WARRANT REGISTRATION RIGHTS AGREEMENT

          Warrant  registration  rights  agreement,  dated as of April 30,  1999
(this "Agreement"),  between KMC TELECOM HOLDINGS,  INC., a Delaware corporation
(the "Company"),  and FIRST UNION INVESTORS,  INC., a North Carolina corporation
("First Union").

          WHEREAS,  pursuant to the terms of a Securities  Purchase Agreement of
even date herewith  (the  "PURCHASE  AGREEMENT"),  between the Company and First
Union,  the  Company  has  agreed to issue  and sell to First  Union a unit (the
"Series E Unit"),  consisting of 35,000 shares of the Company's Series E Senior,
Redeemable,  Exchangeable  PIK Preferred Stock (the "SERIES E PREFERRED  STOCK")
and 94,513 warrants (each, a "WARRANT" and collectively,  the "WARRANTS"),  each
Warrant  initially  entitling the holder thereof to purchase  0.471756 shares of
Common Stock (as defined  below) of the Company at an exercise price of $.01 per
Common Share (as defined below);

          WHEREAS,  the Company,  First Union and the Warrant  Agent (as defined
herein)  have  entered  into a  Warrant  Agreement  of even date  herewith  (the
"WARRANT AGREEMENT") providing for the issuance of the Warrants;

          WHEREAS,  the  Company  has issued  warrants  and rights  relating  to
warrants to certain  holders of its securities  under other warrant  agreements,
including the Warrant  Agreement dated February 4, 1999, as amended on April 30,
1999,  between the Company,  Newcourt  Commercial  Finance  Corporation,  Lucent
Technologies  Inc.,  First  Union and The Chase  Manhattan  Bank (the  "Existing
Warrant Agreement");

          WHEREAS,  the  Company  has  granted  certain  registration  rights to
Newcourt  Commercial  Finance  Corporation and Lucent  Technologies Inc. under a
Warrant  Registration  Rights Agreement dated as of February 4, 1999, as amended
as of the date hereof; and

          WHEREAS, as described in Section 2.4 of the Existing Warrant Agreement
(as defined  below),  the holders of Series E Preferred  Stock have the right to
receive 227,273 Warrants (the "Springing  Warrants")  unless certain  conditions
are met.

          In  consideration  of  the  foregoing  and of  the  mutual  agreements
contained  herein and in the Purchase  Agreement,  the Company and the Purchaser
hereby agree as follows:

          1. DEFINITIONS.

          As used in this  Agreement,  the following  capitalized  defined terms
shall have the following meanings:

          "Auditors" means, at any time, the independent auditors of the Company
at such time.

          "Board" means the board of directors of the Company from time to time.


<PAGE>

          "Closing Date" means April 30, 1999.

          "Comfort Letter" has the meaning specified in Section 3 hereof.

          "Commission"   means  the  United  States   Securities   and  Exchange
Commission.

          "Common Shares" means the shares of the Common Stock of the Company.

          "Common  Stock" means the common stock,  par value $.01 per share,  of
the Company.

          "Company" has the meaning specified in the recitals to this Agreement.

          "Company IPO Shares" has the meaning specified in Section 2 hereof.

          "Cutback Notice" has the meaning specified in Section 2 hereof.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Existing  Holders"  means  the  Existing  Priority  Holders  and  the
Existing Preferred Holders.

          "Existing  Preferred Holders" means the record holders of the Existing
Preferred  Warrants  and the  holders  of Common  Shares  (or other  securities)
received upon exercise thereof.

          "Existing  Preferred  Warrants" means the 52,272 existing warrants and
the right to acquire certain  Springing  Warrants unless certain  conditions are
satisfied,  all of which were issued pursuant to the Existing Warrant Agreement,
each such warrant  initially  entitling the holder thereof to purchase  0.471756
shares of Common  Stock of the Company at an  exercise  price of $.01 per Common
Share.

          "Existing  Preferred  Warrant Shares" means the Common Shares issuable
upon exercise of an Existing Holder's Existing  Preferred  Warrants,  such other
securities  as shall be issuable  upon the  exercise of the  Existing  Preferred
Warrants,  or the  Common  Shares or such  other  securities  received  upon the
exercise thereof,  pursuant to the Existing Warrant  Agreement,  in each case to
the extent that such Common Shares or other  securities would be (upon issuance)
or are, as the case may be, subject to restrictions on transfer.

