Document:

Guarantee Agreement

 Exhibit 4.2 
  
  
  
 GUARANTEE AGREEMENT

 Between 
 SUSQUEHANNA BANCSHARES, INC., 
 as Guarantor, 
 and 
 THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., 
 as Trustee, 
 dated as of March 16, 2010 
  
  
  

 CROSS-REFERENCE TABLE* 
  

			
	 Section of
 Trust Indenture Act
 of 1939, as amended
	  	 Section of
 Guarantee Agreement

	 310(a)
	  	 4.1(a)

	 310(b)
	  	 4.1(c), 2.8

	 310(c)
	  	 Inapplicable

	 311(a)
	  	 2.2(b)

	 311(b)
	  	 2.2(b)

	 311(c)
	  	 Inapplicable

	 312(a)
	  	 2.2(a)

	 312(b)
	  	 2.2(b)

	 313(a)
	  	 2.3

	 313(b)
	  	 2.3

	 313(c)
	  	 2.3

	 313(d)
	  	 2.3

	 314(a)
	  	 2.4

	 314(b)
	  	 Inapplicable

	 314(c)
	  	 2.5

	 314(d)
	  	 Inapplicable

	 314(e)
	  	 1.1, 2.5, 3.2

	 314(f)
	  	 3.2

	 315(a)
	  	 3.1(d)

	 315(b)
	  	 2.7

	 315(c)
	  	 3.1(c)

	 315(d)
	  	 3.1(d)

	 315(e)
	  	 2.1

	 316(a)
	  	 2.6, 5.4

	 316(b)
	  	 5.3

	 316(c)
	  	 2.1

	 317(a)
	  	 Inapplicable

	 317(b)
	  	 Inapplicable

	 318(a)
	  	 2.1(b)

	 318(b)
	  	 2.1

	 318(c)
	  	 2.1

  

	*	This Cross-Reference Table does not constitute part of the Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions.

  

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 GUARANTEE AGREEMENT 
 This GUARANTEE AGREEMENT, dated as of March 16, 2010, is executed and delivered by SUSQUEHANNA BANCSHARES, INC., a Pennsylvania
corporation (the “Guarantor”), having its principal office at 26 North Cedar St., Lititz, Pennsylvania 17543, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as trustee (the “Guarantee
Trustee”), for the benefit of the Holders (as defined herein) from time to time of the Capital Securities and the Common Securities (each as defined herein and together, the “Securities”) of SUSQUEHANNA CAPITAL II, a Delaware
statutory trust (the “Issuer”). 
 WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of
March 16, 2010 (the “Trust Agreement”), among the Guarantor, as Depositor, the Property Trustee and the Delaware Trustee named therein, the Administrative Trustees named therein and the Holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing $50,000,000 aggregate Liquidation Amount (as defined in the Trust Agreement) of its 11% Cumulative Trust Preferred Securities, Series II, Liquidation Amount $1,000.00 per
capital security (together with any other capital securities issued pursuant to the Trust Agreement, the “Capital Securities”), representing preferred undivided beneficial interests in the assets of the Issuer and having the terms set
forth in the Trust Agreement; 
 WHEREAS, the Capital Securities will be issued by the Issuer and the proceeds thereof, together
with the proceeds from the issuance of the Issuer’s Common Securities, will be used to purchase the Debentures (as defined in the Trust Agreement) of the Guarantor which will be deposited with The Bank of New York Mellon Trust Company, N.A., as
Property Trustee under the Trust Agreement, as trust assets; and 
 WHEREAS, as incentive for the Holders to purchase Securities
the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay to the Holders of the Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set
forth herein. 
 NOW, THEREFORE, in consideration of the purchase by each Holder of Securities, which purchase the Guarantor
hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the Securities. 
 ARTICLE I. 
 DEFINITIONS 
 Section 1.1. Definitions. 
 As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or

 
otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof. 
 “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; provided, however, that an Affiliate of the Guarantor shall not be deemed to be an Affiliate of the Issuer. For the purposes of this definition, “control”
when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing. 
 “Board
of Directors” means either the board of directors of the Guarantor or any committee of that board duly authorized to act hereunder or any directors or officers of the Guarantor to whom such board of directors or such committee shall have
duly delegated its authority. 
 “Common Securities” means the securities representing common undivided
beneficial interests in the assets of the Issuer. 
 “Event of Default” means a default by the Guarantor on any
of its payment or other obligations under this Guarantee Agreement; provided, however, that, except with respect to a default in payment of any Guarantee Payments, the Guarantor shall have received notice of default and shall not have cured
such default within 90 days after receipt of such notice. 
 “First Supplemental Indenture” means the First
Supplemental Indenture, dated March 16, 2010, between the Guarantor and The Bank of New York Mellon Trust Company, N.A., as trustee, as amended or supplemented from time to time. 
 “Guarantee Payments” means the following payments or distributions, without duplication, with respect to the Securities, to
the extent not paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid Distributions (as defined in the Trust Agreement) required to be paid on the Securities, to the extent the Issuer shall have funds on hand available
therefor at such time, (ii) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the “Redemption Price”), with respect to any Securities called for redemption by the Issuer, to the extent the
Issuer shall have funds on hand available therefor at such time and (iii) upon a voluntary or involuntary termination, winding up or liquidation of the Issuer, unless Debentures are distributed to the Holders, the lesser of (a) the
aggregate of the Liquidation Amount plus accrued and unpaid Distributions to the date of payment and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer after satisfaction of
liabilities to creditors of the Issuer as required by applicable law (in either case, the “Liquidation Distribution”). 
  

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 “Guarantee Trustee” means The Bank of New York Mellon Trust Company, N.A.,
until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement, and thereafter means each such Successor Guarantee Trustee. 
 “Holder” means any holder, as registered on the books and records of the Issuer, of any Securities; provided,
however, that in determining whether the holders of the requisite percentage of Securities have given any request, notice, consent or waiver hereunder, “Holder” shall not include the Guarantor, the Guarantee Trustee, or any
Affiliate of the Guarantor or the Guarantee Trustee. 
 “Indenture” means the Indenture, dated as of
March 8, 2010, between the Guarantor and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by the First Supplemental Indenture, and as further amended or supplemented from time to time. 
 “List of Holders” has the meaning specified in Section 2.2(a). 
 “Majority in aggregate Liquidation Amount of the Securities” means, except as provided by the Trust Indenture Act, a vote
by the Holder(s), voting separately as a class, of more than 50% of the aggregate Liquidation Amount of all then outstanding Securities issued by the Issuer. 
 “Officers’ Certificate” means a certificate signed by any two of the following: Chairman of the Board, the Chief Executive Officer, the President, any Vice Chairman of the Board, the
Chief Financial Officer, any Vice President, the Treasurer, the Secretary, the Controller, any Assistant Controller, any Assistant Treasurer or any Assistant Secretary of the Company (as each term is used in the Indenture). Any Officers’
Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include: 
 (a) a statement that each individual signing such Officers’ Certificate has read such covenant or condition and the definitions herein relating thereto; 
 (b) a brief statement of the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers’ Certificate are based; 
 (c) a statement that, in the opinion of each individual signing the Officer’s Certificate, he or she has made such examination or
investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and 
 (d) a statement as to whether, in the opinion of each individual signing the Officers’ Certificate, such condition or covenant has been complied with. 
  

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 “Person” means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. 
 “Responsible Officer” when used with respect to the Guarantee Trustee means any officer of the Guarantee Trustee assigned
by the Guarantee Trustee from time to time to administer its corporate trust matters. 
 “Successor Guarantee
Trustee” means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1. 
 “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended. 
 ARTICLE II. 
 TRUST INDENTURE ACT 
 Section 2.1. Trust Indenture Act; Application. 
 (a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such
provisions. 
 (b) If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the
duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. 
 Section 2.2. List of Holders. 
 (a) The Guarantor will furnish or cause to be furnished to the Guarantee
Trustee: 
 (i) semi-annually, not more than 15 days after January 15 and July 15 in each year, a list,
in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders as of such January 1 and July 1, and 
 (ii) at such other times as the Guarantee Trustee may request in writing, within 30 days after the receipt by the Guarantor of any such request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished, excluding from any such list names and addresses received by the Guarantee Trustee in its capacity as Securities Registrar. 
 (b) The Guarantee Trustee shall comply with its obligations under Section 311(a), Section 311(b) and Section 312(b) of the
Trust Indenture Act. 
  

