EXHIBIT 10.3

                                                                       EXECUTION

                       AMENDMENT NO. 4 AND LIMITED WAIVER
                                       TO
               AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

            AMENDMENT NO. 4 AND LIMITED  WAIVER TO AMENDED AND RESTATED LOAN AND
SECURITY  AGREEMENT  ("AMENDMENT"),  dated as of April  12,  2001,  is among KMC
TELECOM INC., a Delaware  corporation  ("KMC"), KMC TELECOM II, INC., a Delaware
corporation  ("KMC II"),  KMC TELECOM III,  INC., a Delaware  corporation  ("KMC
III"),  KMC TELECOM OF VIRGINIA,  INC., a Virginia  public service company ("KMC
VIRGINIA"),  KMC TELECOM  LEASING I LLC, a Delaware  limited  liability  company
("LEASING I"), KMC TELECOM LEASING II LLC, a Delaware limited  liability company
("LEASING  II"),  KMC  TELECOM  LEASING  III LLC, a Delaware  limited  liability
company  ("LEASING  III"),  KMC  TELECOM.COM,   INC.,  a  Delaware   corporation
("TELECOM.COM");  KMC III SERVICES  LLC, a Delaware  limited  liability  company
("SERVICES"; KMC, KMC II, KMC III, KMC Virginia, Leasing I , Leasing II, Leasing
III,  Telecom.com  and  Services  being  hereinafter  collectively  referred  to
hereinafter  as the  "BORROWERS"),  the  "Lenders"  party  hereto,  FIRST  UNION
NATIONAL  BANK ("FIRST  UNION"),  as  administrative  agent for the Lenders (the
"AGENT") and CIT LENDING SERVICES CORPORATION (f/k/a NEWCOURT COMMERCIAL FINANCE
CORPORATION),  as collateral agent for the Lenders (the "COLLATERAL  AGENT"; the
Agent together with the Collateral Agent being referred to as the "AGENTS").

            WHEREAS,  the  Borrowers,  the Agents and the Lenders are parties to
that  certain  Amended and  Restated  Loan and  Security  Agreement  dated as of
February 15, 2000,  as amended by Amendment  No. 1 thereto dated as of March 28,
2000,  Amendment No. 2 thereto dated as of July 28, 2000 and Amendment No. 3 and
Limited Waiver  thereto dated as of February 23, 2001 (as so amended,  the "LOAN
AGREEMENT";  undefined  capitalized  terms used herein  shall have the  meanings
assigned  thereto in the Loan  Agreement),  pursuant to which the  Lenders  have
agreed  to make  certain  "Loans"  and  other  financial  accommodations  to the
Borrowers;

            WHEREAS,  the  Borrowers  have  requested  that  Lenders  (i) modify
certain  financial  covenants so that the Borrower may be in compliance with the
February 2001 Business Plan (as  hereinafter  defined)  under the Loan Agreement
and (ii) make certain other  amendments to the Loan  Agreement,  in each case in
the manner set forth herein; and

            WHEREAS,  the Agents and  Lenders  have  agreed to the  waivers  and
amendments requested by the Borrowers and set forth below, but only on the terms
and conditions set forth in this Amendment.

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


<PAGE>

            1. AMENDMENTS TO THE LOAN AGREEMENT.  Effective as of the date first
above written and subject to the  satisfaction  of the  conditions  set forth in
SECTION 4 below, the Loan Agreement shall be and hereby is amended as follows:

            1.1  AMENDED   REFERENCES  TO  MILESTONE  PLAN.  All  references  to
"Milestone  Plan"  appearing  in the  Loan  Agreement  shall  be  amended  to be
references to "February 2001 Business Plan".

             1.2  AMENDMENTS TO SECTION 1.02.

            (a) SECTION 1.02 is hereby amended by deleting in their entirety the
definitions  of "Access  Lines,"  "Consolidated  Debt,"  "Contributed  Capital,"
"Excluded  Subsidiary,"  "Fixed  Charges,"  "Fixed  Coverage  Ratio,"  "Interest
Expense,"  "Milestone  Plan,"  "Permitted  Acquisition,"  "Prepayment  Premium,"
"Principal Payments" and "Required Contribution" appearing therein.

            (b) The  definitions  of  "Affiliate",  "Mortgages",  "Multiemployer
Plan",  "Plan", and "Qualified  Intercompany Loan" set forth in SECTION 1.02 are
hereby  amended to delete each  reference  appearing  therein to "Borrower"  and
"Borrowers" and substitute  therefor the words "Loan Party" and "Loan Party's",
respectively.

            (c) The definition of "Borrowing  Base" set forth in SECTION 1.02 is
hereby  amended to delete  CLAUSE (II)  appearing  therein  (other than the word
"and"  appearing  at the end of such clause) and  re-number  CLAUSE (iii) as new
CLAUSE (II).

            (d) The  definition of "Change of Control" set forth in SECTION 1.02
is hereby  amended  to delete  the  references  to  "Borrower"  and  "Borrowers"
contained  therein  and  insert  references  to  "Loan  Party  (other  than  KMC
Holdings)" and "Loan Parties" in its place.

            (e) The definition of "'Consolidated'  or 'consolidated'"  set forth
in SECTION 1.02 is hereby amended to delete the proviso at the end thereof.

            (f) The  definition  of "Debt" set forth in  SECTION  1.02 is hereby
amended to (i) insert  immediately after the words "excluding trade payables and
accrued  expenses  incurred in the  ordinary  course of  business"  appearing in
CLAUSE (III) thereof the parenthetical  "(unless  evidenced by a promissory note
or past due more than six months)",  (ii) delete the reference to "any Borrower"
appearing  therein and substitute  therefor the words "any Loan Party" and (iii)
delete the penultimate sentence thereof.

            (g) The  definition  of "ERISA" set forth in SECTION  1.02 is hereby
amended to insert  immediately  after the words  "from time to time,"  appearing
therein the phrase "and the rules and regulations  promulgated  thereunder,  and
any successor statutes or rules and regulations".

            (h) The definition of "ERISA Affiliate" set forth in SECTION 1.02 is
hereby amended to insert  immediately after the words "any corporation which is"
appearing therein the phrase ", or at any relevant time was,".



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<PAGE>

            (i) The definition of "Event of Default" is hereby amended to insert
the following  sentence at the end thereof:  "For purposes of SECTION 8.04 only,
'Event of Default' shall include any Default under SECTION 9.01(F)."

            (j) The  definition  of  "Excess  Operating  Cash Flow" set forth in
SECTION 1.02 is hereby  amended to insert  immediately  after the words "capital
expenditures" the parenthetical "(to the extent permitted in compliance with the
Loan Agreement)".

            (k) The  definition  of  "Investment"  set forth in SECTION  1.02 is
hereby  amended  to delete the  phrase  "advances  to  employees,  officers  and
directors  and  similar  items"  appearing  in  the  parenthetical  thereto  and
substitute  therefor the phrase  "travel,  hardship and relocation  expenses for
employees and officers in an amount not to exceed $1,000,000 in the aggregate at
any time outstanding".

            (l) The definition of "Loan  Documents" set forth in SECTION 1.02 is
hereby  amended to (i) insert  immediately  after the phrase "the Fee  Letters,"
appearing  therein the phrase "the  Restructuring  Security  Documents,  Warrant
Agreement,  any  collateral  account  agreement  delivered  pursuant  to SECTION
5.04(H)," and (ii) to change the words "any Borrower"  contained therein to "any
Loan Party".

            (m) SECTION 1.02 is further  amended by amending and  restating  the
definitions  of  "Applicable  Margin,"  "Collateral",  "EBITDA,"  "KMC  Holdings
Guaranty,"   "LIBOR  Interest   Payment  Date,"   "Material   Adverse   Effect,"
"Obligations,"  "Term A Loan  Termination  Date,"  and "Term B Loan  Termination
Date" appearing therein as follows:

                  "'APPLICABLE  MARGIN'  shall  mean with  respect  to each Loan
      bearing  interest  based  upon  the Base  Rate or LIBO  Rate,  the  margin
      determined in accordance  with the criteria set forth on SCHEDULE  1.01(a)
      hereto,  which  margin  shall  be  calculated  based  upon  the  financial
      statements provided pursuant to SECTION 5.06, with any readjustments being
      effective  five (5) Business Days following the Agent's  receipt  thereof;
      PROVIDED,  HOWEVER,  that the  Applicable  Margins  set forth on  SCHEDULE
      1.01(A) shall each be reduced by 100 basis points in the event that at any
      time KMC Holdings submits to the Lenders a fully-funded  business plan for
      KMC Holdings  and its  Subsidiaries  complying  with the  requirements  of
      SECTION  5.06(R)  and  otherwise  acceptable  to  the  Lenders,  including
      evidence  satisfactory  to the Lenders that all capital  required to fully
      fund such plan had been raised and  contributed as a capital  contribution
      to the Borrowers,  which reduction  shall become  effective on the date of
      approval of such plan by the Lenders.

                  'COLLATERAL'   shall  mean,  all  property  and  interests  in
      property  now owned or  hereafter  acquired  by any Loan  Party in or upon
      which a security interest,  lien or mortgage is granted or purported to be
      granted to the  Collateral  Agent by any Loan  Party,  whether  under this
      Agreement or any of the other Loan Documents.

                  'EBITDA'  shall  mean,  with  respect to any  Person,  for any
      period,  an  amount  equal  to (i) Net  Income  PLUS  (ii)  the sum of the
      following,  to the extent deducted in determining Net Income:  (A) income,


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<PAGE>

      property and franchise or other applicable  taxes,  (B) interest  expense,
      (C) amortization, depreciation and other non-cash charges and (D) any fees
      and  expenses of the Lenders and  Borrowers  in  connection  with the Loan
      Documents MINUS (iii) the sum of interest income plus extraordinary gains,
      as  determined  in  accordance  with GAAP as calculated at the end of such
      period.

                  "KMC  HOLDINGS  GUARANTY"  shall mean that  certain  unlimited
      guaranty of KMC  Holdings in the form of EXHIBIT G hereto and executed and
      delivered by KMC Holdings in connection  with the Existing  Agreement,  as
      amended by the General Reaffirmation and Modification Agreement made as of
      February 15, 2000, Amendment No. 1 to Guaranty dated as of March 28, 2000,
      Amendment No. 2 to Guaranty dated as of June 30, 2000,  Amendment No. 3 to
      Guaranty  dated as of July 28,  2000 and as amended  and  restated  on the
      Fourth Amendment  Effective Date substantially in the form of ATTACHMENT A
      annexed to the Fourth Amendment.

                  "LIBOR  INTEREST  PAYMENT DATE" shall mean,  with respect to a
      LIBOR Loan, the last day of each Interest Period  applicable to such Loan,
      and, if such  Interest  Period has a duration  of more than one month,  on
      each day which occurs during such Interest Period every one month from the
      first day of such Interest Period.

                  'MATERIAL  ADVERSE  EFFECT'  shall mean,  with  respect to any
      Person,  a  material  adverse  effect  upon the  condition  (financial  or
      otherwise),  operations or properties or prospects of such Person, or upon
      the ability of such Person to perform under the Loan Documents or upon the
      ability of the Agents and  Lenders to enforce  the  Obligations;  PROVIDED
      that,  with  respect to Data Holdco or any of its  Subsidiaries  'Material
      Adverse  Effect' shall mean a material  adverse  effect upon the condition
      (financial or otherwise), operations or properties of Data Holdco and such
      Subsidiaries,  taken as a whole,  or upon the  ability of KMC  Holdings to
      perform its  obligations  under the Loan  Documents or upon the ability of
      the Agents and Lenders to enforce the Obligations.

                  'OBLIGATIONS' shall mean all the obligations of any Loan Party
      now or hereafter  existing under this Agreement or any other Loan Document
      to which any Loan Party is a party, whether for principal, interest, fees,
      expenses,  reimbursement,  indemnification  or  otherwise,  including  all
      obligations  of  any  Loan  Party  in  respect  of  overdrafts  and  other
      liabilities  owed to First Union  National Bank and arising from treasury,
      depositary  and  cash  management  services  or  in  connection  with  any
      automated  clearing house  transfers of funds,  in each case together with
      all  extensions  or  renewals  of  any  of the  foregoing,  including  all
      interest, charges, expenses, fees, attorneys' fees and disbursements,  and
      paralegals'  fees  which  accrue  after  the  commencement  of any case or
      proceeding   in   bankruptcy   after  the   insolvency   of,  or  for  the
      reorganization  of  any  Loan  Party,  whether  or  not  allowed  in  such
      proceeding,  and in each case whether voluntary or involuntary,  direct or
      indirect, absolute or contingent,  liquidated or unliquidated,  whether or
      not  jointly  owed  with  others,  and  whether  or not from  time to time
      decreased or extinguished  and later increased,  created or incurred,  and
      all or any portion of such  obligations or  liabilities  that are paid, to
      the  extent  all or any  part of such  payment  is  avoided  or  recovered
      directly  or  indirectly  from any Agent or any  Lender  as a  preference,


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<PAGE>

      fraudulent transfer or otherwise, and  all obligations of every  nature of
      Grantors now or hereafter existing under this Agreement.


                  'TERM A LOAN TERMINATION DATE' shall mean April 1, 2007.

                  'TERM B LOAN TERMINATION DATE' shall mean April 1, 2007."

            (n)  SECTION  1.02 is further  amended to insert the  following  new
definitions therein in alphabetical order:

                  "'ASSET  SALE'  shall mean the sale by KMC  Holdings or any of
      its Subsidiaries to any Person of (i)  substantially  all of the assets of
      any  division or line of business of KMC Holdings or such  Subsidiary,  or
      (ii) any other assets (whether tangible or intangible, but excluding sales
      of inventory in the ordinary course of business),  including pursuant to a
      securitization  transaction  permitted  pursuant to SECTION 6.13(XI) and a
      sale leaseback transaction expressly permitted pursuant to SECTION 6.15.

                  'BASE RATE INTEREST  PAYMENT DATE' shall mean,  from and after
      the Fourth Amendment Effective Date, with respect to a Base Rate Loan, the
      first day of each calendar month,  or, if such first day is not a Business
      Day, the next succeeding Business Day, commencing May 1, 2001.

                  'BORROWING    SUPPLEMENT'    shall   mean   a    questionnaire
      substantially in the form of EXHIBIT V annexed hereto.

                  'CARRY OVER AMOUNT"  shall have the meaning given to such term
      in SECTION 7.01(C) hereof.

                  'CASH INTEREST  EXPENSE' shall mean for any period,  the total
      interest  expense  (including,   without   limitation,   interest  expense
      attributable to capital  leases) with respect to all  outstanding  Debt of
      Data  Holdco and its  Subsidiaries  determined  on a  consolidated  basis,
      without  duplication,  for Data Holdco and its  Subsidiaries in accordance
      with GAAP  EXCLUDING,  HOWEVER,  any interest  expense not payable in cash
      (including  amortization  of discount and  amortization  of debt  issuance
      costs).

                  'CERTIFICATE  OF DESIGNATION OF THE SERIES E PREFERRED  STOCK'
      shall mean the Certificate of Voting Powers, Designations, Preferences and
      Relative   Participating,   Optional   or   Other   Special   Rights   and
      Qualifications,  Limitations  and  Restrictions  Thereof  of the  Series E
      Preferred Stock.

                  'COLLATERAL ACCOUNT' shall have the meaning given to such term
      in SECTION 5.04(H) hereof.

                  'CORE REVENUES' shall mean the sum,  without  duplication,  of
      the  amounts  for such period of total  revenues  of the  Borrowers  MINUS
      reciprocal compensation revenues.



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<PAGE>

                  'DATA  CONTRACT" shall mean,  collectively,  (i) any agreement
      between  any one or more  Data  Subsidiaries  and  Person  (other  than an
      Affiliate of a Data Subsidiary) ('DATA CUSTOMER') (a) existing on the date
      of the Fourth  Amendment  Effective Date or (b) relating to the provision,
      operation or  maintenance  of  telecommunications  equipment,  software or
      networks,  and (ii) any  equipment  purchase  agreement  between  any Data
      Subsidiary and a Data Customer  relating to the purchase of multi-service,
      internet  protocol  platform ports and/or software and/or hardware related
      to the  foregoing,  in the  case of  clauses  (i) and  (ii)  above,  which
      agreement  (A) requires  such Data  Subsidiary  to obtain  financing by an
      unaffiliated  third  party in order for such  Subsidiary  to  perform  any
      substantive  portion  of its  obligations  under such Data  Contract,  (B)
      relates to a  discrete  project  described  in clause (a) or (b) above and
      circumscribed  from the CLEC Business of the  Borrowers,  and (C) does not
      provide for the up-front  payment of any capital  expenditures by the Data
      Customer prior to the Data Subsidiary  performing under such agreement and
      PROVIDED  that on or prior to the  execution  of any such  agreement,  KMC
      Holdings  delivers to the Agents and Lenders an officer's  certificate  of
      the Chief Financial Officer of KMC Holdings certifying that such agreement
      cannot  otherwise be financed by one or more Loan Parties  (without regard
      to any applicable covenant  restrictions on the financing contained in the
      Loan  Documents)  and cannot be  performed  by a Loan  Party,  including a
      reasonably  detailed  explanation  of  the  assumptions   underlying  such
      conclusion.

                  'DATA  LLC'  shall  mean  KMC Data  LLC,  a  Delaware  limited
      liability company.

                  'DATA  HOLDCO'  shall have the  meaning  given to such term in
      SECTION 5.27(A) hereof.

                  'DATA HOLDCO  ALLOCATION  AMOUNT" shall have the meaning given
      to such term in SECTION 6.04(A) hereof.

                  'DATA  HOLDCO  GUARANTY'  shall  mean that  certain  unlimited
      guaranty  of  Data  Holdco  in the  form  of  ATTACHMENT  N to the  Fourth
      Amendment,  executed and delivered by Data Holdco in  connection  with the
      Fourth Amendment on the Restructuring Effective Date.

                  'DATA  SUBSIDIARY'  shall  mean  KMC V, KMC VI,  KMC VII,  KMC
      Funding,  KMC VIII,  KMC IX, KMC QV, KMC  Funding V and Data LLC,  each of
      their  respective  Subsidiaries  in  existence  on  the  Fourth  Amendment
      Effective Date, and each New Data Subsidiary.

                  'EXCESS   DATA  CASH  FLOW'   shall  mean  the  sum,   without
      duplication,  of the  amounts for such period for Data Holdco and the Data
      Subsidiaries of (i) EBITDA,  PLUS or MINUS (ii) changes in working capital
      for such period,  as appropriate,  MINUS (iii) the amounts for such period
      of, without duplication, (a) to the extent incurred in compliance with the
      Loan  Agreement,  scheduled cash  repayments of any Debt of Data Holdco or
      any such  Data  Subsidiary,  (b) the  amount of any fees or  expenses  and
      reserves  incurred  in  connection  with  any  securitization  of  a  Data


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<PAGE>

      Contract,  including provision for current taxes based on proceeds of such
      securitization  payable  in cash with  respect  to such  period,  (c) Cash
      Interest  Expense  with  respect to all  outstanding  Debt,  to the extent
      incurred in  compliance  with the Loan  Agreement,  of Data Holdco and the
      Data  Subsidiaries  (d) any Data  Holdco  Allocation  Amount to the extent
      applied to pay  amounts  due under the  Indentures  or Series E  Preferred
      Stock pursuant to SECTION 6.04(A), and (e) capital expenditures, PLUS (iv)
      any net proceeds of any related  financings  (including any Permitted Data
      Financings  (other than any  securitization  of any Data  Contract))  with
      respect to such capital expenditures.

                  'FEBRUARY 2001 BUSINESS PLAN' shall mean that certain Business
      Plan of KMC  Holdings  and its  Subsidiaries  presented  to the  Agents on
      February 28, 2001.

                  'FOURTH AMENDMENT' shall mean that certain Amendment No. 4 and
      Limited Waiver to Amended and Restated Loan and Security  Agreement  dated
      as of April 12,  2001 by and  among the  Borrowers,  the  Lenders  and the
      Agents.

                  'FOURTH  AMENDMENT  EFFECTIVE  DATE'  shall  mean  the  Fourth
      Amendment Effective Date as defined in the Fourth Amendment.

                  'GUARANTORS' shall mean KMC Holdings, Services I, Services II,
      from and after the  Restructuring  Effective Date,  Data Holdco,  and each
      Person that has executed or will execute or from time to time thereafter a
      Guaranty and Security Agreement.

                  'GUARANTY AND SECURITY  AGREEMENT'  shall mean,  collectively,
      the Amended and  Restated KMC  Holdings  Guaranty  and Security  Agreement
      dated as of the Fourth Amendment  Effective Date substantially in the form
      of  ATTACHMENT  A to the Fourth  Amendment,  and any Guaranty and Security
      Agreement  executed and delivered by a Subsidiary of KMC Holdings in favor
      of the Collateral Agent for the ratable benefit of itself and the Lenders,
      substantially in the form of EXHIBIT U hereto.

                  'HOLDINGS IV" shall  mean  KMC  Telecom  IV  Holdings, Inc., a
      Delaware Corporation.

                  'HOLDINGS  IV  REGULATORY  APPROVALS'  shall have the  meaning
      given to such term in SECTION 5.27.

                  'INITIAL IRU FEE' shall have the meaning given to such term in
      SECTION 6.18 hereof.

                  'INTERCOMPANY NOTES' shall have the meaning given to such term
      in SECTION 6.13(VII) hereof.

                  'IRU' shall mean an indefeasible right to use specified fibers
      in a fiber optic  System  owned or to be  constructed  by one or more Loan
      Parties,  which  fibers are dark  fibers to the extent part of an existing
      System  of a Loan  Party  at the  time of  execution  of the  related  IRU
      Agreement.

                  'IRU AGREEMENT' shall mean an agreement  pursuant to which one
      or more Loan Parties agrees to grant to a third party one or more IRUs.



