8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) June 29, 2022 (June 28, 2022)

XAI Octagon Floating Rate & Alternative Income Term Trust

(Exact name of registrant as specified in its charter)

Delaware	811-23247	82-235867
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

321 North Clark Street, Suite 2430, Chicago, Illinois	60654
(Address of principal executive offices)	(Zip Code)

Registrants telephone number, including area code (312) 374-6930

(Former name or former address, if changed since last report.) 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:  

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest	XFLT	New York Stock Exchange
6.50% Series 2026 Term Preferred Shares (Liquidation Preference $25.00)	XFLTPRA	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐   

Item 1.01. Entry into a Material Definitive Agreement.

Convertible Preferred Shares

On June 28, 2022, XAI Octagon Floating Rate & Alternative Income Term Trust (NYSE: XFLT) (the “Trust”) entered into a purchase agreement (the “Convertible Preferred Shares Purchase Agreement”) between the Trust, Eagle Point Credit Management LLC and the purchasers named therein (the “Purchasers”), in connection with the issuance and sale of 400,000 shares of the Trust’s 6.00% Series 2029 Convertible Preferred Shares, liquidation preference of $25.00 (the “Convertible Preferred Shares”), at a price equal to $23.25 per Convertible Preferred Share, in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 (the “Convertible Preferred Placement”). The Trust expects to receive net proceeds (before expenses) from the sale of the Convertible Preferred Shares of approximately $9.3 million.

In addition, pursuant to the Convertible Preferred Shares Purchase Agreement, the Purchasers have agreed to purchase up to 800,000 additional Convertible Preferred Shares, at one or more subsequent closings, as determined by the Trust in its discretion, on or before June 30, 2023. In the event the Trust does not elect to sell to the Purchasers all of the Convertible Preferred Shares which the Purchasers have agreed to purchase by June 30, 2023, the Trust will pay to the Purchasers an amount equal to $0.50 per unissued Convertible Preferred Share.

The Convertible Preferred Shares have a liquidation preference of $25.00 per share. In the event of any liquidation, dissolution or winding up of the Trust’s affairs, holders of Convertible Preferred Shares will be entitled to receive a liquidating distribution per share equal to the liquidation preference, plus an amount equal to all unpaid dividends and distributions on such share accumulated to (but excluding) the date fixed for distribution or payment, whether or not earned or declared by the Trust, but excluding interest on any such distribution or payment.

The Convertible Preferred Shares pay a quarterly dividend at a fixed annual rate of 6.00% of the liquidation preference, or $1.50 per share, per year. The dividend rate is subject to adjustment under certain circumstances.

Cumulative cash dividends or distributions on each Convertible Preferred Share are payable quarterly, when, as and if declared, or under authority granted, by the Board of Trustees of the Trust out of funds legally available for such payment. The Trust will pay dividends on the Convertible Preferred Shares every January 31, April 30, July 31 and October 31, commencing July 31, 2022.

The Convertible Preferred Shares are senior securities that constitute shares of beneficial interest of the Trust. The Convertible Preferred Shares rank senior to the Trust’s common shares of beneficial interest, par value $0.01 per share (the “Common Shares”), in priority of payment of dividends and as to the distribution of assets upon dissolution, liquidation or winding up of the Trust’s affairs; equal in priority with the Trust’s 6.50% Series 2026 Term Preferred Shares, liquidation preference $25.00 (the “2026 Preferred Shares” and together with the Convertible Preferred Shares, the “Preferred Shares”) and all other future series of preferred shares the Trust may issue as to priority of payment of dividends and as to distributions of assets upon dissolution, liquidation or the winding-up of the Trust’s affairs; and subordinate in right of payment to amounts owed under the Credit Agreement, and to the holder of any future senior Indebtedness.

The Trust is required to redeem, out of funds legally available therefor, all outstanding Convertible Preferred Shares on June 30, 2029, or the “Term Redemption Date,” at a price equal to the liquidation preference plus an amount equal to accumulated but unpaid dividends and distributions, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the Term Redemption Date.

If the Trust fails to maintain asset coverage of at least 200% as of the close of business on the last Business Day of a calendar quarter, and such failure is not cured by the close of business on the date that is thirty (30) calendar days following the date of filing of the Trust’s Annual Report or Semi-Annual Report on Form N-CSR with respect to the Trust’s fourth and second fiscal quarters, respectively, and the applicable monthly report on Form N-PORT filed by the Trust with the Securities and Exchange Commission (the “SEC”) with respect to the fiscal period ending as of the last day of such calendar quarter with respect to the Trust’s first and third fiscal quarters (such date the “Asset Coverage Cure Date”), then the Trust is required to redeem, within ninety (90) calendar days of the Asset Coverage Cure Date, such number of Preferred Shares equal to the lesser of (1) the minimum number of Preferred Shares the redemption of which, if deemed to have occurred immediately prior to the opening of business on the Asset Coverage Cure Date that will result in the Trust having an asset coverage ratio of at least 200% and (2) the maximum number of Preferred Shares that can be redeemed out of funds legally available for such redemption. In addition to Preferred Shares required to be redeemed, at the Trust’s sole discretion, the Trust may redeem such number of Preferred Shares (including Preferred Shares required to be redeemed) that will result in the Trust having an asset coverage ratio of up to and including 285%. The Preferred Shares to be redeemed may include, at the Trust’s sole option, any number or proportion of the Convertible Preferred Shares and other series of Preferred Shares. If the Convertible Preferred Shares are to be redeemed in such an event, they will be redeemed at a redemption price equal to the liquidation preference per share plus accumulated but unpaid dividends, if any, on such liquidation preference (whether or not declared, but excluding interest on accrued but unpaid dividends, if any) to, but excluding, the date fixed for such redemption.

At any time on or after June 30, 2024, at the Trust’s sole option, the Trust may redeem, from time to time, the Convertible Preferred Shares in whole or in part, out of funds legally available for such redemption, at a price per share equal to the sum of the liquidation preference plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such redemption.

Each holder of a Convertible Preferred Share shall have the right, at such holder’s option, to convert any such Convertible Preferred Share, at any time on or after the date six months after the issuance date of the Convertible Preferred Share and prior to the close of business on the business day immediately preceding the Term Redemption Date, into such number of Common Shares equal to the liquidation preference of the Convertible Preferred Share plus an amount equal to all unpaid dividends and distributions on such Share accumulated to (but excluding) the date of exercise, divided by the Conversion Price. The “Conversion Price” is the greater of (i) the market price per Common Share, represented by the five-day volume-weighted average price (“VWAP”) per Common Share ending on the trading day immediately preceding the date of exercise, or (ii) the Trust’s most recently reported net asset value per Common Share immediately prior to the date of exercise. If the Trust fails to fulfill its obligations to deliver Common Shares upon conversion of any Convertible Preferred Shares, the quarterly dividend rate payable on the Convertible Preferred Shares of any sub-series of which one or more shares was surrendered for conversion on such exercise date will increase to a fixed annual rate of 8.00% of the liquidation preference until the date on which the Trust fulfills its delivery obligations.

No holder of Convertible Preferred Shares may exercise its conversion right if upon conversion the holder would receive Common Shares that would cause funds and accounts (collectively, the “EP Accounts”) managed by Eagle Point Credit Management LLC (“Eagle Point”) and any person controlled by its direct parent company (“Eagle Point Parent”) to beneficially own in the aggregate more than 4.9% of the Common Shares.

The Trust is required to redeem the Convertible Preferred Shares at the liquidation preference, plus any accumulated and unpaid dividends thereon (whether or not authorized or declared) to, but excluding, the redemption date, if the Common Shares are no longer publicly traded on the NYSE, the Nasdaq Capital Market, the Nasdaq Global Select Market or the Nasdaq Global Market for a period of twenty (20) consecutive trading days.

In the case of a consolidation, merger or sale of all or substantially all of the Trust’s assets to another closed-end fund or business development company, the Trust must redeem the Convertible Preferred Shares at $25.00, plus any accumulated and unpaid dividends thereon (whether or not authorized or declared) to, but excluding, the redemption date unless (i) the successor entity’s common shares are publicly-traded on the NYSE, the Nasdaq Capital Market, the Nasdaq Global Select Market or the Nasdaq Global Market and have average daily trading volume over the 90 days immediately preceding approval of the transaction by the Board of Trustees of the Trust that is equal to or greater than the average daily trading volume of the Common Shares over such period; and (ii) if the Trust is not the successor entity, the successor entity issues to the holders of Convertible Preferred Shares preferred shares with terms that are substantially identical to the terms of the Convertible Preferred Shares.

For so long as the Convertible Preferred Shares are outstanding, the Purchasers have agreed not to sell in any day, in the aggregate, an amount of Common Shares exceeding 15% of the previous 20 trading days’ average trading volume.

Eagle Point and the Purchasers have granted to the Trust an irrevocable proxy to vote all Preferred Shares (including 2026 Preferred Shares and Convertible Preferred Shares) held by the EP Accounts in proportion to the vote of all other preferred shareholders.

The Convertible Preferred Shares will not be listed on any exchange and may not be transferred without the consent of the Trust.

The foregoing description of the Convertible Preferred Shares does not purport to be complete and is qualified in its entirety by reference to the full text of the Statement of Preferences of Term Preferred Shares, filed herewith as Exhibit 3.1 and incorporated by reference herein, and the Convertible Preferred Shares Purchase Agreement, filed herewith as Exhibit 10.1 and incorporated by reference herein.

Registered Direct Placement of Common Shares

Concurrently, the Trust has entered into a purchase agreement (the “Common Share Purchase Agreement”) between the Trust and the Purchasers in connection with the purchase and sale of Common Shares in a registered direct placement pursuant to the Trust’s effective shelf registration statement filed with the SEC. The Trust has agreed to sell 1,450,000 Common Shares at a price of $6.90 per Common Share. The offering is expected to close on or about June 30, 2022, subject to the satisfaction of customary closing conditions. The Trust expects to receive net proceeds (before expenses) from the sale of Common Shares of approximately $10.0 million.

The Common Share offering has been made pursuant a prospectus supplement, dated June 28, 2022, and the accompanying prospectus, dated January 24, 2022, each of which constitutes part of the Trust’s effective shelf registration statement on Form N-2 (File No. 333-261521) previously filed with the SEC (the “Registration Statement”).

The Trust has not retained a placement agent, underwriter, broker or dealer with respect to the Offering.

The foregoing description of the Common Share Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Common Share Purchase Agreement filed herewith as Exhibit 10.2 and incorporated herein by reference.

Preferred Share Voting Arrangements

Pursuant to the Convertible Preferred Shares Purchase Agreement and a letter agreement by and among the Trust, Eagle Point and the Purchasers, the Purchasers and Eagle Point have granted the Trust an irrevocable proxy to vote at any annual meeting or special meeting of shareholders of the Trust all Convertible Preferred Shares and 2026 Preferred Shares held by the Purchasers, Eagle Point, any other person controlled by Eagle Point Parent, or any other investment vehicles or accounts sponsored or managed by Eagle Point or any person controlled by Eagle Point Parent, or which Eagle Point or any person controlled by Eagle Point Parent otherwise has or shares the power to vote, or to direct the voting of, as of the record date for the applicable annual or special meeting of shareholders of the Trust in the same proportion as the vote of all other holders. The foregoing is qualified in its entirety by reference to the full text of the Convertible Preferred Shares Purchase Agreement filed herewith as Exhibit 10.1 and incorporated herein by reference and the letter agreement filed herewith as Exhibit 10.3 and incorporated herein by reference.

Item 3.02. Unregistered Sale of Equity Securities

The disclosure required by this Item and included in Item 1.01 of this Current Report is incorporated herein by reference.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On June 28, 2022, the Trust adopted Appendix B to the Statement of Preferences of Term Preferred Shares (the “Statement of Preferences”) establishing and fixing the rights and preferences of the Convertible Preferred Shares. The Statement of Preferences, as amended, authorizes 1,200,000 Convertible Preferred Shares, liquidation preference $25.00 per share. A copy of the Statement of Preferences is filed herewith as Exhibit 3.1 and incorporated herein by reference.

Item 7.01. Regulation FD Disclosure

On June 28, 2022, the Trust issued a press release, furnished as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific refence in such filing.

Item 8.01. Other Events

On June 28, 2022, the Trust conducted the Common Share offering pursuant to the Trust’s Registration Statement. A copy of the opinion of Skadden, Arps, Slate, Meagher & Flom LLP relating to the legality of the Common Shares is filed herewith as Exhibit 5.1 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d)        Exhibits

3.1 Statement of Preferences of Term Preferred Shares

5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP

10.1 Convertible Preferred Shares Purchase Agreement, dated June 28, 2022, among the Trust, Eagle Point and the Purchasers

10.2 Common Shares Purchase Agreement, dated June 28, 2022, between the Trust and the Purchasers

10.3 Letter Agreement, dated June 28, 2022, among the Trust, Eagle Point and the Purchasers

23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1)

99.1 Press Release, dated June 28, 2022

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TERM TRUST
Date: June 29, 2022	By:	/s/ Benjamin D. McCulloch
	Name:	Benjamin D. McCulloch
	Title:	Secretary and Chief Legal Officer

EX-3.1

Exhibit 3.1

XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TERM TRUST

STATEMENT OF PREFERENCES

OF

TERM PREFERRED SHARES

The XAI Octagon Floating Rate & Alternative Income Term Trust, a Delaware statutory trust (the “Trust”), hereby certifies that:

WHEREAS, the Board of Trustees of the Trust (the “Board of Trustees”), at a meeting duly convened and held on February 23, 2021, pursuant to authority expressly vested in it by Article VI of the Second Amended and Restated Agreement and Declaration of Trust of the Trust (the “Declaration of Trust”), adopted resolutions classifying an unlimited amount of shares of beneficial interest of the Trust as authorized but unissued preferred shares of the Trust, par value $0.01 per share.

WHEREAS, the preferences, rights, voting powers, restrictions, limitations as to dividends and distributions, qualifications, and terms and conditions of redemption of each Series of Term Preferred Shares are set forth in this Statement of Preferences, as modified, amended or supplemented from time to time in any Appendix (each an “Appendix” and collectively the “Appendices”) to this Statement of Preferences specifically relating to such Series (each such Series being referred to herein as a “Series of Term Preferred Shares,” “Term Preferred Shares of a Series” or a “Series” and shares of all such Series being referred to herein individually as a “Term Preferred Share” and collectively as the “Term Preferred Shares”).

ARTICLE I
Definitions

Section 1.1 Definitions. Unless the context or use indicates another or different meaning or intent and except with respect to any Series as specifically provided in the Appendix applicable to such Series, each of the following terms when used in this Statement of Preferences shall have the meaning ascribed to it below, whether such term is used in the singular or plural and regardless of tense or gender:

“1940 Act” means the Investment Company Act of 1940, as amended, or any successor statute.

“1940 Act Asset Coverage” means the Asset Coverage specified in Section 18(a)(2)(B) of the 1940 Act as in effect on the date hereof.

“Appendices” and “Appendix” shall have the respective meanings as set forth in the Recitals of this Statement of Preferences.

“Asset Coverage” shall mean the “asset coverage” of a class of senior security which is stock, as specified in Section 18 of the 1940 Act as in effect on the date hereof.

“Asset Coverage Cure Date” means, with respect to the failure by the Trust to maintain Asset Coverage as of the close of business on the last Business Day of a Calendar Quarter (as required by Section 2.4(a)), the date that is thirty (30) calendar days following the Filing Date with respect to such Calendar Quarter.

“Board of Trustees” shall have the meaning as set forth in the Recitals of this Statement of Preferences.

“Business Day” means any calendar day on which the New York Stock Exchange is open for trading and that is neither a Saturday, Sunday nor any other day on which banks in the city of New York, New York are authorized or obligated by law to close.

“Calendar Quarter” shall mean any of the three month periods ending March 31, June 30, September 30, or December 31 of each year.

“Commission” means the U.S. Securities and Exchange Commission.

“Common Shares” means the common shares of beneficial interest, par value $0.01 per share, of the Trust.

“Custodian” means a bank, as defined in Section 2(a)(5) of the 1940 Act, that has the qualifications prescribed in paragraph 1 of Section 26(a) of the 1940 Act, or such other entity as shall be providing custodian services to the Trust as permitted by the 1940 Act or any rule, regulation, or order thereunder, and shall include, as appropriate, any similarly qualified sub-custodian duly appointed by the Custodian.

