Exhibit 10.30


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT
(the “Agreement”) is made and entered
into by and between Datalink Corporation, a Minnesota corporation (the “Company”), and Paul F. Lidsky (the “Executive”) effective as of the
20th day of July, 2009.


 


R E C I T A L S :


 


WHEREAS, the Company is
a leading provider of data storage products and solutions;  and


 


WHEREAS,
the Company and the Executive desire to set forth in this Agreement the terms
under which Executive will serve as President and Chief Executive Officer of
the Company;


 


NOW, THEREFORE,
the parties hereto agree as follows:


 


1.             Employment and Duties.  The Company hereby agrees to employ the
Executive, and the Executive hereby accepts the Company’s offer to serve, as
President and Chief Executive Officer of the Company.  As such, the Executive shall have
responsibilities, duties and authority reasonably accorded to and expected of
such an officer of the Company and will report to the Company’s Board of
Directors (the “Board”) and its committees.  Except for an interim period ending not later
than August 20, 2009 (during which period the Executive will expeditiously
arrange termination of employment with his current employer), the Executive
agrees to devote the Executive’s full business time, attention and efforts to
promote and further the business of the Company.  The Executive will faithfully adhere to,
execute and fulfill all policies established by the Board and its committees.


 


Except for the interim period described above,
the Executive will not, during the Term of Executive’s employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with the Executive’s duties and
responsibilities hereunder.  The
foregoing limitations will not be construed to prohibit the Executive from
making personal investments in such form or manner as will neither require the
Executive’s services in the operation or affairs of the companies or
enterprises in which such investments are made nor violate the terms of Section 4
hereof.


 


The Executive will continue as a member of the
Board after the date of this Agreement.  
However, unless a majority of the Board otherwise determines, in the
event of (and effective coincident with) any termination of the Executive’s
employment with the Company for any reason at any time, the Executive’s service
as a member of the Board will automatically terminate.  The Executive hereby resigns as a member of
the Board’s audit and compensation committees.


 

















 


2.             Compensation.  For all services rendered by the Executive on
and after the date hereof, the Company will compensate the Executive as
follows:


 


(a)           Base Salary.  Commencing on the date hereof, the base
salary payable to the Executive (the “Base Salary”)
shall be $325,000 per year, payable on a regular basis in accordance with the
Company’s standard payroll procedures but not less than semi-monthly.  Such base salary will be subject to review
and adjustment from time to time by the Company’s Compensation Committee (the “Compensation Committee”).


 


(b)           Bonuses.  During the Term, the Executive is entitled to
an annual cash bonus (the “Annual Bonus”)
based on attainment of particular financial and business milestones (the “Performance Milestones”).  The amount of the Annual Bonus, the relevant
Performance Milestones for each year and the payment arrangements will be set
from time to time by the Compensation Committee.  Unless the Compensation Committee otherwise
determines, 75% of the Annual Bonus will relate to achievement of financial
milestones and 25% will relate to business milestones.  The Compensation Committee will have complete
discretion to determine the Executive’s level of achievement toward the
Performance Milestones.  Unless the
Compensation Committee otherwise determines, the percentage of the Executive’s
Base Salary payable as an Annual Bonus for achievement of 100% of both the
financial and business Performance Milestones (the “Target
Bonus”) will be 80%.  To
the extent that the Compensation Committee determines that the Executive has
achieved less or greater than 100% of the relevant Performance Milestones, and
unless the Compensation Committee otherwise determines, the percentage of the
Target Bonus payable will be as follows:


 


	
  Attainment

  	
   

  	
  Payout

  	
   

  
	
  80%

  	
   

  	
  20

  	
  %

  
	
  85%

  	
   

  	
  40

  	
  %

  
	
  90%

  	
   

  	
  60

  	
  %

  
	
  95%

  	
   

  	
  80

  	
  %

  
	
  100%

  	
   

  	
  100

  	
  %

  
	
  101 — 150%

  	
   

  	
  Linear

  	
   

  
	
  Capped at 150%

  	
   

  	
   

  	
   

  



 


For 2009 only, the Executive’s Annual Bonus will
be $130,000, conditioned on the Executive’s continuous employment with the
Company through December 31, 2009. 
This Annual Bonus amount is payable not later than March 15, 2010.


 


(c)           Executive Perquisites, Benefits and Other
Compensation.  Commencing
on the date hereof, the Executive shall be entitled to receive additional
benefits and compensation from the Company in such form and to such extent as
provided to other senior executive officers from time to time.  Initially, these additional items are
specified below:


 

















 


(i)            A
car allowance and reimbursement for use of a corporate cell phone, all in accordance
with Company policy for similarly situated executive officers.


 


(ii)           Reimbursement
for all business travel and other out-of-pocket expenses reasonably incurred by
the Executive in the performance of the Executive’s services pursuant to this
Agreement.  All reimbursable expenses
shall be appropriately documented in reasonable detail by the Executive upon
submission of any request for reimbursement, and in a format and manner
consistent with the Company’s expense reporting policy.


