EARTHLINK NETWORK INC /DE/, S-1/A, 1999-01-11

EARTHLINK NETWORK INC /DE/
S-1/A, 1999-01-11
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 11, 1999.

REGISTRATION NO. 333-69177
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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
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PRE-EFFECTIVE
AMENDMENT NO. 3
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------

EARTHLINK NETWORK, INC.

(Exact Name of Issuer as Specified in its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 7391 58-2389244
(State or other Jurisdiction (Primary Industrial (I.R.S. Employer
of Classification Code) Identification
Incorporation or Organization) No.)
</TABLE>

3100 NEW YORK DRIVE, PASADENA, CALIFORNIA 91107, (626) 296-2400
(Address and Telephone Number of Principal Executive Offices)
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GRAYSON L. HOBERG
EARTHLINK NETWORK, INC.
3100 NEW YORK DRIVE
PASADENA, CALIFORNIA 91107
(626) 296-2400

(Name, Address and Telephone Number of Agent for Service)
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COPIES TO:

W. TINLEY ANDERSON, III, ESQ. HERBERT P. FOCKLER, ESQ.
DANIEL O. KENNEDY, ESQ. JON C. GONZALES, ESQ.
Hunton & Williams DON S. WILLIAMS, ESQ.
NationsBank Plaza, Suite 4100 Wilson Sonsini Goodrich & Rosati
600 Peachtree Street, NE 650 Page Mill Road
Atlanta, Georgia 30308 Palo Alto, California 94304
(404) 888-4000 (650) 493-9300

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. / /

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

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

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

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED PRICE(1) FEE(2)
<S> <C> <C>
Common Stock, $.01 par value.................................................. $258,750,000 $71,932.50
</TABLE>

(1) Estimated solely for purpose of calculating the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933, as amended based on an assumed
offering price of $90.

(2) A registration fee of $46,556.31 was previously paid with the original
filing of this Form S-1. An additional registration fee of $25,376.19 is
submitted with this Amendment No. 3 to reflect an increase in the proposed
maximum aggregate offering price.

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

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

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<PAGE>

SUBJECT TO COMPLETION, DATED JANUARY 11, 1999

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>

2,435,879 Shares

[LOGO]

EarthLink Network, Inc.

Common Stock

---------

Of the shares of common stock offered, 2,000,000 shares are being sold by
EarthLink and
435,879 shares are being sold by the selling stockholders named
under "Principal and
Selling Stockholders." EarthLink will not receive any
of the proceeds from
shares sold by the selling
stockholders.

Our shares are listed for trading on The Nasdaq Stock Market's National Market
under the symbol "ELNK."
On January 7, 1999, the last reported sales price of our
common stock
on The Nasdaq National Market
was $81.00.

Investing in common stock involves certain risks. See "Risk Factors" on page 5.

Neither the Securities and Exchange Commission nor any state securities
commission

has approved or disapproved of these securities or determined if this
prospectus is

truthful or complete. Any representation to the contrary is a criminal
offense.

<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions EarthLink Stockholders
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Per Share............................................. $ $ $ $
Total(1).............................................. $ $ $ $
</TABLE>

(1) EarthLink has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase a maximum of 365,381
additional shares to cover over-allotments of shares.

Delivery of the shares of common stock will be made on or about January ,
1999, against payment in immediately available funds.

Credit Suisse First Boston

Invemed Associates

ING Baring Furman Selz LLC

Cruttenden Roth Incorporated

Prospectus dated , 1999
<PAGE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUMMARY............................. 3
RISK FACTORS................................... 5
USE OF PROCEEDS................................ 11
DIVIDEND POLICY................................ 11
PRICE RANGE OF COMMON STOCK.................... 11
CAPITALIZATION................................. 12
DILUTION....................................... 13
STRATEGIC ALLIANCE WITH SPRINT................. 13
ANTICIPATED FOURTH QUARTER FINANCIAL RESULTS... 14
SELECTED HISTORICAL FINANCIAL INFORMATION...... 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF 17
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS...................................

<CAPTION>
PAGE
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<S> <C>
BUSINESS....................................... 30
MANAGEMENT..................................... 40
PRINCIPAL AND SELLING STOCKHOLDERS............. 50
DESCRIPTION OF CAPITAL STOCK................... 52
SHARES ELIGIBLE FOR FUTURE SALE................ 63
UNDERWRITING................................... 65
NOTICE TO CANADIAN RESIDENTS................... 67
LEGAL MATTERS.................................. 68
EXPERTS........................................ 68
ADDITIONAL INFORMATION......................... 68
INDEX TO FINANCIAL STATEMENTS.................. F-1
</TABLE>

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

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that have been made
pursuant to the provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are not historical facts, but rather are
based on our current expectations, estimates and projections about EarthLink's
industry, our beliefs and assumptions. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions are
intended to identify forward-looking statements. These statements are not
guarantees of future performance and are subject to certain risks, uncertainties
and other factors, some of which are beyond our control, are difficult to
predict and could cause actual results to differ materially from those expressed
or forecasted in the forward-looking statements. These risks and uncertainties
are described in "Risk Factors" and elsewhere in this prospectus. We caution you
not to place undue reliance on these forward-looking statements, which reflect
our management's view only as of the date of this prospectus. We are not
obligated to update these statements or publicly release the result of any
revisions to them to reflect events or circumstances after the date of this
prospectus or to reflect the occurrence of unanticipated events.

2
<PAGE>
PROSPECTUS SUMMARY

YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING OUR COMPANY AND THE COMMON STOCK BEING SOLD IN THIS
OFFERING AND OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING
ELSEWHERE IN THIS PROSPECTUS. BECAUSE THIS IS ONLY A SUMMARY, YOU SHOULD READ
THE REST OF THIS PROSPECTUS BEFORE YOU INVEST IN OUR COMMON STOCK. READ THE
ENTIRE PROSPECTUS CAREFULLY, ESPECIALLY THE RISKS DESCRIBED UNDER "RISK
FACTORS."

EARTHLINK NETWORK, INC.

EarthLink is a leading Internet service provider, or ISP, providing reliable
nationwide Internet access and related value-added services to our individual
and business members. Our member base has grown from approximately 420,000
members on December 31, 1997 to approximately 1,000,000 on December 31, 1998,
making us one of the world's leading ISPs. We believe our growth has resulted
from our efforts to enhance our members' Internet experience through simple,
rapid and reliable access to the Internet, high quality service, and member
education and support. As a result, we believe we have a high member retention
rate for our industry. We receive significant benefits from the size of our
member base, including bargaining power with Internet content providers, online
advertisers and retailers, and network providers.

We generate our members through a combination of innovative and
cost-conscious marketing programs. We market our services and products through
referrals, online advertising and magazine, radio and television advertisements.
Our affinity marketing and membership referral programs are also valuable
components of our marketing strategy. We have over 500 affinity marketing
partners, including prominent retailers, print publishers, and software and
hardware companies. Leading affinity marketing partners include CompUSA, Novus
Service's Discover Card, MacMillan Digital Publishing USA, SAM's Club, Sony
Entertainment and Warner Bros. We recently added Apple and Packard Bell to our
family of distribution partners.

In June 1998, we entered into a strategic alliance with Sprint, which is
another important driver of our member growth. As a part of this alliance,
Sprint transferred approximately 130,000 members to us and is committed to
generating at least 150,000 new members for us during each of the next 5 years
through their channels. Additionally, we are now co-branded as Sprint's
exclusive consumer Internet access provider, and we have exclusive access to
certain dial-up modem ports in Sprint's network. We also have access to Sprint's
marketing and distribution channels and the right to use Sprint's widely
recognized brand name. As a result of this relationship, we recently added
Sprint PCS and Radio Shack as affinity partners.

EarthLink provides highly reliable Internet access through a nationwide
telecommunications network of leased, high-speed, dedicated data lines and over
1,700 dial-up access sites, or POPs. We own and operate POPs in Southern
California and lease POPs from UUNET, Sprint, and PSINet nationwide. Over 90% of
the U.S. population can access our Internet service through a local telephone
call. We also provide Internet connections by cable modem, ADSL, ISDN, frame
relay and other high-speed access technologies.

Our standard $19.95 per month dial-up Internet service provides our members
with unlimited access to the Internet, email, a Web browser, six megabytes for a
personal web site, a Personal Start Page, BLINK (our member news magazine),
toll-free 24-hour technical support and access to Internet newsgroups. We also
offer premium services to consumers and small businesses, including electronic
commerce solutions, Web hosting and high-speed Internet connections.

Our address is 3100 New York Drive, Pasadena, California 91107, and our
telephone number is (626) 296-2400.

3
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered.............. 2,435,879 shares (comprised of 2,000,000 shares offered
by EarthLink and 435,879 shares offered by selling
stockholders)

Common Stock Outstanding after
this Offering................... 30,904,457 shares (1)

Use of Proceeds................... General corporate purposes including working capital and
potential acquisitions

Nasdaq National Market Symbol..... ELNK
</TABLE>

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(1) Based on shares of common stock outstanding on November 30, 1998, excluding
(i) 4,924,611 shares of common stock subject to outstanding options and
warrants, (ii) 1,615,501 shares of common stock available for future grant
of options under employee and director stock option plans and (iii)
8,205,882 shares of common stock issuable upon conversion of the Series A
convertible preferred stock owned by Sprint (assuming the acceleration of
certain rights) and (iv) 770,083 shares of common stock equivalent shares
to be purchased by Sprint pursuant to certain preemptive rights (of which
192,521 shares are common stock and 577,562 shares are preferred stock).

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------- -----------------------------------
PRO FORMA (3) PRO FORMA (3)
1995 1996 1997 1997 1997 1998 1998
--------- --------- --------- ------------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues................... $ 3,028 $ 33,230 $ 80,888 $ 95,377 $ 56,427 $ 117,640 $ 128,762
Loss from operations............. (6,018) (30,258) (28,454) (152,473) (22,276) (38,155) (59,535)
Net loss......................... (6,120) (31,149) (29,916) (153,935) (23,327) (37,248) (58,628)
Deductions for accretion
dividends (1).................. (13,099) (4,330) (8,946)
Net loss attributable to common
stockholders................... (6,120) (31,149) (29,916) (167,034) (23,327) (41,578) (67,574)
Basic and diluted net loss per
share (2)...................... $ (0.80) $ (2.57) $ (1.50) $ (8.35) $ (1.22) $ (1.64) $ (2.67)
Weighted average shares
outstanding (2)................ 7,674 12,138 20,002 20,002 19,186 25,292 25,292
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-------------------------
AS ADJUSTED
ACTUAL (4)
--------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................. $ 134,397 $ 288,607
Total assets.......................................................................... 273,342 427,552
Total liabilities..................................................................... 54,487 54,487
Accumulated deficit................................................................... (107,650) (107,650)
Stockholders' equity.................................................................. 218,855 373,065
</TABLE>

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

(1) Reflects the accretion of liquidation dividends on Series A convertible
preferred stock at 3% compounded quarterly and the accretion of a dividend
related to the beneficial conversion feature in accordance with EITF D-60.

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

(3) Pro forma financial data give effect to the Sprint transaction. The
unaudited pro forma statement of operations data are based on our
consolidated statements of operations and the statements of revenues and
direct expenses of the Sprint Internet Passport business as if the
transaction occurred on January 1, 1997.

(4) As adjusted to reflect the sale of 2.0 million shares of common stock by us
at an assumed price to the public of $81.00 per share.

EXCEPT AS NOTED, ALL OF THE INFORMATION IN THIS PROSPECTUS ASSUMES THAT THE
UNDERWRITER'S OVER-ALLOTMENT OPTION IS NOT EXERCISED. ALL SHARE DATA REFLECTS A
2-FOR-1 STOCK SPLIT EFFECTED ON JULY 21, 1998.

4
<PAGE>
RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING A
DECISION TO INVEST IN EARTHLINK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR,
OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF FUTURE OPERATIONS COULD BE
MATERIALLY ADVERSELY AFFECTED. IN SUCH CASE, THE TRADING PRICE OF OUR COMMON
STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT. THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED
IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY FACTORS, INCLUDING THE
RISKS FACED BY US DESCRIBED BELOW AND ELSEWHERE IN THIS PROSPECTUS.

WE HAVE A SHORT OPERATING HISTORY, HAVE INCURRED NET LOSSES SINCE INCEPTION
AND EXPECT FUTURE LOSSES. We began offering Internet access services in July
1994. As a result, we have only a limited operating history upon which you may
evaluate our business and prospects. We incurred net losses of approximately
$66.1 million from inception through 1997 and approximately $41.6 million for
the nine months ended September 30, 1998. As of September 30, 1998, we had an
accumulated deficit of approximately $107.7 million. We expect to continue to
incur net losses as we expend substantial resources on sales, marketing and
administration; expand our network systems; develop new service offerings; and
improve our management information systems. We cannot assure you that we will
achieve or sustain profitability.

OUR BUSINESS IS HIGHLY COMPETITIVE. We operate in the Internet services
market, which is extremely competitive. Our current and prospective competitors
include many large companies that have substantially greater market presence,
financial, technical, marketing and other resources than we have. We compete
directly or indirectly with the following categories of companies:

- established online services, such as America Online, the Microsoft Network
and Prodigy;

- local, regional and national ISPs, such as MindSpring, Rocky Mountain
Internet and Internet America;

- national telecommunications companies, such as AT&T and GTE;

- regional Bell operating companies, such as BellSouth and SBC
Communications; and,

- online cable services, such as At Home and Roadrunner.

Our competition is likely to increase. We believe this will probably happen
as large diversified telecommunications and media companies acquire ISPs and as
ISPs consolidate into larger, more competitive companies. Diversified
competitors may bundle other services and products with Internet connectivity
services, potentially placing us at a significant competitive disadvantage. In
addition, competitors may charge less than we do for Internet services, causing
us to reduce (or preventing us from raising) our fees. As a result, our business
may suffer.

OUR RAPID GROWTH MAY STRAIN OUR OPERATIONS. Our rapid growth will continue
to cause a significant strain on our managerial, operational, financial and
information systems resources. To accommodate our increasing size and manage our
growth, we must continue to implement and improve these systems and expand,
train and manage our employees. Although we are taking steps to manage our
growth effectively, we may not succeed. If we fail to successfully manage our
growth, our ability to maintain and increase our member base will be impaired,
and as a result, our business may suffer.

SPRINT'S SIGNIFICANT OWNERSHIP OF OUR STOCK LIMITS OUR FLEXIBILITY. Sprint
owns approximately 27% of our capital stock on a fully diluted basis, of which
approximately 10% is voting stock. Sprint is currently entitled to designate,
and has designated, two members of our Board of Directors. As a result, Sprint
can exercise considerable influence over our operations and business strategy.
Our business goals and those of Sprint may not always remain aligned, and,
therefore, Sprint may limit our ability to act in our self interest. This could
ultimately harm us.

Also, without Sprint's consent, we cannot enter into certain commercial
relationships with

5
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competitors of Sprint such as AT&T and MCI WorldCom. This may reduce or
eliminate opportunities for revenue growth. Further, Sprint's competitors may
choose not to engage in commercial relationships with us because of our close
relationship with Sprint, potentially significantly reducing our opportunities
for revenue growth.

Our contractual relationship with Sprint substantially reduces the
likelihood that a party other than Sprint will acquire us. Until September 5,
2000, we are prohibited from soliciting acquisition proposals; however, we do
have the right to consider unsolicited third party offers. Thereafter, we can
solicit acquisition proposals, but, if we do, Sprint will then have the right to
make an offer to acquire us at fair market value. However, beginning September
5, 2001 through September 5, 2003, Sprint has the right to acquire us for fair
market value (including a control premium) regardless of whether we have
initiated the solicitation of third party acquisition proposals. These
provisions may force our stockholders to sell their shares at a time when they
do not wish to do so, or at a price they do not want.

WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGE TO REMAIN COMPETITIVE. The
Internet services market is characterized by rapidly changing technology,
evolving industry standards, changes in member needs and frequent new service
and product introductions. Our future success depends, in part, on our ability
to use leading technologies effectively, to develop our technical expertise, to
enhance our existing services and to develop new services that meet changing
member needs on a timely and cost-effective basis. In particular, we must
provide subscribers with the appropriate products, services and guidance to best
take advantage of the rapidly evolving Internet. Our failure to respond in a
timely and effective manner to new and evolving technologies (such as those
offering greater bandwidth services, among others) could have a negative impact
on our business and financial results.

Our business may also be affected by problems caused by computer viruses,
security breaches and other inappropriate uses of our network (e.g., email
"spamming"). Alleviating these problems may cause interruptions, delays or
cessation in service to our members, which could cause them to terminate their
membership or assert claims against us.

OUR BUSINESS DEPENDS ON CONTINUED GROWTH OF THE INTERNET. Our future
success substantially depends on continued growth in the use of the Internet.
Although we believe that Internet usage and popularity will continue to grow as
it has in the past, we cannot be certain that this growth will continue or that
it will continue in its present form. If Internet usage declines or evolves away
from our business, our growth will slow or stop and our financial results will
suffer.

OUR FINANCIAL RESULTS MAY FLUCTUATE. Our financial results may fluctuate
significantly because of several factors, many of which are beyond our control.
These factors include:

- costs associated with gaining and retaining members and capital
expenditures for upgrading our systems and infrastructure;

- increased competition;

- changes in our pricing policies and those of our competitors;

- changes in our operating expenses (including telecommunications costs);

- timing and market acceptance of new and upgraded Internet service
introductions by us and our competitors;

- seasonal fluctuations in demand for our services;

- introduction of alternative technologies;

- effect of potential acquisitions; and

- other general economic factors.

Fluctuations caused by these and other factors could cause our business to
suffer.

OUR BUSINESS IS DEPENDENT UPON OUR INTERNAL AND LEASED NETWORK. Our success
depends, in part, on the capacity, reliability and security of our network
infrastructure. Network capacity constraints have occurred in the past and may
occur in the future, both at the level of particular dial-up points of presence,
or POPs,

6
<PAGE>
(affecting only members attempting to use that particular POP) and in connection
with system-wide services (such as email and news services, which can affect all
members). These capacity constraints result in slow downs, delays or
inaccessibility when members try to use a particular service. Poor network
performance could cause members to terminate their membership with us. To reduce
the probability of such problems, we will be required to expand and improve our
infrastructure. Such expansion and improvement will be very costly and time
consuming.

We must also protect our infrastructure against fire, earthquakes, power
loss, telecommunications failure, computer viruses, security breaches and
similar events. We do not currently maintain a redundant or backup network hub.
A natural disaster or other unanticipated problem at our headquarters and sole
network hub in Pasadena, California, at POPs through which members connect to
the Internet, or in the nation's telecommunications network in general could
cause interruptions in our services.

Currently 43% of our active members access our service through UUNET POPs,
21% through PSINet POPs, 13% through Sprint POPs and 23% through our POPs. UUNET
and PSINet POPs are non-exclusive to our members, but our members have exclusive
access to Sprint's and to our POPs. Because we depend on UUNET, PSINet and
Sprint for crucial portions of our network infrastructure, we do not have direct
control over network reliability and other service quality concerns. Our
agreements with UUNET, PSINet and Sprint can be terminated starting in March
1999 (subject to earlier required reductions in usage at UUNET's option),
November 2000 and June 2002, respectively. Moreover, UUNET and PSINet provide
network access to some of our competitors. Either UUNET or PSINet could choose
to grant these competitors preferential network access, potentially limiting our
members' ability to access the Internet. Even without such preferential
treatment, increased usage of UUNET's and PSINet's POPs by other ISPs and online
service providers may negatively affect access system performance.

WE ARE DEPENDENT ON TELECOMMUNICATIONS CARRIERS AND OTHER SUPPLIERS. We
rely on traditional telecommunications carriers to transmit our traffic over
local and long distance networks. These networks may experience disruptions that
are not easily remedied. In addition, we depend on certain suppliers of hardware
and software. If our suppliers fail to provide us with network services,
equipment or software in the quantities, at the quality levels or at the times
we require, or if we cannot develop alternative sources of supply, it will be
difficult, if not impossible, for us to provide our services.

YEAR 2000 RISK MAY ADVERSELY AFFECT OUR COMPANY. Many existing computer
programs use only two digits to identify a year. These programs were designed
and developed without addressing the impact of the upcoming change in the
century. If not corrected, many computer software applications could fail or
create erroneous results by, at or beyond the year 2000. We utilize software,
computer technology and other services internally developed and provided by
third-party vendors that may fail due to the year 2000 phenomenon. For example,
we are dependent on the institutions involved in processing our members' credit
card payments for Internet services. We are also dependent on telecommunications
vendors and leased POP vendors to maintain network reliability.

We are currently assessing the year 2000 readiness of our third-party
supplied software, computer technology and other services. Based upon the
results of this assessment, the Company will develop and implement, if
necessary, a remediation plan with respect to third-party software, computer
technology and services that may fail to be year 2000 compliant. We have
assessed our proprietary software and internal systems and determined them to be
year 2000 compliant. We anticipate that our systems, including components
thereof provided by third-party vendors, will be year 2000 compliant by 2000. At
this time, the expenses associated with this assessment and potential
remediation plan cannot be determined. The failure of our software and computing
systems and of our third-party vendors to be year 2000 compliant could have a
material adverse effect on us.

7
<PAGE>
ANY DECLINE IN OUR MEMBER RETENTION LEVELS WILL ADVERSELY AFFECT US. Our
new member acquisition costs are substantial relative to the monthly fees we
charge. Accordingly, our long-term success largely depends on our retention of
existing members. While we continue to invest significant resources in our
infrastructure and technical and member support capabilities, it is relatively
easy for Internet users to switch to competing providers. Consequently, our
investments may not help member retention. Any significant loss of members will
substantially decrease our revenue and cause our business to suffer.

WE ARE DEPENDENT ON KEY EXECUTIVES AND PERSONNEL. EarthLink greatly depends
on key technical, sales, marketing, information systems, financial and executive
personnel. We must hire additional personnel to accommodate anticipated growth.
Competition for these employees, especially those with technical expertise, is
intense. We may not be able to retain existing employees or identify or hire new
employees because of that competition. We are highly dependent on the continued
services of our senior management team. Our President and Chief Executive
Officer, Charles G. Betty, is our only executive with an employment agreement.
However, this agreement does not prevent Mr. Betty from terminating his
employment. We maintain key-man life insurance on Mr. Sky Dayton, our founder
and Chairman, Mr. Betty and Mr. David Beckemeyer, our Chief Technical Officer.
These policies may not be sufficient to compensate us for the loss of their
services. If we fail to attract, hire or retain the necessary personnel, or if
we lose the services of any member of our senior management team, our business
could suffer.

WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION. We provide
Internet services through data transmissions over public telephone lines and
cable networks. These transmissions are governed by the Federal Communications
Commission (the "FCC"). As an Internet access provider, we are not subject to
direct regulation by the FCC or any other governmental agency, other than
regulations applicable to businesses generally. However, we could become subject
to FCC or other regulatory agency regulation especially as Internet services and
telecommunication services converge. Changes in the regulatory environment could
decrease our revenues and increase our costs.

The Federal Telecommunications Act of 1996 imposed fines on Internet service
providers, in part, for providing access to indecent and obscene services. This
part of the Act was found unconstitutional by the Supreme Court of the United
States in June of 1997. However, on March 12, 1998, the Senate Commerce
Committee approved two bills that attempt to reconstruct these unconstitutional
provisions. Although it is too early to determine the ultimate course of these
bills, and to evaluate the constitutionality of the proposals, these provisions,
if enacted and upheld, could expose ISPs such as EarthLink to liabilities.

Additional laws and regulations may be adopted with respect to the Internet,
covering issues such as Universal Service Fund support payments, content, user
privacy, pricing, libel, obscene material, indecency, gambling, intellectual
property protection and infringement and technology export and other controls.
Other federal Internet-related legislation has been introduced which may limit
commerce and discourse on the Internet. The FCC currently is considering:

- whether ISPs are regulated telecommunications providers;

- whether ISPs are required to contribute to the Universal Service Fund;
and,

- how various companies in the Internet and telecommunications industries
should be classified.

WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE. We have funded operations
primarily through operating funds, private and public sales of equity
securities, borrowings from third parties and capitalized leases. Our capital
requirements depend on numerous factors, including the rate of market acceptance
of our services, our ability to maintain and expand our member base, the rate of
expansion of our network infrastructure and potential acquisitions. We cannot
accurately predict the timing and amount of our capital requirements. If our
capital requirements vary

8
<PAGE>
materially from our plans, we may require additional financing sooner than
anticipated. We have no commitments for any additional financing other than a
$25 million (increasing to $100 million over a three year period) line of credit
from Sprint. Any additional equity financing may be dilutive to our
stockholders, and debt financing, if available, may involve restrictions on our
financing and operating activities. If we are unable to obtain additional
financing as needed, we may be required to reduce the scope of our operations or
anticipated expansion.

WE ARE SUBJECT TO RISKS ASSOCIATED WITH ACQUISITIONS. We continually
evaluate strategic acquisitions of businesses and subscriber accounts.
Acquisitions often involve risks, including that:

- we may experience difficulty in assimilating the acquired operations and
personnel;

- we may be unable to retain the acquired subscribers;

- the acquisition may disrupt our ongoing business;

- we may not be able to successfully incorporate acquired technology and
rights into our service offerings and maintain uniform standards,
controls, procedures, and policies; and,

- we may lack the necessary experience to enter new markets.

We may not successfully overcome problems encountered in connection with
potential future acquisitions. In addition, an acquisition could materially
adversely affect our operating results by diluting our shareholders' equity,
causing us to incur additional debt, or requiring us to amortize acquisition
expenses and acquired assets.

WE MAY NOT SUCCESSFULLY PROTECT OUR PROPRIETARY RIGHTS. Our success is
dependent in part on our technology and other proprietary rights. To protect our
rights, we rely on a combination of copyright, trademark, patent and trade
secret laws and contractual restrictions. We cannot be sure that these steps
will be adequate to prevent misappropriation or infringement of our intellectual
property. Nor can we be sure that competitors will not independently develop
technologies that are substantially equivalent or superior to our proprietary
property and technology.

INTELLECTUAL PROPERTY CLAIMS AGAINST US CAN BE COSTLY AND RESULT IN THE LOSS
OF SIGNIFICANT RIGHTS. From time to time, other parties allege that we infringe
on their intellectual property rights. To date, none of those claims have had a
significant adverse effect on us. However, existing or future claims may have an
adverse effect on our business. Such claims could result in substantial costs
and diversion of resources, even if ultimately decided in our favor. If a claim
is asserted alleging that we infringed the proprietary technology or information
of a third party, we may be required to seek licenses for such intellectual
property. We cannot be sure that such licenses would be offered or obtained on
commercially reasonable terms, if at all. The failure to obtain the necessary
licenses or other rights could have a material adverse effect on our business.

MANAGEMENT AND CERTAIN STOCKHOLDERS CAN EXERCISE SIGNIFICANT INFLUENCE OVER
EARTHLINK. Based on stock ownership as of November 30, 1998, our executive
officers, directors and 5% stockholders (including Sprint) (and their
affiliates) will own an aggregate of approximately 33.8% of our outstanding
shares after this offering (approximately 33.5% if the underwriters' over-
allotment option is exercised in full). However, assuming the acceleration of
certain rights relating to Sprint's shares of our Series A convertible preferred
stock and Sprint's exercise of certain preemptive rights, Sprint will own
approximately 10% of our voting stock and approximately 27% of our capital stock
on a fully diluted basis. These stockholders, if acting together, would be able
to significantly influence all matters requiring approval by our stockholders,
including the election of directors and the approval of mergers or other
business combinations.

OUR STOCK PRICE IS HIGHLY VOLATILE. The market price of our common stock is
subject to significant fluctuations in response to various factors and events
which may or may not be related to our performance.

In addition, the stock market has from time to time experienced significant
price and volume fluctuations, which have particularly affected the

9
<PAGE>
market prices of the stocks of Internet-sector companies and which may be
unrelated to the operating performance of such companies. Furthermore, our
operating results and prospects from time to time may be below the expectations
of public market analysts and investors. Any such event could result in a
material decline in the price of our common stock.

WE DO NOT PLAN TO PAY CASH DIVIDENDS ON OUR COMMON STOCK. We have never
declared or paid any cash dividends on our common stock and do not anticipate
paying cash dividends in the foreseeable future.

NEW INVESTORS WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION. Stock
purchased in this offering will incur immediate and substantial dilution in net
tangible book value of $73.89 per share. To the extent that currently
outstanding options and warrants are exercised or converted, there will be
further dilution in your shares.

WE HAVE NOT IDENTIFIED SPECIFIC USES OF THE OFFERING PROCEEDS. We have not
designated any specific use for the net proceeds from the sale of our common
stock in this offering and accordingly, our management will have significant
flexibility in applying the net proceeds of this offering. We expect to use the
net proceeds for general corporate purposes, including the funding of
anticipated operating losses and capital expenditures. We may, when the
opportunity arises, use a portion, or all, of the net proceeds to acquire or
invest in businesses, products and technologies. From time to time, in the
ordinary course of business, the Company expects to evaluate potential
acquisitions of such businesses, products or technologies. Our management's
failure to apply such funds effectively could cause our business to suffer.

10
<PAGE>
USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $154.2
million (approximately $182.5 million if the underwriters fully exercise their
over-allotment option) from our sale of the 2,000,000 shares of common stock
offered by us with this prospectus based on an assumed offering price of $81.00
per share. This estimate is after deducting estimated underwriting discounts and
commissions and other fees and expenses payable by us. We will not receive any
portion of the proceeds from the sale of shares of common stock by the selling
stockholders.

We intend to use the net proceeds from this offering for general corporate
purposes, including working capital. We may use a portion, or all, of the net
proceeds to acquire complementary businesses, members, products or technologies.
From time to time we evaluate such potential acquisitions and anticipate
continuing to make such evaluations. In this regard, we are currently evaluating
certain acquisition opportunities; however, we cannot assure you that we will
identify suitable acquisition candidates or that we will, in fact, complete any
acquisition. Until we use the net proceeds for a particular purpose, we will
invest them in short-term interest bearing securities.

DIVIDEND POLICY

We have never paid or declared any cash dividends. We currently expect to
retain future earnings, if any, to finance the growth and development of our
business, including potential acquisitions. Therefore, we do not anticipate
paying cash dividends in the foreseeable future, except as required pursuant to
the terms of the Series A convertible preferred stock owned by Sprint.

PRICE RANGE OF COMMON STOCK

Our common stock has been traded on the Nasdaq National Market under the
symbol "ELNK" since our initial public offering on January 22, 1997. The
following table shows the high and low closing sales price as reported by the
Nasdaq National Market for each quarter since we have been public (as adjusted
for our 2-for-1 stock split effected on July 21, 1998).

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1997

First Quarter (from January 22, 1997)............ $10 1/8 $ 5 1/16

Second Quarter................................... 6 3/4 4 5/16

Third Quarter.................................... 9 3/4 5 1/8

Fourth Quarter................................... 12 7/8 8

1998

First Quarter.................................... $28 7/32 $12 1/4

Second Quarter................................... 38 3/8 25

Third Quarter.................................... 44 1/8 26 1/2

Fourth Quarter................................... 71 7/8 33 7/8

1999

First Quarter (through January 7, 1999).......... $81 $62 7/16
</TABLE>

On January 7, 1999, the last reported sale price of common stock on the
Nasdaq National Market was $81.00 per share, and there were approximately 285
holders of record of our common stock.

11
<PAGE>
CAPITALIZATION

The following table sets forth, as of September 30, 1998, (i) our
capitalization, and (ii) our capitalization as adjusted to reflect the sale of
the common stock offered by this prospectus, after deduction of estimated
offering expenses and underwriting discounts, and assuming an offering price of
$81.00 per share.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-----------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt........................................................................... $ 7,288 $ 7,288
---------- -----------
Stockholders' equity:
Preferred stock, $0.01 par value, 25,000,000 shares authorized, 4,102,941 shares
outstanding actual and as adjusted(1)................................................ 41 41
Common stock, $0.01 par value, 50,000,000 shares authorized, 28,521,321 shares
outstanding actual and 30,521,321 shares as adjusted(2).............................. 285 305

Additional paid-in capital............................................................... 324,855 479,045

Warrants to purchase common stock........................................................ 1,324 1,324

Accumulated deficit...................................................................... (107,650) (107,650)
---------- -----------

Total stockholders' equity........................................................... 218,855 373,065
---------- -----------

Total capitalization................................................................. $ 226,143 $ 380,353
---------- -----------
---------- -----------
</TABLE>

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

(1) Convertible into a maximum of 8,205,882 shares of common stock, assuming
acceleration of certain dividend rights by Sprint.

(2) Based on shares of common stock outstanding on September 30, 1998, excluding
(i) 4,941,826 shares of common stock subject to outstanding options and
warrants, (ii) 2,012,150 shares of common stock available for future grant
of options under employee and director stock option plans, (iii) 8,205,882
shares of common stock issuable upon conversion of Sprint's Series A
convertible preferred stock (assuming the acceleration of certain rights)
and (iv) 770,083 common stock equivalent shares to be purchased by Sprint
pursuant to certain preemptive rights (of which 192,521 shares are common
stock and 577,562 shares are preferred stock).

12
<PAGE>
DILUTION

The net tangible book value of our common stock on September 30, 1998 was
$121.1 million, or approximately $3.30 per share. Net tangible book value per
share represents the amount of our tangible assets less the amount of total
liabilities divided by the number of shares of common stock outstanding
(assuming conversion into common stock of the Series A convertible preferred
stock held by Sprint on a 2-for-1 basis and the acceleration of certain rights).

After giving effect to our sale of 2,000,000 shares of common stock offered
by us with this prospectus at an assumed offering price of $81.00 per share and
after deducting our estimated underwriting discounts and expenses related to
this offering, our net tangible book value on September 30, 1998 would have been
$275.3 million, or approximately $7.11 per share. This represents an immediate
increase in the net tangible book value of $3.81 per share to existing
stockholders and an immediate dilution of $73.89 per share to new investors.

<TABLE>
<S> <C> <C>
Assumed offering price per share............................................. $ 81.00

Net tangible book per share value as of September 30, 1998................. $ 3.30

Increase per share attributable to the Offering............................ 3.81
---------

Net tangible book value after the Offering................................... 7.11
---------

Dilution per share to new investors.......................................... $ 73.89
---------
---------
</TABLE>

The table excludes all options and warrants that will remain outstanding
upon completion of the offering. See Notes 8 and 9 of Notes to Consolidated
Financial Statements. The exercise of outstanding options and warrants having an
exercise price less than the offering price would increase the dilutive effect
to new investors.

STRATEGIC ALLIANCE WITH SPRINT

On June 5, 1998, we entered into a very important strategic alliance with
Sprint in the area of consumer Internet access and related services. In
connection with the formation of that alliance, Sprint tendered for and
purchased 2.5 million shares of our common stock for $22.50 per share. At the
close of the tender offer, we issued Sprint approximately 4.1 million shares of
our newly created Series A convertible preferred stock, convertible into 8.2
million shares of common stock (assuming the acceleration of certain rights). In
return, Sprint:

(1) transferred approximately 130,000 members to us;

(2) paid us approximately $24 million in cash; and

(3) granted us the exclusive right to use certain dial-up modem ports in
their high-speed data network for four years.

Additionally, we entered into a five-year marketing and distribution
agreement with Sprint. The following are highlights from that agreement:

(a) Sprint must deliver a minimum of 150,000 new members per year for
five years through its own marketing channels;

(b) we are Sprint's exclusive provider of consumer Internet access
services for at least ten years; and,

13
<PAGE>
Sprint also provided us with a $25 million line of credit (increasing to
$100 million over three years) in the form of senior debt that is convertible
into our common stock.

We also entered into a governance agreement with Sprint. This agreement
establishes certain terms and conditions concerning our corporate governance,
the acquisition and disposition of our equity securities by Sprint (including
certain preemptive rights in favor of Sprint), the rights of Sprint to make
offers to purchase all outstanding shares of our common stock and rights of our
Board of Directors to receive and entertain offers to effect certain business
combinations. EarthLink, and certain of our stockholders, have also entered into
an agreement with Sprint which obligates such stockholders, under certain terms
and conditions, to take action in support of our obligations to Sprint under the
governance agreement.

Sprint can appoint (1) one person to our Board so long as Sprint owns at
least 10% of our capital stock on a fully diluted basis, and (2) a second person
to our Board of Directors so long as Sprint owns at least 20% of our capital
stock on a fully diluted basis. William T. Esrey, Chairman and Chief Executive
Officer of Sprint, and Patti S. Manuel, President of Sprint's Long Distance
Division, are Sprint's currently appointed members to our Board of Directors.

As a result of these transactions, Sprint now owns approximately 27% of our
capital stock on a fully diluted basis (this assumes the conversion of Sprint's
Series A convertible preferred stock into common stock and assumes acceleration
of certain dividend rights and the exercise by Sprint of certain preemptive
rights) of which approximately 10% is voting stock. Sprint has the right to
maintain (but not exceed) these ownership levels by purchasing from us
additional common stock equivalent shares, with up to 75% of these common stock
equivalents being in the form of shares of a new series of convertible preferred
stock having terms that are structured and priced in the same manner as the
Series A convertible preferred stock. Sprint has elected to exercise this right
in connection with this offering and to purchase 770,083 common stock equivalent
shares, of which 192,521 shares are common stock and 577,562 shares are
preferred stock.

The Series A convertible preferred stock accrues dividends for the first
five years by increasing its liquidation value at a rate of 3% annually.
Thereafter the Series A convertible preferred stock will pay a cash dividend of
3% of the liquidation value during years six through 20. The cash dividend will
increase to 8% in year 21 and increase to 12% by year 23.

ANTICIPATED FOURTH QUARTER FINANCIAL RESULTS

Based on a preliminary analysis of our results of operations as of the date
of this prospectus, we anticipate that for the quarter ending December 31, 1998
our total revenues will be in the range of $57.0 million to $58.7 million. We
will have a net loss and EBITDA loss for the quarter ending December 31, 1998
and expect to have a net loss and EBITDA loss for the foreseeable future. These
statements regarding anticipated results are preliminary, based on partial
information and management assumptions, have not been audited and constitute
forward-looking statements pursuant to the Private Securities Litigation Reform
Act of 1995. Actual final results for the quarter could differ, depending on a
number of factors, including accounting adjustments made during the course of
closing the year. For a more detailed discussion of factors that affect our
operating results, see "Risk Factors--Our Financial Results May Fluctuate."

