First Supplemental Indenture dated May 3, 2004



 EXHIBIT 4.1 
  

  
 SUSQUEHANNA BANCSHARES, INC. 
  
 Issuer 
  
 and 
  
 J. P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION 
  
 Trustee 
  
 FIRST SUPPLEMENTAL INDENTURE 
  
 Dated as of May 3, 2004 
  
 To 
  
 INDENTURE 
  
 Dated as of November 4, 2002 
  
 4.75% FIXED RATE/FLOATING
RATE SUBORDINATED NOTES DUE 2014 
  

  









 TABLE OF CONTENTS 
  

			
	 	  	Page


		
	 ARTICLE 1 Relation to Indenture; Definitions
	  	1
	 SECTION 1.01. Relation to Indenture
	  	1
	 SECTION 1.02. Definitions
	  	1
	 SECTION 1.03. General References
	  	2
		
	 ARTICLE 2 The Series of Securities
	  	2
	 SECTION 2.01. The Form and Title of the Securities
	  	2
	 SECTION 2.02. Amount
	  	2
	 SECTION 2.03. Stated Maturity
	  	2
	 SECTION 2.04. Interest and Interest Rates
	  	2
	 SECTION 2.05. Place of Payment
	  	3
	 SECTION 2.06. Redemption
	  	3
	 SECTION 2.07. Covenants
	  	3
	 SECTION 2.08. Modification and Waiver
	  	3
	 SECTION 2.09. Global Securities
	  	3
		
	 ARTICLE 3 Miscellaneous
	  	4
	 SECTION 3.01. Certain Trustee Matters
	  	4
	 SECTION 3.02. Continued Effect
	  	4
	 SECTION 3.03. Governing Law
	  	4
	 SECTION 3.04. Counterparts
	  	4

  
 EXHIBITS 
  

			
		
	Exhibit A:	  	Form of Note

  









 FIRST SUPPLEMENTAL INDENTURE, dated as of May 3, 2004 (this “Supplemental
Indenture”), between SUSQUEHANNA BANCSHARES, INC., a Pennsylvania corporation (the “Company”), having its principal office at 26 North Cedar Street, Lititz,
Pennsylvania 17543, and J. P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, having a designated corporate trust office located in Pittsburgh, Pennsylvania
(“J. P. Morgan”), as trustee under the Indenture referred to below (in such capacity, the “Trustee”). 
  
 RECITALS OF THE COMPANY 
  
 WHEREAS, the Company has heretofore entered into an Indenture, dated as of November 4, 2002 (the “Original Indenture”), with J. P.
Morgan, as trustee; 
  
 WHEREAS, the Original Indenture is
incorporated herein by this reference and the Original Indenture, as supplemented by this Supplemental Indenture, is herein called the “Indenture”; 
  
 WHEREAS, under the Original Indenture, a new series of Securities (as defined in the Original Indenture) may at any time be
established by the Board of Directors of the Company, in accordance with the provisions of the Original Indenture, and the terms of such series may be established by a supplemental Indenture executed by the Company and by the Trustee; 
  
 WHEREAS, the Company proposes to create under the Indenture a new series of
Securities; 
  
 WHEREAS, all acts and things necessary to make the
Notes (as herein defined), when executed by the Company and authenticated and delivered by the Trustee as provided in the Original Indenture and this Supplemental Indenture, the valid and binding obligations of the Company and to make this
Supplemental Indenture a valid and binding agreement in accordance with the Original Indenture have been done or performed; 
  
 NOW, THEREFORE, in consideration of the premises, agreements and obligations set forth herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree, for the equal and proportionate benefit of all Holders of the Notes, as follows: 
  

ARTICLE 1 
 Relation to Indenture;
Definitions 
  
 SECTION 1.01. Relation to
Indenture 
  
 With respect to the Notes (as
defined below), this Supplemental Indenture constitutes an integral part of the Indenture. 
  
 SECTION 1.02. Definitions 
  
 For all purposes of this Supplemental Indenture, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto
in the Original Indenture. 
  

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 SECTION 1.03. General References 
  
 All references in this Supplemental Indenture to Articles and Sections,
unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture; and the term “herein”, “hereof”, “hereunder” and any other word of similar import refers to this
Supplemental Indenture. 
  
