EARTHLINK NETWORK INC, 10-K405/A, 1998-04-30

EARTHLINK NETWORK INC
10-K405/A, 1998-04-30
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A

[X] AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission file number 000-20799

EARTHLINK NETWORK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 95-4481766
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)

3100 NEW YORK DRIVE, PASADENA, CALIFORNIA 91107
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

(626) 296-2400
(REGISTRANT'S TELEPHONE, INCLUDING AREA CODE)

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value

--------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
The aggregate market value of the Registrant's outstanding Common Stock held by
non-affiliates of the Registrant on March 9, 1998 was $279,364,000. There were
11,445,792 shares of Common Stock outstanding as of March 9, 1998.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

DIRECTORS

Set forth below is certain biographical information with respect to the
Company's directors:

INFORMATION REGARDING DIRECTORS

SKY D. DAYTON
Age: 26

Mr. 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
Age: 41

Mr. Betty has served as the President and as a director of the Company
since January 1996, and, was named the Company's Chief Executive Officer in May
1996. From February 1994 to January 1996, Mr. Betty was a strategic planning
consultant, advising, among others, 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.

SIDNEY AZEEZ
Age: 65

Mr. 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"), both of which are 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
Age: 54

Mr. 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

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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.
Age: 52

Mr. Lacy has been a director of the Company since June 1996. From October
1996 to October 1997 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
Age: 36

Mr. 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
Age: 47

Mr. 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
Age: 46

Mr. 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 Technologies, Inc.
("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.
UUNET is presently a wholly-owned subsidiary of MFS and, indirectly, of
WorldCom. 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

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Corporation, and he remained President and Chief Executive Officer until June
1994. From 1975 to 1989, Mr. Sidgmore was employed by GEIS, where he was Vice
President and General Manager of GEIS North America from 1985 to 1989.
Mr. Sidgmore is also a director of Saville Systems PLC, a provider of billing
software for the telecommunications industry.

REED E. SLATKIN
Age: 48

Mr. 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.

EXECUTIVE OFFICERS

The executive officers of the Company serve at the discretion of the Board
of Directors and presently include Messrs. Sky D. Dayton, Charles G. Betty,
Grayson L. Hoberg, David R. Tommela, Brinton O.C. Young and Dr. Richard D.
Edmiston. See "Information Regarding Directors" for information regarding
Messrs. Dayton and Betty.

GRAYSON L. HOBERG
Age: 39

Mr. Hoberg has served as Vice President, Finance and Administration and
Chief Financial Officer of the Company since December 1997. From September 1993
to December 1997, he served in various capacities for, and ultimately as, the
Vice President of Business Operations for TCI.NET, the Internet Division of TCI
Cable. From December 1991 to September 1993, he was Manager of Information
Systems at Coors Brewery. From January 1988 to December 1991, he was Consulting
Manager at Price Waterhouse.

DAVID R. TOMMELA
Age: 59

Mr. 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
Age: 46

Mr. 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.

DR. RICHARD D. EDMISTON
Age: 55

Dr. Edmiston has served as Vice President of Research and Development of
the Company since January 1997. From December 1992 to January 1997, Dr.
Edmiston was Vice President of Network Planning and Architecture at BBN
Corporation, a leading Internet research and development organization,

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and the founder of BBN Planet, a leading provider of Internet services to
businesses. From September 1990 to November 1992, Dr. Edmiston managed
distributed computer and information systems research at GTE Laboratories.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own
beneficially more than 10% of the Company's Common Stock to file reports of
ownership and changes in ownership of such stock with the Securities and
Exchange Commission (the "SEC") and the National Association of Securities
Dealers, Inc. These persons are also required by SEC regulations to furnish the
Company with copies of all such forms they file. To the Company's knowledge,
based solely on a review of the copies of such reports furnished to the Company
and written representations that no other reports were required, all of the
Company's reporting persons complied during fiscal 1997 with all applicable
Section 16(a) filing requirements.

ITEM 11. EXECUTIVE COMPENSATION

TABLE I - SUMMARY COMPENSATION TABLE

The following table presents certain information required by the SEC
relating to various forms of compensation awarded to, earned by or paid to the
Company's Chief Executive Officer and the five most highly compensated executive
officers other than the Chief Executive Officer who earned more than $100,000
during fiscal 1997 and was serving at the end of fiscal 1997. Such executive
officers are referred to as the "Named Executive Officers."

LONG TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
------------------- SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
--------------------------- ---- ------ ----- ----------------------- ------------
<S> <C> <C> <C> <C> <C>
Sky Dayton 1997 $180,000 $45,052 -- --
Chairman (1) 1996 153,036 70,006 -- --
1995 97,726 16,573 250,000 --

Charles G. Betty 1997 240,000 60,142 -- $10,578(2)
President and Chief Executive Officer (1) 1996 220,550 77,635 250,000 24,000(3)
1995 -- -- -- --

Grayson L. Hoberg (4) 1997 8,654 -- 100,000 --
Vice President, Finance and Administration 1996 -- -- -- --
and Chief Financial Officer 1995 -- -- -- --

David R. Tommela 1997 132,000 26,723 -- 1,218(5)
Vice President, Operations 1996 130,392 34,439 12,500 --
1995 8,862 -- 37,500 --

Richard D. Edmiston 1997 185,000 33,398(6) 27,500 33,626(7)
Vice President, Research and Development 1996 -- -- --
1995 -- -- --

Brinton O.C. Young 1997 140,000 29,754 -- --
Vice President, Strategic Planning 1996 73,681 18,409 112,500 --
1995 -- -- -- --
</TABLE>

__________

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(1) Mr. Dayton served as the Company's President until January 15, 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.

(2) Consists of reimbursement of $8,363 of travel expenses pursuant to Mr.
Betty's employment agreement and $2,215 in matching contributions to Mr.
Betty's account under the Company's 401(k) plan.

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

(4) Mr. Hoberg commenced employment on December 5, 1997 with an annualized base
salary of $150,000.

(5) Consists of matching contributions to Mr. Tommela's account under the
Company's 401(k) plan.

(6) Includes a signing bonus of $15,000 paid to Mr. Edmiston pursuant to his
employment with the Company.

(7) Consists of reimbursement of $32,203 of travel expenses pursuant to Mr.
Edmiston's employment and $1,423 in matching contributions to Mr.
Edmiston's account under the Company's 401(k) plan.

Table II - Option Grants in Fiscal 1997

This table presents information regarding options granted to the Company's
Named Executive Officers during fiscal 1997 to purchase shares of the Company's
Common Stock. In accordance with SEC rules, the table shows the hypothetical
"gains" or "option spreads" that would exist for the respective options based on
assumed rates of annual compound stock price of 5% and 10% from the date the
options were granted over the full option term.

% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES
SECURITIES GRANTED TO OF STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR THE OPTION TERM (1)
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------------
NAME GRANTED (#) YEAR ($/SH) DATE 5% 10%
- ---- ------------- ------- ------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Grayson L. Hoberg. . . . . . . . . 50,000 (2) 12.6% $16.00 11/07/07 $1,297,201 $2,539,443
50,000 (3) 12.6 19.88 12/05/07 1,103,452 2,345,693
Richard D. Edmiston. . . . . . . . 27,500 (4) 7.0% 13.00 1/23/07 795,961 1,479,194
</TABLE>

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

(1) 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 a price of $25.75 per share, the closing
price of a share of Common Stock on December 31, 1997. 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.

(2) Vests in equal increments of 5% per quarter over the five-year period
beginning on the date of grant, November 7, 1997.

(3) Vests in equal increments of 5% per quarter over the five-year period
beginning on the date of grant, December 5, 1997.

(4) Vests in equal increments of 5% per quarter over the five-year period
beginning on the date of grant, January 23, 1997.

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TABLE III - OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION
VALUES

None of the Named Executive Officers exercised any stock options during
fiscal 1997. The following table shows the number of shares of Common Stock
subject to exercisable and unexercisable stock options held by each of the Named
Executive Officers as of December 31, 1997. The table also reflects the values
of such options based on the positive spread between the exercise price of such
options and $25.75, which was the closing sales price of a share of Common Stock
reported on the Nasdaq National Market on December 31, 1997.

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. . . . . . . . . 125,000 125,000 $2,992,500 $2,992,500
Charles G. Betty . . . . . . . 80,000 170,000 1,557,300 3,208,200
Grayson L. Hoberg. . . . . . . - 100,000 - 781,250
David R. Tommela . . . . . . . 18,750 31,250 373,613 610,388
Richard D. Edmiston. . . . . . 4,125 23,375 52,594 298,031
Brinton O.C. Young . . . . . . 33,750 78,750 539,663 1,259,213
</TABLE>
-----------

(1) The value of "in-the-money" options represents the difference between the
exercise price of stock options and $25.75, the closing sales price
reported by the Nasdaq National Market of the Company's Common Stock for
December 31, 1997.

