KMC TELECOM HOLDINGS, INC.

                           CERTIFICATE OF THE POWERS,
                   DESIGNATIONS, PREFERENCES AND RIGHTS OF THE
                SERIES D CUMULATIVE CONVERTIBLE PREFERRED STOCK,
                            PAR VALUE $.0l PER SHARE

                     Pursuant to Sections 141 and 151 of the
                General Corporation Law of the State of Delaware

                  As contemplated by Section 141 of the General  Corporation Law
of the State of Delaware (the "DGCL"), the following resolution was duly adopted
by the Board of Directors of KMC Telecom Holdings,  Inc., a Delaware corporation
(the "Corporation"), by unanimous written consent, dated April 30, 1999;

                  WHEREAS,   the  Board  of  Directors  of  the  Corporation  is
authorized,  within the limitations and  restrictions  stated in the Amended and
Restated  Certificate  of  Incorporation  of  the  Corporation,  to  provide  by
resolution or  resolutions  for the issuance of shares of preferred  stock,  par
value $.01 per share, of the Corporation, in one or more series with such voting
powers,  full or  limited,  or without  voting  powers,  and such  designations,
preferences and relative,  participating,  optional or other special rights, and
qualifications,  limitations or restrictions as shall be stated and expressed in
the resolution or resolutions  providing for the issuance thereof adopted by the
Board of Directors,  and as are not stated and expressed in the  Certificate  of
Incorporation,  or any amendment  thereto,  including (but without  limiting the
generality  of the  foregoing)  such  provisions  as may be  desired  concerning
voting,  redemption,  dividends,  dissolution or the  distribution of assets and
such other  subjects or matters as may be fixed by resolution or  resolutions of
the Board of Directors under the DGCL;


<PAGE>

                  WHEREAS,  the Board of Directors of the Corporation,  pursuant
to its authority under Section 151 of the DGCL, desires to authorize and fix the
terms of its Series D Cumulative Convertible Preferred Stock; and

                  WHEREAS,  the  Board  of  Directors  of  the  Corporation  has
determined  that such  Series D  Cumulative  Convertible  Preferred  Stock shall
constitute  "Parity  Preferred  Stock" within the meaning of the Certificates of
the Powers,  Designations,  Preferences and Rights of the Corporation's Series A
Cumulative   Convertible  Preferred  Stock,  Series  B  Cumulative   Convertible
Preferred Stock and Series C Preferred Stock;

                  NOW, THEREFORE, BE IT RESOLVED:

                  1.  Designation  and Number of Shares.  There  shall be hereby
established  a series of  preferred  stock  designated  as "Series D  Cumulative
Convertible  Preferred Stock" (such Series being hereinafter  referred to as the
"Series  D  Preferred  Stock").  The  authorized  number  of  shares of Series D
Preferred  Stock shall be 25,000.  The  liquidation  preference  of the Series D
Preferred Stock shall be $100 per share (the "Liquidation Preference").

                  2. Rank. The Series D Preferred  Stock shall,  with respect to
dividend distributions and distributions upon the liquidation,  winding-up,  and
dissolution of the  Corporation,  rank (i) senior to the Common Stock, par value
$.0l per share, of the Corporation (the "Common  Stock");  (ii) on a parity with
(A) each class or series of Capital  Stock,  other than the Common Stock and the
Senior  Preferred Stock, and (B) the Parity Preferred Stock; and (iii) junior to
the Senior  Preferred  Stock (the  Common  Stock and the  classes  and series of
Capital Stock described in clause (ii) of this Section are collectively referred
to as the "Junior Stock"). The Series D Preferred Stock shall also, with respect
to any redemption or repurchase by the  Corporation  of its Capital Stock,  rank
junior with respect to the Senior Preferred Stock, except as provided in Section
3 of the Shareholders Agreement.

                  3.       Dividends.

                  (a)  Beginning  on  the  date  of  issuance  of the  Series  D
Preferred  Stock,  the holders of the  outstanding  shares of Series D Preferred
Stock shall be entitled  to  receive,  when,  as and if declared by the Board of
Directors of the  Corporation,  out of funds legally  available  therefor,  cash
dividends  on each share of Series D Preferred  Stock at an annual rate equal to
7.0%  of  the  Liquidation  Preference,  payable  quarterly  in  arrears  on the
applicable  Dividend  Payment Date or the next  succeeding  Business Day, if the
applicable  Dividend  Payment Date is not a Business  Day.  Notwithstanding  the
foregoing,  the dividend  payable on each share of Series D Preferred Stock with
respect  to the  Initial  Dividend  Period  shall  be  equal  to (i) 7.0% of the
Liquidation  Preference multiplied by (ii) a fraction equal to (A) the number of
days from (and  including)  the  Series D  Preferred  Stock  Issue  Date to (but

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<PAGE>

excluding) the Dividend Payment Date with respect to the Initial Dividend Period
divided by (B) 365. All dividends shall be cumulative,  whether or not earned or
declared, from the date of issuance of the Series D Preferred Stock and shall be
payable  quarterly in arrears on each Dividend  Payment Date,  commencing on the
first Dividend Payment Date after the date of issuance of the Series D Preferred
Stock. If any dividend (or portion thereof) payable on any Dividend Payment Date
is not declared or paid in full on such  Dividend  Payment  Date,  the amount of
such dividend  payable that is not paid on such date shall  increase at the rate
of 7.0% per annum  (compounded  quarterly on each  subsequent  Dividend  Payment
Date) from such Dividend  Payment Date until paid in full. Each  distribution on
the  Series D  Preferred  Stock  shall be  payable  to holders of record as they
appear on the stock books of the Corporation on such record dates, not less than
ten (10) nor more than sixty (60) days  preceding the related  Dividend  Payment
Date, as shall be fixed by the Board of Directors of the Corporation.