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 Section 2.3. Reports by the Guarantee Trustee. 
 The Guarantee Trustee shall transmit to Holders such reports concerning the Guarantee Trustee and its actions under this Guarantee Agreement
as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Guarantee Trustee shall, within sixty days after each May 15
following the date of this Guarantee Agreement deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a). 
 Section 2.4. Periodic Reports to the Guarantee Trustee. 
 The Guarantor shall provide to the Guarantee Trustee, the Securities and Exchange Commission and the Holders such documents, reports and
information, if any, as required by Section 314 of the Trust Indenture Act and the compliance certificate required by Section 314 of the Trust Indenture Act, in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act. Delivery of such reports, information and documents to the Guarantee Trustee is for informational purposes only and the Guarantee Trustee’s receipt of such shall not constitute constructive notice of any information
contained therein, including the Guarantor’s compliance with any of its covenants hereunder (as to which the Guarantee Trustee is entitled to rely exclusively on Officers’ Certificates). 
 Section 2.5. Evidence of Compliance with Conditions Precedent. 
 The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers’ Certificate. 
 Section 2.6. Events of Default; Waiver. 
 The Holders of a Majority in aggregate Liquidation Amount of the Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any right consequent therefrom. 
 Section 2.7.
Event of Default; Notice. 
 (a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default actually known to the Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, that, except in the case of a

  

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default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as the Board of Directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. 
 (b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received
written notice, or a Responsible Officer charged with the administration of this Guarantee Agreement shall have obtained written notice, of such Event of Default. 
 Section 2.8. Conflicting Interests. 
 The Trust Agreement shall be
deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. 
 ARTICLE III. 
 POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE 
 Section 3.1. Powers and Duties of the Guarantee Trustee. 
 (a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee. 
 (b) If an Event of Default has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of
the Holders. 
 (c) The Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in
its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 
  

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 (d) No provision of this Guarantee Agreement shall be construed to relieve the Guarantee
Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: 
 (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: 
  

	 	(A)	the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee Agreement, and the Guarantee Trustee shall
not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee Agreement; and 

  

	 	(B)	in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof or
of the Trust Indenture Act are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement;

 (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; 
 (iii) the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a Majority in aggregate Liquidation Amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or
exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and 
 (iv) no
provision of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if
the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it. 
  

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 Section 3.2. Certain Rights of Guarantee Trustee. 
 (a) Subject to the provisions of Section 3.1: 
 (i) The Guarantee Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties. 
 (ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers’ Certificate unless otherwise prescribed herein. 
 (iii) Whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take any
action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers’ Certificate which, upon receipt of such request from the
Guarantee Trustee, shall be promptly delivered by the Guarantor. 
 (iv) The Guarantee Trustee may consult with
legal counsel of its selection, and the advice or opinion of such legal counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or opinion. Such legal counsel may be legal counsel to the Guarantor or any of its Affiliates and may be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from any court of competent jurisdiction. 
 (v) The
Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such adequate
security and indemnity as would satisfy a reasonable person in the position of the Guarantee Trustee, against the costs, expenses (including attorneys’ fees and expenses) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided that nothing contained in this Section 3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement. 
  

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 (vi) The Guarantee Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee
Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. 
 (vii) The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, and the Guarantee Trustee shall not
be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. 
 (viii) Whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive written instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Guarantee Trustee (A) may request instructions from the Holders, (B) may refrain from enforcing such remedy or right or taking such other action until such written instructions are received, and (C) shall
be protected in acting in accordance with such written instructions. 
 (ix) The Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Guarantee Agreement. 
 (x) In no event shall the Guarantee Trustee be responsible or liable for special, indirect, or consequential loss or damage
of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Guarantee Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. 
 (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform
any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty to act in accordance with such power and authority. 
 Section 3.3. Indemnity. 
 The Guarantor agrees to indemnify the Guarantee Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Guarantee Trustee,
arising out of or in connection with the acceptance

  

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or administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. The provisions of this Section shall survive the termination of this Agreement and the resignation or removal of the Guarantee Trustee. 
 ARTICLE IV. 
 GUARANTEE TRUSTEE 
 Section 4.1. Guarantee Trustee: Eligibility. 
 (a) There shall at all times be a Guarantee Trustee which shall: 
 (i) not be an Affiliate of the Guarantor; and 
 (ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and have a combined capital and surplus of at least $50,000,000, and shall be a corporation meeting the requirements of Section 310(a) of the Trust Indenture Act. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the supervising or examining authority, then, for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. 
 (b)
If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). 
 (c) If the Guarantee Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. 
 Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee. 
 (a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. 
 (b) The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor. If an instrument of acceptance by a Successor Guarantee Trustee shall not have been delivered to the Guarantee Trustee within 30 days after such removal, the Guarantee

  

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Trustee being removed may petition any court of competent jurisdiction for the appointment of a Successor Guarantee Trustee. 
 (c) The Guarantee Trustee appointed hereunder shall hold office until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take
effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee. 
 (d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days
after delivery to the Guarantor of an instrument of resignation, the resigning Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee. 
 ARTICLE V.

 GUARANTEE 
 Section 5.1. Guarantee. 
 The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Issuer), as and when due, regardless of any defense, right of set-off or counterclaim which the Issuer may have or
assert. The Guarantor’s obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. 
 Section 5.2. Waiver of Notice and Demand. 
 The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first
against the Guarantee Trustee, Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. 
 Section 5.3. Obligations Not Affected. 
 The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the
following: 
  

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 (a) the release or waiver, by operation of law or otherwise, of the performance or
observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Securities to be performed or observed by the Issuer; 
 (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions (other than an extension of time for payment of Distributions that results from the extension of any
interest payment period on the Debentures as provided in the Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Securities; 
 (c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Securities, or any action on the part of the Issuer granting indulgence or extension of any kind;

 (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; 
 (e) any invalidity of, or defect or deficiency in, the Securities; 
 (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or 
 (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. 
 There shall be no obligation of the Holders to give notice to, or obtain the consent of, the Guarantor with respect to the happening of any of the foregoing. 
 Section 5.4. Rights of Holders. 
 The Guarantor expressly acknowledges that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in aggregate Liquidation Amount of the Securities have the right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Issuer or any other Person. 
  

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 Section 5.5. Guarantee of Payment 
 This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by
payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Issuer) or upon distribution of Debentures to Holders as provided in the Trust Agreement. 
 Section 5.6. Subrogation. 
 The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement and shall have the
right to waive payment by the Issuer pursuant to Section 5.1; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it
may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. 
 Section 5.7. Independent Obligations. 
 The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. 
 ARTICLE VI. 
 SUBORDINATION 
 Section 6.1. Subordination. 
 The obligations of the Guarantor under this Guarantee Agreement will constitute unsecured obligations of the Guarantor and will rank
subordinate and junior in right of payment to all Senior Indebtedness (as defined in the Indenture with respect to the series of Debentures issued thereunder in respect of the Capital Securities) of the Guarantor, except those made pari passu
or subordinate to such obligations expressly by their terms in the same manner as set forth in Article XV of the Indenture. 
  