14
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION

The following selected historical financial information was derived from our
historical consolidated financial statements. You should read this information
in conjunction with the historical consolidated financial statements and their
notes and the discussion in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus. The
selected historical financial information for the period from inception on May
26, 1994 through December 31, 1994 and the three years ended December 31, 1997
is derived from our consolidated financial statements, which were audited by
PricewaterhouseCoopers LLP. The selected historical financial information for
the nine months ended September 30, 1997 and 1998 is derived from our unaudited
consolidated financial statements. In our opinion, the unaudited consolidated
financial statements include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the results for the
periods presented.

The pro forma statement of operations data give effect to the Sprint
transaction as if it had occurred on January 1, 1997. The pro forma financial
information does not purport to represent what the Company's results of
operations would have been if the Sprint transaction had in fact occurred on
such date, nor does it purport to indicate the future financial position or
results of future operations of the Company. The pro forma adjustments are based
on currently available information and certain assumptions that management
believes to be reasonable.

You should read the following selected historical and pro forma financial
and operating data in conjunction with the discussion in "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Company's consolidated financial statements and notes thereto,
and other financial and operating data included elsewhere in this prospectus.

15
<PAGE>
EARTHLINK NETWORK, INC
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
INCEPTION (MAY
26, 1994) YEAR ENDED DECEMBER 31,
THROUGH ------------------------------------------
DECEMBER 31, PRO FORMA (5)
1994 1995 1996 1997 1997
-------------- ------- -------- -------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Recurring revenues............................ $ 53 $ 2,422 $ 27,606 $ 74,657 $ 74,657
Other revenues................................ 58 606 5,624 6,231 6,231
Incremental revenues.......................... -- -- -- -- --
SIP net operating revenues.................... -- -- -- -- 14,489
------ ------- -------- -------- -------------
Total revenues............................ 111 3,028 33,230 80,888 95,377
------ ------- -------- -------- -------------
Operating costs and expenses:
Cost of recurring revenues.................... 4 1,024 17,717 36,854 36,854
Cost of other revenues........................ 12 328 2,235 1,649 1,649
SIP cost of services.......................... -- -- -- -- 51,313
Sales and marketing........................... 37 3,763 17,194 25,606 25,606
General and administrative.................... 168 2,062 10,534 14,333 14,333
Operations and member support................. 38 1,869 15,808 30,900 30,900
Amortization and transaction costs (1)........ -- -- -- -- 70,692
SIP selling, general administrative........... -- -- -- -- 13,099
SIP other..................................... -- -- -- -- 3,404
------ ------- -------- -------- -------------
Total operating costs and expenses........ 259 9,046 63,488 109,342 247,850
------ ------- -------- -------- -------------
Loss from operations............................ (148) (6,018) (30,258) (28,454) (152,473)
Interest income................................. -- 34 150 637 637
Interest expense................................ -- (136) (1,041) (2,099) (2,099)
------ ------- -------- -------- -------------
Net loss.................................. (148) (6,120) (31,149) (29,916) (153,935)
Deductions for accretion dividends (2).......... -- -- -- -- (13,099)
------ ------- -------- -------- -------------
Net loss attributable to common stockholders.... $ (148) $(6,120) $(31,149) $(29,916) $(167,034)
------ ------- -------- -------- -------------
------ ------- -------- -------- -------------
Basic and diluted net loss per share (3)........ $(0.05) $ (0.80) $ (2.57) $ (1.50) $ (8.35)
------ ------- -------- -------- -------------
------ ------- -------- -------- -------------
Weighted average shares (3)..................... 3,100 7,674 12,138 20,002 20,002
------ ------- -------- -------- -------------
------ ------- -------- -------- -------------
Other operating data:
EBITDA (4).................................... $ (141) $(5,713) $(26,105) $(19,077)
Cash flows from
Operating activities........................ (146) (3,643) (16,222) (21,290)
Investing activities........................ (97) (4,266) (18,361) (16,095)
Financing activities........................ 243 8,199 38,286 49,842

NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------
PRO FORMA (5)
1997 1998 1998
--------- -------- -------------

<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Recurring revenues............................ $ 51,869 $109,957 $109,957
Other revenues................................ 4,558 4,897 4,897
Incremental revenues.......................... -- 2,786 2,786
SIP net operating revenues.................... -- -- 11,122
--------- -------- -------------
Total revenues............................ 56,427 117,640 128,762
--------- -------- -------------
Operating costs and expenses:
Cost of recurring revenues.................... 25,828 53,163 53,163
Cost of other revenues........................ 1,326 730 730
SIP cost of services.......................... -- -- 17,881
Sales and marketing........................... 18,904 25,348 25,348
General and administrative.................... 10,462 15,344 15,344
Operations and member support................. 22,183 36,248 36,248
Amortization and transaction costs (1)........ -- 24,962 36,160
SIP selling, general administrative........... -- -- 3,070
SIP other..................................... -- -- 353
--------- -------- -------------
Total operating costs and expenses........ 78,703 155,795 188,297
--------- -------- -------------
Loss from operations............................ (22,276) (38,155) (59,535)
Interest income................................. 416 2,568 2,568
Interest expense................................ (1,467) (1,661) (1,661)
--------- -------- -------------
Net loss.................................. (23,327) (37,248) (58,628)
Deductions for accretion dividends (2).......... -- (4,330) (8,946)
--------- -------- -------------
Net loss attributable to common stockholders.... $ (23,327) $(41,578) $(67,574)
--------- -------- -------------
--------- -------- -------------
Basic and diluted net loss per share (3)........ $ (1.22) $ (1.64) $ (2.67)
--------- -------- -------------
--------- -------- -------------
Weighted average shares (3)..................... 19,186 25,292 25,292
--------- -------- -------------
--------- -------- -------------
Other operating data:
EBITDA (4).................................... $ (15,705) $ (4,759)
Cash flows from
Operating activities........................ (20,252) 14,398
Investing activities........................ (13,056) (1,031)
Financing activities........................ 46,404 104,580
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------
1994 1995 1996 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................................................. $ -- $ 290 $ 3,993 $ 16,450
Total assets........................................................................... 186 4,874 27,119 46,887
Long-term debt......................................................................... -- 355 6,088 8,218
Total liabilities...................................................................... 89 4,584 34,367 40,812
Accumulated deficit.................................................................... (148) (5,007) (36,156) (66,072)
Stockholders' equity (deficit)......................................................... 97 290 (21,261) 6,075

<CAPTION>
SEPTEMBER 30,
--------------
1998
--------------
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................................................. $ 134,397
Total assets........................................................................... 273,342
Long-term debt......................................................................... 7,288
Total liabilities...................................................................... 54,487
Accumulated deficit.................................................................... (107,650)
Stockholders' equity (deficit)......................................................... 218,855
</TABLE>

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

NOTE--"SIP" AS USED IN THIS SELECTED HISTORICAL FINANCIAL INFORMATION REFERS TO
THE SPRINT INTERNET PASSPORT BUSINESS WE ACQUIRED IN CONNECTION WITH THE SPRINT
TRANSACTION.

(1) Amortization and transaction costs represent $23,565,000 in amortization of
intangible assets acquired and a one time transaction cost of $1,397,000
resulting from the strategic alliance with Sprint in June 1998.

(2) Reflects the accretion of liquidation dividends on Series A convertible
preferred stock at 3% compounded quarterly and the accretion of a dividend
related to the beneficial conversion feature in accordance with EITF D-60.

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

(4) Represents earnings (loss) before depreciation and amortization, interest
income and expense and income tax expense. EBITDA is not determined in
accordance with generally accepted accounting principles, is not indicative
of cash used by operating activities and should not be considered in
isolation from, as an alternative to, or more meaningful than measures of
performance determined in accordance with generally accepted accounting
principles.

(5) Pro forma financial data give effect to the Sprint transaction. The
unaudited pro forma statement of operations data are based on our
consolidated statements of operations and the statements of revenues and
direct expenses of the Sprint Internet Passport business as if the Sprint
transaction occurred on January 1, 1997. See "Strategic Alliance with
Sprint" and "Pro Forma Financial Information" appearing in the Consolidated
Financial Statements.

16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

READ THE FOLLOWING DISCUSSION TOGETHER WITH THE FINANCIAL STATEMENTS AND
RELATED NOTES INCLUDED ELSEWHERE IN THIS PROSPECTUS. THE RESULTS DISCUSSED BELOW
ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED IN ANY FUTURE
PERIODS. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS BASED ON CURRENT
EXPECTATIONS AND WHICH INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS AND THE
TIMING OF CERTAIN EVENTS MAY DIFFER SIGNIFICANTLY FROM THOSE PROJECTED IN SUCH
FORWARD-LOOKING STATEMENTS DUE TO A NUMBER OF FACTORS, INCLUDING THOSE SET FORTH
HEREIN, IN THE SECTION ENTITLED "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

We are a leading Internet service provider, or ISP, providing reliable
nationwide Internet access and related value-added services to our individual
and business members. Our member base has grown rapidly, making us one of the
world's leading ISPs. We believe this growth is the result of our efforts to
enhance our members' Internet experience through simple, rapid and reliable
access to the Internet, high quality service and member support and enhanced
services.

We provide our members with a core set of features through our standard
Internet service, which provides unlimited Internet access and several related
services for a $19.95 monthly fee. We also offer a variety of premium services
to both our individual and business members. Recurring revenues, which are
generally paid for in advance with credit cards, consist of monthly fees charged
to members for Internet access and other ongoing services including business Web
site hosting, national ISDN, LAN ISDN, and frame relay connections and, in
certain areas, cable modem access. We derive incremental revenues by leveraging
the value of our member base and user traffic through promotional and content
partnerships, online advertising, and electronic commerce. We recognize access
fees and certain incremental revenues ratably over the period services are
provided. Other revenues generally represent one-time, non-refundable set up
fees and are recorded as earned.

Cost of recurring revenues principally includes telecommunications costs and
depreciation expense on equipment used in network operations for ongoing member
services. Fees paid to UUNET, PSINet and Sprint for local dial-up access to
their respective nationwide systems of POPs are included in telecommunications
costs. Cost of other revenues principally includes expenses associated with new
member registration and cost of products sold.

We have experienced net losses since we began operations. As of September
30, 1998, we had an accumulated deficit of $107.7 million (exclusive of $1.3
million in losses incurred from inception through June 19, 1995 which have been
reclassified from accumulated deficit to common stock as a result of the
Company's conversion from S Corporation to C Corporation status and inclusive of
$4.3 million representing dividends on Series A convertible preferred stock).

We believe that a key to our success in the competitive ISP market is to
rapidly expand our member base. This will allow us to amortize our assets over a
larger revenue base and enhance our ability to enter into favorable arrangements
with network service providers, affinity marketing partners, online advertisers
and content providers. While we have experienced a trend of continuing
improvement in our net loss and earnings before interest, taxes, depreciation
and amortization ("EBITDA") we anticipate investing heavily in obtaining new
members and expect to have negative EBITDA for the foreseeable future including
the quarter ending December 31, 1998.

EBITDA is not determined in accordance with generally accepted accounting
principles and is not indicative of cash used by operating activities. You
should not consider EBITDA in isolation from, as an alternative to, or more
meaningful than measures of performance determined in accordance with generally
accepted accounting principles. We expect we will continue to incur net losses
as we continue to expend substantial resources on sales and marketing to rapidly
increase our member base. We may

17
<PAGE>
not be successful in attaining or, if attained, sustaining profitability or
positive cash flow from our operating activities.

On June 5, 1998, we entered into a very important strategic alliance with
Sprint in the area of consumer Internet access and related services. In
connection with the formation of that relationship, Sprint tendered for and
purchased 2.5 million shares of our common stock for $22.50 per share. At the
close of the tender offer, we issued Sprint approximately 4.1 million shares of
our newly created Series A convertible preferred stock, convertible into
approximately 8.2 million shares of our common stock (assuming the acceleration
of certain rights). In return, Sprint:

(1) transferred approximately 130,000 members to us;

(2) paid us approximately $24 million in cash; and

(3) granted us the exclusive right to use certain dial-up modem ports in
their high-speed data network for four years.

Additionally, we entered into a five-year marketing and distribution
agreement with Sprint. The following are highlights from that agreement:

(a) Sprint must deliver a minimum of 150,000 new members per year for
five years through its own marketing channels;

(b) we are Sprint's exclusive provider of consumer Internet access
services for at least ten years; and,

Sprint also provided us with a $25 million line of credit (increasing to
$100 million over three years) in the form of convertible senior debt.

Sprint can appoint (1) one person to our Board of Directors so long as
Sprint owns at least 10% of our capital stock on a fully diluted basis, and (2)
an additional person to our Board of Directors so long as Sprint owns at least
20% of our capital stock on a fully diluted basis. William T. Esrey, Chairman
and Chief Executive Officer of Sprint, and Patti S. Manuel, President of
Sprint's Long Distance Division, are Sprint's currently appointed members to our
Board of Directors.

As a result of these transactions, Sprint now owns approximately 27% of our
capital stock on a fully diluted basis (this assumes the conversion of Sprint's
Series A convertible preferred stock into common stock and assumes acceleration
of certain dividend rights and the exercise by Sprint of certain preemptive
rights), of which approximately 10% is voting stock. Sprint has the right to
maintain (but not exceed) these ownership levels by purchasing from us
additional common stock equivalent shares, with up to 75% of these common stock
equivalents being in the form of Series A convertible preferred stock. Sprint
has elected to exercise this right in connection with this offering to purchase
770,083 common stock equivalent shares, of which 192,521 shares are common stock
and 577,562 shares are preferred stock.

18
<PAGE>
The Series A convertible preferred stock accrues dividends for the first
five years by increasing its liquidation value at a rate of 3% annually.
Thereafter the Series A convertible preferred stock will pay a cash dividend of
3% of the liquidation value during years six through 20. The cash dividend will
increase to 8% in year 21 and increase to 12% by year 23.

RESULTS OF OPERATIONS

The following table sets forth the percentage of total revenues represented
by certain items in our statements of operations for the periods indicated:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------ ---------------
1995 1996 1997 1997 1998
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Revenues:
Recurring revenues.......................... 80% 83% 92% 92% 94%
Other revenues.............................. 20 17 8 8 4
Incremental revenues........................ -- -- -- -- 2
------ ------ ------ ------ ------
Total revenues............................ 100% 100% 100% 100% 100%
------ ------ ------ ------ ------

Operating costs and expenses:
Cost of recurring revenues.................. 34 53 46 46 45
Cost of other revenues...................... 11 7 2 2 1
Sales and marketing......................... 124 52 32 34 21
General and administrative.................. 68 32 18 18 13
Operations and member support............... 62 47 38 39 31
Amortization and transaction costs (1)...... -- -- -- -- 21
------ ------ ------ ------ ------
Total operating costs and expenses........ 299 191 136 139 132
------ ------ ------ ------ ------

Loss from operations.......................... (199) (91) (36) (39) (32)
Interest income............................... 1 -- 1 1 2
Interest expense.............................. (4) (3) (3) (3) (1)
------ ------ ------ ------ ------
Net loss.................................. (202%) (94%) (38%) (41%) (31%)
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>

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

NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

RECURRING REVENUES

We experienced substantial growth in revenues for the nine month period
ended September 30, 1998 as compared to the corresponding period of 1997. The
increase in recurring revenues of 112% from $51.9 million in the nine month
period ended September 30, 1997 to $110.0 million in the nine month period ended
September 30, 1998 was primarily due to an increase in our member base from
approximately 362,000 at September 30, 1997 to approximately 815,000 at
September 30, 1998.

19
<PAGE>
OTHER REVENUES

<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
-------------------- INCREASE
1997 1998 (DECREASE)
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Dial-up set up fees............................................................... $ 2,736 $ 2,310 $ (426)
Non-dial-up set up fees........................................................... 1,822 2,587 765
--------- --------- -----
Total other revenues.............................................................. $ 4,558 $ 4,897 $ 339
--------- --------- -----
--------- --------- -----
</TABLE>

The decrease in dial-up set up fees is primarily due to our increased
willingness to waive set up fees for dial-up members acquired through certain
marketing programs in response to competitive pressures. We expect this trend to
continue for dial-up set up revenues. We have continued to expand our sales of
premium services such as business Web site hosting, national ISDN, LAN ISDN,
frame relay connections and cable modem connections. Set up fees for these
services are generally not waived, and, as such, one-time fees for the set up of
non-dial-up accounts has increased.

INCREMENTAL REVENUES

In the first quarter of 1998 EarthLink began reporting incremental revenues
derived from advertising, content and electronic commerce fees that leverage the
value of our growing member base and user traffic. The principal component of
our strategy is our Premiere Partnership Program, through which we offer and
sell promotional packages that provide advertisers with access to the multiple
points of contact we have with our members. We also sell advertising and content
space on our various online properties such as the Personal Start Page and the
Mall, and through our news magazine, BLINK. We generally charge transaction fees
on electronic commerce activities we facilitate. Incremental revenues were $2.8
million during the nine months ended September 30, 1998.

COST OF RECURRING REVENUES

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------
PERCENT OF PERCENT OF
RECURRING RECURRING
1997 REVENUES 1998 REVENUES
--------- ------------- ---------- -------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C>
Recurring revenues................................................. $ 51,869 100% $ 109,957 100%
Cost of recurring revenues......................................... 25,828 50 53,163 48
</TABLE>

Cost of recurring revenues increased 106% during the nine month period ended
September 30, 1998 as compared to the corresponding period of 1997, primarily
due to the increase in our member base. The decrease in the cost of recurring
revenues as a percentage of recurring revenues is attributable to: (a) more
effective management of our network, (b) the addition of Sprint to our family of
POP providers, and (c) our increasing ability to negotiate more favorable
commercial arrangements with our telecommunications service providers as we
leverage our growing member base.

20
<PAGE>
COST OF OTHER REVENUES

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------
INCREASE
1997 1998 (DECREASE)
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Royalties........................................................................... $ 873 $ 108 $ (765)
Other............................................................................... 453 622 169
--------- --------- -----
Total cost of other revenues........................................................ $ 1,326 $ 730 $ (596)
--------- --------- -----
--------- --------- -----
</TABLE>

Cost of other revenues decreased 45% for the nine months ended September 30,
1998 as compared to the corresponding period of 1997. The decrease was primarily
due to a reduction in royalty expense. The increase in the remaining components
of cost of other revenues is primarily due to the increase in the rate of member
growth during the nine month period ended September 30, 1998 as compared to the
corresponding period of 1997.

SALES AND MARKETING

Sales and marketing expenses consist primarily of third-party bounties,
advertising, sales commissions, salaries, referral credits and the cost of
promotional material. Sales and marketing expenses increased from $18.9 million
to $25.3 million during the nine months ended September 30, 1997 and 1998,
respectively. The increase was primarily due to increased third-party bounty
payments, increased emphasis on marketing, including expanded sales and
marketing efforts on a nationwide basis, increased sales commissions and
increased marketing personnel headcount. We do not defer sales, marketing or
other direct costs associated with the acquisition of members. We expense these
costs as incurred.

GENERAL AND ADMINISTRATIVE

General and administrative expenses consist primarily of costs associated
with the accounting and human resources departments, professional expenses,
rent, bad debt and compensation. General and administrative expenses increased
46% from $10.5 million to $15.3 million during the nine months ended September
30, 1997 and 1998, respectively. The increase was primarily due to increases in
credit card processing fees and bad debt. The increase in credit card processing
fees was due to the increase in our member base.

OPERATIONS AND MEMBER SUPPORT

Operations and member support expenses consist primarily of costs associated
with technical support and member service, as well as customer information
systems. Operations and member support expenses increased 64% from $22.2 million
to $36.3 million during the nine months ended September 30, 1997 and 1998,
respectively. We focus on retaining existing members by providing superior
services and devoting significant resources to expanding technical support staff
and network operations capabilities. We had 518 employees engaged in operations
and member support activities on September 30, 1997 and 893 on September 30,
1998. We continue to improve member service functions by investing in training
programs, hardware and software.

INTEREST EXPENSE

Interest expense increased from $1.5 million to $1.7 million during the nine
months ended September 30, 1998 as compared to the corresponding periods of
1997. This increase was primarily due to increases in capital lease activities,
which were partially offset by repayment of a note payable and conversion into
common stock of another note payable during the first six months of 1998.

21
<PAGE>
INTEREST INCOME

Interest income increased from $416,000 to $2.6 million during the nine
months ended September 30, 1997 and 1998, respectively. The increase was
primarily due to an increase in average cash balances available for investment
as a result of our public follow-on common stock offering completed in June
1998.

1997 COMPARED TO 1996

RECURRING REVENUES

Recurring revenues increased $47.1 million or 171% from $27.6 million in
1996 to $74.7 million in 1997 due to the significant increase in our member base
during 1997.

OTHER REVENUES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
INCREASE
1996 1997 (DECREASE)
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Dial-up set up fees............................................................... $ 4,563 $ 3,478 $ (1,085)
Other set up fees and revenues.................................................... 1,061 2,753 1,692
--------- --------- -----------
Total other revenues.............................................................. $ 5,624 $ 6,231 $ 607
--------- --------- -----------
--------- --------- -----------
</TABLE>

Other revenues increased $607,000 or 11% from 1996 to 1997. Due to
competitive pricing and other pressures, we waived set up fees for dial-up
members acquired through certain marketing partnerships. This caused a decrease
in dial-up set up fees earned during 1997. We expect this trend to continue for
dial-up set up fees. During 1997, we began to aggressively promote Web hosting
and nationwide high speed access services. The decline in dial-up set up fees
was offset by increases in the other set up fees and revenues attributable to
our Web hosting, high speed access services and cost of products sold.

COST OF RECURRING REVENUES

Cost of recurring revenues increased from $17.7 million in 1996 to $36.9
million in 1997 because our member base increased, but decreased from 64% of
recurring revenues in 1996 to 49% of recurring revenues in 1997. The decrease
from 1996 to 1997 was primarily due to our ability to effectively manage
communications costs and economies of scale to reduce per member costs as the
total member base expanded. Until October 1996, we paid UUNET a fixed monthly
fee per member plus a variable amount based on member usage in excess of a
threshold number of hours per month. Our network services agreement with UUNET
was amended as of October 1996 to change the cost basis from per member to peak
port hours. In June 1997, UUNET agreed to waive monthly revenue minimums, excess
hours fees and peak service user targets for the remaining six months of 1997.
In return, EarthLink agreed not to invoke its early termination right prior to
September 1998. If usage becomes more concentrated during peak times, the fees
we pay to UUNET will increase, thereby adversely affecting our operating
margins. Under our agreement with PSINet, we pay PSINet a fixed monthly fee for
each member accessing our services through a PSINet POP.

22
<PAGE>
COST OF OTHER REVENUES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
INCREASE
1996 1997 (DECREASE)
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Royalties......................................................................... $ 1,907 $ 930 $ (977)
Other............................................................................. 328 719 391
--------- --------- -----
Total cost of other revenues...................................................... $ 2,235 $ 1,649 $ (586)
--------- --------- -----
--------- --------- -----
</TABLE>

Cost of other revenues decreased $586,000 or 26% from $2.2 million in 1996
to $1.6 million in 1997. The decrease was due to the renewal of various
contracts under more favorable terms.

SALES AND MARKETING

Sales and marketing expenses increased $8.4 million or 49% from $17.2
million in 1996 to $25.6 million 1997. The increase was primarily due to our
emphasis on marketing services, expanding sales and marketing efforts
nationwide, increased sales commissions, marketing personnel headcount,
third-party bounties and referral credits. We do not defer sales, marketing or
other direct costs associated with the acquisition of members; rather, we
expense these costs as they are incurred.

GENERAL AND ADMINISTRATIVE

General and administrative expenses increased $3.8 million or 36% from $10.5
million in 1996 to $14.3 million in 1997 due to increases in bad debt, payroll,
rent, depreciation expenses and credit card fees. Bad debt expense was $2.5
million or 7.5% of total revenues in 1996 due to difficulties in billing and in
disconnecting late-paying members on a timely basis. Bad debt expense was $3.5
million or 4.3% of total revenues in 1997. Bad debt decreases were due to our
review and elimination of accounts with questionable payment history and the
compression of our collection cycle. The rise in payroll costs was primarily due
to growth in headcount. Personnel engaged in general and administrative
activities increased from 92 to 110 during 1997. Depreciation expense rose
because of the acquisition of office equipment and the build-out of leasehold
improvements. Credit card processing fees increased primarily because our member
base increased.

OPERATIONS AND MEMBER SUPPORT

Operations and member support expenses increased $15.1 million or 96% from
$15.8 million in 1996 to $30.9 million in 1997 reflecting our efforts to retain
existing members by devoting significant resources to expanding technical
support and network operations capabilities. Employees engaged in operations and
member support activities increased from 401 to 565 during 1997. During 1997, we
created a new call center and invested in training programs and hardware and
software to solve member problems.

INTEREST EXPENSE

Interest expense increased from $1.0 million in 1996 to $2.1 million in 1997
primarily due to our increased borrowings and capital lease obligations to
finance our expansion of network infrastructure and capital equipment
acquisitions.

INTEREST INCOME

Interest income increased from $150,000 in 1996 to $637,000 in 1997
primarily because of the increase in average cash balances available for
investment.

23
<PAGE>
1996 COMPARED TO 1995

REVENUES

Recurring revenues increased $25.2 million or more than 1,000% from $2.4
million in 1995 to $27.6 million in 1996 as a result of an increase in member
count. The increase in other revenues from $606,000 in 1995 to $5.6 million in
1996 was primarily due to the increase in the number of new members during the
latter period and one-time set up fees collected from those new members.

COST OF REVENUES

Cost of recurring revenues increased from 42% of recurring revenues or $1.0
million in 1995 to 64% of recurring revenues or $17.7 million in 1996 due to our
expansion to nationwide service through our relationship with UUNET. We paid
UUNET a fixed monthly fee per member plus a variable amount based on customer
usage in excess of a threshold number of hours per month. Our UUNET contract was
amended as of October 1996 so that the key variable component is peak usage
rather than hourly usage.

SALES AND MARKETING

Sales and marketing expense increased from $3.8 million in 1995 to $17.2
million in 1996. Our principal strategy during 1995 and 1996 was to rapidly
expand our customer base and increase our market share of the under-penetrated
market for Internet access services. To realize this strategy, we aggressively
invested in sales and marketing. This strategy required substantial initial cash
outlays which outpaced the resultant growth in revenues. In the latter part of
1996, our marketing efforts emphasized the variety of services available to
business members, including business Web sites, high-speed ISDN communications
capability, high-speed frame relay connections and Internet access through
corporate networks.

GENERAL AND ADMINISTRATIVE

Since our inception, general and administrative expenses have increased as a
result of increased employee headcount, rent, depreciation and credit card fees.
During 1996, we hired a number of senior management personnel, moved into a new
headquarters building and engaged professional consultants to assist in the
development of an administrative infrastructure to accommodate anticipated
increases in the number of members and employees, which resulted in a
significant increase in general and administrative expenses as compared to 1995.
General and administrative expenses for 1996 included bad debt expense of $2.5
million which resulted from difficulties in billing and in disconnecting late-
paying members on a timely basis. In addition, in September 1996, we issued
75,000 shares of Common Stock as consideration for the termination of a
consulting agreement. The value of the stock, $413,000, was included in general
and administrative expenses for the year ended December 31, 1996.

OPERATIONS AND MEMBER SUPPORT

Operations and member support expenses increased from $1.9 million in 1995
to $15.8 million in 1996. This trend reflected the costs associated with
building a member service organization to support our member base and
anticipated member growth. Employees engaged in operations and member support
activities increased from 112 to 444 during 1996.

INTEREST EXPENSE

Interest expense increased from $136,000 in 1995 to $1.0 million in 1996
primarily because of increased borrowings and capital lease obligations we
incurred to finance the expansion of network infrastructure and capital
equipment acquisitions.

24
<PAGE>
INTEREST INCOME

Interest income increased from $34,000 in 1995 to $150,000 in 1996 primarily
because of the increase in average cash balances available for investment.

QUARTERLY RESULTS

Revenues and operating expenses have increased in each of the seven quarters
ended September 30, 1998, primarily due to increases in our member base and
associated costs. Loss from operations (excluding amortization and transaction
costs) as a percent of revenue over this period has declined reflecting our
increasing economies of scale.

Our financial results may fluctuate significantly because of several
factors, many of which are beyond our control. These factors include: the costs
associated with gaining and retaining members and capital expenditures for
upgrading our systems and infrastructure; the timing and market acceptance of
new and upgraded Internet service introductions by us and our competitors;
increased competition; changes in our pricing policies and those of our
competitors; changes in our operating expenses (including telecommunications
costs); seasonal fluctuations in demand for our services; the introduction of
alternative technologies; the effect of potential acquisitions; and, other
general economic factors.

25
<PAGE>
The following table sets forth certain unaudited quarterly financial data
for the seven quarters ended September 30, 1998. This unaudited information has
been prepared on the same basis as the audited consolidated financial statements
contained elsewhere in this prospectus and, in the opinion of our management,
includes all adjustments (consisting of normal recurring adjustments) necessary
to present fairly the information set forth when read in conjunction with the
consolidated financial statements and the related notes. The operating results
for any quarter are not necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------
MAR. 31 JUN. 30 SEPT. 30 DEC. 31 MAR. 31 JUN. 30 SEPT. 30
CONSOLIDATED STATEMENT OF OPERATIONS DATA: 1997 1997 1997 1997 1998 1998 1998
--------- --------- --------- --------- --------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:

Recurring revenues......................... $ 14,539 $ 17,880 $ 19,450 $ 22,787 $ 27,856 $ 35,224 $ 46,877
Other revenues............................. 1,632 1,367 1,559 1,673 1,578 1,620 1,699
Incremental revenues (1)................... -- -- -- -- 392 1,146 1,248
--------- --------- --------- --------- --------- ---------- ----------
Total revenues........................... 16,171 19,247 21,009 24,460 29,826 37,990 49,824

Operating costs and expenses:
Cost of recurring revenues................. 7,622 8,902 9,304 11,025 14,208 17,781 21,174
Cost of other revenues..................... 479 495 352 323 115 221 394
Sales and marketing........................ 6,183 6,051 6,670 6,702 7,390 7,983 9,975
General and administrative................. 3,502 3,449 3,511 3,871 4,513 4,988 5,843
Operations and member support.............. 6,422 7,791 7,970 8,717 9,540 11,630 15,078
Amortization and transaction
costs (2)................................ -- -- -- -- -- 7,208 17,754
--------- --------- --------- --------- --------- ---------- ----------
Total operating costs and expenses....... 24,208 26,688 27,807 30,638 35,766 49,811 70,218

Loss from operations......................... (8,037) (7,441) (6,798) (6,178) (5,940) (11,821) (20,394)
Interest expense............................. (507) (444) (516) (632) (687) (621) (353)
Interest income.............................. 165 135 116 221 223 426 1,919
--------- --------- --------- --------- --------- ---------- ----------
Net loss................................. (8,379) (7,750) (7,198) (6,589) (6,404) (12,016) (18,828)
Deductions for accretion
dividends (3).............................. -- -- -- -- -- (1,054) (3,276)
--------- --------- --------- --------- --------- ---------- ----------
Net loss attributable to common
stockholders............................... $ (8,379) $ (7,750) $ (7,198) $ (6,589) $ (6,404) $ (13,070) $ (22,104)
--------- --------- --------- --------- --------- ---------- ----------
--------- --------- --------- --------- --------- ---------- ----------
Basic and diluted net loss per
share (4).................................. $ (0.46) $ (0.40) $ (0.36) $ (0.29) $ (0.28) $ (0.53) $ (0.78)
--------- --------- --------- --------- --------- ---------- ----------
--------- --------- --------- --------- --------- ---------- ----------
Weighted average shares
outstanding (4)............................ 18,188 19,476 19,864 22,482 22,746 24,586 28,458
--------- --------- --------- --------- --------- ---------- ----------
--------- --------- --------- --------- --------- ---------- ----------
</TABLE>

26
<PAGE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------
MAR. 31 JUN. 30 SEPT. 30 DEC. 31 MAR. 31 JUN. 30 SEPT. 30
AS A PERCENTAGE OF TOTAL REVENUES: 1997 1997 1997 1997 1998 1998 1998
------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Recurring revenues......................... 90% 93% 93% 93% 94% 93% 94%
Other revenues............................. 10 7 7 7 5 4 3
Incremental revenues (1)................... -- -- -- -- 1 3 3
------- ------- -------- ------- ------- ------- --------
Total revenues........................... 100 100 100 100 100 100 100

Operating costs and expenses:
Cost of revenues........................... 47 46 44 45 48 47 42
Cost of other revenues..................... 3 3 2 1 -- 1 1
Sales and marketing........................ 38 31 32 27 25 21 20
General and administrative................. 22 18 17 16 15 13 12
Operations and member support.............. 40 41 38 36 32 30 30
Amortization and transaction costs (2)..... -- -- -- -- -- 19 36
------- ------- -------- ------- ------- ------- --------
Total operating costs and expenses....... 150 139 133 125 120 131 141

Loss from operations....................... (50) (39) (33) (25) (20) (31) (41)
Interest expense........................... (3) (2) (2) (3) (2) (2) (1)
Interest income............................ 1 1 1 1 1 1 4
------- ------- -------- ------- ------- ------- --------
Net loss................................. (52)% (40)% (34)% (27)% (21)% (32)% (38)%
Deductions for accretion dividends (3)..... -- -- -- -- -- (3) (6)
------- ------- -------- ------- ------- ------- --------
Net loss attributable to common
stockholders............................. (52)% (40)% (34)% (27)% (21)% (35)% (44)%
------- ------- -------- ------- ------- ------- --------
------- ------- -------- ------- ------- ------- --------
</TABLE>

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

(1) We began reporting incremental revenues in the first quarter of 1998.

(2) Amortization and transaction costs represent $23,565,000 in amortization of
intangible assets acquired and a one time transaction cost of $1,397,000
resulting from the strategic alliance with Sprint in June 1998.

(3) Represents the accretion of liquidation dividends on Series A convertible
preferred stock at 3% compounded quarterly and the accretion of a dividend
related to the beneficial conversion feature in accordance with EITF D-60.

(4) SFAS No. 128, Earnings per Share ("EPS"), and Staff Accounting Bulletin No.
98 require companies, such as EarthLink, that incorporated the SAB 83
concept of "cheap stock" in determining pre-initial public offering EPS data
to restate EPS data to conform to SFAS No. 128. Basic EPS now represents the
weighted average number of shares divided into net income during a given
period. Potential common stock items, options, warrants or convertible
instruments are not included in the calculation of EPS due to their
anti-dilutive effect.

27
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

Our operating activities used $3.6 million, $16.2 million and $21.3 million
in cash during the years ended December 31, 1995, 1996 and 1997, respectively.
Our operating activities provided $14.4 million of cash during the nine months
ended September 30, 1998, primarily because of the increase in accrued
liabilities of $13.8 million.

Our investing activities, consisting primarily of capital equipment
purchases for expansion, used cash of approximately $4.3 million, $18.4 million
and $16.1 million in 1995, 1996 and 1997, respectively. During 1997, we
purchased the rights to subscribers and related assets of Internet in a Mall,
Inc., a Tarzana, California based ISP, at a cost of approximately $1.4 million.
Investing activities used $1.0 million in cash during the nine months ended
September 30, 1998. Net cash received in the Sprint transaction of $23.8 million
was partially offset by Sprint transaction costs of $8.9 million for the nine
months ended September 30, 1998. Capital equipment purchases were $15.9 million
for the nine months ended September 30, 1998.

Financing activities provided approximately $8.2 million, $38.3 million and
$49.8 million in cash during 1995, 1996 and 1997, respectively. Financing
activities provided cash of approximately $104.6 million during the nine months
ended September 30, 1998. We raised $6.3 million, $8.7 million and $15.4 million
in private sales of equity securities during 1995, 1996 and 1997, respectively.
In the first quarter of 1997, we sold 4,569,500 shares of common stock in our
initial public offering. The offering generated approximately $26.2 million in
net proceeds. We completed a follow on public offering in June 1998 of 5.5
million shares of common stock at $30 per share of which we sold 3.7 million
shares and selling stockholders sold 1.8 million shares. Our net proceeds were
approximately $105 million. During 1995, 1996 and 1997, respectively, we
financed the acquisition of data processing and office equipment amounting to
approximately $556,000, $11.3 million and $10.5 million, respectively, through
equipment sale leaseback agreements. Proceeds from capital lease transactions
for the nine months ended September 30, 1998 were $6.2 million. We record sale
leaseback transactions at cost, which approximates the fair market value of the
property, and, therefore, no gains or losses are recorded. We continue to
depreciate the property and record a financing obligation representing the
proceeds based upon payments under the lease agreement.

On September 30, 1998, we had approximately $134.4 million in cash and cash
equivalents. We believe our available cash is sufficient to meet our operating
expenses and capital requirements for the next 12 months. We also have a $25
million credit facility from Sprint in the form of convertible senior debt,
increasing to $100 million over a three-year period, at an interest rate of 6%
per annum. Our capital requirements depend on numerous factors, including the
rate of market acceptance of our services, our ability to maintain and expand
our member base, the rate of expansion of our network infrastructure, the size
and types of acquisitions in which we may engage and the level of resources
required to expand our marketing and sales programs. We cannot accurately
predict the timing and amount of capital requirements. We may require additional
financing sooner than anticipated if capital requirements vary materially from
those currently planned. We have no commitments for any additional financing
other than the line of credit from Sprint, and we cannot be sure that we can
obtain additional commitments on favorable terms, if at all. Additional equity
financing may dilute our stockholders, and debt financing, if available, may
restrict our ability to declare and pay dividends and raise future capital. If
we are unable to obtain additional needed financing, we may be required to
reduce the scope of operations or anticipated expansion, which could materially
and adversely affect us.