                  (b) All  accumulated  and  unpaid  dividends  on the  Series D
Preferred  Stock  shall  be paid by the  Corporation  upon the  occurrence  of a
Realization  Event,  without  reference to any regular Dividend Payment Date, to
holders  of record on such date.  The  Corporation  shall  send by first  class,
postage prepaid mail a notice of the Realization  Event to all holders of Series
D Preferred Stock that are entitled to receive such dividends.  In the case of a
Realization Event which is an initial public offering,  if any such holder gives
written  notice to the  Corporation  that such  holder  wishes to  receive  such
accumulated  unpaid  dividends  in the form of shares of Common Stock in lieu of
cash, the Corporation,  in lieu of a cash payment, shall issue to such holder on
such  Dividend  Payment  Date,  a number of shares of Common  Stock equal to the
quotient obtained by dividing (x) the aggregate accumulated and unpaid dividends
on the shares of Series D  Preferred  Stock held by such holder by (y) the price
at which shares of Common Stock are sold in such offering  (before  deduction of
underwriting discounts and expenses of sale).

                  (c) All  dividends  paid  with  respect  to shares of Series D
Preferred  Stock  pursuant  to  Section  3(a) shall be paid pro rata and in like
manner to all of the holders entitled thereto.

                  (d)  Except as  otherwise  provided  in  paragraph  (b) above,
nothing  herein  contained  shall  in any  way or  under  any  circumstances  be
construed  or deemed to require the Board of  Directors  of the  Corporation  to
declare,  or the  Corporation to pay or set apart for payment,  any dividends on
shares of the Series D Preferred  Stock at any time,  nor to permit the Board of
Directors of the Corporation to declare,  or the Corporation to pay or set apart
for payment,  any  dividends on shares of the Series D Preferred  Stock prior to
the payment of any dividends accrued on shares of the Senior Preferred Stock.

                  (e) Whenever the provisions  hereof require that the amount of
dividends  with respect to the Series D Preferred  Stock be determined  for less
than a full  quarterly  period ending on a Dividend  Payment Date, the amount of
dividends for such period shall be equal to 7.0% of the  Liquidation  Preference
multiplied  by a fraction  equal to (i) the number of days from (and  including)
the most recent  Dividend  Payment Date to (but  excluding)  the last day of the
period in respect of which such determination is being made divided by (ii) 365.

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<PAGE>

                  4.       Liquidation Preference.

                  (a) In the event of any voluntary or involuntary  liquidation,
dissolution  or  winding-up  of the affairs of the  Corporation,  the holders of
shares of Parity  Preferred Stock  (including the Series D Preferred Stock) then
outstanding shall be entitled to be paid for each share held thereby, out of the
assets of the Corporation  available for  distribution to its  stockholders,  an
amount in cash equal to the Liquidation  Preference plus an amount in cash equal
to  all  accumulated  and  unpaid  dividends  thereon  (calculated  pursuant  to
Paragraph  3(a)) to the date fixed for  liquidation,  dissolution  or winding-up
(including  an amount equal to a prorated  dividend for the period from the last
Dividend  Payment  Date  to the  date  fixed  for  liquidation,  dissolution  or
winding-up),  before any payment shall be made or any assets  distributed to the
holders of any shares of Junior Stock,  but after all liquidation  payments have
been made to the  holders of all  shares of Senior  Preferred  Stock.  Except as
provided  in the  preceding  sentence,  holders  of the Parity  Preferred  Stock
(including  the  Series  D  Preferred  Stock)  shall  not  be  entitled  to  any
distribution in the event of any  liquidation,  dissolution or winding-up of the
affairs of the Corporation.  If the assets of the Corporation are not sufficient
to pay in full the  foregoing  liquidation  payments  payable to the  holders of
outstanding  shares  of the  Parity  Preferred  Stock  (including  the  Series D
Preferred  Stock),  then the  holders  of all shares of Parity  Preferred  Stock
(including   the  Series  D  Preferred   Stock)  shall  share  ratably  in  such
distribution  of assets in  accordance  with the amount that would be payable on
such  distribution if the amounts to which the holders of outstanding  shares of
Parity  Preferred  Stock  (including the Series D Preferred  Stock) are entitled
were paid in full. If all of the foregoing  liquidation payments with respect to
any share of Series D  Preferred  Stock  have been  made,  such share may not be
converted into Common Stock pursuant to Section 5.

                  (b) For the purposes of this Section 4, neither the  voluntary
sale, conveyance,  exchange or transfer (for cash, shares of stocks,  securities
or other  consideration)  of all or substantially all or part of the property or
assets of the  Corporation  nor the  consolidation  or merger of the Corporation
with  one or more  other  corporations  shall  be  deemed  to be a  liquidation,
dissolution  or  winding-up,  voluntary  or  involuntary,  of the affairs of the
Corporation (unless such sale, conveyance, exchange or transfer is in connection
with  a   liquidation,   dissolution   or  winding-up  of  the  affairs  of  the
Corporation).

                  4A.      Conversion into Series C Preferred Stock

                  At any time prior to a Qualified Public Offering,  each holder
of Series D Preferred  Stock shall have the right to convert  all,  but not less
than all, of such holder's shares of Series D Preferred Stock (together with all
accumulated  unpaid  dividends  thereon to the date of conversion) into an equal
number of shares of Series C  Preferred  Stock  (together  with all  accumulated
unpaid dividends thereon to the date of conversion).  In order to convert shares
of Series D Preferred Stock pursuant to this Section 4A the holder thereof shall
surrender  at the office of the  Corporation  the  certificate  or  certificates
therefor,  duty endorsed to the Corporation in blank, and give written notice to
the  Corporation  that such holder elects to convert such shares and shall state
in writing  therein  the name or names  (with  addresses)  in which such  holder
wishes the certificate or certificates of Series C Preferred Stock to be issued.