“Custodian Agreement” means the Custodian Agreement by and among the Custodian and the Trust.

“Date of Original Issue” means, with respect to any Series, the date specified as the Date of Original Issue for such Series in the Appendix for such Series.

“Declaration of Trust” shall have the meaning as set forth in the Recitals of this Statement of Preferences.

“Default” shall have the meaning as set forth in Section 2.2(g)(i).

“Default Period” shall have the meaning as set forth in Section 2.2(g)(i).

“Default Rate” shall have the meaning as set forth in Section 2.2(g)(i).

“Deposit Securities” means, as of any date, any United States dollar-denominated security or other investment of a type described below that either (i) is a demand obligation payable to the holder thereof on any Business Day or (ii) has a maturity date, mandatory redemption date or mandatory payment date, on its face or at the option of the holder, preceding the relevant Redemption Date, Dividend Payment Date or other payment date in respect of which such security or other investment has been deposited or set aside as a Deposit Security:

(i) cash or any cash equivalent;

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(ii) any U.S. Government Obligation;

(iii) any Short-Term Money Market Instrument;

(iv) any investment in any money market fund registered under the 1940 Act that qualifies under Rule 2a-7 under the 1940 Act, or similar investment vehicle described in Rule 12d1-1(b)(2) under the 1940 Act, that invests principally in Short-Term Money Market Instruments or U.S. Government Obligations or any combination thereof; or

(v) any letter of credit from a bank or other financial institution that has a credit rating from at least one rating agency that is the highest applicable rating generally ascribed by such rating agency to bank deposits or short-term debt of similar banks or other financial institutions as of the date of this Statement of Preferences (or such rating’s future equivalent).

“Dividend Default” shall have the meaning as set forth in Section 2.2(g)(i).

“Dividend Payment Date” means, with respect to any Series, each of the Dividend Payment Dates for such Series set forth in the Appendix for such Series.

“Dividend Period” means, with respect to any Series, the Dividend Period for such Series set forth in the Appendix for such Series.

“Dividend Rate” means, with respect to any Series and as of any date, the Fixed Dividend Rate for that Series as adjusted, if a Default Period shall be in existence on such date, in accordance with the provisions of Section 2.2(g).

“Electronic Means” means email transmission, facsimile transmission or other similar electronic means of communication providing evidence of transmission (but excluding online communications systems covered by a separate agreement) acceptable to the sending party and the receiving party, in any case if operative as between any two parties, or, if not operative, by telephone (promptly confirmed by any other method set forth in this definition), which, in the case of notices to the Redemption and Paying Agent and the Custodian, shall be sent by such means to each of its representatives set forth in the Redemption and Paying Agent Agreement and the Custodian Agreement, respectively.

“Filing Date” means, with respect to any Calendar Quarter, the date of filing of the Trust’s SEC Report with respect to such Calendar Quarter.

“Fixed Dividend Rate” means, with respect to any Series, the rate per annum specified as the Fixed Dividend Rate for such Series in the Appendix for such Series.

“Holder” means, with respect to the Term Preferred Shares of any Series or any other security issued by the Trust, a Person in whose name such security is registered in the registration books of the Trust maintained by the Redemption and Paying Agent or otherwise.

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“Liquidation Preference” means, with respect to any Series, the amount specified as the liquidation preference per share for that Series in the Appendix for such Series.

“Mandatory Redemption Price” shall have the meaning as set forth in Section 2.5(b)(i).

“Market Value” of any asset of the Trust means, for securities for which market quotations are readily available, the market value thereof determined by an independent third-party pricing service designated from time to time by the Board of Trustees. Market Value of any asset shall include any interest accrued thereon. The pricing service shall value portfolio securities at the mean between the quoted bid and asked price or the yield equivalent when quotations are readily available. Securities for which quotations are not readily available shall be valued at fair value as determined by the pricing service using methods that include consideration of: yields or prices of securities of comparable quality, type of issue, coupon, maturity and rating; indications as to value from dealers; and general market conditions. The pricing service may employ electronic data processing techniques or a matrix system, or both, to determine recommended valuations.

“Non-Call Period” means, with respect to any Series, the period (if any) during which such Series shall not be subject to redemption at the option of the Trust, as set forth in the Appendix for such Series.

“Notice of Redemption” shall have the meaning as set forth in Section 2.5(d).

“Optional Redemption Date” shall have the meaning as set forth in Section 2.5(c)(i).

“Optional Redemption Premium” means, with respect to any Series, the premium (expressed as a percentage of the Liquidation Preference of the shares of such Series), if any, payable by the Trust upon the redemption of Term Preferred Shares of such Series at the option of the Trust, as set forth in the Appendix for such Series.

“Optional Redemption Price” shall have the meaning as set forth in Section 2.5(c)(i).

“Outstanding” means, as of any date with respect to Term Preferred Shares of any Series, the number of Term Preferred Shares of such Series theretofore issued by the Trust except (without duplication):

(i) any shares of such Series theretofore cancelled or redeemed or delivered to the Redemption and Paying Agent for cancellation or redemption in accordance with the terms hereof;

(ii) any shares of such Series as to which the Trust shall have given a Notice of Redemption and irrevocably deposited with the Redemption and Paying Agent sufficient Deposit Securities to redeem such shares in accordance with Section 2.5 hereof;

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(iii) any shares of such Series as to which the Trust shall be the Holder or the beneficial owner; and

(iv) any shares of such Series represented by any certificate in lieu of which any new certificate has been executed and delivered by the Trust.

“Person” means and includes an individual, a partnership, a trust, a corporation, a limited liability company, an unincorporated association, a joint venture or other entity or a government or any agency or political subdivision thereof.

“Preferred Shares” means any shares of beneficial interest of the Trust, par value $0.01 per share, classified as preferred shares, including shares of each Series of Term Preferred Shares, shares of any other series of such preferred shares now or hereafter issued by the Trust, and any other shares of beneficial interest hereafter authorized and issued by the Trust of a class having priority over any other class as to distribution of assets or payments of dividends.

“Record Date” means, with respect to any Series, the Record Date for such Series set forth in the Appendix for such Series.

“Redemption and Paying Agent” means, with respect to any Series, DST Systems, Inc. and its successors or any other redemption and paying agent appointed by the Trust with respect to such Series.

“Redemption and Paying Agent Agreement” means, with respect to any Series, the Redemption and Paying Agent Agreement or other similarly titled agreement by and among the Redemption and Paying Agent for such Series and the Trust with respect to such Series.

“Redemption Date” shall have the meaning as set forth in Section 2.5(d).

“Redemption Default” shall have the meaning as set forth in Section 2.2(g)(i).

“Redemption Price” shall mean the Term Redemption Price, the Mandatory Redemption Price or the Optional Redemption Price, as applicable.

“SEC Report” means, with respect to any Calendar Quarter, the Trust’s Annual Report or Semi-Annual Report on Form N-CSR, as applicable, and the applicable monthly report on Form N-PORT filed by the Trust with the Securities and Exchange Commission with respect to the fiscal period ending as of the last day of such Calendar Quarter.

“Securities Depository” shall mean The Depository Trust Company and its successors and assigns or any other securities depository selected by the Trust that agrees to follow the procedures required to be followed by such securities depository as set forth in this Statement of Preferences with respect to the Term Preferred Shares.

“Senior Security” shall have the meaning specified in Section 18 under the 1940 Act, as in effect on the date hereof.

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“Series” shall have the meaning as set forth in the Recitals of this Statement of Preferences.

“Short-Term Money Market Instruments” means the following types of instruments if, on the date of purchase or other acquisition thereof by the Trust, the remaining term to maturity thereof is not in excess of 180 days:

(i) commercial paper rated A-1 if such commercial paper matures in 30 days or A-1+ if such commercial paper matures in over 30 days;

(ii) demand or time deposits in, and banker’s acceptances and certificates of deposit of (A) a depository institution or trust company incorporated under the laws of the United States of America or any state thereof or the District of Columbia or (B) a United States branch office or agency of a foreign depository institution (provided that such branch office or agency is subject to banking regulation under the laws of the United States, any state thereof or the District of Columbia); and (iii) overnight funds.

“Statement of Preferences” means this Statement of Preferences of XAI Octagon Floating Rate & Alternative Income Term Trust, as it may be amended from time to time in accordance with its terms.

“Term Preferred Shares” shall have the meaning as set forth in the Recitals of this Statement of Preferences.

“Term Redemption Date” means, with respect to any Series, the date specified as the Term Redemption Date in the Appendix for such Series.

“Term Redemption Price” shall have the meaning as set forth in Section 2.5(a).

“Trust” shall have the meaning as set forth in the Preamble to this Statement of Preferences.

“U.S. Government Obligations” means direct obligations of the United States or of its agencies or instrumentalities that are entitled to the full faith and credit of the United States and that, other than United States Treasury Bills, provide for the periodic payment of interest and the full payment of principal at maturity or call for redemption.

“Voting Period” shall have the meaning as set forth in Section 2.6(b)(i).

With respect to any Series, any additional definitions specifically set forth in the Appendix relating to such Series and any amendments to any definitions specifically set forth in the Appendix relating to such Series, as such Appendix may be amended from time to time, shall be incorporated herein and made part hereof by reference thereto, but only with respect to such Series.

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Section 1.2 Interpretation. The headings preceding the text of Articles and Sections included in this Statement of Preferences are for convenience only and shall not be deemed part of this Statement of Preferences or be given any effect in interpreting this Statement of Preferences. The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Statement of Preferences. The use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively. Reference to any Person includes such Person’s successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually. Reference to any agreement (including this Statement of Preferences), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof. Except as otherwise expressly set forth herein, reference to any law means such law as amended, modified, codified, replaced or re-enacted, in whole or in part, including rules, regulations, enforcement procedures and any interpretations promulgated thereunder. References to Articles or Sections shall refer to those portions of this Statement of Preferences. The use of the terms “hereunder,” “hereof,” “hereto” and words of similar import shall refer to this Statement of Preferences as a whole and not to any particular Article, Section or clause of this Statement of Preferences.

ARTICLE II
Terms Applicable to All Series of
Term Preferred Shares

Except for such changes and amendments hereto with respect to a Series of Term Preferred Shares that are specifically contemplated by the Appendix relating to such Series, each Series of Term Preferred Shares shall have the following terms:

Section 2.1 Number of Shares; Ranking.

(a)       The number of authorized shares constituting any Series of Term Preferred Shares shall be as set forth with respect to such Series in the Appendix hereto relating to such Series. No fractional Term Preferred Shares shall be issued.

(b)       The Term Preferred Shares of each Series shall rank on a parity with shares of each other Series of Term Preferred Shares and with shares of any other series of Preferred Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Trust. The Term Preferred Shares of each Series shall have preference with respect to the payment of dividends and as to distribution of assets upon dissolution, liquidation or winding up of the affairs of the Trust over Common Shares as set forth herein.

(c)       No Holder of Term Preferred Shares shall have, solely by reason of being such a Holder, any preemptive or other right to acquire, purchase or subscribe for any Term Preferred Shares or Common Shares or other securities of the Trust which it may hereafter issue or sell.

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Section 2.2 Dividends and Distributions.

(a)       The Holders of any Term Preferred Shares of any Series shall be entitled to receive, when, as and if declared by, or under authority granted by, the Board of Trustees, out of funds legally available therefor and in preference to dividends and distributions on Common Shares, cumulative cash dividends and distributions on each share of such Series, calculated separately for each Dividend Period for such Series at the Dividend Rate in effect from time to time for such Series during such Dividend Period, computed on the basis of a 360-day year consisting of twelve 30-day months, on an amount equal to the Liquidation Preference for a share of such Series, and no more. Dividends and distributions on the Term Preferred Shares of any Series shall accumulate from the Date of Original Issue with respect to such Series and shall be payable monthly in arrears as provided in Section 2.2(f). Dividends payable on any Term Preferred Shares of any Series for any period of less than a full monthly Dividend Period, upon any redemption of such shares on any Redemption Date other than on a Dividend Payment Date, or, in the case of the first Dividend Period, more than a full monthly period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months and the actual number of days elapsed for any period of less than, or, in the case of the first Dividend Period, greater than, one month.

(b)       Dividends on shares of each Series of Term Preferred Shares with respect to any Dividend Period shall be declared to the Holders of record of such shares as their names shall appear on the registration books of the Trust at the close of business on the applicable Record Date, and shall be paid as provided further in Section 2.2(f) hereof.

(c)       (i) No full dividends or distributions shall be declared or paid on shares of a Series of Term Preferred Shares for any Dividend Period or part thereof unless full cumulative dividends and distributions due through the most recent dividend payment dates therefor for all outstanding Preferred Shares (including shares of other Series of Term Preferred Shares) have been or contemporaneously are declared and paid through the most recent dividend payment dates therefor. If full cumulative dividends and distributions due have not been declared and paid on all outstanding Preferred Shares of any series, any dividends and distributions being declared and paid on a Series of Term Preferred Shares will be declared and paid as nearly pro rata as possible in proportion to the respective amounts of dividends and distributions accumulated but unpaid on each such series of Preferred Shares on the relevant dividend payment date for such series. No Holders of Term Preferred Shares shall be entitled to any dividends and distributions, whether payable in cash, property or shares, in excess of full cumulative dividends and distributions as provided in this Section 2.2(c)(i) on such Term Preferred Shares. No interest or sum of money in lieu of interest shall be payable in respect of any dividend payments on any Series of Term Preferred Shares that may be in arrears.

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(ii)       For so long as any Term Preferred Shares are Outstanding, the Trust shall not: (x) declare any dividend or other distribution (other than a dividend or distribution paid in Common Shares) in respect of the Common Shares, (y) call for redemption, redeem, purchase or otherwise acquire for consideration any Common Shares, or (z) pay any proceeds of the liquidation of the Trust in respect of the Common Shares, unless, in each case, (A) immediately thereafter, the Trust shall have 1940 Act Asset Coverage after deducting the amount of such dividend or distribution or redemption or purchase price or liquidation proceeds, (B) all cumulative dividends and distributions on all Term Preferred Shares and all other Preferred Shares ranking on a parity with the Term Preferred Shares due on or prior to the earlier of the declaration, record or payment date, as applicable, of the applicable dividend, distribution, redemption, purchase or acquisition shall have been declared and paid (or shall have been declared and Deposit Securities or sufficient funds (in accordance with the terms of such Preferred Shares) for the payment thereof shall have been deposited irrevocably with the paying agent for such Preferred Shares) and (C) the Trust shall have deposited Deposit Securities pursuant to and in accordance with the requirements of Section 2.5(d)(ii) hereof with respect to Outstanding Term Preferred Shares of any Series to be redeemed pursuant to Section 2.5(a) or Section 2.5(b) hereof for which a Notice of Redemption shall have been given or shall have been required to be given in accordance with the terms hereof on or prior to the date of the applicable dividend, distribution, redemption, purchase or acquisition.

(iii)       Any dividend payment made on shares of a Series of Term Preferred Shares shall be credited against the dividends and distributions accumulated with respect to the Dividend Period or Dividend Periods for such Series for which dividends and distributions have not been paid, in chronological order.

(d)       Not later than 12:00 noon, New York City time, on the Dividend Payment Date for a Series of Term Preferred Shares, the Trust shall deposit with the Redemption and Paying Agent Deposit Securities having an aggregate Market Value on such date sufficient to pay the dividends and distributions that are payable on such Dividend Payment Date in respect of such Series. The Trust may direct the Redemption and Paying Agent with respect to the investment or reinvestment of any such Deposit Securities prior to the Dividend Payment Date, provided that such investment or reinvestment consists exclusively of Deposit Securities and provided further that the proceeds of any such investment will be available as same day funds at the opening of business on such Dividend Payment Date.

(e)       All Deposit Securities paid to the Redemption and Paying Agent for the payment of dividends payable on a Series of Term Preferred Shares shall be held in trust for the payment of such dividends by the Redemption and Paying Agent for the benefit of the Holders of such Series entitled to the payment of such dividends pursuant to Section 2.2(f). Any moneys paid to the Redemption and Paying Agent in accordance with the foregoing but not applied by the Redemption and Paying Agent to the payment of dividends, including interest earned on such moneys while so held, will, to the extent permitted by law, be repaid to the Trust as soon as possible after the date on which such moneys were to have been so applied, upon request of the Trust.

