D&E Communications, Inc. Non-Compete Agreement

D&E Communications, Inc.

Non-Compete Agreement

This AGREEMENT is made this 17th day of December, 2008, by and between Stuart L Kirkwood (“Employee”) and D&E Communications, Inc. (“Company”), as a condition of continued employment. In consideration of the Company’s extension of additional severance benefits to Employee, and Employee’s acceptance thereof, and in consideration of the mutual promises and covenants contained herein, the receipt and sufficiency of such consideration being hereby acknowledged, the parties, intending to be legally bound, agree as follows:

BACKGROUND

Employee and Company are parties to a Non-Compete Agreement dated March 12, 2008 (the “Prior Non-Compete Agreement”). The Company now desires to enter into this amendment and restatement of the Prior Non-Compete Agreement with the Employee, replacing the Prior Non-Compete Agreement, for the limited purpose of complying with certain restrictions that are now applicable under section 409A of the Internal Revenue Code (the “Code”) to nonqualified deferred compensation arrangements, and the Employee also desires to enter into the amended Agreement both to continue the change in control severance benefits provided in the Prior Non-Compete Agreement but also to avoid the adverse individual tax consequences that would result from non-compliance with Code section 409A, on the terms and conditions contained in this Agreement. Upon its effective date, this Non-Compete Agreement supersedes and replaces the Prior Non-Compete Agreement.

I understand that I, the undersigned Employee, shall devote my entire working time and attention to the business of the Company. During my employment with the Company, I shall not directly or indirectly render any services of a business, commercial, or professional nature to any other person or organization, whether for compensation or otherwise, without the prior written consent of the Company. The Company’s written consent shall be required for my participation in leadership positions in volunteer and community service organizations and for any service as a director or board member of a for-profit organization. I shall perform all duties and responsibilities according to the policies and directions established by the Company; and perform these in a prudent, businesslike manner, and in accordance with the Company’s Code of Business Conduct and Ethics (the “Code of Conduct”).

a.         As compensation for my services rendered under this Agreement, I shall continue to be entitled to receive from the Company a salary payable in equal biweekly installments. In addition, the following terms continue to apply:

i.          This salary is reviewed annually and may be adjusted at the Company’s sole discretion, depending upon my employment performance and other relevant factors.

ii.        I shall also continue to be entitled to various employment-related benefits generally provided by the Company to its employees, subject to change at the Company’s sole discretion.

b.         In addition, I acknowledge and agree that, conditioned upon my signing of this Agreement, I will receive the following additional consideration in return for the promises I make in this Agreement:

1.         An increase in the severance payment to which I am entitled under paragraph 10 of this Agreement from thirteen (13) times my then-existing biweekly salary rate, as set forth in the prior Agreement, to twenty-six (26) times my then-existing biweekly salary rate as provided in paragraph 10 of this Agreement.

a.         The Company has developed and will continue to develop trade secrets, confidential and proprietary information which is material to its success and will also obtain trade secrets, confidential and/or proprietary information from its customers, prospective customers, employees, vendors, suppliers and contractors. I understand that my position with the Company is one of trust and confidence because I may have access to, acquire, learn, attain, or develop (by me alone or in conjunction with others), trade secrets, confidential and proprietary information (collectively, the "Material"). Such Material includes, but is not limited to accounts, customer lists and information, employee lists and other information concerning persons employed by the Company, vendor discounts and programs, cost and pricing information for bids and other sales, computer data and files, internal policies, procedures, financial information, business practices, methods, and plans, trade secrets, and other confidential, private, valuable and important information of a nonpublic nature concerning the Company, its employees, customers, prospective customers, vendors, suppliers and contractors.

b.         I recognize and acknowledge that the Material is of substantial value to the Company and its business. I further acknowledge that serious detriment and damage would result to the Company if the Material were used in violation of this Agreement, or otherwise misused or disclosed to any third party without authorization. Accordingly, I pledge my best efforts and utmost diligence to protect and keep private and confidential the Material.

c.         During my term of employment with the Company beginning with the effective date of this Agreement and at any time thereafter, I shall not in any manner or for any purpose, directly or indirectly, for myself, or in concert, collaboration with or for any other person, firm or corporation or other entity, use or in any way disclose, in whole or in part, any of the Material to any third parties, except where such disclosure or use is necessary to the performance of my duties and responsibilities for the Company. Should I fail to comply with this provision, the Company shall be entitled to all remedies at law and in equity (including injunctive relief) against me and any person to whom I may have disclosed such confidential or proprietary information.

I will promote the goodwill of the Company and avoid any conflicts between my private interests and the Company's. If I have separate dealings with or holdings in a firm, corporation, or other entity ("Business") doing business with or competing with the Company, have a family member with such dealings or holdings, or do business with such a Business in my own name or a family member's name, I must submit a written statement to the officers of the Company describing the nature of the relationship and transaction, and promptly comply with the Company's requests for additional information concerning the relationship and transaction. For purposes of this Agreement, "family member" shall mean my spouse, if any, and my children. I may not take any action with respect to the relationship and transaction until such time as the Company reviews said written statement and notifies me of its determination. I must submit a new written statement whenever any facts or circumstances related to the relationship and transaction changes. I agree in all respects to abide by the Code of Conduct.

I agree that any and all inventions, discoveries or improvements that I create, design or develop, in whole or in part, during the term of my employment and which are within the scope of the Company's operations, are the Company's exclusive property and shall be immediately disclosed to the Company. I agree to make application for such letters patent on any inventions as required by the Company and sign and execute any documents incident to the filing and perfection of said applications and letters patent. The Company will bear and defray the costs and expenses incident to these obligations.

I represent and warrant that I am not a party to or otherwise subject to or bound by the terms of any contract, agreement, understanding, or court order which in any manner limits or otherwise affects my ability to perform the obligations of my employment with the Company or my obligations under this Agreement. I further represent and warrant that my employment with the Company will not require me to disclose or use any confidential or proprietary information belonging to prior employers or other persons or entities.

a.         During my employment with the Company beginning with the effective date of this Agreement and for a period of one (1) year after said employment is ended for any reason, including but not limited to the termination of my employment due to inadequate performance and regardless of whether such termination is initiated by the Company or by me, I shall not within a seventy-five (75) mi