YEAR 2000 RISK MAY ADVERSELY AFFECT OUR COMPANY

Many existing computer programs use only two digits to identify a year.
These programs were designed and developed without addressing the impact of the
upcoming change in the century. If not corrected, many computer software
applications could fail or create erroneous results by, at or beyond

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the year 2000. We utilize software, computer technology and other services
internally developed and provided by third-party vendors that may fail due to
the year 2000 phenomenon. For example, we are dependent on the institutions
involved in processing our members' credit card payments for Internet services.
We are also dependent on telecommunications vendors and leased POP vendors to
maintain network reliability.

We are currently assessing the year 2000 readiness of our third-party
supplied software, computer technology and other services. Based upon the
results of this assessment, the Company will develop and implement, if
necessary, a remediation plan with respect to third-party software, computer
technology and services which may fail to be year 2000 compliant. We have
assessed our proprietary software and internal systems and determined them to be
year 2000 compliant. We anticipate that our systems, including components
thereof provided by third-party vendors, will be year 2000 compliant by 2000. At
this time, the expenses associated with this assessment and potential
remediation plan cannot be determined. The failure of our software and computing
systems and our third-party vendors to be year 2000 compliant could have a
material adverse effect on us.

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BUSINESS

OVERVIEW OF EARTHLINK

We are a leading Internet service provider, or ISP, providing reliable
nationwide Internet access and related value-added services to our individual
and business members. Our member base has grown from approximately 420,000
members on December 31, 1997 to approximately 1,000,000 on December 31, 1998,
making us one of the world's leading ISPs. We believe our growth has resulted
from our efforts to enhance our members' Internet experience through simple,
rapid and reliable access to the Internet, high quality service, and member
education and support. As a result, we believe we have a high member retention
rate for our industry. We receive significant benefits from the size of our
member base, including bargaining power with providers of Internet content,
online advertisers and retailers, and network providers.

We generate our members through a combination of innovative and
cost-conscious marketing programs. We market our services and products through
referrals, online advertising and magazine, radio and television advertisements.
Our affinity marketing and membership referral programs are also valuable
components of our marketing strategy. We have over 500 affinity marketing
partners, including prominent retailers, print publishers, and software and
hardware companies. Leading affinity marketing partners include CompUSA, Novus
Service's Discover Card, Gateway, MacMillan Digital Publishing USA, SAM's Club,
Sony Entertainment and Warner Bros. We recently added Apple and Packard Bell to
our family of distribution partners.

In June 1998, we entered into a strategic alliance with Sprint, which is
another important driver of our member growth. As a part of this alliance,
Sprint transferred approximately 130,000 members to us and committed to generate
at least 150,000 new members for us during each of the next 5 years through
their channels. Additionally, we are now co-branded as Sprint's exclusive
consumer Internet access provider, and we have exclusive access to certain
dial-up modem ports in Sprint's network. We also have access to Sprint's
marketing and distribution channels and the right to use Sprint's widely
recognized brand name. As a result of this relationship we recently added Sprint
PCS and Radio Shack as affinity partners.

We provide highly reliable Internet access through a nationwide
telecommunications network of leased, high-speed, dedicated data lines and over
1,700 dial-up access sites, or POPs. We own and operate POPs in Southern
California and lease POPs from UUNET, Sprint, and PSINet nationwide. Over 90% of
the U.S. population can access our Internet service through a local telephone
call. We also provide Internet connections by cable modem, ADSL, ISDN, frame
relay and other high-speed access technologies.

INDUSTRY BACKGROUND

The Internet is an increasingly significant global medium for
communications, information and online commerce. Industry analyst IDC estimates
that the number of Internet users was 81 million in 1997 and will reach 177
million by 2000. In addition, IDC projects that ISP revenues in the United
States will grow from $4.6 billion in 1997 to $18.3 billion in 2000, implying a
compound annual growth rate of 58.5% per year. Continued growth in Internet
usage is expected to be fueled by several factors, including the large and
growing installed base of personal computers in the workplace and home, advances
in the performance and speed of personal computers and modems, improvements in
network infrastructure, easier and cheaper access to the Internet, and increased
general awareness of the Internet.

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Potential Internet users, particularly non-technical users, may find the
size and complexity of the Internet difficult and intimidating. These users
generally place a premium on products and services that are easy to use.
Experienced users increasingly view the Internet as mission critical. They
generally focus on network quality, reliability, customer service quality and
cost. We believe the requirements of both inexperienced and experienced users
create a significant market opportunity for vendors that can serve both user
groups.

EARTHLINK'S STRATEGY

EarthLink's objectives are to be the leading nationwide ISP and to provide
its members with a high-quality Internet experience. Key elements of our
strategy include:

MAXIMIZE MEMBERS' OVERALL EXPERIENCE. We want to provide our members with a
superior online experience. The following points illustrate our efforts to do
so:

- Superior Member Service: We believe that an integral part of the EarthLink
experience is fast, polite, and helpful member service. Accordingly, we
invest significant resources in supporting our members. We view member
support as another opportunity to interface directly with our members to
educate them on how to get the most out of the Internet. We have scaled
our highly-trained member support staff in line with member growth to
minimize member hold times and solve each individual problem in the most
expeditious manner. Our member care center is available seven days a week,
24 hours a day via a toll free call.

- Reliable Access: We currently use UUNET, PSINet and Sprint, as well as our
own facilities, to provide dial-up access and network telecommunications
services. Our members can access our service through over 1,700 POPs. As a
result, our members are able to navigate the Internet with few delays,
timeouts and disruptions.

- Easy to Use Solution: Users may encounter numerous difficulties using the
Internet because of its size and complexity. Therefore, we focus
significant resources on retaining members by providing them with reliable
and easy to use Internet access. We designed our TotalAccess software
(which includes software and documentation for both Windows and Macintosh
users) to make it easy for members to register and configure their system
for Internet access. We constantly work to develop new services, content
and features to enhance that user experience.

- Broad Service Offering: Our members receive six megabytes of space on our
Web server and special tools to create their own Web page. We recently
introduced a "Click-N-Build" Web construction tool, an e-commerce solution
and cable modem access. Going forward, we will continue to offer our
members leading Internet and communication products and services.

- Personal Start Page: We provide a customizable personal start page user
interface that allows members to closely match their needs. Members may
select from a number of browsers, navigation engines and sources of news
headlines.

- Member sign-up: From marketing and promotional materials to registration
and access software, we have carefully crafted the sign-up process to be
easy-to-use and to engender loyalty.

RAPIDLY EXPAND OUR MEMBER BASE. We believe that a key to our success in the
competitive ISP market is to rapidly expand our member base. This will allow us
to amortize our assets over a larger revenue base and enhance our ability to
enter into favorable arrangements with network service providers, affinity
marketing partners, online advertisers and content providers. We have
accelerated efforts and financial commitments to attract new members, while
continuing to provide high-quality service to ensure member retention.
Historically, we have capitalized on our reputation for high-quality service and
have obtained a significant portion of our new members from existing member
referrals. We recently added Apple and Packard Bell to our family of over 500
affinity partners plus numerous other channel partners. We plan to continue to
expand our marketing program, to maintain a presence at national, regional and
local trade shows, and to offer economic incentives to members who refer new

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members. Our access to Sprint's high-speed data network and marketing channels
further enhances our ability to add new members.

CAPITALIZE ON SPRINT ALLIANCE. We intend to maximize the opportunities
presented by our alliance with Sprint to attract new members nationwide and to
further enhance our position as a leading ISP. We believe that the substantial
increase in members and other financial and operational resources resulting from
the Sprint alliance will enable us to achieve our strategic objectives on a
cost-effective and accelerated basis. We also believe that new members will be
generated by the Sprint relationship at a lower cost than we would spend to add
these members on our own. Therefore, we intend to take full advantage of
Sprint's recognized brand image, extensive distribution channels (including
Radio Shack and Sprint PCS) and approximately 16 million long-distance and local
telephone customers. To that end, our brand is jointly marketed with Sprint's
widely-recognized brand in connection with consumer Internet services.
Additionally, we expect to further benefit from our exclusive access to certain
dial-up modem ports in Sprint's high-speed data network.

INCREASE MARKETING AND EXPAND DISTRIBUTION. We continue to expand our
targeted marketing programs and distribution efforts to increase our member
base, nationwide presence and brand recognition. To achieve these objectives, we
continue to increase our investments in a wide-ranging marketing and
distribution program, including expanded affinity partners, print publications,
radio, television, billboards and direct mail. We closely monitor the results of
these marketing programs as part of our ongoing effort to increase the
cost-effectiveness of our marketing efforts.

LEVERAGE THIRD PARTY SERVICE PROVIDERS. We leverage the infrastructure of
others by leasing POP capacity from UUNET, PSINet and Sprint. This allows us to
maintain focus on our members' needs while benefiting from the continuing
decrease in telecommunications services costs. Not only does this approach lower
our required capital expenditures, it also gives us flexibility to rapidly
expand service coverage. Moreover, access to multiple networks provides members
with increased service quality resulting from redundant network access. We will
continue pursuing this strategy so that we can devote our principal resources to
sales and marketing efforts and to improving members' Internet experience.

DERIVE INCREMENTAL REVENUES. We leverage our growing member base and user
traffic to increase revenues from sources other than those that are access
related such as advertising and electronic commerce. Our Premiere Partnership
Program is the principal component of this strategy. Through the Premiere
Partnership Program we sell promotional packages that provide advertisers,
retailers and content providers with access to the multiple points of contact we
have with our members. We also sell advertising space on our various online
properties like the Personal Start Page and our news magazine, BLINK. The
EarthLink Mall and branded Personal Start Pages are further sources of
incremental revenues.

MANAGE INFRASTRUCTURE TO MEET MEMBER GROWTH. Our membership has grown
rapidly since inception. To continue to effectively add new members and continue
to offer high-quality service, we have made significant capital investments,
including expansion of our network hub, accounting and billing systems and
customer care systems. We believe our current infrastructure is adequate to
manage a significant increase in our member base.

EARTHLINK'S SERVICES

We provide a wide variety of competitively priced Internet services. Our
TotalAccess software incorporates a telephone dialer and email program with
several leading third-party Internet access tools, including the latest browsers
from Netscape and Microsoft. This software provides a functional, easy-to-use
Internet access solution for Windows 3.1, Windows 95 and Macintosh platforms.
The TotalAccess software automatically installs these and other software
applications on member computers. The simple point-and-click functionality of
TotalAccess, combined with its easy-to-use multimedia

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registration system, permits online credit card registration, allowing both our
novice and experienced members to quickly set up access to the Internet.

Our service offerings include:

STANDARD INTERNET SERVICES

<TABLE>
<S> <C>
EMAIL PUBLICATIONS
WEB BROWSER MEMBER AND TECHNICAL SUPPORT
6MB WEB SPACE FOR A PERSONAL WEB EARTHLINK WEB SITE
SITE NEWSGROUPS
PERSONAL START PAGE THE EARTHLINK ONLINE MALL
NATIONWIDE POPS
</TABLE>

PREMIUM SERVICES

<TABLE>
<S> <C>
BUSINESS WEB SITE HOSTING DOMAIN NAME SERVICE
NATIONAL ISDN STAR EMAIL ADDRESSING
NATIONAL LAN ISDN INTERNATIONAL ROAMING SERVICE
NATIONAL FRAME RELAY 800 SERVICE
TOTALACCESS GOLD INTERNET ROOMS
ADDITIONAL MAILBOXES ELECTRONIC COMMERCE SOLUTION
</TABLE>

EMERGING ACCESS SERVICES

<TABLE>
<S> <C>
CABLE MODEM FIBER TO THE CURB
SATELLITE/WIRELESS ACCESS (IN
ADSL DEVELOPMENT)
</TABLE>

EARTHLINK'S STANDARD INTERNET SERVICES. We provide our members with a core
set of features through our standard Internet service. This standard service
allows unlimited access to the Internet and the World Wide Web as well as other
features and services for a monthly fee of $19.95 and a one-time set up fee
(which is frequently waived). We include the following features in our standard
Internet service:

EMAIL. Each member receives an electronic mailbox which enables members to
exchange an unlimited number of multimedia, text, graphics, audio and video
messages with other online and Internet users.

WEB BROWSER. We provide members with a free Web browser. Currently, we
offer Netscape Communicator or Microsoft Internet Explorer. Members may also
use any other browser of their choice.

6MB WEB SPACE FOR A PERSONAL WEB SITE. We provide each member with six free
megabytes of space on our Web server to create a personal Web site. We
recently introduced our "Click-N-Build" web site creation tool which enables
members to build their sites without having to learn complex programming
languages. We also provide tutorials and tools to help members develop their
sites. This enables members to participate in the Internet community by
personally adding content to the World Wide Web.

PERSONAL START PAGE. Each member receives a Personal Start Page, an
enhanced default start page for members that first appears when they log on
to the EarthLink Network. Members can customize their start page. For
example, a member may select from a number of browsers, navigation engines
and sources of news headline. Members also have the option to view stock
quotes, and weather reports and are provided with a personal reminder
system, as well as a place to list their own personal Web links and links to
EarthLink member and technical support resources. Our Premiere Partners on
our member's Personal Start Page include ABCNews.com,

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American Greetings, AccuWeather, CNN Interactive, Excite, GoTo.com,
Infoseek, Lycos, MiningCo.com, Snap, PC Quote, Travelscape.com and Wired
Digital.

NATIONWIDE POPS. EarthLink members can access their accounts through a
nationwide network of over 1,700 POPs.

PUBLICATIONS. We mail our bi-monthly printed news magazine, BLINK, to each
member. BLINK provides useful information, such as tips on how to search for
certain categories of information on the Internet, information regarding new
EarthLink service offerings, pointers to new Internet sites and other items
of interest. BLINK is also available online on the EarthLink home page.
Additionally, we provide new members with an orientation booklet called
"Getting the Most Out of the Internet," written by our founder, Sky Dayton.

MEMBER AND TECHNICAL SUPPORT. We currently provide the following member and
technical support services: (i) toll-free, live telephone assistance
available seven days a week, 24 hours a day; (ii) email-based assistance
available seven days a week, 24 hours a day; (iii) help sites and Internet
guide files on the EarthLink Web site; and, (iv) automated "fax back" and
"fax on demand" assistance; and (v) printed reference material.
Additionally, we provide dedicated support for business members through
dedicated member care support personnel who are specially trained for
business products and services such as business Web sites and local area
network ISDN.

EARTHLINK WEB SITE. We maintain a Web site at www.earthlink.net that
contains content and links to third-party content and services. Our in-house
staff actively seeks out interesting content from across the World Wide Web
and organizes it into areas of interest on our Web site under topics such as
"Arts & Entertainment," "Sports," "Travel," "News," "Finance" and "Games."
Our Web site provides a road map to the abundant information and services
available on the Internet. The site also contains Web pages dedicated to
online member assistance including technical support, account maintenance
and service updates.

NEWSGROUPS. "Newsgroups," one of the most popular areas of the Internet,
facilitate ongoing online discussions of specific areas of interest.
EarthLink aggregates and provides access to thousands of these newsgroups,
enabling its members to participate in realtime public discussions of a
myriad of topics.

THE EARTHLINK ONLINE MALL. Our online electronic shopping mall provides
users with a one-stop gateway to some of the top retailers on the Web, using
a familiar mall map interface. Retailers such as The Disney Store,
BarnesandNoble.com and 1-800-FLOWERS "lease" space in the Mall.

EARTHLINK'S PREMIUM SERVICES. In addition to our standard service, we offer
a variety of premium services, including the following:

BUSINESS WEB SITE HOSTING. We provide a Web hosting service for business
members. Monthly fees for business Web sites range from $89 to $455, plus
one-time set up fees of $179 to $479, depending on the size of the site and
whether the site is a shared or unique address. A wide variety of options is
available for an extra fee. Additional charges may apply for excess site
traffic. We also offer an introductory service for small businesses,
STARTERSITE, which is a ten megabyte, unique-domain Web site priced at
$19.95 per month, plus a one-time set up fee of $25.

NATIONAL ISDN. Our nationwide high-speed ISDN access service provides
significantly higher access speeds than conventional analog modems. The
monthly charge for ISDN is $34.95 for the first 100 channel hours and $0.99
for each additional channel hour, plus a one-time set up fee of $50.

NATIONAL LAN ISDN. Small to medium-sized businesses can connect their
existing LAN to the Internet at ISDN speed with LAN ISDN. This nationwide
service costs $99.95 per month for 160

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channel hours and four email boxes. The set up fee of $149 is waived for
current EarthLink members, and additional channel hours cost $0.85 per hour.

NATIONAL FRAME RELAY. Frame relay enables companies to connect their LANs
to the Internet via a direct, continuous connection at speeds ranging from
56 Kbps to 1.5 Mbps. Frame relay connections, available nationwide, range
from $240 to $1,460 per month depending on access speeds, data throughput,
etc. One-time set up fees range from $495 to $1,995.

TOTALACCESS GOLD. TotalAccess Gold is a value-added package, which includes
an additional email box, priority technical support with a guaranteed
5-minute maximum wait time, and a quarterly CD-ROM containing software tools
and plug-ins. The package adds $9.95 to the monthly price of a standard
dialup or ISDN account.

ADDITIONAL MAILBOXES. Additional electronic mailboxes are available for a
per-mailbox fee of $4.95 per month and a $9.95 set up fee.

DOMAIN NAME SERVICE. We provide unique domain names for those members who
prefer an individualized address or plan to establish a business Web site.
These unique domain names allow consumers and businesses to customize their
email and Web site addresses. EarthLink charges a one-time fee of $75 to set
up domain name service and assist members in establishing their unique
domain names. Members then pay an annual renewal fee to an Internet domain
registration agency.

STAR EMAIL ADDRESSING. EarthLink members desiring an unlimited choice of
email addresses (for example "[email protected]" or "[email protected]")
can purchase star addressing. With star addressing, all email goes into a
central mailbox, for easy processing to individual addresses at the same
domain. There is a one-time set up fee of $125, but no monthly fee for
maintaining the service.

INTERNATIONAL ROAMING SERVICE. We offer international roaming services so
that members who travel outside the United States can access their EarthLink
accounts and the Internet. The fee for international roaming is $0.15 per
minute plus applicable fees, if any, charged by local and long distance
carriers.

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

INTERNET ROOMS. The Internet Room is an easy to use communications tool
enabling members to use email, online chat and other advanced tools for
communication. The Internet Rooms provide members with a powerful and easy
way to establish Web sites without having to rely on complicated programming
languages such as HTML or FTP. There is an annual fee of $29.95 for each
Internet Room.

ELECTRONIC COMMERCE SOLUTION. We recently introduced our electronic
commerce solution for businesses. The software components allow businesses
to build and operate an online "storefront" and process online credit card
transactions. In conjunction with our hosting services, businesses can
conveniently establish their electronic commerce presence.

EARTHLINK'S EMERGING ACCESS SERVICES. In response to feedback from our
members, we are developing the next generation of Internet access services
targeted at consumers and small businesses. These services offer access speeds
several times faster than ISDN connections utilizing a variety of emerging
connectivity technologies.

35
<PAGE>
CABLE MODEM. We currently offer high-speed cable modem connections to the
Internet for consumers and small businesses in selected service areas,
through partnerships with cable providers such as Charter Communications.

ADSL. We are testing Asymetric Digital Subscriber Line, or ADSL, service
that provides a continuous high-speed connection through existing telephone
lines. This service is in the pilot phase and has not yet been priced.

FIBER TO THE CURB. We are conducting a technology trial utilizing "fiber to
the curb" technology, an emerging broadband-capable technology alternative
to both twisted pair copper lines and coaxial cable. This service is in the
pilot phase and has not yet been priced.

SATELLITE/WIRELESS ACCESS. EarthLink is currently evaluating opportunities
to offer Internet access service delivery through both satellite and
ground-based wireless technologies.

MEMBER AND TECHNICAL SUPPORT

We believe that reliable member and technical support is critical to
retaining existing members and attracting new members. We currently provide the
following member and technical support services: (i) toll-free, live telephone
assistance available seven days a week, 24 hours a day; (ii) email-based
assistance available seven days a week, 24 hours a day; (iii) help sites and
Internet guide files on the EarthLink Web site; (iv) automated "fax back" and
"fax on demand" assistance; and (v) printed reference material. Additionally, we
provide dedicated support for business members.

Our call center currently handles an average of over 130,000 member and
technical support calls a week. We also contract with a vendor of call center
services whose EarthLink-trained employees provide additional technical support
assistance. We believe the center's technology and systems are scaleable to
accommodate call volume growth. We actively evaluate our call center facilities
in order to deliver more effective and efficient services to our members.

SALES AND MARKETING

Our sales and marketing efforts consist of the following programs:

ORIGINAL EQUIPMENT MANUFACTURER CHANNELS. EarthLink has marketing arrangements
with a number of leading hardware and software manufacturers to include our
TotalAccess software pre-installed on or included with their products. Our OEM
partners include, among numerous others, Apple, Packard Bell and Gateway.

AFFINITY MARKETING PROGRAM. Affinity marketing partners typically bundle our
TotalAccess software with their own goods or services to create a package that
promotes EarthLink to potential members. Our affinity marketing partners
include, among numerous others:

COMPUSA. CompUSA includes TotalAccess software pre-loaded on each of its
private-label computer systems, as well as offering TotalAccess software to
its customers through in-store displays.

DISCOVER CARD. EarthLink and NOVUS Services' Discover Card division offer
the Discover Connection, an Internet access package, with exclusive features
and awards for Discover Cardmembers.

MACMILLAN DIGITAL PUBLISHING USA. EarthLink is the exclusive national
Internet access provider included in the Internet Starter Kit CD-Rom which
MacMillan publishes.

SAM'S CLUB. SAM's Club co-brands and co-offers TotalAccess software through
direct mail and catalog promotions to SAM's Club members.

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<PAGE>
SONY ENTERTAINMENT. Sony bundles TotalAccess software on its enhanced music
CDs.

SPRINT ALLIANCE. Our alliance with Sprint includes a marketing agreement and
distribution arrangement that provides us access to Sprint's branded marketing
and distribution channels in the United States, the right to use Sprint's brand
for a minimum of ten years and a five-year commitment from Sprint to deliver a
minimum of 150,000 new members annually through Sprint's channels. Additionally,
Sprint promotes EarthLink as Sprint's exclusive consumer Internet access
provider.

MEMBER REFERRAL PROGRAM. We believe that our existing members are among our
most important marketing tools. We currently waive one month of standard access
service fees for each member who refers a new member to our service. These
referrals generate a significant percentage of our new membership.

ADVERTISING. We advertise our services in print, electronic and broadcast
media. We also maintain a presence at national trade shows such as Internet
World and MacWorld, as well as numerous local and regional trade shows.
Additionally, we market through computer, Internet and related publications and
bundle our TotalAccess software with certain of these publications.

PREMIERE PARTNERSHIPS. As part of our strategy to generate incremental revenue
through third party electronic commerce, advertising and content, we leverage
our current properties (such as our Web site and Personal Start Page) through
our Premiere Partnership Program. The Premiere Partnership Program focuses on
third parties having a natural affinity to and benefit for our member base. The
program generates revenues through (1) sales of banner and other online ads; (2)
fees generated through revenue sharing arrangements with online retailers who
are accessed through our properties; and, (3) payments for placing links from
our properties to third-party content.

TECHNICAL DEVELOPMENT AND SERVICE ENHANCEMENT

We place significant emphasis on expanding and refining our services to
enhance member Internet experience. Our technical staff is engaged in a variety
of technical development and service enhancement activities and continuously
reviews new third-party software products and technology for potential
incorporation into our systems and services. The redesigned and enhanced version
of TotalAccess, version 2.2, is a recent product of these efforts. The new
version places a premium on ease of use, and incorporates a variety of powerful
features that reduce the number and types of challenges faced by new members
using the Internet for the first time. We also regularly update and expand the
online services provided through the EarthLink Web site, organize Web content
and develop online guides, help screens and other user services and resources.

POPS AND NETWORK INFRASTRUCTURE

We provide our members with Internet access primarily through third-party
network POPs. Our use of third parties to provide Internet connectivity enables
us to increase port capacity without the significant capital requirements
necessary to build and maintain a network. It also gives us the flexibility
necessary to adapt to changing technology such as cable modems. Over 90% of the
U.S. population can access our Internet service through a local telephone call.

Members located in a geographic area not currently serviced by a local POP
can access the Internet through an 800 service. Our POP sites are connected to
the Internet primarily through our Pasadena network hub. That hub is in turn
connected directly to the Internet by redundant high-speed fiber optic data
lines obtained from various vendors. We have invested in measures to minimize
the effects of damage from fire, earthquake, power loss, telecommunications
failure, computer viruses, security breaches and similar events or backup
Internet services or backbone facilities or other redundant computing or
telecommunications facilities. We do not currently maintain redundant network
hub facilities.

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COMPETITION

We operate in the Internet services market, which is extremely competitive.
Our current and prospective competitors include many large companies that have
substantially greater market presence, financial, technical, marketing and other
resources than we have. We compete directly or indirectly with the following
categories of companies:

- established online services, such as America Online, the Microsoft Network
and Prodigy;

- local, regional and national ISPs, such as MindSpring, Rocky Mountain
Internet and Internet America Inc.;

- national telecommunications companies, such as AT&T and GTE;

- regional Bell operating companies, such as BellSouth and SBC
Communications Corp; and

- online cable services, such as At Home and Roadrunner.

PROPRIETARY RIGHTS

GENERAL. We rely on a combination of copyright, trademark, patent and trade
secret laws and contractual restrictions to establish and protect our technology
and proprietary rights and information. We require employees and consultants
and, when possible, suppliers and distributors, to sign confidentiality
agreements. However, we cannot assure you that our steps will be sufficient to
prevent misappropriation of our technology and proprietary rights and
information or that our competitors will not independently develop technologies
that are substantially equivalent or superior to ours.

From time to time, third parties have alleged that certain of our trademarks
infringe their trademarks. None of these claims has had an adverse effect on our
ability to market and sell its services. However, we cannot assure you that
those claims will not have an adverse effect in the future or that others will
not assert infringement claims against us in the future.

LICENSES. We have licenses to distribute third-party software incorporated
in our TotalAccess software. Applications which we license for distribution
include Netscape Communicator (this license automatically renews each December
for additional one-year terms unless either party terminates the license on 120
days notice), Microsoft Internet Explorer (this license expires in August 1999
and thereafter automatically renews for additional one-year terms, although
either party may terminate the license at any time on 30 days notice), and
MacTCP software from Apple (this license renews each December for additional
one-year terms unless either party terminates the license on twelve-month
notice). The only software in the TotalAccess package that we developed is the
front-end and installation/registration program. We intend to maintain or
negotiate renewals of existing software licenses and authorizations. We may also
want or need to license other applications in the future. Our inability to renew
existing software licenses or to license additional applications could have a
material adverse effect on us.

EMPLOYEES

As of September 30, 1998, we employed 1,195 people, including 186 sales and
marketing personnel, 893 operations and member and technical support
representatives and 116 administrative

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personnel. None of our employees are represented by a labor union, and we have
no collective bargaining agreement.

FACILITIES

Our corporate headquarters and call center are located in a 93,000
square-foot facility in Pasadena, California. Base rent is currently $73,000 per
month. We have an option to extend this lease for an additional five years at
the then-prevailing market rate following its expiration in September 2007. Our
data center and primary data hub are housed in a 110,000 square foot facility
adjacent to our headquarters with rent of $92,000 per month, subject to yearly
increases. The lease for this space expires February 2007, with an option to
extend for an additional ten year term.

39
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table contains certain information about our executive
officers and directors:

<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------------------- --- --------------------------------------------------
<S> <C> <C>
Sky D. Dayton..................................... 27 Founder and Chairman of the Board of Directors
Charles G. Betty.................................. 41 President, Chief Executive Officer and Director
Dr. Richard D. Edmiston........................... 55 Vice President, Research and Development
Grayson L. Hoberg................................. 40 Sr. Vice President, Finance and Administration and
Chief Financial Officer
David R. Tommela.................................. 59 Sr. Vice President, Operations
Brinton O.C. Young................................ 47 Sr. Vice President, Marketing
William S. Heys................................... 48 Sr. Vice President, Sales
Sidney Azeez (1).................................. 66 Director
William T. Esrey.................................. 58 Director
Robert M. Kavner (1).............................. 55 Director
Linwood A. Lacy, Jr. (2).......................... 53 Director
Patti S. Manuel................................... 42 Director
Paul McNulty...................................... 37 Director
Kevin M. O'Donnell (2)............................ 48 Director
Reed E. Slatkin (1)(2)............................ 49 Director
</TABLE>

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

(1) Member of Audit Committee.

(2) Member of Compensation Committee.

SKY D. DAYTON, our founder, has served as Chairman of the Board of Directors
since our inception in May 1994 and served as its Chief Executive Officer from
May 1994 until May 1996. From 1992 to 1993, he was 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 software
company. From 1990 to 1994, Mr. Dayton co-owned Cafe Mocha, a coffee house in
Los Angeles, which he co-founded, and was a co-owner of Joe Cafe, a coffee house
in Studio City, California.

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

DR. RICHARD D. EDMISTON has served as Vice President, Research and
Development from January 1997 through December 1998. 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, 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.

GRAYSON L. HOBERG has served as Senior Vice President, Finance and
Administration and Chief Financial Officer since August 1998 and served as Vice
President, Finance and Administration and

40
<PAGE>
Chief Financial Officer 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
Brewing Company. From January 1988 to December 1991, he was a Consulting Manager
at Price Waterhouse LLP.

DAVID R. TOMMELA has served as Senior Vice President, Operations since
August 1998 and was Vice President, Operations from December 1995 through August
1998. From 1973 to August 1995, he served in various capacities for, and
ultimately as the Chief Information Officer of, Southern California Edison
Company, an electric power utility.

BRINTON O. C. YOUNG has served as Senior Vice President, Marketing since
August 1998 and was Vice President, Strategic Planning from March 1996 through
August 1998. From 1990 to 1996, Mr. Young was President of Young & Associates, a
consulting firm specializing in strategic planning for high growth companies.

WILLIAM S. HEYS has served as Senior Vice President, Sales since August
1998, and was Vice President of EarthLink's relationship with Sprint from
January 1998 through August 1998. Prior to joining EarthLink, Mr. Heys founded
the high-tech industry consulting firm BHC & Associates. Before starting BHC,
Mr. Heys served in a variety of executive sales and marketing management
positions at IBM, Wang, Hayes Microcomputer Products and Digital Communications
Associates, Inc.

SIDNEY AZEEZ has been a director 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., cellular telephone
companies, PCS, Inc., a wireless communications company, and several banks in
Colorado and New Jersey. Mr. Azeez is a director of Universal Telecell, Inc. and
Thermal Tech Development, Inc.

WILLIAM T. ESREY has served as a director since June 1998. He has been
Chairman of the Board of Directors of Sprint Corporation since 1990, Chief
Executive Officer of Sprint since 1985 and a Director of Sprint since 1985. Mr.
Esrey is the Chairman of the Executive Committee of the Board of Directors of
Sprint. He is also a director of Duke Energy Corporation, Exxon Corporation,
Everen Capital Corporation, and General Mills, Inc.

ROBERT M. KAVNER has been a director 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 Artists Agency. From 1984 to 1994, Mr. Kavner held several senior
management positions at AT&T, including Senior Vice President and Chief
Financial Officer, Executive Vice President of the Communications Products
Group, Chief Executive Officer of the Multimedia Products and Services Group,
President of the Computer Division, Chairman of the UNIX Systems Laboratory,
Chairman of AT&T Capital Corporation, Chairman of AT&T Paradyne Corporation and
Chairman of AT&T Venture Capital Group. Mr. Kavner also served as a member of
AT&T's Executive Committee. Mr. Kavner serves as a director of Fleet Financial
Group, Ascent Entertainment, Inc. and Ticketmaster Online-CitySearch, Inc.

LINWOOD A. LACY, JR. has been a director since June 1998. From October 1996
to October 1997, he 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

41
<PAGE>
May 1996 served as its Vice Chairman. Mr. Lacy serves as a director of Ingram
Industries Inc., Entex Information Services, Inc., PcOrder.com and Modus Media
International.

PATTI S. MANUEL has been a director since June 1998. Ms. Manuel has served
as President and Chief Operating Officer--Long Distance Division of Sprint
Corporation since February 1998. She has also served as President and Chief
Operating Officer of Sprint L.P. since February 1998. Since May 1997, she has
served as President of Sprint Business, a division of Sprint L.P. From 1994 to
1997, she was President of Sales and Marketing for Sprint Business. She was
named President of Marketing for Sprint Business in 1993.

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

KEVIN M. O'DONNELL, one of our co-founders, has been a director since our
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.

REED E. SLATKIN, one of our co-founders, has been a director 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.

Pursuant to the terms of our Series A convertible preferred stock and the
governance agreement with Sprint, Sprint has the right to elect two individuals
to our Board of Directors for so long as Sprint's equity interest does not
decrease below 20% for three consecutive months. Sprint may also designate one
director to any strategic business planning committee, finance committee and,
subject to certain exceptions, all other committees, if any exist. Sprint has
designated Mr. Esrey and Ms. Manuel as its initial two director representatives.

BOARD OF DIRECTORS AND COMMITTEES

Currently, all directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and qualified.
Our Board of Directors has an audit committee and a compensation committee.
Messrs. Azeez, Kavner and Slatkin are members of the audit committee. Our audit
committee makes recommendations to the Board regarding the selection of
independent auditors, reviews the results and scope of audits and other services
provided by our independent auditors and reviews and evaluates our internal
audit and control functions. Messrs. Lacy, O'Donnell and Slatkin are members of
the compensation committee. The compensation committee sets cash and long-term
incentive compensation for executive officers and other key employees of the
Company. The compensation committee also administers the 1995 Stock Option Plan.

DIRECTOR COMPENSATION

We do not compensate directors for serving on the Board, but we do reimburse
them for the expenses they incur in attending Board and committee meetings. In
addition, non-employee directors are eligible to receive options to purchase
common stock under the Directors Stock Option Plan.

TECHNOLOGY ADVISORY COUNCIL

Our Technology Advisory Council assists us in predicting and overcoming
long-range technology barriers and helps in attracting talented engineers and
technology executives. Mr. Dayton chairs the

42
<PAGE>
Council, which meets quarterly. The following five members, in addition to Mr.
Dayton, currently serve on the Council:

STEWART ALSOP is a partner of New Enterprise Associates, a leading venture
capital firm. In addition, Mr. Alsop writes a column, Alsop's Fables, for Forbes
Magazine. He is also executive producer of Agenda, the annual conference for
senior executives in the computer industry. Previously, Mr. Alsop was the
executive vice president of Infoworld Publishing Company and the former
editor-in-chief of Infoworld. He also founded "PC Letter" and started the Agenda
and Demo conferences.

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

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

DR. ARNO PENZIAS, a 1978 Nobel Prize recipient, is a partner of New
Enterprise Associates, a leading venture capital firm. Mr. Penzias formerly
served as Chief Scientist at Lucent Technologies, Inc., and previously was head
of research at Bell Laboratories.

CHRISTINE VARNEY, former Federal Trade Commissioner and White House Cabinet
Secretary, specializes in Internet law at the firm of Hogan & Hartson LLP. Ms.
Varney was a key participant in formulating the Clinton administration's
Internet strategies.

Except for Mr. Dayton, we granted Mr. Alsop, Mr. Farber, Mr. Neches and Mr.
Penzias warrants to purchase 15,000 shares of common stock. These warrants vest
in equal quarterly increments over two years and have an exercise price of $5.50
per share except Mr. Alsop's warrants have an exercise price of $5.25 per share.
We granted Ms. Varney warrants to purchase 15,000 shares of common stock which
vest in equal quarterly increments over two years and have an exercise price of
$8.875 per share.

43
<PAGE>
EXECUTIVE COMPENSATION

The following table presents certain information relating to compensation
awarded to, earned by or paid to EarthLink's Chief Executive Officer and each of
the six most highly compensated executive officers other than the Chief
Executive Officer during fiscal 1998 (each of whom was serving at the end of
fiscal 1998). These executive officers are referred to in this Prospectus as the
"Named Executive Officers."

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
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 D. DAYTON 1998 $210,025 $45,052 -- --
Chairman of the Board of 1997 $180,000 $45,411 -- --
Directors (1) 1996 153,036 70,006 250,000 --
CHARLES G. BETTY 1998 312,000 60,142 300,000 $22,435(2)
President and Chief Executive Officer 1997 240,000 60,621 -- 10,578(3)
1996 220,550 77,635 500,000 24,000(3)
GRAYSON L. HOBERG 1998 150,017 -- 200,000 1,038(5)
Senior Vice President, Finance and 1997 8,654 --
Administration and Chief Financial Officer
(4)
DAVID R. TOMMELA 1998 145,616 26,512 20,000 2,373(6)
Senior Vice President, Operations 1997 132,000 26,723 -- 1,218(6)
1996 130,392 34,439 25,000 --
RICHARD D. EDMISTON 1998 185,021 18,253 20,000 2,636(9)
Vice President, Research and Development (7) 1997 185,000 33,398(8) 55,000 1,423(9)
BRINTON O.C. YOUNG 1998 160,019 29,522 100,000 --
Senior Vice President, Marketing 1997 140,000 29,754 -- --
1996 73,681 18,409 225,000
WILLIAM S. HEYS 1998 156,158 -- 150,000 --
Senior Vice President (10)
</TABLE>

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

(1) Mr. Dayton served as President until January 15, 1996, when Mr. Betty's
employment commenced. Mr. Dayton served as Chief Executive Officer until May
7, 1996, when Mr. Betty was appointed to that position.

(2) Consists of reimbursement in 1998 of $19,042 in travel expenses pursuant to
Mr. Betty's employment agreement and $3,393 in matching contributions made
to Mr. Betty's account under our 401(k) Plan.

(3) Consists of reimbursement in 1997 of $8,363 in travel expenses pursuant to
Mr. Betty's employment agreement and $2,215 in matching contributions to Mr.
Betty's account under our 401(k) Plan, and reimbursement in 1996 of $24,000
of such reimbursable expenses pursuant to Mr. Betty's employment agreement.

(4) Mr. Hoberg's employment commenced on December 5, 1997.

(5) Consists of matching contributions made to Mr. Hoberg's account under our
401(k) Plan.

(6) Consists of matching contributions made to Mr. Tommela's account under our
401(k) Plan.

