EXHIBIT 10.4



                               AMENDMENT NUMBER 3

                    TO THE PROFESSIONAL SERVICES AGREEMENT

                                      AMONG

        KMC TELECOM INC., KMC TELECOM II, INC., KMC TELECOM III, INC.,

             KMC TELECOM IV, INC., KMC TELECOM OF VIRGINIA, INC.,

            KMC TELECOM LEASING I LLC, KMC TELECOM LEASING II LLC,

           KMC TELECOM LEASING III LLC, KMC TELECOM LEASING IV LLC,

                          AND LUCENT TECHNOLOGIES INC.


      This  Amendment   Number  3  to  the   Professional   Services   Agreement
(hereinafter  the  "AMENDMENT")  is made effective as of 16 April,  2001, by and
between KMC Telecom Inc., a Delaware  corporation ("KMC"), KMC Telecom II, Inc.,
a Delaware corporation ("KMC II"), KMC Telecom III, Inc., a Delaware corporation
("KMC  III"),  KMC  Telecom IV,  Inc.,  a Delaware  corporation,  KMC Telecom of
Virginia, Inc., a Virginia public service company ("KMC Virginia"),  KMC Telecom
Leasing I LLC, a Delaware limited  liability  company ("LEASING I"), KMC Telecom
Leasing II LLC, a Delaware limited liability company ("LEASING II"), KMC Telecom
Leasing III LLC, a Delaware  limited  liability  company  ("LEASING  III"),  KMC
Telecom Leasing IV LLC, a Delaware limited liability company,  each with offices
located at 1545 Route 206, Suite 300, Bedminster,  New Jersey 07921 (hereinafter
collectively  referred  to as  "CUSTOMER"),  and  Lucent  Technologies  Inc.,  a
Delaware  corporation,  acting through its Global Service  Providers Group, with
offices  located  at  600  Mountain  Avenue,   Murray  Hill,  New  Jersey  07074
(hereinafter "LUCENT").

      WHEREAS,  Customer and Lucent have entered  into a  Professional  Services
Agreement (Contract Number LNS970602JC) dated September 4, 1997 (as modified and
amended by Amendment  Number 1, effective  October 1, 1998, as further  modified
and amended by Amendment Number 2 and as further amended,  amended and restated,
supplemented or otherwise modified from time to time, the "PROFESSIONAL SERVICES
AGREEMENT"),  setting  forth the terms and  conditions  pursuant to which Lucent
agreed to provide and Customer agreed to procure certain  Professional  Services
as such Services are described therein;

      WHEREAS,  KMC,  KMC II, KMC III,  KMC  Virginia,  Leasing I,  Leasing  II,
Leasing  III,  KMC III Services LLC and KMC  Telecom.com,  Inc.  (together,  the
"BORROWERS")  have  entered  into an  Amended  and  Restated  Loan and  Security
Agreement  dated as of February 15, 2000 (as amended by Amendment  No. I thereto
dated  March 28,  2000,  Amendment  No. 2 thereto  dated as of July 28, 2000 and
Amendment  No. 3 and Limited  Waiver  thereto  dated  February 23, 2001,  and as
further amended,  amended and restated,  supplemented or otherwise modified from
time to time, the "KMC LOAN AGREEMENT")  among the Borrowers,  the lenders party
thereto (the "LENDERS"),  First Union National Bank as  administrative  agent to
the Lenders and CIT Lending  Services  Corporation  as collateral  agent for the
Lenders;




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      WHEREAS,  the Borrowers have requested that the Lenders (i) modify certain
financial covenants so that the Borrowers may be in compliance with the February
2001 Business Plan (as defined  therein)  under the KMC Loan  Agreement and (ii)
make certain other amendments to the KMC Loan Agreement pursuant,  in each case,
as set forth in Amendment No. 4 and Limited Waiver ("AMENDMENT NO. 4");

      WHEREAS, pursuant to Section 4 of Amendment No. 4, it is a condition
precedent to the effectiveness of Amendment No. 4 that the Customer and the
Seller amend the terms of the Professional Services Agreement as set forth in
this Amendment; and

      WHEREAS,  Customer  and Lucent wish to make certain  modifications  to the
Professional Services Agreement as set forth herein;

      NOW THEREFORE,  in  consideration  of the mutual promises  hereinafter set
forth and other good and valuable consideration,  the receipt and sufficiency of
which is hereby acknowledged, the parties agree as set forth below.