 


3.             Grant of Stock Options.  In
further consideration of this Agreement, the Company hereby awards to the
Executive the option to purchase a total of 450,000 shares of common stock, par
value $.001 per share, of the Company (the “Common Stock”), subject to the
adjustment and the conditions and restrictions set forth below (the “Stock
Option”).  The Stock
Option is granted pursuant to the Company’s 2009 Incentive Compensation Plan
but is not intended to qualify as an incentive option under Section 422 of
the Internal Revenue Code, as amended. 
The Executive may exercise the Stock Option, in whole or in part, at a
purchase price (the “Exercise Price”)
of $3.50 per share (the closing price of the Company’s Common Stock on the
Nasdaq Stock Market on the date of this Agreement), subject to adjustment as
provided below and in compliance with Section 5(f) below, at any time
within ten (10) years from the date of this Agreement (subject to the
limitations below), but only to the extent that the Executive is vested in the
Stock Option.


 


(a)           Vesting.  The Executive will vest
in 25% of the Stock Option on the first, second, third and fourth anniversaries
hereof;  provided, that the Executive
must be employed with the Company continuously to each such vesting date in
order to vest in the portion of the Stock Option on such date.  However, subject to Section 5(f) below,
all of the Stock Option will vest sooner upon a Change of Control event (as
defined below) that occurs during the Term hereof, but only if (i) the
Executive has been employed with the Company continuously from the date hereof
to the date of the Change of Control, (ii) the Change of Control Price (as
defined below) exceeds $3.50 (the closing price of the Company’s Common Stock
on the Nasdaq Stock Market on the date of this Agreement), (iii) the
Compensation Committee as constituted before such Change of Control event
determines in its sole discretion, and expressly authorizes, the acceleration
and vesting of the Executive’s Stock Option and (iv) such acceleration and
vesting will not cause the Stock Option to be subject to the adverse
consequences described in Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”).  Any portion of the Stock Option that does not
vest prior to the Executive’s termination of employment for any reason at any
time will lapse and automatically be canceled. 
Further, any vested portion of the Stock Option not exercised by the
Executive within ninety (90) days after any termination of employment for any
reason at any time (12 months, if Executive dies during the Term hereof and the
Stock Option is being exercised by the Executive’s estate) will lapse and
automatically be canceled.


 


(b)           Change of Control.  A “Change of Control”
means the happening of any of the following events:


 

















 


(i)            An
acquisition of outstanding or newly issued Company securities that results in
any individual, entity or group within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1933, as amended (a “Person,” with such Act being the “Exchange Act”) having beneficial
ownership within the meaning of Rule 13d-3 under the Exchange Act (“Beneficial Ownership”) of more than
50% (other than any Person who, as of the date hereof, already has Beneficial
Ownership of at least 20%) of either (x) the then outstanding shares of
the Company’s Common Stock (the “Outstanding Company
Common Stock”) or (y) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company
Voting Securities”);  or


 


(ii)           A change in the composition of the Board in connection with a tender or exchange offer, a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation (a “Corporate Transaction”) or a direct purchase of securities from the Company such that (A) the individuals who, as of the date hereof, constitute the members of the Board (the “Incumbent Board,” it being intended that the Executive is not considered a member of the Incumbent Board at the date hereof) cease to constitute at least a majority of the Board or (B) a majority of the individuals who, as of the date hereof, constitute the Incumbent Board resign or are removed from the Board;  provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents;  or
 


(iii)          The
approval by the shareholders of the Company of a Corporate Transaction or, if
consummation of such Corporate Transaction is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by consummation); 
excluding, however, such a Corporate Transaction pursuant to which (A) all
or substantially all of the Beneficial Owners of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will Beneficially Own, directly or indirectly, more than
50% of the outstanding shares of common stock, or more than 50% of the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, of the company resulting from such
Corporate Transaction (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(other than the Company, any employee benefit


 

















 


plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or such corporation resulting from such Corporate
Transaction) will Beneficially Own, directly or indirectly, 20% or more of,
respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the
outstanding voting securities of such corporation entitled to vote generally in
the election of directors except to the extent that such ownership existed with
respect to the Company prior to the Corporate Transaction and (C) individuals
who were members of the Incumbent Board will constitute at least a majority of
the board of directors of the corporation resulting from such Corporate
Transaction;  or


 


(iv)          The
approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.


 


Despite all of the foregoing, no Change in
Control is deemed to have occurred with respect to the Executive if the
Executive is part of a purchasing group which consummates the Change in Control
transaction.  The Executive is deemed “part
of a purchasing group” for purposes of the preceding sentence if the Executive
is an equity participant in the purchasing company or group except for (i) passive
ownership of less than three percent (3%) of the stock of the purchasing
company or (ii) ownership of an equity participation in the purchasing
company or group which is otherwise not significant, as determined prior to the
Change in Control by a majority of the Incumbent Board.