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<PAGE>

                  'IRU CAP EX' shall mean for any period and with respect to any
      Loan Party, the aggregate capital expenditures of such Loan Party for such
      period with respect to IRUs.

                  'IRU  CONSTRUCTION  COSTS'  shall mean with respect to any IRU
      Agreement  or IRU  Service  Order,  the  aggregate  cost of  construction,
      installation and testing of the corresponding  IRU Facilities,  including,
      without  limitation,  the  cost  of  acquisition  of any  rights  of  way,
      easements or similar  rights with respect to such IRU  Facilities  and all
      other costs related to the foregoing.

                  'IRU FACILITIES'  shall have the meaning given to such term in
      SECTION 6.18 hereof.

                  'IRU   REPORT'   shall  mean  a  written   report  in  a  form
      satisfactory  to Agents  setting  forth as of the date of such report with
      respect to each executed IRU Agreement and executed IRU Service Order each
      of the  following:  (i) the  customer,  (ii)  location of the relevant IRU
      Facilities,  (iii) total IRU fees, (iv) total IRU Construction  Costs with
      respect to each IRU Facility,  (v) the margin,  (vi) maintenance costs and
      (vii) such other  information  with respect to the  foregoing as any Agent
      may reasonably request from time to time.

                  'IRU SERVICE ORDER' shall mean any  individual  service orders
      or similar orders for a specified route under any IRU Agreement.

                  'KMC  FINANCING'  shall mean KMC Telecom  Financing,  Inc.,  a
      Delaware corporation.

                  'KMC  FINANCIAL  SERVICES'  shall mean KMC  Telecom  Financial
      Services LLC, a Delaware limited liability company.

                  'KMC FUNDING' shall mean KMC Funding  Corporation,  a Delaware
      corporation.

                  'KMC  FUNDING  V' shall  mean KMC  Funding V LLC,  a  Delaware
      limited liability company.

                  'KMC QV' shall mean KMC QV LLC, a Delaware  limited  liability
      company.

                  'KMC  IV'  shall  mean  KMC  Telecom  IV,   Inc.,  a  Delaware
      corporation.

                  'KMC  V'  shall  mean  KMC   Telecom   V,  Inc.,   a  Delaware
      corporation.

                  'KMC  VI'  shall  mean  KMC  Telecom  VI,   Inc.,  a  Delaware
      corporation.

                  'KMC  VII"  shall  mean KMC  Telecom  VII,  Inc.,  a  Delaware
      corporation.



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<PAGE>

                  'KMC VIII" shall mean KMC Telecom VIII LLC, a Delaware limited
      liability company.

                  'KMC IX" shall mean KMC  Telecom  IX LLC,  a Delaware  limited
      liability company.

                  'KNT'  shall  mean KNT  Network  Technologies  LLC, a Delaware
      limited liability company.

                  'LOAN PARTY' shall mean,  collectively,  the Borrowers and the
      Guarantors and individually, any such Borrower and any such Guarantor.

                  'MATERIAL  AGREEMENTS'  shall have the  meaning  given to such
      term in SECTION 3.09(B).

                  'NET ASSET SALE  PROCEEDS'  shall  mean,  with  respect to any
      Asset Sale, cash payments  (including any cash received by way of deferred
      payment  pursuant  to,  or  by  monetization  of,  a  note  receivable  or
      otherwise,  but only as and when so  received)  received  from such  Asset
      Sale, net of any bona fide direct costs  incurred in connection  with such
      Asset Sale, including (i) income taxes reasonably estimated to be actually
      payable within two years of the date of such Asset Sale as a result of any
      gain recognized in connection with such Asset Sale and (ii) payment of the
      outstanding  principal amount of, premium or penalty, if any, and interest
      on any Debt  (other than the Loans) that is secured by a Lien on the stock
      or assets in question  and that is  required to be repaid  under the terms
      thereof as a result of such Asset Sale.

                  'NET ASSET SALE PROCEEDS  SHORTFALL' shall mean, in respect of
      any Asset  Sale made by any Loan Party  pursuant  to  SECTION  6.03(A),  a
      positive amount (if any) equal to (i)  eighty-five  percent (85%) of gross
      PP&E of the assets  subject to such Asset Sale as  reflected  in the books
      and  records of the  applicable  Loan Party at the time of such sale MINUS
      (ii) the amount of Net Asset Sale  Proceeds  from such Asset Sale actually
      applied to prepay the Term Loans and reduce the Revolving Loan  Commitment
      Amount pursuant to SECTION 2.09(C)(III).

                  'NET SECURITIES PROCEEDS' shall mean the cash proceeds (net of
      underwriting  discounts  and  commissions  and other  costs  and  expenses
      actually incurred associated therewith,  including legal fees and expenses
      actually  incurred)  from the  issuance  of any  Equity  Interests  of KMC
      Holdings.

                  'NEW DATA  SUBSIDIARY'  shall have the  meaning  given to such
      term in SECTION 6.08 hereof.

                  'PERMITTED  DATA  FINANCINGS'  shall have the meaning given to
      such term in SECTION 6.13(XI) hereof.

                  'RESTRICTED ACCOUNT' shall have the meaning given to such term
      in SECTION 8.04 hereof.



                                       9
<PAGE>

                  'RESTRICTED ACCOUNT AGREEMENT' shall have the meaning given to
      such term in SECTION 8.04 hereof.

                  'RESTRICTED  SUBSIDIARY'  shall have the meaning given to such
      term in the  Indentures  and  Certificate  of  Designation of the Series E
      Preferred Stock.

                  'RESTRUCTURING DOCUMENTS' shall have the meaning given to such
      term in SECTION 5.25 hereof.

                  'RESTRUCTURING EFFECTIVE DATE' shall have the meaning given to
      such term in SECTION 5.25 hereof.

                  'RESTRUCTURING  SECURITY  DOCUMENTS'  shall  have the  meaning
      given to such term in SECTION 5.25 hereof.

                  'SERIES E PREFERRED STOCK' shall mean the Series E Redeemable,
      Exchangeable, PIK Preferred Stock of KMC Holdings.

                  'SERVICES I' shall mean KMC I Services LLC, a Delaware limited
      liability company.

                  'SERVICES  II' shall  mean KMC II  Services  LLC,  a  Delaware
      limited liability company.

                  'WARRANT  AGREEMENT' shall mean that certain Warrant Agreement
      among KMC Holdings,  the Collateral Agent, as warrant agent, the Agent and
      Lenders in the form of ATTACHMENT K to the Fourth Amendment.

                  'WARRANT   REGISTRATION  RIGHTS  AGREEMENT'  shall  mean  that
      certain Warrant  Registration  Rights  Agreement  among KMC Holdings,  the
      Agent and Lenders in the form of ATTACHMENT L to the Fourth Amendment."

            1.3   AMENDMENT TO SECTION 1. Section 1 is further amended to insert
a new SECTION 1.05 at the end thereof as follows:

                  "SECTION  1.05.  OTHER  DEFINITIONAL  PROVISIONS.  Unless  the
      context  requires  otherwise  (a) any  definition  of or  reference to any
      agreement,  instrument  or other  document  herein  shall be  construed as
      referring to such agreement,  instrument or other document as from time to
      time  amended,   supplemented  or  otherwise   modified  (subject  to  any
      restrictions on such amendments,  supplements or  modifications  set forth
      herein), and (b) the words "including",  "includes" and "include" shall be
      deemed to be followed by the words "without limitation."

            1.4   AMENDMENTS TO SECTION 2.01.

            (a) The first  CLAUSE (D) of SECTION  2.01 is hereby  deleted in its
entirety and the following new CLAUSE (D) is substituted therefor:



                                       10
<PAGE>

                  "(d) The  aggregate  amount  of  Revolving  Loans  that may be
      borrowed from all Revolving  Lenders plus the maximum  amount of Letter of
      Credit Obligations shall not exceed the Borrowing Base at any time."

            (b)   The second CLAUSE (D) of SECTION 2.01 is hereby re-lettered
as CLAUSE (E).

            (c) AMENDMENTS TO SECTION 2.02. CLAUSE (A) of SECTION 2.02 is hereby
amended to (i) delete the phrases "for financing Permitted  Acquisitions" and ",
and to  finance  Permitted  Acquisitions"  appearing  therein  and  (ii)  insert
immediately after the words "general corporate purposes" appearing in the fourth
line thereof, the parenthetical  "(subject to any restrictions  contained in the
Indentures)".

            (d) AMENDMENT TO SECTION 2.03.  CLAUSE (A) of SECTION 2.03 is hereby
amended to (i) insert immediately after the words "A Borrower  requesting a Loan
shall deliver to each of the Agent and the  Collateral  Agent"  appearing in the
first sentence thereof,  the words "a Borrowing  Supplement dated as of the date
of such  request  and" and (ii)  insert  after the words "any  Approved  Vendor"
appearing in CLAUSE (IV)  thereof the words  "listed on SCHEDULE  2.03  attached
hereto".

            1.5  AMENDMENTS  TO  SECTION  2.05(B).  SECTION  2.05(B) of the Loan
Agreement  is hereby  amended to (i) delete  the  phrase  "Subject  to the third
sentence of this SECTION  2.05(B)"  appearing in the first sentence  thereof and
(ii)  delete the phrase  "Subject to the next  sentence,  if"  appearing  in the
second sentence thereof and substitute therefor the word "If".

            1.6 AMENDMENT TO SECTION 2.07(E). SECTION 2.07(E) of the Loan
Agreement is hereby amended by inserting the following sentence at the end
thereof:

                  "Calculation  of all  amounts  payable to a Lender  under this
      Section  2.07 and under  SECTION  2.12 shall be made as though that Lender
      had funded each of its LIBOR Loans through the purchase of a LIBOR deposit
      bearing interest at the LIBO Rate in an amount equal to the amount of such
      LIBOR Loan and  having a  maturity  comparable  to the  relevant  Interest
      Period, whether or not its LIBOR Loans had been funded in such manner."

            1.7   AMENDMENTS TO SECTION 2.08.

            (a) CLAUSE (A) of SECTION 2.08 is hereby deleted in its entirety and
the following new CLAUSE (A) is substituted therefor:

                  "(a)  Interest  on each LIBOR Loan shall be payable in arrears
      on each LIBOR Interest Payment Date and if such LIBOR Loan is paid in full
      other than on such  LIBOR  Interest  Payment  Date,  on such  other  date.
      Interest  on each Base Rate Loan will be  payable  in arrears on each Base
      Rate  Interest  Payment  Date and,  if such Base Rate Loan is paid in full
      other than on such Base Rate Interest Payment Date, on such other date."

            (b) CLAUSE (B) of SECTION 2.08 is hereby deleted in its entirety and
the following new CLAUSE (B) is substituted therefor:



                                       11
<PAGE>

                  "(b) Subject to the  provisions of SECTIONS 2.09 and 9.02, the
      outstanding  principal  balance of the Term A Loans made to the  Borrowers
      shall be payable in seventeen consecutive quarterly installments beginning
      on the Payment  Date  occurring  on April 1, 2003 and  continuing  on each
      Payment Date thereafter  through and including the Term A Loan Termination
      Date in the  amounts  set  forth  on  ANNEX C  hereto;  PROVIDED  that the
      scheduled installments of principal of the Term A Loans set forth on ANNEX
      C  shall  be  reduced  in  connection   with  any  optional  or  mandatory
      prepayments  of the Term A Loans in accordance  with SECTION  2.09(D)(II).
      Subject to the  provisions  of  SECTIONS  2.09 and 9.02,  the  outstanding
      principal  balance  of the  Term B Loans  made to the  Borrowers  shall be
      payable in seventeen consecutive quarterly  installments  beginning on the
      Payment  Date  occurring on April 1, 2003 and  continuing  on each Payment
      Date thereafter  through and including the Term B Loan Termination Date in
      the  amounts  set forth on ANNEX C  hereto;  PROVIDED  that the  scheduled
      installments  of  principal of the Term B Loans set forth on ANNEX C shall
      be reduced in connection with any optional or mandatory prepayments of the
      Term B Loans  in  accordance  with  SECTION  2.09(D)(II).  Subject  to the
      provisions of SECTIONS 2.09 and 9.02, the outstanding principal balance of
      the  Revolving  Loans  made  to the  Borrowers  shall  be  payable  on the
      Revolving Credit Commitment Termination Date."

            (c) CLAUSE (C) of SECTION  2.08 is here by amended to (i)  re-number
CLAUSES (1) through (9) thereof as new CLAUSES (2) through (10), (ii) delete the
words,  "first",  "second",  "third",  "fourth",  "fifth" and "sixth"  appearing
therein and substitute therefor the words "second",  "third", "fourth", "fifth",
"sixth" and "seventh",  respectively,  and (iii) insert a new CLAUSE (1) thereto
as follows:

                  "(1) first,  to pay  Obligations  to First Union  arising from
      treasury,  depositary and cash  management  services or in connection with
      any automated clearing house transfers of funds;".

            (d)   SECTION 2.08 is hereby further amended by inserting a new
CLAUSE (D) at the end thereof as follows:

                  "(d)  Notwithstanding  anything to the  contrary  contained in
      this SECTION 2.08,  SECTION 2.09 or any other  provision of this Agreement
      or the  other  Loan  Documents,  so long as at any  time  the  outstanding
      principal amount of Term B Loans exceeds $421,540,902 and/or the Revolving
      Loan  Commitment  Amount exceeds  $166,724,940  (the amount of such excess
      Term B Loans and excess Revolving Loan Commitment Amount being the "EXCESS
      FACILITY  AMOUNTS"),  any  amounts  received  by any  Agent or Lender as a
      payment or  prepayment  of any Loans  whether as a  voluntary  prepayment,
      mandatory  prepayment  or otherwise  (including  upon the  occurrence  and
      during the  continuance  of any Event of Default and including any amounts
      received by Collateral Agent to be applied to the Loans and  reimbursement
      obligations under the Letters of Credit pursuant to SECTION  2.08(C)(8) as
      a result of any realization on the Collateral,  but specifically excluding
      any  optional  prepayments  of the  Revolving  Loans  pursuant  to SECTION
      2.09(A)(II))  shall be  applied  to prepay  Term B Loans  and  permanently
      reduce the Revolving Loan Commitment  Amount on a pro rata basis until the
      Excess Facility  Amounts have been prepaid or reduced in full, as the case
      may be,  before  application  to the Loans and  remaining  Revolving  Loan


                                       12
<PAGE>

      Commitment Amount pursuant to the other provisions of this Agreement.  Any
      reduction in the Revolving Loan Commitment Amount pursuant to this SECTION
      2.08 shall be  accompanied  by any payments  required  pursuant to SECTION
      2.09(D)(I)."

            1.8   AMENDMENT TO SECTION 2.09.   SECTION 2.09 is hereby deleted in
its entirety and the following new language is substituted therefor:

                  "SECTION 2.09.  OPTIONAL AND MANDATORY PREPAYMENT OF LOANS;
      OPTIONAL AND MANDATORY REDUCTION OF REVOLVING LOAN COMMITMENT AMOUNT.

                  (a) OPTIONAL  PREPAYMENTS.  Provided  that no Event of Default
      has occurred and is  continuing,  the Borrowers  shall have the right upon
      the provision of five (5) days' prior written  notice to the Agent,  which
      notice, once given, shall be irrevocable,  to prepay the Loans as follows,
      all  such  prepayments  or  resulting  reductions  in the  Revolving  Loan
      Commitment Amount to be applied as set forth below or as more specifically
      set forth in SECTION  2.09(D),  it being  understood  and agreed  that any
      reduction in the Revolving Loan Commitment  Amount shall be accompanied by
      any payment required pursuant to SECTION 2.09(D)(I):

                  (i) On any  Payment  Date with  respect  to any Base Rate Term
      Loans and on the last day of the applicable  Interest  Period with respect
      to any  LIBOR  Term  Loans,  the  Borrowers  may  prepay  the  outstanding
      principal  of the Base Rate Term  Loans in a minimum  principal  amount of
      $1,000,000  and  increments  of  $250,000  in  excess   thereof,   or  the
      outstanding  principal  of the LIBOR  Term  Loans in a  minimum  principal
      amount of $5,000,000  and  increments  of  $1,000,000  in excess  thereof,
      together in each case with accrued interest  thereon;  PROVIDED,  HOWEVER,
      that notwithstanding  anything in the foregoing to the contrary,  any such
      prepayments  shall be applied  on a pro rata basis to prepay  Term A Loans
      and Term B Loans and  permanently  reduce the  Revolving  Loan  Commitment
      Amount.  The amount of principal of Term Loans so prepaid shall be applied
      to the remaining  principal  payments of the type of Loans prepaid  (i.e.,
      Base  Rate  Term  Loans or  LIBOR  Term  Loans)  in the  inverse  order of
      maturity.

                  (ii)  On any  Payment  Date  with  respect  to any  Base  Rate
      Revolving Loans and on the last day of the applicable Interest Period with
      respect  to any LIBOR  Revolving  Loans,  the  Borrowers  may  prepay  the
      outstanding  principal  of  such  Base  Rate  Revolving  Loans  and  LIBOR
      Revolving Loans in a minimum principal amount of $1,000,000 and increments
      of $250,000 in excess thereof, together in each case with accrued interest
      thereon.

                  (b) OPTIONAL  REDUCTIONS OF REVOLVING LOAN COMMITMENT  AMOUNT.
      Provided  that no Event of Default has  occurred  and is  continuing,  the
      Borrowers  shall have the right upon the provision of five (5) days' prior
      written  notice  to  the  Agent,  which  notice,   once  given,  shall  be
      irrevocable, on any Payment Date, to permanently reduce the Revolving Loan
      Commitment   Amount  of  all  the   Lenders;   PROVIDED,   HOWEVER,   that


                                       13
<PAGE>

      notwithstanding  anything  in the  foregoing  to the  contrary,  any  such
      reductions  shall be accompanied by a pro rata  prepayment of Term A Loans
      and Term B Loans.  Each such  reduction  shall be in a  minimum  principal
      amount of $1,000,000 and increments of $250,000 in excess thereof.

                  (c)  MANDATORY   PREPAYMENTS   AND  MANDATORY   REDUCTIONS  OF
      REVOLVING  LOAN  COMMITMENT  AMOUNT.  The Loans  shall be prepaid  and the
      Revolving  Loan  Commitment  Amount  shall be  permanently  reduced in the
      amounts and under the  circumstances set forth below, all such prepayments
      and/or reductions to be applied as set forth below or as more specifically
      provided  in SECTION  2.09(D),  it being  understood  and agreed  that any
      reduction in the Revolving Loan Commitment  Amount shall be accompanied by
      any payment required pursuant to SECTION 2.09(D)(I):

                  (i) Upon the  occurrence  of any  Event of Loss in  excess  of
      $1,000,000  with respect to any item of Collateral that is not repaired or
      replaced, or any Events of Loss which, in the aggregate, exceed $5,000,000
      with respect to any item or items of  Collateral  that are not repaired or
      replaced (in each case, other than an item of Collateral no longer used or
      useful in the Business)  such that after such repair or replacement it has
      a value at least equal to its value prior to the  occurrence of such Event
      of Loss,  the Loan Party  which  suffered  such Event of Loss shall make a
      principal  prepayment  within thirty (30) days of such Event of Loss in an
      amount  equal to the  replacement  value of the item of  Collateral  which
      suffered such Event of Loss,  together with accrued  interest thereon with
      such principal  payment to be applied,  on a pro rata basis, to prepay the
      Term Loans and permanently reduce the Revolving Loan Commitment Amount.

                  (ii)  In  the   event   that   any   Borrower   finances   any
      Telecommunications  Equipment (exclusive of soft costs that exceed fifteen
      percent  (15%) of the  invoiced  price of the  related  Telecommunications
      Equipment)  with a  financing  source  other than a Loan  pursuant to this
      Agreement,  then no later  than  the  first  Business  Day  following  the
      consummation of any such financing,  Borrowers shall prepay the Term Loans
      and permanently  reduce  Revolving Loan Commitment  Amount,  each on a pro
      rata  basis  by the  actual  or  imputed  principal  amount  of  any  such
      financing.  Nothing in this SECTION  2.09(C)(II) shall be deemed to permit
      the Borrowers to incur any Debt or other obligations  otherwise prohibited
      by the terms of this Agreement or any other Loan Document.

                  (iii) No later than the first  Business Day following  receipt
      by any Loan Party of any Net Asset Sale  Proceeds  in respect of any Asset
      Sale made by any Loan Party  pursuant to SECTION  6.03(A),  the  Borrowers
      shall apply such Net Asset Sale Proceeds to the extent available to prepay
      the Term  Loans and  permanently  reduce  the  Revolving  Loan  Commitment
      Amount,  each on a pro  rata  basis in an  amount  equal to the sum of (A)
      eighty-five percent (85%) of gross PP&E allocated to the assets subject to
      such Asset Sale as  reflected  in the books and records of the  applicable
      Loan  Party on the date of such Asset  Sale,  PLUS (B) the  aggregate  Net
      Asset Sale Proceeds  Shortfall in respect of all other Asset Sales made by
      the Loan Parties  since the Fourth  Amendment  Effective  Date pursuant to
      SECTION  6.03(A),  PLUS (C)  fifty  percent  (50%) of any Net  Asset  Sale


                                       14
<PAGE>

      Proceeds from such Asset Sale  remaining  after payment of the amounts set
      forth in clauses (A) and (B) above;  PROVIDED,  HOWEVER, that, if an Event
      of Default or Default has  occurred  and is  continuing  at the time of an
      Asset Sale made by any Loan  Party,  the  Borrowers  shall be  required to
      prepay the Term Loans and permanently reduce the Revolving Loan Commitment
      Amount,  each on a pro  rata  basis  in a  principal  amount  equal to one
      hundred  percent  (100%) of the Net Asset  Sale  Proceeds  from such Asset
      Sale.

