Document:

Document

Contrail Aviation Support, LLC
Loan No. 20007260597
September 2, 2021
Note

THIRD AMENDED AND RESTATED PROMISSORY NOTE
REVOLVING NOTE
$25,000,000.00    Effective Date: September 2, 2021
    

THIS THIRD AMENDED AND RESTATED PROMISSORY NOTE REVOLVING NOTE (this “Note”) amends and restates the Promissory Note dated March 2, 2018 in the original principal amount of Twenty Million Dollars ($20,000,000.00) as amended and restated by the First Amended and Restated Promissory Note Revolving Note dated June 24, 2019 in the original principal amount of Twenty Million Dollars ($20,000,000.00), and as further amended and restated by the Second Amended and Restated Promissory Note Revolving Note dated January 24, 2020 in the original principal amount of Forty Million Dollars ($40,000,000.00) (collectively, the “Original Note”) executed by CONTRAIL AVIATION SUPPORT, LLC (“Borrower”) in favor of OLD NATIONAL BANK (the “Lender,” and together with Borrower, collectively the “Parties”). Borrower and Lender desire to amend and restate the Original Note in its entirety as follows: 

FOR VALUE RECEIVED, on or before the Revolving Note Maturity Date (as defined in the Master Loan Agreement referred to below), Borrower promises to pay to the order of Lender, or its assignee, the principal sum of Twenty-Five Million Dollars ($25,000,000.00), or such lesser amount as is shown to be outstanding according to the records of Lender, together with interest on the principal balance outstanding from time to time at such rates and payable at such times as set forth below.