 


(c)           Change of
Control Price.  “Change of Control Price” means the higher
of (i) the highest reported closing price of a share of Common Stock in
any transaction reported on the Nasdaq Stock Market during the 30-day period
prior to and including the date of a Change of Control or (ii) if the
Change of Control is the result of a tender or exchange offer, a Corporate
Transaction or a direct purchase of securities from the Company, the highest
price per share of Common Stock paid in such tender or exchange offer,
Corporate Transaction or direct purchase of securities.


 


If the Change of Control is the result of a direct purchase of
securities from the Company for a consideration consisting in whole or in part
other than cash, then:


 


(i)            insofar as the
purchase consideration consists of securities and the value of such securities
is not determinable by reference to a separate agreement, (A) if the
securities are then traded on a national securities exchange or the Nasdaq
Stock Market (or a similar national quotation system), then the value shall be
computed based on the average of the closing prices of the securities on such
exchange or system over the thirty (30)-day period ending on the date of
receipt by the Company, (B) if the securities are actively traded
over-the-counter, then the value shall be computed based on the average of the
closing bid prices over the thirty (30) day ending on the date of receipt by
the Company and (C) if there is no active public market, then the value
shall be computed based on the fair market value thereof on the date of receipt
by the Company, as determined in good faith by the Board and


 

















 


(ii)           insofar as the
purchase consideration consists of property other than cash and securities,
then the value shall be computed at the fair market value thereof at the time
of such issuance, as determined in good faith by the Board.


 


(d)           Adjustments to
Number of Shares and Exercise Price.  In the event that the Compensation Committee
determines that any dividend or other distribution (whether in the form of
cash, shares or other securities or property), stock split or combination,
forward or reverse merger, reorganization, subdivision, consolidation or
reduction of capital, recapitalization, consolidation, scheme of arrangement,
split-up, spin-off or combination involving the Company or repurchase or
exchange of shares, issuance of warrants or other rights to purchase shares or
other securities of the Company, or other similar corporate transaction or
event affects the Stock Option or the shares of Common Stock underlying it such
that an adjustment is determined by the Compensation Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Stock Option, then
the Compensation Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and type of shares (or other
securities or property) subject to the Stock Option or (ii) the Exercise
Price with respect to the Stock Option; 
provided that the number of shares subject to the Stock Option shall
always be a whole number. 
Notwithstanding the foregoing, any adjustments made pursuant to this Section 3(d) shall
be made in such a manner as to ensure that after such adjustment, the Stock
Option continues not to be deferred compensation subject to Code Section 409A
(or if the Stock Option is already subject to Code Section 409A, so as not
to give rise to liability under Code Section 409A).


 


(e)           Non-Alienation of Benefits.  Other
than pursuant to a qualified domestic relations order or by the Executive’s
will upon his death, no right or benefit under this Section 3 shall be
subject to transfer, anticipation, alienation, sale, assignment, pledge,
encumbrance or charge, whether voluntary, involuntary or by operation of law,
and any attempt to transfer, anticipate, alienate, sell, assign, pledge,
encumber or charge the same shall be void.


 


(f)            Subscription Representations;  Transfer Restrictions.  The Executive understands that the Stock
Option constitutes, and any shares of Common Stock acquired upon exercise
thereof will constitute, “restricted securities” within the meaning of the
Securities Act of 1933, as amended (the “Securities Act”).  Accordingly, even if the Executive is fully
vested in the Stock Option, the Executive may never be able to resell the
underlying shares for a profit, or at all. 
In any event, the Executive will be able to resell or otherwise transfer
the underlying Common Stock only if the sale or other transfer is registered
under the Securities Act and applicable state securities laws or there is an
available exemption from this registration. 
The Executive confirms that the Executive can bear the loss of the
Executive’s entire investment in the Company.


 


(g)           Lock-Up
Agreement.  The Executive
agrees that, in the event of each future public offering of the Company’s
equity securities (an “Offering”),
the Executive will agree to such restrictions on the resale of any shares of
the Company’s Common Stock (including the Stock Option and any shares acquired
upon exercise thereof) then beneficially owned by 


 

















 


Executive as requested by the managing underwriter or underwriters of
the Offering;  provided, however, that
such restrictions run no longer than the period of resale restriction imposed
by such underwriters on the Company’s other executive officers and
directors.  The Executive agrees not to
sell or otherwise transfer (including upon death) any of the shares of Common
Stock (including shares acquired upon exercise of the Stock Option)
beneficially owned by the Executive, unless the purchaser or recipient agrees
in writing to be bound by the foregoing lock-up agreement.


 


(h)           Stock Certificate Restrictions.  The Executive acknowledges that the Company
will place a restrictive legend on any certificate representing shares of
Common Stock acquired upon exercise of the Stock Option, and a “stop transfer
order” with any transfer agent of the Company’s securities, barring the sale or
other transfer of such shares except in compliance with this Agreement and
without registration under the Securities Act or an exemption therefrom, and
noting the existence of the lock-up agreement above.


 


(i)            Future Grants of Equity Securities.  Future grants of restricted stock, stock
options or other equity securities, if any, will be governed by the terms of
the grant agreement to which the future grant relates, and not by this
Agreement.