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<PAGE>

Shares of Series D Preferred Stock shall be deemed to have been converted on the
date of surrender of such certificate or certificates as provided above, and the
person or persons  entitled to receive  the shares of Series C  Preferred  Stock
issuable  upon such  conversion  shall be treated for all purposes as the record
holder or  holders of such  Series C  Preferred  Stock on such date.  As soon as
practicable on or after such conversion  date, the  Corporation  shall issue and
deliver  a  certificate  or  certificates  for the  number of shares of Series C
Preferred Stock issuable upon conversion.

                  5.       Conversion.

                  (a) Conversion Price. Shares of Series D Preferred Stock to be
converted  into shares of Common  Stock shall be so  converted  at a  conversion
price  (which  price shall be adjusted to the nearest  fourth  decimal  place as
hereinafter  provided  and, as so adjusted,  is  hereinafter  referred to as the
"Conversion Price") equal to: (i) from the date of initial issuance of shares of
Series D Preferred  Stock to but  excluding  the  30-month  anniversary  of such
issuance,  $52.50  per  share of  Common  Stock,  with  each  share of  Series D
Preferred  Stock being valued at $100.00 for such  purpose;  provided,  however,
that if a  Realization  Event  shall  occur  during  such  30-month  period  the
Conversion  Price shall equal to a fraction,  the  numerator of which is (A) the
consideration  per share of Common Stock (on a Fully Diluted basis)  received in
connection with such Realization Event, and the denominator of which is (B) 1.30
raised to a number equal to the number of years (or fraction  thereof)  from the
date of initial issuance of shares of Series D Preferred Stock until the date of
such Realization Event, but in no case shall be greater than $52.50 per share of
Common Stock nor less than $42.18 per share of Common  Stock;  and (ii) from and
after the thirty month  anniversary of the date of initial issuance of shares of
Series D Preferred  Stock (subject to paragraph (b) below),  $42.18 per share of
Common  Stock,  with each  share of Series D  Preferred  Stock  being  valued at
$100.00  for  such  purpose;  provided,  however,  that in no  event  shall  the
Conversion Price be less than the par value, if any, of the Common Stock.

                  (b) Automatic  Conversion  Upon a Qualified  Public  Offering.
Upon a Qualified Public  Offering,  each share of Series D Preferred Stock shall
automatically  convert,  without  any action on the part of the holder  thereof,
into shares of Common Stock at the Conversion Price in effect at such time, plus
the right to receive an amount of cash equal to the accumulated unpaid dividends
on such share of Series D  Preferred  Stock to and  including  such date (or the
right to receive  additional  shares of Common  Stock in lieu of cash  dividends
pursuant to Section 3(b)).

                  (c)  Conversion  at the Option of the Holder.  At any time and
from time to time prior to a Qualified Public Offering,  each holder of Series D
Preferred Stock shall have the right to convert such holder's shares of Series D
Preferred  Stock,  in whole or in  part,  into  shares  of  Common  Stock at the
Conversion  Price in effect at such time, plus the right to receive an amount of
cash  equal to the  accumulated  unpaid  dividends  on the  shares  of  Series D
Preferred  Stock so converted to and including the  Conversion  Date (as defined
below);  provided that, if such Conversion Date is prior to a Realization Event,
the  Corporation  may, in lieu of making a payment in cash equal to such amount,
deliver a number of shares of Common  Stock equal to such amount  divided by the
Fair Market Value of one share of Common  Stock.  In order to convert  shares of
Series D Preferred  Stock pursuant to this Section 5(c) the holder thereof shall

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<PAGE>

surrender  at the office of the  Corporation  the  certificate  or  certificates
therefor,  duly endorsed to the Corporation in blank, and give written notice to
the  Corporation  that such holder elects to convert such shares and shall state
in writing  therein  the name or names  (with  addresses)  in which such  holder
wishes the certificate or  certificates of Common Stock to be issued.  Shares of
Series D Preferred  Stock shall be deemed to have been  converted on the date of
surrender of such certificate or certificates as provided above (the "Conversion
Date"), and the person or persons entitled to receive the shares of Common Stock
issuable  upon such  conversion  shall be treated for all purposes as the record
holder or holders of such Common Stock on such date. As soon as  practicable  on
or after  the  Conversion  Date,  the  Corporation  shall  issue  and  deliver a
certificate  or  certificates  for the number of shares of Common Stock issuable
upon conversion.

                  (d)  Fractional  Shares,  Partial  Conversion.  No  fractional
shares  shall be issued upon  conversion  of shares of Series D Preferred  Stock
into  Common  Stock.  In case the number of shares of Series D  Preferred  Stock
represented by the  certificate  or  certificates  surrendered  pursuant to this
Section 5 exceeds the number of shares  converted,  the Corporation  shall, upon
such  conversion,  execute  and  deliver to the  holder,  at the  expense of the
Corporation,  a new  certificate  or  certificates  for the  number of shares of
Series  D  Preferred  Stock  represented  by  the  certificate  or  certificates
surrendered  which are not to be converted.  If any  fractional  share of Common
Stock would,  except for the  provisions  of the first  sentence of this Section
5(d), be delivered upon such conversion, the Corporation,  in lieu of delivering
such  fractional  share,  shall  pay to the  holder  surrendering  the  Series D
Preferred  Stock for  conversion  an amount in cash equal to the current  market
price of such  fractional  share as  determined  in good  faith by the  Board of
Directors.