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<PAGE>
(7) Mr. Edmiston's employment commenced on January 16, 1997.

(8) Includes a signing bonus of $15,000 paid to Dr. Edmiston pursuant to his
employment agreement with EarthLink and a performance bonus of $18,398.

(9) Consists of matching contributions made to Dr. Edmiston's account under
EarthLink's 401(k) Plan.

(10) Mr. Heys' employment commenced on January 2, 1998.

STOCK OPTION INFORMATION

The following table sets forth certain information regarding options granted
in fiscal 1998 to the Named Executive Officers.

OPTION GRANTS IN FISCAL 1998

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENTAGE OF AT ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE THE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------------
NAME GRANTED (#) FISCAL YEAR(1) SHARE(2) DATE 5% 10%
- --------------------------- ------------ --------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sky D. Dayton.............. -- -- -- -- -- --
Grayson L. Hoberg.......... -- -- -- -- -- --
Charles G. Betty........... 150,000(4) 8.3% 22.375 02/10/08 $ 16,434,820 $ 28,157,721
Charles G. Betty........... 150,000(5) 8.3 22.375 06/05/08 16,434,820 28,157,721
David R. Tommela........... 20,000(6) 1.1 16.063 02/04/08 2,317,559 3,880,613
Richard D. Edmiston........ 20,000(6) 1.1 16.063 02/04/08 2,317,559 3,880,613
Brinton O.C. Young......... 100,000(6) 5.5 16.063 02/04/08 11,587,796 19,403,064
William S. Heys............ 150,000(7) 8.3 12.625 01/02/08 17,897,320 29,620,221
</TABLE>

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

(1) The total number of options granted to EarthLink employees in fiscal 1998
was 1,817,400.

(2) The exercise price per share of options granted represented the fair market
value of the underlying shares of common stock on the dates the respective
options were granted.

(3) 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 the closing price of the common stock on
January 7, 1999, $81.00 per share. These assumptions are not intended to
forecast future appreciation of our 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.

(4) Vests in equal increments of 25% on each December 31 beginning December 31,
1998.

(5) Fully vested.

(6) Vests in equal increments of 5% per quarter over the five-year period
beginning on February 4, 1998.

(7) Vests in equal increments of 5% per quarter over the five-year period
beginning on January 12, 1998.

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<PAGE>
The following table sets forth certain information regarding stock options
held at December 31, 1998 by the Named Executive Officers.

OPTION VALUES AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS (1)
-------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sky D. Dayton.......................................... 25,000 150,000 $ 2,002,250 $ 12,013,500
Charles G. Betty....................................... 215,000 360,000 13,248,900 25,640,100
Grayson L. Hoberg...................................... 23,000 160,000 1,659,625 11,525,000
David R. Tommela....................................... 12,000 59,500 909,525 4,412,838
Richard D. Edmiston.................................... 11,250 52,750 809,438 3,767,313
Brinton O.C. Young..................................... 85,000 197,500 6,302,463 14,083,188
William S. Heys........................................ 21,700 135,300 1,491,088 9,298,913
</TABLE>

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

(1) The value of unexercised "in-the-money" options represents the difference
between the exercise price of stock options and $81.00, the closing sales
price of the common stock on January 7, 1999 (the latest practicable date
prior to the printing of this prospectus) as reported on the Nasdaq Stock
Market.

EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS

CONVERTIBLE SECURITIES VESTING PLAN

In December 1997, the Board of Directors adopted the Convertible Securities
Vesting Plan, (the "Vesting Plan"). Under the Vesting Plan, stock options and
warrants held by certain directors and employees will accelerate upon a "change
in control" of EarthLink. Generally, a change in control includes the sale of
all or substantially all of EarthLink'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
EarthLink's outstanding voting securities. In February 1998, we amended the
Vesting Plan to specifically exclude the Sprint Transaction as a change in
control.

KEY EMPLOYEE COMPENSATION CONTINUATION PLAN

In January 1998, the Board of Directors adopted the Key Employee
Compensation Continuation Plan (the "Continuation Plan"). Under the Compensation
Plan, employees identified by the Board of Directors as "key" or critical to
EarthLink are entitled to a severance payment equal to 50% of their compensation
(including certain other benefits) for the twelve-month period ending upon their
termination. We adopted the Continuation Plan to attract the highest quality
individuals to become key members of our leadership team and to retain the
high-quality individuals who are presently members of our leadership team.

EMPLOYMENT AGREEMENT

In April 1998, we amended our existing employment agreement with Mr. Charles
G. Betty. We continue to employ Mr. Betty as President and Chief Executive
Officer at a salary of at least $300,000 per year, plus a $24,000 a year travel
allowance for Mr. Betty and his family, and such other benefits as we generally
make available to our other senior executives. Mr. Betty is entitled, upon the
attainment of specified performance goals, to an annual bonus in the amount
equal to 50% of his base salary. In addition, Mr. Betty will receive a severance
payment equal to 100% of his then current base salary, will

46
<PAGE>
receive the full bonus to which he would have otherwise been entitled during the
year in which the termination occurs, and will continue to receive health,
medical, life and liability insurance coverage for one year (i) if we terminate
him for reasons other than "cause" as defined in the agreement, (ii) if we elect
not to extend the term of the employment agreement at the end of the first
three-year term or any yearly extension, or (iii) if Mr. Betty terminates his
employment because of a breach of the employment agreement by us. In connection
with the amended and restated employment agreement, we granted Mr. Betty an
option to purchase an additional 300,000 shares of common stock at an exercise
price of $22.375 per share. In the event of a "change in control," as defined in
the agreement, our termination of Mr. Betty for reasons other than "cause" or if
Mr. Betty terminates his employment because of our breach of the agreement, all
unvested options he holds will vest immediately.

1995 STOCK OPTION PLAN AND OTHER OPTION AND WARRANT ISSUANCES

EarthLink's 1995 Stock Option Plan (the "1995 Plan") provides for the grant
to our employees of incentive stock options ("ISOs") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, and nonstatutory
stock options to our employees, officers and directors. Our Board of Directors
and stockholders approved the 1995 Plan in 1995. The total number of shares of
common stock available for issuance under the 1995 Plan as of September 30, 1998
was 1,887,150. If any options granted under the plan are forfeited or terminated
for any reason without being exercised in full, then the unpurchased shares
subject to those options will be available for additional grants under the 1995
Plan.

The compensation committee of the Board of Directors administers the 1995
Plan and determines the terms of options granted, including the exercise price,
the number of shares subject to individual option awards and the vesting period
of such options. The exercise price under any nonstatutory options generally
must be at least 85% of the fair market value of the common stock on the date of
grant. The exercise price under ISOs cannot be lower than 100% of the fair
market value of the common stock on the date of grant and, in the case of ISOs
granted to holders of more than 10% of EarthLink's voting power, not less than
110% of such fair market value. The term of an ISO cannot exceed 10 years, and
the term of an ISO granted to a holder of more than 10% of EarthLink's voting
power cannot exceed five years. As of September 30, 1998, options to purchase
2,907,720 shares of common stock were outstanding under the 1995 Plan at a
weighted average exercise price of $13.543 per share and 1,887,150 shares were
reserved for future option grants under the 1995 Plan. In addition, as of that
date, we had issued non-plan options and warrants to purchase an aggregate of
2,034,106 shares of common stock at a weighted average exercise price of $3.39
per share. If not terminated earlier, the 1995 Plan will terminate in 2005.

DIRECTORS STOCK OPTION PLAN AND OTHER DIRECTOR OPTION ISSUANCES

We have reserved 125,000 shares of common stock for issuance upon exercise
of options granted under our Stock Option Plan for Directors (the "Directors
Plan"). We may grant these options to non-employee directors who do not
beneficially own, or serve as employees, directors or officers of any entity
that beneficially owns 5% or more of the outstanding shares of our capital
stock. Under the Directors Plan, grants of options to purchase 20,000 and 5,000
shares of common stock are automatically made to each non-management director at
the time such person first becomes a member of the Board of Directors and at the
beginning of each fiscal year, respectively. As of September 30, 1998, no
options had been granted under the Directors Plan. If not terminated earlier,
the Directors Plan will terminate in 2006.

Before the Board of Directors adopted the Directors Plan, we issued Messrs.
Kavner and Lacy warrants to purchase 100,000 shares of common stock each, at an
exercise price of $2.42 per share, the amount the Board of Directors determined
equaled the fair market value of a share of common stock. The Board made these
grants in consideration of Messrs. Kavner's and Lacy's agreement to serve on

47
<PAGE>
the Board. These warrants vest ratably each year over a five-year period from
January 12, 1996, the date of grant.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In September 1995, Reed E. Slatkin, a member of our Board of Directors,
acted as lessee, together with EarthLink, under a $500,000 equipment lease. In
connection with this arrangement, we granted Mr. Slatkin warrants to purchase
100,000 shares of common stock at $0.91 per share. Mr. Slatkin subsequently
transferred one-half of these warrants to Mr. Kevin M. O'Donnell, another
EarthLink director, as consideration for his indemnification of Mr. Slatkin for
certain liabilities arising in connection with the lease.

In January 1996, Mr. Slatkin guaranteed EarthLink's obligations under a $1.5
million lease for network equipment. As consideration for this guarantee, we
issued Mr. Slatkin warrants to purchase 200,000 shares of common stock at an
exercise price of $2.42 per share, the amount the Board of Directors determined
constituted the fair market value of a share of common stock. Kevin M.
O'Donnell, one of our directors, subsequently agreed to indemnify Mr. Slatkin
against certain liabilities 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, we sold $2,950,000 of our 10% Promissory Notes to 17
purchasers, including certain directors and 5% stockholders. In connection with
this financing, and as additional consideration for these purchasers'
investment, we also issued warrants to purchase 196,680 shares of common stock
having an exercise price of $5.50 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 5% stockholders participated in this financing: Sidney
Azeez, $200,000 note, 13,334 warrants; Robert M. Kavner, $100,000 note, 6,668
warrants; Kevin M. O'Donnell, $225,000 note, 15,000 warrants; Reed E. Slatkin,
$225,000 note, 15,000 warrants; and Storie Partners, L.P., $300,000 note, 20,000
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
111,534 shares of common stock upon consummation of our initial public offering
in January 1997. At that time, we repaid the remaining balance of the 10%
Promissory Notes.

In September 1997, we sold 2,919,518 shares of common stock at a price of
$5.375 per share to certain purchasers, including, among others, certain
directors and stockholders. The following directors and more than 5%
stockholders (including certain of their family members and affiliates)
participated in this financing: Reed E. Slatkin (111,620 shares); Sidney Azeez
(93,024 shares); Charles G. Betty (20,000 shares); Linwood A. Lacy, Jr. (46,512
shares); Richard D. Edmiston (20,000 shares); Brinton O.C. Young (20,000
shares); and, Quantum Industrial Partners LDC (930,234 shares).

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

None of the members of the compensation committee of our Board is currently
or has been, at any time since our formation, an officer or employee of
EarthLink. No executive officer serves as a member of the Board of Directors or
compensation committee of any entity that has one or more executive officers
serving on our Board or its compensation committee.

CERTAIN TRANSACTIONS

In addition to the transactions described under "Compensation Committee
Interlocks and Insider Participation," the SEC requires us to disclose the
following transactions:

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John W. Sidgmore, who served on our Board of Directors until June 5, 1998,
also serves as a director and as President and Chief Executive Officer of UUNET,
is our primary provider of Internet dial-up capacity. In connection with our
execution of a new network services agreement with UUNET in May 1996, we issued
UUNET warrants to purchase 20,000 shares of common stock at an exercise price of
$10.00 per share. UUNET exercised these warrants in full in March 1998.

In connection with the amendment of our network services agreement with
UUNET, we issued UUNET a $5.0 million convertible promissory note and filled a
vacancy on the Board of Directors with Mr. Sidgmore as a designee of UUNET. This
note and accrued interest was converted into 783,030 shares of common stock in
March 1998 in accordance with its terms. We also granted UUNET certain stock
registration rights identical to those held by most of our then existing
stockholders holding unregistered stock. We paid UUNET approximately $21.9
million in 1997 for network services and for interest under the note.

The UUNET network services agreement requires us to pay certain minimum
amounts to UUNET regardless of usage.

We believe that the foregoing transactions were on terms no less favorable
than we could have obtained from unaffiliated parties. Our policy is that all
transactions by us with officers, directors, more than 5% 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 those directors
believe are no less favorable to us than could be obtained from unaffiliated
parties.

SPRINT TRANSACTION

In addition to the transactions described under "Compensation Committee
Interlocks and Insider Participation" and "Certain Transactions," the Sprint
transaction described under "Strategic Alliance with Sprint" involves
transactions with entities which own greater than 5% of our capital stock and of
which directors Mr. Esrey and Ms. Manuel are affiliates.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table contains information concerning (i) those persons whom
we know own beneficially more than 5% of our outstanding common stock, (ii) our
directors, (iii) the Named Executive Officers, (iv) all of our directors and
officers as a group and (v) the selling stockholders. Unless otherwise indicated
in the footnotes below, this information is provided as of November 30, 1998.
The table does not reflect Sprint's right to purchase 770,083 common stock
equivalent shares, which Sprint is entitled to purchase upon the closing of the
offering pursuant to certain preemptive rights under the terms of the Sprint
transaction.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR TO SHARES BENEFICIALLY
OFFERING(2) SHARES OWNED AFTER OFFERING
----------------------- BEING --------------------
NAME OF BENEFICIAL OWNERS(1) NUMBER PERCENT OFFERED NUMBER PERCENT
- -------------------------------------------------- ------------ ------- --------- ------------ ------
<S> <C> <C> <C> <C> <C>
Sky D. Dayton..................................... 2,782,072(3) 9.6 2,782,072 9.0
Reed E. Slatkin................................... 2,128,366(4) 7.3 200,000 1,928,366 6.2
Kevin M. O'Donnell................................ 1,956,032(5) 6.7 125,000 1,831,032 5.9
Sidney Azeez...................................... 251,560(6) * 251,560 *
Charles G. Betty.................................. 399,234(7) 1.4 399,234 1.3
Linwood A. Lacy, Jr............................... 91,683(8) * 91,683 *
Robert M. Kavner.................................. 101,162(9) * 101,162 *
Paul McNulty...................................... 1,110,167(10) 3.8 1,110,167 3.6
William T. Esrey.................................. 11,195,918(11) 30.2 11,195,918 28.6
Patti S. Manuel................................... 11,195,918(12) 30.2 11,195,918 28.6
Brinton O.C. Young................................ 133,750(13) * 133,750 *
Dr. Richard D. Edmiston........................... 33,000(14) * 33,000 *
Grayson L. Hoberg................................. 43,000(15) * 43,000 *
David R. Tommela.................................. 24,000(16) * 24,000 *
William S. Heys................................... 29,800(17) * 1,200 28,600 *
Sprint Corporation................................ 11,195,918(18) 30.2 11,195,918 28.6
All directors and executive officers as a group
(15 persons).................................... 19,169,577(19) 50.0 18,793,377 46.7

OTHER SELLING STOCKHOLDERS(1)
- --------------------------------------------------
<S> <C> <C> <C> <C> <C>
Patrick F. and Denise M. Dwyer(20)................ 1,709 * 1,200 509 *
David J. and Gloria G. Farber(21)................. 3,750 * 3,750 -- --
Allan Hoffman(22)................................. 6,410 * 2,820 3,590 *
Richard Ginsberg(23).............................. 4,272 * 1,272 3,000 *
National Media Corporation(24).................... 100,000 * 100,000 -- --
Richard Vermeil (25).............................. 2,137 * 637 1,500 *
</TABLE>

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

* Represents beneficial ownership of less than 1% of our common stock.

(1) Except as otherwise indicated by footnote (i) the named person has sole
voting and investment power with respect to all shares of common stock
shown as beneficially owned, and (ii) the address of the named person is
that of EarthLink.

(2) Beneficial ownership is determined in accordance with the rules of the SEC,
based on factors including voting and investment power with respect to
shares, subject to applicable community property laws. Shares of common
stock subject to options or warrants exercisable within 60 days of November
30, 1998 are deemed outstanding for the purpose of computing the percentage
ownership of the person holding such options or warrants, but are not
deemed outstanding for computing the percentage ownership of any other
person.

(3) Includes options to purchase 12,500 shares of common stock.

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<PAGE>
(4) Includes (i) warrants to purchase 365,000 shares of common stock and (ii)
24,148 shares of common stock held in trust for Mr. Slatkin's minor
children.

(5) Includes (i) 15,076 shares of common stock by Mr. O'Donnell's son, and (ii)
warrants to purchase 365,000 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.

(6) Includes 62,503 shares of common stock held by Mr. Azeez's family.

(7) Includes options to purchase 232,500 shares of common stock.

(8) Includes options to purchase 20,000 shares of common stock.

(9) Includes warrants to purchase 6,668 shares of common stock and options to
purchase 60,000 shares of common stock.

(10) Includes 933,140 shares held of common stock by Quantum Industrial
Partners LDC whom Mr. McNulty represents on the Company's Board, and
177,027 shares of common stock held by Soros Fund Management LLC for whom
Mr. McNulty serves as Managing Director. Mr. McNulty disclaims beneficial
ownership of such shares.

(11) Includes 2,990,036 shares of common stock and 4,102,941 shares of Series A
convertible preferred stock convertible into 8,205,882 shares of common
stock beneficially owned by Sprint and which Mr. Esrey may be deemed to
beneficially own.

(12) Includes 2,990,036 shares of common stock and 4,102,941 shares of Series A
convertible preferred stock convertible into 8,205,882 shares of common
stock beneficially owned by Sprint and which Ms. Manuel may be deemed to
beneficially own.

(13) Includes options to purchase 113,750 shares of common stock.

(14) Includes options to purchase 15,000 shares of common stock.

(15) Represents options to purchase 28,000 shares of common stock.

(16) Represents options to purchase 14,250 shares of common stock.

(17) Includes options to purchase 28,000 shares of common stock and warrants to
purchase 1,800 shares of common stock.

(18) Includes 2,990,036 shares of common stock and 4,102,941 shares of Series A
convertible preferred stock that is convertible into 8,205,882 shares of
common stock assuming acceleration of certain dividend rights. Sprint's
address is 2330 Shawnee Mission Parkway, Westwood, Kansas 66205.

(19) Includes (i) options and warrants to purchase 1,262,468 shares of common
stock, and (ii) 101,727 shares of common stock owned by family members or
affiliates of certain members of the group.

(20) The Dweyrs' address is 9700 Pacific Avenue, Suite 101, Wildwood, New
Jersey 08260.

(21) The Farbers' address is 250 Good Hope Road, Landenburg, Pennsylvania
19350.

(22) Mr. Hoffman's address is 3122 Fire Road, Suite 200, Egg Harbor Township,
New Jersey 08234.

(23) Mr. Ginsberg's address is 15 Treetop Terrace, Greenwich, Connecticut
06831-4319.

(24) National Media Corporation's address c/o Daniel M. Yukelson, 15821 Ventura
Boulevard, 5th Floor, Encino, California 91436.

(25) Mr. Vermeil's address is 130 Longfield Way, Downington, Pennsylvania
19335.

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DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of (i) 50 million shares of common
stock, $0.01 par value per share, and (ii) 25 million shares of preferred stock,
$0.01 par value per share. As of September 30, 1998, and giving effect to this
offering, 30,521,321 shares of common stock and 4,102,941 shares of preferred
stock (convertible into 8,205,882 shares of common stock assuming acceleration
of certain rights) were outstanding. The following summary is qualified in its
entirety by reference to our Certificate of Incorporation, which is filed as an
exhibit to the Registration Statement of which this prospectus is a part.

COMMON STOCK

Under the Delaware General Corporation Law and the our Certificate of
Incorporation, holders of common stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders, including the election of
directors. The common stock carries no preemptive rights and is not convertible,
redeemable or assessable. The holders of common stock are entitled to dividends
in such amounts and at such times as may be declared by the Board of Directors
out of funds legally available therefor. See "Dividend Policy." Upon our
liquidation, dissolution or winding up, the holders of common stock are entitled
to ratably receive our net assets available after payment or provision for
payment of all debts and other liabilities subject to prior rights of holders of
preferred stock then outstanding, if any. All shares of common stock outstanding
immediately following the offering made by this prospectus will be fully paid
and non-assessable.

PREFERRED STOCK

Our Certificate of Incorporation authorizes the issuance of 25 million
shares of preferred stock, of which 10 million have been designated as Series A
convertible preferred stock pursuant to a Certificate of Designation of which
4,102,941 shares were issued and outstanding as of September 30, 1998. All
issued and outstanding shares of Series A preferred stock are held by Sprint.
The undesignated and unissued preferred stock may be issued from time to time in
one or more series, and the Board of Directors, without further approval of the
stockholders, is authorized to fix the dividend rights and terms, conversion
rights, voting rights, redemption rights and terms, liquidation preferences,
sinking funds and any other rights, preferences, privileges and restrictions
applicable to each such series of preferred stock. The issuance of additional
shares of preferred stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could, among other things,
adversely affect the voting power of the holders of common stock and, under
certain circumstances, make it more difficult for a third party to gain control
of EarthLink, discourage bids for the common stock at a premium, or otherwise
adversely affect the market price of the common stock. The potential issuance of
additional shares of Series A preferred stock to Sprint as a result of this
offering may have similar effects.

The following is a summary of the terms of the Series A stock, and is
qualified in its entirety by reference to the Certificate of Designation, which
is filed as an exhibit to the registration statement of which this prospectus is
a part.

GENERAL; DIVIDEND RIGHTS

Sprint owns all of the issued and outstanding shares of Series A preferred
stock. In addition, the Certificate of Designation provides that we may
originally issue shares of Series A Preferred only to Sprint. The Series A
Preferred stockholders are entitled to receive dividends at a rate per annum of
3% of the Liquidation Value of such shares (as defined below), compounded
quarterly. For a period of five years from the initial issuance date of the
Series A preferred stock (the "Issuance Date"), such dividends are payable "in
kind" by way of an increase in the Liquidation Value of the shares and

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thereafter are payable in cash. Moreover, upon our optional redemption of the
Series A preferred stock or the consummation of certain business combination
transactions during such five year period, the holders of the Series A preferred
stock are entitled to receive an accelerated "in kind" dividend for the entire
initial five year period (the "Acceleration Dividend"). Beginning on the sixth
year after the Issuance Date, holders of Series A convertible preferred stock
are entitled to receive cumulative quarterly cash dividends of 3% annually.
Beginning on the 21st year after the Issuance Date, holders of the Series A
preferred stock are entitled to cumulative quarterly cash dividends of 8% of the
Liquidation Value per share, increasing annually to a maximum rate of 12%.

LIQUIDATION RIGHTS

The Certificate of Designation provides that the holders of Series A
preferred stock will receive, prior to any payment or distribution in respect of
other shares of our capital stock, an amount per share equal to the average
market value of the common stock measured over the thirty day period ending on
the Issuance Date (the "Average Stock Price"), plus all accrued and unpaid
dividends on such share, whether in cash or in kind (such amount, the
"Liquidation Value")

CONVERSION RIGHTS

Beginning on the first anniversary of the Issuance Date, each share of
Series A preferred stock is convertible into such number of shares of common
stock as is determined by dividing the Liquidation Value by the "Conversion
Price" in effect at such time. For the five year period following the Issuance
Date, the Conversion Price is equal to the Average Stock Price multiplied by
116.118%. Thereafter, the Conversion Price is increased annually by 6%,
accruable quarterly. The Conversion Price is also subject to adjustment based on
changes in capitalization of the common stock such as stock splits, stock
dividends and the like. Although conversion of the Series A preferred stock is
at the holder's option, conversion is required in the event the Company
consummates certain business combination transactions.

OPTIONAL REDEMPTION BY THE COMPANY

Beginning on the third anniversary of the Issuance Date, we may elect to
redeem the outstanding shares of Series A preferred stock at a redemption price
per share equal to the Liquidation Value of such share (including the
Acceleration Dividend described above), multiplied by a specified percentage.
The specified percentage is initially equal to 103%, and will be reduced by 1%
annually in each of the subsequent three years, and thereafter will be equal to
100%.

VOTING RIGHTS

The Series A preferred stockholders do not possess general voting rights
together with holders of common stock. However, the Series A preferred
stockholders are separately entitled to elect two of our directors (the
"Investor Directors"). This right terminates as to one of the Investor Directors
if Sprint fails to maintain at least a 20% equity interest in EarthLink (on a
fully diluted basis, subject to adjustment) for any three consecutive months,
and will terminate as to both of the Investor Directors if Sprint fails to
maintain at least a 10% equity interest over the same period. The Certificate of
Designation also requires a separate vote of 66 2/3% of the then-outstanding
shares of Series A preferred stock in certain limited situations, including our
liquidation, dissolution or winding up, or our taking certain actions which
would adversely affect the rights of the holders of the Series A preferred stock
as a class.

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CERTAIN CHARTER AND BYLAW PROVISIONS

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

GOVERNANCE AGREEMENT

GENERAL

In connection with the Sprint strategic alliance, we entered into a
Governance Agreement with Sprint. The Governance Agreement establishes certain
terms and conditions concerning our corporate governance, the acquisition and
disposition of our equity securities by Sprint, Sprint L.P. and any of their
respective affiliates (collectively, the "Affiliated Equity Holders"), the
Affiliated Equity Holders' rights to make offers to purchase all of our
outstanding securities not owned by them and the rights of our Board of
Directors to solicit, receive and entertain offers to effect business
combinations, all as more particularly described in the Governance Agreement.
The following summary of the Governance Agreement is qualified in its entirety
by reference to the actual Governance Agreement, which is attached as an exhibit
to the registration statement of which this prospectus is a part.

CORPORATE GOVERNANCE AND ELECTION OF DIRECTORS

The Governance Agreement establishes that the Board of Directors will
determine our fundamental policies and strategic direction. Consistent with the
voting rights granted to the holders of the Series A Convertible Preferred, the
Governance Agreement provides for Sprint's designation of two "Investor
Directors." Following conversion or redemption of the Series A Convertible
Preferred into common stock, we are obliged to elect the Investor Directors (as
defined in the Governance Agreement) to the Boards of Directors. In addition,
the Governance Agreement permits one Investor Director to participate on any
strategic business planning committee, finance committee or other significant
committee of the Board of Directors, to the extent those committees exist. If
there is no such committee, the Governance Agreement allows Sprint a reasonable
opportunity to review and discuss our strategic and business plans and financing
plans with the management of the Company prior to the submission of any such
plan to the Board of Directors, and to receive advance copies of information and
materials to be provided to the Board of Directors with respect to such matters.
Notwithstanding the foregoing, no Investor Director is entitled to participate
on any committee of our Board of Directors or the board of any significant
subsidiary created for the purpose of considering a Business Combination (as
defined in the Governance Agreement) or any matter related thereto, or to
participate in the Board's deliberations with respect to any of the foregoing.
Consistent with the voting rights granted to the holders of the Series A
preferred stock, Sprint is entitled to designate two Investor Directors for so
long as it holds 20% or more of our fully diluted shares outstanding (subject to
adjustment for certain dilutive events, the "Higher Threshold"), and one
Investor Director for so long as it holds 10% or more of our fully diluted
shares outstanding (subject to adjustment for certain dilutive events, the
"Lower Threshold").

At such time as the Series A preferred stock has been converted into common
stock, the Governance Agreement obligates us to use best efforts to solicit
proxies from our stockholders in favor

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of Sprint's Investor Director nominees. The Governance Agreement also obligates
the Affiliated Equity Holders to vote in favor of any other nominee or director
selected by our Board in accordance with the agreement. The voting obligations
of Affiliated Equity Holders under the Governance Agreement are supported by an
irrevocable proxy granted by Sprint and Sprint L.P. to us and our subsidiary,
EarthLink Operations.

For so long as "Sprint's Percentage Interest" (a term that measures the
Affiliated Equity Holders' combined equity stake in the Company, including their
ownership of both common stock and Series A Convertible Preferred Stock,
expressed as a percentage of our fully-diluted stock outstanding) is greater
than the Lower Threshold, we are prohibited by the Governance Agreement and the
Certificate of Designation from taking or authorizing certain actions without
the concurrence of all Investor Directors serving in such capacity at that time.
These actions include (i) the execution or performance of certain corporate acts
or transactions that would impose limitations on the rights of, or deny certain
benefits to, the Affiliated Equity Holders; (ii) the issuance of any class or
series of our stock that provides for voting rights in excess of one vote per
share; (iii) certain events involving the dissolution or liquidation of the
Company or any subsidiary thereof, or the commencement by or with respect to
EarthLink or any subsidiary thereof of certain bankruptcy or bankruptcy-related
events or proceedings; (iv) the conduct by EarthLink or any significant
subsidiary of business substantially outside its current general field of
enterprise; or (v) our issuance of equity securities in connection with joint
ventures, strategic alliances, acquisitions, mergers and other business
combination transactions ("Transaction Securities") representing (A) in any
twelve-month period, in one or more transactions, 50% or more of the number of
shares of common stock outstanding prior to giving effect to such issuances, or
(B) in any one transaction, 35% or more of the number of shares of common stock
outstanding prior to giving effect to such issuance.

EQUITY PURCHASES FROM THE COMPANY; SUBSCRIPTION RIGHTS

So long as Sprint's Percentage Interest is greater than 17.8%, subject to
adjustment for certain dilutive events and for our incurrence of indebtedness
under the Convertible Debt Financing (the "Top-Up Threshold"), the Affiliated
Equity Holders have certain anti-dilution and subscription rights pursuant to
the Governance Agreement. In addition to their rights to subscribe for our stock
directly from us, the Affiliated Equity Holders may effect their anti-dilution
rights by making purchases of our equity securities ("Equity Securities") at any
time from any person other than us as long as, after giving effect to such
purchases, Sprint's Percentage Interest is less than or equal to the "Pro Rata
Share," a formula that limits the maximum equity stake in the Company that the
Affiliated Equity Holders may have. The Pro Rata Share, which adjusts only upon
the incurrence of indebtedness by EarthLink under the Convertible Debt
Financing, has been established, as of the date of the Governance Agreement, at
an amount equal to 0.278.

Upon proposing to issue any new Equity Securities other than new Equity
Securities that are Transaction Securities ("New Securities"), if Sprint's
Percentage Interest is greater than the Top-Up Threshold, we must provide Sprint
written notice of our intent to effect such issuance at least five business days
prior to the date on which the meeting of our Board of Directors is to be held
to authorize such issuance. For a period of ten business days after Sprint's
receipt of such notice, Sprint has the right to purchase the Pro Rata Share of
such issuance and, if it does so, the New Securities offered pursuant to such
notice shall be issued and sold to Sprint by EarthLink at the same times and on
the same terms and conditions as the New Securities are issued and sold to third
parties. In the event that New Securities are sold in an underwritten public
offering, Sprint may purchase the Pro Rata Shares at a per share price equal to
the per share price that shares of New Securities are sold by us to the
underwriters. If for any reason the issuance of such New Securities to third
parties is not consummated, Sprint's right to purchase its Pro Rata Share of
such issuance shall lapse.

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As noted above, Sprint's general subscription rights generally do not apply
to the issuance of our securities in connection with a transaction such as a
merger or acquisition "Transaction Securities." However, if we determine that
Sprint's Percentage Interest has decreased by five percent or more as a result
of issuances of Transaction Securities, we must notify Sprint of such event. In
addition, not later than the second anniversary of Sprint's receipt of that
notice (the "Window Period"), we are obligated to make written offers (each, a
"Primary Share Offer") to Sprint to purchase, in the aggregate, a number of
shares sufficient to enable Sprint to bring Sprint's Percentage Interest up to
the amount in effect prior to the issuances of Transaction Securities. The
number of shares we are obligated to offer pursuant to such provision is defined
in the Governance Agreement as the "Available Top-Up Shares" and the aggregate
number of Available Top-Up Shares resulting from all issuances of Transaction
Securities is defined as the "Aggregate Number of Top-Up Shares." Sprint may
accept a Primary Share Offer within five business days of its receipt thereof,
and the offer is to be made at a purchase price equal to an average stock price
for common stock for the ten trading days prior to the date of such issuance,
less the underwriting discount applied in the most recent underwritten offering
of common stock. If we determine that Sprint's Percentage Interest has decreased
by 0.10 or more solely as a result of the issuance of Transaction Securities
(after giving effect to any and all Primary Share Offers), the Window Period
shall be accelerated such that we shall be obligated to make one or more Primary
Share Offers with respect to not less than the Aggregate Number of Top-Up
Shares, as then calculated, at the earlier of (i) the expiration of the Window
Period, as determined above, or (ii) six months after the date Sprint receives
notice to that effect from us. Notwithstanding anything else in the Governance
Agreement to the contrary, in no event are we obligated to make Sprint a Primary
Share Offer that, after giving effect to such transaction, would cause Sprint's
Percentage Interest to exceed the Pro Rata Share. In addition, with respect to a
purchase of New Securities pursuant to the exercise of anti-dilution rights
discussed above, Sprint may, at its option, purchase New Securities in the form
of "Alternative Securities" convertible into the applicable number of shares of
common stock. "Alternative Securities" are defined as shares of a new series of
Preferred Stock having terms that are structured and priced in the same manner
as the Series A Convertible Preferred Stock. Such terms are determined, if
applicable, by reference to the average stock price for a share of common stock
for the 30 trading days prior to the date of issuance of such Alternative
Securities. Sprint's purchase of New Securities in the form of Alternative
Securities are limited (i) to not more than 75% of any issuance of New
Securities from the Closing to the second anniversary thereof, (ii) to not more
than 66.67% of any issuance of New Securities after the second anniversary of
the Closing until the third anniversary thereof and (iii) after the third
anniversary, we are not obligated to issue any New Securities in the form of
Alternative Securities.

STANDSTILL PROVISIONS

The Governance Agreement sets forth certain "Standstill Provisions"
applicable to Affiliated Equity Holders. These Standstill Provisions are
summarized below. For additional information concerning the survival of the
Standstill Provisions following termination of the Governance Agreement.

Except for purchases of shares and related activities by Sprint otherwise
permitted under the Governance Agreement, the Affiliated Equity Holders may not,
directly or indirectly, (i) acquire, offer to acquire or agree to acquire any
Equity Securities, or any equity securities of any subsidiary of the Company, or
our or our subsidiaries' material assets; (ii) make or participate in any
"solicitation" of proxies or otherwise seek to influence any person with respect
to the voting of any voting Equity Securities; (iii) make any public
announcement with respect to, or submit a proposal for, or offer to effect any
purchase of any significant portion of the assets of EarthLink or any subsidiary
or division of EarthLink, any tender or exchange offer for any Equity
Securities, or a merger, consolidation or other extraordinary transaction
involving us or any of its Equity Securities; (iv) form, join or in any way

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participate in a "group" as defined in Rule 13d-5(b) under the Exchange Act; or
(v) request us or any of our representatives to amend or waive any provision of
the foregoing.

In addition, Sprint may not, directly or indirectly, sell, transfer or
otherwise dispose of any Equity Securities except (i) pursuant to a registered
underwritten public offering in accordance with the Registration Rights
Agreement, (ii) in accordance with certain exemptions under the Securities Act,
and (iii) to any direct or indirect subsidiary of Sprint. In addition,
notwithstanding the foregoing, none of the Affiliated Equity Holders may sell,
transfer or otherwise dispose of any equity interest in any Equity Securities to
any purchaser or group of purchasers if, after giving effect to such sale, such
purchaser or group of purchasers would, to Sprint's knowledge, own, or have the
right to acquire, 5% or more of the Equity Securities then outstanding, except
to any person that is not obligated (or would not, by virtue of such purchase,
reasonably be anticipated to be obligated) to file a Schedule 13D with the SEC
pursuant to each of paragraphs (b) and (e) of Rule 13d-1 under the Exchange Act.

PURCHASES OF ADDITIONAL EQUITY SECURITIES; BUSINESS COMBINATIONS

Following the 39-month anniversary and prior to the 63-month anniversary of
June 5, 1998 (the "Right to Offer Period"), Sprint shall have the right to make
a "Sprint Offer," by offering to purchase all (but not less than all) of the
outstanding Equity Securities that it does not already own at a price per share
equal to the per share price determined by dividing the "Fair Private Market
Value" by the total number of shares of common stock outstanding on a
fully-diluted basis. The "Fair Private Market Value" is defined as the aggregate
private market equity value (including control premium) that an unrelated third
party would pay if it were to acquire all of our outstanding Equity Securities
(including Equity Securities held by the Affiliated Equity Holders) in an arm's
length transaction, assuming (i) that all credible buyers are given an equal
opportunity by EarthLink to make and effectuate an "Acquisition Proposal" (as
defined by the Governance Agreement) with respect to us, (ii) the absence of any
commercial relations between us and EarthLink Operating Subsidiary, on the one
hand, and Sprint and its affiliates, on the other hand, and (iii) the absence of
any ownership stake in us by the Affiliated Equity Holders. The Fair Private
Market Value is to be determined as follows: the respective Boards of the
Company and Sprint shall negotiate the amount of the Fair Private Market Value
to be paid pursuant to the Sprint Offer; in the event the two parties are unable
to agree on this amount, within 30 days after submission of the Sprint Offer to
our Board of Directors, the parties shall agree to be bound to the valuation
arrived at pursuant to the following formula: (i) two appraisals shall be made
by recognized investment banks, one selected by each of Sprint and EarthLink
(the "Initial Values"), (ii) if the lower of the Initial Values is more than 10%
less than the higher, a third independent valuation will be made by an
investment bank jointly selected by us and Sprint (the "Independent Valuation");
otherwise, the Fair Private Market Value shall be the average of the Initial
Values; and (iii) if the Independent Valuation is greater or less than the
average of the Initial Values by more than 5%, the Fair Private Market Value
shall be deemed to equal the average of the two closest valuations. If the
Independent Valuation does not differ by such amount, it shall be the Fair
Private Market Value.

A Sprint Offer shall not be subject to any financing contingency, and shall
be reflected in a form of definitive agreement that Sprint is prepared to
execute. The conditions to consummation of the Sprint Offer and the
representations and warranties set forth therein shall be reasonable and
customary for transactions in which a similarly situated stockholder offers to
purchase all of the Equity Securities not held by such stockholder or its
affiliates.

