PTO time is calculated as stated in the Paid Time Off (PTO) Matrix in the following area of this policy.

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1 HR-1-14 Paid Time Away From Work (PTO) As of January 1, 2012, all employees, including those previously part of the Vacation/Sick/Personal Day option will be transferred to the Paid Time Off (PTO) option. Susquehanna Bancshares, Inc. recognizes the need for time off with pay from work that may be due to illness, vacation, personal time or other needs. Please note that there are separate policies for Bereavement, Jury Duty, Reserve and National Guard Duty, Holidays, Family and Medical Leave Act (FMLA) Policy, non-fmla Policy, Time Off Without Pay Policy, Absenteeism Policy as well as additional policies which may interrelate to certain areas of this policy. The Human Resources Department is responsible for policy interpretation. Any exceptions to this policy must be reviewed and approved by the Director of Human Resources. Nothing in this policy creates an employment contract, express or implied. All employees are employed at-will and can be terminated at any time without the organization having to demonstrate just cause or good reasons for the termination. I. Eligibility The following employees are eligible for Paid Time Off from work: 1. Regular Full-time Employees who have 60 or more bi-weekly standard hours. 2. Regular Part-time Employees who have less than 60 bi-weekly standard hours. Those employees classified as interns, summer or seasonal help or on-call are ineligible for PTO and will not be given back credit for ineligible service. Those classified as temporary(susq internal), (such as a temporary employee who moves from temporary to regular status via continued employment) may be given back credit, for service during the temporary status, dependent upon the terms and conditions of their offer of employment as approved by both their Manager and Human Resources. Eligible employees who are hired prior to December 1, in their year of hire, are PTO eligible under this policy. Due to scheduling, new part-time employees hired very close to the end of the year may find it difficult to schedule time off and time may need to be forfeited, if scheduling does not permit use of time off. New full-time employees, who are not able to schedule all time, will automatically carry over a maximum of five (5) unused PTO days (based on standard bi-weekly hours) to the following year. Employees hired on or after December 1, will not receive Paid Time Off until the following January. PTO time is calculated as stated in the Paid Time Off (PTO) Matrix in the following area of this policy. If employed on or before the 15 th of a month, the employee will receive credit for that month of employment in the accrual process of earning PTO. Employees may utilize their time off with pay within their first 90 days of employment provided they have received supervisory approval. It is highly recommended that employees communicate requests before hire, which may potentially increase the likelihood of approval with advance communication. Employees who terminate employment before reaching 90 days will be considered ineligible for PTO and will need to pay back any time used. Rev. 6/10/2015 Page 1

2 PAID TIME OFF (PTO) Paid Time Off (PTO) is designed to provide employees with the flexibility to use their time off for their personal needs. PTO can be used for incidental sick time (personal and family), vacation and various types of personal time. III. PTO Accrual Matrix PTO Provided by Length of Service and Status/Position Held Length of Service Year of Hire Less than 5 years Greater than 5 years but less than 15 years Greater than 15 years but less than 20 years Greater than 20 years Non-Exempt Employees 17 days 22 days 27 days 32 days Exempt Employees 22 days 27 days 30 days 32 days Pro-rated based on hire date SBI Parent Senior Management and Affiliate Executive Management SBI Executive/Corporate Management and Affiliate President 27 days 27 days 32 days 32 days 32 days 32 days 32 days 32 days Matrix amounts for PTO were calculated based upon weeks of vacation graduated per service and status level, plus 5 days of sick time, and 2 personal days. This matrix is for regular employees and provides accrual for number of days only. Actual accrual hours are determined by last hire date, current bi-weekly standard hours, and position (FLSA status). New employees hired on or before the 15 th of the month will be given credit for that month in determining the pro-rata/accrual for their first calendar year. Note: Exempt employees are to report time taken in full or half days. Non-exempt employees can take time in any increment. Effective January 1, If you incur a break in service and you are rehired within five years of when you left, your prior employment service will count towards your seniority. If you are rehired after you incur a break in service of five consecutive years or more, your seniority starts over. IV. Status Changes and Standard Hours Changes If bi-weekly standard hours or status changes, in the year of the change the PTO grant will be re-calculated based upon the number of months (time earned) in the old position and the number of months (time earned) in the new position. When the change occurs on or before the 15 th of the month, the employee will be given credit for that month in the new position for accrual calculation. For an exact calculation, please contact the Payroll Department. If an employee s standard hours or status changes in December, no change will be made until the following year. Upon changing from full-time to part-time status accumulated Extended Sick Leave (ESLB) time will be forfeited. Rev. 6/10/2015 Page 2

