AMAZON COM INC
8-K, 1998-08-07
CATALOG & MAIL-ORDER HOUSES
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<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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



                                    FORM 8-K

                                 CURRENT REPORT



                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



                                 AUGUST 3, 1998
                        ---------------------------------
                                 Date of Report
                        (Date of earliest event reported)



                                AMAZON.COM, INC.
- --------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

<TABLE>
<S>                                       <C>                           <C>
             DELAWARE                           000-22513                   91-1646860
   ----------------------------           ---------------------         ------------------
   (State or Other Jurisdiction           (Commission File No.)            (IRS Employer
        of Incorporation)                                               Identification No.)
</TABLE>


                  1516 SECOND AVENUE, SEATTLE, WASHINGTON 98101
- --------------------------------------------------------------------------------
          (Address of principal executive offices, including Zip Code)


                                 (206) 622-2335
- --------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

<PAGE>   2
ITEM 5.  OTHER EVENTS

         (a)      THE JUNGLEE MERGER

         On August 3, 1998, Amazon.com, Inc. ("Amazon.com") entered into a
definitive agreement for the acquisition of all of the outstanding capital stock
of Junglee Corp., a Delaware corporation ("Junglee"), pursuant to an Agreement
and Plan of Merger dated as of August 3, 1998 (the "Junglee Merger Agreement"),
by and among Amazon.com, Junglee and AJ Acquisition, Inc., a Delaware
corporation and wholly-owned subsidiary of Amazon.com ("Junglee Merger Sub").
Subject to the satisfaction of certain conditions precedent, Junglee Merger Sub
will be merged with and into Junglee, with Junglee as the surviving corporation
(the "Junglee Merger").

         Junglee, founded in June 1996 and based in Sunnyvale, California, has
developed World Wide Web-based virtual database technology to help consumers
find products on the Internet.

         Amazon.com will issue approximately 1,600,000 shares of Amazon.com
common stock, par value $.01 per share ("Amazon.com Common Stock"), and assume
all outstanding options in connection with the acquisition of Junglee, pursuant
to the formula set forth below.

         Pursuant to the terms of the Junglee Merger Agreement, at the effective
time of the Junglee Merger, each issued and outstanding share of Junglee common
stock, par value $.001 per share (the "Junglee Common Stock"), including each
share of Junglee Common Stock issued upon conversion of each issued and
outstanding share of Junglee Series A Preferred Stock, par value $.001 per
share, Series B Preferred Stock, par value $.001 per share, and Series C
Preferred Stock, par value $.001 per share (together with the Junglee Common
Stock, the "Junglee Capital Stock"), other than shares of Junglee Capital Stock,
if any, for which dissenters' rights have been or will be perfected in
compliance with the applicable laws of the State of Delaware and the State of
California, will be converted into the right to receive that number of shares of
Amazon.com Common Stock, determined by dividing (i) 1,891,568 by (ii) the total
number of shares of Junglee Capital Stock outstanding immediately prior to the
effective time on a fully diluted basis, assuming all outstanding options and
warrants to purchase shares of Junglee Capital Stock have been validly exercised
and issued prior to the effective time (the "Junglee Exchange Ratio").

         In addition, each option to purchase shares of Junglee Common Stock
outstanding at the effective time of the Junglee Merger will be assumed by
Amazon.com and will be treated as an option to purchase that number of
Amazon.com 



                                                                          PAGE 1
<PAGE>   3

Common Shares equal to the product of the Junglee Exchange Ratio and the number
of shares of Junglee Common Stock subject to such option.

         Amazon.com anticipates that the Junglee Merger will be accounted for
under the purchase method of accounting.

         Pursuant to the Junglee Merger Agreement, Junglee and its stockholders
have agreed to indemnify and hold Amazon.com and the surviving corporation
harmless for any losses that may be suffered by Amazon.com or its affiliates
arising out of or in connection with any inaccuracy in, or misrepresentation or
breach of, any representation or warranty made by Junglee in the Junglee Merger
Agreement and related agreements, or any failure by Junglee to perform its
obligations under the Junglee Merger Agreement and related agreements. 190,000
of the shares of Amazon.com Common Stock to be issued in connection with the
Junglee Merger will be deposited with an escrow agent to secure such
indemnification obligations.

         Pursuant to an Investor Rights Agreement to be executed at the closing
of the Junglee Merger (the "Junglee Investor Rights Agreement"), by and between
Amazon.com and the stockholders of Junglee, Amazon.com has agreed to prepare and
file with the Securities and Exchange Commission (the "SEC"), within 90 days of
the effective time of the Junglee Merger, a Registration Statement on Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"), covering
the resale of the Amazon.com Common Stock to be issued in the Junglee Merger
and to use its best efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable thereafter.

         The Junglee Merger Agreement and the form of Junglee Investor Rights
Agreement (together, the "Junglee Agreements") are filed as exhibits to this
report and are incorporated herein by reference. The descriptions of the Junglee
Agreements herein do not purport to be complete and are qualified in their
entirety by the provisions of the Junglee Agreements.

         (b)      THE PLANETALL MERGER

         On August 3, 1998, Amazon.com entered into a definitive agreement for
the acquisition of all of the outstanding capital stock of Sage Enterprises,
Inc., a Massachusetts corporation ("PlanetAll"), pursuant to an Agreement and
Plan of Merger dated as of August 3, 1998 (the "PlanetAll Merger Agreement"), by
and among Amazon.com, PlanetAll and Pacific Acquisition, Inc., a Massachusetts
corporation and wholly-owned subsidiary of Amazon.com ("PlanetAll Merger Sub").
Subject to the satisfaction of certain conditions precedent, PlanetAll Merger
Sub will 



                                                                          PAGE 2
<PAGE>   4
be merged with and into PlanetAll, with PlanetAll as the surviving corporation
(the "PlanetAll Merger").

