EARTHLINK NETWORK INC, S-1/A, 1997-01-21

EARTHLINK NETWORK INC
S-1/A, 1997-01-21
PREPACKAGED SOFTWARE

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1997.

REGISTRATION NO. 333-15781
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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EARTHLINK NETWORK, INC.
(Exact Name of Issuer as specified in its Charter)

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<S> <C> <C>
DELAWARE 4825 95-4481766
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>

3100 NEW YORK DRIVE, PASADENA, CALIFORNIA 91107
(818) 296-2400
(Address and Telephone Number of Principal Executive Offices)
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BARRY W. HALL, CHIEF FINANCIAL OFFICER
EARTHLINK NETWORK, INC.
3100 NEW YORK DRIVE
PASADENA, CALIFORNIA 91107
(818) 296-2400
(Name, address and telephone number of agent for service)
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COPIES TO:

<TABLE>
<S> <C>
Scott M. Hobby, Esq. Alan Singer, Esq.
J. Stephen Hufford, Esq. Morgan, Lewis & Bockius LLP
W. Tinley Anderson, III, Esq. 2000 One Logan Square
Hunton & Williams Philadelphia, Pennsylvania 19103
NationsBank Plaza, Suite 4100 (215) 963-5000
600 Peachtree Street, NE
Atlanta, Georgia 30308
(404) 888-4000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>

PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 21, 1997

2,000,000 SHARES

EARTHLINK NETWORK-REGISTERED TRADEMARK-

COMMON STOCK

ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY EARTHLINK
NETWORK, INC. (THE "COMPANY"). PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC
MARKET FOR THE COMPANY'S COMMON STOCK. IT IS CURRENTLY ESTIMATED THAT THE
INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN $12.00 AND $14.00 PER SHARE. FOR
FACTORS CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING PRICE, SEE
"UNDERWRITING." THE COMMON STOCK HAS BEEN APPROVED FOR QUOTATION ON THE NASDAQ
NATIONAL MARKET UNDER THE SYMBOL "ELNK."

UP TO 10% OF THE COMMON STOCK OFFERED HEREBY MAY BE RESERVED FOR EMPLOYEES,
DIRECTORS AND FRIENDS OF THE COMPANY. SEE "UNDERWRITING."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

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<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS (1) COMPANY (2)
----------------- ----------------- -----------------
<S> <C> <C> <C>
Per Share......................... $ $ $
Total (3)......................... $ $ $
</TABLE>

(1) FOR INFORMATION REGARDING INDEMNIFICATION OF THE UNDERWRITER, SEE
"UNDERWRITING."

(2) BEFORE DEDUCTING EXPENSES OF THE OFFERING PAYABLE BY THE COMPANY, ESTIMATED
AT $600,000.

(3) THE COMPANY HAS GRANTED THE UNDERWRITER AN OPTION, EXERCISABLE FOR 30 DAYS
FROM THE DATE OF THIS PROSPECTUS, TO PURCHASE UP TO 300,000 ADDITIONAL
SHARES OF COMMON STOCK SOLELY TO COVER OVER-ALLOTMENTS, IF ANY. IF THE
OPTION IS EXERCISED IN FULL, THE TOTAL PRICE TO PUBLIC, UNDERWRITING
DISCOUNTS AND COMMISSIONS AND PROCEEDS TO COMPANY WILL BE $ , $
AND $ , RESPECTIVELY. SEE "UNDERWRITING."

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THE SHARES OF COMMON STOCK ARE OFFERED BY THE UNDERWRITER, SUBJECT TO
PRIOR SALE, WHEN, AS AND IF DELIVERED TO AND ACCEPTED BY IT AND SUBJECT TO ITS
RIGHT TO REJECT ANY ORDER IN WHOLE OR IN PART. IT IS EXPECTED THAT DELIVERY OF
THE SHARES WILL BE MADE IN NEW YORK, NEW YORK ON OR ABOUT , 1997.

INVEMED ASSOCIATES, INC.

THE DATE OF THIS PROSPECTUS IS , 1997.
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[GATEFOLD PAGES SHOWING VARIOUS SCREEN IMAGES FROM THE EARTHLINK NETWORK
WORLD WIDE WEB SITE, SCREENS FROM THE EARTHLINK REGISTRATION SOFTWARE AND
PICTURES OF PRODUCTS WITH WHICH THE EARTHLINK NETWORK TOTALACCESS SOFTWARE
PRODUCT IS BUNDLED AND OFFERED BY VARIOUS OF THE COMPANY'S AFFINITY MARKETING
PARTNERS]

THE EARTHLINK INTERNET USER EXPERIENCE

EarthLink focuses on providing reliable access, useful information, assistance
and services to its customers to encourage their introduction to the Internet
and help them have a satisfying user experience.

GAINING ACCESS TO THE INTERNET THROUGH EARTHLINK NETWORK

The EarthLink Network-R- TotalAccess-TM- software package enables quick and easy
Internet access. A customer simply inserts the EarthLink Network-R-
TotalAccess-TM- disk into the computer and follows the step-by-step instructions
to register on-line for a new EarthLink account and gain access to the resources
of the Internet.

EarthLink Network-R- TotalAccess-TM- guides customers through a simple account
registration procedure. EarthLink provides a toll-free customer support number,
staffed 24 hours a day.

Once on the Internet, the customer can access a variety of EarthLink services,
such as the EarthLink Store, The Daily Blink-TM- on-line newsletter and The
Arena-TM-, EarthLinks' multi-player Internet game area.

[INSIDE BACK COVER PAGE]

EarthLink Network-R- has established relationships with a number of affinity
marketing partners through which the Company has expanded the reach of its
marketing efforts.

Trademarks are property of their respective owners. EarthLink Network-R-
TotalAccess-TM- is a trademark of EarthLink Network, Inc. Netscape Navigator-TM-
is a trademark of Netscape Communications Corporation. T@P Online is a trademark
of MarketSource Corporation. LAUNCH-TM- is a trademark of 2Way Media, Inc.
Activision-R- and Zork are registered trademarks. Spycraft-TM-: The Great Game
and Zork Nemesis are trademarks of Actvision, Inc. CNN-TM-, CNN Interactive-TM-,
CNN Learning-TM-, and each of their logos are trademarks of Cable News Network,
Inc. Smart Ventures-TM- is a trademark for American Institute for Financial
Research, Inc. DealerNet-TM- is a trademark of the Reynolds & Reynolds Company.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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PROSPECTUS SUMMARY

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL EVENTS AND RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS GIVES EFFECT TO
THE CONVERSION, UPON CONSUMMATION OF THIS OFFERING, OF ALL OUTSTANDING SHARES OF
THE COMPANY'S SERIES A CONVERTIBLE PREFERRED STOCK INTO 1,363,624 SHARES OF
COMMON STOCK AND OF $725,000 OF OUTSTANDING INDEBTEDNESS INTO 55,767 SHARES OF
COMMON STOCK, AND ALSO ASSUMES THE UNDERWRITER'S OVER-ALLOTMENT OPTION IS NOT
EXERCISED. SEE "DESCRIPTION OF CAPITAL STOCK" AND "UNDERWRITING." THE PROSPECTUS
REFLECTS A ONE-FOR-TWO REVERSE STOCK SPLIT EFFECTIVE ON DECEMBER 4, 1996. THE
FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION
AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS.

THE COMPANY

EarthLink Network, Inc. ("EarthLink" or the "Company") is an Internet
service provider ("ISP") that was formed to help users derive meaningful
benefits from the extensive resources of the Internet. The Company focuses on
providing reliable access, useful information, assistance and services to its
customers to encourage their introduction to the Internet and to help them have
a satisfying user experience.

The Company believes that many users have not been able to enjoy the
benefits of the Internet. Particularly for non-technical users, access to the
Internet is often difficult. In addition, for some users the volume and lack of
organization of the information on the Internet makes accessing useful
information and entertainment an intimidating task. EarthLink's principal
strategy is to rapidly expand its customer base and retain those customers who
use its services principally by addressing these problems. The Company provides
its services through its EarthLink Network TotalAccess software ("TotalAccess"),
which is designed to simplify access to the Internet through an online
registration feature and a "point and click" graphical user interface. This
software permits users to browse the Internet through use of Netscape
Communications Corporation's ("Netscape") Navigator ("Netscape Navigator") or
Microsoft Corporation's ("Microsoft") Internet Explorer ("Microsoft Explorer")
(one or the other of which is included in each copy of TotalAccess), or any
other third-party browser that a customer may wish to use. The Company also
provides useful information to users through its extensive World Wide Web site.
On this site, users can find technical assistance information, an on-line
newsletter, links to numerous popular categories of information and
entertainment and many other items and services designed to enhance users'
satisfaction with their Internet experience. In addition, the Company provides a
monthly printed newsletter, as well as 24 hour customer and technical support.

The Company markets its services through print advertisements, an affinity
marketing program, a customer referral program and other marketing activities.
Its affinity marketing program includes relationships with, among others,
prominent print publication, software and hardware companies. For example,
Macmillan Publishing USA bundles TotalAccess with several Internet-related book
titles. Customer referrals have also been an important source of new customers,
and the Company provides economic incentives to its customers to encourage these
referrals. The Company believes that these programs are a cost-effective means
of acquiring new customers.

The Company believes that its long-term success largely depends on
maintaining customer satisfaction with its services. Therefore, the Company will
continue to devote substantial resources to enhancing its service offerings,
expanding its technical support staff and expanding its World Wide Web site.

EarthLink also seeks to enhance its revenues by offering business services,
including business Web sites, high-speed ISDN communications capability and
frame relay connectivity. In addition, the Company offers consumer services such
as multiplayer Internet games and the EarthLink online store.

The Company has achieved a nationwide presence, without incurring
significant capital costs, by leasing access to dial-up points-of-presence
("POPs") from UUNET Technologies, Inc. ("UUNET") on a non-exclusive basis. The
Company also operates its own POPs in California. In addition, EarthLink has
agreed to lease POP access from PSINet, Inc. ("PSINet") on a non-exclusive
basis. In January 1997, certain of the Company's customers began to access the
Internet through some of PSINet's POPs. The Company plans to expand its own POPs
in Northern California within the next year and will consider establishing its
own POPs in other areas if there is sufficient concentration of customers to
support the required capital investment.

The Company was incorporated as a California corporation in May 1994 and
reincorporated as a Delaware corporation in June 1996. The Company's principal
executive offices are located at 3100 New York Drive, Pasadena, California
91107, and its telephone number is (818) 296-2400.

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THE OFFERING

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<S> <C>
Common Stock Offered.......................... 2,000,000 shares
Common Stock Outstanding after this
Offering..................................... 9,442,115 shares (1)
Use of Proceeds............................... To finance sales and marketing activities,
leasehold improvements and investments in
network equipment, information systems and
office equipment, new service introductions
and for working capital and other general
corporate purposes, including the repayment
of indebtedness and possibly acquisitions.
Nasdaq National Market Symbol................. ELNK
Risk Factors.................................. The Common Stock offered hereby involves a
high degree of risk. See "Risk Factors."
</TABLE>

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(1) Based on shares of Common Stock outstanding as of October 31, 1996, and
1,363,624 additional shares of Common Stock that will be outstanding upon
consummation of this Offering pursuant to the automatic conversion of all of
the Company's outstanding shares of Series A Convertible Preferred Stock.
This amount excludes (i) 1,028,250 shares of Common Stock subject to options
outstanding under the Company's 1995 Stock Option Plan having a weighted
average exercise price of $7.48 per share, (ii) 1,331,438 shares of Common
Stock subject to outstanding warrants and non-plan stock options having a
weighted average exercise price of $5.82 per share, (iii) 221,750 and 62,500
shares of Common Stock reserved for future grant of options under the
Company's 1995 Stock Option Plan and Directors Stock Option Plan,
respectively, (iv) up to approximately 382,000 shares of Common Stock into
which $5,000,000 of outstanding indebtedness will be convertible upon
consummation of this Offering, and (v) 360,000 shares of Common Stock
underlying warrants and options that the Company has committed to issue if
certain future events occur. See "Capitalization," "Management -- 1995 Stock
Option Plan and Other Option and Warrant Issuances," "Management --
Directors Stock Option Plan and Other Director Option Issuances,"
"Description of Capital Stock" and Notes 7 and 8 of Notes to Financial
Statements.

SUMMARY FINANCIAL DATA
(in thousands, except per share data)

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<CAPTION>
INCEPTION NINE MONTHS ENDED
(MAY 26, 1994) YEAR ENDED ----------------------------
THROUGH DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
DEC. 31, 1994 1995 1995 1996
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<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues......................................... $ 111 $ 3,028 $ 1,447 $ 20,162
Loss from operations................................... (148) (6,018) (2,914) (21,240)
Net loss............................................... (148) (6,120) (2,972) (21,809)
Net loss per share (1)................................. $ (0.04) $ (1.25) $ (0.65) $ (3.32)
Weighted average shares
outstanding (1)....................................... 3,653 4,903 4,596 6,568
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
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ACTUAL PRO FORMA (2) AS ADJUSTED (3)
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<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............................................. $ (6,439) $ (6,439) $ 14,916
Total assets.......................................................... 26,033 31,033 47,388
Capital lease obligations, net of current portion..................... 5,388 5,388 5,388
Total liabilities..................................................... 23,941 28,941 21,716
Accumulated deficit................................................... (26,816) (26,816) (26,816)
Stockholders' equity (deficit)........................................ (11,921) (11,921) 26,397
</TABLE>

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(1) See Note 1 of Notes to Financial Statements for an explanation of the
determination of the number of weighted average shares outstanding used in
the net loss per share computation.

(2) Adjusted to give effect to the issuance of a $5.0 million convertible
promissory note, as if such event occurred on September 30, 1996.

(3) Adjusted to reflect the conversion upon consummation of this Offering of the
Series A Convertible Preferred Stock into 1,363,624 shares of Common Stock
and $725,000 of outstanding indebtedness into 55,767 shares of Common Stock,
the sale of the 2,000,000 shares of Common Stock offered hereby and
application by the Company of a portion of the estimated net proceeds
therefrom (after deduction of estimated offering expenses and underwriting
discounts and commissions) to repay certain indebtedness. See "Use of
Proceeds" and "Capitalization."

"EARTHLINK NETWORK-REGISTERED TRADEMARK-," "EARTHLINK NETWORK
TOTALACCESS-TM-," "BLINK-TM-," "THE ARENA-TM-" AND THE EARTHLINK LOGO ARE
TRADEMARKS OF THE COMPANY. THIS PROSPECTUS INCLUDES TRADEMARKS OF COMPANIES
OTHER THAN THE COMPANY.

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RISK FACTORS

LIMITED OPERATING HISTORY; HISTORY OF LOSSES AND EXPECTATIONS OF FUTURE LOSSES

The Company was founded in May 1994 and began offering its services in July
1994. Accordingly, the Company has only a limited operating history upon which
an evaluation of its prospects can be made. Such prospects must be considered in
light of the substantial risks, expenses and difficulties encountered by new
entrants into the Internet services industry. The Company had net losses of
approximately $6.3 million from inception through 1995 and of approximately
$21.8 million for the nine months ended September 30, 1996. As of September 30,
1996, the Company had an accumulated deficit of approximately $26.8 million
(exclusive of $1.3 million of losses incurred while the Company was an S
Corporation for tax purposes, which, upon the Company's conversion to C
Corporation status in June 1995, were charged to the Company's capital
accounts). The Company expects that it is likely to continue to incur net losses
as it continues to expend substantial resources on sales, marketing and
administration, build its network systems, develop new service offerings and
improve its management information systems. There can be no assurance that the
Company will achieve or sustain profitability or positive cash flow from its
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

COMPETITION

The Internet services market in which the Company operates is extremely
competitive, and the Company expects competition in this market to intensify in
the future. The Company's current and prospective competitors include many large
companies that have substantially greater market presence and financial,
technical, marketing and other resources than the Company. The Company competes
(or in the future is expected to compete) directly or indirectly with the
following categories of companies: (i) national and regional ISPs such as Bolt
Beranek & Newman, Inc. ("BBN"), IDT Corporation ("IDT"), MindSpring Enterprises,
Inc. ("MindSpring"), Netcom On-line Communication Services, Inc. ("NETCOM"),
PSINet and UUNET; (ii) established online services such as America Online,
CompuServe, Prodigy and the Microsoft Network; (iii) computer software and
technology companies such as Microsoft; (iv) national telecommunications
companies such as AT&T Corp. ("AT&T"), MCI Communications Corporation ("MCI")
and Sprint Corporation ("Sprint"); (v) regional Bell operating companies
("RBOCs"); (vi) cable operators such as Comcast Corporation ("Comcast"),
Tele-Communications, Inc. ("TCI") and Time Warner, Inc. ("Time Warner"); and
(vii) nonprofit or educational ISPs.

The entry of new participants from these categories and the potential entry
of competitors from other categories (such as computer hardware manufacturers)
would result in substantially greater competition for the Company. The ability
of these competitors or others to bundle services and products with Internet
connectivity services could place the Company at a significant competitive
disadvantage. In addition, competitors in the telecommunications industry may be
able to provide customers with reduced communications costs in connection with
their Internet access services, reducing the overall cost of Internet access and
significantly increasing pricing pressures on the Company. Among other
competitors who have recently introduced or enhanced their Internet offerings,
AT&T has recently expanded its Internet services offerings. The Company believes
that AT&T's expansion has substantially increased pricing pressure in the
industry. In addition, certain of the Company's online competitors, including
America Online, the Microsoft Network and Prodigy, have recently introduced
unlimited access to the Internet and their proprietary content at flat rates
that are equal to the Company's monthly flat rate, and do not require a set-up
fee. Certain of the RBOCs have also introduced competitive flat-rate pricing for
unlimited access (without a set-up fee for at least some period of time). As a
result, competition for active users of Internet services has intensified. There
can be no assurance that the

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Company will be able to offset the adverse effect on revenues of any necessary
price reductions resulting from competitive pricing pressures by increasing the
number of its customers, by generating higher revenue from enhanced services, by
reducing costs or otherwise.

Competition is also expected to focus increasingly on overseas markets, in
which Internet services are just beginning to be introduced. The Company is not
presently seeking to penetrate overseas markets. To the extent that the ability
to provide Internet services overseas becomes a competitive advantage in the
Internet services industry, the failure of the Company to penetrate overseas
markets may result in the Company being at a competitive disadvantage relative
to other Internet access providers.

There can be no assurance that the Company will have the financial
resources, technical expertise or marketing and support capabilities to compete
successfully. See "-- Dependence on Third-Party Network Providers," "-- New and
Uncertain Market; Dependence on Continued Growth in Use of the Internet;
Uncertainty of Customer Retention," "-- Dependence on Network Infrastructure;
Capacity; Risk of System Failure; Security Risks," "-- Dependence on Affinity
Marketing and Distribution Relationships," "Business -- Competition" and "--
Government Regulation."

RISKS ASSOCIATED WITH MANAGEMENT OF POTENTIAL GROWTH

The Company's growth has placed, and is expected to continue to place, a
significant strain on its managerial, operational, financial and information
systems resources. To accommodate its current size and manage growth, the
Company must continue to implement and improve its operational, financial and
information systems, and expand, train and manage its employee base.
Additionally, expansion of the Company's information and network systems is
required to accommodate its growth. There can be no assurance that the Company
will be able to effectively manage the expansion of its operations, or that the
Company's facilities, systems, procedures or controls will be adequate to
support the Company's operations. The inability of the Company to manage
effectively its future growth would have a material adverse effect on the
Company.

Demand on the Company's network infrastructure, technical staff and
resources has grown rapidly with the Company's expanding customer base, and the
Company has experienced difficulties satisfying the demand for its Internet
services. There can be no assurance that the Company's infrastructure, technical
staff and resources will be adequate to facilitate the Company's growth. In
addition, delays have occurred in establishing Internet accounts for the
Company's customers, and customers have experienced significant delays in
contacting, and in receiving responses from, the Company's customer and
technical support personnel. There can be no assurance that the Company will be
able to establish accounts or provide customer or technical support on a timely
basis, or that any delays will not result in a loss of customers. The Company
believes that its ability to provide timely access for customers and adequate
customer and technical support largely will depend on its ability to attract,
identify, train, integrate and retain qualified personnel. Failure to provide
adequate customer and technical support services would adversely affect the
Company's ability to maintain and increase its customer base, and could
therefore have a material adverse effect on the Company. See "-- Dependence on
Network Infrastructure; Capacity; Risk of System Failure; Security Risks,"
"-- Dependence on Key Personnel," "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Overview" and "Business --
Employees."

DEPENDENCE ON THIRD-PARTY NETWORK PROVIDERS

As of October 31, 1996, the Company maintained 20 Company-owned POPs and
provided Internet access through an additional 336 UUNET POPs to which it has
access on a non-exclusive basis. The Company is dependent on UUNET, a
third-party provider of Internet network infrastructure, to continue to provide
the Company's customers with access to the Internet through UUNET's systems of
POPs. The Company recently executed an agreement with PSINet to access PSINet's
nationwide system of POPs on a non-exclusive basis. In January 1997, certain of
the Company's customers began to access the Internet through some of PSINet's
POPs. The Company's agreement with UUNET has a term expiring in March 1999
(subject to earlier

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cancellation after March 1998 upon one year's prior notice, but provided that if
this notice is given, EarthLink is required to begin to reduce its usage of
UUNET's POPs in accordance with a schedule set forth in the agreement). Unless
otherwise terminated prior to or at the end of its current term, the agreement
automatically renews for consecutive one-year terms. The PSINet agreement has a
term expiring in July 1998 after which it is automatically renewed for
consecutive one-year terms unless prior notice of termination is given.

Both UUNET and PSINet provide POP access to ISPs other than the Company and
to entities offering online services. UUNET provides such access to, among
others, Microsoft for the Microsoft Network, a competitor of the Company. The
Microsoft Network recently introduced unlimited access to the Internet at a flat
rate, which, the Company believes, has substantially increased utilization of
UUNET POPs by subscribers to the Microsoft Network. Microsoft is a significant
customer of UUNET, and therefore could be granted preferred access to UUNET's
system of POPs. Accordingly, if customer usage of the Microsoft Network
materially increases, the Company's access to UUNET's system of POPs may be
limited and the Company's customers may experience increased difficulties in
gaining access to the Internet. As usage of UUNET's and PSINet's POPs by other
ISPs' and online service providers' customers increases, system performance
experienced by EarthLink's customers may degrade and POP access may become
limited. UUNET and PSINet also independently compete with the Company.

UUNET was recently acquired by MFS Communications Company, Inc. ("MFS"), a
supplier of local and long distance telephone service. In December 1996, MFS was
acquired by WorldCom, Inc. ("WorldCom"). There can be no assurance that,
following the expiration of the Company's current agreement with UUNET, the
Company will continue to have access to UUNET's POPs or that such access, if
provided, will be available to the Company on acceptable terms.

The Company's customers generally pay a fixed monthly fee for the Company's
Internet services. Under the Company's current agreement with UUNET, the Company
pays UUNET a monthly fee equal to the greater of a specified minimum or an
amount that varies based primarily on peak customer usage. The Company also pays
UUNET an additional fee to the extent that hours of usage exceed a formula set
forth in the agreement. The Company has recently experienced increasing per
customer usage of its services. If the number of hours used by EarthLink
customers accessing the Internet through UUNET increases beyond the amount
provided for in the agreement or the usage becomes more concentrated during peak
times, the fees paid by the Company to UUNET would increase, which would
adversely affect the Company's operating margins. The UUNET agreement also
provides that in the event of regulatory or legislative changes having a
structural impact on the ISP marketplace which materially increase UUNET's
costs, EarthLink will renegotiate the agreement in good faith at UUNET's
request. There can be no assurance that EarthLink and UUNET will be able to
renegotiate the UUNET agreement with terms acceptable to UUNET and EarthLink or
that any renegotiation would not result in additional costs to the Company. Any
such renegotiated agreement or the failure to renegotiate the agreement could
have a material adverse affect on the Company.

As noted above, under the Company's current agreement with UUNET, the
Company pays UUNET a monthly fee equal to the greater of a specified minimum or
an amount that varies based primarily on peak customer usage. The specified
minimum amount increases over the term of the agreement. The Company's operating
margins could be adversely affected if the Company is unable to increase its
customer base so as to avoid paying the increasing minimum amount. See "--
Dependence on Network Infrastructure; Capacity; Risk of System Failure; Security
Risks," "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Results of Operations -- Cost of Revenues," "Business --
EarthLink's Services" and "-- Customers, POPs and Network Infrastructure."

The inability or unwillingness of one or both of UUNET and PSINet to provide
POP access to the Company's customers, or the Company's inability to secure
alternative POP arrangements if necessary, would limit the Company's ability to
provide Internet access to its customers, and would, in turn, have a material
adverse effect on the Company. See "-- Dependence on Network Infrastructure;
Capacity; Risk of System Failure; Security Risks."

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FACTORS AFFECTING OPERATING RESULTS; POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS

The Company's operating results may fluctuate significantly in the future as
a result of a variety of factors, many of which are beyond the Company's
control. These factors include the rates of, and costs associated with, new
customer acquisition, customer retention, capital expenditures and other costs
relating to the expansion of operations, including upgrading the Company's
systems and infrastructure, the timing and market acceptance of new and upgraded
service introductions, changes in the pricing policies of the Company and its
competitors, changes in operating expenses (including telecommunications costs),
personnel changes, the introduction of alternative technologies, the effect of
potential acquisitions, increased competition in the Company's markets and other
general economic factors. In addition, a significant portion of the Company's
expenses are fixed; therefore, the Company's operating margins are particularly
sensitive to fluctuations in revenues. Due to these factors, in some future
quarter the Company's operating results may fall below the expectations of
securities analysts and investors. In such event, the market price of the
Company's Common Stock would likely be materially and adversely affected.

In May 1996, the Company entered into an agreement with National Media
Corporation ("NMC"), a producer of infomercials and commercials, pursuant to
which NMC agreed to produce and broadcast 15-second and 60-second commercials
for EarthLink's services. Under this agreement, in addition to certain fees
payable to NMC, the Company agreed to issue warrants to NMC to purchase 50,000
shares of Common Stock having an exercise price of $9.76 per share, upon the
completion by NMC, subject to the Company's approval, of the 15-second and
60-second commercials, and to issue warrants to NMC to purchase one share of
Common Stock for each two customers generated by this relationship, up to
300,000 shares of Common Stock. The exercise price of such additional warrants
earned through December 31, 1997 will be $9.76 per share, and thereafter the
exercise price will be the fair market value of the Common Stock on the date of
grant. Upon issuance of any such warrants, the Company will be required to
record in the quarter in which such warrant is issued a non-cash charge against
earnings in an amount equal to the fair value of the warrant on the date of
issuance. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Potential Fluctuations in Quarterly Results."

DEPENDENCE ON NETWORK INFRASTRUCTURE; CAPACITY; RISK OF SYSTEM FAILURE; SECURITY
RISKS

The future success of the Company's business will depend on the capacity,
reliability and security of the Company's network infrastructure, including the
POP sites to which the Company has access through UUNET and PSINet. The Company
will be required to expand and improve this infrastructure as the number of
customers and the amount and type of information its customers communicate over
the Internet increases, and the means by which customers connect to the Internet
evolve. Such expansion and improvement may require substantial financial,
operational and managerial resources. There can be no assurance that the Company
will be able to expand or improve its network infrastructure to meet any
additional demand or changing customer requirements on a timely basis or at a
commercially reasonable cost, if at all.

Capacity constraints have occurred, and may occur in the future, both at the
level of particular POPs (affecting only customers attempting to use that
particular POP) and in connection with system wide services (such as email and
news services, which can affect all customers). From time to time, the Company
has experienced delayed delivery from suppliers of new telephone lines, modems,
servers and other equipment used by the Company in providing its services. Any
severe shortage of new telephone lines, modems, servers or other equipment could
result in incoming access lines becoming full during peak times, causing busy
signals for customers who are trying to connect to the Internet. Similar
problems may occur if the Company is unable to expand the capacity of its
various network, email, Web and other servers quickly enough to keep pace with
demand from the Company's expanding customer base. If the capacity of such
servers is exceeded, customers will experience delays when trying to use a
particular service. Further, if the Company does not maintain sufficient
capacity in its network connections, customers will experience a general slow
down of all services on the Internet. Any of these events could cause customers
to terminate use of the Company's services. Accordingly, any failure of the
Company to expand or enhance its network infrastructure on a timely basis, or

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to adapt it to an expanding customer base, changing customer requirements or
evolving industry standards, could have a material adverse effect on the
Company. See "-- Dependence on Third-Party Network Providers" and "Business --
Customers, POPs and Network Infrastructure."

The Company's operations are dependent on its ability to protect its
computer equipment against damage from fire, earthquake, power loss,
telecommunication failure and similar events. The occurrence of a natural
disaster or another unanticipated problem at the Company's headquarters and
network hub or at POPs through which customers connect to the Internet could
cause interruptions in the services provided by the Company. For example, in
October 1996, the Company experienced a power outage at its network hub in Los
Angeles, which caused a several hour system wide disruption of the Company's
Internet services. Services were restored when the Company installed a backup
power source. The Company's computer equipment, including critical equipment
dedicated to its Internet services, is located in Los Angeles and Pasadena,
California. The Company will relocate its data center from Los Angeles to a
facility adjacent to its Pasadena headquarters in the near future. The risks
associated with such a move include network and services down time, loss of
data, loss of system integrity and the risk of system failure. The occurrence of
any of these events could have a material adverse effect on the Company's
ability to provide Internet services to its customers, and, in turn, on the
Company. In addition, failure of the Company's telecommunications providers to
provide the data communications capacity required by the Company as a result of
a natural disaster, operational disruption or for any other reason could cause
interruptions in the services provided by the Company, which could have a
material adverse effect on the Company.

The Company's network infrastructure, including the POP sites to which the
Company has access through UUNET and PSINet, is vulnerable to computer viruses
and other similar disruptive problems caused by its customers, other Internet
users or other third parties. Computer viruses and other problems could lead to
interruptions, delays in or cessation of service to the Company's customers, as
well as corruption of the Company's or its customers' computer systems.
Inappropriate use of the Internet by third parties could also potentially
jeopardize the security of confidential information stored in the computer
systems of the Company or those of its customers, which may cause losses to the
Company or its customers, or deter certain persons from using the Company's
services. The Company expects that its customers may increasingly use the
Internet for commercial transactions in the future. Any network malfunction or
security breach could cause these transactions to be delayed, not completed or
completed with compromised security. Alleviating problems caused by computer
viruses or other inappropriate uses or security breaches may cause
interruptions, delays or cessation in service to the Company's customers, which
could have a material adverse effect on the Company. In addition, there can be
no assurance that customers or others will not assert claims of liability
against the Company as a result of these events.

The Company does not presently maintain redundant or backup Internet
services or backbone facilities or other redundant computing and
telecommunications facilities. Any accident, incident or system failure that
causes interruptions in the Company's operations could have a material adverse
effect on the Company's ability to provide Internet services to its customers,
and, in turn, on the Company. See "-- Risks Associated with Management of
Potential Growth," and "-- Dependence on Third-Party Network Providers."

FUTURE ADDITIONAL CAPITAL REQUIREMENTS

The Company believes that the net proceeds from this Offering, together with
other available cash, will be sufficient to meet the Company's operating
expenses and capital requirements for at least the next 12 months. However, the
Company's capital requirements depend on numerous factors, including the rate of
market acceptance of the Company's services, the Company's ability to maintain
and expand its customer base, the rate of expansion of the Company's network
infrastructure, the level of resources required to expand the Company's
marketing and sales organization, information systems and research and
development activities, the availability of hardware and software provided by
third-party vendors and other factors. The timing and amount of such capital
requirements cannot accurately be predicted. If capital requirements vary
materially from those currently planned, the Company may require additional
financing sooner than anticipated. The

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Company has no commitments for any additional financing, and there can be no
assurance that any such commitments can be obtained on favorable terms, if at
all. Any additional equity financing may be dilutive to the Company's
stockholders, and debt financing, if available, may involve restrictive
covenants with respect to dividends, raising future capital and other financial
and operational matters. If the Company is unable to obtain additional financing
as needed, the Company may be required to reduce the scope of its operations or
its anticipated expansion, which could have a material adverse effect on the
Company, as well as the market price of the Common Stock. See "-- Risks
Associated with Management of Potential Growth," "-- Dependence or Network
Infrastructure; Capacity; Risk of System Failure; Security Risks," "Use of
Proceeds" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

DEPENDENCE ON TELECOMMUNICATIONS CARRIERS AND OTHER SUPPLIERS

The Company relies on local telephone companies and other companies to
provide data communications capacity via local telecommunications lines and
leased long distance lines. The Company is subject to potential disruptions in
these telecommunications services and may have no means of replacing these
services, on a timely basis or at all, in the event of such disruption. Any such
disruptions could have a material adverse effect on the Company.

In addition, the Company is dependent on certain third-party suppliers of
hardware components. Certain components used by the Company in providing its
network services are currently acquired from limited sources. The Company also
depends on third-party software vendors to provide the Company with much of its
Internet software, including Netscape Navigator and Microsoft Explorer, the
World Wide Web browser software that the Company licenses from Netscape and
Microsoft, respectively. Failure of the Company's suppliers to provide
components and products in the quantities, at the quality levels or at the times
required by the Company, or an inability by the Company to develop alternative
sources of supply if required, could materially adversely affect the Company's
ability to effectively support the growth of its customer base in a timely
manner and increase its costs of expansion. Moreover, because Netscape Navigator
and Microsoft Explorer are the two most widely used Web browsers, the failure of
Netscape or Microsoft to continue to provide World Wide Web browser software to
the Company could have a material adverse effect on the Company.

The Company's suppliers and telecommunications carriers also sell or lease
services and products to the Company's competitors, and some of these carriers
are, and in the future others may become, competitors of the Company. There can
be no assurance that the Company's suppliers and telecommunications carriers
will not enter into exclusive arrangements with the Company's competitors or
otherwise stop selling or leasing their services or products to the Company,
which events could have a material adverse effect on the Company. See "--
Competition," "Business -- Supplier Relationships" and "-- Marketing."

DEPENDENCE ON AFFINITY MARKETING AND DISTRIBUTION RELATIONSHIPS

A significant number of the Company's customers have been generated through
its relationships with its affinity marketing partners. The Company relies on
these marketing relationships to assist it with distributing TotalAccess, which
enables users to register as customers and to access the Company's Internet
services. There can be no assurance that the Company's current affinity
marketing partners will continue to distribute the Company's software or will be
successful in developing new customers for the Company's services. The Company's
inability to maintain its affinity marketing relationships or establish new
affinity marketing relationships could result in delays and increased costs in
expanding its customer base, which could, in turn, have a material adverse
effect on the Company. See "Business -- Marketing -- Affinity Marketing Partners
Program."

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NEW AND UNCERTAIN MARKET; DEPENDENCE ON CONTINUED GROWTH IN USE OF THE INTERNET;
UNCERTAINTY OF CUSTOMER RETENTION

EarthLink's future success is substantially dependent on continued growth in
the use of the Internet. Rapid growth in the use of, and interest in, the
Internet, and in particular the World Wide Web, is a recent phenomenon and there
can be no assurance that Internet usage will become more widespread, that
extensive Internet content will continue to be developed or that extensive
Internet content will continue to be accessible at no or nominal cost. The
Internet may not prove to be viable for a number of reasons, including
potentially inadequate development of the necessary infrastructure or of
performance improvements. If use of the Internet does not continue to grow, the
Company would be materially and adversely affected. Conversely, to the extent
that the Internet continues to experience significant growth in the number of
users and level of use, there can be no assurance that the Internet
infrastructure will be able to support the demands placed on it by such
potential growth. See "-- Risks Associated with Management of Potential Growth."

The sales, marketing and other costs to the Company of acquiring new
customers are substantial relative to the monthly fee derived from such
customers. Accordingly, the Company believes that its long-term success largely
depends on its ability to retain its existing customers, while continuing to
attract new customers. The Company continues to invest significant resources in
its infrastructure and customer and technical support capabilities. However,
there can be no assurance that such investment will improve customer retention.
Because the Internet services market is new and the variety of available
services is not well understood by new and potential customers, it is difficult,
if not impossible, for the Company to predict future customer retention rates.
Moreover, intense competition from competitors, some of whom offer many free
hours of services for new customers, have most likely caused, and may continue
to cause, some of the Company's customers to switch to a competitor's service.
In addition, a certain number of new Internet users experience the Internet only
as a novelty and do not become consistent users of Internet services. These
factors adversely affect the Company's customer retention rates. Any decline in
customer retention rates would have a material adverse effect on the Company.
See "-- Risks Associated with Management of Potential Growth," "-- Dependence on
Network Infrastructure; Capacity; Risk of System Failure; Security Risks," "--
Competition" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Overview."

RAPID TECHNOLOGICAL CHANGE

The market for Internet services is characterized by rapidly changing
technology, evolving industry standards, changes in customer needs and frequent
new service and product introductions. The Company's future success will depend,
in part, on its ability to use leading technologies effectively, to continue to
develop its technical expertise, to enhance its existing services and to develop
new services that meet changing customer needs on a timely and cost-effective
basis and obtain market acceptance. There are currently under development a
number of alternative methods for users to connect to the Internet, including
cable modems and satellite and other wireless telecommunications technologies.
Any failure on the part of the Company to use new technologies effectively, to
develop its technical expertise and new services or to enhance existing services
on a timely basis, either internally or through arrangements with third parties,
could have a material adverse effect on the Company.

DEPENDENCE ON KEY PERSONNEL

The Company is highly dependent on the technical and managerial skills of
its key employees, including technical, sales, marketing, information systems,
financial and executive personnel, and on its ability to identify, hire and
retain additional personnel. To accommodate its current size and manage its
anticipated growth, the Company must maintain and expand its employee base.
Competition for key personnel, particularly persons having technical expertise,
is intense, and there can be no assurance that the Company will be able to
retain existing personnel or to identify or hire additional personnel. The need
for such personnel is particularly important given the strains on the Company's
existing infrastructure and the need to anticipate the demands of future growth.
In particular, the Company is highly dependent on the continued services of its
senior management team, which currently is composed of a small number of
individuals, most of whom only recently joined the Company. Of the members of
its senior management team, only the Company's President

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<PAGE>
and Chief Executive Officer, Charles G. Betty is a party to an employment
agreement with the Company. The Company does not maintain key-man life insurance
on the life of any employee. The inability of the Company to attract, hire or
retain the necessary technical, sales, marketing, information systems, financial
and executive personnel, or the loss of the services of any member of the
Company's senior management team, could have a material adverse effect on the
Company. See "-- Risks Associated with Management of Potential Growth,"
"Business -- Employees" and "Management."

GOVERNMENT REGULATION

The Company provides Internet services, in part, through data transmissions
over public telephone lines. These transmissions are governed by regulatory
policies establishing charges and terms for wire line communications. The
Company is not currently subject to direct regulation by the Federal
Communications Commission (the "FCC") or any other governmental agency, other
than regulations applicable to businesses generally. However, in the future the
Company could become subject to regulation by the FCC or another regulatory
agency as a provider of basic telecommunications services. For example, a number
of long distance telephone carriers recently filed a petition with the FCC
seeking a declaration that Internet telephone service is a "telecommunications
service" subject to common carrier regulation. Such a declaration, if enacted,
would create substantial barriers to the Company's entry into the Internet
telephone market. The FCC has requested comments on this petition, but has not
set a deadline for issuing a final decision. Also, a number of local telephone
companies have asked the FCC to levy access charges on "enhanced service
providers," which may be deemed to include ISPs. Although the Chairman of the
FCC has indicated his opposition to levying service charges against ISPs, local
interconnection charges could be levied in the future. Moreover, the public
service commissions of certain states are exploring the adoption of regulations
that might subject ISPs to state regulation.

The recently enacted Telecommunications Act of 1996 (the "Telecommunications
Act") contains certain provisions that lift, or establish procedures for
lifting, certain restrictions relating to the RBOCs' ability to engage directly
in the Internet access business. The Telecommunications Act also makes it easier
for national long distance carriers such as AT&T to offer local telephone
service and allows RBOCs to provide electronic publishing of information and
databases. Competition from these companies could have a material adverse effect
on the Company. See "Business -- Government Regulation."

POTENTIAL LIABILITY

The case law relating to the liability of ISPs and online services companies
for information carried on or disseminated through their networks has not yet
been definitively established. Several private lawsuits seeking to impose such
liability upon ISPs and online services companies are currently pending.
Although no such claims have been asserted against the Company to date, there
can be no assurance that such claims will not be asserted in the future, or if
asserted, will not be successful. The Telecommunications Act imposes fines on
any entity that knowingly (i) uses any interactive computer service or
telecommunications device to send obscene or indecent material to minors; (ii)
makes obscene or indecent material available to minors via an interactive
computer service; or (iii) permits any telecommunications facility under such
entity's control to be used for the purposes detailed above. The standard for
determining whether an entity acted "knowingly" has not yet been established
although a federal district court panel recently issued a preliminary injunction
preventing enforcement of this part of the Telecommunications Act. This decision
has been appealed. As the law in this area develops, the potential imposition of
liability upon the Company for information carried on and disseminated through
its network could require the Company to implement measures to reduce its
exposure to such liability. The implementation of such measures could require
the expenditure of substantial resources or the discontinuation of certain
service offerings. Any costs that are incurred as a result of such expenditure,
contesting any such asserted claims or the imposition of liability could have a
material adverse effect on the Company.

Due to the increasing use of the Internet, it is possible that additional
laws and regulations may be adopted with respect to the Internet covering issues
such as content, user privacy, pricing, libel, intellectual

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<PAGE>
property protection and infringement and technology export and other controls.
Changes in the regulatory environment relating to the Internet services
industry, including regulatory changes that directly or indirectly affect
telecommunication costs or increase the likelihood or scope of competition,
could have a material adverse effect on the Company.

PROPRIETARY RIGHTS; INFRINGEMENT CLAIMS

The Company believes that its success is dependent in part on its technology
and its continuing right to use such technology. The Company relies on a
combination of copyright, trademark and trade secret laws and contractual
restrictions to establish and protect its technology. It is the Company's policy
to require employees, consultants and, when possible, suppliers to execute
confidentiality agreements upon the commencement of their relationships with the
Company. There can be no assurance that the steps taken by the Company will be
adequate to prevent misappropriation of its technology and other proprietary
property or that the Company's competitors will not independently develop
technologies that are substantially equivalent or superior to the Company's
technology.

The Company has obtained authorization, typically in the form of a license,
to distribute third-party software incorporated in the EarthLink Network
TotalAccess software product for Windows 3.1, Windows 95 and Macintosh
platforms. Most of these licenses have one-year terms and automatically renew
for additional one-year terms in the absence of notice of termination from the
other party, but are generally terminable earlier upon the occurrence of certain
events (and, with respect to Microsoft, is terminable by Microsoft or the
Company at will). Applications licensed by the Company include Netscape
Navigator, Microsoft Explorer and MacTCP software from Apple Computer, Inc.
("Apple"). There can be no assurance that the Company will be able to maintain
its existing licenses or successfully obtain necessary license renewals in the
future. The failure to maintain or renew its licenses in the future could have a
material adverse effect on the Company.