CONVERTIBLE SECURITIES VESTING PLAN

In December 1997, the Board of Directors adopted a plan whereby the vesting
of stock options and warrants held by certain directors and employees will
accelerate upon a change in control of the Company. Generally, a change in
control includes the sale of all or substantially all of the Company's assets or
the acquisition by a person or group (as that term is defined in Section 13(d)
of the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder) of 25% or more of the Company's outstanding voting securities. In
connection with the Sprint Transactions, the Company amended this plan so that
the Sprint Transactions would not constitute a change in control.

KEY EMPLOYEE COMPENSATION CONTINUATION PLAN

In January 1998 the Board of Directors adopted a plan whereby those
employees identified as "key" or critical to the Company are entitled to a
severance payment equal to fifty percent (50%) of their compensation and certain
other benefits received during the twelve-month period ending upon their
termination. The Company adopted this plan to attract the highest quality
individuals to become key members of the Company's leadership team and to retain
the high-quality individuals who are presently members of the Company's
leadership team.

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

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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, Mr. Betty
was named the Company's Chief Executive Officer. Mr. Betty's actual salary for
1997 was $240,000. The agreement further entitles Mr. Betty, upon the
attainment of performance goals, to an annual bonus of $75,000. Mr. Betty's
actual bonus for 1997 was $60,621. 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
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. The agreement was amended in
December 1997 to formally reflect Mr. Betty's position as President and Chief
Executive Officer of the Company. The agreement was further amended in February
1998 to reflect certain conditions of the Sprint Transactions. The Board of
Directors has extended the agreement for an additional year pursuant to the
terms of the agreement.

DIRECTOR COMPENSATION

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

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Company's Board of Directors currently
consists of Messrs. Lacy, O'Donnell and Slatkin. No member of the Compensation
Committee was, during the last fiscal year, an officer or employee of the
Company nor was formerly an officer of the Company. The following transactions
involve, among others, members of the Compensation Committee and are required to
be described under the rules of the Securities and Exchange Commission (the
"SEC"):

In January 1996, Mr. Slatkin guaranteed a $1.5 million lease for network
equipment. As consideration for this agreement, the Company issued Mr. Slatkin
warrants to purchase 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 January 1996. The Company and
Mr. O'Donnell subsequently agreed to indemnify Mr. Slatkin against certain
liability arising out of this lease. As consideration for this agreement,
Mr. Slatkin transferred one-half of these warrants to Mr. O'Donnell.

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 were due on or before June 6, 1997 with interest
payable monthly until such date. The warrants are exercisable for five years
commencing on the date of issuance. 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; Kevin M.
O'Donnell, $225,000 note, 7,500 warrants; Reed E. Slatkin, $225,000 note, 7,500
warrants; and Storie Partners, L.P.,

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$300,000 note, 10,000 warrants. The holders of $725,000 of the 10% Promissory
Notes including Messrs. Slatkin and Abbott and Storie Partners, L.P., converted
their indebtedness into 55,767 shares of Common Stock upon consummation of the
Companys' initial public offering in January 1997. At that time, the Company
also repaid the remaining balance of the 10% Promissory Notes.

In September 1997, the Company sold 1,459,759 shares of its Common Stock to
certain purchasers, including, among others, certain directors and stockholders.
The following directors and more than five percent stockholders (including
certain of their family members and affiliates) participated in this financing:
Reed E. Slatkin (55,810 shares); Sidney Azeez (46,512 shares); Charles G. Betty
(10,000 shares); Linwood A. Lacy, Jr. (23,256 shares); Richard D. Edmiston
(10,000 shares); Brinton O.C. Young (10,000 shares); and Quantum Industrial
Partners LDC (465,117 shares).

Until October 1997, Mr. Lacy also served as President and Chief Executive
Officer of Micro Warehouse Incorporated ("Micro Warehouse"), one of the
Company's affinity marketing partners. For the year ended December 31, 1997, the
Company paid Micro Warehouse approximately $35,200 in bounties for new Company
customers generated by Micro Warehouse.

PURSUANT TO SEC RULES FOR DISCLOSURE OF EXECUTIVE COMPENSATION, THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY HAS PREPARED THE
FOLLOWING REPORT ON EXECUTIVE COMPENSATION. THE COMMITTEE INTENDS THAT THIS
REPORT CLEARLY DESCRIBE THE CURRENT EXECUTIVE COMPENSATION PROGRAM OF THE
COMPANY, INCLUDING THE UNDERLYING PHILOSOPHY OF THE PROGRAM AND THE SPECIFIC
PERFORMANCE CRITERIA ON WHICH EXECUTIVE COMPENSATION IS BASED

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

This report by the Compensation Committee of the Board of Directors (the
"Committee") discusses the Committee's compensation objectives and policies
applicable to the Company's executive officers. The report reviews the
Committee's policy generally with respect to the compensation of all executive
officers as a group for fiscal 1997 and specifically reviews the compensation
established for the Company's Chief Executive Officers as reported in the
Summary Compensation Table. The Committee is composed entirely of non-employee
directors of the Company. The Committee also administers the Company's Stock
Option Plans.

COMPENSATION PHILOSOPHY

The Committee consists of three non-employee directors. The Committee is
responsible for setting cash and long-term incentive compensation for executive
officers and other key employees of the Company.

The Company's compensation policies are intended to create a direct
relationship between the level of compensation paid to executives and the
Company's current and long-term level of performance. The Committee believes
that this relationship is best implemented by providing a compensation package
of separate components, all of which are designed to enhance the Company's
overall performance. The components are base salary, short-term compensation in
the form of annual bonuses and long-term incentive compensation in the form of
stock options.

BASE SALARIES

The base salaries for the Company's executive officers for 1997 was
established subjectively by the Committee. The salaries of the executive
officers were established based on the market environment

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and the Company's need to attract and retain key personnel for whom the Company
must compete against larger, more established companies.

SHORT-TERM ANNUAL BONUSES

Annual bonuses established for the executive officers are intended to
provide an incentive for improved performance in the short term. Target bonus
levels for the executive officers are established by the Committee at the
beginning of the year. For 1997, these bonuses were established based on
pre-determined member count levels, profitability and cash flows.

LONG-TERM INCENTIVE COMPENSATION

The Company's long-term incentive compensation plan for its executive
officers is based on the Company's stock option plans. These plans promote
ownership of the Company's Common Stock which, in turn, provides a common
interest between the stockholder of the Company and the executive officers of
the Company. In establishing a long-term compensation plan, the Board of
Directors concluded that any compensation received under such plans should be
directly linked to the performance of the Company, as reflected by increases in
the price of its Common Stock, and the contribution of the individual thereto.
Options have an exercise price equal to the fair market value of the shares on
the date of grant and, to encourage a long-term perspective, have an exercise
period of ten years. The number of options granted to executive officers is
determined by the Committee, which is charged with administering the stock
option plans.

The base salaries, targeted bonus amounts and number of stock options
established for or granted to the Company's executive officers for 1997 are
based, in part on the Committee's understanding of compensation amounts and
forms paid to persons in comparable roles performing at comparable levels at
other companies in the same or related industries. Such amounts however, mainly
reflect the subjective discretion of the members of the Committee based on the
evaluation of the Company's current and anticipated future financial
performance, the contribution of the individual executive officers to such
financial performance, the contribution of the individual executive officers to
the Company in areas not necessarily reflected by the Company's financial
performance and the most appropriate incentive to link the performance and
compensation of the executive officers to the stockholder's return on the
Company's Common Stock.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

In January 1996, the Company entered into a two-year employment agreement
with Mr. Charles G. Betty which was renewed for an additional year in December
1997. Under this agreement, during 1997 the Company compensated Mr. Betty with
a base salary of $240,000 plus a travel allowance of $8,363 for Mr. Betty and
his family and such other benefits as are generally made available to other
senior executives of the Company. The agreement further entitles Mr. Betty,
upon the attainment of certain performance goals, to an annual bonus of up to
$75,000. As a result of Mr. Betty's contributions not necessarily being
reflected in the Company's financial performance, the Committee reconsidered the
plan and in its discretion, allowed Mr. Betty to participate in the 1997 annual
bonus plan that provided for a cash bonus based on achieving certain member
count levels, profitability and cash flow, and awarded Mr. Betty an actual bonus
of $60,621. In December 1997 the Company amended Mr. Betty's agreement to
increase Mr. Betty's base salary to $300,000 for 1998.

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BENEFITS

The Company believes that it must offer a competitive benefits program to
attract and retain all of its full time employees. Accordingly, the Company
provides the same medical and other benefits to its executive officers that are
generally available to its other employees.