 ARTICLE 2 
 The Series of Securities 
  
 SECTION 2.01. The Form and Title of the Securities 
  
 There is hereby established a new series of Securities to be issued under the Indenture and to be designated as the
Company’s 4.75% Fixed Rate/Floating Rate Subordinated Notes due 2014 (the “Notes”), which Notes shall be deemed “Securities” for all purposes under the Indenture. The Notes shall be substantially in the form attached as
Exhibit A hereto. 
  
 The Notes shall be executed,
authenticated and delivered in accordance with the provisions of, and shall in all respects be subject to, the terms, conditions and covenants of the Original Indenture as supplemented by this Supplemental Indenture (including the form of Note set
forth as Exhibit A hereto (the terms of which are incorporated in and made a part of this Supplemental Indenture for all intents and purposes)). 
  
 SECTION 2.02. Amount 
  

The aggregate principal amount of the Notes which may be authenticated and delivered pursuant hereto is unlimited. The Trustee shall initially
authenticate and deliver Notes for original issue in an initial aggregate principal amount of up to $75,000,000 upon delivery to the Trustee of a Company Order for the authentication and delivery of such Notes. The aggregate principal amount of the
Notes to be issued hereunder may be increased at any time hereafter and the series may be reopened for issuances of additional Notes, upon Company Order without the consent of any Holder. The Notes issued on the date hereof and any such additional
Notes that may be issued hereafter shall be part of the same series of Securities for all purposes under the Indenture. 
  
 SECTION 2.03. Stated Maturity 
  
 The Notes may be issued on any Business Day on or after May 3, 2004, and the Stated Maturity of the Notes shall be May 1, 2014. 
  
 SECTION 2.04. Interest and Interest Rates

  
 The rate or rates at which the Notes shall bear interest,
the date or dates from which such interest shall accrue, the manner in which interest shall be calculated, the Fixed Interest Payment Date and Floating Interest Payment Date (as defined in the form of Note attached as Exhibit A hereto) on which any
such interest shall be payable and the Regular Record Date for any interest payable on any Interest Payment Date, in each case, shall be as set forth in the form of Note set forth as Exhibit A hereto. 
  

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 SECTION 2.05. Place of Payment 
  
 As long as any Notes are outstanding, the Company shall maintain an office
or agency in the city of Pittsburgh, Pennsylvania, or Dallas, Texas where Notes may be presented for payment. 
  
 SECTION 2.06. Redemption 
  
 The Notes are not redeemable prior to May 1, 2009. The Notes will be redeemable in whole or in part on any Floating Interest Payment Date at the
Company’s option and subject to prior regulatory clearance, on or after May 1, 2009, and, except as modified herein, in accordance with Article IV of the Original Indenture, at a redemption price of 100% of the principal amount of the Notes,
plus any accrued but unpaid interest. The Fixed Rate/Floating Rate Subordinated Notes may be redeemed on not less than 30 nor more than 60 days’ prior notice. Other than as set forth in this paragraph, the Fixed Rate/Floating Rate Subordinated
Notes shall not be subject to redemption at the option of the Company. Notice of any redemption will be mailed not less than 30 nor more than 60 calendar days before the Redemption Date to each Holder of Fixed Rate/Floating Rate Subordinated Notes
to be redeemed at its registered address. Unless the Company defaults in payment of the redemption price with respect to any Fixed Rate/Floating Rate Subordinated Note to be so redeemed, on and after the Redemption Date interest will cease to accrue
on the principal amount of such Fixed Rate/Floating Rate Subordinated Note. Notwithstanding the foregoing, any redemption of the Fixed Rate/Floating Rate Subordinated Notes shall be subject to the prior clearance of the Board of Governors of the
Federal Reserve Board System if such clearance is then required under its capital guidelines or policies. 
  
 SECTION 2.07. Covenants 
  
 Article V of the Original Indenture shall apply to the Notes. 
  
