Document:

Exhibit 10.2

 Exhibit 10.2 

Option No.                     

SPERO THERAPEUTICS, INC. 

Stock Option Grant Notice 

Stock Option Grant under the Company’s 

2017 Stock Incentive Plan (As Amended on November 6, 2017) 
  

					
	1.	  	Name and Address of Participant:	  	      

		  		  	      

		  		  	      

			
	2.	  	Date of Option Grant:	  	      

			
	3.	  	Type of Grant:	  	      

			
	4.	  	Maximum Number of Shares for which this Option is exercisable:	  	      

			
	5.	  	Exercise (purchase) price per share:	  	      

			
	6.	  	Option Expiration Date:	  	      

			
	7.	  	Vesting Start Date:	  	      

		
	8.	  	Vesting Schedule: This Option shall become exercisable (and the Shares issued upon exercise shall be vested) as follows provided the Participant is an Employee, director or Consultant of the Company or of an Affiliate on
the applicable vesting date:
		
		  	[25% of the Shares shall be vested on the first anniversary of the Vesting Start Date, and thereafter the remainder of the Shares not yet vested shall vest in equal monthly installments for 36 months beginning on the
first anniversary of the Vesting Start Date.]

 The foregoing rights are cumulative and are subject to the other terms and conditions of this Agreement. 

The Company and the Participant acknowledge receipt of this Stock Option Grant Notice and agree to the terms of the Stock Option Agreement
attached hereto and incorporated by reference herein and the Company’s 2017 Stock Incentive Plan, as amended. 
  

					
	SPERO THERAPEUTICS, INC.
		
	By:	 	 
		 	 Name:
	 	   

		 	 Title:
	 	   

	   

	Participant

 SPERO THERAPEUTICS, INC. 

STOCK OPTION AGREEMENT—INCORPORATED TERMS AND CONDITIONS 

AGREEMENT made as of the date of grant set forth in the Stock Option Grant Notice by and between Spero Therapeutics, Inc. (the
“Company”), a Delaware corporation, and the individual whose name appears on the Stock Option Grant Notice (the “Participant”). 

WHEREAS, the Company desires to grant to the Participant an Option to purchase shares of its common stock, $0.001 par value per share (the
“Shares”), under and for the purposes set forth in the Company’s 2017 Stock Incentive Plan, as amended (the “Plan”); 

WHEREAS, the Company and the Participant understand and agree that any terms used and not defined herein have the same meanings as in the
Plan; and 
 WHEREAS, the Company and the Participant each intend that the Option granted herein shall be of the type set forth in the Stock
Option Grant Notice. 
 NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable
consideration, the parties hereto agree as follows: 
  

	 	1.	GRANT OF OPTION. 

 The Company hereby grants to the Participant the right and option to
purchase all or any part of an aggregate of the number of Shares set forth in the Stock Option Grant Notice, on the terms and conditions and subject to all the limitations set forth herein, under United States securities and tax laws, and in the
Plan, which is incorporated herein by reference. The Participant acknowledges receipt of a copy of the Plan. 
  

	 	2.	EXERCISE PRICE. 

 The exercise price of the Shares covered by the Option shall be the
amount per Share set forth in the Stock Option Grant Notice, subject to adjustment, as provided in the Plan, in the event of a stock split, reverse stock split or other events affecting the holders of Shares after the date hereof (the “Exercise
Price”). Payment shall be made in accordance with Paragraph 9 of the Plan. 
  

	 	3.	EXERCISABILITY OF OPTION. 

 Subject to the terms and conditions set forth in this
Agreement and the Plan, the Option granted hereby shall become vested and exercisable as set forth in the Stock Option Grant Notice and is subject to the other terms and conditions of this Agreement and the Plan. 

	 	4.	TERM OF OPTION. 

 This Option shall terminate on the Option Expiration Date as specified
in the Stock Option Grant Notice and, if this Option is designated in the Stock Option Grant Notice as an ISO and the Participant owns as of the date hereof more than 10% of the total combined voting power of all classes of capital stock of the
Company or an Affiliate, such date may not be more than five years from the date of this Agreement, but shall be subject to earlier termination as provided herein or in the Plan. 

If the Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate for any reason other than the death or
Disability of the Participant, or termination of the Participant for Cause (the “Termination Date”), the Option to the extent then vested and exercisable pursuant to Section 3 hereof as of the Termination Date, and not previously
terminated in accordance with this Agreement, may be exercised within three months after the Termination Date, or on or prior to the Option Expiration Date as specified in the Stock Option Grant Notice, whichever is earlier, but may not be exercised
thereafter except as set forth below. In such event, the unvested portion of the Option shall not be exercisable and shall expire and be cancelled on the Termination Date. 

If this Option is designated in the Stock Option Grant Notice as an ISO and the Participant ceases to be an Employee of the Company or of an
Affiliate but continues after termination of employment to provide service to the Company or an Affiliate as a director or Consultant, this Option shall continue to vest in accordance with Section 3 above as if this Option had not terminated
until the Participant is no longer providing services to the Company. In such case, this Option shall automatically convert and be deemed a Non-Qualified Option as of the date that is three months from
termination of the Participant’s employment and this Option shall continue on the same terms and conditions set forth herein until such Participant is no longer providing service to the Company or an Affiliate. 

Notwithstanding the foregoing, in the event of the Participant’s Disability or death within three months after the Termination Date, the
Participant or the Participant’s Survivors may exercise the Option within one year after the Termination Date, but in no event after the Option Expiration Date as specified in the Stock Option Grant Notice. 

In the event the Participant’s service is terminated by the Company or an Affiliate for Cause, the Participant’s right to exercise
any unexercised portion of this Option even if vested shall cease immediately as of the time the Participant is notified his or her service is terminated for Cause, and this Option shall thereupon terminate. Notwithstanding anything herein to the
contrary, if subsequent to the Participant’s termination, but prior to the exercise of the Option, the Administrator determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which
would constitute Cause, then the Participant shall immediately cease to have any right to exercise the Option and this Option shall thereupon terminate. 

  
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 In the event of the Disability of the Participant, as determined in accordance with the Plan, the
Option shall be exercisable within one year after the Participant’s termination of service due to Disability or, if earlier, on or prior to the Option Expiration Date as specified in the Stock Option Grant Notice. In such event, the Option
shall be exercisable: 
  

	 	(a)	to the extent that the Option has become exercisable but has not been exercised as of the date of the Participant’s termination of service due to Disability; and 

 

	 	(b)	in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of the Participant’s termination of service due to Disability of any additional vesting rights
that would have accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of the Participant’s termination of service
due to Disability. 

 In the event of the death of the Participant while an Employee, director or Consultant of the Company or
of an Affiliate, the Option shall be exercisable by the Participant’s Survivors within one year after the date of death of the Participant or, if earlier, on or prior to the Option Expiration Date as specified in the Stock Option Grant Notice.
In such event, the Option shall be exercisable: 
  

	 	(x)	to the extent that the Option has become exercisable but has not been exercised as of the date of death; and 

  

	 	(y)	in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the
Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death. 