LIMITATIONS ON DEDUCTIBILITY OF COMPENSATION

Under the 1993 Omnibus Budget Reconciliation Act, a portion of annual
compensation payable after 1993 to any of the Company's five highest paid
executive officers would not be deductible by the Company for federal income tax
purposes to the extent such officer's overall compensation exceeds $1,000,000.
Qualifying performance-based incentive compensation, however, would be both
deductible and excluded for purposes of calculating the $1,000,000 base.
Although the Committee does not presently intend to award compensation in excess
of the $1,000,000 cap, it will continue to address this issue when formulating
compensation arrangements for the Company's executive officers.

SUBMITTED BY: THE COMPENSATION COMMITTEE
Linwood A. Lacy, Jr.
Kevin M. O'Donnell
Reed E. Slatkin

THE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION SHALL NOT BE
DEEMED TO BE INCORPORATED BY REFERENCE AS A RESULT OF ANY GENERAL INCORPORATION
BY REFERENCE OF IN THE COMPANY'S 1997 ANNUAL REPORT TO STOCKHOLDERS OR ITS
REPORT ON FORM 10-K.

STOCK PERFORMANCE GRAPH

The following indexed line graph indicates the Company's total return to
stockholders from January 22, 1997, the date on which the Company's Common Stock
began trading on the Nasdaq National Market, to December 31, 1997, as compared
to the total return for the Nasdaq Stock Market - US Index and the Nasdaq
Telecommunications Index for the same period. The calculations in the graph
assume that $100 was invested on January 22, 1997, in each of the Company's
Common Stock and each index and also assume dividend reinvestment.

-11-
<PAGE>

[GRAPH]

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1-22-97 3-31-97 6-30-97 9-30-97 12-31-97
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EarthLink Network, Inc. $100 $96 $100 $144 $198
- --------------------------------------------------------------------------------
Nasdaq Stock Market - US Index $100 $88 $104 $122 $114
- --------------------------------------------------------------------------------
Telecommunications Index $100 $89 $112 $130 $141
- --------------------------------------------------------------------------------
</TABLE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table sets forth information concerning (i) those persons
known by management of the Company to own beneficially more than 5% of the
Company's outstanding Common Stock, (ii) the directors of the Company, (iii) the
officers named in the Summary Compensation Table included elsewhere herein and
(iv) all directors and officers of the Company as a group. Except as otherwise
indicated in the footnotes below, such information is provided as of March 31,
1998. According to rules adopted by the SEC, a person is the "beneficial owner"
of securities if he or she has or shares the power to vote them or to direct
their investment or has the right to acquire beneficial ownership of such
securities within 60 days through the exercise of an option, warrant or right,
the conversion of a security or otherwise. Except as otherwise noted, the
indicated owners have sole voting and investment power with respect to shares
beneficially owned. An asterisk in the percent of class column indicates
beneficial ownership of less than 1% of the outstanding Common Stock.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNERS (1) BENEFICIAL OWNERSHIP CLASS
- ----------------------------------------- -------------------- -----
<S> <C> <C>
Sky D. Dayton. . . . . . . . . . . . . . . 1,637,500(2) 13.5%
Reed E. Slatkin. . . . . . . . . . . . . . 1,237,047(3) 10.2

-12-
<PAGE>

Kevin M. O'Donnell . . . . . . . . . . . . 1,134,739(4) 9.3
Sidney Azeez . . . . . . . . . . . . . . . 590,636(5) 4.9
John W. Sidgmore . . . . . . . . . . . . . 401,515(6) 3.3
Charles G. Betty . . . . . . . . . . . . . 143,299(7) 1.2
Linwood A. Lacy, Jr. . . . . . . . . . . . 78,066(8) *
Robert M. Kavner . . . . . . . . . . . . . 44,009(9) *
Paul McNulty . . . . . . . . . . . . . . . 504(10) *
Brinton O.C. Young . . . . . . . . . . . . 67,500(11) *
Grayson L. Hoberg. . . . . . . . . . . . . 5,000(12) *
David R. Tommela . . . . . . . . . . . . . 3,000(13) *
Dr. Richard D. Edmiston. . . . . . . . . . 11,875(14) *
Quantum Industrial Partners LDC. . . . . . 1,523,180(15) 12.6
Storie Partners, L.P (16). . . . . . . . . 696,950(16) 5.8
Sprint Corporation . . . . . . . . . . . . (17) (17)
All directors and officers as
a group (13 persons). . . . . . . . . . 5,354,690(18) 42.1
- -----------
</TABLE>

(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 137,500 shares of Common Stock. Mr. Dayton's
address is that of the Company.

(3) Includes (i) warrants to purchase 182,500 shares of Common Stock and
(ii) 12,074 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.

(4) Includes (i) 7,538 shares of Common Stock and options to purchase an
additional 87 shares of Common Stock held by Mr. O'Donnell's son, and
(ii) warrants to purchase 182,500 shares of Common Stock. 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.

(5) Includes (i) 347,085 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) Mr. Sidgmore is Chief Executive Officer and a director of UUNET
Technologies, Inc. ("UUNET") and shares voting and investment power with
the other UUNET directors. The business address of Mr. Sidgmore is:
3060 Williams Drive, Fairfax, Virginia 22031.

(7) Includes (i) options to purchase 101,250 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.

(8) Includes options to purchase 20,000 shares of Common Stock.

(9) Includes warrants to purchase 3,334 shares of Common Stock and options to
purchase 20,000 shares of Common Stock.

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

-13-
<PAGE>

(11) Includes options to purchase 47,500 shares of Common Stock.

(12) Represents options to purchase 5,000 shares of Common Stock.

(13) Represents options to purchase 3,000 shares of Common Stock.

(14) Includes options to purchase 1,875 shares of Common Stock.

(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 Soros Fund Management ("SFM"), a sole proprietorship of
Mr. George Soros. 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 36,817 shares of Common Stock and warrants to purchase
3,925 shares of Common Stock held by certain managing directors and other
employees of SFM, of which Mr. Soros disclaims beneficial ownership. The
business address of Quantum Industrial is: c/o Curacao Company N.V.,
Kaya Flamboyan 9, Willemstad, Curacao, Netherlands Antilles.

(16) The business address of Storie Partners L.P. is: c/o Mr. Steve Ledger,
One Bush Street, Suite 1350, San Francisco, California 94104.

(17) 4,783,411 shares of Common Stock beneficially owned representing 30.8
percent of the class. Includes 1,250,000 shares of Common Stock to be
acquired pursuant to the Offer and 3,533,411 shares of Common Stock into
which Sprint's 4,102,941 shares of Convertible Preferred Stock would have
been convertible on the Closing Date of the Offer. In addition, Sprint
may be deemed to be a member of a group with certain Company stockholders
who are parties to the Agreement to Vote and Tender Stock covering
3,989,114 Shares, and a member of a group with certain other Company
stockholders who are parties to the Agreement to Vote covering 2,950,382
Shares, and thus may be viewed as sharing voting and dispositive power
over those Shares for these purposes. As a result of membership in such
groups, for purposes hereof, Sprint may be deemed to share beneficial
ownership of an aggregate of 6,939,496 Shares (representing 61.4% of the
outstanding Shares) of Common Stock subject to such agreements. Sprint
may also be deemed to be a member of a group with certain stockholders in
those two groups who are parties to the Stockholders' Agreement covering
a total of 5,394,996 Shares included among the above number of Shares.
Sprint's address is 2330 Shawnee Mission Parkway, Westwood, Kansas 66205.
See "Business - Sprint Transaction."

(18) Includes (i) options and warrants to purchase 711,176 shares of Common
Stock, (ii) 368,746 shares of Common Stock owned by family members or
affiliates of certain members of the group, and (iii) options and
warrants held by family members or affiliates of certain members of the
group to purchase 87 shares of Common Stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN TRANSACTIONS

In addition to the transaction described under "Compensation Committee
Interlocks and Insider Participation," the following transactions are required
to be disclosed under the rules of the SEC:

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
Technologies, Inc. ("UUNET") and as a director and Vice Chairman and Chief
Operations Officer of UUNET's corporate parent, WorldCom. UUNET is

-14-
<PAGE>

the Company's primary provider of Internet dial-up points of presence ("POPs")
capacity. In connection with the Company's and UUNET's execution of a new
network services agreement in May 1996, the Company issued warrants to UUNET to
purchase 10,000 shares of Common Stock having an exercise price of $20.00 per
share which were exercised on March 31, 1998.

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. EarthLink paid UUNET approximately $21.9 million in 1997 for
network services and interest. Pursuant to the terms of this financing, UUNET
converted all principal and accrued and unpaid interest into 391,515 shares of
Common Stock on March 31, 1998.

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.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

3. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
2.1 Investment Agreement dated as of February 10, 1998, among Sprint
Corporation, a Kansas corporation, Sprint Communications Company L.P.,
a Delaware limited partnership, Dolphin, Inc., a Delaware corporation,
Dolphin Sub, Inc., a Delaware corporation, and EarthLink Network,
Inc., a Delaware corporation (incorporated by reference to Exhibit 2.1
to the Company's Form 8-K filed on February 10, 1998).

