Exhibit 10.20

 

SUSQUEHANNA BANCSHARES, INC.

 

KEY EMPLOYEE

 

SEVERANCE PAY PLAN

 

AMENDED AND RESTATED – December 12, 2007

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ARTICLE I

 

PURPOSE OF PLAN

 

Section 1.01 Purpose of the Plan. The Susquehanna Bancshares, Inc. Key Employee
Severance Pay Plan (the “Plan”), as set forth herein, is intended to alleviate
financial hardships which may be experienced by senior executives and other key
employees of Susquehanna Bancshares, Inc. (the “Company”) and the Company’s
Affiliates whose employment is terminated under specified circumstances within
one (1) year following a Change of Control of the Company, and to reinforce and
encourage the continued attention and dedication of those senior executives and
other key employees to their assigned duties without distraction from a
potential Change of Control of the Company. The Plan is not intended to be an
“employee pension benefit plan” or a “pension plan” as defined in Section 3(2)
of ERISA. Rather, this Plan is intended to meet the criteria set forth in 29
C.F.R. § 2510.3-2(b) for a “severance pay plan” that is an “employee welfare
benefit plan” within the meaning of Section 3(1) of ERISA. Accordingly, the
benefits paid by the Plan are not deferred compensation. In return for the
benefits provided to the Participants under the Plan, each Participant agrees
that he or she will not solicit the customers and employees of the Company and
its Affiliates under the circumstances described in Article VII of this Plan
document.

 

Section 1.02 Restatement of Plan. This amended and restated Plan amends and
replaces the earlier Plan dated January, 1999 as well as the First Amendment
dated May 26, 2000, the Second Amendment dated February 22, 2001, the Amended
and Restated Plan dated April 20, 2005 and the Amended and Restated Plan dated
October 18, 2006.

 

ARTICLE II

 

DEFINITIONS

 

Section 2.01 “Affiliate” and “Associate” shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

 

Section 2.02 “Beneficial Owner” of any securities shall mean:

 

(i) that such Person or any of such Person’s Affiliates or Associates, directly
or indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the

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“Beneficial Owner” of securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person’s Affiliates or Associates until such
tendered securities are accepted for payment, purchase or exchange;

 

(ii) that such Person or any of such Person’s Affiliates or Associates, directly
or indirectly, has the right to vote or dispose of or has “beneficial ownership”
of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act), including without limitation pursuant to any agreement,
arrangement or understanding, whether or not in writing; provided, however, that
a Person shall not be deemed the “Beneficial Owner” of any security under this
subsection (ii) as a result of an oral or written agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
applicable provisions of the General Rules and Regulations under the Exchange
Act, and (B) is not then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or

 

(iii) where voting securities are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person’s Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
the proviso to subsection (ii) above) or disposing of any voting securities of
the Company;

 

provided, however, that nothing in this section shall cause a Person engaged in
business as an underwriter of securities to be the “Beneficial Owner” of any
securities acquired through such Person’s participation in good faith in a firm
commitment underwriting until the expiration of forty (40) days after the date
of such acquisition.

 

Section 2.03 “Benefit” or “Benefits” shall mean any or all of the benefits that
a Participant is entitled to receive pursuant to Article V of the Plan.

 

Section 2.04 “Board of Directors” shall mean the Board of Directors of the
Company.

 

Section 2.05 “Change of Control” shall be deemed to have taken place if any of
the following occurs:

 

(i) any Person is or becomes the Beneficial Owner of securities of the Company
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its subsidiaries) representing
25% or more of either the then outstanding shares of stock of the Company or the
combined voting power of the Company’s then outstanding securities;

 

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(ii) during any period of 24 consecutive months during the existence of this
Agreement commencing on or after the date hereof, the individuals who, at the
beginning of such period, constitute the Board of Directors (the “Incumbent
Directors”) cease for any reason other than death to constitute at least a
majority thereof; provided that a director who was not a director at the
beginning of such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such director was elected
by, or on the recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either actually (because
they were directors at the beginning of such 24-month period) or by prior
operation of this clause (ii);

 

(iii) the consummation of a merger or consolidation of the Company with any
other corporation other than (A) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity or any
parent thereof) at least 60% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner, as
defined in clause (a), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its subsidiaries) representing 40% or more
of either the then outstanding shares of stock of the Company or the combined
voting power of the Company’s then outstanding securities; or

 

(iv) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company, or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, at least 60% of the combined voting power of
the voting securities of which are owned by Persons in substantially the same
proportion as their ownership of the Company immediately prior to such sale.