                  (iv) No later than the two Business Days following the date of
      receipt    by   the    Collateral    Agent   or   any   Loan    Party   of
      insurance/condemnation  proceeds that are required to be applied to prepay
      the Term  Loans and  permanently  reduce  the  Revolving  Loan  Commitment
      Amount,  each on a pro rata basis  pursuant to the  provisions  of SECTION
      5.04(H),  the Borrowers shall prepay the Term Loans and permanently reduce
      the  Revolving  Loan  Commitment  Amount  each on a pro  rata  basis in an
      aggregate   amount   equal  to  one   hundred   percent   (100%)  of  such
      insurance/condemnation proceeds.

                  (v) In the event that  there  shall be Excess  Operating  Cash
      Flow for any fiscal  year  (commencing  with the fiscal  year  2001),  the
      Borrowers  shall,  no later  than  ninety  (90) days after the end of such
      fiscal year,  prepay the Term Loans and  permanently  reduce the Revolving
      Loan  Commitment  Amount,  each on a pro rata basis in a principal  amount
      equal to fifty percent (50%) of the amount of such Excess  Operating  Cash
      Flow.

                  (vi) No later than the two Business Days following  receipt by
      KMC  Holdings  of the Net  Securities  Proceeds  from the  issuance of any
      Equity Interests of KMC Holdings after the Fourth Amendment Effective Date
      in an  aggregate  cumulative  amount for all such  issuances  in excess of
      $200,000,000, Borrowers shall prepay the Term Loans and the Revolving Loan
      Commitment Amount shall be permanently  reduced,  each on a pro rata basis
      in an  aggregate  amount  equal to at least  fifty  percent  (50%) of such
      excess Net Securities Proceeds.

                  (vii) At any time after the Fourth  Amendment  Effective  Date
      but in no event later than May 1, 2002,  Borrowers  shall  prepay the Term
      Loans  and the  Revolving  Loan  Commitment  Amount  shall be  permanently
      reduced, each on a pro rata basis in an aggregate amount equal to at least
      $100,000,000  which prepayment and reductions shall result solely from the
      proceeds of events expressly  permitted pursuant to SECTION  6.03(A)(III),
      it being  understood  and agreed  that any  amounts  applied to prepay the
      Loans pursuant to SECTION  2.09(C)(III)  on or prior to such date shall be
      included in calculating  Borrowers'  compliance  with the  requirements of
      this SECTION 2.09(C)(VII).

                  (viii) No later than the two Business Days  following  receipt
      by any Loan Party of any tax refunds (other than tax refunds in respect of
      taxes  paid  by or on  behalf  of a  Data  Subsidiary)  after  the  Fourth
      Amendment  Effective Date in an aggregate  cumulative  amount for all such
      refunds in excess of $5,000,000, the Borrowers shall prepay the Term Loans
      and the Revolving Loan  Commitment  Amount shall be  permanently  reduced,


                                       15
<PAGE>

      each on a pro rata  basis in an  aggregate  amount  equal to at least  one
      hundred percent (100%) of any such excess.

                  (ix) The Revolving Loan  Commitment  Amount of all the Lenders
      shall be reduced on each Payment Date beginning April 1, 2003 as set forth
      on ANNEX C hereto.

                  (x)  Concurrently   with  any  prepayment  of  the  Loans  and
      permanent  reduction of the Revolving Loan  Commitment  Amount pursuant to
      SECTIONS  2.09(C)(III)-(VI)  AND (VIII) the Borrowers shall deliver to the
      Collateral  Agent a  certificate  of the Chief  Financial  Officer  of KMC
      Holdings  demonstrating  the  calculation of the applicable Net Asset Sale
      Proceeds, insurance/condemnation proceeds, Excess Operating Cash Flow, Net
      Securities  Proceeds  or tax refund as the case may be,  that gave rise to
      such prepayment and reduction,  including the derivation of gross PP&E, if
      applicable.  In the event that the Borrowers shall subsequently  determine
      that the  actual  amount  was  greater  than the  amount set forth in such
      officer's  certificate,  the Borrowers  shall  promptly make an additional
      prepayment of the Loans and the Revolving Loan Commitment  Amount shall be
      permanently  reduced,  each on a pro rata basis in an amount  equal to the
      amount of such excess that would have been required to be applied pursuant
      to such Sections,  and the Borrowers shall concurrently  therewith deliver
      to  the  Collateral  Agent  an  officer's  certificate  demonstrating  the
      derivation of the additional amount resulting in such excess.

                  (d)   APPLICATION OF PREPAYMENTS AND UNSCHEDULED REDUCTIONS
      OF REVOLVING LOAN COMMITMENT AMOUNT.

                  (i) On each date that the Revolving Loan Commitment  Amount is
      reduced,  the Borrowers  shall prepay  FIRST,  the  Revolving  Loans,  and
      SECOND, provide to the Agent cash collateral with respect to the Letter of
      Credit  Obligations  in such amounts such that the sum of the  outstanding
      principal  balance  of the  Revolving  Loans  plus the  Letter  of  Credit
      Obligations  does not exceed the Revolving Loan  Commitment  Amount of all
      the  Revolving  Lenders  after  giving  effect  to the  reduction  thereof
      effective on such date.  Any  reduction in the Revolving  Loan  Commitment
      Amount shall be allocated to each  Revolving  Lender based on its Pro Rata
      Share.   The  Letter  of  Credit   Obligations   shall  be  reduced  on  a
      dollar-for-dollar  basis by the cash  collateral.  All  reductions  in the
      Revolving Loan Commitment  Amount shall be applied to reduce the scheduled
      reductions of the Revolving Loan Commitment Amount set forth on ANNEX C in
      inverse  order of maturity;  PROVIDED  HOWEVER,  that any reduction of the
      Revolving  Loan  Commitment  Amount  pursuant to SECTION  2.08(D) shall be
      applied to reduce pro rata the then remaining scheduled  reductions of the
      Revolving Loan Commitment Amount set forth on ANNEX C.

                  (ii) All  prepayments  of the Term  Loans  shall be applied to
      reduce the scheduled installments of principal of the Term A Loans or Term
      B Loans,  as applicable,  set forth on ANNEX C that are unpaid at the time
      of such prepayment in inverse order of maturity;  PROVIDED,  HOWEVER, that


                                       16
<PAGE>

      any  prepayment of the Term B Loans  pursuant to SECTION  2.08(D) shall be
      applied to reduce pro rata the scheduled  installments of principal of the
      Term B Loans  set  forth on ANNEX C that  are  unpaid  at the time of such
      prepayment."

                  (iii) Aggregate  principal and interest payments in respect of
      Term Loans and Revolving Loans shall be apportioned  among all outstanding
      Loans to which  such  payments  relate,  in each case  proportionately  to
      Lenders' respective Pro Rata Shares.

            1.9 AMENDMENT TO SECTION 2.12(A).  PARAGRAPH 5 of SECTION 2.12(A) is
hereby  amended to (i) delete each reference to "Form 1001 of the IRS" appearing
therein  and  substitute  therefor  the words  "Form  W-8BEN",  (ii) delete each
reference to "Form 4224 of the IRS" appearing  therein and  substitute  therefor
the words "Form  W-8ECI ", and (iii)  insert  immediately  after the words "with
respect to payments of 'portfolio  interest' the  parenthetical  "(in which case
the  certificate  shall be accompanied by two original,  executed copies of Form
W-8BEN or any successor form)".

            1.10  AMENDMENTS TO ARTICLE III.

            (a) The first  sentence of Article  III is hereby  amended to insert
immediately  prior to the  colon at the end  thereof  the  phrase  ", as to each
Borrower, each Loan Party or KMC Holdings and its Subsidiaries,  as the case may
be".

            (b) SECTION 3.01 is hereby  amended to (i) delete each  reference to
"Such Borrower" or "such Borrower"  appearing therein and substitute  therefor a
reference to "KMC Holdings and each of its  Subsidiaries" and (ii) insert at the
end of CLAUSE (A) the phrase "except in jurisdictions where the failure to be so
qualified or in good  standing has not had and could not  reasonably be expected
to have a Material Adverse Effect".

            (c) SECTIONS 3.02, 3.08, 3.09(A),  3.09(C),  3.12, 3.13, 3.17, 3.18,
3.21,  and 3.22 are hereby  amended to delete each  reference to  "Borrower"  or
"Such Borrowers"  appearing therein and substitute therefor a reference to "Loan
Party" or "Loan Parties", respectively.

            (d)  SECTIONS  3.04  and 3.23  are  hereby  amended  to  delete  the
reference  to "such  Borrower"  appearing  therein  and  substitute  therefor  a
reference to "KMC Holdings or any of its Subsidiaries".

            (e) SECTIONS 3.05, 3.06, 3.07, and 3.08, are hereby deleted in their
entirety and the following new language is substituted therefor:

                  "SECTION  3.05.  LITIGATION.  Except as set forth on  SCHEDULE
      3.05, there are no actions, suits or proceedings at law or in equity or by
      or before any  Governmental  Authority now pending or, to the knowledge of
      such Borrower, threatened, against or affecting KMC Holdings or any of its
      Subsidiaries or any property or rights of such Person as to which there is
      a  reasonable  possibility  of an  adverse  determination  and  which,  if
      adversely  determined,  would individually or in the aggregate  materially
      impair the right of such Person to carry on business  substantially as now


                                       17
<PAGE>

      being  conducted  or as  presently  contemplated  or would  result  in any
      Material Adverse Effect.

                  SECTION  3.06.  TAX  RETURNS.  KMC  Holdings  and  each of its
      Subsidiaries has filed or caused to be filed all Federal,  state and local
      tax  returns  which are  required to be filed and has paid or caused to be
      paid all taxes as shown on such returns or on any  assessment  received by
      it to the extent that such taxes have  become  due,  except such taxes the
      amount,  applicability  or validity of which are being  contested  in good
      faith by  appropriate  proceedings  and with  respect to which such Person
      shall have set aside on its books  adequate  reserves with respect to such
      taxes as are required by GAAP.

                  SECTION 3.07. NO DEFAULTS. Neither KMC Holdings nor any of its
      Subsidiaries  is in  default  (i)  with  respect  to any  judgment,  writ,
      injunction, decree, rule or regulation of any Governmental Authority which
      is likely to have a Material  Adverse Effect,  or (ii) in the performance,
      observance  or  fulfillment  of  any  of  the  obligations,  covenants  or
      conditions contained in any material agreement or instrument to which such
      Person is a party or by which any of its assets are bound, which is likely
      to have a Material Adverse Effect."

            (f) CLAUSE (B) of SECTION 3.09 is hereby deleted in its entirety and
the following new CLAUSE (B) is substituted therefor:

                  "(b) SCHEDULE  3.09(B)  accurately and completely  lists,  all
      material  agreements to which KMC Holdings or any of its Subsidiaries is a
      party,  including,   without  limitation,  all  purchase  agreements,  IRU
      Agreements,  IRU Service Orders equal to or in excess of $1,000,000,  Data
      Contracts  and related  financing  agreements,  consulting  agreements  in
      excess of $250,000 per annum,  employment agreements in excess of $400,000
      per  annum,  management  and  related  agreements,  and  any  construction
      contracts,   right  of  way  or  right  of  occupancy  agreements,   lease
      agreements,  contracts  or other  arrangements  to which such  Person is a
      party (other than the Loan  Documents)  for which breach,  nonperformance,
      cancellation  or failure to renew  could  have a Material  Adverse  Effect
      (collectively,  the "MATERIAL  AGREEMENTS").  All Material  Agreements are
      valid,  subsisting and in full force and effect and no Loan Party,  or, to
      the best of such Borrower's knowledge and belief, any other parties, is in
      material default  thereunder.  Each Loan Party has given true and complete
      copies of all Material  Agreements to the Agent. From and after the Fourth
      Amendment  Effective Date,  each Loan Party agrees to supplement  promptly
      SCHEDULE  3.09(B)  with a written  notice to the Agents of an accurate and
      complete list of all new Material Agreements, including Data Contracts and
      related financing agreements, IRU Agreements, Service Orders to which such
      Loan Party is a party, it being understood and agreed that such Loan Party
      shall not be required to deliver a supplement  with respect to  individual
      IRU Service  Orders for less than  $1,000,000  entered into pursuant to an
      IRU  Agreement  previously  disclosed  to the Agents and added to SCHEDULE
      3.09(B)."

            (g)   SECTION 3.10  is  hereby  deleted  in  its  entirety  and  the
following new language is substituted therefor:


                                       18
<PAGE>

                  "SECTION 3.10.  COMPLIANCE  WITH LAWS.  Except as disclosed on
      SCHEDULE 3.10, the operations of KMC Holdings and each of its Subsidiaries
      comply in all material  respects  with all  applicable  federal,  state or
      local  laws and  regulations,  including  Environmental  Laws.  Except  as
      disclosed on SCHEDULE  3.10,  to such  Borrower's  knowledge,  none of the
      operations  of KMC Holdings or any of its  Subsidiaries  is subject to any
      judicial  or  administrative  proceeding  alleging  the  violation  of any
      Environmental  Laws.  Except as disclosed on SCHEDULE 3.10,  such Borrower
      neither knows nor reasonably should know that any of the operations of KMC
      Holdings  or any of its  Subsidiaries  is the  subject of federal or state
      investigation  evaluating whether any Remedial Action is needed to respond
      to a Release.  Except as disclosed on SCHEDULE 3.10,  neither KMC Holdings
      nor any of its  Subsidiaries  has filed any  notice  under any  federal or
      state law indicating past or present  treatment,  storage or disposal of a
      hazardous  waste or  reporting a Release.  Except as disclosed on SCHEDULE
      3.10,  neither KMC Holdings nor any of its Subsidiaries has any contingent
      liability of which such Borrower has  knowledge or reasonably  should have
      knowledge in connection with any Release."

            (h) SECTION 3.11 is hereby  amended to (i) delete each  reference to
"None of such  Borrower"  or  "none  of such  Borrower"  appearing  therein  and
substitute  therefor  a  reference  to  "Neither  KMC  Holdings  nor  any of its
Subsidiaries"   or  "neither  KMC   Holdings  nor  any  of  its   Subsidiaries",
respectively and (ii) insert the phrase ", and no event has occurred which could
reasonably  be expected to cause such Plan or trust to be  qualified" at the end
of the second sentence thereof.

            (i) SECTION 3.19 is hereby deleted in its entirety and the following
new language is substituted therefor:

                  "SECTION  3.19.  CAPITALIZATION  AND  SUBSIDIARIES.   (a)  The
      classes  of Equity  Interests,  number  of  authorized  shares,  number of
      outstanding  shares  and par  values or other  designations  of the Equity
      Interests  or other  equity  securities  or  beneficial  interests  of KMC
      Holdings and each of its  Subsidiaries are correctly set forth on SCHEDULE
      3.19.  All the  outstanding  shares of Equity  Interests  or other  equity
      securities  or  beneficial  interests  of KMC  Holdings  and  each  of its
      Subsidiaries  are duly and validly issued,  fully paid and  nonassessable,
      and none of such  issued and  outstanding  shares,  equity  securities  or
      beneficial  interests  has been issued in violation  of, or is subject to,
      any  preemptive or  subscription  rights.  Except as set forth on SCHEDULE
      3.19,  there are no: (A) outstanding  shares of Equity  Interests or other
      equity securities or beneficial interests or other securities  convertible
      into or  exchangeable  for  shares of  Equity  Interests  or other  equity
      securities  or  other  beneficial  interests  KMC  Holdings  or any of its
      Subsidiaries,  (B) outstanding  rights of subscription,  warrants,  calls,
      options,  contracts  or other  agreements  of any  kind,  issued,  made or
      granted  to or with any  Person  under  which KMC  Holdings  or any of its
      Subsidiaries may be obligated to issue, sell,  purchase,  retire or redeem
      or otherwise acquire or dispose of any shares of Equity Interests or other
      equity  securities or  beneficial  interests of KMC Holdings or any of its
      Subsidiaries,   or  (C)   Subsidiaries  of  KMC  Holdings.   KMC  Holdings
      beneficially owns, directly or indirectly,  all of the Equity Interests of
      each Loan Party.



                                       19
<PAGE>

                  (b) On the Restructuring  Effective Date,  SCHEDULE 3.19 shall
      be replaced by the SCHEDULE 3.19 to be delivered  pursuant to SECTION 5.27
      hereof.  Upon  creation of any New Data  Subsidiary or any other change in
      the capital  structure of any  Subsidiary  of Data Holdco,  the  Borrowers
      shall submit to the Agents for distribution to the Lenders a supplement to
      SCHEDULE 3.19 setting forth the new capital structure of such Subsidiary."

            (j) SECTION 3.20 is hereby deleted in its entirety and the following
new language is substituted therefor:

            "SECTION 3.20 REAL PROPERTY,  LEASES AND EASEMENTS.  Such Loan Party
      leases or owns the real property  described on SCHEDULE 3.20. Set forth on
      SCHEDULE 3.20 is a list of (i) all real  property  leased or owned by such
      Loan Party (the "REAL  PROPERTY") and (ii) all  easements,  rights of way,
      rights of  occupancy,  licenses  and similar  rights with  respect to real
      property  granted  to such  Loan  Party  not  otherwise  disclosed  to the
      Collateral  Agent  and the  Lenders  on a title  report  delivered  to the
      Collateral  Agent and the  Lenders  pursuant  to the terms  hereof and the
      absence of which or  termination  of which  would have a Material  Adverse
      Effect  (together  with all  other  easements,  rights  of way,  rights of
      occupancy,  licenses  and  similar  rights with  respect to real  property
      granted  to such Loan  Party  which are so  disclosed,  collectively,  the
      "EASEMENTS").  Also set forth on SCHEDULE 3.20 is a street  address of the
      Real Property locations  described above,  including a description of such
      properties'  current use.  Except as set forth in SCHEDULE 3.20, such Loan
      Party's interests in the Real Property and the Easements are sufficient in
      order for such Loan  Party to  conduct  its  business  and  operations  as
      presently conducted."

            (k) SECTION 3 is further amended to insert new SECTIONS 3.25,  3.26,
3.27 and 3.28 at the end thereof as follows:

                  "SECTION  3.25.  LABOR  MATTERS.  (a) There are no  strikes or
      other material  labor disputes  against any Loan Party pending or, to such
      Borrower's knowledge,  threatened; (b) hours worked by and payment made to
      employees of such Loan Party comply with the Fair Labor  Standards Act and
      each other federal, state, local or foreign law applicable to such matter;
      (c) all payments due from each Loan Party for employee  health and welfare
      insurance  have been paid or accrued as a  liability  on the books of such
      Loan Party;  (d) except as set forth in SCHEDULE 3.25,  each Loan Party is
      not a party to or bound by any (i) collective bargaining  agreement,  (ii)
      management  agreement,  (iii)  consulting  agreement  in  an  amount  over
      $250,000  per annum or (iv)  employment  agreement  not  disclosed  in the
      public  filings of KMC  Holdings or in an amount over  $500,000  per annum
      (and true and complete copies of any agreements described on SCHEDULE 3.25
      have been  delivered to the Agent);  (e) there is no  organizing  activity
      involving  any  Loan  Party  pending  or,  to such  Borrower's  knowledge,
      threatened  by any  labor  union or group of  employees;  (f) there are no
      representation  proceedings  involving  any Loan Party pending or, to such
      Borrower's knowledge,  threatened with the National Labor Relations Board,
      and no labor  organization or group of employees of such Borrower has made
      a pending demand for recognition;  and (g) except as set forth in SCHEDULE
      3.25,  there are no complaints  or charges  against any Loan Party pending
      or, to the  knowledge of such  Borrower,  threatened  to be filed with any
      Governmental  Authority  or  arbitrator  based  on,  arising  out  of,  in


                                       20
<PAGE>

      connection with, or otherwise relating to the employment or termination of
      employment by any Loan Party of any individual.

                  SECTION   3.26.   RESTRICTED   SUBSIDIARIES.   SCHEDULE   3.26
      accurately and completely identifies each Restricted Subsidiary.

                  SECTION  3.27  SCHEDULE   3.27   accurately   and   completely
      identifies  each of the agreements  between Lucent and KMC Holdings and/or
      one of more Subsidiaries of KMC Holdings.

                  SECTION 3.28 From and after the Restructuring  Effective Date,
      all certificates or instruments (excluding checks) evidencing,  comprising
      or  representing  any  Collateral  (including,   without  limitation,  any
      Intercompany  Notes or other  promissory  notes payable to any Loan Party)
      have been delivered to the  Collateral  Agent duly endorsed or accompanied
      by duly executed instruments of transfer or assignment in blank."

            1.11  AMENDMENT TO SECTION 4.02.  SECTION 4.02 is hereby  amended to
(i) insert  after each  reference  to "such Loan" or "such  Loans"  appearing in
CLAUSES (A),  (B),  (C),  (D),  (E),  (I), (J), (K), (M) the words "or Letter of
Credit" or "or Letters of Credit," respectively.

            1.12  AMENDMENTS TO ARTICLE V.

            (a) The first  sentence  of  ARTICLE V is hereby  amended  to insert
immediately  prior to the  colon at the end  thereof  the  phrase  ", as to each
Borrower, each Loan Party or KMC Holdings and its Subsidiaries,  as the case may
be".

            (b) SECTIONS 5.01, 5.02, 5.03, and 5.20 are hereby amended to delete
each reference to "Borrower" or "such Borrower" appearing therein and substitute
therefor a reference to "KMC Holdings and each of its Subsidiaries", and SECTION
5.03 is hereby  further  amended to insert  the  following  sentence  at the end
thereof:  "The  Borrowers  shall not use or  permit  any  Collateral  to be used
unlawfully or in violation of any provision of this  Agreement or any other Loan
Document or any  applicable  statute,  regulation  or ordinance or any policy of
insurance covering the Collateral."

            (c) SECTIONS 5.04 (other than SECTION  5.04(B)),  5.07,  5.08, 5.11,
5.14,  5.16 and 5.21 are hereby  amended to delete each  reference to "Borrower"
appearing therein and substitute therefor a reference to "Loan Party."

