EXHIBIT 10.18

EMPLOYMENT AGREEMENT

AGREEMENT made as of the 4th day of January, 2007, between D&E Communications,
Inc., a Pennsylvania business corporation, having its principal office at 124
East Main Street, Ephrata, PA 17522-0458 (“D&E”) and W. Garth Sprecher, having
an address of 2027 Wynfield Drive, Lancaster, PA 17601 (“Executive”).

BACKGROUND

D&E desires to employ Executive on a contractual basis as its Senior Vice
President and Secretary, and Executive desires to accept such position, on the
terms and conditions set forth below.

NOW THEREFORE, intending to be legally bound hereby, the parties agree as
follows:

AGREEMENT

1. Employment. D&E hereby agrees to employ the Executive for a fixed term, as
more particularly set forth herein, and provide Executive with certain change in
control benefits, in exchange for which Executive accepts the terms and
conditions set forth herein governing his employment, including the restrictive
covenants set forth herein.

2. Term. Executive’s employment hereunder shall be for a term commencing on
January 4, 2007 and ending on December 31, 2007 (the “Term”).

3. Compensation.

(a) Salary. Executive will be paid an annual salary of $200,000, subject to
adjustment as provided below (the “Salary”), which will be payable in equal
periodic installments according to D&E’s customary payroll practices, but no
less frequently than monthly.

(b) Benefits. Benefits for the Executive and his family will be the same , in
the aggregate, to those provided by D&E to similarly situated D&E executive
officers (“similarly situated D&E executive officers” shall mean the “named
executive officers” in D&E’s proxy statement) as of the date hereof, including
participation in such pension, profit sharing, bonus, life insurance, disability
insurance, hospitalization, major medical, and other employee benefit plans of
D&E that may be in effect from time to time, to the extent Executive is eligible
under the terms of those plans (collectively, the “Benefits”).

(i) Executive shall participate, from the effective date of this Agreement, in
the D&E Supplemental Retirement Plan (the “SERP”), the form of which is attached
hereto as Exhibit A which is a plan of deferred compensation that provides for
an annual supplemental retirement benefit equal to the additional qualified
retirement benefit the Executive would accrue under the D&E Communications, Inc.
Employee’s Retirement Plan (the “Qualified Retirement Plan”).

 

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(ii) Short-Term Incentive Plan. As additional compensation for the services to
be rendered by Executive pursuant to this Agreement, Executive will be eligible
to participate in such executive level bonus/incentive programs and plans as may
be in effect from time to time as approved by the Board of Directors of D&E.
Executive shall be eligible for a targeted Short-term Incentive Plan bonus at
the end of calendar year 2007 at twenty-five percent (25%) of his Salary as
defined in D&E’s Short Term Incentive Plan. The target is neither a minimum nor
a cap on any bonus.

(c) Paid Time Off. Executive shall be entitled to six (6) weeks of paid time off
per year during the term of his employment, or such greater amount commensurate
with periods of paid time off as may from time to time be provided for similarly
situated D&E executive officers.

(d) Expense Reimbursement. D&E will reimburse Executive for reasonable expenses
incurred by Executive in the performance of Executive’s duties pursuant to this
Agreement in accordance with D&E’s regular reimbursement policies, as in effect
from time to time and upon receipt of itemized vouchers therefor and such other
supporting information as D&E may reasonably request.

(e) Automobile. D&E will provide Executive with either a company car or related
reimbursement, in the discretion of D&E, similar to that provided for similarly
situated D&E executive officers.

(f) Reservation of Right to Amend Benefit Plans. Executive understands that from
time to time it may be necessary for economic and business reasons for D&E to
amend any of its benefit plans, which amendments may involve the increase,
decrease or change of form of a benefit. Executive’s employment pursuant to this
Agreement shall be subject to any such amendments, and any such amendments
applicable to all D&E employees, or the specific class thereof of which
Executive is a member, that impacts Executive’s benefit package hereunder shall
not be a breach of this Agreement by D&E. In no event, however, shall any such
amendment deprive Executive of any Benefit that has vested or is then otherwise
owed to Executive under this Agreement, the SERP, D&E’s Short-term Incentive
Plan, D&E’s Long-term Incentive Plan or any of D&E’s pension, profit sharing,
bonus or short-term or long-term disability plans.