1. AMENDMENTS TO THE PROFESSIONAL SERVICES AGREEMENT

      Effective as of the date first above written,  the  Professional  Services
Agreement shall be and hereby is amended as follows:

      a.  SECTION  1.  Terms  and  Scope.  Amend  Sections  1(a)  and (b) of the
          Professional Services Agreement as follows:

          i. insert after the first sentence of Section 1(a) the following
             phrase:

            "; PROVIDED that, Lucent reserves the right to cease performing,  or
            ensuring the performance of, the Services upon the occurrence and/or
            during the continuation of any of the following events: (i) Customer
            shall be in default of its payment  obligations under this Agreement
            or under  the  General  Agreement,  except  in  circumstances  where
            Customer  is  contesting  in good  faith the  payment  of any amount
            otherwise owing to Lucent hereunder or thereunder,  to the extent of
            such disputed  amount;  (ii) Customer shall not have in place, or it
            shall be unlikely  that Customer  shall have in place,  when payment
            for any such  Services  is due to  Lucent,  a  financing  commitment
            having available credit equal to the amount of such Services;  (iii)
            Lucent shall have provided to Customer a notice of a material breach
            (other than any breach in respect of any payment obligation referred
            to in (i) above) under this Agreement  which remains  incurred after
            any  applicable  cure  period;  or (iv) a  'Default'  or  'Event  of
            Default' in respect of any payment  obligation or as a result of any
            proceeding  under any  bankruptcy,  reorganization,  arrangement  of
            debts,  insolvency or receivership  law filed by or against Customer
            or KMC Holdings or 'Borrower' or 'Issuer', as applicable, shall have
            occurred and be continuing  under the KMC I, II, and III Facility or
            any Subordinated Debt Document; PROVIDED that, in each of case (ii),
            (iii) and (iv) above, Lucent will not cease performing,  or ensuring
            the  performance  of, the Services if Lucent  receives from Customer
            adequate  assurance of payment for such Services when due to Lucent.
            For purposes of this Section  1(a),  'adequate  assurance'  shall be


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<PAGE>

            determined by Lucent in the sole and absolute reasonable  discretion
            of Lucent; PROVIDED that, Lucent hereby agrees that (x) the delivery
            to Lucent of an irrevocable letter of credit in a face amount of not
            less than an amount  equal to twice the average  monthly  payment by
            Customer to Lucent for the  provision  of Services  over the six (6)
            month period immediately  preceding any request for the provision of
            'adequate  assurance' (such amount the "Adequate  Assurance Amount")
            for the benefit of Lucent  issued by a bank  acceptable to Lucent in
            its sole, absolute and reasonable discretion organized in the United
            States of America or a State  thereof or (y) the deposit by Customer
            of cash  collateral  in an  amount  of not less  than  the  Adequate
            Assurance  Amount in an escrow  account in the name and to the order
            of Lucent, shall constitute 'adequate assurance,"; and

       ii.  insert  after the phrase  "Services  to be  provided  hereunder"  in
            Section 1(b) the phrase  "(subject to the terms and  conditions  set
            out in this Agreement)".

      b.    SECTION 3.  Invoices  and Terms of Payment:  Amend  Section 3 of the
            Professional  Services  Agreement by replacing in the third sentence
            of paragraph two the phrase  "thirty  (30)" with the phrase  "twenty
            (20)".

      c.    SECTION  20:   Termination  for  Cause:  Amend  Section  20  of  the
            Professional Services Agreement as follows:

            a. redesignate the existing paragraph as subsection "(a)";

            b. in  new  subsection   (a),   replace  the  phrase   "referred  to
               arbitration  pursuant  to  Section  24,  Arbitration,  until such
               dispute has been finally  settled"  with the phrase  "referred to
               dispute  resolution  pursuant to Section 24,  until the expiry of
               the period specified for such dispute resolution or as determined
               by such  dispute  resolution  or  otherwise  as  provided in this
               subsection (a)"; and

            c. insert  after the last  sentence  the  following  phrase  and new
               subsection (b):


                "Notwithstanding  any other  provision of this  Agreement,  this
                Agreement  shall  terminate at Lucent's option upon the delivery
                by Lucent to Customer of a notice of  termination if a 'Default'
                or 'Event of Default' in respect of any payment obligation or as
                a result of any proceeding under any bankruptcy, reorganization,
                arrangement of debts, insolvency or receivership law filed by or
                against  Customer or KMC Holdings or  'Borrower' or 'Issuer,' as
                applicable,  shall have occurred and be continuing under the KMC
                I, II, and III Facility or any Subordinated Debt Document.

