MATERIAL AMENDMENTS

Exhibit G.1.b.1 (a)

SECOND AMENDMENT

TO THE

SECOND AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

XAI Octagon Floating Rate Alternative Income Term Trust

This Second Amendment (the “Amendment”) to the Second Amended and Restated Agreement and Declaration of Trust, dated July 13, 2017, as amended through the date hereof (as so amended, the “Declaration of Trust”), of XAI Octagon Floating Rate Alternative Income Term Trust, a Delaware statutory trust (the “Trust”), is made in accordance with Section 11.3 of the Declaration of Trust;

WHEREAS, the Amendment has been approved by at least eighty percent (80%) of the Trustees;

WHEREAS, the Amendment has been approved by a Majority Shareholder Vote (as defined in the Declaration of Trust) at a special meeting of shareholders held on December 19, 2023, and adjourned to January 24, 2024;

NOW, THEREFORE, the Declaration of Trust is amended as follows:

1. Section 1.1 is amended and restated in its entirety to read as follows:

1.1 Name. This Trust shall be known as the “XAI Octagon Floating Rate & Alternative Income Trust” and the Trustees shall conduct the business of the Trust under that name or any other name or names as they may from time to time determine.

2. Section 11.1 is amended and restated in its entirety to read as follows:

11.1 Duration. Subject to possible termination in accordance with the provisions of Section 11.2(a) hereof, the Trust shall have perpetual existence.

3. Paragraph (a) of Section 11.2 is amended and restated in its entirety to read as follows:

(a) The Trust may be dissolved only after a majority of the Trustees have approved a resolution therefor, followed by approval by not less than seventy-five percent (75%) of the Shares of each class or series outstanding and entitled to vote, voting as separate classes or series, unless such resolution has been approved by eighty percent (80%) of the Trustees, in which case approval by a Majority Shareholder Vote shall be required.

4. Paragraphs (a) and (b) of Section 11.3 are amended and restated in their entirety to read as follows:

(a) Except as provided in paragraph (b) of this Section 11.3, this Declaration may be amended, after a majority of the Trustees have approved a resolution therefor, by the affirmative vote of the holders of not less than a majority of the affected Shares. The Trustees also may amend this Declaration without any vote of Shareholders of any class or series (i) to divide the Shares of the Trust into one or more classes or additional classes, or one or more series of any such class or classes, (ii) to determine the rights, powers, preferences, limitations and restrictions of any class or series of Shares, (iii) to change the name of the Trust or any class or series of Shares, (iv) to make any change that does not adversely affect the relative rights or preferences of any Shareholder, as they may deem necessary, (iv) to conform this Declaration to the requirements of the 1940 Act or any other applicable federal laws or regulations including pursuant to Section 6.2 or the requirements of the regulated investment company provisions of the Code, or (v) to cure any ambiguity or correct or supplement any conflicting provisions of the Declaration; but in each such case the Trustees shall not be liable for failing to do so.

(b) No amendment may be made to Section 2.1, Section 2.2, Section 2.3, Section 3.9, Section 5.1, Section 5.2, Section 11.1, Section 11.2(a), this Section 11.3, Section 11.4, Section 11.6 or Section 11.7 of this Declaration and no amendment may be made to this Declaration which would change any rights with respect to any Shares of the Trust by reducing the amount payable thereon upon liquidation of the Trust or by diminishing or eliminating any voting rights pertaining thereto (except that this provision shall not limit the ability of the Trustees to authorize, and to cause the Trust to issue, other securities pursuant to Section 6.2), except after a majority of the Trustees have approved a resolution therefor, followed by approval by the affirmative vote of the holders of not less than seventy-five percent (75%) of the Shares of each affected class or series outstanding, voting as separate classes or series, or unless such amendment has been approved by eighty percent (80%) of the Trustees, in which case approval by a Majority Shareholder Vote shall be required. Nothing contained in this Declaration shall permit the amendment of this Declaration to impair the exemption from personal liability of the Shareholders, Trustees, officers, employees and agents of the Trust or to permit assessments upon Shareholders.

5. This Amendment shall be effective as of February 1, 2024.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned, constituting at least a majority of the Trustees of the Trust has executed this Certificate of Amendment, to be effective as of the 1st day of February, 2024. This Certificate of Amendment may be executed in two or more counterparts or authorized by electronic transmission, each of which shall be deemed an original, but all of which together shall constitute the same instrument.

/s/ Theodore J. Brombach

Theodore J. Brombach

Trustee

/s/ Danielle Cupps

Danielle Cupps

Trustee

/s/ Gregory G. Dingens

Gregory G. Dingens

Trustee

/s/ Philip G. Franklin

Philip G. Franklin

Trustee

/s/ Scott Craven Jones

Scott Craven Jones

Trustee

/s/ William Meyers

William Meyers

Trustee

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INST DEFINING RIGHTS

Exhibit G.1.b.ii (a)

XAI Octagon Floating Rate & Alternative Income 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 1,200,000 shares of the Trust’s 6.95% 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”).

In addition, pursuant to the Convertible Preferred Shares Purchase Agreement, the Purchasers have agreed to purchase the Convertible Preferred Shares, at one or more subsequent closings, as determined by the Trust in its discretion, on or before May 6, 2025. 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 May 6, 2025, the Trust will pay to the Purchasers an amount equal to $0.75 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 6.95% of the liquidation preference 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 the Trust’s 6.00% Series 2029 Convertible Preferred Shares, liquidation preference $25.00 (the “6.00% Series 2029 Convertible Preferred Shares” and together with the 2026 Preferred Shares and 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.

Exhibit G.1.b.ii (a)

At any time on or after May 6, 2025, 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 2.00% 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.

Exhibit G.1.b.ii (a)

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 the greater of (i) 20% of the average daily trading volume of the Common Shares over the twenty (20) Trading Days immediate preceding such day and (ii) 20% of the current Trading Day’s trading volume of the Common Shares.