3.1 Amended and Restated Certificate of Incorporation incorporated by
reference to (incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1 - File No. 333-15781).

3.2 Bylaws (incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1 - File No. 333-15781).

4.1 See exhibits 3.1 and 3.2 for provisions of the Certificate of
Incorporation and Bylaws defining rights of holders of Common Stock.

4.2 Specimen Stock Certificate (incorporated by reference to Exhibit 4.2
to the Company's Registration Statement on Form S-1 - File
No. 333-15781).

4.3 Form of Warrant Agreement (incorporated by reference to Exhibit 4.3 to
the Company's Registration Statement on Form S-1 - File
No. 333-15781).

-15-
<PAGE>

Delaware corporation (incorporated by reference to Exhibit 10.1 to the
Company's Form 8-K filed on February 10, 1998).

10.2 Proposed form of Certificate of Designation, Preferences and Rights of
Series A Convertible Preferred Stock of Dolphin, Inc. (incorporated by
reference to Exhibit 10.2 to the Company's Form 8-K filed on
February 10, 1998).

10.3 Credit Agreement, dated as of February 10, 1998, between Dolphin,
Inc., a Delaware corporation, and EarthLink Network, Inc., a Delaware
corporation, as Borrowers, and Sprint Corporation, a Kansas
corporation, as Lender (incorporated by reference to Exhibit 10.3 to
the Company's Form 8-K filed on February 10, 1998).

10.4 Lease Line Agreement, dated January 30, 1996, between the Company and
Boston Financial & Equity Corporation (incorporated by reference to
Exhibit 10.4 to the Company's Registration Statement on Form S-1 -
File No. 333-15781).

10.5 Master Lease Agreement, dated September 1, 1995, between the Company
and LINC Capital Management (incorporated by reference to
Exhibit 10.5 to the Company's Registration Statement on Form S-1 -
File No. 333-15781).

10.6 Netscape Communications Corporation Internet Service Provider
Navigator Distribution Agreement dated May 31, 1996, between the
Company and Netscape Communications Corporation (incorporated by
reference to Exhibit 10.6 to the Company's Registration Statement on
Form S-1 - File No. 333-15781).
(a) Amendment No. 1 to Netscape Communications Corporation Internet
Service Provider Agreement (incorporated by reference to
Exhibit 10.6(a) to the Company's Registration Statement on Form S-1 -
File No. 333-15781).
(b) Amendment No. 2 to Netscape Communications Corporation Internet
Service Provider Agreement incorporated by reference to
(Exhibit 10.6(b) to the Company's Registration Statement on Form S-1 -
File No. 333-15781).

10.7 Network Services Agreement dated May 31, 1996, between the Company and
UUNET Technologies, Inc. incorporated by reference to (Exhibit 10.7 to
the Company's Registration Statement on Form S-1 - File No.
333-15781).
(a) Addendum No. 1 to Network Services Agreement (incorporated by
reference to Exhibit 10.7(a) to the Company's Registration Statement
on Form S-1 - File No. 333-15781).

10.8 Software Distribution Agreement (MacTCP), dated October 2, 1995,
between the Company and Apple Computer, Inc. (incorporated by
reference to Exhibit 10.8 to the Company's Registration Statement on
Form S-1 - File No. 333-15781).

10.9 Employment Agreement, dated January 15, 1996, between the Company and
Charles G. Betty (incorporated by reference to Exhibit 10.9 to the
Company's Registration Statement on Form S-1 - File No. 333-15781).

(a) Amendment to Employment Agreement - filed herewith
(b) First Amendment to Employment Agreement - filed herewith
(c) Second Amendment to Employment Agreement - filed herewith

-16-
<PAGE>

10.10 Standard Industrial/Commercial Multi-Tenant Lease, dated December 1,
1995, between the Company and Becton, Dickinson (incorporated by
reference to Exhibit 10.12 to the Company's Registration Statement on
Form S-1 - File No. 333-15781).

10.11 Business Loan Agreement, dated June 15, 1995, and Promissory Note in
the original principal amount of $250,000 between the Company and
California United Bank (incorporated by reference to Exhibit 10.13 to
the Company's Registration Statement on Form S-1 - File
No. 333-15781).

10.12 Production and Distribution Agreement, dated May 6, 1996, between the
Company and National Media Corporation (incorporated by reference to
Exhibit 10.16 to the Company's Registration Statement on Form S-1 -
File No. 333-15781).
(a) Amendment No. 1 to Production and Distribution Agreement
(incorporated by reference to Exhibit 10.16(a) to the Company's
Registration Statement on Form S-1 - File No. 333-15781).

10.13 Internet Wizard Sign-Up Agreement between the Company and Microsoft
Corporation, dated August 16, 1996 (incorporated by reference to
Exhibit 10.19 to the Company's Registration Statement on Form S-1 -
File No. 333-15781).

10.14 Network Access Agreement between the Company and PSINet, Inc., dated
July 22, 1996 and Amendment No. 1 to Network Access Agreement
(incorporated by reference to Exhibit 10.20 to the Company's
Registration Statement on Form S-1 - File No. 333-15781).

10.15 Office Lease by and between The Mutual Life Insurance Company of New
York, as Landlord, and the Company, as Tenant, dated September 20,
1996 (incorporated by reference to Exhibit 10.21 to the Company's
Registration Statement on Form S-1 - File No. 333-15781).

10.16 Standard Office Lease by and between Glen Feliz Properties, as
Landlord, and the Company, as Tenant, dated July 2, 1996 (incorporated
by reference to Exhibit 10.22 to the Company's Registration Statement
on Form S-1 - File No. 333-15781).

10.17 Amended and Restated Note Purchase Agreement between the Company and
UUNET Technologies, Inc., dated October 31, 1996 (incorporated by
reference to Exhibit 10.23 to the Company's Registration Statement on
Form S-1 - File No. 333-15781).
(a) $5,000,000 Convertible Note (incorporated by reference to Exhibit
10.23(a) to the Company's Registration Statement on Form S-1 - File
No. 333-15781).
(b) Addendum to Amended and Restated Registration Rights Agreement
(incorporated by reference to Exhibit 10.23(c) to the Company's
Registration Statement on Form S-1 - File No. 333-15781).

10.18 Amended and Restated Convertible Securities Vesting Plan

10.19 Key Employee Compensation Continuation Plan

(a) Amendment to Key Employee Compensation Continuation Plan

-17-
<PAGE>

23.1 Consent of Price Waterhouse LLP, independent accountants - filed
herewith.

27.1 Financial Data Schedule.

99.1 Registration Rights Agreement, dated as of February 10, 1998, among
Dolphin, Inc., a Delaware corporation, Sprint Corporation, a Kansas
corporation, and Sprint Communications Company L.P., a Delaware
limited partnership (incorporated by reference to Exhibit 99.1 to the
Company's Form 8-K filed on February 10, 1998).

99.2 Stockholders' Agreement, dated as of February 10, 1998, among
EarthLink Network, Inc., a Delaware corporation, Dolphin, Inc., a
Delaware corporation, Sprint Corporation , a Kansas corporation,
Sprint Communications Company L.P., a Delaware limited partnership,
and the persons identified on Schedule I thereto (incorporated by
reference to Exhibit 99.2 to the Company's Form 8-K filed on February
10, 1998).

99.3 Agreement to Vote Stock, dated as of February 10, 1998, among the
Granting Stockholders named on Schedule A thereto, Sprint Corporation,
a Kansas corporation and Sprint Communications Company L.P., a
Delaware limited partnership (incorporated by reference to Exhibit
99.3 to the Company's Form 8-K filed on February 10, 1998).

-18-
<PAGE>

99.4 Agreement to Vote and Tender Stock, dated as of February 10, 1998,
among the Granting Stockholders named on Schedule A thereto, Sprint
Corporation, a Kansas corporation and Sprint Communications Company,
L.P., a Delaware limited partnership (incorporated by reference to
Exhibit 99.4 to the Company's Form 8-K filed on February 10, 1998).
</TABLE>

-19-
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment to Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Pasadena, State of
California, on the 27th day of April, 1998.

EARTHLINK NETWORK, INC.

By: /s/ GRAYSON L. HOBERG
---------------------------
Grayson L. Hoberg
Chief Financial Officer, Vice
President Finance and
Administration

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to Form 10-K has been signed by the following persons in the
capacities indicated below on the 27th day of April, 1998.