 SECTION 2.08. Modification and Waiver 
  
 With the consent of the Holders of not less than 66 2/3% in principal amount
or, if such Notes are not payable at Maturity for a fixed principal amount, 66 2/3% of the aggregate issue price of the Notes, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental hereto for the purposes of adding any provisions to or changing in any manner or eliminating any of the provisions of this Supplemental Indenture or of modifying in any manner the
rights of the Holders of the Notes and related coupons under this Supplemental Indenture; provided, however, that no such supplemental indenture shall, without the consent of each Holder of any Notes affected thereby reduce the redemption
price of the Notes or change the time at which the notes may be redeemed. 
  
 SECTION 2.09. Global Securities 
  
 The Notes shall initially be issuable in whole or in part in the form of one or more Global Securities. Such Global Securities (i) shall be deposited with, or on behalf of, The Depository Trust Company, New York, New
York, which shall act as Depository with respect to the Notes, (ii) shall bear the legends set forth in the form of Note attached as Exhibit A hereto, (iii) may be 

  

 3 








 
exchanged in whole or in part for Securities in definitive form upon the terms and subject to the conditions provided in Sections 2.01 and 2.02 of the
Original Indenture and (iv) shall otherwise be subject to the applicable provisions of the Indenture. 
  
 ARTICLE 3 
 Miscellaneous 
  
 SECTION 3.01. Certain Trustee Matters 

 
 The recitals contained herein shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correctness. 
  
 The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture or the Notes or the proper authorization or the due execution hereof or thereof by the Company. 
  
 SECTION 3.02. Continued Effect 
  
 Except as expressly supplemented and amended hereby, the Original Indenture
shall continue in full force and effect in accordance with the provisions thereof, and the Original Indenture, as supplemented and amended hereby, is in all respects hereby ratified and confirmed. This Supplemental Indenture and all its provisions
shall be deemed a part of the Original Indenture in the manner and to the extent herein and therein provided. 
  
 SECTION 3.03. Governing Law 
  
 This Supplemental Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York. 
  
 SECTION 3.04. Counterparts 
  
 This instrument may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and
delivered, all as of the day and year first above written. 
  

			
	 SUSQUEHANNA BANCSHARES, INC.

		
	 By:
	 	 /s/ William J. Reuter

	 Name:
	 	 William J. Reuter

	 Title:
	 	 President and Chief Executive Officer



  

			
	J. P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
		
	 By:
	 	 /s/ E. D. Renn

	 Name:
	 	 E. D. Renn

	 Title:
	 	 Vice President



  









 EXHIBIT A 
  

THIS 4.75% FIXED RATE/FLOATING RATE SUBORDINATED NOTE (THIS “FIXED RATE/FLOATING RATE SUBORDINATED NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS FIXED RATE/FLOATING RATE SUBORDINATED NOTE NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY STATE OR OTHER SECURITIES LAWS. BY ITS ACQUISITION HEREOF, THE HOLDER (1) AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER THIS FIXED RATE/FLOATING RATE SUBORDINATED NOTE PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS THE LATER OF (X) TWO YEARS (OR THAT SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k)
OF THE SECURITIES ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THE NOTES AND THE LAST DATE ON WHICH SUSQUEHANNA BANCSHARES, INC. (THE “COMPANY”) OR ANY “AFFILIATE” (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) THEREOF
WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) OR (Y) THAT LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW EXCEPT (A) TO THE COMPANY OR ANY AFFILIATE THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE FIXED RATE/FLOATING RATE SUBORDINATED NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A
“QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN EACH CASE TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF THAT INVESTOR
ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL, AND (2) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL
HAVE THE RIGHT PRIOR TO ANY OFFER, SALE OR TRANSFER OF THIS KIND PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. 
  
 THE FIXED RATE/FLOATING RATE SUBORDINATED NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF SUSQUEHANNA BANCSHARES, INC. AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY. 
  









 THIS FIXED RATE/FLOATING RATE SUBORDINATED NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS FIXED RATE/FLOATING RATE SUBORDINATED NOTE IS EXCHANGEABLE FOR SUBORDINATED NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS FIXED RATE/FLOATING RATE SUBORDINATED NOTE (OTHER THAN A TRANSFER OF THIS FIXED RATE/FLOATING RATE SUBORDINATED NOTE AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. 
  
 UNLESS THIS FIXED RATE/FLOATING RATE SUBORDINATED NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55
WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SUBORDINATED NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
  
 REGISTERED 
  

			
	 NO. - 1
	 	$75,000,000

  
 SUSQUEHANNA BANCSHARES,
INC. 
  