                (b)  Termination of this Agreement in accordance with Section 20
                or otherwise shall automatically  accelerate the due date of all
                outstanding  invoices or other amounts owing so that they become
                immediately  due  and  payable  on the  effective  date  of such
                termination.".




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<PAGE>


            d. SECTION 24.  Arbitration:  Amend  Section 24 of the  Professional
               Services  Agreement  by deleting  Section 24 in its  entirety and
               replacing it with the following new Section 24 as follows:

               "24.  DISPUTE RESOLUTION:

                     If a dispute  arises  out of or  relates to this
                Agreement,  or its breach,  the parties  hereto agree to resolve
                the dispute  within  twenty (20) days,  or such longer period as
                mutually   agreed  between  the  parties,   through  good  faith
                confidential  discussions  between  senior  executives  of  each
                party.  If the  parties  fail to  resolve a dispute  after  such
                discussion,  then the parties may initiate formal proceedings at
                law or in equity.".

            e.  SECTION 29: Defined  Terms:  Add the following new Section 29 to
                the Professional Services Agreement:

                "29.  DEFINED TERMS

                For the  purposes of this  Agreement,  the  following  terms and
                their definitions shall apply:

                "GENERAL AGREEMENT" means the General Agreement No. LNM970313MP,
                dated as of March 6,  1997 (as  amended  on  October  15,  1997,
                December 22, 1998,  November 15, 1999,  February 15, 2000 and as
                of the date hereof and as may be amended,  amended and restated,
                supplemented or otherwise modified from time to time);

                "KMC I, II AND III FACILITY" means the Amended and Restated Loan
                and Security Agreement dated as of February 15, 2000 (as amended
                on March 28, 2000,  July 28,  2000,  February 23, 2001 and as of
                the date hereof and as further  amended,  restated,  amended and
                restated,  supplemented or otherwise modified from time to time)
                among KMC Telecom Inc.,  KMC Telecom II, Inc.,  KMC Telecom III,
                Inc., KMC Telecom of Virginia,  Inc., KMC Telecom Leasing I LLC,
                KMC Telecom  Leasing II LLC,  KMC Telecom  Leasing III LLC,  KMC
                Telecom.com,  Inc. and KMC III Services  LLC as  Borrowers,  the
                financial  institutions  signatories  thereto as lenders,  First
                Union  National  Bank  as  administrative   agent  and  Newcourt
                Commercial Finance Corporation as collateral agent;

                "SUBORDINATED  DEBT  DOCUMENTS"  shall  mean  (i)  that  certain
                Indenture  dated as of January  29,  1998  between  KMC  Telecom
                Holdings,  Inc.,  as Issuer,  and The Chase  Manhattan  Bank, as
                Trustee, relating to KMC Telecom Holdings, Inc.'s l2 1/2 percent
                Senior  Discount  Notes  due  2008,   together  with  the  First
                Supplemental Indenture relating thereto dated as of May 24, 1999
                and (ii) that certain Indenture dated as of May 24, 1999 between
                KMC Telecom Holdings,  Inc., as Issuer,  and The Chase Manhattan
                Bank, as Trustee,  relating to KMC Telecom  Holdings,  Inc.'s 13
                1/2 percent Senior Notes due 2009.".



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<PAGE>

2.    ENTIRE AGREEMENT

      Except as specifically modified, amended or supplemented herein, all terms
and conditions of the Professional Services Agreement shall remain in full force
and effect.  The terms and  conditions  contained  in this  Amendment  and those
non-conflicting  terms and  conditions of the  Professional  Services  Agreement
supersede all prior oral and written  understandings among the parties and shall
constitute  the entire  agreement  among the parties with respect to the subject
matter  herein.  This  Amendment  shall not be modified  or amended  except by a
writing signed by an authorized representative of each of the parties.