  

	 	5.	METHOD OF EXERCISING OPTION. 

 Subject to the terms and conditions of this Agreement,
the Option may be exercised by written notice to the Company or its designee, in substantially the form of Exhibit A attached hereto (or in such other form acceptable to the Company, which may include electronic notice).
Such notice shall state the number of Shares with respect to which the Option is being exercised and shall be signed by the person exercising the Option (which signature may be provided electronically in a form acceptable to the Company). Payment of
the Exercise Price for such Shares shall be made in accordance with Paragraph 9 of the Plan. The Company shall deliver such Shares as soon as practicable after the notice shall be received, provided, however, that the Company may delay issuance of
such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or “blue sky” laws). The Shares as to which the Option
shall have been so exercised shall be registered in the Company’s share register in the name of the person so exercising the Option (or, if the Option shall be exercised by the Participant and if the Participant shall so request in the notice
exercising the Option, shall be registered in the 

  
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Company’s share register in the name of the Participant and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the
person exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof, by any person other than the Participant, such notice shall be accompanied by appropriate proof of the right of such person to exercise the
Option. All Shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable. 
  

	 	6.	PARTIAL EXERCISE. 

 Exercise of this Option to the extent above stated may be made in
part at any time and from time to time within the above limits, except that no fractional share shall be issued pursuant to this Option. 
  

	 	7.	NON-ASSIGNABILITY. 

 The Option shall not
be transferable by the Participant otherwise than by will or by the laws of descent and distribution. If this Option is a Non-Qualified Option then it may also be transferred (i) pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules thereunder or (ii) for no consideration to or for the benefit of the Participant’s Immediate Family (including, without
limitation, to a trust for the benefit of the Participant’s Immediate Family or to a partnership or limited liability company for one or more members of the Participant’s Immediate Family), and the transferee shall remain subject to all
the terms and conditions applicable to the Option prior to such transfer and each such transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer. The term “Immediate Family” shall mean the
Participant’s spouse, former spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers, nieces, nephews and grandchildren (and, for this purpose, shall also include the Participant). Except as provided above in
this paragraph, the Option shall be exercisable, during the Participant’s lifetime, only by the Participant (or, in the event of legal incapacity or incompetency, by the Participant’s guardian or representative) and shall not be assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Option or of
any rights granted hereunder contrary to the provisions of this Section 7, or the levy of any attachment or similar process upon the Option shall be null and void. 
  

	 	8.	NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. 

 The Participant shall have no rights as a
stockholder with respect to Shares subject to this Agreement until registration of the Shares in the Company’s share register in the name of the Participant. Except as is expressly provided in the Plan with respect to certain changes in the
capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration. 

  
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	 	9.	ADJUSTMENTS. 

 The Plan contains provisions covering the treatment of Options in a
number of contingencies such as stock splits and mergers. Provisions in the Plan for adjustment with respect to stock subject to Options and the related provisions with respect to successors to the business of the Company are hereby made applicable
hereunder and are incorporated herein by reference. 
  

	 	10.	TAXES. 

 The Participant acknowledges and agrees that (i) any income or other taxes
due from the Participant with respect to this Option or the Shares issuable upon exercise of this Option shall be the Participant’s responsibility; (ii) the Participant was free to use professional advisors of his or her choice in
connection with this Agreement, has received advice from his or her professional advisors in connection with this Agreement, understands its meaning and import, and is entering into this Agreement freely and without coercion or duress;
(iii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or
other effects or implications of the Option, the Shares or other matters contemplated by this Agreement; and (iv) neither the Administrator, the Company, its Affiliates, nor any of its officers or directors, shall be held liable for any
applicable costs, taxes, or penalties associated with the Option if, in fact, the Internal Revenue Service were to determine that the Option constitutes deferred compensation under Section 409A of the Code. 

If this Option is designated in the Stock Option Grant Notice as a Non-Qualified Option or if the
Option is an ISO and is converted into a Non-Qualified Option and such Non-Qualified Option is exercised, the Participant agrees that the Company may withhold from the
Participant’s remuneration, if any, the minimum statutory amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in such person’s gross income. At the Company’s
discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Participant on exercise of the Option. The Participant further agrees that, if the Company does
not withhold an amount from the Participant’s remuneration sufficient to satisfy the Company’s income tax withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld. 

 

	 	11.	PURCHASE FOR INVESTMENT. 

 Unless the offering and sale of the Shares to be issued upon
the particular exercise of the Option shall have been effectively registered under the Securities Act, the Company shall be under no obligation to issue the Shares covered by such exercise unless the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the Securities Act and until the following conditions have been fulfilled: 
  

	 	(a)	The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to,
or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon any certificate(s) evidencing the Shares
issued pursuant to such exercise: 

 “The shares represented by this certificate have been taken for investment and they
may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company
shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws;” and 

  
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 (b) If the Company so requires, the Company shall have received an opinion of its counsel that
the Shares may be issued upon such particular exercise in compliance with the Securities Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any
action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or “blue sky” laws). 
  

	 	12.	RESTRICTIONS ON TRANSFER OF SHARES. 

 12.1 The Participant agrees that in the event the
Company proposes to offer for sale to the public any of its equity securities and such Participant is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or
other transfer of Shares, then it will promptly sign such agreement and will not transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by
him or her during such period as is determined by the Company and the underwriters, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with FINRA rules or similar rules
thereto promulgated by another regulatory authority (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such
underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Participant has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the
Company subject to the foregoing restrictions until the end of the Lock-Up Period. 
 12.2 The
Participant acknowledges and agrees that neither the Company, its stockholders nor its directors and officers, has any duty or obligation to disclose to the Participant any material information regarding the business of the Company or affecting the
value of the Shares before, at the time of, or following a termination of the service of the Participant by the Company, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or
to be acquired by or merged with or into another firm or entity. 

  
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	 	13.	NO OBLIGATION TO MAINTAIN RELATIONSHIP. 

 The Participant acknowledges that:
(i) the Company is not by the Plan or this Option Agreement obligated to continue the Participant as an employee, director or Consultant of the Company or an Affiliate; (ii) the Plan is discretionary in nature and may be suspended or
terminated by the Company at any time; (iii) the grant of the Option is a one-time benefit which does not create any contractual or other right to receive future grants of options, or benefits in lieu of
options; (iv) all determinations with respect to any such future grants, including, but not limited to, the times when options shall be granted, the number of shares subject to each option, the option price, and the time or times when each
option shall be exercisable, will be at the sole discretion of the Company; (v) the Participant’s participation in the Plan is voluntary; (vi) the value of the Option is an extraordinary item of compensation which is outside the scope
of the Participant’s employment or consulting contract, if any; and (vii) the Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments. 
  

	 	14.	IF OPTION IS INTENDED TO BE AN ISO. 

 If this Option is designated in the Stock Option
Grant Notice as an ISO so that the Participant (or the Participant’s Survivors) may qualify for the favorable tax treatment provided to holders of Options that meet the standards of Section 422 of the Code then any provision of this
Agreement or the Plan which conflicts with the Code so that this Option would not be deemed an ISO is null and void and any ambiguities shall be resolved so that the Option qualifies as an ISO. The Participant should consult with the
Participant’s own tax advisors regarding the tax effects of the Option and the requirements necessary to obtain favorable tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements. 