SIGNATURE TITLE
--------- -----

/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 Officer)
Charles G. Betty

/s/ GRAYSON L. HOBERG Chief Financial Officer (Principal Financial
- --------------------- and Accounting Officer)
Grayson L. Hoberg

/s/ SIDNEY AZEEZ* Director
- -----------------
Sidney Azeez

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

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

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

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

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

-20-
<PAGE>

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

* By:/s/ GRAYSON L. HOBERG
---------------------
Grayson L. Hoberg
Attorney-in-Fact

-21-
<PAGE>

EXHIBITS

3.1 Amended and Restated Certificate of Incorporation incorporated by
reference to (incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1 - File No. 333-15781).

3.2 Bylaws (incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1 - File No. 333-15781).

4.1 See exhibits 3.1 and 3.2 for provisions of the Certificate of
Incorporation and Bylaws defining rights of holders of Common Stock.

4.2 Specimen Stock Certificate (incorporated by reference to Exhibit 4.2
to the Company's Registration Statement on Form S-1 - File No.
333-15781).

4.3 Form of Warrant Agreement (incorporated by reference to Exhibit 4.3 to
the Company's Registration Statement on Form S-1 - File No.
333-15781).

10.1 Governance Agreement, dated as of February 10, 1998, among Sprint
Corporation, a Kansas corporation, Sprint Communications Company L.P.,
a Delaware limited partnership, Dolphin, Inc., a Delaware corporation,
and EarthLink Network, Inc., a Delaware corporation (incorporated by
reference to Exhibit 10.1 to the Company's Form 8-K filed on February
10, 1998).

10.5 Master Lease Agreement, dated September 1, 1995, between the Company
and LINC Capital Management (incorporated by reference to Exhibit
10.5 to the Company's Registration Statement on Form S-1 - File No.
333-15781).

-22-
<PAGE>

(a) Amendment No. 1 to Netscape Communications Corporation Internet
Service Provider Agreement (incorporated by reference to Exhibit
10.6(a) to the Company's Registration Statement on Form S-1 - File
No. 333-15781).
(b) Amendment No. 2 to Netscape Communications Corporation Internet
Service Provider Agreement incorporated by reference to
(Exhibit 10.6(b) to the Company's Registration Statement on Form S-1 -
File No. 333-15781).

(a) Addendum No. 1 to Network Services Agreement (incorporated by
reference to Exhibit 10.7(a) to the Company's Registration Statement
on Form S-1 - File No. 333-15781).

(a) Amendment to Employment Agreement - filed herewith
(b) First Amendment to Employment Agreement - filed herewith
(c) Second Amendment to Employment Agreement - filed herewith

10.13 Internet Wizard Sign-Up Agreement between the Company and Microsoft
Corporation, dated August 16, 1996 (incorporated by reference to
Exhibit 10.19 to the Company's Registration

-23-
<PAGE>

Statement on Form S-1 - File No. 333-15781).

10.17 Amended and Restated Note Purchase Agreement between the Company and
UUNET Technologies, Inc., dated October 31, 1996 (incorporated by
reference to Exhibit 10.23 to the Company's Registration Statement on
Form S-1 - File No. 333-15781).
(a) $5,000,000 Convertible Note (incorporated by reference to
Exhibit 10.23(a) to the Company's Registration Statement on Form S-1 -
File No. 333-15781).
(b) Addendum to Amended and Restated Registration Rights Agreement
(incorporated by reference to Exhibit 10.23(c) to the Company's
Registration Statement on Form S-1 - File No. 333-15781).

10.18 Amended and Restated Convertible Securities Vesting Plan

10.19 Key Employee Compensation Continuation Plan

(a) Amendment to Key Employee Compensation Continuation Plan

23.1 Consent of Price Waterhouse LLP, independent accountants - filed
herewith.

27.1 Financial Data Schedule.

99.3 Agreement to Vote Stock, dated as of February 10, 1998, among the
Granting Stockholders named on Schedule A thereto, Sprint Corporation,
a Kansas corporation and Sprint Communications Company L.P., a
Delaware limited partnership (incorporated by reference to
Exhibit 99.3 to the Company's Form 8-K filed on February 10, 1998).

-24-

<PAGE>

AMENDMENT TO EMPLOYMENT AGREEMENT

THIS AMENDMENT TO EMPLOYMENT AGREEMENT is entered into this ____ day of
December, 1997, by and between EarthLink Network, Inc. (the "Company"), and
Charles G. Betty ("Mr. Betty").

RECITALS

On January 15, 1996 the Company and Mr. Betty entered into that certain
Employment Agreement (the "Employment Agreement") whereby the Company
employed Mr. Betty as its President and Chief Operating Officer. At that
time, Mr. Sky Dayton, the Company's founder and Chairman of the Board, served
as the Company's Chief Executive Officer. In June 1996, the Board of
Directors acting by written consent appointed Mr. Betty to serve as President
and Chief Executive Officer and appointed Mr. Dayton to serve as Founder and
Chairman. The Employment Agreement, however, was not amended to reflect this
change in title. Furthermore, the Employment Agreement conflicts, in part,
with the intention of the Compensation Committee of the Board of Directors
with respect to the vesting of Mr. Betty's option shares issued, and which
may be issued, to him.

NOW THEREFORE, in consideration of the foregoing premises and for other
valuable and sufficient consideration, the parties agree as follows.

1. CHANGE IN TITLE. The Employment Agreement is amended as follows:

1.1 Section 2(a) - replace the phrase "President and Chief Operating
Officer" with the phrase "President and Chief Executive Officer" and replace
the phrase "Chief Executive Officer or the Board" with the phrase "the Board".

1.2 Section 2(b) - replace the phrase "the Board of Directors or the Chief
Executive Officer" with the phrase "the Board of Directors" and replace the
phrase "the Chief Executive Officer or the Board" with the phrase "the Board".

1.3 Section 4(a)(2) - replace the phrase "the Chief Executive or the
Board" with the phrase "the Board".

1.4 Section 4(b) - replace the phrase "You and the Chief Executive
Officer and/or Board" with the phrase "You and the Board".

1.5 Section 4(f) - replace the phrase "the Chief Executive Officer or
the Board" with the phrase "the Board".

2. "CHANGE IN CONTROL EVENT" DEFINITION. The Employment Agreement is
further amended by deleting the existing definition of "Change in Control
Event" in Section 1(b) and replacing it with the following definition:

"Change in Control Event" shall mean any of the following events:
(a) the execution of an agreement for the sale of all, or a material
portion, of the assets of the Company; (b) the execution of an agreement
for a merger or recapitalization of the Company, or any merger or
recapitalization whereby the Company is not the surviving

<PAGE>

entity; (c) the acquisition, directly or indirectly, of the beneficial
ownership of 25% or more of the outstanding voting securities of the
Company by any "person" (within the meaning of that term as it is used
in Section 13(d) of the Securities Exchange Act of 1934, as amended, and
the rules promulgated thereunder); (d) the failure of the current
members of the Company's Board of Directors (the "Board") to constitute
a majority of the Board; or (e) a change of control of the Company as
determined by the Board of Directors in its sole discretion.

3. CONTINUATION. Except as specifically set forth in this Amendment the
Employment Agreement shall continue in full force and effect.

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

EARTHLINK NETWORK, INC. CHARLES G. BETTY

By: /s/ Sky D. Dayton /s/ Charles G. Betty
------------------------------- --------------------------------
Sky D. Dayton, Founder and Chairman Charles G. Betty

-2-

<PAGE>
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT is made this ____ day of
February, 1998 between EarthLink Network, Inc., a Delaware corporation (the
"Company") and Charles G. Betty (the "Employee").

RECITALS

WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the shareholders of the Company to enter into a
strategic relationship in the area of Internet access and related services
with Steven Corporation ("Steven") and its affiliates, pursuant an Investment
Agreement, dated as of February __, 1998 among Steven, Steven Communications
Company, L.P., a Delaware limited partnership ("Steven Sub"), Newco, Inc., a
Delaware corporation ("Newco") and its subsidiary (the "Investment
Agreement");

WHEREAS, as a condition to the consummation of the transactions
contemplated in the Investment Agreement (COPY TO COME);

WHEREAS, the Company and Employee have agreed to execute and deliver
this Amendment to satisfy such condition and as an inducement to Steven and
Steven Sub to enter into transactions contemplated in the Investment
Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, Company and Employee agree as
follows:

SECTION 1(b) - DEFINITIONS. "Change in Control." Amend subsection (b)
of Section 1 to add the following sentence to the end of the subparagraph:

This Amendment, and the rights of the parties hereunder, shall be
governed by and construed in accordance with the laws of the State of
California.

<PAGE>

IN WITNESS WHEREOF, Employee and the Company have executed and delivered
this Agreement as of the date first shown above.

EMPLOYEE:

/s/ Charles G. Betty
----------------------------------------
Charles G. Betty

THE COMPANY:

EARTHLINK NETWORK, INC.

By: /s/ Sky D. Dayton
-------------------------------------
Title: Founder and Chairman

<PAGE>

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT is made as of this 10th
day of February, 1998 between EarthLink Network, Inc., a Delaware corporation
(the "Company") and Charles G. Betty (the "Employee").

