Document:

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                                                                     Exhibit 4.1

                         REGISTRATION RIGHTS AGREEMENT

 REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 28, 2000, by
                                      ---------
and between PILOT NETWORK SERVICES, INC., a Delaware corporation (the

"Company"), and MARSHALL CAPITAL MANAGEMENT, INC. (the "Purchaser").
 -------                                                ---------

  The Company has agreed, on the terms and subject to the conditions set forth
in the Securities Purchase Agreement of even date herewith (the "Securities
                                                                 ----------
Purchase Agreement"), to issue and sell to the Purchaser shares (the "Preferred
------------------                                                    ---------
Shares") of the Company's Series A Convertible Preferred Stock, par value $.01
------
per share (the "Preferred Stock"), and a Warrant (the "Warrant") entitling the
                ---------------                        -------
holder thereof to purchase shares (the "Warrant Shares") of Common Stock. The
                                        --------------
Preferred Shares are convertible pursuant to a Certificate of Designation (the

"Certificate of Designation") into shares (the "Conversion Shares") of the
---------------------------                     -----------------
Company's Common Stock, par value $.001 per share (the "Common Stock").
                                                        ------------

  In order to induce the Purchaser to enter into the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended (the "Securities Act"), and under
                                             --------------
applicable state securities laws.  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Securities
Purchase Agreement or the Certificate of Designation, as applicable.

  In consideration of the Purchaser entering into the Securities Purchase
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

  1. DEFINITIONS.
     -----------

  For purposes of this Agreement, the following terms shall have the meanings
specified:

     (a) "Blackout Period" means any period, not to exceed (i) five (5) Business
          ---------------
          Days in any one instance or (ii) twenty (20) Business Days in any
          period of twelve (12) consecutive months, with respect to which the
          Company's Board of Directors has made a good faith determination that
          there exists material, non-public information relating to the Company,
          which, in the reasonable opinion of the Board of Directors, would not
          be appropriate for public disclosure during such period;

     (b)  "Business Day" and "Closing Date" shall have the respective meanings
           ------------       ------------
          specified in the Securities Purchase Agreement;

     (c)  "Dividend Shares" shall have the meaning set forth in the
           ---------------
               Certificate of Designation;
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     (d)  "Effective Date" means the date on which the Registration Statement
           --------------
          relating to the Registrable Securities is declared effective by the
          Securities and Exchange Commission (the "Commission");
                                                   ----------

     (e)  "Filing Deadline" means the thirtieth (30th) day following the Closing
           ---------------
          Date; provided, however, that if such thirtieth day is not a Business
                --------  -------
          Day, the Filing Deadline shall be the Business Day immediately
          following such thirtieth day;

     (f)  "Holder" means any person owning or having the right to acquire,
           ------
          through conversion of the Preferred Shares or exercise of the
          Warrants, Registrable Securities, including initially the Purchaser
          and thereafter any permitted assignee thereof;

     (g)  "Registrable Securities" means the Conversion Shares, the Dividend
           ----------------------
          Shares, the Warrant Shares, and any other shares of Common Stock
          issuable pursuant to the terms of the Certificate of Designation or
          Warrants, and any shares of capital stock issued or issuable from time
          to time (with any adjustments) in replacement of, in exchange for or
          otherwise in respect of the Conversion Shares, the Dividend Shares,
          the Warrant Shares or such other shares;

     (h)  "Register", "registered" and "registration" refer to a registration
           --------    ----------       ------------
          effected by preparing and filing a registration statement or
          statements covering Registrable Securities in compliance with the
          Securities Act and pursuant to Rule 415 under the Securities Act

          ("Rule 415") or any successor rule providing for the offering of
          ----------
          securities on a continuous or delayed basis ("Registration
                                                        ------------
          Statement"), and the declaration or ordering of effectiveness of the
          Registration Statement by the Commission; and

          (i) "Registration Deadline" means the sixtieth (60th) day following
               ---------------------
          the earlier to occur of (i) the date on which a Registration Statement
          covering the Registrable Securities is filed with the Commission and
          (ii) the Filing Deadline.

  2.  MANDATORY REGISTRATION.
      ----------------------

     (a)  On or before the Filing Deadline, the Company shall prepare and file
with the Commission a Registration Statement on Form S-3 as a "shelf"
registration statement under Rule 415 covering the resale of the number of
shares of Initial Registrable Securities equal to the Reserved Amount (as
defined in the Securities Purchase Agreement) as of the Closing Date. Such
Registration Statement shall state, to the extent permitted by Rule 416 under
the Securities Act, that it also covers such indeterminate number of shares of
Common Stock as may be required to effect conversion of the Preferred Shares and
Warrants in order to prevent dilution resulting from stock splits, stock
dividends or similar events.

     (b)  The Company shall use its best efforts to cause the Registration
Statement to become effective as soon as practicable following the filing
thereof, but in no event later than the

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Registration Deadline. The Company shall respond promptly to any and all
comments made by the staff of the Commission on such Registration Statement, and
shall submit to the Commission, before the close of business on the Business Day
immediately following the Business Day on which the Company learns (either by
telephone or in writing) that no review of such Registration Statement will be
made by the staff of the Commission or that the staff of the Commission has no
further comments on such Registration Statement, as the case may be, a request
for acceleration of the effectiveness of such Registration Statement to a time
and date not later than forty eight (48) hours after the submission of such
request. The Company shall maintain the effectiveness of such Registration
Statement until the earlier to occur of (i) the date on which all of the
Registrable Securities have been sold pursuant to such Registration Statement
and (ii) the date on which all of the remaining Registrable Securities (in the
reasonable opinion of counsel to the Holders) may be immediately sold to the
public without registration and without regard to the amount of Registrable
Securities which may be sold by a Holder thereof at a given time (the period
beginning on the Registration Deadline and ending on the earlier of such dates
being referred to herein as the "Registration Period").
                                 -------------------

