Document:

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                                                                   EXHIBIT 10.18

                                                                  EXECUTION COPY

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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     This Amended and Restated Employment Agreement (the "Agreement") is made as
of this 6th day of March, 2000 by and between KMC TELECOM HOLDINGS, INC., a
Delaware corporation with its principal place of business located at 1545 Route
206, Suite 300, Bedminster, New Jersey 07921 ("KMC") and Roscoe C. Young, II, an
individual, residing at 23 Laurelwood Drive, Bernardsville, NJ 07924 ("Mr.
Young").

                              W I T N E S S E T H :
                              - - - - - - - - - -

     WHEREAS, KMC is engaged in, among other things, the business of a
competitive local exchange carrier providing telecommunications services
principally in Tier III and Tier IV Markets, including, but not limited to,
providing on-net, special access and private line and Internet access services
and, primarily on a resale basis, switchboard-based local and long distance
services; and

     WHEREAS, KMC and Mr. Young wish to enter into an agreement pursuant to
which Mr. Young will serve as the President and Chief Operating Officer of KMC
and a member of the Board of Directors ("KMC Board"); and

     WHEREAS, this Agreement supersedes that certain Employment Agreement dated
as of January 1, 1999 by and between Mr. Young and KMC.

     NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which hereby is acknowledged, KMC and Mr. Young agree
as follows:
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     1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
        -------------------
shall have the meanings set forth below:

     "Business" shall mean the business conducted by KMC or a majority owned
      --------
subsidiary ("Subsidiary"), controlled affiliate ("Affiliate") or KMC controlled
joint venture ("Joint Venture") since 1996 and as of the date of execution of
this Agreement, including business activities under substantial review or in
substantial development, all business activities which emanate therefrom by a
reasonable expansion of the present activities of KMC or a Subsidiary, Affiliate
or Joint Venture thereof during the Term (as defined in Section 2(a) hereof),
including all business activities which may hereafter be developed by KMC or a
Subsidiary, Affiliate or Joint Venture thereof, including without limitation:
providing telecommunications and data services to business, government and
institutional end users and Internet service providers, long distance companies
and wireless service providers (including, without limitation, providing on-net
special access and private line and Internet access services, switch-based local
and long distance services, wireless, Centrex-type, frame relay ISDN and ATM
services for applications including LAN-to-LAN interconnect, Internet access,
WAN and high speed video conferencing).

     "Good Reason" shall mean (i) any reduction in the Base Salary or
      -----------
opportunity for an annual bonus, (ii) failure by KMC to provide life, medical,
dental, hospitalization plan or other benefits for Mr. Young on the same basis
as other senior management of KMC or (iii) material diminution in Mr. Young's
reporting authority, function or position in KMC which continues after 20 days
of the date notice is given to KMC's Board by Mr. Young, provided, however, (a)
the failure of Mr. Young to remain a member of the KMC Board or (b) any change
in Mr. Young's reporting responsibility described in Section 2(b) with respect
to the KMC Board shall not constitute Good Reason.

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     "Person" shall mean any individual, firm, corporation, partnership, limited
      ------
liability company, trust, governmental agency or authority, court, tribunal,
arbitrator or other entity.

     Wherever from the context it appears appropriate, each word or phrase
stated in either the singular or the plural shall include the singular and the
plural, and each pronoun stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter.

     2.  EMPLOYMENT AND DUTIES.
         ---------------------

          (a) Employment and Term. KMC hereby agrees to employ Mr. Young, and
              -------------------
Mr. Young hereby agrees to be employed by KMC, as KMC's President and Chief
Operating Officer, upon and subject to the terms and conditions set forth
herein. Mr. Young shall be a member of the KMC Board at all times during the
Term of this Agreement, provided, however, (a) the failure of Mr. Young to
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remain a member of the KMC Board or (b) any change in Mr. Young's reporting
responsibility described in Section 2(b) with respect to the KMC Board shall not
constitute a breach of this Agreement by KMC. The term of Mr. Young's employment
hereunder (the "Term") shall become effective as of March 6, 2000 and, unless
earlier terminated in accordance with this Agreement, shall continue until March
31, 2005.

          (b) Duties and Responsibilities. As President and Chief Operating
              ---------------------------
Officer, Mr. Young shall report and be accountable to the KMC Board. Mr. Young
shall have such duties and responsibilities consistent with his position as may
from time to time be assigned by the KMC Board, including, without limitation,
the responsibility and authority to:

               (i) supervise and administer the implementation of all aspects of
the Business with a view to meeting KMC's short-term and long-term targets,
including, but not limited to, (A) the management of all operations relating to
the Business, and in particular KMC's wireless strategy, (B) the preparation,
review, recommendation and implementation of

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areas for modification of KMC's business plans, including the submission to the
KMC Board of a business plan for each fiscal year not later than thirty (30)
days prior to the commencement of such fiscal year, and (C) the development and
implementation of the Business as it relates to KMC and its Subsidiaries,
Affiliates or Joint Ventures; and

               (ii) perform such other duties and responsibilities as are
usually incumbent upon a president and chief operating officer.

          (c) Performance of Services. During the term of his employment
              -----------------------
hereunder, Mr. Young shall:

               (i) perform and discharge, faithfully, diligently and competently
the duties and responsibilities assigned to him hereunder to the best of his
ability;

               (ii) devote his full and undivided business time, other than
during vacations taken in accordance with KMC's established policies and in
accordance with this Agreement, to the performance and discharge of such duties
and responsibilities, provided that Mr. Young may devote a reasonable amount of
time to charitable, civic and professional organizations (including serving on
boards of companies not in the Business) and activities so long as they do not
interfere with the performance and discharge of his duties and responsibilities;

               (iii) not engage, without the prior written approval of the
Chairman of KMC, in any business or activities which interfere or are reasonably
likely to interfere with the proper performance and discharge of such duties or
responsibilities, other than passive, personal investments in a Person (A) all
of whose business or activities are not in competition with the Business;
provided that if such Person is engaged in any such business or activity, this
clause (A) shall not preclude Mr. Young from beneficially owning or controlling

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not more than two percent (2%) of any class of securities issued by such Person
which class is registered under Section 12 of the Securities Exchange Act of
1934, as amended, and (B) in which Mr. Young has no managerial or active role;
and

               (iv) if requested by the KMC Board, perform the responsibilities
assigned to him hereunder or related services for the benefit of joint ventures,
subsidiaries or affiliates of KMC, or other Persons with which KMC may have a
business relationship, including without limitation acting as an officer or
director thereof.

          (d) Place of Employment. The principal place of employment of Mr.
Young shall be in Bedminster, New Jersey or such other location within 50 miles
of Bedminster, New Jersey, established as the corporate headquarters of KMC. If
KMC relocates its corporate headquarters outside of 50 miles of Bedminster, New
Jersey then Mr. Young shall be entitled to full relocation costs in connection
with moving his home to within 50 miles of the new headquarters. Notwithstanding
the foregoing, Mr. Young acknowledges that he will be required, in connection
with the performance and discharge of his duties and responsibilities hereunder
to travel elsewhere.

     3.  NONCOMPETITION; PROPRIETARY RIGHTS; CONFIDENTIAL INFORMATION; UNIQUE
         --------------------------------------------------------------------
SERVICES.
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          (a) Noncompetition. During the Term and for a period of twenty-four
              --------------
(24) months after the date of termination of Mr. Young's employment hereunder
(unless such termination occurs pursuant to Section 7 (a)(ii) or Section 7
(a)(iii), in which case the period shall be twelve (12) months), Mr. Young shall
not within the United States (i) directly or indirectly, whether individually or
as an employee, agent, manager, director, officer, stockholder, partner,
investor, consultant, advisor or in any other capacity whatsoever, own, manage,
operate,

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control, be employed by, participate in or be connected in any manner whatsoever
with the ownership, management, operation or control of, or have any financial
interest in, any Person, business or venture in competition with the Business at
the time of the termination of Mr. Young's employment, (ii) recruit, solicit or
otherwise seek to induce any individual employed by KMC or any of its
subsidiaries, affiliates or joint ventures in a managerial or higher position to
terminate his or her employment with or to violate any agreement, duty or
responsibility with or to any of the foregoing, (iii) solicit from any Person
with which KMC, any of its Subsidiaries, Affiliates or Joint Ventures, or any
individual employed by any of the foregoing, has a business relationship
relating to the Business, any business relating to services similar to the
services which are or were performed for such Person by KMC or its Subsidiaries,
Affiliates or Joint Ventures during the Term or (iv) solicit, induce, influence
or encourage any joint venture, customer, supplier or other Person having a
business relationship with KMC or any of its subsidiaries, affiliates or joint
ventures to terminate, discontinue, reduce or materially diminish or change its
relationship with KMC or any of its subsidiaries, affiliates or joint ventures.
This Section 3 (a) shall not apply in the event this Mr. Young serves the full
Term of this Agreement and is not re-employed by KMC.

          (b) Proprietary Rights. Mr. Young (i) shall promptly and fully
              ------------------
disclose to KMC, and with all necessary detail for development, marketing, sale
and installation, any and all know-how, discoveries, inventions, compositions,
works, improvements, ideas, concepts, writings, patents, copyrights,
intellectual property, methods, plans, customer lists, supplier lists and other
data and information directly or indirectly relating to in the Business (whether
copyrightable, patentable or otherwise) made, developed, created, received,
conceived, acquired or written by Mr. Young (whether or not at the request or
upon the suggestion of KMC)

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during the Term and for twelve (12) months thereafter, solely or jointly with
others (collectively "Proprietary Rights"), and (ii) hereby acknowledges and
agrees that all of such Proprietary Rights are and will be works made for hire
and are and will be the sole and exclusive property of KMC. Without limiting the
foregoing, Mr. Young hereby (x) assigns and transfers, and agrees to assign and
transfer, to KMC all of his right, title and interest in and to all present and
future Proprietary Rights, (y) agrees promptly to deliver to KMC all papers,
drawings, models, data and other material relating to or embodying any of the
Proprietary Rights and (z) agrees to execute, acknowledge and deliver all such
further agreements, documents and instruments, including, without limitation,
applications for copyrights and patents, and do all other acts and things as may
be necessary or reasonably requested by KMC to obtain copyrights or patents for
any thereof in any and all countries, to register, confirm and vest title and
ownership thereto to KMC and further to effectuate the purposes of this Section
3(b). Mr. Young shall reasonably assist KMC in obtaining such copyrights or
patents during the Term and any time thereafter and agrees to testify in any
prosecution or litigation involving any of the Proprietary Rights; provided that
KMC shall pay or reimburse Mr. Young for all ordinary, necessary, reasonable and
proper expenses actually incurred or paid by him in connection therewith.

          (c) Confidential Information. Mr. Young acknowledges that from time to
              ------------------------
time he shall receive information concerning KMC, its subsidiaries, affiliates
and joint ventures, the Business which involves, trade secrets, proprietary
information or other confidential information, including without limitation, the
Proprietary Rights, names of actual or potential customers which have been
solicited or are on any mailing lists, rolodexes, files, information relating to
agreements, research, methods, writings, manuals, developments and marketing and
any embodiments of any of the foregoing (all of which is collectively called

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"Confidential Information"). Except as is necessary within the scope of and in
connection with the performance and discharge of his duties and responsibilities
hereunder, Mr. Young shall not, during the Term or at any time thereafter,
directly or indirectly, disclose to any Person any Confidential Information.
Notwithstanding the foregoing, Confidential Information shall not include any
information that can be established by reasonable written evidence (i) is in the
public domain other than by reason of a breach by Mr. Young of this Agreement;
or (ii) was in the possession of Mr. Young at the time of the disclosure; or
(iii) was obtained by Mr. Young in good faith from a third party entitled to
disclose it; or (iv) was required to be disclosed by a court of competent
jurisdiction or a governmental authority with authority over Mr. Young or KMC,
in which case Mr. Young shall use his reasonable best efforts, prior to such
disclosure, to give timely notice of such requirement to the KMC Board, in order
to permit KMC to object to such disclosure or seek confidential treatment of the
Confidential Information.