 


4.             Non-Competition and Non-Solicitation.


 


(a)           Basic Terms.  In consideration of this Agreement (including
the Stock Option grant hereunder), the Executive will not, during the period of
the Executive’s employment with the Company and for a period of one (1) year
immediately following the termination of the Executive’s employment under this
Agreement, for any reason whatsoever, directly or indirectly, for the Executive
or on behalf of or in conjunction with any other person, firm, entity, company,
business, partnership, corporation, limited liability company or limited
liability partnership of whatever nature:


 


(i)            engage,
as an officer, director, shareholder, owner, partner, joint venturer or in
a  managerial capacity, whether as an
employee, independent contractor, consultant or advisor or as a sales
representative or executive, in any business that, at the date of the Executive’s
termination of employment, manufactures, markets and/or sells hardware and/or
software products and/or services in competition with the Company in the United
States;


 


(ii)           recruit,
solicit, hire or induce, or attempt to recruit, hire or induce, any employee or
employees to terminate employment or otherwise cease his, her or their
relationship with the Company;


 


(iii)          solicit,
divert or take away, or attempt to solicit, divert or to take away, the
hardware and/or software products and/or services business or patronage of any
of the Company’s actual or prospective clients, customers or accounts
contracted, solicited or served by the Company during Executive’s
employment;  or


 
















 


(iv)          call
upon or solicit any prospective acquisition candidate or individual or groups
of employees of other organizations, which, to the Executive’s actual knowledge
after due inquiry, the Company has called upon or for which the Company has
made an acquisition or hiring analysis, for the purpose of acquiring such
entity or its assets or hiring such individuals.


 


Notwithstanding
the above, the Executive may acquire as a passive investment not more than
three percent (3%) of the capital stock of a competing business, whose stock is
traded on a national securities exchange or over-the-counter.


 


(b)           Equitable Relief.  Because of the difficulty of measuring
economic losses to the Company as a result of a breach of the foregoing
covenants, and because of the immediate and irreparable damage that could be
caused to the Company for which it would have no other adequate remedy, the
Executive agrees that the foregoing covenants may be enforced by the Company in
the event of breach by the Executive by injunctions and restraining orders.


 


(c)           Severability and/or Reformation.  The covenants in this Section 4 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant.  Moreover, in the event any court of competent
jurisdiction determines that the scope, time or territorial restrictions set
forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall be reformed in accordance therewith.


 


(d)           Independently Enforceable.  All of the covenants in this Section 4
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of the Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such
covenants.  It is specifically agreed
that the period of one (1) year following termination of employment stated
at the beginning of this Section 4, during which the agreements and
covenants of the Executive made in this Section 4 shall be effective,
shall be computed by excluding from such computation any time during which the
Executive is in violation of any provision of this Section 4.


 


5.                                       Term; 
Termination;  Rights on
Termination.


 


The term of Executive’s employment under this
Agreement (the “Term”) begins on the date
hereof and continues through the earlier to occur of (i) the second anniversary
of the date hereof or (ii) the first day of the month next following the
Executive’s 65th birthday (the “Normal Retirement Date”);  provided, however, that on the second
anniversary of the date hereof, and on each successive second anniversary thereafter
(such date and each second anniversary thereof shall be hereinafter referred to
as the “Renewal Date”), the Term
will automatically extend so as to terminate on the earlier of (x) two
years from such Renewal Date or (y) the Executive’s Normal Retirement
Date, unless at least 90 days prior to the Renewal Date, the Company gives
written notice to the Executive that the Company is not extending the 


 

















 


Term. 
Despite the Term, this Agreement and the Executive’s employment may be
terminated in any one of the following ways:


 


(a)           Termination Upon Death.  The Executive’s death will immediately
terminate this Agreement.  The Company
will pay the Executive’s estate any of Executive’s accrued Base Salary and any
earned, but unpaid, Annual Bonus (at the time otherwise payable under this
Agreement) through the date of termination and reimbursement of expenses.  The Executive’s estate will forfeit any
portion of the Stock Option not vested in the Executive as of the date of the
Executive’s death.


 


(b)           Termination on Account of Disability.  If, as a result of incapacity due to physical
or mental illness or injury, as reasonably determined by the Executive’s
physician, the Executive is absent from the Executive’s full-time duties
hereunder for ninety (90) days, then thirty (30) days after receiving written
notice (which notice may occur before or after the end of such 90-day period,
but which will not be effective earlier than the last day of such 90-day
period), the Company may terminate the Executive’s employment hereunder;  provided that the Executive is unable to
resume the Executive’s full-time duties at the conclusion of such notice
period.  The Company will pay the
Executive any of the Executive’s accrued Base Salary and any earned, but
unpaid, Annual Bonus (at the time otherwise payable under this Agreement)
through the date of termination and reimbursement of expenses.  The Executive will forfeit any portion of the
Stock Option not vested as of the date of termination.  For a period of 18 months following the date
of termination, the Company will make available to the Executive and the
Executive’s eligible family members, at the Executive’s sole expense, health
insurance continuation coverage pursuant to Section 4980B of the Code,
Sections 601-608 of the Employee Retirement Income Security Act of 1974, as
amended, and under any other applicable law, to the extent required by such
laws (“COBRA Coverage”).