4. Duties. The Executive shall serve as the Senior Vice President and Secretary
of D&E, reporting to the Chief Executive Officer , and have the normal duties,
responsibilities and authority associated with such position including, without
limitation, those set forth in Exhibit B attached and made a part hereof, as
well as such duties (which are reasonably consistent with Executive’s primary
duties) as shall be assigned to him from time to time by the Chief Executive
Officer. In the event Executive is assigned additional duties by either the
Chief Executive Officer or Board of Directors that result in a material change
in Executive’s duties as provided under this Agreement, Executive shall be
entitled to receive additional compensation commensurate with the additional
duties. The Executive shall devote his entire working time and

 

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attention to D&E’s business. During the term of this Agreement, Executive shall
not be employed by, or participate or engage in or be a part of in any manner
the management or operations of any business enterprise other than D&E without
the prior written consent of D&E, which consent may be granted or withheld in
its sole discretion; provided, however, that Executive may, while he remains
employed by D&E, participate in reasonable charitable, social, teaching,
educational and civic activities, as well as industry trade groups and
associations and personal investment activities, so long as such activities do
not interfere with the performance of Executive’s obligations under this
Agreement, as well as those activities set forth on Exhibit C attached hereto.

5. Termination of Employment.

(a) Due To Death, Disability, For Cause or Without Good Reason.

(i) For Cause. If the Executive’s employment shall be terminated by D&E for
Cause, D&E shall pay the Executive his full Salary, plus any accrued paid time
off, through the date of termination at the rate in effect at the time of
termination, any Benefits that have vested or are otherwise owed to Executive,
and D&E shall have no further obligation to the Executive under this Agreement.
“Cause” shall mean:

(a) the failure by the Executive to substantially perform his duties hereunder
after notice from D&E and a failure to cure such violation within thirty
(30) days of the date of said notice or, if said violation cannot be cured
within such period of time, within a reasonable time thereafter, if the
Executive is diligently attempting to cure the violation, but in no event longer
than 60 days from the date of the notice;

(b) the engaging by the Executive in misconduct injurious to D&E;

(c) the dishonesty or gross negligence of the Executive in the performance of
his duties;

(d) material violation by Executive of D&E’s Code of Business Conduct and
Ethics;

(e) use by the Executive of alcohol which interferes with the performance of his
duties;

(f) use by the Executive of illegal drugs;

(g) the breach of Executive’s fiduciary duty involving personal profit;

(h) the violation by the Executive of any law, rule or regulation which
jeopardizes the business of D&E;

 

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(i) moral turpitude or other conduct on the part of Executive which brings
public discredit to D&E;

(j) commission by Executive of workplace violence or harassment; or

(k) the material violation by the Executive of any provision of this Agreement
or any policy of D&E not already addressed above after notice from D&E and a
failure to cure such violation within thirty (30) days of the date of said
notice or, if said violation cannot be cured within such period of time, within
a reasonable time thereafter, if the Executive is diligently attempting to cure
the violation, but in no event longer than 60 days from the date of the notice.

The foregoing notwithstanding, any actions undertaken by Executive at the
specific direction of the Board of Directors or based upon the advice of
corporate counsel shall not constitute “Cause” hereunder, even if such action is
arguably within the ambit of any of subsections (a) through (k) above.

