Exhibit 10.1






                               DENVER AND EPHRATA
                         TELEPHONE AND TELEGRAPH COMPANY
                            EXECUTIVE INCENTIVE PLAN


<PAGE>



                          DENVER AND EPHRATA TELEPHONE
                              AND TELEGRAPH COMPANY

                       INTRODUCTION AND HIGHLIGHTS OF THE

                            EXECUTIVE INCENTIVE PLAN




<PAGE>



                          DENVER AND EPHRATA TELEPHONE
                              AND TELEGRAPH COMPANY



                            EXECUTIVE INCENTIVE PLAN


                                TABLE OF CONTENTS



                                                                         Page(s)


Introduction and Highlights of Executive
   Incentive Plan.........................................................1 - 2

Executive Incentive Plan Document.........................................1 - 4

Executive Incentive Plan Appendices.......................................1 - 5
    Appendix A:  Plan Participants
    Appendix B:  Internal Performance Goals
    Appendix C:  Calculation of Executive Awards
    Appendix D:  Base Salaries of Plan Participants (Officers booklet only)
    Appendix E:  Maximum Cost of the Plan (Officers booklet only)

Executive Incentive Plan Achievement Appraisal............................1 - 5


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Introduction and Highlights                                               Page 1
--------------------------------------------------------------------------------


                    INTRODUCTION AND HIGHLIGHTS OF EXECUTIVE
                                 INCENTIVE PLAN


It is important to examine the benefits which accrue to the organization through
the operation of the incentive plan. The plan impacts directly on top management
employees and other senior executives - those most critical to the Company's
success - and its purpose can be summarized as follows:

o  Provides Motivation:  the opportunity for incentive awards provides
   executives with the impetus to "stretch" for challenging, yet attainable
   goals.

o  Provides Retention:  by enhancing the competitive compensation posture and
   offering an opportunity for incentive awards on an annual basis or on a
   deferral basis.

o  Provides Management Team Building:  by making the incentive award dependent
   on the attainment of goals, a "team-orientation" is fostered among the
   participant group.

o  Provides Promotional Opportunity:  inclusion in the incentive plan becomes
   thought of as a "promotion" by executives.

o  Provides Competitive Compensation Strategy:  the implementation of executive
   incentive arrangements is an accepted trend in the industry.


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Introduction and Highlights                                               Page 2
--------------------------------------------------------------------------------


Highlights of the Executive Incentive Plan included on the following pages are:

1. The recommended plan is competitive with the industry in general and other
   industries.

2. The Chief Executive Officer (C.E.O.), the Chief Operating Officer (C.O.O.)
   and the Board of Directors of D & E Communications, Inc. control all aspects
   of the plan subject to Board approval.

3. The eight top executives of the Company are participants for 1997.

4. The financial criteria necessary for plan operation consist of internal goals
   and are realistic compared to historical performance and the current
   financial climate of the Company.

5. Incentive award calculation range from 0% of salary (did not meet goals) to
   30.0% of salary (maximum performance under the plan).

6. Actual calculations for the Executives are based on automatic calculations
   plus individual performance.

7. Award distribution will be made during the first quarter following the plan
   year.


We are confident that the Executive Incentive Plan will meet the Company's needs
this year and beyond.


<PAGE>



                          DENVER AND EPHRATA TELEPHONE
                              AND TELEGRAPH COMPANY


                        EXECUTIVE INCENTIVE PLAN DOCUMENT




<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Plan Document                                                             Page 1
--------------------------------------------------------------------------------


                            EXECUTIVE INCENTIVE PLAN


The Board of Directors of D & E Communications, Inc. has established this
Executive Incentive Plan. The purpose of the plan is to meet and exceed goals
and to promote a superior level of performance. Through payment of incentive
compensation beyond base salaries, the plan provides reward for meeting and
exceeding goals as well as recognition of individual achievements for plan
participants.