1.RATE OF INTEREST
The principal amount of the Loan outstanding from time to time shall bear interest at the variable rate of LIBOR Rate (as defined in the Master Loan Agreement referenced below) plus 3.45% per annum and such rate shall be adjusted on the 1st day of each month.
2.PAYMENTS
Payments of both principal and interest are to be made in immediately available funds in lawful currency of the United States of America at the office of Lender, or such other place as the holder hereof shall designate to the undersigned in writing. Unless required by applicable law, and prior to any default being declared, payments will be applied first to any accrued unpaid interest; then to principal; then to escrow; then to any late charges; and then to any unpaid collection costs. Funds shall be deemed received by Lender on the next business day if not received by 12:00 p.m. local time at the location payments hereunder are to be made.
Borrower shall make the following payments during the following periods:
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(a)Monthly Payments. Monthly payments of accrued unpaid interest only on the Revolving Loans due in arrears on the 1st day of each month, commencing on October 1, 2021, together with a final payment of the outstanding principal balance together with all accrued but unpaid interest together with such other amounts as shall then be due and owing from Borrower to Lender under the Revolving Loans due on the Revolving Note Maturity Date;
(b)Revolving Loan Resting Period. Borrower shall cause the total outstanding principal balance of all Revolving Loans to be zero (0) for at least thirty (30) consecutive days during the term of the Revolving Loans, or if the term of the Revolving Loans exceeds one (1) year, during each annual period ending on the anniversary of the date of the Revolving Loans (the “Resting Period”). Notwithstanding the foregoing, Borrower shall have no obligation to cause a Resting Period if at the time such Resting Period would be required the Borrower has achieved a Debt Service Coverage Ratio of 1.10:1. For purposes of this section only, Debt Service Coverage Ratio shall mean a ratio, the numerator of which shall be EBITDA for the 12-month period then ended and the denominator being Debt Service.
3.FINAL PAYMENT MATURITY DATE
Notwithstanding anything set forth above, all sums due under this Note, both principal and interest, if not sooner paid, shall be due and payable on September 5, 2023 (“Revolving Note Maturity Date”).
4.PREPAYMENTS; MINIMUM FINANCE CHARGE
Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the Revolving Loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum finance charge of $95.00. Other than Borrower’s obligation to pay any minimum finance charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower making fewer payments. Borrower agrees not to send Lender payments marked “paid in full,” “without recourse,” or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amounted owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Old National Bank, PO Box 3728, Evansville, IN 47736-3728.
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5.PAYMENT DUE DATE/FAILURE TO PAY
(a)All payments due under this Note shall be made without demand and received on the dates set forth in Section 2 above;
(b)In the event of a default as defined in this Note, or as set forth in the Master Loan Agreement or any Collateral Documents or Guaranties, at the option of Lender, for so long as the default exists, interest on the outstanding principal balance hereof shall accrue and will be paid at the rate in effect from time to time hereunder plus an additional 3% per annum, but in no event shall such default rate exceed, however, the maximum rate permitted by law (“Default Interest Rate”); and
(c)Any installment of principal and/or interest due hereunder which is not received on or before the 10th day following the date on which it is due shall be subject to a late payment fee of 5% of the amount owed on such installment (but not less than $50.00) for the purpose of defraying the expense incident to handling such delinquent payment (this payment is in addition to the amount set forth in (b) above).
6.INTEREST RATE COMPUTATION
Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.  All interest payable under this Note is computed using this method.
7.PLACE OF PAYMENT
All payments shall be made to Lender at the address on the interest billing statement provided by Lender or at the address of Lender set forth in Section 13 of this Note, at any branch of Lender, or such other place as Lender may from time to time designate in writing.
8.MASTER LOAN AGREEMENT
This Note evidences indebtedness incurred under; is the “Revolving Note” referred to in; and is subject to the terms and provisions of the Master Loan Agreement by and between Borrower, Contrail Aviation Leasing, LLC and Lender of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including, but not limited to, by Supplements thereto, the “Master Loan Agreement”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement.
This Note is secured by the Collateral Documents. The terms of the Collateral Documents are incorporated herein and made a part hereof by reference.
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9.DEFAULT
In the event of the occurrence of an Event of Default under the Master Loan Agreement, and after giving effect to any applicable right to cure provided by the Master Loan Agreement, Lender may, at its option and without notice, declare this Promissory Note to be, and this Promissory Note shall thereupon become, immediately due and payable, together with accrued interest thereon. Without limiting the foregoing right and without limiting any other rights and remedies of the Lender at law or in equity, the Lender is also entitled to the rights and remedies provided for in the Master Loan Agreement and the Collateral Documents and may enforce the covenants, agreements and undertakings of Borrower contained therein and may exercise the remedies provided for thereby or otherwise available in respect thereto, all in accordance with the terms thereof. In addition to any other right, Lender may apply and/or set-off against amounts due it hereunder any deposits, account balances, or other credits of any Borrower in the possession of or in transit to Lender, and Borrower hereby grants Lender a security interest in all of the foregoing.
10.WAIVERS
Except as herein provided, Borrower and all others who may become liable for all or part of the principal balance hereof or for any obligations of Borrower to Lender or the holder hereof (a) forever waive presentment, protest and demand, notice of protest, demand and dishonor and non-payment of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, (b) agree that the time of payment of the debt or any part thereof may be extended from time to time without modifying or releasing the lien of the Collateral Documents or the liability of Borrower or any other such parties, the right of recourse against Borrower and such parties being hereby reserved by Lender; and (c) agree that time is of the essence. Borrower agrees to pay all reasonable costs of collection when incurred, whether suit be brought or not, including reasonable attorneys’ fees and costs of suit and preparation therefore, and to perform and comply with each of the covenants, conditions, provisions and agreements of Borrower contained in this Note, the Master Loan Agreement and Collateral Documents. It is expressly agreed by Borrower that no extensions of time for the payment of this Note, nor the failure on the part of Lender to exercise any of its rights hereunder, shall operate to release, discharge, modify, change or affect the original liability under this Note, the Master Loan Agreement or any of the Collateral Documents, either in whole or in part.
11.WAIVER OF JURY TRIAL
BORROWER HEREBY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. 
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BORROWER REPRESENTS THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
12.COMPLIANCE
This Note is to be governed by, and construed and enforced in accordance with, the laws of the State of Wisconsin (without giving effect to Wisconsin’s principles of conflicts of law), except to the extent (a) of procedural and substantive matters relating only to the creation, perfection, foreclosure and enforcement of rights and remedies against specific collateral, which matters shall be governed by the laws of the state in which the collateral is located (the “Collateral State”), and (b) that the laws of the United States of America and any rules regulations, or orders issued or promulgated thereunder, applicable to the affairs and transactions entered into by the Lender, otherwise preempt Collateral State law or Wisconsin law; in which event such federal law shall control. Borrower hereby irrevocably submits to the jurisdiction of any Wisconsin or federal court sitting in Milwaukee, Wisconsin (or, with respect to the matters set forth in subsection (a) above, any state in which the property encumbered by the Collateral Documents is located) over any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents. Borrower hereby waives any right to object to the location of venue in any Wisconsin or federal court sitting in Milwaukee, Wisconsin, or, with respect to the matters set forth in subsection (a) above, to the appropriate court located in the Collateral State, concerning any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents and waives any objection which it may have at any time to the laying of venue in any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party to object to the choice of governing law set forth in this section. Borrower acknowledges that the loan evidenced by this Note was solicited, negotiated, closed and funded in the State of Wisconsin, and waives any implication that the laws of any other state shall apply for usury purposes.
13.NOTICES
All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) electronic communication, including, but not limited to, electronic mail, telex, telegram or telecopying (and if by telex, telegram or telecopying, then only if confirmed in writing sent by registered or certified, first class mail, return receipt requested); or (c) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a) or (b) hereof will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (c) will be deemed received three (3) days following deposit in the mail. 
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Borrower:        CONTRAIL AVIATION SUPPORT, LLC
435 Investment Court
Verona, WI 53593-8788