          (d) Return of Confidential Information. Upon termination of Mr.
              ----------------------------------
Young's employment with KMC, Mr. Young shall forthwith return to KMC all
Confidential Information in his possession or control, including without
limitation, all documents, records, reports, writings and other documents
containing or embodiments of Confidential Information and all copies thereof.

          (e) Remedies. Mr. Young and KMC acknowledge that the services to be
              --------
rendered hereunder are of a special, unique, unusual, extraordinary and
intellectual character involving a high degree of skill and having a peculiar
value, the loss of which may cause KMC immediate and irreparable harm which
cannot be adequately compensated in monetary damages. Accordingly, in the event
of a breach or threatened breach by Mr. Young of this Section 3, and following
20 days notice to Mr. Young to cease such activity and his failure to do so, Mr.
Young

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consents that KMC shall be entitled to injunctive or other equitable relief,
both preliminary and permanent, without posting a bond or other security, and
Mr. Young will not raise the defense that KMC has an adequate remedy at law. In
addition, KMC shall be entitled to any other legal or equitable remedies as may
be available. The rights and remedies provided in this Agreement shall be deemed
cumulative, and not exclusive, and the exercise of one shall not preclude the
exercise of any other right or remedy at law or in equity for the same event or
any other event.

          (f) Invalidity. If any portion of the restrictions set forth in this
              ----------
Section 3 should, for any reason whatsoever, be declared invalid by a court of
competent jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.

          (g) Reasonable Scope and Limitations. Mr. Young acknowledges and
              --------------------------------
agrees that the scope, area and time limitations set forth in this Section 3 are
reasonable and customary, and properly required for the adequate protection of
the Business of KMC and its subsidiaries, affiliates, joint ventures and
employees. If at the time of enforcement, any such scope, area or time
limitation is deemed to be unreasonable under circumstances then existing by a
court of competent jurisdiction, then the parties agree that the maximum scope,
area or time limitation which said court shall deem reasonable under such
circumstances shall be substituted for the stated scope, area or time
limitation.

          (h) Claim not a Defense. The existence of any claim or cause of action
              -------------------
by Mr. Young against KMC, whether or not under this Agreement, shall not
constitute a defense to the enforcement by KMC of this Section 3.

          (i) Survival. The provisions of this Section 3 shall survive the
              --------
termination of Mr. Young's employment for any reason whatsoever.

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     4.  COMPENSATION; BENEFITS.
         ----------------------

     As full compensation to Mr. Young, KMC shall pay or provide, or cause to be
paid or provided, to Mr. Young the following compensation and benefits:

          (a) Base Salary. Mr. Young shall receive base salary (the "Base
              -----------
Salary") at the rate of $500,000 per year which shall be earned by and payable
to Mr. Young in arrears in consecutive semi-monthly installments, each of which
shall be approximately equal, in accordance with KMC's standard payroll
practices, as such practices may be amended from time to time.

          (b) Annual Bonus. In addition to the Base Salary, Mr. Young shall be
              ------------
entitled to be eligible and considered for a bonus each year in the sole
discretion of the Compensation Committee of the KMC Board in an amount up to one
hundred percent (100%) (or such higher amount as may be applicable to other
members of KMC's senior management but not duplicative of Section 4(c)) of the
Base Salary.

          (c) Other Bonuses. In addition to the annual bonus, Mr. Young will be
              -------------
entitled to receive a total of Three Million Dollars ($3,000,000) in bonus
payments at the following milestones. Within 30 days after the closing of a
private equity issuance of at least $200 million ("Private Equity Issuance"),
Mr. Young will be entitled to receive a bonus equal to Five Hundred Thousand
Dollars ($500,000). Within 30 days after the closing of the initial public
offering of KMC's common stock ("IPO"), if the IPO occurs after a Private Equity
Issuance, Mr. Young will be entitled to receive a bonus equal to Five Hundred
Thousand Dollars ($500,000). Within thirty 30 days after the closing of (i) the
IPO if a Private Equity Issuance has not yet occurred and (ii) the first two
public capital equity or debt events subsequent to the IPO, including, but not
limited to, a secondary offering of the common stock of KMC, or a high yield

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debt issuance, Mr. Young will be entitled to receive a bonus for each such event
equal to One Million Dollars ($1,000,000). Upon agreement by KMC, Mr. Young may
elect, upon sixty (60) days notice to KMC, to receive any of the foregoing bonus
payments in common stock of KMC, such amount of common stock to be calculated at
the then fair market value as of the date of the event giving rise to the bonus.
Mr. Young shall also have the right to defer the payment of any of the bonuses
payable pursuant to this section at his sole discretion.

          (d) Stock Options; Group Plans. Mr. Young shall be eligible to
              --------------------------
participate, on terms and conditions at least comparable with all other senior
executives of KMC, in (i) any stock option plan KMC adopts, (ii) KMC's 401(k)
plan for salaried employees of KMC, subject to any eligibility requirements
thereof, (iii) KMC's group life, medical, dental, hospitalization or
accident/disability insurance plans and health programs, but in all events,
subject to applicable terms of the plans, and (iv) and any other benefits
generally accorded to employees of KMC. KMC will use its reasonable efforts to
assist Mr. Young in obtaining sufficient funds to exercise the stock options
granted to him as of the date hereof and pay any applicable tax relating to a
Section 83 (b) election under the United States tax code. KMC shall not be
obligated to loan or guarantee any funds obtained by Mr. Young for this purpose.

          (e) Vacation. Mr. Young shall be entitled to three (3) weeks' vacation
              --------
and one (1) week illness allowance with pay in each calendar year on terms
comparable to that afforded other senior executives of KMC. In the event KMC's
vacation or illness allowance policy is increased for such senior executives
generally, then Mr. Young will be entitled to any increase in vacation or
illness allowance such modification provides. There will be no carryover of
unused vacation time or pay or illness allowance from year to year. Mr. Young
shall also be entitled to all holiday privileges regularly observed by KMC
during the Term.

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          (f) Automobile Lease. Mr. Young shall be entitled to the use of a
              ----------------
leased automobile acceptable to KMC, including payment by KMC of lease payments,
insurance, maintenance and repair expenses and the cost of gasoline used by Mr.
Young, not to exceed six hundred dollars ($600.00) per month.

          (g) Reimbursement of Expenses. KMC shall pay or reimburse Mr. Young
              -------------------------
for all ordinary, necessary, reasonable and proper expenses actually incurred or
paid by him during the Term in the performance and discharge of his duties and
responsibilities under this Agreement in accordance with the policies and
procedures established by KMC from time to time for its senior management
generally. As part of such policies and procedures, the KMC Board may from time
to time for members of senior management generally require prior approval for
individual expense items in excess of pre-established aggregate amounts for a
fixed period or in excess of pre-established amounts for any type of expenditure
during any fixed period. Mr. Young will not incur expenses other than in
accordance with KMC's policies and procedures both as to the nature and amount
of such expenses.

     5.  KEY MAN LIFE POLICY.
         -------------------

     In addition to any life insurance policy provided by KMC for the benefit of
Mr. Young pursuant to Section 4, KMC shall be permitted, at its own expense, to
maintain a "key man life insurance policy", in such amount and on such terms as
KMC shall in its sole discretion determine, on the life of Mr. Young for so long
as this Agreement remains in effect. Mr. Young shall fully cooperate with and
assist KMC in obtaining or maintaining any such insurance, including without
limitation, submitting to medical examinations and providing information to
insurance brokers, agents or carriers. Any proceeds from any such "key man"
policy shall be payable solely to KMC; Mr. Young's legal representatives, heirs,
successors, assigns and

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beneficiaries shall have no rights with respect thereto. Mr. Young represents
and warrants that to the best of his knowledge he is in good health and has no
reason to believe that such insurance will not be available to KMC at standard
rates.

     6. REPRESENTATIONS AND WARRANTIES BY MR. YOUNG.
        -------------------------------------------

     Mr. Young hereby represents and warrants, the same being part of the
essence of this Agreement, that he is not, and during the Term will not be, a
party to any agreement, contract or understanding, and that he has no knowledge
of any physical or mental illness, condition, impairment, restriction or
incapacity, which in any way restrict or prohibit or will restrict or prohibit
him from undertaking or performing or discharging any of his duties and
responsibilities under this Agreement.

     7.  TERMINATION.
         -----------

          (a) This Agreement, and Mr. Young's employment, shall terminate prior
to the scheduled termination date set forth in Section 2(a) hereof upon the
following terms and conditions:

               (i) If Mr. Young dies or becomes permanently disabled, this
Agreement shall terminate effective upon his death or when his Disability (as
hereinafter defined) is deemed to have become permanent. If Mr. Young is unable
to perform his normal duties for KMC and/or its subsidiaries, affiliates or
joint ventures because of Disability for a period of at least ninety (90)
consecutive days, or for shorter periods totaling more than one hundred and
eighty (180) days during any period of three hundred and sixty five (365) or
fewer consecutive days for the same cause, the KMC Board may at its option deem
such Disability to have become permanent. For purposes of this Agreement, the
term "Disability" shall mean the physical or mental illness, condition,
impairment, restriction or incapacity of Mr. Young, such

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that Mr. Young shall be substantially unable to perform and discharge his duties
and responsibilities under this Agreement, as certified by a physician,
psychiatrist or other medical practitioner satisfactory to KMC if KMC so
requests.

               (ii) KMC may terminate this Agreement other than for reasons
specified in Section 7(a)(i) or (iv), upon ninety (90) days' prior written
notice to Mr. Young.

               (iii) Mr. Young may terminate this Agreement for Good Reason upon
notice to the KMC Board of his intent to resign for Good Reason provided Mr.
Young, with his counsel, shall have met with the KMC Board, if requested by the
KMC Board, during the twenty (20) day period required for notice of his intent
to resign for Good Reason.

               (iv) KMC may terminate this Agreement for Cause (as defined
below), by notice to Mr. Young. The term "Cause" shall mean any of the
following: (A) Mr. Young commits malfeasance towards KMC and/or any of its
subsidiaries, affiliates or joint ventures (including without limitation
misappropriation of funds, acts of fraud or dishonesty, or a material violation
of corporate policy), or is convicted of any crime or offense involving
dishonesty, or improper taking of monies or other property, or any felony
offense, or any crime of moral turpitude, or commits fraud or embezzlement, or
any other violation of law which materially impairs his ability to perform and
discharge his duties or responsibilities hereunder or which otherwise materially
adversely affects KMC and/or its subsidiaries, affiliates or joint ventures; (B)
Mr. Young has breached any of his material duties to KMC and/or its
subsidiaries, affiliates or joint ventures or otherwise violated any other
material provision of this Agreement or has made a material misrepresentation
which breach, violation or misrepresentation adversely affects the business of
KMC and/or its subsidiaries or affiliates or joint ventures and, if such breach,
violation or misrepresentation can reasonably be expected to be cured within
twenty

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(20) days, such breach, violation or misrepresentation has not been cured to
KMC's satisfaction within twenty (20) days after it notifies Mr. Young thereof;
or (C) Mr. Young has neglected or failed to discharge any of his material duties
or responsibilities under this Agreement or failed to obey appropriate
directions from KMC and/or its subsidiaries, affiliates or joint ventures
consistent with this Agreement, and if such neglect or failure can reasonably be
expected to be cured within twenty (20) days, such neglect or failure has not
been cured to KMC's satisfaction within twenty (20) days after it notifies Mr.
Young thereof.