 

Upon the occurrence of a Change of Control, no subsequent event or condition
shall constitute a Change of Control for purposes of this Agreement, with the
result that there can be no more than one Change of Control hereunder.

 

Section 2.06 “Company” shall mean Susquehanna Bancshares, Inc., or any successor
thereto.

 

Section 2.07 “Compensation” shall mean one hundred ten percent (110%) of the sum
of the Participant’s annual base salary, determined as the greater of (a) the
amount in effect on the first day of the calendar quarter immediately preceding
a Change of Control or (b) the amount in effect on the first day of the calendar
quarter immediately preceding his or her Termination following a Change of
Control.

 

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Section 2.08 “Compensation Committee” shall mean the Compensation Committee of
the Board of Directors of the Company, or such other committee as may be
designated by the Board of Directors to perform the duties of the Compensation
Committee.

 

Section 2.09 “Competitor” means any person (including a Participant), legal
entity, business or activity which is in competition with any services or
financial products sold, or any business or activity engaged in, by the Company
or any Affiliate within an area of 100 miles of any office or facility of the
Company or any Affiliate.

 

Section 2.10 “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended.

 

Section 2.11 “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.

 

Section 2.12 “Non-Solicitation Period” shall mean the period following
Termination of Employment for any reason that corresponds to the Benefit that
the Participant is eligible to receive following Termination after a Change of
Control. For a Benefit of one-half times his or her Compensation, the
Non-Solicitation Period shall be six (6) months. For a Benefit of one times his
or her Compensation, the Non-Solicitation Period shall be twelve (12) months.
For a Benefit of one and one-half times his or her Compensation, the
Non-Solicitation Period shall be eighteen (18) months. For a Benefit of two
times his or her Compensation, the Non-Solicitation Period shall be twenty-four
(24) months.

 

Section 2.13 A “Notice of Termination” shall mean a written notice which
(i) indicates the specific termination provision in this Plan relied upon,
(ii) briefly summarizes the facts and circumstances deemed to provide a basis
for termination of the Participant’s employment under the provision so
indicated, and (iii) if the Termination Date is other than the date of receipt
of such notice, specifies the Termination Date (which date shall not be more
than fifteen (15) days after the giving of such notice).

 

Section 2.14 “Participant” shall mean any senior executive or other key employee
of the Company or any Affiliate of the Company who is approved as eligible to
participate in the Plan.

 

Section 2.15 “Person” shall mean any individual, firm, corporation, partnership
or other entity.

 

Section 2.16 “Plan” shall mean the Susquehanna Bancshares, Inc. Key Employee
Severance Pay Plan, as set forth herein, and as the same may from time to time
be amended.

 

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Section 2.17 “Subsidiary” shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.

 

Section 2.18 “Termination Date” shall mean the date of receipt of the Notice of
Termination described in Article IV hereof or any later date specified therein,
as the case may be.

 

Section 2.19 “Termination of Employment” shall mean the termination of the
Participant’s actual employment relationship with the Company.

 

Section 2.20 “Termination following a Change of Control” shall mean a
Termination of Employment within one (1) year after a Change of Control either:

 

(i) initiated by the Company for any reason other than (a) the Participant’s
continuous illness, injury or incapacity for a period of twelve (12) consecutive
months or (b) for “cause,” which shall mean misappropriation of funds, habitual
insobriety, substance abuse, conviction of a crime involving moral turpitude, or
gross negligence in the performance of duties, which gross negligence has had a
material adverse effect on the business, operations, assets, properties or
financial condition of the Company and its Subsidiaries taken as a whole; or

 

(ii) initiated by the Participant upon one or more of the following occurrences:

 

  (A) any change resulting in a significant reduction by the Company of the
authority, duties or responsibilities of the Participant;

 

  (B) any removal by the Company of the Participant from the employment grade,
compensation level or officer positions which the Participant holds as of the
Change of Control except in connection with promotions to higher office;

 

  (C) the requirement that the Participant undertake business travel (or
commuting in excess of fifty miles each way) to an extent substantially greater
than is reasonable and customary for the position the Participant holds.