                  (e)  Adjustment  of  Conversion  Price Upon Issuance of Common
Stock. Except as provided in Section 5(f), if and whenever the Corporation shall
hereafter issue or sell, or is, in accordance  with  subsection  5(e)(1) through
5(e)(6),  deemed to have  issued  or sold,  any  shares  of  Common  Stock for a
consideration  per share less than the  Conversion  Price in effect  immediately
prior to the time of such  issue or sale,  then,  forthwith  upon such  issue or
sale, the Conversion  Price shall be reduced to the price determined by dividing
(i) an amount  equal to the sum of (a) the  number  of  shares  of Common  Stock
outstanding  immediately  prior  to such  issue or sale  (determined  on a Fully
Diluted  basis)  multiplied  by the then existing  Conversion  Price and (b) the
consideration,  if any,  received by the Corporation upon such issue or sale, by
(ii) the total number of shares of Common Stock  outstanding  immediately  after
such issue or sale (deter-mined on a Fully Diluted basis).

                  For purposes of this Section 5(e),  the following  subsections
5(e)(1) to 5(e)(6) shall also be applicable:

                  5(e)(1)  Issuance  of Rights or  Options.  In case at any time
hereafter  the  Corporation  shall in any manner grant  (whether  directly or by
assumption in a merger or otherwise) any Options to purchase Common Stock or any
Convertible  Securities,  whether or not such Options or the right to convert or
exchange any such Convertible  Securities are immediately  exercisable,  and the
price per share for which  Common  Stock is issuable  upon the  exercise of such
Options  or upon the  conversion  or  exchange  of such  Convertible  Securities
(determined by dividing (i) the total amount,  if any, received or receivable by

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<PAGE>

the  Corporation  as  consideration  for the granting of such Options,  plus the
minimum aggregate amount of additional  consideration payable to the Corporation
upon the exercise of all such  Options,  plus, in the case of such Options which
relate to Convertible  Securities,  the minimum  aggregate  amount of additional
consideration,  if any,  payable  upon  the  issue  or sale of such  Convertible
Securities  and upon the  conversion  or  exchange  thereof,  by (ii) the  total
maximum  number of shares of Common  Stock  issuable  upon the  exercise of such
Options or upon the  conversion or exchange of all such  Convertible  Securities
issuable  upon the exercise of such Options)  shall be less than the  Conversion
Price in effect  immediately  prior to the time of the granting of such Options,
then the total  maximum  number of shares  of  Common  Stock  issuable  upon the
exercise of such  Options or upon  conversion  or exchange of the total  maximum
amount of such Convertible Securities issuable upon the exercise of such Options
shall be deemed to have been  issued  for such price per share as of the date of
granting of such  Options or the  issuance of such  Convertible  Securities  and
thereafter  shall be deemed to be outstanding.  Except as otherwise  provided in
subsection 5(e)(3), no adjustment of the Conversion Price shall be made upon the
actual  issue  of such  Common  Stock  or of such  Convertible  Securities  upon
exercise  of such  Options or upon the actual  issue of such  Common  Stock upon
conversion or exchange of such Convertible Securities.

                  5(e)(2)  Issuance  of  Convertible  Securities.  In  case  the
Corporation  shall  hereafter  in  any  manner  issue  (whether  directly  or by
assumption in a merger or otherwise) or sell any Convertible Securities, whether
or not the rights to  exchange or convert any such  Convertible  Securities  are
immediately  exercisable,  and the price per  share  for which  Common  Stock is
issuable upon such conversion or exchange  (determined by dividing (i) the total
amount received or receivable by the Corporation as consideration  for the issue
or sale of such  Convertible  Securities,  plus the minimum  aggregate amount of
additional consideration, if any, payable to the Corporation upon the conversion
or exchange thereof,  by (ii) the total maximum number of shares of Common Stock
issuable  upon the  conversion or exchange of all such  Convertible  Securities)
shall be less than the Conversion Price in effect  immediately prior to the time
of such issue or sale,  then the total maximum  number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities shall be
deemed to have been  issued for such price per share as of the date of the issue
or sale of such  Convertible  Securities  and  thereafter  shall be deemed to be
outstanding,  provided  that (a) except as  otherwise  provided in  subparagraph
5(e)(3),  no  adjustment of the  Conversion  Price shall be made upon the actual
issue of such Common  Stock upon  conversion  or  exchange  of such  Convertible
Securities and (b) if any such issue or sale of such  Convertible  Securities is
made upon  exercise of any Options to purchase any such  Convertible  Securities
for  which  adjustments  of the  Conversion  Price  have  been or are to be made
pursuant to other provisions of this Section 5(e), no further  adjustment of the
Conversion Price shall be made by reason of such issue or sale.

                  5(e)(3)  Change in Option Price or Conversion  Rate.  Upon the
happening of any of the following events, namely, if the purchase price provided
for  in  any  Option   referred  to  in  subsection   5(e)(1),   the  additional
consideration,   if  any,  payable  upon  the  conversion  or  exchange  of  any
Convertible  Securities referred to in subsection 5(e)(1) or 5(e)(2) or the rate
at which Convertible Securities referred to in subsection 5(e)(1) or 5(e)(2) are
convertible  into or  exchangeable  for Common  Stock  shall  change at any time
(including,  but not  limited  to,  changes  under or by  reason  of  provisions
designed to protect  against  dilution),  the Conversion  Price in effect at the
time of such event shall  forthwith be readjusted to the Conversion  Price which

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<PAGE>

would  have  been in  effect  at such  time  had  such  Options  or  Convertible
Securities  still   outstanding   provided  for  such  changed  purchase  price,
additional  consideration  or  conversion  rate, as the case may be, at the time
initially  granted,  issued or sold, but only if as a result of such  adjustment
the Conversion  Price then in effect  hereunder is thereby  reduced;  and on the
termination  of any such  Option or any such right to convert or  exchange  such
Convertible  Securities,  the Conversion  Price then in effect  hereunder  shall
forthwith be increased to the  Conversion  Price which would have been in effect
at the time of such  termination had such Option or Convertible  Securities,  to
the extent outstanding immediately prior to such termination, never been issued.

