EXHIBIT 10.13


                           SOFTWARE LICENSE AGREEMENT

         This  Software  License  Agreement  is made as of this 3rd day of June,
1999, between Preferred Voice, Inc., a Delaware corporation ("Licensor") and KMC
Telecom  Holdings,  Inc.,  a Delaware  corporation,  on behalf of itself and its
wholly owned subsidiaries and affiliates ("Licensee"). Licensor and Licensee are
collectively referred to in this Agreement as the "Parties."

                             Background Information

         Licensor has developed a system (the "System") that when interconnected
with a  telephone  switching  system  is  capable  of  performing  the  services
described in Exhibit A attached hereto and incorporated herein by reference (the
"Services").  Each  System  consists  of the  hardware  described  in  Exhibit B
attached  hereto  and   incorporated   herein  by  reference  (the   "Designated
Hardware"),  certain  third party  software  (the "Third  Party  Software")  and
certain proprietary application software developed by Licensor (the "Application
Software").   The  Third  Party  Software  and  the  Application   Software  are
collectively  referred to in this  Agreement  as the  "Software."  Licensee is a
licensed   competitive  local  exchange  carrier  that  is  currently  providing
telecommunications  service in 23 local calling  areas (the  "Current  Markets")
serving a population of up to 750,000 persons ("Tier III Markets"). Licensee has
plans to enter 27  additional  Tier III Markets and to deploy  remote  satellite
switching  and offer  services in up to 70 smaller local calling areas serving a
population of less than 100,000 persons, located within 60 miles of the Tier III
Markets  ("Tier IV Markets";  together  with Tier III Markets,  the  "Markets").
Licensee  wishes to offer the Services to end users ("End  Users") under its own
brand in conjunction with its telecommunications services.

         In  consideration  of the  mutual  promises  made  in  this  Agreement,
Licensor and Licensee  agree that the terms and  conditions set forth as follows
will apply to the license of Application Software.

                       ARTICLE 1. LICENSE AND PROCUREMENT

         1.01  License and  Procurement.  Pursuant to this  Agreement,  Licensor
hereby grants to Licensee a nontransferable,  non-exclusive (except as otherwise
provided  below)  license to use the  Application  Software,  together  with all
subsequent  improvements thereto in the 37 Tier III Markets set forth on Exhibit
C attached  hereto,  as such Exhibit C may be amended from time to time pursuant
to this  Agreement,  and two (2) Tier IV Markets  (collectively,  the  "Licensed
Markets").  Licensee shall be permitted to replace a Licensed Market, other than
the Current  Markets (which are designated on Exhibit C with an asterisk),  with
another  Market up to sixty (60) days prior to the scheduled  installation  of a
System in such  Licensed  Market.  In the event that Licensee so replaces a Tier
III Market,  Exhibit C shall be revised to reflect the change;  and in the event
that  Licensee so  replaces a Tier IV Market,  Licensee  shall give  Licensor at
least thirty (30) days' prior  written  notice  thereof.  Licensee also shall be
permitted  to add up to 13 Tier III  Markets and up to 68 Tier IV Markets to the
Licensed  Markets on at least thirty (30) days' prior written  notice thereof to
Licensor,  provided,  that Licensee adds a minimum of thirty (30) Markets to the
Licensed Markets on each occasion on which it adds Markets.

         Licensor also shall procure for Licensee the  Designated  Hardware from
third party manufacturers, a list of which Licensor shall provide to Licensee.


**[Confidential  Treatment]  indicates  portions of this document that have been
deleted from this document and have been  seperately  filed with the  Securities
and Exchange Commission.

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         1.02. Exclusivity.  Licensor agrees that it will not install Systems or
license any third party to install Systems within Licensee's local calling areas
of the switch  locations  set forth in  Exhibit C, as amended  from time to time
pursuant to Section 1.01, or any Tier IV Markets  that-Licensee  designates as a
future  location  for a System,  as those  local  calling  areas are  defined in
Licensee's  network  map as of  March  29,  1999,  and that it will not set up a
distributor or agent in those areas to sell Services competitive with those that
Licensee  provides.  This exclusivity  provision will be limited with respect to
any Market that is added to Exhibit C after the date hereof to the extent of any
contractual obligation to which Licensor is subject on the date of the addition.

         1.03.  Specifications.  Licensor may from time to time furnish Licensee
with  specifications,  the form of which is initially attached hereto as Exhibit
A-1 (the "Specifications"), relating to the use and servicing of the System. The
Specifications  may include a detailed  description of functionality and related
processes  and  procedures  for the System  provided by  Licensor  to  Licensee,
including  without  limitation user manuals,  diagrams,  drawings,  etc. and all
updates, revisions, new versions, and supplements to the Specifications, and any
test plans or performance  criteria  mutually  agreed upon by the parties hereto
for purposes of determining the System's conformity to the Specifications during
the testing period.

                          ARTICLE 2. LIMITATIONS ON USE

         2.01  General  Use.  Licensee  agrees to use the  Application  Software
solely to provide the  Services  to End Users.  Licensee  may private  brand the
Services it offers.

         2.02     Location.

                  (a) Use of Application Software.  The Application Software may
be used  only on  Designated  Hardware  at  Licensee's  switch  location  in the
Licensed Markets.

                  (b) Temporary  Use of  Non-Designated  Hardware.  Licensee may
temporarily  install and use the  Application  Software  on hardware  other than
Designated Hardware,  but only if the Designated Hardware cannot be used because
of  hardware,  software  or other  malfunction  and only  until  the  Designated
Hardware  is  returned  to  operation.  Licensee  shall not  install  or use the
Application  Software on such  replacement  hardware  without  the prior  verbal
consent of Licensor.  Licensor shall not  unreasonably  withhold this consent if
the proposed  replacement  hardware meets or exceeds the  Specifications for the
Designated Hardware.

         2.03 Licensor's Use.  Licensee shall permit Licensor to use its Systems
to provide  Services to its own end users ("Licensor End Users") where efficient
networking  would be  promoted by such use by  Licensor  End Users.  In exchange
therefor,  Licensor shall pay Licensee a fee of $1.25 per month per Licensor End
User that is homed on Licensee's Systems. Such fee shall be payable monthly upon
invoice by Licensee to Licensor  therefor,  and shall be payable  within  thirty
(30) days following receipt of the applicable invoice.

         2.04  Copies.  Licensee may make one "backup  copy" of the  Application
Software for archival  purposes at each location;  any such archival copy may be
stored at the location  where the products are installed and  operational  or at
any such reputable off-site storage facility or facilities, as


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the case may be, which  Licensee,  in its reasonable  judgment,  shall select to
maintain  and protect  such  archival  copy for  purposes of disaster  recovery.
Licensee  shall not otherwise  copy any portion of the Software.  Licensee shall
reproduce and include  Licensor's  applicable  copyright notice,  patent notice,
trademark, or service mark on any copies of the Application Software.

         2.05     Licensee's  User  Responsibilities.   Licensee  shall  be  ex-
clusively responsible for the supervision, management, and control of its use of
the Designated Hardware, including:

                  (a) Assuring proper  configuration of the Designated Hardware,
         related   equipment  and  devices  to  provide  the  grade  of  service
         determined by Licensee at its discretion;

                  (b) Maintaining,  repairing and replacing  Designated Hardware
         as required,  except as otherwise  provided  herein or agreed to by the
         parties;

                  (c)      Establishing adequate operating methods;

                  (d)   Implementing   procedures   sufficient  to  satisfy  its
         obligations  for security under this Agreement,  including  appropriate
         control of its  employees  to  prevent  misuse,  unauthorized  copying,
         modification, or disclosure of the Software.

         2.06 Term. The initial term of this Agreement  shall be ten (10) years,
subject to the provisions of Section 7.01 hereof. Upon expiration of the initial
term specified above, the Agreement shall automatically renew for successive one
(1) year terms unless  either party gives the other notice of its  intention not
to renew the  license at least  sixty (60) days prior to the  expiration  of the
then current  term.  As further  described in Section 1.01 hereof,  Licensee may
from time to time amend Exhibit C hereof,  which amendment may include  deletion
of  certain  Markets  set  forth on  Exhibit  C in lieu of  termination  of this
Agreement.

                           ARTICLE 3. PROPERTY RIGHTS

         3.01 Title to Software.  Title to the Application  Software is reserved
for Licensor. Licensee acknowledges and agrees that Licensor is and shall remain
the owner of the  Application  Software  and shall be the owner of all copies of
the Application Software made by Licensee.

         3.02  Confidentiality  of  Software.  Licensee  acknowledges  that  the
Application  Software is  confidential  in nature and constitutes a trade secret
belonging  to  Licensor.  Licensee  agrees to hold the  Application  Software in
confidence for Licensor and not to sell, rent, license, distribute, transfer, or
disclose the Application  Software or its contents,  including  methods or ideas
used in the Application Software, to anyone except to employees of Licensee when
disclosure  to  employees  is  necessary  to use  the  license  granted  in this
Agreement.  Licensee shall instruct all employees to whom any such disclosure is
made that the  disclosure  is  confidential  and that the employee must keep the
Application  Software  confidential  by using the same care and discretion  that
they  use  with  other  data  designated  by  Licensee  as   confidential.   The
confidentiality  requirements of this Section shall be in effect both during the
term of this Agreement and after it is terminated,  provided, that the foregoing
restrictions  shall not apply to information:  (a) generally known to the public
or  obtainable  from public  sources;  (b) readily  apparent  from the  keyboard
operations, visual display, or output reports of the


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Application   Software;   (c)  previously  in  the  possession  of  Licensee  or
subsequently developed or acquired without reliance on the Application Software;
or (d) approved by Licensor for release without restriction.