     (d)  If (A) the Registration Statement is not filed on or before the Filing
Deadline or declared effective by the Commission on or before the sixtieth
(60th) day following the Registration Deadline, (B) after such Registration
Statement has been declared effective by the Commission, sales of Registrable
Securities cannot be made by a Holder under such Registration Statement for any
reason not within the exclusive control of such Holder (other than during a
Blackout Period or with respect to such Registrable Securities as are then
freely saleable pursuant to Rule 144(k) under the Securities Act), or (C) the
Common Stock is not listed and freely tradeable on the American Stock Exchange,
Nasdaq National Market or the New York Stock Exchange (each of (A), (B) or (C)
being referred to herein as a "Default Event"), the Company shall pay to each
                               -------------
Holder an amount equal to the lesser of (i) one and one half percent (1.5%) per
thirty calendar day period (prorated for any period of less than thirty calendar
days) and (ii) the highest rate permitted by applicable law, times the
                                                             -----
Registrable Securities Value (as defined below) accruing daily and compounded
monthly, from the date on which a Default Event occurs until the date on which
such Default Event and any and all other Default Events have been cured and are
no longer continuing. The amounts paid or payable by the Company hereunder shall
be in addition to any other remedies available to each Holder at law or in
equity or pursuant to the terms hereof or the Securities Purchase Agreement, or
otherwise. Payments of such amounts pursuant hereto shall be made in immediately
available funds within five (5) Business Days after the end of each period that
gives rise to such obligation, provided that, if any such period extends for
more than thirty (30) days, payments shall be made at the end of each thirty-day
period. For purposes hereof, "Registrable Securities Value" means (x) the sum of
                              ----------------------------
the number of shares of Common Stock into which the Preferred Shares then held
by such Holder are convertible plus the number of shares of Common Stock into
                               ----
which the Warrant is then exercisable (without regard to any restrictions or
limitations on such conversion or exercise) times (y) the average Market Price
                                            -----
during the period of determination.

      (e)  In the event that (A) a Registration Statement is not declared
effective by the forty-fifth (45th) day following the Registration Deadline or
(B) after such Registration Statement has been declared effective by the
Commission, sales of Registrable Securities cannot be made by a Holder under
such Registration Statement for any reason not within the exclusive control of
such Holder (other

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than during a Blackout Period or with respect to such Registrable Securities as
are then freely saleable pursuant to Rule 144(k) under the Securities Act), or
(C) the Common Stock is not listed and freely tradeable on the American Stock
Exchange, Nasdaq National Market or the New York Stock Exchange (each event
described in clause (A), (B) or (C) being hereinafter referred to as a
"Repricing Event"), in addition to the amounts which may be
 ---------------
payable pursuant to paragraph 2(c) above (and any other remedies available to
the Holders), the Fixed Conversion Price for any conversion of Preferred Shares
occurring on a Conversion Date following the occurrence of such Repricing Event
shall be deemed to be equal to the lesser of (i) the lowest Conversion Price
that would have applied had such conversion occurred during the period between
the date on which a Repricing Event occurs and the date on which such Repricing
Event and any and all other Repricing Events have been cured and are no longer
continuing and (ii) the Fixed Conversion Price that would otherwise be in effect
on such Conversion Date

  3.  PIGGYBACK REGISTRATION.
      -----------------------

  If at any time prior to the expiration of the Registration Period, (i) the
Company proposes to register shares of Common Stock under the Securities Act in
connection with the public offering of such shares for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan or employee stock award or a registration on Form S-4 under
the Securities Act or any successor or similar form registering stock issuable
upon a reclassification, a business combination involving an exchange of
securities or an exchange offer for securities of the issuer or another entity,
or a registration statement on Form S-3 covering the resale of securities issued
in connection with a corporate acquisition) (a "Proposed Registration") and (ii)
                                                ---------------------
a registration statement covering the sale of all of the Registrable Securities
is not then effective and available for sales thereof by the Holders, the
Company shall, at such time, promptly give each Holder written notice of such
Proposed Registration.  Each Holder shall have twenty  (20) days from its
receipt of such notice to deliver to the Company a written request specifying
the amount of Registrable Securities that such Holder intends to sell and such
Holder's intended method of distribution.  Upon receipt of such request, the
Company shall use its best efforts to cause all Registrable Securities which the
Company has been requested to register to be registered under the Securities Act
to the extent necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the request of such
Holder; provided, however, that the Company shall have the right to postpone or
        --------  -------
withdraw any registration effected pursuant to this Section 3 without obligation
to the Holder.  If, in connection with any underwritten public offering for the
account of the Company or for shareholders of the Company that have contractual
rights to require the Company to register shares of Common Stock, the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in the
judgment of such underwriter(s), marketing or other factors dictate such
limitation is necessary to facilitate such offering, then the Company shall be
obligated to include in such Registration Statement only such limited portion of
the Registrable Securities with respect to which each Holder has requested
inclusion hereunder as such underwriter(s) shall permit.  Any such exclusion of
Registrable Securities shall be made pro rata among the Holders seeking to
include Registrable Securities in the Registration Statement, in proportion to
the number of Registrable Securities sought to be included by such Holders;
provided, however, that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding

                                      -4-
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securities, the holders of which are not entitled to inclusion of such
securities in such Registration Statement or are not entitled to pro rata
inclusion with the Registrable Securities; and provided, further, that, after
giving effect to the immediately preceding proviso, any exclusion of Registrable
Securities shall be made pro rata with holders of other securities having the
right to include such securities in such Registration Statement.

4.  OBLIGATIONS OF THE COMPANY.
    --------------------------

  In addition to performing its obligations hereunder, including without
limitation those pursuant to paragraphs 2(a) and 2(b) above, the Company shall:

      (a)  prepare and file with the Commission such amendments and supplements
to the Registration Statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Securities Act or to
maintain the effectiveness of such Registration Statement during the
Registration Period, or as may be reasonably requested within a reasonable time
prior to any proposed sale by a Holder in order to incorporate information
concerning such Holder or such Holder's intended method of distribution;

      (b)  in the event that the number of shares of Common Stock covered by the
Registration Statement (and any other Registration Statement that is then
effective and available to the Holders for the resale of Registrable Securities)
is insufficient during any period of three consecutive trading days to cover
150% of (i) the number of Registrable Securities issuable to such Holder upon
conversion of the Preferred Shares and exercise of the Warrants held by such
Holder (assuming for such purpose that such conversion or exercise were to occur
in full on each of such trading days without regard to any restriction or
limitation on such conversion or exercise), plus (ii) the number of Registrable
                                            ----
Securities issued to such Holder and which remain unsold, the Company shall
promptly amend the Registration Statement, or file a new Registration Statement,
or both, so as to cover 200% of such Registrable Securities, in any event as
soon as practicable, but not later than the tenth Business Day following the
last day of such three day period. Any Registration Statement filed pursuant to
this Section 4 shall state that, to the extent permitted by Rule 416 under the
Securities Act, such Registration Statement also covers such indeterminate
number of additional Registrable Securities as may be required to effect
conversion of the Preferred Shares or exercise of the Warrants to prevent
dilution resulting from stock splits, stock dividends or similar events. Unless
and until such amendment or new Registration Statement becomes effective, each
Holder shall have the rights described in Section 2 above with regard to the
unavailability of a Registration Statement for resales;