Notwithstanding the foregoing, to the extent that the Option is designated in the Stock Option Grant Notice as an ISO and is not deemed to be
an ISO pursuant to Section 422(d) of the Code because the aggregate Fair Market Value (determined as of the Date of Option Grant) of any of the Shares with respect to which this ISO is granted becomes exercisable for the first time during any
calendar year in excess of $100,000, the portion of the Option representing such excess value shall be treated as a Non-Qualified Option and the Participant shall be deemed to have taxable income measured by
the difference between the then Fair Market Value of the Shares received upon exercise and the price paid for such Shares pursuant to this Agreement. 

Neither the Company nor any Affiliate shall have any liability to the Participant, or any other party, if the Option (or any part thereof)
that is intended to be an ISO is not an ISO or for any action taken by the Administrator, including without limitation the conversion of an ISO to a Non-Qualified Option. 

  
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	 	15.	NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION OF AN ISO. 

 If this Option is designated
in the Stock Option Grant Notice as an ISO then the Participant agrees to notify the Company in writing immediately after the Participant makes a Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of the ISO. A
Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale) of such Shares before the later of (a) two years after the date the Participant was granted the ISO or (b) one year
after the date the Participant acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Participant has died before the Shares are sold, these holding period requirements do not apply and no
Disqualifying Disposition can occur thereafter. 
  

	 	16.	NOTICES. 

 Any notices required or permitted by the terms of this Agreement or the Plan
shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows: 
 If to the Company:

 Spero Therapeutics, Inc. 

675 Massachusetts Avenue 

Cambridge, MA 02139 
 Attention:
Chief Financial Officer 
 If to the Participant, at the address set forth on the Stock Option Grant Notice 

or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail. 
  

	 	17.	GOVERNING LAW. 

 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to its internal principles governing the conflict of law. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in
the Commonwealth of Massachusetts and agree that such litigation shall be conducted in the state courts of Suffolk County, Massachusetts or the federal courts of the United States for the District of Massachusetts. 

 

	 	18.	BENEFIT OF AGREEMENT. 

 Subject to the provisions of the Plan and the other provisions
hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto. 

  
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	 	19.	ENTIRE AGREEMENT. 

 This Agreement, together with the Plan, embodies the entire
agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof (with the exception of acceleration of
vesting provisions contained in any other agreement with the Company). No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict, the express
terms and provisions of this Agreement. Notwithstanding the foregoing in all events, this Agreement shall be subject to and governed by the Plan. 
  

	 	20.	MODIFICATIONS AND AMENDMENTS. 

 The terms and provisions of this Agreement may be
modified or amended as provided in the Plan. 
  

	 	21.	WAIVERS AND CONSENTS. 

 Except as provided in the Plan, the terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a
waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent. 
  

	 	22.	DATA PRIVACY. 

 By entering into this Agreement, the Participant: (i) authorizes
the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such
Affiliate shall request in order to facilitate the grant of options and the administration of the Plan; and (ii) authorizes the Company and each Affiliate to store and transmit such information in electronic form for the purposes set forth in
this Agreement. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
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 Exhibit A 

NOTICE OF EXERCISE OF STOCK OPTION 

[Form for Shares registered in the United States] 
  

	To:	Spero Therapeutics, Inc. 

 IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such
time as the Company has filed a Registration Statement with the Securities and Exchange Commission under which the issuance of the Shares for which this exercise is being made is registered and such Registration Statement remains effective. 

Ladies and Gentlemen: 
 I hereby exercise my
Stock Option to purchase                  shares (the “Shares”) of the common stock, $0.001 par value, of Spero Therapeutics, Inc. (the
“Company”), at the exercise price of $         per share, pursuant to and subject to the terms of that Stock Option Grant Notice dated
                    , 201    . 

I understand the nature of the investment I am making and the financial risks thereof. I am aware that it is my responsibility to have
consulted with competent tax and legal advisors about the relevant national, state and local income tax and securities laws affecting the exercise of the Option and the purchase and subsequent sale of the Shares. 

I am paying the option exercise price for the Shares as follows: 
  

      

 
 Please issue the Shares
(check one): 
  

	 	☐	to me; or 

  

	 	☐	to me and                     
                    , as joint tenants with right of survivorship, 

at the following address: 
  

			
	      
	  	
	      
	  	
	      
	  	

  
 Exhibit A-1 

 My mailing address for stockholder communications, if different from the address listed above,
is: 
  

			
	      
	  	
	      
	  	
	      
	  	

  

	
	Very truly yours,
	
	   

	 Participant (signature)

	
	   

	 Print Name

	
	   

	 Date

  
 Exhibit A-2Exhibit

Exhibit 4.1

SUBORDINATED NOTE CERTIFICATE
ALLEGIANCE BANK
Fixed-to-Floating Rate Subordinated Notes Due 2027
THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED NOTE IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE “FDIC”) OR ANY OTHER GOVERNMENT AGENCY OR FUND.
THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED NOTE IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO THE OBLIGATIONS OF ALLEGIANCE BANK (THE “BANK”) TO ITS GENERAL AND SECURED CREDITORS (TO THE EXTENT OF SUCH SECURITY), TO DEPOSITS AND LIABILITIES OF THE BANK (OTHER THAN EXISTING SUBORDINATED DEBT) AND IS UNSECURED AND INELIGIBLE AS COLLATERAL FOR A LOAN BY THE BANK OR ANY OF ITS SUBSIDIARIES. 
EACH SUBORDINATED NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $1,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF A SUBORDINATED NOTE IN A DENOMINATION OF LESS THAN $1,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER AND MAY BE DISREGARDED BY THE BANK OR ANY OF ITS AGENTS. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SUBORDINATED NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON SUCH SUBORDINATED NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SUBORDINATED NOTE.
THIS SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS AND WAS OFFERED PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(a)(2) OF THE SECURITIES ACT. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REQUIREMENTS OF THE SECURITIES ACT. THIS SUBORDINATED NOTE IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A NOTE SUBSCRIPTION AGREEMENT, DATED DECEMBER 11, 2017, BY AND AMONG ALLEGIANCE BANCSHARES, INC., THE BANK AND THE PURCHASERS REFERRED TO THEREIN AND AN ISSUING AND PAYING AGENCY AGREEMENT, DATED DECEMBER 14, 2017, BY AND BETWEEN THE BANK, AS ISSUER, AND U.S. BANK NATIONAL ASSOCIATION, AS ISSUING AND PAYING AGENT, COPIES OF WHICH, IN EACH CASE, ARE ON FILE WITH THE ISSUER. THIS SUBORDINATED NOTE MAY NOT BE TRANSFERRED EXCEPT IN 

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COMPLIANCE WITH SAID AGREEMENTS. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENTS WILL BE VOID.
THIS IS A GLOBAL NOTE WITHIN THE MEANING OF SECTION 2 OF THE ISSUING AND PAYING AGENCY AGREEMENT. 
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE BANK OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATED NOTE ISSUED IN EXCHANGE FOR THIS NOTE OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) PURSUANT TO AND IN ACCORDANCE WITH THE ISSUING AND PAYING AGENCY AGREEMENT, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE BANK HAS NOT ENTERED INTO AN INDENTURE IN CONNECTION WITH THE ISSUANCE OF THIS SECURITY. EACH PURCHASER OF A BENEFICIAL INTEREST IN THIS SECURITY, IN MAKING ITS PURCHASE, WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED TO THE BANK THAT IT IS AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR AS DEFINED IN SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT (AN “INSTITUTIONAL ACCREDITED INVESTOR”), THAT IT IS PURCHASING SUCH INTEREST FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ANOTHER INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR AND THAT FOLLOWING SUCH PURCHASE IT OR SUCH OTHER INSTITUTIONAL ACCREDITED INVESTOR HOLDING A BENEFICIAL INTEREST IN THIS SECURITY WILL HOLD A BENEFICIAL INTEREST IN A PRINCIPAL AMOUNT OF $100,000 OR AN INTEGRAL MULTIPLE OF $1,000 IN EXCESS THEREOF AT ALL TIMES. 

