Governance Agreement - Concentric Network Corp., Marc Collins-Rector, Chad Shackley, GS Capital Partners LP, Kleiner Perkins Caufield Byers VIII, KPCB VII Founders Fund, KPCB Information Sciences Zaibatsu Fund II and Intuit Inc.


 
                              GOVERNANCE AGREEMENT

     This Governance Agreement (the 'Agreement') is made as of May 15, 1997, by
and among CONCENTRIC NETWORK CORPORATION, a Florida corporation (the 'Company'),
MARC COLLINS-RECTOR, an individual resident of California ('Collins-Rector'),
CHAD SHACKLEY, an individual resident of California ('Shackley') (together with
Collins-Rector, the 'Founders'), GS CAPITAL PARTNERS, L.P., a Delaware limited
partnership ('GSCP'), KLEINER PERKINS CAUFIELD & BYERS VII, a California limited
partnership ('KPCB'), KPCB VII Founders Fund, a California limited partnership
('Founders Fund'), KPCB INFORMATION SCIENCES ZAIBATSU FUND II, a California
limited partnership ('Zaibatsu Fund' and together with KPCB and Founders Fund,
'KP'), and INTUIT, INC. ('Intuit').

     In consideration of the mutual promises made herein, the Company, the
Founders, GSCP, KP and Intuit hereby agree as follows:

1.   The Founders hereby convert, as of the date hereof, all 106,754 shares of
Class B Common Stock of the Company held by them into 106,754 shares of Series A
Preferred Stock of the Company and, agree to as soon as practicable, deliver to
the Company stock certificates representing all such shares of Class B Common
Stock, duly endorsed for transfer to the Company. Each of the Founders and the
Company hereby further agree to exchange each share of Series A Preferred Stock
held by the Founders upon conversion of the Class B Common Stock into one share
of a new Series E Preferred Stock, having the rights, preferences and privileges
set forth on Exhibit A attached hereto, solely in the event that the Company has
             ---------                                                          
not effected a Qualified Public Offering (as such term is to be defined in the
Articles of Incorporation pursuant to clause 2(a)(vii) below) by August 31,
1997, such exchange to be effective within 10 calendar days of such date.

2.   Each of the Founders, GSCP, KP and Intuit (to the extent Intuit exercises
warrants to purchase Series B Preferred Stock of the Company on or prior to the
record date for such shareholder action) hereby agrees to vote all shares of
capital stock of the Company over which they have voting control in favor of the
following actions, as they shall be approved by the Board of Directors of the
Company and submitted for shareholder approval (whether by written consent, at
the annual meeting or at any special meeting of shareholders):

     (a)  to approve a plan of recapitalization of the Company through an
          amendment and restatement of the Company's Articles of Incorporation
          so as to (i) increase the number of authorized Preferred Stock and
          authorized Common Stock to 255,000,000 and 360,000,000, respectively,
          provided, however, that the authorized shares of capital stock will be
          adjusted to give effect to the reverse stock split described in item
          2(d) below; (ii) increase the number of authorized shares of Series B
          Preferred Stock to 13,564,512, (iii) change the conversion rights of
          the Series A Preferred Stock to eliminate any conversion of Series A
          Preferred Stock into Class B Common Stock and to provide instead that
          Series A Preferred Stock will convert into a number of shares of
          Common Stock equal to the combined number of shares of Class A and
          Class B Common Stock into which the Series A Preferred Stock otherwise
          would have converted (i.e., 1.0032 shares of Common Stock), (iv)
          eliminate the Class B Common Stock from the Company's capital
          structure, (v) redesignate the Class A Common 

 
          Stock as Common Stock, and (vi) amend the definition of 'Qualified
          Public Offering' to reduce to $50,000,000 the Corporation Valuation
          (as defined in the Articles of Incorporation) required in a Qualified
          Public Offering and to reduce to $15,000,000 the aggregate size of the
          public offering required for a Qualified Public Offering (the 'Amended
          and Restated Articles');

     (b)  to approve a second amendment to the Company's Amended and Restated
          Articles, solely in the event that the Company does not effect a
          Qualified Public Offering by August 31, 1997, to authorize 106,754
          shares of a new Series E Preferred Stock of the Company having the
          rights, preferences and privileges set forth on Exhibit A and to
                                                          ---------       
          effect the conversion of each share of Series A Preferred Stock held
          by the Founders into one share of the new Series E Preferred Stock;
          provided, however, that the authorized shares of Series E Preferred
          Stock will be adjusted to give effect to the reverse stock split
          described in item 2(d) below;