 -13- 

 Section 6.2. Subordination of Common Securities. 
 If a Debenture Event of Default (as defined in the Trust Agreement) has occurred and is continuing, the rights of the Holders of the Common
Securities to receive Guarantee Payments under this Guarantee shall be subordinated to the rights of the Holders of the Capital Securities to receive Guarantee Payments under this Guarantee. 
 ARTICLE VII. 
 TERMINATION 
 Section 7.1. Termination. 
 This Guarantee Agreement shall terminate and be of no further force and effect upon (i) full payment of the Redemption Price of all Securities, (ii) the distribution of Debentures to the Holders
in exchange for all of the Securities or (iii) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or
will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to Securities or this Guarantee Agreement. 
 ARTICLE VIII. 
 MISCELLANEOUS 
 Section 8.1. Successors and Assigns. 
 All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Securities then outstanding. Except in connection with a consolidation, merger, conveyance or transfer involving the Guarantor that is permitted under Article VIII of the Indenture and pursuant to which the successor or assignee
agrees in writing to perform the Guarantor’s obligations hereunder, the Guarantor shall not assign its obligations hereunder. 
 Section 8.2. Amendments. 
 Except with respect to any changes which do not adversely affect the rights of
the Holders or the Guarantee Trustee in any material respect (in which case no consent of the Holders or the Guarantee Trustee, as the case may be, will be required), this Guarantee Agreement may only be amended with the prior approval of the
Holders of not less than a Majority in aggregate Liquidation Amount of all the outstanding Securities and of the Guarantee Trustee. The provisions of Article VI of the Trust Agreement concerning meetings of the Holders shall apply to the giving of
such approval. 
  

 -14- 

 Section 8.3. Notices. 
 Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving
such notice, and delivered, telecopied or mailed by first class mail as follows: 
 (a) if given to the Guarantor, to the
address set forth below or such other address, facsimile number or to the attention of such other Person as the Guarantor may give notice to the Holders: 
 Susquehanna Bancshares, Inc. 
 26 North Cedar Street 
 Lititz, Pennsylvania 17543 
 Facsimile No.: 717-625-0331 
 Attention: Lisa Cavage 
 (b) if given to the Issuer, in care of the Guarantee Trustee, at the Issuer’s (and the Guarantee Trustee’s) address set forth
below or such other address as the Guarantee Trustee on behalf of the Issuer may give notice to the Holders: 
 Susquehanna
Capital II 
 c/o Susquehanna Bancshares, Inc. 
 26 North Cedar Street 
 Lititz, Pennsylvania 17543 
 Facsimile No.: 717-625-0331 
 Attention: Lisa Cavage 
 with a copy to: 
 The Bank of New York Mellon Trust Company, N.A. 
 525 William Penn Place, Pittsburgh, PA, 15259 
 Telephone No.: 412-236-1213

 Attention: James M. Young, Corporate Trust Administration 
 (c) if given to any Holder, at the address set forth on the books and records of the Issuer. 
 All notices hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the
date of such refusal or inability to deliver. 
  

 -15- 

 Section 8.4. Benefit. 
 This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Securities. 
 Section 8.5. Interpretation. 
 In this Guarantee Agreement, unless the context otherwise requires: 
 (a)
capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.1, and capitalized or otherwise defined terms used in this Guarantee Agreement but not
otherwise defined herein have the respective meanings assigned to them in the Trust Agreement as in effect on the date hereof; 
 (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout; 
 (c) all references to
“the Guarantee Agreement” or “this Guarantee Agreement” are to this Guarantee Agreement as modified, supplemented or amended from time to time; 
 (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; 
 (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; 
 (f) a reference to the singular includes the plural and vice
versa; and 
 (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter
genders. 
 Section 8.6. Governing Law. 
 THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 

Section 8.7. Counterparts 
 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same
instrument. 
 Section 8.8. Waiver of Jury Trial. 
  

 -16- 

 EACH OF THE COMPANY AND THE GUARANTEE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTEE AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. 
 Section 8.9. Force Majeure. 
 In no event shall the Guarantee Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond
its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; it being understood that the Guarantee Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances. 
 [Remainder of page left intentionally blank.] 
  

 -17- 

 This GUARANTEE AGREEMENT is executed 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
	
	 THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.,
     as Guarantee Trustee

		
	By:	 	 /s/ Raymond K. O’Neil

	Name:	 	Raymond K. O’Neil
	Title:	 	Senior Associate

 [Signature Page to
Guarantee Agreement]First Supplemental Agreement

 Exhibit 4.3 
 SUSQUEHANNA BANCSHARES, INC. 
 AND 
 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., 
 as Trustee 
 FIRST SUPPLEMENTAL INDENTURE 
 Dated as of March 16, 2010 
 to 
 INDENTURE 
 Dated as of March 8, 2010 
 Subordinated Debt Securities

 11% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES, SERIES II 

 FIRST SUPPLEMENTAL INDENTURE (the “First Supplemental Indenture”), dated as of
March 16, 2010, between SUSQUEHANNA BANCSHARES, INC., a Pennsylvania corporation (the “Company”), having its principal office at 26 North Cedar Street, Lititz, Pennsylvania 17543, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a
national banking association, having a designated corporate trust office located 525 William Penn Place, Pittsburgh, Pennsylvania 15259, as Trustee (the “Trustee”). 
 WITNESSETH: 
 WHEREAS, the Company and the Trustee have
heretofore executed and delivered a certain Indenture, dated as of March 8, 2010, (the “Indenture”), providing for the issuance from time to time of Securities; 
 WHEREAS, Section 9.01 of the Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee
without the consent of any Holder of any Securities (i) to establish the form or terms of Securities of any series as permitted by Sections 2.01 and 3.01 of the Indenture and (ii) to add to, change or eliminate any provisions of this
Indenture in respect of any one or more series of Securities, provided that any such addition, change or elimination shall neither (A) apply to any Securities of any series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (B) adversely affect the rights of the Holder of any such Security in any material respect; 
 WHEREAS, pursuant to Sections 2.01 and 3.01 of the Indenture, the Company desires to provide for the establishment of a new series of Securities under the Indenture, the form and substance of such
Securities and the terms, provisions and conditions thereof to be set forth as provided in the Indenture and this First Supplemental Indenture; 
 WHEREAS, pursuant to Section 9.01 the Company desires to add to, change or eliminate certain provisions of the Indenture solely as they relate to the series of Securities to be established pursuant
hereto; 
 WHEREAS, the conditions set forth in the Indenture for the execution and delivery of this First Supplemental
Indenture have been satisfied; and 
 WHEREAS, all things necessary to make this First Supplemental Indenture a valid agreement
of the Company and the Trustee, in accordance with its terms, and a valid amendment of, and supplement to, the Indenture have been done. 
 NOW, THEREFORE, in consideration of the premises and the purchase of the Securities of the series established by this First Supplemental Indenture by the Holders thereof from time to time on or after the
date hereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all such Holders, that the Indenture is supplemented and amended, to the extent and for the purposes expressed herein, as follows: 
  

 1 

 ARTICLE I 
 DEFINITIONS 
 1.1 For all purposes of this First
Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires, (i) references to any Article, Section or subdivision thereof are references to an Article, Section or other subdivision of this First
Supplemental Indenture or the Indenture, as applicable, and (ii) capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. 
 1.2 For all purposes of this First Supplemental Indenture, and for all purposes of the Indenture but solely with respect to the series of Securities to be established pursuant to this First Supplemental
Indenture, the following terms shall have the following respective meanings (and to the extent any of the following terms are defined in the Indenture, solely for purposes of the series of Securities to be established pursuant to this First
Supplemental Indenture, such terms shall be deemed to supersede and replace in their entirety the terms set forth in the Indenture): 
 “Additional Interest” means the interest, if any, that shall accrue on any interest on the Junior Subordinated Debentures the payment of which has not been made on the applicable Interest Payment Date and which shall accrue
at the rate per annum established in accordance with Section 3.01 of this Indenture from the applicable Interest Payment Date. Unless the context otherwise requires, all references to interest in this Indentures shall be deemed to include
Additional Interest. 
 “Administrative Trustee” means, in respect of the Trust, each Person identified as an
“Administrative Trustee” in the Trust Agreement, solely in such Person’s capacity as Administrative Trustee of the Trust and not in such Person’s individual capacity, or any successor administrative trustee appointed as therein
provided. 
 “Affiliate” of any specified Person means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing; provided,
however, the Trust shall not be deemed to be an Affiliate of the Company. 
 “Bankruptcy Event” means
any of the events set forth in Section 5.01(3) or (4) of this Indenture. 
 “Business Day” means any
day, other than (i) a Saturday, Sunday or other day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (ii) a day on which the Corporate Trust Office of the
Property Trustee or the Trustee is closed for business. 
 “Capital Securities” means the 11% Cumulative Trust
Preferred Securities, Series II, issued by the Trust. 
  