There can be no assurance that third parties will not assert that the
Company's services and products infringe their proprietary rights. From time to
time, the Company has received communications from third parties alleging that
certain of the names or marks for the Company's services infringe the trademarks
of such parties. To date, no such claims have had an adverse effect on the
Company's ability to market and sell its services. However, there can be no
assurance that those claims will not have an adverse effect in the future or
that other parties will not assert infringement claims against the Company in
the future with respect to current or future services. Such claims could result
in substantial costs and diversion of resources, even if ultimately decided in
favor of the Company, and could have a material adverse effect on the Company,
particularly if judgments on such claims are adverse to the Company. In the
event a claim is asserted alleging that the Company has infringed the
proprietary technology or information of a third party, the Company may be
required to seek licenses to continue to use such intellectual property. There
can be no assurance, however, that such licenses would be offered or obtained on
commercially reasonable terms, if at all, or that the terms of any offered
licenses will be acceptable to the Company. The failure to obtain the necessary
licenses or other rights could have a material adverse effect on the Company.
See "Business -- Proprietary Rights."

INTEGRATION OF POTENTIAL ACQUISITIONS

As part of its business strategy, EarthLink may make acquisitions of, or
significant investments in, complementary companies, services or technologies,
although no such acquisitions or investments are currently pending. Any such
future transactions would be accompanied by the risks commonly encountered in
making acquisitions of companies, services and technologies. Such risks include,
among other things, the difficulty associated with assimilating the operations
and personnel of the acquired companies, the potential disruption of the
Company's ongoing business, the inability of management to maximize the
financial and strategic position of the Company through the successful
integration of acquired network facilities, technology, rights and other assets,
additional expenses associated with the amortization of acquired intangible
assets, the inability to maintain uniform standards, controls, procedures and
policies and the impairment of relationships with employees and customers as a
result of the integration of new management personnel. There can be

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no assurance that the Company will be successful in overcoming these risks or
any other problems encountered in connection with any such acquisitions. See
"Use of Proceeds" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Potential Fluctuations in Quarterly
Results."

CONTROL BY DIRECTORS, EXECUTIVE OFFICERS, FIVE PERCENT STOCKHOLDERS AND
AFFILIATED ENTITIES

The Company's executive officers, directors and holders of more than 5% of
the outstanding Common Stock and their affiliates will beneficially own an
aggregate of approximately 59.4% of the Company's outstanding shares of Common
Stock after this Offering (approximately 57.5% if the Underwriter's over-
allotment option is exercised in full). If warrants and options outstanding and
exercisable within 60 days of December 31, 1996 were exercised, these
percentages would increase to 63.4% and 61.6%, respectively. As a result, these
stockholders, acting together, would effectively be able to control most matters
requiring approval by the Company's stockholders, including the election of a
majority of the Company's directors. See "Principal Stockholders."

BENEFITS OF THE OFFERING TO CURRENT STOCKHOLDERS

After consummation of this Offering, current stockholders, including members
of management, will benefit from the creation of a public market for the
Company's Common Stock and the increase in the market value of the shares held
by such persons. Based upon the assumed public offering price of $13.00 per
share, the excess of market value over amounts paid for Common Stock (including
Common Stock issuable upon conversion of the Series A Convertible Preferred
Stock) by executive officers and directors of the Company is approximately $46.5
million. In addition, the excess of the assumed offering price over the
aggregate exercise price of options and warrants held by executive officers and
directors is approximately $10.5 million.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of the Common Stock in the public
market following this Offering could adversely affect the market price of the
Common Stock. The number of shares of Common Stock available for sale in the
public market is limited by restrictions under the Securities Act and lock-up
agreements under which the holders of 5,998,432 shares of Common Stock,
2,727,273 shares of Series A Convertible Preferred Stock (that will be converted
into 1,363,624 shares of Common Stock upon completion of this Offering) and
warrants, options and convertible debt securities exercisable or convertible
into an aggregate of 2,154,801 shares of Common Stock (including all of the
Company's officers and directors) have agreed not to sell or otherwise dispose
of any of such shares of Common Stock, any such options or warrants to acquire
shares of Common Stock or any such securities convertible into shares of Common
Stock (or any shares of Common Stock issuable upon exercise of such securities)
for a period of one year after the date of this Prospectus without the prior
written consent of the Underwriter. However, the Underwriter may, in its sole
discretion and at any time without notice, release all or any portion of the
securities subject to such lock-up agreements. Further, the holders of
substantially all of the shares of Common Stock outstanding prior to this
Offering as well as holders of certain warrants and convertible debt are parties
to registration rights agreements. The exercise of these registration rights and
subsequent sale of a substantial number of shares of the Common Stock in the
public market could adversely affect the market price of the Common Stock. See
"Description of Capital Stock -- Registration Rights," "Shares Eligible for
Future Sale" and "Underwriting."

EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS

The Company's Certificate of Incorporation and Bylaws contain certain
provisions that may discourage proposals or bids to acquire the Company. These
provisions could limit the price that investors might be willing to pay for
shares of the Common Stock. Certain of such provisions allow the Company to
issue Preferred Stock, the rights and preferences of which may be specified by
the Board of Directors at any time prior to issuance, without further
stockholder approval, and could have the effect of delaying, deferring or
preventing a change in control of the Company. The Company also will be subject
to Section 203 of the

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Delaware General Corporation Law which, under certain circumstances, could
delay, defer or prevent a business combination with an "interested stockholder."
Following the first meeting of its stockholders subsequent to this Offering, and
provided that there are 800 or more beneficial owners of the Common Stock, the
Company anticipates that it will seek stockholder approval to divide its Board
into three classes, each serving a staggered three-year term. See "Description
of Capital Stock."

NO PUBLIC MARKET FOR COMMON STOCK; POTENTIAL VOLATILITY OF STOCK PRICE

Prior to this Offering, there has been no public market for the Common
Stock, and there can be no assurance that a regular trading market will develop
and continue after this Offering or that the market price of the Common Stock
will not decline below the initial public offering price. The initial public
offering price will be determined through negotiations between the Company and
the Underwriter and may not be indicative of the market price of the Common
Stock following this Offering. Among the factors to be considered in such
negotiations are an estimate of the business potential of the Company, the
present state of the Company's development, an assessment of the Company's
management, prevailing market conditions, the demand for similar securities of
comparable companies and other factors deemed relevant. The stock markets have
experienced price and volume fluctuations that have particularly affected the
stocks of technology companies, resulting in changes in the market prices of the
stocks of many companies that may not have been directly related to the
operating performance of those companies. Such broad market fluctuations may
adversely affect the market price of the Common Stock following this Offering.
In addition, the market price of the Common Stock following this Offering may be
highly volatile. Factors such as variations in the Company's financial results,
comments by securities analysts, announcements of technological innovations or
new products by the Company or its competitors, changing government regulations,
developments concerning the Company's proprietary rights or litigation may have
a material adverse effect on the market price of the Common Stock.

IMMEDIATE AND SUBSTANTIAL DILUTION

Assuming an initial public offering price of $13.00 per share, investors
purchasing shares of Common Stock in this Offering will incur immediate and
substantial dilution in net tangible book value of the Common Stock of $10.28
per share. To the extent that currently outstanding options, warrants and
convertible debt are exercised or converted, there will be further dilution. See
"Dilution."

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USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be approximately $23,580,000 ($27,207,000 if the
Underwriter's over-allotment option is exercised in full) at an assumed initial
public offering price of $13.00 per share (the mid-point of the range set forth
on the cover page of this Prospectus), after deducting estimated underwriting
discounts and commissions and offering expenses payable by the Company.

EarthLink expects to use the net proceeds of this Offering to finance sales
and marketing activities, leasehold improvements, investments in network
equipment, information systems and office equipment. In addition, the Company
expects to use the net proceeds for new service introductions and for working
capital and other general corporate purposes. The Company also intends to use a
portion of the net proceeds of this Offering to repay certain outstanding
indebtedness. As of November 30, 1996, approximately $2.95 million was
outstanding under the 10% Promissory Notes (which mature in June 1997). The
holders of $725,000 of such notes have agreed to convert such indebtedness into
55,767 shares of Common Stock upon consummation of this Offering. The balance,
approximately $2.23 million as of November 30, 1996, will be repaid using a
portion of the net proceeds of the Offering. The Company also intends to repay
all outstanding indebtedness under a promissory note issued to UUNET (which, as
of November 30, 1996, had a principal balance of $5.0 million and accrued
interest of approximately $42,700), unless UUNET decides to convert the note
into Common Stock prior to repayment. The note bears interest at a floating rate
of prime plus 2% per annum, and matures in October 1997. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" and "Certain Transactions."

The amounts actually expended for each purpose, other than repayment of the
indebtedness described above, will be determined at the discretion of the
Company's management. The Company's future capital requirements and the
allocation of the net proceeds of this Offering will depend on many factors,
including the rate of market acceptance of the Company's services, the Company's
ability to expand and maintain its customer base, the rate of expansion of the
Company's network infrastructure, the level of resources required to expand the
Company's marketing and sales organization, information systems and research and
development activities, the availability of hardware and software provided by
third-party vendors and other factors. The Company also anticipates that it may
use a portion of the net proceeds to acquire complementary product and service
lines, technology, equipment, other companies or interests in other companies.
While the Company from time to time has engaged in preliminary discussions
concerning possible acquisitions, investments or joint ventures, it has no
present understandings, commitments, agreements or active negotiations with
respect to any such transaction.

Pending such uses, the net proceeds of this Offering will be invested in
government securities or short-term, investment grade, interest-bearing
securities. The Company believes that the net proceeds from this Offering,
together with other available cash, will be sufficient to meet the Company's
operating expenses and capital requirements for at least the next 12 months. See
"Risk Factors -- Future Additional Capital Requirements" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

DIVIDEND POLICY

The Company has not paid any dividends since its inception and does not
intend to pay any dividends in the foreseeable future. The payment of future
cash dividends, if any, will be at the sole discretion of the Board of
Directors.

16
<PAGE>
CAPITALIZATION

The following table sets forth as of September 30, 1996 (i) the
capitalization of the Company, (ii) the pro forma capitalization of the Company
giving effect to the issuance by the Company of a convertible note payable in
the principal amount of $5,000,000 and (iii) the capitalization of the Company
as adjusted to reflect the conversion upon consummation of this Offering of the
Series A Convertible Preferred Stock into 1,363,624 shares of Common Stock and
of $725,000 of outstanding indebtedness into 55,767 shares of Common Stock, the
sale of the shares of Common Stock being offered hereby at an assumed initial
public offering price of $13.00 per share and the application of the estimated
net proceeds therefrom after deduction of estimated offering expenses and
underwriting discounts and commissions.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
---------------------------------
AS
ACTUAL PRO FORMA ADJUSTED
----------- --------- ---------
(IN THOUSANDS)

<S> <C> <C> <C>
Capitalized lease obligations, net of current portion........................ $ 5,388 $ 5,388 $ 5,388
Convertible debt............................................................. -- 5,000 --
----------- --------- ---------
Total debt........................................................... 5,388 10,388 5,388
Redeemable preferred stock................................................... 14,013 14,013 --
Stockholders' equity:
Common Stock, $0.01 par value, 50,000,000 shares authorized; 6,022,724
issued and outstanding, actual and pro forma; 9,442,115 shares issued and
outstanding, as adjusted (1).............................................. 60 60 95
Additional paid-in capital................................................... 14,236 14,236 52,519
Warrants to purchase Common Stock............................................ 599 599 599
Accumulated deficit.......................................................... (26,816) (26,816) (26,816)
----------- --------- ---------
Total stockholders' equity (deficit)................................. (11,921) (11,921) 26,397
----------- --------- ---------
Total capitalization................................................. $ 7,480 $ 12,480 $ 31,785
----------- --------- ---------
----------- --------- ---------
</TABLE>

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

(1) This amount excludes the following securities outstanding or reserved for
future grant as of October 31, 1996: (i) 1,028,250 shares of Common Stock
subject to options outstanding under the Company's 1995 Stock Option Plan
having a weighted average exercise price of $7.48 per share, (ii) 1,331,438
shares of Common Stock subject to outstanding warrants and non-plan stock
options having a weighted average exercise price of $5.82 per share, (iii)
221,750 and 62,500 shares of Common Stock reserved for future grant of
options under the Company's 1995 Stock Option Plan and Directors Stock
Option Plan, respectively, (iv) up to approximately 382,000 shares of Common
Stock into which $5,000,000 of indebtedness will be convertible upon
consummation of this Offering and (v) 360,000 shares of Common Stock
underlying warrants and options that the Company has committed to issue if
certain future events occur. See "Capitalization," "Management -- 1995 Stock
Option Plan and Other Option and Warrant Issuances," "Management --
Directors Stock Option Plan and Other Director Option Issuances,"
"Description of Capital Stock" and Notes 7 and 8 of Notes to Financial
Statements.

17
<PAGE>
DILUTION

The pro forma net tangible book value of the Common Stock as of September
30, 1996, assuming the conversion of the Series A Convertible Preferred Stock
and of $725,000 of outstanding indebtedness into Common Stock, was $2,074,000,
or approximately $0.28 per share. Pro forma net tangible book value per share
represents the amount of the Company's total tangible assets less total
liabilities, divided by the pro forma number of shares of Common Stock
outstanding (assuming the issuance, on September 30, 1996, of the Company's
Series A Convertible Preferred Stock and the conversion of such stock into
1,363,624 shares of Common Stock and of the conversion of $725,000 of
outstanding indebtedness to 55,767 shares of Common Stock). After giving effect
to the sale by the Company of the 2,000,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $13.00 per share and after
deducting estimated underwriting discounts and commissions and offering expenses
payable by the Company, the pro forma net tangible book value of the Company as
of September 30, 1996 would have been $23,580,000, or approximately $2.72 per
share. This represents an immediate increase in the net tangible book value of
$2.44 per share to existing stockholders and an immediate dilution of $10.28 per
share to new investors purchasing shares of Common Stock in this Offering.
Dilution per share represents the difference between the amount per share paid
by purchasers of shares of Common Stock in the Offering made hereby and the net
tangible book value per share of Common Stock immediately after completion of
this Offering.

The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share........................... $ 13.00
Pro forma net tangible book per share value as of September 30,
1996........................................................... $ 0.28
Increase per share attributable to the Offering................. 2.44
---------
Pro forma net tangible book value after this Offering............. 2.72
---------
Dilution per share to new investors............................... $ 10.28
---------
---------
</TABLE>

The following table sets forth, on an as adjusted basis as of September 30,
1996, the difference between the number of shares of Common Stock purchased from
the Company (assuming the conversion, on September 30, 1996, of the Company's
Series A Convertible Preferred Stock and of $725,000 of outstanding indebtedness
into 1,419,391 shares of Common Stock), the total cash consideration paid and
the average price per share paid by the existing holders of Common Stock and by
the new investors, before deducting estimated underwriting discounts and
commissions and offering expenses payable by the Company, at an assumed initial
public offering price of $13.00 per share:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION (1) AVERAGE
------------------------ --------------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................. 7,442,115 78.8% $ 30,820,000 54.2% $ 4.14
New investors.......................... 2,000,000 21.2 26,000,000 45.8 13.00
----------- ----- -------------- -----
Total................................ 9,442,115 100.0% $ 56,820,000 100.0%
----------- ----- -------------- -----
----------- ----- -------------- -----
</TABLE>

- ------------
(1) Excludes non-cash consideration.

The foregoing table excludes all options, warrants and convertible
indebtedness that will remain outstanding upon consummation of this Offering.
See Notes 7 and 8 of Notes to Financial Statements. The exercise or conversion
of outstanding options, warrants and convertible indebtedness having an exercise
or conversion price less than the initial public offering price would increase
the dilutive effect to new investors illustrated by the foregoing tables.

18
<PAGE>
SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and Notes thereto included elsewhere in
this Prospectus. The statement of operations data for the period from inception
(May 26, 1994) through December 31, 1994, for the year ended December 31, 1995
and the nine months ended September 30, 1996, and the balance sheet data as of
December 31, 1994 and 1995 and September 30, 1996, have been derived from
financial statements audited by Price Waterhouse LLP, independent accountants.
The selected financial data for the nine months ended September 30, 1995 have
been derived from the Company's unaudited financial statements. In the opinion
of management, the unaudited financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results for the period presented.

<TABLE>
<CAPTION>
INCEPTION
(MAY 26, 1994) NINE MONTHS ENDED
THROUGH YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ----------------------
1994 1995 1995 1996
-------------- ------------ --------- -----------
(in thousands, except per share data)

<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Recurring revenues.................................... $ 53 $ 2,422 $ 1,057 $ 15,914
Other revenues........................................ 58 606 390 4,248
-------------- ------------ --------- -----------
Total revenues...................................... 111 3,028 1,447 20,162
Operating costs and expenses:
Cost of recurring revenues............................ 4 1,055 448 11,736
Cost of other revenues................................ 12 349 105 2,020
Sales and marketing................................... 37 3,711 1,775 9,867
General and administrative............................ 168 2,062 990 7,838
Operations and customer support....................... 38 1,869 1,043 9,941
-------------- ------------ --------- -----------
Total operating costs and expenses.................. 259 9,046 4,361 41,402
-------------- ------------ --------- -----------
Loss from operations.................................... (148) (6,018) (2,914) (21,240)
Interest expense........................................ -- (136) (70) (683)
Interest income......................................... -- 34 12 114
-------------- ------------ --------- -----------
Net loss............................................ $ (148) $ (6,120) $ (2,972) $ (21,809)
-------------- ------------ --------- -----------
-------------- ------------ --------- -----------
Net loss per share (1).................................. $ (0.04) $ (1.25) $ (0.65) $ (3.32)
-------------- ------------ --------- -----------
-------------- ------------ --------- -----------
Weighted average shares outstanding (1)................. 3,653 4,903 4,596 6,568

DECEMBER 31, SEPTEMBER 30,
---------------------------- ----------------------
1994 1995 1995 1996
-------------- ------------ --------- -----------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............................... $ (62) $ (1,976) $ 1,365 $ (6,439)
Total assets............................................ 186 4,874 4,554 26,033
Capital lease obligations, net of current portion....... -- 355 211 5,388
Total liabilities....................................... 89 4,584 2,239 23,941
Accumulated deficit..................................... (148) (5,007) (1,859) (26,816)
Total stockholders' equity (deficit).................... 97 290 2,316 (11,921)
</TABLE>

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

(1) See Note 1 of Notes to Financial Statements for an explanation of the
determination of the number of weighted average shares outstanding used in
the net loss per share computation.

19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

EarthLink is an ISP that was formed to help users derive meaningful benefits
from the extensive resources of the Internet. The Company began offering its
services in July 1994. Since inception, the growth in the Company's customer
base along with an expansion of service offerings has resulted in significant
increases in revenues and related expenses. As a result, period-to period
comparisons of the Company's results of operations may not be as meaningful as
these comparisons would be for mature companies.

The Company's standard EarthLink Network service provides unlimited Internet
access for a one-time registration fee of $25.00 and a flat monthly fee of
$19.95, which is generally collected from a pre-authorized credit card account.
In addition to its standard service, the Company offers a number of premium,
add-on and other services which can increase the speed of, or add features to,
the capabilities of the standard service. Prices and billing methods for
premium, add-on and other services vary. See "Business -- EarthLink's Services."

The Company has experienced net losses since it commenced operations and had
net losses of approximately $6.3 million from inception through 1995 and of
approximately $21.8 million for the nine months ended September 30, 1996. As of
September 30, 1996, the Company had an accumulated deficit of approximately
$26.8 million (exclusive of $1.3 million of losses incurred while the Company
was an S Corporation for tax purposes, which, upon the Company's conversion to C
Corporation status in June 1995, were charged to the Company's capital
accounts). The Company expects that it will continue to incur net losses as it
continues to expend substantial resources on sales, marketing and
administration, build its infrastructure, develop new service offerings and
improve its management information systems. There can be no assurance that the
Company will achieve or sustain profitability or positive cash flow from its
operations.

The Company's principal strategy is to expand rapidly and retain its
customer base. To realize this strategy, the Company intends to increase its
investment in sales and marketing. Also, the Company plans to add administrative
infrastructure, increase customer and technical support capability and build
network infrastructure to meet customer demand. The sales and marketing and
other costs to the Company of acquiring new customers are substantial relative
to the monthly fee derived from such customers. Accordingly, the Company's
long-term success depends largely upon its ability to retain its existing
customers, while continuing to attract new customers.

The market for the Company's services has only recently begun to develop, is
rapidly evolving and is characterized by an increasing number of market entrants
who have introduced new services for access to the Internet. The Company and its
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in the new and rapidly evolving market for
Internet services and products. To address these risks, the Company must, among
other things, continue to attract, retain and motivate qualified persons, and
continue to upgrade its infrastructure, including its information systems,
technologies and services. There can be no assurance that the Company will be
successful in addressing such risks. See "Risk Factors."

RESULTS OF OPERATIONS

REVENUES. Recurring revenues consist of monthly fees charged to customers
for Internet access and other ongoing services. Other revenues generally
represent one-time setup fees. Recurring revenues are recognized over the period
for which the services are performed.

For the period from inception, May 26, 1994, through December 31, 1994 (the
"Inception Period") and the year ended December 31, 1995, recurring revenues
were approximately $53,000 and $2.4 million, respectively. Other revenues for
the same periods were approximately $58,000 and $606,000, respectively.
Recurring revenues were approximately $1.1 million and $15.9 million for the
nine months ended September 30, 1995 and September 30, 1996, respectively. Other
revenues were approximately $390,000 and

20
<PAGE>
$4.2 million for the nine months ended September 30, 1995 and September 30,
1996, respectively. The increase in recurring revenues in 1995 as compared to
the Inception Period is primarily attributable to the Company being operational
for the full year in 1995 and an increase in the number of customers during that
period. Revenues for the nine months ended September 30, 1996 increased over
revenues for the nine months ended September 30, 1995 as a result of an increase
in the number of customers. The increase in revenues was partially offset by
credits given to customers under the Company's customer referral program. Under
this program, the Company waives one month of service fee in consideration for
each new customer referred by an existing customer. This waived service fee
results in a reduction to revenue. The increase in other revenues for 1995 as
compared to the Inception Period is primarily attributable to an increase in the
number of customers added in 1995 and one-time set-up fees collected from
customers. Other revenues for the nine months ended September 30, 1996 increased
over other revenues in the nine months ended September 30, 1995 as a result of
an increase in the number of new customers during that period and one-time
set-up fees collected from customers. From time to time, the Company waives the
one-time set-up fee it charges new customers. As competition in the ISP market
intensifies, the Company may find it necessary to waive the one-time set-up fee
to remain competitive. Therefore, revenues from the one-time set-up fee are
expected to decrease in future periods.

COST OF REVENUES. Cost of revenues consists of cost of recurring revenues
and cost of other revenues. Cost of recurring revenues principally includes
telecommunications expenses and depreciation expense on equipment used in
network operations for ongoing customer services. Included in telecommunications
cost are fees paid to UUNET for local access to its nationwide system of POPs.
Cost of other revenues principally includes expenses related to the registration
of new customers. These costs include licensing fees for software, software
duplication costs and commissions paid to third parties for referring new
customers to the Company.

For the year ended December 31, 1995, cost of recurring revenues increased
to approximately 44% of recurring revenues, up from 8% of recurring revenues for
the Inception Period. This increase was due to increased hourly customer usage
and the Company's expansion of its POP sites. Cost of recurring revenues for the
nine months ended September 30, 1996 increased to approximately 74% of recurring
revenues, up from 42% of recurring revenues for the nine months ended September
30, 1995 due to increased hourly customer usage and the Company's expansion to
nationwide service through its relationship with UUNET. During these periods,
the Company paid UUNET a fixed monthly fee per customer plus a variable amount
based on customer usage in excess of a threshold number of hours per month. The
Company's agreement with UUNET was amended as of October 1996 such that the key
variable component is peak usage rather than hourly usage. As the Company
continues to expand, the Company anticipates that it may build and use
additional Company-owned POPs in those geographical areas where there is a
sufficient concentration of customers to support the cost of such investment.

As noted above, under the Company's current agreement with UUNET, the
Company pays UUNET a monthly fee equal to the greater of a specified minimum or
an amount that varies based primarily on peak

21
<PAGE>
customer usage. The specified minimum amount increases over the term of the
agreement. The Company's operating margins could be adversely affected if the
Company is unable to increase its customer base so as to avoid paying the
increasing minimum amount. See "Business -- EarthLink's Services" and "--
Customers, POPs and Network Infrastructure."

SALES AND MARKETING. Sales and marketing expenses consist primarily of
sales commissions, salaries, cost of promotional material, advertising, travel
and third-party sales commissions. Sales and marketing expenses were
approximately $37,000, or 33% of revenues, and $3.7 million, or 123% of
revenues, for the Inception Period and the year ended December 31, 1995,
respectively. Sales and marketing expenses were approximately $1.8 million, or
123% of revenues, and $9.9 million, or 49% of revenues, for the nine months
ended September 30, 1995 and September 30, 1996, respectively. These
period-to-period increases have primarily resulted from increased emphasis on
marketing the Company's services, expanding sales and marketing efforts
nationwide, increased sales commissions and increased marketing personnel. The
Company intends to aggressively promote EarthLink's services and as a result
expects further significant increases in sales and marketing expenses in future
periods. The Company does not capitalize costs associated with the acquisition
of customers.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of costs associated with the finance and accounting and human
resources departments, professional expenses, rent and expenses, principally
compensation, related to certain executive officers and bad debts. General and
administrative expenses were approximately $168,000 and $2.1 million for the
Inception Period and the year ended December 31, 1995, respectively. General and
administrative expenses were approximately $990,000 and $7.8 million, for the
nine months ended September 30, 1995 and September 30, 1996, respectively. Since
inception, general and administrative expenses have increased as a result of
increased employee headcount, rent and other general and administrative
expenses. During the nine months ended September 30, 1996, the Company hired a
number of senior management personnel, moved into a new headquarters building
and engaged professional consultants to assist in the development of an
administrative infrastructure to accommodate anticipated increases in the number
of customers and employees, which resulted in a significant increase in general
and administrative expenses as compared to the same period in 1995. General and
administrative expenses for the nine months ended September 30, 1996, included
bad debt expense of $1.7 million resulting from difficulties in billing
customers and in disconnecting late-paying customers on a timely basis. In
addition, in September 1996, the Company issued 37,500 shares of Common Stock as
consideration for the termination of a consulting agreement. The value of the
stock, $413,000, was included in general and administrative expenses for the
nine months ended September 30, 1996. Management intends to implement new
information systems and continue to expand staff in order to support anticipated
customer and operational growth. As a result, the Company expects general and
administrative expenses to increase in future periods.

OPERATIONS AND CUSTOMER SUPPORT. Operations and customer support expenses
consist primarily of expenses associated with technical support and customer
service to register and maintain customer accounts. Operations and customer
support expenses were approximately $38,000, or 34% of revenues, and $1.9
million, or 62% of revenues, for the Inception Period and the year ended
December 31, 1995, respectively. Operations and customer support expenses were
approximately $1.0 million, or 72% of revenues, and $9.9 million, or 49% of
revenues, for the nine months ended September 30, 1995 and September 30, 1996,
respectively. These expenses have increased significantly since the Company's
inception. This trend reflects the costs associated with building a customer
service organization to support the Company's customer base and anticipated
customer growth. The Company intends to continue to increase expenditures for
operations and customer support.

INCOME TAXES. No provision for federal or state income taxes has been
recorded as the Company incurred net operating losses through September 30,
1996. At September 30, 1996, the Company had net operating loss carryforwards
for federal income tax purposes of approximately $24.7 million, which begin to
expire in 2010. The Internal Revenue Code of 1986, as amended, includes
provisions that limit the net operating loss carryforwards for use in a given
year if significant ownership changes have occurred. The Company expects that
this Offering will result in an ownership change limiting the Company's ability
to utilize net operating loss carryforwards to offset future income, if any. The
Company has provided a full valuation allowance on the deferred tax asset
because of the uncertainty regarding realizability. Prior to July 1995, the
Company was

22
<PAGE>
taxed as an S Corporation under the Internal Revenue Code. As a result, losses
totaling approximately $2.8 million flowed directly to the stockholders during
the period and are not included in the amount of net operating loss
carryforwards.

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS

In May 1996, the Company entered into an agreement with NMC, a producer of
infomercials and commercials, pursuant to which NMC agreed to produce and
broadcast 15-second and 60-second commercials for EarthLink's services. Under
this agreement, for customers who, in response to these commercials, subscribe
to and pay for the Company's services for 60 days from the date of registration,
the Company is obligated to pay NMC, at NMC's one-time election made prior to
the first airing of any such commercials, either a $45.00 per customer fee or
fees equal to 7% of all revenues received from such customers for five years
from their registration. In addition, the Company agreed to issue warrants to
NMC to purchase 50,000 shares of Common Stock, having an exercise price of $9.76
per share, upon the completion by NMC, subject to the Company's approval, of the
15-second and 60-second commercials, and to issue warrants to NMC to purchase
one share of Common Stock for each two customers generated by this relationship,
up to 300,000 shares of Common Stock. The exercise price of such additional
warrants earned through December 31, 1997 will be $9.76 per share, and
thereafter the exercise price will be the fair market value of the Common Stock
on the date of grant. Upon issuance of any such warrants, the Company will be
required to record in the quarter in which such warrant is issued a non-cash
charge against earnings in an amount equal to the fair value of the warrant on
the date of issuance.

LIQUIDITY AND CAPITAL RESOURCES

The Company has not generated net cash from operations since its inception.
The Company has funded its operations primarily through private sales of equity
securities, borrowings from third parties and capital leases of equipment. The
Company's operating activities used net cash of approximately $3.6 million and
$11.1 million during 1995 and the nine months ended September 30, 1996,
respectively. During 1995 and the nine months ended September 30, 1996, net cash
used in operations resulted primarily from net losses, partially offset by
increases in trade accounts payable.

Cash used by investing activities has consisted primarily of equipment
purchases for POP and network expansion. For the year ended December 31, 1995
and the nine months ended September 30, 1996, capital expenditures amounted to
approximately $2.8 million and $13.6 million, respectively. The Company
estimates that capital expenditures for the remainder of 1996 and through the
end of 1997 will be approximately $20.0 million including network enhancements,
data center expansion, and procurement of telecommunication and office equipment
and furniture and fixtures. Where feasible, the Company will seek to finance
certain of these expenditures through capital leases.

Cash from financing activities provided the Company with approximately $8.2
million and $31.9 million during 1995 and the nine months ended September 30,
1996, respectively. The Company's financing activities have consisted of the
private sale of debt and equity securities and capital lease transactions,
primarily for equipment. From inception through September 30, 1996, the Company
raised $29.1 million through the private sale of debt and equity securities and
$9.8 million relating to capital lease obligations, respectively. Capital lease
obligations generally result from the sale and leaseback of equipment. During
the year ended December 31, 1995 and the nine months ended September 30, 1996,
the Company financed the acquisition of data processing and office equipment
amounting to approximately $556,000 and $9.2 million, respectively, by entering
into a number of agreements for the sale and leaseback of equipment. The sale
leaseback transactions

23
<PAGE>
are recorded at cost, which approximates the fair market value of the property
and, therefore, no gains or losses have been recorded. The property remains on
the books and continues to be depreciated. A financing obligation representing
the proceeds is recorded and reduced based upon payments under the lease
agreement.

As of December 31, 1995 and September 30, 1996, the Company had cash and
cash equivalents of approximately $290,000 and $8.7 million, respectively, and
negative working capital of approximately $2.0 million and $6.4 million,
respectively. During the second quarter of 1996, the Company received short-term
debt financing (issued in the form of 10% Promissory Notes that mature in June
1997) of $2.95 million from a limited number of investors, including certain
directors and existing stockholders. As additional consideration for this
investment, EarthLink issued warrants to purchase 98,340 shares of Common Stock
having an exercise price of $11.00 per share. The holders of $725,000 of such
notes have agreed to convert the notes into 55,767 shares of Common Stock upon
consummation of this Offering. Also during the third quarter of 1996, the
Company sold 2,727,273 shares of Series A Convertible Preferred Stock to a
limited number of investors, including certain directors, existing stockholders,
the Underwriter and certain of its affiliates and associates for approximately
$15.0 million in the aggregate, or $5.50 per share. In connection with this
financing, the Company issued to certain of the investors warrants to purchase
up to 100,000 shares of Common Stock at an exercise price of $11.00 per share.
The Series A Convertible Preferred Stock will automatically convert into
1,363,624 shares of Common Stock upon the consummation of this Offering. See
"Certain Transactions."

In connection with an amendment of its strategic network services
relationship with UUNET, in October 1996, the Company issued a $5.0 million,
one-year promissory note to UUNET. This note bears interest at prime plus 2% per
annum (an effective rate of 10.25% per annum at December 1, 1996), and will be
convertible upon consummation of this Offering into up to approximately 382,000
shares of Common Stock at a conversion price of between $13.20 and $16.00 per
share, depending upon the number of shares of Common Stock, if any, purchased in
this Offering by certain investors referred to in the preceding paragraph and
the public offering price of the Common Stock in this Offering. See "Certain
Transactions."

EarthLink expects to use the net proceeds of this Offering to finance sales
and marketing activities, leasehold improvements, investments in network
equipment, information systems, office equipment and new service introductions,
and for working capital and other general corporate purposes. The Company
intends to use a portion of the net proceeds of this Offering to repay
approximately $2.23 million of the 10% Promissory Notes, which will remain
outstanding upon consummation of this Offering. The Company also intends to use
a portion of the net proceeds of this Offering to repay its outstanding
convertible debt to UUNET, unless UUNET decides to convert such debt to Common
Stock prior to repayment. See "Use of Proceeds." The Company also anticipates
that it may use a portion of the net proceeds to acquire complementary products
and service lines, technology, equipment, other companies or interests in other
companies. While the Company from time to time has engaged in preliminary
discussions concerning possible acquisitions, investments or joint ventures, it
has no present understandings, commitments, agreements or active negotiations
with respect to any such transaction. See "Certain Transactions."

Pending such uses, the net proceeds of this Offering will be invested in
short-term, investment grade, interest-bearing securities. The Company believes
that the net proceeds from this Offering, together with other available cash
will be sufficient to meet the Company's operating expenses and capital
requirements for at least the next 12 months. However, the Company's capital
requirements depend on numerous factors, including the rate of market acceptance
of the Company's services, the Company's ability to maintain and expand its
customer base, the rate of expansion of the Company's network infrastructure,
the level of resources required to expand the Company's marketing and sales
organization, information systems and research and development activities, the
availability of hardware and software provided by third-party vendors and other
factors. The timing and amount of such capital requirements cannot accurately be
predicted. If capital requirements vary materially from those currently planned,
the Company may require additional financing sooner than anticipated. The
Company has no commitments for any additional financing, and there can be no
assurance that any such commitments can be obtained on favorable terms, if at
all. Any additional equity financing may be dilutive to the Company's
stockholders, and debt financing, if available, may involve restrictive
covenants with respect to dividends, raising future capital and other financial
and operational matters. If the Company is unable to obtain additional financing
as needed, the Company may be required to reduce the scope of its operations or
its anticipated expansion, which could have a material adverse effect on the
Company.

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BUSINESS

OVERVIEW

EarthLink is an ISP that was formed to help users derive meaningful benefits
from the extensive resources of the Internet. The Company focuses on providing
access, information, assistance and services to its customers to encourage their
introduction to the Internet and to help them have a satisfying user experience.

The Company provides its services through its EarthLink Network TotalAccess
software package, which is designed to simplify access to the Internet through
an online registration feature and a "point and click" graphical user interface.
This software permits users to browse the Internet through use of Netscape
Navigator or Microsoft Explorer (one or the other of which is included in each
copy of TotalAccess), or any other third-party browser that a customer may wish
to use. The Company also provides useful information to its users through its
extensive World Wide Web site. On this site, a user can find technical
assistance information, an on-line newsletter, links to numerous popular
categories of information and entertainment and many other items and services
designed to enhance users' satisfaction with their Internet experience. In
addition, the Company provides a monthly printed newsletter to its customers, a
booklet entitled "Getting the Most Out of EarthLink" and 24 hour customer and
technical support.

EarthLink also offers business services, including business Web sites,
high-speed ISDN communications capability and frame relay connectivity. In
addition, the Company offers consumer services such as multiplayer Internet
games and the EarthLink online store.

INDUSTRY BACKGROUND

The Internet is a collection of computer networks linking millions of public
and private computers around the world. Historically, the Internet was used by
government agencies and academic institutions to exchange information, publish
research and transfer email. A number of factors, including the proliferation of
communication-enabled personal computers, the availability of intuitive
graphical user interface software and the wide accessibility of an increasingly
robust network infrastructure, have combined to allow users to easily access the
Internet and, in turn, have produced rapid growth in the number of Internet
users.

The emergence of the World Wide Web, the graphical, multimedia environment
of the Internet, has resulted in the development of the Internet as a new mass
communications medium. The ease and speed of publishing, distributing and
communicating text, graphics, audio and video over the Internet has led to a
proliferation of Internet-based services, including chat, online magazines, news
feeds, interactive games and a wealth of educational and entertainment
information, as well as to the development of online communities. In addition,
the reduced cost of executing transactions over the Internet provides
individuals and organizations with a new means to conduct business.

STRATEGY

The principal components of EarthLink's growth strategy are as follows:

RAPIDLY EXPAND ITS CUSTOMER BASE. EarthLink believes that a key to success
in the competitive ISP market is to expand its customer base as rapidly as
possible to establish a significant revenue base, thereby enhancing its ability
to enter into favorable arrangements with affinity marketing partners and
providers of content, network access and software enhancements. The Company
plans to devote significant effort and financial resources on sales and
marketing. The Company also plans to continue print advertising in major
computer

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magazines, expand its radio advertising program, seek to expand its affinity
marketing program, maintain a presence at national, regional and local trade
shows and continue to offer economic incentives to customers who refer new
customers.

RETAIN THE COMPANY'S EXISTING CUSTOMERS. The sales, marketing and other
costs to the Company of acquiring new customers are substantial relative to the
monthly fee derived from such customers. Accordingly, the Company believes that
its long-term success largely depends on maintaining customer satisfaction with
its services. EarthLink plans to devote significant resources to enhancing its
network operations capability, its World Wide Web site and its service
offerings. In addition, the Company will continue to expand its technical
support staff and enhance the staff 's effectiveness by implementing a new call
center and providing software tools that can assist the staff in identifying and
solving customer problems.

DEVELOP ADDITIONAL SERVICE OFFERINGS. EarthLink recognizes that the
introduction of additional service offerings can serve not only to expand and
maintain its customer base, but also, in certain instances, to enhance revenues.
Accordingly, the Company has introduced a variety of services for business
consumers, including business Web sites, high-speed ISDN communications
capability and frame relay connections, each of which involve a monthly service
charge plus set-up fees. The Company also plans to expand its service offerings
for consumers, including personalized start pages, chat and multiplayer Internet
games.

FOCUS ON CUSTOMER NEEDS. EarthLink seeks to help its customers derive
meaningful benefits from the extensive resources of the Internet. In order to
maintain its focus on customer needs, the Company has leveraged the
infrastructure and software development efforts of others by leasing POP
capacity from UUNET and PSINet and licensing software from software developers.
The Company believes that this approach gives it flexibility to rapidly expand
its service coverage without the need for substantial capital expenditures. The
Company will continue to pursue this strategy so that, in addition to its sales
and marketing efforts, it can devote its principal resources to improving its
customers' experience with the Internet.

EARTHLINK'S SERVICES

EarthLink provides a variety of competitively-priced Internet services to
consumer and business customers. The Company makes these services available
through its EarthLink Network TotalAccess software package. This software
incorporates a telephone dialer and email functionality with several leading
third-party Internet access tools, including either Netscape Navigator or
Microsoft Explorer, thereby providing a functional, easy-to-use Internet access
solution for Windows 3.1, Windows 95 and Macintosh platforms. EarthLink Network
TotalAccess installation software automatically installs these and other
software applications on the customer's computer. The simple point-and-click
functionality of EarthLink Network TotalAccess, combined with its easy-to-use
registration module, permits online credit card registration, allowing new
EarthLink customers to quickly access the Internet.

The prices quoted below are subject to change.

STANDARD EARTHLINK NETWORK INTERNET SERVICES. EarthLink provides its
customers with a core set of features through its standard Internet service,
which provides unlimited access to the Internet as well as the other features
and services for a flat monthly fee of $19.95 and a one-time setup fee of $25.
The following functionalities are included in the standard EarthLink service:

INTERNET ACCESS. EarthLink provides customers with direct high-speed access
to the Internet and the World Wide Web in a manner that is designed to be
reliable and easy to use.

EARTHLINK NETWORK WEB SITE. EarthLink has developed and maintains its own
Web site containing EarthLink content and links to third-party content.
EarthLink's in-house staff actively seeks out interesting content from across
the World Wide Web and categorizes it into subject areas of interest organized
on the EarthLink Web site under topics such as "What's Hot," "Hollywood,"
"News," "Finance" and "Games." The Company's Web site provides a road map to
volumes of information and services available on the Internet. A

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user can browse the site and click on topics of interest in order to link to
desired information. In addition, through search engines and the embedded
functionality of Netscape Navigator or Microsoft Explorer, a user can conduct
customized searches for other topics.

EMAIL. Each customer is provided a mailbox, or address, from which to send
and receive email. Email functionality allows customers to exchange an unlimited
number of multimedia text, graphics, audio and video messages with other
EarthLink customers as well as with non-EarthLink Internet users.

PERSONAL WEB SITES. Each EarthLink customer is provided two megabytes of
disk space on the Company's Web server to create his or her own Web home page.
This enables each customer to participate in the Internet community by
personally adding content to the World Wide Web.

PUBLICATIONS. EarthLink publishes BLINK, a monthly newsletter, which it
mails to each of its customers. Through this publication, the Company provides
its customers with useful information, such as tips on how to search for certain
categories of information on the Internet and information regarding new
EarthLink service offerings, new Internet sites and other items of interest.
This publication is also available as an online feature, updated daily, on the
EarthLink home page. Additionally, the Company's founder, Sky Dayton, has
authored and published a booklet entitled "Getting the Most Out of EarthLink,"
which the Company provides its new customers subscribing through dial-up sales
and provides to all other customers upon request.

CHAT. Chat enables customers to "talk" with one another in typed text in
real time, one-on-one or in groups known as chat rooms.

PREMIUM EARTHLINK NETWORK SERVICES. In addition to its standard service,
the Company offers a variety of premium services, including the following:

BUSINESS WEB SITES. The Company provides space on its Web server for
commercial customers to publish their own Web pages. Monthly fees for business
Web sites range from $89 to $439, plus one-time setup fees of $179 to $479,
depending on the size of the site and whether the site is a shared or unique
address. Each option is also available with an audio feature for an additional
charge. Additional charges, based on the volume of users accessing a site, may
apply.

ISDN CAPABILITY. EarthLink offers high-speed ISDN Internet access
communication lines on a nationwide basis. ISDN provides a faster, more
efficient method for communicating digital data over telephone lines. ISDN
speeds are significantly faster than conventional modem speeds (up to 128 Kbps
versus up to the current maximum of 33.6 Kbps). The monthly ISDN service charge
is $35 for the first 100 channel hours and $1 for each additional channel hour.
A one-time setup fee of $50 is also charged.

FRAME RELAY CAPABILITY. Frame relay enables direct, high-speed continuous
connection of an organization's internal local area network to the Internet
using dedicated circuits at speeds ranging from 56 Kbps to 1,536 Kbps. This
service enables businesses to connect an entire local area network or high-end
workstation to the Internet and provides the fastest data transfer rate
generally available. Frame relay service fees range from $335 to $1,675 per
month depending on access speeds, data throughput and other data transfer
metrics. One-time setup fees range from $495 to $1,995.

