<PAGE>
 
                                                                Execution Copy
                                                                 Exhibit 10.60










                          STOCK PURCHASE AGREEMENT

                               by and between


                  CONCENTRIC NETWORK CORPORATION, As Issuer


                                     and


                 SOUTHWESTERN BELL INTERNET SERVICES, INC.,
                                 As Investor



                              October 19, 1998
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------
                                                                        Page
                                                                        ----
 
SECTION 1.  Definitions................................................ -1-
            1.1.  Defined Terms........................................ -1-
            1.2.  Other Terms.......................................... -4-
            1.3.  Other Definitional Provisions........................ -5-
 
SECTION 2.  Issuance and Sale of Common Stock.......................... -5-
 
SECTION 3.  Representations and Warranties of
            ---------------------------------    
            the Company................................................ -6-
            -----------
            (a)   Organization; Corporate Power........................ -6-
            (b)   Capital Stock and Related Matters.................... -6-
            (c)   Subsidiaries; Investments............................ -7-
            (d)   Authorization; No Breach............................. -8-
            (e)   Company Reports; Financial
                  Statements........................................... -9-
            (f)   No Material Adverse Change.......................... -10-
            (g)   Absence of Certain Developments..................... -10-
            (h)   Contracts and Commitments........................... -11-
            (i)   Intellectual Property Rights........................ -12-
            (j)   Litigation, etc. ................................... -14-
            (k)   Brokerage........................................... -14-
            (l)   Compliance with Laws................................ -14-
            (m)   Affiliated Transactions............................. -15-
 
SECTION 4.  Representations and Warranties of
            --------------------------------
            the Investor.............................................. -15-
            ------------
            (a)   Execution; Authorization; No
                  Contravention....................................... -16-
            (b)   Securities Act...................................... -16-
            (c)   Brokerage........................................... -17-
 
SECTION 5.  Covenants................................................. -17-
            ---------    
            (a)   Inspection Rights................................... -17-
            (b)   Confidentiality..................................... -17-
            (c)   Filings............................................. -18-
            (d)   Reservation of Common Stock......................... -18-
            (e)   Further Assurances.................................. -18-
            (f)   Board Representations............................... -18-
            (g)   Repurchases by the Company.......................... -19-
 
SECTION 6.  Conditions................................................ -19-
            ----------
            6.1.  Conditions to Each Party's Obligation to
                  Effect the Closing.................................. -19-
                  (a)   Regulatory Consents........................... -19-
                  (b)   Litigation.................................... -19-

                                      -i-
<PAGE>
 
                  (c)   Trial Agreement............................... -20-
            6.2.  Conditions to Obligations of
                  Investor............................................ -20-
                  (a)   Representations and Warranties................ -20-
                  (b)   Performance of Obligations of the
                        Company....................................... -20-
                  (c)   Legal Opinion................................. -20-
            6.3.  Conditions to Obligation of the
                  Company............................................. -20-
                  (a)   Representations and Warranties................ -20-
                  (b)   Performance of Obligations of
                        Investor...................................... -21-

SECTION 7.  Termination............................................... -21-
            -----------                                      
            7.1.  Termination by Mutual Consent....................... -21-
            7.2.  Termination by Either Investor or the Company....... -21-
            7.3.  Termination by the Company.......................... -21-
            7.4.  Termination by Investor............................. -21-
            7.5.  Effect of Termination and
                  Abandonment......................................... -22-

SECTION 8.  Investor's Transfer Restrictions.......................... -22-
            --------------------------------            

SECTION 9.  The Company's Right of First Refusal...................... -23-
            ------------------------------------        

SECTION 10. Survival and Indemnification.............................. -24-
            ----------------------------
            Survival of Representations, Warranties, 
            Covenants and Agreement Knowledge of Breach; 
            Indemnification........................................... -24-

SECTION 11. Miscellaneous............................................. -25-
            -------------   
           (a)    Expenses............................................ -25-
           (b)    Public Disclosure................................... -25-
           (c)    Successors and Assigns; Assignment.................. -26-
           (d)    Remedies............................................ -26-
           (e)    Amendments and Waivers.............................. -26-
           (f)    Severability........................................ -26-
           (g)    Counterparts........................................ -26-
           (h)    Descriptive Headings................................ -26-
           (i)    Governing Law....................................... -27-
           (j)    Notices............................................. -27-
           (k)    Entire Agreement.................................... -27-
           (l)    Definition of Knowledge............................. -28-
<PAGE>
 
                           STOCK PURCHASE AGREEMENT


          This Stock Purchase Agreement (the "Agreement") is entered into as of
                                              ---------                        
October 19, 1998 by and between CONCENTRIC NETWORK CORPORATION, a Delaware
corporation (the "Company"), and SOUTHWESTERN BELL INTERNET SERVICES, INC., a
                  -------                                                    
Delaware corporation (the "Investor").
                           --------   

                                  RECITALS:
                                  -------- 

          WHEREAS, the Company desires to issue and sell to the Investor, and
the Investor desires to purchase and acquire from the Company the shares of
Common Stock and Warrants (as defined herein).

                                  AGREEMENT:
                                  --------- 

          NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:

     SECTION 1.  Definitions.
                 ----------- 

          1.1. Defined Terms.  For the purposes of this Agreement, the
               -------------                                          
following terms have the meanings set forth below:

          "Affiliate" means any Person that directly or indirectly, through one
           ---------                                                           
or more intermediaries, has control of or is controlled by, or is under common
control with, the Person specified.

          "Agreement" shall have the meaning set forth in the first paragraph
           ---------                                                         
of this Agreement.

          "Antitrust Authorization Condition" shall have the meaning set forth
           ---------------------------------                                  
in Section 2(b).

          "Antitrust Division" shall mean the Antitrust Division of the United
           ------------------                                                 
States Department of Justice.

          "Audit Date" shall have the meaning set forth in Section 3(e).
           ----------                                                   
<PAGE>
 
          "Balance Sheet Data" shall have the meaning set forth in Section
           ------------------                                             
3(e).

          "Business" means all business operations and activities currently
           --------                                                        
conducted by the Company and its Subsidiaries.

          "Common Stock" means the common stock, par value $0.001 per share,
           ------------                                                     
of the Company.

          "Company" shall have the meaning set forth in the first paragraph of
           -------                                                            
this Agreement.

          "Company Reports" shall have the meaning set forth in Section 3(e).
           ---------------                                                   

          "Contracts" shall have the meaning set forth in Section 3(i).
           ---------                                                   

          "Deductible" shall have the meaning set forth in Section 8.
           ----------                                                

          "FTC" shall mean the Federal Trade Commission.
           ---                                          

          "GAAP" shall have the meaning set forth in Section 3(e).
           ----                                                   

          "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
           -------                                                         
Act of 1976, as amended.

          "Intellectual Property Rights" means all (i) patents, patent
           ----------------------------                               
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof and (vi) trade
secrets and other confidential information (including, without limitation,
tangible and intangible proprietary information, ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), processes, know-how, manufacturing and production 

                                      -2-
<PAGE>
 
processes and techniques, research and development information, drawings,
schematics, specifications, designs, plans, proposals, technical data,
technology, copyrightable works, financial and marketing plans and customer and
supplier lists and information).

          "Internex" shall mean Internex Information Services, Inc.
           --------                                                

          "Investor" shall have the meaning set forth in the first paragraph
           --------                                                         
of this Agreement.

          "Lien" means any mortgage, pledge, security interest, encumbrance,
           ----                                                             
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any filing
or agreement to file a financing statement as debtor under the Uniform
Commercial Code of the applicable jurisdiction or any similar statute other than
to reflect ownership by a third party of property leased to the Company or any
Subsidiaries under a lease which is not in the nature of a conditional sale or
title retention agreement.

          "Material Adverse Effect"  shall mean a material adverse effect on the
           -----------------------                                              
financial condition, operating results, assets, operations or prospects of the
Company and its Subsidiaries taken as a whole.

          "Person" means any individual, partnership, corporation, association,
           ------                                                              
joint stock company, trust, joint venture, unincorporated organization or
governmental entity or department, agency or political subdivision thereof.

          "Preferred Stock" shall have the meaning set forth in Section 3(b).
           ---------------                                                   

          "Purchase Price" shall have the meaning set forth in Section 2(a).
           --------------                                                   

          "Regulatory Relief Date" shall mean the date on which Investor or its
           ----------------------                                              
Affiliates have, in their sole reasonable judgment, obtained any or all
necessary federal and/or state regulatory approvals to provide landline,
interLATA long-distance service in any of Investor's or its Affiliates' in-
region states pursuant to the Communications Act of 1934, as amended by the
Telecommunications Act of 1996.

                                      -3-
<PAGE>
 
          "SEC" shall mean the Securities and Exchange Commission.
           ---                                                    

          "Securities Act" means the Securities Act of 1933, as amended, and the
           --------------                                                       
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.

          "Securities Exchange Act" means the Securities Exchange Act of 1934,
           -----------------------                                            
as amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.

          "Subsidiary" of any specified Person or entity means a corporation or
           ----------                                                          
other entity of which the majority of the voting power of the equity securities
or other equity interests is owned, directly or indirectly, by such specified
Person or entity or any Subsidiary of such specified Person or entity.

          "Transaction Documents" means this Agreement and the Warrant
           ---------------------                                      
Certificate.

          "Warrant Certificate" shall mean the certificate evidencing the
           -------------------                                           
Warrants, substantially in the form of Exhibit A.

          "Warrants" shall mean the warrants to purchase Common Stock at an
           --------                                                        
exercise price of $21.00 per share, evidenced by the Warrant Certificate to be
issued to the Investor.

          "Year 2000 Issue" with respect to any person shall mean any
           ---------------                                           
significant risk that computer hardware, software or equipment containing
embedded microchips utilized in the business or operations of such person will
not, in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively and reliably as in the case of times or time
periods occurring before January 1, 2000, including the making of accurate leap
year calculations.