          "Existing  Priority  Holders" means the record holders of the Existing
Priority  Warrants  and the  holders  of Common  Shares  (or  other  securities)
received upon exercise thereof.

          "Existing  Priority  Warrants"  means the 460,800  warrants  that were
issued  pursuant to a Warrant  Agreement  dated  January  29,  1998  between the
Company and The Chase Manhattan Bank, each such warrant initially  entitling the
holder  thereof to purchase  0.21785 shares of Common Stock of the Company at an
exercise price of $.01 per Common Share.


                                       2

<PAGE>


          "Existing  Priority  Warrant  Shares" means the Common Shares issuable
upon exercise of an Existing  Holder's Existing  Priority  Warrants,  such other
securities  as shall be  issuable  upon the  exercise of the  Existing  Priority
Warrants,  or the  Common  Shares or such  other  securities  received  upon the
exercise  thereof,  pursuant to the Warrant Agreement dated January 29, 1998, in
each case to the extent that such  Common  Shares or other  securities  would be
(upon issuance) or are, as the case may be, subject to restrictions on transfer.

          "Existing Warrant Agreement" has the meaning specified in the recitals
to this Agreement.

          "Existing  Warrants"  means the  Existing  Priority  Warrants  and the
Existing Preferred Warrants.

          "Existing  Warrant Shares" means the Existing  Priority Warrant Shares
and the Existing Preferred Warrant Shares.

          "Expiration  Date" means the second  anniversary  of the Closing Date,
except  that in the event the  Springing  Warrants  are  issued as  provided  in
Section 2.4 of the Existing Warrant Agreement, the Expiration Date, with respect
to the Springing Warrants only, shall be the second anniversary from the date of
issuance of the Springing Warrants.

          "Holders"  means the record holders of the Warrants and the holders of
Common Shares (or other securities) received upon exercise thereof.

          "Includible  Secondary  Shares" has the meaning specified in Section 2
hereof.

          "managing underwriter" has the meaning specified in Section 2 hereof.

          "Opinion" has the meaning specified in Section 3 hereof.

          "Other IPO Shares" has the meaning specified in Section 2 hereof.

          "Piggy-back  Registration Rights" has the meaning specified in Section
2 hereof.

          "Purchase Agreement" has the meaning specified in the recitals to this
Agreement.

          "Registration  Statement"  has the  meaning  specified  in  Section  2
hereof.

          "Resale Shelf" has the meaning specified in Section 3 hereof.

          "Securities  Act" means the United States  Securities  Act of 1933, as
amended.

          "Series E Preferred  Stock" has the meaning  specified in the recitals
to this Agreement.

          "Series E Unit" has the  meaning  specified  in the  recitals  to this
Agreement.


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<PAGE>


          "Springing Warrants" has the meaning specified in the recitals to this
Agreement.

          "Stockholders  Agreement" means the Amended and Restated  Stockholders
Agreement,  dated as of October 31,  1997,  among the  Company,  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, First Union
National Bank, as successor to CoreStates Bank,  N.A., and CoreStates  Holdings,
Inc., as amended and supplemented from time to time.

          "Underlying Securities" means the Common Shares issuable upon exercise
of the Warrants or such other  securities as shall be issuable upon the exercise
of the Warrants, pursuant to the Warrant Agreement.

          "Warrant  Agent" means The Chase  Manhattan  Bank,  in its capacity as
Warrant Agent under the Warrant Agreement.

          "Warrant  Agreement" has the meaning specified in the recitals to this
Agreement.

          "Warrant Registration  Statement" has the meaning specified in Section
3 hereof.

          "Warrants"  has  the  meaning   specified  in  the  recitals  to  this
Agreement.

          "Warrant Shares" means the Common Shares issuable upon exercise of the
Warrants  or  Springing  Warrants  held of record  by the  Holders,  such  other
securities as shall be issuable upon the exercise of such Warrants and Springing
Warrants,  or the  Common  Shares or such  other  securities  received  upon the
exercise thereof,  pursuant to the Warrant Agreement, in each case to the extent
that such Common Shares or other  securities would be (upon issuance) or are, as
the case may be, subject to restrictions on transfer.