 

ARTICLE III

 

PARTICIPANTS

 

The Compensation Committee shall from time to time nominate employees of the
Company or any Affiliate to be Participants in the Plan. Nominated employees
shall be presented to the Board of Directors for approval. The Board of
Directors shall have the authority in its sole discretion from time to time to
appoint and remove employees as Participants in the Plan and to determine the
amount of the immediate cash benefit.

 

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ARTICLE IV

 

NOTICE OF TERMINATION

 

Any Termination following a Change of Control shall be communicated by a Notice
of Termination to the other party given in accordance with Section 10.05 hereof.

 

ARTICLE V

 

BENEFIT

 

Section 5.01 Amount of Immediate Cash Benefit. Upon a Participant’s Termination
following a Change of Control, the Company shall pay the Participant an amount
equal to (i) one-half times his or her Compensation, (ii) one times his or her
Compensation, (iii) one and one-half times his or her Compensation, or (iv) two
times his or her Compensation, in a lump sum within fifteen (15) days after the
Termination Date. The determination of whether a Participant shall be entitled
to receive one-half, one or one and one-half times his or her Compensation shall
be in the sole discretion of the Board of Directors acting on the recommendation
of the Compensation Committee in accordance with Article III of this Plan.

 

Section 5.02 Additional Benefits. For a period of one (1) year following the
Participant’s Termination Date, the Participant shall be entitled to participate
in all employee benefit plans or programs, and to receive all benefits,
perquisites and emoluments, for which any salaried employees of the Company are
eligible under any plan or program in effect on the Participant’s Termination
Date and maintained by the Company for officers at a comparable level (other
than any severance or termination pay plan or program or bonus, stock option or
other long-term incentive plan or program), to the fullest extent permissible
under the general terms and provisions of such plan or program and in accordance
with the provisions thereof, including group hospitalization, health, dental
care, life or other insurance, tax-qualified pension and savings plans, stock
purchase plan, and disability insurance. Notwithstanding the foregoing, if any
such Benefits cannot lawfully be provided, or the provision thereof would
disqualify any plan for favorable tax treatment under the Internal Revenue Code
or result in adverse tax consequences to the Participant, the Company shall pay
to the Participant a lump sum amount equal on an after-tax basis to the
actuarial present value of such Benefits, as determined by an actuary chosen by
the Participant, within fifteen (15) days after such determination by such
actuary. Further notwithstanding the foregoing, nothing in this Plan shall
preclude the amendment or termination of any such plan or program, provided that
such amendment or termination is applicable generally to the officers of the
Company or any Subsidiary or affiliate.

 

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Section 5.03. Other Payments. The Benefits due under this Article V shall be in
addition to and not in lieu of any payments or benefits due to the Participant
under any other plan, policy or program of the Company, except that if a
Participant receives Benefits under this Plan following a Change of Control, the
Participant shall not be entitled to receive additional payments as a result of
the same Change of Control under the Company’s severance pay plan for employees.

 

ARTICLE VI

 

ENFORCEMENT AND REMEDIES

 

Section 6.01 Interest. In the event that the Company shall fail or refuse to
make payment of any amounts or provide any other Benefits due the Participant
under Article V hereof within the respective time periods provided therein, the
Company shall pay to the Participant, in addition to the payment of any other
sums provided in this Plan, interest, compounded daily, on any amount remaining
unpaid (including the amount of any other Benefit due but unpaid) from the date
payment is required under Article V, as appropriate, until paid to the
Participant, at the rate from time to time announced by Chase Manhattan Company
as its “prime rate” plus two percent (2%), each change in such rate to take
effect on the effective date of the change in such prime rate.

 

Section 6.02 Expenses. It is the intent of the Company that the Participant not
be required to incur any expenses associated with the successful enforcement of
his rights under this Plan by arbitration, litigation or other legal action
because the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Participant hereunder. Accordingly, the
Company shall pay the Participant on demand the amount necessary to reimburse
the Participant in full for all expenses (including reasonable attorneys’ fees
and legal expenses) incurred by the Participant in successfully enforcing any of
the obligations of the Company under this Plan.

 

Section 6.03 No Mitigation. The Participant shall not be required to mitigate
any Benefit provided for in this Plan by seeking other employment or otherwise,
nor shall any Benefit provided for herein be reduced by any compensation earned
or benefit received through other employment or otherwise.

 

Section 6.04 No Set-Off. The Company’s obligation to make the payments provided
for in this Plan and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against the Participant or others.