          1.2.    Other Terms.  Other terms may be defined elsewhere in the text
                  -----------                                                   
of this Agreement and, unless otherwise indicated, shall have such meaning
indicated throughout this Agreement.

                                      -4-
<PAGE>
 
          1.3.    Other Definitional Provisions.  (a) The words "hereof",
                  -----------------------------                          
"herein", and "hereunder" and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.

          (b)     The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.

          (c)     The terms "dollars" and "$" shall mean United States Dollars.

     SECTION 2.   Issuance and Sale of Common Stock.
                  --------------------------------- 

          (a)     At the closing of the transactions contemplated hereby (the
"Closing"), (i) the Company will issue and sell to the Investor 906,679 shares
of Common Stock, subject to a reduction by the number of shares of Common Stock
the Investor purchases on the open market prior to the Closing and 906,679
Warrants and will deliver to the Investor the certificate(s) for such Common
Stock and the Warrant Certificate and (ii) the Investor will purchase such
shares and Warrants from the Company for an aggregate consideration consisting
of $21,896,297.85 (less $24.15 times the number of shares of Common Stock
purchased on the open market) (the "Purchase Price"), and will pay at the
                                    --------------                       
Closing the Purchase Price by wire transfer to the Company into the account
designated by the Company no later than seven business days prior to the Closing
Date (as hereinafter defined).

          (b)     Subject to Section 6 hereof, the Closing will occur at the
Company's executive offices at 10:00 a.m. on the later of thirty days from the
execution of this Agreement or five business days after satisfaction of the
Antitrust Authorization Condition (the "Closing Date").  As used herein, the
term "Antitrust Authorization Condition" shall mean that the waiting period
applicable under the HSR Act to the issuance to the Investor of shares of Common
Stock and the exercise of the Warrants shall have expired or early termination
shall have been granted with respect thereto.

                                      -5-
<PAGE>
 
     SECTION 3.   Representations and Warranties of the Company.
                  --------------------------------------------- 

          As a material inducement to the Investor to enter into this Agreement
and purchase the Common Stock and Warrants hereunder, the Company hereby
represents and warrants that as of the date hereof and as of the Closing:

          (a)     Organization; Corporate Power.  The Company is a corporation
                  -----------------------------                        
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is qualified to do business in every jurisdiction in which
it is required to be qualified, except where the failure to so qualify has not
had and would not reasonably be expected to have a Material Adverse Effect. The
Company possesses all requisite corporate power and authority and all licenses,
permits and authorizations necessary to own and operate its properties and to
carry on the Business, subject to such exceptions as have not had and are not
reasonably expected to have a Material Adverse Effect. The Company has delivered
to Investor correct and complete copies of the Company's certificate of
incorporation and by-laws reflecting all amendments made thereto at any time
prior to the date of this Agreement.

          (b)     Capital Stock and Related Matters.
                  --------------------------------- 

          (i)     The authorized capital stock of the  Company consists of
110,000,000 shares of Common Stock, of which 14,899,822 shares were issued and
outstanding as of the date hereof and 10,000,000 shares of Preferred Stock,
$.001 par value, of which 154,657 shares of Series B Preferred Stock (the
"Preferred Stock") were issued and outstanding as of the date hereof.  Except as
contemplated by the Transaction Documents and except for 3,441,044 shares of
Common Stock reserved for issuance pursuant to employee and director stock
option grants, 890,686 shares of Common Stock reserved pursuant to employee and
director stock and option plans (as to which grants have not been made) and
warrants to purchase 2,512,757 shares of Common Stock, neither the Company nor
any Subsidiary has outstanding any stock or securities convertible or
exchangeable for any shares of its capital stock, nor does it have outstanding
any rights, options or warrants to subscribe for or to purchase its capital
stock or any stock or securities convertible into or exchangeable for its
capital stock or any stock appreciation rights or phantom stock plans, nor has
it reserved any shares of capital stock for issuance upon exercise or conversion
of any 

                                      -6-
<PAGE>
 
rights, options or warrants to subscribe for or to purchase its capital stock or
any stock or securities convertible into or exchangeable for its capital stock.
Neither the Company nor any Subsidiary is subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock or any warrants, options or other rights to acquire its capital
stock. All of the outstanding shares of the Company's capital stock are, and the
shares of Common Stock to be issued hereunder and upon exercise of the Warrants
will be upon such issuance and receipt by the Company of payment therefor, duly
authorized, validly issued, fully paid and nonassessable.

          (ii)    There are no statutory stockholders  preemptive rights or
similar contractual rights to which the Company is subject or rights of refusal
to which the Company is subject with respect to the issuance of capital stock of
the Company.  Except as set forth in the Company Reports, the Company has not
violated any applicable federal or state securities laws in connection with the
offer, sale or issuance of any of its capital stock, and the offer, sale and
issuance of the Common Stock hereunder do not require registration under the
Securities Act, assuming the Investor's representation in Section 4(b) is true
in all respects.  There are no agreements to which the Company or, to the
knowledge of the officers of the Company, any holders of the capital stock of
the Company is a party with respect to the voting or transfer of the Company's
capital stock.

          (iii)   The Company has authorized the  issuance and sale to the
Investor of the shares of Common Stock being sold to the Investor pursuant to
Section 2 hereof (including those shares issuable upon exercise of the
Warrants).

          (c)     Subsidiaries; Investments.  Each of the Company's 
                  -------------------------                                     
Subsidiaries, which are listed on Exhibit B hereto, is wholly owned by the
Company and is duly organized, validly existing and in good standing under the
laws of the state of its incorporation, possesses all requisite corporate power
and authority and, except for such exceptions as have not had and are not
reasonably expected to have a Material Adverse Effect, all licenses, permits and
authorizations necessary to own its properties and to carry on its businesses as
now being conducted and is qualified to do business in every jurisdiction in
which it is required to be qualified, except where the failure to so qualify has
not had and is not reasonably expected to have a Material Adverse Effect. All of
the outstanding shares of capital 

                                      -7-
<PAGE>
 
stock of each Subsidiary are duly authorized, validly issued, fully paid and
nonassessable, and all such shares are owned by the Company free and clear of
any Lien. Neither the Company nor any Subsidiary owns or holds the right to
acquire any shares of stock or any other security or interest in any other
Person.

          (d)     Authorization; No Breach.  The execution, delivery and 
                  ------------------------                             
performance of the Transaction Documents by the Company have been duly
authorized by the Company. Each of the Transaction Documents has been duly
executed by the Company and constitutes a valid and legally binding obligation
of the Company, enforceable in accordance with its terms subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. The execution and delivery of the Transaction Documents, and
the fulfillment of and compliance with the terms thereof by the Company, do not
and shall not (i) conflict with or result in a breach of the terms, conditions
or provisions of, (ii) constitute a default under, (iii) result in the creation
of any Lien upon the Company's or any Subsidiary's capital stock or assets
pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi) require
any authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency or other Person pursuant to, the charter or bylaws of the Company or ,
any Contract (as defined in Section 3(i)) or any law, statute, rule, regulation,
order, judgment, decree, agreement, license or instrument to which the Company
or any Subsidiary is subject, except for (A) any such conflict, breach, default,
Lien or right of modification, termination or acceleration (other than any of
the foregoing arising pursuant to the charter or bylaws of the Company) which
would not reasonably be expected to have a Material Adverse Effect or prejudice
in any material respect the rights of the Investor under any of the Transaction
Documents or (B) the requirement to obtain any authorizations or take or make
any related actions and filings required under state securities or "blue sky"
laws or to obtain any other authorization, consent, approval, action, notice,
declaration or filing if the failure to do so would not reasonably be expected
to have a Material Adverse Effect or prejudice in any material respect the
rights of the Investor under any of the Transaction Documents.

                                      -8-
<PAGE>
 
          (e)     Company Reports; Financial Statements. The Company has 
                  -------------------------------------                 
delivered or made available to the Investor (i) each registration statement,
report, proxy statement or information statement filed with the SEC since
December 31, 1997 (the "Audit Date"), including the Company's Annual Report on 
                        ----------                                   
Form 10-K for the year ended December 31, 1997, the Company's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998 and the
Company's proxy statement with respect to its 1998 annual meeting, the Company's
reports on Form 8-K filed June 11, 1998, April 17, 1998 and February 18, 1998,
in each case in the form (including exhibits, annexes and any amendments
thereto) filed with the SEC (collectively, the "Company Reports").  As of their 
                                                ---------------            
respective dates, the Company Reports complied in all material respects with the
requirements of the Securities Act and the Securities Exchange Act and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. Each of
the balance sheets included in or incorporated by reference into the Company
Reports (including the related notes and schedules) fairly presents in all
material respects the financial position of the Company or Internex, as the case
may be, as of its date and each of the statements of operations, stockholders
equity and cash flows included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presents in all
material respects the results of operations, net losses and cash flows, as the
case may be, of the Company or Internex, as the case may be, for the periods set
forth therein (subject, in the case of unaudited statements, to the absence of
notes and normal year-end audit adjustments), in each case in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
                                           ----                               
the periods involved, except as may be noted therein (the date of the most
recently filed balance sheet of the Company is hereinafter referred to as the
"Balance Sheet Date").

          (f)     No Material Adverse Change.  Since the Balance Sheet Date, 
                  --------------------------                          
there has been no material adverse change in the financial condition, operating
results, assets, operations, employee relations or customer or supplier
relations of the Company and its Subsidiaries, taken as a whole.