                             SECTION I - DEFINITIONS

Various terms used in the plan are defined as follows:

o  Award Calculation:  Award expressed as a percent of a participant's salary at
   the beginning of the plan year.

o  Award Distribution:  Award expressed in cash.

o  Base Salary:  The base salary at the beginning of the plan year, excluding
   any bonuses, contributions to employee benefit programs, or other
   compensation not designated as salary.

o  Board of Directors:  The Board of Directors of D & E Communications, Inc.

o  C.E.O.:  Chief Executive Officer of the Company.

o  C.O.O.:  Chief Operating Officer of the Company.

o  Plan Participants:  Full-time Executives of the Company as listed in
   Appendix A.

o  Plan Year:  A fiscal year.

o  Planned Achievements:  Those objectives and goals which are required to
   activate a portion of the awards under the plan based on individual
   performance.


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Plan Document                                                             Page 2
--------------------------------------------------------------------------------


                     SECTION II - ELIGIBILITY TO PARTICIPATE

To be eligible for an award under the plan, a plan participant must be in active
full-time service of the Company at the start and close of the plan year. If a
plan participant voluntarily leaves the employ of the Company during the plan
year, he/she is not eligible to receive an award. However, if the active
full-time service with the Company of a participant in the plan is terminated by
death, disability, retirement, or if a participant is on an approved leave of
absence, the C.E.O. may recommend an award to such a participant based on the
proportion of the plan year that he/she was in active service with the Company.
The plan participants for the plan year are set forth in Appendix A.


                        SECTION III - ACTIVATING THE PLAN

The operation of the plan is predicated on attaining and exceeding performance
goals. The goals will consist of internally measured achievements. The corporate
goals for each plan year will be approved by the Board of Directors while the
executive goals will be approved by the C.E.O. and C.O.O. The corporate goals
for the plan year are set forth in Appendix B.


                       SECTION IV - CALCULATION OF AWARDS

o  Executive Awards

   The executive award is based on corporate performance and individual
   performance. Depending upon levels of corporate performance, awards are 60%
   automatic and 40% based on individual performance. The individual portion is
   calculated based upon the completion and evaluation of set goals by the
   C.O.O. Appendix C outlines the manner in which these awards are calculated
   and range between 0% of base salary to 30% of base salary.


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Plan Document                                                             Page 3
--------------------------------------------------------------------------------


                       SECTION V - DISTRIBUTION OF AWARDS

Distribution of awards will be made during the first quarter following the plan
year. Distributions must be approved by the Board of Directors. In the event of
death, any approved award as outlined in Section II for distribution will become
payable to the designated beneficiary of the participant as recorded under the
Company's group life insurance program, or in the absence of a valid
designation, to the participant's estate. Distribution of awards will be in
cash.


                        SECTION VI - PLAN ADMINISTRATION

The Board of Directors shall, with respect to the plan, have full power and
authority to construe, interpret and manage, control and administer this plan,
and to pass and decide upon cases in conformity with the objectives of the plan
under such rules as the Board may establish.

Subject to the provisions of the plan, the C.O.O. will determine the award for
the executives.

Any decision made or action taken by the Company, the Board of Directors, the
C.E.O., or the C.O.O. arising out of, or in connection with the administration,
interpretation, and effect of the plan shall be at their absolute discretion and
will be conclusive and binding on all parties.

No member of the Board, the C.E.O., or the C.O.O. shall be liable for any act or
action hereunder, whether of omission or commission, by a plan participant or
employee or by any agent to whom duties in connection with the administration of
the plan have been delegated in accordance with the provision of the plan.

Any member of the Board who is also an officer of the Company shall neither vote
on (a) the determination of participants, (b) any award decisions, (C) goal(s)
concerning the plan, and (d) any other matter affecting individual interest
under the plan, nor shall his or her presence be counted in determining whether
a quorum is present at any meeting at which a vote on any of the subjects
enumerated above is taken.


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Plan Document                                                             Page 4
--------------------------------------------------------------------------------


                                  SECTION VII -
               AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION

The Company reserves the right, by and through its Board of Directors to amend,
modify, suspend, reinstate or terminate all or any part of the plan at the end
of any plan year. The C.E.O. will give prompt written notice to each participant
of any amendment, suspension or termination or any material modification of the
plan. The Board also reserves the right to withhold or amend award payments
based on performance or circumstances deemed to be highly unusual.


