AMENDMENT NO. 1 TO
                  PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT


          This Amendment No. 1 to Preferred Stock Registration  Rights Agreement
dated as of April 30, 1999 is made as of June 1, 1999 by KMC  Telecom  Holdings,
Inc. (the  "Company"),  First Union Investors,  Inc.  ("First Union"),  Newcourt
Commercial  Finance  Corporation  ("Newcourt")  and  Lucent  Technologies,  Inc.
("Lucent").

                               W I T N E S S E T H

         WHEREAS,  First  Union owns  shares of the  Company's  Series E Senior,
Redeemable, Exchangeable, PIK Preferred Stock (the "Series E Preferred Stock");

         WHEREAS, the Company and First Union are parties to the Preferred Stock
Registration  Rights  Agreement  dated as of April  30,  1999  concerning  First
Union's Series E Preferred Stock (the "Agreement");

         WHEREAS,  Newcourt  owns  shares of the  Company's  Series E  Preferred
Stock,  and shares of the Company's Series F Senior,  Redeemable,  Exchangeable,
PIK Preferred Stock (the "Series F Preferred Stock"),  and Lucent owns shares of
the Series F Preferred Stock;

         WHEREAS,  the Company wishes to extend the registration  rights granted
to First  Union with  respect to its Series E Preferred  Stock to  Newcourt  and
Lucent with  respect to their  shares of Series E  Preferred  Stock and Series F
Preferred Stock, respectively;

         WHEREAS,  First  Union  wishes  to  consent  to the  granting  of  such
registration rights to Newcourt and Lucent.

         NOW,  THEREFORE,  in consideration of the premises,  the parties hereto
agree as follows:

         1. DEFINED TERMS.  Unless  otherwise  defined  herein,  all capitalized
terms  defined  in the  Agreement  and used  herein are used as so  defined.  In
addition,  the following terms shall have the meanings set forth below,  and, to
the extent that such terms also appear in the Agreement,  the meanings set forth
below shall replace the meanings set forth in the Agreement:

         "Registrable  Securities"  means the shares of Series E Preferred Stock
issued and sold to First Union under the Securities  Purchase Agreement dated as
of April 30, 1999, the shares of Series E Preferred  Stock, the shares of Series
F Preferred  Stock  issued and sold to Newcourt  under the  Securities  Purchase
Agreement  dated as of  February  4, 1999,  and the shares of Series F Preferred
Stock issued and sold to Lucent under the Securities Purchase Agreement dated as
of February 4, 1999.

         2. INSERTION OF NEW SUBHEADING.  A new subheading is inserted below the
heading "2. DEMAND REGISTRATION RIGHTS." to read "2.1 DEMAND RIGHTS."


<PAGE>

         3. AMENDMENT TO SECTION 2.1(A). The first sentence of Section 2.1(a) of
the Agreement is amended to read in its entirety as follows:

            "At any time and from time to time after  October  30,  1999,  First
         Union,  Newcourt and Lucent (each  referred to in this Section 2 as the
         "Demand  Holder") may request the Company to register  its  Registrable
         Securities  in the  manner  set forth  herein by  written  notice  (the
         "REGISTRATION  NOTICE") to the  Company  only if a  disposition  of the
         Registrable Securities may not, in the opinion of the Demand Holder, be
         effected in the public marketplace (as opposed to a private transaction
         under the Securities Act) at equally  favorable net terms to the Demand
         Holder without registration of such shares under the Securities Act."

         4. AMENDMENT TO SECTION 2.1(B). The first sentence of Section 2.1(b) of
the Agreement is amended to read in its entirety as follows:

            "Each of First Union, Newcourt and Lucent will be entitled to obtain
         up  to  two  (2)  Long-Form   Registrations   and  two  (2)  Short-Form
         Registrations."

         5. AMENDMENT TO SECTION 2.2(A). The first sentence of Section 2.2(a) of
the  Agreement  is amended by replacing  the words "First  Union" with the words
"Each of First Union, Newcourt and Lucent".

         6. AMENDMENT TO SECTION 2.3. The  introductory  language of Section 2.3
of the  Agreement is amended by replacing the words "First Union" with the words
"any of First Union, Newcourt and Lucent".