          2. PIGGY-BACK REGISTRATION RIGHTS.

          (a) If, prior to the Expiration  Date, the Company  proposes to file a
Registration  Statement with the Commission respecting an offering of any shares
of Common Stock (or other  securities  issuable  upon  exercise of the Warrants)
(other  than  (i)  an  offering  registered  solely  on  Form  S-4 or S-8 or any
successor form thereto,  or (ii) the initial public offering of shares of Common
Stock (or  other  securities  issuable  upon  exercise  of the  Warrants)  if no
shareholder of the Company participates  therein), the Company shall give prompt
written notice to the Holders of Warrants, Springing Warrants or Warrant Shares,
at least 30 days  prior to the  initial  filing  of the  registration  statement
relating to such offering  (the  "REGISTRATION  STATEMENT").  Each  Holder shall
have the right,  within 20 days after  delivery  of such  notice,  to request in
writing  that the  Company  include  all or a portion of such  Holder's  Warrant
Shares in such Registration  Statement  ("PIGGY-BACK  REGISTRATION RIGHTS"). The
Company  shall include in the public  offering all of the Warrant  Shares that a
Holder has requested be included, unless the underwriter for the public offering
or the  underwriter  managing the public offering (in either case, the "MANAGING
UNDERWRITER") delivers a notice (a "CUTBACK NOTICE") pursuant to Section 2(b) or



                                       4
<PAGE>

2(c) hereof. The managing underwriter may deliver one or more Cutback Notices at
any time prior to the  execution of the  underwriting  agreement  for the public
offering.

          (b) If a proposed  public  offering  includes  both  securities  to be
offered for the account of the Company  ("COMPANY  IPO SHARES") and shares to be
sold by stockholders, the provisions of this Section 2(b) shall be applicable if
the managing underwriter delivers a Cutback Notice stating that, in its opinion,
the number of Common Shares (other than (a) Existing  Warrant  Shares to be sold
by any Existing  Holders and (b) Warrant  Shares to be sold by any Holders) that
selling  stockholders  propose  to sell  therein,  whether  or not such  selling
stockholders  have the right to include shares therein (the "OTHER IPO SHARES"),
plus the number of  Existing  Warrant  Shares  that the  Existing  Holders  have
requested to be sold therein, plus the number of Warrant Shares that the Holders
have  requested  to be sold  therein,  plus the Company IPO Shares,  exceeds the
maximum number of shares  specified by the managing  underwriter in such Cutback
Notice that may be distributed  without adversely affecting the price, timing or
distribution  of the Company IPO Shares.  Such maximum number of shares that may
be so sold, excluding the Company IPO Shares, are referred to as the "INCLUDIBLE
SHARES."

          If the managing  underwriter  delivers  such Cutback  Notice,  (i) the
Company shall be entitled to include all of the Company IPO Shares in the public
offering,  (ii) each  stockholder  who has  requested the inclusion of Other IPO
Shares in the public offering pursuant to Section 6.1 or 6.2 of the Stockholders
Agreement  shall be  entitled  to  include  all of its Other IPO Shares and each
Existing  Priority  Holder  who has  requested  the  inclusion  of its  Existing
Priority  Warrant  Shares  shall be  entitled  to  include  all of its  Existing
Priority  Warrant  Shares,  in each case,  in priority to the  inclusion  of any
Existing  Preferred  Warrant  Shares  and any  Warrant  Shares  requested  to be
included by  Existing  Preferred  Holders  and the  Holders and (iii)  except as
otherwise provided in the preceding clause (ii), each requesting Holder shall be
entitled  to include in the public  offering  up to its pro rata  portion of the
Includible Shares on a PARI PASSU basis with the requesting  Existing  Preferred
Holders and in priority to the  inclusion  (except as otherwise  provided in the
preceding  clause  (ii)) of any Other IPO Shares that are proposed to be sold in
such public offering.