                    SECTION VIII - EFFECTIVE DATE OF THE PLAN

The initial effective date of the plan shall be January 1.


                            SECTION IX - UNUSED FUNDS

Funds that were approved for distribution, but that were not totally used based
on individual performance of plan participants cannot be held over for
distribution in future years. All unused funds will be retained by the Company.


                 SECTION X - EMPLOYER RELATION WITH PARTICIPANTS

Neither establishment nor the maintenance of the plan shall be construed as
conferring any legal rights upon any participant or any person for a
continuation of employment, nor shall it interfere with the right of an employer
to discharge any participant or otherwise deal with him/her without regard to
the existence of the plan.


                           SECTION XI - GOVERNING LAW

Except to the extent pre-empted under federal law, the provisions of the plan
shall be construed, administered and enforced in accordance with the domestic
internal law of the State of Pennsylvania.

In the event of relevant changes in the Internal Revenue Code, related rulings
and regulations or changes imposed by other regulatory agencies affecting the
continued appropriateness of the plan and awards made thereunder, the Board may,
at its sole discretion, accelerate or change the manner of payments of any
unpaid awards or amend the provisions of the plan.


<PAGE>



                          DENVER AND EPHRATA TELEPHONE
                              AND TELEGRAPH COMPANY



                       EXECUTIVE INCENTIVE PLAN APPENDICES




<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Appendix A                                                                Page 1
--------------------------------------------------------------------------------


                            EXECUTIVE INCENTIVE PLAN

                                PLAN PARTICIPANTS




        Name                 Title
        ----                 -----

EXECUTIVES:

Mr. Bryan F. Brossman........Director, Outside Plant and Engineering
Mr. Ghan M. Desai            Director, Information Systems
Mrs. Linda L. Hall           Controller
Mr. Marvin L. Hendrix........Accounting Manager
Mr. Keith A. Hoffert         Director, Planning
Mr. Edward J. Kraus          Director, Marketing
Mr. Douglas W. Snell, Sr.....Director, Facilities Engineering
Mr. Gregory C. Strunk........Director, Central Office Operations and Engineering


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Appendix B                                                                Page 2
--------------------------------------------------------------------------------

                            EXECUTIVE INCENTIVE PLAN


                           INTERNAL PERFORMANCE GOALS



The Board of Directors has established the following internal performance goals
for the 1997 plan year.


         1.     EBITDA*:  The Participants must meet or exceed a D & E
                Communications, Inc.,  EBITDA goal of $15,837,000.  **





*  NOTE: EBITDA is earnings before interest, taxes, depreciation and
         amortization. For purposes of this plan, EBITDA does not include
         equity in net income from affiliates and AFUDC (allowance for funds
         used during construction).


** NOTE: This goal includes the costs of all Incentive Plans.


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Appendix C                                                                Page 3
--------------------------------------------------------------------------------


                            EXECUTIVE INCENTIVE PLAN


                        CALCULATION OF EXECUTIVE AWARDS *


Performance
 Relative                            Award                              Award
   Plan          EBITDA             Minimum                            Maximum
-----------   -----------           -------                            -------
                                      (A)             (IP)               (T)
 Below 90%       - - -                  0%       +        0%      =         0%
    90%       $14,253,300            6.00%       +     4.00%      =     10.00%
   100%       $15,837,000            9.00%       +     6.00%      =     15.00%
   110%       $17,420,700           12.00%       +     8.00%      =     20.00%
   120%       $19,004,400           15.00%       +    10.00%      =     25.00%
   130%       $20,588,100           18.00%       +    12.00%      =     30.00%



* NOTE:  60% of the Executives' award is automatic; the remainder (40%) is based
         on individual performance.