Lender:        OLD NATIONAL BANK
                    23 W. Main St.
Madison, WI 53703

14.INTEREST NOT TO EXCEED MAXIMUM ALLOWED BY LAW.
If from any circumstances whatsoever, by reason of acceleration or otherwise, the fulfillment of any provision of this Note involves transcending the limit of validity prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then the obligations to be fulfilled will be reduced to the limit of such validity as provided in such statute or law, so that in no event shall any exaction be possible under this Note in excess of the limit of such validity.
15.SUCCESSORS
All rights, powers, privileges and immunities herein granted to Lender shall extend to its successors and assigns and any other legal holder of this Note, with full right by Lender to assign and/or sell same.
16.NOT A NOVATION; AMENDMENT AND RESTATEMENT
This Note is an amendment and restatement of the Original Note. It is not intended, and shall not be deemed or construed as a novation of the Original Note and the validity, priority and enforceability of the Original Note shall not be impaired hereby.
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The undersigned agrees to pay all costs of collection, including reasonable attorneys’ fees.
IN WITNESS WHEREOF, the Parties have executed this Note intending it to be effective as of the Effective Date.
BORROWER:                        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK
By:/s/ Joseph Kuhn                        By: /s/ Tommy Olson                    
Joseph Kuhn                        Its: SVP, WI Corp. Banking Execs.                
Its: CEO

    [Signature Page to Third Amended and Restated Promissory Note Revolving Note]Exhibit 10.1

 

PURCHASE
AGREEMENT 

 

THIS
PURCHASE AGREEMENT (this “Agreement”) is entered into as of September 8, 2021, by and between XAI Octagon Floating
Rate & Alternative Income Term Trust, a Delaware statutory trust (the “Trust”), and each purchaser identified
on Appendix A hereto (each, a “Purchaser” and collectively the “Purchasers”).

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the “Securities Act”), the Trust desires to issue, and each Purchaser, severally and not
jointly, desires to purchase shares of the Trust’s 6.50% Series 2026 Term Preferred Shares, liquidation preference $25.00 per share
(the “Preferred Shares”) upon the terms and conditions as more particularly provided herein.