                  5(e)(4)  Consideration for Stock. In case any shares of Common
Stock,  Options or Convertible  Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation  therefor,  without deduction  therefrom of any expenses incurred or
any  underwriting  commissions or concessions paid or allowed by the Corporation
in  connection  therewith.  In case any  shares  of  Common  Stock,  Options  or
Convertible  Securities  shall be issued or sold for a consideration  other than
cash,  the  amount  of  the  consideration  other  than  cash  received  by  the
Corporation  shall be  deemed  to be the fair  value  of such  consideration  as
determined  in good faith by the Board of  Directors,  without  deduction of any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Corporation in connection therewith.  In case any Options shall be issued
in connection  with the issue and sale of other  securities of the  Corporation,
together comprising one integral transaction in which no specific  consideration
is  allocated  to such Options by the parties  thereto,  such  Options  shall be
deemed to have been issued for such consideration as determined in good faith by
the Board of Directors of the Corporation.

                  5(e)(5)  Record  Date.  In case the  Corporation  shall take a
record of the holders of its Common Stock for the purpose of entitling  them (i)
to receive a dividend or other distribution  payable in Common Stock, Options or
Convertible  Securities  or (ii) to  subscribe  for or  purchase  Common  Stock,
options or Convertible  Securities,  then such record date shall be deemed to be
the date of the issue or sale of the shares of Common  Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution  or the  date of the  granting  of such  right of  subscription  or
purchase, as the case may be.

                  5(e)(6) Treasury Shares.  The number of shares of Common Stock
outstanding  at any given time shall not include  shares owned or held by or for
the account of the Corporation,  and the disposition of any such shares shall be
considered  an issue or sale of Common  Stock for the  purpose  of this  Section
5(e).

                  (f) Exceptions to Conversion Price Adjustment. Notwithstanding
the foregoing,  no adjustment to the Conversion  Price shall be made pursuant to
this Section 5 in connection  with the grant,  issuance or sale of Common Stock,
Convertible  Securities,  warrants,  options or other fights to subscribe for or
purchase Common Stock or Convertible Securities:  (i) pursuant to employee stock
purchase  or  stock  option  ownership  plans  adopted  by the  Corporation  for
employees,  consultants  and/or directors of the Corporation and its affiliates;
(ii) pursuant to the terms of any Convertible Securities,  warrants,  options or
other rights to subscribe  for or purchase  granted,  issued or sold pursuant to
clause (ii) above; (iii) pursuant to the High Yield Debt and Equity Offering (as

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<PAGE>

defined in a Subordinated Loan and Security Agreement, dated as of September 22,
1997,  among  KMC  Telecom  Inc.  ("KMC")  and KMC  Telecom  II,  Inc.  and AT&T
Commercial  Finance  Corporation,  as in effect on the Series C Preferred  Stock
Issue Date) or a subsequent debt offering  occurring prior to December 31, 1998;
(iv) pursuant to the terms of any Convertible Securities,  warrants,  options or
other rights to subscribe  for or purchase  granted,  issued or sold pursuant to
clauses (iii) above;  or (v) pursuant to Section 10C of the Amended and Restated
Note  Purchase  and  Investment  Agreement,  dated as of October  22,  1996,  as
amended,  by and  among the  Corporation,  Nassau  Capital  Partners  L.P.,  NAS
Partners I L.L.C.  and Harold N. Kamine;  provided that the aggregate  number of
shares of Common Stock issued or issuable pursuant to clauses (i) and (ii) above
shall not exceed 15% of the Common Stock (on a Fully Diluted basis)  outstanding
from time to time and the  aggregate  number of shares of Common Stock issued or
issuable  pursuant  to clause  (iii) and (iv) above  shall not exceed 11% of the
Common  Stock (on a Fully  Diluted  basis)  outstanding  from time to time;  and
further  provided that for the purposes of this Section 5(f): (a) 221,500 shares
of Common  Stock  initially  allocated  under the 1997 Stock Option Plan will be
deemed  outstanding  regardless  of the number of shares  actually  granted  and
exercisable  thereunder  and (b) shares of Common Stock issued or issuable  upon
exercise of options not among the 221,500 shares initially allocated pursuant to
the 1997 Stock Option Plan and which, when issued, were subject to clause (i) or
(ii) above,  will not be deemed  outstanding,  regardless of whether or not they
have been granted or are exercisable.

                  (g)  Subdivision or  Combination of Common Stock.  In case the
Corporation  shall at any time subdivide (by any stock split,  stock dividend or
otherwise)  its  outstanding  shares of Common  Stock  into a greater  number of
shares,  the Conversion  Price in effect  immediately  prior to such subdivision
shall be  proportionately  reduced,  and,  conversely,  in case the  outstanding
shares of Common Stock shall be combined  into a smaller  number of shares,  the
Conversion  Price  in  effect  immediately  prior to such  combination  shall be
proportionately increased.

                  (h)  Reorganization  or   Reclassification.   If  any  capital
reorganization or reclassification of the capital stock of the Corporation shall
be  effected  in such a way that  holders of Common  Stock  shall be entitled to
receive  stock,  securities  or assets with respect to or in exchange for Common
Stock,  then, as a condition of such  reorganization  or  reclassification  (but
subject to Section 7), lawful and adequate provisions shall be made whereby each
holder of a share or shares of Series D Preferred Stock shall thereupon have the
right to  receive,  upon the basis and upon the terms and  conditions  specified
herein  and in  lieu of the  shares  of  Common  Stock  immediately  theretofore
receivable  upon the  conversion  of such share or shares of Series D  Preferred
Stock,  such shares of stock,  securities  or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately theretofore
receivable upon such conversion had such reorganization or reclassification  not
taken  place,  and in any such case  appropriate  provisions  shall be made with
respect  to the  rights  and  interests  of  such  holder  to the end  that  the
provisions hereof (including, without limitation,  provisions for adjustments of
the Conversion  Price) shall  thereafter be applicable,  as nearly as may be, in
relation to any shares of stock,  securities  or assets  thereafter  deliverable
upon the exercise of such conversion rights.

