Exhibit 99.2**KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY****Fee Waiver Agreement**          THIS FEE WAIVER AGREEMENT (this “Agreement”) is made as of this day July 10, 2007, byand between Kayne Anderson Energy Development Company, a Maryland corporation (hereinafter calledthe “Company”), and KA Fund Advisors, LLC, a Delaware limited liability company(hereinafter called the “Manager”).WITNESSETH:          WHEREAS, the Company and the Manager have separately entered into an Investment ManagementAgreement as of September 20, 2006 (the “Management Agreement”);          WHEREAS, the Company has entered into that certain Treasury Secured Revolving CreditAgreement, dated as of June 4, 2007, by and among the Company, as borrower, the several banks andfinancial institutions from time to time party thereto, SunTrust Bank as administrative agent andCitibank, N.A. as syndication agent (as the same may be amended, restated, supplemented orotherwise modified from time to time, the “Treasury Credit Agreement”);          WHEREAS, the lenders under the Treasury Credit Agreement have agreed to extend revolvingcredit loans to the Company, the proceeds of which will be invested in U.S. government securities(such investments made from time to time using such proceeds, the “Treasury CreditInvestments”); and          WHEREAS, the Company has requested that the Manager waive the portion of its Management Fee(as defined in the Management Agreement) payable to the Manager with respect to the Treasury CreditInvestments and the Manager is willing to waive such amounts on the terms and subject to theconditions hereof.          NOW, THEREFORE, in consideration of the covenants and the mutual promises hereinafter setforth, the parties hereto, intending to be legally bound hereby, mutually agree as follows:          1. Definitions. All capitalized terms used in this Agreement not defined herein shallhave the respective meanings given to them in the Management Agreement.          2. Waiver With Respect to Treasury Credit Investments. The Manager agrees to waive ona quarterly basis in arrears the portion of its Management Fee payable to the Manager with respectto such Treasury Credit Investments for the number of days during which such Treasury CreditInvestments are held by the Company as follows:               (a) For purposes of calculating the Base Management Fee payable under Section 8 of theManagement Agreement, the Company’s Total Assets shall not include any portion of the Company’sgross asset value attributable to such Treasury Credit Investments;
1

 
               (b) For purposes of calculating the Net Investment Income Fee payable under Section 8 of theManagement Agreement, if any, the Company’s Adjusted Net Investment Income shall not include anyportion of the Company’s interest or other income received from such Treasury Credit Investments;and               (c) For purposes of calculating the Capital Gains Fee payable under Section 8 of theManagement Agreement, if any, no Realized Capital Gains on such Treasury Credit Investments, noRealized Capital Losses on such Treasury Credit Investments nor any Unrealized Capital Losses shallbe included in the calculation of either the Net Realized Capital Gains or Total Unrealized CapitalLosses of the Company.          3. Payment. To effect the waiver provided for in this Agreement, the Company mayoffset the appropriate amount of the Management Fee waiver contemplated hereunder against the BaseManagement Fees payable to the Manager under the Management Agreement.          4. Term and Termination. This Agreement, and the Manager’s obligation to so reimbursefees hereunder, shall terminate on the earlier of: (a) the termination of the Treasury CreditAgreement, or (b) termination of the Management Agreement. Except as provided in this section 4,this Agreement may be terminated only by the vote of the Board of Directors of the Company,including the vote of a majority of the members of the Board who are not “interested persons” ofthe Company within the meaning of the Investment Company Act of 1940, as amended (the “1940Act”).          5. Governing Law. This Agreement shall be governed by, and construed in accordancewith, the laws of the State of Maryland without giving effect to the conflict of laws principlesthereof; providedthat nothing herein shall be construed to preempt, or to beinconsistent with, any federal law, regulation or rule, including the 1940 Act and the InvestmentAdvisers Act of 1940, as amended, and any rules and regulations promulgated thereunder.[*Signature Page Follows*]
2

 
          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed andattested by their duly authorized officers, all on the day and year written on the first page ofthis Agreement.               **The Company:**   **The Manager:**                 KAYNE ANDERSON ENERGYDEVELOPMENT COMPANY   KA FUND ADVISORS, LLC          By: KAYNE ANDERSON CAPITAL ADVISORS, L.P., its Manager  By: /s/ J.C. Frey                         Name:J.C. Frey    By: /s/ David Shladovsky                 Title: Vice President     Name: David Shladovsky            Title: General Counsel