          (c) If a proposed  public  offering is entirely a secondary  offering,
the  provisions  of this  Section  2(c)  shall  be  applicable  if the  managing
underwriter  delivers  a  Cutback  Notice  stating  that,  in its  opinion,  the
aggregate number of Existing Warrant Shares, Warrant Shares and Other IPO Shares
proposed  to  be  sold  therein  exceeds  the  maximum  number  of  shares  (the
"INCLUDIBLE  SECONDARY  SHARES")  specified by the managing  underwriter in such
Cutback Notice that may be distributed  without  adversely  affecting the price,
timing or distribution of the Common Shares being  distributed.  If the managing
underwriter delivers such Cutback Notice, (i) each stockholder who has requested
the inclusion of Other IPO Shares in the public offering pursuant to Section 6.1
or 6.2 of the  Stockholders  Agreement  shall be  entitled to include all of its
Other IPO  Shares  and each  Existing  Priority  Holder  who has  requested  the
inclusion of its Existing  Priority  Warrant Shares shall be entitled to include
all of its Existing  Priority  Warrant Shares,  in each case, in priority to the
inclusion  of any  Existing  Preferred  Warrant  Shares and any  Warrant  Shares
requested to be included by the Holders and (ii) except as otherwise provided in
the preceding clause (i), each requesting Holder shall be entitled to include in


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<PAGE>

the  public  offering  up to its pro rata  portion of the  Includible  Secondary
Shares on a PARI PASSU basis with the requesting  Existing Preferred Holders and
in priority to the inclusion  (except as set forth in the preceding  clause (i))
of any Other IPO Shares that are proposed to be sold in such public offering.

          (d) The underwriting  agreement for such public offering shall provide
that each  requesting  Holder  shall have the right to sell its  Warrant  Shares
(other than Warrant  Shares  excluded  from such public  offering  pursuant to a
Cutback  Notice and the terms of Section 2(b) or 2(c)) to the  underwriters  and
that the underwriters shall purchase the Warrant Shares at the price paid by the
underwriters  for the Common  Shares sold by the Company  and/or  other  selling
stockholders, as the case may be.

          3. SHELF REGISTRATION.

          (a) If only the  Company  sells  Common  Shares in an  initial  public
offering or all of the Warrant  Shares have not been sold in a public  offering,
the Company shall use its reasonable  best efforts to cause to be filed pursuant
to Rule 415 under  the  Securities  Act a shelf  registration  statement  on the
appropriate form (the "WARRANT REGISTRATION STATEMENT") covering the issuance of
the Warrant  Shares upon  exercise of the Warrants and shall use its  reasonable
best efforts to cause the Warrant  Registration  Statement  to become  effective
under the  Securities  Act within 180 days after the closing date of the initial
public  offering;  PROVIDED,  HOWEVER,  that  (1) in no  event  may the  Warrant
Registration  Statement be declared  effective prior to the first anniversary of
the  Closing  Date and (2) if the  Commission  shall  request  that the  Company
register the resale of the Warrant Shares instead of the issuance  thereof,  the
Warrant  Registration  Statement  shall  register such resale as opposed to such
issuance.  The Company  shall use  reasonable  best  efforts to keep the Warrant
Registration Statement continuously effective until the earlier of (i) such time
as all Warrants have been  exercised  or, in the case of clause (2),  until such
time as all Warrant Shares have been resold or (ii) the Expiration  Date.  Prior
to filing the Warrant  Registration  Statement  or any  amendment  thereto,  the
Company shall provide a copy thereof to the Purchaser and its counsel and afford
them a reasonable time to comment thereon.

          If the Company is unable to file or cause to be filed, or is unable to
maintain the effectiveness of a Warrant Registration Statement,  notwithstanding
its  reasonable  best  efforts to do so, the Company  shall cause such filing to
take place, or shall cause such Warrant  Registration  Statement to again become
effective,  after  removal  of  the  impediment  to  file  or  to  maintain  the
effectiveness of such Warrant Registration Statement.

          (b) If the Warrant Registration Statement shall register the resale of
the Warrant Shares (a "RESALE SHELF") as provided in Section 3(a)(2) above,  the
Company agrees to:

          (i) make available for inspection by  representatives  of the Holders,
     any underwriter  participating  in any disposition  pursuant to such Resale
     Shelf  and  attorneys  and  accountants   designated  by  the  Holders,  at
     reasonable times and in a reasonable  manner,  financial and other records,
     documents  and  properties of the Company that are pertinent to the conduct
     of due diligence  customary  for an  underwritten  offering,  and cause the
     officers,  directors and employees of the Company to supply all information


                                       6
<PAGE>

     reasonably requested by any such representative,  underwriter,  attorney or
     accountant in connection with a Resale Shelf; PROVIDED,  HOWEVER, that such
     persons  shall  first  agree  in  writing  with  the  Company  to use  such
     information  only  in  connection  with  the  transaction  for  which  such
     information was obtained and that any information that is reasonably and in
     good faith designated by the Company in writing as confidential at the time
     of delivery of such information shall be kept confidential by such persons,
     unless and to the extent that disclosure of such information is required by
     law or such  information  becomes  generally  available to the public other
     than as a result of a disclosure or failure to safeguard  such  information
     by such person;