MULTIPLAYER INTERNET GAMES. The Company recently introduced The Arena, a
multiplayer Internet games service that allows EarthLink and non-EarthLink users
to play multimedia games through the EarthLink Network for an hourly fee. The
Company creates an incentive for non-EarthLink users to subscribe to EarthLink
by charging them a slightly higher fee to participate in The Arena.

SUPPLEMENTAL SERVICES. To augment its standard and premium services, the
Company provides its customers with the following supplemental services:

ADDITIONAL MAILBOXES. The Company provides additional mailboxes for a per
mailbox setup fee of $9.95 and a monthly service fee of $4.95 for those
customers who require more than one mailbox for colleagues, employees or family
members.

DOMAIN NAME REGISTRATION. EarthLink provides unique domain names for those
customers who prefer an individualized address. Instead of
"[email protected]," the user Joe Smith may prefer the name

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"[email protected]." Or a business user may find greater marketing presence by
having a domain name in the name of his business, such as "[email protected]."
EarthLink charges $75 to assist in establishing unique domain names for
customers. Customers then pay an annual renewal fee to an Internet domain
registration agency.

800 SERVICE. EarthLink provides 800 number dial-up service for customers
who do not have access to a local POP. EarthLink charges customers $24.95 per
month for five hours of 800 number service plus a one-time setup fee of $25.00.
Additional hours are $4.95 per hour.

TECHNICAL DEVELOPMENT AND SERVICE ENHANCEMENT

EarthLink places significant emphasis on expanding and refining its services
to enhance its customers' Internet experience. EarthLink's technical staff is
engaged in a variety of technical development and service enhancement
activities, including improvement of the functionality of the Company's
EarthLink Network TotalAccess software and reviewing new third-party software
products for potential incorporation into TotalAccess. EarthLink also regularly
updates and expands the online services provided through the EarthLink Web site.
These activities include organizing Web content and the development of online
guides, help screens and other user services.

The Company anticipates the near-term release of the following services:

PERSONALIZED START PAGE. When customers "sign on" to EarthLink, they
generally begin their Internet session at the EarthLink home page and proceed
from there to the other sites and services of their choice. A "personalized
start page," which the Company plans to introduce in early 1997, will allow
customers to customize the page that first appears when they log on to the
EarthLink Network. For example, a customer may include short-cuts to favorite
Web sites, find advertisements targeted to the customer's interests
automatically displayed, change the "look and feel" of the start page and
otherwise tailor the start page to accomodate his or her personal preferences.

PREMIUM SERVICE OFFERINGS. The Company is engaged in ongoing efforts to
provide its customers with access to premium services, such as the Wall Street
Journal online newspaper and the ESPN sports service. The Company intends to
bundle these third-party premium services in packages and offer them to its
customers at discounted rates. These services will be billed directly to the
user's EarthLink account rather than separately by the provider of the premium
services, and will not require EarthLink customers to establish separate user
names and passwords to access the premium services.

ONLINE COMMERCE. The Company recently opened the EarthLink online store,
which offers EarthLink branded merchandise that online shoppers may purchase by
placing an order through the EarthLink Network via an online credit card
transaction. The Company intends to further develop its systems for offering
electronic retail services by establishing an online mall through which it can
"lease space" to businesses to advertise and sell their products and services.

MARKETING

As of September 30, 1996, the Company marketed and sold its services through
its sales and marketing department comprised of 92 employees. EarthLink's sales
and marketing efforts consist of the following programs:

ADVERTISING. The Company advertises its services in print media and on
radio. Included in the advertisement is a toll-free 800 number to contact the
Company's internal sales staff. When a potential customer calls the Company's
sales staff, the customer is assigned a user name and password. Subsequently,
the new customer is sent a copy of EarthLink Network TotalAccess, which the
customer uses to log on to the Company's system.

AFFINITY MARKETING PROGRAM. EarthLink's affinity marketing program promotes
the Company through the distribution of the EarthLink Network TotalAccess
software package by its affinity marketing partners.

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These partners typically bundle EarthLink Network TotalAccess disks with their
own goods or services. Marketing partners include MacMillan Publishing USA,
Activision, Inc., Micro Warehouse Incorporated, Adobe Systems, Inc., United
Airlines, Inc., Iomega Corp., CompUSA, Inc. and Best Buy Co., Inc.

A significant number of EarthLink's customers have been generated through
its relationships with its affinity marketing partners, and the Company believes
that its affinity marketing relationships will continue to account for a
significant number of new customers. There can be no assurance, however, that
the Company's current affinity marketing partners will continue to distribute
the Company's software or will continue to generate new customers for the
Company's services. The Company's inability to maintain its affinity marketing
relationships or establish new affinity marketing relationships could result in
delays and increased costs in expanding its customer base, which could, in turn,
have a material adverse effect on the Company.

CUSTOMER REFERRAL PROGRAM. The Company believes that one of its most
important marketing tools is its existing customers. In order to encourage
customers to refer other users, the Company currently waives one month of
service fees per referred customer.

OTHER MARKETING ACTIVITIES. EarthLink maintains a presence at national
trade shows such as Comdex, MacWorld and OnLine Expo, as well as local and
regional trade shows. Additionally, the Company markets through computer,
Internet and related publications, and bundles EarthLink Network TotalAccess
with a few of these publications, either as disks that contain only the
EarthLink Network TotalAccess software package or as CD-ROMs that may include
numerous other software applications. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Potential Fluctuations in
Quarterly Results" for additional information concerning a marketing agreement
with NMC.

CUSTOMERS, POPS AND NETWORK INFRASTRUCTURE

As of December 1, 1996 the Company had approximately 200,000 customers.

The Company presently provides its customers with Internet access primarily
through UUNET's nationwide system of POPs. Substantially all of the Company's
customers access the EarthLink Network and the Internet by dialing into local
POPs. Of these, the Company owns 20 POP sites in California and currently offers
additional access through 336 UUNET POPs, to which it has access on a
non-exclusive basis. The following map depicts the Company's POP network, as of
October 31, 1996:

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[MAP]

Not reflected on this map are the approximately 225 POPs maintained by
PSINet, through which the Company has agreed to lease POP capacity on a
non-exclusive basis. Some of the PSINet POPs became accessible to certain of the
Company's customers in January 1997. The Company is dependent on UUNET (and in
the future may also be dependent on PSINet) to continue to provide the Company's
customers with access to the Internet through its system of POPs. The inability
or unwillingness of either or both of these third-party network providers to
permit POP access to EarthLink's customers, or the Company's inability to secure
alternative POP arrangements, could have a material adverse effect on the
Company. See "Risk Factors -- Dependence on Third-Party Network Providers" and
"Risk Factors -- Dependence on Network Infrastructure; Capacity; Risk of System
Failure; Security Risks."

For customers located in a geographic area not presently serviced by a local
POP, the EarthLink Network can be accessed by a toll-free number for which the
Company bills customers on an hourly usage basis. The Company's POP sites are
connected to the Internet primarily through its network hub in Los Angeles. The
Company's network hub is in turn connected directly to the Internet via leased
high-speed fiber optic data lines. The Company intends to relocate its network
hub from Los Angeles to Pasadena. See "-- Facilities" and "Risk Factors --
Dependence on Network Infrastructure; Capacity; Risk of System Failure; Security
Risks."

The Company does not presently maintain redundant or backup Internet
services or backbone facilities or other redundant computing and
telecommunication facilities. Any accident, incident or system failure that
causes interruptions in the Company's operations could have a material adverse
effect on the Company's ability to provide Internet services to its customers,
and, in turn, on the Company.

CUSTOMER AND TECHNICAL SUPPORT

The Company believes that reliable customer and technical support is
critical to retaining existing and attracting new customers. The Company
currently provides the following types of customer and technical support: (i)
toll-free, live telephone assistance available seven days a week, 24 hours a
day; (ii) email-based

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assistance available seven days a week, 24 hours a day; (iii) help sites and
Internet guide files on the EarthLink Web site; (iv) automated "fax back" and
"fax on demand" assistance; and (v) printed reference material. Additionally,
the Company provides dedicated support for its business customers.

In order to continue to improve its support services and to deliver those
services in a more timely and cost-effective manner, the Company is currently
expanding its call center facilities and installing new call management database
software. The Company also intends to purchase new call center hardware and
software.

The Company's growth has placed, and is expected to continue to place, a
significant strain on its managerial, operational, financial and information
system resources. Demand on the Company's network infrastructure, technical
staff and resources has grown rapidly with the Company's expanding customer
base, and the Company has experienced difficulties satisfying the demand for its
Internet services. There can be no assurance that the Company's infrastructure,
information systems, technical staff and resources will be adequate to
facilitate the Company's growth. See "Risk Factors -- Risks Associated with
Management of Potential Growth."

SUPPLIER RELATIONSHIPS

The Company is dependent on certain third-party suppliers of hardware
components. Certain components used by the Company in providing its network
services are currently acquired from limited sources. The Company also depends
on third-party software vendors to provide the Company with much of its Internet
software, including Netscape Navigator and Microsoft Explorer, the World Wide
Web browser software that the Company licenses from Netscape and Microsoft,
respectively. Failure of the Company's suppliers to provide components and
products in the quantities, at the quality levels or at the times required by
the Company, or an inability by the Company to develop alternative sources of
supply if required, could materially adversely affect the Company's ability to
effectively support the growth of its customer base in a timely manner and
result in delays in and increase its costs of expansion. Moreover, because
Netscape Navigator and Microsoft Explorer are the two most widely used Web
browsers, the failure of Netscape or Microsoft to continue to provide World Wide
Web browser software to the Company could have a material adverse effect on the
Company.

COMPETITION

The Internet services market in which the Company operates is extremely
competitive, and the Company expects competition in this market to intensify in
the future. The Company's current and prospective competitors include many large
companies that have substantially greater market presence and financial,
technical, marketing and other resources than the Company. The Company competes
(or in the future is expected to compete) directly or indirectly with the
following categories of companies: (i) national and regional ISPs, such as BBN,
IDT, MindSpring, NETCOM, PSINet and UUNET; (ii) established online services such
as America Online, CompuServe, Prodigy and the Microsoft Network; (iii) computer
software and technology companies such as Microsoft; (iv) national
telecommunications companies, such as AT&T, MCI and Sprint; (v) RBOCs; (vi)
cable operators, such as Comcast, TCI and Time Warner; and (vii) nonprofit or
educational ISPs.

The entry of new participants from these categories and the potential entry
of competitors from other categories (such as computer hardware manufacturers)
would result in substantially greater competition for the Company. The ability
of these competitors or others to bundle services and products with Internet
connectivity services could place the Company at a significant competitive
disadvantage. In addition, competitors in the telecommunications industry may be
able to provide customers with reduced communications costs in connection with
their Internet access services, reducing the overall cost of Internet access and
significantly increasing pricing pressures on the Company. Moreover, certain of
the Company's online competitors, including America Online, the Microsoft
Network and Prodigy, have recently introduced unlimited access to the Internet
and their proprietary content at flat rates that are equal to the Company's flat
rate, and do not require a set-up fee. Certain of the RBOCs have also introduced
competitive flat-rate pricing for unlimited

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access (without a set-up fee) for at least some period of time. As a result,
competition for active users of Internet services has intensified. There can be
no assurance that the Company will be able to offset the adverse effect on
revenues of any necessary price reductions resulting from competitive pricing
pressures by increasing the number of its customers, by generating higher
revenue from enhanced services, by reducing costs or otherwise. See "Risk
Factors -- Competition."

The Company believes that its ability to compete successfully in the
Internet services market depends on a number of factors, including market
presence; the adequacy of the Company's customer and technical support services;
the capacity, reliability and security of its network infrastructure; the ease
of access to and navigation of the Internet provided by the Company's services;
the pricing policies of the Company, its competitors and its suppliers; the
timing of introductions of new services by the Company and its competitors; the
Company's ability to support existing and emerging industry standards; and
industry and general economic trends. There can be no assurance that the Company
will have the financial resources, technical expertise or marketing and support
capabilities to compete successfully.

PROPRIETARY RIGHTS

GENERAL. The Company believes that its success is dependent in part on its
technology and its continuing right to use such technology. The Company relies
on a combination of copyright, trademark and trade secret laws and contractual
restrictions to establish and protect its technology. It is the Company's policy
to require employees and consultants and, when possible, suppliers to execute
confidentiality agreements upon the commencement of their relationships with the
Company. There can be no assurance that the steps taken by the Company will be
sufficient to prevent misappropriation of its technology and other proprietary
property or that the Company's competitors will not independently develop
technologies that are substantially equivalent or superior to the Company's
technology.

There can be no assurance that third parties will not assert that
EarthLink's services infringe their proprietary rights. From time to time, the
Company has received communications from third parties alleging that certain of
the names or marks for the Company's services infringe the trademarks of such
third parties. To date, no such claims have had an adverse effect on the
Company's ability to market and sell its services. However, there can be no
assurance that those claims will not have an adverse effect in the future or
that other parties will not assert infringement claims against the Company in
the future with respect to current or future services. Such claims could result
in substantial costs and diversion of resources even if ultimately decided in
favor of the Company and could have a material adverse effect on the Company,
particularly if judgments on such claims are adverse to the Company. In the
event a claim is asserted alleging that the Company has infringed the
intellectual property or information of a third party, the Company may be
required to seek licenses to continue to use such intellectual property. There
can be no assurance, however, that such licenses would be offered or obtained on
commercially reasonable terms, if at all, or that the terms of any offered
licenses will be acceptable to the Company. The failure to obtain the necessary
licenses or other rights could have a material adverse effect on the Company.

LICENSES. EarthLink has obtained authorization, typically in the form of a
license, to distribute third-party software incorporated in the EarthLink
Network TotalAccess software product for Windows 3.1, Windows 95 and Macintosh
platforms. Applications licensed by the Company include Netscape Navigator (the
initial term of the license for which expires in December 1997 and thereafter
automatically renews for additional one-year terms unless either party
terminates the license on 120 days notice), Microsoft Explorer (the initial term
of the license for which expires in August 1998 and thereafter automatically
renews for additional one-year terms, although either party may terminate the
license at any time on 30 days notice), and MacTCP software from Apple (the
current term of the license for which expires on December 31, 1997 thereafter
and automatically renews for additional one-year terms unless either party
terminates the license on twelve-month notice). The only software in the
EarthLink Network TotalAccess package that is developed by the Company is the
front-end program and the installation/registration program. The Company
currently

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intends to maintain or negotiate renewals of existing software licenses and
authorizations. The Company may want or need to license other applications in
the future. The failure to renew existing software licenses and authorizations
or license other applications could have a material adverse effect on the
Company.

TRADEMARKS. "EarthLink Network-Registered Trademark-," "EarthLink Network
TotalAccess-TM-," "bLink-TM-," "The Arena-TM-" and the EarthLink logo are
trademarks of the Company. This Prospectus includes trademarks of companies
other than the Company.

GOVERNMENT REGULATION

The Company provides Internet services, in part, through data transmissions
over public telephone lines. These transmissions are governed by regulatory
policies establishing charges and terms for wire line communications. The
Company currently is not subject to direct regulation by the FCC or any other
governmental agency, other than regulations applicable to businesses generally.
However, in the future the Company could become subject to regulation by the FCC
or another regulatory agency as a provider of basic telecommunications services.
For example, a number of long distance telephone carriers recently filed a
petition with the FCC seeking a declaration that Internet telephone service is a
"telecommunications service" subject to common carrier regulation. Such a
declaration, if enacted, would create substantial barriers to the Company's
entry into the Internet telephone market. The FCC has requested comments on this
petition, but has not set a deadline for issuing a final decision. Also, a
number of local telephone companies have asked the FCC to levy access charges on
"enhanced service providers," which may be deemed to include ISPs. Although the
Chairman of the FCC has indicated his opposition to levying service charges
against ISPs, local interconnection charges could be levied in the future.
Moreover, the public service commissions of certain states are exploring the
adoption of regulations that might subject ISPs to state regulation.

The recently enacted Telecommunications Act contains certain provisions that
lift, or establish procedures for lifting, certain restrictions relating to the
RBOCs' ability to engage directly in the Internet access business. The
Telecommunications Act also makes it easier for national long distance carriers
such as AT&T to offer local telephone service. In addition, the
Telecommunications Act allows the RBOCs to provide electronic publishing of
information and databases. Competition from these companies could have an
adverse effect on the Company's business. The Telecommunications Act also
imposes fines on any entity that knowingly (i) uses any interactive computer
service or telecommunications device to send obscene or indecent material to
minors; (ii) makes obscene or indecent material available to minors via an
interactive computer service; or (iii) permits any telecommunications facility
under such entity's control to be used for the purposes detailed above. The
standard for determining whether an entity acted "knowingly" has not yet been
established, although a federal district court panel recently issued a
preliminary injunction preventing enforcement of this part of the
Telecommunications Act. This decision has been appealed. See "Risk Factors --
Potential Liability."

Due to the increasing use of the Internet, it is possible that additional
laws and regulations may be adopted with respect to the Internet, covering
issues such as content, user privacy, pricing, libel, intellectual property
protection and infringement and technology export and other controls. Changes in
the regulatory environment relating to the Internet access industry, including
regulatory changes that directly or indirectly affect telecommunications costs
or increase the likelihood or scope of competition from regional telephone
companies or others, could have a material adverse effect on the Company. See
"Risk Factors -- Competition."

EMPLOYEES

As of September 30, 1996, the Company employed 463 people on a full-time
basis, including 92 sales and marketing personnel, 27 Web site and content
development personnel, 75 MIS and information technologies personnel, 197
customer and technical support representatives and 72 administrative personnel.
As of that date, the Company also employed 81 people on a part-time basis, most
of whom serve as telephone customer and technical support representatives. None
of the Company's employees are represented by a labor union, and the Company is
not a party to any collective bargaining agreement.

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FACILITIES

EarthLink's corporate headquarters are located in an 85,500-square foot
facility in Pasadena, California. The lease for this space expires June 30, 2001
and currently provides for rental payments of approximately $46,000 per month.
The Company has an option to extend this lease for an additional five years at
the then prevailing market rate. In addition to the Company's corporate
headquarters, the Company also leases approximately 7,200 square feet of office
space in Los Angeles that presently houses the Company's data center. The lease
for this space expires July 31, 1999 and currently provides for rental payments
of approximately $10,000 per month. EarthLink has signed a lease for an
additional 55,000 square feet in a facility located adjacent to its corporate
headquarters in which it plans to house its data center. The Company expects to
occupy this new space commencing February 1997 for an initial ten-year term at a
rent of $66,000 per month for the first 60 months and $77,000 per month for the
remaining 60 months. The Company has an option to extend this lease for an
additional ten years at the then prevailing market rate.

34
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the Company's
executive officers and directors:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
Sky D. Dayton............................. 25 Founder and Chairman of the Board of Directors
Charles G. Betty.......................... 39 President, Chief Executive Officer and Director
Barry W. Hall............................. 48 Vice President, Finance and Administration and Chief Financial
Officer
Robert E. Johnson, Jr..................... 44 Vice President, Sales and Marketing
David R. Tommela.......................... 57 Vice President, Operations
Brinton O.C. Young........................ 45 Vice President, Strategic Planning
Sidney Azeez (1).......................... 64 Director
Robert M. Kavner (1)...................... 53 Director
Linwood A. Lacy, Jr. (2).................. 51 Director
Paul McNulty.............................. 35 Director
Kevin M. O'Donnell (2).................... 46 Director
John W. Sidgmore.......................... 45 Director
Reed E. Slatkin (1)(2).................... 47 Director
</TABLE>

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

(1) Member of Audit Committee.

(2) Member of Compensation Committee.

SKY D. DAYTON, the founder of the Company, has served as Chairman of the
Board of Directors since the Company's inception in May 1994 and served as its
Chief Executive Officer from May 1994 until May 1996. From 1992 to 1993, he
served as co-owner of a computer-based digital imaging firm, Dayton Walker
Design. From 1991 to 1992, he served as Director of Marketing for new products
at Executive Software, a VAX/VMS utility software maker. From 1990 to 1994, Mr.
Dayton co-owned Cafe Mocha, a coffee house in Los Angeles, which he co-founded,
and was a co-owner of Joe Cafe, a coffee house in Studio City, California.

CHARLES G. BETTY has served as the President and as a director of the
Company since January 1996, and in May 1996, was named the Company's Chief
Executive Officer. From February 1994 to January 1996, Mr. Betty was a strategic
planning consultant, advising Reply Corp., Perot Systems Corporation and
Microdyne, Inc. From September 1989 to February 1994, Mr. Betty served as
President, Chief Executive Officer and a director of Digital Communications
Associates, Inc., a publicly traded network connectivity provider.

BARRY W. HALL has served as Vice President, Finance and Administration and
Chief Financial Officer of the Company since January 1996. From April 1994 to
December 1995, he was an independent management consultant. From 1989 to March
1994, Mr. Hall served as Chief Executive Officer and Chairman of California
Amplifier, Inc., a publicly traded manufacturer of microwave amplifiers. Prior
to joining California Amplifier, Inc., he served as Vice President of Finance
and Chief Financial Officer of Los Angeles Cellular Telephone Company. Mr. Hall
also worked for eight years as a certified public accountant with Arthur Young &
Company. He currently serves on the board of directors of Luther Medical
Products, Inc.

ROBERT E. JOHNSON, JR. has served as Vice President, Sales and Marketing of
the Company since February 1995. From June 1992 through January 1995, he served
as Vice President of Sales for Competence Software, Inc., a provider of
interactive training software. From 1982 to May 1992, he was employed by Real
World Software, Inc., a provider of accounting software, and served as its Vice
President of National Sales from 1990 to May 1992. In December 1994, Mr. Johnson
filed a voluntary bankruptcy petition which was dismissed in January 1996 when
Mr. Johnson and his creditors agreed upon a repayment plan.

35
<PAGE>
DAVID R. TOMMELA has served as Vice President, Operations of the Company
since December 1995. From 1973 to August 1995, he served in various capacities
for, and ultimately as the Chief Information Officer of, Southern California
Edison Company, an electric power utility.

BRINTON O.C. YOUNG has served as Vice President, Strategic Planning of the
Company since March 1996. From 1990 to 1996, Mr. Young was President of Young &
Associates, a consulting firm specializing in strategic planning for high growth
companies.

SIDNEY AZEEZ has been a director of the Company since June 1996. During the
past five years, Mr. Azeez has been a private investor. Mr. Azeez founded
Ultronic Systems Corp., which produced a stock and commodity quotation system.
He also founded American Cellular Network, Inc. and Universal Telecell, Inc.
("Unitel"), cellular telephone companies, PCS, Inc., a wireless communications
company, and several banks in Colorado and New Jersey. Mr. Azeez is a director
of Unitel and Thermal Tech Development, Inc.

ROBERT M. KAVNER has been a director of the Company since June 1996. Since
September 1996, he has served as President and Chief Executive Officer of On
Command Corporation, a provider of on demand video for the hospitality industry.
From 1994 through August 1995, he was director of business advisory services for
Creative Artist Agency. From 1984 to 1994, Mr. Kavner held several senior
management positions at AT&T, including Senior Vice President and Chief
Financial Officer, Executive Vice President of the Communications Products
Group, Chief Executive Officer of the Multimedia Products and Services Group,
President of the Computer Division, Chairman of the UNIX Systems Laboratory,
Chairman of AT&T Capital Corporation, Chairman of AT&T Paradyne Corporation and
Chairman of AT&T Venture Capital Group. Mr. Kavner also served as a member of
AT&T's Executive Committee. Mr. Kavner serves as a director of Fleet Financial
Group, Ascent Entertainment, Inc. and Tandem Computers, Inc.

LINWOOD A. LACY, JR. has been a director of the Company since June 1996.
Since October 1996, he has served as President and Chief Executive Officer of
Micro Warehouse Incorporated. From 1989 to May 1996, he served as the
Co-Chairman and Chief Executive Officer of Ingram Micro, Inc., a microcomputer
products distributor and a then wholly-owned subsidiary of Ingram Industries
Inc. From December 1993 to June 1995, Mr. Lacy was also President of Ingram
Industries Inc. From June 1995 until April 1996, he was President and CEO of
Ingram Industries Inc., and from April 1996 to May 1996 served as its Vice
Chairman. Mr. Lacy serves as a director of Ingram Industries Inc., Entex
Information Services, Inc. and Micro Warehouse Incorporated.

PAUL MCNULTY has been a Director of the Company since November 1996. Mr.
McNulty has been a Managing Director of Soros Fund Management ("SFM"), a New
York-based investment firm, since January 1996, and was a Securities Analyst at
SFM from January 1993 until January 1996. Prior thereto, Mr. McNulty was
employed as an Associate at MVP Ventures, a venture capital firm in Boston,
Massachusetts.

KEVIN M. O'DONNELL, a co-founder of the Company, has been a director of the
Company since its inception. Mr. O'Donnell is President of O'Donnell &
Associates, a venture capital firm specializing in emerging high technology
companies. In 1982, Mr. O'Donnell founded Government Technology Services, Inc.,
a reseller of computer equipment to the federal government, and from 1982 to
1990 served as its Chairman, Chief Executive Officer and President.

JOHN W. SIDGMORE has served as a director of the Company since October 1996.
He has served as President and Chief Operating Officer of MFS Communications
Company, Inc. ("MFS") since August 1996 and as a director of MFS since October
1996. MFS was acquired by WorldCom, Inc. ("WorldCom") in December 1996, and
since December 31, 1996, Mr. Sidgmore has served as a director and as the Vice
Chairman and Chief Operations Officer of WorldCom. In addition, Mr. Sidgmore
served as Chief Executive Officer and a director of UUNET from June 1994 to the
present, and also held the position of President of UUNET from June 1994 to
August 1996 and from January 1997 to the present. In 1989, he became President
and Chief Executive Officer of Intelicom Solutions Corporation (currently CSC
Intelicom), a telecommunications software company. In 1991, this company was
sold to Computer Sciences Corporation, and he remained President and Chief
Executive Officer until June 1994. From 1975 to 1989, Mr. Sidgmore

36
<PAGE>
was employed by GEIS, where he was Vice President and General Manager of GEIS
North America from 1985 to 1989. Mr. Sidgmore is a director of Saville Systems
PLC, a provider of billing software for the telecommunications industry.

REED E. SLATKIN, a co-founder of the Company, has been a director of the
Company since its inception. Mr. Slatkin is a private investor and money manager
who has invested in public and private companies for the last 15 years. Mr.
Slatkin is a director of Havenwood Ventures, Inc.

BOARD OF DIRECTORS

Currently, all directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and qualified.
Following the first meeting of its stockholders subsequent to this Offering, and
provided that there are 800 or more beneficial owners of the Common Stock, the
Company anticipates that it will seek stockholder approval to divide its Board
into three classes, each serving a staggered three-year term. See "Description
of Capital Stock--Common Stock." The Board of Directors maintains an Audit
Committee and a Compensation Committee. The Audit Committee consists of Messrs.
Azeez, Kavner and Slatkin. The Audit Committee is responsible for making
recommendations to the Board regarding the selection of independent auditors,
reviews the results and scope of audits and other services provided by the
Company's independent auditors and reviews and evaluates the Company's internal
audit and control functions. The Compensation Committee consists of Messrs.
Lacy, O'Donnell and Slatkin. The Compensation Committee is responsible for
setting cash and long-term incentive compensation for executive officers and
other key employees of the Company. The Compensation Committee also administers
the Company's 1995 Stock Option Plan.

The holders of the Company's outstanding Series A Convertible Preferred
Stock have the right to elect one director. Mr. McNulty was elected by the
holders of the Series A Convertible Preferred Stock. All outstanding shares of
the Series A Convertible Preferred Stock will automatically be converted into
Common Stock upon consummation of this Offering. In addition, pursuant to the
Note Purchase Agreement with UUNET, the Company agreed to fill a vacancy on the
Board of Directors with a designee of UUNET. Mr. Sidgmore has been designated by
UUNET pursuant to this provision.

TECHNOLOGY ADVISORY COUNCIL

The Company has established a Technology Advisory Council, the purpose of
which is to help the Company predict and overcome long-range technology barriers
and to help the Company attract talented engineers and technology executives.
The Council is chaired by Mr. Dayton, and it is intended that the Council meet
at least quarterly. Except for Mr. Dayton, the members received warrants to
purchase 7,500 shares of Common Stock which vest in equal quarterly increments
over two years and have an exercise price of $11.00 per share. Presently, the
Council consists of the following three members in addition to Mr. Dayton:

DAVID FARBER is an Alfred Fitler Moore Professor of Telecommunications
Systems holding appointments in the Computer and Information Science and
Electrical Engineering Departments at the University of Pennsylvania and is the
Director of the Center for Communications and Information Science and Policy.
Mr. Farber is a member of the boards of trustees of the Internet Society and the
Electronic Fronteir Foundation.

DR. PHILIP M. NECHES is recently retired as Group Technical Officer,
Multimedia Products Group of Lucent Technologies, Inc. He has served as Senior
Vice President and Chief Scientist of NCR Corp. and was Group Technical Officer
for NCR Corp. after its acquisition by AT&T in 1991. Dr. Neches co-founded
Teradata Corporation, a company engaged in commercial parallel computing and
large-scale relational database management systems, and served as its Vice
President and Chief Scientist.

DR. ARNO PENZIAS, a 1978 Nobel Prize recipient, is Chief Scientist at Lucent
Technologies, Inc. Previously he was head of research at Bell Laboratories.

37
<PAGE>
DIRECTOR COMPENSATION

Directors do not receive cash compensation for serving in that capacity, but
are reimbursed for the expenses they incur in attending meetings of the Board or
committees thereof. Non-employee directors are eligible to receive options to
purchase Common Stock awarded under the Company's Directors Stock Option Plan.
See "-- Directors Stock Option Plan."

EXECUTIVE COMPENSATION

The following table sets forth the total compensation, for the years ended
December 31, 1995 and 1996, of each individual who served as the Chief Executive
Officer of the Company during 1996 and each of the four other most highly
compensated executive officers of the Company for 1996. These individuals are
hereinafter referred to as the "Named Officers."

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------
ANNUAL COMPENSATION SECURITIES
NAME AND -------------------------- UNDERLYING OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (1) (#) COMPENSATION
- ----------------------------------------- --------- ----------- ------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
Sky Dayton .............................. 1996 $ 153,036 $ 70,006 -- --
Chairman (2) 1995 97,726 16,573 250,000 --
Charles G. Betty ........................ 1996 220,550 77,635 250,000 $ 24,000(3)
President and Chief Executive Officer 1995 -- -- -- --
(2)
Barry W. Hall ........................... 1996 121,567 32,092 75,000 --
Vice President, Finance and 1995 -- -- -- --
Administration and Chief Financial
Officer
David R. Tommela ........................ 1996 130,392 34,439 12,500 --
Vice President, Operations 1995 8,862 -- 37,500 --
Robert E. Johnson, Jr. .................. 1996 100,000 111,162(4) -- --
Vice President, Sales and Marketing 1995 87,578 21,646(4) 50,000 --
Brinton O.C. Young ...................... 1996 73,681 18,409 112,500 --
Vice President, Strategic Planning 1995 -- -- -- --
</TABLE>

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

(1) Except for the bonus amounts shown for Mr. Johnson, all bonus amounts for
1996 represent the maximum potential bonus subject to approval and potential
reduction by the Company's Board of Directors.

(2) Mr. Dayton served as the Company's President until January 16, 1996 when Mr.
Betty's employment commenced. Mr. Dayton served as the Company's Chief
Executive Officer until May 7, 1996 when Mr. Betty was appointed to that
position.

(3) Consists of reimbursement of travel expenses pursuant to Mr. Betty's
employment agreement.

(4) The bonus amounts shown for Mr. Johnson represent sales commissions.

38
<PAGE>
STOCK OPTION INFORMATION

The following table sets forth certain information regarding options granted
in 1996 to the executive officers named in the Summary Compensation Table above.

OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERMS (5)
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------------
NAME GRANTED (#) YEAR ($/SH) DATE 5% 10%
- -------------------------- ----------- ------------- --------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sky D. Dayton............. -- -- -- -- -- --
Charles G. Betty.......... 175,000(1) 20.6% $ 4.84 1/15/06 $ 2,858,735 $ 5,053,764
75,000(2) 8.8 11.00 9/23/06 763,172 1,703,899
Barry W. Hall............. 50,000(3) 5.9 4.84 1/07/06 816,782 1,443,933
25,000(4) 2.9 9.76 5/06/06 285,391 598,966
David R. Tommela.......... 12,500(4) 1.5 9.76 5/06/06 142,695 299,483
Robert E. Johnson, Jr..... -- -- -- -- -- --
Brinton O.C. Young........ 112,500(4) 13.3 9.76 5/06/06 1,284,258 2,695,348
</TABLE>

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

(1) Vest in equal increments of 5% per quarter over the five-year period
beginning on the date of grant, January 15, 1996.

(2) Vest in equal increments of 5% per quarter over the five-year period
beginning on the date of grant, September 24, 1996.

(3) Vest in equal increments of 5% per quarter over the five-year period
beginning on the date of grant, January 8, 1996.

(4) Vest in equal increments of 5% per quarter over the five-year period
beginning on the date of grant May 7, 1996.

(5) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date based upon an assumed offering price of $13.00 per
share. These assumptions are not intended to forecast future appreciation
of the Company's stock price. The potential realizable value computation
does not take into account federal or state income tax consequences of
option exercises or sales of appreciated stock.

The following table sets forth certain information regarding stock options
held at December 31, 1996 by the executive officers named in the Executive
Compensation section above. None of these options has been exercised.

OPTION VALUES AS OF DECEMBER 31, 1996

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS (1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sky D. Dayton............................................. 75,000 175,000 $ 839,250 $ 1,958,250
Charles G. Betty.......................................... 30,000 220,000 221,700 1,356,300
Barry W. Hall............................................. 10,000 65,000 69,300 419,700
David R. Tommela.......................................... 8,750 41,250 65,250 281,250
Robert E. Johnson, Jr..................................... 15,000 35,000 167,850 391,650
Brinton O.C. Young........................................ 11,250 101,250 36,450 328,050
</TABLE>

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

(1) The value of "in-the-money" options represents the difference between the
exercise price of stock options and the assumed initial public offering
price of $13.00.

EMPLOYMENT AGREEMENT

In January 1996, the Company entered into a two-year employment agreement
with Mr. Charles G. Betty. Under this agreement, the Company agreed to employ
Mr. Betty as its President and Chief Operating Officer at a salary of $225,000
per year plus a $24,000 a year travel allowance for Mr. Betty and his family and
such other benefits as are generally made available to other senior executives
of the Company. In May 1996,

39
<PAGE>

Mr. Betty was named the Company's Chief Executive Officer. Pursuant to his
employment agreement, Mr. Betty was also guaranteed a bonus of at least $37,500
for 1996 and was eligible to earn up to an additional $37,500 for 1996 if the
Company had a specified number of customers by year-end. The agreement further
entitles Mr. Betty, upon the attainment of performance goals, to an annual bonus
of $75,000. In addition, the agreement provides that (i) if Mr. Betty is
terminated by the Company other than for "cause" or "total disability," as
defined in the agreement, (ii) if the Company elects not to extend the term of
the employment agreement at the end of the first two-year term or any yearly
extension or (iii) if Mr. Betty terminates his employment because of a breach of
the employment agreement by the Company, he is entitled to severance
compensation equal to 100% of his then-current annual salary. In connection with
entering into the employment agreement, Mr. Betty purchased 25,000 shares of the
Common Stock at $4.84 per share, and also was granted options to purchase an
additional 175,000 shares of Common Stock at an exercise price of $4.84 per
share. In addition, in September 1996, Mr. Betty was granted options to purchase
an additional 75,000 shares of Common Stock at an exercise price of $11.00 per
share. All of Mr. Betty's options vest in equal quarterly increments of 5%
during the five-year period beginning on the respective dates of grant, January
15, 1996 and September 24, 1996. In the event of a "change in control," as
defined in the agreement, the termination of Mr. Betty by the Company other than
for cause or if Mr. Betty terminates his employment because of a breach of the
agreement by the Company, all unvested options held by Mr. Betty will vest
immediately.

1995 STOCK OPTION PLAN AND OTHER OPTION AND WARRANT ISSUANCES

The EarthLink Network 1995 Stock Option Plan (the "1995 Plan") provides for
the grant of incentive stock options to employees of the Company within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and
non-qualified stock options to employees, officers, directors and consultants of
the Company. The 1995 Plan is administered by the Compensation Committee of the
Board of Directors, which determines the terms of the options granted, including
the exercise price, the number of shares subject to option and the option
vesting period. The exercise price of all options granted under the plan must be
at least 85% of the fair market value (for non-qualified stock options) or 100%
of the fair market value (for incentive stock options) as of the date of grant.
As of September 30, 1996, options to purchase 1,028,250 shares of Common Stock
were outstanding under the 1995 Plan. In addition, as of that date the Company
had issued non-plan options and warrants to purchase an aggregate of 1,331,438
shares of Common Stock at exercise prices ranging from $0.60 to $20.00 per
share.

DIRECTORS STOCK OPTION PLAN AND OTHER DIRECTOR OPTION ISSUANCES

Under the Amended and Restated EarthLink Network, Inc. Stock Option Plan for
Directors (the "Directors Plan"), options to purchase 62,500 shares of Common
Stock may be granted to directors who do not also serve as employees of the
Company and do not beneficially own, nor are employees, directors or officers of
any entity that beneficially owns, 5% or more of the outstanding shares of the
Company's capital stock. Under the Directors Plan, grants of options to purchase
10,000 and 2,500 shares of Common Stock are automatically made to each
non-management director at the time such person first becomes a member of the
Board of Directors and at the beginning of each fiscal year of the Company,
respectively. As of September 30, 1996, there were no options to purchase shares
of Common Stock outstanding under the Directors Plan.

Prior to the adoption by the Board of Directors of the Directors Plan, the
Company issued to each of Messrs. Kavner and Lacy warrants to purchase 50,000
shares of Common Stock at an exercise price of $4.84 per share, the amount then
determined by the Board of Directors to constitute fair market value, in
consideration of Messrs. Kavner's and Lacy's agreement to serve on the Board of
Directors. These warrants vest over a five-year period from January 12, 1996,
the date of grant.

40
<PAGE>
CERTAIN TRANSACTIONS

Kevin M. O'Donnell and Reed E. Slatkin are members of the Board of Directors
of the Company, and each owns more than five percent of the Company's
outstanding Common Stock. Messrs. O'Donnell and Slatkin have participated in the
Company's financing since inception, as described below.

In December 1994, Messrs. Slatkin and O'Donnell provided a $400,000 credit
line to the Company for which each of them received warrants to purchase 75,000
shares of Common Stock at an exercise price of $1.81 per share, the amount then
determined by the Board of Directors to constitute the fair market value of the
Common Stock. Indebtedness outstanding under this line bore interest at 8.1% per
annum. The maximum amount outstanding under this line was $397,686, which was
repaid in full in September 1995.

In August 1995 and January 1996, Mr. Slatkin agreed to act as lessee
together with the Company under equipment leases of $500,000 and $1.5 million,
respectively. As consideration for this agreement, the Company issued Mr.
Slatkin warrants to purchase 50,000 shares of Common Stock at an exercise price
of $1.81 per share and 100,000 shares of Common Stock at an exercise price of
$4.84 per share, the amount then determined by the Board of Directors to
constitute the fair market value as of August 1995 and January 1996,
respectively. The Company and Mr. O'Donnell subsequently agreed to indemnify Mr.
Slatkin against certain liability arising out of these leases. As consideration
for this agreement, Mr. Slatkin transferred one-half of these warrants to Mr.
O'Donnell.

In December 1995, Mr. Slatkin guaranteed a $250,000 letter of credit as
security for the Company's lease of its Pasadena facility. In return, he
received warrants to purchase 50,000 shares of Common Stock at an exercise price
of $4.84 per share, the amount then determined by the Board of Directors to
constitute the fair market value of the Common Stock. The Company and Mr.
O'Donnell subsequently agreed to indemnify Mr. Slatkin with respect to certain
liability arising out of the letter of credit. As consideration for this
agreement, Mr. Slatkin transferred to Mr. O'Donnell one-half of these warrants.

In addition, the Company and Messrs. Dayton, O'Donnell and Slatkin are
parties to a Buy-Sell Agreement pursuant to which the Company has the first
right of refusal upon sale or transfer of shares of Common Stock by such
persons. The right will expire upon consummation of this Offering. See Note 7 to
Notes to Financial Statements.

From time to time since the Company's inception, the Company's officers,
directors and more than five percent stockholders (including certain of their
family members and affiliates) have purchased shares of Common Stock at the
weighted average per share purchase prices as follows: Charles G. Betty, 25,000
shares, $4.84 per share; Sky D. Dayton, 1,500,000 shares, $.0006 per share;
Sidney Azeez, 522,457 shares, $6.26 per share; Linwood A. Lacy, Jr., 24,810
shares, $4.84 per share; Robert M. Kavner, 20,675 shares, $4.84 per share;
Robert London, 372,032 shares, $2.16 per share; Kevin M. O'Donnell, 942,152
shares, $.84 per share; Reed E. Slatkin, 942,157 shares, $.84 per share; and
Storie Partners, L.P., 415,598 shares, $6.26 per share.

In June 1996, the Company issued $2,950,000 of its 10% Promissory Notes to
17 purchasers, including certain of its directors and more than five percent
stockholders. In connection with this financing, and as additional consideration
for the investment of these purchasers, the Company also issued warrants to
purchase 98,340 shares of Common Stock having an exercise price of $11.00 per
share. The 10% Promissory Notes are due on or before June 6, 1997 with interest
payable monthly until such date. The warrants are exerciseable for five years
commencing on the date of issuance.

The holders of $725,000 of the 10% Promissory Notes including Messrs.
Slatkin and Abbott and Storie Partners, L.P., have agreed to convert their
indebtedness into 55,767 shares of Common Stock upon consummation of this
Offering.

The following directors and more than five percent stockholders participated
in this financing: Sidney Azeez, $200,000 note, 6,667 warrants; Robert M.
Kavner, $100,000 note, 3,334 warrants; Robert S. London, $200,000 note, 6,667
warrants; Kevin M. O'Donnell, $225,000 note, 7,500 warrants; Reed E. Slatkin,
$225,000 note, 7,500 warrants; and Storie Partners, L.P., $300,000 note, 10,000
warrants.

41
<PAGE>
In September 1996, the Company sold 2,727,273 shares of its Series A
Convertible Preferred Stock to certain purchasers, including, among others,
certain directors, stockholders, the Underwriter and certain of its associates
for approximately $15,000,000 in the aggregate. In connection with this
transaction, Quantum Industrial Partners LDC and persons and entities associated
with or employed by Soros Fund Management ("SFM") received warrants to purchase
up to 100,000 shares of Common Stock at an exercise price of $11.00 per share.
Each two shares of Series A Convertible Preferred Stock will automatically
convert into one share of Common Stock upon the consummation of this Offering.