         3.03 Security.  Licensee agrees to keep the Software in a secure place,
under  access  and use  restrictions  designated  to prevent  disclosure  of the
Software to  unauthorized  persons.  Licensee  agrees to at least  implement the
security  precautions  that it  normally  uses to protect  its own  confidential
materials and trade secrets.

         3.04  Disclosure as Breach.  Licensee agrees that any disclosure of the
Software  to a third  party  constitutes  a material  breach of this  Agreement,
entitling Licensor to the benefit of Section 7.01 hereof.

         3.05 Removal of Markings.  Licensee agrees not to remove,  mutilate, or
destroy any copyright, patent notice, trademark, service mark, other proprietary
markings, or confidential legends placed on or within the Software.

                               ARTICLE 4. PAYMENT

         4.01  License  Initiation  Fee.  Licensee  shall pay Licensor a license
initiation fee for each Licensed Market,  including each Market that is added to
the  Licensed  Markets  hereafter  pursuant  to the terms of  Section  1.01,  in
accordance  with the  schedule  set  forth in  Exhibit  D  attached  hereto  and
incorporated  herein  by  reference.  Such  fee will be due for the  initial  39
Licensed  Markets upon  execution of this  Agreement and will be due for Markets
that are added hereafter at the time notice is given adding the Markets.

         4.02  Recurring  License Fee.  Licensee  shall pay Licensor a recurring
license fee for each Licensed Market each month  commencing 24 months  following
acceptance of the System in that Licensed Market based on the schedule set forth
in Exhibit D. The  recurring  fee shall be paid monthly on the  fifteenth day of
each month.

         4.03  Support Fee.  Licensee  shall pay Licensor for training and other
support in  accordance  with charges set forth in Exhibit E attached  hereto and
incorporated herein by reference.

         4.04 Fee Payable by  Licensor.  As  described  in Section  2.03 hereof,
Licensor  shall pay  Licensee a fee for certain  uses by Licensor of the Systems
installed hereunder.

                       ARTICLE 5. INSTALLATION AND SERVICE

         5.01 Delivery of Software and Materials. Licensor shall deliver (a) one
copy of the Application  Software in object code and one copy of  Specifications
and any other  documentation  to the Licensee at each switch site in  accordance
with a schedule on which the parties  agree and (b)  literature  relating to the
Systems  allowing  Licensee to private brand the Services it offers  relating to
the System.



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         5.02 Source Code  Escrow.  Licensor  will escrow the source code of the
Application  Software  under  the  terms  of  a  Source  Code  Escrow  Agreement
substantially in the form of Exhibit F attached hereto and  incorporated  herein
by reference.

         5.03 Installation  Services. The Designated Hardware will be shipped to
Licensor's site for assembly and  installation  of the Application  Software and
preinstallation testing.  Licensor will then bring the System to Licensee's site
for  installation.  Licensee  shall  prepare  the  site in  accordance  with the
Specifications for installation of the Designated Hardware by Licensor. Licensor
shall provide  technical  services in connection  with the  installation  of the
Systems at  Licensee's  site for five (5) days.  Installation  of Systems in the
Current Markets will be completed within 120 days, and additional  Systems shall
be installed concurrently with the installation of Licensee's switching systems,
in each case subject to Licensee's capabilities at the applicable site(s).

         Licensor  agrees  that it will  use best  efforts  to  comply  with all
Licensee's security,  confidentiality and regulatory requirements in relation to
the  System  installed  at any site.  In  addition,  Licensor  agrees to use all
reasonable  efforts to install Systems so that they shall comply in all material
respects with all federal, state, and local laws and regulations in force on the
date hereof,  which directly impose  obligations upon Licensor or the applicable
manufacturer.

         5.04 Testing. Licensor shall test the Systems to ensure that they meet,
without material deviation,  the standards contained in the Specifications.  The
testing period shall (i) commence  promptly upon the completion of  installation
of the System at the sites,  but in no event later than five (5) days  following
such completion of installation  (the  "Commencement  Date"),  and (ii) conclude
upon acceptance by Licensee's delivery to Licensor of the Acceptance Certificate
(defined below).

         Should  material  deviations  arise in the  performance  of the  System
relative to the  Specifications,  Licensor  agrees to inform  Licensee  promptly
thereof  by  submitting  notice,   including  a  written,   reasonably  detailed
description  of each deviation from the  Specifications,  to Licensee.  Licensor
shall then have the longer of (i) the  remainder  of the  testing  period,  (ii)
thirty (30) days or (iii) some other period of time mutually  agreed upon by the
parties to cure the noncompliance. Licensee shall use its best efforts to assist
Licensor in curing such  noncompliance.  Upon completion of such cure,  Licensor
shall give  notice to  Licensee  thereof.  The total  period of time that may be
spent  on the  testing  period  shall  not  exceed  ninety  (90)  days  from the
Commencement  Date,  after which time  Licensee  shall no longer be obligated to
accept such corrections from Licensor.

         If Licensor,  using commercially  reasonable efforts, is unable to cure
any noncompliance of the System during the testing period, then following notice
thereof  either party may give the other party thirty (30) days' written  notice
of its election to terminate this Agreement and the reasons therefor.  If either
party terminates this Agreement pursuant to this Section,  Licensor shall refund
to Licensee  any monies  previously  paid by  Licensee  relating  thereto  (less
one-sixtieth  (1/60th)  thereof  for each month (or  portion  thereof)  from the
installation  to the  date of  termination  pursuant  hereto);  and the  license
granted hereunder shall be terminated.

         5.05  Acceptance.  Licensor  shall  inform  Licensee  in writing of the
completion of Licensor's  testing  under Section 5.04.  Licensee will  thereupon
commence  testing of the  System,  and shall have ten (10) days in which to test
the functionality of the System with employees. Upon completion of


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the ten (10) day test  period,  Licensee  shall  either  provide  Licensor  with
written  notice of any  problems  revealed  in its tests or deliver  Licensor an
acceptance  certificate,  substantially in the form attached hereto as Exhibit G
(the "Acceptance  Certificate").  In the event Licensee identifies any problems,
Licensor  will have fifteen (15) days in which to resolve the problems and after
receiving notification that the problem is resolved,  Licensee will have another
fifteen (15) day test period. The Software shall be deemed to have been accepted
by Licensee upon execution and delivery by Licensee to Licensor of an Acceptance
Certificate,  executed by an authorized representative of Licensee or failure of
Licensee  to  provide  written  notice  to  Licensor  of any  problems  Licensee
discovers within the ten (10) day period it is conducting tests.

         5.06 Technical  Support.  During the term of this  Agreement,  Licensor
shall  provide a technical  support  help desk that  Licensee may call to report
System troubles  twenty-four  (24) hours per day, seven (7) days per week basis.
Licensor shall  troubleshoot the problems and contact the appropriate  vendor to
resolve  problems  that  cannot be  resolved  by  actions  Licensee  may take on
Licensor's  instruction.  During  the  term of this  Agreement,  Licensor  shall
provide (i) remote, dial-up System support, on a twenty-four (24) hours per day,
seven  (7)  days  per  week  basis,  and  (ii)  packages,  generally  containing
corrections  of known  software  defects  and  updates or patches to increase or
improve performance and occasionally also containing minor feature  enhancements
of existing software,  relating to a current Software  platform.  Licensee shall
provide  permanent  digital  connectivity  to each  System  for the  purpose  of
off-site  software  revision  and  maintenance.   Licensor  also  shall  provide
additional technical support services to Licensee on request and as available at
its then standard rates.

         5.07  Training.  Licensor  shall,  as  described  on Exhibit E attached
hereto by Licensor,  provide Licensee's  personnel with training and instruction
concerning the operation and use of the System by conducting  training  sessions
at a mutually convenient time at Licensee's facility.  Ray Miller, the President
of Licensor,  shall perform at least two (2) of the Voice  Recognition  Training
sessions.  Licensee shall be deemed to be satisfied  with each training  session
unless written notice is otherwise sent to Licensor  within five (5) days of the
end of such session. Any additional training services not described on Exhibit E
that are requested by Licensee shall be invoiced to Licensee in accordance  with
Licensor's then prevailing  hourly rates.  Licensee shall be responsible for all
travel and other expenses of its personnel attending such training sessions.

                         ARTICLE 6. WARRANTY PROVISIONS

         6.01     Warranties

         (a) Designated  Hardware.  Licensee shall be entitled to the benefit of
all  warranties  provided  by  the  manufacturers  of the  Designated  Hardware.
Licensor shall provide Licensee with copies of all such warranties.