                                      -9-
<PAGE>
 
          (g)     Absence of Certain Developments.
                  ------------------------------- 

                  (i)   Except as expressly contemplated by the Transaction
Documents or as disclosed in the Company Reports since the Audit Date, neither
the Company nor any Subsidiary has:

          (A)     issued any notes, bonds or other debt securities or any
     capital stock or other equity securities or any securities convertible,
     exchangeable or exercisable into any capital stock or other equity
     securities (other than employee stock options and shares of Common Stock
     issued upon the exercise thereof, shares of the Company's Series A
     Preferred Stock and Series B Preferred Stock issued in connection with the
     Company's dividend payment and exchange offer related to its outstanding
     Shares of Preferred Stock and shares issued in connection with the
     acquisition of its Subsidiaries);

          (B)     borrowed any amount or incurred or become subject to any
     liabilities, except liabilities incurred in the ordinary course of business
     and liabilities under contracts entered into in the ordinary course of
     business (including any capital lease obligations);

          (C)     discharged or satisfied any material Lien or paid any material
     obligation or liability, other than in the ordinary course of business;

          (D)     declared or made any payment or distribution of cash or other
     property to its stockholders with respect to its capital stock or other
     equity securities or purchased or redeemed any shares of its capital stock
     or other equity securities (including, without limitation, any warrants,
     options or other rights to acquire its capital stock or other equity
     securities) other than dividend payments made with respect to the Company's
     Preferred Stock;

          (E)     sold, assigned or transferred any material Intellectual
     Property or disclosed any proprietary confidential information to any
     Person (other than any such disclosure in the ordinary conduct of business
     operations or which disclosure 

                                      -10-
<PAGE>
 
     was subject to a confidentiality agreement, which in either case does not
     have a Material Adverse Effect);

          (F)     suffered any extraordinary losses, waived any rights of
     material value or canceled any material debts or claims, other than in the
     ordinary course of business and consistent with past practice;

          (G)     changed its accounting principles, practices or methods,
     except as required by GAAP; or

          (H)     suffered any loss, or threatened loss, of any supplier or
     customer or group of related suppliers or customers which is reasonably
     expected to have a Material Adverse Effect.

          (h)     Contracts and Commitments.
                  ------------------------- 

          (i)     All of the contracts, agreements and  instruments (a) filed as
exhibits to the Company Reports which have not expired in accordance with their
terms or (b) which have been entered into since the Audit Date and which will be
filed as exhibits to the Form 10-K for the year ended December 31, 1998 (the
"Contracts") are valid and legally binding obligations of the Company or its
Subsidiaries, as the case may be, and, to the knowledge of the Company, the
other parties thereto, and, to the knowledge of the Company or the applicable
Subsidiary, are enforceable in accordance with their terms subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.  To the knowledge of the Company or the
applicable Subsidiary: (i) the Company and its Subsidiaries have performed in
all material respects all obligations required to be performed by them under the
Contracts and are not in material default under or in material breach of any
Contract or in receipt of any claim of such default or breach; (ii) no event has
occurred which with the passage of time or the giving of notice or both would
result in a material default, material breach or event of material noncompliance
by the Company or any Subsidiary under any Contract; (iii) neither the Company
nor any Subsidiary has any present expectation or intention of not fully
performing all its material obligations under the Contracts; (iv) neither the
Company nor any Subsidiary has knowledge of any 

                                      -11-
<PAGE>
 
material breach or anticipated material breach by the other parties to any
Contract; and (v) neither the Company nor any Subsidiary has any written notice
or other communication to the effect that any other party to any Contract
intends to terminate such contract, agreement or instrument prior to the
expiration of the maximum stated term of such contract, agreement or instrument.

          (ii)    A true and correct copy of each of the  Contracts which are
referred to in (i)(b) hereof, together with all amendments, waivers or other
changes thereto has been supplied or made available to the Investor through the
SEC's EDGAR filing system.

          (i)     Intellectual Property Rights.
                  ---------------------------- 

          (i)     To the Company's knowledge, neither the Company nor any
Subsidiary is, or as a result of the execution and delivery of this Agreement or
the performance of the Company's obligations hereunder will be, in violation of
any license, sublicense or other agreement applicable to it and, to the
Company's knowledge, the Company or one of its Subsidiaries owns all right,
title and interest to, or has the right to use pursuant to a valid license, all
Intellectual Property Rights used in the Business, subject to such exceptions as
have not had and are not reasonably expected to have a Material Adverse Effect.

          (ii)    To the Company's knowledge (A) there have been no claims made
against the Company or any Subsidiary or threatened or, to the Company's
knowledge, likely to be threatened by any Person, asserting the invalidity,
misuse or unenforceability of any Intellectual Property Rights referred to in
(i) above or challenging the ownership, validity or effectiveness of any of the
Intellectual Property Rights, which, if successful, would reasonably be expected
to have a Material Adverse Effect, (B) to the Company's knowledge, neither the
Company nor any Subsidiary has received any notices of any material unauthorized
use, infringement or misappropriation by, or conflict with, any present or
former employee of the Company, principal shareholders, strategic partners or
any other third party with respect to such Intellectual Property Rights
(including, without limitation, any demand or request that the Company or any
Subsidiary license any rights from a third party) which, if successful, would
reasonably be expected to have a Material Adverse Effect, (C) to the Company's
knowledge, the conduct of the Business has not 

                                      -12-
<PAGE>
 
infringed, misappropriated or conflicted with and does not infringe,
misappropriate or conflict with any Intellectual Property Rights of other
Persons, and (D) to the Company's knowledge, the Intellectual Property Rights
owned by or licensed to the Company or its Subsidiaries have not been infringed,
misappropriated or conflicted by other Persons, except in the case of the clause
(A) (B), (C) or (D) above for any infringement, misappropriation or conflict
that has not had and is not reasonably expected to have a Material Adverse
Effect. No Intellectual Property Right or product is subject to any Lien and the
Company does not know of any fact that would render the Intellectual Property
Rights invalid. Except with respect to Intellectual Property Rights licensed by
the Company from third parties in the ordinary course of business, to the
Company's knowledge, no Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
manner the licensing or exploitation thereof by the Company or any Subsidiary.
Except for license agreements for the Company's products executed in the
ordinary course of business, without alteration or amendment of any material
term therein, and in accordance with the Company's past practices, to the
Company's knowledge neither the Company nor any Subsidiary has entered into any
agreement to indemnify any other person against any charge of infringement
relating to any Intellectual Property Right. To the Company's knowledge, no
employee of the Company or any Subsidiary is in violation of any term of any
confidentiality or invention assignment agreement, employment contract (whether
written or verbal), patent disclosure agreement or any other contract or
agreement relating to the relationship of any such employee with the Company or
any Subsidiary or any other party (including prior employers) because of the
nature of the business conducted or proposed to be conducted by the Company or
any Subsidiary. To the Company's knowledge, all registered trademarks, service
marks and copyrights held by the Company or its Subsidiaries are valid and
subsisting.

          (j)     Litigation, etc.  Except as set forth in the Company Reports,
                  ----------------                                             
there are no actions, suits, proceedings, orders, investigations or claims
pending (other than any such actions, suits, proceedings, orders, investigations
and claims which may be pending but of which none of the Company, any of its
Subsidiaries and their respective representatives have received notice) or, to
the Company's knowledge, threatened  against the Company or any Subsidiary (or
to the Company's knowledge, pending or threatened 

                                      -13-
<PAGE>
 
against any of the officers or directors of the Company or any Subsidiary) at
law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality which seek to enjoin or prevent the
consummation of or otherwise relate specifically to the transactions
contemplated by the Transaction Documents or which have had or are reasonably
expected to have a Material Adverse Effect; neither the Company nor any
Subsidiary is subject to any pending arbitration proceedings under collective
bargaining agreements or otherwise or, to the Company's knowledge, any
governmental investigations or inquiries (including, without limitation,
inquiries as to the qualification to hold or receive any license or permit)
which have had or are reasonably expected to have a Material Adverse Effect.
Neither the Company nor any Subsidiary is subject to any judgment, order or
decree of any court or other governmental agency that requires or prohibits any
conduct on the part of the Company or its Subsidiaries that affects the Business
in a manner that would have a Material Adverse Effect.

          (k)     Brokerage.  Except as set forth on Schedule 3(n) hereto, 
                  ---------                                            
there are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by the Transaction
Documents for which the Investor will have any liability or responsibility based
on any arrangement or agreement binding upon the Company or any of its
Subsidiaries.

          (l)     Compliance with Laws.  To the Company's knowledge, neither the
                  --------------------                                          
Company nor any Subsidiary has violated any law or any governmental rule, order
or regulation or requirement which violation through the date hereof has had or
would reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any Subsidiary has received notice of any such violation.  To the
knowledge of the Company, the operation of the Business by the Company and its
Subsidiaries complies and has complied in all material respects with the
Communications Act of 1934, as amended, and the rules, orders, regulations and
other applicable requirements of the Federal Communications Commission and the
public utility commissions of the states in which the Business is conducted
having jurisdiction over the Company or any of its Subsidiaries; provided,
however, that no representation or warranty is made regarding the effect of
future pronouncements or rulings by any applicable governmental body.

                                      -14-
<PAGE>
 
          (m)     Affiliated Transactions.  Except as disclosed in the Company
                  -----------------------                                     
Reports hereto, no officer, director or Affiliate of the Company or any
Subsidiary or, to the knowledge of the Company, any individual related by blood,
marriage or adoption to any such individual or any entity in which any such
Person or individual owns a greater than 10% beneficial interest, is a party to
any agreement, contract, commitment or transaction with the Company or any
Subsidiary that is material to the Company and its Subsidiaries, taken as a
whole, or has any material interest in any material property used by the Company
or any Subsidiary which is required to be filed or disclosed in the Company
Reports pursuant to Item 404 of Regulation S-K of the Act.

          (n)     Year 2000.  The Company has reviewed its operations and those 
                  ---------                                          
of its Subsidiaries with a view to assessing whether it or its Subsidiaries'
respective businesses, networks or products will, in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission or other
utilization of data, be vulnerable to a Year 2000 Issue and reasonably
anticipates that it will on a timely basis successfully resolve any Year 2000
Issue. Based on such review, the Company has no reason to believe that a
Material Adverse Effect will occur with respect to it or  any Subsidiary's
businesses or operations resulting from a Year 2000 Issue.