Our Board of Directors shall have a one-time right, exercisable within 14
days after receipt of the Sprint Offer, to postpone the making of that offer for
nine months. Upon exercise of such right, Sprint is obligated to withdraw the
Sprint Offer for a period of nine months, provided that (i) the Right to Offer
Period shall be extended to the 72-month anniversary of June 5, 1998 and (ii)
our exercise of our postponement right shall not limit Sprint's right to respond
to a "Third-Party Offer" as set forth below.

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In addition, upon the determination of the amount of the Fair Private Market
Value, Sprint shall be obligated to commence and effectuate a Sprint Offer,
provided that Sprint shall, subject to certain limitations, have a one-time
right, exercisable within 14 days after receipt of the determination of Fair
Private Market Value, to determine not to proceed to make such Sprint Offer. If
Sprint does not exercise this right, our Board of Directors shall, unless an
"Intervening Offer" (as defined below) is then outstanding, (i) support the
Sprint Offer by approving and recommending it to our stockholders and (ii) cause
us to take all steps reasonable and necessary to facilitate consummation of such
Sprint Offer. However, at such time as a "Third-Party Offer" shall constitute an
Intervening Offer, Sprint shall be released from its obligation to commence and
effectuate the Sprint Offer, and we shall be released from our obligation to
support and facilitate consummation of the Sprint Offer. If the Intervening
Offer is undertaken in the form of a tender offer, at the consummation of such
tender offer, the offeror shall have an option to purchase from all Affiliated
Equity Holders, at the tender offer price, in the aggregate, a "Specified Number
of Equity Securities" (a number of Equity Securities owned by Affiliated Equity
Holders equal to the proportion of Equity Securities held by unaffiliated equity
holders and tendered into or voted for a competing Business Combination), less
the number of Equity Securities that have already been tendered to such offeror.
In addition, if the Intervening Offer (or a related matter) must be approved by
our stockholders in order for such offer to be effectuated, the Affiliated
Equity Holders are obligated, subject to certain limited exceptions, to cast in
favor of the Intervening Offer (and such related matters) such number of votes
as is equal to the Specified Number of Equity Securities. Affiliated Equity
Holders are not entitled to exercise rights of appraisal with respect to any
Business Combination effected in connection with an Intervening Offer.

The Governance Agreement defines an "Intervening Offer" as an offer for
aggregate consideration reasonably determined in good faith by our Board to be
in excess of the aggregate consideration proposed to be paid by Sprint in a
Sprint Offer or a "Qualified Offer" by Sprint (as defined below), as applicable.
The conditions to consummation of an Intervening Offer and the representations,
warranties and covenants set forth in the Intervening Offer shall be customary
for a transaction of that type.

THIRD-PARTY OFFERS

We are obligated to provide Sprint with prompt written notice of its receipt
of a bona fide, written offer to effect a Business Combination from a third
party (an "Offer"). Upon receipt of such Offer, the Board is to determine
whether it intends to recommend that Offer to the stockholders (a "Recommended
Third-Party Offer") or that such offer is not in the best interests of our
stockholders, in which event it intends not to recommend such offer to the
stockholders (a "Non-Recommended Third-Party Offer" and, together with a
Recommended Third-Party Offer, a "Third-Party Offer").

For a period of ten days following the giving of notice of receipt of an
Offer, we may not enter into a definitive agreement with respect to that Offer.
Sprint has an option to make a "Qualified Offer" with respect to either (i) an
Offer that is a Recommended Third-Party Offer or (ii) an Offer that is a
Non-Recommended Third-Party Offer if the Board of Sprint reasonably determines
that the conditions to the Non-Recommended Third-Party Offer are reasonably
likely to be satisfied and the Offer consummated. A "Qualified Offer" is defined
as an offer made by an Affiliated Equity Holder to acquire all of the Equity
Securities not already owned by the Affiliated Equity Holders at a price per
share in excess of the equivalent per share price set forth in a Third-Party
Offer or an Intervening Offer, as the case may be. A Qualified Offer shall be
reflected in a form of definitive agreement that the Affiliated Equity Holder is
prepared to execute, and the conditions to consummation of such offer and the
representations, warranties and covenants set forth in it shall be customary for
transactions in which a similarly situated stockholder offers to purchase all of
the Equity Securities not held by such stockholder and may not, in any event, be
more onerous in any material respect than those set forth in the Third-Party
Offer or the Intervening Offer, as the case may be.

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We may not adopt any takeover defenses, enter into any agreement or take any
other action in connection with a Recommended Third-Party Offer that would
materially impair an Affiliated Equity Holder's ability to make and consummate a
Qualified Offer or materially increase such Affiliated Equity Holder's cost of
consummating a Qualified Offer. Notwithstanding the foregoing, the Company is
permitted to enter into a definitive agreement with respect to a Recommended
Third-Party Offer that provides for a termination fee not to exceed 3% of the
consideration to be received per share of common stock multiplied by the number
of shares our common stock outstanding on a fully diluted basis (less the number
of shares beneficially owned by the offering party), plus customary fees and
expenses. Nevertheless, the definitive agreement with respect to such
Recommended Third-Party Offer must provide that such fees and expenses shall not
be payable if Sprint makes a Qualified Offer within 72 hours of the first public
announcement of such Recommended Third-Party Offer.

If Sprint has the option to make a Qualified Offer and does so more than
five days prior to the date of a stockholders' meeting held to consider a
Third-Party Offer or an Intervening Offer, the Board of Directors shall, unless
an Intervening Offer is then outstanding, support the Qualified Offer by
approving and recommending it to our stockholders and cause us to take all steps
reasonable and necessary to facilitate consummation of the Qualified Offer.
However, at such time as a Third-Party Offer made subsequent to a Qualified
Offer shall constitute an Intervening Offer, our obligations to support and
facilitate a Qualified Offer shall terminate and we shall be free to consider
and act upon such Intervening Offer. Sprint is nonetheless entitled, at any time
prior to consummation of the Intervening Offer, to make another Qualified Offer,
and in such event, the most recent Third-Party Offer shall cease to constitute
an Intervening Offer.

If a Recommended Third-Party Offer or an Intervening Offer is undertaken in
the form of a tender offer, at the consummation of such tender offer, the
offeror shall have an option to purchase from all Affiliated Equity Holders, at
the tender offer price, in the aggregate, a Specified Number of Equity
Securities, less the number of Equity Securities that have already been tendered
to such offeror. In addition, if a Recommended Third-Party Offer or an
Intervening Offer, as the case may be (or a related matter), must be approved by
our stockholders in order for such offer to be effectuated, the Affiliated
Equity Holders are obligated, subject to certain limited exceptions, to cast in
favor of such offer (and such related matter) such number of votes as is equal
to the Specified Number of Equity Securities. Affiliated Equity Holders are not
entitled to exercise rights of appraisal with respect to any Business
Combination effected in connection with a Recommended Third-Party Offer or
Intervening Offer.

The Governance Agreement defines "Business Combination" to mean a
transaction, undertaken in any form whatsoever, involving (i) the purchase or
acquisition of Equity Securities if the consummation of such transaction would
result in the purchaser beneficially owning 35% or more of the Equity Securities
outstanding, or (ii) a merger, consolidation, combination or other extraordinary
transaction with respect to the Company in which, upon consummation thereof, the
shareholders or owners of the other entity that is a party thereto, or the
controlling persons thereof, would acquire beneficial ownership of 50% or more
of the Equity Securities outstanding. The term Business Combination includes a
"Significant Sale," which means the sale of our assets or of any subsidiary or
the sale of capital stock of any subsidiary by us, in any such case, for which
the consideration proposed to be paid in such transaction represents 35% or more
of our market capitalization on the date we agree to such sale.

SOLICITATION OF OFFERS

From June 5, 1998 until the earlier of the 27-month anniversary of such date
or the termination of the Governance Agreement in accordance with its terms, we
may not, directly or indirectly, (i) solicit or initiate, or encourage the
submission of, any "Acquisition Proposal" (as defined below), or (ii)
participate in any discussions or negotiations regarding, or take any action
that may reasonably be

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<PAGE>
expected to lead to any Acquisition Proposal. However, to the extent required by
the fiduciary obligations of the Board of Directors, as determined in good faith
by the Board based on the advice of outside counsel, we may (A) furnish
information in response to any unsolicited requests therefor and discuss such
information, (B) upon our receipt of an Acquisition Proposal, following delivery
to Sprint of notice thereof, participate in negotiations regarding such
Acquisition Proposal and (C) enter into an agreement respecting such Acquisition
Proposal or any related agreements or take any other action ancillary thereto.

After the 27-month anniversary of June 5, 1998 and until the earlier of the
39-month anniversary of such date or the termination of the Governance Agreement
in accordance with its terms, we may not, directly or indirectly, take any of
the actions identified in the prior paragraph except through an investment
banking firm we formally engage for such purpose; provided, that 30 days prior
to engaging an investment banking firm for that purpose, we shall notify Sprint
of our intention to effect such engagement, and Sprint shall be permitted to
prepare and make a Sprint Offer for so long as such investment banking firm
remains engaged by EarthLink for that specific purpose. Subject to the terms and
conditions of the Sprint Offer, and unless an Intervening Offer is then
outstanding, Sprint is entitled to pursue any such Sprint Offer for so long as
necessary to permit it to be consummated. We are obligated to furnish Sprint
with copies of all information provided by the Company to such investment
banking firm at the time such information is provided to such firm, subject to
Sprint entering into a customary confidentiality agreement with respect to that
information.

Our Board of Directors is obligated to (i) promptly notify Sprint in writing
of (A) its receipt of an Acquisition Proposal, (B) any inquiries or discussions
that may reasonably be expected to lead to an Acquisition Proposal, (C) our
execution of a confidentiality agreement with respect to an Acquisition Proposal
or (D) the furnishing of any confidential information in contemplation of an
Acquisition Proposal, whether or not pursuant to a confidentiality agreement;
(ii) describe the terms and conditions of any Acquisition Proposal in reasonable
detail; (iii) provide to Sprint copies of any definitive agreements with respect
to any Acquisition Proposal and any confidentiality agreements with respect
thereto; and (iv) subject to Sprint's obligation to hold such information in
strict confidence, make available to Sprint all information made available to
the party making the Acquisition Proposal at the same time it is provided to
such party.

An "Acquisition Proposal" means any proposal for a tender or exchange offer,
a merger, consolidation, share exchange or other business combination, in which
we are a constituent party to such transaction, or a sale of securities (other
than Transaction Securities), recapitalization, liquidation, dissolution or
similar transaction involving us, or any proposal or offer to acquire in any
manner, directly or indirectly, a material equity interest in, or a material
amount of voting securities (with the acquisition of beneficial ownership of 20%
or more of the voting Equity Securities being deemed to be material for this
purpose) or assets of, EarthLink. In addition, a "Material Sale," defined as any
proposal involving the sale of our assets or any subsidiary or the sale of
capital stock of any subsidiary, in any such case, for which the consideration
proposed to be paid in such transaction represents 20% or more of the market
capitalization on the date we receive such proposal, is also deemed to
constitute an Acquisition Proposal.

Subject to certain exceptions, we are obligated under the Governance
Agreement not to take any action or omit to take any action that would result in
(i) any Affiliated Equity Holder being deemed an "Acquiring Person" or similar
designation under any stockholders' rights plan, (ii) any Affiliated Equity
Holder being prejudiced under any applicable state takeover statute, including
Section 203 of the Delaware General Corporation Law, or (iii) otherwise causing
any takeover defense to materially impair or obstruct, or prevent (either
legally or financially) the exercise by any Affiliated Equity Holder of rights
granted under Article IV of the Governance Agreement.

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<PAGE>
STOCKHOLDERS' AGREEMENT; IRREVOCABLE PROXIES

In order to provide for enforcement of certain aspects of the Governance
Agreement, Sprint and the following EarthLink principal stockholders have
entered into a Stockholders' Agreement: Sky Dayton, Chairman of the Board of
Directors; Quantum Industrial Partners LDC; Reed Slatkin, a Director of the
Company; Kevin M. O'Donnell, a Director of the Company; Sidney Azeez, a Director
of the Company; and George Soros. Further, in order to provide for enforcement
of the Stockholders' Agreement and certain other provisions of the Governance
Agreement requiring the Affiliated Equity Holders to vote their voting Equity
Securities in a certain manner, Sprint has provided us an Irrevocable Proxy.

TERMINATION; SURVIVAL

The Governance Agreement terminates at the earliest to occur of the
following: (i) such time as Sprint's Percentage Interest is greater than 90% or
less than the Lower Threshold; (ii) the expiration of the Right to Offer Period;
(iii) the first date on which any person or "group" as defined in Rule 13d-5(b)
of the Exchange Act is determined (A) to beneficially own or control more than
35% of the Equity Securities outstanding by virtue of the acquisition of such
securities pursuant to a Third-Party Offer, provided the rights granted and
process contemplated by Article IV of the Governance Agreement have been
observed and effected in accordance with the terms thereof or (B) to
beneficially own or control 50% or more of the voting Equity Securities
outstanding; (iv) upon the termination of our Marketing and Distribution
Agreement with Sprint in accordance with certain of its provisions; or (v) upon
the exercise of registration rights (demand or incidental) by any "Holder" of
"Registrable Securities" under the Registration Rights Agreement entered into in
connection with the Sprint Transaction.

Notwithstanding the termination of the Governance Agreement, until the sixth
anniversary of June 5, 1998, and thereafter for as long as Sprint's Percentage
Interest is greater than the Lower Threshold, Sprint shall still be subject to
the Standstill Provisions described above, and shall still have certain
governance and anti-dilution rights under the Governance Agreement. In such
event, the Standstill Provisions and such other provisions (as well as any
definitional provisions with respect to the foregoing) shall remain in full
force and effect until such time as Sprint's Percentage Interest is lower than
the Lower Threshold; provided, however, that during any period in which the
Standstill Provisions survive, Sprint and its affiliates may directly approach
our Board in order to make an offer to effect a Business Combination.

LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY; INDEMNIFICATION

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

While these provisions provide directors with protection from awards for
monetary damages for breaches of their duty of care, they do not eliminate such
duty. Accordingly, these provisions will have

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no effect on the availability of equitable remedies such as an injunction or
rescission based on a director's breach of his or her duty of care. The
provisions described above apply to an officer of a corporation only if he or
she is a director of such corporation and is acting in his or her capacity as
director, and do not apply to the officers of the corporation who are not
directors.

Our Bylaws provide that, to the fullest extent permitted by the Delaware
General Corporation Law, we may indemnify our directors, officers and employees.
The Bylaws further provide that we may similarly indemnify its other employees
and agents. In addition, we anticipates that each director will enter into an
indemnification agreement pursuant to which we will indemnify such director to
the fullest extent permitted by the Delaware General Corporation Law. At
present, there is no pending litigation or proceeding involving any of our
directors or officers Company in which indemnification is required or permitted,
and we are not aware of any threatened litigation or proceeding that may result
in a claim for such indemnification.

REGISTRATION RIGHTS

The holders of substantially all of the shares of common stock outstanding
prior to the closing of our initial public offering, (including shares held by
our founder and Chairman of the Board and our President and Chief Executive
Officer), as well as certain holders of warrants and convertible debt, are
parties to registration rights agreements with us. Sprint also has registration
rights with respect to the common stock owned or acquired by it or issuable upon
conversion of the Series A preferred stock held by it. These agreements, which
relate to approximately 16,566,300 shares of common stock (assuming the exercise
or conversion of all preferred stock), provide incidental or "piggyback"
registration rights that allow such holders, under certain circumstances, to
include their shares of common stock in registration statements initiated by the
Company or other stockholders. These agreements also permit demand registrations
on Form S-3 registration statements provided that we are eligible to register
our capital stock on Form S-3. All such registration rights are subject to
conditions and limitations, including the right of the underwriters of an
offering to limit the number of shares to be included in a registration.

TRANSFER AGENT AND REGISTRAR

American Stock Transfer & Trust Company is our transfer agent and registrar.

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SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of common stock in the public market
following the offering made by this prospectus could adversely affect market
prices prevailing from time to time. Furthermore, sales of substantial amounts
of common stock in the public market after various resale restrictions lapse
could adversely affect the prevailing market price and our ability to raise
equity capital in the future.

Upon the completion of this offering, 30,904,457 shares of common stock will
be outstanding (based on shares outstanding on November 30, 1998, and assuming
no exercise of options or warrants or conversion of preferred stock). Of these
shares, 16,212,519 are freely tradable without restriction, including:
10,089,500 shares previously registered and sold in public offerings; 2,875,000
shares registered and sold in this offering; 1,392,311 shares issued pursuant to
employee benefit plans and registered on a Form S-8; and 3,088,464 shares sold
into the market in reliance on Rule 144 of the Securities Act; less 1,757,280 of
the foregoing shares purchased by Sprint pursuant to its tender offer, and which
are not eligible for resale pursuant to the terms of that transaction, except
that shares purchased by our "affiliates", as that term is defined in Rule 144
under the Securities Act, may generally be sold only in compliance with the
limitations of Rule 144. In addition to the shares owned by Sprint noted above,
Sprint owns an additional 1,232,756 shares purchased in the Sprint tender which
are not eligible for resale. The remaining 11,701,902 shares were issued and
sold by us in private transactions, and are immediately available for sale
pursuant to Rule 144 (subject, in certain cases, to the volume and other
limitations of Rule 144). However, in connection with this offering, the holders
of 6,273,063 shares of common stock (including all of our directors and officers
and all Selling Stockholders) have entered into lock-up agreements under which
they have agreed not to offer, sell or otherwise dispose of any such shares of
common stock, any such options or warrants to acquire shares of common stock or
any such securities convertible into shares of common stock (or any shares of
common stock issuable upon exercise or conversion of such securities) owned by
them for a period of 90 days after the date of this prospectus. Credit Suisse
First Boston may, in its sole discretion and at any time without notice, release
all or any portion of the securities subject to such lock-up agreements. Credit
Suisse First Boston currently has no plans to release any portion of the
securities subject to such lock-up agreements. We have agreed that we will not,
directly or indirectly, without the prior written consent of Credit Suisse First
Boston, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option right or warrant to purchase, or
otherwise transfer or dispose of any shares of common stock, or any securities
convertible into or exchangeable for common stock, for a period of 90 days from
the date of this prospectus, except that we may grant additional options under
our 1995 Stock Option Plan or Outside Directors Stock Option Plan or issue
shares of common stock under outstanding options, warrants and convertible
securities.

The holders of substantially all of the shares of common stock issued prior
to our initial public offering (including shares held by our founder and
Chairman, our President and Chief Executive Officer and certain holders of
warrants) and Sprint are parties to registration rights agreements that provide
incidental or "piggyback" registration rights that allow such holders, under
certain circumstances, to include shares of common stock in registration
statements we or other stockholders initiate. Such registration rights
agreements also permit demand registrations on Form S-3 registration statements,
provided we are eligible to register securities on such form. The number of
shares sold in the public market could increase if such rights are exercised.
See "Description of Capital Stock-- Registration Rights."

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned "restricted shares" (as
defined in Rule 144) for at least one year (including the holding period of any
prior owner, except an affiliate) is entitled to sell, within any three month
period, a number of shares that does not exceed the greater of (i) one percent
of the number of shares of common stock then outstanding or (ii) the average
weekly trading volume of the

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common stock on the Nasdaq National Market during the four calendar weeks
preceding the required filing of a Form 144 with respect to such sale. Sales
under Rule 144 are also subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about
EarthLink. Under Rule 144(k), a person who is not deemed to have been an
affiliate at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years
(including the holding period of any prior owner except an affiliate), is
entitled to sell such shares without complying with the manner of sale, public
information, volume and other limitation or notice provisions of Rule 144. In
general, under Rule 701 of the Securities Act as currently in effect, any
employee, consultant or advisor of EarthLink who purchases shares from EarthLink
in connection with a compensatory stock or option plan or other written
agreement is eligible to resell such shares 90 days after the effective date of
our initial public offering (which was completed in January 1997) in reliance on
Rule 144, but without compliance with certain restrictions, including the
holding period, contained in Rule 144.

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UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated January , 1999 (the "Underwriting Agreement"), the
underwriters named below (the "Underwriters"), for whom Credit Suisse First
Boston Corporation ("CSFBC"), Invemed Associates, Inc., ING Baring Furman Selz
LLC and Cruttenden Roth Incorporated are acting as representatives (the
"Representatives"), have severally, but not jointly, agreed to purchase from us
and the selling stockholders the following respective numbers of shares of
common stock:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- -------------------------------------------------------------------------------- ------------
<S> <C>
Credit Suisse First Boston Corporation..........................................
Invemed Associates, Inc.........................................................
ING Baring Furman Selz LLC......................................................
Cruttenden Roth Incorporated....................................................

------------
Total....................................................................... 2,435,879
------------
------------
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, and that the Underwriters will be
obligated to purchase all of the shares of common stock offered hereby (other
than those shares covered by the over-allotment option described below) if any
are purchased. The Underwriting Agreement provides, that, in the event of a
default by an Underwriter, in certain circumstances the purchase commitments of
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.

EarthLink has granted to the Underwriters an option exercisable by CSFBC,
expiring at the close of business on the 30th day after the date of this
prospectus, to purchase up to 365,381 additional shares of common stock at the
offering price, less underwriting discounts and commissions, all as set forth on
the cover page of this prospectus. Such option may be exercised only to cover
over-allotments in the sale of the shares of common stock. To the extent that
the option is exercised, each Underwriter will become obligated, subject to
certain conditions, to purchase approximately the same percentage of such
additional shares of common stock as it was obligated to purchase pursuant to
the Underwriting Agreement.

EarthLink and the selling stockholders have been advised by the
Representatives that the Underwriters propose to offer the shares of common
stock to the public initially at the public offering price set forth on the
cover page of this Prospectus and, through the Representatives, to certain
dealers at such price less a concession of $ per share, and the Underwriters
and such dealers may allow a discount of $ per share on sales to certain other
dealers. After the offering, the public offering price and concession and
discount to dealers may be changed by the Representatives.

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<PAGE>
The following table summarizes the compensation to be paid to the
Underwriters by EarthLink and the selling stockholders, and the expenses payable
by EarthLink and the selling stockholders.

<TABLE>
<CAPTION>
TOTAL
------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
----------- -------------- --------------
<S> <C> <C> <C>
Underwriting Discounts and Commissions paid by EarthLink............... $ $ $
Expenses payable by EarthLink.......................................... $ $ $
Underwriting Discounts and Commissions paid by Selling Stockholders.... $ $ $
</TABLE>

EarthLink and certain of its directors, officers and stockholders have
agreed that they will not offer, sell, contract to sell, announce their
intention to sell, pledge or otherwise dispose of, directly or indirectly, or,
in the case of the Company file with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933 (the "Securities Act")
relating to any additional shares of the common stock or securities convertible
into or exchangeable or exercisable for any shares of the common stock, without
the prior written consent of CSFBC for a period of 90 days after the date of
this Prospectus.

EarthLink and the selling stockholders have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act, or contribute to payments that the Underwriters may be required
to make in respect thereof.

As of December 16, 1998, Invemed Associates, Inc. ("Invemed"), one of the
Underwriters, and certain officers of Invemed, held 99,998 shares of common
stock. In addition, a minority shareholder and director of Invemed's corporate
parent owns an aggregate of 4,544 shares of common stock. Such common stock was
purchased in September 1996 for $5.50 per share. Invemed has agreed, for a
period of 90 days following the date of this prospectus, that it will not sell,
transfer, assign, pledge or hypothecate such shares other than to another
Underwriter or an officer of another Underwriter.

The Representatives, on behalf of the Underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions,
penalty bids and "passive" market making in accordance with Regulation M under
the Securities Exchange Act of 1934 (the "Exchange Act"). Over-allotment
involves syndicate sales in excess of the offering size, which creates a
syndicate short position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of the shares of
common stock in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the
Representatives to reclaim a selling concession from a syndicate member when the
shares of common stock originally sold by such syndicate member are purchased in
a syndicate covering transaction to cover syndicate short positions. In
"passive" market making, market makers in the Securities who are Underwriters or
prospective Underwriters may, subject to certain limitations, make bids for or
purchases of the Securities until the time, if any, at which a stabilizing bid
is made. Such stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of such transactions. These transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

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NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that EarthLink and the
selling stockholders prepare and file a prospectus with the securities
regulatory authorities in each province where trades of common stock are
effected. Accordingly, any resale of the common stock in Canada must be made in
accordance with applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made in accordance
with available statutory exemptions or pursuant to a discretionary exemption
granted by the applicable Canadian securities regulatory authority. Purchasers
are advised to seek legal advice prior to any resale of the common stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to EarthLink, the selling stockholders
and the dealer from whom such purchase confirmation is received that (i) such
purchaser is entitled under applicable provincial securities laws to purchase
such common stock without the benefit of a prospectus qualified under such
securities laws, (ii) where required by law, that such purchaser is purchasing
as principal and not as agent and (iii) such purchaser has reviewed the text
above under "Resale Restrictions".

RIGHTS OF ACTION (ONTARIO PURCHASERS)

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Section 32 of the Regulation under the SECURITIES ACT (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or recission or rights of action under
the civil liability provisions of the U.S. federal securities laws.

ENFORCEMENT OF LEGAL RIGHTS

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of common stock to whom the SECURITIES ACT (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from EarthLink. Only one such
report must be filed in respect of common stock acquired on the same date and
under the same prospectus exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
Legislation.

67
<PAGE>
LEGAL MATTERS

Hunton & Williams, Atlanta, Georgia, will pass upon the validity of the
issuance of the shares of common stock offered hereby for EarthLink. Certain
legal matters in connection with the offering will be passed upon for the
underwriters by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California.

EXPERTS

The consolidated financial statements of EarthLink Network, Inc. as of
December 31, 1996 and 1997 and for each of the three years in the period ended
December 31, 1997 and the statement of assets acquired and liabilities assumed
of the Sprint Internet Passport Business acquired by EarthLink Network, Inc. as
of June 5, 1998 included in this prospectus have been so included in reliance on
the reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

The statement of revenues and direct expenses of Consumer Internet Access
Services of Sprint for the year ended December 31, 1997, appearing in this
prospectus and in the Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

We are subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files
reports, proxy statements and other information with the SEC. Such reports,
proxy statements and other information may be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the SEC's regional offices located at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661 and Seven World Trade Center, 13th Floor, New York, NY 10048. Copies of
such material can be obtained from the Public Reference Section of the SEC upon
payment of certain fees prescribed by the SEC. The SEC's Web site contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. The address of that site is
http://www.sec.gov. Our common stock is quoted on the Nasdaq National Market and
our reports, proxy statements and other information may also be inspected at the
offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.

We have filed a Registration Statement on Form S-1 with the SEC under the
Securities Act in respect of the common stock offered hereby. This prospectus,
which is a part of the registration statement, omits certain information
contained in the registration statement as permitted by the SEC's rules and
regulations. For further information with respect to the Company and the common
stock offered hereby, please reference the registration statement, including its
exhibits. Statements herein concerning the contents of any contract or other
document filed with the SEC as an exhibit to the registration statement are not
necessarily complete and are qualified in all respects by such reference. Copies
of the registration statement, including all exhibits and schedules thereto, may
be inspected without charge at the public reference facilities maintained by the
SEC, or obtained at prescribed rates from the Public Reference Section of the
SEC at the address set forth above.

68
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
EARTHLINK NETWORK, INC. PAGE
---------
<S> <C>
Report of Independent Accountants.................................................... F-2

Consolidated Balance Sheet as of December 31, 1996 and 1997 and September 30, 1998
(unaudited)........................................................................ F-3

Consolidated Statement of Operations for the years ended December 31, 1995, 1996 and
1997 and the nine months ended September 30, 1997 and 1998 (unaudited)............. F-4

Consolidated Statement of Stockholders' Equity (Deficit) for the years ended December
31, 1994, 1995, 1996 and 1997 and the nine months ended September 30, 1998
(unaudited)........................................................................ F-5

Consolidated Statement of Cash Flows for the years ended December 31, 1995, 1996 and
1997 and the nine months ended September 30, 1997 and 1998 (unaudited)............. F-6

Notes to Consolidated Financial Statements........................................... F-7

CONSUMER INTERNET ACCESS SERVICES OF SPRINT CORPORATION

Report of Independent Auditors....................................................... F-21

Statements of Revenues and Direct Expenses........................................... F-22

Note to Statements of Revenues and Direct Expenses................................... F-23

EARTHLINK NETWORK, INC.

Report of Independent Accountants.................................................... F-24

Statement of Assets Acquired and Liabilities Assumed of the Sprint Internet Passport
Business as of June 5, 1998........................................................ F-25

Note to Statement of Assets Acquired and Liabilities Assumed......................... F-26

EARTHLINK NETWORK, INC.

Pro Forma Financial Information...................................................... F-27

Pro Forma Combined Statement of Operations for the year ended December 31, 1997
(unaudited)........................................................................ F-28

Note to Pro Forma Combined Statement of Operations................................... F-29

Pro Forma Combined Statement of Operations for the nine months ended September 30,
1998 (unaudited)................................................................... F-30

Note to Pro Forma Combined Statement of Operations................................... F-31
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders

of EarthLink Network, Inc.

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' equity (deficit) and of
cash flows present fairly, in all material respects, the financial position of
EarthLink Network, Inc. at December 31, 1996 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICEWATERHOUSECOOPERS LLP

Costa Mesa, California

June 5, 1998, except as to Note 14, which is as of July 21, 1998

F-2
<PAGE>
EARTHLINK NETWORK, INC.

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
--------- ---------
SEPTEMBER 30,
1998
-------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................... $ 3,993 $ 16,450 $ 134,397
Restricted short-term investment............................................ 1,087 1,250 1,250
Accounts receivable, net of allowance of $781,000, $165,000 and $387,000 at
December 31, 1996 and 1997 and September 30, 1998, respectively........... 1,725 2,520 4,596
Prepaid expenses............................................................ 885 1,109 3,755
Other assets (Note 5)....................................................... 1,383 753 644
--------- --------- -------------
Total current assets...................................................... 9,073 22,082 144,642
Other long-term assets (Note 5)............................................... 329 449 564
Property and equipment, net (Notes 1 and 4)................................... 17,401 23,398 30,405
Intangibles, net (Notes 3, 6 and 9)........................................... 316 958 97,731
--------- --------- -------------
$ 27,119 $ 46,887 $ 273,342
--------- --------- -------------
--------- --------- -------------

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

Current Liabilities:
Trade accounts payable...................................................... $ 11,207 $ 6,472 $ 11,918
Accrued payroll and related expenses........................................ 1,469 2,316 6,881
Other accounts payable and accrued liabilities.............................. 2,061 3,717 13,017
Current portion of capital lease obligations (Note 11)...................... 3,582 7,112 7,985
Notes payable (Note 7)...................................................... 7,950 9,387 80
Deferred revenue............................................................ 2,010 3,590 7,318
--------- --------- -------------
Total current liabilities................................................. 28,279 32,594 47,199

Long-term debt (Note 11)...................................................... 6,088 8,218 7,288
--------- --------- -------------
Total liabilities......................................................... 34,367 40,812 54,487
Commitments and contingencies (Note 11)
Mandatorily redeemable convertible preferred stock (Note 8)................... 14,013 -- --
Stockholders' equity (deficit):
Preferred stock, $0.01 par value, 25,000,000 shares authorized, 2,727,273,
nil and nil shares outstanding as redeemable preferred stock at December
31, 1996 and 1997 and September 30, 1998, respectively (Note 8)........... -- -- --
Preferred stock, $0.01 par value, 25,000,000 shares authorized, nil, nil and
4,102,941 shares outstanding as convertible preferred stock at December
31, 1996 and 1997 and September 30, 1998, respectively (Note 13).......... -- -- 41
Common stock, $0.01 par value, 50,000,000 shares authorized, 12,045,448,
22,500,744 and 28,521,321 shares issued and outstanding at December 31,
1996 and 1997 and September 30, 1998, respectively (Note 8)............... 120 225 285
Additional paid-in capital.................................................. 14,176 70,829 324,855
Warrants to purchase common stock (Note 9).................................. 599 1,093 1,324
Accumulated deficit......................................................... (36,156) (66,072) (107,650)
--------- --------- -------------
Total stockholders' equity (deficit)...................................... (21,261) 6,075 218,855
--------- --------- -------------
$ 27,119 $ 46,887 $ 273,342
--------- --------- -------------
--------- --------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-3
<PAGE>
EARTHLINK NETWORK, INC

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------- ----------------------
1995 1996 1997 1997 1998
--------- ---------- ---------- ---------- ----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues:
Recurring revenues................................... $ 2,422 $ 27,606 $ 74,657 $ 51,869 $ 109,957
Other revenues....................................... 606 5,624 6,231 4,558 4,897
Incremental revenues................................. -- -- -- -- 2,786
--------- ---------- ---------- ---------- ----------
Total revenues..................................... 3,028 33,230 80,888 56,427 117,640
Operating costs and expenses:

Cost of recurring revenues........................... 1,024 17,717 36,854 25,828 53,163
Cost of other revenues............................... 328 2,235 1,649 1,326 730
Sales and marketing.................................. 3,763 17,194 25,606 18,904 25,348
General and administrative........................... 2,062 10,534 14,333 10,462 15,344
Operations and member support........................ 1,869 15,808 30,900 22,183 36,248
Amortization and transaction costs (Note 13)......... -- -- -- -- 24,962
--------- ---------- ---------- ---------- ----------
Total operating costs and expenses................. 9,046 63,488 109,342 78,703 155,795
--------- ---------- ---------- ---------- ----------

Loss from operations................................... (6,018) (30,258) (28,454) (22,276) (38,155)
Interest income........................................ 34 150 637 416 2,568
Interest expense....................................... (136) (1,041) (2,099) (1,467) (1,661)
--------- ---------- ---------- ---------- ----------
Net loss........................................... (6,120) (31,149) (29,916) (23,327) (37,248)

Deductions for accretion dividends (Note 13)........... -- -- -- -- (4,330)
--------- ---------- ---------- ---------- ----------
Net loss attributable to common stockholders........... $ (6,120) $ (31,149) $ (29,916) $ (23,327) $ (41,578)
--------- ---------- ---------- ---------- ----------
--------- ---------- ---------- ---------- ----------
Basic and diluted net loss per share (Notes 1
and 14).............................................. $ (0.80) $ (2.57) $ (1.50) $ (1.22) $ (1.64)
--------- ---------- ---------- ---------- ----------
--------- ---------- ---------- ---------- ----------
Weighted average shares outstanding (Notes 1 and 14)... 7,674 12,138 20,002 19,186 25,292
--------- ---------- ---------- ---------- ----------
--------- ---------- ---------- ---------- ----------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-4
<PAGE>
EARTHLINK NETWORK, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------------ ------------------------ PAID-IN WARRANTS ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL ISSUED DEFICIT
----------- ----------- ----------- ----------- ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994............ 5,882 $ 59 $ 117 $ 69 $ (148)
Issuance of common stock................ 4,232 42 6,216 -- --
Reclassification of S Corporation
accumulated deficit................... -- -- (1,261) -- 1,261
Warrants issued for lease guarantee
(Note 9).............................. -- -- -- 50 --
Warrants issued for non-competition
agreement (Note 9).................... -- -- -- 5 --
Net loss................................ -- -- -- -- (6,120)
----- --- ----------- ----- ----------- ----------- ------------
Balance at December 31, 1995............ 10,114 101 5,072 124 (5,007)
Issuance of common stock................ 1,846 18 8,642 -- --
Issuance of common stock for services... 85 1 462 -- --
Warrants issued in connection with
equipment leases and other financings
(Note 9).............................. -- -- -- 475 --
Net loss................................ -- -- -- -- (31,149)
----- --- ----------- ----- ----------- ----------- ------------
Balance at December 31, 1996............ 12,045 120 14,176 599 (36,156)
Initial public offering, net of
expenses.............................. 4,570 46 26,180 -- --
Conversion of redeemable preferred stock
into common stock..................... 2,727 27 13,986 -- --
Conversion of debt to common stock...... 112 1 724 -- --
Issuance of common stock in connection
with private placement................ 2,920 30 15,379 -- --
Issuance of common stock pursuant to
exercise of stock options............. 127 1 384 -- --
Warrants issued in exchange for services
(Note 9).............................. -- -- -- 494 --
Net loss................................ -- -- -- -- (29,916)
----- --- ----------- ----- ----------- ----------- ------------
Balance at December 31, 1997............ 22,501 225 70,829 1,093 (66,072)
Unaudited:
Issuance of preferred stock........... 4,103 $ 41 -- -- 134,959 -- --
Follow on offering, net of expenses
(Note 13)........................... -- -- 3,763 38 105,844 -- --
Conversion of debt to common stock.... -- -- 783 8 5,030 -- --
Issuance of common stock for
services............................ 20 -- 130 -- --
Issuance of common stock pursuant to
exercise of stock options........... -- -- 1,454 14 3,613 -- --
Warrants issued in exchange for
services (Note 9)................... -- -- -- -- -- 351 --
Retirement of warrants................ -- -- -- -- 120 (120)
Net loss.............................. -- -- -- -- -- -- (37,248)
Accretion of convertible preferred
stock............................... -- -- -- -- 4,330 -- (4,330)
----- --- ----------- ----- ----------- ----------- ------------
Balance at September 30, 1998
(unaudited)........................... 4,103 $ 41 28,521 $ 285 $ 324,855 $ 1,324 $ (107,650)
----- --- ----------- ----- ----------- ----------- ------------
----- --- ----------- ----- ----------- ----------- ------------

<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
(DEFICIT)
-------------

<S> <C>
Balance at December 31, 1994............ $ 97
Issuance of common stock................ 6,258
Reclassification of S Corporation
accumulated deficit................... --
Warrants issued for lease guarantee
(Note 9).............................. 50
Warrants issued for non-competition
agreement (Note 9).................... 5
Net loss................................ (6,120)
-------------
Balance at December 31, 1995............ 290
Issuance of common stock................ 8,660
Issuance of common stock for services... 463
Warrants issued in connection with
equipment leases and other financings
(Note 9).............................. 475
Net loss................................ (31,149)
-------------
Balance at December 31, 1996............ (21,261)
Initial public offering, net of
expenses.............................. 26,226
Conversion of redeemable preferred stock
into common stock..................... 14,013
Conversion of debt to common stock...... 725
Issuance of common stock in connection
with private placement................ 15,409
Issuance of common stock pursuant to
exercise of stock options............. 385
Warrants issued in exchange for services
(Note 9).............................. 494
Net loss................................ (29,916)
-------------
Balance at December 31, 1997............ 6,075
Unaudited:
Issuance of preferred stock........... 135,000
Follow on offering, net of expenses
(Note 13)........................... 105,882
Conversion of debt to common stock.... 5,038
Issuance of common stock for
services............................ 130
Issuance of common stock pursuant to
exercise of stock options........... 3,627
Warrants issued in exchange for
services (Note 9)................... 351
Retirement of warrants................ --
Net loss.............................. (37,248)
Accretion of convertible preferred
stock............................... --
-------------
Balance at September 30, 1998
(unaudited)........................... $ 218,855
-------------
-------------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-5
<PAGE>
EARTHLINK NETWORK, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss..................................................... $ (6,120) $ (31,149) $ (29,916) $ (23,327) $ (37,248)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization.............................. 305 4,153 9,377 6,572 33,275
Provision for doubtful accounts receivable................. -- 781 (615) (620) 222
Issuance of common stock in exchange for professional
services................................................. -- 50 -- -- --
Issuance of common stock in exchange for termination of
consulting agreement..................................... -- 413 -- -- --
Issuance of warrants in exchange for professional
services................................................. -- -- 494 -- 60
Increase in accounts receivable............................ (191) (2,288) (180) (722) (2,298)
Increase (decrease) in prepaid expenses and other assets... (141) (2,353) 202 (96) (2,652)
Increase in accounts payable and accrued liabilities....... 2,292 12,373 (2,232) (3,098) 19,311
Increase in deferred revenue............................... 212 1,798 1,580 1,039 3,728
--------- --------- --------- --------- ---------
Net cash (used in) provided by operating activities............ (3,643) (16,222) (21,290) (20,252) 14,398
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment.......................... (2,766) (18,774) (14,528) (11,489) (15,911)
Purchases of intangible assets............................... -- -- (1,404) (1,404) (9)
Transaction costs............................................ -- -- -- -- (8,861)
Net cash acquired from acquisition........................... -- -- -- -- 23,750
Purchase of restricted short-term investment................. (1,500) (1,087) (200) (200) --
Liquidation of restricted short-term investment.............. -- 1,500 37 37 --
--------- --------- --------- --------- ---------
Net cash used in investing activities.................... (4,266) (18,361) (16,095) (13,056) (1,031)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of notes payable...................... 1,494 7,950 4,387 2,252 200
Repayment of notes payable................................... (67) (1,494) (2,225) (2,225) (4,507)
Proceeds from capital lease obligations...................... 556 11,348 10,544 7,837 6,212
Principal payments under capital lease obligations........... (42) (2,191) (4,884) (3,354) (6,269)
Proceeds from issuance of mandatorily redeemable preferred
stock...................................................... -- 14,013 -- -- --
Proceeds from private placements of common stock............. 6,258 8,660 15,409 15,492 --
Proceeds from public offerings............................... -- -- 26,226 26,226 105,329
Proceeds from stock options and warrants exercised........... -- -- 385 176 3,615
--------- --------- --------- --------- ---------
Net cash provided by financing activities................ 8,199 38,286 49,842 46,404 104,580
--------- --------- --------- --------- ---------
Net increase in cash and cash equivalents...................... 290 3,703 12,457 13,096 117,947
Cash and cash equivalents, beginning of period................. -- 290 3,993 3,993 16,450
--------- --------- --------- --------- ---------
Cash and cash equivalents, end of period....................... $ 290 $ 3,993 $ 16,450 $ 17,089 $ 134,397
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Acquisition, net of cash acquired (Note 4):
Issuance of convertible preferred stock...................... $ 135,000
Transaction costs............................................ 9,914
Intangible assets............................................ (121,164)
---------
Net cash acquired from acquisition........................... $ 23,750
---------
---------
</TABLE>

The accompanying notes are an integral part of these financial statements

F-6
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

EarthLink Network, Inc. ("EarthLink" or the "Company") was organized on May
26, 1994 as a California corporation and reincorporated in 1996 as a Delaware
corporation. In June 1998 and in connection with the Sprint Transaction (Note
13), EarthLink Network, Inc. became EarthLink Operations, Inc. and a
wholly-owned subsidiary of the Company. All references in these consolidated
financial statements to EarthLink or the Company relate, collectively, to both
EarthLink Network, Inc. and EarthLink Operations, Inc. The Company is an
Internet service provider that was formed to help members derive meaningful
benefits from the extensive resources of the Internet.