RECITALS

WHEREAS, the Company and Employee have entered into an Employment
Agreement, dated January 15, 1996, as first amended on December __, 1997
(together, the "Agreement");

WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the shareholders of the Company to enter into a
strategic relationship in the area of Internet access and related services
with Steven Corporation, a Kansas corporation ("Steven") and its affiliates,
pursuant an Investment Agreement, dated as of February 10, 1998 among Steven,
Steven Communications Company, L.P., a Delaware limited partnership ("Steven
Sub"), Newco, Inc., a Delaware corporation ("Newco") and Newco Sub, Inc., a
Delaware corporation (the "Investment Agreement");

WHEREAS, as a condition to the consummation of the transactions
contemplated in the Investment Agreement, the Company has agreed to amend
this Agreement to preclude the transactions contemplated by the Investment
Agreement from inadvertently causing a "Change in Control" as defined in the
Agreement and accelerating the vesting of options previously granted to
Employee;

WHEREAS, the Company and Employee have agreed to execute and deliver
this Amendment to satisfy such condition and as a further inducement to
Steven and Steven Sub to enter into the transactions contemplated in the
Investment Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, Company and Employee agree as
follows:

SECTION 1(b) - DEFINITIONS. "Change in Control." Amend subsection (b)
of Section 1 to add the following sentence to the end of the subparagraph:

"Notwithstanding the foregoing, none of the transactions
contemplated by that certain Investment Agreement, dated as of
February 10, 1998, among Steven Corporation, a Kansas corporation,
Steven Communications Company, LP, a Delaware limited partnership,
the Company, Newco, Inc., a Delaware corporation and Newco Sub, a
Delaware corporation (the "Investment Agreement") or any Ancillary
Agreements, as defined in the Investment Agreement (including,
without limitation, the conversion of the Convertible Preferred
Stock and/or the Convertible Notes, each as defined in the
Investment Agreement) either individually or in the aggregate,
shall be deemed to be a "Change in Control

<PAGE>

Event", unless it constitutes a Business Combination that is not a
Discriminatory Transaction, as defined in the Investment Agreement."

This Amendment, and the rights of the parties hereunder, shall be
governed by and construed in accordance with the laws of the State of
California.

<PAGE>

IN WITNESS WHEREOF, Employee and the Company have executed and delivered
this Second Amendment as of the date first shown above.

EMPLOYEE:

/s/ Charles G. Betty
-----------------------------------------
Charles G. Betty

THE COMPANY:

EARTHLINK NETWORK, INC.

By: /s/ Sky D. Dayton
-------------------------------------
Title: Founder and Chairman

<PAGE>
EARTHLINK NETWORK, INC.
AMENDED AND RESTATED
CONVERTIBLE SECURITIES VESTING PLAN

BACKGROUND

It having been previously brought to the attention of the Board of Directors
(the "Board") that outstanding warrants, non-plan options and plan-based
options for the purchase of shares of the Company's capital stock held by the
Company's officers and directors set forth on Schedule I hereto
(collectively, the "Convertible Securities") do not contain the appropriate
change-in-control vesting provisions which the Board believed to be in
effect, the Board directed the Company's officers to investigate the
provisions of the Convertible Securities and report their findings to the
Board. The report indicates that the Convertible Securities, in fact, do not
contain the change-in-control vesting provisions which the Board believed to
be in effect and which the Board considers necessary to protect the interests
of the holders in the event of a change-in-control of the Company.
Furthermore, the report indicates that the Company's 1995 Stock Option Plan
also fails to contain a change-in-control vesting provision applicable to the
Convertible Securities issued and issuable thereunder.

The Board notes that the industry in which the Company primarily conducts
business, namely the Internet service provider and telecommunications
industry, is undergoing a transformation characterized most notably by
acquisitions, buy-outs, mergers and consolidations of, by and between
traditional industry members and non-traditional market entrants. It is the
Board's belief that because of these industry characteristics,
change-in-control provisions which accelerate vesting of purchase rights are
standard in the industry.

DETERMINATION

Upon consideration of the above background information, the Board deems it to
be in the Company's and its stockholders' best interest to amend the vesting
schedules of the Convertible Securities so that unvested purchase rights
accelerate and become fully vested and exercisable upon a change-in-control
event, as described below. The Board believes it is crucial for its
directors and senior executives to be protected against such
change-in-control events.

The Board therefore adopts this Convertible Securities Vesting Plan (the
"Plan") and hereby authorizes and directs the officers of the Company,
working with the Company's legal counsel and accountants, to take such action
as is necessary to amend the vesting schedules of the Convertible Securities
to include the change-in-control provision and further amend the Convertible
Securities as necessary to remove and/or alter provisions which may conflict
with the change-in-control provision.

The Board notes that as of the date of this Plan, the Company has not entered
into a business combination transaction with any party, nor does the Company
currently contemplate entering into such a transaction with any specific
party in the foreseeable future.

ADOPTION OF CHANGE-IN-CONTROL PROVISION

The vesting schedules of the Convertible Securities shall be amended to
include substantially the following provision but with such modifications as
are necessary to comport with the balance of the instrument as may be
determined by the Company's officers:

<PAGE>

Upon a Change-in-Control, all unvested purchase rights granted in
this instrument shall immediately vest and become exercisable
notwithstanding the vesting schedule otherwise contemplated by this
instrument.

"Change-in-Control" shall mean the occurrence of any of the
following events: (a) the execution of an agreement for the sale of
all, or a material portion, of the assets of the Company; (b) the
execution of an agreement for a merger or recapitalization of the
Company, or any merger or recapitalization whereby the Company is
not the surviving entity; (c) the acquisition, directly or
indirectly, of the beneficial ownership of 25% or more of the
outstanding voting securities of the Company by any "person"
(within the meaning of that term as it is used in Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder); or (d) a change of control of the Company
as determined by the Board of Directors in its sole discretion.
Notwithstanding the foregoing, none of the transactions
contemplated by that certain Investment Agreement, dated as of
February 10, 1998, among Steven Corporation, a Kansas corporation,
Steven Communications Company, LP, a Delaware limited partnership,
the Company, Newco, Inc., a Delaware corporation and Newco Sub, a
Delaware corporation (the "Investment Agreement" or any Ancillary
Agreements, as defined in the Investment Agreement (including,
without limitation) the conversion of the Convertible Preferred
Stock and/or the Convertible Notes, each as defined in the
Investment Agreement) either individually or in the aggregate,
shall be deemed to be a "Change in Control", unless it constitutes
a Business Combination that is not a Discriminatory Transaction, as
defined in the Investment Agreement.

<PAGE>

EARTHLINK NETWORK, INC.
KEY EMPLOYEE COMPENSATION CONTINUATION PLAN
SUMMARY PLAN DESCRIPTION

ARTICLE 1

ESTABLISHMENT OF THE PLAN
-------------------------

1.1 EarthLink Network, Inc. (the "Company") hereby establishes the
EarthLink Network, Inc. Key Employee Compensation Continuation Plan (the
"Plan") effective as of January 16, 1998. The purpose of the Plan is to
provide severance pay to key employees in the event that the Company
terminates the employment of such employees under certain limited
circumstances as described herein.

1.2 The Company intends for this Plan to constitute an employee welfare
benefit plan within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and a severance pay plan
within the meaning of Department of Labor (DOL) Regulation Section
2510.3-2(b).

ARTICLE 2

DEFINITIONS
-----------

2.1 "BOARD OF DIRECTORS" means the Board of Directors of the Company.

2.2 "CHANGE OF CONTROL" means (i) a sale or exchange of all or
substantially all the assets of the Company, (ii) the liquidation or
dissolution of the Company or (iii) any merger, consolidation, reorganization
or other transaction or event that results in a Change of Ownership in the
Company (as defined in the following sentence). For purposes of this Plan, a
"Change of Ownership" means (i) the acquisition by any individual, entity or
group (hereinafter referred to as a "person") of beneficial ownership of or
the right to vote 25 percent or more of the then outstanding stock of the
Company; provided, however, that the following acquisitions shall not
constitute a Change in Ownership: (a) any acquisition of stock directly from
the Company (excluding any acquisition by a conversion privilege), (b) any
acquisition by the Company, (c) any acquisition by any employee benefit plan
(or related trust) that the Company sponsors or maintains or (d) any
acquisition that occurred before the effective date of the Plan, (ii)
individuals who constitute the Board of Directors of the Company as of the
effective date of the Plan cease for any reason to constitute at least a
majority of the Board of Directors of the Company or its successor; provided,
however, that any individual becoming a director after the effective date of
this Plan, whose election or nomination for election by the Company's
shareholders was approved by a vote of at least the majority of the directors
comprising the Board of Directors of the Company as of the effective date of
the Plan will be considered as though such individual was a member of the
Board of Directors as of the effective date of the Plan, and (iii) any
reorganization, merger, consolidation or similar event, unless the persons
who had beneficial ownership of and the right to vote all of the outstanding
shares of stock of the Company before such event beneficially own and have
the right to vote the outstanding shares of stock of the Company resulting
from such event in substantially the same proportion as before such event.