 4.75% FIXED RATE/FLOATING RATE SUBORDINATED NOTES DUE 2014

  
 CUSIP NO.: 869 099 AE 1 
  
 SUSQUEHANNA BANCSHARES, INC., a Pennsylvania corporation (hereinafter called
the “Company”, which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of $75,000,000 on May 1, 2014
(the “Maturity Date”), and to pay interest thereon at the rate per annum of 4.75% from and including May 3, 2004, to but excluding May 1, 2009 (the “Fixed Rate Period”), which interest has been paid or duly provided for,
semi-annually in arrears on each May 1 and November 1, commencing November 1, 2004 (the “Fixed Interest Payment Date”); and to pay interest thereon at the rate equal to the then applicable United States dollar three-month LIBOR rate plus
1.82%, which interest has been paid or duly provided for, quarterly in arrears on each February 1, May 1, August 1 and November 1, commencing August 1, 2009 (the “Floating Interest Payment Date”) and through but excluding the Maturity Date
or date of earlier redemption 

  

 2 








 
(the “Floating Rate Period”); until the principal hereof is paid or made available for payment; provided that if any Registration Default (as such
term is defined in the Registration Right Agreement, dated as of the date hereof, among the Company and the Initial Purchasers named therein) occurs with respect to this Fixed Rate/Floating Rate Subordinated Note, then additional interest
(“Additional Interest”) will accrue (in addition to the stated interest on this Fixed Rate/Floating Rate Subordinated Note described above) on this Fixed Rate/Floating Rate Subordinated Note at a per annum rate of 0.25% from and including
the date of the occurrence of such Registration Default to but excluding the date on which no Registration Default is in effect with respect to this Fixed Rate/Floating Rate Subordinated Note; provided, further, however, that if the period during
which one or more Registration Defaults remains in effect with respect to this Fixed Rate/Floating Rate Subordinated Note continues for more than 90 days, then from and including the 91st day during which one or more Registration Defaults remain in
effect with respect to this Fixed Rate/Floating Rate Subordinated Note to but excluding the date on which no Registration Default is in effect with respect to this Fixed Rate/Floating Rate Subordinated Note, such Additional Interest shall accrue on
this Fixed Rate/Floating Rate Subordinated Note at a per annum rate of 0.50%. All Additional Interest payable with respect to this Fixed Rate/Floating Rate Subordinated Note shall be paid in the same manner as periodic interest payments are required
to be made to the Holder of this Fixed Rate/Floating Rate Subordinated Note pursuant to the terms hereof. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to
the Person in whose name this Fixed Rate/Floating Rate Subordinated Note is registered at the close of business on the 15th calendar day immediately preceding the relevant Interest Payment Date (the “Regular Record Date”). Any such
interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Fixed Rate/Floating Rate Subordinated Note is registered at the
close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Subordinated Notes of this series not less than 10 days prior to such Special Record Date,
or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Subordinated Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture. Interest payable with respect to the Fixed Rate Period for any full semi-annual period will be computed on the basis of a 360-day year consisting of twelve 30-day months, provided that the amount of interest payable
with respect to the Fixed Rate Period for any partial semi-annual period during the Fixed Rate Period will be computed based on the actual number of days elapsed during that 180-day period. 
  
 During the Floating Rate Period, the interest rate per annum will be reset on
the first day of each Interest Reset Period (as defined below) and will be equal to LIBOR (as defined below) plus 1.82%, as determined by the calculation agent, who initially shall be the Trustee (the “Calculation Agent”). The amount of
interest for each day the Fixed Rate/Floating Rate Subordinated Notes are outstanding during the Floating Rate Period (the “Daily Interest Amount”) will be calculated by dividing the interest rate in effect for that day by 360 and
multiplying the result by the outstanding principal amount of the Fixed Rate/Floating Rate Subordinated Notes. The amount of interest to be paid during the Floating Rate Period for each Interest Period (as defined below) will be calculated by adding
the Daily Interest Amounts for each day in the Interest Period. 
  