 


(c)           Termination by the Company for Cause.  The Company may terminate this Agreement at
any time for Cause upon written notice to the Executive.  For purposes of this Agreement, “Cause” is (i) the Executive’s
willful, material and irreparable breach of this Agreement;  (ii) the Executive’s gross negligence in
the performance or intentional nonperformance (continuing for thirty (30) days
after receipt of written notice of need to cure) of any of the Executive’s
material duties and responsibilities under this Agreement;  (iii) the Executive’s willful
dishonesty, fraud or misconduct with respect to the business or affairs of the
Company;  or (iv) the Executive’s
conviction of a felony crime.  Upon any
termination for Cause, the Executive will receive no severance compensation
other than base salary accrued through the date of termination and
reimbursement of expenses.  The Executive
will forfeit any portion of the Stock Option not vested as of the date of
termination.  For a period of 18 months
following the date of termination, the Company will make COBRA Coverage
available to the Executive and the Executive’s eligible family members, at the
Executive’s sole expense.


 


(d)           Termination by the Company Without Cause or by the
Executive for Good Reason. 
At any time, either the Executive or the Company may terminate this
Agreement and the Executive’s employment, effective thirty (30) days after
written notice is provided to the 


 

















 


other.  If
the Company terminates the Executive’s employment without Cause or if the
Executive resigns employment for Good Reason (as defined below), the Executive
will receive from the Company, subject to Section 5(f) below, (i) any
Base Salary accrued through the date of termination and reimbursement of
expenses, (ii) any earned, but unpaid, Annual Bonus (at the time otherwise
payable under this Agreement) through the date of termination and (iii) a
single, lump sum payment equal to 1.5 times the Executive’s annual Base
Salary.  The Executive will forfeit any
portion of the Stock Option not vested as of the date of termination.  For a period of 18 months following the date
of termination, the Company will make COBRA Coverage available to the Executive
and the Executive’s eligible family members. 
Subject to Section 5(f) below, the Company will directly pay,
or will reimburse the Executive for, the 18 months of premiums for the COBRA
Coverage.  However, if the Executive
becomes re-employed with another employer and is eligible to receive any health
insurance benefits under another employer’s plans, the Company’s obligations to
pay or reimburse for medical and dental insurance benefits under this Section 5(d) shall
terminate.


 


For purposes of this Agreement, each of the
following is a “Good Reason” for the
Executive to terminate employment with the Company:  (i) the Company’s imposition of material
and adverse changes, without the Executive’s consent, in the Executive’s
principal duties (including upon a Change of Control);  (ii) the Company’s move (including upon
a Change of Control) of its principal executive offices more than 50 miles from
its current location without the Executive’s consent;  and (iii) the reduction by the Company
(including upon a Change of Control) in the Executive’s Base Salary without the
Executive’s consent by more than the weighted average percentage reduction made
contemporaneously by the Company of the base salaries all other executive
officers.  Despite the foregoing, if
within the 30-day period after receiving the Executive’s notice of intent to
terminate employment on account of Good Reason, the Company corrects the
deficiency giving rise to such notice, the resignation by the Executive will
not constitute a termination for Good Reason (without a new event giving rise
therefor).


 


(e)           Termination in Connection with a Change of Control.  Notwithstanding the other provisions of this Section 5,
if during the Term of this Agreement, (x) the Company terminates the
Executive’s employment in anticipation of, in connection with, at the time of
or within ninety (90) days after a Change of Control or (y) the Executive
resigns employment with the Company for Good Reason arising in anticipation of,
in connection with, at the time of or within ninety (90) days after a Change of
Control, the Executive will receive from the Company, subject to Section 5(f) below,
(i) any Base Salary accrued through the date of termination and
reimbursement of expenses, (ii) any earned, but unpaid, Annual Bonus (at
the time otherwise payable under this Agreement) through the date of
termination and (iii) a single, lump sum payment equal to 1.5 times the
Executive’s annual Base Salary.  The
Executive will vest in his Stock Option to the extent provided for by Section 3(a) above.  For a period of 18 months following the date
of termination, the Company will make COBRA Coverage available to the Executive
and the Executive’s eligible family members. 
Subject to Section 5(f) below, the Company will directly pay,
or will reimburse the Executive for, the 18 months of premiums for the COBRA
Coverage.  However, if the Executive
becomes re-employed with another employer and is eligible to receive any health
insurance benefits under another employer’s plans, the 


 

















 


Company’s obligations to pay or reimburse for
medical and dental insurance benefits under this Section 5(e) shall
terminate.


