AMENDMENT NO. 1
                                       TO
                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT


          AMENDMENT  NO. 1 TO AMENDED AND RESTATED  LOAN AND SECURITY  AGREEMENT
("AMENDMENT")  dated as of March 28, 2000, is among KMC TELECOM INC., a Delaware
corporation  ("KMC"),  KMC TELECOM II, INC., a Delaware  corporation ("KMC II"),
KMC TELECOM  III,  INC.,  a Delaware  corporation  ("KMC  III"),  KMC TELECOM OF
VIRGINIA, INC., a Virginia public service company ("KMC VIRGINIA"),  KMC TELECOM
LEASING I LLC, a Delaware limited  liability  company ("LEASING I"), KMC TELECOM
LEASING II LLC, a Delaware limited liability company ("LEASING II"), KMC TELECOM
LEASING III LLC, a Delaware  limited  liability  company  ("LEASING  III"),  KMC
TELECOM.COM, INC., a Delaware corporation ("TELECOM.COM"); KMC III SERVICES LLC,
a Delaware  limited  liability  company  ("SERVICES";  KMC, KMC II, KMC III, KMC
Virginia,  Leasing I , Leasing II, Leasing III,  Telecom.com  and Services being
hereinafter  collectively  referred  to  hereinafter  as the  "BORROWERS"),  the
financial institutions from time to time parties thereto (the "LENDERS"),  FIRST
UNION NATIONAL BANK, as  administrative  agent for the Lenders (the "AGENT") and
NEWCOURT COMMERCIAL FINANCE CORPORATION, an affiliate of The CIT Group, Inc., as
collateral  agent for the Lenders (the  "COLLATERAL  AGENT";  the Agent together
with the Collateral Agent being referred to as the "AGENTS").


          WHEREAS, the Borrowers, the Agents and the Lenders are parties to that
certain Amended and Restated Loan and Security  Agreement (the "LOAN AGREEMENT";
undefined capitalized terms used herein shall have the meanings assigned thereto
in the Loan  Agreement)  dated as of February  15,  2000,  pursuant to which the
Lenders have agreed to make certain "Loans" and other  financial  accommodations
to the Borrowers; and


          WHEREAS,  the Borrowers have requested that the Agents and the Lenders
amend the Loan Agreement in the manner set forth herein,  and the Agents and the
Lenders have agreed to such request;


          NOW, THEREFORE,  in consideration of the premises set forth above, and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby  acknowledged,  the  Borrowers,  the Agents and the Lenders  agree as
follows:

          1.  AMENDMENT  TO THE LOAN  AGREEMENT.  Effective as of the date first
above  written and subject to the  execution  of this  Amendment  by the parties
hereto, the Loan Agreement shall be and hereby is amended as follows:

          1.1 SECTION 1.02 is hereby amended to delete the proviso  contained in
the definition of "Applicable Margin" and to substitute the following therefor:


          "provided, however, in the event that the Required Contribution is not
obtained  on or prior to July 31,  2000,  each such  margin  shall be  increased
beginning  on August  1, 2000 and  continuing  until  such time as the  Required
Contribution has been obtained, by 100 basis points."


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<PAGE>

          1.2 SECTION  1.02 is hereby  further  amended to delete the proviso to
the   definition   of   "TERM   B   LOAN   COMMITMENT   AMOUNT".

          1.3 SECTION 1.02 is hereby  further  amended to add the  following new
definition in the appropriate alphabetical location:

          "KMC  HOLDINGS  STOCK SALE" shall mean the sale to one or more Persons
of at least $100,000,000 of Equity Interests in KMC Holdings,  which may include
the sale of redeemable,  exchangeable  preferred Equity Interests with terms and
conditions  substantially  as  described  in  Exhibit A to that  certain  letter
agreement dated March 22, 2000 between Lucent and KMC Holdings.

          1.4 SECTION  2.02(A) is hereby  amended to delete clause (II) thereof.

          1.5   SECTION   2.02(D)  is  hereby   amended  to  delete  the  amount
$200,000,000 in clause (II) thereof,  and to replace such amount with the amount
$241,000,000.

          1.6  SECTION  2.05(B)  is hereby  amended  to delete  the  penultimate
sentence thereof.

          1.7  SECTION  5.18 is  amended  to  delete  the  text  thereof  and to
substitute the following therefor:

          "The Borrowers  shall obtain the Required  Contribution on or prior to
April 1, 2001."

          1.8 SECTION  6.08(7) is hereby  amended to delete the date "August 31,
2000" and to substitute therefor the date "April 1, 2001".

          1.9 SECTION  7.01(A) is hereby  amended to add the following  sentence
thereto:

          "In the  calculation of such ratio,  the amount of  unrestricted  cash
balances of the  Borrowers in excess of  $20,000,000  shall be  subtracted  from
Total Debt."

          2. CONDITIONS  PRECEDENT.  This Amendment shall become effective as of
the date above written, if, and only if, the Agents have received on or prior to
March 30, 2000,  duly executed  originals of this  Amendment from the Borrowers,
the Requisite Lenders and the Agents,  and duly executed  originals of Amendment
No. 1 to the KMC Holdings Guaranty from KMC Holdings.