         7.  AMENDMENT  TO SECTION  2.3(A),  (C),  (D),  (E),  (H), (I) AND (M).
Sections  2.3(a),  (c), (d), (e), (h), (i) and (m) of the Agreement are amended,
in each case by replacing  each  occurrence  of the words "First Union" with the
words "First Union,  Newcourt or Lucent, as the case may be,". Section 2.3(m) is
further amended by deleting ";and" at the end and replacing the deleted material
with a period. The final paragraph of Section 2.3, which is not designated by an
alphabetic character,  is also amended by replacing each occurrence of the words
"First Union" with the words "First Union,  Newcourt or Lucent,  as the case may
be,".

         8.  AMENDMENT TO SECTION  2.4(B).  Section  2.4(b) of the  Agreement is
amended to read in its entirety as follows:

             "(b) Except as otherwise  expressly provided in this Agreement,  in
         connection  with each Demand  Registration,  the Company will reimburse
         First Union, Newcourt or Lucent, as the case may be, for the reasonable
         fees and  disbursements  of  counsel  chosen by it. If more than one of
         First Union,  Newcourt and Lucent are  participating in a registration,
         whether by virtue of coincident demand or otherwise, they shall jointly
         select  counsel and the Company will only be obligated to reimburse any
         or all of them  for  the  reasonable  fees  and  disbursements  of once
         counsel chosen by them."



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<PAGE>

         9. AMENDMENT TO SECTION 2.5(A) AND (B).  Sections 2.5(a) and (b) of the
Agreement are amended,  in each case by replacing  each  occurrence of the words
"First Union" with the words "First Union,  Newcourt or Lucent,  as the case may
be,".

         10.  AMENDMENT TO SECTION 2.6.  Section 2.6 of the Agreement is amended
to read in its entirety as follows:

              "2.6. PARTICIPATION IN UNDERWRITTEN  REGISTRATIONS.  No Person may
         participate in any registration  hereunder which is underwritten unless
         such Person (a) agrees to sell such  Person's  securities  on the basis
         provided  in any  underwriting  arrangements  approved by the Person or
         Persons  entitled  hereunder  to  approve  such  arrangements  and  (b)
         completes  and  executes  all  customary   questionnaires,   powers  of
         attorney,  indemnities,  underwriting  agreements  and other  documents
         reasonably required under the terms of such underwriting  arrangements;
         PROVIDED,  that First  Union,  Newcourt or Lucent,  as the case may be,
         shall not be required to make any  representations or warranties to the
         Company or the underwriters other than  representations  and warranties
         regarding itself and its intended method of distribution."

         11.  AMENDMENT TO SECTION 3.1.  Section 3.1 of the Agreement is amended
by adding the following after the address for First Union and its counsel:

              if to Newcourt:

                      Newcourt Commercial Finance Corporation
                      2 Gatehall Drive
                      Parsippany, New Jersey 07054
                      Attn: Vice President--Credit
                      Fax:  (973) 355-7644

              with a copy to:

                      Newcourt Commercial Finance Corporation
                      2 Gatehall Drive
                      Parsippany, New Jersey 07054
                      Attn: Vice President--Legal
                      Fax:  (973) 355-7645

              if to Lucent:

                      Lucent Technologies, Inc.
                      283 King George Road
                      Room A1D 27
                      Warren, New Jersey 07059
                      Attn:  Sue Colross
                      Fax:  (908) 558-1705

              with a copy to:

                      Sidley & Austin
                      875 Third Avenue
                      New York, New York 10001
                      Attn:  Irving L. Rotter
                      Fax:   (212) 906-2021



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<PAGE>

         12. Except as expressly  amended  hereby,  all of the provisions of the
Agreement  are hereby  affirmed  and shall  continue in full force and effect in
accordance with their terms.

         13. This Amendment  shall be governed and construed in accordance  with
the laws of the  state  of  Delaware  applicable  to  agreements  made and to be
performed  entirely  within  such state,  without  regard to the  principles  of
conflicts of laws thereof.

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




















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<PAGE>



         IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Amendment on the date first written above.



                                           KMC TELECOM HOLDINGS, INC.


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

                                           FIRST UNION INVESTORS, INC.


                                            By: /s/ Pearce Landry
                                                -----------------------------
                                                Name:  Pearce A. Landry
                                                Title:  Vice President

                                            NEWCOURT COMMERCIAL FINANCE
                                            CORPORATION


                                            By: /s/ John P. Sirico II
                                                -----------------------------
                                                Name:  John P. Sirico II
                                                Title: Vice President

                                            LUCENT TECHNOLOGIES, INC.


                                            By: /s/ Leslie L. Rogers
                                                -----------------------------
                                                Name:  Leslie L. Rogers
                                                Title: Managing Director








Signature Page to
Amendment No. 1 to
Preferred Stock
Registration Rights
Agreement