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, (1) THE BANK SHALL NOT PAY ANY INTEREST ON THIS NOTE WHILE IT REMAINS IN DEFAULT IN THE PAYMENT OF ANY ASSESSMENT TO THE FDIC IF PAYMENT OF SUCH INTEREST WOULD THEN BE PROHIBITED BY 12 U.S.C. SECTION 1828(b) (OR ANY SUCCESSOR STATUTE), AND (2) IF THE BANK BECOMES A CRITICALLY UNDERCAPITALIZED DEPOSITORY INSTITUTION, THE BANK SHALL NOT MAKE ANY PAYMENTS OF PRINCIPAL OR INTEREST ON THIS NOTE IF THE BANK WOULD THEN BE PROHIBITED FROM MAKING ANY SUCH PAYMENTS BY 12 U.S.C. SECTION 1831o (OR ANY SUCCESSOR STATUTE), PROVIDED, IN EACH CASE, (A) INTEREST SHALL CONTINUE TO ACCRUE ON THIS NOTE, AND (B) THE BANK SHALL NOT BE RELIEVED FROM MAKING SUCH PAYMENTS OF PRINCIPAL OR INTEREST ON THIS NOTE WHEN PERMITTED BY APPLICABLE LAW. 

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NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, FOR SO LONG AS THE BANK IS AN INSURED, STATE NONMEMBER BANK, RETIREMENT, REDEMPTION OR PREPAYMENT OF THIS NOTE IS SUBJECT TO THE PROVISIONS OF SECTION 18(I)(1) OF THE FEDERAL DEPOSIT INSURANCE ACT, 12 U.S.C. SECTION 1828(i)(1), REQUIRING THAT NO SUCH BANK SHALL REDUCE THE AMOUNT OR RETIRE ANY PART OF ITS COMMON OR PREFERRED CAPITAL STOCK, OR RETIRE ANY PART OF ITS CAPITAL NOTES OR DEBENTURES WITHOUT THE PRIOR WRITTEN CONSENT OF THE FDIC. THE FDIC HAS NOT GIVEN ANY CONSENT TO RETIREMENT, REDEMPTION OR PREPAYMENT OF THIS NOTE, AND ANY RETIREMENT, REDEMPTION OR PREPAYMENT OF ALL OR PART OF THE PRINCIPAL AMOUNT OF THIS NOTE, INCLUDING THE PAYMENT BY THE BANK OF THE PRINCIPAL AMOUNT OF THIS NOTE WHEN DUE AND PAYABLE AT THE MATURITY HEREOF, WHETHER BY VOLUNTARY OR INVOLUNTARY PAYMENT OR BY ANY OTHER PAYMENT, UPON ACCELERATION OF THE MATURITY OF THIS NOTE IN ACCORDANCE WITH SECTION 6 HEREOF, OR OTHERWISE, INCLUDING BY MEANS OF BANKER’S LIEN, SETOFF, OFFSET OR SIMILAR LEGAL OR EQUITABLE RIGHTS, BY APPLICATION OF ANY PROPERTY OR OTHER ASSETS OF THE BANK TO THE PAYMENT, REALIZATION UPON, PURCHASE, OR OTHER ACQUISITION OF THIS NOTE, OR IN ANY OTHER WAY, IS SUBJECT TO THE SPECIFIC PRIOR WRITTEN CONSENT OF THE FDIC. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH HOLDER OF THIS NOTE WHICH IS A DEPOSITORY INSTITUTION (REGARDLESS OF WHERE CHARTERED AND WHETHER OR NOT INSURED BY THE FDIC) EXPRESSLY WAIVES ANY RIGHT OF BANKER’S LIEN, SETOFF, OFFSET, OR SIMILAR LEGAL OR EQUITABLE RIGHT, WHICH SAID HOLDER MAY OTHERWISE HAVE UNDER ANY APPLICABLE PROVISIONS OF STATUTORY OR COMMON LAWS. 

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Registered No. 1
	Principal Amount:
	

	$40,000,000
	

	 
	 
	 

	 
	CUSIP:
	01748DAZ9
	

ALLEGIANCE BANK
Fixed-to-Floating Rate Subordinated Notes Due 2027 

1.Payment.
(a)    Allegiance Bank, a Texas-chartered commercial bank (the “Issuer”), for value received, hereby promises to pay to Cede & Co., or registered assigns, as nominee of DTC, the principal sum of Forty Million Dollars (U.S.) ($40,000,000.00) on December 15, 2027 (the “Maturity Date”) and to pay interest thereon (i) at the rate of 5.25% per year (computed on the basis of a 360-day year of twelve 30-day months) from and including December 14, 2017, to but excluding December 15, 2022, or any early redemption date (the “Fixed Rate Interest Period”), payable during the Fixed Rate Interest Period semi-annually in arrears, on June 15 and December 15 of each year (each, a “Fixed Interest Payment Date”), and (ii) at the rate per annum equal to the Three-Month USD LIBOR Rate plus 303 basis points (3.03%) (computed on the basis of a 360-day year based on the number of days actually elapsed) from and including December 15, 2022 to the Maturity Date or any early redemption date, payable quarterly in arrears on each December 15, March 15, June 15 and September 15 (each, a “Floating Interest Payment Date” and together with each Fixed Interest Payment Date, the “Interest Payment Dates”). The first Interest Payment Date shall be June 15, 2018.
(b)    If any Interest Payment Date or the Maturity Date or early redemption date is not a Business Day, then the payment shall be made on the next succeeding Business Day and no interest shall accrue as a result of such postponement. A “Business Day” means any day other than a Saturday, Sunday, federal holiday or day on which banks in the State of New York are authorized or obligated by law or executive order to close.

(c)    For purposes hereof:
    
(i)    “Calculation Agent” means the calculation agent appointed by the Issuer to calculate the interest due with respect to the Notes on each Floating Interest Payment Date.

(ii)    “Determination Date” with respect to an Interest Period shall be the second London Banking Day preceding the first day of such Interest Period.

(iii)    “Floating Rate Distribution Period” means the period from, and including, the immediately preceding Floating Interest Payment Date to, but excluding, the relevant Floating Interest Payment Date (in each case as adjusted to make such Floating Interest Payment Date a Business Day), provided that the first Floating Rate Distribution Period shall be the period beginning on, and including, December 15, 2022.

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(iv)    “Interest Period” means the period commencing on and including an Interest Payment Date and ending on and including the day immediately preceding the next succeeding Interest Payment Date.