                                       9
<PAGE>

                  (i) Carryover.  Notwithstanding  any other  provisions of this
Section 5, the  Corporation  shall not be required to make any adjustment to the
Conversion Price unless such adjustment would require an increase or decrease of
at least one percent (1%) in the Conversion  Price. Any lesser  adjustment shall
be carried  forward  and shall be made no later  than the time of, and  together
with,  the next  subsequent  adjustment  which,  together with any adjustment or
adjustments  so carried  forward,  shall amount to an increase or decrease of at
least one percent (1%) in the Conversion Price.

                  (j) Other Events.  If the Corporation  shall make any dividend
(excluding  cash dividends  payable out of accumulated  earnings and profits) or
distribution on the Common Stock or issue any Common Stock,  other capital stock
or other  security of the  Corporation  or any rights or warrants to purchase or
acquire any such security, which transaction does not result in an adjustment to
the Conversion Price pursuant to the foregoing provisions of this Section 5, the
Board of Directors may consider  whether such action is of such a nature that an
adjustment to the Conversion  Price should  equitably be made in respect of such
transaction.  If the Board of Directors of the  Corporation  determines  that an
adjustment to the Conversion  Price should be made, an adjustment  shall be made
effective  as of such  date,  as  determined  by the Board of  Directors  of the
Corporation.  The  determination of the Board of Directors of the Corporation as
to whether such an adjustment to the  Conversion  Price should be made,  and, if
so, as to what adjustment should be made and when, shall be final and binding on
the Corporation and all stockholders of the Corporation.  The Corporation  shall
be entitled to make such  additional  adjustments  in the Conversion  Price,  in
addition to those  required by the  foregoing  provisions  of this Section 5, as
shall be  necessary  in order that any  dividend  or  distribution  in shares of
capital stock of the Corporation,  subdivision,  reclassification or combination
of shares of stock of the Corporation or any recapitalization of the Corporation
shall not be taxable to the holders of the Common Stock.

                  (k)  Notice  of   Adjustment.   Upon  any  adjustment  of  the
Conversion  Price, then and in each such case the Corporation shall give written
notice  thereof,  by delivery in person,  certified or registered  mail,  return
receipt requested,  or facsimile  addressed to each holder of shares of Series D
Preferred  Stock  affected by such  adjustment  at the address of such holder as
shown on the books of the  Corporation,  which notice shall state the Conversion
Price  resulting from such  adjustment,  setting forth in reasonable  detail the
method upon which such calculation is based.

                  6.       Voting Rights.

                  (a) The  holders  of  Series  D  Preferred  Stock,  except  as
otherwise  required  under Delaware law or as set forth below in this Section 6,
shall not be entitled or permitted  to vote on any matter  required or permitted
to be voted upon by the stockholders of the Corporation.

                                       10
<PAGE>

                  (b)  Subject to Section 7,  without  the prior  consent of the
holders  of  two-thirds  of the  shares of the  Series D  Preferred  Stock  then
outstanding, voting as a separate class, the Corporation shall not:

                  (i) increase the number of shares of Series D Preferred  Stock
authorized for issuance;

                  (ii)  merge or  consolidate  with or into any  other  company,
person or  entity,  unless  holders of each  share of Series D  Preferred  Stock
receive  consideration  in an amount  equal to at least the  greater  of (A) the
product  of (x) the  number of shares of Common  Stock  into which such share of
Series D Preferred  Stock is then  convertible and (y) the  consideration  to be
received  by holders of each share of Common  Stock  pursuant  to such merger or
consolidation  and (B) the  Liquidation  Preference  of such  share of  Series D
Preferred Stock plus all accumulated but unpaid  dividends  thereon  (whether or
not declared);

                  (iii)  amend,  modify or repeal  the  powers,  preferences  or
rights of or the restrictions  provided for the benefit of holders of the Series
D Preferred  Stock or the Common  Stock if such action would affect the Series D
Preferred Stock or the Common Stock adversely;

                  (c)  Without  the consent of each holder of Series D Preferred
Stock  affected  thereby,  the  Corporation  shall not  reduce  the  Liquidation
Preference  of the  Series D  Preferred  Stock  or the  rate at which  dividends
accumulate thereon, or modify the dividend cumulation provisions of the Series D
Preferred  Stock or the times and prices at which the Series D  Preferred  Stock
may be  redeemed  in a manner  that would be adverse to the  holders of Series D
Preferred Stock.

                  7. Optional Redemption. (a) The outstanding shares of Series D
Preferred Stock shall be subject to redemption,  as hereinafter provided, at the
option of the  Corporation,  in whole  but not in part,  in  connection  with an
Acquisition  Event.  For  purposes  hereof,  "Acquisition  Event" shall mean any
merger or  consolidation  of the Corporation  with any other company,  person or
entity  (whether  or  not  the  Corporation  is the  entity  surviving  in  such
transaction)  as a result  of which  the  holders  of  shares  of  Common  Stock
(determined  on a fully  diluted  basis)  will hold less than a majority  of the
outstanding  shares of common  stock or other  equity  interests of the company,
person or entity resulting from such transaction (or any parent of such entity).