     SECTION 4.   Representations and Warranties of the Investor.
                  ---------------------------------------------- 

          As a material inducement to the Company to enter into this Agreement
and issue and sell the Common Stock and Warrants hereunder, the Investor hereby
represents and warrants that:

          (a)     Execution; Authorization; No Contravention.  The Investor has 
                  ------------------------------------------               
duly executed and delivered to the Company each Transaction Document to which it
is a party, and each such Transaction Document constitutes a valid and legally
binding obligation of the Investor, enforceable against the Investor in
accordance with its terms subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles. The
execution, delivery and performance by the Investor of each Transaction 

                                      -15-
<PAGE>
 
Document to which it is a party and the consummation of the transactions
contemplated thereby: (a) are within the Investor's corporate power and
authority and have been duly authorized by all necessary corporate action on the
part of the Investor; (b) do not and will not conflict with or contravene the
terms of the Investor's certificate of incorporation or bylaws; (c) do not and
will not violate, conflict with or result in any breach or contravention of or
require any consent, authorization, approval, exemption or other action by or
notice or declaration to, or filing with, any court or administrative or
governmental body or agency or other Person pursuant to (i) any material
agreement, lease or contract of such Investor, or (ii) any applicable statute or
any rule or regulation of any governmental authority or any order or decree
applicable to such Investor (other than as required by the HSR Act.

          (b)     Securities Act.  The Investor is acquiring the Common Stock 
                  --------------                                      
solely for the purpose of investment and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act.
The Investor acknowledges that the shares of Common Stock are not registered
under the Securities Act, and that such shares may not be transferred or sold
except pursuant to the registration provisions of such Securities Act or
pursuant to an applicable exemption therefrom and pursuant to state securities
laws and regulations as applicable and are subject to substantial restrictions
on transferability under the terms of the Stockholders' Agreement. The Investor
is knowledgeable, sophisticated and experienced in business and financial
matters of the type contemplated by the Transaction Documents and is able to
bear the economic risks associated with its investment in the Company. The
Investor has been afforded access to information regarding the Company and its
Subsidiaries and their respective financial condition, operating results,
properties, liabilities, operations and management sufficient to enable it to
evaluate the risks and merits of its investment in the Company.

          (c)     Brokerage.  There are no claims for brokerage commissions,
                  ---------                                                 
finders' fees or similar compensation in connection with the transactions
contemplated by the Transaction Documents for which the Company will have any
liability or responsibility based on any arrangement or agreement binding upon
the Investor.

     SECTION 5.   Covenants.
                  --------- 

                                      -16-
<PAGE>
 
          (a)     Inspection Rights.  The Company shall permit, and cause its
                  -----------------                                          
Subsidiaries to permit, the representatives designated by the Investor upon
reasonable notice and during normal business hours, to (x) visit and inspect any
of the properties of the Company and its Subsidiaries, (y) examine the corporate
and financial records of the Company and its Subsidiaries and to make copies
thereof, and (z) discuss the affairs, finances and accounts of any such
corporations with the directors, officers, key employees and (with the prior
consent of the Company, which will not be unreasonably withheld) independent
accountants of the Company.

          (b)     Confidentiality.  The Investor shall hold in confidence all
                  ---------------                                            
information and data obtained by it from the Company or any Subsidiary (whether
in connection with the negotiation of the transactions contemplated by the
Transaction Documents, pursuant to Section 5(a) or otherwise) and shall not
disclose such information to any Person without the prior written consent of the
Company (except that the Investor may disclose such information to those of its
Affiliates, directors, officers and other representatives who require access to
such information and who has executed a copy of the Company's standard
Confidentiality and Proprietary Information Agreement, previously provided to
Investor, in order to enable the Investor to exercise its rights under the
Transaction Documents and who agree to be subject to the restrictions set forth
in this Section 5(b)); provided, however, that the provisions of this Section
5(b) shall not apply to any information or data that can be shown (i) to be
generally available to the public through no fault of the Investor or its
Affiliates, directors, officers and other representatives or (ii) to have been
lawfully obtained by the Investor from other sources not subject to a
confidentiality obligation to the Company.

          (c)     Filings.  The Company and the Investor will promptly file 
                  -------                                                
with the FTC and the Antitrust Division a notification and report form and
related documentary materials if and when required by the HSR Act in connection
with any of the transactions contemplated by this Agreement and the Transaction
Documents and promptly file any additional information requested as soon as
reasonably practicable after receipt of request thereof. Each of the Company and
the Investor will use their reasonable best efforts to obtain as promptly as
practicable after the date 

                                      -17-
<PAGE>
 
hereof early termination or expiration of any waiting period applicable under
the HSR Act to the transactions contemplated hereby.

          (d)     Reservation of Common Stock.  The Company shall at all times
                  ---------------------------                                 
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of the exercise of the Warrants, the number of
shares of its Common Stock issuable upon the exercise of the Warrants.  All
shares of Common Stock which are so issuable shall, when issued upon the
exercise of the Warrants, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges.

          (e)     Further Assurances.  If at any time after the Closing any 
                  ------------------                                    
further action is necessary or desirable to carry out the purposes of this
Agreement or the Transaction Documents, the proper officers or directors of the
Company or the Investor, as the case may be, shall execute and deliver any
further instruments or documents and take all such necessary action that may
reasonably be requested by the other party.

          (f)     Board Representations.  The Investor shall be entitled to
                  ---------------------                                    
designate, at its option, either (i) one non-director delegate who shall be
entitled to receive notice of and to attend all meetings of the Company's Board
of Directors, as well as to receive all materials received by directors, but who
shall not be a member of the Board of Directors, shall have no fiduciary duties
to the Company, to the Board of Directors or stockholders of the Company and
shall not be entitled to vote at meetings of the Board of Directors (an
"Observer") or (ii) a designee that the Company agrees to use its best efforts
to have the Company's Board of Directors nominate to serve on the Company's
Board of Directors.  Any Observer shall execute and deliver to the Company a
copy of the Company's standard Proprietary Information and Nondisclosure
Agreement as a condition to receiving the information provided for hereunder.

          (g)     Repurchases by the Company.  Provided that the Investor has 
                  --------------------------                               
not purchased any equity securities of the Company, except as contemplated
hereby (including the Warrants), until the Regulatory Relief Date, the Company
will not reacquire or redeem any capital stock so that the ownership by Investor
and its Affiliates would equal or exceed on a fully diluted basis 10% of all
equity of the Company.

                                      -18-
<PAGE>
 
     SECTION 6.   Conditions.
                  ---------- 

          6.1.    Conditions to Each Party's Obligation to Effect the Closing.
                  -----------------------------------------------------------  
The respective obligation of each party to effect the Closing is subject to the
satisfaction or waiver at or prior to the Closing of each of the following
conditions:

          (a)     Regulatory Consents.  The Antitrust Authorization Condition 
                  -------------------                                   
shall have been satisfied and all notices, reports and other filings required to
be made prior to the Closing by the Company or Investor or any of their
respective Subsidiaries with, and all consents, registrations, approvals,
permits and authorizations required to be obtained prior to the Closing by the
Company or Investor or any of their respective Subsidiaries from, any government
or regulatory authority, agency, commission, body or other governmental entity
("Governmental Entity") in connection with the execution and delivery of this
  -------------------                                                        
Agreement and the consummation of the transactions contemplated hereby by the
Company and Investor shall have been made or obtained (as the case may be).

          (b)     Litigation.  No court or Governmental Entity of competent
                  ----------                                               
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, law, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits the Closing or the exercise of the
Warrants (collectively, an "Order"), and no Governmental Entity shall have
                            -----                                         
instituted any proceeding or threatened to institute any proceeding seeking any
such Order.

          (c)     Trial Agreement.  At the time of Closing, no federal or state
                  ---------------                                              
regulatory agency or court shall have ruled that the Trial Agreement, executed
on the date hereof, violates any federal, state or local statute, rule or
regulation, provided that there is no reasonable prospect that the Trial
Agreement can be conformed to the ruling, while satisfying the original intent
of the parties to the Trial Agreement.

          6.2.    Conditions to Obligations of Investor. The obligations of
                  -------------------------------------                    
Investor to effect the Closing are also subject to the satisfaction or waiver at
or prior to the Closing of the following conditions:

                                      -19-
<PAGE>
 
          (a)     Representations and Warranties.  The representations and
                  ------------------------------                          
warranties of the Company set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except to the extent any such representation or
warranty expressly speaks as of an earlier date), and Investor shall have
received a certificate signed on behalf of the Company by the President or
Executive Vice President of the Company to such effect.

          (b)     Performance of Obligations of the Company.  The Company shall 
                  -----------------------------------------          
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date.

          (c)     Legal Opinion.  Investor shall have received an opinion of 
                  -------------                                       
Wilson Sonsini Goodrich & Rosati, counsel to the Company, dated the Closing
Date, regarding the due authorization, validity and fully paid and nonassessable
status of the shares of Common Stock.

          6.3.    Conditions to Obligation of the Company. The obligation of the
                  ---------------------------------------                       
Company to effect the Closing is also subject to the satisfaction or waiver by
the Company at or prior to the Closing Date of the following conditions:

          (a)     Representations and Warranties.  The representations and
                  ------------------------------                          
warranties of Investor set forth in this Agreement shall be true and correct in
all respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, (except to the extent any such
representation and warranty expressly speaks as of an earlier date).

          (b)     Performance of Obligations of Investor. Investor shall have
                  --------------------------------------                     
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date.

     SECTION 7.   Termination.
                  ----------- 

          7.1.    Termination by Mutual Consent.  This Agreement may be 
                  -----------------------------                            
terminated at any time prior to the Closing, by mutual written consent of the
Company and Investor.