          (ii) use its reasonable  best efforts to cause all Warrant Shares sold
     under a  Resale  Shelf  to be  listed  on any  securities  exchange  or any
     automated  quotation system on which securities of the same class issued by
     the Company are then listed if requested  by the Holders of Warrant  Shares
     representing a majority of the Warrants  originally  issued,  to the extent
     such Warrant Shares satisfy applicable listing requirements;

          (iii) provide as soon as practicable, a reasonable number of copies of
     the Warrant  Registration  Statement,  any  pre-effective or post-effective
     amendment   thereto,   and  the  prospectus   (including  each  preliminary
     prospectus  and any  amendment  or  supplements  thereto)  included in such
     Resale Shelf to Holders that are selling  Warrant  Shares  pursuant to such
     Resale Shelf;

          (iv)  cause to be  provided  to the  Warrant  Agent,  on behalf of the
     Holders and beneficial owners of Warrant Shares,  upon the effectiveness of
     such Resale Shelf, a customary  "10b-5" opinion of independent  counsel (an
     "OPINION") and a customary "cold comfort" letter of independent auditors (a
     "COMFORT LETTER");

          (v) cause to be  provided  to the  Holders  and  beneficial  owners of
     Warrant Shares an Opinion and Comfort Letter with respect to each Form 10-K
     and Form 10-Q,  including any amendments  thereto,  that is incorporated by
     reference in such Resale Shelf; and

          (vi) notify the Warrant Agent,  for  distribution to the Holders,  (A)
     when the Resale  Shelf has  become  effective  and when any  post-effective
     amendment thereto has been filed and becomes effective,  (B) of any request
     by the  Commission or any state  securities  authority for  amendments  and
     supplements  to  the  Resale  Shelf  or of  any  material  request  by  the
     Commission or any state  securities  authority for  additional  information
     after the Resale  Shelf has become  effective,  (C) of the  issuance by the
     Commission or any state  securities  authority of any stop order suspending
     the  effectiveness of the Resale Shelf or the initiation of any proceedings
     for that purpose,  (D) if,  between the effective  date of the Resale Shelf
     and the  closing  of any  sale  of  Warrant  Shares  covered  thereby,  the
     representations and warranties of the Company contained in any underwriting
     agreement, securities sales agreement or other similar agreement, including
     this Agreement,  relating to disclosure cease to be true and correct in any
     material respect or if the Company  receives any notification  with respect


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<PAGE>

     to the  suspension of the  qualification  of the Warrant Shares for sale in
     any jurisdiction or the initiation of any proceeding for such purpose,  (E)
     of the  happening  of any event  during  the  period  the  Resale  Shelf is
     effective such that such Resale Shelf or the related prospectus contains an
     untrue  statement  of a  material  fact or omits to state a  material  fact
     required to be stated therein or necessary to make  statements  therein not
     misleading   and  (F)  of  any   determination   by  the  Company   that  a
     post-effective  amendment to a Registration Statement would be appropriate.
     The Holders hereby agree to suspend the use of the prospectus  contained in
     any Resale  Shelf upon  receipt of such notice under clause (C), (E) or (F)
     above  until,  in the case of clause  (C),  such stop  order is  removed or
     rescinded  or, in the case of clauses (E) and (F),  the Company has amended
     or supplemented such prospectus to correct such misstatement or omission.

          4. SUSPENSION.

          Notwithstanding   the   foregoing,   in  addition  to  any  suspension
contemplated  by  clauses  (C),  (E) or  (F) of  Section  3(b)(vi),  during  any
consecutive  365-day  period,  the Company  shall have the  privilege to suspend
availability of the Warrant  Registration  Statement and the related  prospectus
for (i) up to two 30-consecutive-day periods, except for the 30 days immediately
prior to the Expiration  Date, if the Board  determines in good faith that there
is a valid purpose for such suspension and (ii) five additional, non-consecutive
three-day  periods,  except for the 30 days immediately  prior to the Expiration
Date,  if the Board  determines  in good faith that the Company  cannot  provide
adequate disclosure during such period due to circumstances  beyond its control.
Notice of such suspension shall be given promptly to the Warrant Agent.