The following directors and more than five percent stockholders (including
certain of their family members and affiliates) participated in this financing
(share numbers reflect shares of Common Stock to be issued upon conversion of
the Series A Convertible Preferred Stock): Quantum Industrial Partners LDC
(933,063 shares of Common Stock and 95,300 shares of Common Stock underlying
warrants, which includes 214,545 shares of Common Stock and warrants to purchase
23,600 shares of Common Stock held by George Soros, who may be deemed to have
sole and ultimate control over SFM, in which Quantum Industrial Partners LDC has
vested investment discretion with respect to its portfolio investments, and
45,455 shares of Common Stock and 5,000 shares of Common Stock underlying
warrants held by trusts established for the benefit of certain children of Mr.
Soros); Storie Partners, L.P. (90,909 shares of Common Stock); Reed E. Slatkin
(39,273 shares of Common Stock); Sidney Azeez (15,000 shares of Common Stock);
Linwood A. Lacy, Jr. (10,000 shares of Common Stock); Robert S. London (10,000
shares of Common Stock); Paul McNulty (454 shares of Common Stock and 50 shares
of Common Stock underlying warrants); Kevin M. O'Donnell (10,000 shares of
Common Stock); and Charles G. Betty (5,000 shares of Common Stock).

John W. Sidgmore, a member of the Company's Board of Directors, also serves
as a director and as President and Chief Executive Officer of UUNET and as a
director and Vice Chairman and Chief Operations Officer of UUNET's corporate
parent, WorldCom. UUNET is the Company's primary provider of POP capacity. In
connection with the Company's and UUNET's execution of a new network services
agreement in May 1996, the Company agreed to issue warrants to UUNET to purchase
10,000 shares of Common Stock having an exercise price of $20.00 per share.

In connection with an amendment to the Company's network services agreement
with UUNET, the Company issued a $5.0 million, one-year promissory note to UUNET
and filled a vacancy on the Board of Directors with a designate of UUNET, John
W. Sidgmore. This note bears interest at prime plus 2% per annum (an effective
rate of 10.25% per annum at December 1, 1996), and will be convertible upon
consummation of this Offering into a maximum of 382,000 shares of Common Stock
at a conversion price at between $13.20 and $16.00 per share, depending on the
number of shares of Common Stock, if any, purchased in this Offering by certain
investors referred to two paragraphs above, and the public offering price of the
Common Stock in this Offering. The Company also granted UUNET registration
rights identical to those presently held by most of the Company's existing
stockholders. For the year ended December 31, 1995 and the nine-month period
ended September 30, 1996, EarthLink paid UUNET approximately $52,000 and
approximately $2.0 million for network services.

Linwood A. Lacy, Jr., a member of the Company's Board of Directors, also
serves as President and Chief Executive Officer of Micro Warehouse Incorporated
("Micro Warehouse"), one of the Company's affinity marketing partners. For the
nine-month period ended September 30, 1996, the Company paid Micro Warehouse
approximately $35,000 in bounties for new Company customers generated by Micro
Warehouse.

The Company believes that the foregoing transactions were on terms no less
favorable to the Company than could be obtained from unaffiliated parties. It is
the Company's current policy that all transactions by the Company with officers,
directors, more than five percent stockholders and their affiliates will be
entered into only if such transactions are approved by a majority of
disinterested independent directors and are on terms such directors believe are
no less favorable to the Company than could be obtained from unaffiliated
parties.

42
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of December 31, 1996 by (i) each
person or entity who is known by the Company to own beneficially more than five
percent of the Common Stock, (ii) each of the Company's directors and executive
officers, and (iii) all directors and executive officers of the Company as a
group. This table gives effect to the automatic conversion, upon consummation of
this Offering, of all of the Company's outstanding Series A Convertible
Preferred Stock and includes options, warrants and other convertible securities
that are exercisable or convertible within 60 days of December 31, 1996.

<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY SHARES BENEFICIALLY OWNED
OWNED PRIOR TO -------------------------
AND AFTER THE BEFORE THE AFTER THE
NAME AND ADDRESS OF BENEFICIAL OWNERS (1) OFFERING OFFERING OFFERING
- ---------------------------------------------------------------- ---------------- ---------- ----------
<S> <C> <C> <C>
Sky D. Dayton................................................... 1,575,000(2) 21.0% 16.5%
Kevin M. O'Donnell.............................................. 1,134,690(3) 14.9 11.8
Reed E. Slatkin................................................. 1,181,237(4) 15.5 12.3
Sidney Azeez.................................................... 544,124(5) 7.3 5.8
Charles G. Betty................................................ 70,799(6) * *
Linwood A. Lacy, Jr............................................. 44,810(7) * *
Robert M. Kavner................................................ 34,009(8) * *
Robert E. Johnson, Jr........................................... 15,000(9) * *
John W. Sidgmore................................................ 392,000(10) 5.0 4.0
Paul McNulty.................................................... 504(11) * *
Brinton O.C. Young.............................................. 26,875(12) * *
Barry W. Hall................................................... 13,750(13) * *
David R. Tommela................................................ 9,375(14) * *
Quantum Industrial Partners LDC................................. 673,063(15) 9.0 7.1
c/o Curacao Corporation Company N.V.
Kaya Flamboyan 9
Willemstad, Curacao
Netherlands Antilles
UUNET Technologies, Inc......................................... 392,000(16) 5.0 4.0
3060 Williams Drive
Fairfax, Virginia 22031
Storie Partners, L.P............................................ 529,583 7.1 5.6
One Bush Street
San Francisco, CA 94104
Robert S. London................................................ 388,699(17) 5.2 4.1
Cruttenden Roth Incorporated
809 Presidio Ave.
Santa Barbara, CA 93101
All directors and executive officers as a group (13 persons).... 5,042,173(18) 60.0% 48.5%
<FN>
- ------------
</TABLE>

* Represents beneficial ownership of less than 1% of the Common Stock.
(1) Except as otherwise indicated by footnote, the named person has sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned.
(2) Includes options to purchase 75,000 shares of Common Stock. Mr. Dayton's
address is that of the Company.

(3) Includes (i) 7,538 shares of Common Stock held by Mr. O'Donnell's son, (ii)
warrants to purchase 182,500 shares of Common Stock, and (iii) options to
purchase 38 shares of Common Stock held by Mr. O'Donnell's son. Mr.
O'Donnell disclaims beneficial ownership of the shares of Common Stock held
by his son and the shares of Common Stock issuable upon exercise of options
held by his son. Mr. O'Donnell's address is 9933 Beverly Grove Drive,
Beverly Hills, California 90210.

(4) Includes (i) warrants to purchase 182,500 shares of Common Stock and (ii)
7,428 shares of Common Stock held in trust for Mr. Slatkin's minor children.
Mr. Slatkin's address is 890 N. Kellog Avenue, Santa Barbara, California
93111.
(5) Includes (i) 302,861 shares of Common Stock held by Mr. Azeez's family and
(ii) warrants to purchase 6,667 shares of Common Stock. The address of Mr.
Azeez is c/o Unitel Cellular Communications Systems, Bayport One, Suite 400,
West Atlantic City, New Jersey 08232.
(6) Includes (i) options to purchase 38,750 shares of Common Stock and (ii)
2,049 shares of Common Stock held by Mr. Betty's father-in-law and
mother-in-law of which Mr. Betty disclaims beneficial ownership.

(7) Includes warrants to purchase 10,000 shares of Common Stock.

(8) Includes warrants to purchase 13,334 shares of Common Stock.

(9) Includes options to purchase 15,000 shares of Common Stock.

(10) Includes 10,000 shares of Common Stock issuable upon the exercise of
warrants and up to 382,000 shares of Common Stock issuable upon the
conversion of outstanding indebtedness. Mr. Sidgmore is Chief Executive
Officer and a director of UUNET and shares voting and investment power with
the other UUNET directors.

(11) Includes warrants to purchase 50 shares of Common Stock.

(12) Includes options to purchase 16,875 shares of Common Stock.

(13) Includes options to purchase 13,750 shares of Common Stock.

(14) Includes options to purchase 9,375 shares of Common Stock.

43
<PAGE>
(15) Includes warrants to purchase 66,700 shares of Common Stock. Quantum
Industrial Partners LDC ("Quantum Industrial") has vested investment
discretion with respect to its portfolio investments, including the Common
Stock, in SFM, a sole proprietorship of Mr. George Soros, over which Mr.
Soros may be deemed to have sole and ultimate control. Mr. Soros may be
deemed to be the beneficial owner of the Common Stock held by Quantum
Industrial. The shares shown exclude 214,545 shares of Common Stock and
warrants to purchase 23,600 shares of Common Stock held directly by Mr.
Soros and 45,455 shares of Common Stock and warrants to purchase 5,000
shares of Common Stock held by trusts established for the benefit of certain
children of Mr. Soros. The shares shown also exclude 42,727 shares of Common
Stock and warrants to purchase 4,700 shares of Common Stock held by certain
managing directors and other employees of SFM, of which Mr. Soros disclaims
beneficial ownership.

(16) Includes 10,000 shares of Common Stock issuable upon the exercise of
warrants and up to 382,000 shares of Common Stock issuable upon the
conversion of outstanding indebtedness.

(17) Includes warrants to purchase 6,667 shares of Common Stock.

(18) Includes (i) options and warrants to purchase 573,839 shares of Common
Stock and (ii) 319,876 shares of Common Stock owned by family members or
affiliates of certain members of the group, (iii) options and warrants held
by family members or affiliates of certain members of the group to purchase
38 shares of Common Stock and (iv) up to 382,000 shares of Common Stock
issuable upon the conversion of outstanding indebtedness held by UUNET, of
which Mr. Sidgmore serves as Chief Executive Officer and a director.

44
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of (i) 50 million
shares of Common Stock, $0.01 par value per share, and (ii) 10 million shares of
Preferred Stock, $0.01 par value per share, of which there is one authorized
series, Series A Convertible Preferred Stock, consisting of 2,727,273 authorized
shares. As of September 30, 1996, there were 6,022,724 shares of Common Stock
outstanding and 2,727,273 shares of Series A Convertible Preferred Stock. The
shares of Series A Convertible Preferred Stock will automatically convert into
1,363,624 shares of Common Stock upon consummation of this Offering. In
addition, the holders of $725,000 of the Company's outstanding indebtedness have
agreed to convert such indebtedness into 55,767 shares of Common Stock upon
consummation of this Offering. The following summary is qualified in its
entirety by reference to the Company's Amended and Restated Certificate of
Incorporation, which is filed as an exhibit to the Registration Statement of
which this Prospectus is a part.

COMMON STOCK

Under the Delaware General Corporation Law and the Company's Amended and
Restated Certificate of Incorporation, holders of Common Stock are entitled to
one vote per share on all matters submitted to a vote of the stockholders,
including the election of directors. The Company's Amended and Restated
Certificate of Incorporation provides for cumulative voting rights in the
election of directors, meaning that in such elections (i) each stockholder is
entitled to cast such number of votes as is equal to the product of the number
of shares owned by such stockholder multiplied by the number of directors
standing for election and (ii) each stockholder may cast all of such votes for a
single director or may distribute them among any two or more candidates for
election as such stockholder chooses. Following the first meeting of its
stockholders subsequent to this Offering, and provided that there are 800 or
more beneficial owners of the Common Stock, the Company anticipates that it will
seek stockholder approval to eliminate cumulative voting. The Common Stock
carries no preemptive rights and is not convertible, redeemable or assessable.
The holders of Common Stock are entitled to dividends in such amounts and at
such times as may be declared by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." Upon the liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to receive
ratably the net assets of the Company available after payment or provision for
payment of all debts and other liabilities subject to prior rights of holders of
Preferred Stock then outstanding, if any. All shares of Common Stock outstanding
immediately following this Offering will be fully paid and non-assessable.

Pursuant to Section 2115 of the California Corporations Code (the
"California Law"), a corporation incorporated in a state other than California
(such as the Company, which is incorporated in Delaware) may nevertheless be
subject to certain of the provisions of the California Law (as specified in
Section 2115 of the California Law) applicable to California corporations
(commonly designated a "Quasi-California Corporation") if more than one-half of
its outstanding voting securities are owned of record by persons having
addresses in California and more than half of its business is conducted in
California (generally, the average of its property factor, payroll factor and
sales factor (as defined in Sections 25129, 25132 and 25134 of the California
Revenue and Taxation Code) is more than 50 percent during its latest full income
year). Such a foreign corporation will not be treated as a Quasi-California
Corporation, however, if it has outstanding securities trading on the Nasdaq
National Market and has at least 800 holders of its equity securities as of the
record date of its most recent annual shareholders' meeting. Prior to this
Offering, a substantial majority of the Company's outstanding voting securities
were owned of record by persons having addresses in California. It is expected
that such percentage will be reduced as a result of this Offering. To the
extent, however, that the Company meets the requirements set forth in Section
2115 of the California Law, the Company could become a Quasi-California
Corporation subject to the California Law which, among other things, requires
cumulative voting and is more restrictive than the Delaware General Corporation
Law concerning dividends and other distributions to stockholders and, generally
with respect to a Quasi-California Corporation, does not permit classification
of the Board of Directors.

45
<PAGE>
PREFERRED STOCK

The Company's Amended and Restated Certificate of Incorporation authorizes
the issuance of 10 million shares of Preferred Stock, all of which will be
available for future issuance upon consummation of this Offering. Preferred
Stock may be issued from time to time in one or more series, and the Board of
Directors, without further approval of the stockholders, is authorized to fix
the dividend rights and terms, conversion rights, voting rights, redemption
rights and terms, liquidation preferences, sinking funds and any other rights,
preferences, privileges and restrictions applicable to each such series of
Preferred Stock. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could, among
other things, adversely affect the voting power of the holders of Common Stock
and, under certain circumstances, make it more difficult for a third party to
gain control of the Company, discourage bids for the Common Stock at a premium,
or otherwise adversely affect the market price of the Common Stock.

CERTAIN CHARTER AND BYLAW PROVISIONS

Following the consummation of this Offering, the Company will be subject to
the "business combination" statute of the Delaware General Corporation Law. This
statute prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner,
such as the approval of a majority of certain members of the Board of Directors.
The term "business combination" includes mergers and stock and asset sales. An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of the
corporation's voting stock. The effect of this statute could, among other
things,
make it more difficult for a third party to gain control of the Company,
discourage bids for the Common Stock at a premium or otherwise adversely affect
the market price of the Common Stock.

LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY; INDEMNIFICATION

The Company has included in its Amended and Restated Certificate of
Incorporation provisions that limit the personal liability of its officers and
directors for monetary damages for breach of their fiduciary duty of directors,
except for liability that cannot be eliminated under the Delaware General
Corporation Law. The Amended and Restated Certificate of Incorporation provides
that, to the fullest extent provided by the Delaware General Corporation Law,
directors of the Company will not be personally liable for monetary damages for
breach of their fiduciary duty as directors. The Delaware General Corporation
Law does not permit a provision in a corporation's certificate of incorporation
that would eliminate such liability (i) for any breach of their duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (iii) for
any unlawful payment of a dividend or unlawful stock repurchase or redemption,
as provided in Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal benefit.

While these provisions provide directors with protection from awards for
monetary damages for breaches of their duty of care, they do not eliminate such
duty. Accordingly, these provisions will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care. The provisions described above apply to an
officer of a corporation only if he or she is a director of such corporation and
is acting in his or her capacity as director, and do not apply to the officers
of the corporation who are not directors.

The Company's Bylaws provide that, to the fullest extent permitted by the
Delaware General Corporation Law, the Company may indemnify its directors,
officers and employees. The Bylaws further provide that the Company may
similarly indemnify its other employees and agents. In addition, the Company
anticipates that each director will enter into an indemnification agreement with
the Company pursuant to which the Company will indemnify such director to the
fullest extent permitted by the Delaware General Corporation

46
<PAGE>
Law. At present, there is no pending litigation or proceeding involving a
director or officer of the Company in which indemnification is required or
permitted, and the Company is not aware of any threatened litigation or
proceeding that may result in a claim for such indemnification.

REGISTRATION RIGHTS

The holders of substantially all of the shares of Common Stock and all of
the shares of Series A Convertible Preferred Stock outstanding prior to this
Offering (including the Company's founder and Chairman of the Board and its
President and Chief Executive Officer) as well as certain holders of warrants
and convertible debt are parties to registration rights agreements with the
Company. These agreements provide incidental or "piggyback" registration rights
that allow such holders, under certain circumstances, to include shares of
Common Stock in registration statements initiated by the Company or other
stockholders. These agreements also permit demand registrations on Form S-3
registration statements at such time when the Company is eligible to register
its capital stock on such form. These agreements do not permit holders of
registration rights to include their shares of Common Stock in this Offering. In
addition, the Company has agreed to register 20,000 shares of Common Stock to be
issued pursuant to a consulting agreement in equal increments in January 1998
and January 1999. See "Shares Eligible for Future Sale."

TRANSFER AGENT AND REGISTRAR

The Company's Transfer Agent and Registrar is American Stock Transfer &
Trust Company.

47
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to this Offering, there has been no market for the Common Stock.
Future sales of substantial amounts of Common Stock in the public market could
adversely affect market prices prevailing from time to time. Sales of
substantial amounts of Common Stock in the public market after various
restrictions lapse could adversely affect the prevailing market price and the
ability of the Company to raise equity capital in the future.

Upon the completion of this Offering, 9,442,115 shares of Common Stock will
be outstanding. Of these shares, the 2,000,000 shares of Common Stock sold in
this Offering will be freely tradable without restriction under the Securities
Act, except that shares purchased by "affiliates" of the Company, as that term
is defined in Rule 144 under the Securities Act, may generally be sold only in
compliance with the limitations of Rule 144.

The remaining 7,442,115 shares were issued and sold by the Company in
private transactions and may be publicly sold only if registered under the
Securities Act or sold in accordance with an applicable exemption from
registration, such as those provided under Rules 144 and 701 under the
Securities Act. Of such shares, 2,220,590 shares will be immediately available
for sale upon completion of this Offering (subject to the volume limitations of
Rule 144) and 2,054,815 shares will become eligible for sale during 1997.
However, the holders of 7,362,056 shares of Common Stock (including shares of
Common Stock issuable upon conversion of the Series A Convertible Preferred
Stock) and warrants, options and convertible debt securities exercisable or
convertible into an aggregate of 2,154,801 shares of Common Stock (including all
of the Company's directors and officers) have entered into lock-up agreements
under which they have agreed not to offer, sell or otherwise dispose of any such
shares of Common Stock, any such options or warrants to acquire shares of Common
Stock or any such securities convertible into shares of Common Stock (or any
shares of Common Stock issuable upon exercise or conversion of such securities)
owned by them for a period of one year after the date of this Prospectus,
without the prior written consent of the Underwriter. The Company has entered
into a similar agreement, except that the Company may grant additional options
under its 1995 Stock Option Plan or issue shares of Common Stock under
outstanding options, warrants and convertible securities.

The holders of substantially all of the shares of the shares of Common Stock
and all of the shares of Series A Convertible Preferred Stock outstanding prior
to this Offering (including the Company's founder and Chairman and its President
and Chief Executive Officer) as well as certain holders of warrants and
convertible debt are parties to registration rights agreements with the Company
that provide incidental or "piggyback" registration rights that allow such
holders, under certain circumstances, to include shares of Common Stock in
registration statements initiated by the Company or other stockholders. Such
registration rights agreements also permit demand registrations on Form S-3
registration statements at such time as the Company is eligible to register
securities on such form. The number of shares sold in the public market could
increase if such rights are exercised. See "Description of Capital Stock --
Registration Rights."

Approximately 90 days after the date of this Prospectus, the Company intends
to file a Registration Statement on Form S-8 covering shares issuable under the
Company's 1995 Stock Option Plan (including shares subject to then outstanding
options under such plans), thus permitting the resale of such shares in the
public market without restriction under the Securities Act after expiration of
the applicable lock-up agreements.

Following the expiration of the 90-day period following the date of this
Prospectus, 1,028,250 shares of Common Stock subject to outstanding options will
become eligible for sale, to the extent they are vested, without restriction in
the public market pursuant to Rule 701; however, 512,750 of such shares will be
subject to lock-up agreements for an additional 275 days.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least two
years (including the holding period of any prior owner, except an affiliate) is
entitled to sell within any three month period commencing 90 days after the date
of this Prospectus, a number of shares that does not exceed the greater of (i)
one percent of the number of shares of Common Stock then outstanding or (ii) the
average weekly trading volume of the Common Stock during the four

48
<PAGE>
calendar weeks preceding the required filing of a Form 144 with respect to such
sale. Sales under Rule 144 are generally subject to certain manner of sale
provisions and notice requirements and to the availability of current public
information about the Company.

The Securities and Exchange Commission (the "Commission") has recently
proposed reducing the initial Rule 144 holding period to one year. There can be
no assurance as to if or when such rule changes will be enacted. If enacted,
such modifications will have a material effect on the times when shares of the
Company's Common Stock become eligible for resale.

49
<PAGE>
UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1997 (the "Underwriting Agreement"), the
Underwriter has agreed to purchase from the Company 2,000,000 shares of Common
Stock at the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus.

The Underwriting Agreement provides that the obligations of the Underwriter
are subject to certain conditions precedent and that the Underwriter will be
obligated to purchase all of the shares of Common Stock offered hereby if any
are purchased.

The Company has granted the Underwriter an option, expiring at the close of
business on the 30th day after the date of this Prospectus, to purchase up to
300,000 additional shares of Common Stock at the initial public offering price
less the underwriting discounts and commissions as set forth on the cover page
of this Prospectus. Such option may be exercised only to cover over-allotments
in the sale of the shares of Common Stock.

The Company has been advised by the Underwriter that the Underwriter
proposes to offer the Common Stock to the public initially at the offering price
set forth on the cover page of this Prospectus. The Underwriter may allot to
certain dealers a concession of $ per share, and the Underwriter and such
dealers may re-allow a concession of $ per share on sales to certain other
dealers. After the initial public offering, the public offering price and
concessions to dealers may be changed by the Underwriter.

The Company, the holders of 7,362,056 shares of Common Stock (including
shares issuable upon conversion of the Series A Convertible Preferred Stock) and
warrants, options and convertible debt securities exercisable or convertible
into an aggregate of 2,154,801 shares of Common Stock (including all of the
Company's officers and directors) have entered into lock-up agreements under
which they have agreed, subject to limited exceptions, not to offer, issue, sell
or otherwise dispose of any such shares of Common Stock, any such options or
warrants to acquire shares of Common Stock or any such securities convertible
into shares of Common Stock (or any shares of Common Stock issuable upon
exercise or conversion of such securities) owned by them for a period of one
year after the date of this Prospectus, without the prior written consent of the
Underwriter. See "Shares Eligible for Future Sale."

The Company has agreed to indemnify the Underwriter against certain
liabilities, including civil liabilities under the Securities Act, or to
contribute to payments which the Underwriter may be required to make with
respect thereto.

Prior to this Offering, there has been no public market for the Common
Stock. The initial public offering price will be determined through negotiations
between the Company and the Underwriter and may not be indicative of the market
price of the Common Stock following this Offering. Among the factors to be
considered in such negotiations are an estimate of the business potential of the
Company, the present state of the Company's development, an assessment of the
Company's management, prevailing market conditions, the demand for similar
securities of comparable companies and other factors deemed relevant.

At the request of the Company, the Underwriter is reserving up to 200,000
shares of Common Stock (10% of the shares to be offered) for sale to employees,
directors and friends of the Company. The number of shares available for sale to
the general public in this Offering will be reduced to the extent such persons
purchase such reserved shares. Shares purchased by employees, directors and
friends of the Company will be at the public offering price as set forth on the
cover page of this Prospectus. Any reserved shares not so purchased will be
offered by the Underwriters to the general public in this Offering.

As of December 31, 1996, the Underwriter and certain officers and employees
of the Underwriter held 113,635 shares of Series A Convertible Preferred Stock
(which will be converted into 56,815 shares of Common Stock upon completion of
the offering). In addition, two minority shareholders and directors of the
Underwriter's corporate parent own an aggregate of 13,636 shares of Series A
Convertible Preferred Stock

50
<PAGE>
which will be converted into 6,817 shares of Common Stock upon completion of the
offering. Such Series A Convertible Preferred Stock was purchased in September
1996 for $5.50 per share. For a period of one year following the date of this
Prospectus, the Underwriter and the other holders of Series A Convertible
Preferred Stock described in this paragraph will not sell, transfer, assign,
pledge or hypothecate the Series A Convertible Preferred Stock or the Common
Stock issuable upon conversion of the Series A Convertible Preferred Stock,
other than to the Underwriter or an officer of the Underwriter.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Hunton & Williams, Atlanta, Georgia.
Certain legal matters in connection with the Offering will be passed upon for
the Underwriter by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.

EXPERTS

The financial statements as of December 31, 1994 and 1995 and September 30,
1996 and for the period from inception through December 31, 1994, the year ended
December 31, 1995 and the nine months ended September 30, 1996 included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed a registration statement on Form S-1 (the
"Registration Statement") with the Commission under the Securities Act in
respect of the Common Stock offered hereby. This Prospectus omits certain
information contained in the Registration Statement as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits thereto. Statements herein
concerning the contents of any contract or other document filed with the
Commission as an exhibit to the Registration Statement are not necessarily
complete and are qualified in all respects by such reference. Copies of the
Registration Statement, including all exhibits and schedules thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of such
material can be obtained from the Public Reference Section of the Commission
upon payment of certain fees prescribed by the Commission. The Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of that site is http://www.sec.gov.

51
<PAGE>
EARTHLINK NETWORK, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Accountants......................................... F-2

Balance Sheet as of December 31, 1994 and 1995 and September 30, 1996..... F-3

Statement of Operations for the period from inception (May 26, 1994)
through December 31, 1994, the year ended December 31, 1995 and the nine
months ended September 30, 1995 (unaudited) and September 30, 1996....... F-4

Statement of Stockholders' Equity (Deficit) for the period from inception
(May 26, 1994) through December 31, 1994, the year ended December 31,
1995 and the nine months ended September 30, 1996........................ F-5

Statement of Cash Flows for the period from inception (May 26, 1994)
through December 31, 1994, the year ended December 31, 1995 and the nine
months ended September 30, 1995 (unaudited) and September 30, 1996....... F-6

Notes to Financial Statements............................................. F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of EarthLink Network, Inc.

In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in stockholders' equity (deficit) and of cash flows
present fairly, in all material respects, the financial position of EarthLink
Network, Inc. at December 31, 1994 and 1995 and September 30, 1996, and the
results of its operations and its cash flows for the period from inception (May
26, 1994) through December 31, 1994, the year ended December 31, 1995 and the
nine months ended September 30, 1996 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Costa Mesa, California
December 4, 1996

F-2
<PAGE>
EARTHLINK NETWORK, INC.

BALANCE SHEET

ASSETS

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
EQUITY AT
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996
------------- ------------- ------------- -------------
(UNAUDITED)
NOTE 7)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents......................... -- $ 290 $ 8,688
Restricted short-term investment (Note 6)......... -- 1,500 296
Accounts receivable, net of allowance of $664
at September 30, 1996............................ $ 27 218 1,765
Prepaid expenses.................................. -- 123 712
Other assets (Note 4)............................. 122 653
----- ------------- -------------
Total current assets.......................... 27 2,253 12,114
Property and equipment, net (Notes 1 and 3)......... 90 2,551 13,453
Intangibles, net (Notes 2, 5 and 8)................. 69 70 466
----- ------------- -------------
Total assets.................................. $ 186 $ 4,874 $ 26,033
----- ------------- -------------
----- ------------- -------------

LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Trade accounts payable............................ $ 18 $ 1,766 $ 5,878
Accrued payroll and related expenses.............. 4 193 1,522
Other accounts payable and accrued liabilities.... -- 405 3,809
Lines of credit (Note 6).......................... -- 1,494 --
Current portion of capital lease obligations (Note
10).............................................. -- 159 2,857
Notes payable (Note 6)............................ 67 -- 2,950
Deferred revenue.................................. -- 212 1,537
----- ------------- -------------
Total current liabilities..................... 89 4,229 18,553
Capital lease obligations, net of current portion
(Note 10)......................................... -- 355 5,388
----- ------------- -------------
Total liabilities............................. 89 4,584 23,941
----- ------------- -------------
Commitments and contingencies (Note 10)
Mandatorily redeemable convertible preferred stock
(Note 7).......................................... -- -- 14,013 $ --

Stockholders' equity (deficit)
Preferred Stock, $0.01 par value, 10,000,000
shares authorized, nil, nil and 2,727,273 shares
outstanding as redeemable preferred stock........ -- -- --
Common Stock, $0.01 par value, 50,000,000 shares
authorized, 2,941,180, 5,057,165 and 6,022,724
issued and outstanding 7,386,348 outstanding on a
pro forma basis (Note 7)......................... 29 51 60 74
Additional paid-in capital........................ 147 5,122 14,236 28,235
Warrants to purchase common stock (Note 8)........ 69 124 599 599
Accumulated deficit............................... (148) (5,007) (26,816) (26,816)
----- ------------- ------------- -------------
Total stockholders' equity (deficit)................ 97 290 (11,921) $ 2,092
----- ------------- ------------- -------------
----- ------------- ------------- -------------
$ 186 $ 4,874 $ 26,033
----- ------------- -------------
----- ------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>
EARTHLINK NETWORK, INC.
STATEMENT OF OPERATIONS

Weighted average shares outstanding
(Note 1).............................. 3,653 4,903 4,596 6,568
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>
EARTHLINK NETWORK, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
TOTAL
COMMON STOCK ADDITIONAL STOCKHOLDERS'
------------------------- PAID-IN WARRANTS ACCUMULATED EQUITY
SHARES AMOUNT CAPITAL ISSUED DEFICIT (DEFICIT)
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C>
Issuance of Common Stock................ 2,941 $ 29 $ 147 $ -- $ -- $ 176
Warrants issued in connection with line
of credit
(Note 8).............................. -- -- -- 69 -- 69
Net loss................................ -- -- -- -- (148) (148)
----- ----- ----------- ----- ----------- -----------
Balance at December 31, 1994............ 2,941 29 147 69 (148) 97
Issuance of Common Stock................ 2,116 22 6,236 -- -- 6,258
Reclassification of S Corporation
accumulated deficit (Note 8).......... -- -- (1,261) -- 1,261 --
Warrants issued for lease guarantee
(Note 8).............................. -- -- -- 50 -- 50
Warrants issued for non-competition
agreement (Notes 2 and 8)............. -- -- -- 5 -- 5
Net Loss................................ -- -- -- -- (6,120) (6,120)
----- ----- ----------- ----- ----------- -----------
Balance at December 31, 1995............ 5,057 51 5,122 124 (5,007) 290
Issuance of Common Stock................ 923 9 8,651 -- -- 8,660
Issuance of Common Stock for services... 43 -- 463 -- -- 463
Warrants issued in connection with
equipment leases and other
financings............................ -- -- -- 475 -- 475
Net loss................................ -- -- -- -- (21,809) (21,809)
----- ----- ----------- ----- ----------- -----------
Balance at September 30, 1996........... 6,023 $ 60 $ 14,236 $ 599 $ (26,816) $ (11,921)
----- ----- ----------- ----- ----------- -----------
----- ----- ----------- ----- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE>
EARTHLINK NETWORK, INC.
STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
INCEPTION
(MAY 26,
1994) NINE MONTHS ENDED
THROUGH YEAR ENDED -----------------------------
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1995 1996
------------- ------------- ------------- -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................. $ (148) $ (6,120) $ (2,972) $ (21,809)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization........... 7 305 167 2,773
Provision for doubtful accounts
receivable............................. -- -- -- 664
Issuance of common stock in exchange for
professional services.................. -- -- -- 50
Issuance of common stock in exhange for
termination of consulting agreement.... -- -- -- 413
Increase in accounts receivable......... (27) (191) (62) (2,211)
Increase in prepaid expenses and other
assets................................. -- (141) (164) (1,120)
Increase in accounts payable and accrued
liabilities............................ 22 2,292 1,308 8,845
Increase in deferred revenue............ -- 212 118 1,325
----- ------ ------ -------------
Net cash used in operating
activities........................... (146) (3,643) (1,605) (11,070)
----- ------ ------ -------------
Cash flows from investing activities:
Purchases of property and equipment....... (97) (2,766) (1,161) (13,596)
Liquidation of restricted short-term
investment............................... -- (1,500) (500) (296)
Purchase of restricted short-term
investment............................... -- -- -- 1,500
----- ------ ------ -------------
Net cash used in investing
activities........................... (97) (4,266) (1,661) (12,392)
----- ------ ------ -------------
Cash flows from financing activities:
Proceeds from (payment of) line of
credit................................... -- 1,494 494 (1,494)
Increase (decrease) in note payable....... 67 (67) (67) 2,950
Proceeds from capital lease obligations... -- 556 298 9,220
Principal payments under capital lease
obligations.............................. -- (42) (1) (1,489)
Proceeds from issuance of Mandatorily
Redeemable Preferred Stock............... -- -- -- 14,013
Proceeds from issuance of Common Stock.... 176 6,258 3,365 8,660
Proceeds from Common Stock pending
issuance................................. -- -- 1,800 --
----- ------ ------ -------------
Net cash provided by financing
activities........................... 243 8,199 5,889 31,860
----- ------ ------ -------------
Net increase in cash and cash equivalents... -- 290 2,623 8,398
Cash and cash equivalents, beginning of
year...................................... -- -- -- 290
----- ------ ------ -------------
Cash and cash equivalents, end of period.... $ -- $ 290 $ 2,623 $ 8,688
----- ------ ------ -------------
----- ------ ------ -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

EarthLink Network, Inc. ("EarthLink" or the "Company") was organized on May
26, 1994 and is an Internet service provider that was formed to help users
derive meaningful benefits from the extensive resources of the Internet.

The Company has experienced operating losses since its inception as a result
of efforts to build its network infrastructure and internal staffing, develop
its systems, and expand into new markets. The Company expects to continue to
focus on increasing its customer base and to expend substantial resources on
sales, marketing and administration, building its network systems, developing
new service offerings and improving its management information systems.
Accordingly, the Company expects its cost of revenues, selling, general, and
administrative expenses and capital expenditures will continue to increase
significantly, all of which will have a negative impact on short-term operating
results. In addition, the Company may change its pricing policies to respond to
a changing competitive environment. There can be no assurance that growth in the
Company's revenues or customer base will continue or that the Company will be
able to achieve or sustain profitability or positive cash flow. The failure of
the Company to achieve or sustain profitability or positive cash flow may
require the Company to reduce the scope of its operations or its anticipated
expansion, which could adversely affect the Company's business and results of
operations.

REVENUES

Recurring revenues from monthly Internet service are recognized over the
period services are provided. Other revenues, consisting primarily of sign-up
fees, are recognized as revenue when the registration process is completed.

CASH AND CASH EQUIVALENTS

All highly liquid investments with an original maturity of three months or
less at the date of acquisition are classified as cash equivalents.

ACCOUNTS RECEIVABLE AND DEFERRED REVENUES

Commencing in 1995, the Company began to bill for Internet service generally
one month in advance. Accordingly, these non-cancelable advanced billings are
included in both accounts receivable and deferred revenue.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations
or credit risk consist principally of cash investments and trade receivables.
The Company's cash investment policies limit investments to short-term,
investment grade instruments. Concentrations of credit risk with respect to
trade receivables are limited due to the large number of customers comprising
the Company's customer base.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost and depreciated using the
straight-line method over the estimated useful life of the assets, which is
generally three years. Leasehold improvements are amortized using the straight
line method over the shorter of their estimated lives or the term of the lease,
ranging from one to five years.

F-7
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

EQUIPMENT UNDER CAPITAL LEASE

The Company leases certain of its data communications and other equipment
under capital lease agreements. The assets and liabilities under capital lease
are recorded at the lesser of the present value of aggregate future minimum
lease payments, including estimated bargain purchase options, or the fair value
of the assets under lease. Assets under capital lease are amortized over the
lesser of their estimated useful lives of three years or the term of the lease.

INTANGIBLES

Intangible assets consist primarily of deferred financing and professional
service costs, prepaid lease guarantee costs, goodwill, rights to client lists
and a covenant not to compete. The costs assigned to intangible assets are being
amortized on a straight-line basis over the estimated useful lives of the
assets, which range from two to three years. The Company regularly reviews the
recoverability of intangible assets based on estimated undiscounted future cash
flows from operating activities compared with the carrying values of the
intangibles.

ADVERTISING AND CUSTOMER ACQUISITION COSTS

Advertising and customer acquisition costs are included in sales and
marketing. Such costs are expensed as incurred.

INCOME TAXES

Income taxes are accounted for under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under this method, deferred
tax assets and liabilities are determined based on differences between the
financial reporting basis and tax basis of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.

NET LOSS PER SHARE

Net loss per share is computed using the weighted average number of common
shares outstanding. In addition, pursuant to Securities and Exchange Commission
Staff Accounting Bulletin No. 83, Common Stock and other potentially dilutive
instruments issued by the Company at prices below the public offering price
during the twelve-month period prior to the proposed offering date (using the
treasury stock method and an assumed initial public offering price of $13.00 per
share) including Common Stock pending issuance have been included in the
calculation as if they were outstanding for all periods regardless of whether
they are dilutive. Common Stock equivalent shares issued by the Company more
than twelve months prior to the proposed offering date have been excluded from
the net loss per share calculation because the impact is anti-dilutive.

USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-8
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

RECENT PRONOUNCEMENTS

The Company has adopted, as of January 1, 1996, SFAS No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
and SFAS 123 and "Accounting for Stock-Based Compensation". The adoption of SFAS
No. 121 has not had any effect on the Company's financial position or results of
operations. The Company continues to account for its employee stock based
compensation in accordance with the provisions of APB 25 and provides pro forma
disclosures in the notes to the financial statements (see note 8), as if the
measurement provisions of SFAS No. 123 had been adopted. As such SFAS 123 has
not had a material effect on the Company's financial position or results of
operations.

INTERIM FINANCIAL STATEMENTS

The interim financial data for September 30, 1995 is unaudited. However, in
the opinion of the Company, the interim financial data includes all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of the results for the interim periods.

2. PURCHASE OF CERTAIN ASSETS FROM BECKEMEYER DEVELOPMENT TECHNOLOGIES

In order to recruit the principal shareholder of Beckemeyer Development
Technologies ("BDT") to serve as the Company's Vice President of Engineering, on
November 7, 1995, the Company agreed to purchase all fixtures, equipment, and
the client list of BDT for cash of $64,000. In addition to the above, the
principal shareholder was issued warrants to purchase 10,330 shares of the
Company's Common Stock at $4.84 per share as consideration for an agreement not
to compete for a two-year period. The value assigned to the warrants was $5,000
based upon an appraisal obtained by the Company. The warrants expire October 10,
2005. This purchase price was allocated to the assets acquired with the
remainder reflected as an intangible asset. At the time of purchase, BDT was not
material to the results of operations, financial position or customer base of
EarthLink.

3. PROPERTY AND EQUIPMENT

Property and equipment consist of:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
-------------------- -------------
1994 1995 1996
--------- --------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Data communications equipment.......................................... $ 71 $ 2,167 $ 10,246
Office and other equipment............................................. 26 661 5,564
Leasehold improvements................................................. -- 35 624
Construction in progress............................................... -- -- 25
--- --------- -------------
97 2,863 16,459
Less accumulated depreciation and amortization......................... (7) (312) (3,006)
--- --------- -------------
$ 90 $ 2,551 $ 13,453
--- --------- -------------
--- --------- -------------
</TABLE>

Property under capital lease, primarily data communications equipment
included above, aggregated $556,000 and $9,775,000 at December 31, 1995 and
September 30, 1996, respectively. Included in accumulated depreciation and
amortization are amounts related to property under capital lease of $56,000 and
$1,720,000 at December 31, 1995 and September 30, 1996, respectively.
Depreciation expense charged to operations was $7,000, $305,000 and $2,694,000
in 1994, 1995 and for the nine months ended September 30, 1996, respectively,
and included nil, $56,000, and $1,664,000, respectively, pertaining to property
under capital lease.

F-9
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. OTHER ASSETS

Other assets consist of:

<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
DECEMBER 31, ---------------
1995
---------------
(IN THOUSANDS)
<S> <C> <C>
Deposits................................................................ $ 122 $ 327
Deferred offering costs................................................. -- 277
Other................................................................... -- 49
----- -----
$ 122 $ 653
----- -----
----- -----
</TABLE>

5. INTANGIBLE ASSETS

Intangible assets consist of:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1994 1995 1996
--------- --------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred financing costs............................................ $ 69 $ -- $ 347
Lease guarantee..................................................... -- 50 110
Rights to client lists.............................................. -- 10 10
Professional Services............................................... -- -- 56
Other............................................................... -- 10 22
--- --- -----
69 70 545
Less: Accumulated amortization...................................... -- -- (79)
--- --- -----
$ 69 $ 70 $ 466
--- --- -----
--- --- -----
</TABLE>

6. NOTES PAYABLE

In 1995 the Company had three secured revolving credit agreements with its
banks. The outstanding principal balances under these lines of credit were
$1,000,000, $248,000 and $246,000 at December 31, 1995. The effective interest
rates at December 31, 1995 were 6.48%, 7.62% and 7.65%, respectively. The
Company repaid amounts outstanding on such lines of credit on April 6, 1996,
March 15, 1996 and June 8, 1996 respectively. The lines of credit subsequently
expired.

In June 1996, the Company issued to 17 investors, promissory notes
aggregating $2,950,000. Certain of the investors are directors and stockholders
of the Company. The 10% promissory notes expire on June 6, 1997. As described in
Note 7, the Company issued warrants valued at $116,000 to note holders. The fair
value of the warrants is included in deferred financing costs and is being
amortized as interest expense over the life of the notes resulting in a 14.30%
effective interest rate. Interest expense, which is paid in advance, on these
notes was approximately $123,000 for the nine months ended September 30, 1996.

7. CAPITAL STOCK AND MANDATORILY REDEEMABLE EQUITY SECURITIES

BUY-SELL AGREEMENT

The Company and certain stockholders entered into a Buy-Sell Agreement
pursuant to which the Company has the first right of refusal upon sale or
transfer of shares of Common Stock by these stockholders. The right will expire
by either written agreement of all parties, dissolution, bankruptcy, or
insolvency of the

F-10
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Company, registration of the Company's Common Stock under Section 12(b) or 12(g)
of the Securities Exchange Act of 1934, consummation of a public offering, sale
or merger, or at such time as only one stockholder remains.

COMMON STOCK

The Company issued 45,485 shares of Common Stock at $4.84 per share and
25,000 shares of Common Stock at $4.84 per share on January 18, 1996 and March
20, 1996, respectively. On May 6, 1996, the Company issued 852,460 shares of
common stock at $9.76 per share in a private placement. As a result of these
placements, EarthLink raised, in the aggregate, $8,660,000.

COMMON STOCK ISSUANCES FOR OTHER THAN CASH

On May 5, 1996, the Company issued 5,122 shares of Common Stock at $9.76 per
share, to a sub-contractor in lieu of cash for services provided to the Company.
In September 1996, the Company issued 37,500 shares of Common Stock at $11.00
per share as consideration for the termination of a consulting agreement.

MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

On September 10, 1996, the Company issued 2,727,273 shares of its Series A
Redeemable Convertible Preferred Stock to investors including among others,
certain directors, stockholders and the Underwriter associated with the proposed
initial public offering and certain of its associates for $15,000,000. Each two
shares of the Series A Convertible Preferred Stock is convertible into one
share, adjusted for stock splits or recapitalizations, of the Company's Common
Stock at the option of the holder through March 10, 1997 and is automatically
converted upon consummation of an underwritten public offering of the Company's
common stock in which the proceeds are at least $20 million. Stock issuance
costs of $987,000 have been charged to redeemable convertible preferred stock.
Assuming conversion of the Series A Redeemable Convertible Preferred Stock into
shares of common stock on September 30, 1996, the pro forma number of, and par
value of common stock shares outstanding would be 7,386,348 and $74,000,
respectively.