                                      -20-
<PAGE>
 
          7.2.    Termination by Either Investor or the Company.  This Agreement
                  ---------------------------------------------                 
may be terminated at any time prior to the Closing by either Investor or the
Company if (i) the Closing shall not have occurred by April 30, 1999, or (ii)
any Order permanently restraining, enjoining or otherwise prohibiting the
Closing shall become final and non-appealable; provided, that the right to
                                                 --------                   
terminate this Agreement pursuant to clause (i) above shall not be available to
any party that has breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the
occurrence of the failure of the Closing to occur.

          7.3.    Termination by the Company.  This Agreement may be terminated 
                  --------------------------                         
at any time prior to the Closing, by action of the Company if there has been a
material breach by Investor of any representation, warranty, covenant or
agreement contained in this Agreement that is not curable or, if curable, is not
cured within 15 days after written notice is given by the Company to Investor.

          7.4.    Termination by Investor.  This Agreement may be terminated at
                  -----------------------                                      
any time prior to the Closing, by action of Investor if there has been a
material breach by the Company of any representation, warranty, covenant or
agreement contained in this Agreement that is not curable or, if curable, is not
cured within 15 days after written notice is given by Investor to the Company.

          7.5.    Effect of Termination and Abandonment.  In the event of
                  -------------------------------------                  
termination of this Agreement, this Agreement shall become void and of no effect
with no liability on the part of any party hereto (or of any of its directors,
officers, employees, agents, legal and financial advisors or other
representatives); provided, however, except as otherwise provided herein, no
                  --------  -------                                         
such termination shall relieve any party hereto of any liability or damages
resulting from any breach of this Agreement.

     SECTION 8.   Investor's Transfer Restrictions.
                  -------------------------------- 

          (a)     The Investor shall not, directly or indirectly, sell,
transfer, pledge, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise dispose of, any (x) shares of Common Stock purchased
hereunder or upon exercise of the Warrant or (y) Warrants except: (i) to the
Company; (ii) to an 

                                      -21-
<PAGE>
 
Affiliate of Investor, so long as such Affiliate agrees to hold such shares
subject to all of the provisions of Sections 8 and 9 of this Agreement, and
agrees to transfer such shares of Common Stock to the Investor or another
Affiliate of Investor if it ceases to be an Affiliate; (iii) pursuant to a
rights offering, dividend or other pro rata distribution to the stockholders of
the Investor; (iv) after the date which is the one year anniversary of the
Closing, pursuant to Rule 144 promulgated under the Securities Act (including
the observance of the requirements of paragraph (f) of such rule, whether or not
otherwise applicable to such disposition, solely with respect to transactions
that would otherwise constitute a First Refusal Sale (as defined below)); (v)
after the date which is the one year anniversary of the Closing, in private
placement transactions exempt from the registration requirements of the
Securities Act; provided that in the event of a proposed transfer to one of the
parties listed on Exhibit C hereto pursuant to this subsection (v) in one or
more transactions occurring during a 90-day period of 100,000 or more shares of
Common Stock or Warrants to acquire 100,000 shares or more of Common Stock (a
"First Refusal Sale"), such transfer shall be subject to the provisions of
Section 9 below; or (vi) in response to a bona fide public tender offer or
exchange offer subject to Regulation 14D or Rule 13e-3 promulgated under the
Exchange Act for cash or other consideration which is made by or on behalf of
the Company.

          (b)     Any attempted sale, transfer or other disposition by Investor
or an Affiliate of Investor which is not in compliance with this Section 8 or
Section 9 below shall be null and void.

     SECTION 9.   The Company's Right of First Refusal.
                  ------------------------------------ 

          (a)     Prior to the Investor effecting a First Refusal Sale pursuant
to Section 8(a)(v), the Company shall have a first refusal right to purchase
such shares on the following terms and conditions:

          (i)     The Investor shall give prior notice (the "Transfer Notice")
to the Company in writing of such intention, specifying the name of the proposed
purchaser or transferee, the number of shares of Common Stock proposed to be
sold or transferred, the proposed price therefor and the other material terms
upon which such disposition is proposed to be made.

                                      -22-
<PAGE>
 
          (ii)    The Company shall have the right, exercisable by written
notice given by the Company to the Investor within five (5) business days after
receipt of such Transfer Notice (the "Response Notice"), to purchase all, but
not less than all of the shares of Common Stock specified in such Transfer
Notice for cash at the price per share or, if consideration other than cash is
specified in the Transfer Notice, in an amount in cash equal to the Fair Market
Value of such non-cash consideration, as specified in the Transfer Notice. Fair
Market Value shall, with respect to securities which are traded, constitute the
average closing price over the twenty trading days prior to the date of the
Transfer Notice and with respect to other consideration, shall be determined in
good faith by the Investor.

          (iii)   If the Company exercises its right of first refusal hereunder,
the closing of the purchase of the shares of Common Stock with respect to which
such right has been exercised shall take place within thirty (30) calendar days
after the Company gives the Response Notice to the Investor.  Upon exercise of
its right of first refusal, the Company and the Investor shall be legally
obligated to consummate the purchase and sale contemplated thereby and shall use
their best efforts to secure any approvals required in connection therewith.

          (iv)  If the Company does not exercise its right of first refusal
hereunder within five business days or fails to close within the time period
specified in (iii) above (providing that nothing contained herein should relieve
the Company of liability for such breach), the Investor shall be free, during
the period of sixty (60) calendar days following (A) the expiration of such
five-day period or (B) such failure to close, to sell the shares of Common Stock
specified in such Transfer Notice to the proposed purchaser or transferee
specified in such Transfer Notice and on terms not less favorable to the
Investor than the terms specified in such Transfer Notice.

          (b)     The Company may assign its right of first refusal hereunder to
any other person.

     SECTION 10.   Survival and Indemnification.
                   ---------------------------- 

                                      -23-
<PAGE>
 
          Survival of Representations, Warranties, Covenants and Agreements;
          ------------------------------------------------------------------
Knowledge of Breach; Indemnification.  Notwithstanding any otherwise applicable
------------------------------------                                           
statute of limitations, the representations and warranties of each of the
Investor and the Company, respectively, included or provided for herein shall
survive the execution and delivery of this Agreement thirty (30) days after the
receipt by the Investor or the Company, as the case may be, of audited
consolidated financial statements for the other party, as of and for the year
ending December 31, 1998, together with a report thereon by the other party's
independent public accountants provided, however, that any representation,
                               --------  -------                          
warranty, covenant or agreement contained in Sections 3(n) and 4(c) shall
survive the execution and delivery of this Agreement until the expiration of the
applicable statute of limitations (including any waivers or extensions thereof)
with respect to such matters; provided, however, that the provisions of this
Section 10 shall constitute the exclusive remedy on the part of any party hereto
in respect of a breach of the representations and warranties of the other party
contained in this Agreement. The covenants and other agreements contained in
this Agreement shall survive the execution and delivery of this Agreement
except that covenants or agreements with a term specified therein shall
terminate at the end of such term. Investor and the Company shall indemnify each
other for breaches of the foregoing representations, warranties and covenants as
to which the indemnified party has given notice during the periods of survival
set forth above, provided, that, in no event shall the Investor be liable to the
                 --------  ----                                                 
Company or the Company be liable to the Investor, as the case may be, pursuant
to this Section 10, for any breach of the representations, warranties, covenants
and agreements included or provided for herein or in any schedule or certificate
or other document delivered pursuant to this Agreement, unless and until all
claims for which damages are recoverable hereunder by the Investor or the
Company, as the case may be, exceed $500,000 (the "Deductible"), in which case
                                                   ----------                 
the Investor or the Company, as the case may be, shall be entitled to damages
equal to such excess, but not more than the Purchase Price plus the charges and
expenses (including reasonable attorneys' fees and expenses) incurred by the
party sustaining such damages in connection with the Transaction Documents and
the transactions thereby.  Any payments pursuant to this Section 10 shall be
treated as an adjustment to the Purchase Price for all tax purposes.  The
indemnification provided for by this Section 10 shall apply 

                                      -24-
<PAGE>
 
notwithstanding any investigation made by or on behalf of any party.

     SECTION 11.  Miscellaneous.
                  ------------- 

          (a)     Expenses.  Except as otherwise expressly provided in this
                  --------                                                 
Agreement, the parties shall bear their own respective expenses (including, but
not limited to, all compensation and expenses of counsel, financial advisors,
consultants, actuaries and independent accountants) incurred in connection with
this Agreement and the transactions contemplated hereby and by the Transaction
Documents.

          (b)     Public Disclosure.  Each party to this Agreement hereby agrees
                  -----------------                                             
with the other party hereto that, except as may be required to comply with the
requirements of applicable law or the rules and regulations of each stock
exchange or of the Nasdaq National Market or other automated quotation system
upon which the securities of one of the parties is listed or to which such
securities are admitted for trading no press release or similar public
announcement or communication will be made or caused to be made concerning the
execution or performance of this Agreement unless specifically approved in
advance by both parties hereto.

          (c)     Successors and Assigns; Assignment. Except as otherwise 
                  ----------------------------------                 
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that the Investor may designate, by written
notice to the Company, an Affiliate to acquire some or all of the shares of
Common Stock or Warrants hereunder; provided, however, that no such designation
of an Affiliate shall relieve the Investor of its obligations under this
Agreement. The Investor, any Affiliate and any sucessors and assigns shall be
treated as one entity for the purposes of this Agreement.

          (d)     Remedies.  Any Person having any rights under any provision of
                  --------                                                      
this Agreement will be entitled to proceed to enforce such rights specifically,
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law.

                                      -25-
<PAGE>
 
          (e)     Amendments and Waivers.  This Agreement and any of the terms
                  ----------------------                                      
contained herein may only be amended or modified by the Company and the Investor
or their successor and assigns in writing.

          (f)     Severability.  In the event that any one or more of the 
                  ------------                                         
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby.