 

NOW,
THEREFORE, in consideration of the foregoing and of the mutual agreements hereinafter contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Trust and each Purchaser hereby
agree as follows:

 

ARTICLE
I

PURCHASE AND SALE; CLOSING

 

1.1
         Purchase and Sale of the Shares. At the Closing (as defined in Section 1.2), the Trust
shall sell to each Purchaser, and each Purchaser, severally and not jointly, shall buy from the Trust, upon the terms and conditions
hereinafter set forth, the number of Preferred Shares as specified on Appendix A to Agreement (all such Preferred Shares, the
“Shares”), and at the purchase price of $25.00 per Share (plus accrued dividends from July 31, 2021 up to, but not
including, the Closing Date in amount equal to $0.17604 per share).

 

1.2
         The Closing. The completion of the purchase and sale of the Shares (the “Closing”)
shall occur at [10:00] a.m. (Eastern time), on September 9, 2021 (the “Closing Date”) at the offices of the Trust,
or at such other time, date and location as the parties shall mutually agree. At the Closing, (a) the purchase price for the Shares being
purchased by each Purchaser (the “Purchase Price”) shall be delivered by or on behalf of such Purchaser to the Trust
as more particularly provided in Section 1.3 and (b) the Trust shall cause DST Systems, Inc., the Trust’s transfer agent (the “Transfer
Agent”), to deliver to each Purchaser the number of Shares as specified on Appendix A to this Agreement and as more
particularly provided in Section 1.4.

 

1.3.         Delivery
of the Purchase Price. At the Closing, each Purchaser shall remit by wire transfer the amount of funds equal to the Purchase Price
with respect to the Shares being purchased by it to the account designated by the Trust on Appendix B hereto.

 

1.4
        Delivery of the Shares. On the Closing Date, each Purchaser shall direct the broker-dealer
at which the account or accounts to be credited with the Shares being purchased by such Purchaser are maintained (which broker/dealer
shall be a Depository Trust Company participant) to set up a Deposit/Withdrawal at Custodian (“DWAC”) instructing
the Transfer Agent to credit such account or accounts with the Shares purchased by such Purchaser by means of an electronic book-entry
delivery. Such DWAC shall indicate the Closing Date as the settlement date for the deposit of the Shares being purchased by such Purchaser.
Immediately following the delivery to the Trust by or on behalf of each Purchaser of the Purchase Price in accordance with and pursuant
to Section 1.3, the Trust shall direct the Transfer Agent to credit such Purchaser’s account or accounts with the Shares being
purchased by such Purchaser pursuant to the information contained in the DWAC.

 

     

     

    

 

1.5
         Conditions to the Trust’s Obligations. The Trust’s obligation to sell and
issue the Shares to each Purchaser will be subject to the receipt by the Trust of the respective Purchase Price from such Purchaser as
set forth in Section 1.3 and the accuracy of the representations and warranties made by such Purchaser and the fulfillment of those undertakings
of such Purchaser to be fulfilled prior to the Closing Date.

 

1.6
         Conditions to Purchaser’s Obligations. Each Purchaser’s obligation to purchase
the respective Shares to be purchased by it hereunder is subject to the fulfillment to each such Purchaser’s reasonable satisfaction,
prior to or at such Closing, of the following conditions:

 

(a)          The
representations and warranties of the Trust in this Agreement shall be correct when made and at such Closing.

 

(b)          The
Trust shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied
with by it prior to or at such Closing.

 

(c)          The
Trust shall have delivered to each such Purchaser an officer’s certificate from the Trust’s Vice President, dated the date
of such Closing, certifying that the conditions specified in Sections 1.6(a) and 1.6(b) have been fulfilled.

 

(d)
         The Trust shall have delivered to each such Purchaser a certificate of its Secretary, dated
the date of such Closing, certifying as to (i) the resolutions attached thereto and other trust proceedings relating to the authorization,
issuance and sale of the Shares and the authorization, execution and delivery of this Agreement and (ii) the Trust’s organizational
documents as then in effect.

 

ARTICLE
II

REPRESENTATIONS AND WARRANTIES

 

2.1           Purchaser Representations and Warranties. In connection with the purchase and sale of the Shares, each Purchaser represents and
warrants, severally and not jointly, to the Trust that:

 

(a)
           Such Purchaser is acquiring the Shares for such Purchaser’s account and with no view
to the distribution thereof. Such Purchaser has no present intent, agreement, understanding or arrangement to sell, assign or transfer
all or any part of the Shares, or any interest therein, to any other person.

