<PAGE>

                                                                    EXHIBIT 10.4

                        INTERSHOP COMMUNICATIONS, INC.

                           REORGANIZATION AGREEMENT

     This Intershop Communications, Inc. Reorganization Agreement ("Agreement")
is entered into as of July 16, 1998, by and among Intershop Communications,
Inc., a Delaware corporation (the "Company"), Intershop Communications AG, a
German stock corporation ("Intershop AG"), J. Burgess Jamieson ("Jamieson") and
Stephan Schambach ("Schambach") upon the following terms and conditions:

                                   RECITALS

     A.  Pursuant to that certain Reorganization Agreement, dated as of June 23,
1998 ("Reorganization Agreement"), certain investors in the Company exchanged
their shares in the Company for shares of Intershop AG common stock. As a
result, the Company has become a subsidiary of Intershop AG. Intershop AG
intends now to commence its initial public offering of stock on the Neuer Market
in Frankfurt, Germany (the "IPO").

     B.  Schambach, Jamieson and Intershop AG (collectively, the "Stockholders")
presently hold all Company stock issued and outstanding.

     C.  In order to facilitate the IPO, the Stockholders and the Company desire
that (1) Jamieson surrender to the Company nine hundred seventy-six thousand
(976,000) shares, collectively, of Company series A preferred stock ("Series A
Preferred") and Company series B preferred stock ("Series B Preferred")in
exchange for nine hundred seventy-six thousand (976,000) shares of Company class
B common stock ("Class B Common"); (2) Schambach surrender to the Company four
million four hundred ten thousand (4,410,000) shares of Company common stock in
exchange for four million four hundred ten thousand (4,410,000) shares of Class
B Common; and (3) Intershop AG surrender to the Company all remaining issued and
outstanding Company stock in exchange, collectively, for an equal number of
shares of Company class A common stock ("Class A Common") (the
"Reorganization").

     D.  The Reorganization is intended to qualify as a reorganization under
Section 368(a)(1)(E) of the Internal Revenue Code (the "Code") and this
Agreement is intended to be a "Plan of Reorganization" within the meaning of
Regulation 1.368-2(g) under the Code.

     E.  The parties hereto intend that the transactions contemplated in this
Agreement will qualify for the exemption from registration set forth in Section
4(2) of the Securities Act of 1933, as amended (the "Securities Act").

     Now, Therefore, in consideration of the covenants and promises contained in
this Agreement, the parties hereto agree as follows:
<PAGE>

                                   SECTION 1

                            Terms of Reorganization

     1.1  Closing. The closing (the "Closing") of the Reorganization described
herein shall occur on the date of this Agreement. At the Closing, (a) Jamieson
agrees to surrender to the Company nine hundred seventy-six thousand (976,000)
shares, collectively, of Series A Preferred and Series B Preferred in exchange
for nine hundred seventy-six thousand (976,000) shares of Class B Common; (b)
Schambach agrees to surrender to the Company four million four hundred ten
thousand (4,410,000) shares of Company common stock in exchange for four million
four hundred ten thousand (4,410,000) shares of Class B Common; and (c)
Intershop AG agrees to surrender to the Company all remaining issued and
outstanding Company stock in exchange, collectively, for an equal number of
shares of Class A Common. Such exchange shall be effective as of the date of
this Agreement the ("Closing Date"), subject to the terms and conditions hereof,
and is intended to constitute a reorganization pursuant to Section 368(a)(1)(E)
of the Internal Revenue Code of 1986, as amended.

     1.2  Class A Common. The rights, preferences and privileges of the Class A
Common shall be as set forth in the Amended and Restated Certificate of
Incorporation of the Company (the "Certificate").

     1.3  Class B Common. The rights, preferences and privileges of Class B
Common shall be as set forth in the Certificate.

     1.4  Conditions. The respective obligations of each party to consummate the
transaction contemplated by this Agreement on the Closing Date shall be subject
to satisfaction or waiver (such waiver being in a writing signed by both
parties) on or prior to the Closing Date of the following conditions:

          (a) The Stockholders shall have delivered to the Company the original
stock certificates representing the number of shares of common and preferred
stock provided for in paragraph 1.1, above, with respect to the Closing. Such
certificate(s) shall be duly issued in the Stockholders' respective names and
shall be accompanied by such supporting documents as may, in the opinion of the
Company's counsel, be necessary to pass to the Company good and marketable title
to such shares.

          (b) The Stockholders shall each have executed and delivered to the
Company an Assignment Separate from Certificate in substantially the forms
attached hereto as Exhibit A.