         (b)      Application Software.

                  i.      General.  Licensor warrants that (i) it has good title
to the Application Software and the right to license its use to Licensee free of
any proprietary  rights,  liens,  or  encumbrances of any other party,  (ii) the
Application Software will permit the System to provide


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Services when properly  interconnected  to  Licensee's  functioning  Lucent 5ESS
switch  (provided,  that ANY  MODIFICATION  OF THE  APPLICATION  SOFTWARE BY ANY
PERSONS OTHER THAN LICENSOR SHALL VOID THE WARRANTY IN THIS CLAUSE (ii)),  (iii)
commencing  on  installation  thereof,  and for a period  of  ninety  (90)  days
thereafter,  (1) the Software (A) shall conform in all material  respects to the
Specifications and (B) shall be free of viruses,  bugs or contaminants which may
cause damage to  Licensee's  systems or interrupt  Licensee's  utilization  of a
System;  and (2) the media in which the Software is  contained  shall be free of
material defects in materials or workmanship.

                  ii.      Year 2000.  Licensor  warrants  that  the Application
Software  delivered or modified by Licensor is, or will be, Year 2000  Compliant
(as  defined  below).   Year  2000  Compliant   Software  that  is  intended  to
interoperate  with third party  products  (including  Third Party  Software)  as
described in herein will be  compatible  and  interoperate  in such manner as to
process between them, as applicable, date related data correctly as described in
the  definition of "Year 2000  Compliant."  Except as set forth in the preceding
sentence, (i) Licensor assumes no responsibilities or obligations to cause third
party products (including Third Party Software) to function with the Application
Software;  and (ii)  Licensor  will not be in  breach of this  warranty  for any
failure of the  Application  Software to be Year 2000  Compliant if such failure
results from the inability of any software,  hardware, or systems of Licensee or
any third party to be Year 2000 Compliant.  "Year 2000 Compliant" means that (a)
neither the performance nor  functionality  of the Application  Software will be
affected  by dates  prior to,  during and after the year 2000,  (b) no value for
current date will cause any  interruption  in the  operation of the  Application
Software;  (c) the year 2000 is recognized as a leap year; (d) in all interfaces
and data storage the century,  in any date, is specified either explicitly or by
unambiguous algorithms or inferencing rules; and (e) date-based functionality of
the Application  Software  behaves and will behave  consistently for dates prior
to, during and after the year 2000.

         6.02  Remedies.  In the  event of any  nonconformity  or  defect in the
Application  Software  (or any other  breach with  respect to the  condition  or
operation  of the  Application  Software)  for which  Licensor  is  responsible,
Licensor shall, during the foregoing  respective  warranty periods,  (A) provide
reasonable efforts to correct or cure such nonconformity, defect, contaminant or
breach (which may include a workaround  for system  errors),  (13) at Licensor's
option,  replace the relevant part of the Application Software in lieu of curing
such nonconformity, defect, contaminant or breach, or (C) if Licensor determines
that neither of the foregoing is commercially practicable,  refund all sums paid
to Licensor by Licensee  with respect to  nonconforming,  defective or breaching
Application  Software  less  one-sixtieth  (1/60th)  thereof  for each month (or
portion  thereof)  that  has  ensued  following  acceptance  of the  Application
Software.  In  addition,  with  respect  to any defect or  nonconformity  in the
Designated  Hardware during the warranty  period,  Licensor shall cooperate with
Licensee in  attempting  to provide  Licensee  with the benefit,  if any, of the
support  commitment  of  any  third-party  manufacturers  and  suppliers  of the
Designated Hardware.

         6.05     Warranty Disclaimer.  LICENSOR  DOES NOT REPRESENT  OR WARRANT
THAT ALL ERRORS WILL BE  CORRECTED.  LICENSEE  AGREES THAT  LICENSEE'S  SOLE AND
EXCLUSIVE  REMEDY FOR THE DEFECTS  DESCRIBED IN THIS SECTION SHALL BE LIMITED TO
THE  CORRECTIVE  ACTION  DESCRIBED IN THIS SECTION.  THE EXPRESS  WARRANTIES SET
FORTH IN THIS AGREEMENT ARE IN LIEU OF


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ALL  OTHER   WARRANTIES   EXPRESS  OR  IMPLIED,   INCLUDING  ANY  WARRANTIES  OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

         6.06  Limitation  of  Remedies.  LICENSEE  AGREES  THAT  ITS  EXCLUSIVE
REMEDIES, AND LICENSOR'S ENTIRE LIABILITY WITH RESPECT TO THE SOFTWARE IS AS SET
FORTH IN THIS  AGREEMENT.  LICENSEE  FURTHER  AGREES THAT LICENSOR  SHALL NOT BE
LIABLE TO LICENSEE FOR ANY DAMAGES, INCLUDING ANY LOST PROFITS, LOST SAVINGS, OR
OTHER INCIDENTAL OR CONSEQUENTIAL  DAMAGES,  ARISING OUT OF ITS USE OR INABILITY
TO USE THE SOFTWARE OR THE BREACH OF ANY EXPRESS OR IMPLIED WARRANTY.

         6.07     Indemnification.

                  (a)  Infringement.  Licensor  agrees  to  indemnify  and  hold
Licensee and its directors, officers, employees and agents, harmless against any
and all claims, demands, actions, losses, liabilities,  judgments,  settlements,
awards  and  costs   (including   reasonable   attorneys'   fees  and  expenses)
(collectively,  "Liabilities")  arising  out of or related to any claim  against
Licensee by a third party that  Licensee's use or possession of the  Application
Software (or the license  granted to Licensee  hereunder with respect  thereto),
infringes or violates any United States patent,  copyright or other  proprietary
right of any third party; provided that Licensee gives Licensor prompt notice of
any such  claim of which it has  actual  knowledge  and  cooperates  fully  with
Licensor in the defense of such claim.  Licensor shall have the exclusive  right
to defend and settle at its sole discretion and expense all suits or proceedings
arising out of the  foregoing.  Licensee  shall not have the right to settle any
action, claim or threatened action without the prior written consent of Licensor
(at Licensor's  sole and absolute  discretion).  In case use of the  Application
Software  is  forbidden  by  a  court  of  competent   jurisdiction  because  of
proprietary  infringement,  Licensor shall promptly,  at its option, (i) procure
for Licensee the rights to continue using the Application Software; (ii) replace
the infringing Application Software with non-infringing  Application Software of
equal performance and quality which are materially the functional  equivalent of
the infringing  Application  Software;  (iii) modify the infringing  Application
Software  so  it  becomes   non-infringing  while  materially   maintaining  the
functionality  thereof,  or  (iv)  if none  of the  foregoing  are  commercially
practicable,  refund all sums paid to Licensor by Licensee  with  respect to the
infringing  Application  Software less  one-sixtieth  (1/60th)  thereof for each
month or portion thereof that has ensued following  acceptance of the infringing
Application Software. Licensor will then be released from any further obligation
whatsoever to Licensee with respect to the  infringing  part of the  Application
Software.  Nothing in this Section shall be deemed to make  Licensor  liable for
any patent or copyright  infringement  suits that arise in  connection  with (a)
designs,  modifications,  use,  integration  or data  furnished  by  Licensee if
infringement  would have been avoided by not using or combining the  Application
Software with such other programs or data or (b) if infringement would have been
avoided by the use of an updated version made available to Licensee.

                  (b) Other.  Licensor  agrees to  indemnify  and hold  Licensee
harmless  against any and all  Liabilities  arising out of Licensor's  negligent
acts or omissions, intentional torts, or material breach of this Agreement.



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                             ARTICLE 7. TERMINATION

         7.01 Cause for Termination. The license granted in this Agreement shall
terminate  automatically  and  without  further  notice upon the  occurrence  of
expiration of the term, specified in Section 2.06 or of any, renewal term in the
absence of a subsequent  renewal in accordance with the terms of this Agreement.
Licensor may terminate  this  Agreement in the event that Licensee (a) discloses
the  Software  to a third  party,  whether  directly or  indirectly  and whether
inadvertently or purposefully or (b) attempts to use, copy,  license,  or convey
the  Software  in any  manner  contrary  to the  terms of this  Agreement  or in
derogation of Licensor's  proprietary rights in the Application Software, and in
either case fails to cure such breach within such five (5) day period  following
notice by Licensor.  Licensee may terminate this Agreement on any anniversary of
the date  hereof  upon at least  ninety  (90)  days  prior  written  notice.  In
addition,  either party may terminate this  Agreement (and all licenses  granted
hereunder)  at any time if (a) the other party  breaches any term hereof  (other
than breaches by Licensee pursuant to the preceding  sentence) and fails to cure
such breach,  (b) the other party engages in any business  activity that, in the
non-breaching  party's  reasonable  determination,  has or may  have an  adverse
effect upon the  non-breaching  party's  business or  reputation,  (c) the other
party shall be or becomes insolvent, (d) the other party makes an assignment for
the  benefit  of  creditors,  (e)  there  are  instituted  by  the  other  party
proceedings  in  bankruptcy  or  under  any  insolvency  or  similar  law or for
reorganization,  receivership or dissolution,  (f) there are instituted  against
the other party proceedings in bankruptcy or under any insolvency or similar law
or for  reorganization,  receivership or dissolution,  which proceedings are not
dismissed  within  60  days,  or (g) the  other  party  ceases  to do  business;
provided,  however,  that no party  shall be deemed  to be in  breach  until the
non-breaching  party  gives  written  notice  to the  breaching  party  and  the
breaching party shall fail to remedy such breach within thirty (30) days (or ten
(10) days in the case of a failure  to pay any sum due)  after  receipt  of such
written notice. In the event that Licensor terminates this Agreement pursuant to
this  Section,  Licensor  may (i)  invoke  all rights  Licensor  possesses  upon
termination  and (ii) if Licensee  remains  liable for any  monetary  obligation
created under this Agreement, accelerate and declare all obligations of Licensee
created under this Agreement to be immediately due and payable by Licensee.