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 in G.1.b.i. (b)

ADVISORY CONTRACTS

INVESTMENT SUB-ADVISORY AGREEMENT

INVESTMENT SUB-ADVISORY AGREEMENT (the “Agreement”), dated as of April 3, 2024 (the “Effective Date”) among XAI Octagon Floating Rate & Alternative Income Trust, a Delaware statutory trust (the “Trust”), XA Investments LLC, a Delaware limited liability company (the “Adviser”), and Octagon Credit Investors, LLC, a Delaware limited liability company (the “Sub-Adviser”).

WHEREAS, the Adviser has agreed to furnish investment management and advisory services to the Trust, a closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”);

WHEREAS, the investment advisory agreement between the Adviser and the Trust dated as of September 26, 2017 (such agreement or the most recent successor agreement between such parties relating to advisory services to the Trust is referred to herein as the “Investment Advisory Agreement”) contemplates that the Adviser may sub-contract investment advisory services with respect to the Trust to a sub-adviser(s) pursuant to a sub-advisory agreement(s) agreeable to the Trust and approved in accordance with the provisions of the 1940 Act;

WHEREAS, the Adviser wishes to retain the Sub-Adviser to provide certain sub-advisory services;

WHEREAS, the Sub-Adviser is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”); and

WHEREAS, this Agreement has been approved in accordance with the provisions of the 1940 Act, and the Sub-Adviser is willing to furnish such services upon the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the mutual premises and covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, it is agreed by and between the parties hereto as follows:

1. Appointment

(a)       The Adviser hereby appoints the Sub-Adviser to act as the investment sub-adviser to the Trust and to furnish the services described herein, for the period and upon the terms herein set forth.

(b)       The Sub-Adviser hereby agrees, all as more fully set forth herein, to act as investment sub-adviser to the Trust and to furnish the services described below with respect to the investment of the Trust’s assets and the purchase of securities for and the sale of securities held in the investment portfolio of the Trust.

(c)       The Sub-Adviser for all purposes in this Agreement will be deemed to be an independent contractor and, unless otherwise expressly provided or authorized in this Agreement, will have no authority to act for or represent the Adviser or the Trust in any way or otherwise be deemed an agent of the Adviser or the Trust.

2. Duties and Obligations of the Sub-Adviser with Respect to Investment of Assets of the Trust

(a)       Subject to the oversight and supervision of the Adviser and direction and control of the Trust’s Board of Trustees, the Sub-Adviser will act as sub-adviser for the Trust and perform one or more of the following services at the request of the Adviser in connection with the investment and reinvestment of the Trust’s assets:

(i) managing the investment and reinvestment of the assets of the Trust in accordance with the investment policies and guidelines of the Trust;

(ii) subject to the provisions of Section 4 hereof, purchasing and selling securities and other assets for the Trust and placing orders for purchases and sales of assets of the Trust;

(iii) providing investment research and credit analysis concerning the assets of the Trust;

(iv) monitoring on a daily basis the investment activities and portfolio holdings relating to the Trust;

(v) voting proxies relating to the Trust’s portfolio securities in accordance with the proxy voting policies and procedures of the Sub-Adviser; and

(vi) settlement of transactions and completing corporate actions.

(b)       At the request of the Adviser, the Sub-Adviser will also, subject to the oversight and supervision of the Adviser and the direction and control of the Trust’s Board of Trustees, consult with the Adviser as to the overall management of the assets of the Trust and the investment policies and practices of the Trust, including (but not limited to) the use by the Trust of financial leverage and matters relating to such financial leverage (e.g., form, amount and costs) and the utilization by the Trust of any interest rate or other hedging or risk management transactions in connection therewith, and will perform any of the services described in the Investment Advisory Agreement.

(c)       In addition, the Sub-Adviser will keep the Trust and the Adviser informed of developments relating to the Sub-Adviser or the Trust’s investments materially affecting the Trust and shall, upon request, furnish to the Adviser and the Trust all information relevant to such developments.

(d)       The Sub-Adviser will periodically communicate to the Adviser or other services providers of the Trust, at such times as the Adviser may request, information concerning the purchase and sale of securities for the Trust and such other information as the Adviser may reasonably require for purposes of fulfilling its obligations to the Trust under the Investment Advisory Agreement.

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(e)       In addition to the investment policies and guidelines of the Trust, the Adviser may from time to time communicate to the Sub-Adviser instructions (the “Instructions”) in writing that limit or supplement the investment policies and guidelines and are subject to approval by the Sub-Adviser, which approval shall not be unreasonably withheld. Neither the investment policies and guidelines nor the Instructions shall require the Sub-Adviser to obtain capabilities or resources beyond those it possesses as of the Effective Date. The Adviser shall promptly notify the Sub-Adviser, in writing, of any change in the investment policies and guidelines that is made for any reason, including but not limited to a change by the Adviser, the Trust or in any applicable law or regulation. The Adviser acknowledges that the Sub-Adviser may be required to terminate delivery of certain data or services used in managing the Trust in the event the Sub-Adviser is no longer able to obtain such data or services.

(f)       Nothing in this Agreement is deemed to impose on the Sub-Adviser responsibility for the preparation of the Trust’s financial statements or the Trust’s other financial and regulatory filing and reporting obligations, provided that the Sub-Adviser shall provide sub-certifications in the form reasonably requested by the Fund relating to the Sub-Adviser’s services under this Agreement to assist the Fund in complying with the provisions of the Sarbanes-Oxley Act of 2002.

3. Covenants

(a)       In the performance of its duties under this Agreement, the Sub-Adviser shall at all times conform to, and act in accordance with, any requirements imposed by:

(i) the provisions of the 1940 Act and the Advisers Act and all applicable Rules and Regulations of the SEC;

(ii) any other applicable provision of law;

(iii) the provisions of this Agreement and Declaration of Trust and By-Laws of the Trust, as such documents are amended from time to time;

(iv) the investment objective, policies and restrictions of the Trust as set forth in its Registration Statement on Form N-2; and

(v) any policies and determinations of the Board of Trustees of the Trust.