(ii) Death or Disability. If the Executive’s employment shall be terminated due
to Executive’s Disability, D&E shall pay the Executive his full Salary and any
accrued paid time off through the date of termination, and any Benefits that
have not vested or are then otherwise owed to Executive, including but not
limited to short-term and/or long-term disability benefits, and D&E shall have
no further obligation to the Executive under this Agreement. If the Executive’s
employment shall be terminated due to Executive’s death, D&E shall pay the
Executive’s designated beneficiaries, or if no designated beneficiaries, pay to
Executive’s heirs his full Salary, plus any accrued paid time off and any
Benefits that have vested or are then otherwise owed to Executive through the
date of termination and for one full month (4 weeks) following the date of
termination. All stock options and performance restricted shares held by
Executive shall immediately vest to the extent provided in the 1999 Long Term
Incentive Plan and any applicable award agreements and D&E shall have no further
obligation to the Executive under this Agreement. “Disability” shall have the
meaning given to the term “total disability” in the D&E Short Term Disability
Program. Nothing in this provision shall be interpreted to limit the Executive’s
rights to recover benefits under any applicable disability insurance policy.

(iii) Without Good Reason. If Executive desires to terminate his employment
without Good Reason, Executive shall provide D&E with at least 60 days’ prior
written notice of the effective date of such termination. Until the effective
date of termination, Executive shall continue to fulfill his duties under this
Agreement. D&E shall continue to pay Executive his normal Salary through the
effective date of termination, plus any accrued paid time off any Benefits that
have vested or are then otherwise owed to Executive, and D&E shall have no
further obligation to the Executive under this Agreement. D&E may, in its
discretion, request that Executive cease to perform his duties under this
Agreement at any time following its receipt of notice of termination and prior
to

 

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the effective date of termination but, in such event, Executive shall still be
entitled to be paid his normal Salary, plus any accrued vacation, and any
Benefits that have vested or are then otherwise owed to Executive, through the
effective date of termination.

(b) Without Cause or for Good Reason. If the Executive’s employment is
terminated without Cause by D&E, or is terminated by Executive for Good Reason,
then D&E shall pay the Executive his full Salary from the date of termination
through the last day of the then current Term. In addition, the Executive shall
be entitled to: (i) an additional annual retirement benefit pursuant to the
terms of the SERP, such that the Executive is treated as if he had remained
employed by D&E through the end of the then current Term. The benefit provided
under the SERP is intended to be in addition to the Qualified Retirement Plan
benefit payable to the Executive regardless of whether the Executive has
satisfied the vesting requirements of such plan(s); and (ii) payment of the
amount that would have been due to the Executive under any Short-term Incentive
Plan in effect at the time of Executive’s termination had the Executive remained
employed by D&E through the end of the incentive period relating thereto. Any
such incentive payment shall be due and payable only at the time and in the
manner provided for in the plan relating thereto. Termination for “Good Reason”
shall mean termination by the Executive of his employment due to:

(i) any material adverse change in the position, responsibilities, authority or
duties assigned to the employee, as contemplated by Paragraph 4, without his
consent, except in connection with the termination of the Executive’s employment
for Cause;

(ii) failure of D&E or any successor or assign to comply with Paragraph 3 hereof
in any material manner;

(iii) requiring the Executive to be based anywhere that is 75 miles or more
distant from the Executive’s current place of work, without his consent, except
for required travel on D&E’s business to an extent substantially consistent with
his present business travel obligations;

(iv) a requirement by D&E or its successor that Executive, in his reasonable
judgment take an action that would violate the requirements of generally
accepted accounting standards, the regulations of the Securities and Exchange
Commission, applicable stock exchange listing standards or D&E’s Code of
Business Conduct and Ethics;

(v) failure of D&E, its successors or assigns, to obtain and maintain officers
and directors liability insurance in accordance with Paragraph 9; or

(vi) failure of any successor or assign of D&E to assume this Agreement and
honor its provisions, or any material breach of this Agreement by D&E or its
successor or assign.