(v)    “Reuters Page LIBOR01” means the display so designated on the Reuters 3000 Xtra (or such other page as may replace the LIBOR01 page on that service, or such other service as may be nominated by the British Bankers’ Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits).
(vi)    “Three-Month USD LIBOR Rate” with respect to any Floating Rate Distribution Period, shall be determined by the Issuing and Paying Agent (as defined in Section 2 hereof) as of the applicable Determination Date, in accordance with the following provisions:

(A)    the rate (expressed as a percentage per year) for deposits in U.S. dollars for a three-month period commencing on the first day of such Floating Rate Distribution Period that appears on “Reuters Page LIBOR01” (or any successor or replacement page) at approximately 11:00 a.m., London time, on such Determination Date;

(B)    if such rate does not appear on the “Reuters Page LIBOR01” as of 11:00 a.m., London time, or if the “Reuters Page LIBOR01” is not available on such date, the Calculation Agent, which shall be appointed by the Issuer prior to the Determination Date for the first Floating Rate Distribution Period, shall obtain such rate from Bloomberg L.P.’s page “BBAM” (or any successor or replacement page);

(C)    if the Calculation Agent determines that such rate has been discontinued, then it shall determine in its sole discretion whether to use a substitute or successor base rate that is most comparable to such rate, provided that if the Calculation Agent determines there is an industry accepted successor base rate, the Calculation Agent shall use such successor base rate, and if the Calculation Agent has determined a substitute or successor base rate in accordance with the foregoing, the Calculation Agent in its sole discretion may also implement changes to the business day convention, any business day definition, the Determination Date and any method for obtaining the substitute or successor base rate if such rate is unavailable on the relevant Business Day, in a manner that is consistent with industry accepted practices for such substitute or successor base rate; or

(D)    if the Calculation Agent determines that such rate has been discontinued, but the Calculation Agent does not determine to use a substitute or successor base rate as provided in the foregoing bullet, then the method set forth below shall apply.

(1)    The Calculation Agent shall select four major banks in the London interbank market and request that the principal London offices of those four selected banks provide their offered quotations for deposits in U.S. dollars for a period of three months, commencing on the first day of the applicable Floating Rate Distribution Period, to prime banks in the London interbank market at approximately 11:00 a.m. (London time) on the Determination Date for such Floating Rate Distribution Period. Offered quotations must be 

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based on a principal amount not less than $1,000,000 for a single transaction in the London interbank market at the relevant time. If two or more quotations are provided, the Three-Month USD LIBOR Rate for such Floating Rate Distribution Period shall be the arithmetic mean of the quotations

(2)    If fewer than two quotations are provided, the Three-Month USD LIBOR Rate for such Floating Rate Distribution Period shall be the arithmetic mean of the rates quoted on the Determination Date for such Floating Rate Distribution Period by three major banks in New York City selected by the Calculation Agent, for loans in U.S. dollars to leading European banks for a three-month period commencing on the first day of such Floating Rate Distribution Period. The rates quoted must be based on a principal amount not less than $1,000,000 for a single transaction in the relevant market at the relevant time.

(3)    If no quotations are provided as described above, the Three-Month USD LIBOR Rate shall be the Three-Month USD LIBOR Rate in effect on such Determination Date or, in the case of the Floating Rate Distribution Period commencing on the first reset date, 2.22% (resulting in a 5.25% interest rate on the Notes for such Floating Rate Distribution Period).

All percentages resulting from any of the above calculations shall be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all dollar amounts used in or resulting from such calculations shall be rounded to the nearest cent (with one-half cent being rounded upwards).

Promptly upon such determination, the Calculation Agent shall notify the Issuer of the interest rate for the new interest reset period.  Upon request by any Noteholder (as defined below), the Calculation Agent shall provide the interest rate then in effect for the relevant Floating Rate Distribution Period on the date of such request and, if determined, the interest rate for the next Floating Rate Distribution Period. All calculations and determinations made by the Calculation Agent for the purposes of calculating interest on the Notes or determining to use (or not to use) a substitute or successor base rate shall be conclusive and binding on the Noteholders and the Issuer, absent manifest errors.
    
(vii)    “London Banking Day” is any day on which dealings in U.S. dollars are transacted or, with respect to any future date, are expected to be transacted in the London interbank market.

(viii)     “Representative Amount” means a principal amount of not less than $1,000,000 for a single transaction in the relevant market at the relevant time.

2.Subordinated Notes, Noteholders. This Subordinated Note is a duly authorized issue of notes of the Issuer designated as Fixed-to-Floating Rate Subordinated Notes Due 2027 (herein called the “Subordinated Notes” or the “Notes”) issued under the Issuing and Paying Agency Agreement, dated as of December 14, 2017 (the “Issuing and Paying Agency 

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Agreement”), by and between the Issuer and U.S. Bank National Association, as Issuing and Paying Agent (herein called the “Issuing and Paying Agent,” which term includes any successor issuing and paying agent under the Issuing and Paying Agency Agreement) and reference is hereby made to the Issuing and Paying Agency Agreement for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer and the Issuing and Paying Agent and of the terms upon which the Subordinated Notes are, and are to be, authenticated and delivered. The holder in whose name any Subordinated Note is registered on the Security Register (as defined herein) is referred to as a “Noteholder,” and such holders collectively are referred to as the “Noteholders.” 
3.Optional Redemption. This Subordinated Note is not convertible. The Issuer may, at its option, beginning with the Interest Payment Date of December 15, 2022, and on any scheduled Interest Payment Date thereafter (or at any time on or after the 30th day prior to the Maturity Date), redeem the Subordinated Notes in whole or in part at a redemption price equal to 100% of the principal amount of the redeemed Subordinated Notes, plus accrued and unpaid interest to the date of the redemption. The option of redemption pursuant to this paragraph is subject to the approval of the Federal Deposit Insurance Corporation (the “FDIC”).

The Issuer shall notify Noteholders of the Subordinated Notes to be redeemed at least 30 but not more than 60 days before the scheduled redemption (which notice may be conditional). If the Issuer is redeeming less than all the Subordinated Notes, the Issuing and Paying Agent under the Issuing and Paying Agency Agreement must select the Subordinated Notes to be redeemed by lot or by such other method as the Issuing and Paying Agent deems fair and appropriate, subject to the rules and procedures of DTC. 