            (d) CLAUSE (H) of  SECTION 5.04  is  hereby  deleted in its entirety
and a new CLAUSE (H) is substituted therefor:

                  (h) APPLICATION OF PAYMENTS.  All insurance  proceeds received
      by such  Loan  Party  (other  than in  respect  of any  assets of any Data
      Subsidiary) from any insurance  referred in SECTION  5.04(B)(I),  (B)(II),
      (D)(I) and (D)(II)  together with any  condemnation  proceeds  received by
      such Loan Party shall be  promptly  delivered  directly to the  Collateral
      Agent for deposit in a  collateral  account to be held as security for the
      Obligations  pursuant  to a  collateral  account  agreement  in  form  and


                                       21
<PAGE>

      substance satisfactory to the Agents (the "COLLATERAL ACCOUNT"); PROVIDED,
      HOWEVER,  that so long as no Default or Event of Default has  occurred and
      is  continuing,  the Loan  Parties  may  retain  an  aggregate  amount  of
      insurance/condemnation proceeds in any fiscal year of the Loan Parties not
      to exceed 0.5% of gross PP&E of the Loan Parties as reflected in the books
      and  records  of the  applicable  Loan Party on the date of receipt of any
      such  proceeds,   so  long  as  at  the  time  of  any  such  casualty  or
      condemnation,  the  Borrowers  shall  deliver  to the  Collateral  Agent a
      certificate of the Chief Financial  Officer of KMC Holdings  demonstrating
      the calculation of the  insurance/condemnation  proceeds that gave rise to
      such retention,  including the derivation of gross PP&E.  Collateral Agent
      shall hold any  insurance/condemnation  proceeds received pursuant to this
      SECTION 5.04 in the Collateral Account and, so long as no Default or Event
      of  Default  has  occurred  or is  continuing,  (i) to the extent any such
      insurance/condemnation   proceeds   are  the  result  of  a  casualty   or
      condemnation  of any central  office  listed on SCHEDULE  5.04, so long as
      such Loan Party may use such  proceeds  diligently  to repair,  restore or
      replace  such  central  office,  Collateral  Agent shall from time to time
      disburse to such Loan Party from the Collateral  Account, to the extent of
      any such  insurance/condemnation  proceeds remaining therein in respect of
      the  applicable  covered loss,  amounts  necessary to pay the cost of such
      repair,  restoration or replacement  after the receipt by Collateral Agent
      of invoices or other documentation  reasonably  satisfactory to Collateral
      Agent  relating to the amount of costs so incurred and the work  performed
      or, with respect to up-front  payments or deposits required by contractors
      or architects in connection with such repair,  restoration or replacement,
      work to be performed  (including,  if required by Collateral  Agent,  lien
      releases and architects'  certificates);  PROVIDED, HOWEVER that if at any
      time the Collateral Agent  reasonably  determines (A) that such Loan Party
      is not proceeding diligently with such repair,  restoration or replacement
      or (B) that such repair,  restoration or  replacement  cannot be completed
      with the insurance/condemnation proceeds then held by the Collateral Agent
      for such  purpose,  together with funds  otherwise  available to such Loan
      Party for such purpose,  or that such repair,  restoration  or replacement
      cannot be completed  within 360 days after the receipt by Collateral Agent
      of such insurance/condemnation  proceeds, Collateral Agent shall, and such
      Loan   Party   hereby   authorizes   Collateral   Agent  to,   apply  such
      insurance/condemnation  proceeds to prepay the Term Loans and  permanently
      reduce  the  Revolving  Loan  Commitment  Amount as  provided  in  SECTION
      2.09(C)(IV)  and (ii) with  respect  to all  other  insurance/condemnation
      proceeds  received by the Collateral  Agent,  Collateral  Agent shall from
      time to time disburse to such Loan Party from the Collateral  Account,  to
      the extent of any such  insurance/condemnation  proceeds remaining therein
      in respect of the  applicable  covered loss,  amounts as requested by such
      Loan Party for application as determined by such Loan Party with the prior
      written  consent of the Agents and Requisite  Lenders (which consent shall
      not be  unreasonably  withheld).  If a  Default  or Event of  Default  has
      occurred or is continuing any amounts on deposit in the Collateral Account
      shall be  applied  in the sole  discretion  of the  Agents  and  Requisite
      Lenders."

            (e)   SECTION  5.05  is  hereby  deleted  in  its  entirety  and the
following new language is substituted therefor:

                  "SECTION 5.05. OBLIGATIONS AND TAXES. KMC Holdings and each of
      its  Subsidiaries  shall  pay  all  of  its  respective  indebtedness  and


                                       22
<PAGE>

      obligations  promptly  and in  accordance  with  their  terms  and pay and
      discharge  promptly all taxes,  assessments  and  governmental  charges or
      levies  imposed upon it or upon its income or profits or in respect of its
      property,  before the same shall become in default,  as well as all lawful
      claims for labor,  materials and supplies or otherwise  which,  if unpaid,
      might become a Lien upon such  properties or any part  thereof;  PROVIDED,
      HOWEVER,  that neither KMC Holdings nor any of its  Subsidiaries  shall be
      required to pay and  discharge or to cause to be paid and  discharged  any
      such tax,  assessment,  charge,  levy or claim so long as the  validity or
      amount thereof shall be contested in good faith by appropriate proceedings
      diligently  pursued,  and such  Person  shall set aside on its books  such
      reserves as are required by GAAP with respect to any such tax, assessment,
      charge, levy or claim so contested."

            (f)   AMENDMENTS TO SECTION 5.06.

            (1) The first  sentence of SECTION 5.06 is hereby  amended to delete
the  reference  to "Such  Borrower"  or "such  Borrower"  appearing  therein and
substitute  therefor a reference to "Such Loan Party" or "such Loan  Party",  as
applicable.

            (2)  CLAUSE  (A) of  SECTION  5.06 is hereby  amended  to (i) insert
immediately after the words "annual  consolidated"  appearing in the second line
thereof  the  words   "financial   statements  for  KMC  Holdings"  (ii)  insert
immediately  after the phrase "for KMC  Holdings,"  appearing in the second line
thereof the phrase  "Data Holdco and the  Borrowers,  in each case on a combined
basis," and (iii) delete the phrase "and combined  financial  statements for the
Borrowers".

            (3) CLAUSE (B) of SECTION 5.06 is hereby deleted in its entirety and
the following new CLAUSE (B) is substituted therefor:

                  "(b)  within  forty-five  (45) days after the end of the first
      three  fiscal  quarters  during each fiscal  year  consolidated  unaudited
      balance   sheets  and  statements  of  operations  for  KMC  Holdings  and
      consolidating  unaudited  balance  sheets and statements of operations for
      KMC Holdings,  Data Holdco and the  Borrowers,  in each case on a combined
      basis,  including  consolidated  statements of stockholders' equity of KMC
      Holdings and cash flows for KMC Holdings,  Data Holdco and the  Borrowers,
      in each case on a combined  basis,  each of the foregoing as of the end of
      each such fiscal quarter, as applicable,  and for the then elapsed portion
      of the fiscal year."

            (4)  CLAUSE  (C) of  SECTION  5.06 is hereby  amended  to (A) insert
immediately  before the words "within forty-five (45) days after the end of each
month" the number "(i)", (B) insert  immediately  after the  parenthetical  "(or
within one hundred twenty (120) days after the end of each December)"  appearing
therein the phrase  "commencing with the month ending April 30, 2001, and solely
with respect to Data Holdco,  commencing  with the month ending June 30,  2001",
and (C) delete the  proviso  at the end  thereof  and  substitute  therefor  the
following new language:

                  "and  (ii) no  later  than  the  first  Friday  of each  month
      commencing May 4, 2001, and solely with respect to Data Holdco, commencing

                                       23
<PAGE>

      the first such date  occurring  no later than  ninety  (90) days after the
      Fourth Amendment  Effective Date, in each case for the prior four calendar
      week period,  projected  twelve  calendar  week cash flow analyses for KMC
      Holdings, Data Holdco and the Borrowers on a consolidated basis consisting
      of projected  statements of cash receipts and disbursements,  in each case
      for the succeeding  twelve calendar week period and actual  statements for
      the previous four calendar  weeks then ended together with a comparison of
      such actual statements to the projected statements for such four weeks".

            (5)  CLAUSE  (D) of  SECTION  5.06 is hereby  amended  to (i) insert
immediately  after the words "CLAUSES (A), (B) and (C) above" the  parenthetical
"(other  than with respect to the  financial  statements  delivered  pursuant to
CLAUSE  (II)  SECTION  5.06(A))"  and (ii) insert  immediately  after the phrase
"present  fairly  the  financial  position  and  result  of  operations  of  KMC
Holdings," the words "Data Holdco".

            (6) CLAUSE (E) of SECTION  5.06 is hereby  amended to (i) delete the
reference  to "the  Borrowers"  appearing  therein  and  substitute  therefor  a
reference to "the Loan  Parties"  and (ii) insert a reference  to "and  SCHEDULE
1.01(A)" immediately after the words "ARTICLE VII" appearing therein.

            (7) CLAUSE (F) of SECTION 5.06 is hereby deleted in its entirety and
the following NEW CLAUSE (F) substituted therefor:

                  "(f)  RESERVED."

            (8) CLAUSES (G) and (H) of SECTION 5.06 are hereby amended to delete
each reference to "any  Borrower"  appearing  therein and substitute  therefor a
reference to "any Loan Party".

            (9) CLAUSE (I) of SECTION  5.06 is hereby  amended to (i) delete the
reference  to  "any  Borrower"  appearing  therein  and  substitute  therefor  a
reference to "any Loan Party", and (ii) delete each reference to "such Borrower"
appearing therein and substitute therefor a reference to "such Loan Party".

            (10)  CLAUSE  (L) of  SECTION  5.06 is hereby  amended to delete the
reference  to "such  Borrower"  appearing  therein  and  substitute  therefor  a
reference to "such Loan Party".

            (11) CLAUSE (M) of SECTION 5.06 is hereby amended to (i) delete each
reference  to "such  Borrower"  appearing  therein  and  substitute  therefor  a
reference  to "such Loan Party" and (ii) delete the word "and"  appearing at the
end thereof.

            (12) CLAUSE (N) of SECTION 5.06 is hereby  amended to (i) delete the
words "such Borrower or KMC Holdings"  appearing therein and substitute therefor
the words  "such Loan  Party" and (ii)  delete the period  appearing  at the end
thereof and substitute a semi-colon therefor.

            (13) SECTION 5.06 is further amended to insert new CLAUSES (O), (P),
(Q), (R), (S), (T) and (U) at the end thereof as follows:



                                       24
<PAGE>

                  "(o) as soon as practicable and in any event no later than May
      15, 2001, in each case in form and substance satisfactory to the Agent and
      Requisite Lenders:

                  (i) a  capital  expenditure  budget  of KMC  Holdings  and the
      Borrowers  for the fiscal year 2001 which  shall  include (1) actuals on a
      city-by-city  basis for the fiscal  quarter  ending March 31, 2001, (2) an
      aggregate  capital  expenditure  budget for KMC Holdings and the Borrowers
      for the remainder of fiscal year 2001 divided into sales, growth and other
      and (3) an  estimate  of  city-by-city  allocation  of  aggregate  capital
      expenditures   for  KMC  Holdings  and  the  Borrowers   based  on  actual
      expenditures for the previous five quarters;

                  (ii)  a copy of the "City Matrix Reports"; and

                  (iii) the "Market  Service  Description,"  or "MSD" which sets
      forth the Borrowers' plans to offer bundle pricing and service offerings;

                  (p)  within  forty-five  (45) days after the end of each month
      commencing  with the month ending April 30, 2001,  and solely with respect
      to Data Holdco, as applicable, commencing the first such date occurring no
      later than ninety (90) days after the Fourth Amendment  Effective Date, in
      each case in a form satisfactory to the Agent:

                  (i) a copy of each  contract  entered  into  during such month
      with third parties that serves to distribute  products of KMC Holdings and
      its  Subsidiaries or pursuant to which such third parties perform indirect
      sales  channel  functions  which at  inception is estimated to generate in
      excess of $5,000,000 in annual revenue to KMC Holdings;

                  (ii)        a summary of actual resale lines for the
      Borrowers on a city-by-city basis;

                  (iii)  a  detailed  summary  report  for  the  Borrowers  on a
      city-by-city  basis  to  include,   revenue,   operating  EBITDA,  capital
      efficiency ratio, net lines added (on-switch and PRI's),  DSO equivalents,
      number of customers and line churn;

                  (iv) a  headcount  report for such month  consisting  of total
      headcount  for  each of KMC  Holdings  and the  Borrowers  and by city and
      operating function;

                  (v)   disclosure of any litigation seeking injunctive
      remedies or legal remedies in excess of $1,000,000; and

                  (vi) an officer's  certificate  of KMC Holdings  setting forth
      with respect to any IRU for which the IRU Cap Ex exceeds  $1,000,000,  (1)
      an IRU  Report,  (2) the  amount of IRU Cap Ex for each Loan Party and (3)
      the  aggregate  unpaid IRU  Construction  Costs  with  respect to each IRU
      Agreement and IRU Service Order of such Loan Party;



                                       25
<PAGE>

                  (q) within  forty-five (45) days after the end of each quarter
      during each fiscal year commencing with the fiscal quarter ending June 30,
      2001, and solely with respect to Data Holdco,  as  applicable,  commencing
      the first such quarter  occurring no later than ninety (90) days after the
      Fourth Amendment Effective Date, in form satisfactory to the Agent:

                  (i) a capital  expenditure  report for such quarter consisting
      of a summary in reasonable detail by city of capital expenditures approved
      by the  Capital  Allocation  Committee  ("CAC")  for  the  Borrowers  on a
      consolidated  basis, such summary based upon categories  acceptable to the
      Agent and at a minimum separating expenditures into categories relating to
      sales, maintenance, network upgrades and corporate, and including, without
      limitation, an analysis of the payback period and internal rates of return
      with respect to all capital expenditures for such quarter;

                  (ii)  a summary of incentive compensation paid during such
      quarter under the employee compensation and incentive plan; and

                  (iii)       a reciprocal compensation and access report by
      carrier;

                  (r) as soon as practicable and in any event no later than each
      June 15 and December 15 during each fiscal year  commencing June 15, 2001,
      an updated  business  plan of KMC  Holdings and its  Subsidiaries  for the
      succeeding five-year period on a consolidated and consolidating basis with
      supporting  assumptions  and  schedules,  it being  understood  that  such
      business plan and level of detail shall be in a format satisfactory to the
      Agent and shall be reasonably  consistent  with the February 2001 Business
      Plan as determined by the Agent,  it being  further  understood  that such
      updated business plan will provide  quarterly detail for the first two (2)
      years (with the  exception  of each June 15 update  which  shall  forecast
      quarterly results for the next six (6) quarters commencing each July 1) of
      the forecast and annual detail for the next three (3) years;

                  (s)  promptly  upon  receipt  by  KMC  Holdings  or any of its
      Subsidiaries,  copies of all written offers to purchase, letters of intent
      or  expressions  of interest in purchasing any assets or operations of KMC
      Holdings or its Subsidiaries, solicited or unsolicited, and, promptly upon
      provision  thereof,  copies  of all  information  provided  to  interested
      parties;   PROVIDED  that,  to  the  extent   required  by  any  potential
      purchasers,  the  identity  of such  purchaser  and the  terms of any such
      written materials may be kept confidential so long as KMC Holdings informs
      the Agent of as much information as may be possible without  violating the
      express terms of any such confidentiality restrictions;

                  (t)   promptly upon execution thereof, copies of all
      agreements with professionals retained to sell assets or operations; and

                  (u) commencing  September 7, 2002 and on each  subsequent date
      which is sixty  (60)  days  prior to the  date on which  KMC  Holdings  is
      required to make a cash payment of interest  pursuant to any  Indenture or
      cash  dividends  to the  holders  of the  Series  E  Preferred  Stock,  an


                                       26
<PAGE>

      officer's  certificate  of the Chief  Financial  Officer  of KMC  Holdings
      certifying that the Borrowers shall on a combined basis have on deposit in
      Collection  Accounts subject to Restricted  Account  Agreements cash in an
      amount  necessary  to  fund  the  operations  of  the  Borrowers  for  the
      succeeding  twelve-month  period (without the need to raise any additional
      financing  or  equity)  based  on the  most  recent  business  plan of KMC
      Holdings and its  Subsidiaries  delivered  pursuant to SECTION 5.06(R) (or
      any more recent  business plan of KMC Holdings  delivered to the Agent and
      Lenders  and  consistent  with the  February  2001  Business  Plan and the
      requirement of SECTION 5.06(R) as determined by the Agents).

The  information  to be  provided  to the Agents and  Lenders  pursuant  to this
SECTION 5.06 may be delivered by electronic  transmission (e-mail) to the Agents
and  Lenders  at the  e-mail  addresses  for each  Agent and Lender set forth on
SCHEDULE 5.06 annexed hereto, it being understood that any officer's certificate
delivered by electronic transmission pursuant to this SECTION 5.06 shall contain
a facsimile  signature of the certifying  officer which shall be deemed to be an
original signature of such officer for all purposes hereunder."

            (g) SECTIONS 5.09 and 5.10 are hereby  deleted in their entirety and
the following new language is substituted therefor:

                  "SECTION   5.09.   ERISA.   KMC   Holdings  and  each  of  its
      Subsidiaries  shall comply in all material  respects  with the  applicable
      provisions of ERISA and furnish to the Agent, (i) as soon as possible, and
      in any event  within  twenty (20) days after such Person or any officer of
      such  Person  knows or has reason to know that any  Reportable  Event with
      respect to any Plan has occurred or any Termination Event has occurred,  a
      statement of an officer of such Person  setting  forth  details as to such
      Reportable Event or Termination  Event and the corrective action that such
      Person proposes to take with respect thereto,  together with a copy of the
      notice of any such  Reportable  Event given to the PBGC, and (ii) promptly
      after receipt  thereof,  a copy of any notice such Person may receive from
      the PBGC relating to the intention of the PBGC to terminate any Plan or to
      appoint a trustee to administer any such Plan.

                  SECTION 5.10. ACCESS TO PREMISES AND RECORDS. KMC Holdings and
      each of its  Subsidiaries  shall permit  representatives  of the Agents to
      have access to such Person's  books and records and to the  Collateral and
      the premises of such Person at reasonable times upon reasonable notice and
      to make such  excerpts  from such  records  as such  representatives  deem
      necessary and to inspect the Collateral."

            (h) SECTIONS 5.12,  5.13, 5.15, 5.17, and 5.18 are hereby deleted in
their entirety and the following new language is substituted therefor:

                  "SECTION 5.12.  ENVIRONMENTAL  NOTICES. If KMC Holdings or any
      of its Subsidiaries shall (a) receive written notice that any violation of
      any  Environmental Law may have been committed or is about to be committed
      by such Person,  (b) receive  written  notice that any  administrative  or
      judicial complaint or order has been filed or is about to be filed against
      such Person alleging violations of any Environmental Law or requiring such
      Person  to  take  any  action  in  connection  with  any  Release  of  any
      Contaminant into the environment, or (c) receive any written notice from a
      Governmental  Authority or private party  alleging that such Person may be


                                       27
<PAGE>

      liable or responsible  for costs  associated with a response to or cleanup
      of a Release or any damages caused thereby,  such Person shall provide the
      Agent with a copy of such  notice  within five (5)  Business  Days of such
      Person's receipt thereof.

                  SECTION  5.13.  AMENDMENT  OF  ORGANIZATIONAL  DOCUMENTS.  KMC
      Holdings on behalf of itself and each of its  Subsidiaries  shall  provide
      the Agent with copies of any amendments to the  Certificate or Articles of
      Incorporation or other organizational  documents of KMC Holdings or any of
      its  Subsidiaries,  certified  by the  secretary of such Person and of all
      other relevant documentation,  any such amendment to be made in accordance
      with SECTION 6.22 of this  Agreement to the extent  applicable.  Each Loan
      Party  shall  promptly  deliver to the  Collateral  Agent  such  financing
      statements  executed by such Loan Party,  which the  Collateral  Agent may
      request as a result of any such event."

                  "SECTION  5.15.  ACCOUNTS  PAYABLE.  Each Loan Party shall pay
      each of its accounts  payable in  accordance  with its practices as of the
      Closing  Date,  PROVIDED,  HOWEVER,  that  such  Loan  Party  shall not be
      required to pay any account payable as long as the validity  thereof shall
      be contested in good faith by  appropriate  protest or  proceedings,  such
      Loan  Party  shall  have set aside  adequate  reserves  on its books  with
      respect  thereto in accordance with GAAP and no Lien (other than Permitted
      Liens)  results  from the  failure to pay during  such good faith  contest
      period."

                  "SECTION 5.17.  FISCAL YEAR. KMC Holdings and each of its
      Subsidiaries (other than any Data Subsidiary) shall maintain a fiscal year
      ending on December 31.

                  SECTION 5.18.  RESERVED."

            (i) SECTION 5 is further amended to insert new SECTIONS 5.22,  5.23,
5.24, 5.25, 5.26 and 5.27 at the end thereof as follows:

                  "SECTION 5.22. CASH OF NON-BORROWER SUBSIDIARIES. KMC Holdings
      shall  cause Data Holdco and each Data  Subsidiary  to  distribute  to KMC
      Holdings  (i) no later  than  eighty-nine  (89) days after the end of each
      fiscal year,  fifty percent (50%) of all Excess Data Cash Flow and (ii) no
      later than two Business Days following the  consummation of any Asset Sale
      by Data Holdco or any Data Subsidiary,  to the extent of any resulting Net
      Asset Sale  Proceeds,  first,  (a) an amount equal to the  aggregate  Data
      Holdco  Allocation  Amount  required to be made as a cash  dividend to KMC
      Holdings  pursuant  to SECTION  6.04(A)  during  the then next  succeeding
      twelve (12) month period and then,  (b) to the extent of any remaining Net
      Asset Sale Proceeds,  an amount equal to twenty-five percent (25%) of such
      Net Asset Sale Proceeds. Promptly upon receipt by KMC Holdings of any cash
      dividends or distributions from Data Holdco consisting of Excess Data Cash
      Flow or Net Asset Sale Proceeds pursuant to CLAUSES (I) and (II)(B) of the
      next preceding sentence, KMC Holdings shall contribute such amounts to the
      Borrowers  as a capital  contribution  by  depositing  such  amounts  in a
      Collection Account of Borrowers subject to a Restricted Account Agreement.