 2 

 “Capital Stock” means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including partnership interests and membership interests, and any and all warrants, rights
or options to purchase or other arrangements or rights to acquire any of the foregoing. 
 “Capital Treatment
Event” means the reasonable determination by the Company that, as a result of any: 
 (i) amendment to,
or change in, the laws or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after March 9, 2010; 
 (ii) proposed change in those laws or regulations that is announced after March 9, 2010; or 
 (iii) official administrative decision or judicial decision or administrative action or other official pronouncement
interpreting or applying those laws or regulations that is announced after March 9, 2010; 
 there is more than an insubstantial risk that
the Company will not be entitled to treat an amount equal to the Liquidation Amount of the Capital Securities as “Tier 1 capital” (or its equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve applicable to bank
holding companies, as then in effect. 
 “Common Securities” means the 11% Cumulative Common Securities, Series
II, issued by the Trust. 
 “Default” with respect to the Junior Subordinated Debentures, means any of the
following events: 
 (a) an Event of Default with respect to the Junior Subordinated Debentures; or 

(b) a default in the payment of any interest upon any Junior Subordinated Debentures when the same shall become due and
payable, and continuance of such default for a period of 30 days, unless the Company shall have elected a Deferral Period and such Deferral Period shall remain in effect; or 
 (c) a failure on the part of the Company to duly observe or perform any of the other covenants or agreements on its part in
the Junior Subordinated Debentures or in this Indenture and continuance of such failure for a period of 60 days after the date on which written notice of such failure, requiring the Company to remedy the same and stating that such notice is a
“Notice of Default” hereunder, shall have been given by registered mail to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Junior Subordinated Debentures at
the time Outstanding; 
  

 3 

 “Deferral Period” means each period beginning on an Interest Payment Date
with respect to which the Company elects pursuant to Section 3.12 of this Indenture to defer all or part of any interest payment and ending on the earlier of (i) the fifth anniversary of such Interest Payment Date and (ii) the next
Interest Payment Date on which the Company has paid the deferred amount, all deferred amounts with respect to any subsequent period and all other accrued interest (including Additional Interest) on the Junior Subordinated Debentures. 
 “Distributions” has the meaning set forth in the Trust Agreement. 
 “Distribution Date” means a date on which Distributions are payable. 
 “Federal Reserve” means the Board of Governors of the Federal Reserve System collectively with any successor federal bank
regulatory agency having primary jurisdiction over the Company. 
 “First Supplemental Indenture” has the
meaning set forth in the preamble hereto. 
 “Guarantee Agreement” means the Guarantee Agreement, dated as of
March 16, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. as Guarantee Trustee. 
 “Interest Period” means the period from and including any Interest Payment Date (or, in the case of the first Interest Payment Date, the original issue date of the Junior Subordinated Debentures) to but excluding the next
Interest Payment Date. 
 “Junior Subordinated Debentures” means the series of Securities established pursuant
to the First Supplemental Indenture. 
 “Liquidation Amount” has the meaning set forth in the Trust Agreement.

 “Property Trustee” means, in respect of the Trust, the commercial bank or trust company identified as the
“Property Trustee” in the Trust Agreement, solely in its capacity as Property Trustee of the Trust and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as therein
provided. 
 “Senior Indebtedness” means the principal of (and premium, if any), accrued interest (including
interest accruing on or after the filing in bankruptcy or reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and
other amounts owing with respect to all Indebtedness of the Company (including Indebtedness of others guaranteed by the Company) other than (i) the following junior subordinated Indebtedness of the Company outstanding on the date hereof, all of
which shall be pari passu in right of payment with the Junior Subordinated Debentures: (a) 10.30% junior subordinated notes due 2027, (b) 4.26% floating rate junior subordinated notes due 2032, (c) 4.24% floating rate junior
subordinated notes due 2033, (d) 3.77% floating rate junior subordinated notes due 2033, (e) 4.17% floating rate junior subordinated notes due 2033, (f) 6.35% fixed/floating junior subordinated notes due 2036, (g) 6.44%
fixed/floating junior subordinated notes due 2036, (h) 6.39% junior subordinated notes due 2036, (i) 6.53% fixed/floating junior subordinated notes due 2037 and (j) 9.375% fixed/floating rate junior subordinated notes due 2057,
(ii) all Indebtedness issued

  

 4 

 
pursuant to the Indenture, dated as of November 5, 2007, between the Company and The Bank of New York Mellon Trust Company, N.A. (f/k/a The Bank of New York Mellon), as Trustee, including
the 9.375% Capital Efficient Notes, Series I, (iii) any series of Securities issued after the issuance of the Junior Subordinated Debentures if, pursuant to the instrument creating or evidencing such series of Securities, it is provided that
such series of Securities is not superior in right of payment to the Junior Subordinated Debentures, or (iv) any other Indebtedness which, pursuant to the instrument creating or evidencing any such Indebtedness or obligation or pursuant to
which the same is outstanding it is provided that such Indebtedness or obligation is not superior in right of payment to the Junior Subordinated Debentures, or it is provided that such obligation is subordinated to senior indebtedness to
substantially the same extent as the Junior Subordinated Debentures are subordinated to Senior Indebtedness, in any such case referred to in clauses (i), (ii), (iii) or (iv), whether outstanding on the date of this Indenture or the date the
Junior Subordinated Debentures are originally issued or thereafter created, incurred or assumed. 
 “Tax Event”
means that the Company has requested and received an opinion of counsel experienced in such matters to the effect that, as a result of any (i) amendment to or change in the laws or regulations of the United States or any political subdivision
or taxing authority of or in the United States that is enacted or issued or becomes effective after March 9, 2010, (ii) proposed change in those laws or regulations that is announced after March 9, 2010, or (iii) official
administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after March 9, 2010, there is a there is more than an insubstantial risk
that (x) the Trust is, or will be, subject to United States federal income tax with respect to income received or accrued on the Junior Subordinated Debentures, (y) interest payable by the Company on the Junior Subordinated Debentures is
not, or will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (z) the Trust is, or will be, subject to more than a de minimis amount of other taxes, duties or other governmental
charges. 
 “Trust” means Susquehanna Capital II, a Delaware statutory trust, and any successor thereto.

 “Trust Agreement” means the Trust Agreement, dated as of November 2, 2007, of the Trust, as amended by
the Amended and Restated Trust Agreement of the Trust, dated as of March 16, 2010, among the Company, The Bank of New York Mellon Trust Company, N.A., as Property Trustee, BNY Mellon Trust of Delaware (f/k/a Bank of New York Mellon (Delaware)),
as Delaware Trustee, and the Administrative Trustees and the holders named therein, as the same may be amended, supplemented or otherwise modified from time to time. 
 “Trust Securities” means the collective reference to the Capital Securities and the Common Securities. 
 ARTICLE II 
 TERMS OF SERIES OF SECURITIES 
 2.1 Pursuant to Sections 2.01 and 3.01 of the Indenture, there is hereby established a series of Securities, the terms of which shall
be as follows: 
  