          (b) Upon any termination pursuant to this Section 7, all rights of Mr.
Young under this Agreement shall cease to be effective as of the date of
termination, Mr. Young shall be removed from his position and Mr. Young shall
have no right to receive any payments or benefits hereunder except for (i)
installments of Base Salary which have been earned in accordance with Section
4(a) hereof up to the effective date of such termination, (ii) reimbursement of
ordinary, reasonable and necessary expenses incurred in accordance with Section
4(f) hereof and, to the extent permitted by law, accrued vacation and illness
allowance, in each case up to the effective date of such termination, (iii) all
other benefits due Mr. Young under benefit programs in which he participated and
under which he is due a benefit, (iv) if the termination is pursuant to Section
7(a)(i) by reason of Mr. Young's Disability, KMC shall pay the greater of (x)
sixty percent (60%) of the Base Salary and (y) the amount payable to Mr. Young
under any disability plan adopted by KMC from time to time, (v) if the
termination is pursuant to Section 7 (a)(i) by reason of Mr. Young's death,
Section 7(a)(ii) or Section 7 (a) (iii), KMC shall pay to Mr. Young a severance
payment in an amount equal to the two times the annual Base Salary and (v)
continuation of Mr. Young's health and dental benefits at the same level as all
other senior management of KMC for the period for which the severance is paid.
If the

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termination is pursuant to Section 7(a)(ii) one-half of any severance payment
will be payable in a lump sum on the date the termination becomes effective,
with the balance being payable in arrears in approximately equal consecutive
semi-monthly installments in accordance with KMC's standard payroll practices,
as such practices may be amended from time to time, over the period beginning on
KMC's first payroll payment date after the termination becomes effective and
ending on the earlier of (x) the first anniversary of such date and (y) March
31, 2005, subject to Mr. Young's compliance with the provisions of Section 3
hereof.

          (c) (i) If Mr. Young's employment is terminated pursuant to Section
7(a)(iv) or (ii) if Mr. Young at any time permits or suffers to exist any act,
event or circumstances which violates, or would violate if occurring within the
time periods set forth in Section 3 hereof violate, any provision of Section 3
hereof, then (x) any loans, extensions of credit or other amounts owed by Mr.
Young to KMC or any of its subsidiaries or affiliates (including without
limitation, any interest thereon) shall automatically and immediately be
accelerated and become due and payable, without any further notice, protest,
demand or formality of any kind, and be paid by Mr. Young on the date his
employment is terminated or such violation occurs and (y) Mr. Young shall
automatically and immediately, without any further notice, demand or formality
of any kind, forfeit all of his rights with respect to, and further deliver or
pay to KMC, (A) (x) any unexercised stock options, whether vested or unvested,
and (y) and unvested or callable stock pursuant to any stock option plan of KMC
or any of its subsidiaries or affiliates, (B) any stock which he acquired within
the twelve (12) month period ending on the date the termination of his
employment becomes effective pursuant to the exercise of options granted by KMC
or any of its subsidiaries or affiliates and (C) the proceeds (net of any
ordinary, reasonable and customary brokerage commissions and expenses of sale

                                      -16-
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actually paid or incurred by Mr. Young) derived from the sale, pledge or other
disposition of any such stock or any interest therein. If Mr. Young disposes of
any such stock or any interest therein by gift, bequest or other means by which
he did not receive cash in an amount reasonably equivalent to the fair market
value of such stock or interest and is thereafter required to make a payment to
KMC under the foregoing clause (C), he shall pay to KMC in cash an amount equal
to the fair market value of such stock at the time of the disposition, as
reasonably and conclusively determined by the KMC Board.

          (d) In the event there is a Change in Control of KMC, and as a result
thereof Mr. Young is terminated from his employment by KMC, then,
notwithstanding such termination, he shall receive the remaining payments of
Base Salary at the times set forth in Section 4(a) for the unexpired Term of
this Agreement unless the parties otherwise agree to a lesser amount. In
addition, following a Change in Control one hundred percent (100%) of the shares
subject to the options granted to Mr. Young pursuant to that certain
Non-Qualified Executive Stock Option Agreement dated the date hereof between KMC
and Mr. Young ("Stock Option Agreement") shall automatically be deemed "Vested"
pursuant to Section 3.1 of the Stock Option Agreement and not subject to
repurchase or call. Prior to an IPO KMC shall use its reasonable efforts to
obtain the agreement of more than seventy five (75%) percent of its shareholders
for any payments payable to Mr. Young by reason of any Change in Control.
Following an IPO and in the event of a Change in Control, to the extent that a
nationally recognized accounting firm certifies to KMC that Mr. Young is and
will be subject to any excise tax pursuant to Code Section 4999 on account of
the options granted pursuant to the Stock Option Agreement, KMC shall pay to Mr.
Young an amount equal to such excise tax and any income, excise or employment
tax payable by Mr. Young by reason of such payment of tax by

                                      -17-
<PAGE>

KMC; provided, however that the total amount of such payments shall not exceed
$3,000,000. Further, to the extent it would reduce the excess parachute payments
(as defined in Code Section 280G), KMC shall have the right to require Mr. Young
to exercise any vested stock options granted pursuant to the Stock Option
Agreement prior to the year of the Change in Control. For purposes of this
Agreement and the options granted to Mr. Young under the Non-Qualified Stock
Option Agreement, dated the date hereof, "Change in Control" shall mean in the
event (A) Harold Kamine and Nassau Capital LLC do not own or control (i) greater
than 35% of the outstanding voting stock of KMC on a fully diluted basis or (ii)
a combined percentage of voting stock of KMC which is greater than that owned by
any other single shareholder or group of shareholders and (B) Harold Kamine is
not the Chairman of KMC or Mr. Kamine and Nassau do not have the ability,
directly or indirectly, to elect a majority of the KMC Board or the individuals
comprising the KMC Board on the commencement date of Mr. Young's employment, or
individuals selected or nominated by the existing members do not constitute a
majority of the KMC Board.

          (e) In the event this Agreement is terminated pursuant to Section 7
(a)(ii) or Section 7(a)(iii), Mr. Young shall be entitled to permanently retain
all options or stock granted pursuant to the Stock Option Agreement on the date
of termination then not subject to any repurchase or call pursuant to Section
3.1 of the Stock Option Agreement and, in addition, that amount of options or
stock granted pursuant to the Stock Option Agreement which would have no longer
been subject to repurchase or call pursuant to Section 3.1 of the Stock Option
Agreement on the six month anniversary of the termination of this Agreement. In
the event there is a Change in Control within six months of the termination of
this Agreement pursuant to Section 7(a)(ii) or Section 7(a)(iii) one hundred
percent (100%) percent of the shares subject to

                                      -18-
<PAGE>

the Option granted pursuant to the Stock Option Agreement shall not be subject
to any repurchase or call right by KMC and any shares purchased by KMC pursuant
to Section 5.3 of the Stock Option Agreement will be returned to Mr. Young in
exchange for the proceeds previously paid to him by KMC for such shares.

          (f) In the event of the termination of this Agreement pursuant to
Section 7(a)(i) by reason of Mr. Young's death, one hundred percent (100%) of
the shares subject to the Option (as defined in the Stock Option Agreement)
shall not be subject to any repurchase or call right by KMC.

          (g) In the event of the termination of this Agreement pursuant to
Section 7 (a)(i) by reason of Mr. Young's Disability, Mr. Young shall be
entitled to permanently retain all options or stock granted pursuant to the
Stock Option Agreement not subject to repurchase or call as of the date of
termination pursuant to Section 3.1 of the Stock Option Agreement and, in
addition, that amount of options or stock granted pursuant to the Stock Option
Agreement which would have no longer been subject to repurchase or call pursuant
to Section 3.1 of the Stock Option Agreement on the twelve month anniversary of
the termination of this Agreement.

     8.  ASSIGNABILITY; SUCCESSORS. The obligations of Mr. Young hereunder are
         -------------------------
personal and may not be delegated, assigned or transferred by him to any Person
in any manner whatsoever. Any such purported delegation, assignment or transfer
shall be null and void. This Agreement may be assigned by KMC to any parent,
subsidiary or affiliate of KMC or any Person which succeeds to the business of
KMC, if the obligations of KMC hereunder are expressly assumed by, and shall be
binding upon such Person, and such Person is or will then be engaged in the
Business. Subject to the foregoing, this Agreement shall be binding on and inure

                                      -19-
<PAGE>

to the benefit of the legal representatives, heirs and permitted successors and
assigns of the parties hereto.

     9.  WITHHOLDING. All payments made by KMC under this Agreement shall be net
         -----------
of any tax or other amounts required to be withheld by KMC under any applicable
law or legal requirement.

     10. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement constitutes the
         -----------------------------------
entire agreement of KMC and Mr. Young with respect to the subject matter hereof
and supersedes all prior written and oral agreements and understandings with
respect to such subject matter, including the Employment Agreement dated as of
January 1, 1999, except for (to the extent not inconsistent with this Agreement,
and in such event this Agreement shall govern) stock options granted in
connection with KMC's Stock Option Plan and stock option agreements entered in
connection therewith, provided, however, that this Agreement shall not supersede
that certain Non-Qualified Stock Option Agreement dated as of December 16, 1998
by and between Mr. Young and KMC with respect to the options granted thereunder.
Neither this Agreement nor any of the terms hereof may be terminated, amended,
supplemented, waived or modified orally, but only by an instrument in writing
signed by both parties. No failure or delay of either party in exercising any
right or remedy under this Agreement or at law or equity shall operate as a
waiver hereof or thereof, nor shall any single or partial exercise of any such
right or remedy, or any abandonment or discontinuance of steps to enforce such a
right or remedy, preclude any other or further exercise thereof or the exercise
of any other right or remedy.

     11. NOTICES. Any notice, request or communication required or permitted to
         -------
be given hereunder shall be deemed to have been properly given if it is given in
writing and is delivered personally or sent by registered or certified mail,
return receipt requested. If to

                                      -20-
<PAGE>

Mr. Young, such notice shall be sent to him at the address set forth in the
first paragraph hereof, with a copy to Michael A. Schlesinger, Esq., Tucker
Flyer, P.C., 1615 L Street, N.W., Washington, D.C. 20036-5612. If to KMC, such
notice shall be directed to the attention of Harold N. Kamine at the address of
KMC set forth in the first paragraph hereof, with a copy Alan M. Epstein, Esq.,
Kelley Drye & Warren LLP, 101 Park Avenue, New York, New York 10178. Either
party may change the address to which notices, requests or communications are to
be directed by a notice to the other party in accordance with this Section 11.

     12. SEVERABILITY. Any provision of this Agreement that shall be prohibited
         ------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, KMC and Mr. Young hereby waive any provision of law that
renders any provision hereof prohibited or unenforceable in any respect;
provided that any final decision of any court of competent jurisdiction in the
State of New York that is not subject to appeal with respect to Section 3 shall
be binding on the parties in all jurisdictions. Following a Change in Control,
in the event of a dispute between Mr. Young and KMC with regard to his
employment by KMC, and should Mr. Young prevail in the proceedings concerning
such dispute on any material issue, Mr. Young shall be entitled to his counsel
fees in connection with such proceedings.

     13. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
         -------------
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAW (EXCLUDING
PRINCIPLES OF CONFLICTS OF LAW

                                      -21-
<PAGE>

TO THE EXTENT APPLICATION THEREOF WOULD RESULT IN THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION) OF THE STATE OF NEW YORK.

     14. COUNTERPARTS. This Agreement may be executable in counterparts, each of
         ------------
which, for all purposes, shall be deemed an original.