 

(b)
           Such Purchaser in connection with its decision to purchase the Shares, relied only upon the
Prospectus (as hereinafter defined) and the representations and warranties of the Trust contained herein. Further, such Purchaser acknowledges
that the Prospectus Supplement (as defined below) was made available to Purchaser before this Agreement (or any contractual obligation
of such Purchaser to purchase the Shares) will be deemed to be effective.

 

    2

     

    

 

(c)
           Such Purchaser has full right, power, authority and capacity to enter into this Agreement and
to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance
of this Agreement. Eagle Point Credit Management, LLC, in its capacity as agent and/or investment manager of each Purchase is duly authorized
and empowered to execute this Agreement on behalf of each Purchaser. This Agreement has been duly and validly authorized, executed and
delivered by or on behalf of each Purchaser and this Agreement constitutes a valid and binding obligation of such Purchaser enforceable
against such Purchaser in accordance with its terms.

 

(d)            Such
Purchaser understands that nothing in this Agreement or any other materials presented to Purchaser in connection with the purchase and
sale of the Shares constitutes legal, tax or investment advice. Such Purchaser has consulted such legal, tax and investment advisors
as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Shares.

 

2.2
           Trust Representations and Warranties. In connection with the purchase and sale of the
Shares, the Trust represents and warrants to each Purchaser that:

 

(a)
           The Trust (i) has been duly formed and has legal existence as a statutory trust and is in good
standing under the laws of the State of Delaware; (ii) has full power and authority to own, lease and operate its properties and assets,
and conduct its business as described in the Registration Statement (as defined below) and the Prospectus ; (iii) is duly licensed and
qualified to transact business and is in good standing in each jurisdiction where it owns or leases property or in which the conduct
of its business or other activity requires such qualification, except where the failure to so qualify or to be in good standing would
not have a material adverse effect on the Trust.

 

(b)            The
Trust has full power and authority to enter into this Agreement and to perform all of the terms and provisions hereof to be carried out
by it. This Agreement has been duly and validly authorized, executed and delivered by or on behalf of the Trust. Assuming due authorization,
execution and delivery by the other parties thereto, this Agreement constitutes a legal, valid and binding obligation of the Trust enforceable
in accordance with its terms, subject to the qualification that the enforceability of the Trust’s obligations thereunder may be
limited by U.S. bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and similar laws affecting creditors’
rights generally, whether statutory or decisional, and to general equitable principles (regardless of whether enforcement is sought in
a proceeding in equity or at law), and except as enforcement of rights to indemnity or contribution thereunder may be limited by federal
or state securities laws.

 

(c)
           The Shares to be issued and delivered to and paid for by the Purchasers in accordance with
this Agreement against payment therefor as provided by this Agreement have been duly authorized and when issued and delivered to the
Purchasers will have been validly issued and will be fully paid and nonassessable.

 

    3

     

    

 

(d)            The
offering and sale of the Shares hereunder are being made pursuant to an effective Registration Statement on Form N-2 (File No. 333-251542
and 811-23247), initially filed with the Securities and Exchange Commission (the “Commission”) on December 18, 2020,
as amended by Pre-Effective Amendments No. 1 and 2 (the “Registration Statement”), and the Prospectus, dated February
2, 2021, including the statement of additional information and all documents incorporated by reference therein (the “Base Prospectus”),
as supplemented by the Prospectus Supplement, dated the date hereof (the “Prospectus Supplement”), that will be filed
with the Commission on or before the Closing Date. “Prospectus,” as used herein, means the Base Prospectus and the
Prospectus Supplement (including the statement of additional information and all documents incorporated therein by reference). No stop
order or other order suspending the Registration Statement has been issued and, to the best of the Trust’s knowledge, no proceedings
for that purpose have been initiated or threatened by the Trust or any other governmental authority.