      (c)  secure the listing of all Registrable Securities on the Nasdaq
National Market prior to the date on which the Registration Statement relating
to such Registrable Securities becomes effective;

      (d)  furnish to each Holder such number of copies of the prospectus
included in such Registration Statement, including a preliminary prospectus, if
any, in conformity with the requirements of the Securities Act, and such other
documents as such Holder may reasonably request in order to facilitate the
disposition of such Holder's Registrable Securities;

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<PAGE>

      (e)  use all commercially reasonable efforts to register or qualify the
Registrable Securities under the securities or "blue sky" laws of such
jurisdictions within the United States as shall be reasonably requested from
time to time by a Holder, and do any and all other acts or things which may be
necessary or advisable to enable such Holder to consummate the public sale or
other disposition of the Registrable Securities in such jurisdictions; provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such jurisdiction;

      (f)  notify each Holder immediately upon the occurrence of any event as a
result of which the prospectus included in any such Registration Statement, as
then in effect, contains an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and as promptly as practicable, prepare, file and furnish to each Holder a
reasonable number of copies of a supplement or an amendment to such prospectus
as may be necessary so that such prospectus does not contain an untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;

      (g) notify each Holder immediately upon the imposition or termination of
any Period;

      (h)  use all commercially reasonable efforts to prevent the issuance any
stop order or other order suspending the effectiveness of any such Statement
and, if such an order is issued, to obtain the withdrawal thereof at the
earliest possible time and to notify each Holder of the issuance of such order
and the resolution thereof;

      (i)  furnish to each Holder, on the date that each Registration Statement
effective, (x) a letter, dated such date, of outside counsel representing the
Company (and reasonably acceptable to such Holder) addressed to such Holder,
confirming the  effectiveness of such Registration Statement and, to the
knowledge of such counsel, the absence of any stop order, and (y) in the case of
an underwriting, (A) an opinion addressed to the underwriters, dated such date,
of such outside counsel, in such form and substance as is required to be given
to such underwriters, and (B) a letter addressed to such underwriters, dated
such date, from the Company's independent certified public accountants, in such
form and substance as is required to be given by the Company's independent
certified public accountants to such underwriters;

      (j)  provide each Holder and its representatives (subject to, upon the
request of the Company with respect to any such representative, the execution of
a confidentiality agreement reasonably satisfactory to the Company by such
representative) the opportunity to conduct a reasonable inquiry of the Company's
financial and other records during normal business hours and make available its
officers, directors and employees for questions regarding information which such
Holder may reasonably request in order to fulfill any due diligence obligation
on its part;

      (k)  permit counsel retained for such purpose by each Holder to review
each

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Registration Statement and all amendments and supplements thereto, and any
comments made by the staff of the Commission and the Company's responses
thereto, within a reasonable period of time prior to the filing thereof with the
Commission (or, in the case of comments made by the staff of the Commission,
within a reasonable period of time following the receipt thereof by the Company)
and amend such materials in accordance with the comments of such counsel;
provided, however, that if such counsel has not delivered comments concerning
--------  -------
such materials to the Company on or before the second (2nd) Business Day
following its receipt thereof, the Company may deem the Holder represented by
such counsel to have waived its right of review and comment hereunder,

      (l)  refrain at any time during the Registration Period from permitting or
authorizing any person or entity (other than a Holder), or granting rights which
would permit or authorize any such person or entity, to include securities for
resale pursuant to any Registration Statement filed by the Company hereunder.

  5.  OBLIGATIONS OF EACH HOLDER.
      --------------------------

  In connection with the registration of the Registrable Securities pursuant to
a Registration Statement, each Holder shall:

      (a)  furnish to the Company in writing such information regarding itself
and intended method of disposition of Registrable Securities as the Company
reasonably request in order to effect the registration thereof;

      (b)  upon receipt of any notice from the Company of the happening of any
event the kind described in paragraphs 4(f), 4(g) or 4(h), immediately
discontinue sale or other disposition of Registrable Securities pursuant to the
applicable Registration Statement until the filing of an amendment or supplement
as described in paragraph 4(f), the cessation of a Blackout Period as described
in paragraph 4(g) or withdrawal of the stop order referred to in paragraph 4(h);

      (c)  to the extent required by applicable law, deliver a prospectus to the
of Registrable Securities;

      (d) notify the Company when it has sold all of the Registrable Securities
theretofore held by it; and

      (e)  promptly notify the Company in the event that any information
supplied by Holder in writing for inclusion in any Registration Statement or
related is untrue or omits to state a material fact required to be stated
therein or necessary to make such information not misleading in light of the
circumstances then existing.

  6.  INDEMNIFICATION.
      ---------------

 In the event that any Registrable Securities are included in a Registration
Statement under this Agreement:

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<PAGE>

      (a)  To the extent permitted by law, the Company shall indemnify and hold
harmless each Holder, the officers, directors, employees and agents of such
Holder, and each person, if any, who controls such Holder within the meaning of
the Securities Act or the Securities Exchange Act of 1934, as amended (the "1934
                                                                            ----
Act"), against any losses, claims, damages, liabilities or reasonable out-of-
---
pocket expenses (whether joint or several) (collectively, including legal or
other expenses reasonably incurred in connection with investigating or defending
same, "Losses"), insofar as any such Losses arise out of or are based upon (i)
       ------
any untrue statement of a material fact contained in such Registration Statement
if any, or final prospectus contained therein or any amendments or supplements
thereto, or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Subject to the provisions of paragraph 6(c) below, the Company will reimburse
such Holder, and each such officer, director, employee, agent or controlling
person for any legal or other expenses as reasonably incurred by any such entity
or person in connection with investigating or defending any Loss; provided,
however, that the foregoing indemnity shall not apply to amounts paid in
settlement of any Loss if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be obligated to indemnify any person for any Loss to the extent that
such Loss arises out of or is based upon and in conformity with written
information furnished by such person expressly for use in such Registration
Statement; and provided, further, that the Company shall not be required to
indemnify any person to the extent that any Loss results from such person
selling Registrable Securities (i) to a person to whom there was not sent or
given, at or prior to the written confirmation of the sale of such shares, a
copy of the prospectus, as most recently amended or supplemented, if the Company
has previously furnished or made available copies thereof or (ii) during any
period following written notice by the Company to such Holder of an event
described in paragraph 4(f), 4(g) or 4(h).