                                       28
<PAGE>

      All other amounts  retained by KMC Holdings  pursuant to this SECTION 5.22
      shall  be  held in a  Collection  Account  of KMC  Holdings  subject  to a
      Restricted Account Agreement pursuant to SECTION 8.04.

                  SECTION  5.23.  KNT ASSETS.  On or before June 15,  2001,  the
      Borrowers  shall  submit  to the  Agent and  Lenders  a  proposal  for the
      resolution of the proposed  transfer of assets  comprising  the Borrowers'
      construction business to KNT which proposal shall be in form and substance
      satisfactory to the Agents and Requisite Lenders.

                  SECTION  5.24.   DESIGNATION  OF  UNRESTRICTED   SUBSIDIARIES.
      Concurrently  with the creation of any new  Subsidiary  by KMC Holdings or
      any of its  Subsidiaries,  KMC Holdings shall designate such Subsidiary as
      an "Unrestricted Subsidiary" as such term is defined in the Indentures and
      Certificate of Designations for the Series E Preferred Stock.

                  SECTION 5.25. POST-CLOSING RELATED TRANSACTIONS.  On or before
      June 1, 2001,  the following  conditions  shall have been  satisfied  (the
      'RESTRUCTURING  EFFECTIVE  DATE'), it being understood that the Agents may
      extend the deadline for delivery or  satisfaction  of any of the following
      items in their sole discretion:

                  (a) KMC  Holdings  shall have (i)  created a new  intermediate
      holding company ('DATA  HOLDCO')  through which the existing data business
      of KMC Holdings and its Subsidiaries shall be conducted from and after the
      Restructuring  Effective Date and (ii) contributed the stock or membership
      interests,  as the case may be, of KMC V and its Subsidiaries,  KMC VI and
      its  Subsidiaries,  KMC Funding,  KMC VII,  KMC VIII,  KMC IX, KMC QV, KMC
      Funding V and Data LLC to Data Holdco;

                  (b) KMC  Holdings  shall  have  contributed  the  stock of KMC
      Financing and KMC Financial  Services to a Borrower (each of the documents
      and instruments  evidencing the contributions set forth in CLAUSES (A)(II)
      and (B), collectively, the 'RESTRUCTURING DOCUMENTS');

                  (c) the Agent and  Collateral  Agent shall have  received  the
      following  items,  in each case in form and substance  satisfactory to the
      Agent and the Collateral Agent:

                  (i)  the Data Holdco Guaranty in the form of ATTACHMENT N
            to the Fourth Amendment, duly executed by Data Holdco;

                  (ii) a certificate dated the Restructuring  Effective Date, of
            the secretary or assistant secretary of Data Holdco, certifying that
            (A)  the  copies  of  the   certificates  of  formation,   operating
            agreements,  or equivalent  charter and  governing  document of Data
            Holdco  attached  thereto are true and correct and in full force and
            effect as of such date,  without  modification  or amendment and (B)
            the stock or membership interests,  as the case may be, of KMC V and
            its Subsidiaries, KMC VI and its Subsidiaries, KMC Funding, KMC VII,
            KMC  VIII,  KMC IX,  KMC QV,  KMC  Funding  V and  Data LLC has been


                                       29
<PAGE>

            contributed  to Data Holdco and attaching true and correct copies of
            the documents and instruments of contribution;

                  (iii) a certificate of the secretary or assistant secretary of
            KMC Holdings,  certifying evidence satisfactory to the Agent and the
            Collateral  Agent that KMC Holdings has contributed the stock of KMC
            Financing and KMC Financial Services to a Borrower;

                  (iv) the written  opinion of special  counsel for KMC Holdings
            and  its  Subsidiaries,  dated  the  Restructuring  Effective  Date,
            addressed  to the  Agent,  the  Collateral  Agent  and  the  Lenders
            satisfactory  to  (and  containing  only  such   qualifications  and
            limitations  as are  satisfactory  to)  counsel to the  Agent,  with
            opinion as to,  among other  things,  (i) due  organization  of Data
            Holdco,  (ii) the  enforceability of the Data Holdco Guaranty,  each
            Guaranty  and  Security  Agreement to be executed by Holdings IV and
            its  Subsidiaries,  KMC Financing and KMC  Financial  Services,  the
            Pledge  Supplement  of  KMC  Holdings,   Pledge  Supplement  of  any
            applicable Borrower, the Pledge Agreement to be executed by Holdings
            IV,  the Pledge  Agreement  to be  executed  by KMC IV and any other
            security  documents  executed on the  Restructuring  Effective  Date
            (collectively,  the 'RESTRUCTURING  SECURITY DOCUMENTS'),  (iii) the
            perfection of any liens granted on the Restructuring Effective Date,
            (iv) no conflicts with applicable  laws or contractual  obligations,
            and (v) the due authorization,  execution and delivery of the Pledge
            Supplement of KMC Holdings,  the Pledge Supplement of any applicable
            Borrower and the other Loan Documents and Restructuring Documents to
            be delivered on the  Restructuring  Effective  Date,  which opinions
            shall be  substantially in the form of ATTACHMENT B-1 annexed to the
            Fourth Amendment,  with such changes thereto as may be acceptable to
            the Agent;

                  (v) the written opinion of regulatory for KMC Holdings and its
            Subsidiaries,  dated the Restructuring  Effective Date, addressed to
            the Agent, the Collateral Agent and the Lenders satisfactory to (and
            containing   only  such   qualifications   and  limitations  as  are
            satisfactory  to)  counsel  to the  Agent,  which  opinion  shall be
            substantially in the forms set forth in ATTACHMENT B-2 to the Fourth
            Amendment hereto;

                  (vi) Data Holdco's  Certificate  or Articles of  Incorporation
            (or other constituent or organizational  documents,  as the case may
            be), in each case, as amended, modified or supplemented prior to the
            Restructuring  Effective  Date,  certified  to be true,  correct and
            complete by the Secretary of State of the state in which such Person
            is organized; and

                  (vii) such  supplement to the Schedules to the Loan  Agreement
            as  are   necessary   to   reflect   the   foregoing   restructuring
            transactions.

                  (d) the  Collateral  Agent shall have  received the  following
      items in each  case in form and  substance  satisfactory  to the Agent and
      Collateral  Agent (Lenders hereby authorize the Agent and Collateral Agent


                                       30
<PAGE>

      to execute any of the following  documents in their respective  capacities
      as Agents):

                  (i) the Pledge  Supplement  duly executed by KMC Holdings with
            respect to the Equity Interests of Data Holdco and Holdings IV; (ii)
            the Pledge Supplement duly executed by the applicable  Borrower with
            respect to the Equity  Interests of KMC  Financing and KMC Financial
            Services;  (iii) the Pledge  Agreement  duly executed by Holdings IV
            with  respect to the  Equity  Interests  of KMC IV;  (iv) the Pledge
            Agreement executed by KMC IV with respect to the Equity Interests of
            its  Subsidiaries,  in each case together  with, for all such Equity
            Interests which are  certificated,  stock  certificates  and undated
            stock powers executed in blank in form and substance satisfactory to
            the  Collateral  Agent and for all such Equity  Interests  which are
            limited liability company interests, pledge instructions and initial
            transaction  statements  in form and substance  satisfactory  to the
            Collateral Agent;

                  (ii) to the extent required by the Agent or Collateral  Agent,
            Addenda to the  Collateral  Assignment  of Licenses duly executed by
            Holdings IV and each of its Subsidiaries,  and an updated Schedule I
            thereto  certified  as being  complete  and  correct by all the Loan
            Parties, together with consents to assignment of licenses and rights
            from Persons  designated  by the  Collateral  Agent duly executed by
            such  Persons,  including  agreements  as to default  notices,  cure
            rights,  waiver of lien rights,  conveyance of nondisturbance rights
            and other terms satisfactory to the Collateral Agent;

                  (iii) to the extent required by the Agent or Collateral Agent,
            Addenda to the  Collateral  Assignment  of Leases  duly  executed by
            Holdings IV and each of its Subsidiaries,  and an updated Schedule I
            thereto  certified  as being  complete  and  correct by all the Loan
            Parties, together with consents to assignment,  duly executed by the
            appropriate  Persons,  including  agreements as to default  notices,
            cure rights,  waiver of lien rights,  conveyance  of  nondisturbance
            rights and other terms  satisfactory  to the  Collateral  Agent with
            respect  to those  leased  properties  specified  by the  Collateral
            Agent,  together  with  landlord  waivers  in the form of  EXHIBIT D
            hereto  executed by the  appropriate  landlord with respect to those
            leased properties specified by the Collateral Agent;

                  (iv)  to  the  extent   required   by  the  Agent,   completed
            environmental  questionnaires  and indemnity  agreement  executed by
            Holdings IV and each of its  Subsidiaries  and Phase I Environmental
            Reports  with  respect to premises  described  on SCHEDULE  3.10 (if
            any);

                  (v)  Irrevocable  Proxies  executed  by each  pledgor  under a
            Pledge  Agreement  with  respect  to the  Equity  Interests  pledged
            thereunder; and

                  (vi) a Restricted  Account Agreement executed and delivered by
            KMC II with respect to KMC II's  lockbox  number  932050  maintained
            with First Union;



                                       31
<PAGE>

                  (vii)  evidence that KMC's Lockbox Account No. 18171260
            located at American National Bank & Trust Co. of Chicago has been
            closed and any and all checks and other deposits which may have
            been directed to such account redirected to a Collection Account
            maintained with the Agent; and

                  (viii) a Guaranty and Security  Agreement  executed by each of
            Holdings IV and its Subsidiaries it being understood and agreed that
            such  agreement  and  any  other  Restructuring   Security  Document
            executed  and  delivered  by  Holdings IV and its  Subsidiaries  may
            contain such  restrictions on the duration of any grant or pledge as
            shall be required pursuant to applicable law and satisfactory to the
            Agent and Collateral Agent;

                  (ix) such other  evidence as may be  requested by the Agent or
            Collateral Agent that the Collateral  Agent's security  interests in
            the Collateral have been properly perfected and constitute first and
            prior security interests subject only to Permitted Liens,  including
            by (A) filing Mortgages,  the Collateral Assignment of Licenses, the
            Collateral  Assignment  of  Leases,  leasehold  mortgages  and UCC-1
            financing  statements   (including,   without  limitation,   fixture
            filings)  in certain  filing and  recording  offices,  (B)  security
            documents  in form and  substance  satisfactory  to the Agents  with
            respect to any trademarks  registered  with the United States Patent
            and Trademark Office since the Closing Date, (C) obtaining  consents
            to  the  Collateral  Assignments  of  Licenses  and  the  Collateral
            Assignments   of  Leases   and  (D)  taking   possession   of  stock
            certificates  and other  instruments,  in each case, as requested by
            the Agent or  Collateral  Agent,  and  including  amendments  to any
            existing   Guaranty  and  Security   Agreement,   Pledge  Agreement,
            Contribution  Agreement  or  other  collateral  document  as  may be
            reasonably  requested  by the  Agent  or  Collateral  Agent  to make
            conforming  changes thereto,  including changes  consistent with the
            terms of the Holdings Guaranty and Data Holdco Guaranty;

                  (e) evidence satisfactory to the Agent that the Borrowers have
      used  commercially  reasonable  efforts  to  obtain  an  access  agreement
      executed and  delivered  by the  applicable  landlord  with respect to KMC
      III's premises located at Moraine, Ohio in form and substance satisfactory
      to the Agent and Collateral Agent;

                  (f) KMC  Holdings  shall have used its best  efforts to engage
      The Chase  Manhattan Bank (or such other  financial  institution as may be
      acceptable to the Agent) to replace First Union as Warrant Agent under and
      as defined in the Warrant Agreement;

                  (g)  evidence  (i)  that  the  loans  under  the  KMC IV  Loan
      Agreement  (as  defined in the Fourth  Amendment)  have been  indefeasibly
      repaid in full and all other  obligations  under  such  agreement  and the
      other loan documents  thereunder have been completely  discharged and (ii)
      all liens under such Loan and Security  Agreement shall have been released
      and all collateral pledged thereunder delivered to the borrowers and other
      obligors thereunder; and



                                       32
<PAGE>

                  (h) the Agents and  Lenders  shall  have  received  such other
      agreements,  instruments  and  documents  as  the  Agents  may  reasonably
      require.

                  SECTION 5.26.  POST-CLOSING  UCC MATTERS.  On or before August
      31, 2001 and at such times thereafter as any Agent may reasonably request,
      each Loan Party  shall (i) execute and  deliver  such UCC  amendments  and
      additional UCC-1 financing statements as the Agent or Collateral Agent may
      request in order to continue to perfect the  Collateral  Agent's  security
      interest  in  the  Collateral  under  revised  Article  9 of  the  Uniform
      Commercial  Code as  adopted by any State  after the date  hereof and (ii)
      deliver  an  opinion  of  special  counsel  to the Loan  Parties as to the
      perfection  of  the  security  interests  granted  pursuant  to  the  Loan
      Documents in the Collateral under any such revised statute, as applicable,
      which legal opinion shall be in form and substance reasonably satisfactory
      to the Agent and Collateral Agent.

                  SECTION 5.27.  POST-CLOSING HOLDING IV MATTERS.

                  (a)  Within  fifteen  (15)  Business  Days  after  the  Fourth
      Amendment  Effective  Date, KMC Holdings  shall file with the  appropriate
      government  agencies in each of the states in which  Holdings IV or any of
      its Subsidiaries has a certificate of public  convenience and necessity or
      other  authority to provide  intrastate  telecommunications  services,  an
      application  which shall request approval (i) of the transfer of ownership
      of Holdings IV and its  Subsidiaries to a Borrower,  and (ii) for Holdings
      IV and its  Subsidiaries  to grant a security  interest and lien on all of
      their  respective  assets,  and for the applicable  Borrower to pledge the
      Equity  Interests of Holdings IV, in each case to the Collateral Agent for
      the benefit of the Lenders  (such  approvals,  the 'HOLDINGS IV REGULATORY
      APPROVALS').

                  (b) Within five (5) Business  Days after the date KMC Holdings
      receives  all Holdings IV  Regulatory  Approvals,  (i) KMC Holdings  shall
      contribute all of the Equity Interests of Holdings IV to a Borrower,  (ii)
      such Borrower  shall execute a Pledge  Supplement to its Pledge  Agreement
      pledging  all of the Equity  Interests  of Holdings  IV to the  Collateral
      Agent for the benefit of the Lenders,  (iii) the Agent shall have received
      the  written   opinion  of  special  counsel  for  KMC  Holdings  and  its
      Subsidiaries,  dated the date of such Pledge Supplement,  addressed to the
      Agent,  the  Collateral  Agent  and  the  Lenders   satisfactory  to  (and
      containing only such  qualifications  and limitations as are  satisfactory
      to) counsel to the Agent, with opinion as to, among other things,  (a) due
      organization of the applicable  Borrower,  (b) the  enforceability  of the
      Pledge  Supplement  and  the  documents  or  instruments   evidencing  the
      contribution  set forth in clause (i)  above,  (c) the  perfection  of any
      liens  granted  pursuant  to the  Pledge  Supplement  and  related  Pledge
      Agreement,   (d)  no  conflicts  with   applicable   laws  or  contractual
      obligations, and (e) the due authorization,  execution and delivery of the
      Pledge Supplement and such documents or instruments,  which opinions shall
      be  substantially  in the form of  ATTACHMENT  B-1  annexed  to the Fourth
      Amendment,  with such modifications thereto as are acceptable to the Agent
      and  necessary  to  reflect  the  circumstances,   documents  and  parties
      described  in this  SECTION  5.27(B),  and (iv)  the  written  opinion  of
      regulatory  counsel for KMC Holdings and its Subsidiaries,  dated the date


                                       33
<PAGE>

      of such Pledge  Supplement,  addressed to the Agent,  the Collateral Agent
      and the Lenders  satisfactory to (and containing only such  qualifications
      and  limitations  as are  satisfactory  to)  counsel to the  Agent,  which
      opinion shall be  substantially in the form set forth in ATTACHMENT B-2 to
      the  Fourth  Amendment  hereto  with  such  modifications  thereto  as are
      acceptable  to the Agent  and  necessary  to  reflect  the  circumstances,
      documents and parties described in this SECTION 5.27(B)."

            1.13  AMENDMENTS TO ARTICLE VI.

            (a) The first  sentence  of ARTICLE  VI is hereby  amended to insert
immediately  prior to the  colon at the end  thereof  the  phrase  ", as to each
Borrower, each Loan Party or KMC and its Subsidiaries, as the case may be".

            1.14  AMENDMENTS TO SECTION 6.01.

            (a) The first  sentence of SECTION 6.01 is hereby  amended to delete
the words "Such Borrower"  appearing  therein and substitute  therefor the words
"KMC Holdings and each of its Subsidiaries".

            (b) CLAUSES (II),  (III) and (IV) of SECTION 6.01 are hereby deleted
in their  entirety  and the  following  new  CLAUSES  (II),  (III)  and (IV) are
substituted therefor, respectively:

                  "(ii) Liens  securing any Purchase Debt to the extent that the
      Liens  cover only the subject  assets  subject to such  Purchase  Debt and
      provided such Liens are incurred no later than twenty (20) days  following
      the purchase of the subject assets;

                  (iii) Liens for taxes,  assessments or governmental charges or
      levies on property of KMC Holdings or any of its Subsidiaries  (other than
      Liens  imposed  by or under  ERISA)  if the same  shall not at the time be
      delinquent  or  thereafter  can be  paid  without  penalty,  or are  being
      diligently contested in good faith and by appropriate  proceedings and for
      which such Person  shall have set aside  reserves on its books as required
      by GAAP;

                  (iv) Liens  imposed  by law,  such as  landlord's,  carrier's,
      warehousemen's  and  mechanic's  liens,  which  liens  shall be  waived in
      writing to the extent  waivable,  and with respect to obligations  not yet
      due or being  contested in good faith by  appropriate  proceedings  and in
      either case for which KMC  Holdings  and its  Subsidiaries  shall have set
      aside adequate reserves on its books as required by GAAP;".

            (c)  SECTION  6.01 is  further  amended  to  delete  the  word  "or"
appearing at the end of CLAUSE (VI) thereof and insert new CLAUSES (VIII), (IX),
(X) and (XI) thereto as follows:

                  "(viii)  Liens in the  form of IRUs  arising  pursuant  to IRU
      Agreements and IRU Service Orders permitted pursuant to SECTION 6.18;

                  (ix) Liens in existence as of the Fourth Amendment
      Effective Date and listed on SCHEDULE 6.01;



                                       34
<PAGE>

                  (x) Liens on assets of KMC VII, KMC VIII,  KMC IX, KMC QV, KMC
      Funding  V and Data  LLC and any New Data  Subsidiary  created  solely  in
      connection with Permitted Data Financings; PROVIDED that such Liens attach
      only to the assets of KMC VII,  KMC VIII,  KMC IX, KMC QV, KMC  Funding V,
      Data LLC or such Data  Subsidiary,  as  applicable,  and  secure  only the
      obligations incurred pursuant to such Permitted Data Financing; and

                  (xi) Liens on the capital stock of any Data Subsidiary granted
      by Data Holdco to secure obligations under any Permitted Data Financing."

            (d)   SECTION 6.01 is further amended to insert a new paragraph
at the end thereof as follows:

                  "Except with respect to specific property encumbered to secure
      payment of particular  Debt permitted  pursuant to SECTION 6.13 (including
      any  Permitted  Data  Financing)  or to be sold  pursuant  to an  executed
      agreement  with  respect to a sale of assets or  securitization  otherwise
      permitted  under  this  Agreement,  neither  KMC  Holdings  nor any of its
      Subsidiaries  shall enter into any agreement  (other than the  Indentures)
      prohibiting  the  creation  or  assumption  of any  Lien  upon  any of its
      properties or assets, whether now owned or hereafter acquired."