     (c)  to approve the reincorporation of the Company from Florida into
          Delaware and the related merger agreement to effect such
          reincorporation; and to approve the related agreements, amendments to
          the Certificate of Incorporation, Bylaws, director and officer
          indemnification agreements, other documents and contracts, and other
          necessary or appropriate actions in connection therewith by the
          Company and the Company's Delaware subsidiary;

     (d)  to approve a 15:1 reverse stock split of the outstanding shares of
          Common Stock of the Company as part of the reincorporation of the
          Company into Delaware;

     (e)  to elect Henry Nothhaft and Edward Zander as 'Common Directors' of the
          Company within the meaning of the Articles of Incorporation of the
          Company, as amended; provided, however, that Shackley will have no
          such obligation to vote for any directors under the terms of this
          Agreement;

     (f)  approve an amendment to the Company's 1996 Stock Plan to reserve up to
          11,900,000 additional shares for issuance thereunder;

     (g)  to approve a new 1997 Stock Option Plan and an Employee Stock Purchase
          Plan designed to comply with Section 423 of the Internal Revenue Code
          in such forms and with such share reserves as may be determined by the
          Board of Directors of the Company in its reasonable discretion;

     (h)  to approve a proposal to permit the Company to exceed the 30 percent
          limit for outstanding options to purchase shares of the Company as
          such limit is set forth in Section 260.140.45 and related sections of
          the California Code of Regulations;

     (i)  to approve an Amended and Restated Certificate of Incorporation of the
          Company to be filed in connection with: (i) the closing of the IPO (as
          defined below) and (ii) the 

                                      -2-

 
          conversion of the outstanding shares of the Company's Preferred Stock
          into Common Stock, which shall establish the authorized shares of
          capital stock of the Company as 100,000,000 shares of Common Stock and
          10,000,000 shares of undesignated Preferred Stock; and

     (j)  to approve the terms of an interim financing of the Company in such
          amount and on such terms as may be determined by the Board of
          Directors of the Company in its reasonable discretion, subject to any
          pre-existing shareholder rights granted by applicable statutes or
          other written agreement.

3.   GSCP, KP and Intuit hereby agree that upon filing of the Amended and
Restated Articles, the irrevocable proxies granted by each of the Founders to
GSCP pursuant to Sections 5(a) and 5(b) of the Amended and Restated Stockholders
Agreement by and among the Company, GSCP, KP, Intuit and the Founders, shall
expire and be of no further force and effect.

4.   The Company agrees to place an Eligible Nominee designated by the Founders
on the Company's Board of Directors, as a representative director of the Common
shareholders. The Company will use reasonable efforts to maintain such Eligible
Nominee on the Board of Directors until the earlier to occur of (i) one year
after the closing of the IPO (as defined below), (ii) the expiration or full
release of the Founders (including a release pursuant to section 8 of this
Agreement) from any lock-up restrictions granted to the underwriters in
connection with such IPO (including, without limitation, the Lock-Up Agreement);
or (iii) the sale of all or substantially all of the assets of the Company or
the merger, acquisition or other reorganization of the Company in which more
than fifty percent of the voting power of the Company is disposed of; subject,
however, to the right of the Board of Directors or shareholders to remove such
Eligible Nominee from the Board as provided by applicable law.  An 'Eligible
Nominee' shall be a person, other than a Founder, who has industry credentials
and is reasonably acceptable to the other Board members. The Company and the
Founders acknowledge and agree that initially such Eligible Nominee shall be
Robert W. Doede.  The appointment of Mr. Doede shall occur promptly following
the execution and delivery of this Agreement.

5.   The Company hereby agrees to use commercially reasonable efforts to effect
the following by August 31, 1997:

     (a)  obtain the necessary approvals of its Board of Directors and
          shareholders to effect an underwritten, firm commitment initial public
          offering of the Company's Common Stock (the 'IPO');

     (b)  engage an underwriter or underwriters to effect such an IPO; and

     (c)  prepare and file a registration statement in connection with such an
          IPO with the Securities and Exchange Commission, and take all
          reasonable actions to have such registration statement declared
          effective as soon as practicable after filing.