(b)      The Sub-Adviser will not consult with any other sub-adviser of the Trust or any other sub-adviser to a fund under common control with the Trust concerning transactions of the Trust in securities or other assets.

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(c)       The Sub-Adviser will maintain a written code of ethics (the “Code of Ethics”) pursuant to Rule 17j-1 under the 1940 Act, a copy of which will be provided to the Trust and the Adviser, and will institute procedures reasonably necessary to prevent Access Persons (as defined in Rule 17j-1) from violating its Code of Ethics. The Sub-Adviser will follow such Code of Ethics in performing its services under this Agreement.

(d)       The Sub-Adviser will maintain compliance policies and procedures adopted pursuant to Rule 206(4)-7 under the Advisers Act and Rule 38a-1 under the 1940 Act, a copy of which will be provided to the Trust and the Adviser, and follow such compliance policies and procedures in performing its services under this Agreement; and

(e)       The Sub-Adviser will cooperate with the chief compliance officer of the Trust in connection with the implementation and operation of the Trust’s compliance policies and procedures adopted pursuant to Rule 38a-1 under the 1940 Act, and will prepare necessary reports and provide the Trust’s chief compliance officer with access to information reasonably necessary for the Trust to comply with Rule 38a-1.

4. Portfolio Transactions

(a)       In the performance of its duties under this Agreement, the Sub-Adviser will place orders either directly with the issuer or with any broker or dealer. Subject to the other provisions of this paragraph, in placing orders with brokers and dealers, the Sub-Adviser will attempt to obtain the best price and the most favorable execution of its orders. In placing orders, the Sub-Adviser will consider the experience and skill of the firm’s securities traders as well as the firm’s financial responsibility and administrative efficiency. Consistent with this obligation, the Sub-Adviser may select brokers on the basis of the research, statistical and pricing services they provide to the Trust and other clients of the Sub-Adviser. Information and research received from such brokers will be in addition to, and not in lieu of, the services required to be performed by the Sub-Adviser hereunder. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that the Sub-Adviser determines in good faith that such commission is reasonable in terms either of the transaction or the overall responsibility of the Sub-Adviser to the Trust and its other clients and that the total commissions paid by the Trust will be reasonable in relation to the benefits to the Trust over the long-term. In no instance, however, will the Trust’s securities be purchased from or sold to the Sub-Adviser, or any affiliated person thereof, except to the extent permitted by the SEC or by applicable law.

(b)       At the request of the Adviser or the Trust, the Sub-Adviser will identify and provide a written description to the Adviser and the Board of Trustees of the Trust of “soft dollar” arrangements that the Sub-Adviser maintains with respect to the Trust or with brokers or dealers that execute transactions for the Trust, and of research and other services provided to the Sub-Adviser by a broker or dealer (whether prepared by such broker or dealer or by a third party) as a result, in whole or in part, of the direction of Trust transactions to the broker or dealer.

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(c)       From time to time, the Sub-Adviser or brokers or dealers affiliated with it may find themselves in a position to buy for certain of their clients (each an “Account”) securities which the Sub-Adviser’s investment advisory clients wish to sell, and to sell for certain of their clients securities which advisory clients wish to buy. Where one of the parties is an advisory client, the Sub-Adviser or the affiliated broker or dealer cannot participate in this type of transaction (known as a cross transaction) on behalf of an advisory client and retain commissions from one or both parties to the transaction without the advisory client’s consent. This is because in a situation where the Sub-Adviser is making the investment decision (as opposed to a brokerage client who makes his own investment decisions), and the Sub-Adviser or an affiliate is receiving commissions from both sides of the transaction, there is a potential conflicting division of loyalties and responsibilities on the Sub-Adviser’s part regarding the advisory client. However, the SEC has adopted a rule under the Advisers Act that permits the Sub-Adviser or its affiliates to participate on behalf of an Account in agency cross transactions if the advisory client has given written consent in advance. Therefore, by execution of this Agreement, the Trust authorizes the Sub-Adviser or its affiliates to participate in agency cross transactions involving an Account. The Trust may revoke its consent at any time by written notice to the Sub-Adviser.

5. Confidentiality

Each of the Trust, the Adviser and the Sub-Adviser acknowledge and agree that in satisfying its respective obligations under and performing services in connection with this Agreement, any party may have access to another party’s confidential and proprietary information and materials concerning or pertaining to the other’s business (“confidential information”). Each party will receive and hold such information in the strictest confidence, and acknowledge, represent, and warrant that it will use its best efforts to protect the confidentiality of this information to the same degree of care as it would its own confidential information. Each party agrees that, without the prior written consent of the other party, which approval shall not be unreasonably withheld, such party will not use, copy, or divulge to third parties or otherwise use, except in accordance with the terms of this Agreement, any confidential information of another party without the prior written consent of such other party; provided, however, this covenant shall not apply to (i) information which is in the public domain now or when it becomes in the public domain in the future, other than by reason of a breach of this Agreement, (ii) information which has come to a party from a lawful source not bound to maintain the confidentiality of such information, other than from any other party or an affiliate or representative of that party, (iii) information which is independently developed without the use of confidential information, (iv) disclosures which are required by law, regulatory authority, regulation or legal process or are made to any regulatory agency in the normal course of an examination, audit or investigation involving such party, or (v) disclosure as reasonably necessary in the course of business to third parties subject to a duty to maintain the confidentiality of the information. Notwithstanding the foregoing, the Sub-Adviser may disclose information it receives from or on behalf of the Trust or the Adviser to officers and employees of the Sub-Adviser or any of its affiliates in the course of providing the services under this Agreement and the Sub-Adviser may disclose the Trust’s TIN information to third parties as required to perform the Sub-Adviser’s services under this Agreement.

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6. Services Not Exclusive

(a)       Nothing in this Agreement shall prevent the Sub-Adviser or any officer, employee or other affiliate thereof from acting as investment adviser for any other person, firm or corporation, or from engaging in any other lawful activity, and shall not in any way limit or restrict the Sub-Adviser or any of its officers, employees or agents from buying, selling or trading any securities for its or their own accounts or for the accounts of others for whom it or they may be acting; provided, however, that the Sub-Adviser will undertake no activities which, in its judgment, will adversely affect the performance of its obligations under this Agreement.