         7.02 Effect of Termination.  Licensee agrees that on termination  under
Section  7.01,  it shall  immediately  destroy  all  copies  of the  Application
Software,  certify (on  Licensor's  request) to Licensor that it has retained no
copies of the Application  Software,  and acknowledge  that it may no longer use
the  Application   Software.   Upon  termination  of  the  license,   Licensor's
obligations  under this Agreement shall cease.  The termination or expiration of
this  Agreement  shall in no way relieve either party from its obligation to pay
the other any sums accrued  hereunder  prior to such  termination or expiration.
Upon such termination or expiration, the provisions of Section 2.04 and Articles
3, 6, 7 and 9 shall survive.

                ARTICLE 8. PERSONNEL & SUBCONTRACTORS; INSURANCE

         8.01  Assignment  and  Substitution.  Licensor  reserves  the  right to
assign,  reassign and substitute its personnel with personnel having  comparable
qualifications at any time during the term of this Agreement, so long as no such
action results in an interruption of service.



                                        9

<PAGE>



         8.02 Subcontractors.  Licensor reserves the right to subcontract any or
all  services  to  qualified  and  experienced   third  parties  and/or  to  use
independent   consultants,   so  long  as  such  use  of  subcontractors  and/or
consultants  does not cause any  interruption of services to Licensee.  Services
supplied by such third parties  shall be subject to the terms and  conditions of
this  Agreement  as if supplied  directly by Licensor.  Any such  subcontracting
shall not relieve  Licensor from  liability (if any) or  obligations  under this
Agreement and Licensor shall be responsible  for the services  performed as well
as the acts of any subcontractor or Consultant (and any agents thereof) as fully
as if they were the acts of Licensor (or such  agents).  Licensor  shall require
that its subcontractors comply with the provisions of this Agreement, insofar as
they apply to the subcontracted  work. Should any subcontractor  fail to perform
in a satisfactory  manner work undertaken by it, Licensor shall  investigate and
take any appropriate  action.  Nothing  contained in this Agreement shall create
any contractual  relationship between any subcontractor of Licensor and Licensee
and no  subcontractor  is  intended  to be or  shall  be  deemed  a third  party
beneficiary of this Agreement.

         8.03 Qualifications. Licensor represents that it and its subcontractors
performing  services are and will  continue to be  experienced  and qualified to
perform  the  services  and  all of  their  respective  obligations  under  this
Agreement.

         8.04 Licensee  Rights.  At Licensee's  request,  Licensor shall provide
Licensee with the resume of a subcontractor  whom Licensor  intends to designate
to perform  onsite work.  Licensee shall have the right to interview and approve
or reject the  assignment  by Licensor of any  subcontractors  to  positions  of
on-site  work,  provided  that Licensee may not exercise its right to reject any
subcontractors  on grounds  unrelated  to job  performance  or in a manner  that
obligates  Licensor to commit an unlawful act. If Licensee does not exercise its
right to interview and approve or reject any such assignment within fifteen (15)
days of submittal of a resume by Licensor to Licensee,  then  Licensee  shall be
deemed to have agreed to such  assignment.  Licensee agrees not to make an offer
of  employment to any  subcontractor  rejected by Licensee;  and Licensee  shall
treat the resume and any interview information as confidential information.

         8.05  Acceptance.  Licensee  may  notify  Licensor  when it  finds  any
Licensor onsite subcontractor unacceptable to provide services at a site for any
lawful reason,  including Licensee's reasonable determination that subcontractor
is not qualified to perform the work to which  subcontractor  is assigned.  Upon
receipt of such notice Licensor shall, within ten (10) business days (or earlier
if Licensee specifically so requests),  review the matter with Licensee and take
appropriate  action as  necessary.  Licensor  shall  have a  reasonable  time to
replace any such subcontractor.

         8.06 Insurance.  Each party hereto shall  maintain,  during the term of
this Agreement,  the following insurance coverage as well as all other insurance
required by law in the jurisdictions  where the work is performed:  (a) worker's
compensation and related insurance as required by law; (b) employer's  liability
insurance with a limit of at least five hundred thousand  ($500,000) dollars for
each occurrence;  (c) comprehensive general liability insurance, with a limit of
at least one million ($1,000,000) dollars per occurrence;  and (d) comprehensive
motor  vehicle  liability   insurance  with  limits  of  at  least  one  million
($1,000,000) dollars for bodily injury including death, to any one person, three
hundred thousand  ($300,000) dollars for each occurrence of property damage, and
one  million  ($1,000,000)  dollars  for each  occurrence.  Each party shall (i)
furnish the other prior to the start of the relevant  work,  if requested by the
other, certificates or adequate proof of the insurance required


                                       10

<PAGE>



by this  Section and (ii) notify the other in writing at least  thirty (30) days
prior to cancellation  of or any material change in the policy.  Notwithstanding
the  above,  each  party  shall  have  the  option  where  permitted  by  law to
self-insure any or all of the foregoing.

                            ARTICLE 9. MISCELLANEOUS

         9.01 Governing  Law. THIS AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED
IN  ACCORDANCE  WITH  THE  LAWS OF THE  STATE  OF NEW  JERSEY,  EXCEPT  THAT ANY
CONFLICTS  OF LAW RULES OR  PRINCIPLES  OF THE STATE OF NEW  JERSEY  THAT  WOULD
REQUIRE REFERENCE TO THE LAWS OF ANOTHER JURISDICTION SHALL BE DISREGARDED.

         9.02  Headings.  Headings  used in  this  Agreement  are to  facilitate
reference only, are not a part of this Agreement, and will not in any way affect
the interpretation hereof The use herein of the word "including," when following
any general  statement,  term or matter,  shall not be  construed  to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters,  whether or not non-limiting
language  (such as "without  limitation,"  or "but not limited  to," or words of
similar import) is used with references  thereto,  but rather shall be deemed to
refer to all other  items and  matters,  that  reasonably  could fall within the
broadest possible scope of such general statement, term or matter.

         9.03  Assignment.  This  Agreement,  and  all  rights  and  obligations
hereunder,  are personal as to the parties  hereto and may not be  assigned,  in
whole or in part, by any of the parties to any other person, firm or corporation
without  the prior  written  consent  thereto by the other party  hereto,  which
consent will not be unreasonably  withheld;  except that either party may freely
assign any or all of its rights and obligations  hereunder to any affiliate.  An
affiliate is (a) an entity that owns all or substantially all of the outstanding
stock of the  entity so  assigning,  (b) an entity all or  substantially  all of
whose stock is owned by the entity so  assigning,  or (c) an entity under common
ownership with the entity so assigning.  Such assignee entity shall thereupon be
free to assign the  rights and  obligations  under this  Agreement  to any other
affiliate.  Any  assignment  contrary to the terms hereof shall be null and void
and of no force or effect.

         9.04 Failure or Partial Exercises.  No failure on the part of any party
to exercise,  and no delay in exercising,  any right or remedy  hereunder  shall
operate as a waiver  thereof.  Nor shall any single or partial  exercise  of any
right or remedy  hereunder  exclude any other or further exercise thereof or the
exercise of any other right hereunder.

         9.05 Entire Agreement Amendments.  This Agreement and all schedules and
exhibits  annexed  hereto  constitute  the entire  agreement  among the  parties
respecting the subject matter hereof and supersedes all prior  agreements  among
the parties  relative to the subject matter hereof.  In entering this Agreement,
Licensee did not rely on any  representations  or  warranties of Licensor or its
employees or agents other than those set forth in this Agreement. This Agreement
may not be  modified  or amended  except by a writing  that states that it is an
amendment   to  this   Agreement   and  which  is  signed  by  duly   authorized
representative of the parties.



                                       11

<PAGE>



         9.06 Notices.  All notices  required or permitted to be given hereunder
shall be in writing and shall be valid and  sufficient if dispatched  either (i)
by hand delivery, (ii) by telex, cable or facsimile transceiver, with confirming
letter mailed promptly thereafter by first class mail, postage prepaid, (iii) by
reputable  overnight express courier or (iv) by certified mail, postage prepaid,
return receipt requested,  deposited in any post office in t , he United States,
in any case,  addressed to the addresses set forth on the signature page of this
Agreement,  or such other  addresses as may be provided from time to time in the
manner set forth above.  When sent by cable or facsimile as  aforesaid,  notices
given as  herein  provided  shall be  considered  to have been  received  at the
beginning  of   recipient's   next  business  day  following   their   confirmed
transmission;  otherwise, notices shall be considered to have been received only
upon delivery or attempted delivery during normal business hours.