(f)       Dividends on shares of a Series of Term Preferred Shares shall be paid on each Dividend Payment Date for such Series to the Holders of shares of such Series as their names appear on the registration books of the Trust at the close of business on the applicable Record Date for such dividend. Dividends in arrears on shares of a Series of Term Preferred Shares for any past Dividend Period may be declared and paid at any time, without reference to any regular Dividend Payment Date, to the Holders of shares of such Series as their names appear on the registration books of the Trust on such date, not exceeding twenty (20) nor less than ten (10) calendar days preceding the payment date thereof, as may be fixed by the Board of Trustees. No interest or sum of money in lieu of interest will be payable in respect of any dividend payment or payments on shares of any Series of Term Preferred Shares which may be in arrears.

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(g)       (i) The Dividend Rate on a Series of Term Preferred Shares shall be adjusted to the Default Rate (as defined below) in the following circumstances. Subject to the cure provisions below, a “Default Period” with respect to a Series of Term Preferred Shares shall commence on any date the Trust fails to deposit with the Redemption and Paying Agent by 12:00 noon, New York City time, on (A) a Dividend Payment Date for such Series, Deposit Securities that will provide funds available to the Redemption and Paying Agent on such Dividend Payment Date sufficient to pay the full amount of any dividend on such Series payable on such Dividend Payment Date (a “Dividend Default”) or (B) an applicable Redemption Date for such Series, Deposit Securities that will provide funds available to the Redemption and Paying Agent on such Redemption Date sufficient to pay the full amount of the Redemption Price payable in respect of such Series on such Redemption Date (a “Redemption Default” and together with a Dividend Default, hereinafter referred to as “Default”). Subject to the cure provisions of Section 2.2(g)(ii) below, a Default Period with respect to a Dividend Default or a Redemption Default on a Series of Term Preferred Shares shall end on the Business Day on which, by 12:00 noon, New York City time, an amount equal to all unpaid dividends on such Series and any unpaid Redemption Price on such Series shall have been deposited irrevocably in trust in same-day funds with the Redemption and Paying Agent. In the case of any Default on a Series of Term Preferred Shares, the Dividend Rate for such Series for each calendar day during the Default Period will be equal to the Default Rate. The “Default Rate” on a Series of Term Preferred Shares for any calendar day shall be equal to the Fixed Dividend Rate for such Series plus two percent (2%) per annum.

(ii)       No Default Period for a Series of Term Preferred Shares with respect to any Default on such Series shall be deemed to commence if the amount of any dividend or any Redemption Price due in respect of such Series (if such Default is not solely due to the willful failure of the Trust) is deposited irrevocably in trust, in same-day funds, with the Redemption and Paying Agent by 12:00 noon, New York City time, on a Business Day that is not later than three (3) Business Days after the applicable Dividend Payment Date or Redemption Date for such Series with respect to which such Default occurred, together with an amount equal to the Default Rate on such Series applied to the amount and period of such non-payment on such Series, based on the actual number of calendar days comprising such period divided by 360.

Section 2.3 Liquidation Rights.

(a)       In the event of any liquidation, dissolution or winding up of the affairs of the Trust, whether voluntary or involuntary, the Holders of Term Preferred Shares shall be entitled to receive out of the assets of the Trust available for distribution to shareholders, after satisfying claims of creditors but before any distribution or payment shall be made in respect of the Common Shares, a liquidation distribution equal to the Liquidation Preference for such shares, plus an amount equal to all unpaid dividends and distributions on such shares accumulated to (but excluding) the date fixed for such distribution or payment on such shares (whether or not earned or declared by the Trust, but excluding interest thereon), and such Holders shall be entitled to no further participation in any distribution or payment in connection with any such liquidation, dissolution or winding up.

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(b)       If, upon any liquidation, dissolution or winding up of the affairs of the Trust, whether voluntary or involuntary, the assets of the Trust available for distribution among the Holders of all Outstanding Term Preferred Shares and any other outstanding Preferred Shares shall be insufficient to permit the payment in full to such Holders of the Liquidation Preference of such Term Preferred Shares plus accumulated and unpaid dividends and distributions on such shares as provided in Section 2.3(a) above and the amounts due upon liquidation with respect to such other Preferred Shares, then such available assets shall be distributed among the Holders of such Term Preferred Shares and such other Preferred Shares ratably in proportion to the respective preferential liquidation amounts to which they are entitled. In connection with any liquidation, dissolution or winding up of the affairs of the Trust, whether voluntary or involuntary, unless and until the Liquidation Preference on each Outstanding Term Preferred Share plus accumulated and unpaid dividends and distributions on such shares as provided in Section 2.3(a) above have been paid in full to the Holders of such shares, no dividends, distributions or other payments will be made on, and no redemption, purchase or other acquisition by the Trust will be made by the Trust in respect of, Common Shares.

(c)       Neither the sale of all or substantially all of the property or business of the Trust, nor the merger, consolidation or reorganization of the Trust into or with any other business or statutory trust, corporation or other entity, nor the merger, consolidation or reorganization of any other business or statutory trust, corporation or other entity into or with the Trust shall be a dissolution, liquidation or winding up, whether voluntary or involuntary, for the purpose of this Section 2.3.

Section 2.4 Coverage Test.

(a)       Asset Coverage Requirement. For so long as any shares of a Series of Term Preferred Shares are Outstanding, the Trust shall have Asset Coverage of at least 200% as of the close of business on the last Business Day of each Calendar Quarter. If the Trust shall fail to maintain such Asset Coverage as of any time as of which such compliance is required to be determined as aforesaid, the provisions of Section 2.5(b)(i) shall be applicable, which provisions shall constitute the sole remedy for the Trust’s failure to comply with the provisions of this Section 2.4(a).

(b)       Calculation of Asset Coverage. For purposes of determining whether the requirements of Section 2.4(a) are satisfied, (i) no Term Preferred Shares of any Series or other Preferred Shares shall be deemed to be Outstanding for purposes of any computation required by Section 2.4(a) if, prior to or concurrently with such determination, either (x) sufficient Deposit Securities or other sufficient funds (in accordance with the terms of such Series or other Preferred Shares) to pay the full redemption price for such Series or other Preferred Shares (or the portion thereof to be redeemed) shall have been deposited in trust with the paying agent for such Series or other Preferred Shares and the requisite notice of redemption for such Series or other Preferred Shares (or the portion thereof to be redeemed) shall have been given or (y) sufficient Deposit Securities or other sufficient funds (in accordance with the terms of such Series or other Preferred Shares) to pay the full redemption price for such Series or other Preferred Shares (or the portion thereof to be redeemed) shall have been segregated by the Custodian and the Trust from the assets of the Trust, by means of appropriate identification on the Custodian’s books and records or otherwise in accordance with the Custodian’s normal procedures, and (ii) the Deposit Securities or other sufficient funds that shall have been deposited with the applicable paying agent and/or segregated by the Custodian, as applicable, as provided in clause (i) of this sentence shall not be included as assets of the Trust for purposes of such computation.

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Section 2.5 Redemption.

Each Series of Term Preferred Shares shall be subject to redemption by the Trust as provided below:

(a)       Term Redemption. The Trust shall redeem all shares of a Series of Term Preferred Shares on the Term Redemption Date for such Series, out of funds legally available therefor, at a price per share equal to the Liquidation Preference per share of such Series plus an amount equal to all unpaid dividends and distributions on such share of such Series accumulated to (but excluding) the Term Redemption Date for such Series (whether or not earned or declared by the Trust, but excluding interest thereon) (the “Term Redemption Price”).

(b)       Asset Coverage Mandatory Redemption.

(i)       If the Trust fails to comply with the Asset Coverage requirement as provided in Section 2.4(a) and such failure is not cured as of the Asset Coverage Cure Date, the Trust shall, to the extent permitted by the 1940 Act and Delaware law, by the close of business on such Asset Coverage Cure Date, fix a redemption date and proceed to redeem in accordance with the terms of such Preferred Shares, a sufficient number of Preferred Shares, which at the Trust’s sole option (to the extent permitted by the 1940 Act and Delaware law) may include any number or proportion of Term Preferred Shares of any Series, to enable it to meet the requirements of Section 2.5(b)(ii). In the event that any shares of a Series of Term Preferred Shares then Outstanding are to be redeemed pursuant to this Section 2.5(b)(i), the Trust shall redeem such shares at a price per share equal to the Liquidation Preference per share of such Series plus an amount equal to all unpaid dividends and distributions on such share of such Series accumulated to (but excluding) the date fixed for such redemption by the Board of Trustees (whether or not earned or declared by the Trust, but excluding interest thereon) (the “Mandatory Redemption Price”).

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(ii)       On the Redemption Date for a redemption contemplated by Section 2.5(b)(i), the Trust shall redeem, out of funds legally available therefor, such number of Preferred Shares (which may include at the sole option of the Trust any number or proportion of Term Preferred Shares of any Series) as shall be equal to the lesser of (x) the minimum number of Preferred Shares, the redemption of which, if deemed to have occurred immediately prior to the opening of business on the Asset Coverage Cure Date, would result in the Trust having Asset Coverage on such Asset Coverage Cure Date of at least 200% (provided, however, that if there is no such minimum number of Term Preferred Shares and other Preferred Shares the redemption or retirement of which would have such result, all Term Preferred Shares and other Preferred Shares then outstanding shall be redeemed), and (y) the maximum number of Preferred Shares that can be redeemed out of funds expected to be legally available therefor in accordance with the Declaration of Trust and applicable law. Notwithstanding the foregoing, in the event that Preferred Shares are redeemed pursuant to this Section 2.5(b), the Trust may at its sole option, but is not required to, redeem a sufficient number of shares of any Series of Term Preferred Shares pursuant to this Section 2.5(b) that, when aggregated with other Preferred Shares redeemed by the Trust, would result, if deemed to have occurred immediately prior to the opening of business on the Asset Coverage Cure Date, in the Trust having Asset Coverage on such Asset Coverage Cure Date of up to and including 285%. The Trust shall effect such redemption on the date fixed by the Trust therefor, which date shall not be later than ninety (90) calendar days after such Asset Coverage Cure Date, except that if the Trust does not have funds legally available for the redemption of all of the required number of Term Preferred Shares and other Preferred Shares which have been designated to be redeemed or the Trust otherwise is unable to effect such redemption on or prior to ninety (90) calendar days after such Asset Coverage Cure Date, the Trust shall redeem those Term Preferred Shares and other Preferred Shares which it was unable to redeem on the earliest practicable date on which it is able to effect such redemption. If fewer than all of the Outstanding Term Preferred Shares of a Series are to be redeemed pursuant to this Section 2.5(b), the number of Term Preferred Shares of such Series to be redeemed shall be redeemed (A) from each Holder pro rata based upon the number of Outstanding shares of such Series held by such Holder, (B) by lot or (C) in such other manner as the Board of Trustees may determine to be fair and equitable.

(c)       Optional Redemptions.

(i)       Subject to the provisions of Section 2.5(c)(ii), the Trust may out of funds legally available therefor at its option on any Business Day following the expiration of the Non-Call Period (if any) for a Series of Term Preferred Shares (any such Business Day referred to in this sentence, an “Optional Redemption Date”) redeem in whole or from time to time in part the Outstanding Term Preferred Shares of such Series, at a redemption price per Term Preferred Share (the “Optional Redemption Price”) equal to (x) the Liquidation Preference per Term Preferred Share of such Series plus (y) an amount equal to all unpaid dividends and distributions on such Term Preferred Share of such Series accumulated to (but excluding) the Optional Redemption Date (whether or not earned or declared by the Trust, but excluding interest thereon) plus (z) the Optional Redemption Premium per share (if any) with respect to an optional redemption of Term Preferred Shares of such Series that is effected on such Optional Redemption Date.

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(ii)       If fewer than all of the outstanding shares of a Series of Term Preferred Shares are to be redeemed pursuant to Section 2.5(c)(i), the shares of such Series to be redeemed shall be selected either (A) from each Holder pro rata based upon the number of Outstanding shares of such Series held by such Holder, (B) by lot or (C) in such other manner as the Board of Trustees may determine to be fair and equitable. Subject to the provisions of this Statement of Preferences and applicable law, the Board of Trustees will have the full power and authority to prescribe the terms and conditions upon which Term Preferred Shares will be redeemed pursuant to this Section 2.5(c) from time to time.

(iii)       The Trust may not on any date deliver a Notice of Redemption pursuant to Section 2.5(d) in respect of a redemption contemplated to be effected pursuant to this Section 2.5(c) unless on such date the Trust has available Deposit Securities for the Optional Redemption Date contemplated by such Notice of Redemption having a Market Value not less than the amount (including any applicable premium) due to Holders of Term Preferred Shares by reason of the redemption of such Term Preferred Shares on such Optional Redemption Date.

(d)       Procedures for Redemption.

(i)       If the Trust shall determine or be required to redeem, in whole or in part, Term Preferred Shares of a Series pursuant to Section 2.5(a), (b) or (c), the Trust shall deliver a notice of redemption (the “Notice of Redemption”), by overnight delivery, by first class mail, postage prepaid or by Electronic Means to Holders thereof, or request the Redemption and Paying Agent, on behalf of the Trust, to promptly do so by overnight delivery, by first class mail, postage prepaid or by Electronic Means. A Notice of Redemption shall be provided not more than forty-five (45) calendar days prior to the date fixed for redemption in such Notice of Redemption (the “Redemption Date”). Each such Notice of Redemption shall state: (A) the Redemption Date; (B) the Series and number of Term Preferred Shares to be redeemed; (C) the CUSIP number for Term Preferred Shares of such Series; (D) the applicable Redemption Price on a per share basis; (E) if applicable, the place or places where the certificate(s) for such shares (properly endorsed or assigned for transfer, if the Board of Trustees requires and the Notice of Redemption states) are to be surrendered for payment of the Redemption Price; (F) that dividends on the Term Preferred Shares to be redeemed will cease to accumulate from and after such Redemption Date; and (G) the provisions of this Statement of Preferences under which such redemption is made. If fewer than all Term Preferred Shares held by any Holder are to be redeemed, the Notice of Redemption delivered to such Holder shall also specify the number of Term Preferred Shares to be redeemed from such Holder or the method of determining such number. The Trust may provide in any Notice of Redemption relating to a redemption contemplated to be effected pursuant to this Statement of Preferences that such redemption is subject to one or more conditions precedent and that the Trust shall not be required to effect such redemption unless each such condition has been satisfied at the time or times and in the manner specified in such Notice of Redemption. No defect in the Notice of Redemption or delivery thereof shall affect the validity of redemption proceedings, except as required by applicable law.

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(ii)       If the Trust shall give a Notice of Redemption, then at any time from and after the giving of such Notice of Redemption and prior to 12:00 noon, New York City time, on the Redemption Date (so long as any conditions precedent to such redemption have been met or waived by the Trust), the Trust shall (A) deposit with the Redemption and Paying Agent Deposit Securities having an aggregate Market Value on the date thereof no less than the Redemption Price of the Term Preferred Shares to be redeemed on the Redemption Date and (B) give the Redemption and Paying Agent irrevocable instructions and authority to pay the applicable Redemption Price to the Holders of the Term Preferred Shares called for redemption on the Redemption Date. Notwithstanding the foregoing, if the Redemption Date is the Term Redemption Date, then such deposit of Deposit Securities will be made no later than 15 calendar days prior to the Term Redemption Date. The Trust may direct the Redemption and Paying Agent with respect to the investment or reinvestment of any Deposit Securities prior to the Redemption Date, provided that such investment or reinvestment consists exclusively of Deposit Securities and provided further that the proceeds of any such investment shall be available at the opening of business on the Redemption Date as same day funds.