      (b)  To the extent permitted by law, each Holder, acting severally and not
jointly, shall indemnify and hold harmless the Company, the officers, directors,
employees, agents and representatives of the Company, and each person, if any,
who controls the Company within the meaning of the Securities Act or the 1934
Act, against any Losses to the extent (and only to the extent) that any such
Losses arise out of or are based upon and in conformity with written information
furnished by such Holder expressly for use in such Registration Statement; and
such Holder will reimburse any legal or other expenses as reasonably incurred by
the Company and any such officer, director, employee, agent, representative, or
controlling person, in connection with investigating or defending any such Loss;
provided, however, that the foregoing indemnity shall not apply to amounts paid
in settlement of any such Loss if such settlement is effected without the
consent of such Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this paragraph 6(b) exceed
the net proceeds resulting from the sale of the Registrable Securities sold by
such Holder under the applicable Registration Statement.

      (c)  Promptly upon an indemnified party learning of any circumstance or
event that may form the basis for a claim against the indemnifying party under
this Section 6 (including receipt by such indemnified party of notice of the
commencement of any action (including any governmental action)), such
indemnified party will, if a claim in respect thereof is to be made against any

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<PAGE>

indemnifying party under this Section 6, deliver to the indemnifying party a
written notice thereof. The indemnifying party may participate in discussions
regarding issues underlying any potential Loss and, if an action is commenced,
shall have the right to participate in and to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the
reasonably incurred fees and expenses of one such counsel to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate under applicable
standards of professional conduct due to actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel in such proceeding.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, to the extent materially prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 6 with respect to such action, but the
omission so to deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party otherwise than
under this Section 6 or with respect to any other action unless the indemnifying
party is materially prejudiced with respect to such other action as a result of
not receiving such notice.

      (d)  In the event that the indemnity provided in paragraph 6(a) or 6(b) is
unavailable or insufficient to hold harmless an indemnified party for any
reason, the Company and each Holder agree, severally and not jointly, to
contribute to the aggregate Losses to which the Company or such Holder may be
subject in such proportion as is appropriate to reflect the relative fault of
the Company and such Holder in connection with the statements or omissions which
resulted in such Losses; provided, however, that in no case shall such Holder be
responsible for any amount in excess of the proceeds resulting from the sale of
the Registrable Securities sold by it under the Registration Statement.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Company or by such
Holder.  The Company and each Holder agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph 6(d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to indemnification or
contribution from any person who is not guilty of fraudulent misrepresentation.
For purposes of this Section 6, each person who controls a Holder within the
meaning of either the Securities Act or the Exchange Act and each officer,
director, employee or  agent of such Holder shall have the same rights to
contribution as such Holder, and each person who controls the Company within the
meaning of either the Securities Act or the Exchange Act and each officer,
director, employee or agent of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph 6(d).

      (e)  The obligations of the Company and each Holder under this Section 6
shall survive the conversion of the Preferred Shares and exercise of the
Warrants in full, the completion of any offering of Registrable Securities
pursuant to a Registration Statement under this Agreement, or otherwise.

                                      -9-
<PAGE>

  7.  REPORTS.
      -------

  With a view to making available to each Holder the benefits of Rule 144 under
the Securities Act ("Rule 144") and any other similar rule or regulation of the
Commission that may at any time permit such Holder to sell securities of the
Company to the public without registration, the Company agrees to:

      (a)  make and keep public information available, as those terms are
understood and defined in Rule 144;

      (b)  file with the Commission in a timely all reports and other documents
required to be filed by the Company under Securities Act and the 1934 Act; and

      (c)  furnish to such Holder, so long as such Holder owns any Registrable
Securities, forthwith upon written request (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of Rule
144, and the 1934 Act, (ii) to the extent not publicly available through the
Commission's EDGAR database, a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in
availing such Holder of any rule or regulation of the Commission which permits
the selling of any such securities without registration.

  8.   MISCELLANEOUS.
       -------------

      (a)  Expenses of Registration.  All expenses, other than underwriting
           ------------------------
discounts and commissions and fees and expenses of counsel to the Holders and
other expenses incurred directly by each Holders in performing its obligations
under this Agreement, incurred in connection with the registrations, filings or
qualifications described herein, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, the
fees and disbursements of counsel for the Company, and the fees and
disbursements incurred in connection with the opinion and letter described in
paragraph 4(h) hereof, shall be borne by the Company.

      (b)  Amendment; Waiver.  Any provision of this Agreement may be amended
           -----------------
only pursuant to a written instrument executed by the Company and each Holder.
Any waiver of the provisions of this Agreement may be made only pursuant to a
written instrument executed by the party against whom enforcement is sought.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each Holder, each future Holder, and the Company. The failure of
any party to exercise any right or remedy under this Agreement or otherwise, or
the delay by any party in exercising such right or remedy, shall not operate as
a waiver thereof.

      (c)  Notices.  Any notice, demand or request required or permitted to be
           -------
given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given (i) when delivered personally or
by verifiable facsimile transmission (with an original to follow) on or before
5:00 p.m., eastern time, on a Business Day or, if such day is not a Business
Day, on the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to a

                                      -10-
<PAGE>

nationally-recognized overnight courier and (iii) on the day actually received
after deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed to the parties as follows:

  If to the Company:

  Pilot Network Services, Inc.
  1080 Marina Village Parkway
  Alameda, California 94501
  Attn: Chief Financial Officer
  Tel: (510) 433-7800
  Fax: (510)

  with a copy to:

  Heller Ehrman White & McAuliffe LLP
  333 Bush Street
  San Francisco, California  94104
  Attn:  Timothy G. Hoxie
  Tel:  (415) 772-6000
  Fax:  (415) 772-6268

and if to any Holder, to such address as shall be designated by such Holder in
writing to the Company.

      (d)  Termination.  This Agreement shall terminate on the earlier to occur
           -----------
of (a) the end of the Registration Period and (b) the date on which all of the
Registrable Securities have been publicly distributed; but any such termination
shall be without prejudice to (i) the parties' rights and obligations arising
from breaches of this Agreement occurring prior to such termination and (ii) the
indemnification and contribution obligations under this Agreement.

      (e)  Assignment.  Upon the transfer of Preferred Shares or the Warrant (or
           ----------
part thereof or Registrable Securities by a Holder, the rights of such Holder
hereunder with respect to the securities so transferred shall be assigned
automatically to the transferee thereof as long as: (i) the Company is, within a
reasonable period of time following such transfer, furnished with written notice
of the name and address of such transferee, (ii) the transferee agrees in
writing with the Company to be bound by all of the provisions hereof and (iii)
such transfer is made in accordance with the applicable requirements of the
Securities Purchase Agreement, the Certificate of Designation or the Warrant, as
the case may be; provided, however, that the registration rights granted in this
                 --------  -------
Agreement shall not be transferred to any person or entity that receives any
such security pursuant to an effective registration statement under the
Securities Act or pursuant to a public sale under Rule 144 or any successor
provision thereto.