          (c) Intershop AG shall have obtained any necessary approvals by its
board of directors and/or shareholders with respect to its consent set forth in
Section 2 hereof.
<PAGE>

                                   SECTION 2

                             Additional Covenants

          (a) Intershop AG hereby consents to the right, as set forth with more
particularity in the Certificate, of the holders of Class B Common to convert
such shares into shares of Intershop AG, and further agrees to immediately
convert such shares within ten (10) business days of receiving such holder's (i)
written request for such conversion and (ii) stock certificate representing the
shares to be converted.

          (b) The Company covenants to amend its Certificate to reflect the
creation of Class A Common and Class B Common.

          (c) The Company further covenants to issue and deliver to each of the
Stockholders a certificate representing the number of shares of Class A Common
or Class B Common, as the case may be, provided for in paragraph 1.1 above.

                                   SECTION 3

                          Investment Representations

     Jamieson and Schambach each hereby represent and warrant with respect to
the acquisition of the Class B Common provided for herein as follows:

     3.1  Authorization. He has full power and authority to enter into this
Agreement and to sell, assign, transfer and deliver all of his stock in the
Company free and clear of all liens, encumbrances, equities, security interests,
restrictions and claims whatsoever other than restrictions under the
Certificate. This Agreement is a valid and legally binding obligation of him,
enforceable in accordance with its terms, except as enforcement hereof may be
limited by bankruptcy and other laws of general application affecting the rights
and remedies of creditors or by the availability of equitable remedies. The
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in a breach or violation by him of any terms
or provisions of (a) any trust, constructive or other, or (b) any material
agreement or instrument to which he is a party or by which he or any of his
properties are bound.

     3.2  Title. He has good and marketable title to the stock to be exchanged
pursuant to this Agreement, free and clear of all liens, encumbrances, equities,
claims, restrictions, security interests, voting trusts or other defects of
title whatsoever other than restrictions under the Certificate.

     3.3  Experience. He is experienced in evaluating and investing in high
technology companies such as the Company, is capable of evaluating the merits
and risks of his investment in the Company and is able to bear the economic risk
of the investment.
<PAGE>

     3.4  No View to Distribute. He is acquiring his stock pursuant to this
Agreement solely for the purpose of investment and not with a view to, or for
resale in connection with, any distribution thereof and he has no present intent
of engaging in a distribution of such stock. He understands that the stock to be
acquired by him has not been registered under the Securities Act of 1933, as
amended (the "Securities Act") by reason of a specific exemption from the
registration provisions of the Securities Act, which depends upon, among other
things, the bona fide nature of his representation regarding the absence of an
intent to distribute such stock as expressed herein.

     3.5  Rule 144. He acknowledges that, because they have not been registered
under the Securities Act, the stock he is acquiring must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available. He is aware of the provisions of Rule 144
promulgated under the Securities Act which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not during the applicable holding period as set
forth in Rule 144, the sale being through a "broker's transaction" or in
transactions directly with a "market maker" (as provided by Rule 144(f)) and the
number of shares being sold during any three (3) month period not exceeding
specified limitations (unless the sale is within the requirements of Rule
144(k)).

     3.6  No Public Market. He understands that no public market now exists for
any of the securities issued by the Company and that no public market will ever
exist for such securities.

     3.7  Access to Information. He has had an opportunity to discuss the
Company's business, management and financial affairs with its management and to
obtain any additional information necessary to verify the accuracy of the
information given to him. He has received all the information he considers
necessary or appropriate for deciding whether to acquire the stock.

                                   SECTION 4

                                    General

     4.1  Governing Law and Venue. This Agreement and the rights of the parties
hereto, shall be governed by and construed in accordance with the internal laws
of the State of California as such laws apply to agreements among California
residents made and to be performed entirely within the State of California. Any
legal action or other legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement shall be brought or otherwise
commenced in any state or federal court located in San Mateo, San Francisco or
Santa Clara counties in the State of California. Each party to this Agreement:
<PAGE>

          (a) expressly and irrevocably consents and submits to the jurisdiction
of each state and federal court located in San Mateo, San Francisco or Santa
Clara counties in the State of California in connection with any such legal
proceeding;

          (b) agrees that each state and federal court located in San Mateo, San
Francisco or Santa Clara counties in the State of California shall be deemed to
be a convenient forum; and

          (c) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in San Mateo, San Francisco or Santa Clara counties in the State of
California, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or that this
Agreement or the subject matter of this Agreement may not be enforced in or by
such court.

     4.2  Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
and shall be enforceable by each such person.

     4.3  Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement among the parties with regard to the subjects
hereof.

     4.4  Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

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

     4.6  Amendments. The provisions of this Agreement may be amended at any
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by each of
the Company and the Stockholders.

     4.7  Pronouns. All pronouns and any variations thereof used in this
Agreement shall be deemed to refer to the masculine, or neuter, singular or
plural, as appropriate.