(b)       The Sub Adviser currently manages, and may in the future manage, other investment accounts and funds, including those with investment objectives similar to the Trust. Securities considered as investments for the Trust may also be appropriate for other investment accounts and funds that may be managed by the Sub-Adviser. Subject to applicable laws and regulations, the Sub-Adviser will attempt to allocate equitably portfolio transactions among the portfolios of its other investment accounts and funds purchasing securities whenever decisions are made to purchase or sell securities by the Trust and one or more of such other accounts or funds over time. In making such allocations, the main factors to be considered by the Sub-Adviser will be the respective investment objectives of the Trust and such other accounts and funds, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment by the Trust and such other accounts and funds, the size of investment commitments generally held by the Trust and such accounts and funds, and the opinions of the persons responsible for recommending investments to the Trust and such other accounts and funds.

7. Books and Records

(a)       The Sub-Adviser undertakes and agrees to maintain or cause others to maintain, in the form and for the period required by Rule 31a-2 under the 1940 Act, all records relating to the Trust’s investments that are required to be maintained by the Trust pursuant to the 1940 Act with respect to the Sub-Adviser’s responsibilities under this Agreement for the Trust, and which are not otherwise maintained by the administrator, fund accounting agent, custodian or other service providers to the Trust.

(b)       In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains for the Trust are the property of the Trust and further agrees to surrender promptly to the Trust any such records upon the Trust’s request, except for any software or other intellectual property that is proprietary to, or owned or licensed by, the Sub-Adviser or any of its affiliates, which shall remain the property of the Sub-Adviser. Notwithstanding the foregoing, the Sub-Adviser shall retain those original records or copies of records in order to comply with the Advisers Act record keeping requirement, applicable law and its own internal policies.

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(c)       Each of the Adviser and the Trust shall own, have custody of and maintain its general corporate accounts and records. At reasonable times and upon reasonable notice, the Trust shall provide the Sub-Adviser with access to all books, records, accounts, facilities, and personnel necessary or appropriate for the performance of the Sub-Adviser obligations under this Agreement.

8. Custody

Nothing in this Agreement will require the Sub-Adviser to take or receive physical possession of cash, securities, or other investments of the Trust. The Trust shall select, engage and maintain at the Trust’s expense one or more custodians meeting the requirements of Section 17(f) of the 1940 and the rules, regulations and interpretations thereunder (each a “Custodian”) to serve as Custodian(s) of the Trust assets. The Adviser shall provide the Sub-Adviser, in writing, the identity of each Custodian, any change in a Custodian and all other information regarding the Custodian(s) required for the Sub-Adviser to carry out its duties under this Agreement. The Adviser shall notify each Custodian of the appointment of the Sub-Adviser and of the authority of the Sub-Adviser to effect investments with respect to the Trust assets. All transactions authorized by this Agreement are made by payment to or delivery by the Custodian(s). The Sub-Adviser shall have no rights or responsibilities, including to direct payment or move cash or assets of the Trust, that would be defined as taking “custody” under the Advisers Act. In connection with the Trust’s custody agreement(s), the Adviser and the Trust will ensure that no such rights are given to the Sub-Adviser. The Trust and the Adviser will ensure that the Sub-Adviser may use the Depositary Trust Company’s Institutional Delivery System for trade confirmation and settlement.

9. Expenses

(a)       During the term of this Agreement, the Sub-Adviser will bear all costs and expenses of its employees and any overhead incurred in connection with its duties hereunder, except as provided pursuant to paragraph (d) of this Section 9, and shall bear the costs of any salaries or trustees fees of any officers or trustees of the Trust who are affiliated persons (as defined in the 1940 Act) of the Sub-Adviser.

(b)       The Sub-Adviser shall not be responsible for any expenses of the Adviser or the Trust not specifically set forth in this Section 9 or otherwise in any written agreement between the Sub-Adviser and the Trust or the Adviser, as the case may be.

(c)       The Trust will bear all other costs, fees and expenses of its operations and transactions, including those relating to: (1) organization; (2) calculation of the Trust’s net asset value (including the cost and expenses of any independent valuation firm, agent or other provider); (3) expenses payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for the Trust and in monitoring the Trust’s investments; (4) interest payable on indebtedness and dividends and distributions on preferred shares, as applicable, if any, incurred to finance the Trust’s investments; (5) offerings of the Trust’s common shares and other securities (including, all fees, costs and expenses related thereto); (7) fees payable to third parties, including agents, legal counsel, consultants or other advisors, relating to, or associated with, evaluating and making investments; (8) administrator, transfer agent and custodian fees; (9) federal and state registration fees; (10) all costs of registration and listing the Trust’s shares on any securities exchange; (11) federal, state and local taxes; (12) independent trustees’ fees and expenses; (13) costs of preparing and filing reports or other documents required by governmental bodies (including the SEC), including printing costs; (14) costs of any reports, proxy statements or other notices to shareholders, including printing costs; (15) insurance premiums for fidelity bond and other insurance coverage, including the Trust’s allocable portion of the fidelity bond, trustees and officers errors and omissions liability insurance, including independent trustees liability insurance, and any other insurance premium; (16) direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; (17) brokerage commissions, assignment fees and other costs in connection with the purchase, holding or sale of securities and other investment instruments (including, without limitation, security settlement costs; (18) expenses incidental to holding meetings of the Trust’s shareholders, including proxy solicitations therefor; (19) unusual, non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Trust is a party and legal obligations that the Trust may have to indemnify the Trust’s directors, officers and/or employees or agents with respect to these actions, suits or proceedings; and (20) all other expenses incurred by the Trust in connection with administering the Trust’s business.