     15. COUNSEL FEES. KMC shall, upon presentation of an appropriate statement,
         ------------
pay the reasonable costs and expenses, up to Ten Thousand Dollars ($10,000), of
Tucker Flyer, P.C. in connection with the negotiation and preparation of this
Agreement and related agreements.

     16. AMBIGUITY IN DRAFTING. Each party shall be deemed to have participated
         ---------------------
equally in the drafting of this Agreement and any ambiguity in this Agreement
shall not be construed against any purported author thereof. Mr. Young
acknowledges that he is capable of evaluating the merits of entering into this
Agreement from a professional and financial perspective and has been given the
opportunity to make such inquiries and investigations as Mr. Young has deemed
appropriate under the circumstances and that, at all times during the course of
the negotiations and execution of this Agreement, Mr. Young has been advised by
counsel.

<PAGE>

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.

EMPLOYEE                                 EMPLOYER

/s/ Roscoe C. Young, II
------------------------------------     KMC TELECOM HOLDINGS, INC.
Roscoe C. Young, II
                                             /s/ HAROLD N. KAMINE
                                         By: -----------------------------------

                                         Title: Chairman
                                                --------------------------------<PAGE>

                                                                   Exhibit 10.19

               CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED
                 BASED ON A REQUEST FOR CONFIDENTIAL TREATMENT

                  OMITTED PORTIONS HAVE BEEN SEPARATELY FILED
                  WITH THE SECURITIES AND EXCHANGE COMMISSION

                                                      Execution Copy

            AMENDED AND RESTATED MEDIA GATEWAY SERVICES AGREEMENT II

          This Media Gateway Services Agreement II (the "Agreement") between KMC
Telecom V Inc., a Delaware corporation whose address is 1545 Route 206, Suite
300, Bedminster, NJ 07921 (collectively, "KMC") and Qwest Communications
Corporation, a Delaware corporation whose address is 700 Qwest Tower, 555
Seventeenth Street, Denver, Colorado  80202 ("Qwest"), is effective as of March
31, 2000 (the "Effective Date").

          WHEREAS, Qwest desires to purchase KMC's MGS Services on an MGS
Circuit basis (as defined below) and KMC desires to provide the MGS Services to
Qwest, pursuant to the rates, terms, and conditions of this Agreement.

          WHEREAS, an affiliate of KMC and Qwest executed the original Media
Gateway Services Agreement ("Original MGS Agreement") effective as of the 21st
day of September, 1999; and

          WHEREAS, an affiliate of KMC and Qwest executed the First Amendment to
the Original MGS Agreement effective as of the 1st day of February, 2000; and

          WHEREAS, KMC and Qwest wish to set forth the terms and conditions
under which Qwest is willing to purchase and KMC is willing to provide MGS
Services to Qwest other than those MGS Services ordered prior to the Effective
Date hereof under the Original MGS Agreement (which shall remain subject to the
terms and conditions of such Original MGS Agreement).

          NOW, THEREFORE, in consideration of the mutual promises, covenants,
and other terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

          Definitions:  The following capitalized terms shall have the meanings
          ------------
specified as follows:

                                       1
<PAGE>

          "MGS Circuit" means a DS0-level circuit individually ordered by Qwest
           -----------
and provided by KMC to allow data or voice dial-up users, through SS7 trunks, to
connect to the Qwest IP network via KMC's Media Gateway servers (each, an "MGS
Server").

          "MGS Services" means the provision, operation and maintenance of MGS
           ------------
Servers, operated by KMC on a dedicated basis for Qwest (including the
maintenance of hardware, equipment, environmental control, network connections,
and line provisioning) that provide connectivity  between the Qwest data network
access connection ("DNAC") at the KMC POP and the public switched telephone
network ("PSTN") for Qwest's end users, through individually-ordered MGS
Circuits using KMC's own connection to the public switched telephone network.
For each MGS Circuit ordered by Qwest, MGS Services will be provided.

          "POP" means the point of presence operated by one party at which data
           ---
(and other telecommunications) traffic is exchanged.

     1.   Incorporation of Recitals.  The foregoing recitals are hereby
incorporated in this Agreement and made a part hereof to the same extent as if
herein set forth in full.

     2.   MGS Services.  KMC will provide the MGS Services to Qwest and Qwest's
          end users according to the Service Levels defined and specified in
          Schedule 2 to this Agreement.  KMC shall provide the MGS Services for
          the term set forth in Section 7.a. below.  Qwest, at its sole cost,
          shall establish and manage (i) a designated DNAC to KMC's network at
          each location that KMC provides the MGS Services and (ii) an access
          link between the DNAC and Qwest's POP.  KMC will be responsible for
          the physical installation of the DNAC at the KMC POP and the testing
          and activation of MGS Circuits.  KMC shall be responsible for all
          operation, maintenance, installation, and network line connections for
          the MGS Services, subject to Qwest's obligations as set forth below.
          Notwithstanding the foregoing,  Qwest shall have the ability to
          conduct remote monitoring, software configuration and billing
          functions for its end user customers using Qwest software and network
          management equipment related to the MGS Services, including software
          programming related to the MGS Servers as necessary.  Qwest shall
          conduct remote monitoring of the MGS Servers, provide traffic and
          utilization information to KMC on a regular basis and notify KMC of
          the need to make onsite corrections of errors or defects, which KMC
          shall do promptly in accordance with the Service Levels set forth in
          Schedule 2.  In order to assist Qwest in ordering MGS Services and
          otherwise fulfilling its obligations under this Section, KMC will,
          upon Qwest's request, provide Qwest with all necessary information in
          KMC's possession and assistance relating to the establishment and
          maintenance of DNACs and the MGS Circuits, including but not limited
          to providing software specifications, documentation, network
          provisioning information, network routing maps and traffic and
          performance reports as it relates to the KMC network.  All such
          information and materials provided by KMC will be the confidential
          information of KMC.  The parties may enter into additional mutually-
          acceptable agreements in separate writings or as written amendments
          hereto, under which

                                       2
<PAGE>

          KMC will provide technical testing and activation of the network
          connections on the Qwest side of the network demarcation (including
          testing of the Qwest-operated remote software, network management
          tools and software configuration).

 .    3.   Rates.

          a.   Qwest shall pay KMC for MGS Services according to the prices for
               MGS Circuits as set forth in Schedule 1 to this Agreement (the
               "MGS Circuit Rates").  Monthly charges for each MGS Circuit
               ordered will commence when each MGS Circuit is deemed installed.
               An MGS Circuit will be deemed installed as of the earlier of (a)
               the day that is the later of (i) the date when KMC notifies Qwest
               that it has installed the MGS Circuit or (ii) [text deleted] days
                                                             ---------------
               after the date when KMC orders the corresponding [text deleted]
                                                                --------------
               from the incumbent local exchange carrier ("ILEC"); or (b) [text
                                                                          -----
               deleted] days after the Effective Date (or, in the case of an
               ---------
               additional MGS Circuit ordered pursuant to Section 6 hereof,

               [text deleted] days after the acceptance of the Service Order by
               ---------------
               KMC).  Qwest will be charged the MGS Circuit Rates pro rated for
               any partial first month.  Payments for the MGS Services/MGS
               Circuits shall be due and payable within [text deleted] days
                                                        ---------------
               after receipt of KMC's invoice, except to the extent Qwest in
               good faith disputes any portion of the charges; provided that
               Qwest may not withhold payment of amounts in dispute to the
               extent such amounts exceed [text deleted] of the invoice amount;
                                          --------------
               provided further that such [text deleted] limit shall not apply
                                          --------------
               to disputes arising from KMC's failure to correctly apply [text
                                                                         -----
               deleted] pursuant to Section 9.b.iii or from KMC invoicing for
               --------
               MGS Circuits prior to the date they are deemed installed, as set
               forth above. In the event of such a dispute, Qwest shall pay the
               undisputed portion of the charges on the invoice (as well as
               amounts in dispute to the extent they are subject to, and exceed,
               the [text deleted] limit set forth above) and the parties shall
                   --------------
               cooperate to resolve the dispute as provided in this Agreement.
               The parties shall use reasonable efforts to resolve such dispute
               within [text deleted] days.  If the dispute is resolved in favor
                      ---------------
               of Qwest and Qwest has withheld the disputed amount, no interest
               credits or penalties will apply.  If the dispute is resolved in
               favor of Qwest and Qwest has paid the disputed amount, Qwest will
               be credited with interest on such amount by KMC at the lesser of
               the rate of one and one-half percent (1 1/2%) per month or the
               maximum rate permitted by law, from the date KMC received payment
               up to and including the date of refund.  If the dispute is
               resolved in favor of KMC and Qwest has paid the disputed amount
               on or before the payment due date, no interest credit or
               penalties will apply.  If the dispute is resolved in favor of KMC
               and Qwest has withheld the disputed amount, any payments withheld
               pending settlement of the disputed amount shall bear interest at
               the lesser of the rate of one and one-half percent (1 1/2%) per

                                       3
<PAGE>

               month or the maximum rate permitted by law, from the payment due
               date up to and including the date of payment.  The MGS Circuit
               Rates are payable by Qwest without regard to any taxes, including
               sales taxes if applicable, FCC charges, or other third party
               costs imposed with respect to the MGS Circuits, which taxes,
               charges and other costs, (other than taxes based on KMC's net
               income) shall be born solely by Qwest. No adjustment shall be
               made to the MGS Circuit Rates on account of taxes or other items
               imposed on Qwest in connection with the MGS Circuits.

          b.   In the event of an ILEC Trunk Delay (as defined below), the term
               of the MGS Circuits listed in the  order affected by the ILEC
               Trunk Delay (the "Affected Order") shall be reduced by a [text
                                                                        -----
               deleted] of [text deleted] equal to the [text deleted] of the
               --------    --------------              --------------
               number of [text deleted] of the ILEC Trunk Delay (up to [text
                         --------------                                -----
               deleted]) multiplied by a fraction, the numerator of which is the
               --------
               [text deleted] of MGS Circuits in the Affected Order that are
               --------------
               affected by the ILEC Trunk Delay, and the denominator of which is
               the [text deleted] of MGS Circuits in the Affected Order;
                   --------------
               provided that in no event will the term of the MGS Circuits
               listed in the Affected Order be reduced by more than [text
                                                                    -----
               deleted].  An "ILEC Trunk Delay" shall be deemed to occur if, (x)
               --------
               after the date upon which installation of an MGS Circuit listed
               in the Affected Order is deemed installed as set forth above,
               Qwest notifies KMC that it has an actual customer to whom it
               desires to provide service using specified MGS Circuits; and (y)
               the [text deleted] corresponding to such MGS Circuit(s) have not
                   --------------
               been installed by the ILEC (including confirmation that the
               affected MGS Circuits are in service) within [text deleted]
                                                            --------------
               following such notification.  The ILEC Trunk Delay shall be
               deemed to begin on the [text deleted] following the notification
                                      --------------
               referred to in (x) above, and to end with respect to a particular
               MGS Circuit on the day on which the [text deleted] corresponding
                                                   --------------
               to such MGS Circuit is installed by the ILEC and is in service.
               The Phase I Implementation Schedule and Phase II Implementation
               Schedule shall be deemed separate orders for purposes of the
               definition of "Affected Order" above.

          c.   Qwest agrees that, except (i) as otherwise expressly provided in
               Section 3.a with respect to (x) disputed amounts not exceeding

               [text deleted] of the amount invoiced by KMC pursuant to Section
               --------------
               3.a, (y) disputes arising from KMC's failure to correctly apply

               [text deleted] pursuant to Section 9b.iii or (z) KMC invoicing
               --------------
               for MGS Circuits prior to the date they are deemed installed (ii)
               during the continuance of an Event of Default described in
               Section 10.a.i and (iii) as otherwise expressly provided in
               Section 9.b.i , 9.b.ii or 14, Qwest's obligations to make all
               payments payable by it under this Agreement in accordance with
               the terms of this Agreement and the Acknowledgement and Consent
               Agreement attached hereto as Exhibit A are absolute and
               unconditional and that it will make all

                                       4
<PAGE>

               payments payable by it hereunder regardless of set-off,
               recoupment, abatement or other similar right, existing or future,
               which Qwest may have against KMC.