 

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Section 6.05 Taxes. Any payment required under this Plan shall be subject to all
requirements of the law with regard to the withholding of taxes, filing, making
of reports and the like, and the Company shall use its best efforts to satisfy
promptly all such requirements.

 

Section 6.06 Acknowledgment; Release. Prior to receiving any lump sum payments
to which the Employee is entitled under this Plan, the Employee will be required
to sign an acknowledgment of receipt and release of claims in a form acceptable
to the Company.

 

ARTICLE VII

 

NON-SOLICITATION BY PARTICIPANT

 

Section 7.01 Non-Solicitation of Customers and Prospects. While a Participant is
employed by the Company or an Affiliate; and, during the applicable
Non-Solicitation Period following Termination of Employment for any reason; the
Participant will not solicit any person who was a customer of the Company or any
Affiliate during the period of the Participant’s employment with the Company or
an Affiliate to become a customer of a Competitor, or solicit on behalf of a
Competitor potential customers who are or were identified through leads
developed during the course of the Participant’s employment with the Company or
any Affiliate, or otherwise divert or attempt to divert to a Competitor any
existing business of the Company or any Affiliate.

 

Section 7.02 Non-Solicitation of Employees. While a Participant is employed by
the Company or an Affiliate; and, during the applicable Non-Solicitation Period
following Termination of Employment for any reason; the Participant will not,
directly for him or herself or any third party, solicit, induce, recruit or
cause another person in the employment of the Company or any Affiliate to
terminate his or her employment for the purposes of joining, associating, or
becoming employed with any business or activity which is in competition with any
services or financial products sold, or any business or activity engaged in, by
Company or any Affiliate.

 

Section 7.03 Enforcement. The Participant understands that in the event of a
violation of any provision of this Article, the Company or any Affiliate shall
have the right to seek injunctive relief, in addition to any other existing
rights provided in this Agreement or by operation of law, without the
requirement of posting bond. The remedies provided in this section shall be in
addition to any legal or equitable remedies existing at law or provided for in
any other agreement between the Participant, the Company or any Affiliate, and
shall not be construed as a limitation upon, or as an alternative or in lieu of,
any such remedies. If any provisions of this section shall be determined by a
court of competent jurisdiction to be unenforceable in part by reason of it
being too great a period of time or covering too great a geographical area, it
shall be in full force and effect as to that period of time or geographical area
determined to be reasonable by the court.

 

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ARTICLE VIII

 

AMENDMENT AND TERMINATION

 

Section 8.01 Amendment, Suspension and Termination. The Company, acting through
the Board of Directors, retains the right, at any time and from time to time
prior to a Change of Control, to amend, suspend or terminate the Plan in whole
or in part, for any reason, and without either the consent of or the prior
notification to any Participant. No such amendment, suspension or termination
shall be permitted upon or after a Change of Control. No such amendment shall
give the Company the right to recover any amount paid to a Participant prior to
the date of such amendment or to cause the cessation and discontinuance of
Benefits to any person or persons under the Plan already receiving Benefits.

 

ARTICLE IX

 

CLAIMS PROCEDURES

 

Section 9.01 Application for Benefits. Each Participant believing
himself/herself eligible for Benefits under this Plan may apply for such
Benefits by filing with the Board of Directors a written request for Benefits,
which request may comprise a Notice of Termination delivered by the Participant.

 

Section 9.02 Appeals of Denied Claims for Benefits. In the event that any claim
for Benefits is denied in whole or in part, the Participant (or beneficiary, if
applicable) whose claim has been so denied shall be notified of such denial in
writing by the Board of Directors. The notice advising of the denial shall
specify the reason or reasons for denial, make specific reference to pertinent
Plan provisions, describe any additional material or information necessary for
the claimant to perfect the claim (explaining why such material or information
is needed), and shall advise the Participant of the procedure for the appeal of
such denial. All appeals shall be made by the following procedure:

 

(a) The Participant whose claim has been denied shall file with the Board of
Directors a notice of desire to appeal the denial. Such notice shall be filed
within sixty (60) days of notification by the Board of Directors of claim
denial, shall be made in writing, and shall set forth all of the facts upon
which the appeal is based.

 

(b) The Board of Directors shall, within thirty (30) days of receipt of the
Participant’s notice of appeal, establish a hearing date on which the
Participant may make an oral presentation to the Board of Directors in support
of his/her appeal. The Participant shall be given not less than ten (10) days
notice of the date set for the hearing.