          5. BLUE SKY.

          The  Company  shall use its  reasonable  best  efforts to  register or
qualify the Underlying  Securities proposed to be sold or issued pursuant to the
Registration   Statement  or  the  Warrant  Registration   Statement  under  all
applicable  securities  or "blue  sky" laws of all  jurisdictions  in the United
States  in which  any  Holder  of  Warrants  may or may be  deemed  to  purchase
Underlying  Securities  upon the  exercise  of Warrants or resale of the Warrant
Shares,  as the case may be,  and  shall  use its  reasonable  best  efforts  to
maintain such  registration or  qualification  through the earlier of (A) in the
case of a Registration Statement,  the date upon which all of the Warrant Shares
have been sold or such other sale as shall be required by  applicable  law,  (B)
the date upon which all Warrants have been  exercised or all Warrant Shares have
been resold, as the case may be, under the Warrant Shelf Registration  Statement
and (C) the Expiration Date;  PROVIDED,  HOWEVER,  that the Company shall not be
required to (i) qualify as a foreign  corporation  or as a broker or a dealer in
securities  in any  jurisdiction  where it would not  otherwise  be  required to
qualify  but for this  Section  5, (ii) file any  general  consent to service of
process or (iii)  subject  itself to taxation in any  jurisdiction  if it is not
otherwise so subject.

          6. ACCURACY OF DISCLOSURE.

          The  Company  (and its  successors)  represents  and  warrants to each
Holder (and each beneficial  owner of a Warrant or Warrant Share) and agrees for


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<PAGE>

the benefit of each Holder  (and each  beneficial  owner of a Warrant or Warrant
Share) that,  except during any period in which the  availability of the Warrant
Registration  Statement  has  been  suspended,   (i)  the  Warrant  Registration
Statement and the documents  incorporated by reference  therein will not contain
any  untrue  statement  of a  material  fact or omit to  state a  material  fact
necessary to make the statements therein not misleading; and (ii) the prospectus
delivered to such Holder upon its exercise of Warrants or pursuant to which such
Holder  sells  its  Warrant  Shares,  as the  case  may be,  and  the  documents
incorporated  by reference  therein  will not contain any untrue  statement of a
material fact or omit to state a material fact  necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading;  PROVIDED, HOWEVER, that representations,  warranties and agreements
set forth in this  Section  6 do not apply to  statements  or  omissions  in the
Warrant  Registration  Statement or any such prospectus  based upon  information
relating to any Holder  furnished to the Company (or its  successors) in writing
by such Holder expressly for use therein.

          7. INDEMNITY.

          The Company  hereby  agrees to indemnify  each  beneficial  owner of a
Warrant and each person,  if any, who controls any beneficial owner of a Warrant
within the meaning of either  Section 15 of the  Securities Act or Section 20 of
the Exchange Act, or is under common  control  with,  or is  controlled  by, any
beneficial  owner of a Warrant  (whether or not it is, at the time the indemnity
provided for in this Section 7 is sought,  such a  beneficial  owner),  from and
against all losses,  damages or liabilities  which such beneficial  owner or any
such controlling or affiliated  person suffers as a result of any breach, on the
date of any exercise of a Warrant by such beneficial  owner or the resale of any
Warrant  Share  by  such  Holder,   in  either  case  pursuant  to  the  Warrant
Registration  Statement,  of  the  representations,   warranties  or  agreements
contained in Section 6 hereof.  Each  beneficial  owner of a Warrant  Share sold
pursuant to a Resale Shelf, by accepting its beneficial  ownership of a Warrant,
hereby (i) agrees to provide the Company  with  information  with  respect to it
that the Company  reasonably  requests in  connection  with any Resale Shelf and
(ii) agrees,  severally and not jointly, to indemnify the Company, its directors
and  officers and each  person,  if any,  who  controls  the Company  within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act against any liability  incurred by it or such controlling person as a result
of any  misstatement  of information  provided by such  beneficial  owner to the
Company in writing  expressly  for inclusion in the Resale Shelf or any omission
of a material fact from any such  information  provided by such beneficial owner
to the Company.