         9.07 Partial  Invalidity.  If any clause or provision of this Agreement
is held to be illegal,  invalid,  or unenforceable  under present or future laws
effective  during the term of this Agreement,  then and in that event, it is the
intention of the parties hereto that the remainder of this  Agreement  shall not
be  affected  thereby,  and it is also  the  intention  of the  parties  to this
Agreement  that in lieu of each clause or  provision of this  Agreement  that is
held to be illegal, invalid, or unenforceable,  there be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid, or
unenforceable  clause or provision as may be possible and still be legal, valid,
and enforceable.

         9.08  Attorneys   Fees.  The  prevailing   party  in  any   litigation,
arbitration  or  other  proceedings  arising  out of  this  Agreement  shall  be
reimbursed  by the  other  party for all costs  and  expenses  incurred  in such
proceedings, including reasonable attorneys' fees.

         9.09  Force  Majeure.  No party  hereto  shall be  liable  for delay or
default in performing hereunder, other than a delay or default in payment of any
monies due to the other party, if such  performance is delayed or prevented by a
Force Majeure  Condition.  "Force Majeure Condition" shall mean any condition or
event beyond the  reasonable  control of the party affected  thereby,  including
fire, explosion,  or other casualty, act of God, war or civil disturbance,  acts
of public enemies, embargo, the performance or non-performance of third parties,
acts  of  city,  state,  local  or  federal   governments  in  their  sovereign,
regulatory,  or  contractual  capacity,  labor  difficulties,  and strikes,  but
specifically  excluding a party's failure to be Year 2000 Compliant.  If a Force
Majeure  Condition  occurs,  the party  delayed or unable to perform  shall give
prompt notice of such  occurrence to the other party.  The party affected by the
other party's  inability to perform may, after sixty (60) days,  elect to either
terminate  this Agreement or continue  performance  with the option of extending
the terms of the Agreement up to the length of time the Force Majeure  Condition
endures.  The party  experiencing  the Force Majeure  Condition  must inform the
other party in writing when such a condition ceases to exist.  Each party shall,
with the cooperation of the other,  exercise all reasonable  efforts to mitigate
the extent of a delay or failure resulting from a Force Majeure Condition.

         9.10 Consequential Damages. THE PARTIES HERETO AGREE THAT NEITHER PARTY
HERETO SHALL BE LIABLE TO THE OTHER PARTY HERETO FOR ANY DAMAGES,  INCLUDING ANY
LOST  PROFITS,  LOST SAVINGS,  OR OTHER  INCIDENTAL  OR  CONSEQUENTIAL  DAMAGES,
ARISING OUT OF THIS AGREEMENT.



                                       12

<PAGE>



         9.11   Independent   Contractor.   The   relationship  of  the  parties
established by this Agreement is that of  independent  contractors,  and nothing
contained in this Agreement will be construed (a) to give either party the power
to direct and control the day-to-day  activities of the other, (b) to constitute
the parties as partners, joint venturers, owners or otherwise as participants in
a joint or common undertaking,  or (c) to allow either party to create or assume
any obligation on behalf of the other for any purpose whatsoever.


PREFERRED VOICE, INC.                   KMC TELECOM HOLDINGS, INC.,
                                        on behalf of itself and its wholly owned
                                        subsidiaries and affiliates


By:                                     By:
     -------------------------               -----------------------------------
Name:                                   Name:
     -------------------------               -----------------------------------
Title:                                  Title:
     -------------------------               -----------------------------------

6500 Greenville Avenue                  1545 Route 206
Suite 570                               Suite 300
Dallas, Texas 75206                     Bedminister, New Jersey 07921
Fax No.:          214-265-9663          Fax No.:          908-719-8775
Phone:            214-265-9580          Phone:            908-719-2200



                                       13

<PAGE>



                                    EXHIBIT A

                              PREFERRED VOICE, INC.
                              Product Descriptions

VIP EMMA 888 Services

Each EMMA 888 service  was  specifically  designed to combine all the  following
existing Telco services with the convenience of speech independent dialing. Each
of these services offer specific  benefits and features  designed to satisfy the
communication needs of the end user.

         1-888 Number dedicated to one user
         Long Distance Calling Card
         Selective Call Screening
         One Number "Locate"                                           EMMA
         Voice Activated Dialing
         Voice Directory

(1)      EMMA.  The "SMART" Business Line and EMMA PA (Personal Assistant):

         The  "SMART"  Business  Line has a local  number  on the  front and can
         receive calls dialed from the public  switched  telephone  network.  In
         addition  to  the  local  number  each  subscriber  may be  assigned  a
         dedicated 888 number giving them not only local but national  presence.
         In addition unlike the traditional  telephone line that is connected to
         a specific  telephone  the SBL floats and can be pointed to ring at any
         telephone the subscriber  selects.  This feature is usually referred as
         "single number  locate." This service may be offered as a supplement to
         existing business lines.

                  One Number Locate:

                  The  subscriber  to this  service is assigned his own personal
                  888 number.  When that  number is dialed the calling  party is
                  greeted  by a prompt.  The call will then be sent to  whatever
                  number  the user  has  programmed  in his  Locate  file  (i.e.
                  cellular phone, hotel, pager, etc.) anywhere in the world.

                  Telephone Calling Card:

                  The subscriber  can use the Sl3L as a telephone  calling card.
                  During the forwarding  prompt, the user touch-tones any key on
                  his phone and speaks his Personal  Identification  Number;  at
                  the next  prompt he may speak a name from his  personal  voice
                  directory.  The Voice  Directory  may  contain  100 names with
                  their  corresponding  numbers.  For  numbers  not in the voice
                  directory,  the subscriber  simply says, "Dial Number" and SBL
                  will prompt "Number please".  The user then may voice dial the
                  number or touch-tone using the DTMF pad.



                                        1

<PAGE>



                  Intelligent Call Screening:

                  This feature can be turned on or off by the subscriber. When a
                  caller dials the  subscriber's  888 number SBL will prompt for
                  the callers name and present the name to the  subscriber.  The
                  subscriber has the option of accepting the call or sending the
                  call to their voice mail.

(2)      EMMA CD (corporate direct):

         Businesses  that have  multiple,  individuals  with EMMA PA numbers can
         avoid having to remember or look-up everyone's  personal EMMA PA number
         by using the EMMA CD. The caller dials the dedicated EMMA CD number and
         simply  speaks  the  called  person's  name  and the  call  is  quickly
         forwarded to his current programmed locate number.

(3)      EMMA VO (Virtual Office)

         This  service  configuration  was  designed for the group that does not
         have a single physical office or whose members are out of their offices
         consistently.  EMMA VO allows the group to have a single  number.  When
         there  is a call  for a  member,  EMMA  will  forward  the  call to the
         member's office. If he is out of the office,  EMMA will locate a member
         if so desired or will take a message.  EMMA  provides  all of the SO/HO
         type of business requirements including single number, Locate, personal
         directory and access to voice mail.

(4)      EMMA FF (Family and Friends):

         This service was  developed  to allow anyone that has the  subscriber's
         dedicated 888 number to access the subscriber's  Voice Directory.  This
         allows the  subscriber  to give  their  number to a son in  college,  a
         daughter in a distant city, etc. At the subscriber's  discretion,  each
         one  of the  callers  can  call  anyone  whose  name  is in  the  Voice
         Directory.

                  EMMA FF.  "Locate":

                  This  service  also  allows the owner to program any number in
                  his Locate file.  The caller  speaks  "Locate" and the call is
                  instantly sent to the owner's cell phone,  pager,  office,  or
                  any number he desires.

                  EMMA FF.  "Telephone Calling Card":

                  The owner turns the service into a fully functional  Telephone
                  Calling Card by speaking "Dial Number". EMMA will prompt for a
                  PIN.  Once  the PIN has been  verified,  the  service  prompts
                  "Number  please" and the user may then speak the number or use
                  DTMF from the telephone pad.



                                        2

<PAGE>



VIP EMMA

Inbound Corporate  extension  directory - This directory stores the subscriber's
internal  names and  extensions.  When Emma  receives a call,  she  compares the
caller's  request to the stored  names and  extensions  and  forwards  the calls
accordingly.  The directory is customized  for each  subscriber  and can include
names, departments, and even branches at different locations.

Outbound corporate directory - (optional service) One or more outbound corporate
directories  can be created to  facilitate  outbound  calling.  For  example,  a
company could create directories for branches,  vendors,  clients, etc. The user
accesses Emma through an extension number or DID and simply speaks the directory
listing and the call is connected,  eliminating  the need to look-up or dial the
number.

Outbound  personal  directory -  (optional  service) A personal  directory  is a
directory  created for an  individual  user and is  accessed  with the use of an
authorization  code or ANI.  Individuals within the Company may want a directory
of their personal frequently called names.

Telephone  Calling  Card - Any  company  utilizing  Emma can issue,  track,  and
terminate  calling  cards on a  real-time  basis.  Calling  cards are  activated
instantaneously.

Effectively,  an Emma  user  becomes a  "virtual  long-distance  company."  This
service can be restricted to specific users or specific phone numbers only.