 

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(c) The Board of Directors shall consider the merits of the claimant’s written
and oral presentations, the merits of any facts or evidence in support of the
denial of benefits, and such other facts and circumstances as the Board of
Directors shall deem relevant. If the claimant elects not to make an oral
presentation, such election shall not be deemed adverse to his/her interest, and
the Board of Directors shall proceed as set forth below as though an oral
presentation of the contents of the claimant’s written presentation had been
made.

 

(d) The Board of Directors shall render a determination upon the appealed claim,
within sixty (60) days of the hearing date, which determination shall be
accompanied by a written statement as to the reasons therefor.

 

ARTICLE X

 

MISCELLANEOUS

 

Section 10.01 Nonalienation of Benefits. None of the payments, Benefits or
rights of any Participant shall be subject to any claim of any creditor, and, in
particular, to the fullest extent permitted by law, all such payments, Benefits
and rights shall be free from attachment, garnishment, trustee’s process, or any
other legal or equitable process available to any creditor of such Participant.
No Participant shall have the right to alienate, anticipate, commute, pledge,
encumber or assign any of the Benefits or payments which he/she may expect to
receive, contingently or otherwise, under this Plan.

 

Section 10.02 No Contract of Employment. Neither the establishment of the Plan,
nor any modification thereof, nor the payment of any Benefits shall be construed
as giving any Participant, or any person whosoever, the right to be retained in
the service of the Company, and all Participants shall remain subject to
discharge to the same extent as if the Plan had never been adopted.

 

Section 10.03 Severability of Provisions. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provisions had not been included.

 

Section 10.04 Successors, Heirs, Assigns, and Personal Representatives. This
Plan shall be binding upon the heirs, executors, administrators, successors and
assigns of the parties, including each Participant, present and future. The
Company shall require any successor or successors (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, or a division thereof, to acknowledge
expressly that this Plan is binding upon and enforceable against the Company in
accordance with the terms hereof, and to become jointly and severally obligated
with the

 

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Company to perform this Plan in the same manner and to the same extent that the
Company would be required to perform if no such succession or successions had
taken place.

 

Section 10.05 Notice. Any Notice of Termination delivered pursuant to Article IV
shall be delivered, if by the Company, to the Participant at his or her last
known address, and if by the Participant, to the Corporate Secretary of the
Company at the Company’s corporate headquarters, personally, by registered or
certified mail, return receipt requested, or by overnight express courier
service. Any such notice shall be deemed delivered and effective when received
in the case of personal delivery, five (5) days after deposit, postage prepaid,
with the U.S. Postal Service in the case of registered or certified mail, or on
the next business day in the case of overnight express courier service.

 

Section 10.06 Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.

 

Section 10.07 Gender and Number. Except where otherwise clearly indicated by
context, the masculine and the neuter shall include the feminine and the neuter,
the singular shall include the plural, and vice-versa.

 

Section 10.08 Unfunded Plan. The Plan shall not be funded. The Company may, but
shall not be required to, set aside or earmark an amount necessary to provide
the Benefits specified herein (including the establishment of trusts). In any
event, no Participant shall have any right to, or interest in, any assets of the
Company which may be applied by the Company to the payment of Benefits.

 

Section 10.09 Payments to Incompetent Persons, Etc. Any benefit payable to or
for the benefit of a minor, an incompetent person or other person incapable of
receipting therefor shall be deemed paid when paid to such person’s guardian or
to the party providing or reasonably appearing to provide for the care of such
person, and such payment shall fully discharge the Company, the Board of
Directors and all other parties with respect thereto.

 

Section 10.10 Lost Payees. A Benefit shall be deemed forfeited if the Board of
Directors is unable to locate a Participant to whom a Benefit is due. Such
Benefit shall be reinstated if application is made by the Participant for the
forfeited Benefit while this Plan is in operation and within three years from
the date of the Participant’s Termination Date.

 

Section 10.11 Controlling Law. This Plan shall be construed and enforced
according to the laws of the Commonwealth of Pennsylvania to the extent not
preempted by Federal law.

 

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IN WITNESS WHEREOF, the Company has caused the Plan to be executed by its duly
authorized officers and its corporate seal to be affixed hereto as of the 12th
day of December, 2007.

 

    SUSQUEHANNA BANCSHARES, INC. Attest:     /s/ Lisa M. Cavage       By:   /s/
William J. Reuter Secretary       Chairman, President & CEO

 

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