 

(e)            The
Prospectus does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading. Since the date as of which information
is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (i) there has been no material adverse
change in the condition (financial or otherwise), business prospects, management, net assets or results of operations of the Trust, whether
or not arising in the ordinary course of business (other than changes resulting from changes in securities markets generally).

 

(f)             The
financial statements, including the statement of assets and liabilities, together with any related notes or schedules thereto, included
or incorporated by reference in the Registration Statement and the Prospectus present fairly the financial position of the Trust as of
the dates and for the periods indicated and said statements were prepared in accordance with generally accepted accounting principles
in the United States applied on a consistent basis.

 

(g)            None
of (i) the execution and delivery by the Trust of this Agreement, (ii) the issuance and sale by the Trust of the Shares as contemplated
by this Agreement, the Registration Statement and the Prospectus and (iii) the performance by the Trust of its obligations under this
Agreement (A) conflicts with or will conflict with, or results in or will result in a breach or violation of the declaration of trust
(as amended and restated from time to time), Statement of Preferences of Term Preferred Shares (“Statement of Preferences”),
bylaws or similar organizational documents of the Trust, (B) conflicts with or will conflict with, results in or will result in a breach
or violation of, or constitutes or will constitute a default or an event of default under, or results in or will result in the creation
or imposition of any lien, charge or encumbrance upon any properties or assets of the Trust under the terms and provisions of any agreement,
indenture, mortgage, loan agreement, note, insurance or surety agreement, lease or other instrument to which the Trust is a party or
by which it may be bound or to which any of the property or assets of the Trust is subject, except which breach, violation, default,
lien, charge or encumbrance would not have a material adverse effect on the Trust, or (C) results in or will result in any violation
of any order, law, rule or regulation of any court, governmental instrumentality, securities exchange or association or arbitrator, whether
foreign or domestic, applicable to the Trust or having jurisdiction over the Trust’s properties, except which violation would not
have a material adverse effect on the Trust.

 

    4

     

    

 

(h)
           No consent, approval, authorization, notification or order of, or filing with, or the issuance
of any license or permit by, any federal, state, local or foreign court or governmental or regulatory agency, commission, board, authority
or body or with any self-regulatory organization, other non-governmental regulatory authority, securities exchange or association, whether
foreign or domestic, is required by the Trust for the consummation by the Trust of the transactions to be performed by the Trust or the
performance by the Trust of all the terms and provisions to be performed by or on behalf of it in each case as contemplated in this Agreement,
the Registration Statement and the Prospectus, except such as (i) may be required and have been obtained under the Securities Act, the
Securities Exchange Act of 1934, the Investment Company Act of 1940 (the “Investment Company Act”) or the Investment
Advisors Act of 1940 or (ii) which failure to obtain would not have a material adverse effect on the Trust.

 

(i)
            Except as otherwise set forth in the Registration Statement or the Prospectus, there is no action, suit, claim, inquiry,
investigation or proceeding affecting the Trust or to which the Trust is a party before or by any court, commission, regulatory
body, administrative agency or other governmental agency or body, whether foreign or domestic, now pending or, to the knowledge of
the Trust, threatened against the Trust, except which would not have a material adverse effect on the Trust.

 

(j)             The
operations of the Trust are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the Money Laundering Control Act of 1986, as
amended, the Bank Secrecy Act, as amended, the United and Strengthening of America by Providing Appropriate tools Required to Intercept
and Obstruct Terrorism Act (USA PATRIOT Act) of 2011, the money laundering statutes of all applicable jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively,
the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Trust with respect to the Money Laundering Laws is pending or, to the knowledge of the Trust
after reasonable inquiry, threatened.

 

(k)
           The Trust intends to direct the investment of the proceeds of the offering of the Shares in
such a manner as to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”),
and has qualified and will continue to operate in compliance with the requirements to maintain its qualification as a regulated investment
company under Subchapter M of the Code.

 

(l)             Neither
the Trust, nor to the knowledge of the Trust, after reasonable inquiry, any trustee, officer, agent, employee or affiliate of the Trust
is (i) currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”)
or any other relevant sanctions authority or (ii) located, organized or resident in a country or territory that is subject to sanctions
by OFAC or any other relevant sanctions authority; and the Trust will not directly or indirectly use the proceeds of the offering, or
lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC or any other relevant
sanctions authority.