            1.15  AMENDMENT TO SECTION 6.03.  SECTION 6.03 is hereby deleted
in its entirety and the following new language is substituted therefor:

                  "SECTION 6.03. SALE OF ASSETS, CONSOLIDATION, MERGER, etc. (a)
      No Loan Party (other than Data Holdco)  shall,  or shall permit any of its
      Subsidiaries  (other than the Data  Subsidiaries) to,  consolidate with or
      merge into any other Person,  or without the prior written  consent of the
      Requisite  Lenders,  sell,  lease,  transfer or  otherwise  dispose of any
      Collateral  or assets  (including  any assets  comprising  the  Borrowers'
      construction business to KNT) or sell or discount receivables,  except for
      (x) sales of  inventory in the  ordinary  course of business,  and (y) any
      sale, lease, transfer or other disposition of Telecommunications Equipment
      or other  fixed  assets no longer  used or  useful in the  conduct  of the
      Business  for the fair  market  value  thereof not to exceed 0.5% of gross
      PP&E of the  Borrowers  as  reflected  in the  books  and  records  of the
      applicable Borrower on the date of any such sale, lease, transfer or other
      disposition,  so long as the  Borrowers  shall deliver to the Agent on the
      date of any such sale, lease,  transfer or other disposition  resulting in
      Net Asset  Sale  Proceeds  in one or a series of related  transactions  in
      excess of $500,000 an officer's  certificate signed by the Chief Financial
      Officer of KMC Holdings  demonstrating  the  calculation of such Net Asset
      Sale  Proceeds,  including the  derivation of gross PP&E of the Borrowers;
      PROVIDED, FURTHER that if no Default or Event of Default has then occurred
      or is  continuing  or  would  result  therefrom  (i)  any  Borrower,  upon
      provision of thirty (30) days prior  written  notice to the Agent and upon
      compliance  with SECTION 8.02, may merge with another  Borrower;  (ii) any
      Loan  Party  (other  than KMC  Holdings  and Data  Holdco)  may grant IRUs
      pursuant to IRU Agreements and IRU Service Orders entered into pursuant to
      SECTION  6.18;  and (iii) any Loan Party (other than KMC Holdings and Data
      Holdco) may consummate other Asset Sales with the prior written consent of
      the Agents and  Requisite  Lenders so long as the Net Asset Sale  Proceeds


                                       35
<PAGE>

      are  applied  to prepay  Loans and reduce the  Revolving  Loan  Commitment
      Amount as provided in SECTION 2.09(C)(III) and any Net Asset Sale Proceeds
      retained by the Loan Parties are applied in compliance with the Indentures
      and the  Certificate of Designation  of the Series E Preferred  Stock,  it
      being  understood  and agreed that in connection  with any such Asset Sale
      consented  to by the Agents  and  Requisite  Lenders,  the  Borrowers  and
      Lenders agree to review the financial covenant levels set forth in SECTION
      7.01 and to make good faith  adjustments to such levels to account for the
      sale of assets subject to such Asset Sale; PROVIDED STILL FURTHER that the
      Loan  Parties  may   consummate   the   transactions   on  or  before  the
      Restructuring Effective Date contemplated by SECTION 5.21; and

                  (b) KMC  Holdings  shall not, and shall not permit Data Holdco
      or any of its  Subsidiaries  to,  consolidate with or merge into any other
      Person (other than with respect to Data Holdco and its Subsidiaries  only,
      Data  Holdco or  another  Data  Subsidiary  so long as Data  Holdco is the
      surviving  entity),  or without the prior written consent of the Requisite
      Lenders,  sell,  lease,  transfer  or  otherwise  dispose  of  any  assets
      including any sale or discount of receivables,  except for, in the case of
      the Data Subsidiaries  only, (x) sales of inventory in the ordinary course
      of business,  and (y) any sale,  lease,  transfer or other  disposition of
      assets no longer  used or useful in the conduct of the Data  Business  for
      the fair market  value  thereof;  provided,  however,  that if no Event of
      Default has then occurred or is continuing or would result therefrom;  (1)
      the Data  Subsidiaries  may enter into Data  Contracts and Permitted  Data
      Financings  related thereto,  in each case as expressly  permitted by this
      Agreement,  and (2) Data Holdco and the Data  Subsidiaries  may make Asset
      Sales,  PROVIDED that (A) the consideration  received therefor is not less
      than one hundred percent (100%) cash (or, if less than one hundred percent
      (100%) cash,  then the calculation of Net Asset Sale Proceeds for purposes
      of clause (C) of this SECTION  6.03(B)  shall be  calculated  based on the
      fair  market  value of the assets  subject to such Asset Sale  rather than
      cash proceeds received in connection therewith) and is for the fair market
      value of such assets,  (B) the Data Subsidiaries  promptly  distribute one
      hundred  percent  (100%) of any Net Asset  Sale  Proceeds  thereof to Data
      Holdco,  and (C) Data  Holdco  promptly  distributes  such Net Asset  Sale
      Proceeds  to KMC  Holdings  to the extent  required  by, and to be applied
      pursuant to, SECTION 5.22."

            1.16  AMENDMENTS TO SECTION 6.04.

            (a) CLAUSE (A) of SECTION 6.04 is hereby deleted in its entirety and
the following new CLAUSE (A) is substituted therefor:

                  "(a) No Loan Party  (other than KMC  Holdings and Data Holdco)
      shall  purchase,  redeem or  otherwise  acquire any  interest of such Loan
      Party,  declare or make or pay any  dividends  in any fiscal  year of such
      Loan Party on any class or classes of stock,  return  capital of such Loan
      Party to its shareholders, make any other distribution on or in respect of
      any shares of any class of capital  stock of such Loan Party or make other
      payments to any  shareholder of such Loan Party  (including in the form of
      compensation,  loan, expense  reimbursement or management fee);  PROVIDED,
      HOWEVER,  that provided no Event of Default or Default has occurred and is
      continuing  or would  result  therefrom,  (i)  such  Loan  Party  may make
      payments of fees or  compensation  for services which are in the nature of


                                       36
<PAGE>

      management,  corporate  overhead,  operating  expenses  or  administrative
      services in each case to the extent permitted by SECTION 6.05 hereof, (ii)
      such Loan Party may pay to KMC Holdings  dividends in the amount necessary
      to make,  in each case  promptly  after  receipt  of such  dividends,  (A)
      scheduled  principal  and  interest  payments  under the  Indentures,  and
      amounts  due  under  SECTION  7.07 of the  Indentures,  and  (B)  required
      payments  of cash  dividends  due to the holders of the Series E Preferred
      Stock;  PROVIDED,  HOWEVER,  that at the time of the  payment by such Loan
      Party of any dividends to KMC Holdings  pursuant to this clause (ii),  KMC
      Holdings shall have received a proportionate amount of cash dividends from
      Data Holdco  based on the  allocation  of  overhead as among KMC  Holdings
      Subsidiaries  as set forth in the February  2001  Business Plan (the 'DATA
      HOLDCO ALLOCATION  AMOUNT'),  which Data Holdco Allocation Amount shall be
      promptly  applied to pay amounts  then due as  described in CLAUSES (A) or
      (B), above, as applicable."

            (b)   SECTION 6.04 is  hereby amended to  insert a new CLAUSE (C) at
the end thereof as follows:

                  "(c) KMC  Holdings  shall not  purchase,  redeem or  otherwise
      acquire any interest of KMC Holdings, declare or make or pay any dividends
      in any  fiscal  year of KMC  Holdings  on any class or  classes  of stock,
      return  capital  of KMC  Holdings  to its  shareholders,  make  any  other
      distribution  on or in respect of any shares of any class of capital stock
      of KMC Holdings or make other payments to any  shareholder of KMC Holdings
      (including in the form of  compensation,  loan,  expense  reimbursement or
      management fee but excluding any  disbursements or dividends made with the
      issuance of  additional  shares of common or existing  series of preferred
      stock);  PROVIDED,  however,  that so  long as no  Event  of  Default  has
      occurred and is  continuing  or would result  therefrom,  KMC Holdings may
      make (i) required  payments of cash dividends to the holders of the Series
      E  Preferred  Stock and (ii)  payments  of  management  fees and  employee
      compensation  pursuant to the  management  and  employment  agreements  in
      effect on the date hereof and set forth on SCHEDULE 3.09(B)."

            1.17  AMENDMENT TO SECTION 6.05.  SECTION 6.05  is hereby deleted in
its entirety and the following new language is substituted therefor:

                  "SECTION  6.05.   MANAGEMENT  FEES  AND  PERMITTED   CORPORATE
      OVERHEAD.  No Loan Party (other than Data Holdco)  shall pay or enter into
      any arrangement to pay any fee or compensation,  or reimburse expenses of,
      an Affiliate  or any other Person for services  which are in the nature of
      management,  corporate overhead or administrative  services except for (i)
      usual and customary  charges  payable to KMC Holdings and allocated to pay
      expenses  incurred in the ordinary course of business which  allocation is
      made consistent with past practices and (ii) payments  permitted  pursuant
      to CLAUSE (II) of SECTION 6.04(B)."

            1.18  AMENDMENT TO SECTION 6.06.  SECTION 6.06 is hereby deleted  in
its entirety and the following new language is substituted therefor:



                                       37
<PAGE>

                  "SECTION 6.06.  GUARANTEES;  THIRD PARTY SALES AND LEASES. KMC
      Holdings  shall  not,  and shall not permit  any of its  Subsidiaries  to,
      directly or  indirectly,  (i) assume any  obligation  or  indebtedness  of
      another Person,  (ii) make or assume any Guarantee  (other than Guarantees
      make by any Data  Subsidiary in favor of its  Subsidiaries  or by any such
      Subsidiary in favor of its parent Data  Subsidiary),  or (iii) finance any
      third party  sales or leases,  except for (a) the  Borrowers'  obligations
      under SECTION 2.15 and  Guarantees of the  Obligations,  (b) Guarantees in
      existence as of the Fourth Amendment Effective Date and listed on SCHEDULE
      6.06 and (c) Guarantees by New Data  Subsidiaries  of obligations of other
      Data   Subsidiaries   arising  under  Data  Contracts  or  Permitted  Data
      Financings."

            1.19  AMENDMENT TO SECTION 6.07.  SECTION 6.07 is hereby  amended to
(i) delete the reference to "Borrower" appearing therein and substitute therefor
a reference  to "Loan  Party" and (ii) insert the  following  proviso at the end
thereof:

                  "; PROVIDED, HOWEVER, that any Investments pursuant to clauses
      (i) through (v) above shall be made through an investment account with the
      Agent  and  subject  to  a  control   agreement  in  form  and   substance
      satisfactory to the Agent."

            1.20  AMENDMENT TO SECTION 6.08.  SECTION 6.08 is hereby deleted  in
its entirety and the following new language is substituted therefor:

                  "SECTION 6.08. SUBSIDIARIES. KMC Holdings shall not, and shall
      not permit any of its Subsidiaries to, create or acquire any Subsidiary or
      acquire all or any significant  portion of the assets or Equity  Interests
      of another Person; PROVIDED that Data Holdco and its Subsidiaries existing
      on the  Restructuring  Effective Date may form new  Subsidiaries  (each, a
      'NEW DATA  SUBSIDIARY')  the sole  purpose  of which is to enter  into and
      perform   obligations   under  new  Data   Contracts  and  Permitted  Data
      Financings,  in each  case as  permitted  pursuant  to the  terms  of this
      Agreement;  PROVIDED that at the time such New Data  Subsidiary is created
      or  acquired,  no Default or Event of Default  shall have  occurred and be
      continuing before or after giving effect to the creation or acquisition of
      such  Subsidiary,  and KMC Holdings has or will obtain external sources of
      funding  (other than,  for the  avoidance  of doubt,  any  Revolving  Loan
      Commitment  Amount  or  other  amounts  required  to  be  applied  to  the
      Obligations  pursuant  to the  terms of this  Agreement)  to  finance  the
      acquisition and operations of such Subsidiary."


            1.21  AMENDMENT TO SECTION 6.09.  SECTION 6.09 is hereby deleted  in
its entirety and the following new language is substituted therefor:

                  "SECTION 6.09. PERMITTED ACTIVITIES.  (a) No Loan Party (other
      than Data Holdco) shall engage in any business or activity  other than the
      operation of its Business in scope in  accordance  with the February  2001
      Business  Plan  without  the  prior  written  consent  of the  Agents  and
      Requisite  Lenders;  PROVIDED that any Loan Party (other than KMC Holdings
      and Data Holdco)  shall be  permitted  to enter into and remain  obligated
      under IRU Agreements pursuant to SECTION 6.18. Notwithstanding anything in
      the  foregoing  to the  contrary,  no Loan Party  (other than Data Holdco)
      shall  extend its  Business  into any new city  (other than (i) a new city


                                       38
<PAGE>

      adjacent  to an  existing  city and part of the same  market,  which entry
      shall be  implemented  solely by an extension  of an existing  System from
      such existing city or (ii) pursuant to an IRU Agreement) without the prior
      written  consent of the Agents and Requisite  Lenders.  KMC Holdings shall
      not engage in any business,  own any assets or incur any liabilities other
      than (i) the performance of its obligations under the Indentures, the Data
      Contracts  existing on the Fourth  Amendment  Effective  Date and the Loan
      Documents  and (ii) the  ownership of all the capital  stock of its direct
      Subsidiaries.

                  (b) Data Holdco  shall not engage in any  business or activity
      other than the  ownership of the capital  stock of the Data  Subsidiaries,
      the performance of its obligations under the Loan Documents and the pledge
      of the capital stock of a Data  Subsidiary  pursuant to SECTION  6.01(XI).
      The Data  Subsidiaries  shall not engage in any business or activity other
      than (i) entering into and performing their respective  obligations  under
      Data  Contracts  and  Permitted  Data  Financings;  PROVIDED  that no Data
      Contract or any other agreement  entered into by any Data Subsidiary shall
      (a) purport to  restrict  the conduct of business of any Loan Party or any
      intercompany  transfers,   loans  or  advances  other  than  as  expressly
      permitted  pursuant to SECTION 6.21,  (b) prohibit or encumber the ability
      of such Data  Subsidiary or any of its Affiliates from making any dividend
      or distribution in respect of the capital stock of such Data Subsidiary or
      Affiliate, except in the case of a pledge of stock of a Data Subsidiary in
      connection with a Permitted Data Financing only, customary restrictions on
      the payment of dividends by such Data  Subsidiary in the case of a default
      event under such  Permitted  Data  Financing or (c) otherwise  require any
      Affiliate of such Data Subsidiary  (other than any other Data  Subsidiary)
      to be liable  in any  respect  or  subject  to  recourse  under  such Data
      Contract  or  agreement,  except  in the case of a  transaction  expressly
      permitted  pursuant  to  SECTION  6.11,  and  (ii)  performing  activities
      incidental to the performance of its obligations  under the Data Contracts
      and Permitted Data Financings as expressly  permitted pursuant to SECTIONS
      6.01,  6.03,  6.06,  6.08 and 6.13 and providing  cash support to the Loan
      Parties."

            1.22  AMENDMENT TO SECTION 6.10.  SECTION 6.10 is hereby  amended to
delete  the  reference  to "Such  Borrower"  appearing  therein  and  substitute
therefor a reference to "Such Loan Party".

            1.23  AMENDMENT TO SECTION 6.11.  SECTION 6.11 is hereby deleted  in
its entirety and the following new language is substituted therefor:

                  "SECTION 6.11.  TRANSACTIONS  WITH AFFILIATES.  Except for the
      Management  Agreement,  the Tax  Sharing  Agreement,  or as set  forth  on
      SCHEDULE  6.11,  no  Loan  Party  shall,   or  shall  permit  any  of  its
      Subsidiaries  to,  directly  or  indirectly,  enter into any  transaction,
      including, without limitation, leases or other agreements for the purchase
      or use of any  goods  or  services,  with  any  Affiliate,  except  in the
      ordinary  course of and pursuant to reasonable  requirements  of such Loan
      Party's  business upon fair and reasonable terms no less favorable to such
      Loan Party than it would obtain in a comparable  arm's length  transaction
      with an unaffiliated Person,  PROVIDED that (i) any transaction  involving
      payments in excess of $10,000,000 and (ii) any transactions between a Loan
      Party (other than Data Holdco) and a Data  Subsidiary  (other than the Tax


                                       39
<PAGE>

      Sharing Agreement,  Management Agreement,  and sub-licensing  arrangements
      similar to those  relating to Data  Contracts  in  existence on the Fourth
      Amendment  Effective Date) shall be strictly  prohibited without the prior
      written consent of the Agents and Requisite Lenders."

            1.24  AMENDMENTS TO SECTIONS 6.12 AND 6.13.

            (a) The first  sentence of each of SECTIONS  6.12 and 6.13 is hereby
amended to delete the words "Such Borrower  shall not" and  substitute  therefor
the words "KMC Holdings shall not, and shall not permit any of its  Subsidiaries
to,".

            (b)  CLAUSE  (IV) of  SECTION  6.13 is hereby  amended to insert the
following  proviso at the end  thereof:  "PROVIDED  that such  Purchase  Debt is
incurred no later than twenty (20) days  following  the  purchase of the subject
assets;".

            (c)  CLAUSE  (VII) of SECTION  6.13 is hereby  amended to insert the
following proviso at the end thereof:

                  ";  PROVIDED  that  (a)  from  and  after  the   Restructuring
      Effective  Date,  such Loan Party shall have executed and delivered to KMC
      Holdings  a  demand  note  (collectively,  the  'INTERCOMPANY  NOTES')  to
      evidence any such  Qualified  Intercompany  Loan owing at any time by such
      Loan Party to KMC Holdings,  which Intercompany Notes shall be in form and
      substance  satisfactory  to the  Agent and  Collateral  Agent and shall be
      pledged  and  delivered  to the  Collateral  Agent  pursuant to the Pledge
      Agreement  executed by KMC Holdings pursuant to the Existing  Agreement as
      additional  collateral  security for the Obligations;  (b) such Loan Party
      shall record all  intercompany  transactions on its books and records in a
      manner  satisfactory to the Collateral  Agent; (c) the obligations of such
      Loan Party under any such Intercompany  Notes shall be subordinated to the
      Obligations of such Loan Party  hereunder in a manner  satisfactory to the
      Agent  and  Collateral   Agent;   (d)  at  the  time  any  such  Qualified
      Intercompany  Loan is incurred by such Loan Party and after giving  effect
      thereto,  such Loan Party shall be Solvent; and (e) no Default or Event of
      Default  would occur and be  continuing  after  giving  effect to any such
      proposed Qualified Intercompany Loan;".

            (d)  SECTION  6.13 is  hereby  amended  to  delete  the  word  "and"
appearing  at the end of CLAUSE  (VIII)  thereof  and insert new CLAUSES (X) and
(XI) at the end thereof as follows:

                  "(x)  Debt of KMC Holdings outstanding on the Fourth
      Amendment Effective Date pursuant to the Indentures; or

                  (xi)  obligations of any Data  Subsidiary (a) under  financing
      leases or loan  agreements or similar debt  documents  with respect to the
      financing  and   contemplated   purchase,   operation  or  maintenance  of
      equipment,  software,  networks or any combination of the foregoing assets
      in connection  with any Data  Contract to which such Data  Subsidiary is a
      party;  and (b) in connection  with any  securitization  of, or equivalent
      monetization  of future  revenue under, a Data Contract to which such Data
      Subsidiary is a party (collectively, 'PERMITTED DATA FINANCINGS')."



                                       40
<PAGE>

            1.25 AMENDMENT TO SECTION 6.14. SECTIONS 6.14 is hereby amended by
deleting each reference therein to "Borrower" and inserting a reference to "Loan
Party" in its place.

            1.26  AMENDMENT TO SECTION 6 is further  amended to delete  SECTIONS
6.15 and 6.17 in their  entirety  and  substitute  the  following  new  language
therefor:

                  "SECTION 6.15. SALE AND LEASEBACK  TRANSACTIONS.  KMC Holdings
      shall not, and shall not permit any of its  Subsidiaries  to,  directly or
      indirectly,  enter into any arrangement with any Person providing for such
      KMC Holdings or any of its Subsidiaries to lease or rent property that KMC
      Holdings  or any of its  Subsidiaries  has sold or will sell or  otherwise
      transfer to such Person;  PROVIDED that Data  Subsidiaries  may enter into
      such arrangements to the extent constituting Permitted Data Financings."

                  "SECTION  6.17.  MANAGEMENT  AND TAX SHARING  AGREEMENTS.  KMC
      Holdings shall not, and shall not permit any of its Subsidiaries to, amend
      the Management  Agreement or the Tax Sharing  Agreement in any manner that
      would have a material  adverse effect on the Lenders,  the Loan Parties or
      the transactions contemplated hereby."

            (a) SECTION 6 is further amended to insert new SECTIONS 6.18,  6.19,
6.20, 6.21, 6.22 and 6.23 at the end thereof as follows:

                  "SECTION 6.18. IRU  AGREEMENTS  AND IRU SERVICES  ORDERS.  KMC
      Holdings shall not, and shall not permit any of its Subsidiaries to, enter
      into or remain  obligated  under any IRU Agreement or IRU Service Order or
      commence  construction of any facilities for the purpose of soliciting IRU
      Agreements or IRU Service Orders without the prior written  consent of the
      Agents  and  Requisite  Lenders;  PROVIDED,  HOWEVER,  that  so long as no
      Default or Event of Default has then occurred and is continuing,  any Loan
      Party may enter into and remain liable with respect to IRU  Agreements and
      IRU Service Orders; PROVIDED that:

                  (i) each such IRU Agreement or IRU Service Order provides that
            (a) such Loan Party shall receive a  nonrefundable  upfront fee (the
            'INITIAL  IRU FEE')  equal to an amount not less than the  projected
            IRU Construction  Costs with respect to the facilities  required for
            the grant of the relevant  IRU subject to such IRU  Agreement or IRU
            Service Order (the 'IRU  FACILITIES'),  and (b) in the event the IRU
            Construction  Costs of any IRU Facilities exceeds an amount equal to
            one hundred ten percent (110%) of the corresponding Initial IRU Fee,
            such  Loan  Party  shall  be  entitled   immediately   to  stop  all
            construction,  installation  and  testing of the  corresponding  IRU
            Facilities  (and each Borrower  hereby  covenants and agrees that in
            the event of any such excess, such Loan Party shall immediately stop
            such  construction,  installation  and testing) and renegotiate with
            the customer such IRU Agreement or IRU Service Order for the payment
            to such Loan Party of  additional  fees  sufficient to cover all IRU
            Construction  Costs not covered by the  Initial  IRU Fee;  PROVIDED,
            HOWEVER,  that notwithstanding  anything in the foregoing clause (a)
            or (b) to the  contrary,  in the  case  of any IRU  with a  customer
            having a senior debt rating of greater  than BBB- as  determined  by


                                       41
<PAGE>

            Standard & Poor's Ratings Group and/or Baa3 as determined by Moody's
            Investors Service,  Inc., (1) the Initial IRU Fee may be equal to or
            greater  than   sixty-six   percent   (66%)  of  the  projected  IRU
            Construction  Costs with respect to the relevant IRU  Facilities and
            (2) any financing of such  remaining  amount by a Loan Party must be
            paid by such customer no later than twelve months following the date
            of payment of such Initial IRU Fee; PROVIDED FURTHER,  HOWEVER, that
            the  aggregate  amount  of  all  projected  IRU  Construction  Costs
            outstanding  at anytime  with respect to any such IRU for which such
            Loan Party has not  received  payment  shall not at  anytime  exceed
            $10,000,000.