 3 








 The indebtedness evidenced by the Fixed Rate/Floating Rate Subordinated Notes is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the principal of (and premium, if any) and interest on all Senior Indebtedness (as defined in the Indenture), and this Fixed
Rate/Floating Rate Subordinated Note is issued subject to such provisions and each Holder of this Fixed Rate/Floating Rate Subordinated Note, by accepting the same, agrees to and shall be bound by such provisions, and authorizes the Trustee in his
behalf to take such action as may be necessary or appropriate to effectuate such subordination as provided in the Indenture and appoints the Trustee his attorney-in-fact for such purpose. 
  
 Payment of the principal of (and premium, if any) and any interest on this Fixed Rate/Floating Rate Subordinated Note will
be made at the offices or agencies of the Company maintained for that purpose in the city of Pittsburgh, Pennsylvania or Dallas, Texas, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company payment of interest may be made by check drawn upon any Paying Agent and mailed on or prior to an Interest Payment Date to the address of the Person entitled thereto as
such address shall appear in the Security Register. In the event that an Interest Payment Date is not a Business Day, the amount payable on such date shall be payable on the next succeeding day that is a Business Day with the same force and effect
as if such payment had been made on such date without any interest or other payment with respect to the delay; provided, however, if such Interest Payment Date occurs during the Floating Rate Period and such next Business Day is in a different
month, then we will pay interest on the Business Day immediately preceding that Interest Payment Date. If the Maturity Date or date of earlier redemption falls on a day that is not a Business Day, the payment of principal and interest, if any, will
be made on the next succeeding business day, and no interest shall accrue for the period from and after such Maturity Date or date of earlier redemption. 
  
 For purposes of the Fixed Rate/Floating Rate Subordinated Notes, the following capitalized terms used herein shall have the meanings set forth below:

  
 “LIBOR,” with respect to an Interest Reset Period,
means the rate (expressed as a percentage per annum) for deposits in United States dollars for a three-month period beginning on the second London Banking Day (as defined below) after the Determination Date (as defined below) that appears on
Telerate Page 3750 (as defined below) as of 11:00 A.M., London time, on the Determination Date. If Telerate Page 3750 does not include this rate or is unavailable on the Determination Date, the Calculation Agent will request the principal London
office of each of four major banks in the London interbank market, as selected by the Calculation Agent, to provide that bank’s offered quotation (expressed as a percentage per annum) as of approximately 11:00 A.M., London time, on the
Determination Date to prime banks in the London interbank market for deposits in a Representative Amount (as defined below) in United States dollars for a three-month period beginning on the second London Banking Day after the Determination Date. If
at least two offered quotations are so provided, LIBOR for the Interest Reset Period will be the arithmetic mean of those quotations. If fewer than two quotations are so provided, the Calculation Agent will request each of three major banks in New
York City, as selected by the Calculation Agent, to provide that bank’s rate (expressed as a percentage per annum), as of approximately 11:00 A.M., New York City 

  

 4 








 
time, on the Determination Date for loans in a Representative Amount in United States dollars to leading European banks for a three-month period beginning on
the second London Banking Day after the Determination Date. If at least two rates are so provided, LIBOR for the Interest Reset Period will be the arithmetic mean of those rates. If fewer than two rates are so provided, then LIBOR for the Interest
Reset Period will be LIBOR in effect with respect to the immediately preceding Interest Reset Period or, in the case of the first Interest Reset Period, 4.75% per annum. 
  
 “Determination Date” with respect to an Interest Reset Period means the second London Banking Day preceding the
first day of the Interest Reset Period. 
  
 “Interest Reset
Period” means each period during the floating-rate period from and including an interest payment date to but excluding the next succeeding interest payment date. The first Interest Reset Period will commence on and include May 1, 2009 and end
on and include August 1, 2009. 
  
 “London Banking Day”
means any day on which dealings in United States dollars are transacted or, with respect to any future date, are expected to be transacted in the London interbank market. 
  
 “Representative Amount” means a principal amount that is representative for a single transaction in the relevant
market at the relevant time. 
  
 “Telerate Page 3750”
means the display designated as “Page 3750” on the Bridge Telerate Service (or such other page as may replace Page 3750 on that service). 
  