          8. EXPENSES.

          All expenses  incident to the Company's  performance  of or compliance
with  its  obligations  under  this  Agreement  will be  borne  by the  Company,
regardless of whether a Registration Statement or Warrant Registration Statement
becomes  effective,  including without limitation (i) all Commission or National
Association of Securities Dealers,  Inc.  registration and filing fees, (ii) all
reasonable  fees and expenses  incurred in connection with compliance with state
securities  or "blue sky" laws,  (iii) all  reasonable  expenses  of any persons
incurred by or on behalf of the Company in preparing or assisting in  preparing,
word  processing,  printing and distributing  any  registration  statement,  any


                                       9
<PAGE>

prospectus,  any amendments or supplements  thereto and other documents relating
to the performance of and compliance  with this  Agreement,  (iv) the reasonable
fees (including  reasonable  legal fees and expenses) and  disbursements  of the
Warrant Agent,  (v) the  reasonable  fees and  disbursements  of counsel for the
Company  and (vi)  the fees and  disbursements,  if any,  of the  Auditors;  but
excluding  any and all fees,  expenses  and  disbursements  of the Holders  (not
specifically  included  above),  including,  without  limitation,  (x)  fees and
disbursements  of counsel  retained  by the  participating  Holders  and (y) the
Holder's share of underwriting discounts and commissions.

          9. COVENANTS OF THE COMPANY.

          The Company hereby agrees and covenants as follows:

          (a) After any initial public  offering of its equity  securities,  the
Company  shall  file as and when  applicable,  on a timely  basis,  all  reports
required  to be  filed by it under  the  Exchange  Act,  and take  such  further
reasonable  action as may be required from time to time and as may be within the
reasonable control of the Company, to enable the Holders to transfer the Warrant
Shares  without  registration  under the Securities Act within the limitation of
the exemptions provided by Rule 144 under the Securities Act or any similar rule
or regulation hereafter adopted by the Commission.

          (b) The Company shall not, directly or indirectly,  (i) enter into any
merger,  consolidation or  reorganization  in which the Company shall not be the
surviving corporation or (ii) transfer or agree to transfer all or substantially
all  the  Company's  assets,   unless  prior  to  such  merger,   consolidation,
reorganization or asset transfer,  the surviving  corporation or the transferee,
respectively,  shall have  agreed in writing  to assume the  obligations  of the
Company  under this  Agreement,  and for that  purpose  references  hereunder to
"Warrant  Shares" shall be deemed to include the securities which the Holders of
Warrant  Shares  would be  entitled to receive in  exchange  for Warrant  Shares
pursuant to any such merger, consolidation or reorganization.

          (c) The Company  shall not grant to any Person (other than a Holder of
Warrant  Shares) any  registration  rights  with  respect to  securities  of the
Company,  or enter  into any  agreement,  that  would be  inconsistent  with the
registration rights granted to Holders of Warrants herein.

          10. MISCELLANEOUS.

          (a) NO  INCONSISTENT  AGREEMENTS.  Each of the Company and First Union
represent to the other that it has not entered into, and agrees that on or after
the date of this  Agreement  it will not  enter  into,  any  agreement  which is
materially  inconsistent  with the rights  granted to the Holders of Warrants or
Warrant  Shares in this  Agreement or otherwise  materially  conflicts  with the
provisions hereof. The Company represents that the rights granted to the Holders
hereunder  do not in any  material  way  conflict  with  and are not  materially
inconsistent  with the rights  granted to the  holders  of the  Company's  other
issued and outstanding securities under any agreements.



                                       10
<PAGE>

          (b)  AMENDMENTS  AND  WAIVERS.   The  provisions  of  this  Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given  unless the  Company and the Warrant  Agent have  obtained  the
written  consent of Holders of at least a majority of the  outstanding  Warrants
affected  by  such  amendment,  modification,  supplement,  waiver  or  consent;
PROVIDED that (i) any  amendment,  modification  or supplement to this Agreement
which,  in the good faith opinion of the Board (and evidenced by a resolution of
such board), does not adversely affect any Holder,  shall not be subject to such
requirement for written  consent;  and (ii) any amendment shall not be effective
unless the Warrant Agent shall have  received an opinion of counsel,  reasonably
satisfactory to it, that such amendment complies with the requirements hereof.