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

                                      -11-
<PAGE>

instrument. This Agreement, once executed by a party, may be delivered to any
other party hereto by facsimile transmission.

      (g)  Governing Law.  This Agreement shall be governed by and construed in
           -------------
accordance with the laws of the State of Delaware without regard to the conflict
of laws provisions thereof.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -12-
<PAGE>

      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date written.

PILOT NETWORK SERVICES, INC.

By: /s/ M. Marketta Silvera
    ----------------------------------
  Name:  M. Marketta Silvera
  Title:  President and Chief Executive Officer

MARSHALL CAPITAL MANAGEMENT, INC.

By: /s/ Allan Weine
    ----------------------------------
    Allan Weine, President

                                      -13-<PAGE>

                                                                     Exhibit 4.2

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

Warrant to Purchase                            Issue Date:  June 28, 2000
256,621 Shares

                       WARRANT TO PURCHASE COMMON STOCK

                                      of

                         PILOT NETWORK SERVICES, INC.

  THIS CERTIFIES that Marshall Capital Management, Inc. or any subsequent holder
hereof (the "Holder"), has the right to purchase from PILOT NETWORK SERVICES,
             ------
INC., a Delaware corporation (the "Company"), up to 256,621 fully paid and
                                   -------
nonassessable shares of the Company's Common Stock, par value $.001 per share
(the "Common Stock"), subject to adjustment as provided herein, at a price equal
      ------------
to the Exercise Price (as defined below), at any time beginning on the date on
which this Warrant is issued (the "Issue Date") and ending at 5:00 p.m., eastern
                                   ----------
time, on the date that is the fifth (5th) anniversary of the Issue Date (the

"Expiration Date").  This Warrant is issued, and all rights hereunder shall be,
----------------
subject to all of the conditions, limitations and provisions set forth herein
and in the Securities Purchase Agreement of even date herewith by and among the
Company and the Purchasers named therein (the "Securities Purchase Agreement").
                                               -----------------------------
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Securities Purchase Agreement or the
Certificate of Designation relating to the Series A Convertible Preferred Stock
issued by the Company pursuant to the Securities Purchase Agreement

("Certificate of Designation").
----------------------------
<PAGE>

1.   Exercise.
     --------

(a)  Right to Exercise; Exercise Price.  The Holder shall have the right to
exercise this Warrant at any time and from time to time during the period
beginning on the Issue Date and ending on the Expiration Date as to all or any
part of the shares of Common Stock covered hereby (the "Warrant Shares"). The
                                                        --------------
"Exercise Price" payable by the Holder in connection with the exercise of this
 --------------
Warrant shall be $17.536, equal to one hundred and twenty percent (120%) of the
Market Price on the Issue Date (subject to adjustment as provided herein).
"Market Price" on any day means the average Closing Bid Price for the Common
-------------
Stock during the period of five (5) consecutive Trading Days immediately
preceding (but not including) such day.

(b)  Exercise Notice.  In order to exercise this Warrant, the Holder shall send
by facsimile transmission, at any time prior to 7:00 p.m., eastern time, on the
Business Day (as defined below) on which the Holder wishes to effect such
exercise (the "Exercise Date"), to the Company a copy of the notice of exercise
               -------------
in the form attached hereto as Exhibit A (the "Exercise Notice") stating the
                                               ---------------
number of Warrant Shares as to which such exercise applies and the calculation
therefor. As used herein, "Business Day" shall mean any day on which the Nasdaq
                           ------------
National Market and commercial banks in the cities of San Francisco and New York
are open for business. The Holder shall thereafter deliver to the Company the
original Exercise Notice, the original Warrant and the Exercise Price. In the
case of a dispute as to the calculation of the Exercise Price or the number of
Warrant Shares issuable hereunder (including without limitation the calculation
of any adjustment to the Exercise Price pursuant to Section 6 below), the
Company shall promptly issue to the Holder the number of Warrant Shares that are
not disputed and shall submit the disputed calculations to the Company's
independent accountant within three (3) Business Days following the Exercise
Date. The Company shall cause such accountant to calculate the Exercise Price
and/or the number of Warrant Shares issuable hereunder and to notify the Company
and the Holder of the results in writing no later than two Business Days
following the day on which such accountant received the disputed calculations.
Such accountant's calculation shall be deemed conclusive absent manifest error.
The fees of any such accountant shall be borne by the party whose calculations
were most at variance with those of such accountant.

(c)  Cancellation of Warrant.  This Warrant shall be canceled upon its exercise
and, if this Warrant is exercised in part, the Company shall, at the time that
it delivers Warrant Shares to the Holder pursuant to such exercise as provided
herein, issue a new warrant, and deliver to the Holder a certificate
representing such new warrant, with terms identical in all respects to this
Warrant (except that such new warrant shall be exercisable into the number of
shares of Common Stock with respect to which this Warrant shall remain
unexercised); provided, however, that the Holder shall be entitled to exercise
              --------  -------
all or any portion of such new warrant at any time following the time at which
this Warrant is exercised, regardless of whether the Company has actually issued
such new warrant or delivered to the Holder a certificate therefor.

2.   Delivery of Warrant Shares Upon Exercise.  Upon receipt of a Exercise
     ----------------------------------------
Notice pursuant to paragraph 1 above, the Company shall, (A) in the case of a
Cashless Exercise (as defined below), no