 

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If the Executive intends to terminate his employment for Good Reason, he must
first give notice to D&E that such action or limitation of D&E constitutes Good
Reason. The Executive’s employment shall be deemed terminated for Good Reason if
D&E fails to cure such situation within thirty (30) days of the date of said
notice or, if said situation cannot be cured within such period, within a
reasonable time thereafter, if a diligent effort is being made to cure such
situation, but in no event longer than 60 days from the date of the notice.
Notwithstanding the foregoing, in the event the Executive is a key employee (as
defined in Internal Revenue Code Section 416(i)) of the Company as of the last
day of the calendar year preceding the date a benefit becomes payable under this
Paragraph 5(b), distribution of that portion of the Executive’s payment
attributable to the termination of his employment for Good Reason, shall be made
or commenced six months after the date the benefit would otherwise have been
paid pursuant to the foregoing provisions of this Paragraph 5(b). This six month
period shall be shortened to the extent that counsel to D&E believes that it is
then permissible under Section 409A of the Internal Revenue Code of 1986, as
amended, without the imposition of an excise tax.

If the Executive dies while receiving severance payments under this paragraph
5(b), then the remaining balance of severance payments due shall be paid to his
designated beneficiaries, or if no beneficiaries are designated, then to the
Executive’s heirs.

6. Restrictive Covenants.

(a) During the Term of this Agreement and during the Restricted Period, the
Executive shall not Compete with D&E in the Territory. For purposes of the
foregoing, (i) “Territory” shall mean any city or county in which D&E provides,
offers or plans to provide or offer its services determined as of the date of
termination of Executive’s employment, provided that any such plan to offer or
provide services has been discussed at the executive level of D&E and
memorialized in an internal memorandum or other writing prior to the termination
of the Executive’s employment. “Territory” shall not include any additional
geographical location of any successor to D&E by purchase, merger,
consolidation, acquisition of assets or otherwise; (ii) “Compete” shall mean the
direct or indirect ownership, management, operation, control, employment by,
participation in, or connection in any manner with the ownership, management,
operation or control of any business which is engaged in providing the types of
communications goods or services, or any other line of business, in which D&E is
engaged at the time of Executive’s termination including, if applicable and
without limitation, wireline, wireless, internet access, VOIP, broadband or any
similar communications means, , whether as an individual on his own, as a
partner, joint venturer, officer, shareholder, employee, agent, independent
contractor, lessor, creditor or otherwise; and (iii) “Restricted Period” shall
mean a period of one (1) year from and after the date of termination of this
Agreement, provided that, if the Executive’s employment is terminated pursuant
to Paragraphs 5(a) or 5(b), the Restricted Period shall be the same as the
period during which the Executive is entitled to Salary payments under
Paragraphs 5(a) and 5(b). The foregoing restrictive covenant will be effective
only if Executive receives the payments to which he is entitled under Paragraphs
5(a) or 5(b). The foregoing restrictive covenant shall not be construed to
prohibit the ownership by Executive of up to five percent (5%) of any class of
securities of any corporation which is

 

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in competition with D&E, provided that such ownership represents a passive
investment and that neither Executive nor any group of persons including
Executive in any way, either directly or indirectly, manages or exercises
control of any such corporation, guarantees any of its financial obligations,
otherwise takes any part in its business, other than exercising his rights as a
shareholder, or seeks to do any of the foregoing.

(b) During the Term of his employment hereunder and for ten (10) years following
termination, the Executive shall not, without the prior written consent of an
authorized officer of D&E, disclose to any person, other than an employee of D&E
or a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties, any material
confidential information, defined as information protected under Section 5302 of
the Pennsylvania Uniform Trade Secrets Act, 12 Pa. C.S. §5301, et seq., obtained
by him while in the employ of D&E with respect to any of D&E’s or its
affiliates’ business plans and strategies, pricing and pricing strategies,
engineering and technical data, services, products, customers, sales records,
methods of business or any business practices the disclosure of which could be
or will be materially damaging to D&E or its affiliates (the “Confidential
Information”); provided, however, that confidential information shall not
include any information known generally to the public (other than as a result of
unauthorized disclosure by the Executive or any person with the assistance,
consent or direction of the Executive) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by D&E or any information that must be
disclosed as required by law or governmental authority.