(iii)       Upon the date of the deposit of such Deposit Securities, all rights of the Holders of the Term Preferred Shares so called for redemption shall cease and terminate except the right of the Holders thereof to receive the Redemption Price thereof and such Term Preferred Shares shall no longer be deemed Outstanding for any purpose whatsoever (other than (A) the transfer thereof prior to the applicable Redemption Date and (B) the accumulation of dividends thereon in accordance with the terms hereof up to (but excluding) the applicable Redemption Date, which accumulated dividends shall be payable only as part of the applicable Redemption Price on the Redemption Date). The Trust shall be entitled to receive, promptly after the Redemption Date, any Deposit Securities in excess of the aggregate Redemption Price of the Term Preferred Shares called for redemption on the Redemption Date. Any Deposit Securities so deposited that are unclaimed at the end of ninety (90) calendar days from the Redemption Date shall, to the extent permitted by law, be repaid to the Trust, after which the Holders of the Term Preferred Shares so called for redemption shall look only to the Trust for payment of the Redemption Price thereof. The Trust shall be entitled to receive, from time to time after the Redemption Date, any interest on the Deposit Securities so deposited.

(iv)       On or after the Redemption Date, each Holder of Term Preferred Shares in certificated form (if any) that are subject to redemption shall surrender the certificate(s) evidencing such Term Preferred Shares to the Trust at the place designated in the Notice of Redemption and shall then be entitled to receive the Redemption Price for such Term Preferred Shares, without interest, and in the case of a redemption of fewer than all the Term Preferred Shares represented by such certificate(s), a new certificate representing the Term Preferred Shares that were not redeemed.

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(v)       Notwithstanding the other provisions of this Section 2.5, except as otherwise required by law, the Trust shall not redeem any Term Preferred Shares unless all accumulated and unpaid dividends and distributions on all Outstanding Term Preferred Shares and other series of Preferred Shares ranking on a parity with the Term Preferred Shares with respect to dividends and distributions for all applicable past dividend periods (whether or not earned or declared by the Trust) (x) shall have been or are contemporaneously paid or (y) shall have been or are contemporaneously declared and Deposit Securities or sufficient funds (in accordance with the terms of such Preferred Shares) for the payment of such dividends and distributions shall have been or are contemporaneously deposited with the Redemption and Paying Agent or other applicable paying agent for such Preferred Shares in accordance with the terms of such Preferred Shares, provided, however, that the foregoing shall not prevent the purchase or acquisition of Outstanding Term Preferred Shares pursuant to an otherwise lawful purchase or exchange offer made on the same terms to Holders of all Outstanding Term Preferred Shares and any other series of Preferred Shares for which all accumulated and unpaid dividends and distributions have not been paid.

(vi)       To the extent that any redemption for which a Notice of Redemption has been provided is not made by reason of the absence of legally available funds therefor in accordance with the Declaration of Trust and applicable law, such redemption shall be made as soon as practicable to the extent such funds become available. No Redemption Default shall be deemed to have occurred if the Trust shall fail to deposit in trust with the Redemption and Paying Agent the Redemption Price with respect to any shares where (1) the Notice of Redemption relating to such redemption provided that such redemption was subject to one or more conditions precedent and (2) any such condition precedent shall not have been satisfied at the time or times and in the manner specified in such Notice of Redemption. Notwithstanding the fact that a Notice of Redemption has been provided with respect to any Term Preferred Shares, dividends may be declared and paid on such Term Preferred Shares in accordance with their terms if Deposit Securities for the payment of the Redemption Price of such Term Preferred Shares shall not have been deposited in trust with the Redemption and Paying Agent for that purpose.

(e)       Redemption and Paying Agent as Trustee of Redemption Payments by Trust. All Deposit Securities transferred to the Redemption and Paying Agent for payment of the Redemption Price of Term Preferred Shares called for redemption shall be held in trust by the Redemption and Paying Agent for the benefit of Holders of Term Preferred Shares so to be redeemed until paid to such Holders in accordance with the terms hereof or returned to the Trust in accordance with the provisions of Section 2.5(d)(iii) above.

(f)       Compliance With Applicable Law. In effecting any redemption pursuant to this Section 2.5, the Trust shall use its best efforts to comply with all applicable conditions precedent to effecting such redemption under the 1940 Act and any applicable Delaware law, but shall effect no redemption except in accordance with the 1940 Act and any applicable Delaware law.

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(g)       Modification of Redemption Procedures. Notwithstanding the foregoing provisions of this Section 2.5, the Trust may, in its sole discretion and without a shareholder vote, modify the procedures set forth above with respect to notification of redemption for the Term Preferred Shares, provided that such modification does not materially and adversely affect the Holders of the Term Preferred Shares or cause the Trust to violate any applicable law, rule or regulation; and provided further that no such modification shall in any way alter the rights or obligations of the Redemption and Paying Agent without its prior consent.

Section 2.6 Voting Rights.

(a)       One Vote Per Term Preferred Share. Except as otherwise provided in the Declaration of Trust, this Statement of Preferences, a resolution of the Board of Trustees or as otherwise required by law, (i) each Holder of Term Preferred Shares shall be entitled to one vote for each Term Preferred Share held by such Holder on each matter submitted to a vote of shareholders of the Trust, and (ii) the Holders of outstanding Preferred Shares, including Outstanding Term Preferred Shares, and of outstanding Common Shares shall vote together as a single class; provided, however, that the Holders of outstanding Preferred Shares, including Outstanding Term Preferred Shares, shall be entitled, voting as a separate class on a one-vote-per-share basis (to the exclusion of the Holders of Common Shares and all other securities of the Trust), to elect two Trustees of the Trust at all times. In accordance with the Declaration of Trust, Trustees elected by the Holders of outstanding Preferred Shares will be elected to serve three-year terms. Two of the existing Trustees as of the Date of Original Issue of the initial Series of Term Preferred Shares issued pursuant to this Statement of Preferences shall be designated by the Trustees as of that date as the initial Trustees elected by the Holders of the outstanding Preferred Shares. The Trustees so designated will next stand for election by the Holders of outstanding Preferred Shares when their current term expires and the class to which they are assigned next stands for election. Subject to Section 2.6(b), the Holders of outstanding Common Shares and Preferred Shares, including Term Preferred Shares, voting together as a single class, shall elect the balance of the Trustees.

(b)       Voting For Additional Trustees.

(i)       Voting Period. During any period in which any one or more of the conditions described in clauses (1) or (2) of this Section 2.6(b)(i) shall exist (such period being referred to herein as a “Voting Period”), the number of Trustees constituting the Board of Trustees shall be automatically increased by the smallest number that, when added to the two Trustees elected by the Holders of Preferred Shares, including Term Preferred Shares, would constitute a majority of the Board of Trustees as so increased by such smallest number; and the Holders of Preferred Shares, including Term Preferred Shares, shall be entitled, voting as a separate class on a one-vote-per-share basis (to the exclusion of the Holders of Common Shares and all other securities of the Trust), to elect such smallest number of additional Trustees, together with the two Trustees that such Holders are in any event entitled to elect. A Voting Period shall commence:

(1)       if, at the close of business on any dividend payment date for any outstanding Preferred Share including any Outstanding Term Preferred Share, accumulated dividends (whether or not earned or declared) on such outstanding share of Preferred Shares equal to at least two (2) full years’ dividends shall be due and unpaid and sufficient cash or specified securities shall not have been deposited with the Redemption and Paying Agent or other applicable paying agent for the payment of such accumulated dividends; or

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(2)       if at any time Holders of Preferred Shares are otherwise entitled under the 1940 Act to elect a majority of the Board of Trustees.

Upon the termination of a Voting Period, the voting rights described in this Section 2.6(b)(i) shall cease, subject always, however, to the revesting of such voting rights in the Holders of Preferred Shares upon the further occurrence of any of the events described in this Section 2.6(b)(i).

(ii)       Notice of Special Meeting. As soon as practicable after the accrual of any right of the Holders of Preferred Shares to elect additional Trustees as described in Section 2.6(b)(i), the Trust shall call a special meeting of such Holders and notify the Redemption and Paying Agent and/or such other Person as is specified in the terms of such Preferred Shares to receive notice (1) by mailing or delivery by Electronic Means or (2) in such other manner and by such other means as are specified in the terms of such Preferred Shares, a notice of such special meeting to such Holders, such meeting to be held not less than ten (10) nor more than thirty (30) calendar days after the date of the delivery by Electronic Means or mailing of such notice. If the Trust fails to call such a special meeting, it may be called at the expense of the Trust by any such Holder on like notice. The record date for determining the Holders of Preferred Shares entitled to notice of and to vote at such special meeting shall be the close of business on the fifth (5th) Business Day preceding the calendar day on which such notice is mailed or otherwise delivered. At any such special meeting and at each meeting of Holders of Preferred Shares held during a Voting Period at which Trustees are to be elected, such Holders, voting together as a class (to the exclusion of the Holders of Common Shares and all other securities of the Trust), shall be entitled to elect the number of Trustees prescribed in Section 2.6(b)(i) on a one-vote-per-share basis.

(iii)       Terms of Office of Existing Trustees. The terms of office of the incumbent Trustees of the Trust at the time of a special meeting of Holders of the Preferred Shares to elect additional Trustees in accordance with Section 2.6(b)(i) shall not be affected by the election at such meeting by the Holders of Term Preferred Shares and such other Holders of Preferred Shares of the number of Trustees that they are entitled to elect, and the Trustees so elected by the Holders of Term Preferred Shares and such other Holders of Preferred Shares, together with the two (2) Trustees elected by the Holders of Preferred Shares in accordance with Section 2.6(a) hereof and the remaining Trustees elected by the Holders of the Common Shares and Preferred Shares, voting together as a single class, shall constitute the duly elected Trustees of the Trust.

18

(iv)       Certain Trustees to Stand for Election Each Year that a Voting Period Continues. For so long as a Voting Period continues, the additional Trustees elected by the Holders of the Preferred Shares pursuant to Section 2.6(b)(i) shall stand for election each year.

(v)       Terms of Office of Certain Trustees to Terminate Upon Termination of Voting Period. Simultaneously with the termination of a Voting Period, the terms of office of the additional Trustees elected by the Holders of the Preferred Shares pursuant to Section 2.6(b)(i) shall terminate, the remaining Trustees shall constitute the Trustees of the Trust and the voting rights of the Holders of Preferred Shares to elect additional Trustees pursuant to Section 2.6(b)(i) shall cease, subject to the provisions of the last sentence of Section 2.6(b)(i).

(c)       Holders of Term Preferred Shares to Vote on Certain Matters.

(i)       Certain Amendments Requiring Approval of Term Preferred Shares. Except as otherwise permitted by the terms of this Statement of Preferences, so long as any Term Preferred Shares are Outstanding, the Trust shall not, without the affirmative vote or consent of the Holders of at least two-thirds (2/3) of the Term Preferred Shares of all Series Outstanding at the time, voting together as a separate class, amend, alter or repeal the provisions of the Declaration of Trust, or this Statement of Preferences, whether by merger, consolidation or otherwise, so as to materially and adversely affect any preference, right or power of such Term Preferred Shares or the Holders thereof; provided, however, that (i) a change in the capitalization of the Trust in accordance with Section 2.7 hereof shall not be considered to materially and adversely affect the rights and preferences of the Term Preferred Shares, and (ii) a division of a Term Preferred Share shall be deemed to affect such preferences, rights or powers only if the terms of such division materially and adversely affect the Holders of the Term Preferred Shares. For purposes of the foregoing, no matter shall be deemed to adversely affect any preference, right or power of a Term Preferred Share of such Series or the Holder thereof unless such matter (i) alters or abolishes any preferential right of such Term Preferred Share, or (ii) creates, alters or abolishes any right in respect of redemption of such Term Preferred Share (other than as a result of a division of a Term Preferred Share). So long as any Term Preferred Shares are Outstanding, the Trust shall not, without the affirmative vote or consent of at least two-thirds (2/3) of the Holders of the Term Preferred Shares Outstanding at the time, voting as a separate class, file a voluntary application for relief under Federal bankruptcy law or any similar application under state law for so long as the Trust is solvent and does not foresee becoming insolvent.

(ii)       1940 Act Matters. Unless a higher percentage is provided for in the Declaration of Trust, the affirmative vote of the Holders of at least “a majority of the outstanding Preferred Shares,” as determined in accordance with Section 2(a)(42) of the 1940 Act, including Term Preferred Shares Outstanding at the time, voting as a separate class, shall be required to approve (A) any plan of reorganization (as such terms is used in the 1940 Act) adversely affecting such shares, or (B) any action requiring a vote of security holders of the Trust pursuant to Section 13(a) of the 1940 Act.

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(iii)       Certain Amendments Requiring Approval of Specific Series of Term Preferred Shares. Except as otherwise permitted by the terms of this Statement of Preferences, so long as any Term Preferred Shares of a Series are Outstanding, the Trust shall not, without the affirmative vote or consent of the Holders of at least two-thirds (2/3) of the Term Preferred Shares of such Series, Outstanding at the time, voting as a separate class, amend, alter or repeal the provisions of the Appendix relating to such Series, whether by merger, consolidation or otherwise, so as to materially and adversely affect any preference, right or power set forth in such Appendix of the Term Preferred Shares of such Series or the Holders thereof; provided, however, that (i) a change in the capitalization of the Trust in accordance with Section 2.7 hereof shall not be considered to materially and adversely affect the rights and preferences of the Term Preferred Shares of such Series, and (ii) a division of a Term Preferred Share shall be deemed to affect such preferences, rights or powers only if the terms of such division materially and adversely affect the Holders of the Term Preferred Shares of such Series; and provided, further, that no amendment, alteration or repeal of the obligation of the Trust to (x) pay the Term Redemption Price on the Term Redemption Date for a Series, or (y) accumulate dividends at the Dividend Rate (as set forth in this Statement of Preferences and the applicable Appendix hereto) for a Series shall be effected without, in each case, the prior unanimous vote or consent of the Holders of such Series of Term Preferred Shares. For purposes of the foregoing, no matter shall be deemed to adversely affect any preference, right or power of a Term Preferred Share of a Series or the Holder thereof unless such matter (i) alters or abolishes any preferential right of such Term Preferred Share, or (ii) creates, alters or abolishes any right in respect of redemption of such Term Preferred Share.

(d)       Voting Rights Set Forth Herein Are Sole Voting Rights. Unless otherwise required by law or the Declaration of Trust, the Holders of Term Preferred Shares shall not have any relative voting rights or preferences or other special rights with respect to voting other than those expressly set forth in this Section 2.6.

(e)       No Cumulative Voting. The Holders of Term Preferred Shares shall have no rights to cumulative voting.

(f)       Voting for Trustees Sole Remedy for Trust’s Failure to Declare or Pay Dividends. In the event that the Trust fails to declare or pay any dividends on any Series of Term Preferred Shares on the Dividend Payment Date therefor, the exclusive remedy of the Holders of the Term Preferred Shares shall be the right to vote for Trustees pursuant to the provisions of this Section 2.6. Nothing in this Section 2.6(f) shall be deemed to affect the obligation of the Trust to accumulate and, if permitted by applicable law, the Declaration of Trust and this Statement of Preferences, pay dividends at the Default Rate in the circumstances contemplated by Section 2.2(g) hereof.

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(g)       Holders Entitled to Vote. For purposes of determining any rights of the Holders of Term Preferred Shares to vote on any matter, whether such right is created by this Statement of Preferences, by the Declaration of Trust, by statute or otherwise, no Holder of Term Preferred Shares shall be entitled to vote any Term Preferred Share and no Term Preferred Share shall be deemed to be “Outstanding” for the purpose of voting or determining the number of shares required to constitute a quorum if, prior to or concurrently with the time of determination of shares entitled to vote or the time of the actual vote on the matter, as the case may be, the requisite Notice of Redemption with respect to such Term Preferred Share shall have been given in accordance with this Statement of Preferences and Deposit Securities for the payment of the Redemption Price of such Term Preferred Share shall have been deposited in trust with the Redemption and Paying Agent for that purpose. No Term Preferred Share held by the Trust shall have any voting rights or be deemed to be outstanding for voting or for calculating the voting percentage required on any other matter or other purposes.

Section 2.7 Issuance of Additional Preferred Shares.

So long as any Term Preferred Shares are Outstanding, the Trust may, without the vote or consent of the Holders thereof, authorize, establish and create and issue and sell shares of one or more series of a class of senior securities of the Trust representing stock under Section 18 of the 1940 Act, ranking on a parity with Term Preferred Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or the winding up of the affairs of the Trust, in addition to then Outstanding Series of Term Preferred Shares, including additional Series of Term Preferred Shares, and authorize, issue and sell additional shares of any such series of Preferred Shares then outstanding or so established and created, including additional Term Preferred Shares of any Series, in each case in accordance with applicable law, provided that the Trust shall, immediately after giving effect to the issuance of such additional Preferred Shares and to its receipt and application of the proceeds thereof, including to the redemption of Preferred Shares with such proceeds, have Asset Coverage (calculated in the same manner as is contemplated by Section 2.4(b) hereof) of at least 200%.