                  (b) For  each  share  of  Series D  Preferred  Stock  redeemed
pursuant to this Section 7, the Corporation shall be obligated on the date fixed
for such redemption  (the  "Redemption  Date"),  which date shall not be earlier
than the date of consummation of the applicable Acquisition Event, to pay to the
holder  thereof (upon  surrender by such holder at the  Corporation's  principal
office of the  certificate  representing  such share duly  endorsed  in blank or
accompanied  by an appropriate  form of  assignment) an amount (the  "Redemption
Price")  equal to the  greater of (A) the product of (x) the number of shares of
Common  Stock  into  which  such  share  of  Series  D  Preferred  Stock is then
convertible and (y) the consideration to be received by holders of each share of
Common  Stock  pursuant  to such  Acquisition  Event  and  (B)  the  Liquidation
Preference of such share of Series D Preferred  Stock plus all  accumulated  but
unpaid dividends thereon (whether or not declared).

                  (c) Notice of any  redemption of the Series D Preferred  Stock
pursuant to this Section 7  (specifying  the time and place of  redemption,  the
Redemption Price, the Conversion Price and the date on and after which shares of

                                       11
<PAGE>

Series D  Preferred  Stock  may no  longer  be  converted)  shall be  mailed  by
certified or registered mail, return receipt requested, to each holder of Series
D Preferred  Stock,  at the address of such  holder  shown on the  Corporation's
records, not less than 30 nor more than 45 days prior to the Redemption Date.

                  (d) If the Corporation  holds and sets aside money  sufficient
to pay the  Redemption  Price of the Series D Preferred  Stock on the Redemption
Date,  then on and  after  the  Redemption  Date:  (i) the  shares  of  Series D
Preferred Stock shall no longer be convertible into shares of Common Stock; (ii)
the  shares  of  Series D  Preferred  Stock  will  cease to be  outstanding  and
dividends  on the Series D Preferred  Stock will cease to be declared  and paid,
whether or not certificates  representing the Series D Preferred Stock have been
delivered  to the  Corporation;  and  (iii) all  other  rights of the  holder in
respect thereof shall terminate  (other than the right to receive the Redemption
Price upon delivery of such Series D Preferred Stock).

                  8. Reissuance of Series D Preferred Stock.  Shares of Series D
Preferred  Stock that have been issued and  reacquired in any manner,  including
shares  purchased or redeemed or exchanged or converted,  shall (upon compliance
with any  applicable  provisions  of the laws of  Delaware)  have the  status of
authorized and unissued shares of preferred stock  undesignated as to series and
may be redesignated and reissued as part of any series of preferred stock (other
than Series D Preferred Stock).

                  9.  Business  Day.  If any  payment  or  conversion  shall  be
required  by the terms  hereof to be made on a day that is not a  Business  Day,
such payment or conversion shall be made on the immediately  succeeding Business
Day.

                  10.  Definitions.  As used in this Certificate of Designation,
the following terms shall have the following meanings (with terms defined in the
singular  having  comparable  meanings  when used in the plural and vice versa),
unless the context otherwise requires:

                  "1997 Stock  Option  Plan" shall mean the 1997 Stock  Purchase
and Option Plan for Key Employees of KMC Telecom Holdings,  Inc. and Affiliates,
as the same may be amended from time to time.

                  "Board of Directors"  shall have the meaning ascribed to it in
the first paragraph of this Resolution.

                  "Business Day" means any day except a Saturday,  a Sunday,  or
other day on which  commercial  banks in the State of New York or New Jersey are
authorized or required by law or executive order to close.

                  "Capital Stock" means, with respect to any Person, any and all
shares,  interests,  participations,  rights in, or other  equivalents  (however
designated  and whether voting or  non-voting)  of, such Person's  capital stock
(but excluding any debt security that is  exchangeable  for or convertible  into
such capital stock).

                  "Common  Stock"  shall  have  the  meaning  ascribed  to it in
Section 2 hereof.

                                       12
<PAGE>

                  "Convertible   Securities"   shall  mean  any   evidences   of
indebtedness,  shares or securities  convertible into or exchangeable for Common
Stock.

                  "Corporation"  shall have the  meaning  ascribed  to it in the
first paragraph of this Resolution.

                  "Dividend  Payment Date" means March 31, June 30, September 30
and December 31 of each year.

                  "Dividend  Period"  means the  Initial  Dividend  Period  and,
thereafter, each Quarterly Dividend Period.

                  "Fair  Market  Value"  per  share  of  Common  Stock  as  of a
particular date (the  "Determination  Date") shall mean: (i) if the Common Stock
is listed or admitted for trading on a national  securities  exchange,  then the
Fair Market  Value shall be the average of the last 30 "daily  sales  prices" of
the Common  Stock on the  principal  national  securities  exchange on which the
Common  Stock is listed or admitted  for  trading on the last 30  Business  Days
prior  to the  Determination  Date,  or if not  listed  or  traded  on any  such
exchange,  then the Fair Market Value shall be the average of the last 30 "daily
sales prices" of the Common Stock on the Nasdaq  National  Market on the last 30
Business Days prior to the Determination  Date (the "daily sales price" shall be
the closing price for bona fide  transactions  of the Common Stock at the end of
each day);  or (ii) if the Common Stock is not so listed or admitted to unlisted
trading  privileges or if no such sale is made on at least 25 of such days, then
the Fair Market Value shall be as reasonably determined by an investment banking
firm of  recognized  national  standing  selected in good faith by the Company's
Board of  Directors  or a duly  appointed  committee  of the Board of  Directors
(which  determination  shall  be  reasonably  described  in the  written  notice
delivered to the holders of the Series D Preferred Stock).

                  "Fully  Diluted" shall mean at any date as of which the number
of  shares of  Common  Stock is to be  determined,  all  shares of Common  Stock
outstanding  at such date and the  maximum  number  of  shares  of Common  Stock
issuable in respect of Convertible  Securities  and warrants,  options and other
rights  to  purchase   (directly  or  indirectly)  shares  of  Common  Stock  or
Convertible  Securities (giving effect to the then current respective conversion
prices) outstanding on such date (to the extent the rights to convert,  exchange
or exercise thereunder are presently exercisable).