(c) Executive agrees, for a period of one (1) year following termination of his
employment with D&E, (i) not to solicit any D&E employees or officers to leave
D&E to accept employment by Executive or his new employer; and (ii) not to
solicit or encourage any D&E customers to cease doing business with D&E and/or
to transfer any or all of their business relationships to any institution which
Executive may found or to Executive’s new employer.

(d) Executive agrees that he will not disparage D&E in any communications of any
nature with any third parties, including but not limited to shareholders of D&E
or its vendors, customers and suppliers, regarding any matters related to D&E
during or following termination of his employment. The foregoing prohibition is
not intended to, and should not be construed as, preventing Executive from
fulfilling any duty to report accounting issues pursuant to the requirements of
the Sarbanes Oxley Act and any regulations promulgated thereunder, or otherwise
providing truthful information to third parties.

(e) Executive acknowledges and agrees that the covenants contained herein are
fair and reasonable in light of the consideration paid hereunder, and that
damages alone shall not be an adequate remedy for any breach by Executive of his
covenants which then apply and accordingly expressly agrees that, in addition to
any other remedies which the D&E may have, D&E shall be entitled to injunctive
relief in any court of competent jurisdiction for any breach or threatened
breach of any such covenants by Executive. Nothing contained herein shall
prevent or delay D&E from seeking, in any court of competent jurisdiction,
specific performance or other equitable remedies in the event of any breach or
intended breach by Executive of any of his obligations hereunder.

 

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(f) The period of time applicable to any covenant in this Paragraph 6 will be
extended by the duration of any violation by Executive of such covenant.

(g) If any covenant in Paragraph 6 is held to be unreasonable, arbitrary, or
against public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope, time, or
geographic area, or all of them, as a court of competent jurisdiction may
determine to be reasonable, not arbitrary, and not against public policy, will
be effective, binding, and enforceable against Executive.

7. D&E Property. The Executive will not remove from D&E’s premises (except to
the extent such removal is for purposes of the performance of the Executive’s
duties at home or while traveling, or except as otherwise specifically
authorized by D&E) any document, record, notebook, plan, model, component,
device, or computer software or code, whether embodied in a disk or in any other
form (collectively, the “Proprietary Items”). The Executive recognizes that, as
between D&E and the Executive, all of the Proprietary Items, whether or not
developed by the Executive, are the exclusive property of D&E. Upon termination
of this Agreement by either party, or upon the request of D&E during the Term,
the Executive will immediately return to D&E all of the Proprietary Items in the
Executive’s possession or subject to the Executive’s control, and the Executive
shall not retain any copies, abstracts, sketches, or other physical embodiment
of any of the Proprietary Items.

8. Employee Inventions.

(a) Each Employee Invention will belong exclusively to D&E. The Executive
acknowledges that all of the Executive’s writing, works of authorship and other
Employee Inventions are works made for hire and the property of D&E, including
any copyrights, patents or other intellectual property rights pertaining
thereto. If it is determined that any such works are not works made for hire,
the Executive hereby assigns to D&E all of the Executive’s right, title, and
interest, including all rights of copyright, patent and other intellectual
property rights, to or in such Employee Inventions. The Executive covenants that
he will promptly:

(i) disclose to D&E in writing any Employee Invention;

(ii) assign to D&E or to a party designated by D&E, at D&E’s request and without
additional compensation, all of the Executive’s right to the Employee Invention
for the United States and all foreign jurisdictions;

(iii) execute and deliver to D&E such applications, assignments, and other
documents as D&E may request in order to apply for and obtain patents or other
registrations with respect to any Employee Invention in the United States and
any foreign jurisdictions;

(iv) sign all other papers necessary to carry out the above obligations; and

 

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(v) give testimony and render any other assistance, but without expense to the
Executive, in support of D&E’s rights to any Employee Invention.