          (g)     Counterparts.  This Agreement may be executed in one or more
                  ------------                                                
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.

          (h)     Descriptive Headings.  The headings of the sections contained 
                  --------------------                               
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not affect the meaning or interpretation of
this Agreement.

          (i)     Governing Law.  This Agreement shall be governed by, and 
                  -------------                                        
construed in accordance with, the internal laws of the State of Delaware without
giving effect to the conflict of laws provisions thereof.

          (j)     Notices.  All notices, demands or other communications to be 
                  -------                                               
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Investor and to the Company at the addresses
indicated below:

if to the Investor, to:     Southwestern Bell Internet
----------------------        Services, Inc.                        
                            175 E. Houston
                            San Antonio, Texas  78205
                            Attention: Thomas W. Hartmann
                            Facsimile: (210) 351-3488

                                      -26-
<PAGE>
 
        with a copy to:     Sullivan & Cromwell
        --------------      1701 Pennsylvania Ave., N.W.
                            Washington, D.C. 20006-5805
                            Attention: Janet T. Geldzahler
                            Facsimile: (202) 956-7515
 
if to the Company, to:      Concentric Network Corporation
---------------------       10590 N. Tantau Avenue    
                            Cupertino, CA  95014
                            Attention: Michael Anthofer
                            Facsimile: (408) 342-2876

        with copy to:       Wilson Sonsini Goodrich & Rosati
        ------------        650 Page Mill Road  
                            Palo Alto, CA  94304
                            Attention:   David Segre
                            Facsimile:   (650) 496-7556

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

          (k)     Entire Agreement.  This Agreement and the Schedules hereto 
                  ----------------                                         
and the other Transaction Documents represent the entire agreement between the
Investor and the Company with respect to the subject matter hereof, and such
agreements supersede all prior agreements between such parties with respect to
the subject matter hereof.

          (l)     Definition of Knowledge.  For the purpose of this Agreement,
                  -----------------------                                     
"knowledge of the Company" or "known" or a similar phrase shall mean the actual
knowledge of those individuals listed on Exhibit D.

                                      -27-
<PAGE>
 
          IN WITNESS WHEREOF, the undersigned parties have duly executed this
Agreement as of the date first above written.


                    CONCENTRIC NETWORK CORPORATION

                    By:       /s/ Michael F. Anhofer
                             -------------------------
                     Name:  Michael F. Anhofer
                     Title: Senior V.P. and C.E.O.

                    SOUTHWESTERN BELL INTERNET SERVICES, INC.

                    By:       /s Steven C. Hubbard
                             -------------------------
                     Name:  Steven C. Hubbard
                     Title: CEO/President

                                      -28-
<PAGE>
 
                                                                       EXHIBIT A


                        CONCENTRIC NETWORK CORPORATION


                    Warrants for the Purchase of Shares of
                Common Stock of Concentric Network Corporation
         -----------------------------------------------------------------------

No. 1A                                                          906,679 Warrants


          FOR VALUE RECEIVED, CONCENTRIC NETWORK CORPORATION, a Delaware
corporation (the "Company"), hereby certifies that Southwestern Bell Internet
Services, Inc., a Delaware corporation ("SBIS"), or permitted assigns
(collectively, the "Holder") is entitled, subject to the provisions of this
warrant certificate (including any substitute certificate issued pursuant to the
terms hereof, this "Warrant Certificate") representing 906,679 warrants
("Warrants"), to purchase from the Company, at the times specified herein, one
fully paid and non-assessable shares of Common Stock (as hereinafter defined) at
the Exercise Price, as defined below.  The number of shares of Common Stock to
be received upon the exercise of a Warrant and the Exercise Price are subject to
adjustment from time to time, but only as hereinafter set forth.

          Concurrently with the issuance of the Warrants, SBIS is purchasing
906,679 shares of Common Stock, par value $.001 per share, of the Company
pursuant to a Stock Purchase Agreement, dated as of October 19, 1998 (the
"Purchase Agreement").

          1.   Definitions.  The following terms, as used herein, have the
               -----------                                                
following meanings:

          "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.

          "Aggregate Exercise Price shall have the meaning set forth in Section
2(a) hereof.

          "Common Stock" means the common stock, $0.001 par value, of the
Company, and (in accordance with Section 8 hereof) capital stock of any class or
classes into which such Common Stock or any such other class may thereafter be
changed or reclassified.

          "Exercise Price" means $21.00 per share.

          "Exercise Subscription Form" shall have the meaning set forth in
Section 2(a) hereof.
<PAGE>
 
          "Expiration Date" means 4:00 p.m., New York City time, on _______,
2001; provided, however, that if such day is a day on which banking institutions
in the City of New York are authorized by law to close, the "Expiration Date"
shall be on the next succeeding day that shall not be such a day.

          "Person" means any individual, corporation, partnership, joint stock
company, joint venture, association, trust, unincorporated organization,
government or any agency, department or political subdivision thereof, or any
other entity.

          "Regulatory Relief" means that SBC Communications Inc. or its
Affiliates, in their sole reasonable judgment, have obtained any or all
necessary federal and/or state regulatory approvals to provide landline,
interLATA long-distance service in any of SBIS' or its Affiliates' in-region
states pursuant to the Communications Act of 1934, as amended by the
Telecommunications Act of 1996.

          "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.

          2.   Exercise and Duration of Warrants.
               --------------------------------- 

          (a)  The Holder of this Warrant Certificate shall have the right to
exercise any or all of the Warrants (but not as to a fractional share of Common
Stock) at any time, or from time to time until the Expiration Date by
presentation and surrender hereof to the Company with the appropriate Exercise
Subscription Form annexed hereto (the "Exercise Subscription Form") and an
Investment Representation Statement annexed hereto duly executed and accompanied
by proper payment of the Exercise Price, as the case may be, multiplied by the
number of shares of Common Stock specified in such form (the "Aggregate Exercise
Price"), all subject to the terms and conditions hereof.  Notwithstanding the
foregoing, prior to receipt of Regulatory Relief, the Holder may only exercise
Warrants to the extent that the total equity securities in the Company held by
Holder and its Affiliates is consistent with the restrictions contained in the
Communications Act of 1934, as amended by the Telecommunications Act of 1996.
Each Warrant not exercised prior to the Expiration Date shall become void and
all rights in respect thereof shall cease as of such time.

          (b)  The Aggregate Exercise Price must be paid in U.S. dollars in
cash, wire transfer of immediately available funds, bank cashier's check or bank
draft payable to the order of the Company.  Upon receipt by the Company of this
Warrant Certificate and a properly executed Exercise Subscription Form, together
with the Aggregate Exercise Price at the Company's office designated for such
purpose, the Holder shall be deemed to be the holder of record of the shares of
Common Stock receivable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder.  The Holder shall pay any and all documentary, stamp or similar
issue taxes of the United States or any state thereof payable in respect of the
issue or delivery of such shares of Common Stock.  The Company shall not be
required to pay any tax or other charge that may be payable in respect of any
transfer 

                                      -2-
<PAGE>
 
involved in the issuance and delivery of any certificate in a name
other than that of the record holder of the Warrants being exercised and in such
case the Company shall not be obligated to issue or deliver any stock
certificate until such tax or charge has been paid in full or it has been
established to the satisfaction of the Company that no such tax or charge is
due.

          (c)  Notwithstanding Sections 2(a) and 2(b) above, at the option of
the Holder of the Warrants, the Warrants may be exercised in the manner set
forth in paragraph (2)(a) above, except that the Holder may, in lieu of paying
the Aggregate Exercise Price in the manner set forth in Section 2(b) above,
exercise, without making any payment in cash, Warrants for that number of shares
of Common Stock determined by dividing (i) the difference between (x) the
current market price per share of Common Stock (as defined in Section 8(b)
below) on the day of exercise multiplied by the number of shares of Common Stock
specified in the Exercise Subscription Form and (y) the Aggregate Exercise Price
by (ii) the current market price per share of Common Stock on the day of
exercise.

          (d)  If the Holder exercises less than all the Warrants, this Warrant
Certificate shall be surrendered by the Holder to the Company and a new Warrant
Certificate of the same tenor and for the unexercised number of Warrants which
was not surrendered shall be executed by the Company.  Subject to the provisions
hereof regarding transfer of the Warrants, the Company shall register the new
Warrant Certificate in such name or names as may be directed in writing by the
Holder and deliver the new Warrant Certificate to the person or persons entitled
to receive the same.

          (e)  Upon surrender of this Warrant Certificate in conformity with the
foregoing provisions, the Company shall transfer to the Holder of this Warrant
Certificate appropriate evidence of ownership of any shares of Common Stock or
other securities or property (including any money) to which the Holder is
entitled, registered or otherwise placed in, or payable to the order of, such
name or names as may be directed in writing by the Holder, and shall deliver
such evidence of ownership and any other securities or property (including any
money) to the person or persons entitled to receive the same, together with an
amount in cash in lieu of any fraction of a share of Common Stock as provided in
Section 5 below.

          (f)  Notwithstanding anything to the contrary contained herein, no
Holder of these Warrants shall be entitled to exercise the same unless, at the
time of exercise, (i) either a registration statement under the Securities Act,
shall have been filed with, and declared effective by, the Securities and
Exchange Commission or the issuance of shares of Common Stock upon the exercise
of the Warrants is permitted pursuant to an available exemption from the
registration requirements of the Securities Act and (ii) all applicable
requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, with respect to the issuance of shares of Common Stock upon the
exercise of the Warrants shall have been satisfied.

                                     -3- 
<PAGE>
 
          3.   Restrictive Legend.  Any substitute Warrant Certificate and any
               ------------------                                             
certificates evidencing shares of Common Stock issued pursuant to exercise of
Warrants shall bear the following legend, unless such securities have been
registered under the Securities Act or unless the Company determines otherwise
in compliance with applicable law:

               "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS
     OF ANY STATE, AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
     SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
     APPLICABLE EXEMPTION THEREUNDER."