                  (ii) such Loan Party does not commence construction of any IRU
            Facilities until a definitive IRU Agreement or IRU Service Order has
            been  executed  by the  parties  thereto  and such  Loan  Party  has
            received the applicable Initial IRU Fee;

                  (iii) such Loan Party  uses the  Initial  IRU Fee for the sole
            purpose of payment of IRU Construction  Costs for the  corresponding
            IRU Facilities before application to any other purpose;

                  (iv)  the  actual  and  anticipated  period  of  construction,
            installation  and  testing  of any IRU  Facilities  shall not exceed
            eighteen (18) months;

                  (v) such Loan Party  delivers to the Agents a complete copy of
            such  IRU  Agreement  and  any  IRU  Service  Order   involving  IRU
            Construction  Costs in excess of $1,000,000  promptly upon execution
            thereof  together  with an IRU  Report  with  respect  to  such  IRU
            Agreement and any IRU Service Order outstanding thereunder;

                  (vi) such Loan Party deposits all payments, including, without
            limitation,  any IRU Fee,  received by such Loan Party under any IRU
            Agreement or IRU Service Order into a Collection  Account subject to
            a Restricted Account Agreement promptly upon receipt thereof;

                  (vii) each such IRU  Agreement or IRU Service Order shall have
            been negotiated on an arms length basis; and

                  (viii) all  construction,  installation  and testing under any
            IRU Agreement or IRU Service Order is performed either directly by a
            Loan Party or, if  subcontracted to a third party, on an arms length
            basis.

                  SECTION 6.19. AMENDMENTS TO MATERIAL AGREEMENTS. No Loan Party
      shall,  or shall  permit any of its  Subsidiaries  to,  terminate,  amend,
      modify  or  supplement  or waive any of its  rights  under,  any  Material
      Agreement  (other than any agreement  listed on SCHEDULE 3.27) to which it
      is a party in any manner that would be inconsistent with the provisions of
      SECTION 6.18 or adverse to the interests of such Loan Party,  any Agent or
      Lender,  or on the ability of such Loan Party to perform  its  obligations
      hereunder,  or to the  transactions  contemplated  hereby,  in  each  case
      without the prior written consent of the Agent and Requisite Lenders. Each
      Loan Party shall  promptly  deliver to the Agents a copy of any amendment,


                                       42
<PAGE>

      modification  or  supplement to any IRU Agreement or any IRU Service Order
      in excess of $1,000,000.

                  SECTION  6.20.  CANCELLATION  OF  INDEBTEDNESS.  No Loan Party
      shall  cancel  any  claim  or debt  owing  to it,  except  for  reasonable
      consideration  negotiated  on an  arm's-length  basis and in the  ordinary
      course of its business consistent with past practices.

                  SECTION  6.21.  IMPAIRMENT  OF  INTERCOMPANY  TRANSFERS.   KMC
      Holdings  shall  not,  nor shall it  permit  any of its  Subsidiaries  to,
      directly  or  indirectly  enter  into or  become  bound by any  agreement,
      instrument,  indenture or other obligation (other than the Indentures, the
      Series E Preferred  Stock,  this  Agreement and the other Loan  Documents)
      which  could  directly  or  indirectly  restrict,  prohibit or require the
      consent of any Person with respect to (i) the payment of any  dividends or
      the making of any other distributions on any of such Subsidiary's  capital
      stock  owned by KMC  Holdings  or any other  Subsidiary  of KMC  Holdings,
      except,  in  the  case  of a  pledge  of  stock  of a Data  Subsidiary  in
      connection with a Permitted Data Financing only, customary restrictions on
      the payment of dividends by such Data  Subsidiary in the case of a default
      event  under  such  Permitted  Data  Financing,   (ii)  the  repayment  or
      prepayment  of any Debt owed by such  Subsidiary  to KMC  Holdings  or any
      other  Subsidiary  of KMC  Holdings,  (iii) make loans or  advances to KMC
      Holdings or any other  Subsidiary  of KMC  Holdings,  except for customary
      restrictions  imposed  on the  ability of a Data  Subsidiary  to make such
      loans or advances in connection with a Permitted Data  Financing,  or (iv)
      transfer  any of its  property  or  assets  to KMC  Holdings  or any other
      Subsidiary of KMC Holdings, except for customary restrictions imposed on a
      Data  Subsidiary  on  transfer of assets  subject to a Lien  pursuant to a
      Permitted Data Financing.

                  SECTION 6.22.  AMENDMENT TO  ORGANIZATION  DOCUMENTS.  No Loan
      Party  shall,  or shall  permit any of its  Subsidiaries  (other than Data
      Subsidiaries) to amend,  supplement or otherwise modify its Certificate or
      Articles of Incorporation or other  organizational  documents  without the
      prior  written  consent  of the Agents and  Requisite  Lenders;  PROVIDED,
      HOWEVER,  that KMC Holdings may amend its Certificate of  Incorporation to
      provide for the issuance of a new series of preferred stock; PROVIDED that
      (i) no  dividends  or  other  distributions  of any kind  (other  than the
      issuance of additional  shares of such preferred  stock) shall be required
      to be paid to the holders thereof until not less than six months after the
      Term A Loan  Termination  Date, and (ii) any  restrictions  imposed on KMC
      Holdings and its Subsidiaries  shall be no more burdensome to KMC Holdings
      and its  Subsidiaries or their ability to perform the Obligations than the
      provisions of the Series E Preferred Stock as set forth in the Certificate
      of  Designations  for the  Series E  Preferred  Stock as in  effect on the
      Fourth Amendment Effective Date.

                  SECTION 6.23  PERMITTED  USE OF  COLLATERAL.  The Loan Parties
      shall not use any Collateral for any purpose other than as contemplated by
      the February 2001 Business Plan."

            1.27  AMENDMENT TO SECTION 7.01.  SECTION 7.01 is hereby deleted  in
its entirety and the following new language is substituted therefor:



                                       43
<PAGE>
                  "(a) MINIMUM CORE REVENUES.  As of the last day of each fiscal
      quarter  occurring on and after the Fourth  Amendment  Effective Date, the
      Borrowers shall on a combined basis have Core Revenues for such quarter of
      not less than the following:

                   FISCAL QUARTER ENDING       MINIMUM CORE
                                               REVENUES

                   March 31, 2001              $37,324,000

                   June 30, 2001               $39,276,000

                   September 30, 2001          $45,222,000

                   December 31, 2001           $51,578,000

                   March 31, 2002              $55,408,000

                   June 30, 2002               $63,871,000

                   September 30, 2002          $69,066,000

                   December 31, 2002           $74,462,000

                   March 31, 2003              $80,563,000

                   June 30, 2003               $87,362,000

                   September 30, 2003          $94,350,000

                   December 31, 2003           $101,563,000

                   March 31, 2004              $108,689,000

                   June 30, 2004               $115,839,000

                   September 30, 2004          $123,181,000

                   December 31, 2004           $130,719,000

                   March 31, 2005              $138,238,000

                   June 30, 2005               $145,665,000

                   September 30, 2005          $153,270,000

                   December 31, 2005           $161,059,000

                   March 31, 2006              $168,851,000

                   June 30, 2006               $176,630,000

                   September 30, 2006          $184,562,000

                   December 31, 2006           $192,647,000

                   March 31, 2007              $200,862,000


                  (b) MINIMUM EBITDA.  As of the last day of each fiscal quarter
      occurring on and after the Fourth Amendment  Effective Date, the Borrowers
      shall not permit EBITDA for all of the  Borrowers on a combined  basis for

                                       44
<PAGE>
      the two fiscal quarters then ending to be less than the following:


                   FISCAL QUARTER ENDING       MINIMUM EBITDA

                   March 31, 2001              ($57,589,000)

                   June 30, 2001               ($52,407,000)

                   September 30, 2001          ($33,972,000)

                   December 31, 2001           ($25,589,000)

                   March 31, 2002              ($20,687,000)

                   June 30, 2002               ($13,900,000)

                   September 30, 2002          ($3,136,000)

                   December 31, 2002           $8,340,000

                   March 31, 2003              $18,003,000

                   June 30, 2003               $27,334,000

                   September 30, 2003          $37,999,000

                   December 31, 2003           $48,006,000

                   March 31, 2004              $56,432,000

                   June 30, 2004               $64,727,000

                   September 30, 2004          $74,797,000

                   December 31, 2004           $85,175,000

                   March 31, 2005              $91,593,000

                   June 30, 2005               $97,885,000

                   September 30, 2005          $108,300,000

                   December 31, 2005           $118,986,000

                   March 31, 2006              $124,581,000

                   June 30, 2006               $129,900,000

                   September 30, 2006          $140,279,000

                   December 31, 2006           $150,876,000

                   March 31, 2007              $154,619,000


                  (c) MAXIMUM CAPITAL  EXPENDITURES.  As of the last day of each
      fiscal quarter occurring on and after the Fourth Amendment Effective Date,
      the Borrowers  shall not permit capital  expenditures  (other than IRU Cap

                                       45
<PAGE>
      Ex) on a combined basis to exceed the following:


                   FISCAL QUARTER ENDING       MAXIMUM CAPITAL
                                               EXPENDITURES

                   March 31, 2001              $27,980,000

                   June 30, 2001               $32,033,000

                   September 30, 2001          $30,209,000

                   December 31, 2001           $29,779,000

                   March 31, 2002              $23,655,000

                   June 30, 2002               $25,439,000

                   September 30, 2002          $27,355,000

                   December 31, 2002           $29,414,000

                   March 31, 2003              $18,242,000

                   June 30, 2003               $19,551,000

                   September 30, 2003          $20,954,000

                   December 31, 2003           $22,458,000

                   March 31, 2004              $18,639,000

                   June 30, 2004               $19,753,000

                   September 30, 2004          $20,931,000

                   December 31, 2004           $22,178,000

                   March 31, 2005              $19,861,000

                   June 30, 2005               $20,799,000

                   September 30, 2005          $21,780,000

                   December 31, 2005           $22,804,000

                   March 31, 2006              $17,279,000

                   June 30, 2006               $17,850,000

                   September 30, 2006          $18,439,000

                   December 31, 2006           $19,045,000

                   March 31, 2007              $19,670,000

      ; PROVIDED that to the extent that capital expenditures  permitted for any
      fiscal quarter on a cumulative  basis exceed actual  capital  expenditures
      for such fiscal quarter,  the excess shall be permitted to be carried over

                                       46
<PAGE>

      to the immediately  succeeding  fiscal quarter;  PROVIDED that in no event
      shall the  aggregate  amount of capital  expenditures  permitted  to be so
      carried  forward  from any one fiscal year to the next  succeeding  fiscal
      year exceed $20,000,000 (the 'CARRY OVER AMOUNT');  PROVIDED, HOWEVER, all
      amounts  used for  capital  expenditures  in any fiscal  quarter  shall be
      deemed to count  first  against any  amounts  carried  over to such fiscal
      quarter  and then  against any  remaining  amount  permitted  for any such
      fiscal quarter;  PROVIDED FURTHER, that,  notwithstanding  anything in the
      foregoing to the contrary,  the Borrowers shall be permitted to exceed the
      capital  expenditure amounts set forth above for any fiscal quarter by and
      amount of not more than (i)  $4,000,000 for the fiscal quarter ending June
      30, 2001,  (ii)  $8,000,000 for the fiscal  quarter  ending  September 30,
      2001,  (iii)  $12,000,000 for the fiscal quarter ending December 31, 2001,
      (iv)  $16,000,000  for the  fiscal  quarter  ending  March 31,  2002,  (v)
      $20,000,000 for the fiscal quarter ending June 30, 2002, (vi)  $24,000,000
      for the fiscal quarter ending September 30, 2002 and (vii) $25,000,000 for
      the fiscal  quarter  ending  December 31, 2002,  so long as the  aggregate
      amount  of  all  such  excess   amounts   shall  not  at  anytime   exceed
      $25,000,000."

            1.28  AMENDMENT TO SECTION 7.02.  SECTION 7.02 is hereby deleted  in
its entirety and the following new language is substituted therefor:

                  "SECTION 7.02.  [Reserved.]".

            1.29  AMENDMENTS TO SECTION 8.04.  SECTION 8.04  is  hereby  amended
and restated in its entirety as follows:

                  "SECTION 8.04  COLLECTION OF ACCOUNTS AND  RESTRICTED  ACCOUNT
      ARRANGEMENTS.  Such Loan Party hereby  represents  and warrants  that each
      depository   account,   including  each  collection,   concentration   and
      disbursement  account   (collectively,   the  "COLLECTION  ACCOUNTS")  now
      maintained  by such Loan Party at any bank  ("COLLECTION  AGENT")  for the
      collection of checks and cash constituting  proceeds of Accounts and sales
      of other personal  property which are part of the Collateral is identified
      on SCHEDULE 8.04 attached  hereto and made a part hereof.  With respect to
      each  Collection  Account,  such  Loan  Party  shall,  no  later  than the
      Restructuring  Effective  Date,  deliver  (to the  extent  not  previously
      delivered  pursuant to the Existing  Agreement) to the Collateral Agent, a
      "RESTRICTED  ACCOUNT  AGREEMENT"  substantially  in the form of  EXHIBIT N
      attached  hereto and made a part hereof,  duly  executed and  delivered by
      such Loan  Party and the  applicable  Collection  Agent,  authorizing  and
      directing such Collection  Agent,  upon receipt of written notice from the
      Collateral  Agent that an Event of Default has occurred and is continuing,
      to deposit  all  checks and cash  received  into a  restricted  account (a
      "RESTRICTED  ACCOUNT") and remit all amounts  deposited in such Restricted
      Account to the Collateral  Agent's  account  specified in such  Restricted
      Account Agreement until such time as the Collection Agent receives written
      notice from the Collateral  Agent rescinding such  instruction.  Such Loan
      Party shall,  following the  occurrence  and during the  continuance of an
      Event of  Default  and any  subsequent  request  by the  Collateral  Agent
      therefor,  take such further action as the Collateral Agent may reasonably
      deem  desirable to effect the transfer of exclusive  ownership and control
      of the Restricted  Accounts and all Collection  Accounts to the Collateral
      Agent.  Until all of the Obligations have been  indefeasibly paid in full,
      such Loan  Party  agrees not to enter into any  agreement  or execute  and


                                       47
<PAGE>

      deliver any direction which would modify,  impair or adversely  affect the
      rights and benefits of the Collateral  Agent under any Restricted  Account
      Agreement.  Such Loan Party  shall not open,  establish  or  maintain  any
      Collection  Account (other than those  identified on SCHEDULE 8.04 hereto)
      with any bank or  other  financial  institution  other  than a Lender  and
      without first having delivered to the Collateral Agent a duly executed and
      delivered  Restricted  Account  Agreement with respect to such  Collection
      Account. SCHEDULE 8.04 sets forth a true, complete and correct list of all
      Collection  Accounts and  disbursement  accounts of each Loan Party.  Such
      Loan Party shall notify the Collateral Agent in writing not less than five
      (5)  days  prior to the date it shall  open or  establish  any  Collection
      Account  or  disbursement  account  other  than an  account  described  on
      SCHEDULE 8.04 hereto."

            1.30  AMENDMENTS TO SECTION 9.01.

            (a) CLAUSE (A) of SECTION  9.01 is hereby  amended to (i) delete the
reference to "Borrower" appearing therein and substitute therefor a reference to
"Loan  Party" and (ii) delete the phrase "and five (5)  Business  Day shall have
elapsed" appearing therein.

            (b) CLAUSE (B) of SECTION 9.01 is hereby deleted in its entirety and
the following new CLAUSE (B) is substituted therefor:

                  "(b) Any Loan Party shall fail to observe or perform any other
      covenant,  condition or agreement to be observed or performed by such Loan
      Party in any of the Loan Documents, and such Loan Party fails to cure such
      breach within ten (10) Business Days after written  notice  thereof unless
      the breach  relates to a covenant  contained in SECTIONS  5.04,  5.22,  or
      ARTICLE VI or Article  VII, in which case no notice or grace  period shall
      apply,  or unless the breach  relates to SECTION 5.06 (other than SECTIONS
      5.06(A),  (B), (E), or (U)), in which case an Event of Default shall occur
      on the thirtieth day following the breach without any notice  requirement,
      unless the breach shall have been cured before such date; or".

            (c) CLAUSE (D) of SECTION 9.01 is hereby deleted in its entirety and
the following new CLAUSE (D) is substituted therefor:

                  "(d) KMC  Holdings  or any of its  Subsidiaries  (other than a
      Data Subsidiary)  shall fail to make any payment due (whether by scheduled
      maturity, required prepayment,  acceleration,  demand or otherwise) on any
      other Debt,  in excess of  $250,000,  including,  in each case  Guarantees
      thereof,  and such  failure  shall  continue  after the  applicable  grace
      period, if any, specified in the agreement or instrument  relating to such
      Debt or Guarantee, as applicable;  or any other default or event under any
      agreement or  instrument  relating to any Debt in excess of $250,000  with
      respect to KMC  Holdings or any of its  Subsidiaries  (other than any Data
      Subsidiary)  including,  in each case,  Guarantees  thereof,  or any other
      event,  shall occur and shall continue after the applicable  grace period,
      if any,  specified in such  agreement or  instrument if the effect of such
      default or event is to accelerate,  or to permit the  acceleration of, the
      maturity of such Debt in excess of $250,000  with  respect to KMC Holdings
      or any such Subsidiary,  including,  in each case,  Guarantees thereof, or


                                       48
<PAGE>

      the  effect of such  default  is to  permit  the  holders  of such Debt to
      require cash collateral  therefor;  or any such  indebtedness in excess of
      $250,000 with respect to KMC Holdings or such  Subsidiary,  including,  in
      each case, Guarantees thereof,  shall be declared to be due and payable or
      required  to be prepaid  (other  than by a  regularly  scheduled  required
      prepayment) prior to the stated maturity thereof; or".

            (d) CLAUSE (L) of SECTION 9.01 is hereby deleted in its entirety and
the following new CLAUSE (L) is substituted therefor:

                  "(l) (i) any Borrower shall default under any Lucent  Purchase
      Agreement or Additional Purchase  Agreement,  which default shall not have
      been cured or waived within the applicable grace period  thereunder or any
      remedies have been  exercised  with respect  thereto;  (ii) any amendment,
      modification,  breach or other event  shall  occur under the  Professional
      Services Agreement  identified on SCHEDULE 3.27 hereto which results in or
      could  reasonably  be expected to give rise to a right to  terminate  such
      agreement;  (iii)  Lucent's  role as primary  maintenance  and  operations
      servicer of the Systems and network of the Borrowers is terminated for any
      reason  other  than  as a  result  of  the  Borrowers'  having  engaged  a
      replacement  servicer  satisfactory to the Agent and Requisite Lenders and
      pursuant to  documentation  satisfactory  to the Agent;  or (iv) any event
      occurs  which  results in an adverse  change in the  provision of material
      services  under  the  Professional   Services  Agreement  or  the  General
      Agreement identified on SCHEDULE 3.27 hereto; or".

            (e)   CLAUSE (R) of  SECTION 9.01  is hereby  amended to  insert the
following new language at the end thereof:

                  "or in any  other  document  or  instrument  delivered  by KMC
      Holdings to Agent or Lender  pursuant to this Agreement and for which such
      failure  under such other  document  or  instrument  could  reasonably  be
      expected to have a Material Adverse Effect".

            (f) CLAUSE (S) of SECTION 9.01 is hereby deleted in its entirety and
the following new CLAUSE (S) is substituted therefor:

                  "(s) KMC  Holdings  or any of its  Subsidiaries  (other than a
      Data Subsidiary) shall fail to observe or perform any covenant,  condition
      or  agreement  to be observed or  performed by such Person in any Material
      Agreement  (other than a Loan Document,  any agreement  listed on SCHEDULE
      3.27 or an agreement referred to in SECTION 9.01(d)), such Person fails to
      cure such  breach  within  ten (10)  Business  Days after  written  notice
      thereof,  and such  failure is  reasonably  likely to result in a Material
      Adverse Effect; or".

            (g)  SECTION  9.01 is further  amended to delete each  reference  to
"Borrower"  appearing  in  SECTIONS  9.01(C),  (G),  (H),  (I),  (K) and (M) and
inserting a reference to "Loan Party" in its place.

            (h) SECTION 9.01 is further amended to delete each reference to "Any
Borrower or KMC Holdings", "any Borrower or KMC Holdings", "such Borrower or KMC


                                       49
<PAGE>

Holdings" and "any Borrower or KMC Holdings" appearing in SECTIONS 9.01(E),  (F)
and (P) and  substitute  therefor a  reference  to "KMC  Holdings  or any of its
Subsidiaries (other than any Data Subsidiary)".

            (i)   SECTION 9.01 is further amended to insert new CLAUSES (T)
and (U) at the end thereof as follows:

                  "(t)  Assets of any Loan  Party  with a fair  market  value of
      $250,000 or more shall be attached,  seized, levied upon or subjected to a
      writ or distress  warrant,  or come within the possession of any receiver,
      trustee,  custodian  or assignee  for the benefit of creditors of any Loan
      Party and such condition continues for thirty (30) days or more.

                  (u) Any event shall occur with respect to any Data  Subsidiary
      (including  under any Material  Agreement or Debt of a Data Subsidiary and
      any event  described in SECTIONS  9.01(E),  (F) or (G) with respect to any
      Data Subsidiary) that (i) gives rise to any judgment in excess of $250,000
      individually  or $500,000 in the aggregate or any  injunction  against any
      Loan  Party or (ii)  otherwise  causes a  material  adverse  effect on the
      business,   properties,   operations,   assets,  condition  (financial  or
      otherwise)  of any Loan Party or impairs  the ability of any Loan Party to
      perform its  obligations  under the Loan  Documents  or the ability of any
      Agent or Lender to enforce the Obligations."