Section 2.8 Status of Redeemed or Repurchased Term Preferred Shares.

Term Preferred Shares that at any time have been redeemed or purchased by the Trust shall, after such redemption or purchase, have the status of authorized but unissued shares of beneficial interest of the Trust.

Section 2.9 Global Certificate.

For so long as any Term Preferred Shares are Outstanding (i) all shares of any Series of Term Preferred Shares Outstanding from time to time shall be represented by one global certificate for such Series registered in the name of the Securities Depository or its nominee and (ii) no registration of transfer of shares of such Series of Term Preferred Shares shall be made on the books of the Trust to any Person other than the Securities Depository or its nominee. The foregoing restriction on registration of transfer shall be conspicuously noted on the face or back of the global certificates.

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Section 2.10 Notice.

All notices or communications hereunder, unless otherwise specified in this Statement of Preferences, shall be sufficiently given if in writing and delivered in person, by telecopier, by Electronic Means or by overnight mail or delivery or mailed by first-class mail, postage prepaid. Notices delivered pursuant to this Section 2.10 shall be deemed given on the date received or, if mailed by first class mail, on the date five (5) calendar days after which such notice is mailed.

Section 2.11 Termination.

In the event that no shares of a Series of Term Preferred Shares are Outstanding, all rights and preferences of the shares of such Series established and designated hereunder shall cease and terminate, and all obligations of the Trust under this Statement of Preferences with respect to such Series shall terminate, other than in respect of the payment of and the right to receive the Redemption Price in accordance with Section 2.5 of this Statement of Preferences.

Section 2.12 Appendices.

The designation of each Series of Term Preferred Shares shall be set forth in an Appendix to this Statement of Preferences. The Board of Trustees may, by resolution duly adopted, without shareholder approval (except as otherwise provided by this Statement of Preferences or required by applicable law) (1) amend the Appendix to this Statement of Preferences relating to a Series so as to reflect any amendments to the terms applicable to such Series including an increase in the number of authorized shares of such Series and (2) add additional Series of Term Preferred Shares by including a new Appendix to this Statement of Preferences relating to such Series.

Section 2.13 Actions on Other than Business Days.

Unless otherwise provided herein, if the date for making any payment, performing any act or exercising any right, in each case as provided for in this Statement of Preferences, is not a Business Day, such payment shall be made, act performed or right exercised on the next succeeding Business Day, with the same force and effect as if made or done on the nominal date provided therefor, and, with respect to any payment so made, no dividends, interest or other amount shall accrue for the period between such nominal date and the date of payment.

Section 2.14 Modification.

The Board of Trustees, without the vote of the Holders of Term Preferred Shares, may interpret, supplement or amend the provisions of this Statement of Preferences or any Appendix hereto to supply any omission, resolve any inconsistency or ambiguity or to cure, correct or supplement any defective or inconsistent provision, including any provision that is inconsistent or otherwise conflicts with any provision of the 1940 Act, the rules and regulations promulgated thereunder, any order issued thereunder by the Commission, or any interpretive position of the staff of the Commission pertaining thereto, in each case, that is applicable to the Trust, or any provision that becomes defective after the date hereof because of impossibility of performance or any provision that is inconsistent with any provision of any other Preferred Shares of the Trust.

Section 2.15 No Additional Rights.

Unless otherwise required by law or the Declaration of Trust, the Holders of Term Preferred Shares shall not have any relative rights or preferences or other special rights other than those specifically set forth in this Statement of Preferences.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

22

IN WITNESS WHEREOF, XAI Octagon Floating Rate & Alternative Income Term Trust has caused these presents to be signed as of March 23, 2021 in its name and on its behalf by its Chief Financial Officer and Treasurer and attested by its Secretary. Said officers of the Trust have executed this Statement as officers and not individually, and the obligations and rights set forth in this Statement are not binding upon any such officers, or the Trustees or shareholders of the Trust, individually, but are binding only upon the assets and property of the Trust.

XAI OCTAGON FLOATING RATE &
ALTERNATIVE INCOME TERM TRUST
By:	/s/ Derek Mullins
	Name:	Derek Mullins
	Title:	Chief Financial Officer and Treasurer

ATTEST:
/s/ Benjamin D. McCulloch
Name:	Benjamin D. McCulloch
Title:	Chief Legal Officer and Secretary

[Statement of Preferences | Signature Page]

APPENDIX A

XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TERM TRUST

TERM PREFERRED SHARES
6.50% SERIES 2026 TERM PREFERRED SHARES

This Appendix establishes a Series of Term Preferred Shares of XAI Octagon Floating Rate & Alternative Income Term Trust (the “Trust”). Except as set forth below, this Appendix incorporates by reference the terms set forth with respect to all Series of such Term Preferred Shares in those “Statement of Preferences” dated March 23, 2021 (the “Statement of Preferences”). This Appendix has been adopted by resolution of the Board of Trustees or a duly authorized committee thereof on March 23, 2021. Capitalized terms used herein but not defined herein have the respective meanings set forth in the Statement of Preferences.

DESIGNATION

Term Preferred Shares, 6.50% Series 2026 Term Preferred Shares: A series of 1,196,000 Preferred Shares classified as Term Preferred Shares is hereby designated as the “Series 2026 Term Preferred Shares.” Each share of such Series shall have such preferences, voting powers, restrictions, limitations as to dividends and distributions, qualifications and terms and conditions of redemption, in addition to those required by applicable law and those that are expressly set forth in the Trust’s Declaration of Trust and the Statement of Preferences (except as the Statement of Preferences may be expressly modified by this Appendix), as are set forth in this Appendix A. The Series 2026 Term Preferred Shares shall constitute a separate series of Preferred Shares and of the Term Preferred Shares and each Series 2026 Term Preferred Share shall be identical. The following terms and conditions shall apply solely to the Series 2026 Term Preferred Shares:

Section 1. Number of Authorized Shares of Series.

The number of authorized shares is 1,196,000.

Section 2. Date of Original Issue with respect to Series.

The Date of Original Issue is March 29, 2021.

Section 3. Fixed Dividend Rate Applicable to Series.

The Fixed Dividend Rate is 6.50%.

Section 4. Liquidation Preference Applicable to Series.

The Liquidation Preference is $25.00 per share.

Section 5. Term Redemption Date Applicable to Series.

The Term Redemption Date is March 31, 2026.

Section 6. Optional Redemption Premium Applicable to Series.

There is no optional redemption premium applicable to the Series.

Section 7. Dividend Payment Dates Applicable to Series.

The Dividend Payment Dates are January 31, April 30, July 31, and October 31 (or, if any such day is not a Business Day, then on the next succeeding Business Day), beginning July 31, 2021.

Section 8. Non-Call Period Applicable to Series.

The Non-Call Period is the period beginning on the Date of Original of Issue and ending at the close of business on March 31, 2023.

Section 9. Exceptions to Certain Definitions Applicable to the Series.

The following definitions contained under the heading “Definitions” in the Statement of Preferences are hereby amended as follows:

Not applicable.

Section 10. Additional Definitions Applicable to the Series.

The following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires:

“Dividend Period” means, with respect to each Series 2026 Term Preferred Share, in the case of the first Dividend Period, the period beginning on the Date of Original Issue for such Series and ending on, but excluding July 31, 2021, and for each subsequent Dividend Period, the period beginning on and including the Dividend Payment Date for the previous Dividend Period and ending on, but excluding the next Dividend Payment Date.

“Record Date” means, with respect to each Series 2026 Term Preferred Share, the close of business on the January 15, April 15, July 15 or October 15, immediately preceding the applicable Dividend Payment Date (or, if any such day is not a Business Day, then on the next succeeding Business Day).

Section 11. Amendments to Terms of Term Preferred Shares Applicable to the Series.

The following provisions contained under the heading “Terms of the Term Preferred Shares” in the Statement of Preferences are hereby amended as follows:

Not applicable.

Section 12. Additional Terms and Provisions Applicable to the Series.

The following provisions shall be incorporated into and be deemed part of the Statement of Preferences:

Not applicable.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

2

IN WITNESS WHEREOF, XAI Octagon Floating Rate & Alternative Income Term Trust has caused these presents to be signed as of March 23, 2021 in its name and on its behalf by its Chief Financial Officer and Treasurer and attested by its Secretary. Said officers of the Trust have executed this Appendix as officers and not individually, and the obligations and rights set forth in this Appendix are not binding upon any such officers, or the Trustees or shareholders of the Trust, individually, but are binding only upon the assets and property of the Trust.

XAI OCTAGON FLOATING RATE &
ALTERNATIVE INCOME TERM TRUST
By:	/s/ Derek Mullins
	Name:	Derek Mullins
	Title:	Chief Financial Officer and Treasurer

ATTEST:
/s/ Benjamin D. McCulloch
Name:	Benjamin D. McCulloch
Title:	Chief Legal Officer and Secretary

[Appendix A to Statement of Preferences | Signature Page]

XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TERM TRUST

AMENDMENT TO
STATEMENT OF PREFERENCES
OF
TERM PREFERRED SHARES
DATED MARCH 23, 2021
(“STATEMENT OF PREFERENCES”)

The undersigned officer of XAI Octagon Floating Rate & Alternative Income Term Trust (the “Trust”), a Delaware statutory trust, hereby certifies as follows:

WHEREAS, the Trust has established a Series of Term Preferred Shares designated as the “Series 2026 Term Preferred Shares” pursuant to Appendix A to the Statement of Preferences.

WHEREAS, pursuant to Section 2.12 of the Statement of Preferences, the Board of Trustees may, by resolution duly adopted, without shareholder approval (except as otherwise provided by this Statement of Preferences or required by applicable law) amend the Appendix to the Statement of Preferences relating to a Series so as to reflect any amendments to the terms applicable to such Series including an increase in the number of authorized shares of such Series.

NOW THEREFORE

1.       The following amendment to Appendix A to the Statement of Preferences has been duly adopted and approved by the Board of Trustees of the Fund:

  The number of shares of the Trust’s Series 2026 Term Preferred Shares be increased from 1,196,000 to 1,596,000.

2.       Except as amended hereby, the Statement of Preferences, including Appendix A thereto, remains in full force and effect.

3.       An original copy of this Amendment shall be lodged with the records of the Trust and filed in such places as the Trustees deem appropriate.

[Signature Page Follows]

IN WITNESS WHEREOF, XAI Octagon Floating Rate & Alternative Income Term Trust, has caused these presents to be signed as of September 8, 2021 in its name and on its behalf by its Chief Financial Officer and Treasurer and attested by its Chief Legal Officer and Secretary. Said officers of the Trust have executed this amendment as officers and not individually, and the obligations and rights set forth in this amendment are not binding upon any such officers, or the trustees or shareholders of the Trust, individually, but are binding only upon the assets and property of the Trust.

XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TERM TRUST
By:	/s/ Derek Mullins
	Name:	Derek Mullins
	Title:	Chief Financial Officer and Treasurer

ATTEST:
/s/ Benjamin D. McCulloch
Name:	Benjamin D. McCulloch
Title:	Chief Legal Officer and Secretary

2

APPENDIX B

XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TERM TRUST

TERM PREFERRED SHARES
6.00% SERIES 2029 CONVERTIBLE PREFERRED SHARES

This Appendix establishes a Series of Term Preferred Shares of XAI Octagon Floating Rate & Alternative Income Term Trust (the “Trust”). Except as set forth below, this Appendix incorporates by reference the terms set forth with respect to all Series of such Term Preferred Shares in those “Statement of Preferences” dated March 23, 2021 (the “Statement of Preferences”). This Appendix has been adopted by resolution of the Board of Trustees or a duly authorized committee thereof on June 28, 2022. Capitalized terms used herein but not defined herein have the respective meanings set forth in the Statement of Preferences.

DESIGNATION

Term Preferred Shares, 6.00% Series 2029 Convertible Preferred Shares: A series of 1,200,000 Preferred Shares classified as Term Preferred Shares is hereby designated as the “Series 2029 Convertible Preferred Shares.” Each share of such Series shall have such preferences, voting powers, restrictions, limitations as to dividends and distributions, conversion privilege, qualifications and terms and conditions of redemption, in addition to those required by applicable law and those that are expressly set forth in the Trust’s Declaration of Trust and the Statement of Preferences (except as the Statement of Preferences may be expressly modified by this Appendix), as are set forth in this Appendix B. The Series 2029 Convertible Preferred Shares shall constitute a separate series of Preferred Shares and of the Term Preferred Shares.

The following terms and conditions shall apply solely to the Series 2029 Convertible Preferred Shares:

Section 1. Number of Authorized Shares of Series; Designation of Sub-Series.

The number of authorized shares of Series 2029 Convertible Preferred Shares is 1,200,000.

The Series 2029 Convertible Preferred Shares shall be divided into a number of sub-series (each a “Sub-Series”) as determined by the Board of Trustees of the Trust or pursuant to their delegated authority.

400,000 Shares of Series 2029 Convertible Preferred Shares have been designated as Sub-Series A.

Upon each subsequent issuance date of Shares of Series 2029 Convertible Preferred Shares, as determined by the Board of Trustees of the Trust or pursuant to their delegated authority, the shares issued on such date shall be designated as a separate Sub-Series. Each share of each Sub-Series shall be identical.

Each Sub-Series shall be listed on Annex I to this Appendix B, which shall be amended or supplemented in connection with each designation of a Sub-Series.

The shares of each Sub-Series shall rank on parity with shares of each other Sub-Series and with shares of any other series of Term Preferred Shares and any other series of Preferred Shares as to the payment of dividends and distribution of assets upon dissolution, liquidation or winding up of the affairs of the Trust.

Section 2. Date of Original Issue with respect to each Sub-Series.

The Date of Original Issue with respect to each Sub-Series shall be set forth on Annex I to this Appendix B.

Section 3. Fixed Dividend Rate Applicable to Series.

The Fixed Dividend Rate is 6.00%.

Section 4. Liquidation Preference Applicable to Series.

The Liquidation Preference is $25.00 per share.

Section 5. Term Redemption Date Applicable to Series.

The Term Redemption Date is June 30, 2029.

Section 6. Optional Redemption Premium Applicable to Series.

There is no optional redemption premium applicable to the Series.

Section 7. Dividend Payment Dates Applicable to Series.

The Dividend Payment Dates are January 31, April 30, July 31, and October 31 (or, if any such day is not a Business Day, then on the next succeeding Business Day).

Section 8. Non-Call Period Applicable to Series.

The Non-Call Period is the period beginning on June 30, 2022 and ending at the close of business on June 30, 2024.

Section 9. Exceptions to Certain Definitions Applicable to the Series.

The following definitions contained under the heading “Definitions” in the Statement of Preferences are hereby amended as follows:

Not applicable.

Section 10. Additional Definitions Applicable to the Series.

The following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires:

“Closing Sale Price” of the Common Shares on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) at 4:00 p.m. (New York City time) on that date as reported in composite transactions for the principal U.S. national securities exchange on which the Common Shares are traded.

“Convertibility Date” means, with respect to each Sub-Series, the Convertibility Date for such Sub-Series as set forth on Annex I of this Appendix B, which shall be the date six-months after the Date of Original Issue with respect to such Sub-Series.

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“Conversion Price” means the greater of (i) the Market Price or (ii) the Trust’s most recently reported net asset value per Common Share immediately prior to the relevant Exercise Date; provided, that the Trust shall use commercially reasonable efforts to publicly report a net asset value each Business Day; and provided, however, if as of any Exercise Date, the Common Shares are not listed or quoted on a United States securities exchange or automated quotation system, the Conversion Price shall be the Trust’s most recently reported net asset value per Common Share immediately prior to the relevant Exercise Date.

“Dividend Period” means, with respect to each Sub-Series of Series 2029 Convertible Preferred Share, in the case of the first Dividend Period, the period beginning on the Date of Original Issue for such Sub-Series and ending on, but excluding, the next Dividend Payment Date, and for each subsequent Dividend Period, the period beginning on and including the Dividend Payment Date for the previous Dividend Period and ending on, but excluding, the next Dividend Payment Date.