     4.8  Authority and Execution. Each person executing this Agreement on
behalf of a party hereto represents and warrants that he is duly and validly
authorized to do so on behalf of such party, with full right and authority to
execute this Agreement and to bind such party with respect to all of its
obligations hereunder.
<PAGE>

     4.9  Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) on the next business day when sent by confirmed telex
or facsimile or (iii) three (3) business days after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the party to be
notified at the address as set forth on the signature page hereto or at such
other address as such party may designate by ten (10) days advance written
notice to the other parties hereto.

     4.10 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

     4.11 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

     4.12 Interpretation. Each party acknowledges that such party, either
directly or through such party's representatives, has participated in the
drafting of this Agreement, and any applicable rule of constructions that
ambiguities are to be resolved against the drafting party should not be applied
in connection with the construction or interpretation of this Agreement.

     4.13 English Language Interpretation. This Agreement has been prepared in
the English language, and the English language shall control its interpretation.

     4.14 Specific Enforcement. Any Holder shall be entitled to specific
enforcement of its rights under this Agreement. The parties acknowledge that
money damages would be an inadequate remedy for a breach of this Agreement and
consent to an action for specific performance or other injunctive relief in the
event of any such breach.

     4.15 Further Assurances. Each party to this Agreement covenants and agrees
to execute and deliver such other agreements and writings and to perform such
other acts as may be necessary for the consummation of the matters contemplated
by this Agreement.
<PAGE>

     In Witness Whereof, this Reorganization Agreement has been executed and
delivered as of the date first written above.

Intershop Communications, Inc.,
a Delaware corporation


By: /s/ Stephan Schambach
   -----------------------------------

Print Name: Stephan Schambach
           ---------------------------

Title: President & CEO
      --------------------------------



Intershop Communications AG,
a German stock corporation


By: /s/ Stephan Schambach
   -----------------------------------

Print Name: Stephan Schambach
            --------------------------

Title: Chairman of Board of Management
       -------------------------------


J. Burgess Jamieson


/s/ J. Burgess Jamieson
--------------------------------------


Stephan Schambach

/s/ Stephan Schambach
--------------------------------------
<PAGE>

                                   Exhibit A

                     ASSIGNMENT SEPARATE FROM CERTIFICATE

The undersigned hereby sells, conveys, assigns and transfers unto Intershop
Communications, Inc., a Delaware corporation (the "Company"), an aggregate of
Four Million Four Hundred Ten Thousand (4,410,000) shares of common stock of the
Company standing in the undersigned name on the books of the Company and
represented by Certificate No. ___ herewith, and does hereby irrevocably
constitute and appoint the Secretary of the Company as attorney to transfer said
stock on the books of the Company with full power of substitution in the
premises.

Date: July 16, 1998



/s/ Stephan Schambach
---------------------
Stephan Schambach
<PAGE>

                                   Exhibit A

                     ASSIGNMENT SEPARATE FROM CERTIFICATE

The undersigned hereby sells, conveys, assigns and transfers unto Intershop
Communications, Inc., a Delaware corporation (the "Company"), an aggregate of
Nine Hundred Seventy-Six Thousand (976,000) shares of preferred stock of the
Company standing in the undersigned name on the books of the Company and
represented by Certificates No.  *  herewith, and does hereby irrevocably
                                ---
constitute and appoint the Secretary of the Company as attorney to transfer said
stock on the books of the Company with full power of substitution in the
premises.

Date: July 16, 1998



/s/ J. Burgess Jamieson
-----------------------
J. Burgess Jamieson

                                     Cert. #         Pref.      No. Shares
                                     -------         -----      ----------

Netconsult Communications, Inc.      PA-3            A              75,000
Netconsult Communications, Inc.      PB-3            B              47,000
                                                                ----------
                                                                   122,000

X 10.1 Split - Becomes                                           1,220,000

Sold in IPO                                                       (244,000)
                                                                ----------
Remaining Shares                                                   976,000
                                                                ==========
<PAGE>

                                   Exhibit A

                     ASSIGNMENT SEPARATE FROM CERTIFICATE

The undersigned hereby sells, conveys, assigns and transfers unto Intershop
Communications, Inc., a Delaware corporation (the "Company"), an aggregate of
_______________________ (_________) shares of common stock of the Company and
_______________________ (_________) shares of preferred stock of the Company
standing in the undersigned name on the books of the Company and represented by
Certificate Nos. ___ herewith, and does hereby irrevocably constitute and
appoint the Secretary of the Company as attorney to transfer said stock on the
books of the Company with full power of substitution in the premises.


Date: July 16, 1998



Intershop Communications AG,
a German stock corporation

By: /s/ Stephan Schambach
   -----------------------------------

Print Name: Stephan Schambach
            --------------------------

Title: Chairman of Board of Management
       -------------------------------