            1.31 AMENDMENT TO SECTION 9.02. CLAUSE (B) of SECTION 9.02 is hereby
deleted in its entirety and the following new CLAUSE (B) is substituted
therefor:

                  "(b) by notice to the Borrowers, declare the Obligations to be
      immediately  due and  payable,  whereupon  all the  Obligations  shall  be
      immediately due and payable,  and the Agent shall have the right to demand
      cash collateral for the Letter of Credit Obligations in an amount equal to
      one hundred  five  percent  (105%) of such  obligations,  without  further
      notice  of any  kind,  PROVIDED,  HOWEVER,  that if an  Event  of  Default
      described  in  SECTIONS  9.01(E) or (F) shall  exist or occur,  all of the
      Obligations  shall  automatically,  without  declaration  or notice of any
      kind,  be  immediately  due  and  payable  and  the  Commitment  shall  be
      automatically terminated."

            1.32 AMENDMENT TO SECTION 9.09. SECTION 9.09 is hereby amended to
delete each reference therein to "Borrower" and insert a reference to "Loan
Party" in its place.

            1.33 AMENDMENT TO SECTION 11.06. SECTION 11.06 is hereby amended to
delete the first proviso appearing therein in its entirety and substitute the
following proviso therefor:

                  "; PROVIDED that  Borrowers  shall not have any  obligation to
      any Indemnitee hereunder with respect to any Indemnified Matters caused by
      or resulting  solely from the willful  misconduct  or gross  negligence of
      such  Indemnitee as determined by a final judgment of a court of competent
      jurisdiction".

            1.34 AMENDMENT TO SECTION 11.07.  SECTION 11.07 is hereby deleted in
     its entirety and the following new language is substituted therefor:



                                       50
<PAGE>

                  "SECTION 11.07.  SURVIVAL OF  REPRESENTATIONS  AND WARRANTIES,
      ETC. All warranties and representations made by any Loan Party in any Loan
      Document  shall survive the  execution and delivery of this  Agreement and
      the other Loan Documents and the making and repayment of the  Obligations.
      The  obligations of each Borrower in SECTIONS  2.07(E),  2.10(I) and 2.12,
      the provisions of SECTIONS 10.01,  10.02,  10.05,  10.10(B) and 11.03, the
      obligations   of  each   Borrower  in  SECTIONS   11.04  and  11.05,   the
      indemnification  obligations  of each  Borrower in SECTION  11.06,  to the
      extent the second  sentence of SECTION 11.13 is applicable,  all covenants
      of each Borrower, and the confidentiality  obligations of each Borrower in
      SECTION 11.16 survive the repayment of the Obligations."

            1.35  AMENDMENT  TO  SCHEDULE  1.01(A).  SCHEDULE  1.01(A) is hereby
deleted in its  entirety  and the  following  new  SCHEDULE  1.01(A) in the form
attached hereto as ATTACHMENT C is substituted therefor.

            1.36  AMENDMENT TO SCHEDULES.  The Schedules are further  amended by
inserting the following new Schedules in sequential order:  SCHEDULE 2.03 in the
form attached  hereto as ATTACHMENT D, SCHEDULE 3.25 in the form of ATTACHMENT E
annexed  hereto,  SCHEDULE  3.26 in the form of  ATTACHMENT  F  annexed  hereto,
SCHEDULE  3.27 in the form of  ATTACHMENT G annexed  hereto and SCHEDULE 5.06 in
the form of ATTACHMENT O hereto.

            1.37  AMENDMENT TO ANNEX B. ANNEX B of the Loan  Agreement is hereby
deleted  in its  entirety  and the  following  new ANNEX B in the form  attached
hereto as ATTACHMENT H is substituted therefor.

            1.38  AMENDMENT TO ANNEX C. ANNEX C of the Loan  Agreement is hereby
deleted  in its  entirety  and the  following  new ANNEX C in the form  attached
hereto as ATTACHMENT I is substituted therefor.

            1.39 AMENDMENT TO EXHIBIT F. EXHIBIT F of the Loan Agreement is
hereby deleted in its entirety and the following new EXHIBIT F in the form of
ATTACHMENT P is substituted therefor.

            2. LIMITED WAIVERS TO LOAN AGREEMENT.

            (a) The  Borrowers  have  requested  that the Lenders  waive certain
Defaults  and Events of Default  that have  occurred  and are  continuing  under
SECTION  9.01(B) of the Loan  Agreement  and,  as a material  inducement  to the
Agents  and  Lenders  to enter  into this  Amendment,  agree to make  additional
extensions of credit to the Borrowers  under the Loan  Agreement  after the date
hereof and waive such Defaults and Events of Default pursuant to this SECTION 2,
KMC Holdings and the Borrowers  have agreed that KMC Holdings and certain of its
Subsidiaries   shall  grant  additional  Liens  on  and  security  interests  in
substantially all of their assets as set forth SECTIONS 1.12(I) and 4 hereof.

            (b) On the basis of the representations and warranties  contained in
this Amendment,  and subject to the terms and conditions of this Amendment,  the
Agents  and  Requisite  Lenders  hereby  agree to waive any  Default or Event of


                                       51
<PAGE>

Default which may have  occurred  under  SECTION  9.01(B) of the Loan  Agreement
solely  as a result  of the  Borrowers'  failure  to be in  compliance  with the
covenants  set forth in  SECTION  7.01(B) of the Loan  Agreement  for the fiscal
quarter ending March 31, 2001.

            3.  LIMITATION  OF WAIVER.  Without  limiting the  generality of the
provisions of SECTION 11.02(B) of the Loan Agreement, the waiver set forth above
shall be limited precisely as written and relates solely to noncompliance by the
Borrowers  with the  provisions  of  SECTION  7.01(B)  and  9.01(B)  of the Loan
Agreement  in the manner and to the extent  described  above and nothing in this
Amendment shall be deemed to:

            (a)  constitute a waiver of  compliance  by Borrower with respect to
(i) SECTION  7.01(B) or 9.01(B) of the Loan  Agreement in any other  instance or
(ii) any other term,  provision or condition of the Loan  Agreement or any other
instrument or agreement referred to therein; or

            (b)  prejudice any right or remedy that the Agents or any Lender may
now have  (except  to the extent  such  right or remedy was based upon  existing
defaults that will not exist after giving effect to this  Amendment) or may have
in the  future  under or in  connection  with the Loan  Agreement  or any  other
instrument or agreement referred to therein.

            Except as expressly  set forth  herein,  the terms,  provisions  and
conditions of the Loan  Agreement and the other Loan  Documents  shall remain in
full  force and  effect  and in all  other  respects  are  hereby  ratified  and
confirmed.

            4. CONDITIONS PRECEDENT. This Amendment shall become effective as of
the date above written (the "FOURTH AMENDMENT EFFECTIVE DATE"), if, and only if,
the following conditions are satisfied:

            (a) the Agent shall have received the following  items, in each case
in form and substance satisfactory to the Agent and the Collateral Agent:

            (1)   this Amendment duly executed by the Borrowers, the Lenders
and the Agents;

            (2) the KMC Holdings Guaranty, as amended and restated on the Fourth
Amendment  Effective  Date in the form of  ATTACHMENT  A  annexed  hereto,  duly
executed by KMC Holdings;

            (3) a Reaffirmation  of Guaranty in the form of ATTACHMENT J annexed
hereto duly executed by KMC Holdings, Services I and Services II;

            (4) a Warrant  Agreement  substantially  in the form of ATTACHMENT K
annexed hereto duly executed by KMC Holdings, the Agent, as warrant agent and as
Agent, and each Lender;

            (5) a Warrant  Registration  Rights  Agreement  substantially in the
form of ATTACHMENT L annexed hereto duly executed by KMC Holdings, the Agent and
each Lender;

            (6) the written opinion of special counsel for the Borrowers and KMC
Holdings, dated the Fourth Amendment Effective Date, addressed to the Agent, the


                                       52
<PAGE>

Collateral  Agent and the  Lenders  satisfactory  to (and  containing  only such
qualifications  and  limitations as are  satisfactory  to) counsel to the Agent,
with opinion as to, among other  things,  (i) the  enforceability  of the Fourth
Amendment,  the Loan  Agreement  as  amended by the  Fourth  Amendment,  the KMC
Holdings  Guaranty  and  Security  Agreement  dated as of the  Fourth  Amendment
Effective Date, any other security  documents  executed on the Fourth  Amendment
Effective  Date,  and the Warrant  Agreement  (ii) the  perfection  of any liens
granted  on the  Fourth  Amendment  Effective  Date,  (iii)  no  conflicts  with
applicable  laws or  contractual  obligations,  and (iv) the due  authorization,
execution and delivery of the Fourth  Amendment and the other Loan  Documents to
be delivered on the Fourth Amendment  Effective Date and the Warrant  Agreement,
which  opinions  shall be  substantially  in the form of  ATTACHMENT  M  annexed
hereto;

            (7) evidence that all commitments to make loans or other  extensions
of credit under that certain  Loan and Security  Agreement  dated as of June 30,
2000 among KMC Telecom IV, Inc., a Delaware corporation,  KMC IV Services LLC, a
Delaware  limited  liability  company,  and KMC Telecom  Leasing IV of Virginia,
Inc., a Virginia corporation, as borrowers, the financial institutions from time
to time party thereto as lenders,  Lucent,  as agent for the lenders,  and State
Street Bank and Trust Company,  as collateral agent for the lenders,  as amended
or modified (the "KMC IV LOAN AGREEMENT"), have been terminated; and

            (8) officer's  certificates  of KMC Holdings  dated as of the Fourth
Amendment  Effective  Date,  in form and  substance  satisfactory  to the Agent,
certifying  (i) that all of the  Series F Senior  Redeemable,  Exchangeable  PIK
Preferred  Stock of KMC Holdings has been  retired,  terminated,  cancelled,  or
converted into Series E Preferred Stock and (ii) as to the status of KMC QV, KMC
Funding V, Data LLC, KMC VIII and KMC IX.

            (b) the Collateral Agent shall have received  evidence  satisfactory
to the Agent and Collateral Agent that the Collateral Agent's security interests
in the Collateral  have been properly  perfected and constitute  first and prior
security  interests  subject  only to Permitted  Liens,  including by (A) filing
Mortgages,  the Collateral Assignment of Licenses,  the Collateral Assignment of
Leases,  leasehold mortgages and UCC-1 financing statements (including,  without
limitation,  fixture  filings) in certain  filing and recording  offices and (C)
taking possession of stock certificates and other instruments,  in each case, as
requested by the Collateral Agent;

            (c) KMC Holdings shall have contributed as a capital contribution to
the Borrowers by depositing  same into an Account of the Borrowers  subject to a
Restricted  Account Agreement not less than  $200,000,000,  which proceeds shall
not be required to be applied to prepay the Loans and reduce the Revolving  Loan
Commitment Amount;

            (d) the Agent shall have  received  such  additional  updates to the
Schedules to the Loan  Agreement as  Borrowers  may deliver to the Agent,  which
updates shall be satisfactory to the Agent;

            (e) Lucent and the Agents  shall  have  received  amendments  to the
Professional  Services Agreement and the General Agreement in form and substance
satisfactory to Lucent; and



                                       53
<PAGE>

            (f) the Agents and Lenders shall have received such other documents,
agreements and instruments as the Agents may reasonably require.

            5.  REPRESENTATIONS  AND  WARRANTIES OF THE  BORROWERS.  In order to
induce the Lenders to enter into this  Amendment and to amend the Loan Agreement
in the manner provided herein, each Borrower hereby represents and warrants,  as
to each  Borrower  or each Loan  Party,  as the case may be,  that after  giving
effect to this Amendment:

            (a) AUTHORIZATION OF AGREEMENTS;  BINDING OBLIGATIONS. The execution
and delivery of this  Amendment  and the  performance  of the Loan  Agreement as
amended by this  Amendment (as so amended,  the "AMENDED  Agreement")  have been
duly authorized by all necessary  corporate  action on the part of such Borrower
and  constitute  the legal,  valid and  binding  obligations  of such  Borrower,
enforceable  against such Borrower in  accordance  with their  respective  terms
except as may be limited by bankruptcy, insolvency reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.

            (b) CORPORATE  POWER AND AUTHORITY.  Such Borrower has all requisite
corporate power and authority to enter into this Amendment,  and such Loan Party
has all requisite  corporate  power and authority to carry out the  transactions
contemplated  by, and perform its  obligations  under,  the Loan  Agreement,  as
amended by this Amendment.

            (c) NO CONFLICT. The execution and delivery by such Borrower of this
Amendment and the  performance by such Borrower of the Amended  Agreement do not
and will not (i) violate any  provision of any law or any  governmental  rule or
regulation  applicable  to  such  Borrower,   the  Certificate  or  Articles  of
Incorporation  or  Bylaws  (or  comparable  organizational  documents)  of  such
Borrower  or any  order,  judgment  or decree  of any  court or other  agency or
government  binding on such Borrower,  (ii) conflict with, result in a breach of
or  constitute  (with due  notice or lapse of time or both) a default  under any
contractual obligation of such Borrower, (iii) result in or require the creation
or imposition of any Lien upon any of the  properties or assets of such Borrower
(other  than  Liens  created  under  any of the Loan  Documents  in favor of the
Collateral  Agent on  behalf  of  Lenders),  or (iv)  require  any  approval  of
stockholders  or any  approval  or consent of any Person  under any  contractual
obligation of such Borrower.

            (d) GOVERNMENT CONSENTS. The execution and delivery by such Borrower
of this Amendment and the performance by such Borrower of the Amended  Agreement
do not and will not require  any  registration  with,  consent or approval of or
notice  to,  or  other  action  to,  with or by,  any  multi-national,  federal,
provincial,   state,  municipal,   local  or  other  governmental  authority  or
regulatory body.

            (e) ABSENCE OF  DEFAULTS.  As of the date  hereof,  and after giving
effect to this  Amendment,  such Borrower  shall be in  compliance  with all the
terms  and  provisions  set  forth in the  Amended  Agreement  on its part to be
observed or  performed,  and no Event of Default or Default  shall have occurred
and be continuing

            (f)  REAFFIRMATION.  Upon the effectiveness of this Amendment,  such
Borrower hereby  reaffirms all  representations  and warranties made in the Loan


                                       54
<PAGE>

Agreement,  and to the extent the same are not amended  hereby,  agrees that all
such  representations  and warranties  shall be deemed to have been remade as of
the date of delivery of this  Amendment,  unless and to the extent that any such
representation  and warranty is stated to relate  solely to an earlier  date, in
which case such representation and warranty shall be true and correct as of such
earlier date.

            6. REFERENCE TO AND EFFECT ON THE LOAN AGREEMENT.

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

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

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

            7. RELEASE AND DISCHARGE OF CLAIMS AND ACTIONS. TO INDUCE THE AGENTS
AND THE LENDERS TO ENTER INTO THIS  AMENDMENT,  EACH BORROWER AND EACH GUARANTOR
ON BEHALF OF ITSELF AND EACH OF ITS  SUBSIDIARIES  AND  AFFILIATES  EACH  HEREBY
KNOWINGLY,  VOLUNTARILY,  INTENTIONALLY  AND IRREVOCABLY  RELEASES,  ACQUITS AND
FOREVER  DISCHARGES  THE AGENT AND EACH  LENDER AND THEIR  RESPECTIVE  OFFICERS,
DIRECTORS,  AGENTS,  EMPLOYEES,  SUCCESSORS AND ASSIGNS,  FROM ALL  LIABILITIES,
CLAIMS,  DEMANDS,  ACTIONS  OR CAUSES  OF ACTION OF ANY KIND (IF ANY THERE  BE),
WHETHER ABSOLUTE OR CONTINGENT, DUE OR TO BECOME DUE, DISPUTED OR UNDISPUTED, AT
LAW OR IN  EQUITY,  THAT  ANY  BORROWER  OR ANY  GUARANTOR  NOW HAVE OR EVER HAD
AGAINST ANY AGENTS OR LENDER ARISING UNDER, BASED UPON OR IN CONNECTION WITH THE
LOAN  AGREEMENT  OR  ANY  OF  THE  OTHER  LOAN  DOCUMENTS  OR  THE  TRANSACTIONS
CONTEMPLATED THEREBY BY REASON OF ANY MATTER, CAUSE OR THING WHATSOEVER FROM THE
BEGINNING OF THE WORLD TO AND INCLUDING  THE FOURTH  AMENDMENT  EFFECTIVE  DATE;
PROVIDED HOWEVER THAT NOTHING IN THIS SECTION 7 SHALL BE CONSTRUED TO RELEASE OR
DISCHARGE LUCENT FROM ANY  LIABILITIES,  CLAIMS,  DEMANDS,  ACTIONS OR CAUSES OF
ACTION OF ANY KIND WHICH ANY BORROWER OR GUARANTOR  NOW HAS OR EVER MAY HAVE HAD
AGAINST LUCENT UNDER EITHER THE KMC IV LOAN AGREEMENT OR IN CONNECTION  WITH THE
PATHSTAR SYSTEMS IN HICKORY, NORTH CAROLINA, AND WILMINGTON, NORTH CAROLINA.



                                       55
<PAGE>

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

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

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



                                       56
<PAGE>

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

            THE BORROWERS:


                                    KMC TELECOM INC.

                                    KMC TELECOM II, INC.

                                    KMC TELECOM III, INC.

                                    KMC TELECOM OF VIRGINIA, INC.

                                    KMC TELECOM.COM, INC.

                                    In each case:


                                    By: /S/ CONSTANCE LOOSEMORE
                                        -----------------------
                                    Name: Constance Loosemore
                                    Title:  Treasurer

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


                                    By: /S/ CONSTANCE LOOSEMORE
                                        -----------------------
                                    Name: Constance Loosemore
                                    Title:  Treasurer


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


                                    By: /S/ CONSTANCE LOOSEMORE
                                        -----------------------
                                    Name: Constance Loosemore
                                    Title:  Treasurer


                                      S-1
<PAGE>



                                    KMC TELECOM LEASING III LLC

                                    KMC III SERVICES LLC

                                    In each case:

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


                                    By: /S/ CONSTANCE LOOSEMORE
                                        -----------------------
                                    Name: Constance Loosemore
                                    Title:  Treasurer


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


                                    By: /S/ G.C. ULLRICH
                                        -----------------------
                                    Name: G.C. Ullrich
                                    Title: Senior Vice President


                                    CIT  LENDING  SERVICES   CORPORATION  (f/k/a
                                    NEWCOURT COMMERCIAL FINANCE CORPORATION), as
                                    the Collateral Agent and as a Lender


                                    By: /S/ MARK O'KEEFFE
                                        -----------------------
                                    Name: Mark O'Keeffe
                                    Title: VP


                                    CANADIAN IMPERIAL BANK OF COMMERCE, as a
                                     Lender


                                    By: /S/ JACQUELINE STEWART
                                        -----------------------
                                    Name: Jacqueline Stewart
                                    Title:  Executive Director




                                      S-2
<PAGE>



                                    GENERAL ELECTRIC CAPITAL CORPORATION, as
                                    a Lender


                                    By: /S/ BRIAN P. WARD
                                        -----------------------
                                    Name: Brian P. Ward
                                    Title: Manager - Operations


                                    LUCENT TECHNOLOGIES INC., as a Lender


                                    By: /S/ DINA FEDE
                                        -----------------------
                                    Name: Dina Fede
                                    Title: Director-NA Customer Finance


                                    CREDIT SUISSE FIRST BOSTON, as a Lender


                                    By: /S/ DAVID L. SAWYER   /S/ LALITA ADVANI
                                        -------------------   -----------------
                                    Name: David L. Sawyer     Lalita Advani
                                    Title: Vice President     Assistant Vice
                                                              President


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


                                    By: /S/ BRIAN SCHNEIDER
                                        ------------------------
                                    Name: Brian Schneider
                                    Title:  Assistant Vice President

                                    By: /S/ MICHAEL S. GREENBERG
                                        ------------------------
                                    Name: Michael S. Greenberg
                                    Title: Assistant Vice President




                                      S-3
<PAGE>



                                    MORGAN STANLEY SENIOR FUNDING, INC., as a
                                     Lender


                                    By: /S/ T. MORGAN EDWARDS II
                                        ------------------------
                                    Name: T. Morgan Edwards II
                                    Title: Vice President

                                    By:________________________
                                    Name:
                                    Title:


                                    MORGAN STANLEY DEAN WITTER PRIME INCOME
                                    TRUST, as a Lender


                                    By: /S/ SHEILA FINNERTY
                                        --------------------
                                    Name: Sheila Finnerty
                                    Title: Sr. Vice President


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


                                    By: /S/ STENDER E. SWEENEY II
                                        -------------------------
                                    Name: Stender E. Sweeney
                                    Title:  Vice Presidenet



                                    STEIN ROE & FARNHAM INCORPORATED as agent
                                    for KEYPORT LIFE INSURANCE COMPANY, as a
                                    Lender


                                    By: /S/ BRIAN W. GOOD
                                        -----------------
                                    Name: Brian W. Good
                                    Title: Sr. Vice President & Portfolio
                                     Manager



                                      S-4
<PAGE>




                                    STEIN ROE FLOATING RATE LIMITED LIABILITY
                                    COMPANY, as a Lender


                                    By: /S/ BRIAN W. GOOD
                                        ------------------
                                    Name: Brian W. Good
                                    Title: Senior Vice President


                                    IBM CREDIT CORPORATION, as a Lender


                                    By: /S/ THOMAS S. CURCIO
                                        --------------------
                                    Name: Thomas S. Curcio
                                    Title: Manager of Credit, Commercial &
                                           Specialty Financing


                                      S-5