3.    COUNTERPARTS; EFFECTIVENESS

     (a) This  Amendment may be executed by the parties hereto via telecopier or
facsimile  transmission  in any  number of  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 instrument.

     (b) This  Amendment  shall be effective upon (i) receipt of a legal opinion
of Kelley Drye & Warren LLP,  counsel to  Customer,  in a form  satisfactory  to
Lucent,  (ii)  payment of all  documented  out-of-pocket  third  party  expenses
(including,  in each case, all reasonable  'attorneys and  paralegals'  fees and
related expenses and costs) incurred by Lucent,  including  without  limitation,
(x) thc legal fees of Jones, Day, Reavis & Pogue, special counsel to Lucent, and
(y) the consulting fees of Zolfo-Cooper,  LLC,  advisor to Lucent,  and, in each
case of (x) and (y), expenses incidental thereto, and (iii) receipt by Lucent of
this Amendment duly authorized, executed and delivered by the parties hereto.

4.    REPRESENTATIONS AND WARRANTIES

      The Customer hereby represents and warrants to Lucent as follows:

     (a) this  Amendment has been duly  authorized  by all  necessary  corporate
action on its part, has been duly executed and delivered by its duly  authorized
officer  or  officers,   and  constitutes  its  valid  and  binding   agreement,
enforceable against it in accordance with its terms;

     (b) the  representations  and  warranties  contained  in  the  Professional
Services  Agreement,  as amended  hereby,  are true and correct on and as of the
date  hereof as though made on and as of the date  hereof,  except to the extent
that such  representations and warranties  expressly relate to a specified date,
in which case such  representations and warranties are hereby reaffirmed as true
and correct when made;

     (c) no  default  has  occurred  or is  continuing  under  the  Professional
Services Agreement on the date hereof; and

     (d) Customer  is  in full  compliance  with all  covenants  and  agreements
contained in the Professional Services Agreement.

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<PAGE>

5.    REFERENCE TO PROFESSIONAL SERVICES AGREEMENT

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

6.    GOVERNING LAW

      THIS AMENDMENT FIVE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH
THE OTHER REMAINING  TERMS OF THE GENERAL  AGREEMENT AND THE LAW OF THE STATE OF
NEW YORK (INCLUDING FOR SUCH PURPOSES  SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS  LAWS OF THE STATE OF NEW YORK).  IF ANY PROVISION OF THIS AMENDMENT
FIVE IS CONTRARY TO APPLICABLE LAW, SUCH PROVISION  SHALL BE DEEMED  INEFFECTIVE
WITHOUT INVALIDATING THE REMAINING PROVISIONS HEREOF.





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<PAGE>



      IN WITNESS WHEREOF,  the parties have caused this Amendment to be executed
by their duly authorized representative on this 16 day of April, 2001.


KMC TELECOM INC.                         KMC TELECOM LEASING I LLC

By:   /S/ CONSTANCE LOOSEMORE            By:   /S/ CONSTANCE LOOSEMORE
      -----------------------                  -----------------------
      Name:                                    Name:
      Title:                                   Title:

KMC TELECOM II, INC.                     KMC TELECOM LEASING II LLC

By:   /S/ CONSTANCE LOOSEMORE            By:   /S/ CONSTANCE LOOSEMORE
      -----------------------                  -----------------------
      Name:                                    Name:
      Title:                                   Title:

KMC TELECOM III, INC.                    KMC TELECOM LEASING III LLC

By:   /S/ CONSTANCE LOOSEMORE            By:   /S/ CONSTANCE LOOSEMORE
      -----------------------                  -----------------------
      Name:                                    Name:
      Title:                                   Title:

KMC TELECOM IV, INC.                     KMC TELECOM LEASING IV LLC

By:   /S/ CONSTANCE LOOSEMORE            By:   /S/ CONSTANCE LOOSEMORE
      -----------------------                  -----------------------
      Name:                                    Name:
      Title:                                   Title:

KMC TELECOM OF VIRGINIA, INC.

By:   /S/ CONSTANCE LOOSEMORE
      -----------------------
      Name:
      Title:



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<PAGE>




LUCENT TECHNOLOGIES INC.


By:   /S/ WILLIAM H. PITTMAN
      ---------------------------
      Name:  William H. Pittman
      Title:  Area Vice President




                                       S-2