KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY

Investment Management Agreement

     THIS INVESTMENT MANAGEMENT AGREEMENT (this Agreement) is made as of the [___]th day of September, 2006, by and between Kayne Anderson Energy Development Company, a Maryland corporation (hereinafter called the Company), and KA Fund Advisors, LLC, a Delaware limited liability company (hereinafter called the Manager).

WITNESSETH:

     WHEREAS, the Company is a newly organized closed-end management investment company that has filed an election to be treated as a business development company under the Investment Company Act of 1940, as amended (the 1940 Act);

     WHEREAS, the Manager is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and is engaged in the business of supplying investment advice, investment management and administrative services, as an independent contractor; and

     WHEREAS, the Company desires to retain the Manager to render advice and services to the Company pursuant to the terms and provisions of this Agreement, and the Manager wishes to be retained to furnish said advice and services, each on terms and subject to the conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the covenants and the mutual promises hereinafter set forth, the parties hereto, intending to be legally bound hereby, mutually agree as follows:

     1. Appointment of Manager. The Company hereby employs the Manager and the Manager hereby accepts such employment, to render investment advice and management services with respect to the assets of the Company for the period and on the terms set forth in this Agreement, subject to the supervision and direction of the Companys Board of Directors (the Board).

     2. Duties of Manager.

          (a) General Duties. The Manager shall act as investment manager to the Company and shall supervise investments and reinvestments of the Companys assets in accordance with the investment objectives, policies, programs and restrictions of the Company as provided in the Companys governing documents, including, without limitation, the Companys Charter and Bylaws, or otherwise and such other limitations as the Board may impose from time to time in writing to the Manager, which objectives, policies, programs and restrictions shall initially be those set forth in the Companys Registration Statement on Form N-2 for the registration of shares of common stock of the Company under the Securities Act of 1933, filed with the Securities and Exchange Commission (the SEC). Without limiting the generality of the foregoing, the Manager shall: (i) furnish the Company with advice and recommendations with respect to the investment and reinvestment of the Companys assets and the purchase and sale of portfolio securities for the Company, including the taking of such other steps as may be

necessary to implement such advice and recommendations, and determine the composition of the Companys portfolio, the nature and timing of the changes to the Companys portfolio and the manner of implementing such changes; (ii) identify, evaluate and negotiate the structure of the Companys investments (including performing due diligence on the Companys prospective portfolio companies); (iii) furnish the Company with reports, statements and other data on securities, economic conditions and other pertinent subjects which the Board may reasonably request; (iv) close and monitor the performance of, and manage the investments of the Company, subject to the ultimate supervision and direction of the Board; (v) provide persons satisfactory to the Board to act as officers and employees of the Company (such officers and employees, as well as certain directors, may be directors, officers, partners, or employees of the Manager or its affiliates); (vi) to the extent permitted under the 1940 Act, on the Companys behalf, make available, and upon request, provide significant managerial assistance to those portfolio companies to which the Company is required to provide such assistance under the 1940 Act and who require such assistance, including among other things, monitoring the operations of the Companys portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial consultation; (vii) recommend to the Board the fair value of the Companys investments that are not publicly traded debt or equity securities based on the Companys valuation guidelines; (viii) vote proxies and respond to requests for other corporate actions in accordance with the proxy voting and corporate action policy and procedures adopted by the Manager; and (ix) render to the Board such periodic and special reports and such other investment advice, research and related services with respect to the Companys investment activities as the Board may reasonably request for the investment of the Companys assets.