 5 

 (a) Designation. The Securities of this series shall be known and designated as the
“11% Junior Subordinated Deferrable Interest Debentures, Series II” of the Company (the “Junior Subordinated Debentures”). The Junior Subordinated Debentures initially shall be issued to the Trust. 
 (b) Aggregate Principal Amount. The aggregate principal amount of the Junior Subordinated Debentures that may be authenticated and
delivered under the Indenture and this First Supplemental Indenture is unlimited. $50,010,000 aggregate principal amount of the Junior Subordinated Debentures are issued on the date of this First Supplemental Indenture. The Company has the right to
issue additional Junior Subordinated Debentures as Add On Securities in the future. Any such additional Junior Subordinated Debentures shall have the same terms as the Junior Subordinated Debentures issued on the date of this First Supplemental
Indenture but may be offered at a different offering price and accrue interest from a different date than the Junior Subordinated Debentures issued on the date of this First Supplemental Indenture. Any such additional Junior Subordinated Debentures
will be treated as part of the same series as the Junior Subordinated Debentures issued on the date of this First Supplemental Indenture for all purposes under the Indenture. 
 (c) Denominations. The Junior Subordinated Debentures shall be issued only in fully registered form, and the authorized denominations
of the Junior Subordinated Debentures shall be $1,000.00 principal amount and any integral multiple thereof. 
 (d) Maturity
Date. The principal amount of, and all accrued and unpaid interest on, the Junior Subordinated Debentures shall be payable in full on March 23, 2040 or, if such day is not a Business Day, the following Business Day (the “Stated
Maturity Date”). 
 (e) Rate of Interest. The Junior Subordinated Debentures shall bear interest on their principal
amount from and including the date they are issued to but excluding the date on which the principal amount is paid or made available for payment at the annual rate of 11%, payable on semi-annually in arrears on each March 23 and
September 23, beginning on September 23, 2010 (each such date an “Interest Payment Date”). In the event that any Interest Payment Date would otherwise fall on a day that is not a Business Day, the payment of interest shall be
postponed to the next day that is a Business Day and no interest shall accrue as a result of that postponement. Any installment of interest (or portion thereof) deferred in accordance with Section 3.12 of the Indenture or otherwise unpaid shall
bear interest (“Additional Interest”), to the extent permitted by law, at the annual rate of 11%, from the relevant Interest Payment Date, compounded on each subsequent Interest Payment Date, until paid in accordance with Section 3.12
of the Indenture. 
 (f) To Whom Interest Payable. Interest shall be payable to the Person in whose name the Junior
Subordinated Debentures are registered at the close of business on the Regular Record Date next preceding the Interest Payment Date, which shall be (i) the Business Day next preceding such Interest Payment Date if (A) the Junior
Subordinated Debentures are issued in the form of definitive Securities registered in the name of the Property Trustee and the Capital Securities are issued in the form of global securities or (B) the Junior Subordinated Debentures are issued
in the form of global notes (following distribution to holders of the Capital Securities) or (ii) the fifteenth calendar day (whether or not a Business Day) preceding the Interest Payment Date if (A) the Junior Subordinated Debentures are not
issued in definitive form registered in the

  

 6 

 
name of the Property Trustee or (B) the Capital Securities are no longer issued in the form of global securities; provided, however, that interest payable on any Junior Subordinated
Debentures at Maturity shall be paid to the Person to whom principal is paid. 
 (g) Option to Defer Interest Payments.
The Company shall have the right to defer interest payments on the Junior Subordinated Debentures in the manner and to the extent set forth in Section 3.12 of the Indenture. 
 (h) Redemption. The Junior Subordinated Debentures are redeemable at the Company’s option, subject to any required approval of
the Federal Reserve (if the redemption occurs prior to the Scheduled Maturity Date): 
 (i) in whole or in part,
at any time on or after March 23, 2015 at a redemption price equal to 100% of their principal amount plus accrued and unpaid interest to the Redemption Date; and 
 (ii) in whole but not in part at a redemption price equal to 100% of their principal amount plus accrued and unpaid interest
to the Redemption Date, within 90 days after the occurrence of a Capital Treatment Event or a Tax Event. 
 (i) Sinking
Fund. The Junior Subordinated Debentures shall not be subject to any sinking fund or similar provisions. 
 (j)
Conversion. The Junior Subordinated Debentures shall not be convertible into any other securities or other property. 
 (k) Form. The Junior Subordinated Debentures shall be substantially in the form of Annex A attached hereto, with such modifications thereto as may be approved by the authorized officer executing the same. 
 ARTICLE III 
 ADDITIONAL PROVISIONS 
 3.1. Scope. The additional changes, modifications and supplements to the
Indenture set forth below shall apply to, and govern the terms of, the Junior Subordinated Debentures and shall not apply to any other series of Securities. 
 3.2 Option to Defer Interest Payments. There shall be added to the end of Article III of the Indenture new Sections 3.12 and 3.13, which shall read in their entirety as follows: 
 “3.12 Option to Defer Interest Payments. (a) So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time and from time to time prior to Maturity, to defer the payment of interest on the Junior Subordinated Debentures for one or more consecutive Interest Periods that do not exceed five years; provided
that no Deferral Period shall extend beyond the Stated Maturity Date or the earlier repayment or redemption in full of the Junior Subordinated Debentures. 
  

 7 

 (b) At the end of any Deferral Period, the Company shall pay all deferred
interest on the Junior Subordinated Debentures (together with Additional Interest thereon, if any, at the rate specified for the Junior Subordinated Debentures) to the extent permitted by applicable law, to the Persons in whose name the Securities
are registered at the close of business on the Regular Record Date with respect to the Interest Payment Date at the end of such Deferral Period. 
 (c) Upon termination of any Deferral Period and upon the payment of all deferred interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Deferral
Period pursuant to clause (a) of this Section 3.12. 
 (d) The Company may elect to pay interest on any
Interest Payment Date during any Deferral Period. 
 (e) The Company shall give written notice of its election to
begin or extend any Deferral Period to the Trustee and (i) if the Property Trustee is not the sole holder of the Junior Subordinated Debentures, to the Holders of the Junior Subordinated Debentures and the Trustee at least one Business Day
prior to the next succeeding Interest Payment Date or (ii) if the Property Trustee is the sole Holder of the Junior Subordinated Debentures, to the Property Trustee and the Delaware Trustee at least one Business Day prior to the earlier of
(a) the next Distribution Date or (b) the date the Administrative Trustees are required to give notice to any securities exchange or other applicable self-regulatory organization or to holders of the Capital Securities of the record date
for such Distribution Date or of such Distribution Date. 
 (f) The Trustee shall promptly give notice of the
Company’s election to begin any Deferral Period to the Holders of the Outstanding Junior Subordinated Debentures.” 
 3.13 Agreed Tax Treatment. Each Junior Subordinated Debenture issued hereunder shall provide that the Company and, by its acceptance of a Junior Subordinated Debenture or a beneficial interest
therein, the Holder thereof, and any Person that acquires a beneficial interest in such Junior Subordinated Debenture, agree that for United States federal, state and local tax purposes it is intended that the Junior Subordinated Debentures
constitute indebtedness. 
 3.3 Events of Default. Sections 5.01 and 5.02 of the Indenture shall be amended and restated
in their entirety to read as follows: 
 “5.01 Events of Default. “Event of Default”, with
respect to the Junior Subordinated Debentures, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or 
  

 8 

 
involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 

(1) a default in the payment in full of any interest (including Additional Interest) on any Junior Subordinated Debenture
and such default continues for a period of 30 days after the conclusion of a five-year period during which interest payments on the Junior Subordinated Debentures have been deferred or otherwise not paid in full; 
 (2) a default in the payment of principal of any Junior Subordinated Debentures when due and payable at its Stated Maturity,
upon redemption or otherwise; 
 (3) the entry of a decree or order by a court having jurisdiction in the
premises granting relief in respect of the Company in an involuntary case under any Bankruptcy Law, adjudging the Company as bankrupt, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any Bankruptcy Law or any other applicable federal or state bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, custodian, assignee, trustee, sequestrator (or other similar official) of the
Company or of substantially all of its properties, or ordering the winding up or liquidation of its affairs under any such law, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or

 (4) the institution by the Company of proceedings to be adjudicated as bankrupt, or the consent by the Company
to the institution of proceedings against it under any Bankruptcy Law, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any Bankruptcy Law or any other applicable federal or state bankruptcy,
insolvency or other similar law, or the consent by the Company to the filing of any such petitioner to the appointment of a receiver, liquidator, custodian, assignee, trustee, sequestrator (or other similar official) of the Company, or of
substantially all of its respective properties, under any such law. 
 The company shall deliver to the Trustee,
within 30 days after the occurrence thereof, written notice in the form of an Officers’ Certificate of any event which is, or with the giving of notice or the lapse of time or both would become, an Event of Default, its status and what action
the Company is taking or proposes to take with respect thereto. 
 For the avoidance of doubt, and without
prejudice to any other remedies that may be available to the Trustee, the Holders of the Junior Subordinated Debentures or the holders of the Capital Securities under this Indenture, no breach by the Company of any other covenant or obligation under
this Indenture or the terms of the Junior Subordinated