The Company has experienced operating losses since inception as a result of
efforts to build its network infrastructure and internal staffing, develop its
systems, and expand into new markets. The Company expects that it will continue
to incur net losses as it continues to expend substantial resources on sales and
marketing as it attempts to rapidly increase its market share. There can be no
assurance that the Company will achieve or sustain profitability or positive
cash flow from its operations.

REVENUES

Recurring revenues consists of monthly fees charged to members for Internet
access and other ongoing services from monthly Internet service and are
recognized over the period services are provided. Other revenues generally
represent one-time non-refundable set up fees. Such revenues are recorded as
earned.

CASH AND CASH EQUIVALENTS

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

ACCOUNTS RECEIVABLE AND DEFERRED REVENUES

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

CONCENTRATIONS OF CREDIT RISK

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

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost and depreciated using the
straight-line method over the estimated useful life of the assets, which is
generally three years for computers and computer related equipment and five
years for other non-computer furniture and equipment. Leasehold improvements are

F-7
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
amortized using the straight-line method over the shorter of their estimated
lives or the term of the lease, ranging from one to ten years.

EQUIPMENT UNDER CAPITAL LEASE

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

INTANGIBLES

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

ADVERTISING AND CUSTOMER ACQUISITION COSTS

Advertising and customer acquisition costs are included in sales and
marketing. Such costs are expensed as incurred. Advertising expenses were
$937,000, $3.2 million and $5.1 million, respectively, for the three years ended
December 31, 1997.

INCOME TAXES

Income taxes are accounted for under the liability method. Under this
method, deferred tax assets and liabilities are determined based on differences
between the financial reporting basis and tax basis of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

NET LOSS PER SHARE

The Company adopted Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings per Share" ("EPS") and Staff Accounting Bulletin (SAB) No. 98.
SAB No. 98 states that companies, such as EarthLink, that completed an initial
public offering ("IPO") within the past 5 years and incorporated the SAB No. 83
concept of "cheap stock" in determining pre-IPO EPS data must restate all EPS
data to conform to SFAS No. 128. Accordingly, all EPS data have been restated to
conform to SFAS No. 128. SFAS No. 128 requires a dual presentation of basic and
diluted EPS. Basic EPS represents the weighted average number of shares divided
into net income (loss) attributable to common stockholders during a reported
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock. However, the Company has not included potential common stock
in the calculation of EPS since inception as such inclusion would have an
anti-dilutive effect.

F-8
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

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

COMMON STOCK BASED COMPENSATION

The Company continues to account for its employee stock based compensation
in accordance with the provisions of APB 25 and provides pro forma disclosures
in the notes to the financial statements (Note 9), as if the measurement
provisions of SFAS No. 123 had been adopted.

RECLASSIFICATION

Certain amounts in the prior and current year financial statements have been
reclassified to conform to the presentation of the fiscal 1998 unaudited interim
information.

UNAUDITED INTERIM INFORMATION

The information presented as of September 30, 1998, and for the nine month
periods ended September 30, 1997 and 1998, has not been audited. In the opinion
of management, the unaudited interim financial statements included all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Company's financial position as of September 30, 1998, and
the results of its operations and its cash flows for the nine months ended
September 30, 1997 and 1998, and the stockholders' deficit for the nine months
ended September 30, 1998.

2. PURCHASE OF CERTAIN ASSETS FROM BECKEMEYER DEVELOPMENT TECHNOLOGIES

In order to recruit the principal shareholder of Beckemeyer Development
Technologies ("BDT") to serve as the Company's Vice President of Engineering, on
November 7, 1995, the Company agreed to purchase all fixtures, equipment, and
the client list of BDT for cash of $64,000. In addition to the above, the
principal shareholder was issued warrants to purchase 20,660 shares of the
Company's Common Stock at $2.42 per share as consideration for an agreement not
to compete for a two-year period. The value assigned to the warrants was $5,000
based upon an appraisal obtained by the Company. The warrants expire October 10,
2005. This purchase price was allocated to the assets acquired with the
remainder reflected as an intangible asset. At the time of purchase, BDT was not
material to the results of operations, financial position or customer base of
EarthLink.

3. PURCHASE OF CERTAIN ASSETS FROM INTERNET IN A MALL

In April 1997, the Company purchased the subscribers and related assets,
including accounts receivable related to the consumer dial-up Internet access
service of Internet in a Mall, a Tarzana, California based Internet access
provider. Under the terms of the agreement, as amended, the Company purchased
rights to approximately 28,000 subscriber accounts as of April 1997.

F-9
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. PROPERTY AND EQUIPMENT

Property and equipment consist of:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1997
--------- ----------
(IN THOUSANDS)
<S> <C> <C>
Data communications equipment.......................................... $ 11,464 $ 17,056
Office and other equipment............................................. 6,686 12,196
Leasehold improvements................................................. 646 5,013
Construction in progress............................................... 2,841 1,901
--------- ----------
21,637 36,166
Less accumulated depreciation and amortization......................... (4,236) (12,768)
--------- ----------
$ 17,401 $ 23,398
--------- ----------
--------- ----------
</TABLE>

Property under capital lease, primarily data communications equipment
included above, aggregated $11,904,000, and $22,448,000 at December 31, 1996 and
1997, respectively. Included in accumulated depreciation and amortization are
amounts related to property under capital lease of $2,896,000 and $8,528,000 at
December 31, 1996 and 1997, respectively. Depreciation expense charged to
operations was $305,000, $3,924,000 and $8,531,000 in 1995, 1996, and 1997,
respectively, and included $56,000, $2,840,000 and $5,632,000, respectively,
pertaining to property under capital lease.

5. OTHER ASSETS

Other assets consist of:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deposits................................................................... $ 409 $ 789
Deferred offering costs.................................................... 804 --
Inventory.................................................................. 499 413
--------- ---------
$ 1,712 $ 1,202
--------- ---------
--------- ---------
</TABLE>

F-10
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INTANGIBLE ASSETS

Intangible assets consist of:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1996 1997 1998
--------- --------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Member base................................................ $ -- $ -- $ 65,000
Marketing and distribution agreement....................... -- -- 20,000
Goodwill................................................... -- -- 36,164
Deferred financing costs................................... 347 430 310
Rights to client lists..................................... 10 1,414 1,414
Other...................................................... 188 188 290
--------- --------- -------------
545 2,032 123,178
Less accumulated amortization.............................. (229) (1,074) (25,447)
--------- --------- -------------
$ 316 $ 958 $ 97,731
--------- --------- -------------
--------- --------- -------------
</TABLE>

7. NOTES PAYABLE

In June 1996, the Company issued to 17 investors, 10% Promissory Notes
aggregating $2,950,000. Certain of the investors were directors and stockholders
of the Company. As described in Note 9, the Company issued warrants valued at
$116,000 to the note holders. The fair value of the warrants was recorded as
deferred financing costs and amortized as interest expense over the life of the
notes. Upon consummation of the Company's initial public offering on January 22,
1997, the holders of $725,000 of the 10% Promissory Notes converted their
indebtedness into 111,534 shares of Common Stock. In January 1997, the Company
repaid the $2,225,000 balance remaining on the 10% Promissory Notes.

The Company has a convertible note payable to UUNET Technologies, Inc.
("UUNET"). The $5 million Convertible Note was extended one year, and, as such,
the entire amount is due October 31, 1998, if not converted. The Convertible
Note will become due and payable immediately if the monthly amounts payable
under Company's Network Service Agreement with UUNET (the "UUNET Agreement") are
less than $1.5 million during any consecutive three months. The Convertible Note
bears interest at 10.25% and is convertible into a maximum of 783,030 shares of
Common Stock at a conversion price of $6.44 per share.

8. CAPITAL STOCK AND MANDATORILY REDEEMABLE EQUITY SECURITIES

COMMON STOCK

The Company issued 734,310 shares of Common Stock at $0.41 per share,
1,654,170 shares of Common Stock at $0.91 per share and 1,843,490 at $2.42 per
share on March 10, 1995, June 19, 1995 and October 31, 1995, respectively. As a
result of these placements, the Company raised, in the aggregate $6,258,000
during 1995. The Company issued 90,970 shares of Common Stock at $2.42 per share
and 50,000 shares of Common Stock at $2.42 per share on January 18, 1996 and
March 20, 1996, respectively. On May 6, 1996, the Company issued 1,704,920
shares of Common Stock at $4.88 per share in a private placement. As a result of
these placements, EarthLink raised, in the aggregate, $8,660,000 during 1996. On
September 19, 1997, the Company closed a private placement of 2,919,518 shares
of its unregistered restricted Common Stock. Net proceeds from the offering were
approximately $15.4 million.

F-11
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. CAPITAL STOCK AND MANDATORILY REDEEMABLE EQUITY SECURITIES (CONTINUED)
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

On September 10, 1996, the Company issued 2,727,273 shares of its Series A
Redeemable Convertible Preferred Stock to investors including among others,
certain directors, stockholders and the Underwriter associated with the
Company's initial public offering and certain of its associates for $15,000,000.
Stock issuance costs of $987,000 have been charged to redeemable convertible
preferred stock. Each two shares of the Series A Redeemable Convertible
Preferred Stock was automatically converted into one share of Common Stock upon
consummation of the initial public offering of the Company's Common Stock on
January 22, 1997.

INITIAL PUBLIC OFFERING

On January 22, 1997 the Company commenced its initial public offering. The
offering consisted of 4,000,000 shares of Common Stock issued at $6.50 per
share. Net proceeds to the Company were approximately $22.8 million. Upon
consummation of the offering 2,727,273 shares of the Company's Series A
Redeemable Convertible Preferred Stock were converted to 2,727,248 shares of
Common Stock. In February 1997, the Underwriter exercised its over-allotment
option and purchased 569,500 shares at the initial public offering price of
$6.50. Net proceeds to the Company were approximately $3.4 million.

COMMON STOCK ISSUANCES FOR OTHER THAN CASH

In May 1996, the Company issued 10,244 shares of Common Stock at $4.88 per
share, to a sub-contractor in lieu of cash for services provided to the Company.
In September 1996, the Company issued 75,000 shares of Common Stock at $5.50 per
share as consideration for the termination of a consulting agreement.

9. STOCK OPTIONS AND WARRANTS

STOCK OPTIONS

1995 STOCK OPTION PLAN

In September 1995, the Company established the EarthLink Network 1995 Stock
Option Plan (the "1995 Plan"). The 1995 Plan provides for the grant of incentive
stock options to purchase up to 2,500,000 shares of common stock to employees of
the Company and non-qualified stock options to employees, officers, directors
and consultants of the Company. The 1995 Plan is administered by a committee
appointed by the Board which determines the terms of the options granted,
including the exercise price, the number of shares subject to option, and the
option vesting period. The exercise price of all options granted under the plan
must be at least 100% of the fair market value on the date of grant. Options
generally vest in equal quarterly increments over a five year period. As of
December 31, 1997, 174,864 shares remain available for issuance under the 1995
Plan.

DIRECTORS STOCK OPTION PLAN

In September 1995, the Company established the EarthLink Directors Stock
Option Plan (the "Directors Plan"). The Directors Plan, as amended and restated
in December 1996, provides for the grant of options to purchase an aggregate of
125,000 shares of Common Stock to directors who do not also serve as employees
of the Company and do not beneficially own, nor are employees, directors or
officers of any

F-12
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTIONS AND WARRANTS (CONTINUED)
entity which owns 5% or more of the outstanding shares of the Company's capital
stock. Under the Directors Plan, grants of options to purchase 20,000 and 5,000
shares of Common Stock are automatically made to each non-management director at
such time as the person first becomes a member of the Board of Directors and at
the beginning of each fiscal year, respectively. Options generally vest in equal
quarterly increments over a five year period. As of December 31, 1997, there
were no outstanding options to purchase shares of Common Stock under the
Directors Plan.

NON-QUALIFIED OPTION GRANTS

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

VALUE OF OPTIONS GRANTED

For disclosure purposes the fair value of all stock options granted is
estimated using the Black-Scholes option-pricing model with the following
weighted average assumptions used for stock options granted in 1997: no annual
dividends, expected volatility of 69%, risk-free interest rate of 6.49%, and
expected life of 6.6 years. For 1995 and 1996, the fair value of each option
grant is estimated on the date of grant using the minimum value method with the
following assumptions used for grants during both periods: dividend yield of
0.0%, risk free interest rate of 5.83% and expected option term of 10 years.

Had compensation cost been determined on the basis of fair value pursuant to
SFAS No. 123, net loss and net loss per share would have been increased as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Net loss:
As reported................................................. $ 6,120 $ 31,149 $ 29,916
--------- --------- ---------
--------- --------- ---------
Pro forma................................................... $ 6,145 $ 31,477 $ 30,737
--------- --------- ---------
--------- --------- ---------

Basic and diluted net loss per share:
As reported................................................. $ 0.80 $ 2.57 $ 1.50
--------- --------- ---------
--------- --------- ---------
Pro forma................................................... $ 0.81 $ 2.60 $ 1.54
--------- --------- ---------
--------- --------- ---------
</TABLE>

WARRANTS

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

In September 1995, certain stockholders guaranteed a $500,000 lease for
networking equipment. The Company issued warrants to purchase 100,000 shares of
Common Stock at $0.91 per share, valued at $25,000, based upon an appraisal
obtained by the Company, as consideration for this guarantee. These warrants
expire August 31, 2000.

F-13
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. STOCK OPTIONS AND WARRANTS (CONTINUED)

In December 1995, certain stockholders provided the Company with a $250,000
Irrevocable Standby Letter of Credit as a performance guarantee for a real
estate lease. In conjunction with this transaction the Company issued warrants
to purchase 100,000 shares at $2.42 per share, valued at $25,000, based upon an
appraisal obtained by the Company. These warrants expire December 1, 2000.

In January 1996, certain stockholders guaranteed a $1,500,000 lease for
networking equipment. The Company issued warrants to purchase 200,000 shares of
Common Stock at $2.42 per share. The fair value of the warrants has been
reflected in intangible assets. These warrants expire January 11, 2001.

In January 1996, the Company issued warrants to purchase 200,000 shares of
Common Stock at $2.42 to Board members. The warrants vest quarterly over five
years. As these warrants were issued for service on the Board of Directors they
are accounted for under APB 25 and as such are included in the summary of
non-qualified options and are not included in the summary of warrant grants.

In January 1996, LINC Capital Partners, Inc. ("LINC") provided a $1,500,000
lease line for equipment. The Company issued warrants to LINC to purchase
100,000 shares of Common Stock at $2.42 per share. The fair value of the
warrants has been reflected as deferred financing costs. These warrants expire
January 18, 2006.

In February 1996, Boston Financial & Equity Corporation ("Boston Financial")
provided a $700,000 lease line for equipment. The Company issued warrants to
Boston Financial to purchase 10,000 shares of Common Stock at $4.88 per share.
The fair value of the warrants has been reflected as deferred financing costs.
These warrants expire February 15, 2006.

In May 1996, the Company issued warrants to purchase 90,954 shares of Common
Stock at $4.88 per share to various lessors in return for lease lines and other
services to the Company. The fair value of the warrants has been reflected as
deferred financing costs. The warrants expire on May 10, 2006.

In May 1996, in connection with the amendment and restatement of the UUNET
Agreement, the Company agreed to issue warrants to purchase 20,000 shares of
Common Stock at an exercise price of $10.00 per share. The fair value of the
warrants has been reflected as deferred financing costs.

In connection with the issuance of 10% Promissory Notes aggregating
$2,950,000, the Company issued to the lenders warrants to purchase an aggregate
of 196,680 shares of Common Stock at an exercise price of $5.50 per share, as
adjusted. The fair value of the warrants has been reflected as deferred
financing costs.

In connection with the execution of the PSINet, Inc. ("PSINet") agreement in
July 1996 (Note 11), the Company issued warrants to purchase 200,000 shares of
Common Stock at an exercise price of $10.00 per share. The fair value of the
warrants has been reflected as deferred financing costs.

In connection with the private placement of Series A Redeemable Convertible
Preferred Stock, described above, the Company granted to certain purchasers of
the Series A Redeemable Convertible Preferred Stock warrants to purchase 200,000
shares of Common Stock at $5.50 per share.

WARRANTS ISSUED FOR SERVICES

In May 1996, the Company entered into an agreement with NMC, a producer of
infomercials and commercials, pursuant to which NMC agreed to produce and
broadcast commercials for EarthLink's services in exchange for warrants. Upon
completion of the infomercial in April 1997, the Company issued warrants to NMC
to purchase 100,000 shares of Common Stock, having an exercise price of $4.88
per share. In September 1997, the parties orally agreed to rescind the
agreement. The rescission agreement

F-14
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTIONS AND WARRANTS (CONTINUED)
included the return of the 100,000 warrants and the cancellation of any future
obligations of either party. However, the rescission agreement was never
executed and thus may be considered non-operative. The fair value of the
warrants, $76,000, has been recorded as prepaid advertising and will be expensed
upon airing of the infomercials.

In January 1997 and October 1997, the Company issued warrants to purchase
12,000 and 50,000 shares, respectively, of the Company's Common Stock to certain
consultants. The respective exercise prices of the warrants were $6.50 and
$8.875. The fair value of the warrants is reflected as prepaid consulting fees
and amortized ratably over the life of the consulting agreement. Consulting
expense recorded with respect to warrants issued to consultants was $23,340
during 1997.

In September 1996, the Company issued warrants to purchase 15,000 shares of
the Company's Common Stock at $5.50 per share to each of the three members of
the Company's Technology Advisory Council. The warrants vest quarterly over two
years. The fair value of the warrants is reflected as deferred professional
services expense and amortized ratably over the member's two year term of
service in the Technology Advisory Council.

In March 1997 and October 1997, the Company issued warrants to purchase
15,000 shares of the Company's Common Stock to each of two new members of the
Company's Technology Advisory Council. The warrants have an exercise price of
$5.25 per share and $8.875 per share, respectively, and vest quarterly over two
years. The fair value of the warrants is reflected as deferred professional
services expense and amortized ratably over the member's two year term of
service in the Technology Advisory Council.

Following is a summary of stock option and warrant activity during the three
years ended December 31, 1997:

<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
------------------------------------- WEIGHTED
INCENTIVE AVERAGE
STOCK NON-QUALIFIED EXERCISE
OPTIONS STOCK OPTIONS WARRANTS PRICE PER SHARE PRICE
---------- ------------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994................. -- -- 300,000 $ 0.91 $ 0.91
Granted...................................... 465,000 850,000 220,660 $ 0.30 - 2.42 $ 1.52
Forfeited.................................... -- (120,418) -- $ 0.30 $ 0.30
---------- ------------- ---------- ---------------
Balance at December 31, 1995................. 465,000 729,582 520,660 $ 0.91 - 2.42 $ 1.50
Granted 1,612,500 350,000 1,062,634 $ 0.91 - 10.00 $ 4.57
Forfeited (21,000) -- -- $ 4.88 $ 4.88
---------- ------------- ---------- ---------------
Balance at December 31, 1996................. 2,056,500 1,079,582 1,583,294 $ 0.91 - 5.50 $ 3.45
Granted...................................... 691,250 100,000 192,000 $ 0.91 - 10.00 $ 6.71
Forfeited.................................... (422,614) -- -- $ 2.42 - 6.50 $ 4.51
Exercised.................................... (97,914) (29,582) -- $ 0.30 - 6.50 $ 2.82
---------- ------------- ---------- ---------------
Balance at December 31, 1997................. 2,227,222 1,150,000 1,775,294 $ 0.91 - 10.00 $ 4.01
---------- ------------- ---------- ---------------
---------- ------------- ---------- ---------------

Exercisable at December 31, 1997............. 598,710 417,500 1,673,840 $ 0.91 - 10.00 $ 3.66
---------- ------------- ---------- ---------------
---------- ------------- ---------- ---------------
</TABLE>

The weighted average fair values of the options granted during the three
years ended December 31, 1997, were $0.35, $1.01 and $4.98, respectively. The
weighted average fair values of warrants granted during the three years ended
December 31, 1997, were $0.05, $0.86 and $3.49, respectively.

F-15
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. STOCK OPTIONS AND WARRANTS (CONTINUED)

Following is a summary of stock options and warrants outstanding as of
December 31, 1997:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- ---------------------------------------------------- ----------- --------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
$0.91 - $0.91....................................... 1,000,000 3.66 $ 0.91 700,000 $ 0.91
$2.42 - $2.42....................................... 1,575,260 3.99 $ 2.42 818,760 $ 2.42
$4.88 - $5.50....................................... 1,758,756 4.09 $ 5.20 909,016 $ 5.24
$5.75 - $9.94....................................... 598,500 4.75 $ 7.61 42,274 $ 6.38
$10.00 - $10.00..................................... 220,000 4.27 $ 10.00 220,000 $ 10.00
----------- ----------
$0.91 - $10.00...................................... 5,152,516 4.06 $ 4.00 2,690,050 $ 3.66
----------- ----------
----------- ----------
</TABLE>

10. INCOME TAXES

The stockholders, upon incorporating the Company, elected to treat the
Company as an S Corporation under the Internal Revenue Code. On June 19, 1995,
this election was revoked as certain ineligible entities (i.e partnerships and
corporations) became stockholders. Losses of $1,261,000 incurred from inception
through June 19, 1995 have been reclassified from accumulated deficit to Common
Stock as a result of the change to C Corporation status. The Company is now
subject to income taxes on income earned after June 19, 1995. At December 31,
1996 and 1997, the Company had net operating loss carryforwards for federal
income tax purposes totaling approximately $33,751,000, and $61,004,000,
respectively, which begin to expire in 2011. The Internal Revenue Code of 1986,
as amended, includes provisions which may limit the net operating loss
carryforwards available for use in any given year if certain events occur,
including significant changes in ownership. Due to the Company's initial public
offering and other issuances of Common Stock and Common Stock equivalents,
utilization of the Company's net operating loss carryforwards to offset future
income may be limited.

Deferred tax assets include the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Net operating loss carryforwards...................................... $ 13,578 $ 24,584
Deferred financing costs.............................................. 88 118
Depreciation.......................................................... 50 323
Accrued liabilities................................................... 103 201
---------- ----------
Gross deferred tax assets............................................. 13,819 25,226
Deferred tax asset valuation allowance................................ (13,819) (25,226)
---------- ----------
$ -- $ --
---------- ----------
---------- ----------
</TABLE>

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

F-16
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. INCOME TAXES (CONTINUED)
PROFIT SHARING PLAN

Effective January 1997, the Company implemented a profit sharing plan
pursuant to Section 401(k) of the Internal Revenue Code, whereby participants
may contribute a percentage of compensation, but not in excess of the maximum
allowed under the Code. The Company makes a discretionary matching contribution
of 25% up to a maximum of 6% of the participant's total eligible compensation.
The Company's matching contributions vest over four years from the participant's
date of hire. Total contributions for 1997 were $84,000.

11. COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases its facilities and certain equipment under non-cancelable
operating leases expiring in various years through 2008. Total rent expense in
1995, 1996 and 1997, respectively, for all operating leases amounted to
$145,000, $914,000 and $1.9 million, respectively. The Company also leases
equipment, primarily data communications equipment, under non-cancelable capital
leases. Most of the Company's capital leases include purchase options at the end
of the lease term.

In February 1997, EarthLink commenced occupation of a 55,000 square feet in
a facility located adjacent to its corporate headquarters to house the Company's
data center. In June 1997, the Company amended the lease for its corporate
headquarters facility. Under the amended lease, the Company will occupy an
additional 45,000 square feet of the existing facility and deliver an
irrevocable letter of credit in the amount of $450,000 to the Lessor.

During the three years ended December 31, 1997, the Company financed the
acquisition of data processing and office equipment amounting to approximately
$556,000, $11.3 million and $10.5 million, respectively, by entering into a
number of agreements for the sale and leaseback of equipment. The sale leaseback
transactions are recorded at cost, which approximates the fair market value of
the property and, therefore, no gains or losses have been recorded. The property
remains on the books and continues to be depreciated. A financing obligation
representing the proceeds is recorded and reduced based upon payments under the
lease agreement.

F-17
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Minimum lease commitments under non-cancelable leases at December 31, 1997
are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING DECEMBER 31, LEASES LEASES
- ------------------------------------------------------------------------ --------- -----------
(IN THOUSANDS)
<S> <C> <C>
1998.................................................................... $ 8,576 $ 1,898
1999.................................................................... 6,516 2,126
2000.................................................................... 3,258 1,994
2001.................................................................... 657 1,767
2002.................................................................... 91 1,897
Thereafter.............................................................. 8 8,807
--------- -----------
Total minimum lease payments............................................ 19,106 $ 18,489
-----------
-----------
Less amount representing interest....................................... (3,776)
---------
Present value of future lease payments.................................. 15,330
Less current portion.................................................... 7,112
---------
$ 8,218
---------
---------
</TABLE>

GUARANTEED USAGE LEVELS

At December 31, 1997, the Company has committed to guaranteed usage levels
of data and voice communication with certain telecommunication vendors in the
aggregate amount of $3 million in 1998.

SIGNIFICANT AGREEMENTS

Access to the Internet for members outside of the Company's California
regional base is provided through points of presence ("POP") capacity leased
from UUNET and PSINet. EarthLink is, in effect, buying this capacity in bulk at
a discount, and providing access to EarthLink's member base at EarthLink's
normal rates. Payment to UUNET and PSINet is generally concurrent with
EarthLink's receipt of funds from members. At December 31, 1997, $2.0 million
and $2.1 million in amounts due to UUNET were recorded in accounts payable and
other accrued liabilities, respectively, and $540,000 and $4.4 million in
amounts due PSINet were recorded in other accrued liabilities and notes payable,
respectively.

Effective June 30, 1997 the Company's agreement with UUNET was amended.
UUNET agreed to waive monthly revenue minimums, excess hours fees, and peak
service user targets during the six months ended December 31, 1997. In return,
EarthLink agreed not to invoke its early termination right prior to September
1998. If the number of hours used by EarthLink members accessing the Internet
through UUNET increases beyond the amount provided for in the agreement or the
usage becomes more concentrated during peak times, the fees paid by the Company
to UUNET would increase, which would adversely affect the Company's operating
margins.

EarthLink has licensed Netscape Communicator software ("Netscape
Communicator") from Netscape Communications Corporation, and Microsoft Internet
Explorer software ("Internet Explorer") from Microsoft Corporation. These
licenses permit the Company to distribute Netscape Communicator and Internet
Explorer in the EarthLink Network TotalAccess software package. Management
believes that contract renewal for both of the browsers, under conditions
acceptable to EarthLink, is probable.

F-18
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Minimum commitments under non-cancelable network service agreements from
UUNET and PSINet are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, IN MILLIONS
- ---------------------------------------------------------------------------------- -----------
<S> <C>
1998.............................................................................. $ 22.8
1999.............................................................................. 6.0
-----
Total......................................................................... $ 28.8
-----
-----
</TABLE>

12. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1996 1997
----- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash paid for:
Interest............................................................ $ 60 $ 1,041 $ 1,965
--- --------- ---------
--- --------- ---------
Income taxes........................................................ $ 1 $ 1 $ 1
--- --------- ---------
--- --------- ---------
</TABLE>

13. SUBSEQUENT EVENTS

STRATEGIC ALLIANCE WITH SPRINT CORPORATION

On February 10, 1998, EarthLink entered into certain agreements to establish
a broad strategic relationship (the "Strategic Alliance") with Sprint
Corporation ("Sprint") in the area of consumer Internet access and related
services. In connection with the Strategic Alliance, on June 5, 1998, Sprint
consummated a tender offer for 2.5 million shares of the Company's Common Stock
at a price per share of $22.50 in cash to each tendering stockholder (the
"Offer"). Immediately following the closing of the Offer, Sprint received
approximately 4.1 million shares of the Company's Series A Convertible Preferred
Stock, par value $0.01 per share, in exchange for (i) transfer to the Company of
Sprint's approximately 130,000 Sprint Internet Passport subscribers, (ii)
aggregate cash consideration of approximately $24 million and (iii) the
exclusive right to use certain ports within Sprint's high-speed data network for
four years. EarthLink and Sprint also entered into a Marketing and Distribution
Agreement which includes a commitment by Sprint to deliver a minimum of 150,000
new subscribers per year for five years through its own channels, EarthLink's
right to be Sprint's exclusive provider of consumer Internet access services for
at least ten years and the right to use Sprint's brand and distribution network
for at least ten years. Sprint has also provided EarthLink with a credit
facility of up to $25 million (increasing to $100 million over three years) in
the form of convertible senior debt (collectively, the "Sprint Transaction").

In connection with the Sprint Transaction, a newly-formed subsidiary of the
Company was merged with and into the former EarthLink Network, Inc. (the
"Merger"), pursuant to which (i) the former EarthLink became a wholly-owned
subsidiary of the Company and (ii) each outstanding share of former EarthLink
common stock was converted into one share of common stock of the Company.
EarthLink Operations, Inc. ("EarthLink Operations"), the corporation surviving
the Merger, is now a wholly-owned subsidiary of the Company. All references in
these financial statements to EarthLink or the Company related, collectively, to
both EarthLink Network, Inc. and EarthLink Operations, Inc.

The value of intangible assets acquired in the Sprint Transaction,
aggregating $121.2 million, as of September 30, 1998, is being amortized on a
straight-line basis over their estimated useful lives. During the

F-19
<PAGE>
EARTHLINK NETWORK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUBSEQUENT EVENTS (CONTINUED)
nine months ended September 30, 1998 the Company incurred amortization expense
of $23.6 million on these assets.

Dividends on the Convertible Preferred Stock are reflected as an increase to
net loss attributable to common stockholders. The adjustment of $3.3 million
recorded during the quarter ended September 30, 1998 represents a liquidation
dividend of $1.8 million based on a 3% dividend and the accretion of a $1.5
million dividend related to the beneficial conversion feature of the Convertible
Preferred Stock in accordance with EITF Topic No. D-60 based upon the rate at
which the preferred stock becomes convertible.

CONVERSION OF NOTE PAYABLE

On March 31, 1998, UUNET converted the $5 million Convertible Note and
related accrued interest into 783,030 shares of the Company's Common Stock at a
conversion price of $6.44 per share.

FOLLOW ON PUBLIC OFFERING (UNAUDITED)

In June 1998 the Company completed a follow on public offering of 4.8
million shares of its Common Stock at $30 per share. The offering consisted of
3.0 million shares and an underwriter's overallotment of 720,000 shares offered
by the Company and 1.8 million shares offered by certain stockholders. The
Company did not receive any proceeds from the sale of shares by selling
stockholders. Net proceeds to the Company were approximately $105 million.

AMENDMENT TO LEASE (UNAUDITED)

Effective July 1998, the Company amended the lease for its Data Center
facility. Under the amended lease the Company increased the space it occupies
from 55,000 to 110,000 square feet of the existing facility and received an
improvement allowance of $1.2 million from the lessor. Rent commitments for the
110,000 square feet of space are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (IN THOUSANDS)
- ----------------------------------------------------------------------------- ---------------
<S> <C>
1998 (October 1, 1998 -- December 31, 1998).................................. $ 276
1999......................................................................... 1,270
2000......................................................................... 1,765
2001......................................................................... 1,765
2002......................................................................... 1,881
2003......................................................................... 1,897
Thereafter................................................................... 6,263
-------
$ 15,117
-------
-------
</TABLE>

Under the amended lease the Company will deliver an irrevocable letter of
credit of $1 million to the lessor and cancel its current letter of credit of
$800,000.

14. SUBSEQUENT EVENT

TWO FOR ONE STOCK SPLIT

In July 1998 the Company effected a two-for-one stock split. The
accompanying consolidated financial statements and related notes have been
retroactively adjusted to give effect to the stock split.

F-20
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Sprint Corporation

We have audited the accompanying statement of revenues and direct expenses
of the Consumer Internet Access Services of Sprint Corporation (the "Company")
for the year ended December 31, 1997. This statement is the responsibility of
the Company's management. Our responsibility is to express an opinion on the
statement based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the revenues and direct expenses are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit also
includes assessing the basis of accounting used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

The accompanying statement of revenues and direct expenses was prepared for
inclusion in the Registration Statement on Form S-1 of EarthLink Network, Inc.
for purposes of complying with the rules and regulations of the Securities and
Exchange Commission in lieu of the full financial statements required by Rule
3-05 for the transaction between EarthLink Network, Inc. and Sprint Corporation.
The statement is not intended to be a complete presentation of the Consumer
Internet Access Services of Sprint Corporation revenues and expenses.

In our opinion, the statement of revenues and direct expenses referred to
above presents fairly, in all material respects, the revenues and direct
expenses described in the note to the statement of revenues and direct expenses
for the Consumer Internet Access Services of Sprint Corporation for the year
ended December 31, 1997, in conformity with generally accepted accounting
principles.

Ernst & Young LLP

Kansas City, Missouri
March 6, 1998

F-21
<PAGE>
CONSUMER INTERNET ACCESS SERVICES OF SPRINT CORPORATION
STATEMENTS OF REVENUES AND DIRECT EXPENSES

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1998
YEAR ENDED -------------------
DECEMBER 31, 1997
----------------- (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Net operating revenues................................................... $ 14,489 $ 6,259

Direct expenses:
Cost of services....................................................... 51,313 9,813
Selling, general and administrative.................................... 13,099 2,155
Depreciation........................................................... 6,070 2,146
Other.................................................................. 3,404 198
-------- -------

Total direct expenses.................................................... 73,886 14,312
-------- -------

Direct expenses in excess of revenues.................................... $ (59,397) $ (8,053)
-------- -------
-------- -------
</TABLE>

SEE ACCOMPANYING NOTE.