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(d)       The Trust may, if and to the extent approved by the Board of Trustees, including a majority of the Trustees who are not parties to this Agreement or interested persons of any party to this Agreement, from time to time reimburse the Sub-Adviser for certain costs and expenses incurred by the Sub-Adviser in connection with the management of the Trust’s assets, which may include the Trust’s allocable share of portfolio management and trading software costs, research expenses (including modeling and analytic software costs), diligence expenses and out-of-pocket travel costs incurred in connection with the management of the Trust’s assets. For the avoidance of doubt, in no event shall expenses associated with the general overhead of the Sub-Adviser be reimbursed by the Trust.

10. Compensation of the Sub-Adviser

(a)       The Adviser agrees to pay to the Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation for all services rendered by the Sub-Adviser under this Agreement, a monthly fee in arrears in an amount equal to the Specified Percentage (as defined below) of the advisory fee payable to the Adviser from the Trust.

(b)       The “Specified Percentage” shall equal the blended percentage computed by applying the following percentages to the total average daily Managed Assets of all Eligible Funds (as defined below):

Eligible Funds
Average Daily Managed Assets	Percentage
First $500 million	60%
Over $500 million	50%

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“Eligible Funds” means the Trust and any other investment company registered under the 1940 Act for which the Adviser (or an Affiliate of the Adviser) serves as investment adviser and the Sub-Adviser (or an Affiliate of the Sub-Adviser) serves as investment sub-adviser; provided that in the case of any Eligible Funds which are part of a “master-feeder” structure, only the assets of the master fund will be counted.

By way of example, and for the avoidance of doubt, in a theoretical scenario in which the Trust had Managed Assets of $300 million and there was one other Eligible Fund with Managed Assets of $400 million, total Managed Assets of all Eligible Funds would be $700 million, resulting in a Specified Percentage of 57.14%. The fee payable by the Adviser to the Sub-Adviser with respect to the Trust pursuant to this Agreement would equal 57.14% of the net advisory fee payable to the Adviser from the Trust.

(c)       For any period less than a month during which this Agreement is in effect, the fee shall be prorated according to the proportion which such period bears to a full month of 28, 29, 30 or 31 days, as the case may be.

(d)       “Managed Assets” means the total assets of the Trust or any other Eligible Fund, including the assets attributable to the proceeds from financial leverage (including through the issuance of preferred shares or the issuance senior securities representing indebtedness), minus liabilities, other than liabilities related to any financial leverage.

(e)       For purposes of this Agreement, the total assets of the Trust or any Eligible Fund shall be calculated pursuant to the procedures adopted by resolutions of the board of trustees or directors thereof for calculating the value of the Trust’s or any other Eligible Fund’s assets, and on days on which the value of the Trust’s or any other Eligible Fund’s assets are not so determined, the asset value computation to be used will be as determined on the immediately preceding day on which the value of the Trust’s or such other Eligible Fund’s assets was determined.

(f)       The Sub-Adviser may elect from time to time, in its sole discretion, to waive its right to receipt of all or a portion of the sub-advisory fee.

11. Representations and Warranties

(a)       The Trust represents and covenants to the Sub-Adviser as follows:

(i) The Trust is duly organized and validly existing under the laws of the State of Delaware with the power to own and possess its assets.

(ii) The execution, delivery and performance by the Trust of this Agreement are within the Trust’s powers and have been duly authorized by all necessary actions of the Board of Trustees, and the execution, delivery and performance of this Agreement by the parties to this Agreement do not contravene or constitute a default under (1) any provision of applicable law, rule or regulation, (2) the Trust’s governing instruments, or (3) any agreement, judgment, injunction, order, decree or other instruments binding upon the Trust.

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(iii) The Trust is, or will be prior to commencing operations, registered as a closed-end management investment company under the 1940 Act and the Trust’s shares are, or will be prior to commencing operations, registered under the Securities Act of 1933, as amended, and under any applicable state securities laws, or exempt from such registration.

(iv) Prior to the Sub-Adviser commencing services under this Agreement, the Trust will have legal title to the assets in the Trust and no restrictions shall exist as to the ownership or transfer of such assets unless specifically set forth in this Agreement.

(b)       The Adviser represents and covenants to the Sub-Adviser as follows:

(i) The Adviser is duly organized and validly existing under the laws of the State of Delaware.

(ii) The execution, delivery and performance by the Adviser of this Agreement are within the Adviser’s powers and have been duly authorized by all necessary action, and no action by or in respect of, or filing with, any governmental body, agency or official is required on the part of the Adviser for the execution, delivery and performance of this Agreement by the parties to this Agreement, and the execution, delivery and performance of this Agreement by the parties to this Agreement do not contravene or constitute a default under (1) any provision of applicable law, rule or regulation, (2) the Adviser’s governing instruments, or (3) any agreement, judgment, injunction, order, decree or other instruments binding upon the Adviser.

(iii) This Agreement constitutes a valid and binding obligation of the Adviser, enforceable against the Adviser in accordance with its terms, except to the extent such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or similar laws affecting the rights of creditors generally and by general equity principles.

(iv) The Adviser is not prohibited by the 1940 Act or the Advisers Act from serving as investment adviser to the Trust.

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(v) The Adviser hereby acknowledges receipt of Sub-Adviser’s Form ADV, Part 2 before, or at the time of, signing this Agreement.

(c)       The Sub-Adviser represents and covenants to the Adviser and the Trust as follows:

(i) The Sub-Adviser is duly organized and validly existing under the laws of the State of Delaware.

(ii) The execution, delivery and performance by the Sub-Adviser of this Agreement are within the Sub-Adviser’s powers and have been duly authorized by all necessary action, and no action by or in respect of, or filing with, any governmental body, agency or official is required on the part of the Sub-Adviser for the execution, delivery and performance of this Agreement by the parties to this Agreement, and the execution, delivery and performance of this Agreement by the parties to this Agreement do not contravene or constitute a default under (1) any provision of applicable law, rule or regulation, (2) the Sub-Adviser’s governing instruments, or (3) any agreement, judgment, injunction, order, decree or other instruments binding upon the Sub-Adviser.