     4.   Services Commitment. Qwest will purchase MGS Services in at least the
          quantities set forth in the Implementation Schedule attached hereto as
          Schedule 3(the "Services Commitment") on or before July 31, 2000 (the
          "Commitment Date") unless this Agreement is terminated pursuant to
          Section 7.b or pursuant to Sections 10, 14, or 16 before the
          Commitment Date, in which case Qwest shall have no obligation with
          respect to the Services Commitment (except for MGS Services actually
          rendered and, if applicable, the early termination charge set forth in
          Section 7.b).  This Agreement includes the terms, conditions, Service
          Level commitments, technology and MGS Circuit Rates for the MGS
          Circuits/MGS Services within the Services Commitment, as well as
          additional MGS Circuits/MGS Services that may be ordered pursuant
          hereto.

     5.   Implementation Schedules and Growth Forecast.

          MGS Circuits sufficient to satisfy the Services Commitment shall be
          installed pursuant to the Implementation Schedule set forth in
          Schedule 3 hereto.  In the event KMC is unable to (except to the
          extent such inability results from any acts or omissions of Qwest), or
          the parties otherwise agree that KMC shall not install such MGS
          Circuits before the Commitment Date, Qwest will nonetheless be deemed
          to have satisfied the Services Commitment and no shortfall penalty
          shall be owed by Qwest to KMC with respect to same.  Qwest
          acknowledges that KMC may not agree to defer the installation of MGS
          Circuits without first obtaining the consent of a Financing Source (as
          defined in Section 16(b)) and KMC has no obligation hereunder to
          obtain such consent..

     6.   Equipment Configuration.  KMC shall provide MGS Services other than
          those in the Implementation Schedule after receipt of a Qwest service
          order in a form mutually agreed by the parties (each a "Service
          Order") for such MGS Services; provided, however, that any Service
          Order shall not be binding until accepted by KMC and in the event KMC
          in its discretion determines that filling such order would require
          additional third party capital financing, such Service Order shall be
          subject to obtaining such additional third party capital financing,
          and the provision of MGS Services pursuant thereto may be conditioned
          on the agreement of both parties to a separate agreement governing
          such MGS Services.  Such Service Order shall specify a requested
          installation date that is at least 90 days after the date of such
          Service Order.  KMC shall notify Qwest within 2 business days after
          receipt of a Service Order if such Service Order contains insufficient
          information for KMC to meet the requested provisioning period.  In
          filling Service Orders, KMC shall use modems, MGS Servers and other
          network equipment (according to a configuration of cabinets, fuse
          panels, racks, routers and other equipment necessary for a plug and
          play configuration) that are specified by Qwest in each

                                       5
<PAGE>

          Service Order. The MGS Service will initially be provided using Cisco
          or Nortel equipment (as agreed to by Qwest) (together with equipment
          specified by Qwest pursuant to the last sentence of this Section 6,
          the "Qwest- Required Equipment") which enables Qwest to exchange
          either data (e.g. V.90), voice (e.g. G.711) or fax (e.g. T.37) traffic
          with end user customers (i.e. the dial-up users) of the MGS Services.
          Except with respect to MGS Circuits that must be ordered to satisfy
          the Services Commitments, Qwest may specify other models or vendors of
          equipment to be used in the MGS Services configuration, provided that
          Qwest shall be responsible for and shall pay any increased costs to
          KMC resulting from the use by KMC of other models and vendors of MGS
          Servers at Qwest's request. Qwest may also request that software
          upgrades be made; provided that Qwest shall be responsible for and
          shall pay any increased costs to KMC resulting from such software
          upgrades; provided further that absent such request and payment by
          Qwest, KMC shall be under no obligation to upgrade any software. Each
          Service Order is hereby incorporated by reference.

     7.   Term, Early Termination Charge.

          a.   This Agreement shall have an initial term commencing on the
               Effective Date and ending forty-two (42) months after the date
               all MGS Circuits are deemed installed pursuant to Section 3.a,
               unless earlier terminated pursuant to Section 9.b.,10, 14, or 16.
               Each of the MGS Circuits listed in the Implementation Schedule
               shall have a term that is forty-two (42) months after the date it
               is deemed installed pursuant to Section 3.a, but shall continue
               at the option of Qwest for an additional term to be specified in
               writing by Qwest no later than 30 days prior to the expiration of
               the initial term. Each additional MGS Circuit provided pursuant
               to Section 6 shall have a term beginning on the date it is deemed
               installed as described in Section 3 a. and ending forty-two (42)
               months thereafter, unless earlier terminated pursuant to Section
               9.b.i, 9.b.ii, 10, 14, or 16 or extended by Qwest in the manner
               described in the immediately preceding sentence.  In the event
               the term of one or more such MGS Circuits extends beyond the
               expiration of the initial term as set forth above, the terms and
               conditions of this Agreement shall continue to apply to each such
               additional MGS Circuit until the expiration of the term of each
               such MGS Circuit.  Following expiration of the initial term of
               this Agreement, the term shall automatically renew for successive
               twelve month terms unless either party notifies the other party
               of its intent not to renew at least thirty (30) days prior to the
               end of the initial term or renewal term, as the case may be.

          b.   In the event Qwest terminates or cancels MGS Services for an MGS
               Circuit, or this Agreement, [text deleted], then Qwest shall be
                                           --------------
               responsible for paying KMC an early termination charge equal to
               one hundred percent (100%) of the MGS Circuit Rates for the
               canceled MGS Circuit(s), multiplied by the number of full months
               remaining in the term at the time of

                                       6
<PAGE>

               cancellation. Any termination of this Agreement as described in
               the immediately preceding sentence shall not be effective until
               the early termination charge due pursuant to the immediately
               preceding sentence has been paid in full.

     8.   Insurance.

          a.   During the term of this Agreement, KMC shall maintain insurance
               of the kinds and in the amounts specified below with insurers of
               recognized responsibility, licensed to do business in the
               State(s) where the MGS Services are being performed, and having
               either: an A.M Best's rating of A8, a Standard & Poor's ("S&P's")
               rating of AA, or a Moody's rating of AaZ.  If any MGS Services
               provided for or to be performed under this Agreement are
               subcontracted, KMC shall require the subcontractor(s) to maintain
               and furnish it with insurance approved by Qwest.

          b.   In accordance with the above, KMC and any subcontractors shall
               maintain the insurance coverage in accordance with that certain
               Access Service Agreement  between KMC and certain of its
               affiliates and Qwest dated as of December 15, 1998, as such may
               be amended from time to time pursuant to the terms thereof.

          c.   Should KMC at any time neglect or refuse or provide the insurance
               required, or should such insurance be canceled or non-renewed,
               Qwest shall have the right to purchase such insurance, and the
               cost shall be billed to KMC.  In addition, should KMC at any time
               neglect or refuse to pay the necessary premium, Qwest shall have
               the right to pay same and deduct the amount therefor from monies
               due KMC.

          d.   KMC and all subcontractors shall comply with the terms of the
               Occupational Safety and Health Administration (OSHA) and all
               locations, jurisdictions' safety and health regulations during
               the full term of this Agreement.

     9.   Representations and Warranties.

          a.   Each party represents and warrants to the other that it has the
               power and authority to enter into this Agreement including each
               Schedule, Attachment and Exhibit hereunder.

          b.   KMC represents, warrants and agrees that:

               i.   it will provide, to Qwest and its end user customers, MGS
                    Services that meet or exceed the Service Levels described in
                    Schedule 2.  Should KMC, in any [text deleted] during any
                                                    --------------
                    consecutive [text
                                -----

                                       7
<PAGE>

                    deleted] period, (x) fail to provide the MGS Services
                    --------
                    at the Service Levels defined in item 1 (v) of Schedule 2
                    for [text deleted] of the MGS Circuits in a particular
                        --------------
                    Market Area;  or (y) fail to meet the Service Level
                    set forth in item 1 (iii) of Schedule 2 for Qwest calls
                    affecting, in the aggregate, more than [text deleted]
                                                           --------------
                    of the MGS Circuits in a particular Market Area; or (z) fail
                    to meet the Service Level set forth in item 1 (ii) of
                    Schedule 2 in a particular Market Area (unless, in any of
                    such events, such failure was substantially caused by a
                    force majeure event, Qwest-Required Equipment or an action
                    or omission of Qwest, its equipment or its agents or
                    employees), Qwest shall be entitled to terminate all MGS
                    Circuits in such Market Area without any liability to KMC
                    except for payment due for services provided up to the point
                    of termination, by providing written notice to KMC within
                    sixty (60) days after the occurrence of the events giving
                    rise to Qwest's right to terminate such Market Area;
                    provided that, within ten (10) business days after the end
                    of any calendar month in which such failure of MGS Circuits
                    to meet such standards has occurred, Qwest shall give KMC
                    written notice of such failure and provide to KMC all
                    information within Qwest's possession that is reasonably
                    calculated to assist KMC in taking steps to prevent the
                    recurrence of such failure.  If, during the term of this
                    Agreement, Qwest shall become entitled to terminate all MGS
                    Circuits in any [text deleted] or more Market Areas that
                                    --------------
                    contain in the aggregate [text deleted] or more of the MGS
                                             --------------
                    Circuits to be provided hereunder, Qwest shall be entitled
                    to terminate this Agreement in its entirety by providing
                    written notice to KMC within sixty (60) days after the
                    occurrence of the events giving rise to Qwest's right to
                    terminate this Agreement, provided Qwest has provided KMC
                    with reasonable notice of KMC's failure to meet Service
                    Levels under this Agreement.  Notwithstanding the provisions
                    of Section 10.a, termination of Market Areas and/or this
                    Agreement for breach of this Service Level warranty pursuant
                    to this Section 9.b.i shall be Qwest's sole remedy for
                    breach of this Agreement for failure of KMC to meet Service
                    Levels in accordance with this Section 9.b.i, and such
                    termination shall be effective (without penalty) thirty (30)
                    days after KMC receives notice of the breach of this
                    warranty and intent to terminate from Qwest.  For purposes
                    of this Section 9.b.i, a "Market Area" means the market
                    being served by a single aggregation point for MGS Servers;

            ii.     In the event an MGS Circuit is interrupted continuously
                    for a period of [text deleted] or incurs cumulative outages
                                    --------------
                    of over [text deleted] in any [text deleted] period, Qwest
                            --------------        --------------
                    shall be entitled, at its sole option, to either (but not
                    both) of the following: (i) a credit to