 

    5

     

    

 

(m)           The
Trust is duly registered with the Commission under the Investment Company Act as a non-diversified, closed-end management investment
company; the provisions of the Trust’s declaration of trust (as amended and restated from time to time), Statement of Preferences
and bylaws comply in all material respects with the requirements of the Investment Company Act.

 

(n)           The
Trust shall, by 5:30 p.m. Eastern time on the second trading day immediately following the date of this Agreement, issue a Current Report
on Form 8-K including the form of this Agreement and an opinion of legal counsel as to the validity of the Shares as exhibits thereto.

 

ARTICLE
III

OTHER AGREEMENT OF THE PARTIES

 

3.1           It
is the intent of the parties to this Agreement that in no event shall Purchasers, by reason of this Agreement or the transactions contemplated
thereby, be deemed to control, directly or indirectly, the Trust, and Purchasers shall not exercise, or be deemed to exercise, directly
or indirectly, a controlling influence over the management or policies of the Trust.

 

ARTICLE
IV

GENERAL PROVISIONS

 

4.1         
Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Trust and each Purchaser hereby will survive the execution of this
Agreement, the delivery to such Purchaser of the Shares and the payment by such Purchaser of the Purchase Price therefor for a period
of one year.

 

4.2
         Entire Agreement. This Agreement represents the entire agreement among the parties with
respect to the transactions contemplated herein and supersedes all prior agreements, written or oral, with respect thereto.

 

4.3          Amendment
and Waiver. The provisions of this Agreement may be amended only with the prior written consent of the Trust and each Purchaser.
The failure of any party to insist upon strict adherence to any one or more of the covenants and restrictions in this Agreement, on one
or more occasion, shall not be construed as a waiver, nor deprive such party of the right to require strict compliance thereafter with
the same. All waivers must be in writing and signed by the waiving party.

 

4.4           Expenses.
Each Purchaser and the Trust will pay its own respective expenses, including attorneys’ fees, in connection with the negotiation
of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated by this Agreement.

 

4.5          Successors
and Assigns. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns; provided, however, that neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any party without the prior written consent of each other party, except that the Shares may
be transferred by each Purchaser without the consent of the Trust.

 

    6

     

    

 

4.6          Governing
Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect
to the choice of law principles thereof.

 

4.7          Counterparts.
This Agreement may be executed in counterparts, each of which shall be an original and all of which shall constitute a single agreement.
Delivery of an executed signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery
of a manually executed counterpart hereof.

 

4.8          Severability.
The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person
or entity or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order
to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder
of this Agreement and the application of such provision to other persons, entities or circumstances shall not be affected by such invalidity
or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.

 

4.9          Construction.
Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action to be taken by any person, or which such person is prohibited
from taking, such provision shall be applicable whether such action is taken directly or indirectly by such person, whether or not expressly
specified in such provision. The construction of this Agreement shall not be affected by which party drafted this Agreement.

 

4.10         Headings.
The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.

 

4.11         Further
Assurances. In connection with this Agreement and the transactions contemplated herein, the parties to this Agreement shall execute
and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate
and perform the provisions of this Agreement and such transactions.

 

[signature
page follows]

 

    7

     

    

 

IN
WITNESS WHEREOF, the parties hereto have executed this Purchase Agreement on the date first written above.

 

	 	XAI
    OCTAGON FLOATING RATE & ALTERNATIVE INCOME TERM TRUST
	 	 
	 	/s/
    Kimberly A Flynn
	 	Name:
    	Kimberly
    A. Flynn
	 	Title:	Vice President

 

	 	PURCHASERS: 
	 	 	 
	 	By:	EAGLE POINT CREDIT MANAGEMENT, LLC
	 	 	 
	 	 	On behalf of each Purchaser listed on Appendix A
    hereto
	 	 	 
	 	 	/s/
Taylor Pine
	 	 	Name:  	Taylor Pine
	 	 	Title:	Director

 

    8

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