This document and its attachments are confidential and proprietary  information,
the  exclusive  rights to which are the sole property of Preferred  Voice,  Inc.
Upon receipt and  acceptance of these  materials,  the  recipient  agrees not to
reproduce or distribute copies  electronic,  xerographic,  verbal, or otherwise)
without the express written permission of Preferred Voice, Inc.




                                        3

<PAGE>



                                   EXHIBIT A-1
                                   -----------

                                 Specifications
                                 --------------



                                        4

<PAGE>


                                                                            EMMA

                       [Graphic - Flow Chart of Call Flow]




<PAGE>


                                                                  EMMA USER FLOW

                    [GRAPHIC - Flow Chart of Emma User Flow]




<PAGE>



                                                      SBL FUNCTIONAL CALL FLOW -
                                                      INCOMING CALL

             [Graphic - Flow Chart of Smart Business Line Call Flow]




<PAGE>



                                                                   OUTGOING CALL

                  [Graphic - Flow Chart of Outgoing Call Flow]




<PAGE>



                                                                  REMOTE CALLING
                                                                   CARD FUNCTION

             [Graphic - Flow Chart of Remote Calling Card Function]




<PAGE>



                                                               "LOCATE" FUNCTION

                   [Graphic - Flow Chart of "Locate" Function]




<PAGE>



                                                                PROGRAM FUNCTION

                   [Graphic - Flow Chart of Program Function]




<PAGE>



Power Requirements

o    -48v 40 amp DC Power terminating at the Rack Space.

o    Power Inverter then wired to a dual plug AC junction box.


Terminating Connections

o    T-1's will be terminated with a male RJ-45 Connector

o    POTS lines will be terminated with a male RJ-11 Connector

o    ISDN BRI will be terminated with a male RJ-45 Connector


Space Required

o    The PFVI System requires a 19" Rack

o    The Inverter Requires a 19" Rack

o    The Master switch requires a 19" Rack

o    All other components will be placed on a shelf


The Monitor Mouse and Keyboard will be connected to a intelligent switch box.

Rack Layout:

                            [Graphic of Rack Layout]




<PAGE>



                                    EXHIBIT B


                         HARDWARE CONFIGURATION (24 PTS)


                      ITEM                                      DESCRIPTION

                    FTU-2000A                                 CUSTOM COMPUTER
                   PIIBX40P38                               PENT 11 400MHz CPU
                   PIIBX33P38                               PENT 11 333MHz CPU
                     64M040                                    64MB DIMM RAM
                      FD015                                   3.5" FDD, BLACK
                      HD91S                                   9.1GB HDD, SCSI
                   ALM-100B-H                                 4.3GB HDD, SCSI
                     CDKIT1                                      ALARM BOARD
                     CDT240A                                  DUAL SLIM CD-ROM
                     SCSR03                                   SLIM LINE CD-ROM
                     MD566A                                  JUMPERABLE FAX/MDM
                      MNT40                                     MS WIN NT 4.0
                     240SCT1                                    PORT RESOURCE
                     ANTARES                                   VOICE RESOURCE
                     PRO 2V                                    ALARM RESOURCE
                    PORT FEE                                 VOICE REC RESOURCE


          Optional Hardware Components
                                                               48v Inverter
                                                               Master Switch

               Traffic Engineering

                      Users                                       Ports
                      1000                                          11
                      2000                                          20
                      3000                                          26

                    Spare Kit





<PAGE>



                                    EXHIBIT C
                                    ---------
       Additional 13 Tier III & 70 1 Tier IV Licensee Markets and Switches
       -------------------------------------------------------------------
                                  [to be added]
                                  -------------

EXISTING 23
-----------

Ann Arbor, MI*
Augusta, GA*
Baton Rouge, LA*
Brevard, FL*
Corpus Christi,  TX*
Daytona Beach, FL*
Fayetteville,  NC*
Fort Myers, FL*
Fort Wayne,  IN*
Greensboro,  NC*
Hampton Roads,  VA*
Huntsville,  AL*
Longview,  TX*
Madison, WI*
Duluth, MN*
Pensacola, FL*
Roanoke, VA*
Sarasota, FL*
Savannah, GA*
Shreveport, LA*
Tallahassee,  FL*
Topeka, KS*
Winston-Salem,  NC*

Board Approved
--------------

Akron,  OH
Charleston,  SC
Dayton,  OH
Toledo,  OH
Lansing,  MI
Monroe,  LA
Spartanburg,  SC
St.  Petersburg/Clearwater,  FL

Pending  (subject  to  change)
------------------------------

Beaumont, TX
Columbus, GA
Del Ray Beach, FL
Lakeland, FL
Macon, GA
Naples, FL




<PAGE>



                                    EXHIBIT D
                                    ---------
                                  License Fees
                                  ------------


License Initiation Fee

                  Tier III Market = [Confidential Treatment Requested]**

                  Tier IV Market = [Confidential Treatment Requested]**


Monthly Recurring License Fee

                  Tier III Market = [Confidential Treatment Requested]**

                  Tier IV Market = [Confidential Treatment Requested]**




<PAGE>



                                    EXHIBIT E
                                    ---------

                            PVI Services Integration


1.   Services Training - [Confidential Treatment Requested]**/day plus travel
     and material expenses (Est. time 3 days).

     o    Target Audience

          -    Product Manager
          -    Product Marketing

     o    Contents

          -    Complete review of each PVI service description and application
          -    Market Position
          -    Target Market

2.   Sales Training - [Confidential Treatment Requested]**/day plus travel and
     material  expenses.  (Est. time 2 days).

     o    Service Descriptions
     o    Licensee Needs
     o    Sell to End User

          -    Business
          -    Residential

     o    Closing Techniques
     o    Role Playing

3.   System  Installation  and  Maintenance  Training - [Confidential  Treatment
     Requested]**/day plus travel and material expenses (Est. time 4 days).

     Installation

     o    Hardware Installation
     o    T-1 Configuration
     o    VIP Programming

          -    SCC
          -    DID

     Maintenance

     o    Alarm Systems
     o    Hardware Replacement
     o    Hardware Expansion


4.   Voice Recognition  Training - [Confidential Treatment Requested]**/day plus
     travel and material expenses.  (Est. time 3 days).

     o    Voice Recognition Overview
     o    Cut Thru Sensitivity
     o    Speaker Dependent
     o    Speaker Independent
     o    Continues
     o    Discreet
     o    Phonetics
     o    Voice Print
     o    Product Design
     o    Limitations / Expectations
     o    Language


                                        1

<PAGE>



5.   Licensee  Customer Provisioning - [Confidential Treatment Requested]**/hour
     plus system access connection charges.

6.   Technical Support Help Desk. On a time and materials basis.



                                        2

<PAGE>



                                    EXHIBIT F
                          SOURCE CODE ESCROW AGREEMENT


         This Source Code Escrow  Agreement  is made as of this 3rd day of June,
1999,  among Preferred Voice,  Inc., a Delaware  corporation  ("Licensor"),  KMC
Telecom  Holdings,  Inc.,  a Delaware  corporation,  on behalf of itself and its
wholly owned subsidiaries and affiliates ("Licensee"),  and Chase Bank of Texas,
N.A. ("Escrow Agent").

         The parties hereto hereby agree as follows:

1        Definitions.

                  (a)  The  "License   Agreement"  means  the  Software  License
Agreement between Licensor and Licensee dated as of June 3, 1999.

                  (b) The  "Source  Code"  means the  source  code  listings  in
magnetic media form and related programmer-level  documentation for the computer
programs licensed to Licensee under the License Agreement and defined therein as
Software, together with any Updates as defined in this Agreement.

2.       Escrow.

         Pursuant to the terms of this  Agreement,  Licensor  shall  deposit the
Source  Code in escrow  with  Escrow  Agent to be  released  by Escrow  Agent to
Licensee as authorized by this Agreement.

3.       Ownership of Source Code.

         Licensor  warrants to Licensee  that it possesses  all of the rights in
the Source Code necessary to enter into this Agreement and to deposit the Source
Code with the Escrow Agent pursuant to its terms.

4.       Initial Deposit of Source Code.

         Licensor  agrees to deposit with Escrow Agent,  within ten (10) days of
the date the customer accepts the programs  licensed to Licensee pursuant to the
License Agreement  (collectively  the "Licensed  Software") a copy of the Source
Code corresponding to the Licensed Software.

5.       Updates.

         During the term of this  Agreement,  Licensor  shall  deposit  with the
Escrow  Agent  the  source   code,   listings,   and  related   programmer-level
documentation  for every  update,  correction,  or new  release of the  Licensed
Software  (collectively  "Updates")  released  to  Licensee in object code form.
Source  code,  listings  and  related  programmer-level  documentation  shall be
deposited concurrently with each Update, but no more frequently than monthly nor
less frequently  than quarterly  (which  quarterly  deposits shall be made on or
about each January 1, April 1, July 1 and October 1 of each year during the term
of this Agreement).



                                        1

<PAGE>



6.       Title.

         Title to the Source Code will remain in Licensor.  The rights of Escrow
Agent and  Licensee in the Source  Code are  limited to the rights  specifically
granted in this Agreement and will remain subject to the terms and conditions of
this Agreement.