“Eagle Point” means Eagle Point Credit Management LLC or any Person controlled by Eagle Point Holdings LP, Eagle Point’s immediate parent company.

“EP Accounts” means any funds and accounts managed by Eagle Point.

“Market Disruption Event” means any suspension of, or limitation imposed on, trading of the Common Shares by any exchange or quotation system on which the VWAP is determined pursuant to the definition of the term “VWAP” (the “Relevant Exchange”) during any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day and whether by reason of movements in price exceeding limits permitted by the Relevant Exchange as to securities generally, or otherwise relating to the Common Shares on the Relevant Exchange.

“Market Price” means per Common Share, as of any Exercise Date, the arithmetic average of the VWAP per Common Share for each of the five (5) consecutive full Trading Days ending on the Trading Day immediately preceding such Exercise Date.

“Minimum Conversion Shares” means, as of any Exercise Date, the lesser of (i) 10,000 Series 2029 Convertible Preferred Shares or (ii) the total number of Series 2029 Convertible Preferred Shares held by all holders exercising their option to convert on such Exercise Date and eligible for conversion on such Exercise Date.

“Non-Listing Event” means that the Trust’s Common Shares shall have failed to be publicly-traded on the New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Select Market or the Nasdaq Global Market for a period of twenty (20) consecutive Trading Days.

“Qualifying Transaction” means the merger or consolidation of the Trust with a closed-end investment company or business development company or the sale or transfer of all or substantially all of the Trust’s assets to a closed-end investment company or business development company, in which (a) the Trust is the successor entity or the successor entity’s common shares are publicly traded on the New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Select Market or the Nasdaq Global Market and have an average daily trading volume that is equal to or greater than the average daily trading volume of the Common Shares over the ninety (90) Trading Days immediately preceding the approval of the transaction by the Board of Trustees of the Trust, and (b) if the Trust is not the successor entity, the successor entity issues to the holders of Series 2029 Convertible Preferred Shares preferred shares with terms that are substantially identical to the terms of the Series 2029 Convertible Preferred Shares.

“Record Date” means, with respect to each Series 2029 Convertible Preferred Share, the close of business on the January 15, April 15, July 15 or October 15, immediately preceding the applicable Dividend Payment Date (or, if any such day is not a Business Day, then on the next succeeding Business Day).

3

“Relevant Exchange” has the meaning set forth in the definition of the term “Market Disruption Event.”

“Reorganization Transaction” means a merger or consolidation of the Trust with any other closed-end investment company or business development company or the sale or transfer of all or substantially all of the Trust’s assets to any other closed-end investment company or business development company; provided that a Qualifying Transaction shall not be a Reorganization Transaction.

“Trading Day” means a Business Day on which the Relevant Exchange is scheduled to be open for business and, other than with respect to determination of a Delisting Event, on which there has not occurred a Market Disruption Event.

“Voting Security” has the meaning set forth in Section 2(a)(42) of the 1940 Act.

“VWAP” per Common Share on any Trading Day means the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg (or, if Bloomberg ceases to publish such price, any successor service reasonably agreed by the Trust and Eagle Point; provided that reporting prepared for the Trust by the then-current Designated Market Maker for the Common Shares shall be considered reasonably agreed by both the Trust and Eagle Point) page “XFLT US<Equity>VAP” (or its equivalent successor if such page is not available) in respect of the period from the open of trading on the relevant Trading Day until the close of trading on such Trading Day (or if such volume-weighted average price is unavailable, the average Closing Sale Price for the five Trading Days immediately prior to giving notice of conversion).

Section 11. Amendments to Terms of Term Preferred Shares Applicable to the Series.

The provisions contained in Section 2.9 under the heading “Terms Applicable to all Series of Term Preferred Shares” in the Statement of Preferences are hereby amended and restated with respect to the series 2029 Convertible Preferred Shares as follows:

(a)           Share Certificates. A register shall be kept at the offices of the Trust or any transfer agent duly appointed by the Trustees under the direction of the Trustees which shall contain the names and addresses of the Holders of the Series 2029 Convertible Preferred Shares and the number of shares of each Sub-Series of Series 2029 Convertible Preferred Shares held by them respectively and a record of all transfers thereof. Such register shall be conclusive as to who are the holders of the shares of each Sub-Series of Series 2029 Convertible Preferred Share and who shall be entitled to receive dividends or distributions or otherwise to exercise or enjoy the rights of a Holder of the Series 2029 Convertible Preferred Shares. No Holder of the Series 2029 Convertible Preferred Shares shall be entitled to receive payment of any dividend or distribution, nor to have notice given to him as herein provided, until he, she or it has given his, her or its address to a transfer agent or such other officer or agent of the Trustees as shall keep the register for entry thereon.

Section 12. Additional Terms and Provisions Applicable to the Series.

The following provisions shall be incorporated into and be deemed part of the Statement of Preferences:

(a)           Conversion of Shares.

(i)         Conversion Privilege. Subject to and upon compliance with the provisions of this Section 12(a) each holder of a share of a Sub-Series of Series 2029 Convertible Preferred Shares shall have the right, at such holder’s option, to convert any such share, at any time on or after the Convertibility Date applicable to such Sub-Series and prior to the close of business on the Business Day immediately preceding the Term Redemption Date, into such number of Common Shares equal to the Liquidation Preference of the Series 2029 Convertible Preferred Share plus an amount equal to all unpaid dividends and distributions on such Share accumulated to (but excluding) the Exercise Date, divided by the Conversion Price (subject to, and in accordance with, the settlement provision of Section 12(a)(ii), the “Conversion Obligation”).

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(ii)        Conversion Procedures; Settlement Upon Conversion.

(A)       In connection with the conversion of any Series 2029 Convertible Preferred Shares, such holder shall complete, sign and deliver (including via facsimile, .pdf attachment or other electronically transmitted signature thereof (including DocuSign or Adobe Sign)) an irrevocable notice to the Trust as set forth in Annex II to this Appendix B) (a “Notice of Conversion”) and state in writing therein the number of Shares of each Sub-Series of Series 2029 Convertible Preferred Shares to be converted.

On any single Exercise Date, converting holders must surrender for conversion an aggregate number of Series 2029 Convertible Preferred Shares equal to or greater than the Minimum Conversion Shares. If more than one Series 2029 Convertible Preferred Share shall be surrendered for conversion at one time by the same holder on a single Exercise Date, the Conversion Obligation with respect to such shares shall be computed on the basis of the aggregate Liquidation Preference plus an amount equal to all unpaid dividends and distributions on such shares accumulated to (but excluding) the Exercise Date, so surrendered on such Exercise Date by such holder.

(B)       A share shall be deemed to have been converted immediately prior to the close of business on the Business Day (the “Exercise Date”) that the holder has complied with the requirements set forth in subsection (A) above. By the close of business on the second Business Day immediately following the Exercise Date, the Trust shall (1) update the register maintained by the Trust pursuant to Section 11(a) to reflect the change in the number of shares of each applicable Sub-Series outstanding and held by such holder as a result of the conversion and (2) issue or cause to be issued, and deliver to such holder of converted Series 2029 Convertible Preferred Shares certificates or a book-entry transfer through the Depository Trust Company for the full number of Common Shares to which such holder shall be entitled in satisfaction of the Conversion Obligation; provided that if the Trust shall fail to fulfill the obligations in clauses (1) and (2) above by the close of business on the second Business Day immediately following the Exercise Date, the dividends payable on the Convertible Preferred Shares of any Sub-Series of which one or more Shares was surrendered for conversion on such Exercise Date shall increase to a rate per annum that is 2.00% above the Fixed Dividend Rate stated in Section 3 until the date on which the obligations set forth in clauses (1) and (2) above have been satisfied. All Common Shares to be issued upon conversion of Series 2029 Convertible Preferred Shares shall be fully paid and nonassessable by the Trust and free from all taxes, liens and charges with respect to the issue thereof.

(D)       No fractional Common Shares or scrip representing fractional Common Shares shall be issued upon conversion of any Series 2029 Convertible Preferred Shares into Common Shares. In lieu of fractional shares otherwise issuable, the converting holder will be entitled to receive an amount in cash equal to the fraction of Common Share multiplied by the applicable Conversion Price. In order to determine whether the number of Common Shares to be delivered to a holder upon the conversion of such holder’s Series 2029 Convertible Preferred Shares will include a fractional share, such determination shall be based on the aggregate number of Series 2029 Convertible Preferred Shares of such holder that are being converted on any single Exercise Date.

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(D)       If a holder submits a Series 2029 Convertible Preferred Share for conversion, the Trust shall pay any documentary, stamp or similar issue or transfer tax due on the issue of the Common Shares upon conversion.

(E)       The Person in whose name the certificate for any Common Shares delivered upon conversion is registered shall be treated as a shareholder of record as of the close of business on the relevant Exercise Date. Upon a conversion of Series 2029 Convertible Preferred Shares, the rights of the converting holder with respect to the Series 2029 Convertible Preferred Shares being converted shall cease, except that the holder thereof shall thereafter have and retain (i) the right to receive Common Shares in respect of the converted Series 2029 Convertible Preferred Shares and cash in lieu of fractional shares, and (ii) the right to vote such Series 2029 Convertible Preferred Shares in connection with any matters submitted to a vote of Shareholders or to receive distributions with respect to such Series 2029 Convertible Preferred Share, in each case as to which the applicable record date established by the Board of Trustees for determining Shareholders entitled to vote on such matter or entitled to receive distributions, as the case may be, shall occur prior to the Exercise Date.

(H)       Notwithstanding anything to the contrary herein, no holder shall exercise its conversion privilege or be entitled to receive Common Shares upon the exercise of its conversion privilege to the extent (but only to the extent) that the receipt of such Common Shares would cause EP Accounts, in the aggregate, to be become, directly or indirectly, “beneficial owners” (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of more than 4.9% of the Common Shares outstanding at such time (the “EP Account Ownership Limitation”). In addition, notwithstanding anything to the contrary herein, no holder that is an investment company (as defined in the 1940 Act) or would be an investment company but for Section 3(c)(1) or 3(c)(7) of the 1940 Act shall exercise its conversion privilege or be entitled to receive Common Shares upon the exercise of its conversion privilege, to the extent (but only to the extent) that the receipt of such Common Shares would cause such holder to become, directly or indirectly, a beneficial owner of more than 3% of the Voting Securities of the Trust (together with the EP Account Ownership Limitation, the “Ownership Limitations”). Any purported conversion of Series 2029 Convertible Preferred Shares shall be void and have no effect to the extent (but only to the extent) that delivery of Common Shares upon such conversion would result in the converting holder or the EP Accounts becoming the beneficial owner of Common Shares in excess of an Ownership Limitation.

(b)           Mandatory Redemption.

(i)         Non-Listing Event Mandatory Redemption. Upon the occurrence of a Non-Listing Event, the Trust shall, to the extent permitted by the 1940 Act and Delaware law, by the close of business on the next Business Day immediately following the occurrence of a Non-Listing Date, fix a redemption date (which date shall be no later than 30 days after the occurrence of the Non-Listing Event) and proceed to redeem all of the outstanding Series 2029 Convertible Preferred Shares in accordance with the procedures for redemption set forth in Sections 2.5(d) – (f) of the Statement of Preferences and at a price per share equal to the Liquidation Preference per share plus an amount equal to all unpaid dividends and distributions on such share accumulated to (but excluding) the date fixed for such redemption by the Board of Trustees (whether or not earned or declared by the Trust, but excluding interest thereon).

(ii)        Reorganization Transaction Mandatory Redemption. In the case of a Reorganization Transaction, the Trust shall, prior to the closing of the Reorganization Transaction, fix a redemption date and proceed to redeem all of the outstanding Series 2029 Convertible Preferred Shares in accordance with the procedures for redemption set forth in Sections 2.5(d) – (f) of the Statement of Preferences prior to such closing and at a price per share equal to the Liquidation Preference per share plus an amount equal to all unpaid dividends and distributions on such share accumulated to (but excluding) the date fixed for such redemption by the Board of Trustees (whether or not earned or declared by the Trust, but excluding interest thereon).

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(c)           Irrevocable Proxy. To the fullest extent permitted by applicable law, each holder may in its discretion grant an irrevocable proxy.

(d)           Transfer. Unless approved in writing by the Trust, a holder may not sell, transfer, convey, assign or otherwise dispose of Series 2029 Convertible Preferred Shares. Any transfer in violation of the foregoing restrictions shall be void ab initio and any transferee of Series 2029 Convertible Preferred Shares transferred in violation of the foregoing restrictions shall be deemed to agree to hold all payments it received on any such improperly transferred Series 2029 Convertible Preferred Shares in trust for the benefit of the transferor of such Series 2029 Convertible Preferred Shares.

(e)           Status of Redeemed, Converted or Repurchased Shares. Series 2029 Convertible Preferred Shares that at any time have been converted into Common Shares as provided herein or redeemed or repurchased by the Trust shall, after such conversion, redemption or purchase, have the status of authorized but unissued shares of beneficial interest of the Trust.

(f)            Withholding. If any amount of withholding tax is payable with respect to any distribution or other amount paid or deemed paid with respect to the Series 2029 Convertible Preferred Shares (including constructive distributions), the Company may withhold such amount from any cash, property or Common Shares otherwise deliverable (whether presently or in the future) to the holder upon a distribution, redemption, conversion, or otherwise.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, XAI Octagon Floating Rate & Alternative Income Term Trust has caused these presents to be signed as of the date first written above in its name and on its behalf by its Chief Financial Officer and Treasurer and attested by its Secretary. Said officers of the Trust have executed this Appendix as officers and not individually, and the obligations and rights set forth in this Appendix are not binding upon any such officers, or the Trustees or shareholders of the Trust, individually, but are binding only upon the assets and property of the Trust.

XAI OCTAGON FLOATING RATE &
ALTERNATIVE INCOME TERM TRUST

	By:	/s/ Benjamin D. McCulloch
		Name: Benjamin D. McCulloch
		Title: Chief Legal Officer and Secretary
ATTEST:
/s/ Kimberly A. Flynn
Name: Kimberly A. Flynn
Title: Vice President

[Appendix B to Statement of Preferences | Signature Page]

Annex I

Series 2029 Convertible Preferred Shares

Sub-Series	Date of Original Issue	Convertibility Date
Sub-Series A	June 30, 2022	December 30, 2022

[Annex II to Appendix B to Statement of Preferences]

FORM OF NOTICE OF CONVERSION

XAI Octagon Floating Rate & Alternative Income Term Trust

321 North Clark Street, Suite 2430

Chicago, IL 60654

Attention: [    ]

The undersigned registered owner of Series 2029 Convertible Preferred Shares issued by XAI Octagon Floating Rate & Alternative Income Term Trust (the “Trust”) hereby exercises the option to convert the number of shares of each such Sub-Series below designated into Common Shares (and cash in lieu of fractional Common Shares, if applicable), in accordance with the terms of the Trust’s Statement of Preferences.

The undersigned represents that the Common Shares are being acquired for the holder’s own account and not as a nominee for any other party. The undersigned represents and warrants that all offers and sales by the undersigned of the Common Shares shall be made pursuant to either an effective registration statement or an exemption from registration under the Securities Act of 1933, as amended.

If the aggregate number of Series 2029 Convertible Preferred Shares being converted by all holders thereof on the date hereof is less than 10,000 shares, the undersigned represents that the Series 2029 Convertible Preferred Shares set forth below represents all Series 2029 Convertible Preferred Shares held by the holder as of the date hereof that are eligible for conversion.

Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Trust’s Statement of Preferences.

Sub-Series Number of Shares

Holder:

(Print Legal Name of Holder)

(Signature of Duly Authorized Representative of Holder)

Address of Holder:

[Annex II to Appendix B to Statement of Preferences]

EX-5.1

Exhibit 5.1

[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]

June 28, 2022

XAI Octagon Floating Rate & Alternative Income Term Trust

321 North Clark Street, Suite 2430

Chicago, Illinois 60654

Re: XAI Octagon Floating Rate & Alternative Income Term Trust —
Offering of Common Shares

Ladies and Gentlemen:

We have acted as special counsel to XAI Octagon Floating Rate & Alternative Income Term Trust, a statutory trust (the “Trust”) created under the Delaware Statutory Trust Act (the “DSTA”), in connection with the issuance and sale by the Trust of [ ] shares (the “Shares”) of the Trust’s common shares of beneficial interest, par value $0.01 per share (the “Common Shares”), pursuant to the Purchase Agreement, dated June 28, 2022 (the “Purchase Agreement”), between the Trust and the purchasers identified on Appendix A thereto (the “Purchasers”).