Additionally, any time the Subordinated Notes remain outstanding, the Subordinated Notes are redeemable by the Issuer in whole, but not in part, on not fewer than 30 nor greater than 60 days’ prior notice, subject to the FDIC’s prior approval, to the extent then required, upon the occurrence of any of the following:     

(i)     a “tax event,” which means the receipt by the Issuer of an opinion of independent tax counsel to the effect that (a) an amendment to or change (including any announced prospective amendment or change) in any law or treaty, or any regulation thereunder, of the United States or any of its political subdivisions or taxing authorities, (b) a judicial decision, administrative action, official administrative pronouncement, ruling, regulatory procedure, regulation, notice or announcement, including any notice or announcement of intent to adopt or promulgate any ruling, regulatory procedure or regulation, (c) an amendment to or change in any official position with respect to, or any interpretation of, an administrative or judicial action or a law or regulation of the United States that differs from the previously generally accepted position or interpretation, or (d) a threatened challenge asserted in writing in connection with an audit of the Issuer’s federal income tax returns or positions or a similar audit of any of the Issuer’s, or its parent corporation’s, subsidiaries or a publicly known threatened challenge asserted in writing against any other taxpayer that has raised capital through the issuance of securities that are substantially similar to the Notes, in each case, occurring or becoming publicly known on or after the date of the issuance of the Notes, resulting in more than an insubstantial risk that the 

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interest payable on the Notes is not, or within 90 days of receipt of such opinion of tax counsel, shall not be, deductible by the Issuer, in whole or in part, for U.S. federal income tax purposes;

(ii)     a “capital event,” which means the Issuer makes a reasonable determination (as evidenced by an officers’ certificate delivered to the Issuing and Paying Agent) that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws or any rules or regulations thereunder of the United States or any rules, guidelines or policies of an applicable regulatory authority for the Issuer or its parent corporation, or (b) any official or administrative pronouncement or action or judicial decision interpreting or applying such laws, rules or regulations, which amendment or change is effective or which pronouncement, action or decision is announced on or after the date of original issuance of the Subordinated Notes, it is reasonably likely that the Subordinated Notes shall not be entitled to treatment as Tier 2 capital, the Subordinated Notes do not constitute, or within 90 days of the date of such opinion shall not constitute, Tier 2 capital (or its then equivalent) for purposes of capital adequacy guidelines of the Board of Governors of the Federal Reserve or the FDIC (or any successor regulatory authority with jurisdiction over bank holding companies or their bank subsidiaries), as then in effect and applicable to the Issuer; or

(iii)    an “investment company event,” which means the Issuer becoming required to register as an investment company pursuant to the Investment Company Act of 1940, as amended.

In the event of any such redemption, the redemption price shall be 100% of the aggregate principal amount of the Subordinated Notes being redeemed (plus accrued and unpaid interest through the early redemption date).

On and after any early redemption date, interest shall cease to accrue on the Subordinated Notes called for redemption. On or prior to any early redemption date, the Issuer is required to deposit with the Issuing and Paying Agent money sufficient to pay the redemption price of and accrued interest on the Subordinated Notes to be redeemed on such date.

4.Subordination. The indebtedness of the Issuer evidenced by the Subordinated Notes, including the principal and interest on this Note, shall be subordinate and junior in right of payment to the prior payment in full of all existing and future Senior Indebtedness (as defined below) of the Issuer. The Noteholder hereby acknowledges and agrees that such subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness. Upon any payment or distribution of assets to creditors in case of the Issuer’s liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors or any bankruptcy, insolvency, or similar proceedings, all holders of Senior Indebtedness shall be entitled to receive payment in full of all amounts due to such holders pursuant to the terms of such Senior Indebtedness before the Noteholders shall be entitled to receive any payment of principal or interest on their Subordinated Notes. In the event of any such proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the Noteholders, together with the holders of any obligations of the Issuer ranking equally in right of payment with the Subordinated Notes, shall be entitled to be paid from the remaining assets of the Issuer, the unpaid principal thereof, and 

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the unpaid interest thereon, before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Issuer that by its terms expressly ranks subordinate or junior to the Subordinated Notes. In addition, no payment on account of principal or interest on the Subordinated Notes shall be made by the Issuer if, at the time of such payment or immediately after giving effect thereto, there shall have occurred an event of default with respect to any of the Issuer’s Senior Indebtedness, permitting the holders thereof (or a trustee on behalf of the holders thereof) to accelerate the maturity thereof, or an event that, with the giving of notice or the passage of time or both, would constitute such an event of default, and such event of default shall not have been cured or waived.
“Senior Indebtedness” means the principal of (and premium, if any) and interest, if any, on: 
(a)    all of the Issuer’s obligations for money borrowed (including deposits); 
(b)    indebtedness of the Issuer evidenced by bonds, debentures, securities, notes or similar instruments; 
(c)    obligations of the Issuer similar to those in Subsection 4(b) above arising from off-balance sheet guarantees and direct credit substitutes; 
(d)     all obligations, contingent or otherwise, of the Issuer with respect to letters of credit, bankers’ acceptances, security purchase facilities or similar facilities; 
(e)    obligations of the Issuer issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); 
(f)    capital lease obligations of the Issuer; 
(g)    obligations of the Issuer associated with derivative products including but not limited to securities contracts, foreign currency exchange contracts, swap agreements (including interest rate and foreign exchange rate swap agreements), cap agreements, floor agreements, collar agreements, interest rate agreements, foreign exchange rate agreements, options, commodity futures contracts, commodity option contracts and similar financial instruments; 
(h)    a deferred obligation of, or any such obligation, directly or indirectly guaranteed by, the Issuer which obligation is incurred in connection with the acquisition of any business, properties or assets not evidenced by a note or similar instrument given in connection therewith; 
(i)    debt of others described in the preceding clauses that the Issuer has guaranteed or for which the Issuer is otherwise liable or that is secured by a lien on any property or asset of the Issuer; and
(j)    obligations owed to the Federal Reserve Bank or the FDIC, and any rights acquired by the FDIC as a result of loans made by the FDIC to the Issuer or the purchase or guarantee of any of its assets by the FDIC pursuant to the provisions of 12 U.S.C. § 1823, whether now outstanding or hereafter incurred, unless, in any case in the instrument creating or evidencing any such indebtedness or obligation, or pursuant to which the same is outstanding, it is expressly provided that such indebtedness or obligation is not superior in right of payment to 

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the Subordinated Notes or to other debt that is pari passu with or subordinate to the Subordinated Notes. 
Each Noteholder by accepting a Note authorizes and directs the Issuing and Paying Agent on its behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Noteholders and the holders of Senior Indebtedness of the Issuer as provided in this Section 4 and appoints the Issuing and Paying Agent as attorney-in-fact for any and all such purposes.
Nothing herein shall impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note in accordance with its terms. Nothing herein shall act to prohibit, limit or impede the Issuer from issuing additional debt of the Issuer having the same rank as the Subordinated Notes or which may be junior or senior in rank to the Subordinated Notes. 
Each Noteholder by accepting a Note acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of the Issuer, whether such Senior Indebtedness was created or acquired before or after the issuance of the Notes, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness.
Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness of the Issuer may, at any time and from time to time, without the consent of or notice to the Issuing and Paying Agent or the Noteholders, without incurring responsibility to the Issuing and Paying Agent or the Noteholders and without impairing or releasing the subordination provided in this Section 4 or the obligations hereunder of the Noteholders to the holders of the Senior Indebtedness of the Issuer, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness of the Issuer, or otherwise amend or supplement in any manner Senior Indebtedness of the Issuer, or any instrument evidencing the same or any agreement under which Senior Indebtedness of the Issuer is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness of the Issuer; (iii) release any person or entity liable in any manner for the payment or collection of Senior Indebtedness of the Issuer; and (iv) exercise or refrain from exercising any rights against the Issuer and any other person or entity.
5.Consolidation, Merger and Sale of Assets. The Issuer shall not consolidate with or merge into another person or entity, or convey or transfer its properties and assets substantially as an entirety to any person or entity, unless:
(a)    the person or entity formed by such consolidation or into which the Issuer is merged or the person or entity which acquires by conveyance or transfer the properties and assets of the Issuer substantially as an entirety is a corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or any other 

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entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and expressly assumes, by a supplemental agreement, the due and punctual payment of the principal of and any interest on the Subordinated Notes according to their terms, and the due and punctual performance and observance of all covenants and conditions to be performed by the Issuer contained in this Note and the Issuing and Paying Agency Agreement; and
(b)    immediately after giving effect to such transaction, no Event of Default (as defined herein), and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing. 
Upon any such consolidation or merger, or conveyance or transfer, the successor entity or person formed, or into which the Issuer is merged or to which such conveyance or transfer is made, shall succeed to, and be substituted for, the Issuer under the Issuing and Paying Agency Agreement, and the Issuer shall be released from all of its obligations pursuant thereto. 