                  "High Yield Debt and Equity  Offering"  shall have the meaning
ascribed to it in Section 5 hereof.

                  "Initial Dividend Period" means the dividend period commencing
on, and  including,  the Series D Preferred  Stock Issue Date and ending on, and
excluding, the first Dividend Payment Date to occur thereafter.

                  "Junior  Stock"  shall  have  the  meaning  ascribed  to it in
Section 2 hereof.

                                       13
<PAGE>

                  "Liquidation Preference" shall have the meaning ascribed to it
in Section 1 hereof

                  "Option" shall mean rights,  options, or warrants to subscribe
for purchase or otherwise acquire Convertible Securities or Common Stock.

                  "Parity  Preferred  Stock" means,  collectively,  the Series A
Preferred Stock, the  Corporation's  Series B Cumulative  Convertible  Preferred
Stock,  par value $.01 per share,  the Series C  Preferred  Stock,  the Series D
Preferred  Stock and any other series of preferred  stock which is determined to
be "Parity Preferred Stock" by the Board of Directors.

                  "Person" means any individual, firm, corporation, partnership,
limited liability company,  trust,  incorporated or unincorporated  association,
joint  venture,  joint stock company,  governmental  body or other entity of any
kind.

                  "Qualified  Public  Offering" shall mean the offer for sale of
Common  Stock  pursuant  to an  effective  registration  statement  filed by the
Corporation  under  the  Securities  Act of  1933,  as  amended,  in any  single
transaction or series of related transactions, in which the Corporation receives
aggregate  gross  proceeds  (before  deduction  of  underwriting  discounts  and
expenses of sale) of at least  $40,000,000 in the  aggregate;  provided that the
per share price at which such shares are sold in the offering (before  deduction
of  underwriting  discounts  and  expenses  of sale) is at least  four times the
conversion  price of the Series A Preferred  Stock which would then be in effect
if determined pursuant to the terms of the Series A Preferred Stock in effect on
the initial  issuance date of the Series D Preferred  Stock  (whether or not any
shares of Series A Preferred Stock are then outstanding).

                  "Quarterly"  shall mean the quarterly  periods  commencing on,
and including,  each Dividend  Payment Date and ending on, and  excluding,  each
next Dividend Payment Date occurring immediately thereafter, respectively.

                  "Realization  Event" shall mean the occurrence of (i) the sale
of all or substantially  all of the Common Stock or assets of the Corporation or
the  consolidation  or  merger  of  the  Corporation  with  one  or  more  other
corporations,  in any single transaction or series of related  transactions,  or
(ii) the closing of one or more public  offerings  of Common  Stock in which the
Corporation  receives aggregate gross proceeds (before deduction of underwriting
discounts and expenses of sale) of at least $40,000,000.

                  "Senior  Preferred  Stock" means,  collectively,  the Series E
Preferred  Stock,  and the  Series F  Preferred  Stock and any  other  series of
preferred  stock  which is  determined  to be  "Senior  Preferred  Stock" by the
Directors,  provided  that, no Capital Stock shall be designated as such without
the consent of the majority of the Holders of Series D Preferred Stock.

                  "Series A Preferred  Stock" means the  Corporation's  Series A
Cumulative Convertible Preferred Stock, par value, $.0l per share.

                  "Series C Preferred  Stock" means the  Corporation's  Series C
Cumulative Convertible Preferred Stock, par value, $.0l per share.

                                       14
<PAGE>

                  "Series D Preferred  Stock" shall have the meaning ascribed to
it in Section 1 hereof.

                  "Series D Preferred  Stock Issue Date" means the first date on
which the Series D Preferred Stock is issued by the Corporation.


                  "Series  E  Preferred   Stock"   means  the  Series  E  Senior
Redeemable, Exchangeable, PIK Preferred Stock.

                   "Series  F  Preferred   Stock"  means  the  Series  F  Senior
Redeemable, Exchangeable, PIK Preferred Stock.

                  "Shareholders   Agreement"  means  the  Amended  and  Restated
Stockholders Agreement among KMC Telecom Holdings, Inc., Nassau Capital Partners
L.P., NAS Partners I L.L.C., Harold N. Kamine, KMC Telecommunications L.P., AT&T
Credit Corporation, General Electric Capital Corporation,  Corestates Bank, N.A.
and  Corestates  Holdings,  Inc.,  dated as of October 31,  1997,  as amended by
Amendment  No.1,  dated as of January  7,  1998,  to the  Amended  and  Restated
Stockholders Agreement,  dated as of October 31, 1997, Amendment No. 2, dated as
of January 26, 1998, to the Amended and Restated Stockholders  Agreement,  dated
as of October 31, 1997,  Amendment  No. 3, dated as of February 25, 1998, to the
Amended and  Restated  Stockholders  Agreement,  dated as of October  31,  1997,
Amendment  No. 4, dated as of  February 4, 1999,  to the  Amended  and  Restated
Stockholders Agreement,  dated as of October 31, 1997, Amendment No. 5, dated as
of April 30, 1999, to the Amended and Restated Stockholders Agreement,  dated as
of October 31, 1997.



                  IN WITNESS  WHEREOF,  KMC TELECOM  HOLDINGS,  INC., has caused
this  certificate to be duly executed by its Chief  Financial  Officer this 30th
day of April, 1999.

                                     KMC TELECOM HOLDINGS, INC.


                                     By:    /s/  James D. Grenfell
                                        --------------------------------
                                         Name:   James D. Grenfell
                                         Title:  Chief Financial Officer





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