          3.  REPRESENTATIONS  AND  WARRANTIES OF THE  BORROWERS.  The Borrowers
hereby represent and warrant as follows:

          (a)  This  Amendment  and  the  Loan  Agreement,  as  amended  hereby,
constitute  legal,  valid  and  binding  obligations  of the  Borrowers  and are
enforceable against the Borrowers in accordance with their terms.

          (b) Upon the  effectiveness  of this Amendment,  the Borrowers  hereby
reaffirm all representations  and warranties made in the Loan Agreement,  and to
the extent the same are not amended hereby,  agree that all such representations


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<PAGE>


and warranties shall be deemed to have been remade as of the date of delivery of
this  Amendment,  unless  and to the  extent  that any such  representation  and
warranty  is stated to relate  solely to an  earlier  date,  in which  case such
representation and warranty shall be true and correct as of such earlier date.

          (c) As of the date hereof,  and after giving effect to this Amendment,
each Borrower shall be in compliance with all the terms and provisions set forth
in the  Loan  Agreement,  as  amended  hereby,  on its  part to be  observed  or
performed,  and no Event of  Default  or  Default  shall  have  occurred  and be
continuing.

          4. Reference to and Effect on the Loan Agreement.

          (a) Upon the  effectiveness of Section 1 hereof, on and after the date
hereof,  each  reference  in  the  Loan  Agreement  to  "this  Loan  Agreement,"
"hereunder,"  "hereof,"  "herein"  or words of like  import  shall mean and be a
reference to the Loan  Agreement as amended  hereby,  and each  reference to the
Loan Agreement in any other document,  instrument or agreement shall mean and be
a reference to the Loan Agreement as modified hereby.

          (b) The Loan Agreement,  as amended hereby,  and all other  documents,
instruments and agreements  executed and/or  delivered in connection  therewith,
shall remain in full force and effect, and are hereby ratified and confirmed.

          (c) Except as expressly provided herein,  the execution,  delivery and
effectiveness  of this  Amendment  shall not  operate  as a waiver of any right,
power or remedy of the Agents or the  Lenders,  nor  constitute  a waiver of any
provision  of  the  Loan  Agreement  or any  other  documents,  instruments  and
agreements executed and/or delivered in connection therewith.

          5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE OTHER REMAINING TERMS OF THE LOAN AGREEMENT AND THE INTERNAL
LAWS (AS OPPOSED TO CONFLICT OF LAW PROVISIONS) OF THE STATE OF NEW YORK.

          6.  PARAGRAPH  HEADINGS.  The  paragraph  headings  contained  in this
Amendment  are and shall be  without  substance,  meaning or content of any kind
whatsoever and are not a part of the agreement among the parties thereto.

          7.  COUNTERPARTS.  This  Amendment  may be  executed  in  one or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.











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<PAGE>



          IN WITNESS  WHEREOF,  this  Amendment has been duly executed as of the
day and year first above written.


          THE BORROWERS:


                                      KMC TELECOM INC.

                                      KMC TELECOM II, INC.

                                      KMC TELECOM III, INC.

                                      KMC TELECOM OF VIRGINIA, INC.

                                      KMC TELECOM.COM, INC.

                                      In each case:


                                      By:     /s/ William H. Stewart
                                             ----------------------------
                                      Name:  William H. Stewart
                                      Title: CFO

                                      KMC TELECOM LEASING I LLC
                                      By:  KMC TELECOM INC., as its Sole Member


                                      By:     /s/ William H. Stewart
                                             ----------------------------
                                      Name:  William H. Stewart
                                      Title: CFO




                                      KMC TELECOM LEASING II LLC
                                      By:  KMC TELECOM II, INC., as its Sole
                                           Member


                                      By:     /s/ William H. Stewart
                                             ----------------------------
                                      Name:  William H. Stewart
                                      Title: CFO





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<PAGE>


                                      KMC TELECOM LEASING III LLC

                                      KMC III SERVICES LLC

                                      In each case:


                                      By:  KMC TELECOM III, INC., as its Sole
                                           Member


                                      By:     /s/ William H. Stewart
                                             ----------------------------
                                      Name:  William H. Stewart
                                      Title: CFO

                                      FIRST UNION NATIONAL BANK, as the
                                      Agent and as a Lender


                                      By:     /s/ Mark L. Cook
                                             ------------------------------
                                      Name:  Mark L. Cook
                                      Title: Senior Vice President

                                      NEWCOURT  COMMERCIAL FINANCE CORPORATION
                                      (f/k/a    AT&T    COMMERCIAL     FINANCE
                                      CORPORATION),  an  affiliate  of The CIT
                                      Group, Inc., as the Collateral Agent and
                                      as a Lender


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


                                      CANADIAN IMPERIAL BANK OF COMMERCE,
                                      as a Lender


                                      By:     /s/ Ellen Marshall
                                             ------------------------------
                                      Name:  Ellen Marshall
                                      Title: Managing Director
                                             CIBC World Markets Corp., as Agent