 All percentages resulting from any of the above calculations will be rounded, if necessary, to the nearest one thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent
being rounded upwards). The interest rate on the Fixed Rate/Floating Rate Subordinated Notes will in no event be higher than the maximum rate permitted by New York law as the same may be modified by Unites States law of general application.

  
 The Calculation Agent will, upon the request of any Holder of
the Fixed Rate/Floating Rate Subordinated Notes, provide the interest rate then in effect. All calculations of the Calculation Agent, in the absence of manifest error, shall be conclusive for all purposes and binding on the Company and the Holders
of the Fixed Rate/Floating Rate Subordinated Notes. The Company may appoint a successor Calculation Agent with the written consent of the trustee, which consent shall not be unreasonably withheld. 
  
 This Fixed Rate/Floating Rate Subordinated Note is one of a duly authorized
issue of securities of the Company (herein called the “Securities”), issued and to be issued under an Indenture, dated as of November 4, 2002 and as supplemented by the First Supplemental Indenture, dated May 3, 2004 (the
“Indenture”), between the Company and J. P. Morgan Trust Company, National Association, (herein called the “Trustee”, which term includes any successor Trustee 

  

 5 








 
under the Indenture), to which Indenture and all Indentures supplemental thereto reference is hereby made for a statement of the respective rights of the
Company, the Trustee and the Holders of the Securities (including this Fixed Rate/Floating Rate Subordinated Note), and the terms upon which the Securities (including this Fixed Rate/Floating Rate Subordinated Note) are, and are to be, authenticated
and delivered. This Fixed Rate/Floating Rate Subordinated Note is one of a series of Subordinated Notes of the Company designated as its 4.75% Fixed Rate/Floating Rate Subordinated Notes due 2014 (herein called the “Fixed Rate/Floating Rate
Subordinated Notes”), initially limited in aggregate principal amount to $75,000,000. 
  
 The Fixed Rate/Floating Rate Subordinated Notes are not redeemable prior to May 1, 2009. The Fixed Rate/Floating Rate Subordinated Notes will be redeemable in whole or in part at the Company’s option and upon
clearance with the Federal Reserve Board, on or after May 1, 2009, and on any Floating Interest Payment Date thereafter, (a “Redemption Date”), at a redemption price equal to 100% of the principal amount of the Fixed Rate/Floating Rate
Subordinated Notes to be redeemed, plus any accrued but unpaid interest to the Redemption Date. The Fixed Rate/Floating Rate Subordinated Notes may be redeemed on not less than 30 nor more than 60 days’ prior notice. Other than as set forth in
this paragraph, the Fixed Rate/Floating Rate Subordinated Notes shall not be subject to redemption at the option of the Company. Notice of any redemption will be mailed not less than 30 nor more than 60 calendar days before the Redemption Date to
each Holder of Fixed Rate/Floating Rate Subordinated Notes to be redeemed at its registered address. Unless the Company defaults in payment of the redemption price with respect to any Fixed Rate/Floating Rate Subordinated Note to be so redeemed, on
and after the Redemption Date interest will cease to accrue on the principal amount of such Fixed Rate/Floating Rate Subordinated Note. Notwithstanding the foregoing, any redemption of the Fixed Rate/Floating Rate Subordinated Notes shall be subject
to the prior clearance of the Board of Governors of the Federal Reserve Board System if such clearance is then required under its capital guidelines or policies. 
  
 As provided in the Indenture and subject to certain limitations and conditions set forth therein and in this Fixed
Rate/Floating Rate Subordinated Note, the transfer of this Fixed Rate/Floating Rate Subordinated Note may be registered in the Security Register of the Company upon surrender of this Fixed Rate/Floating Rate Subordinated Note for registration of
transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest on this Fixed Rate/Floating Rate Subordinated Note are payable, duly endorsed by, or accompanied by, a written instrument of
transfer in form satisfactory to the Company, duly executed by the registered Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Subordinated Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees. 
  
 No service charge will be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

  
 The Fixed Rate/Floating Rate Subordinated Notes are issuable
only as registered Subordinated Notes without coupons in denominations of $100,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture, and subject to certain limitations set forth 

  

 6 








 
therein, this Fixed Rate/Floating Rate Subordinated Note is exchangeable for a like aggregate principal amount of Fixed Rate/Floating Rate Subordinated Notes
of different authorized denominations, as requested by the Holder surrendering the same. 
  