7.       Release of Source Code to Licensee.

         If Licensee  concludes that Licensor has failed in any material respect
to comply with the License  Agreement  or to update the Source Code  pursuant to
Section 5 of this Agreement (which failure may include  Licensors  failure to be
Year 2000 Compliant (as defined in the License  Agreement) and failure to remedy
such breach),  or upon Licensor's making of an assignment for the benefit of its
creditors,  or  the  institution  by  or  against  Licensor  of  proceedings  in
bankruptcy  looking  towards the liquidation of Licensor or under any insolvency
or similar law or for  receivership or dissolution,  or Licensor's  cessation of
business, it may notify Licensor in writing, specifying in reasonable detail the
matters that  Licensor  has failed to perform.  For a period of twenty (20) days
after receipt of the notice, Licensor will have the right to cure the identified
breaches. In the event that Licensee concludes that the identified breaches have
not been cured within that period of time, Licensee may notify both Licensor and
Escrow Agent and demand that Escrow  Agent  release the Source Code to Licensee.
If  Licensor  disagrees  that its  obligations  have been and  remain  breached,
Licensor may,  within  fifteen (15) days after receipt of Licensee's  notice and
demand for release,  notify both Escrow  Agent and  Licensee  that it objects to
release of the Source  Code.  The failure of Licensor to furnish  timely  notice
objecting  to  the  immediate  release  of the  Source  Code  will  conclusively
establish its consent to the  immediate  release of the Source Code to Licensee,
and the copy of the Source  Code  deposited  in escrow in  accordance  with this
Agreement  shall be  released to  Licensee.  In the event of  Licensor's  timely
objection  to  release of the  Source  Code,  representatives  of  Licensor  and
Licensee  shall meet no later than five (5) days after delivery of the objection
to attempt to resolve  the  dispute.  If  Licensor  and  Licensee  are unable to
resolve the dispute  within the following  five (5) days,  then either party may
commence arbitration under Section 8 to resolve the dispute.

8.       Arbitration

                  (a)  Licensee and  Licensor  agree that all  disputes  arising
hereunder  between them that cannot be resolved by negotiation shall be resolved
through  binding  arbitration.  Such  arbitration  will be  conducted in Dallas,
Texas,  or such other place as may be agreed to by the  parties.  These  parties
further agree that this agreement to arbitrate may be enforced by an application
to any court having jurisdiction over the parties and the controversy.

                  (b)  Unless  otherwise   agreed,   the  arbitration  shall  be
conducted  by a three (3)  arbitrators,  one (1) of whom  shall be  selected  by
Licensor,  one (1) of whom shall be  selected  by  Licensee  and one (1) of whom
shall be selected by the  arbitrators  chosen by Licensor  and Licensee to agree
upon an arbitrator.  If a party (including the designated  arbitrators) does not
select an arbitrator  within ten (10) days of election to  arbitrate,  the other
party or parties may apply to the American  Arbitration  Association  ("AAA") to
select an arbitrator who is reasonably familiar with the computer industry.

                  (c) The  arbitrators  shall  set a time for a  hearing  of the
dispute not later than 10 days after their appointment,  and a decision shall be
rendered no later than 30 days after the last hearing  date,  unless the parties
agree otherwise.


                                        2

<PAGE>



                  (d)  The  arbitration   shall  be  conducted  using  the  then
prevailing  rules  of the  AAA  for  commercial  arbitrations,  including  rules
relating to  discovery;  provided,  however,  that the  arbitration  will not be
conducted under the auspices of the AAA and the fee schedule of the AAA will not
apply unless AAA-appointed arbitrators are used or the parties agree to do so.

                  (e)  The  arbitrators  will  be  limited  to  interpreting  or
construing  the  applicable   provisions  of  the  License  Agreement  and  this
Agreement,  and will have no authority or power to alter, amend, modify,  revoke
or  suspend  any  condition  or  provisions  of the  License  Agreement  or this
Agreement.

                  (f) The  arbitrators  will be empowered to compel  Licensor to
comply  with its  obligations  under  Sections  4 or 5 of this  Agreement  or to
prevent  Licensor  from  wrongfully  preventing  or delaying  the release of the
Source Code to Licensee.

                  (g) If the arbitrators find Licensor  breached its obligations
but also find that it did so as part of a good faith dispute of its  obligations
under the License Agreement or this Agreement,  then the arbitrators shall order
Licensor to perform its obligations within fifteen (15) days, and may only order
release of the Source Code in the event Licensor does not so perform.

                  (h) The  decision  of the  arbitrators  will be binding on the
parties  and will be  enforceable  in any  court  having  jurisdiction  over the
parties and the controversy.

                  (i) The arbitration  costs shall be borne by the losing party,
and  the  prevailing  party  in the  arbitration  will  be  reimbursed  for  the
reasonable costs and expenses it incurs in the arbitration.

                  (j) In the  event  Escrow  Agent  institutes  a  petition  for
interpleader in accordance with Section 12 or otherwise invokes the jurisdiction
of any court,  then any party may  petition  such court to refer the  dispute to
arbitration  in  accordance  with this Section 8 and the court shall enforce the
decision of the arbitrator in disposing of such interpleader or other action.

9.       License of Source Code.

         Effective  upon  the  delivery  of  the  Source  Code  to  Licensee  in
accordance  with the terms of this  Agreement,  Licensor  grants to  Licensee  a
personal,  nonexclusive,  and  nontransferable  license  only  to  use,  modify,
maintain,  and update the Source Code,  solely for Licensee's  internal business
and  exclusively  for the  purpose of  maintaining  and  updating  the  Licensed
Software.  All  modifications,  enhancements,  maintenance  and  updates  to the
Licensed  Software  will  be the  property  of  Licensor,  subject  to  Licensor
reimbursing Licensee for its costs of such work. Escrow Agent and Licensee shall
treat and preserve  the Source Code as a trade secret of Licensor in  accordance
with the same practices employed by Escrow Agent and Licensee to safeguard their
respective trade secrets against  unauthorized use and disclosure.  This Section
will survive the termination of this Agreement.

10.      Scope of Understanding.

         Escrow  Agent's  duties and  responsibilities  in connection  with this
Escrow  Agreement  shall be purely  ministerial  and shall be  limited  to those
expressly set forth in this Escrow  Agreement.  Escrow Agent is not a principal,
participant or beneficiary in any transaction  underlying this Escrow  Agreement
and shall have no duty to inquire beyond the terms and provisions hereof. Escrow
Agent


                                        3

<PAGE>



shall have no  responsibility  or obligation of any kind in connection with this
Escrow  Agreement  or the Source  Code and shall not be  required to deliver the
Source Code or take any action with  respect to any matters  that might arise in
connection therewith, other than to receive, hold and deliver the Source Code as
herein provided.  Without limiting the generality of the foregoing, it is hereby
expressly  agreed and  stipulated by the parties  hereto that Escrow Agent shall
not be required to exercise any discretion hereunder.  Escrow Agent shall not be
liable for any error in  judgment,  any act or  omission,  any mistake of law or
fact,  or for anything it may do or refrain from doing in  connection  herewith,
except for,  subject to Section 11 herein,  its own willful  misconduct or gross
negligence.  It is the  intention of the parties  hereto that Escrow Agent shall
never be  required  to use,  advance  or risk its own funds or  otherwise  incur
financial  liability in the  performance of any of its duties or the exercise of
any of its rights and powers hereunder.

11.      Reliance; Liability.

         Escrow  Agent  may rely on,  and  shall  not be  liable  for  acting or
refraining from acting Upon, any written notice, instruction or request or other
paper  furnished to it  hereunder or pursuant  hereto and believed by it to have
been signed or presented  by the proper party or parties.  Escrow Agent shall be
responsible  for holding and  delivering the Source Code pursuant to this Escrow
Agreement;  provided, however, that in no event shall Escrow Agent be liable for
any lost profits, lost savings, or other special, exemplary,  consequential,  or
incidental  damages in excess of Escrow  Agent's  fee  hereunder  and  provided,
further, that Escrow Agent shall have no liability for any loss arising from any
cause beyond its control,  including, but not limited to, the following: (a) act
of God,  force  majeure,  including,  without  limitation,  war  (whether or not
declared  or  existing),   revolution,   insurrection,  riot,  civil  commotion,
accident, fire, explosion, stoppage of labor, strikes and other differences with
employees; (b) the act, failure or neglect of either Licensor or Licensee or any
agent or  correspondent  or any other person  selected by Escrow Agent;  (c) any
delay,  error,  omission or default of any mail,  courier,  telegraph,  cable or
wireless  agency or  operator;  or (d) the acts or edicts of any  government  or
governmental  agency or other group or entity  exercising  governmental  powers.
Escrow  Agent is not  responsible  or liable in any  manner  whatsoever  for the
sufficiency,  correctness, genuineness or Validity of the subject matter of this
Escrow  Agreement  or any part  hereof or for the  transaction  or  transactions
requiring or  underlying  the  execution of this Escrow  Agreement,  the form or
execution  hereof or for the identity or authority of any person  executing this
Escrow Agreement or any part hereof or depositing the Source Code.