Holders of Series A Convertible Preferred Stock are entitled to voting
rights and participation in dividends equivalent to the number of common shares
issuable if converted. The Series A Convertible Preferred Stockholders have the
exclusive right to elect one director and participate in the election of other
directors along with holders of Common Stock. In the event of a change in
ownership, as defined, the holders of the Company's Series A Convertible
Preferred Stock have the right to demand complete redemption. The holders of the
Company's Series A Convertible Preferred Stock have a liquidation preference
equal to their initial investment. Any assets remaining after the preferred
liquidation preference plus declared and unpaid dividends will be distributed to
the holders of Common Stock.

8. STOCK OPTIONS AND WARRANTS

STOCK OPTIONS

1995 STOCK OPTION PLAN

In September 1995, the Company established the EarthLink Network 1995 Stock
Option Plan (the "1995 Plan"). The 1995 Plan provides for the grant of incentive
stock options to purchase up to 1,250,000 shares of common stock to employees of
the Company and non-qualified stock options to employees, officers, directors
and consultants of the Company. The 1995 Plan is administered by a committee
appointed by the

F-11
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Board which determines the terms of the options granted, including the exercise
price, the number of shares subject to option, and the option vesting period.
The exercise price of all options granted under the plan must be at least 100%
of the fair market value on the date of grant. Options generally vest in equal
quarterly increments over a five year period.

DIRECTORS STOCK OPTION PLAN

In September 1995, the Company established the EarthLink Directors Stock
Option Plan (the "Directors Plan"). The Directors Plan as amended and restated
in December 1996, provides for the grant of options to purchase 62,500 shares of
Common Stock to directors who do not also serve as employees of the Company and
do not beneficially own, nor are employees, directors or officers of any entity
which owns 5% or more of the outstanding shares of the Company's capital stock.
Under the Directors Plan, grants of options to purchase 10,000 and 2,500 shares
of Common Stock are automatically made to each non-management director at such
time as the person first becomes a member of the Board of Directors and at the
beginning of each fiscal year, respectively. Options generally vest in equal
quarterly increments over a five year period. As of September 30, 1996, there
were no options to purchase shares of Common Stock outstanding under the
Directors Plan.

NON-QUALIFIED OPTION GRANTS

In addition to the options granted under the plan described above, the
Company granted non-qualified stock options to certain employees, officers and
directors. Non-qualified options have a maximum term of ten years and generally
vest in equal quarterly increments over a five-year period.

F-12
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Following is a summary of the status of the incentive stock and
non-qualified options during the year ended December 31, 1995 and the nine
months ended September 30, 1996.

<TABLE>
<CAPTION>
INCENTIVE STOCK OPTIONS
----------------------------------------
OPTIONS OUTSTANDING
---------------------------
WEIGHTED
AVERAGE
NUMBER OF OPTION PRICE EXERCISE
SHARES PER SHARE PRICE
----------- -------------- -----------
<S> <C> <C> <C>
Plan Creation 1995
Granted................................................................... 232,500 $ 4.84 $ 4.84
----------- -------------- -----
Balance at December 31, 1995.............................................. 232,500 $ 4.84 $ 4.84
Granted................................................................... 806,250 $ 4.84-11.00 $ 8.25
Forfeited................................................................. (10,500) $ 9.76 $ 9.76
----------- -------------- -----
Balance at September 30, 1996............................................. 1,028,250 $ 4.84-11.00 $ 7.48
----------- -------------- -----

OPTIONS EXERCISABLE
---------------------------
WEIGHTED
AVERAGE
NUMBER OF OPTION PRICE EXERCISE
SHARES PER SHARE PRICE
----------- -------------- -----------
<S> <C> <C> <C>
Plan Creation 1995
Granted................................................................... 36,125 $ 4.84 $ 4.84
----------- -------------- -----
Balance at December 31, 1995.............................................. 36,125 $ 4.84 $ 4.84
Granted................................................................... 48,031 $ 4.84-11.00 $ 6.94
----------- -------------- -----
Balance at September 30, 1996............................................. 84,156 $ 4.84-11.00 $ 6.04
----------- -------------- -----
<CAPTION>

NON-QUALIFIED STOCK OPTIONS
----------------------------------------
OPTIONS OUTSTANDING
---------------------------
WEIGHTED
AVERAGE
NUMBER OF OPTION PRICE EXERCISE
SHARES PER SHARE PRICE
----------- -------------- -----------
<S> <C> <C> <C>
Granted in 1995........................................................... 425,000 $ 0.60-1.81 $ 1.60
Forfeited................................................................. (60,209) $ 0.60 $ 0.60
----------- -------------- -----
Balance at December 31, 1995.............................................. 364,791 $ 0.60-1.81 $ 1.76
Granted................................................................... 175,000 $ 4.84-11.00 $ 7.48
----------- -------------- -----
Balance at September 30, 1996............................................. 539,791 $ 0.60-11.00 $ 3.62
----------- -------------- -----
<CAPTION>

OPTIONS EXERCISABLE
---------------------------
WEIGHTED
AVERAGE
NUMBER OF OPTION PRICE EXERCISE
SHARES PER SHARE PRICE
----------- -------------- -----------
<S> <C> <C> <C>
Granted in 1995........................................................... 97,292 $ 0.60-1.81 $ 1.63
----------- -------------- -----
Balance at December 31, 1995.............................................. 97,292 $ 0.60-1.81 $ 1.63
Granted................................................................... -- -- --
----------- -------------- -----
Balance at September 30, 1996............................................. 97,292 $ 0.60-1.81 $ 1.63
----------- -------------- -----
</TABLE>

F-13
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The summary of non-qualified options includes warrants to purchase 100,000
shares of Common Stock at $4.84. These warrants were issued for service on the
Board of Directors and as such are accounted for under APB 25.

Had compensation cost been determined on the basis of fair value pursuant to
SFAS 123, net loss and net loss per share would have been increased as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, NINE MONTHS ENDED
1995 SEPTEMBER 30, 1996
------------- ------------------
<S> <C> <C>
Net Loss
As reported....................................................... $ 6,120,000 $ 21,809,000
------------- ------------------
Pro forma......................................................... $ 6,405,000 $ 23,108,000
------------- ------------------
Net loss per share
As reported....................................................... $ 1.25 $ 3.32
------------- ------------------
Pro forma......................................................... $ 1.31 $ 3.52
------------- ------------------
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the minimum value method with the following assumptions used for grants during
both periods: dividend yield of 0.0%, risk free interest rate of 5.83% and
expected option term of 10 years.

WARRANTS

The Company has issued to certain Board members, consultants, lease
providers, creditors and others warrants to purchase shares of the Company's
Common Stock.

On December 15, 1994, certain stockholders provided the Company a revolving
line of credit of $400,000 bearing interest at a rate of 8.1%. As of December
31, 1994, the outstanding balance was $67,000. The loan balance, including
interest expense of $15,000, was repaid during the year ended December 31, 1995.
The Company issued warrants to the stockholders to purchase 150,000 shares of
Common Stock at $1.81 per share valued at $69,000, based upon an appraisal
obtained by the Company, as additional consideration for this line of credit.
These warrants expire June 19, 2000.

On September 1, 1995, certain stockholders guaranteed a $500,000 lease for
networking equipment. The Company issued warrants to purchase 50,000 shares of
Common Stock at $1.81 per share, valued at $25,000, based upon an appraisal
obtained by the Company, as consideration for this guarantee. These warrants
expire August 31, 2000.

On December 13, 1995, certain stockholders provided the Company with a
$250,000 Irrevocable Standby Letter of Credit as a performance guarantee for a
real estate lease. In conjunction with this transaction the Company issued
warrants to purchase 50,000 shares at $4.84 per share, valued at $25,000, based
upon an appraisal obtained by the Company. These warrants expire December 1,
2000.

On January 11, 1996, certain stockholders guaranteed a $1,500,000 lease for
networking equipment. The Company issued warrants to purchase 100,000 shares of
Common Stock at $4.84 per share. The value of the warrants has been reflected in
intangible assets. These warrants expire January 11, 2001.

F-14
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

On January 12, 1996 the Company issued warrants to purchase 100,000 shares
of Common Stock at $4.84 to Board members. The warrants vest quarterly over five
years. As these warrants were issued for service on the Board of Directors they
are accounted for under APB 25 and as such are included in the summary of
nonqualified options and are not included in the summary of warrant grants
below.

On January 18, 1996, LINC Capital Partners, Inc. ("LINC") provided a
$1,500,000 lease line for equipment. The Company issued warrants to LINC to
purchase 50,000 shares of Common Stock at $4.84 per share. The value of the
warrants has been reflected as deferred financing costs. These warrants expire
January 18, 2006.

On February 15, 1996, Boston Financial & Equity Corporation ("Boston
Financial") provided a $700,000 lease line for equipment. The Company issued
warrants to Boston Financial to purchase 5,000 shares of Common Stock at $9.76
per share. The value of the warrants has been reflected as deferred financing
costs. These warrants expire February 15, 2006.

On May 6, 1996, the Company agreed to issue warrants to a producer of
infomercials and commercials to purchase 50,000 shares of Common Stock at an
exercise price of $9.76 per share upon completion, subject to the Company's
approval, of 15-second and 60-second commercials for the Company's services. In
addition, the Company agreed to issue additional warrants to purchase a maximum
of 300,000 shares of Common Stock based upon the number of customers obtained
through the commercials. Through December 31, 1997, the exercise price will be
$9.76; per share thereafter, the exercise price will be set at the then fair
value of the Common Stock. The value of the warrants will be reflected as
consideration upon issuance.

On May 10, 1996, the Company issued warrants to purchase 45,477 shares of
Common Stock at $9.76
per share to various lessors in return for lease lines and other services to the
Company. The value of the warrants has been reflected as deferred financing
costs. The warrants expire on May 10, 2006.

On May 31,1996, in connection with the amendment and restatement of the
UUNET Agreement, the Company agreed to issue warrants to purchase 10,000 shares
of Common Stock at an exercise price of $20.00 per share.

In connection with the issuance of promissory notes aggregating $2,950,000,
the Company issued to the lenders warrants to purchase an aggregate of 98,340
shares of Common Stock at an exercise price of $11.00 per share, as adjusted.
The value of the warrants has been reflected as deferred financing costs.

In connection with the execution of the PSINet Inc. ("PSINet") agreement on
July 22, 1996 (Note 10) the Company issued warrants to purchase 100,000 shares
of Common Stock at an exercise price of $20.00 per share. The value of the
warrants has been reflected as deferred financing costs.

In connection with the private placement of Series A Convertible Preferred
Stock, described above, the Company granted to certain purchasers of the Series
A Convertible Preferred Stock warrants to purchase 100,000 shares of common
stock at $11.00 per share.

On September 24, 1996 the Company issued warrants to purchase 7,500 shares
of the Company's common stock at $11.00 per share to each of the three members
of the Company's Technology Advisory Council. The warrants vest quarterly over
two years. The value of the warrants is reflected as deferred professional
services expense and amortized ratably over the vesting period.

F-15
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

A summary of these warrant grants is as follows:

<TABLE>
<CAPTION>
WARRANTS OUTSTANDING
----------------------------------------
WEIGHTED
AVERAGE
NUMBER OF WARRANT PRICE EXERCISE
SHARES PER SHARE PRICE
----------- -------------- -----------
<S> <C> <C> <C>
Granted.................................................................. 150,000 $ 1.81 $ 1.81
----------- -------------- -----------
Balance at December 31,1994.............................................. 150,000 $ 1.81 $ 1.81
Granted.................................................................. 110,330 $ 1.81-4.84 $ 3.47
----------- -------------- -----------
Balance at December 31,1995.............................................. 260,330 $ 1.81-11.00 $ 2.51
Granted.................................................................. 531,317 $ 4.84-20.00 $ 11.01
----------- -------------- -----------
Balance at September 30,1996............................................. 791,647 $ 1.81-20.00 $ 8.21
----------- -------------- -----------
----------- -------------- -----------
</TABLE>

<TABLE>
<CAPTION>
WARRANTS EXERCISABLE
----------------------------------------
WEIGHTED
AVERAGE
NUMBER OF WARRANT PRICE EXERCISE
SHARES PER SHARE PRICE
----------- -------------- -----------
<S> <C> <C> <C>
Granted.................................................................. 150,000 $ 1.81 $ 1.81
----------- -------------- -----------
Balance at December 31,1994.............................................. 150,000 $ 1.81 $ 1.81
Granted.................................................................. 110,330 $ 1.81-4.84 $ 3.47
----------- -------------- -----------
Balance at December 31,1995.............................................. 260,330 $ 1.81-11.00 $ 2.51
Granted.................................................................. 508,817 $ 4.84-20.00 $ 11.01
----------- -------------- -----------
Balance at September 30,1996............................................. 769,147 $ 1.81-20.00 $ 8.13
----------- -------------- -----------
----------- -------------- -----------
</TABLE>

9. INCOME TAXES

The stockholders, upon incorporating the Company, elected to treat the
Company as an S Corporation under the Internal Revenue Code. On June 19, 1995,
this election was revoked as certain ineligible entities (i.e partnerships and
corporations) became stockholders. Losses of $1,261,000 incurred from inception
through June 19, 1995 have been reclassified from accumulated deficit to Common
Stock as a result of the change to C Corporation status. The Company is now
subject to income taxes on income earned after June 19, 1995. At December 31,
1995 and September 30, 1996, the Company had net operating loss carryforwards
for federal income tax purposes totaling approximately $3,328,000 and
$24,707,000 respectively, which begin to expire in 2010. The Internal Revenue
Code of 1986, as amended, includes provisions which may limit the net operating
loss carryforwards available for use in any given year if certain events occur,
including significant changes in ownership. If the Company is successful in
completing its proposed initial public offering, utilization of the Company's
net operating loss carryforwards to offset future income may be limited.

F-16
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Deferred tax assets include the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- --------------
<S> <C> <C>
Net operating loss carryforwards...................................... $ 1,304,000 $ 9,920,000
Deferred financing costs.............................................. -- 60,000
Depreciation.......................................................... -- 40,000
Vacation accrual...................................................... 27,000 56,000
-------------- --------------
Gross deferred tax assets............................................. 1,331,000 10,076,000
Deferred tax asset valuation allowance................................ (1,331,000) (10,076,000)
-------------- --------------
$ -- $ --
-------------- --------------
-------------- --------------
</TABLE>

The Company recorded a full valuation allowance for net deferred tax assets
due to the uncertainty of future taxable income.

10. COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases its facilities and certain equipment under non-cancelable
operating leases expiring in various years through 2000. Total rent expense for
the years ended December 31, 1994 and 1995 and for the nine months ended
September 30, 1996 for all operating leases amounted to $24,000, $145,000 and
$541,000, respectively. The Company also leases equipment, primarily data
communications equipment, under non-cancelable capital leases. Most of the
Company's capital leases include purchase options at the end of the lease term.

During the year ended December 31, 1995 and the nine months ended September
30, 1996, the Company financed the acquisition of data processing and office
equipment amounting to approximately $556,000 and $9.2 million, respectively, by
entering into a number of agreements for the sale and leaseback of equipment.
The sale leaseback transactions are recorded at cost, which approximates the
fair market value of the property and, therefore, no gains or losses have been
recorded. The property remains on the books and continues to be depreciated. A
financing obligation representing the proceeds is recorded and reduced based
upon payments under the lease agreement.

Minimum lease commitments under non-cancelable leases at September 30, 1996
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING CAPITAL OPERATING
DECEMBER 31, LEASES LEASES
- ------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
1996 (three months)...................................................... $ 908,000 $ 188,000
1997..................................................................... 3,523,000 713,000
1998..................................................................... 3,458,000 698,000
1999..................................................................... 1,505,000 647,000
2000..................................................................... 309,000 650,000
thereafter............................................................... 78,000 332,000
------------- -------------
Total minimum lease payments............................................. 9,781,000 $ 3,228,000
-------------
-------------
Less amount representing interest........................................ (1,536,000)
-------------
Present value of future lease payments................................... 8,245,000
Less current portion..................................................... (2,857,000)
-------------
$ 5,388,000
-------------
-------------
</TABLE>

F-17
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

GUARANTEED USAGE LEVELS

Guaranteed usage levels of data and voice communication with certain of the
Company's telecommunication vendors at September 30, 1996 aggregate to the
following annual amounts:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- -----------------------------------------------------------------------
<S> <C>
1996 (three months).................................................. $ 63,000
1997................................................................. 3,135,000
----------
Total.................................................................. $3,198,000
----------
----------
</TABLE>

SIGNIFICANT AGREEMENTS

Access to the Internet for customers outside of the Company's California
regional base is provided through points of presence ("POP") capacity leased
from UUNET Technologies, Inc. ("UUNET"). EarthLink is in effect a reseller of
UUNET's services, buying in bulk at a discount, and providing access to
EarthLink's customer base at EarthLink's normal rates. Payment to UUNET is
generally concurrent with EarthLink's receipt of funds from customers. UUNET was
recently acquired by MFS Communications, Inc. ("MFS"), a supplier of local and
long distance telephone service. In August 1996, MFS and WorldCom, Inc.
("WorldCom") announced that MFS and WorldCom had executed a definitive agreement
for the merger of MFS into WorldCom. At September 30, 1996, $2.4 million and
$2.3 million in amounts due to UUNET were recorded in accounts payable and other
accrued liabilities, respectively.

EarthLink has licensed Netscape Navigator software ("Netscape Navigator"),
the World Wide Web client software, from Netscape Communications Corporation.
This license permits the Company to distribute Netscape Navigator as part of its
EarthLink Network TotalAccess software package. Management believes that
contract renewal, under conditions acceptable to EarthLink, is probable.

On July 22, 1996 the Company entered into an agreement with PSINet pursuant
to which the Company intends to lease POP access from PSINet, becoming in effect
a reseller of PSINet services in a similar fashion to the Company's UUNET
arrangement, as amended.

11. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
----------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
Cash paid for:
Interest.............................................................. $ 60 $ 759
Income taxes.......................................................... $ 1 $ 1
</TABLE>

NON-CASH INVESTING AND FINANCING ACTIVITIES:

As discussed in Note 2, the Company obtained a covenant not to compete
agreement in exchange for warrants valued at $5,000.

As discussed in Note 7, certain stockholders guaranteed a $500,000 equipment
lease in exchange for warrants valued at $25,000 and provided a standby letter
of credit as a performance guarantee for a real estate lease in exchange for
warrants valued at $25,000 during the year ended December 31, 1995. The Company
obtained a revolving line of credit of $400,000 in exchange for warrants valued
at $69,000 during 1994.

F-18
<PAGE>
EARTHLINK NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

12. REINCORPORATION

On June 27, 1996, the Company effected a reincorporation in Delaware. As a
result of the reincorporation, the Company's authorized shares of Common Stock
were increased to 25,000,000 shares with a par value of $0.01 per share. In
addition, the Company authorized 10,000,000 shares of preferred stock with a par
value of $0.01 per share. In March 1995 and January 1996 the Company effected
splits of the Company's Common Stock of 100-for-1 and 10-for-1, respectively. In
December 1996, the Company effected a 1-for-2 reverse stock split. The
accompanying financial statements have been retroactively adjusted to give
effect to the reincorporation, the stock splits and the reverse stock split.

13. SUBSEQUENT EVENTS

CONVERTIBLE DEBT

In October, 1996, the Company issued a $5 million, one year promissory note
at prime plus 2% to UUNET. Upon closing of the proposed initial offering, the
note will be convertible into a maximum of 382,000 shares of Common Stock at a
conversion price between $13.20 per share and $16.00 per share depending upon
the number of shares of Common Stock purchased in the proposed initial offering
by certain investors in Series A Convertible Preferred Stock. UUNET is a
provider of service to the Company and has a designate on the Company's board of
directors.

SIGNIFICANT AGREEMENTS

In October 1996, the Company's agreement with UUNet was amended. Under the
amended agreement, the Company pays UUNET a monthly fee equal to the greater of
a specified minimum or an amount that varies based primarily on peak customer
usage. The Company also pays UUNET an additional fee to the extent that hours of
usage exceed a formula set forth in the agreement. This agreement has a term
that expires in March 1999 (subject to earlier cancellation after March 1998
with one year's prior notice, but provided that if this notice is given, the
Company is required to begin to reduce its usage of UUNET's POPs in accordance
with a schedule set forth in the agreement). If the agreement expires at the end
of its term, it is automatically renewed for consecutive one-year terms unless
prior notice of termination is given. Minimum fees under the agreement are:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, IN MILLIONS
- ------------------------------------------------------------------------------------------- -----------
<S> <C>
1996 (three months)...................................................................... $ 3.0
1997..................................................................................... 16.2
1998..................................................................................... 22.8
1999..................................................................................... 6.0
-----
Total...................................................................................... $ 48.0
-----
-----
</TABLE>

LEASES

Earthlink has signed a lease for an additional 55,000 square feet in a
facility located adjacent to its corporate headquarters in which it plans to
house its data center. The lease term commences and the Company expects to
occupy this new space in February 1997 for an inital ten-year term. Monthly
rental will be $66,000 for the first 60 months increasing to $77,000 for the
remaining 60 months.

F-19
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------

No dealer, saleperson or other person has been authorized to give any
information or make any representation other than those contained in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company or the Underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any of the securities offered hereby in any jurisdiction to any person to
whom it is unlawful to make such offer or solicitation in such jurisdiction.
Neither the delivery of this Prospectus nor any offer or sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company or that information contained herein is
correct as of any time subsequent to its date.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 16
Dividend Policy........................................................... 16
Capitalization............................................................ 17
Dilution.................................................................. 18
Selected Financial Data................................................... 19
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 20
Business.................................................................. 25
Management................................................................ 35
Certain Transactions...................................................... 41
Principal Stockholders.................................................... 43
Description of Capital Stock.............................................. 45
Shares Eligible for Future Sale........................................... 48
Underwriting.............................................................. 50
Legal Matters............................................................. 51
Experts................................................................... 51
Additional Information.................................................... 51
Financial Statements...................................................... F-1
</TABLE>

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

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

EARTHLINK NETWORK-REGISTERED TRADEMARK-

2,000,000 SHARES
COMMON STOCK

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

PROSPECTUS
-------------------

INVEMED ASSOCIATES, INC.

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following are the estimated expenses, other than underwriting discounts
and commissions, to be borne by the Company in connection with the issuance and
distribution of the Common Stock being registered:

<TABLE>
<CAPTION>
ITEM AMOUNT
- ------------------------------------------------------------------------------- -----------
<S> <C>
Securities and Exchange Commission registration fee............................ $ 10,455
NASD filing fee................................................................ 3,950
Nasdaq National Market listing fee............................................. 43,000
Blue Sky fees and expenses..................................................... 10,000
Printing and engraving expenses................................................ 175,000
Legal fees and expenses........................................................ 175,000
Accounting fees and expenses................................................... 170,000
Transfer Agent and Registrar fee............................................... 3,000
Miscellaneous.................................................................. 9,595
-----------
Total...................................................................... $ 600,000
-----------
-----------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the General Corporation Law of the State of Delaware,
as amended, the Company has the power to indemnify directors and officers under
certain prescribed circumstances and subject to certain limitations against
certain costs and expenses, including attorneys' fees actually and reasonably
incurred in connection with any action, suit or proceeding, whether civil,
criminal, administrative or investigative, to which any of them is a party by
reason of his or her being a director or officer of the Company if it is
determined that he acted in accordance with the applicable standard of conduct
set forth in such statutory provision.

Article XII of the Company's By-laws generally permits indemnification of
directors and officers to the fullest extent authorized by the General
Corporation Law of the State of Delaware.

The Company intends to purchase directors' and officers' liability
insurance.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since its inception in May 1994, the Company has issued and sold
unregistered securities in the transitions described below. All of the following
share and per share amounts have been restated to give effect to all of the
Company's stock splits. See Note 12 to Notes to Financial Statements.

Shares of Common Stock

1. On May 27, 1994, the Company issued 1,500,000 shares of Common Stock to
Mr. Dayton as founder's stock for an aggregate price of $1,000.

2. On June 10, 1994, the Company sold 500,000 shares of Common Stock to
each of Messrs. Slatkin and O'Donnell, directors of the Company, at a purchase
price of $0.10 per share.

3. On October 17, 1994, the Company sold 220,590 shares of Common Stock to
each of Messrs. Slatkin and O'Donnell, directors of the Company, at a purchase
price of $0.17 per share.

4. On March 30, 1995, the Company sold 61,170 shares of Common Stock, to
each of Messrs. Slatkin and O'Donnell, directors of the Company, and 244,815
shares of Common Stock to Robert London, at a purchase price of $0.82 per share.

II-1
<PAGE>
5. On June 19, 1995, the Company sold 827,085 shares of Common Stock to 20
investors, including Messrs. Slatkin, O'Donnell, directors of the Company, and
to Mr. Sidney Azeez, a director of the Company, at a purchase price of $1.81 per
share.

6. On October 31, 1995, the Company sold 921,745 shares of Common Stock to
19 investors, including Messrs. Slatkin and O'Donnell, directors of the Company,
and to Mr. Azeez, a director of the Company, at a purchase price of $4.84 per
share.

7. On January 18, 1996, the Company sold 45,485 shares of Common Stock to
Messrs. Linwood Lacy, Jr. and Robert Kavner, directors of the Company, at a
purchase price of $4.84 per share.

8. On March 20, 1996, the Company sold 25,000 shares of Common Stock to Mr.
Charles G. Betty, a director of the Company and the Company's President and
Chief Operating Officer, at a purchase price of $4.84 per share.

9. On May 6, 1996, the Company sold 5,122 shares of Common Stock to a
sub-contractor at a purchase price of $9.76 per share, which purchase price was
paid by performance of certain services.

10. On May 6, 1996, the Company sold 852,453 shares of Common Stock to 34
investors (primarily existing stockholders of the Company), including Messrs.
Azeez, Slatkin and O'Donnell, directors of the Company, at a purchase price of
$9.76 per share.

11. On September 8, 1996, the Company issued 37,500 shares of Common Stock
to a consultant in consideration of the cancellation of the consulting agreement
between the consultant and the Company.

12. On December 11, 1996, the Company agreed to enter into a consulting
agreement with New Media Group, Inc. pursuant to which the Company will issue an
aggregate of 20,000 shares of Common Stock in equal increments in January 1998
and 1999 as consideration for the consulting services to be performed.

Shares of Series A Convertible Preferred Stock

13. On September 10, 1996, the Company issued 1,363,624 shares of Series A
Convertible Preferred Stock to certain investors, including Messrs. Azeez,
Betty, Slatkin, O'Donnell and Lacy, directors of the Company, at a purchase
price of $11.00 per share which shares will be automatically converted into
shares of Common Stock upon consummation of this offering. In connection with
this transaction, certain of these investors were also granted warrants to
purchase 100,000 shares of Common Stock having an exercise price of $11.00 per
share.

Warrants to Purchase Common Stock

14. In December 1994 the Company agreed to grant, and on June 18, 1995, the
Company granted, Warrants to purchase 75,000 shares of Common Stock at an
exercise price of $1.81 per share to each of Messrs. Slatkin and O'Donnell in
connection with their provision of a $400,000 credit line to the Company.

15. On August 31, 1995, the Company granted Warrants to purchase 50,000
shares of Common Stock at an exercise price of $1.81 per share to Mr. Slatkin in
connection with his acting as lessee, with the Company, under a $500,000
equipment lease. Mr. Slatkin subsequently transferred one-half of these warrants
to Mr. O'Donnell as consideration for his agreement to indemnify Mr. Slatkin for
certain liability arising in connection with the lease.

16. On October 31, 1995, the Company granted Warrants to purchase 10,330
shares of Common Stock at an exercise price of $4.84 per share to David
Beckemeyer as partial consideration for the sale of certain of the assets of
Beckemeyer Consulting.

17. On December 1, 1995, the Company granted Warrants to purchase 50,000
shares of Common Stock at an exercise price of $4.84 per share to Mr. Slatkin in
connection with their provision of a $250,000 line

II-2
<PAGE>
of credit as security for the lease of the Company's Pasadena, California
facility. Mr. Slatkin subsequently transferred one-half of these warrants to Mr.
O'Donnell in consideration for his agreement to indemnify Mr. Slatkin for
certain liability arising in connection with the line of credit.

18. Effective January 11, 1996, the Company granted Warrants to purchase
100,000 shares of Common Stock at an exercise price of $4.84 per share to Mr.
Slatkin in connection with his acting as lessee, with the Company, under a
$1,500,000 equipment lease. Mr. Slatkin subsequently transferred one-half of
these warrants to Mr. O'Donnell as consideration for his agreement to indemnify
Mr. Slatkin for certain liability arising in connection with the lease.

19. On January 12, 1996, the Company granted warrants to purchase 50,000
shares of Common Stock at an exercise price of $4.84 per share to each of
Messrs. Lacy and Kavner as consideration for their agreeing to serve on the
Company's Board of Directors.

20. On January 18, 1996, the Company granted warrants to purchase 50,000
shares of Common Stock at an exercise price of $4.84 per share to LINC Capital
Partners, Inc. ("LINC") in connection with LINC's provision of a $2,000,000
equipment lease credit line.

21. On February 15, 1996, the Company granted warrants to purchase 5,000
shares of Common Stock at an exercise price of $9.76 per share to Boston
Financial & Equity Corporation ("BFE") in connection with BFE's provision of a
$700,000 equipment lease credit line.

22. On May 6, 1996, the Company agreed to issue warrants to purchase up to
50,000 shares of Common Stock at an exercise price of $9.76 per share to
National Media Corporation in connection with the production of commercials on
behalf of the Company. In addition, the Company agreed to issue additional
warrants to National Media Corporation to purchase up to a maximum of 300,000
shares of Common Stock based upon the number of subscribers obtained through the
commercials. Through December 31, 1997, the exercise price will be $9.76 per
share; thereafter, the price will be set at the fair market value of the Common
Stock of the Company.

23. On May 10, 1996, the Company issued warrants to purchase an aggregate of
45,477 shares of Common Stock at an exercise price of $9.76 per share to
MM/GATX, LINC Capital Corporation, Charter Equipment Leasing, El Camino
Resources for lease lines.

24. On May 10, 1996, the Company entered into consulting agreements with two
consultants, David Hayes and Allen Claypool. In connection with these
agreements, the Company agreed that it will issue warrants to purchase an
aggregate of 10,000 shares of Common Stock at a per share exercise price of
$9.76 per share upon completion of the consulting services.

25. On May 31, 1996, in connection with the amendment of its agreement with
UUNET, the Company agreed to issue warrants to purchase 10,000 shares of Common
Stock at $20.00 per share.

26. On June 6, 1996, the Company issued warrants to purchase 98,340 shares
of Common Stock at an exercise price of $5.50 per share. Messrs. Azeez, Kavner,
O'Donnell and Slatkin were granted 6,667, 3,334, 7,500 and 7,500 of these
warrants, respectively. The warrants were issued in connection with the issuance
of the 10% Promissory Notes of the Company, as described in paragraph 35 below.

27. On July 22, 1996, the Company issued warrants to purchase 100,000 shares
of Common Stock at an exercise price of $20.00 per share in connection with the
execution of its agreement with PSINet.

28. In September 1996, the Company issued Warrants to purchase 7,500 shares
of Common Stock at an exercise price of $11.00 per share to each of three
members of the Company's Technology Advisory Council.

Convertible Debt Obligation

29. Effective October 31, 1996, UUNET Technology, Inc. purchased from the
Company, a $5 million convertible promissory note, which, upon consummation of
this Offering, will be convertible into a maximum of 382,000 shares of Common
Stock.

II-3
<PAGE>
Options to Purchase Common Stock

30. On March 18, 1995, the Company granted non-plan Options to purchase
75,000 shares of Common Stock at an exercise price of $0.60 per share to Mr.
Phil Gale in consideration for Mr. Gale's development efforts and as payment for
the development by Mr. Gale of certain software for the Company. Upon
termination by Mr. Gale of his employment on March 8, 1996, 14,791 of these
shares had vested and the balance expired.

31. On June 19, 1995, the Company granted non-plan Options to purchase
250,000 shares of Common Stock at an exercise price of $1.81 to Mr. Dayton in
consideration for his continuing efforts to develop the Company and its
business.

32. On June 19, 1995, the Company granted non-plan Options to purchase
50,000 shares of Common Stock at an exercise price of $1.81 per share to Mr.
Robert E. Johnson, Jr. in consideration for his accepting employment with the
Company.

33. On December 1, 1995, the Company granted non-plan Options to purchase
50,000 shares of Common Stock at an exercise price of $4.84 to Mr. Leland C.
Thoburn in consideration for his accepting employment with the Company.

34. In addition to the options described, between September 30, 1995 and
September 24, 1996, the Registrant granted options to purchase an aggregate of
1,038,750 shares of Common Stock to employees of the Registrant at exercise
prices ranging from $4.84 to $11.00 per share as incentives under the
Registrant's 1995 Stock Option Plan. Of these, options for 10,500 shares of
Common Stock have been forfeited due to the termination of the employment of
various grantees.

35. On June 7, 1996, the Company issued $2.95 million principal amount of
10% promissory notes to certain investors, including Messrs. Azeez, Kavner,
O'Donnell and Slatkin, directors of the Company. Messrs. Azeez, Kavner,
O'Donnell and Slatkin purchased notes in the respective principal amounts of
$200,000; $100,000; $225,000; and $225,000. As additional consideration for the
investment, the Company issued warrants described in paragraph 26 above.

All issuances of securities described above were made in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act of
1933 or Section 3(b) of the Securities Act of 1933 and Rule 701 thereunder. The
Company believes that all of the securities were acquired by the investors for
investment and with no view toward the resale or distribution thereof. In each
instance, the investor was either an employee of the Company or a sophisticated
investor, the offers and sales were made without any public solicitation and the
stock certificates bear restrictive legends. No underwriter was involved in the
transactions and no commissions were paid.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Amended and Restated Certificate of Incorporation**
(a) Certificate of Amendment of Amended and Restated Certificate of Incorporation++
3.2 -- Bylaws**
3.3 -- Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock++
(a) Certificate of Amendment of EarthLink Network, Inc. Certificate of Designation,
Preferences and Rights of Series A Convertible Preferred Stock++
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------
<C> <C> <S>
4.1 -- See exhibits 3.1, 3.2 and 3.3 for provisions of the Certificate of Incorporation and Bylaws
defining rights of holders of Common Stock
4.2 -- Specimen Stock Certificate++
4.3 -- Form of Warrant Agreement**
4.4 -- Registration Rights Agreement, Amendment No. 1 to Registration Rights Agreement and
Amendment No. 2 to Registration Rights Agreement (See also Exhibit 10.23(c))++
4.5 -- Buy-Sell Agreement, dated June 10, 1995, among the Registrant, Sky Dayton, Reed Slatkin and
Kevin O'Donnell***
5.1 -- Opinion of Hunton & Williams++
9.1 -- Voting Trust Agreement, dated June 10, 1995, among Sky Dayton, Reed Slatkin and Kevin
O'Donnell***
10.1 -- 1995 Stock Option Plan and forms of Stock Option Agreement and Stock Purchase Agreement**
10.2 -- Amended and Restated Stock Option Plan for Directors++
10.3 -- Master Lease Agreement, dated February 8, 1996, between the Registrant and Boston Financial
& Equity Corporation**
10.4 -- Lease Line Agreement, dated January 30, 1996, between the Registrant and Boston Financial &
Equity Corporation**
10.5 -- Master Lease Agreement, dated September 1, 1995, between the Registrant and LINC Capital
Management**
10.6 -- Netscape Communications Corporation Internet Service Provider Navigator Distribution
Agreement dated May 31, 1996, between the Registrant and Netscape Communications
Corporation+**
(a) Amendment No. 1 to Netscape Communications Corporation Internet Service Provider
Agreement++
(b) Amendment No. 2 to Netscape Communications Corporation Internet Service Provider
Agreement+, ++
10.7 -- Network Services Agreement dated May 31, 1996, between the Registrant and UUNET
Technologies, Inc.+**
(a) Addendum No. 1 to Network Services Agreement+,++
10.8 -- Software Distribution Agreement (MacTCP), dated October 2, 1995, between the Registrant and
Apple Computer, Inc.***
10.9 -- Employment Agreement, dated January 15, 1996, between the Registrant and Charles G. Betty**
10.10 -- Indemnification Agreement, dated August 31, 1995, among the Registrant and Kevin O'Donnell
as Indemnitors and Reed Slatkin as Indemnitee**
10.11 -- Indemnification and Participation Agreement, dated December 1, 1995, among the Registrant
and Kevin O'Donnell as Indemnitors and Reed Slatkin as Indemnitee**
10.12 -- Standard Industrial/Commercial Multi-Tenant Lease, dated December 1, 1995, between the
Registrant and Becton, Dickinson***
10.13 -- Business Loan Agreement, dated June 15, 1995, and Promissory Note in the original principal
amount of $250,000 between the Registrant and California United Bank***
10.14 -- Line of Credit Note in the original principal amount of $250,000, dated June 23, 1995, and
Security Agreement, dated June 23, 1995, between the Registrant and the Bank of California,
N.A.**
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------
<C> <C> <S>
10.15 -- Line of Credit Note in the original principal amount of $1,000,000, dated November 2, 1995,
between the Registrant and the Bank of California, N.A.**
10.16 -- Production and Distribution Agreement, dated May 6, 1996, between the Registrant and
National Media Corporation**
(a) Amendment No. 1 to Production and Distribution Agreement
10.17 -- Documents evidencing the Company's sale of $2,950,000 of its 10% Promissory Notes, dated
June 18, 1996:
(a) Form of Subscription Agreement***
(b) Form of Warrant***
(c) Form of 10% Promissory Note***
10.18 -- Amended and Restated Stock Purchase Agreement Relating to 2,727,273 Shares of Series A
Convertible Preferred Stock between the Company and the Investors named therein, dated
September 10, 1996++
(a) Form of stock purchase Warrant++
10.19 -- Internet Wizard Sign-Up Agreement between the Company and Microsoft Corporation, dated
August 16, 1996+
10.20 -- Network Access Agreement between the Company and PSINet, Inc., dated July 22, 1996 and
Amendment No. 1 to Network Access Agreement+
10.21 -- Office Lease by and between The Mutual Life Insurance Company of New York, as Landlord, and
the Company, as Tenant, dated September 20, 1996++
10.22 -- Standard Office Lease -- Gross, by and between Glen Feliz Properties, as Landlord, and the
Company, as Tenant, dated July 2, 1996++
10.23 -- Amended and Restated Note Purchase Agreement between the Company and UUNET Technologies,
Inc., dated as of October 31, 1996++
(a) $5,000,000 Convertible Note++
(b) Stockholders Agreement++
(c) Addendum to Amended and Restated Registration Rights Agreement++
11.1 -- Statement of computation of per share earnings
23.1 -- Consent of Price Waterhouse LLP, independent public accountants
23.2 -- Consent of Hunton & Williams (contained in its opinion in exhibit 5.1)
27. -- Financial Data Schedule
</TABLE>

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

** Incorporated by reference to the exhibit designated by the same exhibit
number and filed as an exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-5055) filed with the Commission on June 3,
1996.

*** Incorporated by reference to the exhibit designated by the same exhibit
number and filed as an exhibit to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Registration No. 333-5055) filed with
the Commission on June 27, 1996.
+ Confidential portions of this exhibit have been omitted, marked with
asterisks (*) and filed separately with the Securities and Exchange
Commission pursuant to an application for confidential treatment.
++ Previously filed.

(b) Financial Statement Schedules:

All of the financial statement schedules for which provision is made in the
applicable accounting regulations of the Commission are either not required
under the related instructions or are inapplicable and have therefore been
omitted, except for the Financial Data Schedule referenced above as Exhibit 27
and filed

II-6
<PAGE>
herewith; provided, however, that Exhibit 27 shall not be deemed filed for
purposes of Section 11 of the Securities Act, Section 18 of the Exchange Act and
Section 323 of the Trust Indenture Act, or otherwise be subject to the
liabilities of such sections, nor shall it be deemed a part of this Registration
Statement.

ITEM 17. UNDERTAKINGS

The Company hereby undertakes to provide the Underwriter at the closing
specified in the underwriting agreement, certificates in such denominations and
registered in such names as required by the Underwriter to permit prompt
delivery to each Purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons to the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form of a
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-7
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Pasadena, State of
California, on the 21st day of January, 1997.

EARTHLINK NETWORK, INC.

By: /S/ SKY D. DAYTON

-----------------------------------
Sky D. Dayton
Chairman of the Board of Directors

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement has been signed by the following persons in
the capacities indicated below on the 21st day of January, 1997.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------- --------------------------------------

<C> <S>
/S/ SKY D. DAYTON
- -------------------------------------- Chairman of the Board of Directors
Sky D. Dayton

/S/ CHARLES G. BETTY President, Chief Executive Officer and
- -------------------------------------- Director (Principal Executive
Charles G. Betty Officer)

/S/ BARRY W. HALL Chief Financial Officer (Principal
- -------------------------------------- Financial and
Barry W. Hall Accounting Officer)

SIDNEY AZEEZ*
- -------------------------------------- Director
Sidney Azeez

ROBERT M. KAVNER*
- -------------------------------------- Director
Robert M. Kavner

LINWOOD A. LACY, JR.*
- -------------------------------------- Director
Linwood A. Lacy, Jr.