 The Fixed Rate/Floating Rate Subordinated Notes shall not be subject to any sinking fund. 
  
 Prior to due presentment for registration of transfer of this Fixed Rate/Floating Rate Subordinated Note, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this Fixed Rate/Floating Rate Subordinated Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Fixed
Rate/Floating Rate Subordinated Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 
  
 The Fixed Rate/Floating Rate Subordinated Note shall contain the additional provisions relating to book-entry securities and transfers in certain
situations set forth in Exhibit E to the Indenture. 
  
 If an
Event of Default with respect to the Fixed Rate/Floating Rate Subordinated Notes shall occur and be continuing, the principal hereof may be declared due and payable in the manner and with the effect provided in the Indenture. 
  
 In connection with the transactions contemplated by the Registration Rights
Agreement, the Fixed Rate/Floating Rate Subordinated Notes and all Exchange Securities and Private Exchange Securities (as each such term is defined in the Registration Rights Agreement) issued in exchange for the Fixed Rate/Floating Rate
Subordinated Notes pursuant to the Registration Rights Agreement shall vote and consent together on all matters as a single class and shall constitute a single series of Securities under the Indenture. 
  
 The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected by such amendment or modification under the Indenture at any time by the Company and
the trustee with the consent of the Holders of 66 2/3% in principal amount of the Outstanding Securities of each such series to be so affected. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount
of the Outstanding Securities of any series, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Fixed Rate/Floating Rate Subordinated Note shall be conclusive and binding upon such Holder and upon all future Holders of this Fixed Rate/Floating Rate Subordinated Note and of any Subordinated Notes
issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Fixed Rate/Floating Rate Subordinated Note. 
  
 No reference herein to the Indenture and no provision of this Fixed
Rate/Floating Rate Subordinated Note or of the Indenture shall alter or impair the obligation of the Company, which is 

  

 7 








 
absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Fixed Rate/Floating Rate Subordinated Note at the
times, place and rate, and in the coin and currency, herein prescribed. 
  
 This Fixed Rate/Floating Rate Subordinated Note shall be construed in accordance with and governed by the laws of the State of New York without regard to conflicts of laws principles thereof. 
  
 All terms used in this Fixed Rate/Floating Rate Subordinated Note which are
defined in the Indenture shall have the meanings assigned to them in the Indenture. 
  
 Unless the certificate of authentication hereon has been executed by the Trustee, directly or through an authenticating agent, by the manual signature of an authorized officer, this Fixed Rate/Floating Rate
Subordinated Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 
  

 8 








 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. 
  
 Dated: May 3, 2004 
  

					
	 SUSQUEHANNA BANCSHARES, INC.

		
	By:	 	 
	 	 	 Name:
	 	 William J. Reuter

	 	 	 Title:
	 	 President and Chief Executive Officer



  

					
	 Attest:

		
	By:	 	 
	 	 	 Name:
	 	 Lisa M. Cavage

	 	 	 Title:
	 	 Vice President, Secretary and Counsel


  
 Dated: May 3, 2004 
  
 This is one of the Securities of the series designated herein referred to in
the within-mentioned Indenture. 
  

			
	 J. P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee

		
	By:	 	 
	 	 	 Authorized Officer



  









 ASSIGNMENT 
  
 FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto 
  
 PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE 
  
 __________________________________________________________________________________________________ 
  
 Name and address of assignee, including zip code (must be printed or typewritten) 
 __________________________________________________________________________________________________ 
  
 __________________________________________________________________________________________________ 
  
 the within Fixed Rate/Floating Rate Subordinated Note, and all rights thereunder, hereby irrevocably constituting and appointing 
 __________________________________________________________________________________________________ 
  
 Attorney to transfer said Fixed Rate/Floating Rate Subordinated Note on the books of the within Company, with full power of
substitution in the premises. 
  

					
	 Dated:                    
	 	 	 	 ____________________________________

			
	 	 	NOTICE:	 	The signature to this assignment must correspond with the name as it appears upon the face of the within or attached Fixed Rate/Floating Rate Subordinated Note in every particular, without
alteration or enlargement or any change whatever.