 


(f)            Prerequisites to Severance Benefits;  Timing of Cash Payments.  The Company’s obligations to make cash
payments under Section 5, and the exercisability of the Stock Option after
any termination of the Executive’s employment at any time for any reason, are
subject to the following:


 


(i)            the
Executive must execute and deliver to the Company a release in the form
attached as Exhibit A (the “Release”) and must not revoke
it and


 


(ii)           the
Executive must continuously comply with the provisions of this Agreement
(including the non-competition and non-solicitation provisions of Section 4
above).


 


The Company will pay the lump sum cash severance
amounts under Section 5(d) or 5(e) above on the first day of the
month following the Executive’s date of termination (or, if later, five
business days after expiration of any period for revocation under the Release).


 


6.                                       Tax Withholdings.  The Company may withhold from any amounts
payable under this Agreement such federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.  The Executive may satisfy withholding
obligations relating to the vesting of Restricted Stock by instructing the
Company to retain and cancel a number of shares of Common Stock having a Market
Price on the date of termination (or as of the immediately preceding business day
if the date of termination is not a business day) equal to the withholding tax
obligation amount.  The term “Market Price” with respect to
shares of Common Stock means the closing price on the Nasdaq Stock Market or,
if none, the average of the last reported closing bid and asked prices on any
other national or regional securities exchange or as quoted in the National
Association of Securities Dealers, Inc.’s Automated Quotations System (“Nasdaq”),
or if not listed on a national or regional securities exchange or quoted in
Nasdaq, the closing price as reported by bigcharts.com (or if this service is
discontinued, such other reporting service acceptable to the Company), or if no
quotations in such Common Stock are available, the fair market value of the shares
as determined in good faith by the Board.


 


7.                                       Reduction to Avoid Excise Tax.  If any payment or
distribution to or for the benefit of the Executive (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement or otherwise
(a “Payment”)
would constitute a “parachute payment” within the meaning of Section 280G
of the Code, the Payment shall be reduced to the extent necessary so that no
portion of the Payment is subject to the excise tax imposed by Section 4999
of the Code, together with any interest or penalties imposed with respect to
such excise tax, but only if, by reason of such reduction, the net after-tax
benefit to the Executive shall equal or exceed the net after-tax benefit to the
Executive if no reduction was made.  Subject to the next paragraph, the
Company shall afford the Executive an opportunity to select a reduction of cash
or non-cash items, or a combination of both, to reduce the excess Payment.


 

















 


All determinations required to be made under this Section 7,
including whether a reduction of any Payment is required and the assumptions to
be utilized in arriving at such determination, shall be made by the Company’s
independent registered public accountants serving immediately prior to the
Change in Control, or such other nationally recognized accounting firm as may
be agreed by the Company and the Executive (the “Accounting Firm”); 
provided, that the Accounting Firm’s determination shall be made based upon “substantial
authority” within the meaning of Section 6662 of the Code.  Any
determination by the Accounting Firm hereunder shall be binding upon the
Company and the Executive.


 


8.                                       Return of Company Property.  All records, designs, tradenames and
trademarks, service names and service marks, patents, business plans, financial
statements, manuals, memoranda, customer and other lists and other property
delivered to or compiled by the Executive by or on behalf of the Company, or
its representatives, vendors or customers which pertain to the business of the
Company are and will remain the property of the Company, and be subject at all
times to its discretion and control. 
Likewise, all correspondence, reports, records, charts, advertising and
marketing materials and other similar data pertaining to the business,
activities or future plans of the Company which is collected by or in the
possession of the Executive shall be delivered promptly to the Company without
request by it upon termination of the Executive’s employment.  Further, upon any termination of employment,
the Executive shall return any Company computer (without deleting or tampering
with information thereon) and any other physical property of the Company.


 


9.                                       Inventions.  The Executive will disclose promptly to the
Company any and all significant conceptions and ideas for inventions,
improvements and valuable discoveries, whether patentable or not, which are
conceived or made by the Executive, solely or jointly with another, during the
period of employment, and which are directly related to the business or
activities of the Company and which the Executive conceives as a result of the
Executive’s employment by the Company. 
The Executive hereby assigns and agrees to assign all of the Executive’s
interests therein to the Company or its nominee.  Whenever requested to do so by the Company,
the Executive will execute any and all applications, assignments or other
instruments that the Company shall deem necessary to apply for and obtain
letters patent of the United States or any foreign country or to otherwise
protect the Company’s interest therein. 
Nothing in this Agreement shall apply to an invention for which no
equipment, supplies, facility or trade secret information of the Company was
used and which was developed entirely on the Executive’s own time and (i) which
does not relate (a) directly to the business of the Company or (b) to
the Company’s actual or demonstrably anticipated research or development or (ii) which
does not result from any work performed by the Executive for the Company.