This opinion is being furnished in accordance with the requirements of sub-paragraph (l) of item 25.2 of part C of Form N-2 under the Securities Act of 1933 (the “Securities Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”).

In rendering the opinions stated herein, we have examined and relied upon the following:

(i)       the notification of registration on Form N-8A (File No. 811-23247) of the Trust filed with the Securities and Exchange Commission (the “Commission”) under the 1940 Act on April 7, 2017;

(ii)       the registration statement on Form N-2 (File Nos. 333-261521 and 811-23247) of the Trust, filed with the Commission on December 7, 2021 under the Securities Act and the 1940 Act, allowing for delayed offerings pursuant to Rule 415 of the General Rules and Regulations under the Securities Act (the “Securities Act Rules and Regulations”), Pre-Effective Amendments Nos. 1 and 2 thereto, including information deemed to be a part of the registration statement pursuant to Rule 430B of the Securities Act Rules and Regulations, and the Notice of Effectiveness of the Commission posted on its website declaring such registration statement effective on January 24, 2022 (such registration statement, as so amended, being hereinafter referred to as the “Registration Statement”);

XAI Octagon Floating Rate & Alternative Income Term Trust

June 28, 2022

Page 2

(iii)       the prospectus and Statement of Additional Information of the Trust, each dated January 24, 2022, in the form filed with the Commission on June 28, 2022 pursuant to Rule 424(b) of the Securities Act Rules and Regulations (such prospectus and Statement of Additional Information being hereinafter referred to collectively as the “Base Prospectus”);

(iv)       the preliminary prospectus supplement of the Trust, dated June 28, 2022, relating to the offering of the Shares, in the form filed with the Commission on June 28, 2022 pursuant to Rule 424(b) of the Securities Act Rules and Regulations;

(v)       the prospectus supplement of the Trust, dated June 28, 2022 (together with the Base Prospectus, the “Prospectus”), relating to the offering of the Shares, in the form filed with the Commission on June 28, 2022 pursuant to Rule 424(b) of the Securities Act Rules and Regulations;

(vi)       an executed copy of the Purchase Agreement;

(vii)       an executed copy of a certificate of Benjamin D. McCulloch, Secretary of the Trust, dated the date hereof (the “Secretary’s Certificate”);

(viii)       a copy of the Trust’s Certificate of Trust, dated April 4, 2017, as amended by Certificates of Amendment dated July 13, 2017 and August 31, 2017, certified by the Secretary of State of the State of Delaware as of June 28, 2022 and certified pursuant to the Secretary’s Certificate;

(ix)       a copy of the Trust’s Second Amended and Restated Agreement and Declaration of Trust, by the trustees of the Trust, dated July 13, 2017, as amended by the Certificate of Amendment to the Trust’s Second Amended and Restated Agreement and Declaration of Trust, dated August 31, 2017, by the trustees of the Trust, certified pursuant to the Secretary’s Certificate;

(x)       a copy of the Trust’s Amended and Restated By-Laws, as amended and in effect as of November 16, 2021 through the date hereof, certified pursuant to the Secretary’s Certificate;

(xi)       copies of certain resolutions of the Board of Trustees of the Trust, adopted on November 16, 2021 and June 26, 2022, and certain resolutions of an offering committee of the Board of Trustees of the Trust, adopted on June 28, 2022, certified pursuant to the Secretary’s Certificate; and

(xii)       a copy of a certificate, dated the date hereof, from the Secretary of State of the State of Delaware with respect to the Trust’s existence and good standing in the State of Delaware.

XAI Octagon Floating Rate & Alternative Income Term Trust

June 28, 2022

Page 3

We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Trust and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the Trust and others, and such other documents as we have deemed necessary or appropriate as a basis for the opinions stated below.

In our examination, we have assumed the genuineness of all signatures, including electronic signatures, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as facsimile, electronic, certified, or photocopied copies, and the authenticity of the originals of such copies. As to any facts relevant to the opinions stated herein that we did not independently establish or verify, we have relied upon statements and representations of officers and other representatives of the Trust and others and of public officials, including the facts and conclusions set forth in the Secretary’s Certificate and the factual representations and warranties contained in the Purchase Agreement.

In making our examination of documents, we have assumed that the parties thereto, other than the Trust, had or will have the power, corporate or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and the validity and binding effect thereof on such parties.

We do not express any opinion with respect to the laws of any jurisdiction other than the DSTA.

Based upon the foregoing and subject to the qualifications and assumptions stated herein, we are of the opinion that the Shares have been duly authorized by all requisite statutory trust action on the part of the Trust under the DSTA and, when the Shares are duly registered into the share record books of the Trust and delivered to and paid for by the Purchasers as contemplated by the Purchase Agreement, the Shares will be validly issued and fully paid, and under the DSTA, the holders of the Shares will have no obligation to make further payments for the purchase of such Shares or contributions to the Trust solely by reason of their ownership of such Shares except for their obligation to repay any funds wrongfully distributed to them.

In rendering the foregoing opinions, we have assumed that the Certificate of Trust, Declaration of Trust and the By-Laws constitute the only governing instruments, as defined in the DSTA, of the Trust.

XAI Octagon Floating Rate & Alternative Income Term Trust

June 28, 2022

Page 4

We hereby consent to the filing of this opinion with the Commission as an exhibit to the Current Report on Form 8-K being filed on the date hereof and incorporated by reference into the Registration Statement. We also hereby consent to the reference to our firm under the heading “Legal Matters” in the Prospectus. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Securities Act or the Securities Act Rules and Regulations. This opinion is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws.

Very truly yours,

/s/ Skadden, Arps, Slate, Meagher & Flom LLP

KTH

EX-10.1

Exhibit 10.1

EXECUTION VERSION

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (this “Agreement”) is entered into as of June 28, 2022, by and among XAI Octagon Floating Rate & Alternative Income Term Trust, a Delaware statutory trust (the “Trust”), Eagle Point Credit Management LLC (“Eagle Point”) 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, the Trust desires to issue, and each Purchaser, severally and not jointly, desires to purchase shares of the Trust’s 6.00% Series 2029 Convertible Preferred Shares, liquidation preference $25.00 per share (the “Convertible Preferred Shares”), a series of the Trust’s preferred shares of beneficial interest (the “Preferred Shares”), upon the terms and conditions as more particularly provided herein; and

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; CLOSINGS

1.1       Purchase and Sale of the Shares. At the Initial 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 Convertible Preferred Shares as specified on Appendix A to this Agreement (all such Convertible Preferred Shares, the “Initial Shares”), and at the purchase price of $23.25 per share.

1.2       The Initial Closing. The completion of the purchase and sale of the Initial Shares (the “Initial Closing”) shall occur at 10:00 a.m. (Eastern time), on June 30, 2022 (the “Initial Closing Date”) at the offices of the Trust, or at such other time, date and location as the parties shall mutually agree. At the Initial Closing, (a) the purchase price for the Initial 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 1.5 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 Initial Shares as specified on Appendix A to this Agreement and as more particularly provided in Section 1.6.

1.3       Purchases and Sales of Additional Shares. Each Purchaser, severally and not jointly, hereby agrees to purchase up to an additional number of Convertible Preferred Shares specified on Appendix A to this Agreement (all such Preferred Shares, the “Additional Shares” and, together with the Initial Shares, the “Shares”) at the purchase price of $23.25 per Additional Share. Each Purchaser, severally and not jointly, shall purchase Additional Shares in the same proportion as the number of Shares purchased by each Purchaser at the Initial Closing at such times, dates and locations as determined by the Trust in its discretion on or before June 30, 2023 (each such purchase of Additional Shares, a “Subsequent Closing” and, together with the Initial Closing, each a “Closing”).

1.4       Subsequent Closings. The Trust shall provide notice of each Subsequent Closing to each Purchaser no fewer than six (6) business days prior to such Subsequent Closing. At each Subsequent Closing, (a) the purchase price for the Additional Shares being purchased by each Purchaser (the “Additional Shares Purchase Price”) shall be delivered by or on behalf of such Purchaser to the Trust as more particularly provided in Section 1.5 and (b) the Trust shall cause the Transfer Agent to deliver to each Purchaser the number of Additional Shares to be purchased by each Purchaser, as more particularly provided in Section 1.6. The Additional Shares sold by the Trust to the Purchasers at each Subsequent Closing will be designated as a separate sub-series of the Preferred Shares.

1.5       Delivery of the Purchase Price. At each Closing, each Purchaser shall remit by wire transfer the amount of funds equal to the Purchase Price or Additional Share Purchase Price, as applicable, with respect to the Shares being purchased by it to the account designated by the Trust.

1.6        Delivery of the Shares. On the Initial Closing Date and the date of each Subsequent Closing (each, a “Closing Date”), the Transfer Agent shall update the share register for the Convertible Preferred Shares to reflect the names and addresses of each Purchaser and the number of shares of each sub-series of Convertible Preferred Shares held by each Purchaser.

1.7       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 or Additional Share Purchase Price, as applicable, from such Purchaser as set forth in Section 1.5 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 applicable Closing Date.

1.8       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 President, Vice President or other senior officer, dated the date of such Closing, certifying that the conditions specified in Sections 1.8(a) and 1.8(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.

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(e)       At least three Business Days prior to the date of the applicable Closing, each Purchaser shall have received written instructions signed by an officer of the Trust on letterhead of the Trust specifying (i) the name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the account name and number into which the Purchase Price or Additional Share Purchase Price, as applicable, for the Shares is to be deposited.

(f)        Such Purchaser shall have received an opinion, dated as of the date of the Initial Closing, from Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for the Trust, as to the validity of the Shares.

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 understands that the Shares are “restricted securities” and have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state securities laws and such Purchaser is acquiring the Shares as principal for its own account and not with a view to or for the purpose of distributing or reselling such securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares in violation of the Securities Act or any applicable state securities law.

(b)        Each Purchaser severally represents that it (a) is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act, (b) either alone or together with its representatives has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of this investment and make an informed decision to so invest, and has so evaluated the risks and merits of such investment and made such informed decision to so invest, (c) has the ability to bear the economic risks of this investment and can afford a complete loss of such investment, (d) understands the terms of and risks associated with the purchase of the Shares, including a lack of liquidity, pricing availability and risks associated with the industry in which the Trust operates, (e) has had the opportunity to review the Disclosure Documents (as defined below) and such other disclosure regarding the Trust, its business and its financial condition as such Purchaser has determined to be necessary or relevant in connection with the purchase of the Shares, and has carefully reviewed such disclosure and (f) has had a full opportunity to ask such questions and make such inquiries concerning the Trust, its business and its financial condition as such Purchaser has deemed appropriate in connection with such purchase and to receive satisfactory answers to such questions and inquiries.

(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, in its capacity as agent and/or investment manager of each Purchaser, 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.

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(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.

(e)       Such Purchaser is not (i) currently subject to any sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), the European Union, the United Kingdom, or the United Nations 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 such Purchaser will knowingly use funds from any payment made pursuant to the terms of the Shares, or lend, contribute or otherwise make available such funds 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.

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 currently conducted; (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 have been duly authorized and when issued and delivered to the Purchasers against payment therefor as provided by this Agreement will have been validly issued and will be fully paid and nonassessable.

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(d)       The Trust’s Annual Report on Form N-CSR for the fiscal year ended September 30, 2021, as filed with the SEC on November 29, 2021, and the Trust’s Semi-Annual Report on Form N-CSRS for the period ended March 31, 2022, as filed with the SEC on May 26, 2022 (collectively, the “Disclosure Documents”), do not contain any untrue statement of a material fact, except to the extent updated or corrected in a subsequent filing by the Trust with the SEC. The SEC Reports fairly describe, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries. Except as disclosed in the Disclosure Documents, since March 31, 2021, 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).

(e)       The financial statements, including the statement of assets and liabilities, together with any related notes or schedules thereto, included in the Disclosure Documents present fairly the financial position of the Trust as of the dates and for the periods indicated and such statements were prepared in accordance with generally accepted accounting principles in the United States applied on a consistent basis.

(e)       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 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, as amended through the date hereof (“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.

(f)        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, 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.

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(g)       Except as otherwise disclosed by the Trust to the Purchasers, 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.

(h)       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.

(i)         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 intends to continue to operate in compliance with the requirements to maintain its qualification as a regulated investment company under Subchapter M of the Code.

(j)       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 sanctions administered by OFAC, the European Union, the United Kingdom, or the United Nations 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.

(k)       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.

(l)       Private Placement of Shares.

(i)        Neither the Trust nor any of its affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act (“Regulation D”)) has, directly or through any agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) that is or will be integrated with the sale of the Shares in a manner that would require registration of the Shares under the Securities Act.

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(ii)        None of the Trust or any of its affiliates (as defined in Rule 501(b) of Regulation D) or any other person acting on its or their behalf has solicited offers for, or offered or sold, the Shares by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.

(iii)       Neither the Trust nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Shares to the registration requirements of section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction. Assuming the accuracy of the representations and warranties of the Purchasers contained herein, it is not necessary, in connection with the issuance and sale of the Shares to the Purchasers to register the Shares under the Securities Act.

ARTICLE III
OTHER AGREEMENTS OF THE PARTIES

3.1           Unissued Additional Shares Payment. In the event the Trust does not sell to each Purchaser all Additional Shares which such Purchaser has agreed to purchase by June 30, 2023, the Trust will pay to each Purchaser an amount equal to $0.50 per unissued Additional Share.

3.2           Restrictions on Transfer. For so long as the Convertible Preferred Shares are outstanding, Eagle Point and any successor investment adviser responsible for managing an investment in the Shares, shall not and shall not cause any EP Account to, or in the event that no investment adviser is responsible for managing the Shares, each Purchaser shall not, sell, offer, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, otherwise transfer or dispose of or enter into any swap or other agreement, arrangement, hedge or transaction that transfers into another, in whole or in part, directly or indirectly, and of the economic consequences of ownership of any Convertible Preferred Shares or shares of any other series of Preferred Shares that the EP Accounts or Purchasers, as applicable, hold; provided, that the foregoing shall in no way restrict (i) the redemption of Preferred Shares by the Trust pursuant to the Statement of Preferences or (ii) the exercise of the option to convert the Shares into common shares of beneficial interest of the Trust (“Common Shares”) pursuant to the terms of the Statement of Preferences.

3.4           Voting. Each Purchaser hereby grants to the Trust an irrevocable proxy to vote at any annual or special meeting of shareholders of the Trust all of the Convertible Preferred Shares that such Purchaser holds in the same proportion as the vote of all other holders of Preferred Shares of the Trust.

3.5           Beneficial Ownership of Common Shares Information. For so long as the Convertible Preferred Shares are outstanding, in connection with the limitation on beneficial ownership provided in Section 12(a)(ii)(G) of Appendix B to the Statement of Preferences and upon the written request of the Trust, Eagle Point will provide the Trust, within five (5) business days of the date of such request, a report regarding the aggregate Common Share ownership of any funds or accounts managed by Eagle Point (the “EP Accounts”) as of the most recent quarter end.

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3.6           Limitation on Sale of Common Shares. For so long as the Convertible Preferred Shares are outstanding, Eagle Point and any successor investment adviser responsible for managing an investment in the Shares, shall not and shall not cause any Purchaser to, or in the event that no investment adviser is responsible for managing the Shares, each Purchaser shall not, sell, offer, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, otherwise transfer or dispose of or enter into any swap or other agreement, arrangement, hedge or transaction that transfers into another, in whole or in part, directly or indirectly, and of the economic consequences of ownership of any Common Shares of the Trust that they hold, whether now owned or hereafter acquired (including pursuant to the conversion of the Convertible Preferred Shares), to the extent (but only to the extent) that the aggregate number of Common Shares so sold, transferred or otherwise disposed of by the holders of Convertible Preferred shares, in the aggregate, on any one day would exceed 15% of the average daily trading volume of the Common Shares over the twenty (20) Trading Days immediate preceding such day.

3.7           Tax Information. On the Initial Closing Date, each Purchaser shall deliver to the Trust a properly completed and executed IRS Form W-9, dated as of the Initial Closing Date, and shall update or replace such form from time to time upon any subsequent obsolescence, inaccuracy, or other invalidity thereof.