                                      -3-

 
     The Founders recognize that the Company cannot guarantee that a public
offering by the Company will be possible or desirable prior to or on August 31,
1997, or at any time thereafter, but if market conditions or other factors make
an IPO undesirable, in the determination of the Company and its underwriter or
underwriters, the Company will consult in good faith with the Founders about the
possible steps that may be taken under the circumstances, with a view to
enabling the Founders to sell their shares as soon as reasonably possible,
subject to compliance with applicable securities laws. Notwithstanding the
foregoing, the Company will be under no obligation to effect an IPO or to
register the shares of the Founders in the event that an IPO is not possible or
desirable and the Founders further recognize and agree that the other provisions
of this Agreement, including but not limited to each of the Founders obligations
in paragraph 2 above, will survive and remain in full force and effect if, for
any reason, the Company is not able to effect an IPO.

6.   Each of GSCP, KP and Intuit hereby agree to vote for amendments to existing
registration rights agreements to give the Founders' shares piggyback
registration rights with priority over all other Registrable Securities (as
defined therein) in any follow-on offering effected by the Company prior to the
expiration or full release of lock-up agreements entered into by the Founders
with the underwriters in connection with the IPO in the event of a cutback by
the underwriter on the number of shares that may be offered or sold by selling
shareholders, it being understood that such amendments require the approval of
additional parties not signatories to this Agreement and will not be implemented
without such approval. The Company agrees to use its reasonable efforts to
obtain the signature of such additional parties to effectuate the foregoing as
soon as possible.

7.   The Company and the Founders acknowledge and agree that each Founder has
options to purchase 1,200,100 shares of the Company's Common Stock (the
'Founders' Options') and that all of such options are fully vested, are in full
force and effect as of the date hereof and do not expire prior to August 19,
1999.  Within 90 days of the closing of the IPO, the Company agrees to file a
Registration Statement on Form S-8 to register the shares issuable, among other
things, upon exercise of the Founders' Options.  The Founder's recognize and
agree that such shares issuable on exercise of the Founders' Options will be
subject to the Lock-Up restrictions described below.

8.   Collins-Rector agrees to execute and deliver to the Company the lock-up
agreement in the form attached hereto as Exhibit B (the 'Lock-Up Agreement');
                                         ---------                           
provided, however, (i) if any officer, director or shareholder of the Company
(other than Shackley but including, without other limitation, KP or GSCP) enters
into a lock-up agreement with the underwriters of the IPO that provides for a
shorter lock-up period, the Lock-Up Agreement shall automatically be amended to
provide for a lock-up period that is the same lock-up period agreed to by such
other shareholder, (ii) if KP, GSCP, Telecom Italia, Racal Datacom or Softbank
Holdings, Inc. do not enter into a lock-up agreement prior to the closing of the
IPO, the Lock-Up Agreement shall automatically terminate and be null and void ab
initio and (iii) if any shareholder of the Company (other than Shackley) who has
previously entered into a lock-up agreement with the underwriters of the IPO is
released in any manner from the terms of their lock-up or similar agreement (or
the terms of such agreement are amended in favor of such shareholder), Collins-
Rector shall also be similarly released (or in the event of an amendment, the
same amendment shall also apply to the Lock-Up Agreement in favor of Collins-
Rector).

                                      -4-

 
9.   The Company and each of the Founders, GSCP, KP and Intuit hereby amend the
provisions of any and all agreements each may have with the Company, including
but not limited to (i) that certain Preferred Stock and Warrant Purchase
Agreement, dated April 20, 1995, as amended, (ii) that certain Amended and
Restated Stockholder Agreement dated April 20, 1995, as amended, and (iii) each
of the Irrevocable Proxies granted by such party to vote the shares of capital
stock of the Company, to conform the definition of 'Qualified Public Offering',
or similar term contained therein, to the definition of Qualified Public
Offering described in the Amended and Restated Articles (noted at paragraph 2(a)
above).

10.  Concurrently with the execution of this Agreement, the Company agrees to
execute and deliver to the Founders a release of the noncompetition covenants of
the Founders in the form attached hereto as Exhibit C.
                                            --------- 

11.  In case any provision of this Agreement shall be declared invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

12.  The Founders and each of the other parties hereto will cooperate with the
Company to carry out the purposes and intents of this Governance Agreement.



                  [Remainder of page intentionally left blank]

                                      -5-

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

                                  CONCENTRIC NETWORK CORPORATION
 

                                  By:  /s/ Michael Anthofer
                                       --------------------
                                       Michael Anthofer
                                       Vice President and Chief Financial 
                                       Officer


FOUNDERS                          INTUIT, INC.