(iii) This Agreement constitutes a valid and binding obligation of the Sub-Adviser, enforceable against the Sub-Adviser in accordance with its terms, except to the extent such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or similar laws affecting the rights of creditors generally and by general equity principles.

(iv) The Sub-Adviser is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement.

12. Certain Information

The Adviser shall promptly notify the Sub-Adviser, and the Sub-Adviser shall promptly notify the Trust and the Adviser in writing of the occurrence of any of the following events:

(a)        such party failing to be registered as an investment adviser under the Advisers Act;

(b)        such party having been served or otherwise have notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, involving the affairs of the Trust;

(c)        the occurrence of any change in control of such party or any parent of such party within the meaning of the 1940 Act; or

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(d)        the occurrence of any material adverse change in the business or financial position of such party.

13. Limitation on Liability

The Sub-Adviser will not be liable for any error of judgment or mistake of law or for any loss suffered by Sub-Adviser, the Adviser or by the Trust in connection with the performance of this Agreement, except a loss resulting from a breach of a fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its duties and obligations under this Agreement (as the same shall be determined in accordance with the 1940 Act and any interpretations or guidance by the SEC or its staff thereunder). Nothing herein shall constitute a waiver or restriction of any party’s rights under applicable federal or state securities laws.

14. Indemnification

The Trust shall indemnify, defend and protect the Sub-Adviser, its members and their respective officers, managers, partners, parent, corporate group affiliates, agents, employees, controlling persons, members, and any other person affiliated with any of them (collectively, the “Indemnified Parties”) (each of whom shall be deemed a third party beneficiary hereof) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Trust or its security holders) arising out of or otherwise based upon the performance of any of the Sub-Adviser’s duties or obligations under this Agreement or otherwise as an investment adviser of the Trust. Notwithstanding the foregoing provisions of this Section 14 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Trust or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of any Indemnified Party’s duties or by reason of the reckless disregard of the Sub-Adviser’s duties and obligations under this Agreement (as the same shall be determined in accordance with the 1940 Act and any interpretations or guidance by the SEC or its staff thereunder).

15. Duration and Termination

(a)       This Agreement shall become effective as of the Effective Date and, unless sooner terminated with respect to the Trust as provided herein, shall continue in effect for a period of two years. Thereafter, if not terminated, this Agreement shall continue in effect with respect to the Trust for successive periods of 12 months, provided such continuance is specifically approved at least annually by both:

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(i) the vote of a majority of the Trust’s Board of Trustees or the vote of a majority of the outstanding voting securities of the Trust at the time outstanding and entitled to vote, and

(ii) the vote of a majority of the Trustees who are not parties to this Agreement or interested persons of any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval.

(b)      Notwithstanding the foregoing, this Agreement may be terminated by (i) the Adviser or the Trust at any time, without the payment of any penalty, upon giving the Sub-Adviser 60 days’ notice (which notice may be waived by the Sub-Adviser), provided that such termination by the Trust shall be directed or approved by the vote of a majority of the Trustees of the Trust in office at the time or by the vote of the holders of a majority of the voting securities of the Trust at the time outstanding and entitled to vote, or (ii) the Sub-Adviser on 60 days’ written notice to the Trust and the Adviser (which notice may be waived by the Trust or the Adviser on behalf of both the Trust and the Adviser).

(c)       This Agreement will immediately terminate in the event of its assignment and will immediately terminate upon any termination of the Investment Advisory Agreement between the Trust and the Adviser.

(d)       As used in this Agreement, the terms “majority of the outstanding voting securities,” “interested person” and “assignment” shall have the same meanings of such terms in the 1940 Act.

(e)       The terms of Sections 5, 7, 10, 13, 14, 18, 19 and 20 of this Agreement shall survive the termination of this Agreement.

16. Notices

Any notice under this Agreement shall be in writing to the other parties and shall be considered as properly given or made if (a) sent by overnight delivery by a nationally recognized air courier service, (b) sent by electronic mail with no receipt of error in the delivery, or (c) mailed by registered or certified mail, return receipt requested, and if addressed to the respective address listed below:

If to Adviser, to:

XA Investments, LLC

321 North Clark Street #2430

Chicago, IL 60654

Attention: General Counsel

If to the Trust, to:

XAI Octagon Floating Rate & Alternative Income Trust

321 North Clark Street #2430

Chicago, IL 60654

Attention: Chief Executive Officer

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If to Sub-Adviser, to:

Octagon Credit Investors, LLC

250 Park Avenue, 15th Floor

New York, NY 10177

Attention: [ ]

with a copy to:

Geoffrey Dorment, General Counsel

gdorment@octagoncredit.com

212-400-8470

or at such address as the other party may designate from time to time for the receipt of such notice and shall be deemed effective on receipt.

17. Amendment of this Agreement

No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any amendment of this Agreement shall be subject to the 1940 Act.

18. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware for contracts to be performed entirely therein without reference to choice of law principles thereof and in accordance with the applicable provisions of the 1940 Act. WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND ANY RIGHT TO SEEK PUNITIVE OR CONSEQUENTIAL DAMAGES.

19. Use of the Name

The Sub-Adviser has consented to the use by the Trust of the name or identifying word “Octagon” in the name of the Trust. Such consent is conditioned upon the employment of the Sub-Adviser as the investment adviser to the Trust. The name or identifying word “Octagon” may be used from time to time solely in connection with the Sub-Adviser’s services under this Agreement. The Sub-Adviser may require the Trust to cease using “Octagon” in the name of the Trust, if the Trust ceases to employ, for any reason, the Sub-Adviser, any successor thereto or any affiliate thereof as investment sub-adviser of the Trust. If so required by the Sub-Adviser, the Trust will cease using “Octagon” in its name as promptly as practicable and make all reasonable efforts to remove “Octagon” from its name.

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20. Miscellaneous

(a)       The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

(b)       If any provision of this Agreement is invalid, illegal, or unenforceable under applicable law of mandatory application, the validity, legality, and enforceability of that provision or condition in other instances and of the remaining provisions and conditions are not in any way affected thereby.