 


10.                                 Confidentiality. 
In consideration of this Agreement, the Executive agrees to not at any time use
or, other than as required by court order, disclose, or permit use or
disclosure of, any of the Company’s confidential information or trade
secrets.  This includes all knowledge and information that Executive
acquires during employment with the Company which relates to the business,
developments, activities, products and services or financial affairs of the
Company or any individual or firm that is engaged in or has done business with
the Company.  This also 


 

















 


includes any information or compilation of
information that derives independent economic value from not being generally
known or readily ascertainable by proper means by other persons and which
relates to any aspect of the Company’s business, including, but not limited
to:  trade secrets within the meaning of the Minnesota Trade Secrets Act,
customer lists, customer information, costs and selling prices, payment and
credit information, customer profiles and analysis, prospect tracking
recording, financial information, budget and financial plans, costing, pricing,
billing information, tax data, sales and marketing information, business
strategies and plans, technical information including software, research, product/product
development information, personnel information such as salaries, phone numbers,
titles, benefits, bonuses, employment histories, shareholder information and
stock data and any discoveries, inventions, ideas, methods, products,
equipment, developments, improvements or programs which the Company holds
confidential and has not publicly disclosed.  Despite the above, the
Executive is not obliged to maintain the confidentiality of information that is
or becomes public other than as a result of acts by or through the Executive or
that the Executive independently obtains from a third party having no duty of
confidentiality to the Company.


 


11.                                 Indemnification;  Directors’ and Officers’ Insurance.  The Executive shall have the benefit of
indemnification to the fullest extent permitted by applicable law, which
indemnification shall continue after the termination of this Agreement for such
period as may be necessary to continue to indemnify Executive for acts or
omissions during the Term hereof to the fullest extent permitted by applicable
law.


 


12.                                 Code Section 409A.  To the extent applicable and notwithstanding
any other provision of this Agreement, this Agreement and the Stock Option and
other payments and benefits hereunder shall be administered, operated and
interpreted in accordance with Code Section 409A and Department of
Treasury regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other guidance that may be
issued after the date of this Agreement; 
provided, however, in the event that the Compensation Committee
determines that any amounts payable hereunder may be taxable to the Executive
under Code Section 409A and related Department of Treasury guidance prior
to the payment and/or delivery to the Executive of such amount, the Company may
(a) adopt such amendments to this Agreement and the related Stock Option
or other payments and benefits hereunder, and appropriate policies and
procedures, including amendments and policies with retroactive effect, that the
Compensation Committee determines necessary or appropriate to preserve the
intended tax treatment of the benefits provided by this Agreement and/or (b) take
such other actions as the Compensation Committee determines necessary or
appropriate to comply with or exempt this Agreement and the Stock Option and
other payments and benefits hereunder from the requirements of Code Section 409A
and related Department of Treasury guidance, including such Department of
Treasury guidance and other interpretive materials as may be issued after the
date of this Agreement.  The Company
makes no guarantees to the Executive regarding the tax treatment of this
Agreement and, notwithstanding the above provisions and any agreement or
understanding to the contrary, if any stock, payments or other amounts due to
the Executive (or his beneficiaries, as applicable) results in, or causes in
any manner, the application of an accelerated or additional tax, fine or
penalty under Code Section 409A or otherwise to be imposed, then the
Executive (or his beneficiaries, as 


 

















 


applicable) shall be solely liable for the
payment of, and the Company shall have no obligation or liability to pay or
reimburse (either directly or otherwise) the Executive (or his beneficiaries,
as applicable) for, any such additional taxes, fines or penalties.


 


13.                                 Complete Agreement.  This Agreement supersedes any other
agreements or understandings, written or oral, between the Company and the
Executive, and the Executive has no oral representations, understandings or
agreements with the Company or any of its officers, directors, employees or
representatives covering the same subject matter as this Agreement.  This document is the final, complete and
exclusive statement and expression of the agreement between the Company and the
Executive and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral
or written agreements.  This document may
not be later modified except by a written instrument signed by a duly
authorized officer of the Company and the Executive, and no term of this
Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.


 


14.                                 Notice.  Whenever any notice is required hereunder, it
shall be given in writing addressed as follows:


 


	
  To the Company:

  	
  Datalink Corporation

  
	
   

  	
  8170 Upland Circle

  
	
   

  	
  Chanhassen, Minnesota 55317

  
	
   

  	
  Attention: Greg R. Meland, Chairman

  
	
   

  	
   

  
	
  To the Executive:

  	
  Paul F. Lidsky

  
	
   

  	
  18715 — 24th Avenue North

  
	
   

  	
  Plymouth, Minnesota 55447

  



 


Notice is given and effective three (3) days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received.  Either party may change the
address for notice by notifying the other party of such change in accordance
with this Section 14.


 


15.                                 Arbitration.  Except as to matters of injunctive or
equitable relief (over which the parties agree that the federal and state
courts located in Minneapolis, Minnesota will have exclusive jurisdiction and
are deemed to be of proper venue and convenience to the parties), any
unresolved dispute or controversy arising under or in connection with this
Agreement will be settled exclusively by arbitration, conducted before a panel
of three (3) arbitrators in Minneapolis, Minnesota, in accordance with the
rules of the American Arbitration Association then in effect.  The arbitrators will not have the authority
to add to, detract from or modify any provision hereof nor to award punitive
damages to any injured party.  A decision
by a majority of the arbitration panel will be final and binding.  Judgment may be entered on the arbitrators’
award in any court having jurisdiction. 
The direct expense of any arbitration proceedings,


 

















 


including, but not limited to, the
administrative fees and the arbitrators’ fees and expenses, will be borne by
the Company.