6.Events of Default; Acceleration. If any of the following events shall occur and be continuing (each an “Event of Default”):
(a)    the Issuer shall consent to the appointment of a receiver, liquidator, trustee or other similar official in any bankruptcy, liquidation, insolvency or similar proceeding with respect to the Issuer; or
(b)    a court or other governmental agency or body having jurisdiction shall enter a decree or order for the appointment of a receiver, liquidator, trustee or other similar official in any bankruptcy, receivership, liquidation, insolvency or similar proceeding with respect to the Issuer and such decree or order shall have remained in force for 30 days;
then, and in each such case, unless the principal of this Note already shall have become due and payable, the holders of 100% of the outstanding principal amount of the Subordinated Notes, by notice in writing to the Issuer, may declare the principal amount of this Note to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable. Except as permitted by this Section 6, the holders of the Subordinated Notes shall not have the right to accelerate the payment of or otherwise declare the principal of the Subordinated Notes and any accrued interest to the date of declaration to be due and payable prior to the date of maturity of the Notes.
7.Failure to Make Payment. In the event of failure by the Issuer to make any required payment of principal or interest on this Note (and, in the case of payment of interest, such failure to pay shall have continued for 30 calendar days), the Noteholders may (if such principal or interest remains unpaid following delivery by such Noteholders of notice to the Issuer) institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Issuer and collect the amounts adjudged or decreed to be payable in the manner provided by law. 

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8.Payment Procedures. Payment of the principal and interest payable on the Maturity Date shall be made by wire transfer in immediately available funds to a bank account in the United States designated by the Noteholder, upon presentation and surrender of this Note at the office of the Issuing and Paying Agent or at such other place or places as the Issuer shall designate by notice to the Noteholders, provided that this Note is presented to the Issuing and Paying Agent in time for the Issuing and Paying Agent to make such payments in such funds in accordance with its normal procedures. Payments of interest (other than interest payable on the Maturity Date or upon early redemption) shall be made by wire transfer in immediately available funds or check mailed to the person entitled thereto, as such person’s address appears on the Security Register maintained by the Issuing and Paying Agent as of the applicable Regular Record Date or to such other address in the United States as any Noteholder shall designate to the Issuing and Paying Agent in writing not later than the relevant Regular Record Date. Interest payable on any Interest Payment Date shall be payable to the holder in whose name this Note is registered at the close of business on the fifteenth calendar day (whether or not a Business Day) immediately preceding the applicable Interest Payment Date (such date being referred to herein as the “Regular Record Date”), except that interest not punctually paid may be paid to the Noteholder in whose name this Note is registered at the close of business on a Special Record Date fixed by the Issuer (a “Special Record Date”), notice of which shall be given to the holder not less than 15 calendar days prior to such Special Record Date. To the extent permitted by applicable law, interest shall accrue, at the rate at which interest accrues on the principal of this Note, on any amount of principal of or interest on this Note not paid when due. All payments on this Note shall be applied first to accrued interest and then the balance, if any, to principal.
9.Form of Payment, Maintenance of Payment Office. Payments of principal of and interest on this Note shall be made in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. Until the date on which all of the Subordinated Notes shall have been surrendered or delivered to the Issuer or the Issuing and Paying Agent for cancellation or destruction, or become due and payable and a sum sufficient to pay the principal of and interest on all of the Subordinated Notes shall have been either paid or reserved for payment by the Issuer as provided herein, the Issuer shall at all times maintain an office or agency in the State of New York where Subordinated Notes may be presented or surrendered for payment. Any money that the Issuer pays to the Issuing and Paying Agent for the purpose of making payments on this Note and that remains unclaimed two years after the payments were due shall be either returned to the Issuer at the Issuer’s request or be escheated to the State as required by applicable law. After that time, the Noteholder can only look to the Issuer for payment on this Note.
 
10.Registration of Transfer, Security Register. Except as otherwise provided herein, this Note is transferable in whole and not in part, and may be exchanged for a like aggregate principal amount of Subordinated Notes of other authorized denominations, by the Noteholder in person, or by his attorney duly authorized in writing, at the office of the Issuing and Paying Agent. The Issuing and Paying Agent, acting solely for this purpose as an agent of the Issuer, shall maintain a register providing for the recordation of the names, addresses and tax identification numbers of the Noteholders, and the principal amounts (and stated interest) of the Notes owing to the Noteholders, and any exchange or transfer thereof (the “Security Register”). 

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The entries in the Security Register shall be conclusive absent manifest error, and the Issuer, the Issuing and Payment Agent and the Noteholders shall treat each person whose name is recorded in the Security Register pursuant to the terms hereof as a Noteholder for all purposes. Upon presentation of this Note for exchange or registration of transfer, the Issuer shall execute, authenticate and deliver in exchange therefor a Note or Notes of like tenor and terms, each in a denomination of $1,000 or any amount in excess thereof which is an integral multiple of $1,000 and, in the absence of an opinion of counsel satisfactory to the Issuer to the contrary, bearing the restrictive legends set forth on the face of this Note and that is or are registered in such name or names requested by the Noteholder. Any Note presented for registration of transfer or for exchange shall be duly endorsed, or accompanied by a written instrument of transfer in form satisfactory to the Issuer, and shall be accompanied by such evidence of due authorization and guarantee of signature as may reasonably be required by the Issuer in form satisfactory to the Issuer, duly executed by the Noteholder or his attorney duly authorized in writing, with such tax identification number or other information for each person in whose name a Note is to be issued, and accompanied by evidence of compliance with any restrictive legends appearing on such Note or Notes as the Issuer may reasonably request to comply with applicable law. No exchange or registration of transfer of this Note shall be made on or after the fifteenth day immediately preceding the Maturity Date. This Note is subject to the restrictions on transfer of a subscription agreement between the Issuer of this Note and the purchasers referred to therein, a copy of which is on file with the Issuer. The Note may not be sold or otherwise transferred except in compliance with said agreement.
 
11.Charges and Transfer Taxes. No service charge (other than any cost of delivery) shall be imposed for any exchange or registration of transfer of this Note, but the Issuing and Paying Agent or the Issuer may require payment from the Noteholder of a sum sufficient to cover any stamp or other tax or governmental charge payable in connection therewith (other than exchanges pursuant to the Issuing and Paying Agency Agreement not involving any transfer) or presentation of evidence that such tax or charge has been paid.