2.3 "COMPANY" means EarthLink Network, Inc. or any of its subsidiaries
or affiliates that adopt the Plan, except that the Company in the context of
the Plan Administrator, the Board of Directors and a Change of Control shall
only mean EarthLink Network, Inc.

2.4 "DISABILITY" means the permanent and total disability of the
Participant such that he is unable to engage in any substantial gainful
activity by reason of any medically-determinable physical or

<PAGE>

mental impairment that can be expected to result in death or that has lasted
or can be expected to last for a continuous period of not less than 12
months. The Participant will not be considered to be permanently and totally
disabled unless he furnishes proof of the existence of such disability in
such form and manner and based on competent medical advice, and at such
times, as the Plan Administrator may reasonably require.

2.5 "EMPLOYEE" means any person whom the Company employs for purposes
of the Federal Insurance Contributions Act.

2.6 "FOR CAUSE" means the involuntary termination of employment of the
Participant because of (i) the willful and continued failure by the
Participant to perform his duties at the Company, (ii) misconduct by the
Participant that is injurious to the Company, financially or otherwise, (iii)
commission by the Participant of an act of fraud or dishonesty relating to
and adversely affecting the Company, (iv) conviction of the Participant of a
felony in connection with his employment with the Company, or (v) the
habitual failure of the Participant, after written notice specifying such
failure and a reasonable opportunity to cure such failure having passed, to
perform his employment duties at the Company in a satisfactory manner.

2.7 "FOR GOOD REASON" means the voluntary termination of employment by
the Participant because and within 90 days of (i) a substantial diminution in
the then-current duties, benefits and responsibilities of the Participant at
the Company, (ii) a substantial diminution in the then-current base salary or
usual bonuses of the Participant, (iii) requiring the Participant to be based
anywhere other than thirty miles of Participant's then-current location, (iv)
the failure by the Company to continue in effect any material benefit or
compensation plan, life insurance plan, health and accident plan or
disability plan in which Participant is participating, unless such benefit or
compensation plan, life insurance plan, health and accident plan, disability
or similar plan is replaced with a comparable plan in which Participant will
participate or which will provide Participant with comparable benefits, (v)
the failure of the Company to provide the Participant with the number of paid
vacation days to which Participant is normally entitled in accordance with
the normal vacation policy of the Company, or (vi) any action by the Company
that adversely effects in a material way the Participant's participation in
or materially reduces Participant's benefits under any of such benefit as
compensation plans.

2.8 "PARTICIPANT" means any Employee selected for participation in the
Plan.

2.9 "PLAN ADMINISTRATOR" means the Compensation Committee of the Board
of Directors.

2.10 "WITHOUT CAUSE" means the involuntary termination of employment of
the Participant due to lack of work at the Company or any other reason that
the Board of Directors determines is in the best interest of the Company
other than For Cause or a Disability.

ARTICLE 3

ELIGIBILITY FOR PLAN PARTICIPATION
----------------------------------

Each Employee of the Company shall become a Participant in the Plan as
of the date the Plan Administrator selects the Employee for participation.
Except as set forth in Article 8 of the Plan, the Plan Administrator in its
sole and unfettered discretion can terminate the participation in the Plan of
any Employee at any time. The Plan Administrator hereby selects the
Employees listed on EXHIBIT A for participation in the Plan immediately as of
the date of its adoption.

-2-

<PAGE>

ARTICLE 4

CONDITIONS FOR PAYMENT OF BENEFITS
----------------------------------

4.1 A Participant shall be entitled to severance pay under the Plan
only if the Company terminates his employment Without Cause or the
Participant voluntarily terminates his employment For Good Reason. A
Participant shall not be entitled to severance pay under the Plan if he (i)
resigns other than For Good Reason, (ii) is terminated For Cause, (iii) dies
or (iv) voluntarily or involuntarily terminates employment as a result of a
Disability.

ARTICLE 5

SALARY CONTINUATION BENEFITS
----------------------------

5.1 The amount of severance pay to which a Participant will be entitled
will equal (i) 50 percent of the Participant's then-current base salary at
the Company, (ii) 50 percent of the amount of any commissions the Company
paid to the Participant in the 12-month period ending on the termination of
Participant's employment, (iii) 50 percent of the amount of any bonuses the
Company paid to the Participant in the 12-month period ending as of the date
of the termination of the Participant's employment, (iv) 50 percent of the
value of any perquisites to which the Participant was entitled from the
Company in the 12-month period ending as of the termination of the
Participant's employment, including but not limited to the value of any
living allowances, personal travel allowances, auto lease/rental payments and
similar amounts, (v) an amount equal to the premiums needed for six months of
COBRA coverage for the Participant, the Participant's spouse and the
dependents of the Participant if they elect COBRA coverage, and (vi) an
amount equal to the premiums needed for the six months following the
termination of Participant's employment to purchase life insurance and
disability insurance comparable to the amount of such insurance that the
Participant had at termination of employment.

5.2 Except as set forth in Section 5.3, the aggregate severance
payments described in Section 5.1 above shall be made to the Participant in
one lump sum payment within 30 days of Participant's termination of
employment with the Company.

5.3 Severance payments will be made only after the Participant executes
a release and waiver containing such terms and conditions as the Plan
Administrator may reasonably require.

ARTICLE 6

CLAIMS FOR BENEFITS
-------------------

6.1 In the event that a Participant desires to make a claim with
respect to any of the benefits provided hereunder, the Participant shall
submit evidence satisfactory to the officer of the Company that the Plan
Administrator designates to receive claims. Any claim with respect to any of
the benefits provided under the Plan shall be made in writing within 30 days
of the event that the Participant is asserting constitutes a termination of
employment. Failure by the Participant to submit his claim within the 30-day
period shall bar the Participant from any claim for benefits under the Plan
as a result of the occurrence of that event.

6.2 In the event that a claim of a Participant is wholly or partially
denied, the Participant or his duly authorized representative may appeal the
denial of the claim to the Board of Directors or to any committee that the
Board of Directors designates at any time within 90 days after the
Participant receives written notice from the Company of the denial of the
claim. In connection therewith, the Participant or his duly authorized
representative may request a review of the denied claim, may review pertinent
documents, and may submit issues and comments in writing. Upon receipt of an
appeal, the Board of

-3-

<PAGE>

Directors or such designated committee shall make a decision with respect to
the appeal and, not later than 60 days after receipt of a request for review,
shall furnish the Participant with a decision on review in writing, including
the specific reasons for the decision written in a manner calculated to be
understood by the Participant, as well as specific references to the
pertinent provisions of this Plan upon which the decision is based.

6.3 No benefit that shall be payable under the Plan to any Participant
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to do so shall be
void. No benefit shall in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements or torts of any Participant, nor
shall it be subject to attachment or legal process.

6.4 The Plan shall not give any Employee or Participant any right or
claim except to the extent that the right is fixed specifically under the
Plan. The establishment of the Plan shall not be construed to give any
Employee or Participant a right to be continued in the employ of the Company
or as interfering with the right of the Company to terminate the employment
of any Employee or Participant at any time.

ARTICLE 7

ADMINISTRATION AND FINANCING OF THE PLAN
----------------------------------------

7.1 The Plan Administrator shall interpret and administer the Plan.
The Plan Administrator shall establish rules for the administration of the
Plan. The Plan Administrator shall have discretionary authority to construe
the terms of the Plan and shall determine all questions arising in its
administration, interpretation and application, including those concerning
eligibility for benefits. All determinations of the Plan Administrator shall
be final and binding on all Employees and Participants. The Plan
Administrator may appoint a committee or an agent or other representative to
act on its behalf, and may delegate to such committee or agent or
representative any of the powers of the Plan Administrator. Any action that
such committee or agent or representative takes shall be considered to be the
action of the Plan Administrator, when the committee or agent or
representative is acting within the scope of the authority that the Plan
Administrator delegates it, and the Plan Administrator shall be responsible
for all such actions.

7.2 The Company that employs the Participant on his last day of
employment will fund the Plan by payments made from its general assets.

ARTICLE 8

AMENDMENT AND TERMINATION
-------------------------

The Board of Directors in accordance with applicable corporate law
reserves the right at any time to amend or terminate the Plan, except that,
after a Change of Control has occurred, the Plan Administrator may not
terminate the participation in the Plan of any Participant who is in the Plan
as of the Change of Control and the Board of Directors may not amend or
terminate the Plan until all Participants in the Plan as of the Change of
Control terminate employment.