                                      -2-
<PAGE>

later than the close of business on the third (3rd) Business Day following the
Exercise Date set forth in such Exercise Notice, (B) in the case of a Cash
Exercise (as defined below) no later than the close of business on the later to
occur of (i) the third (3rd) Business Day following the Exercise Date set forth
in such Exercise Notice and (ii) such later date on which the Company shall have
received payment of the Exercise Price, and (C) with respect to Warrant Shares
which are disputed as described in paragraph 1(b) above, and required to be
delivered by the Company pursuant to the accountant's calculations described
therein, the close of business on the third (3rd) Business Day following the
determination made pursuant to paragraph 1(b) (the "Delivery Date"), issue and
                                                    -------------
deliver or caused to be delivered to the Holder the number of Warrant Shares as
shall be determined as provided herein. The Company shall effect delivery of
Warrant Shares to the Holder by, as long as the Company's designated transfer
agent for the Common Stock (the "Transfer Agent") participates in the Depository
                                 --------------
Trust Company ("DTC") Fast Automated Securities Transfer program ("FAST"),
                ---                                                ----
crediting the account of the Holder or its nominee at DTC (as specified in the
applicable Exercise Notice) with the number of Warrant Shares required to be
delivered, no later than the close of business on such Delivery Date. In the
event that the Transfer Agent is not a participant in FAST, or if Warrant Shares
are not otherwise eligible for delivery through FAST, or if the Holder so
specifies in an Exercise Notice or otherwise in writing on or before the
Exercise Date, the Company shall effect delivery of Warrant Shares by delivering
to the Holder or its nominee physical certificates representing such Warrant
Shares, no later than the close of business on such Delivery Date. Warrant
Shares delivered to the Holder shall not contain any restrictive legend as long
as (i) the resale of such Warrant Shares is covered by an effective Registration
Statement (as defined in the Registration Rights Agreement) and such Holder
represents in writing to the Company that such Warrant Shares have been or are
being sold pursuant to such registration statement, (ii) such Holder represents
in writing to the Company that such Warrant Shares have been publicly sold
pursuant to Rule 144 ("Rule 144") and such Holder has delivered to the Company
                       --------
customary Rule 144 broker's and seller's representation letters, or (iii) such
Holder represents in writing to the Company that sales of such Warrant Shares
may be made pursuant to Rule 144(k) under the Securities Act of 1933, as
amended, or any successor rule or provision.

3.   Failure to Deliver Warrant Shares.
     ---------------------------------

(a)  Exercise Default.  In the event that, as a result of any action or failure
to act on the part of the Company (including without limitation a failure by the
Company to have a sufficient number of shares of Common Stock authorized and
reserved for issuance pursuant to exercise of the Warrants), the Company does
not deliver to a Holder certificates representing the number of Warrant Shares
specified in the applicable Exercise Notice on or before the Delivery Date
therefor and such failure continues for ten (10) Business Days (an "Exercise
                                                                    --------
Default"), the Company shall pay to the Holder payments ("Exercise Default
-------                                                   ----------------
Payments") in the amount of (i) (N/365) multiplied by (ii) the aggregate
--------                                -------------
Exercise Price for the Warrant Shares which are the subject of such Exercise
Default multiplied by (iii) the lower of twenty four percent (24%) and the
        -------------
maximum rate permitted by applicable law, where "N" equals the number of days
elapsed between the original Delivery Date for such Warrant Shares and the date
on which all of such Warrant Shares are issued and delivered to the Holder.
Amounts payable under this subparagraph 3(a) shall be paid to the Holder in
immediately

                                      -3-
<PAGE>

available funds on or before the fifth (5th) Business Day of the calendar month
immediately following the calendar month in which such amount has accrued.

(b)  Buy-in.  Nothing herein shall limit a Holder's right to pursue actual
damages for the Company's failure to issue and deliver Warrant Shares in
connection with an exercise on the applicable Delivery Date (including, without
limitation, damages relating to any purchase of shares of Common Stock by the
Holder to make delivery on a sale effected in anticipation of receiving Warrant
Shares upon exercise, such damages to be in an amount equal to (A) the aggregate
amount paid by the Holder for the shares of Common Stock so purchased minus (B)
                                                                      -----
the aggregate amount of net proceeds, if any, received by the Holder from
the sale of the Warrant Shares issued by the Company pursuant to such exercise),
and the Holder shall have the right to pursue all remedies available to it at
law or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief).

(c)  Reduction of Exercise Price. In the event that, as a result of any action
or failure to act on the part of the Company (including without limitation a
failure by the Company to have a sufficient number of shares of Common Stock
authorized and reserved for issuance pursuant to exercise of the Warrants), a
Holder has not received certificates representing the Warrant Shares by the
tenth (10th) Business Day following an Exercise Default, the Holder may, upon
written notice to the Company, regain on such Business Day the rights of a
Holder of this Warrant, or part thereof, with respect to the Warrant Shares that
are the subject of such Exercise Default, and the Exercise Price for such
Warrant Shares shall be reduced by one percent (1%) for each day beyond such
10th Business Day in which the Exercise Default continues. In such event, the
Holder shall retain all of the Holder's rights and remedies with respect to the
Company's failure to deliver such Warrant Shares (including without limitation
the right to receive the cash payments specified in subparagraph 3(a) above). In
no event shall any adjustment pursuant to this paragraph (c) result in an
Exercise Price that is less than the Closing Bid Price for the Common Stock on
the Issue Date (as such Closing Bid Price may be adjusted for stock splits,
stock dividends and similar events).

(d)   Holder of Record.  Each Holder shall, for all purposes, be deemed to have
become the holder of record of Warrant Shares on the Exercise Date of this
Warrant, irrespective of the date of delivery of such Warrant Shares. Nothing in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a stockholder of the Company prior to the Exercise Date.

  4.   Exercise Limitations.
       --------------------

  In no event shall a Holder be permitted to exercise this Warrant, or part
thereof, with respect to Warrant Shares in excess of the number of such shares,
upon the issuance of which, (x) the number of shares of Common Stock
beneficially owned by the Holder plus (y) the number of shares of Common Stock
                                 ----
issuable upon such exercise plus (z) the number of shares of Common Stock that
                            ----
was issued to the Holder pursuant to this Warrant during the period of sixty
(60) days immediately preceding such exercise, would be equal to or exceed 9.99%
of the number of shares of Common Stock then issued and outstanding, it being
the intent of the Company and the Holder that no Holder be deemed at any

                                      -4-
<PAGE>

time to have the power to acquire, vote or dispose of greater than 9.99% of the
number of shares of Common Stock issued and outstanding during any sixty-day
period. To the extent that the limitation contained in this paragraph 4 applies,
the submission of a Conversion Notice by the Holder shall be deemed to be the
Holder's representation that this Warrant is exercisable pursuant to the terms
hereof and the Company shall be entitled to rely on such representation without
making any further inquiry. Nothing contained herein shall be deemed to restrict
the right of a Holder to exercise this Warrant, or part thereof, at such time as
such exercise will not violate the provisions of this Section 4. The limitation
contained in this Section 4 shall not apply if the original Holder hereof
elected in the Securities Purchase Agreement not to be subject to such
limitation.

5.   Payment of the Exercise Price.  The Holder may pay the Exercise Price in
     -----------------------------
either of the following forms or, at the election of Holder, a combination
thereof:

(a)  Cash Exercise: by delivery of immediately available funds.