                                       8
<PAGE>

                    Qwest's account for the pro-rata connectivity charges for
                    [text deleted] of MGS Services for every [text deleted]
                    --------------                           --------------
                    continuous interruption of the MGS Services up to total
                    credits equal to pro-rata connectivity charges for [text
                                                                       -----
                    deleted] of MGS Services in [text deleted] for each MGS
                    --------                    --------------
                    Circuit; or (ii) the termination of the affected MGS
                    Circuits, provided such interruption(s) was not
                    substantially caused by an event of force majeure, or an
                    action or omission of Qwest, its equipment or its agents or
                    employees. Termination of any particular MGS Circuits or MGS
                    Services under this Section shall not serve to terminate any
                    other MGS Circuits or MGS Services and any exercise of
                    Qwest's rights under this Section shall not (x) reduce or
                    otherwise affect Qwest's rights to termination of this
                    Agreement for Service Level failures under Section 9.b.i; or
                    (y) affect the number of MGS Circuits for which MGS Services
                    have been ordered with respect to Services Commitments (i.e.
                    the number of MGS Circuits for which MGS Services have been
                    ordered will not be reduced in determining whether Qwest has
                    met the Services Commitments if MGS Circuits are terminated
                    pursuant to this Section); provided that with the exception
                    of (x) and (y) above, notwithstanding the provisions of
                    Section 10(a), acceptance of a credit pursuant to (i) above
                    or termination of affected MGS Circuit(s) pursuant to (ii)
                    above shall be Qwest's sole remedy for the interruptions
                    described in this Section 9.b.ii;

           iii.     In the event of an ILEC Trunk Delay lasting more than

                    [text deleted], KMC shall provide to Qwest for each affected
                    --------------
                    MGS Circuit an [text deleted] equal to the product of (A)
                                   --------------
                    [text deleted] of the [text deleted] for the affected MGS
                    --------------        --------------
                    Circuit times (B) the [text deleted] of [text deleted]
                                          --------------    --------------
                    following the [text deleted] of such ILEC Trunk Delay on
                                  --------------
                    which such MGS Circuit is not in service by reason of such
                    ILEC Trunk Delay.  Notwithstanding the provisions of Section
                    10(a), acceptance of a credit pursuant hereto and reduction
                    of the term of an Affected Order pursuant to Section 3.b
                    shall be Qwest's sole remedies for an ILEC Trunk Delay;

           iv.      to the best of its knowledge, there are no pending or
                    threatened lawsuits, claims, disputes or actions (a)
                    alleging that the Equipment infringes or misappropriates any
                    third party's patent, copyright, trademark, trade secret,
                    proprietary or other intellectual property rights, or (b)
                    adversely affecting the Equipment, the MGS Services or KMC's
                    ability to undertake and perform its obligations under this
                    Agreement; and

                                       9
<PAGE>

                v.  it has and will maintain manufacturer's warranties of the
                    kind typically used in the applicable industry for all
                    Equipment used to provide the MGS Services and will pass on
                    the benefits of such warranties to the full extent possible
                    to Qwest for the MGS Services.

          c.   THE EXPRESS WARRANTIES IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER
               WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
               THOSE OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

     10.  Default/Termination.  This Agreement and any MGS Services can be
          terminated only as provided in Sections 9.b.i, 9b.ii, 14, 16, and this
          Section 10.

          a.    i.  Qwest may terminate this Agreement if any one of the
                    following occur (each, an "Event of Default"): (i) if KMC
                    becomes insolvent or admits in writing its inability to pay
                    debts as they mature, or makes an assignment for the benefit
                    of creditors and as a result thereof KMC fails to meet the
                    requirements of Section 9.b.i or 9.b.ii; (ii) if a petition
                    under any foreign, state or United States bankruptcy act,
                    receivership statute, or the like, as they now exist, or as
                    they may be amended, is filed by KMC and as a result thereof
                    KMC fails to meet the requirements of Section 9.b.i or
                    9.b.ii; or (iii) if such a petition is filed against KMC by
                    any third party and such application is not resolved
                    favorably to such other party within sixty (60) days and as
                    a result thereof KMC fails to meet the requirements of
                    Section 9.b.i or 9.b.ii.

               ii.  KMC may terminate this Agreement if any one of the following
                    occur (each, an "Event of Default"): (i) if Qwest fails to
                    pay any amount due to KMC within fifteen (15) business days
                    of demand of such overdue amount by KMC (or, in the case of
                    disputed amounts withheld by Qwest pursuant to Section 3.a,
                    within fifteen (15) business days after the dispute as to
                    such amounts is resolved in KMC's favor); (ii) if Qwest
                    becomes insolvent or admits in writing its inability to pay
                    debts as they mature, or makes an assignment for the benefit
                    of creditors and as a result thereof Qwest fails to timely
                    pay KMC in accordance with the terms of this agreement;
                    (iii) if a petition under any foreign, state or United
                    States bankruptcy act, receivership statute, or the like, as
                    they now exist, or as they may be amended, is filed by Qwest
                    and as a result thereof Qwest fails to timely pay KMC in
                    accordance with the terms of this agreement; or (iv) if such
                    a petition is filed against Qwest by any third party and
                    such application is not resolved favorably to such other
                    party within

                                       10
<PAGE>

                    sixty (60) days and as a result thereof Qwest fails to
                    timely pay KMC in accordance with the terms of this
                    agreement.

          b.   The parties acknowledge that this Agreement may be subject to the
               approval of public utility commissions of individual states or
               other regulatory agencies wherein MGS Services are provided.
               Either party shall have the right to terminate the affected MGS
               Service without liability except for MGS Services actually
               rendered if, by a final, non-appealable order of a court of
               competent jurisdiction, the Federal Communications Commission, or
               other local, state or federal government authority, (i) KMC is
               prohibited from furnishing the MGS Services; or (ii) any material
               rate or term contained herein is substantially changed in a
               manner that is materially adverse to the terminating party.

          c.   If, during the term of this Agreement, an entity, person or
               successor acquires 50% or more of Qwest Communication
               International Inc.'s voting securities or all or substantially
               all of its assets whether by merger, consolidation,
               reorganization or sale of assets the acquiring entity, person or
               successor shall have the right to terminate this Agreement,
               including Qwest's obligation for the Services Commitments under
               this Agreement; provided, however, that such acquiror, or Qwest,
               as the case may be, shall pay the applicable termination charges,
               if any, set forth in Section 7.b.  Such right may be exercised
               either by Qwest or by the acquiring entity, person or successor.

     11.  Indemnification for Infringement.

          a.   The following indemnification provisions set forth the entire
               obligation of KMC with respect to infringement of proprietary
               rights arising directly from the Qwest-Required Equipment used to
               provide MGS Services; provided, however, notwithstanding the
               foregoing, that KMC shall have no indemnification or other
               obligation to Qwest whatever with respect to infringement of
               proprietary rights arising directly from the Qwest-Required
               Equipment except to the extent, if any,  that KMC possesses the
               right to be indemnified by the vendor or manufacturer of the
               Qwest-Required Equipment from time to time for infringement of
               proprietary rights:

               i.   KMC or its suppliers will defend any claim, suit or
                    proceeding brought against Qwest insofar as it is based on a
                    claim that any Qwest-Required Equipment used hereunder
                    infringes a United States copyright or an existing United
                    States patent (issued as of August 31, 1999).  Qwest shall
                    notify KMC promptly in writing of the claim and give KMC and
                    its suppliers full authority, information, and assistance
                    for the defense.  If such claim has occurred, or in KMC's
                    opinion is likely to occur, Qwest agrees to

                                       11
<PAGE>

                    permit KMC and its suppliers, at KMC's option and expense,
                    either to procure for Qwest the right to continue using the
                    Qwest- Required Equipment or to replace or modify the same
                    so that it becomes noninfringing, or, if neither of the
                    foregoing alternatives is reasonably available, remove the
                    Equipment and refund Qwest the portion of the price for the
                    MGS Services reasonably attributable to such Equipment
                    depreciated or amortized by an equal annual amount over the
                    lifetime of the Qwest-Required Equipment as established by
                    Cisco or Nortel.

               ii.  KMC and its suppliers have no liability under this
                    Section 11 for any claim based upon the combination,
                    operation, or use of any Qwest-Required Equipment used
                    hereunder with equipment, devices, or software not supplied
                    by the vendor of such Qwest-Required Equipment.  KMC and its
                    suppliers have no liability for any claim under this Section
                    11 based upon alteration or modification by Qwest or a third
                    party of any Qwest-Required Equipment supplied hereunder.
                    Further, KMC and its suppliers shall have no liability for
                    any claim based upon compliance with Qwest's designs,
                    specifications, or instructions.

          b.   The following provisions relate to all Equipment other than
               Qwest-Required Equipment and all combinations of Equipment:

               i.   KMC agrees to defend and/or handle at its own expense, and
                    to indemnify and hold Qwest harmless from and against any
                    and all liabilities, losses, costs, damages and expenses
                    (including reasonable attorneys' fees attributable to such
                    claim) associated with, any claim or action against Qwest by
                    any third party based upon any actual or alleged
                    infringement or violation of a United States patent, or any
                    trademark, copyright, or trade secret of a third party
                    enforceable in the United States related to KMC's provision
                    of the MGS Services ("Infringement Claim"), provided that
                    Qwest shall approve the terms of any settlement or
                    compromise unless KMC demonstrates its financial capacity to
                    satisfy the settlement or compromise.

               ii.  KMC shall have the sole right to conduct the defense of
                    any such claim or action and all negotiations for its
                    settlement or compromise.  Qwest shall promptly notify KMC
                    of the subject claim and provide reasonable information in
                    connection with such claim.

               iii. KMC warrants that it has the full power and authority to
                    deliver, convey and grant to Qwest the related license and
                    other rights granted under this Agreement; and that KMC's
                    provision of MGS

                                       12
<PAGE>

                    Services under this Agreement and Qwest's use of the MGS
                    Services related to the Equipment will not constitute a
                    misappropriation of any trade secrets or constitute a
                    patent, copyright or trademark infringement.

               iv.  This indemnity shall not extend to any claim of
                    infringement resulting from Qwest's unauthorized
                    modification of equipment of KMC or the combination of the
                    Equipment or MGS Services with services or equipment not
                    provided by KMC or by or for Qwest with KMC's express
                    written approval.

     12.  General Indemnification and Limitation of Liability.

          a.   Each party shall indemnify the other party from any third-party
               claim or damages due to the injury or death of any individual, or
               the loss or damage to real or personal property, resulting from
               the willful or negligent acts, or omissions of the indemnifying
               party, its agents or employees.

          b.   NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR TO ANY THIRD PARTY
               FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
               DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, EVEN IF THE
               PARTIES HAVE KNOWLEDGE OF THE POSSIBILITY OF SUCH DAMAGES.  THE
               FOREGOING LIMITATION SHALL NOT APPLY IN THE EVENT OF: (i)  A
               CLAIM BROUGHT BY QWEST AGAINST KMC ARISING UNDER THE SECTION OF
               THIS AGREEMENT ENTITLED INFRINGEMENT (SECTION 11); (ii) EITHER
               PARTY'S BREACH OF THE CONFIDENTIALITY OBLIGATIONS OF SECTION 15
               (CONFIDENTIAL INFORMATION); OR (iii) THE  WILLFUL MISCONDUCT OF
               EITHER PARTY, ITS AGENTS, ITS EMPLOYEES OR NOMINEES ARISING OUT
               OF OR IN CONNECTION WITH THIS AGREEMENT.

          c.   IN NO EVENT SHALL A PARTY'S TOTAL LIABILITY TO THE OTHER UNDER
               THIS AGREEMENT EXCEED $5,000,000 (OTHER THAN QWEST'S PAYMENT OF
               THE MGS CIRCUIT RATES), EXCEPT WITH RESPECT TO THE GROSS
               NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY.

          d.   In the event any applicable law does not allow the limitation or
               exclusion of liability as provided for in this Agreement, the
               subject limitation or exclusion of liability shall be deemed
               modified so as to limit or exclude the parties' liability for
               damages hereunder to the greatest extent permitted by such law.

                                       13
<PAGE>

     13.  Internet Disclaimers and Limitations.

          a.   Neither party will be liable or responsible for the Internet or
               any information contained thereon. Neither party will warrant,
               and neither will assume any responsibility for any consequences
               suffered by any person as a result of obtaining Internet access
               including without limitation, damages arising from accessing
               Internet content or from computer viruses.

          b.   KMC will have no responsibility for authentication of the end
               users accessing the MGS Circuits. Qwest will be responsible for
               controlling end user access to the MGS Circuits.

          c.   Qwest shall be responsible for billing its end users and all
               records related to such billing or accounting.