-4-

<PAGE>

ARTICLE 9

MISCELLANEOUS PROVISIONS
------------------------

9.1 The failure of the Plan Administrator to enforce any of the
provisions of the Plan shall in no way be construed to be a waiver of these
provisions, nor in any way to affect the validity of the Plan or any part
thereof, or the right of the Plan Administrator thereafter to enforce every
provision.

9.2 The benefits provided under this Plan are in addition to and not in
lieu of any other similar benefits that the Company may specify from time to
time in any employee handbook or in any other agreement between the Company
and the Participant. Additionally, the benefits that this Plan provides
shall not be reduced or offset by any other payments or benefits that the
Participant may receive from any other third party or other employer after
the termination of the Participant's employment with the Company.

9.3 Article headings are for convenience only and the language of the
Plan itself will be controlling.

9.4 This Plan shall be unfunded. Any liability of the Company under
the Plan shall be based solely on contractual obligations, if any, that are
created hereunder. No such liability of the Company shall be deemed to be
secured by any property of the Company.

9.5 Whenever any benefits become payable under the Plan, the Company
shall have the right to withhold such amounts as are sufficient to satisfy
any federal, state or local withholding tax requirements.

9.6 The Plan shall be construed and administered under the laws of the
State of Delaware.

IN WITNESS WHEREOF, the Company has caused the Plan to be executed on
January 16, 1998.

EARTHLINK NETWORK, INC.

By: /s/ Charles G. Betty
------------------------------------

Title: President and CEO
---------------------------------

-5-

<PAGE>

EARTHLINK NETWORK, INC.
KEY EMPLOYEE COMPENSATION CONTINUATION PLAN
SUMMARY PLAN DESCRIPTION

NAME OF PLAN:

EarthLink Network, Inc. Key Employee Compensation Continuation Plan

NAME, ADDRESS, AND TELEPHONE NUMBER OF SPONSOR AND PLAN ADMINISTRATOR:

EarthLink Network, Inc. ("Company")
3100 New York Drive
Pasadena, California 91107
(626) 296-2400

The Plan Sponsor appoints the Plan Administrator to administer the Plan.

EMPLOYER IDENTIFICATION NUMBER:

95-4481766

EFFECTIVE DATE:

January 16, 1997

PLAN YEAR:

Calendar year

FISCAL YEAR FOR MAINTAINING PLAN RECORDS:

Calendar Year

TYPE OF WELFARE PLAN:

The Plan is a severance pay plan that provides benefits to certain employees
in the event of termination of their employment due to certain specified
reasons.

TYPE OF ADMINISTRATION OF THE PLAN:

The Compensation Committee of the Company's Board of Directors is the Plan
Administrator and administers the Plan as described in Article 7.

PROVISIONS FOR ELIGIBILITY REQUIREMENTS:

The Plan describes eligibility requirements in Article 3.

<PAGE>

DESCRIPTION OF PLAN BENEFITS:

The Plan describes conditions for payment of benefits in Article 4 and the
amount of such benefits in Article 5.

SOURCES OF CONTRIBUTIONS TO THE PLAN AND FUNDING MEDIUM:

The general assets of the Company that employs the Participant shall fund the
severance pay from the Plan.

PROCEDURES FOR PRESENTING CLAIMS AND REDRESS OF DENIED CLAIMS:

Article 6 provides detailed instructions for filing a claim and redress of a
denied claim.

AGENT FOR SERVICE OF PROCESS:

EarthLink Network, Inc.
3100 New York Drive
Pasadena, California 91107
Attn.: Ms. Kirsten L. Hansen

In addition to the agent listed above, service of process may be made upon
the Plan Administrator itself.

-2-

<PAGE>

YOUR RIGHTS UNDER ERISA

The following statement is required by law to be included in this Summary
Plan Description:

As a Participant in the EarthLink Network, Inc. Severance Pay Plan (the
"Plan") you are entitled to certain rights and protections under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). ERISA provides
that all Plan Participants shall be entitled to:

Examine, without charge, at the Plan Administrator's office and
at other specified location, such as worksites, all Plan
documents and copies of all documents filed by the Plan with the
U.S. Department of Labor, such as detailed annual reports.

Obtain copies of all Plan documents and other Plan information
upon written request to the Plan Administrator. The
administrator may make a reasonable charge for the copies.

Receive a summary of the Plan's annual financial report.
The Plan Administrator is required by law to furnish each
Participant with a copy of this summary annual report.

In addition to creating rights for Plan Participants, ERISA imposes duties
upon the people who are responsible for the operation of the Plan. The
people who operate your Plan, called fiduciaries, have a duty to do so
prudently and in the interest of you and other Plan Participants. No one,
including your employer or any other person, may fire you or otherwise
discriminate against you in any way solely in order to prevent you from
obtaining a benefit or exercising your rights under ERISA. If your claim for
a benefit is denied, in whole or in part, you must receive a written
explanation of the reason for the denial. You have the right to have the
Plan review and reconsider your claim. Under ERISA, there are steps you can
take to enforce the above rights. For instance, if you request materials
from the Plan and do not receive them within 30 days, you may file suit in a
federal court. In such a case, the court may require the Plan Administrator
to provide the materials and pay you up to $100 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the
control of the Plan Administrator. If you have a claim for benefits which is
denied or ignored, in whole or in part, you may file suit in a state or
federal court. If it should happen that Plan fiduciaries misuse the Plan's
money, or if you are discriminated against for asserting your rights, you may
file suit in a federal court. The court will decide who should pay court
costs and legal fees. If you are successful, the court may order the person
you have sued to pay these costs and fees. If you lose, the court may order
you to pay these costs and fees. If you have any questions about your Plan,
you should contact the Plan Administrator. If you have any questions about
this statement or about your rights under ERISA, you should contact the
nearest office of the U.S. Labor-Management Services Administration,
Department of Labor.

<PAGE>

AMENDMENT TO KEY EMPLOYEE COMPENSATION CONTINUATION PLAN

THIS AMENDMENT TO KEY EMPLOYEE COMPENSATION CONTINUATION PLAN ("Plan')
is effective as of this 10th day of February, 1998 by action of the Board of
Directors of EarthLink Network, Inc., a Delaware corporation (the "Company")
at a special meeting duly called and held on February 10, 1998.

RECITALS

WHEREAS, the Board of Directors adopted the Plan on January 16, 1998;

WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the shareholders of the Company to enter into a
strategic relationship in the area of Internet access and related services
with Steven Corporation, a Kansas corporation ("Steven") and certain of its
affiliates, pursuant an Investment Agreement, dated as of February __, 1998
among Steven, Steven Communications Company, L.P., a Delaware limited
partnership ("Steven Sub"), Newco, Inc., a Delaware corporation ("Newco") and
its subsidiary Newco Sub, Inc., a Delaware corporation (the "Investment
Agreement");

WHEREAS, as a condition to the consummation of the transactions
contemplated in the Investment Agreement, the Company has agreed to amend the
Plan to preclude any of the transactions contemplated in the Investment
Agreement from inadvertently being deemed a "Change in Control," as defined
in the Plan, and accelerating the vesting of options previously granted to
key employees or causing the provision of any other payments thereunder;

WHEREAS, the Company has agreed to adopt this Amendment to satisfy such
condition and as a further inducement to Steven and Steven Sub to enter into
the transactions contemplated in the Investment Agreement;

NOW, THEREFORE, the Plan is amended as follows:

ARTICLE 2 - DEFINITIONS. "Change in Control." Amend subsection 2.2 of
Article 2 to add the following sentence to the end of the subparagraph:

"Notwithstanding the foregoing, none of the transactions
contemplated by that certain Investment Agreement, dated as of
February __, 1998, among Steven Corporation, a Kansas corporation,
Steven Communications Company, LP, a Delaware limited partnership,
the Company, Newco, Inc., a Delaware corporation and Newco Sub, a
Delaware corporation (the "Investment Agreement" or any Ancillary
Agreements, as defined in the Investment Agreement (including,
without limitation) the conversion of the Convertible Preferred
Stock and/or the Convertible Notes, each as defined in the
Investment Agreement) either individually or in the aggregate,
shall be deemed to be a "Change in Control",

<PAGE>

unless it constitutes a Business Combination that is not a
Discriminatory Transaction, as defined in the Investment Agreement."

<PAGE>

IN WITNESS WHEREOF, the Company has executed and delivered this Amendment
as of the date first shown above.

THE COMPANY:

EARTHLINK NETWORK, INC.

By: /s/ Charles G. Betty
---------------------------------------
Charles G. Betty
President and Chief Executive Officer

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 333-22317 and No. 333-48909) of EarthLink Network,
Inc. of our report dated January 29, 1998 appearing on page F-2 of EarthLink
Network, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997.

Price Waterhouse LLP

Costa Mesa, California
April 27, 1998