(c)       Nothing contained in this Agreement will be deemed to require the Trust to take any action contrary to the Trust’s Amended and Restated Agreement and Declaration of Trust or By-laws, as they may be amended and/or restated from time to time, with notice to the Sub-Adviser, or any applicable statute or regulation, or to relieve or deprive the Board of Trustees of its responsibility for and control of the conduct of the affairs of the Trust.

(d)       This Agreement shall be binding on, and shall inure to the benefit of the parties hereto and their respective successors.

(e)       This Agreement may be executed in counterparts by the parties hereto, each of which when executed is deemed to be an original and all of which together are deemed to be one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

(f)       This Agreement constitutes the entire understanding and agreement, and supersedes any and all other proposals, understandings, and agreements among the parties with respect to the subject matter hereof.

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IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by their duly authorized officers, all as of the day and the year first above written.

XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TRUST
By:	/s/ Benjamin D. McCulloch
	Name:	Benjamin D. McCulloch
	Title:	Secretary & Chief Legal Officer
XA INVESTMENTS LLC
By:	/s/ Benjamin D. McCulloch
	Name:	Benjamin D. McCulloch
	Title:	Managing Director & General Counsel
OCTAGON CREDIT INVESTORS, LLC
By:	/s/ Lauren Law
	Name:	Lauren Law
	Title:	Portfolio Manager

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INST DEFINING RIGHTS

Exhibit G.1.b.ii (a)

XAI Octagon Floating Rate & Alternative Income 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 1,800,000 shares of the Trust’s 6.95% Series II 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”).

In addition, pursuant to the Convertible Preferred Shares Purchase Agreement, the Purchasers have agreed to purchase the Convertible Preferred Shares, at one or more subsequent closings, as determined by the Trust in its discretion, on or before December 10, 2025. 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 December 10, 2025, the Trust will pay to the Purchasers an amount equal to $0.75 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 6.95% of the liquidation preference 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 the Trust’s 6.00% Series 2029 Convertible Preferred Shares, liquidation preference $25.00 (the “6.00% Series 2029 Convertible Preferred Shares”) and Trust’s 6.95% Series I 2029 Convertible Preferred Shares, liquidation preference $25.00 (the “6.95% Series I 2029 Convertible Preferred Shares” and together with the 2026 Preferred Shares and the 6.00% Series 2029 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.

Exhibit G.1.b.ii (a)

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 December 10, 2025, 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 2.00% 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.

Exhibit G.1.b.ii (a)

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 the greater of (i) 20% of the average daily trading volume of the Common Shares over the twenty (20) Trading Days immediate preceding such day and (ii) 20% of the current Trading Day’s trading volume of the Common Shares.

Eagle Point and the Purchasers have granted to the Trust an irrevocable proxy to vote all 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 in G.1.b.i. (c)

MATERIAL AMENDMENTS

Exhibit G.1.b.1 (b)

APPENDIX C

XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TERM TRUST

TERM PREFERRED SHARES
6.95% 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 October 6, 2023. Capitalized terms used herein but not defined herein have the respective meanings set forth in the Statement of Preferences.

DESIGNATION

Term Preferred Shares, 6.95% Series 2029 Convertible Preferred Shares: A series of 1,200,000 Preferred Shares classified as Term Preferred Shares is hereby designated as the “6.95% 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 C. The 6.95% 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 6.95% Series 2029 Convertible Preferred Shares:

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

The number of authorized shares of 6.95% Series 2029 Convertible Preferred Shares is 1,200,000.

The 6.95% 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.

Upon each subsequent issuance date of Shares of 6.95% 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 C, 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 C.

Section 3. Fixed Dividend Rate Applicable to Series.

The Fixed Dividend Rate is 6.95%.

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 the Date of Original Issue with respect to Sub-Series A as set forth on Annex I to this Appendix C and ending at the close of business on the date that is 18 months after the Date of Original Issue of such Sub-Series.

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 C, which shall be the date six-months after the Date of Original Issue with respect to such Sub-Series.

“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.

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“Dividend Period” means, with respect to each Sub-Series of 6.95% Series 2029 Convertible Preferred Shares, 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 ultimate 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 6.95% Series 2029 Convertible Preferred Shares or (ii) the total number of 6.95% 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 6.95% Series 2029 Convertible Preferred Shares preferred shares with terms that are substantially identical to the terms of the 6.95% Series 2029 Convertible Preferred Shares.

“Record Date” means, with respect to each 6.95% 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).

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“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 6.95% 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 6.95% Series 2029 Convertible Preferred Shares and the number of shares of each Sub-Series of 6.95% 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 6.95% 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 6.95% Series 2029 Convertible Preferred Shares. No Holder of the 6.95% 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 6.95% 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 6.95% 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 6.95% 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 C) (a “Notice of Conversion”) and state in writing therein the number of Shares of each Sub-Series of 6.95% Series 2029 Convertible Preferred Shares to be converted.

On any single Exercise Date, converting holders must surrender for conversion an aggregate number of 6.95% Series 2029 Convertible Preferred Shares equal to or greater than the Minimum Conversion Shares. If more than one 6.95% 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 6.95% Series 2029 Convertible Preferred Shares 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 6.95% 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 6.95% 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 6.95% Series 2029 Convertible Preferred Shares will include a fractional share, such determination shall be based on the aggregate number of 6.95% 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 6.95% 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 6.95% Series 2029 Convertible Preferred Shares, the rights of the converting holder with respect to the 6.95% 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 6.95% Series 2029 Convertible Preferred Shares and cash in lieu of fractional shares, and (ii) the right to vote such 6.95% Series 2029 Convertible Preferred Shares in connection with any matters submitted to a vote of Shareholders or to receive distributions with respect to such 6.95% 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 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 6.95% 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 6.95% 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).

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(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 6.95% 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).

(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 6.95% Series 2029 Convertible Preferred Shares. Any transfer in violation of the foregoing restrictions shall be void ab initio and any transferee of 6.95% 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 6.95% Series 2029 Convertible Preferred Shares in trust for the benefit of the transferor of such 6.95% Series 2029 Convertible Preferred Shares.