         (A)  "Automatic" Calculation

         (IP) "Individual Performance" Calculation

         (T)  "Total" Maximum Allowable

         Percent is of Base Salary


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Appendix D                                                                Page 4
--------------------------------------------------------------------------------


                            EXECUTIVE INCENTIVE PLAN


                      BASE SALARIES OF PLAN PARTICIPANTS *


<TABLE>
<CAPTION>

Name                                          Title                        1997 Salary**
----                                          -----                        -----------

EXECUTIVES:


<S>                          <C>                                             <C>
Mr. Bryan F. Brossman        Director, Outside Plant and Engineering         $57,100
Mr. Ghan M. Desai            Director, Information Systems                   $61,500
Mrs. Linda L. Hall           Controller                                      $63,000
Mr. Marvin L. Hendrix        Accounting Manager                              $61,000
Mr. Keith A. Hoffert         Director, Planning                              $56,600
Mr. Edward J. Kraus          Director, Marketing                             $65,100
Mr. Douglas W. Snell, Sr.    Director, Facilities Engineering                $59,900
Mr. Gregory C. Strunk        Director, CO Operations and Engineering         $67,000

</TABLE>


* This page included for officers only.

** Salary as of January 1, 1997.


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Appendix E                                                                Page 5
--------------------------------------------------------------------------------


                            EXECUTIVE INCENTIVE PLAN


                           MAXIMUM COST OF THE PLAN *





    Performance                        Maximum
      Relative                        Executive         Before          After
    To The Plan        EBITDA       Distributions      Tax Total       Tax Total
    -----------        ------       -------------      ---------       ---------
     Below 90%           -  - -        $      0         $      0        $      0
         90%        $14,253,300        $ 49,120         $ 49,120        $ 29,180
        100%        $15,837,000        $ 73,680         $ 73,680        $ 43,770
        110%        $17,420,700        $ 98,240         $ 98,240        $ 58,361
        120%        $19,004,400        $122,800         $122,800        $ 72,951
        130%        $20,588,100        $147,360         $147,360        $ 87,541


* This page included for officers only.


<PAGE>



                          DENVER AND EPHRATA TELEPHONE
                              AND TELEGRAPH COMPANY

                            EXECUTIVE INCENTIVE PLAN

                        ACHIEVEMENT APPRAISAL GUIDELINES




<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Achievement Appraisal                                                     Page 1
--------------------------------------------------------------------------------


                            GUIDELINES FOR COMPLETING

                      INCENTIVE PLAN ACHIEVEMENT APPRAISAL


WHAT ARE PLANNED ACHIEVEMENTS?

         Planned achievements are not synonymous with position accountabilities.
         Position accountabilities are the on-going activities and end-results
         that are expected of the participant during the current fiscal year. If
         the President had all the participants' planned achievements spread
         before him or her, he or she would have a reasonably complete picture
         of what the Company expects to achieve during the year. The PLANNED
         ACHIEVEMENTS, therefore, are the KEY annual goals requiring special
         executive concentration and effort for the incentive plan year.

HOW MANY PLANNED ACHIEVEMENTS SHOULD BE ESTABLISHED?

         As a rule of thumb, a participant's incentive award should be based on
         the evaluation of two to five planned achievements. A large number
         would tend to dilute the significance and value of a participant's
         major expectations. (Sample Form Page 4)

WHO ESTABLISHES THESE PLANNED ACHIEVEMENTS?

         The Board of Directors establishes the planned achievements for the
         C.E.O. and C.O.O. The C.O.O. is responsible for establishing the
         executives' achievements. Each participant should meet and discuss the
         specific expectations and reach a mutual understanding of what they
         should be for the current year. These specific goals for the year
         should then be committed to writing, and progress toward meeting the
         goals should be monitored during the year.

         Each participant should clearly understand that incentive award
         opportunities will be dependent on the success of the individual in
         meeting and exceeding expectations.

HOW SHOULD THE PLANNED ACHIEVEMENTS BE DEFINED?

         Except in the most unusual circumstances, each planned achievement
         should be quantified and directly measurable. The expectations should
         be described in terms of such variables as how much, how many, when,
         etc. Being able to quantify and define specific achievements clearly
         distinguishes them from position accountabilities.


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Achievement Appraisal                                                     Page 2
--------------------------------------------------------------------------------


HOW ARE ACTUAL RESULTS MEASURED AGAINST PLANNED ACHIEVEMENTS?

         At the end of the fiscal year, the C.O.O. evaluates each executive's
         performance against the planned achievements. The "Incentive Plan
         Achievement Appraisal" form (Page 5) is provided for this purpose. The
         form should serve as a guideline and written record of each
         participant's evaluation. The participant's actual accomplishments
         should be compared to each of the established planned achievements. The
         comparison should first be quantitative; that is, both the planned
         achievements and the actual results must be described in quantifiable
         terms.