          4.   Reservation of Shares.  The Company hereby agrees that at all
               ---------------------                                        
times there shall be reserved for issuance and delivery upon exercise of the
Warrants such number of its authorized but unissued shares of its Common Stock
or other securities of the Company from time to time issuable upon exercise of
the Warrants as will be sufficient to permit the exercise in full of the
Warrants.  All such shares of Common Stock shall be duly authorized and, when
issued upon such exercise, shall be validly issued, fully paid and non-
assessable, free and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale (other than restrictions on resale imposed
under applicable law) and free and clear of all preemptive or similar rights,
except for any of the foregoing that may be imposed by or through the Holder of
the Warrants or the Person to whom shares of Common Stock or other securities
are issued upon the exercise thereof.

          5.   Fractional Shares.  No fractional shares or scrip representing
               -----------------                                             
fractional shares shall be issued upon the exercise of any Warrant.  With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market price per share of Common Stock on the day of
exercise.

          6.   Transfer, Loss of Warrant Certificate.
               ------------------------------------- 

          (a)  Subject to the provisions of this Section 6 and Section 15, the
Company will, from time to time, register the transfer of any outstanding
Warrant Certificate upon its records. Each taker and Holder of this Warrant
Certificate by taking or holding the same, consents and agrees that prior to any
transfer of this Warrant Certificate, the holder hereof shall give written
notice to the Company of such holder's intention to effect such transfer.  Each
such notice shall describe the manner and circumstances of the proposed transfer
in sufficient detail.  The Company shall register such transfer upon surrender
of such Warrant Certificate to the Company for transfer, accompanied by
appropriate instruments of transfer duly executed by the holder or the holder's
duly authorized attorney.  Upon any such registration of transfer, a new Warrant
Certificate shall be issued in the name of the transferee, and the surrendered
Warrant Certificate shall be canceled.  Each Warrant Certificate evidencing the
transferred Warrants shall bear, 

                                      -4-
<PAGE>
 
unless the same has been registered under the Securities Act, the restrictive
legend set forth in Section 3 herein.

          (b)  Notwithstanding anything to the contrary contained in Section
6(a), the Company shall not be obligated to register the transfer of any
outstanding Warrant Certificate unless a registration statement under the
Securities Act, shall have been filed with, and declared effective by, the
Securities and Exchange Commission with respect to the transfer of the
applicable Warrants or such transfer is permitted pursuant to an available
exemption from the registration requirements of the Securities Act.

          (c)  Any attempted or purported Transfer of Warrants in violation of
paragraph 6(b) above shall not be effective to Transfer ownership of such
Warrants to the purported Transferee thereof, who shall not be entitled to any
rights as a Holder with respect to the Warrants purported to be Transferred.
All rights with respect to any Warrants attempted or purported to be Transferred
in violation of the aforementioned provisions shall remain the property of the
Person who initially attempted or purported to transfer such Warrants in
violation thereof.  Upon a determination by the Board of Directors of the
Company that there has been or is threatened an attempted or purported Transfer
of Warrants in violation of the aforementioned provisions, the Board of
Directors of the Company may take such action as it deems advisable, including,
but not limited to, refusing to give effect on the books of the corporation to
such attempted or purported Transfer or instituting legal proceedings to enjoin
or rescind the same.

          (d)  Upon receipt by the Company of evidence satisfactory to it (in
the exercise of its reasonable discretion) of the loss, theft, destruction or
mutilation of this Warrant Certificate, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant Certificate, if mutilated, the Company shall
execute and deliver a new Warrant Certificate of like tenor and date.  Any such
new Warrant Certificate executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not the warrant so
lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone.
The provisions of this Section 6 are exclusive and shall preclude (to the extent
lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen, or destroyed Warrant Certificates.

          7.   Rights of the Holder.  Prior to the exercise of any Warrant, the
               --------------------                                            
Holder shall not, by virtue hereof, be entitled to any rights of a stockholder
of the Company, including, without limitation, the right to vote, to give or
withhold consent to any corporate action of the Company, to receive dividends or
other distributions, to exercise any preemptive or similar right or to receive
any notice of meetings of stockholders or any notice of any proceedings of the
Company except as may be specifically provided for herein.

          8.   Anti-Dilution Provisions.  The Exercise Prices in effect at any
               ------------------------                                       
time, and the number of shares of Common Stock which may be purchased upon the
exercise hereof, shall be subject to change or adjustment as follows:

                                      -5-
<PAGE>
 
          (a)  In case the Company shall (i) pay a dividend or make any other
     distribution on or in respect of its Common Stock in shares of Common
     Stock, (ii) subdivide its outstanding Common Stock, (iii) combine its
     outstanding Common Stock into a smaller number of shares of Common Stock,
     or (iv) issue by reclassification of its Common Stock (whether pursuant to
     a merger or consolidation or otherwise) any other shares representing
     common equity of the Company, then (x) the number of shares of Common Stock
     theretofore issuable upon exercise of a Warrant shall be appropriately
     adjusted so that the Holder of each Warrant exercised after the record date
     fixing stockholders to be affected by such event shall be entitled to
     purchase at the Exercise Price, as adjusted below, the number of shares of
     Common Stock (or other shares representing common equity of the Company)
     which he would have owned or have been entitled to receive after the
     happening of any of the events described above, had such Warrant been
     exercised immediately prior to such record date and (y) the Exercise
     Price shall be adjusted by multiplying the Exercise Price by a fraction,
     the numerator of which is equal to the number of shares of Common Stock
     purchasable prior to the adjustment specified in (x) above and the
     denominator of which is equal to the number of shares of Common Stock
     purchasable after such adjustment.  An adjustment made pursuant to this
     subparagraph shall become effective immediately after the record date in
     the case of a dividend or distribution and shall become effective
     immediately after the effective date in the case of a subdivision,
     combination or reclassification.

          (b)  The "current market price per share of Common Stock" at any date
     shall be deemed to be the average of the daily Closing Prices (as defined
     below) for 30 consecutive Trading Days (as defined below) immediately
     preceding the day in question, after appropriate adjustment for stock
     dividends, distributions, subdivisions, combinations or reclassifications
     occurring within such 30-day period. The term "Closing Price" on any day
     shall mean the reported last sale price per share of Common Stock on such
     day or, in case no such sale takes place on such day, the average of the
     reported closing bid and asked prices, in each case on the principal
     national securities exchange on which the Common Stock is listed or
     admitted to trading, or, if the Common Stock is not listed or admitted to
     trading on any national securities exchange, the last quoted sale price or,
     if not so quoted, the average of the closing bid and asked prices quoted on
     the Nasdaq National Market or, if not so quoted, the average of the closing
     bid and asked prices as furnished by any member of the National Association
     of Securities Dealers, Inc. selected from time to time by the Company for
     that purpose; and the term "Trading Day" shall mean a day on which the
     principal national securities exchange on which the Common Stock is listed
     or admitted to trading or, if the Common Stock is quoted on the Nasdaq
     National Market, then the Nasdaq National Market, is open for the
     transaction of business or, if the Common Stock is not listed or admitted
     to trading on any national securities exchange or quoted on the Nasdaq
     National Market, a Monday, Tuesday, Wednesday, 

                                      -6-
<PAGE>
 
     Thursday, or Friday on which banking institutions in the City of New York,
     New York are not authorized or obligated by law or executive order to
     close.

          (c)  In the event that at any time, as a result of an adjustment made
     pursuant to Sections 8(a) above, the Holder shall become entitled to
     receive any shares of the capital stock of the Company other than Common
     Stock, thereafter the number of such other shares so receivable upon
     exercise of the Warrants shall be subject to adjustment from time to time
     in a manner and on terms as nearly equivalent as practicable to the
     provisions with respect to the Common Stock contained in Section 8(a).

          (d)  In case:

               (i)   the Company shall authorize the issuance to all holders of
                     its Common Stock of rights or warrants to subscribe for or
                     purchase shares of its Common Stock or of any other
                     subscription rights or warrants; or

               (ii)  the Company shall authorize the distribution to all holders
                     of its Common Stock (whether pursuant to a merger or
                     consolidation or otherwise) of evidences of its
                     indebtedness or assets (other than dividends paid in or
                     distributions of the Company's capital stock for which the
                     Exercise Price shall have been adjusted pursuant to Section
                     8(a) above); or

               (iii) of any capital reorganization or reclassification of the
                     Common Stock (other than a change in par value of the
                     Common Stock) or of any consolidation or merger to which
                     the Company is a party and for which approval of any
                     stockholders of the Company is required (other than a
                     consolidation or merger in which the Company is the
                     continuing corporation and that does not result in any
                     reclassification or change of the Common Stock
                     outstanding), or of the conveyance or transfer of the
                     properties and assets of the Company substantially as an
                     entirety; or

               (iv)  of the voluntary or involuntary dissolution, liquidation or
                     winding-up of the Company; or

               (v)   the Company proposes to take any action (other than actions
                     of the character described in Section 8(a) above) that
                     would require an adjustment of the Exercise Prices pursuant
                     to this Section 8;

                                      -7-
<PAGE>
 
     then the Company shall cause to be mailed by registered mail or overnight
     courier to the Holder, at the earliest practicable time (and in any event
     not less than 20 days prior to the applicable record or effective date
     hereinafter specified), a notice stating (A) the date as of which the
     holders of Common Stock of record to be entitled to receive any such
     rights, warrants or distributions are to be determined, or (B) the date on
     which any such reorganization, reclassification, consolidation, merger,
     conveyance, transfer, dissolution, liquidation or winding-up is expected to
     become effective, and the date as of which it is expected that holders of
     Common Stock of record shall be entitled to exchange their shares of Common
     Stock for securities or other property, if any, deliverable upon such
     reorganization, reclassification, consolidation, merger, conveyance,
     transfer, dissolution, liquidation or winding-up.