 


16.                                 Binding  Effect; 
Governing Law.  This Agreement will inure to the benefit of
the successors or assigns of the Company. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Minnesota, exclusive of its conflicts of laws rules.


 


IN WITNESS WHEREOF,
the undersigned have hereunto affixed their signatures.


 


	
  DATALINK CORPORATION

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Greg R. Meland

  	
   

  	
  By

  	
  /s/ Paul F. Lidsky

  
	
   

  	
  Greg R. Meland, Chairman

  	
   

  	
  Paul F. Lidsky

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
  7/20/2009

  	
   

  	
  Date

  	
  7/20/2009

  



 

















 


Exhibit A


Release of Claims


 


I release Datalink Corporation and its officers, directors, employees
and agents from any claim, cause of action, damages or expenses, including
attorneys’ fees, arising out of the relationship between the parties through
the signing of this Release.  This is intended to be a complete release of
claims by me, whether the claims are known or unknown, matured or unmatured or
fixed or contingent.  Therefore, by this release I GIVE UP
ANY RIGHT TO MAKE A CLAIM, BRING A LAWSUIT, FILE AN ADMINISTRATIVE CHARGE OF
DISCRIMINATION OR OTHERWISE SEEK MONEY DAMAGES OR COURT ORDERS AS A RESULT OF
MY EMPLOYMENT BY DATALINK, OR OF MY SEPARATION FROM EMPLOYMENT WITH DATALINK. 
I acknowledge and intend that this Release cover claims of wrongful
termination, defamation, intentional infliction of emotional distress, any
claims under the Federal Age Discrimination in Employment Act, Title VII of the
Civil Rights Act of 1964, the Americans With Disabilities Act, the Minnesota
Human Rights Act and Minnesota Statute Section 181.81 (which prohibits age
discrimination) and any other state or federal statutes prohibiting
discrimination in employment.  This Release also binds my heirs,
administrators, representatives, executors, successors and assigns.  I
have been advised by my legal counsel of the effect of this Release. 
Despite the above, this Release does not apply to claims against Datalink for
breaching its obligations under an Employment Agreement dated July 20,
2009.


 


NOTICE TO THE UNDERSIGNED:


 


THIS IS A RELEASE OF LEGAL RIGHTS YOU MAY HAVE.  YOU SHOULD
CONSULT WITH AN ATTORNEY REGARDING THIS RELEASE AND OTHER ASPECTS OF THIS
LETTER BEFORE YOU SIGN IT.


 


YOU HAVE 21 DAYS TO CONSIDER WHETHER OR NOT TO SIGN THIS RELEASE,
STARTING FROM THE DATE YOU FIRST RECEIVE A COPY OF IT.  YOU MAY SIGN
THIS RELEASE AT ANY TIME DURING THE 21-DAY PERIOD.


 


YOUR EMPLOYMENT BY DATALINK HAS TERMINATED.  YOUR ACCEPTANCE OR
FAILURE TO ACCEPT THIS RELEASE DOES NOT AFFECT YOUR TERMINATION.  IF YOU
DO NOT ACCEPT THIS RELEASE, OR IF YOU REVOKE YOUR ACCEPTANCE OF IT, DATALINK
WILL NOT PROVIDE YOU THE SEVERANCE PAY AND OTHER BENEFITS DESCRIBED IN YOUR
EMPLOYMENT AGREEMENT.


 


AFTER YOU ACCEPT THIS RELEASE BY SIGNING IT, YOU MAY REVOKE YOUR
ACCEPTANCE FOR A PERIOD OF 15 DAYS AFTER THE DATE YOU SIGN.  THIS RELEASE
IS NOT EFFECTIVE UNTIL THIS 15-DAY REVOCATION PERIOD EXPIRES.


 


IF YOU WISH TO REVOKE YOUR ACCEPTANCE OF THIS RELEASE, YOU MUST NOTIFY
DATALINK IN WRITING WITHIN THE 15-DAY REVOCATION PERIOD.  YOU MUST DELIVER
YOUR NOTICE TO DATALINK IN PERSON OR BY CERTIFIED MAIL,


 

















 


RETURN RECEIPT REQUESTED, ADDRESSED TO:  Greg R. Meland, Chairman,
Datalink Corporation, 8170 Upland Circle, Chanhassen, Minnesota 
55317.  IF YOU FAIL TO PROPERLY DELIVER OR MAIL YOUR WRITTEN REVOCATION AS
INSTRUCTED, YOUR REVOCATION WILL NOT BE EFFECTIVE.


 


	
  Date this Release is first given by Datalink to the undersigned:

  	
   

  
	
   

  	
   

  
	
  Agreed to and accepted by the undersigned:

  	
   

  
	
   

  	
   

  
	
  Date this Release is signed by the undersigned:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Employee