KEVIN M. O'DONNELL*
- -------------------------------------- Director
Kevin M. O'Donnell

JOHN W. SIDGMORE*
- -------------------------------------- Director
John W. Sidgmore

REED E. SLATKIN*
- -------------------------------------- Director
Reed E. Slatkin

/s/ PAUL MCNULTY
- -------------------------------------- Director
Paul McNulty

*By: /S/ SKY D. DAYTON
------------------------------------
Sky D. Dayton
Attorney-in-fact
</TABLE>

II-8
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBITS PAGE
- --------- ---------
<C> <S> <C>
1.1 Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation**
(a) Certificate of Amendment of Amended and Restated Certificate of Incorporation++
3.2 Bylaws**
3.3 Certificate of Designation Preferences and Rights of Series A Convertible Preferred Stock++
(a) Certificate of Amendment of EarthLink Network, Inc. Certificate of Designation,
Preferences and Rights of Series A Convertible Preferred Stock
4.1 See exhibits 3.1, 3.2 and 3.3 for provisions of the Certificate of Incorporation and Bylaws
defining rights of holders of Common Stock++
4.2 Specimen Stock Certificate++
4.3 Form of Warrant Agreement**
4.4 Registration Rights Agreement, Amendment No. 1 to Registration Rights Agreement and Amendment
No. 2 to Registration Rights Agreements (See also Exhibit 10.23(c))++
4.5 Buy-Sell Agreement, dated June 10, 1995, among the Registrant, Sky Dayton, Reed Slatkin and
Kevin O'Donnell***
5.1 Opinion of Hunton & Williams++
9.1 Voting Trust Agreement, dated June 10, 1995, among Sky Dayton, Reed Slatkin and Kevin
O'Donnell***
10.1 1995 Stock Option Plan and forms of Stock Option Agreement and Stock Purchase Agreement**
10.2 Amended and Restated Stock Option Plan for Directors++
10.3 Master Lease Agreement, dated February 8, 1996, between the Registrant and Boston Financial &
Equity Corporation**
10.4 Lease Line Agreement, dated January 30, 1996, between the Registrant and Boston Financial &
Equity Corporation**
10.5 Master Lease Agreement, dated September 1, 1995, between the Registrant and LINC Capital
Management**
10.6 Netscape Communications Corporation Internet Service Provider Navigator Distribution Agreement
dated May 31, 1996, between the Registrant and Netscape Communications Corporation+**
(a) Amendment No. 1 to Netscape Communications Corporation Internet Service Provider
Agreement++
(b) Amendment No. 2 to Netscape Communications Corporation Internet Service Provider
Agreement+, ++
10.7 Network Services Agreement dated May 31, 1996, between the Registrant and UUNET Technologies,
Inc.+**
(a) Addendum No. 1 to Network Services Agreement+,++
10.8 Software Distribution Agreement (MacTCP), dated October 2, 1995, between the Registrant and
Apple Computer, Inc.***
10.9 Employment Agreement, dated January 15, 1996, between the Registrant and Charles G. Betty**
10.10 Indemnification Agreement, dated August 31, 1995, among the Registrant and Kevin O'Donnell as
Indemnitors and Reed Slatkin as Indemnitee**
10.11 Indemnification and Participation Agreement, dated December 1, 1995, among the Registrant and
Kevin O'Donnell as Indemnitors and Reed Slatkin as Indemnitee**
10.12 Standard Industrial/Commercial Multi-Tenant Lease, dated December 1, 1995, between the
Registrant and Becton, Dickinson***
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBITS PAGE
- --------- ---------
<C> <S> <C>
10.13 Business Loan Agreement, dated June 15, 1995, and Promissory Note in the original principal
amount of $250,000 between the Registrant and California United Bank***
10.14 Line of Credit Note in the original principal amount of $250,000, dated June 23, 1995, and
Security Agreement, dated June 23, 1995, between the Registrant and the Bank of California,
N.A.**
10.15 Line of Credit Note in the original principal amount of $1,000,000, dated November 2, 1995,
between the Registrant and the Bank of California, N.A.**
10.16 Production and Distribution Agreement, dated May 6, 1996, between the Registrant and National
Media Corporation**
(a) Amendment No. 1 to Production and Distribution Agreement
10.17 Documents evidencing the Company's sale of $2,950,000 of its 10% Promissory Notes, dated June
18, 1996:
(a) Form of Subscription Agreement***
(b) Form of Warrant***
(c) Form of 10% Promissory Note***
10.18 Amended and Restated Stock Purchase Agreement Relating to 2,727,273 Shares of Series A
Convertible Preferred Stock between the Company and the Investors named therein, dated
September 10, 1996++
(a) Form of Stock Purchase Warrant++
10.19 Internet Wizard Sign-Up Agreement between the Company and Microsoft Corporation, dated August
16, 1996+
10.20 Network Access Agreement between the Company and PSINet, Inc., dated July 22, 1996 and
Amendment No. 1 to Network Access Agreement+
10.21 Office Lease by and between The Mutual Life Insurance Company of New York, as Landlord, and
the Company, as Tenant, dated September 20, 1996++
10.22 Standard Office Lease -- Gross, by and between Glen Feliz Properties, as Landlord, and the
Company, as Tenant, dated July 2, 1996++
10.23 Amended and Restated Note Purchase Agreement between the Company and UUNET Technologies, Inc.,
dated October 31, 1996++
(a) $5,000,000 Convertible Note++
(b) Stockholders Agreement++
(c) Addendum to Amended and Restated Registration Rights Agreement++
11.1 Statement of computation of per share earnings
23.1 Consent of Price Waterhouse LLP, independent public accountants
23.2 Consent of Hunton & Williams (contained in its opinion in exhibit 5.1)
27. Financial Data Schedule
</TABLE>

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

** Incorporated by reference to the Exhibit designated by the same exhibit
number and filed as an exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-5055) filed with the Commission on June 3,
1996.

<PAGE>

2,000,000 Shares

EARTHLINK NETWORK, INC.

Common Stock, par value $.01 per share

UNDERWRITING AGREEMENT

January __, 1997

Invemed Associates, Inc.
375 Park Avenue
Suite 2205
New York, NY 10152-0189

Ladies and Gentlemen:

1. INTRODUCTORY. EarthLink Network, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell 2,000,000 shares (the "Firm Shares") of
its authorized but unissued Common Stock, par value $.01 per share ("Common
Stock"), to you (the "Underwriter"). The Company also proposes to issue and
sell to the Underwriter, at the option of the Underwriter, an aggregate of not
more than 300,000 additional shares (the "Optional Shares") of Common Stock, as
set forth in Section 3 below. The Firm Shares and the Optional Shares are
herein collectively referred to as the "Stock." The Company hereby agrees with
the Underwriter as follows:

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

(a) The Company represents and warrants to, and agrees with, the
Underwriter that:

(i) A registration statement on Form S-1 (File No. 333-15781),
including a form of prospectus, relating to the Stock has been filed
with the Securities and Exchange Commission (the "Commission") and
either (A) has been declared effective under the Securities Act of
1933, as amended (the "Act"), and is not proposed to be amended or (B)
is proposed to be amended by amendment or post-effective amendment.
If such registration statement ("initial registration statement") has
been declared effective, either (i) an additional registration
statement ("additional registration statement") relating to the Stock
may have been filed with the Commission pursuant to Rule 462(b) ("Rule
462(b)") under the Act and, if so filed, has become effective upon
filing pursuant to such Rule, and the Stock has been duly registered
under the Act pursuant to the initial registration statement and, if
applicable, the additional registration statement or (ii) such an
additional registration statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become effective upon
filing pursuant to such Rule and upon such filing all of the Stock
will have been duly registered under the Act pursuant to the initial

<PAGE>

registration statement and such additional registration statement. If
the Company does not propose to amend the initial registration
statement or, if an additional registration statement has been filed
and the Company does not propose to amend it and if any post-effective
amendment to either such registration statement has been filed with
the Commission prior to the execution and delivery of this Agreement,
the most recent amendment (if any) to each such registration statement
has been declared effective by the Commission or has become effective
upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act or,
in the case of the additional registration statement, Rule 462(b).
For purposes of this Agreement, "Effective Time" with respect to the
initial registration statement or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement
means (i) if the Company has advised the Underwriter that it does not
propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery
of this Agreement, was declared effective by the Commission or has
become effective upon filing pursuant to Rule 462(c), or (ii) if the
Company has advised the Underwriter that it proposes to file an
amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended
by such amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. If an additional registration
statement has not been filed prior to the execution and delivery of
this Agreement but the Company has advised the Underwriter that it
proposes to file one, "Effective Time" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration
statement, as amended at its Effective Time, including all information
contained in the additional registration statement (if any) and deemed
to be a part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including
all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement". The Initial Registration Statement and the Additional
Registration Statement are herein referred to collectively as the
"Registration Statements" and individually as a "Registration
Statement". The form of prospectus relating to the Stock, as first
filed with the Commission pursuant to and in accordance with Rule
424(b) ("Rule 424(b)") under the Act or (if no such filing is required
or until such time as such filing is made) as included in a
Registration Statement, is hereinafter referred to as the
"Prospectus". No document has been or will be prepared or distributed
in reliance on Rule 434 under the Act.

(ii) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all material respects to the
requirements of the Act and the rules and regulations of the
Commission (the "Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the

-2-
<PAGE>

statements therein not misleading, and (B) on the Effective Date of
the Additional Registration Statement (if any), each Registration
Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material fact
and did not omit, or will not omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and (C) on the date of this Agreement, the
Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement each
conforms, and at the time of filing of the Prospectus pursuant to Rule
424(b) or (if no such filing is required and if the Effective Time of
the Additional Registration Statement is subsequent to the execution
and delivery of this Agreement) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included,
each Registration Statement and the Prospectus will conform, in all
material respects to the requirements of the Act and the Rules and
Regulations, and none of such documents includes, or will include, any
untrue statement of a material fact or omits, or will omit, to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the
Prospectus will conform in all material respects to the requirements
of the Act and the Rules and Regulations, neither of such documents
will include any untrue statement of a material fact or will omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and no Additional
Registration Statement has been filed or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written
information furnished to the Company by the Underwriter specifically
for use therein, it being understood that the only such information is
that described as such in Section 7(b) of this Agreement.

(iii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its place
of incorporation with power and authority (corporate and other) to own
its properties and conduct its business as described in the
Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of business requires
such qualification, except where the failure to be so qualified would
not have a material adverse effect on the Company; and no proceeding
has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.

(iv) The Company has no subsidiaries and owns no securities of
any other entity, except for investment-grade, interest-bearing
securities.

(v) The Stock and all other outstanding shares of capital stock
of the Company have been duly authorized; all outstanding shares of
capital stock of the Company are, and, when the Stock has been
delivered and paid for in accordance with this Agreement on each
Closing Date (as defined below), such Stock will have been, validly
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus; and the stockholders
of the Company have no preemptive rights with respect to the Stock.

-3-
<PAGE>

(vi) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action by the Company and
will not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to,
any contract, indenture, mortgage, loan agreement, note, lease or
other instrument or agreement that is material to the Company and to
which the Company is a party or by which it may be bound, or to which
any of the property or assets of the Company is subject; nor will such
action result in any violation of the provisions of the charter or
bylaws of the Company or any applicable law, administrative regulation
or administrative or court decree.

(vii) No consent, approval, authorization or other order of, or
filing with, any court, regulatory body, administrative agency, other
governmental body or any self-regulatory agency is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated herein, except such as have been obtained or
made under the Act and such as may be required under state securities
laws.

(viii) The accountants who have expressed their opinions with
respect to certain of the financial statements and schedules included
in each Registration Statement are independent as required by the Act.

(ix) The financial statements and schedules of the Company
included in each Registration Statement and the Prospectus present
fairly the financial position of the Company as of the respective
dates of such financial statements, and the results of operations and
cash flows of the Company for the respective periods covered thereby,
all in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as
disclosed in the Prospectus. The financial information set forth in
the Prospectus under "Selected Financial Data" presents fairly, on the
basis stated in the Prospectus, the information set forth therein.

(x) The Company is not in violation of its charter or bylaws or
in default under any consent decree, or in default with respect to any
provision of any lease, loan agreement, franchise, license, permit or
other contractual obligation to which it is a party or by which it may
be bound, or to which any of the property or assets of the Company is
subject; and there does not exist any state of facts which constitutes
an event of default as defined in such documents or which, with notice
or lapse of time, or both, would constitute such an event of default,
in each case except for defaults which neither singly nor in the
aggregate are material to the condition, financial or otherwise, or
the results of operations, business or prospects of the Company.

(xi) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or any of its properties, which is required to
be disclosed in a Registration Statement (other than as disclosed
therein), or which, if determined adversely to the Company, could
result in any material adverse change in the condition, financial or
otherwise, or in the results of operations, business or prospects of
the Company, or could materially and adversely affect its property or
assets or the consummation of the transactions contemplated by this
Agreement; and no such actions, suits or proceedings are threatened
or, to the Company's knowledge, contemplated.

-4-
<PAGE>

(xii) There are no holders of securities of the Company having
rights to registration thereof except as disclosed in the Prospectus.
No holders of registration rights have such rights with respect to the
offering being made by the Prospectus.

(xiii) This Agreement has been duly authorized, executed and
delivered by the Company.

(xiv) Except as disclosed in the Prospectus, the Company has good
and marketable title to all real properties and all other properties
and assets owned by it, in each case free from liens, encumbrances and
defects that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by it as described
in the Prospectus; and except as disclosed in the Prospectus, the
Company holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by it as described in the
Prospectus.

(xv) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise,
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Stock.

(xvi) Subsequent to the date of the latest audited financial
statements included in the Prospectus, except as otherwise described
in the Prospectus, (A) the Company has not incurred any material
liabilities or obligations, direct or contingent, nor entered into any
material transactions not in the ordinary course of business, (B)
there has not been any material adverse change in the condition,
financial or otherwise, results of operations, business or prospects
of the Company nor any material change in its capital stock, short-
term debt or long-term debt and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company in any
class of its capital stock.

(xvii) There is no document of a character required to be
described in the Registration Statements or the Prospectus or to be
filed as an exhibit to the Registration Statements which is not
described or filed as required.

(xviii) Except as described in the Prospectus, the Company owns
and possesses all right, title and interest in and to, or has duly
licensed from third parties, all patents, patent rights, trademarks,
copyrights, inventions, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other proprietary rights
("Trade Rights") presently employed by it in connection with the
business now operated by it. Except as described in the Prospectus,
the Company has not received any notice of infringement,
misappropriation or conflict from any third party as to such Trade
Rights which has not been resolved or disposed of, and the Company has
not infringed, misappropriated or otherwise conflicted with material
Trade Rights of any third parties.

(xix) The conduct of the business of the Company is in compliance
in all respects with applicable federal, state, local and foreign laws
and regulations, except where the failure to be in compliance would
not have a material adverse effect upon the condition, financial or
otherwise, results of operations, business or prospects of the
Company.

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<PAGE>

(xx) No labor dispute with the employees of the Company exists
or, to the knowledge of the Company, is imminent which might
reasonably be expected to materially adversely affect the condition,
financial or otherwise, results of operations, business or prospects
of the Company; and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors which might reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, results of operations, business or prospects
of the Company.

(xxi) The Company is not in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or
any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "environmental laws") and, to its
knowledge, does not own or operate any real property contaminated with
any substance that is subject to any environmental laws, is not liable
for any off-site disposal or contamination pursuant to any
environmental laws and is not subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
might, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the condition, financial or
otherwise, results of operations, business or prospects of the
Company.

(xxii) The Company is not and, after giving effect to the
offering and sale of the Stock, will not be an "investment company",
as defined in the Investment Company Act of 1940, as amended.

(xxiii) No broker, finder, consultant or other person or entity
is entitled to any brokerage, finder's or other fee or commission in
connection with the sale of the Stock, except as may be provided to
the Underwriter by the express terms of this Agreement.

(xxiv) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes.

(b) Any certificate signed by any officer of the Company and
delivered to the Underwriter or to counsel for the Underwriter pursuant to
this Agreement or in connection with the consummation of the transactions
contemplated hereby shall be deemed a representation and warranty by the
Company to the Underwriter as to the matters covered thereby.

3. PURCHASE, SALE AND DELIVERY OF STOCK. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriter, and the Underwriter agrees to purchase from the Company at a
purchase price of $[ ] per share, the Firm Shares.

The Company will deliver certificates representing the Firm Shares to the
Underwriter, against payment of the purchase price in immediately available
funds payable to the order of the Company at the office of Morgan, Lewis &
Bockius LLP, 2000 One Logan Square, Philadelphia, PA 19103, at 10:00 A.M.,
Philadelphia time, on December 24, 1996, or at such other date and time as the
Underwriter and the Company determine, such time and date being herein referred
to as the "First Closing Date." For purposes of Rule 15c6-1 under the Exchange
Act, the First Closing Date (if later than the otherwise applicable settlement
date) shall be the settlement date for payment of funds and delivery of
securities for

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<PAGE>

all the Stock sold pursuant to the offering. The certificates for the Firm
Shares so to be delivered will be in definitive form, in such denominations and
registered in such names as the Underwriter requests and will be made available
for checking and packaging at such office in New York, New York as designated by
the Underwriter at least 24 hours prior to the First Closing Date.

In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriter to purchase up to an
aggregate of 300,000 Optional Shares, at the same purchase price per share to be
paid for the Firm Shares, for use solely in covering any overallotments made by
the Underwriter in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised in whole or in part, from time to time, upon
written notice from the Underwriter given to the Company from time to time not
more than 30 days subsequent to the date of the Prospectus, setting forth the
aggregate number of Optional Shares as to which the Underwriter is exercising
the option. The Company agrees to sell to the Underwriter the number of
Optional Shares specified in such notice and the Underwriter agrees to purchase
such Optional Shares. No Optional Shares shall be sold or delivered unless the
Firm Shares previously have been, or simultaneously are, sold and delivered.
The right to purchase the Optional Shares or any portion thereof may be
exercised from time to time and, to the extent not previously exercised, may be
surrendered and terminated at any time upon notice by the Underwriter to the
Company.

Each time for the delivery of and payment for the Optional Shares (an
"Optional Closing Date", which may be the First Closing Date) (the First Closing
Date and each Optional Closing Date, if any, are sometimes referred to as a
"Closing Date") shall be determined by the Underwriter but shall be not later
than five full business days after written notice of election to purchase
Optional Shares is given. The Company will deliver certificates representing
the Optional Shares being purchased on each Optional Closing Date to the
Underwriter against payment of the purchase price therefor in immediately
available funds made payable to the order of the Company, at the above-mentioned
office of Morgan, Lewis & Bockius LLP. The certificates for the Optional Shares
being purchased on each Optional Closing Date will be in definitive form, in
such denominations and registered in such names as the Underwriter requests upon
reasonable notice prior to such Optional Closing Date and will be made available
for checking and packaging at such office in New York, New York as is designated
by the Underwriter at least 24 hours prior to such Optional Closing Date.

4. OFFERING BY UNDERWRITER. It is understood that the Underwriter
proposes to offer the Stock for sale to the public as set forth in the
Prospectus.

5. CERTAIN AGREEMENTS OF THE COMPANY. The Company covenants and agrees
with the Underwriter that:

(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by the Underwriter,
subparagraph (4)) of Rule 424(b) not later than the earlier of (i) the
second business day following the execution and delivery of this Agreement
or (ii) the fifteenth business day after the Effective Date of the Initial
Registration Statement.

The Company will advise the Underwriter promptly of any such filing
pursuant to Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and an
additional registration statement is necessary to register a portion of the
Stock under the Act but the Effective Time thereof has not occurred as of
such

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<PAGE>

execution and delivery, the Company will file the additional registration
statement with the Commission pursuant to and in accordance with Rule
462(b) on or prior to 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, on or prior to the time the Prospectus is printed
and distributed to the Underwriter, or will make such filing at such later
date as shall have been consented to by the Underwriter.

(b) The Company will advise the Underwriter promptly of: (i) any
proposal to amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial Registration
Statement, the Additional Registration Statement (if any) or the Prospectus
and will not effect such amendment or supplementation without the
Underwriter's consent; (ii) the effectiveness of each Registration
Statement (if its Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment and or supplementation of
a Registration Statement or the Prospectus; (iii) the issuance by the
Commission of any stop order proceeding in respect of a Registration
Statement or of any notification or other communication relating to the
institution of any stop order proceeding in respect of a Registration
Statement, and the Company will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued; and (iv) of any notification of the suspension of
qualification of the Stock for sale in any jurisdiction or the initiation
or threat of any proceedings for that purpose.

(c) If, at any time when a prospectus relating to the Stock is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Act, the Company promptly
will advise the Underwriter thereof and promptly will prepare and file with
the Commission an amendment or supplement which will correct such statement
or omission or an amendment which will effect such compliance. Neither the
Underwriter's consent to, nor the Underwriter's delivery of, any such
amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6 of this Agreement.

(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.

(e) The Company will furnish to the Underwriter copies of each
Registration Statement (two of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Underwriter requests. The
Prospectus shall be furnished on or prior to 3:00 P.M., New York time, on
the business day following the later of the execution and delivery of this
Agreement or the Effective Time of the Initial Registration Statement. All
other documents shall be furnished as soon as available.

-8-
<PAGE>

(f) The Company will arrange for the qualification of the Stock for
sale under the blue sky laws of such jurisdictions as the Underwriter
designates, and will continue such qualifications in effect so long as
required for distribution of the Stock.

(g) The Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flows
of the Company certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter, other than the last fiscal
quarter of the fiscal year, ending after the Effective Date of the Initial
Registration Statement (or, if later, the Effective Date of the Additional
Registration Statement), summary financial information of the Company for
such quarter in reasonable detail.

(h) During the period of five years from the date hereof, the Company
will furnish to the Underwriter, as soon as practicable after the end of
each fiscal year, a copy of its annual report to stockholders for such
year; and the Company will furnish to the Underwriter (i) as soon as
available, a copy of each report and any proxy statement of the Company
filed with the Commission under the Exchange Act or mailed to stockholders,
and (ii) from time to time, such other information concerning the Company
as the Underwriter may reasonably request.

(i) The Company will use the net proceeds received by it from the
sale of the Stock in the manner specified in the Prospectus under the
caption "Use of Proceeds."

(j) For a period of one year after the date of the initial public
offering of the Stock, the Company will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement (except for a registration statement
on Form S-8 covering shares issuable upon exercise of options granted
under the Company's 1995 Stock Option Plan) under the Act relating to,
any additional shares of its Common Stock or securities convertible into
or exchangeable or exercisable for any shares of its Common Stock, or
publicly disclose the intention to make any such offer, sale, pledge,
disposal or filing, without the prior written consent of the Underwriter,
except issuances of Common Stock pursuant to the conversion or exchange
of convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on October 15, 1996, grants of employee
stock options pursuant to the terms of the Company's 1995 Stock Option Plan
(provided that any options issued to officers and directors of the Company
thereunder may not be exercised at any time on or prior to the first
anniversary of the date of the Prospectus), and issuances of Common Stock
pursuant to the exercise of such options.

(k) The Company will use its best efforts to list for quotation the
Stock on the Nasdaq National Market.

(l) The Company agrees that it shall not accelerate the vesting of
any options of any person with respect to whom the Underwriter has not
obtained the agreement to be provided pursuant to Section 6(k) of this
Agreement.

The Company agrees with the Underwriter that, whether or not the
transactions contemplated hereunder are consummated, the Company will pay (i)
all costs, fees and expenses incurred in connection with the performance of the
Company's obligations hereunder, including, without limiting the generality of
the foregoing, all fees and expenses of legal counsel for the Company and of the
Company's independent accountants, all costs and expenses incurred in connection
with the preparation, printing, filing and distribution of the Registration
Statements, each preliminary prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and supplements thereto,
this Agreement and the blue sky memoranda, and for any travel expenses of the
Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with

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<PAGE>

prospective purchasers of the Stock, (ii) all costs, fees and expenses
(including legal fees and disbursements of counsel for the Underwriter) incurred
by the Underwriter in connection with qualifying or registering all or any part
of the Stock for offer and sale under blue sky laws, including the preparation
of blue sky memoranda relating to the Stock, (iii) the fees of the National
Association of Securities Dealers, Inc. ("NASD") in connection with the request
for clearance of such offering with the NASD and the inclusion of the Stock in
Nasdaq National Market, and (iv) all fees and expenses of the Company's transfer
agent, costs of printing the certificates for the Stock and all transfer taxes,
if any, with respect to the sale and delivery of the Stock to the Underwriter.

6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER. The obligations of
the Underwriter to purchase and pay for the Firm Shares on the First Closing
Date and the Optional Shares to be purchased on each Optional Closing Date will
be subject to the accuracy of the representations and warranties on the part of
the Company herein set forth, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:

(a) The Underwriter shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective Time of
the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the last
amendment or post-effective amendment to the registration statement to be
filed prior to the Effective Time), of Price Waterhouse LLP confirming that
they are independent public accountants within the meaning of the Act and
the Rules and Regulations and stating in effect that:

(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply as
to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations;

(ii) on the basis of specified procedures, including (a) a
comparison of the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and (b)
inquiries of officials who have responsibility for financial and
accounting matters as to whether the information conforms in all
material respects with the disclosure requirements of Items 301 and
402, respectively, of Regulation S-K, nothing came to their attention
as a result of the foregoing procedures that caused them to believe
that this information does not conform in all material respects with
the disclosure requirements of Items 301 and 402, respectively, of
Regulation S-K;

(iii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Registration Statements;

(iv) on the basis of the review referred to in clause (iii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:

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<PAGE>

(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles;

(B) at a specified date not more than five days prior to
the date of this Agreement, there was any change in the capital
stock or total long-term debt of the Company, or any increase in
short-term indebtedness of the Company (other than as a result of
the issuance of a $5,000,000 note to UUNET Technologies, Inc.),
or any decrease in net current assets (other than as a result of
the issuance of a $5,000,000 note to UUNET Technologies, Inc.),
or any material decrease in total assets or stockholders' equity
(without giving effect to the increase in stockholders' equity
resulting from the conversion of the Company's Series A
Convertible Preferred Stock into Common Stock) of the Company as
compared with amounts shown on the latest balance sheet included
in the Prospectus;

(C) for the period from the closing date of the latest
income statement included in the Prospectus to the specified date
referenced in clause (B) above there were any decreases, as
compared with the period of corresponding length ended the date
of the latest statement of operations in the Prospectus, in
revenues or any increase in the total primary or fully diluted
per share amounts of loss before extraordinary items or of net
loss;

except in all cases set forth in clauses (B) and (C) above, for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur; and

(v) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements with the results obtained
from inquiries, a reading of general accounting records of the Company
and other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to be in
agreement with such results.

For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement, "Registration Statements" shall mean the initial
registration statement as proposed to be amended by the last amendment or
post-effective amendment to be filed prior to its Effective Time, (ii) if
the Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and
delivery, "Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be filed
or as proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (iii) "Prospectus" shall mean the
prospectus included in the Registration Statements.

(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by the Underwriter. If the Effective Time of the Additional Registration
Statement

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<PAGE>

(if any) is not prior to the execution and delivery of the Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time the Prospectus
is printed and distributed to the Underwriter, or shall have occurred at
such later date as shall have been consented to by the Underwriter. If the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement, the Prospectus shall have been
filed with the Commission in accordance with the Act and the Rules and
Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company or the
Underwriter, shall be contemplated by the Commission.

(c) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Stock hereunder, the validity and form of
the certificates representing the Stock, the execution and delivery of this
Agreement, and all corporate proceedings and other legal matters incident
thereto, and the form of the Registration Statement and the Prospectus
(except financial statements) shall have been approved by counsel for the
Underwriter exercising reasonable judgment.

(d) The Underwriter shall not have advised the Company that the
Registration Statements or Prospectus, or any amendment or supplement
thereto, contains any untrue statement of fact or omits to state any fact
which the Underwriter has concluded, in good faith, is material and, in the
case of an omission, is required to be stated therein or is necessary to
make the statements therein not misleading.

(e) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred: (i) any change, or any development involving a
prospective change, in the condition (financial or other), results of
operations, business or properties of the Company which, in the judgment of
the Underwriter, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for the Stock; (ii) any suspension or limitation of trading
in securities generally on the New York Stock Exchange or Nasdaq National
Market, or any setting of minimum prices for trading on such exchange or
market, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iii) any banking
moratorium declared by Federal, New York or California authorities; (iv)
any outbreak or escalation of hostilities or other calamity or crises the
effect of which is such as to make it, in the judgment of the Underwriter,
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Stock; or (v) any material
adverse change in the financial or securities markets beyond normal
fluctuations, which, in the judgment of the Underwriter, makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Stock.

(f) The Underwriter shall have received an opinion, dated such
Closing Date, of Hunton & Williams, counsel for the Company, in form and
substance satisfactory to the Underwriter to the effect that:

(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with corporate power and authority to own its properties
and conduct its business as described in the Prospectus; and the
Company has been duly qualified to do business as a foreign
corporation under the laws of, and is in good standing as such in
every other state of the United States where the ownership or leasing
of property, or the conduct of its business

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<PAGE>

requires such qualification, except where the failure so to qualify
would not have a material adverse effect upon the Company;

(ii) to the knowledge of such counsel, the Company has no
subsidiaries and owns no securities of any other entity, except for
investment-grade, interest-bearing securities;

(iii) the authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus, and the shares of issued
and outstanding capital stock have been duly authorized and validly
issued and are fully paid and nonassessable;

(iv) the form of certificate for the shares of Stock to be
delivered hereunder is due and proper under the Delaware General
Corporation Law, and when such certificates are delivered to the
Underwriter or upon the Underwriter's order against payment of the
agreed consideration therefor in accordance with the provisions of
this Agreement, the shares of Stock represented thereby will be duly
authorized, validly issued, fully paid and nonassessable and the
stockholders of the Company have no preemptive rights with respect to
the Stock;

(v) to the knowledge of such counsel, there are no holders of
securities of the Company having rights to registration thereof except
as disclosed in the Prospectus; and, to the knowledge of such counsel,
no holders of registration rights have such rights with respect to the
offering being made by the Prospectus;

(vi) no consent, approval, authorization or order of, or filing
with, any governmental agency or body, any court or any self-
regulatory organization is required for the consummation of the
transactions contemplated by this Agreement in connection with the
sale of the Stock, except such as have been obtained and made under
the Act and such as may be required under state securities or blue sky
laws (as to which state securities laws such counsel need express no
opinion);

(vii) to the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened which are required to
be disclosed in the Registration Statements, other than those
disclosed therein;

(viii) to the knowledge of such counsel, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments, documents or agreements required to be described or
referred to in the Registration Statements or to be filed as exhibits
thereto other than those described or referred to therein or filed as
exhibits thereto; and, to the knowledge of such counsel, no default
exists in the due performance or observance by the Company of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument, agreement or document so described, referred to or filed;

(ix) this Agreement has been duly authorized, executed and
delivered by the Company;

(x) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, the charter or bylaws of the Company,
any statute or any rule or regulation of any governmental

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<PAGE>

agency or body, or, to the knowledge of such counsel, any order of any
governmental agency or body or any court having jurisdiction over the
Company or any of its properties, or, to the knowledge of such
counsel, any material agreement or instrument to which the Company is
a party or by which the Company is bound or to which any of the
properties of the Company is subject;

(xi) the information in the Registration Statement, to the
extent that it describes matters of law, statutes, legal and
government proceedings and contracts and other documents, is accurate
in all material respects and fairly presents the information required
to be shown;

(xii) the Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statement (if any) was filed and
became effective under the Act as of the date and time (if
determinable) specified in such opinion, the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule 424(b)
under the Act specified in such opinion on the date specified therein
or was included in the Initial Registration Statement or the
Additional Registration Statement (as the case may be), and, to the
knowledge of such counsel, no stop order suspending the effectiveness
of a Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of their
respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; and

(xiii) the Company is not and, after giving effect to the
offering and sale of the Stock and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.

Such counsel shall also state that it has participated in conferences
with officers and other representatives of the Company, representatives of
the Underwriter and representatives of the independent certified public
accountants of the Company during which the contents of the Registration
Statements and the Prospectus and related matters were discussed and,
although such counsel does not pass judgment upon and does not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in any Registration Statement or the Prospectus, nothing has come
to the attention of such counsel that has caused such counsel to believe
that any part of any Registration Statement or any amendment thereto, as of
its effective date or as of such Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto,
as of its issue date or as of such Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading
(except that such counsel need express no opinion as to the financial
statements, financial statement schedules or other financial data included
therein).

(g) The Underwriter shall have received from Morgan, Lewis & Bockius
LLP, counsel to the Underwriter, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Company, the
validity of the Stock, the Registration Statements, the

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<PAGE>

Prospectus and other related matters as the Underwriter may require, and
the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.

(h) The Underwriter shall have received a certificate, dated such
Closing Date, of the President and Chief Financial Officer of the Company
to the effect that the representations and warranties of the Company in
this Agreement are true and correct on and as of such Closing Date to the
same effect as if made on such Closing Date, that the Company has complied
in all material respects with all agreements and satisfied in all material
respects all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date, that no stop order suspending the
effectiveness of any Registration Statement has been issued and, to their
knowledge, no proceedings for that purpose have been instituted or are
contemplated by the Commission, that the Additional Registration Statement
(if any) satisfying the requirements of subparagraphs (1) and (3) of Rule
462(b) was filed pursuant to Rule 462(b), including payment of the
applicable filing fee in accordance with Rule 111(a) or (b) under the Act,
prior to the time the Prospectus was printed and distributed to the
Underwriter and that there has not been, since the date hereof or since the
respective dates as of which information is given in the Registration
Statements and the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the results of operations,
business affairs or business prospects of the Company.

(i) The Underwriter shall have received a letter, dated such Closing
Date, of Price Waterhouse LLP which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than five days prior to such Closing
Date for the purposes of this subsection.

(j) The Stock shall have been duly admitted for quotation on Nasdaq
National Market as of the First Closing Date.

(k) The Company shall have obtained and delivered to the Underwriter
executed copies of an agreement from each securityholder of the Company
that owns, in the aggregate (assuming for this purpose the conversion of
all securities convertible into Common Stock and the exercise of all
options and warrants to purchase Common Stock owned by such
securityholder), 10,000 or more shares of Common Stock, and each director
and each officer of the Company in form and substance satisfactory to the
Underwriter to the effect that such persons will not, for a period of one
year after the date of the Prospectus offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, any shares of Common Stock
or securities convertible into or exchangeable or exercisable for any
shares of Common Stock, or publicly disclose the intention to make any such
offer, sale, pledge or disposal without the prior written consent of the
Underwriter.

The Company will furnish the Underwriter with such manually signed or
conformed copies of such opinions, certificates, letters and documents as
the Underwriter reasonably requests.

7. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company will indemnify and hold harmless the Underwriter
against any losses, claims, damages or liabilities, to which the
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement, the
Prospectus, or any amendment or

-15-
<PAGE>

supplement thereto, or any related preliminary prospectus, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Underwriter for
any legal or other expenses reasonably incurred by the Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by the Underwriter expressly for use
therein, it being understood and agreed that the only such information
provided by the Underwriter consists of the information described as such
in subsection (b) below. The obligation of the Company to indemnify the
Underwriter pursuant hereto is subject to the condition that, insofar as
such losses, claims, damages or liabilities relate to any such untrue
statement, alleged untrue statement, omission or alleged omission made in a
preliminary prospectus, such indemnity shall not inure to the benefit of
the Underwriter, if, but only to the extent that, such losses, claims,
damages or liabilities resulted because (i) the Underwriter failed to
deliver a copy of the Prospectus to such person asserting such losses,
claims, damages or liabilities at or prior to the time delivery of the
Prospectus is required by the Act, unless such failure was due to the
failure of the Company to provide copies of the Prospectus to the
Underwriter, (ii) such untrue statement, omission or alleged omission
contained in a preliminary prospectus was corrected in the Prospectus, and
(iii) the delivery of the Prospectus to such person would have constituted
a valid defense to the losses, claims, damages or liabilities asserted by
such person.

(b) The Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by the Underwriter
expressly for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such
expenses are incurred. For all purposes of this Agreement, the information
set forth (i) on the last paragraph of the cover page of the Prospectus,
(ii) on page 2 of the Prospectus regarding stabilization and (iii) in the
fourth and ninth paragraphs under "Underwriting" in the Prospectus is the
only information furnished to the Company by the Underwriter for use in the
Registration Statements or the Prospectus, or any related preliminary
prospectus.

(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the failure so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under subsection (a) or (b) above. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be

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<PAGE>

entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under subsection (a) or (b) above for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of, or consent to the entry of any
judgment with respect to, any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such
settlement or judgment includes an unconditional release of such
indemnified party from all liability on any claims that are the subject
matter of such action.

(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriter on the
other from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand
and the Underwriter on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the Underwriter on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bears to the total underwriting discount
received by the Underwriter, in each case as set forth on the cover page of
the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriter and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection
(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), the Underwriter
shall not be required to contribute any amount in excess of the amount by
which the underwriting discount applicable to the Stock exceeds the amount
of any damages which the Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls the Underwriter within the meaning of the Act; and the obligations
of the Underwriter under this Section shall be in addition to any liability
which the Underwriter may otherwise have and shall extend, upon the same
terms and conditions,

-17-
<PAGE>

to each director of the Company, to each officer of the Company who has
signed a Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.

8. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers, and of the Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Stock. If for any reason the purchase of the Stock by the
Underwriter is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriter under Section 7 shall remain in
effect, and if any shares of Stock have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall also remain in effect. If the purchase of the Stock by the Underwriter is
not consummated for any reason other than solely because of the occurrence of
any event specified in clause (ii), (iii), (iv) or (v) of Section 6(e), or
solely because the condition set forth in Section 6(j) is not satisfied solely
due to the failure of the Company to have 400 stockholders, in addition to
paying the costs, fees and expenses referred to in the last paragraph of Section
5, the Company will reimburse the Underwriter for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by it in
connection with the offering of the Stock.

10. NOTICES. All communications hereunder will be in writing and, if sent
to the Underwriter, will be mailed, delivered or sent by facsimile transmission
and confirmed to Invemed Associates, Inc., 375 Park Avenue, Suite 2205, New
York, New York 10152, Attention: President; or, if sent to the Company, will be
mailed, delivered or sent by facsimile transmission and confirmed to its address
set forth in the Registration Statements, Attention: President.

11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder. No purchaser of Stock from
the Underwriter shall be deemed to be a successor by reason merely of such
purchase.

12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.

13. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflict of laws.

The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.

-18-
<PAGE>

If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us one of the counterparts hereof, whereupon it will
become a binding agreement between the Company and the Underwriter in accordance
with its terms.

Very truly yours,

EARTHLINK NETWORK, INC.

By:_________________________________
Name:
Title:

The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.

INVEMED ASSOCIATES, INC.

By: _____________________________
Name:
Title:

-19-

<PAGE>

EXHIBIT 10.16(a)

AMENDMENT NO 1 TO PRODUCTION AND DISTRIBUTION AGREEMENT

This Amendment No. 1 ("Amendment No. 1") as dated as of the 20th day of
December, 1996 and relates to that certain Production and Distribution
Agreement (the "Agreement") by and between EarthLink Network, Inc.
("EarthLink") and National Media Corporation ("National"), dated
May 6, 1996.

Whereas, on December 4, 1996, EarthLink effected a one-for-two stock
combination.

Whereas, EarthLink and National wish to amend the Agreement to reflect the
occurrence of such stock combination.

In exchange for mutual consideration, the receipt and adequacy of which is
hereby acknowledged, the parties to the Agreement amend the Agreement as
follows.

1) Sections 4.2(a) and (b) of the Agreement are amended to read in their
entirety as follows:

"(a) WARRANTS FOR EARTHLINK SPOTS. EarthLink shall provide National
with warrants to purchase 25,000 shares of EarthLink's common stock
upon EarthLink's approval of the Short Spot and warrants to purchase
an additional 25,000 shares of EarthLink's common stock upon
EarthLink's approval of the Long Spot. The exercise price for all
such warrants shall be $9.76 per share.

(b) WARRANTS FOR NATIONAL CUSTOMERS. EarthLink shall provide National
with warrants to purchase one share of EarthLink common stock for
each two National Customers who subscribe to and pay in full for the
ELN Service for at least 60 days from the date of registration, up
to a maximum of warrants for 300,000 shares of EarthLink common
stock. The exercise price for all such warrants shall be $9.76 per
share with respect to all warrants so earned on or before December
31, 1997 and the fair market value of EarthLink's common stock, as
determined by EarthLink's Board of Directors, (or, if EarthLink's
common stock is publicly traded, the then-applicable 30-day average
closing price thereof) with respect to all warrants so earned from
and after January 1, 1998."

2) Section 4.2(d) shall be added to the Agreement to read in its entirety
as follows:

"4.2(d) To the extent that any further stock combinations or stock
splits shall be undertaken by EarthLink prior to the issuance of any
of the above warrants described in Section 4, the stock underlying
any warrants thereafter issued hereunder, the exercise price with
respect to such warrants and the number of National Customers whose
subscriptions and payment in full for the ELN Service for at least
60 days from the date of registration shall entitle National to
receive a warrant to purchase one share of common stock shall all
be adjusted proportionately to reflect such stock combination or
stock split.

<PAGE>

3) Other than as set forth herein the terms of the Agreement shall not be
effected by this Amendment No. 1.

In Witness Whereof, the parties hereto have executed this Amendment No. 1 as
of the day and year first above written.

EARTHLINK NETWORK, INC.

By: /s/ CHARLES G. BETTY
------------------------------

Title: President and C.E.O.
---------------------------

NATIONAL MEDIA CORPORATION

By: /s/ MARK P. HERSHHORN
------------------------------

Title: Chief Executive Officer
---------------------------

<PAGE>

EXHIBIT 10.19

INTERNET-SIGN UP WIZARD REFERRAL AND MICROSOFT INTERNET
EXPLORER LICENSE AND DISTRIBUTION AGREEMENT

This Internet-Sign Up Referral and Microsoft Internet Explorer License
and Distribution Agreement ("Agreement") is made and entered into this 16th
day of August, 1996 ("Effective Date"), by and between MICROSOFT CORPORATION,
a Washington corporation, One Microsoft Way, Redmond, WA 98052-6399 ("MS"),
and Earthlink Network, Inc., a Delaware corporation, including its majority
owned subsidiaries and affiliates (collectively, "COMPANY").

INTRODUCTION

This Agreement includes two distinct business arrangements.

Under the first arrangements, MS plans to develop and distribute an
"Internet Connection Wizard" as a means of promoting internet access services
for various Internet access service providers, including COMPANY, and of
acquiring subscribers for such access services. COMPANY will pay MS a
referral fee for each subscriber acquired by means of the Internet Connection
Wizard.

Under the second arrangement, COMPANY may distribute, on a royalty-free
basis, a customized version of Microsoft Internet Explorer to subscribers
or potential subscribers of its Internet access services.

In consideration of the mutual promises and covenants contained herein,
the parties agree as follows:

1. DEFINITIONS. The following terms, whenever initially capitalized, shall
have the following meanings for purposes of this Agreement:

1.1 "Access" shall mean telecommunications facilities and services that
enable a computer user to access and use Internet sites and content by means
of a TCP/IP connection.

1.2 "COMPANY Information" shall mean information regarding or relating to
the ISP Service such as order processing information, fees, service plans,
etc., and other information that is reasonably necessary to describe and
solicit orders of the ISP Service to the ISP Subscriber and/or such other
information that has been mutually agreed to by the parties.

1.3 "Comic Chat" shall mean the graphical Internet chat client in all
available language versions requested by COMPANY, and for all available
platforms.

1.4 "Criteria" shall mean the applicable Internet Explorer criteria as
defined in the Microsoft Internet Explorer Logo Qualification Criteria,
attached to Exhibit G as Attachments 1 and 2, and such future versions as
established by MS in its sole discretion.

1.5 "Guidelines" shall mean the guidelines for use of the Logo as
outlined in the Microsoft Internet Explorer Logo Usage Guidelines which are
attached hereto as Exhibit G and H and are an integral part of this Agreement.

1.6 "IEAK" shall mean the Internet Explorer Administration Kit, including
any updates to the IEAK as may be provided by MS from time to time, which
contains a single copy of the Licensed Software in object code as well as a
set of tools that enable COMPANY to perform limited customizations

LICENSE #7691-6250

* -- Confidential portions of this exhibit have been omitted, marked with
asterisks (*) and filed separately with the Securities and Exchange
Commission pursuant to an application for confidential treatment.

<PAGE>

to the Licensed Software in order to facilitate the ISP Subscriber sign up
process, and to automate the task of creating diskettes/CD ROMs for
distribution. COMPANY shall use the IEAK in accordance with the instructions
in the IEAK and the Logo Guidelines provided by MS.

1.7 "Internet Connection Wizard" shall mean an electronic referral
mechanism to be developed by MS to promote the ISP services for various ISP
service providers, including COMPANY, and which ordering mechanism shall
enable the end user to order ISP Service via a link to COMPANY's Sign-up
Server or other method mutually agreed to by the parties. The Internet
Connection Wizard shall prompt the ISP Subscriber to enter various Locator
Information. The Internet Connection Wizard shall be launched from an icon on
the "desktop" of the English language version of Windows 95 designated as "The
Internet" or such other name designated by MS. MS may include the Internet
Connection Wizard in other MS products as determined by MS. An overview of
the referral and ordering process is set forth in Exhibit Z.