/s/ Marc Collins-Rector           By:  /s/ 
-----------------------               ------------------------------
Marc Collins-Rector                   Name: 
                                      Title: 

/s/ Chad Shackley
-----------------
Chad Shackley



GS CAPITAL PARTNERS, L.P.         KPCB INFORMATION SCIENCES ZAIBATSU FUND II   
                                                                               
By: GS Advisors, L.P., its        
    general partner               
    By:  GS Advisors, Inc., its   By:  KPCB VII ASSOCIATES, its general partner 
         general partner                                                        
                                     
                                     
By: /s/                           By:  /s/    
    ----------------------------       --------------------------------         
    Name:                              Name:                                 
    Title:                             Title:                                 
                                  


KLEINER PERKINS CAUFIELD & BYERS VII                         KPCB VII FOUNDERS FUND                       
                                  
By:  KPCB VII ASSOCIATES, its     
general partner                   By: KPCB VII ASSOCIATES, its general partner  


By:  /s/                          By:  /s/ 
     -------------------------         --------------------------- 
     Name:                             Name: 
     Title:                            Title: 

                                      -6-

 
                                   Exhibit A
                                   ---------

                        CONCENTRIC NETWORK CORPORATION
                         SERIES E PROPOSED TERM SHEET

     The issuance of  Series E Preferred Stock by Concentric Network Corporation
(the 'Company') will be accomplished by the conversion of 106,789 shares of the
Company's authorized shares of Series A Preferred Stock, constituting all of the
outstanding shares of Series A Preferred Stock of the Company held by Marc
Collins-Rector and Chad Shackley (the 'Founders'), into 106,789 shares of a new
class of Series E Preferred Stock having the rights, preferences and privileges
set forth below.

      The following term sheet is subject in its entirety to the terms of the
definitive documentation to be executed and delivered in connection with the
conversion of the Series B Common Stock and the issuance of the Series E
Preferred Stock.

ISSUER:             Concentric Network Corporation, a Florida corporation (the
                    'Company')

TYPE OF
SECURITY:           Series E Preferred Stock ('Series E Shares' or 'Series E
                    Preferred')

CONVERSION OF
FOUNDERS' SERIES A
PREFERRED STOCK:    Each outstanding share of Series A Preferred Stock held by
                    the Founders will be automatically converted into a single
                    share of Series E Preferred Stock if the Company has not
                    effected a Qualified Public Offering by August 31, 1997.

CLASSES OF
PREFERRED STOCK:    The Company has four other outstanding series of Preferred
                    Stock. The Series E Preferred will rank on a parity, in
                    terms of rights in respect of the dissolution, liquidation
                    or winding-up of the Company, with the Series A, B, C and D
                    Preferred Stock.

CONVERSION:         The Series E Preferred automatically will be converted into
                    shares of Common Stock on a one for one basis upon the
                    closing of an underwritten public offering and is
                    convertible at the option of the holder into shares of
                    Common Stock. The Series E Preferred Stock is not afforded
                    antidilution adjustments other than with respect to splits,
                    combinations, recapitalizations and the like of the Common
                    Stock.

DIVIDENDS:          Holders of Series A, B, C, D and E Preferred Stock will be
                    entitled to equivalent dividends and distributions (other
                    than those paid in additional shares of Common Stock) as
                    those paid on shares of Common stock (or any other class of
                    capital stock, but excluding senior classes). Such
                    equivalent dividends will be determined based upon the
                    dividend payable on the number of shares of Common Stock
                    into which such shares of Series A, B, C, D and E Preferred
                    could be converted on the record date for the declaration of
                    such dividends.

LIQUIDATION

 
PREFERENCE:         In the event of any liquidation, dissolution or winding up
                    of the Company, holders of Series E Preferred will be
                    entitled to an amount equal to $0.01 plus all accrued and
                    unpaid dividends per share, on a parity with the holders of
                    Series A, B, C and D Preferred Stock before any payments are
                    made to the holders of Common Stock or any other junior
                    securities. In the event that the Company has insufficient
                    funds to pay the full liquidation preference payable to the
                    holders of Series A, B, C, D and E Preferred Stock, and the
                    holders of any class or series of Preferred Stock that is on
                    a parity with the Series A, B, C, D and E Preferred Stock,
                    the existing funds will be allocated among the holders of
                    all such shares pro rata in proportion to the full amounts
                    to which they would respectively otherwise be entitled.