12.Ownership. Prior to due presentment of this Note for registration of transfer, the Issuer may deem and treat the Noteholder as the absolute owner of this Note for the purpose of receiving payment of principal of and premium, if any, and interest on this Note and for all other purposes whatsoever.

13.Notices. All notices to the Issuer under this Note shall be in writing and addressed to the Issuer at 8847 West Sam Houston Parkway, N., Suite 200, Houston, Texas, 77040, Attention: Chief Financial Officer, or to such other address as the Issuer may provide by notice to the Noteholder. All notices to the Noteholders shall be in writing and sent by first-class mail to each Noteholder at his or its address as set forth in the Security Register. For so long as the Notes are represented by a Global Note, any notices to Noteholders shall be delivered to DTC as the sole Noteholder in accordance with its applicable policies as in effect from time to time.

14.Denominations. The Subordinated Notes are issuable only as registered Notes without interest coupons in denominations of $1,000 or any amount in excess thereof which is a whole multiple of $1,000.

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15.Modification and Amendment.  

(a)Without the consent of any Noteholders, the Issuer and the Issuing and Paying Agent may enter into one or more modifications of the Issuing and Paying Agency Agreement or the Subordinated Notes, in form reasonably satisfactory to the Issuing and Paying Agent, to (i) evidence the succession of another entity to the Issuer and the assumption by any such successor of the obligations of the Issuer contained in the Issuing and Paying Agency Agreement and in the Subordinated Notes, (ii) change or eliminate any of the provisions of the Issuing and Paying Agency Agreement, provided that any such change or elimination shall become effective only when there is no outstanding Subordinated Note created prior to the execution of such amendment or modification which is entitled to the benefit of such provisions, (iii) establish other forms or terms of the Subordinated Notes as permitted in the Issuing and Paying Agency Agreement, (iv) evidence and provide for the acceptance of appointment under the Issuing and Paying Agency Agreement by a successor Issuing and Paying Agent, (v) cure any ambiguity, correct or supplement any provisions in the Issuing and Paying Agency Agreement or in this Note which may be inconsistent with any other provisions herein or in the Issuing and Paying Agency Agreement, or make any other provisions with respect to matters or questions arising herein or in the Issuing and Paying Agency Agreement; provided that such action shall not adversely affect the interests of any Noteholder in any material respect as determined in good faith by the board of directors of the Issuer, (vi) modify the restrictions on and procedures for resales and other transfers of the Subordinated Notes to reflect any change in applicable law or regulation (or the interpretation thereof) or in practices relating to the resale or other transfer of restricted securities generally, or (vii) modify, eliminate or add to the provisions of the Issuing and Paying Agency Agreement to such extent as shall be necessary to qualify the Issuing and Paying Agency Agreement (including any supplemental agreement thereto) under the Trust Indenture Act of 1939, as amended, or under such similar statute hereafter enacted.
(b)With the consent of the Noteholders of a majority in aggregate principal amount of the outstanding Subordinated Notes affected thereby, the Issuer and the Issuing and Paying Agent may enter into one or more agreements supplemental to the Issuing and Paying Agency Agreement for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Issuing and Paying Agency Agreement or of modifying in any manner the rights of the Noteholders under the Issuing and Paying Agency Agreement; provided, however, that no such supplemental agreement shall, without the consent of each Noteholder affected thereby: (i) change the stated maturity date of the principal (or any installment of principal) of any Note, (ii) change any Interest Payment Date on which interest on any Note is to be paid, (iii) reduce the principal amount of any Note, (iv) reduce the rate of interest on any Note, (v) change the manner of calculation of interest on any Note, (vi) change any of the redemption provisions of any Note, (vii) change any place of payment for any Note, (viii) change the currency in which the principal of, or premium, if any, or interest on, any Note is payable, (ix) impair the right to institute suit for the enforcement of any required payment in respect of any Note on or after the stated maturity thereof, or (x) reduce the percentage of the aggregate principal amount of the outstanding Notes, the consent of whose Noteholders is 

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required for the modification and amendment of the Issuing and Paying Agency Agreement and the Subordinated Notes.
 
16.Absolute and Unconditional Obligation of the Issuer. No provisions of this Note shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed. No recourse for the payment of the principal of or interest on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or agreement of the Issuer related to this Note, or because of the creation of any indebtedness represented hereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, whether by virtue of any constitution, statute, or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Note.

17.Waiver and Consent.
 
(a)     Any consent or waiver given by the Noteholder shall be conclusive and binding upon such Noteholder and upon all future holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. 
(b)    No delay or omission of the Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.
(c)    Any insured depository institution which shall be a Noteholder or which otherwise shall have any beneficial ownership interest in any Note shall, by its acceptance of such Note (or beneficial interest therein), be deemed to have waived any right of offset with respect to the indebtedness evidenced thereby. 
18.Further Issues. The Issuer may, from time to time, without the consent of any of the Noteholders, create and issue additional notes having the same terms and conditions of the Subordinated Notes in all respects (except for the issue date, issue price and initial Interest Payment Date, as applicable) so that such additional notes would form a single series with the Subordinated Notes and rank equally and ratably with the Subordinated Notes or would form a new series. No additional Subordinated Notes may be issued if any Event of Default has occurred and is continuing with respect to the Subordinated Notes.

19.Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York.
 
20.Satisfaction and Discharge. The Issuing and Paying Agency Agreement and this Note shall cease to be of further effect when:

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(a)    either (A) all Notes heretofore authenticated and delivered (other than (i) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in the Issuing and Paying Agency Agreement and (ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in the Issuing and Paying Agency Agreement) have been delivered to the Issuer for cancellation; or (B) all Notes not theretofore delivered to the Issuer for cancellation (i) have become due and payable, or (ii) shall become due and payable at their stated maturity within one year, or (iii) are to be called for redemption within one year in accordance with the terms of the Issuing and Paying Agency Agreement and the Notes and, in the case of (B) (i), (ii) or (iii) above, the Issuer has irrevocably paid to the Noteholders funds in an amount in the currency in which the Notes are payable, sufficient to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the Issuer for cancellation, for principal (and premium, if any) and interest with respect thereto, to the date of such payment (in the case of Notes that have become due and payable) or the stated maturity or redemption date, as the case may be; 
(b)    the Issuer has paid or caused to be paid all or other sums payable under the Issuing and Paying Agency Agreement and the Notes; and 
(c)    the Issuer has delivered to each Noteholder an officer’s certificate stating that all conditions precedent described above relating to the satisfaction and discharge of the Issuing and Paying Agency Agreement and the Notes have been complied with.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned has caused this Note to be duly executed and attested.
 ALLEGIANCE BANK

By: /s/ George Martinez    
		
	Name:
	George Martinez

		
	Title:
	Chief Executive Officer

ATTEST:

By: /s/ Paul Egge    
Name: Paul Egge
		
	Title:  
	Executive Vice President and 

Chief Financial Officer

Dated: December 14, 2017

[Note Signature Page]

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	CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred  
to in the within-mentioned Issuing  
and Paying Agency Agreement
	 

	U.S. BANK NATIONAL ASSOCIATION 
as Issuing and Paying Agent

By     /s/ David W. Doucette    
Name: David W. Doucette 
Title:   Vice President
	 

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