1.8 "Internet Explorer" shall mean the (a) Microsoft Internet Explorer
(Domestic English Language and such other foreign language versions requested
by COMPANY and which MS has available) for the following platforms: Windows
3.x (including Windows for Workgroups 3.x), Windows NT 3.x, Windows 95 and
Apple Macintosh; and (b) a customized version of Internet Explorer created
through the use of the IEAK. Availability of various versions of Internet
Explorer is summarized in Exhibit F.

1.9 "Internet Mail and News" shall mean the client for email and Internet
newsgroups in all available language versions requested by COMPANY, and for all
available platforms.

1.10 "Internet Product" shall mean any COMPANY product which provides
access to or information about the Internet. An Internet Product may not be a
personal computer. For purposes of this Agreement, "ISP Service" (defined
below) shall be a type of Internet Product.

1.11 "Internet Site" shall mean COMPANY's worldwide web site(s) which
meet the applicable Criteria.

1.12 "ISP Information" shall mean information regarding or relating to
internet access services (including the ISP Service) such as order processing
information, fees, service plans, ETC., and other information that is
reasonably necessary to describe and solicit orders of such internet access
services to the internet access service subscriber and/or such other
information that has been mutually agreed to by MS and an internet service
provided (including COMPANY).

1.13 "ISP Information Page" shall mean a HTML based page which includes
ISP Information, to be maintained by COMPANY and hosted on the MS Referral
Server. The ISP Information Page shall be downloaded to the prospective ISP
Subscriber as part of the ordering and referral process.

1.14 "ISP Phone Book(s)" shall mean a listing of names of ISPs and
associated telephone numbers and other ISP Information, including COMPANY
Information. ISP Phone Books may be unique to a given telephone area code
and/or geographic region. There may be one or more ISP Phone Books specific
to a single telephone area code, geographic region or Service Area. The ISP
Phone Book(s) shall be hosted on one or more Referral Server(s). MS shall
solely determine the placement, presentation and content of COMPANY
Information in the ISP Phone Book(s).

1.15 "ISP Referral Fee" shall mean an amount set forth in Exhibit D for
each new ISP Subscriber. COMPANY shall receive a credit for each ISP
Subscriber for which an ISP Referral Fee was previously paid, who cancels the
ISP Service account within ninety (90) days of initiation of the ISP Service.

1.16 "ISP Service" shall mean a COMPANY service, listed in Exhibit B,
which provides an internet protocol (IP) access service to the Internet as
contemplated by this Agreement. The parties

<PAGE>

acknowledge that COMPANY may provide access to the Internet via other
Internet Product(s) not listed in Exhibit B.

1.17 "ISP Subscriber" shall mean any individual or legal entity who
subscribes to the ISP Service through or as a result of the Internet
Connection Wizard.

1.18 "License Key" shall mean the 10-digital alpha numeric code provided
by MS that enables COMPANY to use the customization features in the IEAK.

1.19 "Licensed Software" shall mean, collectively, Internet Explorer,
NetMeeting, Internet Mail and News, and Comic Chat.

1.20 "Locator Information" shall mean an ISP Subscriber's name, email and
conventional mailing addresses, telephone and facsimile numbers, credit card
number, and any other data about such subscriber that enables the possessor of
such information to personally identify the end user.

1.21 "Logo" shall mean the "Microsoft-Registered Trademark- Internet
Explorer" logo depicted in the Guidelines or such additional or replacement
logos as MS may provide from time to time under this Agreement.

1.22 "NetMeeting" shall mean Microsoft's realtime collaboration and
communication software in all available language versions requested by
COMPANY, and for all available platforms.

1.23 "Referral Server" shall mean a server maintained by MS which shall
provide an ISP Subscriber with one or more ISP Phone Books, and which shall
enable the ISP Subscriber to transmit ordering information, via the Internet
Connection Wizard to the Sign-up Server.

1.24 "Service Area" shall mean the area in which COMPANY currently
provides or will provide Access, as of the Effective Date, as set forth in
Exhibit B.

1.25 "Sign-up Server" shall mean a server maintained by COMPANY which
shall enable the ISP Subscriber to order ISP Service from COMPANY and shall
further enable COMPANY to configure the ISP Subscriber's copy of the Licensed
Software (hosted on the ISP Subscriber's computer), all via online
transmission. COMPANY shall use the Sign-up Server to configure the ISP
Subscriber's copy of Licensed Software in accordance with the ISP Subscriber
Configuration Guidelines set forth in Exhibit E.

2. LICENSE FOR DISTRIBUTION OF CUSTOMIZED VERSION OF MICROSOFT INTERNET
EXPLORER; LOGO LICENSE; AND LICENSE RESTRICTIONS

2.1 MS grants to COMPANY a nonexclusive, limited worldwide, royalty-free
license during the term of this Agreement to (a) customize Internet Explorer
using the IEAK solely in accordance with the instructions provided in the
IEAK's "Custom ISK Wizard"; and (b) reproduce and distribute (directly and
indirectly) through COMPANY's distribution channel the Licensed Software
(including Internet Explorer as may be customized by COMPANY) to potential
end users of COMPANY's Internet Product(s). COMPANY acknowledges and agrees
that its use of the IEAK to customize Internet Explorer requires the rightful
receipt from MS of the License Key allocated to COMPANY. Except as provided
in Exhibit E, Company may not ********* ** *** ************ **** ** ********
******** ******* ** *** *** ************ ********** in the course of
Company's configuration of the ISP Subscriber's copy of Licensed Software.

2.2 COMPANY acknowledges and agrees that its use of the IEAK to customize
Internet Explorer requires the rightful receipt from MS of the License Key
allocated to COMPANY. COMPANY agrees that it shall use the IEAK solely in
accordance with the instructions provided in the IEAK's Custom

* - Confidential portions of this exhibit have been omitted, marked with
asterisks (*) and filed separately with the Securities and Exchange
Commission pursuant to an application for confidential treatment.

<PAGE>

ISK Wizard that is available to COMPANY upon input of the allocated License
Key and in accordance with the Logo Guidelines provided by MS.

2.3 If MS makes a new release (other than an "Update" release which is
designated by MS as a change in the hundredths digit ([x.x(x)]) of any
component of the Licensed Software available, then: (a) COMPANY may no longer
distribute the old version of the Licensed Software component, and may only
distribute such new release of the Licensed Software component with COMPANY's
Internet Product, provided, however that Company may continue to distribute
existing inventory of Company's Internet Product containing a prior version
of a Licensed Software component for a period of six (6) months following MS'
release of a new release; and (b) COMPANY must formally notify its customers
on COMPANY's home page for its main public web site that an upgrade of the
Licensed Software component is available at the download URL specified in the
most current version of the Internet Explorer Logo License Agreement located
on www.microsoft.com for Internet Explorer and at www.microsoft.com/ie for
other components of the Licensed Software. The text of the respective notices
must state: For Internet Explorer: "Microsoft has made available a new
version of Internet Explorer. Click the Internet Explorer Logo to upgrade
your browser today." and for other components: "Microsoft has made available a
new version of (NetMeeting/Internet Mail and News/Comic Chat). Go to
www.microsoft.com/ie to update you software today". This notification will
remain present on the COMPANY's main public web site until the earlier of
COMPANY's depletion of its outdated inventory, or until three (3) months
following the public availability of a new release.

2.4 Subject to and expressly conditioned upon compliance with the terms
and conditions of this Agreement, MS hereby grants to COMPANY a worldwide,
nonexclusive, non-assignable, nontransferable, royalty-free, right to use the
Logo solely in conjunction with COMPANY's Internet Site(s) and/or Internet
Product(s) and solely in the manner described in the Guidelines. COMPANY
agrees and acknowledges: MS owns the Logo; use of the Logo will inure to the
benefit of MS; COMPANY will not adopt, use, or register any corporate name,
trade name, trademark, service mark, or certification mark, or other
designation similar to, or containing in whole or in part, the Logo;
COMPANY's use of the Logo shall adhere to the Criteria.

2.5 COMPANY may not reverse engineer, decompile or disassemble the
Licensed Software.

2.6 COMPANY shall only distribute NetMeeting in conjunction with Internet
Explorer.

2.7 COMPANY may not permit further redistribution of the Licensed Software
by ISP Subscribers and end user customers of COMPANY's other internet access
services, if applicable.

2.8 COMPANY shall maintain and not alter or remove any copyright,
trademark and other protective notices contained in the Licensed Software,
including the end user license agreement ("EULA") which is included in the
setup installation of the Licensed Software. COMPANY shall also comply with
Microsoft's trademark guidelines with respect to the proper use of Microsoft
trademarks associated with the Licensed Software.

2.9 COMPANY shall require its distributors, dealers and others in its
distribution channels to comply with the relevant distribution terms of this
Agreement, in particular with Section 2.

2.10 COMPANY shall not modify, alter or remove contents of the Licensed
Software except as expressly provided in this Agreement.

2.11 All rights not expressly granted herein are reserved by MS.

3. MICROSOFT OBLIGATIONS

MS shall perform the following:

<PAGE>

3.1 DEVELOP INTERNET CONNECTION WIZARD AND ISP PHONE BOOK(S);
MAINTAIN ISP PHONE BOOK(S). Provided that COMPANY complies with its
obligations under this Agreement, MS shall include COMPANY's name, telephone
number and other mutually agreed upon COMPANY Information in the applicable
ISP Phone Book(s). Notwithstanding anything to the contrary in this
Agreement, MS may move COMPANY Information to another ISP Phone book or
remove COMPANY Information from one or all ISP Phone books if (a) during any
two calendar quarters COMPANY's shipments of Licensed Software (where
Internet Explorer is distributed ** *** **** *** *******) falls below
************ ******* ***** of total COMPANY shipments of all web browsers or
(b) commencing two calendar quarters after MS first distributes an Internet
Connection Wizard, during any single calendar quarter the number of new ISP
Subscribers for such quarter compared to the number of new subscribers of
other ISPs which appear in the same ISP Phone Book as COMPANY for such
quarter, is such that COMPANY is in the ****** ****** ******* ***** of all
ISPs listed in the ISP Phone Book. By way of example, if there are *** ***
ISPs in an ISP Phone Book ***** *** ******* *** *** ****** ****** ** ***
*********** ******** ** ***** **** ** *** *** ***** *****, then MS could move
COMPANY information to another ISP Phone Book or remove COMPANY information
from one or all ISP Phone Books. For purposes of Section 3.1(a) browser
shipment calculation shall exclude those copies of a web browser shipped by
******** ******** ********** ****** ** ******* **

3.2 DISTRIBUTION OF INTERNET CONNECTION WIZARD. Incorporate the
Internet Connection Wizard into an icon on the "desktop" of the English
language version of Windows 95 designated as "The Internet" or such other
name designated by MS.

3.3 REFERRAL SERVER. Develop and maintain Referral Server.

3.4 PROMOTION. Include information concerning the ISP Service in press
releases and marketing activities related to promotion of the Internet
Connection Wizard.

4. COMPANY OBLIGATIONS
-------------------

COMPANY shall perform the duties described in Exhibit C.

5. PAYMENT AND REPORTING
---------------------

5.1 ADVANCE. In Consideration for MS including information regarding
the ISP Services in the ISP Phone Book, COMPANY shall distribute up to ******
****** of Microsoft Internet Explorer to its current customer base ** *******
according to Exhibit D Section 4. Advance shall be ****** **** ******* ******
** *** ******** *** ******** ********* shipped to subscribers before 9/30/96.
COMPANY shall pay the Advance to MS on or before 9/30/96.

5.2 ISP REFERRAL FEE. In consideration of each ISP Subscriber, COMPANY
shall pay MS the ISP Referral Fee for each subscription for ISP Service
ordered by each ISP Subscriber.

5.3 REPORTING. Within forty five (45) days after the end of each
calendar quarter, COMPANY shall furnish MS a statement together with payment
for any amount shown thereby to be due to MS. The royalty statement shall be
based upon ISP Referral Fees for the quarter then ended, and shall be in the
form of the sample report included on Exhibit D. Late payment(s), including
receipts for foreign taxes withheld, if applicable, shall bear interest at
the rate of one and one-half percent (1.5%) per month or the maximum rate
allowable by applicable law, from the date such payment is due until the date
it is actually paid. COMPANY's report shall include for each version of the
Licensed Software, the number of copies of the Licensed Software licensed or
distributed by or for COMPANY during that calendar quarter, including
"competitive upgrade" copies as described in Exhibit D. In the event that no
copies were licensed or distributed by or for COMPANY during a calendar
quarter, COMPANY shall indicate this on the report. COMPANY's report shall
further include the number of copies of all web browsers licensed or

<PAGE>

distributed by or for COMPANY during that calendar quarter. All such reports
shall be maintained in confidence by MS and shall not be disclosed to any
third party except to its immediate legal and financial consultants as may be
required in the ordinary course of MS' business.

5.4 All amounts due hereunder shall be sent to the address listed in
Section 11. All amounts due hereunder are exclusive of any taxes, duties,
fees, excises or tariffs imposed on any of COMPANY's activities in connection
with this Agreement. Such charges, if any, shall be paid by COMPANY.

6. ACCEPTANCE, DISCLAIMER OF WARRANTY AND LIMITATION OF LIABILITY
--------------------------------------------------------------

6.1 The Licensed Software and IEAK are deemed accepted by COMPANY.

6.2 Neither the COMPANY nor any of its employees shall have any right to
make any representation, warranty, or promise on behalf of MS.

6.3 THE LICENSED SOFTWARE AND IEAK ARE PROVIDED TO COMPANY AS IS WITHOUT
WARRANTY OF ANY KIND. THE ENTIRE RISK AS TO THE RESULTS AND PERFORMANCE OF THE
LICENSED SOFTWARE AND IEAK ARE ASSUMED BY COMPANY AND THE END-USER CUSTOMER.
MS DISCLAIMS ALL WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT.

6.4 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY DIRECT (EXCEPT AS TO
AMOUNTS OWED HEREUNDER), CONSEQUENTIAL, INDIRECT, INCIDENTAL, OR SPECIAL
DAMAGES WHATSOEVER, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF
BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, AND
THE LIKE, ARISING OUT OF THE USE OF OR INABILITY TO USE THE LICENSED SOFTWARE
OR IEAK, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. BECAUSE SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF
LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES, THE ABOVE LIMITATION MAY
NOT APPLY.

6.5 Not withstanding Section 6.4:

(a) MS agrees to defend COMPANY against, and pay the amount of any adverse
final judgment (or settlement to which MS consents) resulting from, third
party claim(s) (hereinafter "Indemnified Claims") that the Internet Explorer
infringes any copyright or trade secret enforceable in any included
Jurisdictions (defined in Section 6.5(d), below); provided MS is notified
promptly in writing of the Indemnified Claim and has sole control over its
defense or settlement, and COMPANY provides reasonable assistance in the
defense of the same at MS expense for COMPANY's reasonably incurred
out-of-pocket expenses.
(b) In the event MS receives information concerning an intellectual
property infringement claim (including an Indemnified Claim) related to the
Internet Explorer, MS may at its expense, without obligation to do so, either
(i) procure for COMPANY the right to continue to distribute the alleged
infringing Internet Explorer or (ii) replace or modify the Internet Explorer
to make it non-infringing, and in which case, COMPANY shall thereupon cease
distribution of the alleged infringing Internet Explorer.
(c) MS shall have no liability for any intellectual property infringement
claim (including an Indemnified Claim) based on COMPANY's (i) manufacture,
distribution, or use of any Internet Explorer after MS' notice that COMPANY
should cease manufacture, distribution, or use of such Internet Explorer due
to such a claim; or (ii) unauthorized combination of a Internet Explorer with
any other product, program or data; or (iii) unauthorized adaptation or
modification of any Internet

<PAGE>

Explorer. For all claims described in this Section 6.5(c), COMPANY agrees to
defend and indemnify MS to the same extent that MS is obligated to defend and
indemnify COMPANY under Sections 6.5(a), 6.5(b) and 6.5(c).
(d) MS shall have no obligation to COMPANY for any Indemnified Claims
which arise outside the geographical boundaries of the United States, Canada,
Australia, Japan, the European Union, and Norway ("Included Jurisdictions").

7. TERM OF AGREEMENT
-----------------

The term of this Agreement shall commence as of the Effective Date and shall
continue for a period of two (2) years. Thereafter, this Agreement shall
automatically renew for successive one year terms unless either party gives
the other party thirty (30) days written notice of its intent not to renew.
Either party may terminate for any reason upon 30 days written notice.

8. DEFAULT AND TERMINATION
-----------------------

8.1 This Agreement may terminate earlier if any of the following events
of default occur: (a) if COMPANY materially fails to perform or comply with
this Agreement or any provision hereof; (b) if COMPANY fails to strictly
comply with the provisions of Section 10 or makes or attempts to make an
assignment in violation of Section 13.5; (c) if COMPANY becomes insolvent or
admits in writing its inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors; (d) if a petition under any foreign,
state, or United States bankruptcy act, receivership statute, or the like, as
they now exist, or as they may be amended, is filed by COMPANY; or (e) if
such a petition is filed by any third party, or an application for a receiver
of COMPANY is made by anyone and such petition or application is not resolved
favorably to COMPANY within sixty (60) days.

8.2 Termination under subsection 8.1(b) shall be effective as of the
date notice is given. In all other cases, termination shall be effective
thirty (30) days after notice of termination to COMPANY if COMPANY's defaults
have not been cured. The rights and remedies of MS provided in this Section
shall not be exclusive and are in addition to any other rights and remedies
provided by law or this Agreement.

8.3 Upon termination of this Agreement for any reason, COMPANY must
cease distribution of the Licensed Software. Upon termination of this
Agreement, COMPANY's Information shall be immediately removed from the ISP
Phone Book(s). If this Agreement is terminated other than due to COMPANY's
default, COMPANY may distribute Licensed Software remaining in inventory as
of such termination date for a period of three (3) months. After such time,
COMPANY shall destroy all full or partial copies of the Licensed Software and
IEAK in COMPANY's possession or under its control. If this Agreement is
terminated for cause pursuant to Section 8, COMPANY shall return to MS or
destroy all full or partial copies of the Licensed Software and IEAK in
COMPANY'S possession or under its control within ten (10) days following the
termination date, including any in-house copies COMPANY may have produced.

8.4 End user licenses validly granted prior to expiration or termination
of this Agreement shall survive termination or expiration of this Agreement.

8.5 Sections 1, 5, 6, 8, 10, 11, 12 and 13 shall survive termination of
this Agreement.

9. SUPPORT
-------

9.1 COMPANY shall have the sole responsibility and expense for providing
all support for the Sign-up Server and all support needed by ISP Subscribers
for the Licensed Software and the ISP Service.

<PAGE>

9.2 MS will provide COMPANY (but not ISP Subscribers) support for the
Internet Connection Wizard. Except for such support, this Agreement does not
include technical support from MS to COMPANY. Technical support may be
available from MS or an MS subsidiary pursuant to a separate agreement.

10. NONDISCLOSURE AGREEMENT

COMPANY shall keep confidential the terms and conditions of this Agreement,
and other non-public information and know-how disclosed to COMPANY by MS.
However, COMPANY may disclose the terms and conditions of this Agreement in
confidence as follows: (1) in confidence to its immediate legal and financial
consultants as required in the ordinary course of COMPANY's business; (2) to
the SEC or others as legally required in connection with a public offering of
the COMPANY's stock, in which event COMPANY will inform MS of the date and
content of its filing and will cooperate with MS in attempting to keep as
many of the terms of this agreement confidential as possible, especially the
financial terms; (3) to COMPANY's Affinity Marketing Partners only upon
specific request of such partners and then only page 1, paragraph 2.1 and the
signature page.

11. NOTICES AND REQUESTS

All notices, authorizations, and requests in connection with this Agreement
shall be deemed given on the day they are (i) deposited in the U.S. mails,
postage prepaid, certified or registered, return receipt requested; or (ii)
sent by overnight courier, charges prepaid, with a confirming fax; and
addressed as follows:

NOTICES TO COMPANY:

EarthLink Network, Inc.
3100 New York Drive
Pasadena, CA 91107

Attn: Garry Betty, President
Telephone: (818) 296 2408
Fax: (818) 296 4161

NOTICES TO MS AND PAYMENTS/VOLUME DISTRIBUTIONS SUMMARIES:

Notices: MICROSOFT CORPORATION
One Microsoft Way
Redmond, WA 98052-6399

Attn: Senior Vice President, Systems
Copy to: Law & Corporate Affairs, US Legal
Fax: (206) 936-7209

Payments/Volume MICROSOFT CORPORATION
Distribution Remittance Processing
Summaries: P.O. Box 84808
Seattle, WA 98124-6108

or such other address as the party to receive the notice or request so
designates by written notice to the other.

12. AUDITS

8
<PAGE>

12.1 During the term of this Agreement, COMPANY agrees to keep all
usual and proper records and books of account and all usual and proper
entries relating to COMPANY's ISP Subscriptions sufficient to substantiate
the number of ISP Subscribers. COMPANY shall maintain on COMPANY premises
such records for itself and for each Subsidiary which exercises rights under
this Agreement.

12.2 In order to verify statements issued by COMPANY and COMPANY's
compliance with the terms of this Agreement, MS may cause an audit to be made
of COMPANY's applicable books and records. Any audit shall be conducted
during regular business hours at COMPANY's facilities upon reasonable advance
notice. Any audit shall be conducted by an independent certified public
accountant of national stature selected by MS (other than on a contingent fee
basis).

12.3 COMPANY agrees to provide MS' designated audit team access to the
relevant COMPANY's records and facilities.

12.4 Prompt adjustment shall be made to compensate for any errors or
omissions disclosed by such audit. Any such audit shall be paid for by MS
unless material discrepancies are disclosed. "Material" shall mean the under
reporting of five percent (5%) of the amount due. If material discrepancies
are disclosed, COMPANY agrees to pay MS for the costs associated with the
audit in addition to the amount of any discrepancy.

13. GENERAL

13.1 This Agreement shall be construed and controlled by the laws of the
State of Washington, and COMPANY consents to jurisdiction and venue in the
state and federal courts sitting in the State of Washington. Process may be
served on either party in the manner provided in Section 11 above, or by such
other method as is authorized by law.

13.2 Neither this Agreement, nor any terms and conditions contained
herein, shall be construed as creating a partnership, joint venture, agency
relationship or as granting a franchise.

13.3 This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements or communications. It shall not be modified
except by a written agreement dated subsequent to the date of this Agreement
and signed on behalf of COMPANY and MS by their respective duly authorized
representatives. No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of
the same of any other provisions hereof, and no waiver shall be effective
unless made in writing and signed by an authorized representative of the
waiving party.

13.4 If any provision of this Agreement shall be held by a court of
competent jurisdiction to be illegal, invalid or unenforceable, the remaining
provisions shall remain in full force and effect.

13.5 The rights and obligations hereunder shall inure to the benefit of
the successors of the parties hereto, provided any rights or obligations
hereunder shall not be assigned by COMPANY without the prior written approval
of MS. COMPANY hereby agrees that it will remain responsible for and guarantee
the compliance of each majority owned subsidiary or affiliate which exercises
rights under this Agreement.

13.6 Any Licensed Software which COMPANY distributes or licenses to or
on behalf of the United States of America, its agencies and/or
instrumentalities (the "Government"), is provided to COMPANY with RESTRICTED
RIGHTS. Use, duplication or disclosure by the Government is subject to
restriction as set forth in subparagraph (c)(l)(ii) of the rights in
Technical Data and Computer Software clause at DFAR 252.227-7013, or as set
forth in the particular department or agency regulations or rules which
provide Microsoft protection equivalent to or greater than the above-cited
clause. COMPANY shall comply with any requirements of the Government to
obtain such RESTRICTED RIGHTS protection,

<PAGE>

including without limitation, the placement of any restrictive legends on the
Tool documentation and any license agreement used in connection with the
distribution thereof. Manufacturer is Microsoft Corporation, One Microsoft
Way, Redmond, Washington 98052-6399. Under no circumstances shall Microsoft
be obligated to comply with any Governmental requirements regarding cost and
pricing data and cost accounting. For any distribution or license of the
Licensed Software that would require compliance by Microsoft with
Governmental requirements relating to cost and pricing data or cost
accounting, COMPANY must obtain an appropriate waiver or exemption from such
requirements for the benefit of Microsoft from the appropriate Governmental
authority before the distribution and/or license of the Licensed Software to
the Government.

13.7 COMPANY acknowledges that the Licensed Software and IEAK are
subject to the export control laws and regulations of the US, and any
amendments thereof. COMPANY confirms that with respect to the Licensed
Software, it will not export or re-export them, directly or indirectly,
either to (a) any countries that are subject to US export restrictions
(currently including, but not necessarily limited to, Cuba, the Federal
Republic of Yugoslavia (Serbia and Montenegro), Iran, Iraq, Libya, North
Korea, and Syria); (b) any end user who COMPANY knows or has reason to know
will utilize them in the design, development or production of nuclear,
chemical or biological weapons; or (c) any end user who has been prohibited
from participating in the US export transactions by any federal agency of the
US government. COMPANY further acknowledges that the Licensed Software and
IEAK may include technical data subject to export and re-export restrictions
imposed by US law.

13.8 COMPANY shall, at its own expense, obtain and arrange for the
maintenance in full force and effect of all governmental approvals, consents,
licenses, authorizations, declarations, filings, and registrations as may be
necessary for the performance of all of the terms and conditions of the
Agreement including, but not limited to, foreign exchange approvals, import
and offer agent licenses, fair trade approvals and all approvals which may be
required to realize the purposes of the Agreement.

13.9 In the event income taxes are required to be withheld by any
non-U.S.A. government on payments required hereunder, COMPANY may deduct such
taxes from the amount owed MS and pay them to the appropriate tax authority.
COMPANY shall promptly deliver to MS an official receipt for any such taxes
withheld or other documents necessary to enable MS to claim a U.S.A. Foreign
Tax Credit. COMPANY will make certain that any taxes withheld are minimized
to the extent permitted by the applicable law.

13.10 If either MS or COMPANY employs attorneys to enforce any rights
arising out of or relating to this Agreement, the prevailing party shall be
entitled to recover reasonable attorney's fees and costs.

13.11 The following Exhibits are part of the Agreement:

Exhibit B Company ISP Service(s)
Exhibit C Company Obligations
Exhibit D ISP Referral Fees
Exhibit E ISP Subscriber Configuration Guidelines
Exhibit F Internet Explorer
Exhibit G Microsoft -Registered Trademark- Internet Explorer Online
Logo Usage Guidelines
Attach 1&2 Microsoft Internet Explorer Logo Qualification
Criteria
Exhibit H Microsoft -Registered Trademark- Internet Explorer
Standard Logo Usage Guidelines
Exhibit X Microsoft Frontpage Server Extensions
Exhibit Y Current agreement list.
Exhibit Z Windows 95 ISP Referral and Ordering Process

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above. All signed copies of this Agreement shall be deemed
originals.

MICROSOFT CORPORATION EarthLink Network, Inc.
---------------------------
(COMPANY)

/s/ Cameron D. Myhrvold /s/ Charles G. Betty
- -------------------------- ---------------------------
By (sign) By (sign)

Cameron D. Myhrvold Garry Betty
- -------------------------- ---------------------------
Name (Print) Name (Print)

VP-Public Network Sales Its President
- -------------------------- ---------------------------
Title Title

9-19-96 8/16/96
- -------------------------- ---------------------------
Date Date

<PAGE>

EXHIBIT B
COMPANY'S ISP SERVICE(S)

EarthLinks co-branded
Affinity Marketing Program

COMPANY SERVICE AREA

Currently United States and Canada

<PAGE>

EXHIBIT C

COMPANY OBLIGATIONS (NOTE: MS OBLIGATIONS ARE SET FORTH IN SECTION 3)

COMPANY SHALL PERFORM THE FOLLOWING DUTIES/OBLIGATIONS;

1. Offer the ISP Services(s).

2. Develop and maintain a Sign-up-Server. The Sign-up Server shall be
operational on a 7X24 basis.

3. Estabilsh a toll free telephone number, or any other communication
medium mutually agreed to by the parties for the processing of orders for ISP
Subscribers. COMPANY shall notify MS in writing by a mutually agreed upon
date of such specific communication medium or other relevant means of order
entry secured by COMPANY for the ISP Service and any other COMPANY
Information. COMPANY shall use unique numbers, extensions or addresses so as
to ensure that all ISP Subscribers (e.g. those directed to the Sign-up Server
by the Internet Connection Wizard) can be easily segregated from other orders
received by COMPANY that do not originate from the Internet Connection Wizard
for revenue reporting purposes.

4. Use and display the "Microsoft Internet Explorer" logo on the home
page for COMPANY's ISP Service, along with a hot link to
www.microsoft.com/ie/ie.htm on the face of the home page.

5. In copies of Microsoft Internet Explorer distributed by COMPANY,
COMPANY may set the "default" URL to point to COMPANY's home page for the ISP
Service, provided that such home page includes a hot link to
www.microsoft.com/ie/ie.htm.

6. Offer the Microsoft Internet Explorer ** *** **** *** *** ****** ***
********** *** **********. At the time of ISP Service request from an ISP
Subscriber, COMPANY shall not express or imply that an alternate browser is
available. COMPANY may provide a non-MS web browser with its ISP Service only
upon a customer initiated request.

7. Company shall not advertise or otherwise promote any non-MS web
browser **** **** ** ** *** ** ***** ************. By way of example, COMPANY
shall not display any logo for, or maintain a link to, a non-MS web browser on
Company's home page for the ISP Service, on the Start Page, or on any COMPANY
home page for any other internet access service offered by COMPANY.

8. Use the Microsoft Internet Explorer name and logo in COMPANY's
packaging, advertising and promotional materials. Such use shall be pursuant
to MS' standard trademark policies as attached hereto and as may be provided
by MS to COMPANY from time to time.

9. Within sixty (60) days following execution of this Agreement, issue
a press release announcing that COMPANY has licensed the Microsoft Internet
Explorer and include favorable commments about the Internet Explorer and
ActiveX technology. In the event COMPANY elects to distribute NetMeeting,
COMPANY shall issue a press release announcing such distribution within sixty
(60) days following execution of this Agreement. COMPANY shall provide any
such press release to Microsoft for review at least five (5) days

<PAGE>

prior to release, COMPANY agrees MS may use COMPANY's name in any press
release MS issues regarding licensing of the Microsoft Internet Explorer.

10. Before COMPANY is listed in the ISP Phone Book(s), COMPANY will
test and certify compliance of Access with MS specifications for security and
authentication protocols, other industry protocols, and other specifications
and standards specified by MS from time to time in accordance with the
procedures, and using the testing tools specified by MS from time to time,
COMPANY will provide MS with information and access as requested by MS from
time to time to allow MS to ensure COMPANY's ongoing compliance with such
specifications, the acceptance testing procedures, and the terms of this
Agreement.

<PAGE>

EXHIBIT D
---------

ISP REFERRAL FEES

Number of New ISP Subscribers
Quarterly Fee
----------------------------- ---

************ ***
************ ***
************ ***
************ ***

1. The above Referral Fees shall be reduced by an additional ************
*** if, COMPANY implements at least two (2) "ActiveX" controls in the
design of COMPANY's home page for the ISP Service. COMPANY shall notify
MS of the ActiveX controls implemented by COMPANY.

2. The above Referral Fees shall be reduced by an additional ************
*** if: (a) COMPANY uses Microsoft Windows NT and Microsoft Internet
Information Server as the platform for COMPANY's web site that hosts the
home page for the ISP Service and (b) if COMPANY offers web hosting
services, it uses Microsoft Internet Information Server as one of its
platforms for such web hosting services.

3. If COMPANY offers web hosting services, the above Referral Fees shall be
reduced by an additional *************** if COMPANY uses Microsoft
Front Page server extensions (listed in Exhibit X) on COMPANY's web hosting
servers.

4. COMPANY may deduct from aggregate Referral Fees owed to MS, the following
amounts for each copy of the most current available version of Internet
Explorer distributed ** * ************ ******** to subscribers to COMPANY's
internet access services *** *** ***** * ******* ***** **** ********
******** as of the date that COMPANY's name first appears in an ISP Phone
Book: (a) ***** ******* **** for each copy distributed on external media
(e.g. diskette or CD ROM) and (b) *** ****** **** for each copy distributed
electronically (e.g. downloaded from COMPANY's web site). The foregoing
deductions shall be limited to copies of Internet Explorer distributed
prior to one hundred and eighty (180) days after the Effective Date of
the Agreement and shall be further limited to no more than one (1) copy
of Internet Explorer per subscriber. In no event shall such deductions
exceed the total amount of Referral Fees payable to MS hereunder. COMPANY
shall report all such copies (separately for external media and electronic
distribution) on its quarterly reports.

<PAGE>

EXHIBIT D (CONT'D)
-------------------

REFERRAL FEE REPORT

Report for _____________________________
Report Period: _______________________, 19____ to ______________________, 19___

Microsoft License #______________________________

- --------------------------------------------------------------------------------
Referral Fee Calculation:

A. Total new ISP Subscriber* for the quarter: ____________ X $___=______
B. Previously reported ISP Subscriber accounts
lasting < 60 days which
terminate during the quarter ____________ X $ =______
C. Total fees due (Line A - Line B)= ______
D. Less Deductions for ********** ********** of Internet Explorer ______
Total payment enclosed: ______
*as defined in Section 1
- --------------------------------------------------------------------------------

E. Total number of *** ** *** ******** distributed during quarter
through all channels: _______

F. Total number of copies of Internet Explorer distributed through
all channels where Internet Explorer is distributed ** *** ****
*** ******** _______

G. Total number of *********** ******** copies of Internet
Explorer shipped - external media _______

H. Total number of ************ ******** copies of Internet
Explorer shipped - electronic _______

The undersigned hereby certifies that he/she is an officer or director of
COMPANY and that this report is complete and correct.

___________________________(Signature)

___________________________(Print)

___________________________(Title)

___________________________(Date)

Telephone Number: ( )
___________________________

<PAGE>

EXHIBIT E
---------

ISP SUBSCRIBER CONFIGURATION GUIDELINES

1. COMPANY shall configure the ISP Subscriber's copy of Internet Explorer
(hosted on the ISP Subscriber's computer) via an INS file such that the
"default" URL on Internet Explorer points to the Start Page.

2. COMPANY can add and populate a "favorites folder" on the ISP Subscriber's
copy of Internet Explorer via an INS file.

3. [DRAFT] COMPANY's ISP Information Page shall comply with the following:

a. Size of the HTML page limited to 5K.
b. The page should have one exit point that points back to the main
referral page.
c. No scrolling, no tabs, no links, and no fields.
d. Should fit on 640x480 with no fields.
e. Use buttons as much as possible.
f. Do not use hot links.
g. A "cancel" leaves the entire Internet Connection Wizard.

MS reserves the right to change the above criteria.

<PAGE>

EXHIBIT F
---------

INTERNET EXPLORER

AVAILABILITY VERSION
- -----------------------------------------------------------------------
PLATFORM 2.0 NEXT(c)
- -----------------------------------------------------------------------
Windows 3.x, WFW 3.11 Today(a) *********
Windows NT -- ***********
Windows 95 Today(a) *************
Apple Macintosh Today(b) ********

(a) *******************
(b) **********************
(c) **********************
(d) ***********

<PAGE>

EXHIBIT G TO THE LICENSE AND DISTRIBUTION AGREEMENT
---------------------------------------------------

MICROSOFT-REGISTERED TRADEMARK- INTERNET EXPLORER
ONLINE LOGO USAGE GUIDELINES

This site is best experienced with
[LOGO]
Click here to start.

1. USAGE
Use the Internet Explorer online logo (the "logo") only to promote
Microsoft Internet Explorer and indicate that your Internet Site includes
or is compatible with the Microsoft Internet Explorer.

The Logo may only be used on your Internet Site which must meet the
applicable Logo Qualification Criteria and may not be used in any other
fashion.

RECOMMENDED TEXT. Based upon extensive research, we suggest that the
Internet Explorer Logo be accompanied by the following text: "This site
is best experienced with ... Click here to start." as indicated in the
below images. This information clarifies how the logo should be used,
especially for new Internet visitors who are unfamiliar with the
different means of navigating the Internet.

This site is best experienced with
[LOGO]
Click here to start.

This site is best experienced with [LOGO] Click here to start.

PRODUCT NAME. It should appear as "Microsoft-Registered Trademark-
Internet Explorer" at the first and most prominent use in all materials
and can thereafter be referred to as "Internet Explorer."

2. INTENT
You are not permitted to use the logo to disparage Microsoft, its
products or services, or for promotional goods or for products which, in
MS' reasonable judgement, may diminish or otherwise damage Microsoft's
goodwill in the Logo, including but not limited to uses which could be
deemed to be obscene, pornographic, excessively violent, or otherwise in
poor taste or unlawful, or which purpose is to encourage unlawful
activities. Similarly, you cannot imitate Microsoft's product packaging
or the Logo in any of your materials, including advertising, product
packaging, and promotional materials. The Logo must not be used in a
manner that implies Microsoft's sponsorship or endorsement of the
product, service, or content presented on your Internet Site.

3. LOGO LINK
Used in an Internet Site, the Logo must be an active link to this
URL address:
http://www.microsoft.com/ie/ie.htm
----------------------------------

<PAGE>

4. PRESENTATION
PROMINENCE. Do not use the Logo or the names "Microsoft," "Microsoft
Internet Explorer," or "Internet Explorer" more prominently than your
company, product, or Internet Site name.

ARTWORK. Use only Microsoft authorized electronic artwork of the Logo.
The Logo must stand by itself and must include a minimum amount of empty
space surrounding the Logo (30 pixels) so as to separate it from any
other object, such as type, photography, borders, edges, and so on. The
Logo may not be used as a feature or design element of any other Logo.

SIZE. The Logo cannot be reduced in size beyond what is electronically
provided by Microsoft and must be placed in a prominent location on the
Internet Site where it is used. Do not remove any trademark symbols or
alter the Logo in any way. Redraws, distortions, or animation of the
Logo are not permitted beyond what is provided to authorized/registered
Microsoft Online logo Internet Sites.

FOOTNOTE. Include the following footnote on Internet Sites that include
the Logo: "Microsoft is a registered trademark in the United States and
other countries and the Microsoft Internet Explorer Logo is a trademark
of Microsoft Corporation."

ALTERATIONS TO THESE GUIDELINES
Microsoft reserves the right to change the Logo and these Usage Guidelines at
any time and solely at its discretion. If possible, Microsoft will provide
advanced notice of these changes. Any use of the Logo that is not consistent
with these guidelines is strictly prohibited.

CANCELLATION OF AUTHORIZATION TO HOST LOGO
Microsoft reserves the right to review use of the Internet Explorer Logo.
Disregard for these Usage Guidelines may result in a revocation of the right
to use the logo, and with it all benefits enjoyed through participation in
the logo program.

Third parties improperly using the Logo must correct any deficiencies in
their use of the Logo and/or in the quality of the product used in
conjunction with the Logo upon reasonable notice from Microsoft. Refusal to
correct such deficiencies may result in revocation of the right to use the
Logo.

QUESTIONS
If you have any questions about the Logo Program, please send e-mail to
"[email protected]"

TRADEMARKS. Microsoft and Windows are registered trademarks and ActiveX is a
trademark in the United States and other countries and the Microsoft Internet
Explorer Logo is a trademark of Microsoft Corporation.

<PAGE>

ATTACHMENT 1 TO EXHIBIT G OF THE MICROSOFT INTERNET EXPLORER LOGO
USAGE GUIDELINES
Microsoft -Registered Trademark- Internet Explorer Online
Logo Qualification Criteria

This site is best experienced with

[LOGO]

Click here to Start

Gaining authorization to use the version of the Microsoft -Registered
Trademark- Internet Explorer online logo shown above for your Internet Site
is easy. Simply fulfill the following two criteria and you are eligible to
use the logo.

1. Showcase on your Internet Site one or more of these HTML features:
- RATINGS. Support self-regulation of content to ensure
appropriate access to your Internet Site.
- MARQUEES. Scroll text or graphics across your screen.
- ENHANCED TABLES. Use colors/textures to make tabular data
- more legible and visually appealing.
- BACKGROUND SOUNDS. Provide an auditory experience when your
Internet Site is accessed.
- WATERMARKS. Create a mark of distinction on your home page.
- INLINE AVIs. Graphically animate your page beyond static
images.
- ENHANCED HTML FRAME TAGS. Simulate the appearance of a
magazine with borderless, nonscrolling, floating frames,
and even frames within frames.
- ENHANCED HTML STYLE SHEETS. Control margins, line spacing,
and placement of design elements; specify fonts and point
sizes; get desktop publishing support for the Web.

2. Enroll in the logo program, and agree to follow the Logo Usage Guidelines.

NEED HELP GETTING STARTED?
Please go to the FREE Microsoft Internet Explorer online logo-compliant Web
site template at http://www.microsoft.com/ie/log/actxtemp.htm. This template
will help to get you started in building your Internet Site or to simply
enhance your existing Internet Site. See examples of the new HTML features
and ActiveX -TM- -compatible controls at the ActiveX Gallery at
http://www.microsoft.com/ie/appdev/controls/default.htm.

If you want more assistance, order the ActiveX Development Kit at
http://www.microsoft.com/intdev/sdk.

NOTE ABOUT CHANGES:
Note: Due to the rapid development of Internet Explorer technology, these
criteria will change periodically over time. All online logo authorized sites
will be notified by e-mail of any changes to these criteria. Permission to
use the logo is limited to those who meet the then applicable criteria, and
those who no longer meet the criteria must discontinue use of logo.

<PAGE>

ATTACHMENT 2 TO EXHIBIT G OF THE MICROSOFT INTERNET EXPLORER LOGO
USAGE GUIDELINES
Microsoft -Registered Trademark- Internet Explorer Online
Animated Logo Qualification Criteria

This site is best experienced with

[LOGO]

Click here to start.
Gaining authorization to use the animated version of the Microsoft Internet
Explorer online logo shown above for your Internet Site is easy. Simply
fulfill the following three criteria and you are eligible to use the logo:

1. Showcase on your Internet Site one or more of these HTML features:
- RATINGS. Support self-regulation of content to ensure
appropriate access to your Internet Site.
- MARQUEES. Scroll text or graphics across your screen.
- ENHANCED TABLES. Use colors/textures to make tabular data
more legible and visually appealing.
- BACKGROUND SOUNDS. Provide an auditory experience when your
Internet Site is accessed.
- WATERMARKS. Create a mark of distinction on your home page.
- INLINE AVIs. Graphically animate your page beyond static
images.
- ENHANCED HTML FRAME TAGS. Simulate the appearance of a
magazine with borderless, nonscrolling, floating frames, and
even frames within frames.
- ENHANCED HTML STYLE SHEETS. Control margins, line spacing,
and placement of design elements; specify fonts and point
sizes; get desktop publishing support for the Web.

2. Activate your Internet Site with ActiveX -TM- -compatible Technology.
Support one or more ActiveX-compatible controls on your Internet Site.
- DEMONSTRATE ACTIVEX-COMPATIBLE CONTROLS. Make your
Internet Site interactive today!
- SCRIPT ACTIVEX-COMPATIBLE CONTROLS. Use ActiveX-compatible
scripts to make a Web page interactive. You can easily link
together ActiveX-compatible controls or intrinsic controls to
create dynamic pages.