  

 9 

 
Debentures shall be an Event of Default with respect to the Junior Subordinated Debentures.” 
 “5.02 Acceleration of Maturity; Rescission and Annulment. If an Event of Default referred to in clause (1) of Section 5.01 with respect to any Junior Subordinated Debentures
Outstanding occurs and is continuing, then, and in every such case, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Junior Subordinated Debentures may declare the principal amount of, and all accrued interest
(including Additional Interest) on, all of the Junior Subordinated Debentures to be immediately due and payable, by a notice in writing to the Company (and to the Trustee if given by Holders); provided that, if, upon an Event of Default, the
Trustee or the Holders of not less than 25% in principal amount of the Outstanding Junior Subordinated Debentures fail to declare the principal amount of, and all accrued interest (including Additional Interest) on, all the Junior Subordinated
Debentures to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount of the Capital Securities then outstanding shall have such right to do so by a notice in writing to the Company and the Trustee, and upon any
such declaration the same shall become immediately due and payable; and provided further that, if an Event of Default arising under subsection (3) or (4) of Section 5.01 occurs and is continuing, then, and in every such case,
the principal amount of, and accrued interest (including Additional Interest) on, all of the Junior Subordinated Debentures will automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately
due and payable.” 
 3.4 Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by
Holders of Capital Securities. Section 5.08 of the Indenture is amended by adding at the end thereof the following: 
 “In the case of the Junior Subordinated Debentures, any holder of the Capital Securities shall have the right, upon the occurrence of an Event of Default described in Section 5.01(1) or 5.01(2), to institute a suit directly
against the Company for enforcement of payment to such holder of principal of (premium, if any) and (subject to Section 3.07) interest (including any Additional Interest) on the Junior Subordinated Debentures having a principal amount equal to
the aggregate Liquidation Amount of such Capital Securities.” 
 3.5 Waiver of Past Defaults. Section 5.13 of the
Indenture shall be amended by adding the following paragraph at the end thereof: 
 “In the case of the Junior Subordinated
Debentures, if the holders of the Junior Subordinated Debentures fail to waive a default, the Holders of a majority in aggregate liquidation amount of the Capital Securities shall have the right to waive any default, which could have been waived by
the holders of the Junior Subordinated Debentures.” 
  

 10 

 3.5 Duties of Trustee; Notice of Default. With respect to the Junior Subordinated
Debentures, each reference to “Event of Default” in Section 6.01 and 6.05 of the Indenture shall be deemed to be a reference to a “Default”. 
 3.6 Right of Set-Off. Article V of the Indenture is amended by adding the following new Section 5.16 at the end thereof 
 “5.16 Right of Set-Off. With respect to the Junior Subordinated Debentures, notwithstanding anything to the
contrary in this Indenture, the Company shall have the right to set off any payment it is otherwise required to make thereunder in respect of any such Junior Subordinated Debenture to the extent the Company has theretofore made, or is concurrently
on the date of such payment making, a payment under the Guarantee Agreement or under Section 5.08 of the Indenture. 
 3.7
Modifications of Indenture. Notwithstanding anything to the contrary contained in Section 9.01 or 9.02 of the indenture: 
 (a) so long as any of the Capital Securities remains outstanding: (i) no amendment or modification to the Indenture shall be made that adversely affects the holders of the Capital Securities in any
material respect, and no termination of the Indenture shall occur, and no waiver of any Event of Default or waiver of compliance with any covenant under the Indenture applicable to the Junior Subordinated Debentures shall be effective, without the
prior consent of the holders of at least a majority of the aggregate Liquidation Amount of the Capital Securities then outstanding, unless and until the principal of and all accrued and unpaid interest (including Additional Interest) on the Junior
Subordinated Debentures shall have been paid in full and (ii) no amendment shall be made to Section 5.08 of the Indenture that would impair the rights of the holders of Capital Securities provided therein without the prior consent of the
holders of each Capital Security then outstanding, unless and until the principal of and all accrued and unpaid interest (including Additional Interest) on the Junior Subordinated Debentures shall have been paid in full; and 
 (b) the consent of the Holders of the Junior Subordinated Debentures shall not be required to effect any amendment of the
Indenture or the First Supplemental Indenture

  

 11 

 
required in order to make the Indenture or the First Supplemental Indenture consistent with the description of the Indenture, the First Supplemental Indenture or the form of the Junior
Subordinated Debentures contained in the Prospectus, dated March 8, 2010, as supplemented by the Prospectus Supplement, dated March 9, 2010, relating to the Capital Securities. 
 3.8 Additional Covenants. Article X of the Indenture is hereby amended by adding the following new Sections to the end thereof.

 “10.06 Covenant Not to Make Certain Payments. (a) (i) If an Event of Default has
occurred and is continuing; (ii) the Company has given notice of its election to defer interest payments but the Deferral Period has not yet commenced; or (iii) a Deferral Period is continuing or the Company is in default regarding its
payment of any obligation under the Guarantee Agreement, the Company shall not, and shall not permit any Subsidiary, to: (X) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment regarding
any of the Company’s Capital Stock, (Y) make any payment of principal of, or interest or premium, if any, on, or repay, purchase or redeem any Parity Securities or other debt securities of the Company that rank junior upon the liquidation
of the Company to the Junior Subordinated Debentures, or (Z) make any guarantee payments with respect to any Guarantee by the Company if such Guarantee ranks on parity with or junior to the Junior Subordinated Debentures.” 
 (b) Notwithstanding the foregoing, at any time, including during a Deferral Period, the Company may: (i) make dividends
or distributions payable in its Capital Stock or rights to acquire its Capital Stock and any cash payments in lieu of fractional shares issued in connection therewith; (ii) make payments under the Guarantee Agreement; (iii) make any
declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of rights, stock or other property under any such plan, or redeem or purchase any rights under any such plan; (iv) purchase,
redeem or acquire Capital Stock in connection with: (A) any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants; (B) a dividend reinvestment or
stock purchase plan; and (C) the issuance of Capital Stock, or securities convertible into Capital Stock, as consideration in an acquisition transaction that was entered into before the beginning of the Deferral Period; (v) exchange or
convert (A) any class or series of the Company’s Capital Stock for any other class or series of its Capital Stock or (B) any class or series of the Company’s indebtedness for any class or series of its Capital Stock; or
(vi) purchase fractional interests in shares of the Company’s Capital Stock pursuant to conversion or exchange provisions of such Capital Stock or the security being converted or exchanged.” 
 “10.07 Payment of Trust Costs and Expenses. Since the Trust has been formed solely to facilitate an investment in
the Junior Subordinated Debentures, the Company, in its capacity as the issuer of the Junior Subordinated Debentures, hereby covenants to pay all debts and obligations (other than distributions in respect of, or the redemption or repurchase price
for, the Capital Securities or the Common Securities) and all costs and expenses of the Trust (including, but not limited to, all costs and expenses relating to the 
  