          (e)  Whenever reference is made in this Section 8 to the issuance of
     shares of Common Stock, the term "Common Stock" shall include any equity
     securities of any class of the Company hereafter authorized which shall not
     be limited to a fixed sum or percentage in respect of the right of the
     holders thereof to participate in dividends or distributions of assets upon
     the voluntary or involuntary liquidation, dissolution or winding-up of the
     Company.

          (f)  Notwithstanding any provision to the contrary in this Section 8,
     the Exercise Price in effect at any time, and the number of shares of
     Common Stock which may be purchased upon the exercise hereof, shall not be
     subject to change or adjustment in either of the following cases:

               (i)   In case the Company shall issue shares of Common Stock to
          any Person, or rights, options or warrants to any Persons entitling
          such Persons to subscribe for or purchase shares of Common Stock, at a
          price per share at least equal to or greater than the current market
          price per share of Common Stock as of the issue date such shares of
          Common Stock or rights, options or warrants to any such Person; or

               (ii)  In case the Company purchases any assets or securities (a
          "Purchase") and provides all or some of the consideration for such
          Purchase in shares of Common Stock.

Notwithstanding any other provision contained in this Section 8, no adjustment
to the Exercise Price need be made unless the adjustment would require an
increase or decrease of at least 1% in the Exercise Price as then in effect.
Any adjustments that are not made as a result of this Section 8(g) shall be
carried forward and taken into account in any subsequent adjustment.

          9.   Officers' Certificate.  Whenever any adjustment in the Exercise
               ---------------------                                          
Price is made, the Company (A) shall as soon as reasonably practicable file in
the custody of its Secretary at its 

                                      -8-
<PAGE>
 
principal office, a statement describing the adjustment and the method of
calculation used, and may obtain the certificate of any independent firm of
public accountants of national recognition selected by the Board of Directors of
the Company which, if obtained, shall be presumptive evidence of the correctness
of any such calculation that such adjustment was properly calculated in
accordance with the provisions of Section 8 and (B) shall cause a copy of such
statement to be mailed by first class mail postage prepaid to the Holder.

          10.  Consolidation or Merger.  In case of any consolidation of the
               -----------------------                                      
Company with, or merger of the Company into, any other Person or any merger of
another Person into the Company (other than a consolidation or merger in which
the Company is the continuing corporation and that does not result in any
reclassification or change of the Common Stock outstanding), the Holder of this
Warrant Certificate shall have the right thereafter to exercise the Warrants for
the kind and amount of securities, cash and other property receivable upon such
consolidation or merger by a holder of the number of shares of Common Stock of
the Company for which the Warrants may have been exercised immediately prior to
such consolidation or merger, assuming such holder of Common Stock of the
Company (i) is not a Person with which the Company consolidated or into which
the Company merged or which merged into the Company, as the case may be
("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation or merger
(provided that if the kind or amount of securities, cash and other property
receivable upon such consolidation or merger is not the same for each share of
Common Stock of the Company held immediately prior to such consolidation or
merger by other than a constituent Person or an Affiliate thereof and in respect
of which such rights of election shall not have been exercised ("non-electing
share"), then for the purpose of this Section 10 the kind and amount of
securities, cash and other property receivable upon such consolidation or merger
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the nonelecting shares).  Adjustments for
events subsequent to the effective date of such a consolidation or merger shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Warrant Certificate.  In any such event, effective provisions shall be made
in the certificate or articles of incorporation of the resulting or surviving
corporation or otherwise so that the provisions set forth herein for the
protection of the rights of Warrant holders shall thereafter continue to be
applicable; and any such resulting or surviving corporation shall expressly
assume the obligation to deliver, upon exercise, such shares of stock, other
securities, cash and property.  The provisions of this Section 10 shall
similarly apply to successive consolidations or mergers.

          11.  Notices.  Any notice or other communication required or permitted
               -------                                                          
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid.  Any notice shall be deemed given when so delivered personally, sent by
facsimile transmission or, if mailed, three (3) business days after the date of
deposit in the United States mail, by certified mail return receipt requested,
as follows:

                                      -9-
<PAGE>
 
If to the Company:       Concentric Network Corporation
                         10590 N. Tantau Avenue
                         Cupertino, CA  95014
                         Attention:      Michael Anthofer
                         Facsimile:      (408) 342-2876

If to the Holder:        Southwestern Bell Internet Services, Inc.
                         175 E. Houston
                         San Antonio, Texas  78205
                         Attention:  General Attorney,
                                     Mergers & Acquisitions
                         Facsimile:  (210) 351-3488

or such other address as shall have been furnished to the party giving or making
such notice, demand or delivery.

          12.  APPLICABLE LAW.  THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING
               --------------                                                  
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW
OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.

          13.  Amendments; Waivers.  Any provision of this Warrant Certificate
               -------------------                                            
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by the Holder and the Company, or in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

          14.  Agreement of Holder.  By acceptance of this Warrant Certificate
               -------------------                                            
and the Warrants represented thereby the Holder hereby agrees to be bound by the
terms and conditions contained herein.

          15.  Transfers.  Transfers of the Warrants shall be made in accordance
               ---------                                                        
with Section 8 of the Purchase Agreement.

                                     -10-
<PAGE>
 
          IN WITNESS WHEREOF, the Company has duly caused this Warrant
Certificate to be signed and attested by its duly authorized officers and to be
dated as of ____________, 1998.

                         CONCENTRIC NETWORK CORPORATION



                         By:___________________________
                             Name:
                             Title:

Attest:



By:__________________________
  Name:
  Title:



Consented to and Accepted:

SOUTHWESTERN BELL INTERNET SERVICES, INC.


By:__________________________
 Name:
 Title:



     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
SECURITIES LAWS OF ANY STATE, AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREUNDER.  NO HOLDER OF WARRANTS EVIDENCED BY THIS
CERTIFICATE MAY TRANSFER SUCH WARRANTS OR ANY INTEREST THEREIN TO ANY PERSON
OTHER THAN SBC COMMUNICATIONS INC. OR AN AFFILIATE OF SBC COMMUNICATIONS INC.

                                     -11-
<PAGE>
 
                                ASSIGNMENT FORM

           (To be executed if Holder desires to transfer a Warrant)


          For Value Received, the undersigned hereby sells, assigns and
transfers to _________________________________________.

________________________________________________________________________________
           Please insert social security or other identifying number
                                        
________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
               (Please print name and address including zip code)


Warrants represented by this Warrant Certificate, and does hereby irrevocably
appoint _______________________ Attorney, to transfer such rights on the books
of the Company with full power of substitution.

Date: ____________________.


                                 ________________________________(1)
                                 (Signature of Owner)

                                 ___________________________________
                                 (Street Address)

                                 ___________________________________
                                 (City)     (State)   (Zip Code)



(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.

                                     -12-
<PAGE>
 
                           EXERCISE SUBSCRIPTION FORM

 (To be executed only upon exercise for cash of Warrants at the Exercise Price)


To: Concentric Network Corporation

          The undersigned irrevocably exercises Warrants for the purchase of
__________ shares of common stock,  $0.001  par value, of Concentric Network
Corporation (the "Common Stock") at the Exercise Price and herewith makes
payment of $__________________________ (such payment being made in U.S. dollars
in cash, wire transfer of immediately available funds, bank cashier's check or
bank draft payable to the order of Concentric Network Corporation), all on the
terms and conditions specified in the attached Warrant Certificate, and
surrenders this Warrant Certificate and all right, title and interest in the
Warrants exercised hereby to Concentric Network Corporation and directs that the
shares of Common Stock deliverable upon the exercise of these Warrants be
registered or placed in the name and at the address specified below and
delivered thereto.


Date: __________________.


                         ________________________________(1)
                         (Signature of Owner)

                         ___________________________________
                         (Street Address)

                         ___________________________________
                         (City)     (State)   (Zip Code)



(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.

                                     -13-
<PAGE>
 
Securities and/or check to be issued to:


Please insert social security or identifying number:


Name:


Street Address:


City, State and Zip Code:


Any unexercised Warrants evidenced by the
within Warrant Certificate to be issued to:



Please insert social security or identifying number:


Name:


Street Address:


City, State and Zip Code:

                                     -14-
<PAGE>
 
                           EXERCISE SUBSCRIPTION FORM

 (To be executed only upon cashless exercise of Warrants at the Exercise Price)


To:  Concentric Network Corporation

          The undersigned irrevocably exercises Warrants for the purchase of
__________ shares of common stock,  $0.001  par value, of Concentric Network
Corporation (the "Common Stock") at the Exercise Price without any cash payment
pursuant to Section 2(c) of the attached Warrant Certificate and on the other
terms and conditions specified therein, and surrenders this Warrant Certificate
and all right, title and interest in the Warrants exercised hereby to Concentric
Network Corporation and directs that the shares of Common Stock deliverable upon
the exercise of these Warrants be registered or placed in the name and at the
address specified below and delivered thereto.


Date: ________________.


                         ________________________________(1)
                         (Signature of Owner)

                         ___________________________________
                         (Street Address)

                         ___________________________________
                         (City)     (State)   (Zip Code)



(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.

                                     -15-
<PAGE>
 
Securities and/or check to be issued to:


Please insert social security or identifying number:


Name:


Street Address:


City, State and Zip Code:


Any unexercised Warrants evidenced by the
within Warrant Certificate to be issued to:


Please insert social security or identifying number:


Name:


Street Address:


City, State and Zip Code:

                                     -16-
<PAGE>
 
                                   EXHIBIT B

                                  SUBSIDIARIES


InterNex Information Services, Inc.
Delta Internet Services, Inc.
AnaServe, Inc.
<PAGE>
 
                                   EXHIBIT C



                                   [Omitted]
<PAGE>
 
                                   EXHIBIT D



                                   [Omitted]