         The evaluation process must also recognize the qualitative aspect of an
         individual's achievements. There may be occasions when a quantified
         achievement is the result of factors largely outside the control of the
         individual. In such cases, the participant's achievement may be of less
         significance on a qualitative basis. In evaluating the qualitative
         aspect of achievements, the evaluator should take into account such
         factors as the duration of time that the achievement will have impact,
         the scope of the achievement and the degree of difficulty that the
         participant encountered in successfully reaching or exceeding
         expectations.

         For each planned achievement, the Company will use three levels of
         performance to measure the participant's performance against each
         objective and to reach an overall evaluation.

         When appropriate, additional weight should be given to those
         achievements which are most critical. The significance of each of the
         planned achievements and their order of priority should be clearly
         established at the beginning of each year by the participant in
         discussion with his/her evaluator.

         The evaluator will then determine an overall achievement appraisal
         rating based on the evaluation of each separate achievement and the
         overall performance of the individual participant.

HOW IS THE SPECIFIC AMOUNT OF THE INCENTIVE AWARD DETERMINED?

         The evaluator will be responsible for translating individual overall
         achievements into specific dollar amounts, which become the recommended
         incentive awards for the year. The individual award recommendation will
         range from 0% to 100% of the award opportunity, depending on the level
         of individual performance.




<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Achievement Appraisal                                                     Page 3
--------------------------------------------------------------------------------


WHO APPROVES THE AWARD RECOMMENDATIONS?

         The Board of Directors will approve the awards. A written evaluation of
         all participants will accompany recommendations from the C.O.O. subject
         to the C.E.O.'s approval.

HOW ARE THE AWARDS COMMUNICATED TO THE PARTICIPANTS?

         The most important element in the success of the incentive program is
         to clearly communicate the basis for each individual award to the
         participant. Once the awards are approved, the Board will be
         responsible to present the awards to the C.E.O. and the C.O.O.

         The C.O.O. will be responsible to present the awards to the executives
         and discuss the appraisal of their achievements. In addition, each
         executive needs to understand the meaning and significance of the
         award.


<PAGE>


               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Achievement Appraisal                                                     Page 4
--------------------------------------------------------------------------------


PLANNED ACHIEVEMENT:






--------------------------------------------------------------------------------

ACTUAL RESULTS:






--------------------------------------------------------------------------------

PERFORMANCE RATING:

| | Exceeded Expectations    | | Met Expectations       | |Below Expectations
================================================================================

================================================================================

PLANNED ACHIEVEMENT:






--------------------------------------------------------------------------------


ACTUAL RESULTS:






--------------------------------------------------------------------------------

PERFORMANCE RATING:

| | Exceeded Expectations    | | Met Expectations       | |Below Expectations
================================================================================

<PAGE>

               DENVER AND EPHRATA TELEPHONE AND TELEGRAPH COMPANY

Achievement Appraisal                                                     Page 5
--------------------------------------------------------------------------------

                      INCENTIVE PLAN ACHIEVEMENT APPRAISAL


Name:                                      Base Salary:
--------------------------------------------------------------------------------
Position:
================================================================================

COMPANY PERFORMANCE:

         Company Performance Relative to Plan                       ___________%


INDIVIDUAL PERFORMANCE:
                                                               Actual Percentage
             Performance Result (Check One)                     For Award Basis

             | |  Exceeded Expectations (100%)                      ___________%
             | |  Met Expectations (50% to 100%)                    ___________%
             | |  Below Expectations (0% to 50%)                    ___________%


INCENTIVE AWARD RECOMMENDATION (Appendix C or D):

         Automatic - Minimum..........._________%                $______________

         Individual Performance........_________%                $______________

         Maximum Award................._________%                $______________

================================================================================

COMMENTS:







================================================================================

SIGNATURES:

         Prepared By:  _______________________________      Date: ______________

         Reviewed By:  _______________________________      Date: ______________

         Approved By:  _______________________________      Date: ______________