(e)       Status of Redeemed, Converted or Repurchased Shares. 6.95% 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 6.95% Series 2029 Convertible Preferred Shares (including constructive distributions), the Trust 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 C to Statement of Preferences | Signature Page]

Annex I

6.95% Series 2029 Convertible Preferred Shares

(Effective as of October 6, 2023)

Sub-Series	Date of Original Issue	Convertibility Date
Sub-Series A

[Annex I to Appendix C 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 6.95% 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 6.95% 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 6.95% Series 2029 Convertible Preferred Shares set forth below represents all 6.95% 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 I to Appendix C to Statement of Preferences]

MATERIAL AMENDMENTS

Exhibit G.1.b.1 (c)

APPENDIX D

XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TRUST

TERM PREFERRED SHARES
6.95% SERIES II 2029 CONVERTIBLE PREFERRED SHARES

This Appendix establishes a Series of Term Preferred Shares of XAI Octagon Floating Rate & Alternative Income 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 10, 2024. Capitalized terms used herein but not defined herein have the respective meanings set forth in the Statement of Preferences.

DESIGNATION

Term Preferred Shares, 6.95% Series II 2029 Convertible Preferred Shares: A series of 1,800,000 Preferred Shares classified as Term Preferred Shares is hereby designated as the “6.95% Series II 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 D. The 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares:

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

The number of authorized shares of 6.95% Series II 2029 Convertible Preferred Shares is 1,800,000.

The 6.95% Series II 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.

Upon each subsequent issuance date of Shares of 6.95% Series II 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 D, 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 D.

Section 3. Fixed Dividend Rate Applicable to Series.

The Fixed Dividend Rate is 6.95%.

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 December 31, 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 the Date of Original Issue with respect to Sub-Series A as set forth on Annex I to this Appendix D and ending at the close of business on the date that is 18 months after the Date of Original Issue of such Sub-Series.

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

The following definitions contained under the heading “Definitions” in the Statement of Preferences are, as such terms are used this Appendix D, 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 D, which shall be the date six-months after the Date of Original Issue with respect to such Sub-Series.

“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.

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“Dividend Period” means, with respect to each Sub-Series of 6.95% Series II 2029 Convertible Preferred Shares, 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 ultimate 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 6.95% Series II 2029 Convertible Preferred Shares or (ii) the total number of 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares preferred shares with terms that are substantially identical to the terms of the 6.95% Series II 2029 Convertible Preferred Shares.

“Record Date” means, with respect to each 6.95% Series II 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).

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“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 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares and the number of shares of each Sub-Series of 6.95% Series II 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 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares. No Holder of the 6.95% Series II 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 6.95% Series II 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 6.95% Series II 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 6.95% Series II 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 D) (a “Notice of Conversion”) and state in writing therein the number of Shares of each Sub-Series of 6.95% Series II 2029 Convertible Preferred Shares to be converted.

On any single Exercise Date, converting holders must surrender for conversion an aggregate number of 6.95% Series II 2029 Convertible Preferred Shares equal to or greater than the Minimum Conversion Shares. If more than one 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares 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 6.95% Series II 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.

(C)       No fractional Common Shares or scrip representing fractional Common Shares shall be issued upon conversion of any 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares will include a fractional share, such determination shall be based on the aggregate number of 6.95% Series II 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 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares, the rights of the converting holder with respect to the 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares and cash in lieu of fractional shares, and (ii) the right to vote such 6.95% Series II 2029 Convertible Preferred Shares in connection with any matters submitted to a vote of Shareholders or to receive distributions with respect to such 6.95% Series II 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.

(F)       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 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 6.95% Series II 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 6.95% Series II 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).

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(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 6.95% Series II 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).

(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 6.95% Series II 2029 Convertible Preferred Shares. Any transfer in violation of the foregoing restrictions shall be void ab initio and any transferee of 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares in trust for the benefit of the transferor of such 6.95% Series II 2029 Convertible Preferred Shares.

(e)       Status of Redeemed, Converted or Repurchased Shares. 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares (including constructive distributions), the Trust 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 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 Legal Officer and Secretary and attested by its Vice President. 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 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 C to Statement of Preferences | Signature Page]

Annex I

6.95% Series II 2029 Convertible Preferred Shares

(Effective as of June 13, 2024)

Sub-Series	Date of Original Issue	Convertibility Date
Sub-Series A	June 13, 2024	December 13, 2024

[Annex I to Appendix D to Statement of Preferences]

FORM OF NOTICE OF CONVERSION

XAI Octagon Floating Rate & Alternative Income Trust

321 North Clark Street, Suite 2430

Chicago, IL 60654

Attention: [ ]

The undersigned registered owner of 6.95% Series II 2029 Convertible Preferred Shares issued by XAI Octagon Floating Rate & Alternative Income 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 6.95% Series II 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 6.95% Series II 2029 Convertible Preferred Shares set forth below represents all 6.95% Series II 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 D to Statement of Preferences]

INTERNAL CONTROL RPT

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Trustees of

XAI Octagon Floating Rate & Alternative Income Trust

In planning and performing our audit of the financial statements of XAI Octagon Floating Rate & Alternative Income Trust (the “Fund”) as of and for the year ended September 30, 2024, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), we considered the Fund’s internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-CEN, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

The management of the Fund is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A fund’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (GAAP). A fund’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the fund; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the fund are being made only in accordance with authorizations of management and trustees of the fund; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a fund’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Fund’s annual or interim financial statements will not be prevented or detected on a timely basis.

Our consideration of the Fund’s internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be material weaknesses under standards established by the PCAOB. However, we noted no deficiencies in the Fund’s internal control over financial reporting and its operation, including controls over safeguarding securities, that we consider to be a material weakness as defined above as of September 30, 2024.

This report is intended solely for the information and use of management and the Board of Trustees of the Fund and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.

 

COHEN & COMPANY, LTD.

Cleveland, Ohio

November 27, 2024