3.8           Listing of Common Stock. The Trust covenants and agrees that the Trust shall list and keep listed, so long as the Common Shares shall be so listed on such exchange or automated quotation system, any Common Shares issuable upon conversion of the Shares.

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 or Additional Shares Purchase Price, as applicable, 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.

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4.4           Expenses. The Trust will pay all 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; provided that the maximum amount of fees, costs and expenses incurred by the Purchasers that the Trust shall be required to pay shall be $50,000.

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.

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]

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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/ Benjamin D. McCulloch
Name:	Benjamin D. McCulloch
Title:	Secretary
EAGLE POINT CREDIT MANAGEMENT LLC (solely with respect to Sections 3.2, 3.5 and 3.6)
/s/ Taylor Pine
Name:	Taylor Pine
Title:	Director
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

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EX-10.2

Exhibit 10.2

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (this “Agreement”) is entered into as of June 28, 2022, 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 common shares of beneficial interest, par value $0.01 per share (the “Common Shares”), upon the terms and conditions as more particularly provided herein; and

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 Common Shares as specified on Appendix A to this Agreement (all such Common Shares, the “Shares”), and at the purchase price of $6.90 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 June 30, 2022 (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 the Closing, of the following conditions:

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

(c)       The Trust shall have delivered to each such Purchaser an officer’s certificate from the Trust’s President, Vice President or other senior officer, dated the Closing Date, 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 Closing Date, 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.

(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 Purchaser 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 hereto, 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.

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

(d)       The offering and sale of the Shares hereunder are being made pursuant to an effective Registration Statement on Form N-2 (File No. 333-261521 and 811-23247), initially filed with the Securities and Exchange Commission (the “Commission”) on December 7, 2021, as amended by Pre-Effective Amendment No. 1 thereto (the “Registration Statement”), and the Prospectus, dated January 24, 2022, 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. “Preliminary Prospectus,” as used herein means, the Base Prospectus and the Preliminary Prospectus Supplement, dated June 28, 2022 (including the statement of additional information and all documents incorporated therein by reference) that was used prior to the execution and delivery of this Agreement and filed with the Commission by the Trust. “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). “Disclosure Package” means the Preliminary Prospectus taken together with the information relating to (i) the number of Shares issued and (ii) the offering price of the Shares included on the cover page of the Prospectus. 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)       At the time of execution of this Agreement, the Disclosure Package did 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 light of the circumstances under which they were made, not misleading. As of the Closing Date, the Prospectus will 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, the Preliminary Prospectus 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, the Preliminary Prospectus 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, the Preliminary Prospectus 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), 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.

(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, the Preliminary Prospectus 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.

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(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 intends to 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.

(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) 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       Absence of Control. 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.

3.2       Tax Information. On the Closing Date, each Purchaser shall deliver to the Trust a properly completed and executed IRS Form W-9, dated as of the Closing Date, and shall update or replace such form from time to time upon any subsequent obsolescence, inaccuracy, or other invalidity thereof.

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.

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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.

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]

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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/ Benjamin D. McCulloch
Name:  Benjamin D. McCulloch
Title:    Secretary
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

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EX-10.3

Exhibit 10.3

EXECUTION VERSION

XAI Octagon Floating Rate & Alternative Income Term Trust

321 North Clark Street, Suite 2430

Chicago, Illinois 60654

June 28, 2022

Eagle Point Credit Management LLC

600 Steamboat Road, Suite 202

Greenwich, CT 06830

Ladies and Gentlemen:

Whereas, the parties previously entered into a letter agreement, dated as of September 8, 2021 (the “Letter Agreement”) in connection with the Purchase Agreement, dated as of September 8, 2021 (the “Purchase Agreement”), between XAI Octagon Floating Rate & Alternative Income Term Trust (the “Trust”) and each purchaser party thereto (each, a “Purchaser”) relating to the purchase of shares of the Trust’s 6.50% Series 2026 Term Preferred Shares, liquidation preference $25.00 per share (the “2026 Preferred Shares”). Eagle Point Credit Management LLC (“Eagle Point”) is the investment manager of each Purchaser.

Whereas the Trust, Eagle Point and the Purchasers desire to amend and restate the Letter Agreement.

The parties do hereby agree:

1.             (a)       Each Purchaser hereby grants to the Trust an irrevocable proxy to vote at any annual or special meeting of shareholders of the Trust all of the 2026 Preferred Shares which the Purchaser is entitled to vote as of the record date for the applicable annual or special meeting of shareholders of the Trust in the same proportion as the vote of all other holders of Preferred Shares of the Trust.

(b)       Eagle Point hereby grants to the Trust an irrevocable proxy to vote at any annual or special meeting of shareholders of the Trust all other 2026 Preferred Shares held by Eagle Point, any person controlled by Eagle Point Holdings LP, Eagle Point’s immediate parent company (“Eagle Point Parent”), or any other investment vehicles or accounts sponsored or managed by Eagle Point or any person controlled by Eagle Point Parent, or which Eagle Point or any person controlled by Eagle Point Parent otherwise has or shares the power to vote, or to direct the voting of, as of the record date for the applicable annual or special meeting of shareholders of the Trust (together with the 2026 Preferred Shares which any Purchaser is entitled to vote, the “Eagle Point Shares”), in the same proportion as the vote of all other holders of Preferred Shares of the Trust.

2.            Upon the request of the Trust, Eagle Point shall promptly provide to the Trust a written certification listing the number of Eagle Point Shares as of the record date of such meeting and identifying the intermediary(s), if any, through which such Eagle Point Shares are held. The Trust (or its agent) shall cooperate with Eagle Point in connection with Eagle Point’s compliance with its obligations hereunder.

3.            All notices shall be in writing and shall be delivered by registered or overnight mail, facsimile, or electronic mail to the address for each party specified below or to such other person or address as such party may designate for receipt of such notice.

If to the Trust:

XAI Octagon Floating Rate & Alternative Income Term Trust

c/o XA Investments LLC

321 North Clark Street, Suite 2430

Chicago, Illinois 60654

Attention: General Counsel

E-mail: bmcculloch@xainvestments.com

If to Eagle Point:

Eagle Point Credit Management LLC

600 Steamboat Road, Suite 202

Greenwich, CT 06830

If to a Purchaser:

c/o Eagle Point Credit Management LLC

600 Steamboat Road, Suite 202

Greenwich, CT 06830

4.            The execution and delivery by each of the Trust, Eagle Point and each Purchaser of this Letter Agreement and the performance by each of the Trust, Eagle Point and each Purchaser of its respective obligations hereunder have been duly authorized by all necessary action of the Trust, Eagle Point and each Purchaser. Eagle Point, in its capacity as agent and/or investment manager of each Purchaser is duly authorized and empowered to execute this Agreement on behalf of each Purchaser. Each of the Trust, Eagle Point and each Purchaser hereby represents and warrants that this Letter Agreement is enforceable against it in accordance with its terms.

5.            Each party hereto hereby acknowledges and agrees that irreparable harm will occur in the event any of the provisions of this Letter Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties will be entitled to seek specific performance hereunder, including, without limitation, an injunction or injunctions to prevent and enjoin breaches of the provisions of this Letter Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they may be entitled at law or in equity. Any requirements for the securing or posting of any bond with respect to any such remedy are hereby waived. All rights and remedies under this Letter Agreement are cumulative, not exclusive, and will be in addition to all rights and remedies available to any party at law or in equity.

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6.            The parties hereto hereby irrevocably and unconditionally consent to and submit to the jurisdiction of the state or federal courts in the State of Delaware for any actions, suits or proceedings arising out of or relating to this Letter Agreement or the transactions contemplated hereby. The parties irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Letter Agreement, or the transactions contemplated hereby, in the state or federal courts in the State of Delaware, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party waives all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Letter Agreement.

7.             This Letter 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.

8.             The provisions of this Letter Agreement may be amended or modified only with the prior written consent of the Trust and Eagle Point. The failure of any party to insist upon strict adherence to any one or more of the covenants and restrictions in this Letter 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.

9.             This Letter 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 Letter 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.

10.           This Letter 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.

11.          This Letter 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.

12.          The provisions of this Letter 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 Letter 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 Letter 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.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties hereto have executed this Letter Agreement as of the date first above written.

XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TERM TRUST

By:	/s/ Benjamin D. McCulloch
	Name:	Benjamin D. McCulloch
	Title:	Secretary
EAGLE POINT CREDIT MANAGEMENT LLC
By:	/s/ Taylor Pine
	Name:	Taylor Pine
	Title:	Director
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

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EX-99.1

Exhibit 99.1

XAI Octagon Floating Rate &
Alternative Income Term Trust Announces Private Placement of Convertible Preferred Shares and
Registered Direct Placement of Common Shares

CHICAGO, Illinois – June 28, 2022 – XAI Octagon Floating Rate & Alternative Income Term Trust (the “Trust”) (NYSE: XFLT), a diversified, closed-end management investment company with an investment objective to seek attractive total return with an emphasis on income generation across multiple stages of the credit cycle, has entered into a Purchase Agreement with certain institutional investors for the purchase and sale of 400,000 shares of the Trust’s 6.00% Series 2029 Convertible Preferred Shares due June 2029 (the “Convertible Preferred Shares”), liquidation preference $25.00 per share. The Trust expects to receive net proceeds (before expenses) from the sale of the Convertible Preferred Shares of approximately $9.3 million. The offering is expected to close on or about June 30, 2022, subject to the satisfaction of customary closing conditions. In addition, pursuant to Purchase Agreement, the investors have agreed to purchase up to 800,000 additional shares of Convertible Preferred Shares, at one or more subsequent closings on or before June 30, 2023 as determined by the Trust in its discretion.

The Convertible Preferred Shares pay a quarterly dividend at a fixed annual rate of 6.00% of the liquidation preference, or $1.50 per share, per year.

The Trust is required to redeem, out of funds legally available therefor, all outstanding Convertible Preferred Shares on June 30, 2029, or the “Term Redemption Date,” at a price equal to the liquidation preference plus an amount equal to accumulated but unpaid dividends and distributions, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the Term Redemption Date.

At any time on or after June 30, 2024, at the Trust’s sole option, the Trust may redeem, from time to time, the Convertible Preferred Shares in whole or in part, out of funds legally available for such redemption, at a price per share equal to the sum of the liquidation preference plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such redemption.

Each holder of a Convertible Preferred Share shall have the right, at such holder’s option, to convert any such Convertible Preferred Share, at any time on or after the date six months after the issuance date of the Convertible Preferred Share (the “Convertibility Date”) and prior to the close of business on the business day immediately preceding the Term Redemption Date, into such number of common shares of beneficial interest (“Common Shares”) equal to the liquidation preference of the Convertible Preferred Share plus an amount equal to all unpaid dividends and distributions on such Share accumulated to (but excluding) the date of exercise, divided by the Conversion Price. The “Conversion Price” is the greater of (i) the market price per Common Share, represented by the five-day volume-weighted average price (“VWAP”) per Common Share ending on the trading day immediately preceding the date of exercise, or (ii) the Trust’s most recently reported net asset value per Common Share immediately prior to the date of exercise.

The Convertible Preferred Shares will not be listed on any exchange and may not be transferred without the consent of the Trust.

   

Additional information regarding the Convertible Preferred Shares are included in a Current Report on Form 8-K to be filed with the U.S. Securities and Exchange Commission (“SEC”).

The Convertible Preferred Shares were offered directly to the purchasers without a placement agent, underwriter, broker or dealer.

The Convertible Preferred Shares and the Common Shares into which the Convertible Preferred Shares are convertible are being issued in reliance upon an exemption from registration under the Securities Act of 1933 (the “Securities Act”) and have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the Convertible Preferred Shares, nor shall there be any sale of Convertible Preferred Shares in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such jurisdiction.

Concurrently, the Trust has entered into a Purchase Agreement with certain institutional investors for the purchase and sale of Common Shares in a registered direct placement pursuant to the Trust’s effective shelf registration statement filed with the SEC. The Trust has agreed to sell 1,450,000 Common Shares at a price of $6.90 per Common Share. The offering is expected to close on or about June 30, 2022, subject to the satisfaction of customary closing conditions. The Trust expects to receive net proceeds (before expenses) from the sale of Common Shares of approximately $10 million.

The Common Shares were offered directly to the purchasers without a placement agent, underwriter, broker or dealer.

The offering of Common Shares may be made only by means of a prospectus.

Investors should consider the investment objectives and policies, risk considerations, charges and expenses of the Trust carefully before investing. The preliminary prospectus supplement, dated June 28, 2022, and accompanying prospectus, dated February 10, 2022, each of which has been filed with the SEC, contain a description of these matters and other important information about the Trust and should be read carefully before investing.

Copies of the preliminary prospectus supplement and accompanying prospectus may be obtained from: XA Investments, Attn: Investor Relations, 321 N. Clark, Suite 2430, Chicago, IL 60654, or by emailing info@xainvestments.com, or by calling 1-888-903-3358.

Investors may also obtain these documents free of charge from the SEC’s website at www.sec.gov.

The information in the preliminary prospectus supplement, the accompanying prospectus and this press release is not complete and may be changed. This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.

   

The Trust intends to use the net proceeds from the offerings to invest in accordance with its investment objective and policies, to pay down outstanding borrowings under its credit facility and/or for general working capital purposes.

About XA Investments

XA Investments LLC (“XAI”) serves as the Trust’s investment adviser. XAI is a Chicago-based firm founded by XMS Capital Partners in April, 2016. In addition to investment advisory services, the firm also provides investment fund structuring and consulting services focused on registered closed-end funds to meet institutional client needs. XAI offers custom product build and consulting services, including development and market research, sales, marketing, fund management and administration. XAI believes that the investing public can benefit from new vehicles to access a broad range of alternative investment strategies and managers. XAI provides individual investors with access to institutional-caliber alternative managers. For more information, please visit www.xainvestments.com.

About XMS Capital Partners

XMS Capital Partners, LLC, established in 2006, is a global, independent financial services firm providing M&A, corporate advisory and asset management services to clients. It has offices in Chicago, Boston and London. For more information, please visit www.xmscapital.com.

About Octagon Credit Investors

Octagon Credit Investors, LLC (“Octagon”) serves as the Trust’s investment sub-adviser. Octagon is a 25+ year old, $32.1B below-investment grade corporate credit investment adviser focused on leveraged loan, high yield bond and structured credit (CLO debt and equity) investments. Through fundamental credit analysis and active portfolio management, Octagon’s investment team identifies attractive relative value opportunities across below-investment grade asset classes, sectors and issuers. Octagon’s investment philosophy and methodology encourage and rely upon dynamic internal communication to manage portfolio risk. Over its history, the firm has applied a disciplined, repeatable and scalable approach in its effort to generate attractive risk-adjusted returns for its investors. For more information, please visit www.octagoncredit.com.

* * *

The Trust, XAI and Octagon do not provide tax advice; consult a professional tax advisor regarding your specific tax situation. Income may be subject to state and local taxes, as well as the federal alternative minimum tax.

This press release contains certain statements that may include “forward-looking statements.” Forward-looking statements can be identified by the words “may,” “will,” “intend,” “expect,” “estimate,” “continue,” “plan,” “anticipate,” and similar terms and the negatives of such terms. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Many factors that could materially affect the Trust’s actual results are the performance of the portfolio of securities held by the Trust, the conditions in the U.S. and international financial and other markets, the price at which Preferred Shares trade in the public markets and other factors discussed in the Trust’s prospectus supplement and accompanying base prospectus and to be discussed in the Trust’s periodic filings with the SEC.

Although the Trust believes that the expectations expressed in such forward-looking statements are reasonable, actual results could differ materially from those expressed or implied in such forward-looking statements. The Trust’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties. You are cautioned not to place undue reliance on these forward-looking statements, which are made as of the date of this press release. Except for the Trust’s ongoing obligations under the federal securities laws, the Trust does not intend, and the Trust undertakes no obligation, to update any forward-looking statement.

NOT FDIC INSURED        NO BANK GUARANTEE        MAY LOSE VALUE

Company Contact:

Kimberly Flynn, Managing Director

XA Investments LLC

Phone: 1-888-903-3358

Email: info@xainvestments.com

www.xainvestments.com