3. Enroll in the logo program and agree to follow the Logo Usage Guidelines.

NEED HELP GETTING STARTED?
Please go to the FREE Microsoft Internet Explorer online logo-compliant Web
site template at http://www.microsoft.com/ie/log/actxtemp.htm. This template
will help to get you started in building your Internet Site or to simply
enhance your existing Internet Site. See examples of the new HTML features
and ActiveX-compatible controls at the ActiveX Gallery at
http://www.microsoft.com/ie/appdev/controls/default.htm.

If you want more assistance, order the ActiveX Development Kit at
http://www.microsoft.com/intdev/sdk.

Note: Due to the rapid development of Internet Explorer technology, these
criteria will change periodically over time. All online logo authorized sites
will be notified by e-mail of any changes to these criteria. Permission to
use the logo is limited to those who meet the then applicable criteria, and
those who no longer meet the criteria must discontinue use of logo.

<PAGE>
EXHIBIT H TO THE LICENSE AND DISTRIBUTION AGREEMENT

MICROSOFT-Registered Trademark-INTERNET EXPLORER STANDARD LOGO USAGE GUIDELINES
- -------------------------------------------------------------------------------

Includes

[LOGO]

Microsoft has established the following set of guidelines to assist you in
proper use of the Microsoft Internet Explorer standard logo (the "Logo").
The power of the Logo lies in its consistent and appropriate use. Any usage
outside these guidelines dilutes the effectiveness of the Logo and makes it
more difficult to defend our rights to the trademark.
Microsoft reserves the right to change the Logo and/or these Guidelines at
any time at its discretion. Third parties shall comply with the Guidelines as
amended from time to time.

ACCOMPANYING WORDS

The graphic may not be used without the words "Includes,"
"Microsoft-Registered Trademark-," and "Internet Explorer" attached, except
as otherwise provided below. No additional or substitute words may be used.
The words may not be abbreviated, translated, or transliterated, as in
non-English documentation. Microsoft will, however, provide the Logo in
versions where the word "Includes" may be translated for the local market, as
available. You may not substitute your own translation of the Logo.

USING THE MICROSOFT INTERNET EXPLORER STANDARD LOGO

- - Use the Logo only to promote Microsoft Internet Explorer and indicate that
your product includes Microsoft Internet Explorer.
- - This Logo is NOT to be placed on World Wide Web sites for the purpose of
downloading Microsoft Internet Explorer. For this purpose, please see the
Microsoft Internet Explorer Online Logo Usage guidelines at
http://www.microsoft.com/ie/logo/.
- - Microsoft will provide you with electronic artwork of the Logo. You may not
alter this artwork in any way.
- - This Logo is for Microsoft and third party use only as a graphical
representation of Microsoft Internet Explorer software.
- Microsoft Use: The Logo may be used by Microsoft on packaging, channel,
collateral, advertising, direct mail, and events promotion materials for
Microsoft products that include Microsoft Internet Explorer software. When
referring to Microsoft Internet Explorer by itself, Microsoft may use the
Logo without the word "Includes."
- Third Party Use: The Logo may be used by third parties authorized to
distribute the Microsoft Internet Explorer software under a separate
License and Distribution Agreement. Authorized third parties may use the
Logo only on the product packaging of products that include Microsoft
Internet Explorer software and related advertising.

LEGAL INFORMATION

- - The Logo is owned by Microsoft Corporation. All uses of the Logo must
include the following notice: "Microsoft is a registered trademark in the
United States and other countries and the Microsoft Internet Explorer Logo is
a trademark of Microsoft Corporation." A trademark symbol (-TM-) should appear
to the right of the Logo without alteration from the electronic or
camera-ready artwork provided. In

<PAGE>

addition, a registered trademark symbol (-Registered Trademark-) must
appear in the upper-right corner immediately following the word "Microsoft."
Do not remove any trademark symbols or alter the Logo in any way.
- - The product name for Microsoft Internet Explorer should appear as
"Microsoft-Registered Trademark-Internet Explorer" at the first and most
prominent use in all materials and can thereafter be referred to as "Internet
Explorer."
- - Microsoft owns the Microsoft Internet Explorer Logo and all uses of the Logo
will inure to the benefit of Microsoft. Third parties shall employ best
efforts to use the Logo in a manner that does not derogate from Microsoft's
rights in the Logo and will take no action that will interfere with or
diminish Microsoft's rights in the Logo. Third parties should not adopt, use,
or register any corporate name, trade name, trademark, service mark or
certification mark, trade dress, or other designation similar to, or
containing in whole or in part the Logo.
- - Third parties may not use the Logo in a manner that would imply that their
company or any goods or services provided by such third parties are sponsored
or endorsed by, or affiliated with Microsoft.
- - Third parties may not display the Logo on packaging, documentation,
collateral, or advertising in a manner that suggests their product is a
Microsoft product, or in a manner that suggests Microsoft is a part of their
product name.
- - You are not permitted to use the Logo to disparage Microsoft Corporation,
its subsidiaries, products, or services, or for promotional goods or for
products which, in Microsoft's reasonable judgment, may diminish or otherwise
damage Microsoft's goodwill in the Logo, including but not limited to uses
that could be deemed obscene, pornographic, excessively violent, or otherwise
in poor taste or unlawful, or which purpose is to encourage unlawful
activities.
- - Third parties may not imitate Microsoft's product packaging or the Logo in
any of their materials, including advertising, product packaging, and
promotional materials.
- - The Logo or the names "Microsoft," "Microsoft Internet Explorer," or
"Internet Explorer" cannot appear larger and/or more prominent than third
parties' trade name, service name, product name, or trademark on any
materials produced or distributed by such third parties.
- - Microsoft reserves the right to object to unfair uses or misuses of its
trademarks or other violations of applicable law.

SIZING AND PLACEMENT REQUIREMENTS

- - Recommended minimum size is 1" high. The "small" graphic interchange format
(GIF) file provided is an example of the smallest recommended size.
- - The Logo with accompanying words must stand alone. A minimum amount of
empty space must surround the Logo so as to separate it from any other object
such as type, photography, borders, edges, and so on. The required border of
empty space around the Logo must be 1/2X wide, where X equals the height of
the Logo as measured from the top edge of the word "Includes" to the bottom
edge of the word "Explorer."
- - You may not combine the Logo with any other object, including, but not
limited to, other logos, words, graphics, photos, slogans, numbers, design
features, or symbols.
- - The Logo may not be used as a design feature on your product, product
packaging, documentation, collateral, or advertising.

FOUR-COLOR OR ONE-COLOR APPLICATIONS

COLORS

The color version is the preferred way of reproducing the Logo. The Logo
consists of a blue graphic element and black type. The PANTONE-Registered
Trademark- Matching System (PMS) color for the blue is PMS 279 C. Four-color
process (CMYK) equivalents can also be used. For online usage, the blue color
should be Red 0, Green 102, Blue 255 for 8-bit or higher resolution palettes.

The color version can be reproduced only as described here.

<PAGE>

BLACK-AND-WHITE APPLICATIONS

The black-and-white Logo consists of a black graphic element and black type.
Please use the file provided.

ACCESSING THE FILES

The print files are provided in Encapsulated PostScript-Registered Trademark-
(EPS) and Windows-Registered Trademark- metafile (WMF) format. Use the EPS
files for materials printed to a PostScript-compatible printer. Use the
Windows metafile to print to a non-PostScript printer. These files should not
be opened and edited, only placed (for example, select "import...picture")
into software programs such as common page-layout or presentation programs,
word-processing software, and so forth.
Due to translation problems between the Mac and PC, Mac-TM- EPS images may
lose their preview. When you place them into your page-layout document, you
will see a box or a big 'X' instead of the preview. The image will still
print correctly and the bounding box accurately shows the size of the image.
EPS images are sizable, but please scale proportionately.
PC EPS images only have black-and-white previews. If you chose to use a color
PC EPS, it will still preview in black-and-white. When you print it, the
color will print correctly.
EPS format is device-dependent so the resolution of the device you are
printing to is the resolution you will achieve.
The art files include Adobe Illustrator (ART) and Macromedia Freehand (FH5)
format. These are provided for use where the print files supplied will not
work. They are not to be altered.

QUALITY CONTROL

Microsoft reserves the right to review your use of the Logo and to conduct
spot checks on all products, product packaging, marketing materials, and
documentation and may periodically send out requests for samples. Microsoft
may also conduct spot checks in retail outlets and other product sources to
monitor your compliance with these Logo Usage Guidelines. Refusal to submit
samples, noncompliance with these Guidelines, or failure to correct any
deficiencies in your use of the Logo and/or in the quality of the product
used in conjunction with the Logo upon reasonable notice from Microsoft could
result in revocation of your license to use the Logo.

- -C- 1996 Microsoft Corporation. All rights reserved.
Microsoft and Windows are registered trademarks in the United States and/or
other countries and the Microsoft Internet Explorer logo is a trademark of
Microsoft Corporation.
PostScript is a registered trademark of Adobe Systems, Inc. Macintosh is a
registered trademark and Mac is a trademark of Apple Computer, Inc. PANTONE
is a registered trademark of Pantone, Inc.

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

<PAGE>

EXHIBIT 10.20
[LOGO]

NETWORK ACCESS AGREEMENT

PSINet Inc. Purchaser: EarthLink Network, Inc.
510 Huntmar Park Drive 3100 New York Drive
Herndon, VA 22070 Pasadena, CA 91107
703.904.4100 818.296.2400
703.904.4200 (fax) 818.296.4161 (fax)

Business Contact: Contact: Garry Betty
Phone/Fax: Phone/Fax: 818 296 2408
Business Contact: Business Contact: Same
Title/Phone/Fax: Title/Phone/Fax: President/CEO, fax 818 296 4161:

THIS AGREEMENT is made between PSINet Inc., a corporation incorporated under
the laws of the State of New York and having its principal place of business
at 510 Huntmar Park Drive, Herndon, Virginia 22070 ("PSINet"), and the
wholesale customer of PSINet's wide-area computer network system ("EarthLink"
or "Purchaser") as specified above.

WITNESSETH:

WHEREAS, Purchaser desires to obtain from PSINet network access for the
benefit of Purchaser's customers desiring access at speeds up to 128Kbps
(hereinafter, "Customers"); and

WHEREAS, PSINet is willing and able to provide such access;

NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree, intending to be legally bound, as
follows:

1. DEFINITIONS. The following terms shall have the following meanings for
purposes of this Agreement and for purposes of the Exhibits hereto:

1.2 "HOST" shall mean a computer with a Network address (IP address).

1.3 "NETWORK" shall mean the combination of computer hardware, computer
software programs and data transmission facilities operated by PSINet
which will permit computers operated by Purchaser's Customers to
communicate with

- --------------------------------------------------------------------------------
PSINet/EarthLink
Network Access Agreement Page: 1 7/24/96

<PAGE>

computers at remote locations which are operated by others and to
provide access to Internet.

1.4 "POP" shall mean a Network point-of-presence where PSINet equipment
will be located and these POPs will be positioned throughout the world
in order to permit authorized users to access the Network by telephone.

1.5 "PSINET CUSTOMER" will be EarthLink's non-dedicated
(non-static-addressed) or non-LAN dial-up customers designated by
EarthLink as having their principal dial-up access through PSINet's
dial-up network in the U.S. and Canada.

1.6 "NON-PSINET CUSTOMER" will be EarthLink's dial-up customers
designated by EarthLink as having their principal dial-up access
through another network than PSINet's, whether it be EarthLink's own
network, or another of EarthLink's network vendors.

1.7 "CUSTOMER" will be a customer of EarthLink, whether a "PSINet
Customer" or "Non-PSINet Customer".

2. INTERNET CONNECTION SERVICES.

2.1 GENERAL. PSINet agrees to provide Purchaser with dialup (also call
"switched") telephone connection services for Purchaser's Customers to
access the Network and the Internet. Purchaser and its Customers may
access the Network from any PSINet POP in the United States and Canada.
The fees to be paid by Purchaser to PSINet for such access services are
set forth in Section 5.1.

2.2 PROVISION OF ACCESS. Throughout the term of this Agreement, PSINet
shall provide Purchaser's Customers with the right to access at
speeds up to 128 Kbps using standard telephone and ISDN lines, and
use its Network at the levels then provided and supported by PSINet
("Access"). A recent estimated listing of Network POPs can be retrieved
by sending electronic mail at '[email protected]' or through access to
PSINet's world-wide web site at 'http://www.psi.net'. PSINet reserves
the right to install new POPs and/or to close existing POPs as it, in
its sole discretion, deems appropriate. In the event PSINet deems it
necessary to close an existing POP, PSINet shall provide Purchaser with
sixty (60) days written notice thereof. Purchaser may order such Access
on behalf of its present or future Customers and there shall be no
limit on the number of Customers who may use the Network; provided,
however, subject to the Service Level Agreement in Section 3.7 that
PSINet may refuse service to Purchaser because there is insufficient
capacity on the Network or in the POP to provide the Access amount
requested.

2.2.1 TERMINATION OF ACCESS. PSINet shall terminate the Access rights of
any Purchaser Customer as soon as is reasonably practicable upon written
notice from Purchaser to do so or upon mutually agreed upon electronic
process with receipt confirmed, but shall have no liability in
connection therewith.

- --------------------------------------------------------------------------------
PSINet/EarthLink
Network Access Agreement Page: 2 7/24/96

<PAGE>

2.2.2 ISDN SERVICE. PSINet shall make ISDN 64k and 128k Internet connection
services available to Purchaser for Purchaser's dial-up customers. The
fees to be paid by Purchaser for such services are set forth in Section
5.1.

3. PURCHASER OBLIGATIONS.

3.1 PURCHASER RESPONSIBILITY FOR ITS CUSTOMERS. Purchaser shall be
responsible for all Customer support, pricing and service plans, billing
and collections with respect to its own Customers.

3.2 PURCHASER CONNECTION TO THE NETWORK. Purchaser may provide, at its
own expense, the telecommunications circuit for its connection to the
Network which shall run between the best suited PSINet POP (as
determined by PSINet) and the Purchaser's operations center (which
includes the local telephone company or Competitive Access Provider
circuits). In addition, Purchaser may provide an estimate of the traffic
it anticipates between Purchaser's network and PSINet's Network.

3.3 [INTENTIONALLY LEFT BLANK]

3.4 [INTENTIONALLY LEFT BLANK]

3.5 CUSTOMER EQUIPMENT. PSINet shall not be responsible for the
installation, operation or maintenance of any computer equipment or
computer software programs used by any Purchaser Customer.

3.6 OPTIONAL PEERING. In addition to the connection of Purchaser's
network and PSINet's Network as set forth in Section 3.2, Purchaser may,
but shall not be obligated to, provide telecommunications circuits
interconnecting Purchaser's network with PSINet's network at a location
agreed upon by the parties and, from time to time, in other locations.
The parties will use these circuits only for traffic originating within
one party's network (or the networks of its Customers) and destined only
to the other party's network (or the networks of its Customers).

3.7 SERVICE LEVEL AGREEMENT. Purchaser will maintain a 90 day rolling
forecast of predicted PSINet Customers at each POP, and provide this
forecast to PSINet as requested. This forecast will include comparative
historical numbers as they become available. Except as set forth in the
section below, Purchaser will have no liability for the inaccuracy of
this forecast.

The number forecasted at each POP 60 days prior to a given day will
give rise to mutual obligations for that day at that POP as follows:

1. If the number of actual PSINet Customers for a given POP on a
given day is greater than 110% of the number forecasted, no
penalty or Service Level Agreement ("SLA") applies.

- --------------------------------------------------------------------------------
PSINet/EarthLink
Network Access Agreement Page: 3 7/24/96

<PAGE>

2. If the number of PSINet Customers on a given day is less than
90% of the number forecasted, Purchaser will pay a penalty of *%
above the applicable fees for that POP for that day.

3. For each POP where neither 1 nor 2 applies, PSINet will be
required to provide 99.5% availability for dial-in-access. For
each day less than 99.5% availability is provided, Purchaser
will be credited *** ********** ********* ***** ****** *** ****
****** ******** ******** ********* ******* ** **** ***. For
example, if on April 2, 1997 Purchaser forecasted that there
would be 910 PSINet Customers on the Smalltown POP, and the
actual number of PSINet Customers on the Smalltown POP on
June 1, 1997 were 1000, and the total number of PSINet
Customers on June 30, 1997 were 155,001, and the availability of
Smalltown POP fell below 99.5% on June 1, 1997, Purchaser would
be credited ***** * ******* ** ******* for that service lapse.

Purchaser will provide at least 60 days' notice if it decides to
build a POP to service existing PSINet Customers in a particular city,
provided the existing PSINet Customers for that POP exceed 5,000
customers.

4. PSINET OBLIGATIONS.

4.1 QUALITY OF SERVICE. PSINet shall provide to Purchaser (for its
Customers) Internet connection services that meet reasonable commercial
standards, including, without limitation, with respect to accessibility,
latency, packet loss, and throughput. For example, PSINet shall maintain
throughput of 80% of nominal port speed (e.g. 23 Kbps for a 28.8 Kbps
connection, 51 Kbps for a 64 Kbps single ISDN connection) 90% of the
time. PSINet shall keep and maintain its Network in good condition and
repair. The Network shall be properly maintained, serviced and upgraded
by PSINet as it, in its sole discretion, shall determine is necessary in
order to ensure connectivity to Purchaser Customers.

4.1.1 REPORTS AND INFORMATION REGARDING SERVICE.

4.1.1.1 ACCESS TO NETWORK MONITORING SYSTEMS. PSINet shall provide Purchaser
with read-only access to all applicable network monitoring systems used
by PSINet to monitor its network. Such access will permit Purchaser to
determine availability at each POP.

4.1.1.2 PSINET NETWORK OUTAGES. PSINet shall provide to Purchaser prompt
notification of any PSINet network outages that affect Purchaser's
Customers. When possible, at least three days advance notice of planned
outages shall be given to Purchaser so that Purchaser's Customers may be
alerted.

4.1.1.3 SNMP ACCESS. PSINet shall provide to Purchaser SNMP access to
PSINet's Network (i.e., direct read-only access to the dialup equipment,
as well as, if

- --------------------------------------------------------------------------------
PSINet/EarthLink
Network Access Agreement Page: 4 7/24/96

<PAGE>
possible, the devices used to provide backbone transport) with respect to
Purchaser's dial-up Customers, as soon as such access is practicable.

4.1.1.4 TECHNICAL INTERCONNECT. PSINet will develop a means to allow PSINet
Customers to be authenticated via Purchaser's RADIUS serves in Purchaser's
data center. PSINet Customers will be set up by Purchaser to log into
PSINet's network with an "ELN/" in front of their username.

PSINet will provide real-time monitoring capabilities for Purchaser's
technical and support staff to track access of PSINet Customers on PSINet's
network. PSINet will provide 24X7 NOC-to-NOC support for Purchaser.

5. PRICE AND PRICING TERMS.

5.1 CHARGES. Purchaser will pay PSINet the applicable monthly fee for each
PSINet Customer who has access to PSI's network during a particular month.
Where the PSINet Customer did not have access for the entire month, the
monthly fee will be prorated. Where the PSINet Customer has signed up AND
canceled Purchaser's service within an initial 30 day period, no monthly fee
will be due PSINet for that PSINet Customer.

In addition to PSINet Customers, Purchaser will have customers who use
Purchaser's own dial-up TCP/IP network or other networks provided by vendors
other than PSINet. Purchaser will make reasonable efforts to ensure that it
segregates customers to one network or another in a given billing month.
However, for such Non-PSINet customers who access the PSINet network in a
given month, PSINet will charge Purchaser $**** for each day such Non-PSINet
customer accesses the PSINet network, but no more than the applicable flat
monthly rate for each PSINet Customer.

For each PSINet customer in the United States, monthly charges to Purchaser
shall be based upon the number of PSINet Customers, calculated at the end of
each month, as follows:

TIER PRICE VOLUME
A ****** 0-10,000
B ***** 10,001-125,000
C ***** 125,001 +

For each PSINet Customer in Canada, the monthly charge to the Purchaser will
be $**** more (U.S. dollars) than the price noted above. Canadian and US
Customers will count together cumulatively for the purpose of determining
Purchaser's pricing tier above.

The minimum volume required to maintain Tier C pricing shall increase
according to the month from the period beginning April 30, 1997 until
December 31, 1997, after which the minimum monthly volume necessary to
maintain Tier C pricing shall remain at 250,000 Customers.

<PAGE>

Month-ending Tier C minimum commitment table:
<TABLE>
<CAPTION>
<S> <S> <S> <S> <S> <S> <S> <S> <S>
4/97 5/97 6/97 7/97 8/97 9/97 10/97 11/97 12/97

135,000 145,000 155,000 170,000 185,000 190,000 210,000 230,000 250,000

</TABLE>

The applicable base charges above are applied to all PSINet Customers
irrespective of the rate that previously was applied to
each group of Customers. That is, when the volume threshold for a certain
tier is reached, Purchaser shall be entitled to the pricing for that tier for
all PSINet Customers (e.g. at and below that tier volume).

ISDN Service: Charges will be the same as above for ISDN 64K connection
services. Charges will be twice the 64K rate for 128K service.

5.1.1 MOST FAVORED NATION. PSINet commits that the pricing provided to
Purchaser will be at least as low as for comparable volume levels and similar
services as that provided any other PSINet customer.

5.2 ADJUSTMENTS TO BASE CHARGE. When the number of PSINet Customers exceeds
500,000, PSINet and purchaser will begin good faith negotiations on new
pricing terms.

5.3 MINIMUM COMMITMENT: On January 1, 1997, Purchaser's minimum monthly
commitment to PSINet shall become $******* per month for each month of 1997.
This minimum commitment will expire on December 31, 1997.

5.4 TAXES. Purchaser shall be liable for and shall reimburse PSINet for all
taxes and related charges however designated, imposed in connection with or
arising from the provision of access to the PSINet network by Purchaser or
its Customers. This clause is intended to cover "per-subscriber" or
"per-byte" charges targeted at the Internet traffic of Purchaser or its
customers. These taxes will not include the following:

-Taxes on T1 or PRI local loop lines to PSINet POPs
-Taxes on PSINet's equipment or facilities
-Taxes on PSINet's dedicated data circuits

5.5 INVOICES. PSINet shall invoice Purchaser monthly in arrears for all
charges under this Agreement. Except where inapplicable per Section 5.9, all
invoices will be payable within (30) days of receipt of invoice.
Delinquent payments are subject to a late payment charge at the annualized rate
of prime plus four percent computed monthly (4%), or portion thereof, of the
amount due (but not to exceed the maximum lawful rate). In the event
Purchaser shall fail to pay PSINet any amount due under this Agreement for a
period of forty (40) days, PSINet, in addition to charging applicable
delinquency fees, may discontinue providing to Purchaser and its Customers
upon seven (7) days' prior written notice to Purchaser. PSINet shall resume
providing Access immediately upon receipt of

<PAGE>

such payment, and in such event Purchaser shall pay PSINet a reasonable
reconnection fee. However, Purchaser shall not be deemed to be delinquent,
nor may access be terminated, until Purchaser has exhausted the line of
credit described in Section 5.9

5.6 CUSTOMER CHARGES. Purchaser is solely responsible for establishing and
collecting its Customer charges for services it offers its customers through
the Network and for preparing and mailing invoices to its Customers.
Purchaser is responsible for payment of the total amounts invoiced it by
PSINet regardless of whether Purchaser is paid by its Customers.

5.7 MARKETING REFERRALS. Until January 1, 1997, PSINet will provide
Purchaser with the first opportunity to sell to all leads calling into PSINet
inquiring about or seeking the purchase of non-dedicated, dial up Internet
access. At Purchaser's discretion, such leads will be transferred
telephonically directly to Purchaser's telemarketing group, where Purchaser
will attempt to sell the lead a dial-up access account. Purchaser will pay
PSINet a one-time bounty of $***** for each lead that signs up for services
and remains a paying customer for more than 60 days. By 30 days after the end
of each month, Purchaser shall provide PSINet an accounting of the number of
leads received and the number successfully converted into sign-ups, along
with payment of applicable bounties.

5.8 USAGE REPORTS. PSINet will provide full usage reports at the end of
each day. These reports shall include detailed accounting of each Purchaser
network customer (PSINet Customer or Non-PSINet Customer) login to PSINet's
network. Additionally, PSINet and Purchaser will work to set up a system
whereby Purchaser can track usage (connects and disconnects) in real time.

5.9 ADDITIONAL CONSIDERATION. In exchange for Purchaser issuing to PSINet
the sum of 200,000 warrants to purchase the same number of shares of common
stock of Purchaser (or the equivalent thereof to compensate for any changes
in the capital structure of Purchaser between the time of grant and the time of
exercise by PSINet, with 4 years to exercise), the exercise price to be the fair
market value at the time of grant, PSINet will provide the following credit
and rental facilities to Purchaser:

1. A credit line for Purchaser's payables to PSINet hereunder
according to these terms:

- Up to $5,000,000
- Accruing interest at prime plus 4% per annum
Applied to payables beyond the 30 day payment term described above
- Balloon payment at the end of the initial term hereof

2. A commitment to a rental facility for $5,000,000 of equipment
(owned or leased by PSINet) for deployment in Purchaser's network. Such
rental charges shall include all costs, such as service maintenance, and
shall be for equipment agreed to in advance by the parties.

<PAGE>

The equipment shall be Sun servers, Ascend Max Hubs and
other network equipment. The maximum initial value of
assets being rented shall not exceed $5,000,000 in value.

Rental agreement shall include Fair Market Value buyout
provisions, a 3-year term and an effective rate of not
more than prime plus 3% per annum.

Monthly rental payments will be due beginning 30 days
after funding of Purchaser's IPO, or February 1, 1997,
whichever is sooner.

Terms of Purchaser's warrants shall include a term of 4 years;
will provide for appropriate adjustments to the exercise price
and number of shares which may be purchased in the event of stock
splits, dividends and the like. In addition, PSINet shall receive
registration rights in respect to the shares (the "Shares") issuable
upon the exercise of the Warrants as described in the attached
Exhibit "A". PSINet shall be entitled to receive financial
information regarding the Company for so long as PSINet holds the
Shares.

6. TERM/EXTENSIONS/TERMINATION. The term of this Agreement shall be two
(2) years, commencing on August 1, 1996 and ending July 31, 1998,
and, unless either party notifies the other in writing not less than
one-hundred eighty (180) days prior to the end of the initial term or
any extension thereof, this Agreement shall be automatically renewed
annually thereafter for a period of one year. Notwithstanding the
foregoing, such termination notice shall not be given by either party
prior to December 31, 1997.

Either party may terminate this Agreement if such other party has
materially breached this Agreement and has failed to cure such breach
within thirty (30) days after receiving written notice of such
breach; provided, however, that this notice period shall not apply to
a termination by PSINet in accordance with the provisions of Section
5.5.

7. WARRANTIES EXCLUDED. EXCEPT AS EXPRESSLY PROVIDED HEREIN, PSINet
MAKES NO WARRANTIES IN CONNECTION WITH ITS NETWORK OR THE PROVISION
OF ACCESS AS CONTEMPLATED HEREIN, WHETHER WRITTEN OR ORAL, STATUTORY,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTY OF
MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
OR USE. PURCHASER'S SOLE AND EXCLUSIVE REMEDY SHALL BE PSINET'S
OBLIGATION TO ADJUST THE FEES PAYABLE BY PURCHASER AS SET FORTH
ELSEWHERE HEREIN.

8. LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING CONTAINED IN THIS
AGREEMENT TO THE CONTRARY, THE PARTIES AGREE THAT NEITHER PARTY SHALL
IN ANY EVENT BE LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR ANY
ACTUAL, DIRECT, INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL,
RELIANCE, PUNITIVE OR ANY OTHER DAMAGES OR FOR ANY LOST PROFITS OF ANY

Page: 8

<PAGE>

KIND OR NATURE WHATSOEVER, REGARDLESS OF THE FORESEEABILITY THEREOF,
ARISING OUT OF THE PROVISION OF ACCESS OR IN ANY WAY ARISING OUT OF
THIS AGREEMENT, WHETHER IN AN ACTION ARISING OUT OF BREACH OF
CONTRACT, BREACH OF WARRANTY, DELAY, NEGLIGENCE, STRICT TORT
LIABILITY, PATENT MATTERS OR ANY OTHER THEORY. NO ACTION OR
PROCEEDING AGAINST EITHER PARTY MAY BE COMMENCED MORE THAN TWO YEARS
AFTER THE SERVICES ARE RENDERED. THIS CLAUSE SHALL SURVIVE FAILURE OF
AN EXCLUSIVE REMEDY. EITHER PARTY'S TOTAL LIABILITY FOR GROSS
NEGLIGENCE DURING THE LIFETIME OF THIS AGREEMENT SHALL IN NO EVENT
EXCEED FIVE HUNDRED THOUSAND DOLLARS ($500,000) IN THE AGGREGATE.

9. INDEMNIFICATION OF PSINET. Purchaser shall indemnify and hold
harmless PSINet and PSINet's directors, officers, employees, agents
and advisors from and against any and all claims of other persons or
entities arising out of material, data, information or other content
transmitted by Purchaser Customers or other acts or omissions of
Purchaser and/or its Customers.

10. CONFIDENTIAL INFORMATION.

10.1 Nondisclosure. If either party acquires Confidential Information of
the other, such receiving party shall maintain the confidentiality of
the disclosing party's Confidential Information shall use such
Confidential Information only for the purposes for which it is
furnished and shall not reproduce or copy it in whole or in part,
except for use as authorized in this Agreement. Confidential
Information shall mean all information of the disclosing party which
it treats as confidential or proprietary. Confidential Information
shall not include information which is or hereafter becomes generally
available to others without restriction or which is obtained by the
receiving party without violating the disclosing party's rights under
this Article 10 or any other obligation of confidentiality. The terms
and conditions of this Agreement shall constitute Confidential
Information. The provisions in the Bilateral Nondisclosure Agreement
executed between the parties on July 18, 1996 shall survive the
execution and termination of this Agreement for any reason.

10.2 Duration. With respect to all Confidential Information, the parties'
rights and obligations under this Article shall remain in full force
and effect following the termination of this Agreement.

10.3 Ownership. All materials and records which constitute Confidential
Information, other than service orders and copies of this Agreement,
shall be and remain the property of, and belong exclusively to, the
disclosing Party, and the receiving party agrees either to surrender
possession of and turn over or to destroy all such Confidential
Information which it may possess or control upon request of the
disclosing party or upon the termination of this Agreement.

Page: 9

<PAGE>

10.4 Injunctive Relief. The parties acknowledge and agree that, in the
event of a breach or threatened breach by any party of any provision
of this Article 10, the other party will have no adequate remedy in
money or damages and, accordingly, shall be entitled to an injunction
against such breach. However, no specification in this Section of a
specific legal or equitable remedy shall be construed as a waiver or
prohibition against any other legal or equitable remedies in the
event of a breach of this Article of this Agreement.

10.5 Legal Obligation to Disclose. Each party shall be released from its
obligations under this Article 10 with respect to information which
such party is required to disclose to others pursuant to obligations
imposed by law, rule or regulation; provided, however, that prior to
any such required disclosure, if practicable, such party provides
written notice to and consults with the other party.

11. MISCELLANEOUS.

11.1 Independent Parties/No Agency. The relationship of PSINet and
Purchaser shall be that of independent third parties. Except as
otherwise expressly provided in this Agreement, this Agreement does
not constitute either party as the agent or legal representative of
the other party and does not create a partnership or joint venture
between the parties. Except as otherwise expressly provided in this
Agreement, neither party shall have any authority to contract for or
bind any other party in any manner whatsoever. This Agreement confers
no rights of any kind upon any third party.

11.2 Force Majeure. PSINet shall not be liable for failure to fulfill its
obligations hereunder if such failure is due to causes beyond its
control, including, without limitation, acts of God, fire,
catastrophe, governmental prohibitions or regulations, viruses which
did not result from the acts or omissions of PSINet, its employees or
agents, national emergencies, insurrections, riots or wars, or
strikes, lockouts, work stoppages or other labor difficulties. The
time for any performance required hereunder shall be extended by the
delay incurred as a result of such act of force majeure, and PSINet
shall act with dilligence to correct such force majeure.

11.3 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to a party under this Agreement shall impair
any such right, power or remedy of such party nor shall it be
construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of either party of any breach or
default under this Agreement, or any waiver on the part of either
party of any provisions or conditions of this Agreement must be made
in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement or
by law or otherwise afforded to a party, shall be cumulative and not
alternative.

Page: 10

<PAGE>

11.4 BENEFIT AND ASSIGNMENT. No party hereto shall assign this Agreement, in
whole or in part, whether by operation of law or otherwise, without the
prior written consent of the other party hereto (which consent shall not
be unreasonably delayed or withheld); and any purported assignment in
violation of the foregoing shall be void. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns as permitted hereunder. No
person or entity other than the parties hereto is or shall be entitled
to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth
in this Agreement shall be solely for the benefit of, and shall be
enforceable only by, the parties hereto or their respective successors
and assigns as permitted hereunder.

11.5 ADDITIONAL ACTIONS, DOCUMENTS AND INFORMATION: AUDIT. Each of the
parties hereto agrees that it will, at any time, prior to, at or after
the date hereof, take or cause to be taken such further actions, and
execute, deliver and file or cause to be executed, delivered and filed
such further documents and instruments and obtain such consents, as may
be reasonably requested in order to fully effectuate the purposes,
terms and conditions of this Agreement. In addition, PSINet may, at
reasonable intervals and upon reasonable notice to Purchaser, either by
itself or by its outside audit firm, audit the relevant books, records
and electronic data of Purchaser to assure proper payments have been
made by Purchaser hereunder. PSINet shall bear the costs of each such
audit unless the results of such audit show that Purchaser has
underpaid PSINet by 5% or more, in which case the cost of such audit
and the following correctional audit shall be borne by Purchaser.

11.6 NOTICES.

(a) All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by certified or registered mail
(return receipt requested), express air courier, charges prepaid, or
facsimile addressed as follows:

To Purchaser: as provided above

To PSINet:

PSINet Inc.
510 Huntmar Park Drive
Herndon, Virginia 22070
Facsimile: (703) 904-1608
Attn: Harold S. Wills, Chief Operating Officer

or to such other address as either party shall have furnished to the
other in writing.

(b) If a notice is given by either party by certified or registered mail,
it will be deemed received by the other party on the third business day
following the date on which it is deposited for mailing. If a notice is
given by either party by air express courier, it will be deemed
received by the other party on the next business day following the date
on which it is provided to the air express courier. If a notice is
given by facsimile, it will be deemed received by the other party after

- --------------------------------------------------------------------------------
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Network Access Agreement Page: 11

<PAGE>

confirmation of receipt. Notwithstanding the foregoing, any payments
made under this Agreement shall be deemed received only when actually
received.

11.7 SEVERABILITY. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, such provision shall be construed so as to
render it enforceable and effective to the maximum extent possible in
order to effectuate the intention of this Agreement; and if such
provision shall be wholly invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.

11.8 SURVIVAL OF OBLIGATIONS. The parties' rights and obligations that, by
their nature, would continue beyond the termination, cancellation, or
expiration of this Agreement, shall survive such termination,
cancellation or termination.

11.9 TITLES AND SUBTITLES. The titles of the Articles and Sections of this
Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

11.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

11.11 GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the State of New York without reference to its principles of
conflicts of laws.

11.12 ENTIRE AGREEMENT/AMENDMENTS. This Agreement (including all Exhibits and
the Bilateral Nondisclosure Agreement) constitutes the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written
instrument signed by the parties hereto.

- --------------------------------------------------------------------------------
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Network Access Agreement Page: 12

<PAGE>

BOTH PARTIES REPRESENT AND WARRANT THAT THEY HAVE FULL CORPORATE POWER AND
AUTHORITY TO EXECUTE AND DELIVER THIS AGREEMENT AND TO PERFORM THEIR
OBLIGATIONS HEREUNDER, AND THAT THE PERSON WHOSE SIGNATURE APPEARS BELOW IS
DULY AUTHORIZED TO ENTER INTO THIS AGREEMENT ON BEHALF OF THE PARTY.

IN WITNESS WHEREOF, THE PARTIES HAVE ENTERED INTO THIS AGREEMENT AS OF THE
DATE SET FORTH:

Charles G. Betty
- --------------------------------------------------------------------------------
Authorized Purchaser Representative/Title (please type or print)

/s/ Charles G. Betty 7/22/96
- --------------------------------------------------------------------------------
Purchaser Signature Date

Harold S. Wills
- --------------------------------------------------------------------------------
Authorized PSINet Representative (please type or print)

/s/ Harold S. Wills 7/22/96
- --------------------------------------------------------------------------------
PSINet Representative Signature Date

[GRAPHICS]

- --------------------------------------------------------------------------------
PSINet/EarthLink 7/22/96
Network Access Agreement Page: 13

<PAGE>

AMENDMENT TO NETWORK ACCESS AGREEMENT

This Amendment to the Network Access Agreement (this "Amendment") is made as of
this _____ day of October, 1996 between PSINet, a New York corporation and
EarthLink Network, Inc., a Delaware corporation.

RECITALS

A. PSINet and EarthLink entered into that certain Network Access
agreement for network access for the benefit of EarthLink's customers, on
July 22, 1996.

B. The parties wish to amend the Original Agreement to reflect certain
revisions as discussed between the parties.

NOW, THEREFORE, in consideration of the mutual obligations in this Amendment and
for other good consideration, the receipt and sufficiency of which are
acknowledged, the parties to this Amendment agree as follows:

1. MODIFICATION OF CLAUSE 5.1. Clause 5.1 of the Original Agreement, titled
Charges, specifically the third paragraph relating to monthly charges, is
modified to read in its entirety as follows:

Tier Price Volume
---- ----- ------

A ****** 0-10,000
B ***** 10,001-100,000
C ***** 100,000+

The fifth paragraph of Clause 5.1 is modified to read as follows:

The minimum volume required to maintain Tier C pricing shall increase according
to the month from the period beginning July 30, 1997 until December 31, 1997,
after which the minimum monthly volume necessary to maintain Tier C pricing
shall remain at 165,000 Customers.

The sixth paragraph of Clause 5.1 is modified to read as follows:

7/97 8/97 9/97 10/97 11/97 12/97
100,000 110,000 120,000 135,000 150,000 165,000

2. MODIFICATION OF CLAUSE 5.3. Clause 5.3 of the Original Agreement, titled
Minimum Commitment, is modified to read in its entirety as follows:

On January 1, 1998, Purchaser's minimum monthly commitment to PSINet shall
become $******* per month for each month until expiring on July 31, 1998.

3. MODIFICATION OF CLAUSE 5.7. Clause 5.7 of the Original Agreement, titled
Marketing Referrals, shall read as follows:

Beginning December 1, 1996, and continuing through March 31, 1997, PSINet
will provide Purchaser with the first opportunity to sell to all leads calling
into PSINet inquiring about or seeking the purchase of non-dedicated, dial up
Internet access. At Purchaser's discretion, such leads will be transferred
telephonically directly to Purchaser's telemarketing group, where Purchaser will
attempt to sell the lead a dial-up access

<PAGE>

account. Purchaser will pay PSINet a one-time bounty of $***** for each lead
that signs up for services and remains a paying customer for more than 60 days.
By 30 days after the end of each month, Purchaser shall provide PSINet an
accounting of the number of leads received and the number successfully converted
into sign-ups, along with payment of applicable bounties.

CANCELING CUSTOMERS. The following text is added to the Original Agreement
as the second paragraph of Clause 5.7:

Existing PSINet service customers who don't want to move to Mindspring or
who are otherwise canceling the PSINet service will be offered by PSINet
EarthLink as an alternative. If interested, PSINet will transfer or otherwise
direct such customers to EarthLink's sales group to be closed.

4. CONTINUED EFFECT OF ORIGINAL AGREEMENT. All provisions of the Original
Agreement, except as modified by this Amendment, shall remain in full force and
effect and are hereby reaffirmed.

IN WITNESS WHEREOF, the duly authorized representatives of the parties hereto
have executed this Amendment as the date first written above.

EARTHLINK NETWORK, INC. PSINet, INC.

By: /s/ CHARLES G. BETTY By: /s/ HAROLD S. WILLS
-------------------------------- --------------------------------
Charles G. Betty Harold S. Wills
Chief Executive Officer Title:
EarthLink Network, Inc. PSINet, Inc.
3100 New York Drive 510 Huntmar Park Drive
Pasadena, California 91107 Herndon, Virginia 22070
Phone (818) 296-2400 Phone:
Fax (818) 296-4161

<PAGE>

EXHIBIT 11.1
EARTHLINK NETWORK, INC.

STATEMENT OF COMPUTATION OF
PER SHARE EARNINGS*
(In thousands except for per share data)

Inception
(May 26,
1994)
through Year ended Nine months ended
December 31, December 31, ---------------------------------------------
1994 1995 September 30, 1995 September 30, 1996
------------ ------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net loss ($148) ($6,120) ($2,972) ($21,809)
------------ ------------ ------------------ ------------------
------------ ------------ ------------------ ------------------

Average shares oustanding 2,587 3,837 3,530 5,658

Common equivalent shares:
Purchase of shares of Common
Stock below the expected IPO
price during fiscal 1995 0 0 0 0

Purchase of shares of Common
Stock below the expected IPO
price during fiscal 1996 468 468 468 312

Assumed exchange of warrants
for Common Stock 235 235 235 235

Assumed exchange of options
for Common Stock 363 363 363 363
------------ ------------ ------------------ ------------------

Weighted average
shares outstanding 3,653 4,903 4,596 6,568
------------ ------------ ------------------ ------------------
------------ ------------ ------------------ ------------------

Net loss per share (0.04) (1.25) (0.65) (3.32)
------------ ------------ ------------------ ------------------
------------ ------------ ------------------ ------------------

* All shares in these tables are weighted on the basis of the number of days the shares were outstanding or
assumed to be outstanding during each period.

</TABLE>

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated December 4, 1996 relating
to the financial statements of EarthLink Network, Inc., which appears in such
Prospectus. We also consent to the reference to us under the heading "Experts"
and "Selected Financial Data" in such Prospectus. However, it should be noted
that Price Waterhouse LLP has not prepared or certified such "Selected Financial
Data."

PRICE WATERHOUSE LLP

Costa Mesa, California
January 21, 1997

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1995 JAN-01-1995
<PERIOD-END> DEC-31-1995 SEP-30-1996
<CASH> 1,790 8,984
<SECURITIES> 0 0
<RECEIVABLES> 218 2,429
<ALLOWANCES> 0 664
<INVENTORY> 0 0
<CURRENT-ASSETS> 2,253 12,114
<PP&E> 2,883 16,454
<DEPRECIATION> 305 2,773
<TOTAL-ASSETS> 4,874 26,033
<CURRENT-LIABILITIES> 4,229 18,553
<BONDS> 0 0
0 14,013
0 0
<COMMON> 51 60
<OTHER-SE> 239 (11,981)
<TOTAL-LIABILITY-AND-EQUITY> 4,874 26,033
<SALES> 0 0
<TOTAL-REVENUES> 3,028 20,162
<CGS> 0 0
<TOTAL-COSTS> 1,404 13,756
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 136 683
<INCOME-PRETAX> (6,120) (21,809)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (6,120) (21,809)
<EPS-PRIMARY> (1.25) (3.32)
<EPS-DILUTED> 0 0

</TABLE>