     14.  Force Majeure.  In no event shall either party be liable to the other
          party (other than for obligation to pay money) for any delay or
          failure to perform due to causes beyond the control and without the
          fault or negligence of the party claiming excusable delay, including
          but not limited to acts of God, fire, explosion, vandalism, cable cut,
          storm, governmental action, wars, strikes or other labor difficulties,
          supplier failures, breaches or delays (for the avoidance of doubt, to
          include any failure, breach or delay of Qwest as a supplier of KMC).
          Notwithstanding the foregoing, in the event of a force majeure (other
          than a supplier failure as to which Qwest is the supplier), KMC will
          use substantially the same or better efforts that it uses with respect
          to its other customers to restore the MGS Services for Qwest.  If a
          force majeure condition continues for a period greater than [text
                                                                      -----
          deleted], either party may terminate only that MGS Service which is
          --------
          the subject of the force majeure condition without further penalty
          (except that Qwest shall not have the right to terminate any MGS
          Service pursuant to this Section 14 as a result of a force majeur
          condition caused by Qwest).

     15.  Confidential Information.  Qwest and KMC agree that unless otherwise
          specifically provided in the applicable Exhibit and/or Schedule, the
          following confidentiality provisions shall apply.

          a.   All information (including the terms and conditions hereof)
               marked as confidential and disclosed by either party to the
               other, or which comes to the attention of either party or its
               employees, officers, agents or advisors ("Representatives")
               during the course of work pursuant to the terms of this Agreement
               and any other information that a party receiving such information
               should know, by its nature, is confidential, shall be
               confidential information. Confidential information constitutes a
               valuable asset of and is proprietary to the party disclosing or
               originally possessing it.  KMC acknowledges that Qwest keeps its
               customers' records strictly confidential.  KMC and its
               Representatives shall keep strictly confidential any Qwest

                                       14
<PAGE>

               customer records, whether or not they are marked as confidential.
               Neither party shall willfully disclose confidential information
               or knowingly permit its Representatives to disclose confidential
               information  to any person other than persons among its
               Representatives having a specific need to know in performance of
               the work or to any Financing Source as defined in Section 16 (b).
               Each party shall take reasonable care to ensure fulfillment of
               this obligation, including instructing its Representatives an/or
               Financing Source(s) not to sell, lease, assign, transfer, use
               outside their scope of employment or reveal any confidential
               information or Qwest customer records without prior written
               consent of the other party.  KMC shall obtain the written
               agreement of its affiliates and Representatives who will receive
               Qwest customer records or other confidential information to
               conform to KMC's obligations under this Section.  KMC will not
               provide Qwest customer records or other confidential information
               provided by Qwest to the Financing Source(s) unless the Financing
               Source(s) provide written agreement to keep such information
               confidential.

          b.   If a subpoena or other legal process in any way concerning
               confidential information is served upon a party to which
               confidential information has been disclosed ("Recipient"), the
               Recipient shall notify the disclosing party ("Discloser")
               promptly, and the Recipient shall cooperate with the Discloser,
               at the latter's expense, in any lawful effort to contest the
               validity of such subpoena or other legal process.

          c.   This Section will in no way limit either party's ability to
               satisfy any governmentally required disclosure of its
               relationship with the other party, or either party's ability to
               satisfy any requests or demands generated in the course of audits
               of either party or either party's parent or either party's
               attorneys or auditors, provided such audits are conducted
               pursuant to non-disclosure obligations.

          d.   The obligations of confidentiality in this Section shall not
               apply to any information which a party has in its possession when
               disclosed to it by the other party, information which a party
               independently develops, information which is or becomes known to
               the public other than by breach of this Agreement or information
               rightfully received by a party from a third party without the
               obligation of confidentiality.

          e.   Each party acknowledges and agrees that in the event of a breach
               or threatened breach of the foregoing provisions, it will have no
               adequate remedy in money or damages and accordingly shall be
               entitled to injunctive relief; provided, however, that no
               specification of any legal or equitable remedy shall be construed
               as a waiver or prohibition against any other contractual, legal
               or equitable remedy available to either party hereunder;

                                       15
<PAGE>

          f.   Upon completion, expiration or termination of this Agreement, or
               at any other time upon request, each party shall return any and
               all related confidential information of the other party and all
               copies thereof (in whatever form and on whatever medium).

          g.   The terms of this section of the Agreement shall survive the
               expiration or termination of this Agreement.

     16.  Assignment; Rights of Subsidiaries.

          (a) Neither party may assign this Agreement without the prior written
          consent of the other party, which consent shall not be unreasonably
          withheld. If consent is not granted under this Section, the party
          seeking consent may terminate the Agreement upon sixty days notice to
          the other party  or challenge the refusal to consent as unreasonable
          through appropriate legal action.  It shall not be unreasonable for
          KMC to withhold its consent if the assignee has a net worth less than
          that of Qwest as of the Effective Date.  The assignment or delegation
          of any of KMC's rights under this Agreement to any of the following
          shall be considered reasonable reasons for which Qwest may withhold
          its consent for such assignment: [text deleted], and/or [text
                                           --------------         -----
          deleted].  Any prohibited assignment or delegation shall be null and
          --------
          void.  Notwithstanding the foregoing, either party may assign this
          Agreement to any company or entity controlling, controlled by or under
          common control with such party or its affiliates without the other
          party's consent; provided that the assignee has a net worth equal to
          or greater than that of Qwest or KMC, as may be applicable, as of the
          Effective Date. In addition, either party may assign this Agreement
          without the approval of the other party to any successor in interest
          resulting from a merger, acquisition, reorganization or transfer of
          all or substantially all of the assigning party's business with or to
          a successor; provided that the assignee has a net worth equal to or
          greater than that of Qwest or KMC, as may be applicable, as of the
          Effective Date.

          (b) Qwest acknowledges that in order for KMC to provide the services
          set forth in this Agreement KMC will finance the capital costs of this
          Agreement with  third party financing sources. KMC shall have the
          right to assign or collaterally assign this Agreement to a third party
          or parties providing financing for the capital expenses required to be
          undertaken by KMC in order to provide the services under this
          Agreement ("Financing Source(s)"), and Qwest shall execute and deliver
          consents to the assignment by KMC as are requested by the Financing
          Sources and are customary and usual, provided such consents contain
          non-disturbance rights of Qwest, and are otherwise reasonably
          acceptable to Qwest under these circumstances.

     17.  Modification; Amendment; Waiver. No modification, changes, amendment
          or supplement to this Agreement shall be binding upon the parties
          unless made in writing and duly signed by both parties.  The parties
          acknowledge that KMC shall

                                       16
<PAGE>

          finance the capital costs of this Agreement with Financing Sources.
          Accordingly, Qwest agrees to cooperate with KMC to discuss and make
          such amendments or modifications to this Agreement as may be
          reasonably necessary or appropriate to finance and syndicate this
          Agreement to Financing Sources. At no time shall any failure or delay
          by either party in enforcing any provisions, exercising any option, or
          requiring performance of any provisions, be construed to be a waiver,
          cancellation of same. No effective waiver of any right hereunder shall
          be construed to be a waiver of any other right.

     18.  Notices.  All notices shall be in writing and either delivered
          personally or mailed, first class mail and postage prepaid, or by
          facsimile with electronically-generated confirmation of receipt that
          is followed with a mailed copy.  Notice shall be deemed communicated
          on receipt in case of personal delivery and five (5) days after
          mailing in the case of mailed notice (including the mailed copy of a
          facsimile transmission).  All such notices or other communications
          shall be addressed as set forth below, but either party may change its
          address by notice or other communication given in accordance with the
          provisions of this paragraph.

          If to Qwest :
          555 Seventeenth Street, Suite 1000
          Denver, Colorado 80202
          Attn:  President -- Internet and Multimedia Markets
          Attn:  General Counsel

          If to KMC:
          1545 Route 206
          Suite 300
          Bedminster, NJ  07921
          Attn:  General Counsel

     19.  Governing Law; Interpretation.  In all respects this Agreement shall
          be governed by the substantive laws of the State of New York without
          regard to conflict of law principles.

     20.  Dispute Resolution.

          a.   It is the intent of KMC and Qwest that any disputes which may
               arise between them or between the employees of each of them be
               resolved as quickly as possible.  Quick resolution may, in
               certain circumstances, involve immediate decisions made by the
               parties' representatives.  When such resolution is not possible,
               and depending upon the nature of the dispute, the parties hereto
               agree to resolve such disputes in accordance with the provisions
               of this paragraph; provided however, if they are unable to do so
               within sixty (60) days commencing with the date of the notice set

                                       17
<PAGE>

               forth in Section 20.b then either party may seek any and all
               remedies available at law or equity.

          b.   Qwest and KMC shall each designate, by separate letter,
               representatives as points of contact and decision-making for the
               pre-acceptance phases of the Agreement.  Any disputed issues
               arising under this Agreement shall be initially referred to the
               parties' designated representatives.  The parties' designated
               representatives shall render a mutually agreeable resolution of
               the disputed issue, in writing, within three business days of
               such referral.  Either party may modify the designated
               representative upon written notice to the other party.

          c.   Any claims or disputes arising under the terms and provisions of
               this Agreement, or any claims or disputes which the parties'
               representatives are unable to resolve within the three day time
               period shall continue to be resolved between the parties'
               representatives if mutually agreeable.

     21.  Attorney's Fees.  If a legal action or arbitration proceeding is
          commenced in connection with any dispute under this Agreement, the
          prevailing party shall be entitled to reasonable counsel fees,  costs
          and necessary disbursements incurred in connection with the action or
          proceeding, as determined by the court or arbitrators.

     22.  Inconsistencies. In the event of any inconsistency or conflict among
          this Agreement, or any Schedule or Exhibit, the governing provisions
          and interpretation necessary to resolve the inconsistency or conflict
          shall be based on the following order: the specific Schedule or
          Exhibit signed by the parties, followed next by the provisions of this
          Agreement.

     23.  Publicity. Neither party shall use the other party's name or logo or
          refer to such party directly or indirectly in any advertising, sales
          presentation to any other person, news release, release to any
          professional or trade publication or for any other purpose without
          such party's prior written approval, provided that either party may
          use the other party's name or logo, or both, in a list of such party's
          customers, if such use does not imply endorsement.  Either party shall
          be allowed to issue press releases and public announcements regarding
          this Agreement with the other party's prior written approval which
          shall not be unreasonably withheld.

     24.  Miscellaneous.

          a.   If any of the provisions of this Agreement are held invalid, the
               remaining provisions shall be unimpaired.

          b.   Headings are for reference only and shall not affect the meaning
               of any of the provisions of this Agreement.

                                       18
<PAGE>

          c.   The parties, who have both been represented by legal counsel,
               have jointly participated in negotiating and drafting this
               Agreement, including its Schedules, Exhibits and any attachments.
               In the event an ambiguity or question of intent or interpretation
               arises, this Agreement shall be construed as if jointly drafted
               by the parties and no presumption, inference or burden of proof
               shall arise favoring or disfavoring a party by virtue of
               authorship of any or all of the Agreement's provisions.

          d.   The rights and remedies set forth in this Agreement are not
               exclusive and are in addition to any other rights and remedies
               available in law or in equity.

          e.   The terms and provisions contained in this Agreement that by
               their sense and context are intended to survive shall survive the
               completion of performance and termination of this Agreement,
               including, without limitation, the obligation of making all
               payments due hereunder and to preserve the confidentiality of
               confidential information.