F-22
<PAGE>
CONSUMER INTERNET ACCESS SERVICES OF SPRINT CORPORATION

NOTE TO STATEMENTS OF REVENUES AND DIRECT EXPENSES
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED WITH RESPECT TO THE THREE MONTHS ENDED MARCH 31, 1998)

SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

BASIS OF PRESENTATION

The statements of revenues and direct expenses represent the activities
related to the Consumer Internet Access Services of Sprint Corporation and have
been prepared in connection with the transaction between EarthLink Network, Inc.
and Sprint Corporation. The statements of revenues and direct expenses are not
intended to be a complete presentation of the revenues and expenses of the
Consumer Internet Access Services of Sprint Corporation because corporate
allocated expenses have not been included. Direct expenses are defined as those
costs which were incurred as a direct result of providing Consumer Internet
Access Services and which will no longer be incurred by Sprint Corporation
subsequent to consummation of the transaction with EarthLink Network, Inc.

Sprint Corporation began offering Internet access in the fourth quarter of
1996 and any revenues generated and direct operating expenses incurred from
inception through December 31, 1996, were nominal. Sprint Corporation reports
this operation within its "Emerging Businesses Segment" (the "Group") and
maintains the financial information relative to the Internet subscribers in the
Group. Revenues and direct operating expense information are separately
maintained for the Consumer Internet Access Services within the Group. Sprint
Corporation does not, however, separately maintain and account for other costs
and expenses to operate this business and is unable to determine or reasonably
estimate these costs on a historical basis. In addition, Sprint Corporation does
not separately maintain and account for all assets used in the consumer Internet
access services business. Such assets, primarily network related, are recorded
in the other businesses of Sprint Corporation and used by the other divisions of
Sprint Corporation, including the Group. Accordingly, financial statements for
1996 and full financial statements required by Rule 3-05 of Regulation S-X have
not been presented.

The statements of revenues and direct expenses are not indicative of the
financial condition or results of operations of this business going forward
because of the change in the business and the omission of various operating
expenses.

UNAUDITED FINANCIAL INFORMATION

The statement of revenues and direct expenses for the three months ended
March 31, 1998 is unaudited. Sprint Corporation believes that such information
includes all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the revenues and direct expenses related to the
Consumer Internet Access Services of Sprint Corporation.

REVENUE RECOGNITION

Operating revenues are recognized as services are rendered to customers and
are recorded net of an estimate for uncollectible accounts. The provision for
doubtful accounts for the year ended December 31, 1997 and the three months
ended March 31, 1998 was $723,000 and $471,000 (unaudited), respectively.

DEPRECIATION

The cost of property, plant and equipment is depreciated on a straight-line
basis over estimated economic useful lives.

USE OF ESTIMATES

The statements of revenues and direct expenses are prepared in accordance
with generally accepted accounting principles which requires management to make
estimates and assumptions that affect the amounts reported in the financial
statement. Actual results could differ from those estimates.

F-23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

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

We have audited the accompanying statement of assets acquired and
liabilities assumed of the Sprint Internet Passport Business acquired by
EarthLink Network, Inc. as of June 5, 1998. This statement of assets acquired
and liabilities assumed is the responsibility of the Company's management; our
responsibility is to express an opinion on the statement of assets acquired and
liabilities assumed based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets acquired and
liabilities assumed is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of assets acquired and liabilities assumed. An audit also
includes, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
statement of assets acquired and liabilities assumed. We believe that our audit
provides a reasonable basis for our opinion.

The accompanying statement of assets acquired and liabilities assumed was
prepared for inclusion in the Registration Statement on Form S-1 of EarthLink
Network, Inc. for purposes of complying with the rules and regulations of the
Securities and Exchange Commission in lieu of the full financial statements
required by Rule 3-05 of Regulation S-X for the transaction between EarthLink
Network, Inc. and Sprint Corporation.

In our opinion, the accompanying statement of assets acquired and
liabilities assumed presents fairly, in all material respects, the assets
acquired and liabilities assumed as described in the note to the statement of
assets acquired and liabilities assumed of the Sprint Internet Passport Business
by EarthLink Network, Inc. as of June 5, 1998, in conformity with generally
accepted accounting principles.

PRICE WATERHOUSE LLP

Costa Mesa, California
June 16, 1998

F-24
<PAGE>
EARTHLINK NETWORK, INC.

STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
OF THE SPRINT INTERNET PASSPORT BUSINESS

<TABLE>
<CAPTION>
JUNE 5, 1998
--------------
(IN THOUSANDS)
<S> <C>
Current assets:
Cash............................................................................................ $ 23,750
--------------
Total current assets.......................................................................... 23,750

Intangible assets................................................................................. 119,718
--------------
143,468
--------------
Current liabilities:
Other accounts payable and accrued liabilities.................................................. (8,468)
--------------
Total current liabilities..................................................................... (8,468)
--------------
Net assets acquired............................................................................... $ 135,000
--------------
--------------
</TABLE>

See accompany note to this financial statement.

F-25
<PAGE>
EARTHLINK NETWORK, INC.

NOTE TO STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
OF THE SPRINT INTERNET PASSPORT BUSINESS

JUNE 5, 1998

SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

BASIS OF PRESENTATION

The statement of assets acquired and liabilities assumed represents the
acquisition by EarthLink Network, Inc. (the "Company") of the Sprint Internet
Passport business ("SIP") of Sprint Corporation ("Sprint") in a transaction
accounted for as a purchase. The purchase price paid by the Company consisted of
approximately 4.1 million shares of Series A Convertible Preferred Stock, which
has been valued at $135,000,000. In exchange for the Series A Convertible
Preferred Stock, the Company obtained SIP's customer base, cash and access to
Sprint's high-speed data network. Sprint has further provided the Company access
to up to $100 million in convertible debt financing, and has entered into a
Marketing and Distribution Agreement with the Company.

Sprint Corporation began offering Internet access in the fourth quarter of
1996. Sprint reports this operation within its "Emerging Businesses Segment"
(the "Group") and maintains the financial information relative to the Internet
subscribers in the Group. Revenues and direct operating expense information are
separately maintained for the Sprint Internet Passport business within the
Group. Sprint Corporation does not, however, separately maintain and account for
other costs and expenses to operate this business and is unable to determine or
reasonably estimate these costs on a historical basis. In addition, Sprint
Corporation does not separately maintain and account for all assets used in the
Sprint Internet Passport business. Such assets, primarily network related, are
recorded in the other businesses of Sprint Corporation and used by the other
divisions of Sprint Corporation, including the Group. Accordingly, the Company
has included this statement of assets acquired and liabilities assumed in order
to comply with Rule 3-05 of Regulation S-X.

USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

The preparation of the statement of assets acquired and liabilities assumed
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the statement. Actual results could differ from those estimates.

PURCHASE PRICE ALLOCATION

The purchase price was allocated to the fair value of assets acquired,
consisting of cash and intangible assets related to a customer base, Sprint's
provision of additional customers and the co-branding feature of the Marketing
and Distribution Agreement and the excess of consideration over the fair value
of net assets acquired.

INTANGIBLE ASSETS

The intangible assets are amortized on a straight-line basis over the
estimated useful lives as follows: customer base amortized over 18 months, the
Marketing and Distribution Agreement amortized over 5 and 10 years, which are
the life of the portion of the contract related to Sprint's provision of
additional customers and the overall contract life relative to the co-branding
feature, respectively, and the excess of consideration over the fair value of
net assets acquired over 18 months. The Company regularly reviews the
recoverability of intangible assets based on estimated undiscounted future cash
flows from operating activities compared with the carrying values of the
intangible assets.

OTHER ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The liabilities consist of accrued expenses for incremental acquisition
costs directly attributable to the acquisition, primarily investment banking,
legal and accounting professional fees.

F-26
<PAGE>
EARTHLINK NETWORK, INC.
PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial statements
give effect to the acquisition by the Company of the Sprint Internet Passport
business ("SIP") of Sprint in a transaction accounted for as a purchase. The
unaudited statements of operations are based on the statements of operations of
the Company and the statements of revenues and direct expenses of SIP appearing
elsewhere in this Prospectus, and combine the results of operations of the
Company and of SIP for the year ended December 31, 1997 and the nine months
ended September 30, 1998 as if the acquisition occurred on January 1, 1997.
These unaudited pro forma financial statements should be read in conjunction
with the historical statement of revenues and direct expenses and notes thereto
of SIP and the historical financial statements and notes thereto of the Company,
both included elsewhere in this Prospectus. The historical statement of revenues
and direct expenses of SIP are not necessarily indicative of the financial
condition or results of operations of such operations on a prospective basis
because of the omission of various operating expenses from such presentation and
the change in the nature and scope of such business as it will be operated by
the Company.

The purchase price paid by the Company consisted of approximately 4.1
million shares of Series A Convertible Preferred Stock, which has been valued at
$135,000,000. In exchange for the Series A Convertible Preferred Stock, the
Company obtained SIP's customer base of approximately 130,000 members, cash of
$23,750,000 and access to Sprint's high-speed data network. Sprint has further
provided the Company access to $25 million (increasing to $100 million over a
three year period) in convertible debt financing, and has entered into a
Marketing and Distribution Agreement with the Company. The Company acquired no
other assets of SIP or Sprint. Accordingly, the purchase price was allocated to
the cash and intangible assets acquired. The excess of the purchase price over
the fair value of the assets acquired was allocated to goodwill. The final
allocation may differ from that used in the unaudited pro forma condensed
combined financial statements. The acquisition was accounted for using the
purchase method.

Sprint began offering Internet access in the fourth quarter of 1996 and
reported this operation within its Emerging Businesses Segment (the "Group").
Sprint maintained the financial information relative to the Internet subscribers
in the financial statements for the Group. Sprint maintained revenue and direct
operating expense information separately within the Group. Direct operating
expenses include cost of services and products, selling, general and
administrative expense, and depreciation expense. Sprint, however, did not
separately maintain and account for other costs and expenses to operate this
business. The Company is unable to determine or estimate these costs on a
historical and pro forma basis. In addition, Sprint did not separately maintain
and account for all assets used in the individual business. Such assets,
primarily network related, are recorded in the other businesses of Sprint and
used by the other divisions of Sprint in addition to the Group.

F-27
<PAGE>
EARTHLINK NETWORK, INC.

PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
SPRINT
EARTHLINK INTERNET
NETWORK, INC. PASSPORT PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
------------- ---------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Recurring revenues................................ $ 74,657 $ 74,657
Other revenues.................................... 6,231 6,231
Net operating revenues............................ $ 14,489 14,489
------------- ---------- ---------

Total revenues.................................. 80,888 14,489 95,377
------------- ---------- ---------

Operating costs and expenses:
Cost of recurring revenues........................ 36,854 36,854
Cost of other revenues............................ 1,649 1,649
Cost of services.................................. 51,313 51,313
Sales and marketing............................... 25,606 25,606
General and administrative........................ 14,333 14,333
Operations and member support..................... 30,900 30,900
Amortization and transaction costs................ 70,692(a) 70,692
Selling, general and administrative............... 13,099 13,099
Depreciation...................................... 6,070 (6,070)(b)
Other............................................. 3,404 3,404
------------- ---------- ----------- ---------

Total operating costs and expenses.............. 109,342 73,886 64,622 247,850
------------- ---------- ----------- ---------

Loss from operations................................ (28,454) (59,397) (64,622) (152,473)
Interest expense.................................... (2,099) (2,099)
Interest income..................................... 637 637
------------- ---------- ----------- ---------

Net loss............................................ (29,916) (59,397) (64,622) (153,935)

Deductions for accretion dividends.................. (13,099)(c) (13,099)
------------- ---------- ----------- ---------

Net loss attributable to common stockholders........ $(29,916) $ (59,397) $(77,721) $(167,034)
------------- ---------- ----------- ---------
------------- ---------- ----------- ---------
Basic and diluted net loss per share................ $ (1.50) $ (8.35)
------------- ---------
------------- ---------

Weighted average shares outstanding................. 20,002 20,002(d)
------------- ---------
------------- ---------
</TABLE>

F-28
<PAGE>
EARTHLINK NETWORK, INC.

PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)

NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS

Pro Forma adjustments are as follows:

a. This entry reflects the amortization of intangible assets as follows:
customer base ($65,000,000) amortized over 18 months, the Marketing and
Distribution Agreement amortized over five and ten years, which are the life
of the portion of the contract related to Sprint's provision of customers
($12,500,000) and the overall contract life relative to the co-branding
feature ($7,500,000), respectively, and the excess of purchase price over
net assets acquired ($36,718,000) amortized over 18 months. Additional costs
to provide service to the acquired members are not considered to be
material.

b. The Company acquired no depreciable assets of SIP. This adjustment
eliminates the depreciation expense recorded by SIP.

c. This adjustment reflects the liquidation dividends based upon a 3%
Liquidation Value accretion dividend ($7,480,000), the accretion of a
dividend related to the beneficial conversion feature in accordance with
EITF Topic No. D-60 based upon the rate at which the preferred stock becomes
convertible ($5,619,000).

d. Pro forma share data are based on the number of shares of the Company's
Common Stock and common equivalent shares that would have been outstanding
had SIP been acquired on January 1, 1997. As of December 31, 1997, EarthLink
had reserved 3,377,222 shares for issuance upon the exercise of outstanding
employee stock options, 783,030 shares for issuance pursuant to the
Convertible Note issued to UUNET Technologies, Inc. and 1,775,294 shares
reserved for issuance upon exercise of outstanding warrants. These common
stock equivalents and 4.1 million shares of the Series A Convertible
Preferred Stock have been excluded from the calculation as their effect is
antidilutive.

F-29
<PAGE>
EARTHLINK NETWORK, INC.

PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

(UNAUDITED)

<TABLE>
<CAPTION>
EARTHLINK SPRINT INTERNET
NETWORK, INC. PASSPORT PRO FORMA PRO FORMA
HISTORICAL HISTORICAL(A) ADJUSTMENTS COMBINED
------------- --------------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Recurring revenues................................ $109,957 $109,957
Other revenues.................................... 4,897 4,897
Incremental revenues.............................. 2,786 2,786
Net operating revenues............................ $ 11,122 11,122
------------- --------------- ----------- ---------

Total revenues.................................. 117,640 11,122 128,762
------------- --------------- ----------- ---------

Operating costs and expenses:
Cost of recurring revenues........................ 53,163 53,163
Cost of other revenues............................ 730 730
Cost of services.................................. 17,881 17,881
Sales and marketing............................... 25,348 25,348
General and administrative........................ 15,344 15,344
Operations and member support..................... 36,248 36,248
Amortization and transaction costs................ 24,962 11,198(b) 36,160
Selling, general and administrative............... 3,070 3,070
Depreciation...................................... 3,655 (3,655)(c) --
Other............................................. 353 353
------------- --------------- ----------- ---------

Total operating costs and expenses.............. 155,795 24,959 7,543 188,297
------------- --------------- ----------- ---------

Loss from operations................................ (38,155) (13,837) (7,543) (59,535)
Interest expense.................................... (1,661) (1,661)
Interest income..................................... 2,568 2,568
------------- --------------- ----------- ---------
Net loss............................................ (37,248) (13,837) (7,543) (58,628)

Deductions for accretion dividends.................. (4,330) (4,616)(d) (8,946)
------------- --------------- ----------- ---------

Net loss attributable to common stockholders........ $(41,578) $(13,837) $(12,159) $(67,574)
------------- --------------- ----------- ---------
------------- --------------- ----------- ---------

Basic and diluted net loss per share................ $ (1.64) $ (2.67)
------------- ---------
------------- ---------

Weighted average shares outstanding................. 25,292 25,292(e)
------------- ---------
------------- ---------
</TABLE>

F-30
<PAGE>
EARTHLINK NETWORK, INC.

PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)

NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS

Pro Forma adjustments are as follows:

(a) The historical SIP revenues and expenses include results from January 1,
1998 through June 5, 1998 (the date of acquisition).

(b) This entry reflects the amortization of intangible assets as follows:
customer base ($65,000,000) amortized over 18 months, the Marketing
Agreement amortized over five and ten years, which are the life of the
portion of the contract related to Sprint's provision of customers
($12,500,000) and the overall contract life relative to the co-branding
feature ($7,500,000), respectively, and the excess of purchase price over
net assets acquired ($36,718,000) amortized over 18 months. Additional costs
to provide service to the acquired members are not considered to be
material.

(c) The Company acquired no depreciable assets of SIP. This adjustment
eliminates the depreciation expense recorded by SIP.

(d) This adjustment reflects the liquidation dividends based upon a 3%
Liquidation Value accretion dividend ($5,758,000) and the accretion of a
dividend related to the beneficial conversion feature in accordance with
EITF Topic No. D-60 based upon the rate at which the preferred stock becomes
convertible ($3,188,000).

(e) Pro forma per share data are based on the number of shares of the Company's
Common Stock and common equivalent shares that would have been outstanding
had SIP been acquired on January 1, 1997. As of September 30, 1998,
EarthLink had reserved for issuance 3,657,720 shares upon the exercise of
outstanding employee stock options, and 1,284,106 shares reserved for
issuance upon exercise of outstanding warrants. These common stock
equivalents and 4.1 million shares of the Series A Convertible Preferred
Stock have been excluded from the calculation as their effect is
antidilutive.

F-31
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

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

<TABLE>
<CAPTION>
ITEM AMOUNT
- -------------------------------------------------------------------------------- ------------
<S> <C>
Securities and Exchange Commission registration fee............................. $ 46,556
NASD filing fee................................................................. 17,247
Nasdaq National Market listing fee.............................................. 17,500
Blue Sky fees and expenses...................................................... 10,000
Printing and engraving expenses................................................. 100,000
Legal fees and expenses......................................................... 150,000
Accounting fees and expenses.................................................... 75,000
Transfer Agent and Registrar fee................................................ 5,000
Miscellaneous................................................................... 78,697
------------
Total........................................................................... $ 500,000
------------
------------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

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

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

The Company has purchased directors' and officers' liability insurance.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the three year period preceding the filing of this Registration
Statement, the Company issued and sold unregistered securities in the
transactions described below. All of the following share and per share amounts
have been restated to give effect to all of the Company's stock splits.

SHARES OF COMMON STOCK

1. On June 19, 1995, the Company sold 1,654,170 shares of Common Stock to 20
investors, including Messrs. Slatkin, O'Donnell and Azeez, directors of the
Company, at a purchase price of $0.91 per share.

2. On October 31, 1995, the Company sold 1,843,490 shares of Common Stock to 19
investors, including Messrs. Slatkin, O'Donnell and Azeez, directors of the
Company, at a purchase price of $2.42 per share.

II-1
<PAGE>
3. On January 18, 1996, the Company sold 90,970 shares of Common Stock to
Messrs. Linwood Lacy, Jr. and Robert Kavner, directors of the Company, at a
purchase price of $2.42 per share.

4. On March 20, 1996, the Company sold 50,000 shares of Common Stock to Mr.
Charles G. Betty, a director of the Company and the Company's President and
Chief Executive Officer, at a purchase price of $2.42 per share.

5. On May 6, 1996, the Company sold 10,244 shares of Common Stock to a
sub-contractor at a purchase price of $4.88 per share, which purchase price
was paid by performance of certain services.

6. On May 6, 1996, the Company sold 1,704,906 shares of Common Stock to 34
investors (primarily existing stockholders of the Company), including
Messrs. Azeez, Slatkin and O'Donnell, directors of the Company, at a
purchase price of $4.88 per share.

7. On September 8, 1996, the Company issued 75,000 shares of Common Stock to a
consultant in consideration of the cancellation of the consulting agreement
between the consultant and the Company.

8. On December 11, 1996, the Company agreed to enter into a consulting
agreement with New Media Group, Inc., pursuant to which the Company agreed
to issue an aggregate of 40,000 shares of Common Stock in equal increments
in January 1998 and 1999 as consideration for the consulting services to be
performed.

9. On September 19, 1997, the Company sold 2,919,518 shares of Common Stock to
investors, including Messrs. Slatkin, Azeez, Betty and Lacy, directors of
the Company, and Messrs. Edmiston and Young, officers of the Company, at a
purchase price of $5.375 per share.

SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK

10. On September 10, 1996, the Company issued 2,727,273 shares of Series A
Convertible Preferred Stock to certain investors, including Messrs. Azeez,
Betty, Slatkin, O'Donnell and Lacy, directors of the Company, at a purchase
price of $5.50 per share. These shares automatically converted into
2,727,248 shares of Common Stock in January 1997 upon the closing of the
Company's initial public offering. In connection with this transaction,
certain of these investors were also granted warrants to purchase 200,000
shares of Common Stock having an exercise price of $5.50 per share.

WARRANTS TO PURCHASE COMMON STOCK

11. On August 31, 1995, the Company granted Warrants to purchase 100,000 shares
of Common Stock at an exercise price of $0.91 per share to Mr. Slatkin in
connection with his acting as lessee, with the Company, under a $500,000
equipment lease. Mr. Slatkin subsequently transferred one-half of these
warrants to Mr. O'Donnell as consideration for his agreement to indemnify
Mr. Slatkin for certain liability arising in connection with the lease.

12. On October 31, 1995, the Company granted Warrants to purchase 20,660 shares
of Common Stock at an exercise price of $2.42 per share to David Beckemeyer
as partial consideration for the sale of certain of the assets of Beckemeyer
Development.

13. On December 1, 1995, the Company granted Warrants to purchase 100,000 shares
of Common Stock at an exercise price of $2.42 per share to Mr. Slatkin in
connection with their provision of a $250,000 line of credit as security for
the lease of the Company's Pasadena, California facility. Mr. Slatkin
subsequently transferred one-half of these warrants to Mr. O'Donnell in
consideration for his agreement to indemnify Mr. Slatkin for certain
liability arising in connection with the line of credit.

14. Effective January 11, 1996, the Company granted Warrants to purchase 200,000
shares of Common Stock at an exercise price of $2.42 per share to Mr.
Slatkin in connection with his acting as lessee, with

II-2
<PAGE>
the Company, under a $1,500,000 equipment lease. Mr. Slatkin subsequently
transferred one-half of these warrants to Mr. O'Donnell as consideration for
his agreement to indemnify Mr. Slatkin for certain liability arising in
connection with the lease.

15. On January 12, 1996, the Company granted warrants to purchase 100,000 shares
of Common Stock at an exercise price of $2.42 per share to each of Messrs.
Lacy and Kavner as consideration for their agreeing to serve on the
Company's Board of Directors.

16. On January 18, 1996, the Company granted warrants to purchase 100,000 shares
of Common Stock at an exercise price of $2.42 per share to LINC Capital
Partners, Inc. ("LINC") in connection with LINC's provision of a $2,000,000
equipment lease credit line.

17. On February 15, 1996, the Company granted warrants to purchase 10,000 shares
of Common Stock at an exercise price of $4.88 per share to Boston Financial
& Equity Corporation ("BFE") in connection with BFE's provision of a
$700,000 equipment lease credit line.

18. On May 6, 1996, the Company issued warrants to purchase up to 100,000 shares
of Common Stock at an exercise price of $4.88 per share to National Media
Corporation in connection with the production of commercials on behalf of
the Company.

19. On May 10, 1996, the Company issued warrants to purchase an aggregate of
90,954 shares of Common Stock at an exercise price of $4.88 per share to
MMC/GATX, LINC Capital Corporation, Charter Equipment Leasing, El Camino
Resources for lease lines.

20. On May 10, 1996, the Company entered into consulting agreements with two
consultants, David Hayes and Allen Claypool. In connection with these
agreements, the Company agreed that it will issue warrants to purchase an
aggregate of 20,000 shares of Common Stock at a per share exercise price of
$4.88 per share upon completion of the consulting services.

21. On May 31, 1996, in connection with the amendment of its agreement with
UUNET, the Company agreed to issue warrants to purchase 20,000 shares of
Common Stock at $10.00 per share.

22. On June 6, 1996, the Company issued warrants to purchase 196,680 shares of
Common Stock at an exercise price of $2.75 per share. Messrs. Azeez, Kavner,
O'Donnell and Slatkin were granted 13,334, 6,668, 15,000 and 15,000 of these
warrants, respectively. The warrants were issued in connection with the
issuance of the 10% Promissory Notes of the Company, as described in
paragraph 35 below.

23. On July 22, 1996, the Company issued warrants to purchase 200,000 shares of
Common Stock at an exercise price of $10.00 per share in connection with the
execution of its agreement with PSINet.

24. In September 1996, the Company issued Warrants to purchase 15,000 shares of
Common Stock at an exercise price of $5.50 per share to each of three
members of the Company's Technology Advisory Council.

25. In October 1997, the Company issued Warrants to purchase 50,000 shares of
Common Stock at an exercise price of $8.875 per share to a consultant.

26. In October 1997, the Company issued Warrants to purchase 15,000 shares of
Common Stock at an exercise price of $8.875 per share to a member of the
Company's Technical Advisory Committee.

CONVERTIBLE DEBT OBLIGATION

27. Effective October 31, 1996, UUNET purchased from the Company, a $5 million
convertible promissory note, which UUNET converted into 783,030 shares of
Common Stock on March 30, 1998.

28. On June 19, 1995, the Company granted non-plan Options to purchase 500,000
shares of Common Stock at an exercise price of $0.91 to Mr. Dayton in
consideration for his continuing efforts to develop the Company and its
business.

II-3
<PAGE>
29. On June 19, 1995, the Company granted non-plan Options to purchase 100,000
shares of Common Stock at an exercise price of $0.91 per share to Mr. Robert
E. Johnson, Jr. in consideration for his accepting employment with the
Company.

30. On December 1, 1995, the Company granted non-plan Options to purchase
100,000 shares of Common Stock at an exercise price of $2.42 to Mr. Leland
C. Thoburn in consideration for his accepting employment with the Company.

31. On November 7, 1997, the Company granted non-plan Options to purchase
100,000 shares of Common Stock at an exercise price of $8.00 to Mr. Grayson
Hoberg in consideration for his accepting employment with the Company.

32. In addition to the options described above, between September 30, 1995 and
September 30, 1998, the Registrant granted options to purchase an aggregate
of 4,180,650 shares of Common Stock to employees of the Registrant at
exercise prices ranging from $2.42 to $47.63 per share as incentives under
the Registrant's 1995 Stock Option Plan. Of these, options for 517,800
shares of Common Stock have been forfeited due to the termination of the
employment of various grantees.

PROMISSORY NOTES

33. On June 7, 1996, the Company issued $2.95 million principal amount of 10%
promissory notes to certain investors, including Messrs. Azeez, Kavner,
O'Donnell and Slatkin, directors of the Company. Messrs. Azeez, Kavner,
O'Donnell and Slatkin purchased notes in the respective principal amounts of
$200,000; $100,000; $225,000; and $225,000. As additional consideration for
the investment, the Company issued warrants described in paragraph 27 above.
These notes are no longer outstanding.

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

II-4
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

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 Form 8-K filed by EarthLink Network, Inc.
on February 10, 1998).

3.1 Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-4--File No. 333-52507).

3.2 Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form
S-4--File No. 333-52507).

3.3 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 Form 8-K filed by EarthLink Network,
Inc. on February 10, 1998).

4.1 See Exhibits 3.1, 3.2 and 3.3 for provisions of the Certificate of Incorporation, Bylaws and Certificate
of Designation, Preference and Rights of Series A Convertible Preferred Stock defining rights of holders
of the equity securities of Dolphin, Inc.

4.2 Specimen Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on
Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

4.3 Form of Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Registration Statement on
Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

4.4 Agreement and Plan of Merger between Newco, Inc. and EarthLink Network, Inc. dated as of February 10,
1998 (incorporated by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-4--File
No. 333-52507).

5.1 Opinion of Hunton & Williams.

10.1 1995 Stock Option Plan and forms of Stock Option Agreement and Stock Purchase Agreement (incorporated by
reference to Exhibit 10.1 to Registration Statement of EarthLink Network, Inc. on form S-1--File No.
333-15781).

10.2 Amended and Restated Stock Option Plan for Directors (incorporated by reference to Exhibit 10.2 to the
Company's Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

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

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

10.5 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 Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C>
(a) Amendment No. 1 to Netscape Communications Corporation Internet Service Provider Agreement
(incorporated by reference to Exhibit 10.6(a) to the Registration Statement on Form S-1 of EarthLink
Network, Inc.--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 Registration Statement on Form S-1 of EarthLink
Network, Inc.--File No. 333-15781).

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

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

10.8 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 (incorporated by reference to Exhibit 10.9(a) to the Report on
Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)
(b) First Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9(b) to the
Company's Report on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)
(c) Second Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9(c) to the Report
on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)
(d) Amended and Restated Employment Agreement (incorporated by reference to Exhibit 10.8(d) to the
Company's Registration Statement on Form S-1--File No. 333-53063).

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

10.10 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 Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

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

10.12 Internet Wizard Sign-Up Agreement between the Company and Microsoft Corporation, dated August 16, 1996
(incorporated by reference to Exhibit 10.19 to the Registration Statement on Form S-1 of EarthLink
Network, Inc.--File No. 333-15781).
</TABLE>

II-6

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C>
10.13 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 Registration Statement on
Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

10.14 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 Registration
Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

10.15 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 Registration Statement on Form S-1
of EarthLink Network, Inc.--File No. 333-15781).

10.16 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 Registration
Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).
(b) Addendum to Amended and Restated Registration Rights Agreement (incorporated by reference to Exhibit
10.23(c) to the Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

10.17 Amended and Restated Convertible Securities Vesting Plan (incorporated by reference to Exhibit 10.18 to
the Report on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997).

10.18 Key Employee Compensation Continuation Plan (incorporated by reference to Exhibit 10.19 to the Report on
Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997).
(a) Amendment to Key Employee Compensation Continuation Plan (incorporated by reference to Exhibit
10.19(a) to the Report on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31,
1997).

10.19 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 Form 8-K filed by EarthLink Network, Inc. on February 10, 1998).

10.20 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 Form 8-K filed by EarthLink
Network, Inc. on February 10, 1998).

10.21 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 Form 8-K by EarthLink
Network, Inc. filed on February 10, 1998).

10.22 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 1
thereto (incorporated by reference to Exhibit 99.2 to the Form 8-K of EarthLink Network, Inc. filed on
February 10, 1998).
</TABLE>

II-7

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C>
10.23 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 Form 8-K filed by
EarthLink Network, Inc. on February 10, 1998).

10.24 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 Form 8-K filed by
EarthLink Network, Inc. on February 10, 1998).

10.25 Marketing and Distribution Agreement, dated as of February 10, 1998, among Dolphin, Inc., a Delaware
corporation, EarthLink Network, Inc., a Delaware corporation, 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 10.26 of the Company's Registration Statement on Form
S-4, filed May 13, 1998, File No. 333-52507).

10.26 Third Amendment to the lease agreement between WHMNY Real Estate Limited Partnership, a Delaware limited
partnership ("Landlord"), and EarthLink Network, Inc. (incorporated by reference to Exhibit 10.1 to the
Company's Form 10-Q filed on November 16, 1998.

22.1 Significant Subsidiaries (incorporated by reference to Exhibit 22.1 to the Company's Registration
Statement on Form S-1, filed May 19, 1998, File No. 333-53063).

23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.

23.2 Consent of Ernst & Young LLP, independent auditors.

23.3 Consent of Hunton & Williams (set forth in Exhibit 5.1).

24.1 Power of Attorney (set forth on the signature page to the Registration Statement).

27.1 Financial Data Schedule.

27.2 Financial Data Schedule.
</TABLE>

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

(b) Financial Statement Schedules:

All of the financial statement schedules for which provision is made in the
applicable accounting regulations of the Commission are either not required
under the related instructions or are inapplicable and have therefore been
omitted, except for the Financial Data Schedule referenced above as Exhibit 27
and filed herewith; provided, however, that Exhibit 27 shall not be deemed filed
for purposes of Section 11 of the Securities Act, Section 18 of the Exchange Act
and Section 323 of the Trust Indenture Act, or otherwise be subject to the
liabilities of such sections, nor shall it be deemed a part of this Registration
Statement.

ITEM 17. UNDERTAKINGS

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

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons to the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for

II-8
<PAGE>
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

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

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

II-9
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Pre-effective Amendment No. 3 to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Pasadena, State of California, on the 11th day of January, 1999.

<TABLE>
<S> <C> <C>
EARTHLINK NETWORK, INC.

By: /s/ SKY D. DAYTON
-----------------------------------------
Sky D. Dayton
CHAIRMAN OF THE BOARD OF DIRECTORS
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Pre-effective Amendment No. 3 to Registration Statement has been signed by the
following persons in the capacities indicated below on the 11th day of January,
1999.

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

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

President, Chief Executive
* Officer and Director
- ------------------------------ (Principal Executive
Charles G. Betty Officer)

* Chief Financial Officer
- ------------------------------ (Principal Financial and
Grayson L. Hoberg Accounting Officer)

*
- ------------------------------ Director
Sidney Azeez

*
- ------------------------------ Director
Robert M. Kavner

*
- ------------------------------ Director
Linwood A. Lacy, Jr.

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

*
- ------------------------------ Director
Reed E. Slatkin

*
- ------------------------------ Director
Paul McNulty

*
- ------------------------------ Director
William T. Esrey
</TABLE>

II-10
<PAGE>

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

<C> <S>
*
- ------------------------------ Director
Patti S. Manuel

* /s/ SKY D. DAYTON
- ------------------------------
Sky D. Dayton
Attorney-in-fact
</TABLE>

II-11
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBITS
- -----------
<S> <C>
1.1 Form of Underwriting Agreement.

3.1 Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-4 - File No. 333-52507).

3.2 Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4 -
File No. 333-52507).

4.2 Specimen Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on
Form S-1 of EarthLink Network, Inc. - File No. 333-15781).

4.3 Form of Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Registration Statement on
Form S-1 of EarthLink Network, Inc. - File No. 333-15781).

5.1 Opinion of Hunton & Williams.

(a) Amendment No. 1 to Netscape Communications Corporation Internet Service Provider Agreement
(incorporated by reference to Exhibit 10.6(a) to the Registration Statement on Form S-1 of EarthLink
Network, Inc. - File No. 333-15781).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBITS
- -----------
<S> <C>
(b) Amendment No. 2 to Netscape Communications Corporation Internet Service Provider Agreement
incorporated by reference to (Exhibit 10.6(b) to the Registration Statement on Form S-1 of EarthLink
Network, Inc. - File No. 333-15781).

(a) Addendum No. 1 to Network Services Agreement (incorporated by reference to Exhibit 10.7(a) to the
Registration Statement on Form S-1 of EarthLink Network, Inc. - File No. 333-15781).

(a) Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9(a) to the Report on
Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)

(b) First Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9(b) to the
Company's Report on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)

(c) Second Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9(c) to the Report
on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)

(d) Amended and Restated Employment Agreement (incorporated by reference to Exhibit 10.8(d) to the
Company's Registration Statement on Form S-1--File No. 333-53063).

(a) Amendment No. 1 to Production and Distribution Agreement (incorporated by reference to Exhibit
10.16(a) to the Registration Statement on Form S-1 of EarthLink Network, Inc. - File No. 333-15781).

10.13 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 Registration Statement on
Form S-1 of EarthLink Network, Inc. - File No. 333-15781).
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
- -----------
<S> <C>
10.14 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 Registration
Statement on Form S-1 of EarthLink Network, Inc. - File No. 333-15781).

(a) $5,000,000 Convertible Note (incorporated by reference to Exhibit 10.23(a) to the Registration
Statement on Form S-1 of EarthLink Network, Inc. - File No. 333-15781).

(b) Addendum to Amended and Restated Registration Rights Agreement (incorporated by reference to Exhibit
10.23(c) to the Registration Statement on Form S-1 of EarthLink Network, Inc. - File No. 333-15781).

10.18 Key Employee Compensation Continuation Plan (incorporated by reference to Exhibit 10.19 to the Report on
Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997).

(a) Amendment to Key Employee Compensation Continuation Plan (incorporated by reference to Exhibit
10.19(a) to the Report on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31,
1997).

10.23 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 Form 8-K filed by
EarthLink Network, Inc. on February 10, 1998).
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBITS
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<S> <C>
10.24 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 Form 8-K filed by
EarthLink Network, Inc. on February 10, 1998).

22.1 Significant Subsidiaries (incorporated by reference to Exhibit 22.1 of the Company's Registration
Statement on Form S-1, filed May 19, 1998, File No. 333-53063).

23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.

23.2 Consent of Ernst & Young LLP, independent auditors.

23.3 Consent of Hunton & Williams (set forth in Exhibit 5.1).

24.1 Power of Attorney (set forth on the signature page to the Registration Statement).

27.1 Financial Data Schedule.*

27.2 Financial Data Schedule.*
</TABLE>

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* Previously Filed

<PAGE>

2,500,000 SHARES

EARTHLINK NETWORK, INC.

COMMON STOCK, PAR VALUE $0.01 PER SHARE

UNDERWRITING AGREEMENT

JANUARY [ ], 1999

CREDIT SUISSE FIRST BOSTON CORPORATION
INVEMED ASSOCIATES, INC.
ING BARING FURMAN SELZ LLC
CRUTTENDEN ROTH INCORPORATED
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629

Dear Sirs:

1. INTRODUCTORY. EarthLink Network, Inc., a Delaware corporation
("Company") proposes to issue and sell 2,000,000 shares of its Common Stock,
$0.01 par value per share ("Securities"), and the stockholders listed in
SCHEDULE A hereto ("Selling Stockholders") propose severally to sell an
aggregate of 435,879 outstanding shares of the Securities (such 2,435,879
shares of Securities being hereinafter referred to as the "Firm Securities").
The Company also proposes to sell to the Underwriters, at the option of the
Underwriters, an aggregate of not more than 365,381 additional shares of its
Securities, as set forth below (such 375,000 additional shares being
hereinafter referred to as the "Optional Securities"). The Firm Securities
and the Optional Securities are herein collectively called the "Offered
Securities". The Company and the Selling Stockholders hereby agree with the
several Underwriters named in SCHEDULE B hereto ("Underwriters") as follows:

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:

(i) A registration statement (No. 333-69177) relating to the Offered
Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("Commission") and either (A) has been
declared effective under the Securities Act of 1933 ("Act") and is not
proposed to be amended or (B) is proposed to be amended by amendment or
post-effective amendment. If such registration statement (the "initial
registration statement") has been declared effective, either (A) an
additional registration statement (the "additional registration statement")
relating to the Offered Securities may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so filed, has
become effective upon filing pursuant to such Rule and the Offered
Securities all have been duly registered under the Act pursuant to the
initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have

<PAGE>

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

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

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<PAGE>

Agreement, the Additional Registration Statement each conforms, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no
such filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all material
respects to the requirements of the Act and the Rules and Regulations,
and neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of
this Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and the Prospectus will
conform in all material respects to the requirements of the Act and the
Rules and Regulations, neither of such documents will include any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and no Additional Registration Statement has been or will
be filed. The two preceding sentences do not apply to statements in or
omissions from a Registration Statement or the Prospectus based upon
written information furnished to the Company by any Underwriter through
the Representatives specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(c) hereof.