          (c)  NOTICES.  All notices and other  communications  provided  for or
permitted  hereunder  shall  be made in  writing  by  hand-delivery,  registered
first-class  mail,  telex,  telecopier,  or any courier  guaranteeing  overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 10(c);  (ii) if to the Company,  initially at the Company's  address set
forth in the Purchase Agreement and thereafter at such other address,  notice of
which is given in  accordance  with the  provisions of this Section  10(c);  and
(iii) if to the Purchaser, initially at the Purchaser's address set forth in the
Purchase  Agreement  and  thereafter at such other  address,  notice of which is
given in accordance with the provisions of this Section 10(c).

          All such notices and communications  shall be deemed to have been duly
given:  at the time  delivered by hand, if personally  delivered;  five business
days after  being  deposited  in the mail,  postage  prepaid,  if  mailed;  when
answered back, if telexed; when receipt is acknowledged,  if telecopied;  and on
the  next  business  day if  timely  delivered  to an air  courier  guaranteeing
overnight delivery.

          (d) SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the benefit
of and be binding upon the  successors,  assigns and  transferees of each of the
parties,  including without limitation subsequent Holders; provided that nothing
herein shall be deemed to permit any assignment,  transfer or other  disposition
of Warrants in violation  of the terms of the Purchase  Agreement or the Warrant
Agreement.  If any  transferee  of any Holder  shall  acquire  Warrants,  in any
manner,  whether by operation of law or otherwise,  such Warrants  shall be held
subject to all of the terms of this Agreement and the Warrant Agreement,  and by
taking and holding such  Warrants  such person shall be  conclusively  deemed to
have  agreed to be bound by and to perform  all of the terms and  provisions  of
this  Agreement  and the Warrant  Agreement and such person shall be entitled to
receive the benefits hereof.

          (e) PURCHASES AND SALES OF WARRANTS.  The Company shall not, and shall
use its reasonable  best efforts to cause its affiliates (as defined in Rule 405
under the Securities Act) not to, purchase and then resell or otherwise transfer
any Warrants other than Warrants acquired and cancelled.



                                       11
<PAGE>

          (f)  THIRD  PARTY  BENEFICIARY.  The  Holders  shall  be  third  party
beneficiaries  to the agreements  made  hereunder  between the Company and First
Union, and each Holder shall have the right to enforce such agreements  directly
to the extent it deems such  enforcement  necessary  or advisable to protect its
rights or the rights of Holders hereunder.

          (g)  COUNTERPARTS.  This  Agreement  may be  executed in any number of
counterparts and by the parties hereto in separate  counterparts,  each of which
when so  executed  shall be  deemed  to be an  original  and all of which  taken
together shall constitute one and the same agreement.

          (h) HEADINGS.  The headings in this  Agreement are for  convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

          (i) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York.

          (j) SEVERABILITY.  In the event that any one or more of the provisions
contained  herein,  or the  application  thereof  in any  circumstance,  is held
invalid, illegal or unenforceable,  the validity, legality and enforceability of
any such  provision  in every  other  respect  and of the  remaining  provisions
contained herein shall not be affected or impaired thereby.

          (k)  WAIVER  OF  IMMUNITY.  To the  extent  that  the  Company  has or
hereafter  may acquire any immunity from  jurisdiction  of any court or from any
legal process (whether through service of notice, attachment prior to judgement,
attachment in aid of execution,  execution or otherwise)  with respect to itself
or its property,  it hereby  irrevocably  waives such immunity in respect of its
obligations under this Agreement to the fullest extent permitted by law.

          (l) INITIAL PUBLIC OFFERING.  Notwithstanding anything to the contrary
herein  contained,  if the Company conducts an initial public offering of equity
securities (other than nonconvertible  preferred shares),  the Company will give
the Holders the  opportunity to convert their Warrants into warrants to purchase
such equity  securities (other than  nonconvertible  preferred shares) and their
Warrant Shares into such equity securities (other than nonconvertible  preferred
shares). Such conversion  opportunity will be on terms and conditions determined
to be fair and reasonable by the Company's Board.


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<PAGE>


          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.



                                                KMC TELECOM HOLDINGS, INC.


                                             By /s/ Michael A. Sternberg
                                                --------------------------------
                                                Name:  Michael A. Sternberg
                                                Title:  President


                                             FIRST UNION INVESTORS, INC.


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

















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<PAGE>






________________________________________________________________________________




                      WARRANT REGISTRATION RIGHTS AGREEMENT


                                     between


                           KMC TELECOM HOLDINGS, INC.


                                       and


                           FIRST UNION INVESTORS, INC.



                           Dated as of April 30, 1999



________________________________________________________________________________








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