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<PAGE>




                                      GENERAL ELECTRIC CAPITAL CORPORATION,
                                      as a Lender


                                      By:     /s/ Mark F. Mylon
                                             ------------------------------
                                      Name:  Mark F. Mylon
                                      Title: Manager-Operations

                                      LUCENT TECHNOLOGIES INC., as a Lender


                                      By:     /s/  Dina Fede
                                             ------------------------------
                                      Name:  Dina Fede
                                      Title: Director

                                      BANKBOSTON, N.A., as a Lender


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

                                      CREDIT SUISSE FIRST BOSTON, as a Lender


                                      By:     /s/ Joel Glodowski
                                             ------------------------------
                                      Name:  Joel Glodowski
                                      Title: Managing Director

                                      By:     /s/ Robert Hetu
                                             ------------------------------
                                      Name:  Robert Hetu
                                      Title: Vice President

                                      DRESDNER BANK AG NEW YORK AND GRAND
                                      CAYMAN BRANCHES, as a Lender


                                      By:     /s/ William F. Lernbert
                                             ------------------------------
                                      Name:  William F. Lernbert
                                      Title: Vice President

                                      By:     /s/ Brian Schneider
                                             ------------------------------
                                      Name:  Brian Schneider
                                      Title: Assistant Vice President







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<PAGE>




                                      MORGAN STANLEY SENIOR FUNDING, INC.,
                                      as a Lender


                                      By:     /s/ T. Morgan Edwards II
                                             ------------------------------
                                      Name:  T. Morgan Edwards II
                                      Title: Vice President

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

                                      MORGAN STANLEY DEAN WITTER PRIME
                                      INCOME TRUST, as a Lender


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

                                      UNION BANK OF CALIFORNIA, N.A.,
                                      as a Lender


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

                                      KEYPORT LIFE INSURANCE COMPANY,
                                      as a Lender


                                      By:     /s/ James R. Fellows
                                             ------------------------------
                                      Name:  James R. Fellows
                                      Title: Vice President

                                      STEIN ROE FLOATING RATE LIMITED LIABILITY
                                      COMPANY, as a Lender


                                      By:     /s/ James R. Fellows
                                             ------------------------------
                                      Name:  James R Fellows
                                      Title: Vice President
                                             Stein Roe & Farnham Incorporated,
                                             as Advisor to the Stein Roe
                                             Floating Rate Limited Liability
                                             Company







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<PAGE>



                            REAFFIRMATION OF GUARANTY


          Reference  is hereby  made to (i) that  certain  Guaranty  dated as of
December 22, 1998 (as amended, restated, supplemented or otherwise modified from
time to  time,  the  "GUARANTY")  by KMC  Telecom  Holdings,  Inc.,  a  Delaware
corporation  (the  "GUARANTOR"),   in  favor  of  Newcourt   Commercial  Finance
Corporation,  an affiliate of The CIT Group,  Inc., as collateral  agent for the
ratable  benefit  of the  "Lenders"  (defined  below)  (in  such  capacity,  the
"COLLATERAL  AGENT"),  (ii) that certain  Amended and Restated Loan and Security
Agreement dated as of February 15, 2000 (as amended,  restated,  supplemented or
otherwise  modified from time to time, the "LOAN  AGREEMENT") among KMC Telecom,
Inc.,  KMC Telecom II,  Inc.,  KMC Telecom III,  Inc.,  KMC Telecom of Virginia,
Inc., KMC Telecom Leasing I LLC, KMC Telecom Leasing II LLC, KMC Telecom Leasing
III LLC, KMC  Telecom.com,  KMC III Services  LLC (each of the  foregoing  being
referred to collectively as the  "BORROWERS"),  the financial  institutions from
time to time parties  thereto (the  "LENDERS"),  First Union  National  Bank, as
administrative  agent for the Lenders (the "AGENT"),  and the Collateral  Agent,
and (iii) that certain  Amendment No.1 to Amended and Restated Loan and Security
Agreement dated as of March 28, 2000 (the "AMENDMENT") among the Borrowers,  the
Lenders, the Agent and the Collateral Agent.


          The Guarantor, by its signature below, without in any way establishing
a course of dealing,  hereby (i)  acknowledges and consents to the execution and
delivery of the Amendment by the parties thereto, (ii) agrees that the Amendment
shall not limit or diminish the obligations of the Guarantor to guarantee all of
the  "Obligations"  of each Borrower  under and as defined in the Loan Agreement
and such other amounts as are more specifically described in the Guaranty, (iii)
reaffirms all of its  obligations  under the Guaranty,  and (iv) agrees that the
Guaranty remains in full force and effect and is hereby ratified and confirmed.


          IN WITNESS WHEREOF, this instrument has been executed and delivered as
of this 28th day of March, 2000.

                               KMC TELECOM HOLDINGS, INC.


                               By:     /s/ William H. Stewart
                                      ----------------------------

                               Name:  William H. Stewart

                               Title: CFO and Executive Vice President







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