(b) For purposes of the foregoing, “Employee Invention” shall mean any idea,
invention, technique, modification, process, or improvement (whether patentable
or not), any industrial design (whether registerable or not) and any work of
authorship related to the business of D&E (whether or not copyright protection
may be obtained for it) created, conceived, or developed by the Executive,
either solely or in conjunction with others, during the Term, or a period that
includes a portion of the Term, that relates in any way to, or is useful in any
manner in, the business then being conducted or proposed to be conducted by D&E,
and any such item created by the Executive, either solely or in conjunction with
others, following termination of the Executive’s employment with the Employer,
that is based upon or uses Confidential Information.

9. Indemnification. D&E shall indemnify and hold harmless the Executive, to the
fullest extent permitted by Pennsylvania law and D&E’s Articles of Incorporation
and By-Laws, whichever affords greater protection, with respect to any
threatened, pending or completed action, suit or proceeding brought against him
by reason of the fact that he is or was a director, officer, employee or agent
of D&E or is or was serving at the request of D&E as a director, officer,
employee or agent of another person or entity. To the fullest extent permitted
by Pennsylvania law and D&E’s Articles of Incorporation and By-Laws, D&E shall,
in advance of final disposition, advance expenses (including, without
limitation, attorney’s fees) incurred by the Executive in connection with any
threatened, pending or completed action, suit or proceeding with respect to
which the Executive may be entitled to indemnification hereunder; provided,
however, that the Executive agrees to reimburse D&E all such monies advanced if
the presiding court finds that he is not entitled to be indemnified by D&E under
Pennsylvania law or D&E’s Articles of Incorporation and By-Laws. The Executive’s
right to indemnification provided herein is not exclusive of any other rights of
indemnification to which the Executive may be entitled under any bylaw,
agreement, vote of shareholders or otherwise, and shall continue beyond the term
of this Agreement. D&E shall use its best efforts to obtain insurance coverage
for the Executive under an insurance policy covering officers and directors of
D&E against lawsuits, arbitrations or other proceedings, provided, however, that
nothing herein shall be construed to require D&E to obtain such insurance, if
the Board of Directors of D&E determines that such coverage cannot be obtained
at a commercially reasonable price.

10. Attorney’s Fees and Costs. In the event of any litigation, arbitration,
mediation or other proceeding between D&E and the Executive with respect to the
subject matter of this Agreement and the enforcement of the rights hereunder and
such litigation or other proceeding results in a judgment, order, or other
administrative determination in favor of the Executive, D&E shall reimburse the
Executive for all of his reasonable costs and expenses relating to such
litigation or other proceeding, including, without limitation, his reasonable
attorneys’ fees and expenses.

11. Notices. Any notice required or desired to be given under this Agreement
shall be deemed given if in writing and sent by overnight courier, or via
certified mail, return receipt requested, to the Executive’s residence or to
D&E’s principal office, as the case may be.

 

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12. Waiver of Breach. Either party’s waiver of a breach of any provision in this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by the non-breaching party. No waiver shall be valid
unless in writing and signed by an authorized officer of D&E.

13. Assignment. The Executive acknowledges that his services are unique and
personal. Accordingly, the Executive may not assign his rights or delegate his
duties or obligations under this Agreement. D&E’s rights and obligations under
this Agreement shall inure to the benefit of, and shall be binding upon, D&E’s
successors and assigns, and D&E may assign this Agreement, including the
restrictive covenants contained in Paragraph 7 of this Agreement, to any
successor or assign. Executive’s rights under this Agreement shall inure to the
benefit of his designated beneficiaries, or heirs and assigns to the extent
provided by the express terms of this Agreement, and be binding upon any
successor or assign to the same extent and with the same force as D&E.

14. Entire Agreement. This Agreement contains the entire understanding of the
parties. It may not be changed orally but only by an agreement in writing signed
by the party against whom enforcement of any waiver, change, modification,
extension, or discharge is sought.

15. Headings. Headings in this Agreement are for convenience only and shall not
be used to interpret or construe its provisions.

16. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.

 

Attest:

    D&E COMMUNICATIONS, INC.

 

    By  

 

 

    Title:  

 

Witness:

    EXECUTIVE

 

   

 

    W. Garth Sprecher

 

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