3 V. Scheduling PTO shall be taken at a time mutually agreed upon by the employee and the manager/supervisor and is subject to the operating requirements of the department or office. If necessary, employee seniority will be used as a tiebreaker for requests submitted by April 1st. All employees, regardless of leave plan, are required to use at least five (5) days of leave consecutively during a calendar year. It is highly encouraged that employees attempt to take a two week leave, if possible. It is understood that rare occasions, such as emergencies, may require unscheduled time off due to one s own illness or a family member s illness. Each unscheduled absence from work due to usage of PTO or any other time off as defined by the Absenteeism Policy (HR 4-1) will be regarded as an absence occurrence. VI. Termination of Employment In the event of termination, all earned PTO balances (minus time already taken) will be paid to the employee. Refer below for calculation of PTO at Termination. If termination occurs prior to July 1 st, all unused PTO Carryover and Worked Holiday will be paid. (In the event that an employee is terminated for reasons that disqualify him/her from receiving earned PTO, such as termination for a regulatory-related violation where the regulatory agency deems payout is not permitted, the employee will not be paid remaining earned time.) Unused ESLB, Floating Holiday, and other classifications of non-work hours (except noted above) are not payable at termination. Employees will be given full credit for the final month of employment, if their termination date is after the 15 th of the month. The calculation method is as follows: ((Allowed PTO Hours for Term Year/12 Months) x # of Completed Months) PTO time already taken in the year = Accrued PTO Hours. The result of the calculation is the number of PTO hours (rounded up to the nearest ¼ hour) accrued during the year of termination. If the employee has taken more hours than accrued through the calculation, then repayment is required through payroll deduction or deduction from the employee's direct deposit account. Employees should not request time off during their final two (2) weeks of employment. Exception for Retirement - Usage of PTO Time at Termination - (Retirees, as defined by policies HR1-11 or HR1-12) If retiring during the first quarter of the year (January, February, or March), the retiree would receive ¼ of their annual PTO grant minus time taken. If retiring during the second quarter of the year (April, May, or June), the retiree would receive ½ of their annual PTO grant minus time taken. If retiring July 1, or thereafter, the retiree would receive their entire PTO grant minus time taken. VII. Carry Over of PTO/Conversion to Extended Sick Leave Bank (ESLB) for Full-time Employees Please discuss, with your manager / supervisor, any intention to carry over time. Rev. 6/10/2015 Page 3

4 PTO A maximum of five (5) unused PTO days (based on standard bi-weekly hours) will be carried over to the following year. All other unused PTO will be added to your ESLB to a maximum of 1,040 hours. Carry over PTO time must be used by December 31st. Part-time Employees PTO balances remaining at the end of the year will automatically be forfeited by the part-time employee. Carry over will not be allowed. Part-time employees are encouraged to plan ahead and take their annual PTO grant. VIII. Holidays during PTO When a company-observed holiday falls during a scheduled PTO period, the employee will receive Holiday pay for the holiday and will not have to use PTO time. However, an employee has to be regularly scheduled to work on the holiday in order to receive holiday pay in place of PTO pay. IX. PTO and the Calculation of Overtime PTO hours do not count toward total time worked for overtime calculation. X. Extended Sick Leave Extended sick leave is defined as a period of time greater than three (3) consecutively scheduled work days. Extended sick leave may be due to expected or unexpected medical conditions of the employee. Employees may use their Extended Sick Leave Bank (ESLB) of hours as outlined below for any illness exceeding three (3) days. After exhausting all Extended Sick Leave, employees are required to utilize, at minimum, ½ of their earned but not taken PTO balance prior to taking unpaid time. Both exempt and non-exempt employees will be unpaid after exhausting available PTO or ESLB. Extended Sick Leave will most often involve the Family/Medical Leave Act Policy (HR-5-1) or the Leave of Absence (non- FMLA) Policy (HR-1-16). Please refer to these policies when requesting Extended Sick Leave. If an employee experiences an approved FMLA qualifying event other than personal illness, employee may use an additional 50% of their ESLB not to exceed 12 weeks total in any one calendar year. It is required that 3 PTO days are taken per qualifying event as well as having used at least 1/2 of the earned but not taken PTO. (See Family/Medical Leave Act Policy HR5-1). Employees may not exceed their available balances. Under the Maryland Flexible Leave Act, as applicable, Maryland employees may contact the Susquehanna Leave Coordinator to discuss options in using earned time. Usage at Termination Unused accumulated ESLB is not payable at the time of employment termination. Part-time Employees are not eligible for ESLB XI. Non-serious Family Sick Occurrences For non-serious illness (not qualifying under FMLA), employees must use PTO time. These occurrences are treated as an occurrence under the Absenteeism Policy. Rev. 6/10/2015 Page 4

5 XII. ESLB Time -- Responsibilities for Supervisors and Employees Supervisor The supervisor or manager of an employee is responsible to contact the Benefits Department when an employee s absence is expected to continue for more than two (2) days. The supervisor or manager is also responsible to inform the employee of the need to maintain daily communications with him/her during any period of absence. If the absence is expected to become long term, then communications can become weekly as with changes in status of the absence, i.e., return to work, changes in length of leave, or permanent disability, etc. The supervisor or manager should communicate with the Benefits Department regarding all changes in status of an employee's leave. Employee Responsibilities The employee must personally notify their supervisor of the existence of a sickness and the expected duration of the absence, before or immediately after the start of the normal work day. Also, the employee must directly contact the supervisor on a daily basis as long as the employee is unable to work. In the case of extended illness of three or more days, the employee is expected to contact his/her supervisor weekly to keep him/her informed of the status of the period of disability. The employee is also responsible to contact appropriate insurance providers and the Benefits Department. XIII. Optional Short Term Disability Insurance In order to provide additional protection to employees for loss of income when Extended Sick Leave Banks have been exhausted, Susquehanna offers optional Short Term Disability Insurance, subject to provider approval, upon hire and during annual open enrollment. This insurance is paid 100% by the employee and provides 60% of weekly gross income, subject to a maximum benefit of $1,300 weekly. Benefits begin on the 8th day of disability, or the exhaustion of all ESLB time and are payable for the maximum benefit period of 25 weeks. Employees should still apply for the STD benefit when a disability begins even if they have accrued large ESLB bank because minimum payments may still be due and these are calculated from the beginning of the disability not after the ESLB bank is exhausted. For greater detail, see the Short Term Disability Insurance Policy (HR 9-6). Residents of New Jersey If you live in New Jersey there is a voluntary Short Term Disability Plan set up for your state which can be elected in coordination with the New Jersey State Disability plan. There is also NJ Paid Family Leave Insurance (NJFLI), for which eligible NJ residents may qualify, to bond with a child or to provide care to a family member with a serious health condition, subject to eligibility and limitations provided in that plan. More details may be accessed on WebOne and in HR5-2 New Jersey Family Medical Leave Policy. Rev. 6/10/2015 Page 5