DAMARK Announces $20 Million Preferred Equity Investment; Also: Subsidiary Spin-out Likely Delayed; Comfort With Analysts' Expectations; Class-Action Lawsuit Victory.

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--Sept. 29, 2000

DAMARK International, Inc. (Nasdaq:DMRK) today announced the following:

-- Receipt of a preferred equity investment of $20 million

-- Spin-out decision of ClickShip Direct delayed

-- Management of Provell and ClickShip comfortable with Q3 estimates

-- Unanimous jury verdict favoring company in long standing class-action
litigation

Damark International, Inc. announced that it has placed $20 million of preferred stock with four institutional investors. The preferred stock is convertible into Damark shares at $12.94 per share. The purchasers also received warrants exercisable at $16.17 per share on a number of shares equal to 50 percent of the number of shares that could be acquired. Terms also include a warrant on shares of ClickShip Direct if that subsidiary is spun off and distributed to Damark shareholders. The proceeds from the preferred stock sale are primarily intended to fund Provell, as it replaces former Damark membership programs, and to facilitate an aggressive expansion of Provell's business.

ClickShip Direct strategic options being explored

Mark A. Cohn, Damark's chairman and chief executive officer, indicated that the company is continuing to explore opportunities to capitalize ClickShip Direct so that its shares can be distributed and it can operate as an independent public company.

Cohn stated, "When we initiated plans to complete a spin-off of ClickShip Direct, the e-fulfillment and related e-commerce businesses had attractive market valuations. Prospects for financing ClickShip Direct appeared favorable."

While Damark continues to explore capitalizing ClickShip Direct so that a spin-off can be accomplished, including the use of its recently expanded fulfillment center and related real estate to obtain financing, market conditions have changed, values have declined substantially for comparable companies and financing has not been readily available. Consequently, the company is currently exploring all options relating to ClickShip, including raising capital and other strategic alternatives. Various financing proposals are being explored, and a decision on ClickShip Direct is expected by year-end. There is no assurance as to the alternative that the company will pursue.

Company expresses comfort with third-quarter street estimates

"At Provell, we are delighted to report additional new client wins and an attractive client pipeline, and are comfortable with the range of analysts' estimates for the third quarter," said George S. Richards, the company's president. Cohn reports that ClickShip Direct is also on target and that "we are comfortable with third-quarter estimates, as well."

DAMARK wins class-action lawsuit

The company also, recently and successfully, concluded a four-year old class action litigation case in New Jersey. "We have always believed this litigation to be completely unwarranted. The unanimous jury verdict in our favor validates the integrity of our business practices and helps to restore my faith in the justice system. While we have been forced to expend significant resources in the defense against these misguided and ill-advised claims, we have the satisfaction of putting this matter behind us with a successful conclusion," said Cohn.

DAMARK International, Inc., operating under the Provell name, develops, markets and manages leading edge membership and customer relationship management programs. Provell's proprietary programs provide purchase price discounts and other benefits related to consumer and small business needs in the areas of shopping, travel, hospitality, entertainment, health/fitness, and finance. As of July 1, 2000, consumers enjoyed benefits provided through nearly 2.3 million memberships. The Company is headquartered in Minneapolis, Minnesota and was founded in 1986.

ClickShip Direct, Inc. provides outsourcing of order fulfillment and customer care services to retailers, e-tailers, direct marketers, and manufacturers. These services include online and offline order-capture, payment processing, inventory receipt, warehousing, merchandise shipment, after-the-sale customer service and support, and returns management. CSDI operates two 375-seat customer care centers in Junction City, Kansas and Fayetteville, North Carolina and a 720,000 square foot distribution center in Brooklyn Park, Minnesota. Headquartered in Minneapolis, Minnesota, ClickShip is a wholly owned subsidiary of DAMARK International, Inc. and was incorporated in January 2000. Additional information about CSDI can be found at www.clickshipdirect.com.

Any statements herein regarding the business of DAMARK International, Inc. that are not historical facts are "forward-looking statements" that are intended to qualify for the safe harbor provisions from liability provided by the Private Securities Litigation Reform Act of 1995. For a discussion of risks and uncertainties that could cause actual results to differ from those implied by any forward looking statement, see "Forward-Looking Information" in the Company's most recent Annual and Quarterly Reports on Forms 10-K and 10-Q as filed with the Securities and Exchange Commission.