Item 3.02. Unregistered Sale of Equity Securities.

On January 3, 2023, certain holders of 6.00% Series 2029 Convertible Preferred Shares ("Convertible Preferred Shares") of XAI Octagon Floating Rate & Alternative Income Term Trust (NYSE: XFLT) (the "Trust") elected to convert an aggregate of 200,000 Convertible Preferred Shares into common shares of beneficial interest of the Trust, par value of $0.01 per share ("Common Shares"). Accordingly, pursuant to the terms of the Convertible Preferred Shares, the Trust issued to such holders 793,880 Common Shares in the aggregate at a conversion price of $6.3643 per Common Share, effective as of January 4, 2023. Following the conversion, the Trust has issued and outstanding 36,484,367 Common Shares and 200,000 Convertible Preferred Shares.

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