PREFERRED
STOCK
PROVISIONS:         Series E Preferred is entitled to vote on all matters and
                    votes as a single class with the Common Stock and other
                    series of Preferred Stock of the Company except as set forth
                    below. Voting by the Series E Preferred as a separate voting
                    group is required: (a) on a proposed amendment to the
                    Articles of Incorporation that would (i) increase or
                    decrease the aggregate number of authorized shares of the
                    Series E Preferred, (ii) effect an exchange or
                    reclassification of all or part of the shares of the Series
                    E Preferred into shares of another class or series, (iii)
                    effect an exchange or reclassification, or create a right of
                    exchange, of all or part of the shares of another series or
                    class into the shares of the Series E Preferred, (iv) change
                    the designation, rights, preferences, or limitations of all
                    or part of the shares of the Series E Preferred, (v) change
                    the shares of all or part of the Series E Preferred into a
                    different number of shares of the same series, (vi) create a
                    new class of shares having rights or preferences with
                    respect to distributions or to dissolution that are prior,
                    superior, or substantially equal to the shares of the Series
                    E Preferred, (vii) increase the rights, preferences, or
                    number of authorized shares of any class that, after giving
                    effect to the amendment, have rights or preferences with
                    respect to distributions or to dissolution that are prior,
                    superior, or substantially equal to the shares of the Series
                    E Preferred, (viii) limit or deny an existing preemptive
                    right of all or part of the shares of the Series E
                    Preferred, (ix) cancel or otherwise affect rights to
                    distributions or dividends that have accumulated but not yet
                    been declared on all or part of the shares of the Series E
                    Preferred; (b) on a plan of merger if the plan contains a
                    provision which, if contained in a proposed amendment to the
                    articles of incorporation, would entitle the Series E
                    Preferred to vote as a separate voting group on the proposed
                    amendment; or (c) on a plan of share exchange if the shares
                    of the Series E Preferred are to be converted or exchanged
                    under such plan or if the plan contains any provisions
                    which, if contained in a proposed amendment to the articles
                    of incorporation, would entitle the Series E Preferred to
                    vote as a separate voting group. On any matter on which the
                    holders of the Series E Preferred are entitled to vote, each
                    share is entitled to the number of votes equal to the number
                    of shares of Common Stock into which each such share is then
                    convertible.

                                      -2-

 
                                   Exhibit B
                                   ---------



                             ________________, 1997


Concentric Network Corporation
10590 N. Tantau Avenue
Cupertino, CA 95104


     RE:  PROPOSED INITIAL PUBLIC OFFERING OF COMMON STOCK OF CONCENTRIC NETWORK
          CORPORATION

Ladies and Gentlemen:

     The undersigned is a shareholder and optionholder of Concentric Network
Corporation, a Florida corporation ('CNC-Florida'). The undersigned understands
that either CNC- Florida or Concentric Network Corporation, a Delaware
corporation and wholly-owned subsidiary of CNC-Florida ('CNC-Delaware, and as
the surviving corporation of a merger of CNC-Florida and CNC-Delaware, the
'Company') intends to enter into an underwriting agreement (the 'Underwriting
Agreement') with one or more underwriters, as Representatives of the several
Underwriters (the 'Underwriters'), providing for the purchase by the
Underwriters from the Company of shares of common stock of the Company
(collectively, the 'Underwritten Stock') and for the public offering of such
Underwritten Stock by the Underwriters. The undersigned further understands that
the proposed sale of the Underwritten Stock by the Company is the subject of a
Registration Statement on Form S-1 (the 'Registration Statement') proposed to be
filed with the Securities and Exchange Commission, which includes a preliminary
prospectus to be used in offering the Underwritten Stock to the public. The
undersigned also understands that the preliminary prospectus and the final
prospectus will contain a statement to the effect that the Company, its
directors and executive officers and certain of its shareholders have agreed not
to offer, sell, contract to sell, grant any option to sell or otherwise dispose
of, directly or indirectly: (1) any shares of the Company's common stock or
securities convertible into, or exchangeable for, the Company's common stock or
other rights to purchase the Company's common stock (collectively, the 'Common
Stock'); or (2) any shares of the Underwritten Stock or securities convertible
into, or exchangeable for, Underwritten Stock or warrants or other rights to
purchase the Underwritten Stock, for a period commencing on the date hereof and
continuing for at least 360 days from the effective date of the Registration
Statement (the 'Lock-Up Period'), without the prior written consent of the lead
underwriter selected by the Company (the 'Lead Underwriter').