 12 

 
organization of the Trust, the fees and expenses of the trustees thereof, all costs and expenses relating to the operation of the Trust and any costs, expenses or liabilities of the Trust that
are required by applicable law to be satisfied in connection with the termination of the Trust) and to pay any and all taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed on the Trust by the
United States, or any other taxing authority, so that the net amounts received and retained by the Trust and/or any trustee thereof after paying such expenses will be equal to the amounts the Trust and the trustee would have received had no such
costs or expenses been incurred by or imposed on the Trust. The obligations of the Company to pay all debts, obligations, costs and expenses of the Trust (other than distributions in respect of, or the redemption or repurchase price for, the Capital
Securities) shall constitute additional Indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture.” 
 “10.08 Additional Covenants Related to the Trust. The Company also covenants with each Holder of Junior Subordinated Debentures issued to the Trust (i) to maintain directly or indirectly
100% ownership of the Common Securities; provided, however, that any permitted successor of the Company hereunder may succeed to the Company’s ownership of such Common Securities, (ii) not to voluntarily terminate, wind-up or
liquidate the Trust, except (a) in connection with a distribution of the Junior Subordinated Debentures to the holders of the Trust Securities in liquidation of the Trust or (b) in connection with any mergers, consolidations or
amalgamations permitted by the Trust Agreement or other organizational documents of the Trust and (iii) to use its reasonable efforts, consistent with the terms and provisions of the Trust Agreement or other organizational documents, to cause
the Trust to remain classified as a grantor trust and not an association taxable as a corporation for United States federal income tax purposes.” 
 3.9 Defeasance Not Applicable. Article XIII shall not apply to the Junior Subordinated Debentures. 
 3.10 Notices. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by the Indenture to be made upon, given or furnished
or filed with the Company or the Trustee by any holder of Capital Securities shall be sufficient for every purpose under the Indenture (unless otherwise expressly provided) if in writing and mailed, first class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the first paragraph of the Indenture or at any other address previously furnished in writing by the Company, or to the Trustee at the Corporate Trust Office as set forth in the
Indenture or as the Trustee may designate from time to time by notice to the Holders and the Company. 
  

 13 

 ARTICLE IV 
 MISCELLANEOUS 
 4.1 If any provision of this First
Supplemental Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939 through operation of Section 318(c) thereof, such imposed duties shall control.

 4.2 The Article headings herein are for convenience only and shall not affect the construction hereof. 
 4.3 All covenants and agreements in this First Supplemental Indenture by the Company shall bind its successors and assigns, whether so
expressed or not. 
 4.4 In case any provision of this First Supplemental Indenture shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 
 4.5 Nothing in this First Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this First Supplemental Indenture. 
 4.6 THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 4.7 The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture. The recitals
and statements herein are deemed to be those of the Company and not of the Trustee. 
 4.8 To the extent expressly provided in
this First Supplemental Indenture, the Indenture shall inure to the benefit of the holders of the Capital Securities. 
 4.9 In
the event any conflict arises between the terms of the Indenture and the terms of this First Supplemental Indenture, the terms of this First Supplemental Indenture shall be controlling and supersede such conflicting terms of the Indenture. Unless
otherwise specifically modified or amended hereby, the terms of the Indenture shall remain in full force and effect with respect to the Junior Subordinated Debentures. 
 [Signature page follows.] 
  

 14 

 This instrument may be executed in any number of counterparts, each of which so executed
shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 
 IN
WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, all as of the day and year first above written. 
  

			
	SUSQUEHANNA BANCSHARES, INC.
		
	By:	 	 /s/ Drew K. Hostetter

	Name:	 	Drew K. Hostetter
	Title:	 	 Executive Vice President,
 Treasurer and Chief Financial Officer

  

			
	 THE BANK OF NEW YORK MELLON
 TRUST COMPANY, N.A.,
 as Trustee

		
	By:	 	 /s/ Raymond K. O’Neil

	Name:	 	Raymond K. O’Neil
	Title:	 	Senior Associate

 [Signature Page to
First Supplemental Indenture] 

 Annex A – Form of Junior Subordinated Debenture 
 SUSQUEHANNA BANCSHARES, INC. 
 11% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES, SERIES II 
 No. T-1

 $50,010,000 
 SUSQUEHANNA BANCSHARES, INC., a corporation organized and existing under the laws of the Commonwealth of Pennsylvania (hereinafter called the “Company,” which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to The Bank of New York Trust Company, N.A., as Property Trustee (the “Property Trustee”) of Susquehanna Capital II, a statutory trust formed under the laws of the State
of Delaware, or registered assigns, the principal sum of fifty million ten thousand dollars ($50,010,000) on March 23, 2040 or, if such day is not a Business Day, the following Business Day (the “Stated Maturity Date”).

 The Company further promises to pay interest on said principal sum from March 16, 2010, or from the most recent interest
payment date on which interest has been paid or duly provided for, semi-annually (subject to deferral as set forth herein) in arrears on March 23 and September 23 of each year (each, an “Interest Payment Date”), commencing
September 23, 2010. The interest rate for each Interest Period will be 11% per annum until the principal hereof shall have become due and payable, plus Additional Interest (as defined in the Indenture referred to on the reverse hereof) on
any overdue interest at the annual rate of 11%, compounded semi-annually, until the principal hereof is paid or duly provided for or made available for payment. “Interest Period” as used herein shall mean the period beginning on and
including March 16, 2010, and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date. The
amount of interest payable for any Interest Period shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Security is not a Business Day, then a payment of the
interest payable on such date will be made on the next succeeding day which is a Business Day (without any interest or other payment in respect of such delay). The term “interest” as used herein shall include semi-annual interest payments
and Additional Interest on semi-annual interest payments not paid on the applicable Interest Payment Date, as applicable. Notwithstanding anything to the contrary set forth above, if the Maturity falls on a day that is not a Business Day, the
payment of

  

 A-1 

 
principal and interest payable on such date will be made on the next succeeding day that is a Business Day. No interest or other payment will accumulate for the period from and after the
Maturity. A “Business Day” shall mean any day other than (i) a Saturday, Sunday or other day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or
(ii) a day on which the Corporate Trust Office of the Property Trustee or the Trustee under the Indenture is closed for business. 
 The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security is registered at the close of business on the
Regular Record Date next preceding the Interest Payment Date, which shall be (i) the Business Day next preceding such Interest Payment Date if (A) the Securities of this series are issued in the form of definitive Securities registered in
the name of the Property Trustee and the Capital Securities are issued in the form of global securities or (B) the Securities of this series are issued in the form of global notes (following distribution to holders of the Capital Securities) or
(ii) the fifteenth calendar day (whether or not a Business Day) preceding the Interest Payment Date if (A) the Securities of this series are not issued in definitive form registered in the name of the Property Trustee or (B) the
Capital Securities are no longer issued in the form of global securities; provided, however, that interest payable on any Securities of this series at Maturity shall be paid to the Person to whom principal is paid. At the end of any Deferral
Period, the Company shall pay all deferred interest on this Security (together with Additional Interest thereon) to the extent permitted by applicable law, to the Person in whose name this Security is registered at the close of business on the
Regular Record Date with respect to the Interest Payment Date at the end of such Deferral Period. Any interest installment not punctually paid or duly provided for when due shall 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 Security (or one or more Predecessor Securities) 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 mailed, first-class, postage prepaid, to each Holder of this Security 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 or automated quotation system on which the Securities of this series may be listed or traded, and upon such notice as may be required by such exchange or self-regulatory organization, all as more fully provided in said Indenture.

 So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time and from time to
time prior to Maturity, to defer the payment of interest on this Security for one or more consecutive Interest Periods that do not exceed five years; provided that no Deferral Period shall extend beyond the Stated Maturity Date or the earlier
repayment or redemption in full of this Security. At the end of any Deferral Period, the Company shall pay all deferred interest on this Security (together with Additional Interest thereon, if any, at the rate specified for this Security to the
extent permitted by applicable law), to the Persons in whose name the Securities are registered at the close of business on the Regular Record Date with respect to the Interest Payment Date at the end of such Deferral Period. Upon termination of any
Deferral Period and upon the payment of all deferred interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Deferral Period. The Company may elect to pay interest on any Interest Payment Date
during any Deferral Period. The Company shall give written notice of its election to begin or extend any Deferral Period (i) if the Property Trustee is not the sole holder of this Security, to the Holders of this Security and the Trustee at
least one Business Day prior to the next succeeding Interest Payment Date or (ii) if the Property Trustee is the sole Holder of this Security, to the Property Trustee and the Trustee at least one Business Day prior to the earlier of
(a) the next Distribution Date or (b) the date the

  