(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified does not amount to a material liability to the
Company and its subsidiaries taken as a whole.

(iv) Each subsidiary of the Company has been duly incorporated and is
an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus; and
each subsidiary of the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified does not
amount to a material liability to the Company and its subsidiaries taken as
a whole, all of the issued and outstanding capital stock of each subsidiary
of the Company has been duly authorized and validly issued and is fully
paid and nonassessable; and the capital stock of each subsidiary owned by
the Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.

(v) The Offered Securities and all other outstanding shares of capital
stock of the Company have been duly authorized and validly issued, fully
paid and nonassessable and conform to the description thereof contained in
the Prospectus; except for the preemptive rights possessed by Sprint as are
described in the Prospectus, the stockholders of the Company have no
preemptive rights with respect to the Securities; and no holder of
Securities has any right which has not been fully exercised or waived to
require the Company to register the offer or sale of any Securities owned
by such holder under the Securities Act in the offering contemplated by
this Agreement.

(vi) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with
this offering.

(vii) The Offered Securities have been duly authorized and accepted
for quotation on The Nasdaq National Market, subject to official notice of
issuance.

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<PAGE>

(viii) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the transactions
contemplated by this Agreement in connection with the sale of the Offered
Securities, except such as have been obtained and made under the Act and
such as may be required under state securities laws.

(ix) The execution, delivery and performance of this Agreement, and
the consummation of the transactions herein contemplated will not result in
a breach or violation of any of the terms and provisions of, or constitute
a default under, any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any of
their properties, or any agreement or instrument to which the Company or
any such subsidiary is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the Company or any
such subsidiary is subject, or the charter or by-laws of the Company or any
such subsidiary.

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

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

(xii) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole.

(xiii) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the Company and its subsidiaries
taken as a whole.

(xiv) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (A) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(B) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.

(xv) The Company and its subsidiaries own or possess adequate
trademarks, service marks, trade names, trade secrets and other rights to
inventions, know-how, patents, patent rights, copyrights, confidential
information and other intellectual property (collectively, "intellectual
property rights") necessary to conduct the business now operated by them,
presently employed by them or proposed

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<PAGE>

to be employed by them in connection with their business as described in
the Prospectus, and have not received any notice of infringement of or
conflict with (and neither the Company nor any of its subsidiaries knows
of any infringement or conflict with) asserted rights of others with
respect to any intellectual property rights that, if determined adversely
to the Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole. Except as disclosed in the Prospectus,
the discoveries, inventions, products or processes of the Company and its
subsidiaries referred to in the Prospectus do not, to the best knowledge
of the Company or any of its subsidiaries, infringe or conflict with any
right or patent of any third party, or any discovery, invention, product
or process which is the subject of a patent application filed by any
third party, known to the Company or any of its subsidiaries which would
reasonably be expected to have a material adverse effect on the Company
and its subsidiaries, taken as a whole. No third party, including any
academic or governmental organization, possesses rights to the Company's
patents, copyrights, trademarks, service marks, trade names, or
technology which, if exercised, could enable such third party to develop
products competitive to those of the Company or could have a material
adverse effect on the ability of the Company to conduct its business in
the manner described in the Prospectus.

(xvi) Except as disclosed in the Prospectus, neither the Company nor
any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a material adverse effect on
the Company and its subsidiaries taken as a whole; and the Company is not
aware of any pending investigation which might lead to such a claim.

(xvii) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) the Company and
its subsidiaries, taken as a whole, have not incurred any material
liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (B) the
Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind
on its capital stock; and (C) there has not been any material change in the
capital stock, short-term or long-term debt of the Company and its
subsidiaries, taken as a whole, except in each case as described in or
contemplated by the Prospectus.

(xviii) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (A) transactions are executed in accordance with management's general
or specific authorizations; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (C)
access to assets is permitted only in accordance with management's general
or specific authorization; and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.

(xix) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of
the foregoing is due and payable, except for any such

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<PAGE>

assessment, fine or penalty that is currently being contested in good
faith or as described in or contemplated by the Prospectus.

(xx) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any such subsidiary has been refused
any insurance coverage sought or applied for; and neither the Company nor
any such subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely
affect the business, condition (financial or otherwise), earnings,
properties, business affairs or business prospects, net worth or results of
operations of the Company or any of its subsidiaries taken as a whole,
except as described in or contemplated by the Prospectus

(xxi) No default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default in the due performance
and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of their respective properties is bound,
which default would reasonably be expected to have a material adverse
effect on the Company and its subsidiaries taken as a whole.

(xxii) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, would individually or
in the aggregate have a material adverse effect on the condition (financial
or other), business, properties or results of operations of the Company and
its subsidiaries taken as a whole, or would materially and adversely affect
the ability of the Company to perform its obligations under this Agreement,
or which are otherwise material in the context of the sale of the Offered
Securities; and no such actions, suits or proceedings are threatened or, to
the Company's knowledge, contemplated.

(xxiii) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown and their
results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis; and the schedules included in each Registration Statement present
fairly the information required to be stated therein; and the assumptions
used in preparing the pro forma financial statements included in each
Registration Statement and the Prospectus provide a reasonable basis for
presenting the significant effects directly attributable to the
transactions or events described therein, the related pro forma adjustments
give appropriate effect to those assumptions, and the pro forma columns
therein reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.

(xxiv) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated
by the Prospectus, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.

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

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<PAGE>

(xxvi) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the completion of the
distribution of the Offered Securities it commences doing such business.

(xxvii) Except for the Offered Securities, all outstanding Securities,
and all securities which are convertible into or exercisable or
exchangeable for Securities, held by each of the Company's officers,
directors and holders of five percent or more of such securities in the
aggregate, have executed agreements (collectively, "Lock-up Agreements")
that purport to restrict the holders thereof from selling, making any short
sale of, granting any option for the purchase of, or otherwise transferring
or disposing of, any of such Securities, or any such securities convertible
into or exercisable or exchangeable for Securities, for a period of 90 days
after the date of the Prospectus without the prior written consent of
Credit Suisse First Boston Corporation ("CSFBC"), except as provided in
such Lock-Up Agreements.

(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:

(i) Such Selling Stockholder has and on each Closing Date hereinafter
mentioned will have valid and unencumbered title to the Offered Securities
to be delivered by such Selling Stockholder on such Closing Date and full
right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver the Offered Securities to be delivered by such
Selling Stockholder on such Closing Date hereunder; and upon the delivery
of and payment for the Offered Securities on each Closing Date hereunder
the several Underwriters will acquire valid and unencumbered title to the
Offered Securities to be delivered by such Selling Stockholder on such
Closing Date.

(ii) Such Selling Stockholder has duly executed and delivered a power
of attorney and custody agreement (with respect to such Selling
Stockholder, the "Power-of-Attorney" and the "Custody Agreement",
respectively), each in the form heretofore delivered to the
Representatives, appointing Charles G. Betty and Grayson L. Hoberg as such
Selling Stockholder's attorney-in-fact (the "Attorney-in-Fact") with
authority to execute, deliver and perform this Agreement on behalf of such
Selling Stockholder and appointing American Stock Transfer and Trust, as
custodian thereunder (the "Custodian"). Such Selling Stockholder has full
power (including, if such Selling Stockholder is a corporation or similar
entity, corporate power) to enter into the Custody Agreement and the Power-
of-Attorney and to perform its obligations under the Custody Agreement. If
such Selling Stockholder is a corporation or similar entity, the execution
and delivery of the Custody Agreement and the Power-of-Attorney have been
duly authorized by all necessary corporate action of such Selling
Stockholder; and the Custody Agreement and the Power-of-Attorney have been
duly executed and delivered by such Selling Stockholder and, assuming due
authorization, execution and delivery by the Custodian, are the legal,
valid, binding and enforceable instruments of such Selling Stockholder.

(iii) The sale by such Selling Stockholder of Offered Securities
pursuant hereto is not prompted by any adverse information concerning the
Company or its subsidiaries that is not set forth in the Registration
Statement or the Prospectus.

(iv) The sale of the Offered Securities to the Underwriters by such
Selling Stockholder pursuant to this Agreement, the compliance by such
Selling Stockholder with the other provisions of this Agreement, the
Custody Agreement and the consummation of the other transactions herein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as have been obtained, such as may be

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<PAGE>

required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not
effective under the Securities Act as of the time of execution hereof,
such as may be required (and shall be obtained as provided in this
Agreement) under the Securities Act, or (B) conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute
a default under any indenture, mortgage, deed of trust, lease or other
agreement or instrument to which such Selling Stockholder or (if such
Selling Stockholder is a corporation or similar entity) any of its
subsidiaries is a party or by which such Selling Stockholder or (if such
Selling Stockholder is a corporation or similar entity) any of its
subsidiaries or any of such Selling Stockholder's respective properties
are bound, or (if such Selling Stockholder is a corporation or similar
entity) the charter documents or by-laws of such Selling Stockholder or
any of its subsidiaries or any statute or any judgment, decree, order,
rule or regulation of any court or other governmental authority or any
arbitrator applicable to such Selling Stockholder or any of its
subsidiaries.

(v) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, to the knowledge of
such Selling Stockholder: (A) on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement conformed in all
respects to the requirements of the Act and the Rules and Regulations and
did not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed, or will conform, in all respects to the requirements of the Act
and the Rules and Regulations did not include, or will not include, any
untrue statement of a material fact and did not omit, or will not omit, to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and (C) on the date of this
Agreement, the Initial Registration Statement and, if the Effective Time of
the Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement each
conforms, and at the time of filing of the Prospectus pursuant to
Rule 424(b) or (if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all respects to
the requirements of the Act and the Rules and Regulations, and neither of
such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading. If the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement: on the
Effective Date of the Initial Registration Statement, to the knowledge of
such Selling Stockholder, the Initial Registration Statement and the
Prospectus will conform in all respects to the requirements of the Act and
the Rules and Regulations, neither of such documents will include any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading. The two preceding sentences do not apply to statements or
omissions made in a Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the Company by
any Underwriter though the Representatives specifically for use therein, it
being understood and agreed that the only such information is that
described as such in Section 7(c) hereof.

(vi) Such Selling Stockholder has reviewed the representations and
warranties made by the Company in Section 2(a) hereof, and such Selling
Stockholder has no reason to believe that such representations and
warranties are not accurate.

(vii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between such Selling Stockholder and any
person that would give rise to a valid claim against such Selling
Stockholder or any Underwriter for a brokerage commission, finder's fee or
other like payment in connection with this offering.

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<PAGE>

3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of
the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company and each Selling
Stockholder agree, severally and not jointly, to sell to each Underwriter,
and each Underwriter agrees, severally and not jointly, to purchase from the
Company and each Selling Stockholder, at a purchase price of $ [___] per
share, that number of Firm Securities (rounded up or down, as determined by
CSFBC in its discretion, in order to avoid fractions) obtained by multiplying
2,000,000 Firm Securities in the case of the Company and the number of Firm
Securities set forth opposite the name of such Selling Stockholder in
SCHEDULE A hereto, in the case of a Selling Stockholder, in each case by a
fraction the numerator of which is the number of Firm Securities set forth
opposite the name of such Underwriter in SCHEDULE B hereto and the
denominator of which is the total number of Firm Securities.

Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholders hereunder have been placed in custody, for delivery
under this Agreement, under the Custody Agreements made with the Custodian.
Each Selling Stockholder agrees that the shares represented by the
certificates held in custody for the Selling Stockholders under such Custody
Agreements are subject to the interests of the Underwriters hereunder, that
the arrangements made by the Selling Stockholders for such custody are to
that extent irrevocable, and that the obligations of the Selling Stockholders
hereunder shall not be terminated by operation of law, whether by the death
of any individual Selling Stockholder or the occurrence of any other event,
or in the case of a trust, by the death of any trustee or trustees or the
termination of such trust. If any individual Selling Stockholder or any such
trustee or trustees should die, or if any other such event should occur, or
if any of such trusts should terminate, before the delivery of the Offered
Securities hereunder, certificates for such Offered Securities shall be
delivered by the Custodian in accordance with the terms and conditions of
this Agreement as if such death or other event or termination had not
occurred, regardless of whether or not the Custodian shall have received
notice of such death or other event or termination.

The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in Federal (same day) funds by official bank check or checks
or wire transfer to an account at a bank acceptable to CSFBC drawn to the
order of the Company in the case of 2,000,000 shares of Firm Securities and
the Custodian in the case of 500,000 shares of Firm Securities, at the office
of the Company at its address set forth in Section 10 hereof, at 10:00 A.M.,
New York time, on January [__], 1999, or at such other time not later than
seven full business days thereafter as CSFBC and the Company determine, such
time being herein referred to as the "First Closing Date". The certificates
for the Firm Securities so to be delivered will be in definitive form, in
such denominations and registered in such names as CSFBC requests and will be
made available for checking and packaging at the above office of the Company
at least 24 hours prior to the First Closing Date.

In addition, upon written notice from CSFBC given to the Company and the
Selling Stockholders from time to time not more than 30 days subsequent to
the date of the Prospectus, the Underwriters may purchase all or less than
all of the Optional Securities at the purchase price per Security to be paid
for the Firm Securities. The Company agrees to sell to the Underwriters the
number of Optional Securities specified in such notice and the Underwriters
agree, severally and not jointly, to purchase such Optional Securities. Such
Optional Securities shall be purchased for the account of each Underwriter in
the same proportion as the number of Firm Securities set forth opposite such
Underwriter's name bears to the total number of Firm Securities (subject to
adjustment by CSFBC to eliminate fractions) and may be purchased by the
Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall
be sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to
the extent not previously exercised may be surrendered and terminated at any
time upon notice by CSFBC to the Company.

Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the
First Closing Date (the First Closing Date and each Optional

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<PAGE>

Closing Date, if any, being sometimes referred to as a "Closing Date"), shall
be determined by CSFBC but shall be not later than five full business days
after written notice of election to purchase Optional Securities is given.
The Company will deliver the Optional Securities being purchased on each
Optional Closing Date to the Representatives for the accounts of the several
Underwriters, against payment of the purchase price therefor in Federal (same
day) funds by official bank check or checks or wire transfer to an account at
a bank acceptable to CSFBC drawn to the order of the Company, at the above
office of the Company. The certificates for the Optional Securities being
purchased on each Optional Closing Date will be in definitive form, in such
denominations and registered in such names as CSFBC requests upon reasonable
notice prior to such Optional Closing Date and will be made available for
checking and packaging at the above office of the Company at a reasonable
time in advance of such Optional Closing Date.

4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public
as set forth in the Prospectus.

5. CERTAIN AGREEMENTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. With
respect to paragraphs (a) through (l) the Company, and, with respect to
paragraphs (m) through (o), the Selling Stockholders, agree with the several
Underwriters that:

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

The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has not occurred as
of such execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective amendment
thereto with the Commission pursuant to and in accordance with Rule 462(b)
on or prior to 10:00 P.M., New York time, on the date of this Agreement or,
if earlier, on or prior to the time the Prospectus is printed and
distributed to any Underwriter, or will make such filing at such later date
as shall have been consented to by CSFBC.

(b) The Company will advise CSFBC promptly of any proposal to amend
or supplement the initial or any additional registration statement as filed
or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's consent; and the
Company will also advise CSFBC promptly of the effectiveness of each
Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.

(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company will promptly
notify CSFBC of such

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<PAGE>

event and will promptly prepare and file with the Commission, at its own
expense, an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Neither
CSFBC's consent to, nor the Underwriters' delivery of, any such amendment
or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.

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

(e) The Company will furnish to the Representative copies of each
Registration Statement (four of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a
prospectus relating to the Offered Securities is required to be delivered
under the Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case in such quantities as CSFBC requests. The Prospectus shall be so
furnished on or prior to 3:00 P.M., New York time, on the business day
following the later of the execution and delivery of this Agreement or the
Effective Time of the Initial Registration Statement. All other such
documents shall be so furnished as soon as available. The Company will pay
the expenses of printing and distributing to the Underwriters all such
documents.

(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution.

(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other information concerning
the Company as CSFBC may reasonably request.

(h) The Company will apply the net proceeds from the sale of the
Offered Securities as set forth under "Use of Proceeds" in the Prospectus.

(i) The Company will cause the Offered Securities to be duly included
for quotation on the Nasdaq National Market prior to the First Closing
Date. The Company will ensure that the Offered Securities remain included
for quotation on the Nasdaq National Market following the First Closing
Date.

(j) The Company will (i) obtain the Lock-up Agreements described in
Section 2(a)(xxvii) hereof from the persons indicated in such Section prior
to the First Closing Date, (ii) enforce the terms of each Lock-up
Agreement, and (iii) issue stop-transfer instructions to the transfer agent
for the Securities with respect to any transaction or contemplated
transaction that would constitute a breach of or default under the
applicable Lock-up Agreement. In addition, except with the prior written
consent of CSFBC, the Company agrees (i) not to amend or terminate or waive
any right under any Lock-up

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<PAGE>

Agreement, or take any other action that would directly or indirectly
have the same effect as an amendment or termination or waiver of any
right under any Lock-up Agreement, that would permit any holder of
Securities, or any securities convertible into, or exercisable or
exchangeable for, Securities, to (x) offer, pledge, sell, offer to sell,
contract to sell, sell any option or contract to purchase, purchase any
option to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, such Securities
or other securities, or (y) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of such Securities or other securities, and (ii) not to consent
to any sale, short sale, grant of an option for the purchase of, or other
disposition or transfer of shares of Securities, or securities
convertible into or exercisable or exchangeable for Securities, subject
to a Lock-up Agreement.

(k) For a period of 90 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Act relating
to, any additional shares of its Securities or securities convertible into
or exchangeable or exercisable for any shares of its Securities, or
publicly disclose the intention to make any such offer, sale, pledge,
disposition or filing, without the prior written consent of CSFBC, except
issuances of Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, grants of employee
stock options pursuant to the terms of a plan in effect on the date hereof,
issuances of Securities pursuant to the exercise of such options and
issuances to Sprint Corporation or its affiliates pursuant to the Company's
obligations under the Governance Agreement with Sprint Corporation.

(l) The Company agrees with the several Underwriters that the Company
will pay all expenses incident to the performance of the obligations of the
Company under this Agreement, for any filing fees and other expenses
(including fees and disbursements of counsel) in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions as CSFBC designates and the printing of memoranda relating
thereto, for the filing fee incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review
by the National Association of Securities Dealers, Inc. of the Offered
Securities, for any travel expenses of the Company's officers and employees
and any other expenses of the Company in connection with attending or
hosting meetings with prospective purchasers of the Offered Securities and
for expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters.

(m) The Selling Stockholders shall bear and pay all costs and expenses
incurred incident to the performance of their respective obligations under
this Agreement including: any stamp duties, capital duties and stock
transfer taxes, if any, payable upon the sale of the Offered Securities of
such Selling Stockholders to the Underwriters; and the fees and
disbursements of their respective counsel, accountants and other advisors.

(n) Each Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group, on or prior to the First Closing Date a
properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).

(o) Each Selling Stockholder agrees, for a period of 90 days after
the date of the initial public offering of the Offered Securities, not to
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any additional shares of the Securities of the Company or
securities convertible into or exchangeable or exercisable for any shares
of Securities, or publicly disclose the intention to make any such offer,
sale, pledge or disposal, without the prior written consent of CSFBC.

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<PAGE>

6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on
the First Closing Date and the Optional Securities to be purchased on each
Optional Closing Date will be subject to the accuracy of the representations
and warranties on the part of the Company and the Selling Stockholders
herein, to the accuracy of the statements of Company officers made pursuant
to the provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:

(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement (but in no
event earlier than the Effective Time) or, if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement, shall be prior to the filing of the amendment or post-
effective amendment to the registration statement to be filed shortly prior
to such Effective Time), of PricewaterhouseCoopers LLP confirming that they
are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating to the
effect that:

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

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

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

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

(B) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of this Agreement,
there was any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company and its
consolidated subsidiaries or, at the date of the latest available
balance sheet read by such accountants, there was any decrease in
consolidated net current assets or net assets, as compared with
amounts shown on the latest balance sheet included in the
Prospectus; or

(C) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such accountants
there were any decreases, as compared with the corresponding
period of the previous year and with the period of

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<PAGE>

corresponding length ended the date of the latest income
statement included in the Prospectus, in consolidated net sales
or net operating income in the total or per share amounts of
consolidated net income;

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

(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each case to
the extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such records
by analysis or computation) with the results obtained from inquiries,
a reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.

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

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

(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Offered Securities;
(ii) any suspension or limitation of trading in securities generally on the
New York Stock Exchange, or any

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<PAGE>

setting of minimum prices for trading on such exchange, or any suspension
of trading of any securities of the Company on any exchange or in the
over-the-counter market; (iii) any banking moratorium declared by U.S.
Federal or New York authorities; or (iv) any outbreak or escalation of
major hostilities in which the United States is involved, any declaration
of war by Congress or any other substantial national or international
calamity or emergency if, in the judgment of a majority in interest of
the Underwriters including the Representatives, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.

(d) The Representatives shall have received an opinion, dated such
Closing Date, of Hunton & Williams, counsel for the Company, to the effect
that:

(i) The Company and each of its subsidiaries have been duly
organized and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation,
with corporate power and authority to own their respective properties
and conduct their respective business as described in the Prospectus;
and the Company and each of its subsidiaries is duly qualified to do
business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the Company and its subsidiaries taken as a whole;

(ii) The Offered Securities delivered on such Closing Date and
all other outstanding shares of the Common Stock of the Company have
been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus; and, except as described in the Prospectus, the
stockholders of the Company have no preemptive rights with respect to
the Securities;

(iii) all of the Offered Securities have been duly authorized
and accepted for quotation on the Nasdaq National Market, subject to
official notice of issuance.

(iv) the statements set forth under the heading "Description of
Capital Stock" in the Prospectus, insofar as such statements purport
to summarize certain provisions of the capital stock of the Company,
provide a fair summary of such provisions; and the statements set
forth under the headings "Risk Factors--Significant Ownership by
Sprint; Commercial Relationship with Sprint," "Risk Factors--
Government Regulation," "Risk Factors--Proprietary Rights;
Infringement Claims," "Risk Factors--Control by Directors, Executive
Officers, Five Percent Stockholders and Affiliated Entities," "Risk
Factors--Effect of Certain Charter Provisions," "Risk Factors--Shares
Eligible for Future Sale," "Strategic Alliance with Sprint," "Dividend
Policy," "Management--Employment Contracts and Change in Control
Arrangements," "Management--1995 Stock Option Plan and Other Warrant
and Option Issuances," "Management--Directors Stock Option Plan and
Other Director Issuances," "Management--Certain Transactions" and
"Shares Eligible for Future Sale" in the Prospectus, insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, have been reviewed by such counsel
and fairly present the information called for with respect to such
legal matters, documents and proceedings in all material respects as
required by the Securities Act and the rules and regulations
thereunder.

(v) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company

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<PAGE>

Act of 1940.

(vi) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the
sale of the Offered Securities, except such as have been obtained and
made under the Act and such as may be required under state securities
laws;

(vii) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company or any
of their properties, or any agreement or instrument known to such
counsel to which the Company or any such subsidiary is a party or by
which the Company or any such subsidiary is bound or to which any of
the properties of the Company or any such subsidiary is subject, or
the charter or by-laws of the Company or any such subsidiary;

(viii) The Initial Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Additional Registration Statement (if any) was filed and became
effective under the Act as of the date and time (if determinable)
specified in such opinion, the Prospectus either was filed with the
Commission pursuant to the subparagraph of Rule 424(b) specified in
such opinion on the date specified therein or was included in the
Initial Registration Statement or the Additional Registration
Statement (as the case may be), and, such counsel has been advised by
a telephone call with the Commission that no stop order suspending the
effectiveness of a Registration Statement or any part thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act, and each Registration Statement
and the Prospectus, and each amendment or supplement thereto, as of
their respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; such counsel have no reason to believe that any part of a
Registration Statement or any amendment thereto, as of its effective
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; or that the Prospectus or any amendment or supplement
thereto, as of its issue date or as of such Closing Date, contained
any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; the descriptions in the Registration Statements and
Prospectus of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present the
information required to be shown; and such counsel do not know of any
legal or governmental procedings required to be described in a
Registration Statement or the Prospectus which are not described as
required or of any contracts or documents of a character required to
be described in a Registration Statement or the Prospectus or to be
filed as exhibits to a Registration Statement which are not described
and filed as required; it being understood that such counsel need
express no opinion as to the financial statements or other financial
data contained in the Registration Statements or the Prospectus;

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

(x) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to

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<PAGE>

which the property of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not described therein or any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described therein or filed as required.

In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials and, as to matters
involving the application of laws of any jurisdiction other than the States
of California and Delaware or the United States, to the extent satisfactory
in form and scope to counsel for the Underwriters, upon the opinion of
other counsel. The foregoing opinion shall also state that the
Underwriters are justified in relying upon such opinion(s) of other
counsel, and copies of such opinion(s) shall be delivered to the
Representatives and counsel for the Underwriters.

(e) The Representatives shall have received the opinion contemplated
in the Power of Attorney executed and delivered by each Selling Stockholder
and an opinion, dated such Closing Date, of counsel for the respective
Selling Stockholders, to the effect that:

(i) Each Selling Stockholder had valid and unencumbered title to
the Offered Securities delivered by such Selling Stockholder on such
Closing Date and had full right, power and authority to sell, assign,
transfer and deliver the Offered Securities delivered by such Selling
Stockholder on such Closing Date hereunder; and the several
Underwriters have acquired valid and unencumbered title to the Offered
Securities purchased by them from the Selling Stockholders on such
Closing Date hereunder;

(ii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by any Selling Stockholder for the consummation of
the transactions contemplated by the Custody Agreement or this
Agreement in connection with the sale of the Offered Securities sold
by the Selling Stockholders, except such as have been obtained and
made under the Act and such as may be required under state securities
laws;

(iii) The execution, delivery and performance of the Custody
Agreement and this Agreement and the consummation of the transactions
therein and herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute, any rule, regulation or order of any
governmental agency or body or any court having jurisdiction over any
Selling Stockholder or any of their properties or any agreement or
instrument to which any Selling Stockholder is a party or by which any
Selling Stockholder is bound or to which any of the properties of any
Selling Stockholder is subject, or the charter or by-laws of any
Selling Stockholder which is a corporation;

(iv) The Power of Attorney and related Custody Agreement with
respect to each Selling Stockholder has been duly authorized, executed
and delivered by such Selling Stockholder and constitute valid and
legally binding obligations of each such Selling Stockholder
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and

(v) This Agreement has been duly authorized, executed and
delivered by each Selling Stockholder (or by the Attorney in-Fact).

-17-
<PAGE>

In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Selling Stockholders and public officials and,
as to matters involving the application of laws of any jurisdiction other
than the States of California and Delaware or the United States, to the
extent satisfactory in form and scope to counsel for the Underwriters, upon
the opinion of other counsel. The foregoing opinion shall also state that
the Underwriters are justified in relying upon such opinion(s) of other
counsel, and copies of such opinion(s) shall be delivered to the
Representatives and counsel for the Underwriters.

(f) The Representatives shall have received from Wilson Sonsini
Goodrich & Rosati, counsel for the Underwriters, such opinion or opinions,
dated such Closing Date, with respect to the incorporation of the Company,
the validity of the Offered Securities delivered on such Closing Date, the
Registration Statements, the Prospectus and other related matters as the
Representatives may require, and the Selling Stockholders and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.

(g) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that: the representations and warranties of the Company in this Agreement
are true and correct; the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date; no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission; the Additional Registration Statement (if any) satisfying
the requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time the
Prospectus was printed and distributed to any Underwriter; and, subsequent
to the date of the most recent financial statements in the Prospectus,
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole except as set forth in or
contemplated by the Prospectus or as described in such certificate.

(h) The Representatives shall have received from each Selling
Stockholder (or by the Attorney-in-Fact) a certificate, dated such Closing
Date, signed by such Selling Stockholder (or by the Attorney-in-Fact) in
which such Selling Stockholder shall state that: the representations and
warranties of such Selling Stockholder in this Agreement are true and
correct; and such Selling Stockholder has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
or under the Custody Agreement at or prior to such Closing Date.

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

The Selling Stockholders and the Company will furnish the Representatives
with such conformed copies of such opinions, certificates, letters and
documents as the Representatives reasonably request. CSFBC may in its sole
discretion waive on behalf of the Underwriters compliance with any conditions
to the obligations of the Underwriters hereunder, whether in respect of an
Optional Closing Date or otherwise.

7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may

-18-
<PAGE>

become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below.

(b) The Selling Stockholders, jointly and severally, will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action
as such expenses are incurred; provided, however, that the Selling
Stockholders will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by an Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; provided, further,
that a Selling Stockholder shall only be subject to such liability to the
extent that the untrue statement or alleged untrue statement or omission or
alleged omission is based upon information provided by such Selling
Stockholder or contained in a representation or warranty given by such
Selling Stockholder in this Agreement or the Custody Agreement; and provided,
further, that the liability under this subsection of each Seling Stockholder
shall be limited to an amount equal to the aggregate net proceeds to such
Selling Stockholder from the sale of Securities sold by such Selling
Stockholder hereunder.

(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or such Selling Stockholder may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company and each Selling
Stockholder in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the following information in the Prospectus furnished
on behalf of each Underwriter: the concession and reallowance figures
appearing in the

-19-
<PAGE>

[____] paragraph under the caption "Underwriting" and the information
contained in the [_____] paragraph under the caption "Underwriting".

(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under subsection (a), (b) or (c) above. In case any
such action is brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional
release of such indemnified party from all liability on any claims that are
the subject matter of such action.

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

-20-
<PAGE>

(f) The obligations of the Company and the Selling Stockholders under
this Section shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter (as
hereinafter defined) within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each director of the Company, to each
officer of the Company who has signed a Registration Statement and to each
person, if any, who controls the Company within the meaning of the Act.

8. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of
Offered Securities that such defaulting Underwriter or Underwriters agreed
but failed to purchase does not exceed 10% of the total number of shares of
Offered Securities that the Underwriters are obligated to purchase on such
Closing Date, CSFBC may make arrangements satisfactory to the Company and the
Selling Stockholders for the purchase of such Offered Securities by other
persons, including any of the Underwriters, but if no such arrangements are
made by such Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to
purchase the Offered Securities that such defaulting Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters
so default and the aggregate number of shares of Offered Securities with
respect to which such default or defaults occur exceeds 10% of the total
number of shares of Offered Securities that the Underwriters are obligated to
purchase on such Closing Date and arrangements satisfactory to CSFBC, the
Company and the Selling Stockholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders, except
as provided in Section 9 (provided that if such default occurs with respect
to Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased
prior to such termination). As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section.
Nothing herein will relieve a defaulting Underwriter from liability for its
default.

9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of
the Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers
or directors or any controlling person, and will survive delivery of and
payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by
the Underwriters is not consummated, the Company and the Selling Stockholders
shall remain responsible for the expenses to be paid or reimbursed by them
pursuant to Section 5 and the respective obligations of the Company, the
Selling Stockholders, and the Underwriters pursuant to Section 7 shall remain
in effect, and if any Offered Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section
5 shall also remain in effect. If the purchase of the Offered Securities by
the Underwriters is not consummated for any reason other than solely because
of the termination of this Agreement pursuant to Section 8 or the occurrence
of any event specified in clause (ii), (iii) or (iv) of Section 6(c), the
Company will, reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Offered Securities. If the Company is
required to make any payments to the Underwriters under this Section 9
because of any Selling Stockholder's refusal, inability or failure to satisfy
any condition to the obligations of the Underwriters set forth in Section 6
hereof, such defaulting Selling Stockholder, pro rata in proportion to the
percentage of Offered Securities to be sold by each, shall reimburse the
Company on demand for all amounts so paid.

-21-
<PAGE>

10. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to the Representatives at Eleven Madison Avenue, New York, N.Y.
10010-3629, Attention: Investment Banking Department - Transactions Advisory
Group, or, if sent to the Company or to the Selling Stockholders (or any of
them), will be mailed, delivered or telegraphed and confirmed to it at 3100
New York Drive, Pasadena, California, 91107, facsimile (626) 296-4151,
Attention: Grayson L. Hoberg; provided, however, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed
and confirmed to such Underwriter.

11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons
referred to in Section 7, and no other person will have any right or
obligation hereunder.

12. REPRESENTATION. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this
Agreement, and any action under this Agreement taken by the Representatives
will be binding upon all the Underwriters. The Attorney-in-Fact will act for
the Selling Stockholders in connection with such transactions, and any action
under or in respect of this Agreement taken by the Attorney-in-Fact will be
binding upon all the Selling Stockholders.

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

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

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-22-
<PAGE>

If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of
the counterparts hereof, whereupon it will become a binding agreement among
the Selling Stockholders, the Company and the several Underwriters in
accordance with its terms.

Very truly yours,

EARTHLINK NETWORK, INC.

By:
--------------------------------
CHARLES G. BETTY
PRESIDENT AND CHIEF EXECUTIVE OFFICER

THE SELLING STOCKHOLDERS

By:
--------------------------------
ATTORNEY-IN-FACT

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

CREDIT SUISSE FIRST BOSTON CORPORATION
INVEMED ASSOCIATES, INC.
ING BARING FURMAN SELZ LLC
CRUTTENDEN ROTH INCORPORATED
Acting on behalf of themselves and as the Representatives of the
several Underwriters.

By CREDIT SUISSE FIRST BOSTON CORPORATION

By:
--------------------------------
Title:
--------------------------------

-23-
<PAGE>

SCHEDULE A

<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF OPTIONAL
FIRM SECURITIES SECURITIES
SELLING STOCKHOLDER TO BE SOLD TO BE SOLD
------------------- --------------- ----------
<S> <C> <C>

----------- -----------
Total.............................

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

</TABLE>

<PAGE>

SCHEDULE B

NUMBER OF
FIRM SECURITIES
UNDERWRITER TO BE PURCHASED
----------- ---------------
<S> <C>

Credit Suisse First Boston Corporation ..................

Invemed Associates, Inc. ................................

ING Baring Furman Selz LLC...............................

Cruttenden Roth Incorporated ............................

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

Total ................................................
---------------
---------------

</TABLE>

<PAGE>

EXHIBIT 5.1

January 13, 1999

EarthLink Network, Inc.
3100 New York Drive, Suite 201
Pasadena, California 91107

Re: Registration of 2,435,879 Shares of Common Stock;
Registration Statement on Form S-1 (Reg. No. 333-69177)

Ladies and Gentlemen:

We have acted as counsel to EarthLink Network, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, pursuant to the Company's Registration
Statement on Form S-1, Registration No. 333-69177 (the "Registration
Statement"), of a public offering of 2,435,879 shares of common stock, $.01
par value ("Common Stock") of the Company (the "Firm Shares"), of which
2,000,000 are being sold by the Company and 435,879 are being sold by the
Selling Stockholders as described in the underwriting agreement (the
"Underwriting Agreement") to be entered into between the Company and Credit
Suisse First Boston Corporation, Invemed Associates, Inc., ING Baring Furman
Selz LLC and Cruttenden Roth Incorporated (the "Underwriters"). In addition,
the Company will grant to the Underwriters an option to purchase up to an
additional 375,000 shares of Common Stock solely to cover over-allotments, if
any (the "Option Shares"). The Firm Shares and the Option Shares are
hereinafter referred to collectively as the "Shares."

In this capacity, we have examined the Registration Statement
(including all amendments thereto), the proposed form of Underwriting Agreement,
the Company's Certificate of Incorporation and originals or copies, certified or
otherwise identified to our satisfaction, of such corporate records, agreements,
documents and other instruments of the Company relating to the authorization and
issuance of the Shares to be sold by the Company and other matters as we have
deemed relevant and necessary as a basis for the opinion hereinafter set forth.

In conducting our examination we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents.

<PAGE>

EarthLink Network, Inc.
January 13, 1999
Page 2

Based upon the foregoing, and in reliance thereon, we are of the
opinion that the Shares, when issued and delivered against payment therefor in
accordance with the terms of the Underwriting Agreement, will be legally and
validly issued, fully paid and non-assessable.

We hereby consent to the incorporation of this opinion into the
Registration Statement as Exhibit 5.1 thereto and to the reference to our firm
under the heading "Legal Matters" in the Prospectus that is a part of the
Registration Statement.

We further consent to the use of this opinion as an exhibit to
applications to securities commissioners of various states of the United States
for the registration or qualification of the Shares under the securities or
"blue sky" laws of such states.

Very truly yours,

HUNTON & WILLIAMS

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated June 5, 1998, except as
to Note 14, which is as of July 21, 1998, relating to the consolidated financial
statements of EarthLink Network, Inc., and of our report dated June 16, 1998,
relating to the statement of assets acquired and liabilities assumed of the
Sprint Internet Passport Business acquired by EarthLink Network, Inc., which
appear in such Prospectus. We also consent to the references to us under the
headings "Experts" and "Selected Financial Data" in such Prospectus. However, it
should be noted that PricewaterhouseCoopers LLP has not prepared or certified
such "Selected Financial Data."

PRICEWATERHOUSECOOPERS LLP

Century City, California

January 8, 1999

<PAGE>
EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 6, 1998, with respect to the Statement of
Revenues and Direct Expenses of the Consumer Internet Access Services of Sprint
Corporation included in Pre-effective Amendment No. 3 to the Registration
Statement (Form S-1) and related Prospectus of EarthLink Network, Inc. for the
registration of 2,435,879 shares of its common stock.

/s/ Ernst & Young LLP

Kansas City, Missouri

January 8, 1999