(b)  Cashless Exercise: by surrender of this Warrant to the Company together
with a notice of cashless exercise, in which event the Company shall issue
to the Holder the number of Warrant Shares determined as follows:

                   X = Y x (A-B)/A

where:             X = the number of Warrant Shares to be issued to the Holder.

                   Y = the number of Warrant Shares with respect to which this
                   Warrant is being exercised.

                   A = the average of the Closing Bid Prices of the Common Stock
                   for the five (5) Trading Days immediately prior to (but not
                   including) the Exercise Date.

                   B = the Exercise Price;

provided, however, that the Holder may exercise this Warrant pursuant to a
--------  -------
Cashless Exercise only if, on the Exercise Date, the resale of Warrant Shares is
not covered by an effective Registration Statement (as defined in the
Registration Rights Agreement) that is available to the Holder on such date.

For purposes of Rule 144 under the Securities Act of 1933, as amended, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
been commenced, on the Issue Date to the extent permitted by law.

6.  Anti-Dilution Adjustments; Distributions; Other Events. The Exercise Price
    ------------------------------------------------------
and the

                                      -5-
<PAGE>

number of Warrant Shares issuable hereunder shall be subject to adjustment from
time to time as provided in this Section 6. In the event that any adjustment of
the Exercise Price or number of Warrant Shares as required herein results in a
fraction of a cent or fraction of a share, as applicable, such exercise Price or
number of Warrant Shares shall be rounded upon or down to the nearest cent or
share, as applicable.

(a)  Adjustment of Exercise Price upon Issuance of Common Stock below the
     --------------------------------------------------------------------
Exercise Price. In the event that the Corporation issues Common Stock,
--------------
whether upon the exercise of rights, warrants, securities convertible or
exercisable into Common Stock or otherwise (including under the Equity Line), at
a price per share that is lower than the Exercise Price in effect on any date
following the Issue Date (a "Dilutive Issuance"), the Exercise Price shall be
                             -----------------
reduced, on a weighted average basis, to such lower price. Any adjustment made
herein on a "weighted average basis" as a result of a Dilutive Issuance of
Common Stock shall be calculated taking into account both (x) the difference
between the price at which such Common Stock is issued and the applicable
Exercise Price and (y) the number of shares of Common Stock being issued
relative to the number of shares of Common Stock into which this Warrant is
exercisable at the Exercise Price on the date of such issuance. By way of
example, assuming that (a) the Exercise Price is $9.00, (b) this Warrant is
exercisable at the Exercise Price into 1.04 million shares of Common Stock, (c)
the amount of the Dilutive Issuance is 520,00 shares, and (d) the purchase price
per share of Common Stock being issued in the Dilutive Issuance is $5, the Fixed
Conversion Price as adjusted would be equal to $7.00. In no event shall any
adjustment pursuant hereto result in (i) an Exercise Price that exceeds the
Exercise Price that would otherwise apply in the absence of such adjustment or
(ii) an Exercise Price that is less than the Closing Bid Price for the Common
Stock on the Issue Date (as such Closing Bid Price may be adjusted for stock
splits, stock dividends and similar events).

(b)  Exceptions to Adjustment of Exercise Price.  No adjustment to the Exercise
     ------------------------------------------
Price will be made as a result of the issuance of any securities of the Company
issued pursuant to (i) an employee stock option, purchase or benefit plan or
program duly adopted by the Company; (ii) any options, warrant, convertible
securities or rights or agreements to purchase securities of the Company
outstanding on the date hereof; (iii) any firm-commitment underwritten public
offerings of securities in an amount not less than $40,000,000; (iv) any
securities issued for consideration other than cash pursuant to a merger,
consolidation, acquisition or similar business combination with a third party,
the primary purpose of which is not the raising of capital (provided that, in
any such event, the provisions of paragraphs 6(c), 6(d), 6(e), 6(f) and 6(g)
will remain in effect); (v) shares of Common Stock issued upon conversion of the
Preferred Shares or exercise of the Warrants; (vi) any debt or other securities
issued pursuant to any equipment leasing arrangement or debt financing from a
bank or other financial institution, or (vii) any securities issued in
connection with strategic transactions involving the Company and third parties,
including by way of example (A) joint ventures, manufacturing, marketing or
distribution arrangements or (B) technology transfer or development
arrangements; provided, that, in any such event, the provisions of paragraphs
6(c), 6(d), 6(e), 6(f) and 6(g) will remain in effect.

(c)  Subdivision or Combination of Common Stock.  If the Company, at any time
     ------------------------------------------
after

                                      -6-
<PAGE>

the initial issuance of this Warrant, subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a greater number of shares, then after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company, at
any time after the initial issuance of this Warrant, combines (by reverse stock
split, recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect immediately
prior to such combination will be proportionally increased

(d)  Distributions.  If the Company or any of its subsidiaries shall at any time
     -------------
distribute to holders of Common Stock (or to a holder, other than the Company,
of the common stock of any such subsidiary) cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or the immediately
preceding year) including any dividend or distribution in shares of capital
stock of a subsidiary of the Company (collectively, a "Distribution") then, in
                                                       ------------
any such case, the Holder of this Warrant shall be entitled to receive, at the
same time as such assets are received by a holder of such stock, at the option
of such Holder, either (A) an amount and type of such Distribution as though
such Holder were a holder on the record date therefor of a number of shares of
Common Stock into which this Warrant is exercisable as of such record date (such
number of shares to be determined at the Exercise Price then in effect and
without regard to any limitation on exercise of this Warrant that may exist
pursuant to the terms hereof or otherwise) , or (B) a reduction in the Exercise
Price for the Preferred Shares held by such Holder as of the record date for
such Distribution, such reduction to be effected by reducing the Exercise Price
in effect on the Business Day immediately preceding such record date by an
amount equal to the fair market value of the assets so distributed divided by
the number of shares of Common Stock to which such Distribution is made, such
fair market value to be reasonably determined by an investment banking firm
selected by the Holder and which is reasonably acceptable to the Company.