12.      Right of Interpleader.

         Should any  controversy  arise  involving the parties  hereto or any of
them or any other person,  firm or entity with respect to this Escrow  Agreement
or the Source Code, or should a substitute escrow agent fail to be designated as
provided in Section 17 hereof,  or if Escrow Agent should be in doubt as to what
action to take,  Escrow  Agent  shall  have the right,  but not the  obligation,
either to (a)  withhold  delivery  of the Source Code until the  controversy  is
resolved,  the conflicting demands are withdrawn or its doubt is resolved or (b)
institute a petition for interpleader in any court of competent  jurisdiction to
determine the rights of the parties hereto. In the event Escrow Agent is a party
to any  dispute,  Escrow  Agent  shall have the  additional  right to refer such
controversy  to binding  arbitration.  Should a  petition  for  interpleader  be
instituted,  or should  Escrow Agent be  threatened  with  litigation  or become
involved  in  litigation  or binding  arbitration  in any manner  whatsoever  in
connection with this Escrow  Agreement or the Source Code,  then, as between (a)
Licensor  and  Licensee  on the one hand  and (b)  Escrow  Agent  on the  other,
Licensor and Licensee hereby jointly


                                        4

<PAGE>



and severally  agree to reimburse  Escrow Agent for its attorneys'  fees and any
and all other expenses,  losses,  costs and damages  incurred by Escrow Agent in
connection  with or  resulting  from such  threatened  or actual  litigation  or
arbitration prior to any disbursement hereunder.

13.      Indemnification.

         Licensor and Licensee  hereby  jointly and severally  indemnify  Escrow
Agent,  its  officers,  directors,  partners,  employees and agents (each herein
called an "Indemnified Party") against, and hold each Indemnified Party harmless
from, any and all expenses,  including, without limitation,  attorneys' fees and
court costs, losses, costs, damages and claims,  including,  but not limited to,
costs of  investigation,  litigation and arbitration,  tax liability and loss on
investments  suffered or incurred by any Indemnified Party in connection with or
arising from or out of this Escrow  Agreement,  except such acts or omissions as
may result from the willful  misconduct or gross  negligence of such Indemnified
Party.  IT IS THE EXPRESS  INTENT OF EACH OF LICENSOR  AND LICENSEE TO INDEMNIFY
AND HOLD  HARMLESS  THE  INDEMNIFIED  PARTIES  FROM  THEIR  OWN  NEGLIGENT  ACTS
OMISSIONS.

14.      Compensation and Reimbursement of Expenses.

         As between (a)  Licensor on the one hand and (b) Licensee on the other,
Licensee  hereby  agrees to pay  Escrow  Agent  for its  services  hereunder  in
accordance  with the Fee  Schedule I attached  hereto by Escrow Agent and to pay
all expenses  incurred by Escrow Agent in connection with the performance of its
duties and enforcement of its rights  hereunder and otherwise in connection with
the  preparation,  operation,  administration  and  enforcement  of this  Escrow
Agreement,  including, without limitation,  attorneys' fees and related expenses
incurred by Escrow Agent. The foregoing notwithstanding, as between (a) Licensor
and Licensee on the one hand and (b) the Escrow Agent on the other, Licensor and
Licensee  shall be jointly and severally  liable to Escrow Agent for the payment
of all such fees and expenses.

15.      Consultation with Legal Counsel.

         Escrow Agent may consult with its counsel or other counsel satisfactory
to it  concerning  any  question  relating  to its  duties  or  responsibilities
hereunder or otherwise  in  connection  herewith and shall not be liable for any
action  taken,  suffered  or omitted by it in good faith upon the advice of such
counsel.

16.      Choice of Laws; Cumulative Rights.

         This Escrow  Agreement shall be construed  under,  and governed by, the
laws of the State of Texas,  excluding,  however (a) its choice of law rules and
(b) the  portions  of the Texas  Trust Code Sec.  111.001,  et seq. of the Texas
Property Code concerning  fiduciary  duties and liabilities of trustees.  All of
Escrow Agent's  rights  hereunder are cumulative of any other rights it may have
at law, in equity or otherwise.

17.      Resignation.

         Escrow Agent may resign  hereunder  upon ten (10) days' prior notice to
Licensor and Licensee. Upon the effective date of such resignation, Escrow Agent
shall  deliver the Source Code to any  substitute  escrow  agent  designated  by
Licensor and Licensee in writing.  If Licensor and Licensee  fail to designate a
substitute  escrow  agent  within ten (10) days after the giving of such notice,
Escrow Agent may, at its option,  institute a petition for interpleader.  Escrow
Agent's sole


                                        5

<PAGE>



responsibility  after such 10-day  notice  period  expires  shall be to hold the
Source Code and to deliver the same to a designated  substitute escrow agent, if
any,  or in  accordance  with the  directions  of a final order or judgment of a
court of competent  jurisdiction,  at any which time of delivery  Escrow Agent's
obligations hereunder shall cease and terminate.

18.      Severability.

         If one or more of the provisions hereof shall for any reason be held to
be invalid,  illegal or  unenforceable in any respect under applicable law, such
invalidity, illegality or unenforceability shall not affect any other provisions
hereof, and this Escrow Agreement shall be construed as if such invalid, illegal
or unenforceable  provision had never been contained  herein,  and the remaining
provisions hereof shall be given full force and effect.

19.      Assignment.

         This  Escrow  Agreement  shall not be  assigned  by either  Licensor or
Licensee  (except to affiliates  thereof)  without the prior written  consent of
Escrow Agent, which consent shall not be unreasonably withheld.

20.      Term of Agreement.

         The term of this  Agreement  commences on its  effective  date and will
continue until the Source Code is delivered to Licensee  pursuant its terms;  or
if the transfer has not occurred,  this  Agreement will terminate and the Source
Code will be destroyed  upon  Licensee's  termination  of this Agreement or upon
termination of the License Agreement, whichever occurs first.

21.      Notices.

         All notices  required or  permitted to be given  hereunder  shall be in
writing  and shall be valid and  sufficient  if  dispatched  either  (i) by hand
delivery, (ii) by telex, cable or facsimile transceiver,  with confirming letter
mailed  promptly  thereafter  in  accordance  with clause (iv) hereof,  (iii) by
reputable  overnight express courier or (iv) by certified mail, postage prepaid,
return receipt requested,  deposited in any post office in the United States, in
any case,  addressed to the addresses  set forth on the  signature  page of this
Agreement,  or such other  addresses as may be provided from time to time in the
manner set forth above.  When sent by cable or facsimile as  aforesaid,  notices
given as herein  provided  shall be  considered  to have been received when sent
during normal  business  hours;  otherwise,  notices shall be considered to have
been received only upon delivery or attempted  delivery  during normal  business
hours.

22.      General.

         This Agreement  contains the complete and exclusive  agreement  between
the  parties,  supersedes  any and all  prior  or oral  written  communications,
proposals,  and  agreements,  and may not be  waived or  modified  except by the
parties'  written  agreement.  The paragraph  headings in this Agreement are for
convenience  only;  they form no part of the  Agreement  and will not affect its
interpretation.  No delay or failure of any party in exercising  any right under
this  Agreement  and no partial or single  exercise of a right will be deemed to
constitute a waiver of that right or any other right under the agreement.




                                        6

<PAGE>



IN WITNESS  WHEREOF,  the  parties,  by their  duly  authorized  officers,  have
executed this Escrow Agreement.

PREFERRED VOICE, INC.                   KMC TELECOM HOLDINGS, INC.
By:                                     on behalf of itself and its wholly owned
     ----------------------------       subsidiaries and affiliates
Name:                                   By:
     ----------------------------            -----------------------------------
Title:                                  Name:
     ----------------------------            -----------------------------------
                                        Title:
6500 Greenville Avenue                       -----------------------------------
Suite 570                               1545 Route 206
Dallas, Texas 75206                     Suite 300
Fax:     214-265-9663                   Bedminister, New Jersey  07921
Phone:   214-265-9580                   Fax:      908-719-8775
                                        Phone:    908-719-2200


Chase Bank of Texas, N. A.
Escrow Agent

By:
     ----------------------------
Its:
     ----------------------------
Address:
     ----------------------------

     ----------------------------
Fax:
     ----------------------------



                                        7

<PAGE>




                                    EXHIBIT G

                         Form of Acceptance Certificate

The undersigned,  an authorized  representative of KMC Telecom Holdings, Inc., a
Delaware corporation,  on behalf of itself and its wholly owned subsidiaries and
affiliates  ('Licensed'),  in his/her capacity as , does hereby certify that (a)
the testing period (as such term is defined in the Software  License  Agreement,
dated as of May ___, 1999 (the  "Agreement"),  by and between  Preferred  Voice,
Inc.  ("Licensor")  and  Licensee  with respect to the System (as defined in the
Agreement)  purchased or licensed by Licensee has been  successfully  completed,
(b) the System satisfies the requirements of the  Specifications  (as defined in
the Agreement) and (c) the System is hereby accepted by Licensee.


Date:                                   KMC TELECOM HOLDINGS, INC.
     --------------------------
                                        By:
                                             -----------------------------------
                                        Printed Name:

                                             -----------------------------------



                                        8

<PAGE>


                                   SCHEDULE 1

                                ESCROW AGENT FEES




                                        9