     25.  Relationship of the Parties.  The parties are independent contractors.
          Nothing in this Agreement or in the activities contemplated by the
          parties pursuant to this Agreement shall be deemed to create an
          agency, partnership, employment or joint venture relationship between
          the parties.  Each party shall be deemed to be acting solely on its
          own behalf and, except as expressly stated, has no authority to pledge
          the credit of, or incur obligations or perform any acts or make any
          statements on behalf of, the other party.  Neither party shall
          represent to any person or permit any person to act upon the belief
          that it has any such authority from the other party.  Neither party's
          officers or employees, agents or contractors shall be deemed officers,
          employees, agents or contractors of the other party for any purpose.

     26.  Compliance with Laws.

          a.   The parties shall comply with all applicable federal, state and
               local laws, regulations and ordinances as they relate to this
               Agreement and the MGS Services, including, but not limited to,
               the regulations of the United States Government, e.g., the
               provisions of Executive Order 11246 (as amended) of the President
               of the United States on Equal Employment Opportunity and the
               rules and regulations issued pursuant thereto.

          b.  KMC warrants, represents, covenants and agrees that it will not
              assign to perform any efforts under this Agreement any individual
              who is an unauthorized alien under the Immigration Reform and
              Control Act of 1986 or its implementing regulations.  KMC shall
              indemnify and hold harmless Qwest, its parent, subsidiaries and
              affiliated companies from and against any

                                       19
<PAGE>

              and all liabilities, damages, losses, claims or expenses
              (including attorneys' fees) arising out of any breach by KMC of
              this section. In the event any KMC personnel or contractor
              working under this Agreement, or other individual(s) providing
              work to Qwest on behalf of KMC under this Agreement, are
              discovered to be unauthorized aliens, KMC will immediately remove
              such individuals from performing work and replace such
              individuals with individuals who are not unauthorized aliens. KMC
              shall indemnify and hold harmless Qwest, its parent, subsidiaries
              and affiliated companies from and against any and all
              liabilities, damages, losses, claims or expenses (including
              attorneys' fees) arising out of any breach by KMC of this
              section.

          c.  Neither party shall cause the other party to violate any ruling,
              order or determination by the Federal Communications Commission
              ("FCC") or any other governmental body relating to the provision
              of the MGS Services under the terms and conditions set forth in
              the Agreement.  Should such a ruling, order or determination
              become effective, the other party shall indemnify, defend and hold
              the other party harmless against any such event.

     27.  Successors.  This Agreement shall inure to the benefit of and be
          binding on the parties, and their heirs, successors, assigns and legal
          representatives, but nothing contained in this section shall be
          construed to permit an assignment or other transfer except as
          specifically provided herein.

     28.  Entire Agreement. This Agreement is comprised of this Agreement and
          any Schedule or Exhibits specified hereunder or which are added to
          hereto by the parties; such Schedule or Exhibits are incorporated by
          this reference and shall constitute a part of this Agreement as if
          fully set forth herein.  This Agreement constitutes the entire
          agreement between the parties and supersedes all previous agreements,
          promises, proposals, representations, understandings and negotiations,
          whether written or oral, between the parties respecting the subject
          matter hereof, except that this Agreement does not supersede the
          Original MGS Agreement to the extent, and only to the extent, that the
          terms and conditions of such Original MGS Agreement shall continue to
          apply to the Services ordered under such Original MGS Agreement prior
          to the Effective Date hereof.

     29.  Counterparts.  This Agreement may be executed in one or more
          counterparts, each of which shall constitute an original, but all such
          counterparts together shall constitute but one and the same
          instrument.

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

                                       20
<PAGE>

 KMC Telecom V Inc.

 By: /s/ Roscoe C. Young
     -----------------------
 Name:   Roscoe C. Young
       ---------------------
 Title:  President and Chief Operating Officer
        -------------------------------------

 Qwest Communications Corporation

 By: /s/ F. Joseph Glynn
     -----------------------
 Name:   F. Joseph Glynn
       ---------------------
 Title:  VP IP Connectivity Products
        ----------------------------

                                       21
<PAGE>

                                   Schedule 1
                         Prices/Rates for MGS Services

Set forth on Appendix A to this Schedule is a table stating the MGS Circuit
Rates which will apply to the MGS Services. The prices are based on the number
of MGS Circuits installed and in operation, subject to the following rules :

1.   Rates. The rates for MGS Service for the term of this Agreement are set
     -----
     forth in Appendix A to this Schedule. The number of MGS Circuits for
     purposes of these prices shall include all MGS Circuits deemed installed
     pursuant to Section 3.a of the Agreement.

2.   If new or upgraded equipment is requested by Qwest prior to the expiration
     of the Agreement's term, Qwest will pay for such equipment.

3.   The parties agree and acknowledge that expenses and market prices related
     to the provision of the MGS Services may decrease in the future.  Should
     the market conditions change (including but not limited to the market
     prices for similar services), the parties agree to discuss in good faith
     reductions to the MGS Circuit Rates.  Qwest acknowledges that KMC may not
     agree to reduce the MGS Circuit Rates without first obtaining the consent
     of a Financing Party and KMC has no obligation hereunder to obtain such
     consent.

4.   As set forth in Section 7 of the Agreement, the MGS Circuits provided
     pursuant to the Implementation Schedule under this Agreement shall have an
     initial term which is co-terminous with the initial term of the Agreement
     (and shall terminate when this Agreement is terminated), and each
     additional MGS Circuit shall have an initial term commencing on the date it
     is installed and ending forty-two (42) months thereafter. The MGS Circuit
     Rates set forth in this Schedule shall apply to each MGS Circuit during the
     initial term for such MGS Circuit.  Unless the Agreement has been earlier
     terminated, substituted for another Agreement where such agreement
     specifically amends this Agreement, or is not renewed by the parties,
     following the expiration of the initial term of the Agreement, the parties
     agree to enter into good faith negotiations with regard to rates, terms and
     conditions which will apply to MGS Circuits ordered under this Agreement
     (not including any MGS Circuits which may be expressly ordered separately
     under later agreements between the parties) after the expiration of the
     initial term for each MGS Circuit, provided that the MGS Circuit Rates set
     forth herein (as they exist as of that date) shall continue to apply during
     such negotiations.

                                       22
<PAGE>

                            Appendix A to Schedule 1

1.   Monthly charge of $[text deleted] per [text deleted].
                        --------------     --------------

2.   Location Adjustment.  Qwest acknowledges that, because of the
     characteristics of the locations at which Qwest has ordered or may order
     MGS Service hereunder, KMC may be required to incur higher than normal
     [text deleted], [text deleted] or [text deleted] costs with respect to one
     --------------  --------------    --------------
     or more MGS Circuits provided hereunder.  In the event that, following
     review and consent by Qwest as described below, KMC incurs [text deleted],
                                                                --------------
     [text deleted] or [text deleted] costs in excess of [text deleted] with
     --------------    --------------                    --------------
     regard to one or more MGS Circuits, then as to each such Circuit, in
     addition to the monthly charge set forth in paragraph 1, above, Qwest shall
     pay a monthly surcharge equal to the amount by which the cost incurred by
     KMC of [text deleted], [text deleted] or [text deleted] attributable to
            --------------  --------------    --------------
     such MGS Circuit exceeds [text deleted]. KMC shall notify Qwest in advance
                              --------------
     of any location at which such surcharge will be applicable and Qwest will
     either consent to such surcharge (such consent not to be unreasonably
     withheld) or cooperate with KMC in identifying an alternative location at
     which MGS Service will be provided, in which case such alternative location
     shall be subject to the surcharge (if applicable).  In the event KMC incurs
     [text deleted], [text deleted] or [text deleted] costs of less than [text
     --------------  --------------    --------------                    -----
     deleted] with regard to one or more MGS Circuits, then as to each such
     --------
     Circuit, KMC shall provide to Qwest a credit equal to the amount by which
     the cost incurred by KMC for [text deleted], [text deleted] or [text
                                  --------------  --------------    -----
     deleted] attributable to such MGS Circuit is less than [text deleted].
     --------                                               --------------

3.   Maintenance Costs.  KMC shall provide up to twenty-four (24) hours of on-
     site maintenance (not including travel time) per location per calendar
     month.  In the event the hours of such on-site maintenance at any location
     exceed twenty-four (24) in any calendar month, Qwest will reimburse KMC for
     its reasonable costs of providing the hours of on-site maintenance in
     excess of twenty-four (24).  KMC will notify Qwest when it has attained
     this twenty-four (24) hour threshold at a given location.  To the extent
     Qwest fails to remotely monitor the equipment or software at any site or
     fails to notify KMC of any deficiency which Qwest remotely detects, KMC
     shall bear no responsibility for a failure of the subject equipment or
     software under this Agreement or otherwise to the extent that such failure
     could have been prevented or resolved with notice from Qwest regarding such
     deficiency as required hereunder.

4.   Trunk Provisioning.  If Qwest desires that KMC provision two-way trunks in
     connection with one or more of the MGS Services, Qwest shall submit a
     written request to KMC and KMC shall, within 15 days, provide Qwest with a
     written estimate of all direct costs, charges and fees payable by KMC to
     third parties in connection with the provisioning, maintenance and
     operation of such two-way trunks (to the extent they exceed costs
     associated with one-way trunks) and an estimated time frame in which KMC
     will order the same.  If Qwest accepts such estimates of charges and the
     time frame for ordering, Qwest shall provide KMC with a written acceptance
     and KMC shall order such two-way trunks

                                       23
<PAGE>

     within such time-frame and thereafter Qwest shall be responsible for paying
     for all direct costs, charges and fees payable by KMC in connection with
     the provisioning, maintenance and operation of the two-way trunks to the
     extent they exceed costs associated with one-way trunks.

                                       24
<PAGE>

                                   Schedule 2
                                 Service Levels

     1.   Service Level.    For purposes of this Agreement, "Service Level" or
          --------------
"Service Levels" means the level of service at or above which KMC shall provide
the MGS Services to Qwest and includes the following elements (all of which
shall be based on industry-standard measurements) provided by KMC:

      (i)   24x7 (at the KMC POP) remote hands services;

      (ii)  P.01 grade of service measured on a calendar month basis, for the
            portion of the KMC network, from and including KMC switches (but not
            including Qwest-Required Equipment), to the DNAC, during peak busy
            hours;

      (iii) a time to repair of four (4) hours from the time Qwest's calls to
            the KMC help desk are answered, for each port, MGS Circuit, or MGS
            Server;

      (iv)  meeting or exceeding industry standards for onsite power and
            environmental control and quality provided to devices; local
            interconnection trunks, local loop access, and for out-of-band
            access circuits to the devices under this Agreement; and

      (v)   an average uptime of 99.99% for the portion of the KMC network, from
            and including KMC switches (but not including Qwest-Required
            Equipment), to the DNAC, measured on a per-MGS Circuit basis.

2.   Failure.  KMC will be deemed to have failed to meet the Service Levels
     -------
above if:

      (i)   at any time KMC fails to satisfy its obligations set forth in
            subsections 1(i) and/or 1(iv) of this Schedule 2; and/or

      (ii)  in any two calendar months within any six (6) consecutive calendar
            month period of the Agreement, ten percent (10%) of the MGS Circuits
            provided under this Agreement fail to meet any of the standards set
            forth in subsections 1(ii), 1(iii) and/or 1(v) of this Schedule 2;
            provided that, within ten (10) business days after the end of any
            calendar month in which such failure of MGS Circuits to meet such
            standards has occurred, Qwest shall give KMC written notice of such
            failure and provide to KMC all information within Qwest's possession
            that is reasonably calculated to assist KMC in taking steps to
            prevent the recurrence of such failure.

                                       25

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