     In light of the foregoing, the undersigned hereby represents, warrants and
agrees that, during the Lock-Up Period, the undersigned will not, without the
prior written consent of the Lead Underwriter, offer, sell, contract to sell,
grant any option to sell or otherwise dispose of, directly or indirectly, any
shares of the Common Stock or the Underwritten Stock or securities

 
convertible into, or exchangeable for, the Common Stock or the Underwritten
Stock or warrants or other rights to purchase the Common Stock or the
Underwritten Stock of which the undersigned is now, or may in the future become,
the beneficial owner (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended).

     The foregoing restriction is expressly agreed to preclude the undersigned
from engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or result in a sale or disposition of shares of
the Common Stock or the Underwritten Stock during the Lock-Up Period even if
such shares would be disposed of by someone other than the undersigned. Such
prohibited hedging or other transactions would include without limitation any
short sale or any purchase, sale or grant of any right (including without
limitation any put or call option) with respect to any shares of Common Stock or
Underwritten Stock or with respect to any security that includes, relates to or
derives any significant part of its value from such shares.

     Notwithstanding anything to the contrary contained herein or otherwise, in
the event the Registration Statement is not declared effective by the Securities
and Exchange Commission on or prior to August 31, 1997, this Agreement shall
automatically terminate and be deemed null and void ab initio.

     It is understood and agreed that the foregoing representations and
agreements are provided as an inducement to, and may be relied upon by, the
Company, the Lead Underwriter and the Underwriters in connection with their
entering into the Underwriting Agreement and the preparation and distribution of
the Registration Statement and the prospectus, and that the Lead Underwriter is
intended to be a third party beneficiary of this Agreement with full right to
enforce this Agreement as though a party hereto.

     This letter may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute a single
instrument.

                                 Very truly yours,


                                 ________________________________________
                                 (Company Name if applicable)


                                 ________________________________________ 
                                 Signature

                                 ________________________________________ 
                                 Print Name

                                 ________________________________________ 
                                 Title (if applicable)

                                      -2-


                                   EXHIBIT C
                                   ---------

                        CONCENTRIC NETWORK CORPORATION
                           10590 North Tantau Avenue
                              Cupertino, CA 95104

                                 May __, 1997


Mr. Chad Shackley
2700 Benedict Canyon
Beverly Hills, CA 90210

     Re:  Waiver of Non-Competition Covenant

Dear Chad:

     As you know, you have entered into a Confidentiality, Non-Competition and
Copyright Agreement (the 'Agreement') with Concentric Network Corporation (the
'Company'). Section 2 of the Agreement prevents you from competing with the
Company during your employment and for the two-year period after your
termination of employment with the Company. As partial consideration for your
execution of the Governance Agreement, dated of even date herewith, of which
this letter is an exhibit, the Company hereby agrees to conditionally waive and
terminate the restrictions placed on you by Section 2 of the Agreement and any
similar noncompetition covenants (whether oral or written) that may be in effect
and to further release you from any and all claims the Company may have against
you or your affiliates for any prior breach of Section 2 of the Agreement or any
other similar noncompetition covenant (whether oral or written) that may be in
effect (the 'Waiver and Release'). This Waiver and Release pertains only to
Section 2 of the Agreement and any other noncompetition provision (whether
written or oral) that may be in effect, and all other provisions of the
Agreement will remain in full force and effect unless otherwise modified by
mutual consent of the parties.

     The Waiver and Release will be effective as of the date of this letter upon
the concurrent execution and delivery to the Company of the Governance Agreement
and is expressly conditioned on your full performance of each of your
obligations thereunder.

     Please counter-sign and return the enclosed copy of this letter, together
with the Governance Agreement, as an acknowledgment of the terms of this letter.

 
May __, 1997
Page 2

     Please do not hesitate to contact me at (408) 342-2800 if you have any
questions regarding this letter agreement. Thank you in advance for your
cooperation.

                              Very truly yours,

                              CONCENTRIC NETWORKS CORPORATION


                              By:   _______________________________
                                    Michael F. Anthofer
                                    Senior Vice President and
                                    Chief Financial Officer


ACKNOWLEDGED AND AGREED:

CHAD SHACKLEY


By:  ___________________________ 
     Chad Shackley