(e)  Consolidation or Merger.  In the event of a merger, consolidation, business
     -----------------------
combination, tender offer, exchange of shares, recapitalization, reorganization,
redemption or other similar event, as a result of which shares of Common Stock
of the Company shall be changed into the same or a different number of shares of
the same or another class or classes of stock or securities or other assets of
the Company or another entity or there is a sale of all or substantially all the
Company's assets (a "Corporate Change"), then this Warrant shall be exercisable
                     ----------------
into such class and type of securities or other assets as the Holder would have
received had the Holder exercised this Warrant immediately prior to such
Corporate Change; provided, however, that Company may not effect any Corporate
Change unless (i) it (or, in the case of a tender offer, the offering party)
first shall have given ten (10) days' notice to the Holder hereof of any
Corporate Change and makes a public announcement of such event before or at the
same time that it gives such notice (it being understood that the filing by the
Company of a Form 8-K for the purpose of disclosing the anticipated consummation
of the Corporate Change shall constitute such a notice for purposes of this
provision) and (ii) it requires the resulting successor or acquiring entity (if
not the Company) to assume by written instrument the obligations of the Company
hereunder and under the Securities Purchase Agreement and the

                                      -7-
<PAGE>

Registration Rights Agreement.

(f) Adjustments; Additional Shares, Securities or Assets.  In the event that at
    ----------------------------------------------------
any time, as a result of an adjustment made pursuant to this paragraph 6, the
Holder of this Warrant shall, upon exercise of this Warrant, become entitled to
receive securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this paragraph 6. Any adjustment
made herein that results in a decrease in the Exercise Price shall also effect a
proportional increase in the number of shares of Common Stock into which this
Warrant is exercisable.

7.  Fractional Interests.
    --------------------

    No fractional shares or scrip representing fractional shares shall be
issuable upon the exercise of this Warrant, but on exercise of this Warrant, the
Holder hereof may purchase only a whole number of shares of Common Stock. If, on
exercise of this Warrant, the Holder hereof would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon exercise shall be rounded up or down to the nearest whole
number of shares of Common Stock.

8.  Transfer of this Warrant.  The Holder may sell, transfer, assign, pledge
    ------------------------
or otherwise dispose of this Warrant, in whole or in part, as long as such sale
or other disposition is made pursuant to an effective registration statement or
an exemption to the registration requirements of the Securities Act of 1933, as
amended, and applicable state laws.  Upon such transfer or other disposition,
the Holder shall deliver a written notice to Company, substantially in the form
of the Transfer Notice attached hereto as Exhibit B (the "Transfer Notice"),
                                                          ---------------
indicating the person or persons to whom this Warrant shall be transferred and,
if less than all of this Warrant is transferred or this Warrant is transferred
in parts, the number of Warrant Shares to be covered by the part of this Warrant
to be transferred to each such person. Within three (3) Business Days of
receiving a Transfer Notice and the original of this Warrant, the Company  shall
deliver to the each transferee designated by the Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of Warrant Shares.
Notwithstanding the foregoing, no Holder may knowingly and voluntarily sell this
Warrant (or any portion thereof) to an entity that is a competitor of the
Company.

9.  Benefits of this Warrant.
    ------------------------

    Nothing in this Warrant shall be construed to confer upon any person other
than the Holder of this Warrant any legal or equitable right, remedy or claim
under this Warrant and this Warrant shall be for the sole and exclusive benefit
of the Holder of this Warrant.

10. Loss, theft, destruction or mutilation  of Warrant.
    --------------------------------------------------

                                      -8-
<PAGE>

    Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
of this Warrant, if mutilated, the Company shall execute and deliver a new
Warrant of like tenor and date.

11.  Notice or Demands.
     -----------------

     Except as otherwise provided herein, any notice, demand or request required
or permitted to be given pursuant to the terms of this Warrant shall be in
writing and shall be deemed given (i) when delivered personally or by verifiable
facsimile transmission (with an original to follow) on or before 5:00 p.m.,
eastern time, on a Business Day or, if such day is not a Business Day, on the
next succeeding Business Day, (ii) on the next Business Day after timely
delivery to a nationally-recognized overnight courier and (iii) on the Business
Day actually received if deposited in the U.S. mail (certified or registered
mail, return receipt requested, postage prepaid), addressed as follows:

     If to the Company:

     Pilot Network Services, Inc.
     1080 Marina Village Parkway
     Alameda, California 94501
     Attn: Chief Financial Officer
     Tel: (510) 433-7800
     Fax: (510)

     with a copy to:

     Heller Ehrman White & McAuliffe LLP
     333 Bush Street
     San Francisco, California  94104
     Attn:  Timothy G. Hoxie
     Tel:  (415) 772-6000
     Fax:  (415) 772-6268

and if to the Holder, to such address as shall be designated by the Holder in
writing to the Company.

12.  Applicable Law.
     --------------

     This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the state of Delaware, without giving
effect to conflict of law provisions thereof.

                                      -9-
<PAGE>

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -10-
<PAGE>

  IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 28th
day of June, 2000.

                         PILOT NETWORK SERVICES, INC.

                         By:  /s/ M. Marketta Silvera
                              _____________________________________________
                              Name: M. Marketta Silvera
                              Title: President and Chief Executive Officer

                                      -11-
<PAGE>

                                                            EXHIBIT A to WARRANT
                                                            --------------------

                                EXERCISE NOTICE
                                ---------------

  The undersigned Holder hereby irrevocably exercises the right to purchase
________________ of the shares of Common Stock ("Warrant Shares") of PILOT
                                                 --------------
NETWORK SERVICES, INC. evidenced by the attached Warrant (the "Warrant").
                                                               -------
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant. Unless otherwise specified in
writing to the Company, the undersigned represents to the Company that the
shares of Common Stock covered by this notice have been or will be sold pursuant
to the terms of an effective registration statement.

1.   Form of Exercise Price.  The Holder intends that payment of the Exercise
Price shall be made as:

     ______ a Cash Exercise with respect to _________________ Warrant Shares;
               -------------
      and/or

     ______ a Cashless Exercise with respect to _________________ Warrant
              -----------------
              Shares.

2.   Payment of Exercise Price.  In the event that the Holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the Holder shall pay the sum of $________________ to the
Company in accordance with the terms of the Warrant.

3.   Delivery of Warrant Shares.  The Company shall deliver to the Holder
_____________ Warrant Shares in accordance with the terms of the Warrant.

Date: ______________________

___________________________________
  Name of Registered Holder

By:  _______________________________
     Name:
     Title:

                                      -12-
<PAGE>

                                                            EXHIBIT B to WARRANT
                                                            --------------------

                                TRANSFER NOTICE
                                ---------------

FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons named below the right to
purchase ___________shares of the Common Stock of PILOT NETWORK SERVICES, INC.
evidenced by the attached Warrant.

Date: ______________________

___________________________________
  Name of Registered Holder

By:  _______________________________
    Name:
    Title:

Transferee Name and Address:

-------------------------------------

-------------------------------------

-------------------------------------

                                      -13-

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