 A-2 

 
Administrative Trustees are required to give notice to any securities exchange or other applicable self-regulatory organization or to holders of the Capital Securities of the record date for such
Distribution Date or of such Distribution Date. 
 If an Event of Default has occurred and is continuing or the Company has
given notice of its election to defer interest payments but the Deferral Period has not yet commenced or a Deferral Period is continuing or the Company is in default regarding its payment of any obligation under the Guarantee Agreement, the Company
shall not, and shall not permit any Subsidiary, to: (A) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment regarding any of the Company’s Capital Stock, (B) make any payment of
principal of, or interest or premium, if any, on, or repay, purchase or redeem any Parity Securities or other debt securities of the Company that rank junior upon the liquidation of the Company to this Security, or (C) make any guarantee
payments with respect to any Guarantee by the Company if such Guarantee ranks on parity with or junior to this Security. Notwithstanding the foregoing, at any time, including during a Deferral Period, the Company may: (i) make dividends or
distributions payable in its Capital Stock or rights to acquire its Capital Stock and any cash payments in lieu of fractional shares issued in connection therewith; (ii) make payments under the Guarantee Agreement; (iii) make any
declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or redeem or purchase any rights under any such plan; (iv) purchase Capital Stock related to (1) the issuance of Capital Stock or rights
under any benefit plans for directors, officers, employees or consultants of the Company; (2) the issuance of Capital Stock or rights under a dividend reinvestment or stock purchase plan; (3) the issuance of Capital Stock, or securities
convertible into Capital Stock, as consideration in an acquisition transaction that was entered into before the beginning of the Deferral Period; (v) exchange or convert (1) any class or series of the Company’s Capital Stock for any
other class or series of its Capital Stock or (2) any class or series of the Company’s indebtedness for any class or series of its Capital Stock; or (vi) purchase fractional interests in shares of the Company’s Capital Stock
pursuant to conversion or exchange provisions of such Capital Stock or the security being converted or exchanged. 
 Payment of
the principal of and interest on this Security will be made at the principal corporate trust office or agency of the Trustee maintained for that purpose in New York, New York, 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 mailed to the address of the Person entitled thereto as such address shall appear in
the Security Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated in writing at least 15 days before the relevant Interest Payment Date by the Person entitled thereto as
specified in the Securities Register; provided further, that for so long as this Security is held by the Property Trustee, payments of principal of and interest on the Security shall be made by wire transfer in immediately available funds to such
account at the Property Trustee as the Property Trustee may designate in writing to the Securities Registrar at least one Business Day before the date such payment is due. 
 The Indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness of the Company, and this Security is issued subject to the provisions of the

  

 A-3 

 
Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in Article XV of the Indenture and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his
acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such
Holder upon said provisions. 
 Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. 
 Unless the
certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

  

 A-4 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal. 
  

			
	SUSQUEHANNA BANCSHARES, INC.
		
	By:	 	  

	Name:	 	
	Title:	 	

  

	
	Attest:
	
	  

 Dated: March
    , 2010 
 This is one of the Securities referred to in the mentioned Indenture. 
  

			
	 THE BANK OF NEW YORK
 MELLON TRUST COMPANY, N.A.,
     as Trustee

		
	By:	 	  

	Name:	 	
	Title:	 	

 Dated: 
 [Signature Page to Form of Junior Subordinated Debenture] 

 REVERSE OF SECURITY 
 This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and
to be issued in one or more series under an Indenture, dated as of March 8, 2010, as supplemented by the first supplemental indenture thereto, dated as of March 16, 2010 (herein called the “Indenture”, and such first
supplemental indenture dated as of March 16, 2010, herein called the “First Supplemental Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee (herein called the
“Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and First Supplemental Indenture thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof,
which series shall be in an initial aggregate principal amount of $50,010,000, which principal amount may be increased from time to time by the issuance of Add On Securities. 
 All terms used in this Security that are defined in the First Supplemental Indenture or in the Indenture shall have the meanings assigned to
them in the First Supplemental Indenture or the Indenture, as the case may be. 
 The Company may, at its option, and subject to
the terms and conditions of the First Supplemental Indenture and Article XI of the Indenture, redeem this Security, subject to any required approval of the Federal Reserve (if the redemption occurs prior to the Stated Maturity Date) and the terms
and conditions of Article XI of the Indenture: 
 (1) in whole or in part, at any time on or after March 23, 2015 at a
redemption price equal to 100% of its principal amount plus accrued and unpaid interest to the Redemption Date; and 
 (2) in
whole but not in part, any time at a redemption price equal to 100% of its principal amount plus accrued and unpaid interest to the Redemption Date, within 90 days after the occurrence of a Capital Treatment Event or a Tax Event. 
 This Security shall be subject to partial redemption only in the amount of $1,000, or integral multiples thereof. In the event of redemption
of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. 
 The Indenture contains provisions for satisfaction and discharge of the entire indebtedness of this Security upon compliance by the Company
with certain conditions set forth in the Indenture. The provisions of Article XIII of the Indenture shall not apply to this Security. 
 So long as any of the Capital Securities remains outstanding, (i) no amendment or modification to the Indenture shall be made that adversely affects the holders of the Capital Securities in any material respect, and no termination of
the Indenture shall occur, and no waiver of any Event of Default or waiver of compliance with any covenant under the Indenture applicable to this Security shall be effective, without the prior consent of the holders of at least a majority of the
aggregate Liquidation Amount of the Capital Securities then outstanding, unless

  

 A-6 

 
and until the principal of and all accrued and unpaid interest (including Additional Interest) on this Security shall have been paid in full and (ii) no amendment shall be made to
Section 5.08 of the Indenture that would impair the rights of the holders of Capital Securities provided therein without the prior consent of the holders of each Capital Security then outstanding, unless and until the principal of and all
accrued and unpaid interest (including Additional Interest) on this Security shall have been paid in full. Any such consent or waiver by without the consent of the holders of at least a majority of the aggregate Liquidation Amount of the Capital
Securities then outstanding and the registered Holders of this Security (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. 
 As provided in and subject to the provisions of the Indenture, if an Event of Default referred to in clause (1) of Section 5.01 of the Indenture occurs and is continuing, then, and in every such
case, the Trustee or the Holders of not less than 25% in aggregate principal amount of Securities of this series may declare the principal amount of, and all accrued interest (including Additional Interest) on, all Securities of this series to be
immediately due and payable, by a notice in writing to the Company (and to the Trustee if given by Holders); provided that, if, upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding
Securities fail to declare the principal amount of, and all accrued interest (including Additional Interest) on, all Securities of this series to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount of the
Capital Securities then outstanding shall have the right to do so by a notice in writing to the Company and the Trustee, and upon any such declaration the same shall become immediately due and payable; and provided further that, if an Event of
Default arising under subsection (3) or (4) of Section 5.01 of the Indenture occurs and is continuing, then, and in every such case, the principal amount of, and accrued interest (including Additional Interest) on, all Securities of
this series will automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable. 
 If an Event of Default specified in Section 5.01(3) or 5.01(4) of the Indenture with respect to Securities of this series at the time Outstanding occurs, the principal amount of all the Securities of
this series and the accrued interest (including any Additional Interest) on such Securities shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable. Payment of
principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XV notwithstanding that such amount shall become immediately due and payable as herein provided. In case of any
other Event of Default, there shall be no right to declare the principal amount and the accrued interest (including Additional Interest) of the Securities of this series to be due and payable immediately. 
 No reference herein to the Indenture or the First Supplemental Indenture and no provision of this Security or of the Indenture or the First
Supplemental Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, places and rate, and in the coin or currency,
herein prescribed. 
  

 A-7 

 As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained under Section 5.02 of the Indenture duly endorsed by, or
accompanied by written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series,
of authorized denominations and for the same aggregate principal amount, shall be issued to the designated transferee or transferees. No service charge shall 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. 
 Prior to due
presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this
Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 
 The
Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series
are exchangeable for like aggregate principal amount of Securities of such series of a different authorized denomination, as requested by the Holder surrendering the same. 
 The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires beneficial
interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness. 
 THE INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 
  

 A-8

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