         PlanetAll, founded in September 1996 and based in Boston,
Massachusetts, provides contact management services via the Internet, including
Web-based address book, calendar and reminder features.

         Amazon.com will issue approximately 800,000 shares of Amazon.com Common
Stock and assume all outstanding options in connection with the acquisition of
PlanetAll, pursuant to the formula set forth below.

         Pursuant to the terms of the PlanetAll Merger Agreement, at the
effective time of the PlanetAll Merger, each issued and outstanding share of
PlanetAll common stock, par value $.01 per share (the "PlanetAll Common Stock"),
and each issued and outstanding share of PlanetAll Series A Preferred Stock, par
value $.01 per share, and Series B Preferred Stock, par value $.01 per share
(together with the PlanetAll Common Stock, the "PlanetAll Capital Stock"), other
than shares of PlanetAll Capital Stock, if any, for which dissenters' rights
have been or will be perfected in compliance with the applicable laws of the
Commonwealth of Massachusetts, will be converted into the right to receive that
number of shares of Amazon.com Common Stock, determined by dividing (i) 900,000
by (ii) the total number of shares of PlanetAll Capital Stock outstanding
immediately prior to the effective time on a fully diluted basis (assuming all
outstanding options and warrants to purchase shares of PlanetAll Capital Stock
have been validly exercised and issued prior to the effective time (the
"PlanetAll Exchange Ratio").

         In addition, each option to purchase shares of PlanetAll Common Stock
outstanding at the effective time of the PlanetAll Merger will be assumed by
Amazon.com and will be treated as an option to purchase that number of
Amazon.com Common Shares equal to the product of the PlanetAll Exchange Ratio
and the number of shares of PlanetAll Common Stock subject to such option. Any
warrants to purchase shares of PlanetAll Capital Stock outstanding at the
effective time will be assumed by Amazon.com and will constitute a warrant to
acquire that number of shares of Amazon.com Common Stock equal to the product of
the PlanetAll Exchange Ratio and the number of shares of PlanetAll Capital Stock
subject to such warrant.

         Amazon.com anticipates that the PlanetAll Merger will be accounted for
under the pooling of interests method of accounting.

         Pursuant to the PlanetAll Merger Agreement, PlanetAll and its
stockholders have agreed to indemnify and hold Amazon.com and the surviving
corporation harmless for any losses that may be suffered by Amazon.com or its
affiliates arising 



                                                                          PAGE 3
<PAGE>   5

out of or in connection with any inaccuracy in, or misrepresentation or breach
of, any representation or warranty made by PlanetAll in the PlanetAll Merger
Agreement and related agreements or any failure by PlanetAll to perform its
obligations under the PlanetAll Merger Agreement and related agreements. Shares
representing 10% of the Amazon.com Common Stock to be issued at the effective
time of the PlanetAll Merger will be deposited with an escrow agent to secure
such indemnification obligations.

         Pursuant to an Investor Rights Agreement to be executed at the closing
of the PlanetAll Merger (the "PlanetAll Investor Rights Agreement"), by and
between Amazon.com and the stockholders of PlanetAll, Amazon.com has agreed to
prepare and file with the SEC, within 45 days of the effective time of the
PlanetAll Merger, a Registration Statement on Form S-3 under the Securities Act
covering the resale of the Amazon.com Common Stock to be issued in the 
PlanetAll Merger and to use its best efforts to have the Registration 
Statement declared effective by the SEC as promptly as practicable thereafter.

         The PlanetAll Merger Agreement and the form of PlanetAll Investor
Rights Agreement (together, the "PlanetAll Agreements") are filed as exhibits to
this report and are incorporated herein by reference. The descriptions of the
PlanetAll Agreements herein do not purport to be complete and are qualified in
their entirety by the provisions of the PlanetAll Agreements.

         (c)      Exhibits

                     2.1             Agreement and Plan of Merger dated as of
                                     August 3, 1998, by and among Amazon.com,
                                     Inc., AJ Acquisition, Inc. and Junglee
                                     Corp.

                     2.2             Agreement and Plan of Merger dated as of
                                     August 3, 1998, by and among Amazon.com,
                                     Inc., Pacific Acquisition, Inc. and Sage
                                     Enterprises, Inc.

                     99.1            Form of Investor Rights Agreement by and 
                                     between Amazon.com, Inc. and certain 
                                     stockholders of Junglee Corp. named 
                                     therein.

                     99.2            Form of Investor Rights Agreement by and 
                                     between Amazon.com, Inc. and the 
                                     stockholders of Sage Enterprises, Inc.

                     99.3            Press Release issued August 3, 1998



                                                                          PAGE 4
<PAGE>   6

                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                       AMAZON.COM, INC.



Dated:  August 6, 1998             By /s/ Joy D. Covey
                                      --------------------
                                          Joy D. Covey
                                          Chief Financial Officer, Vice 
                                          President, Finance
                                          and Administration, and Secretary



                                                                          PAGE 5

<PAGE>   7
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
      Exhibit Number           Description
      --------------           -----------
<S>                      <C>
          2.1            Agreement and Plan of Merger dated as of August 3, 1998,
                         by and among Amazon.com, Inc., AJ Acquisition, Inc. and
                         Junglee Corp.

          2.2            Agreement and Plan of Merger dated as of August 3, 1998,
                         by and among Amazon.com, Inc., Pacific Acquisition,
                         Inc. and Sage Enterprises, Inc.

          99.1           Form of Investor Rights Agreement by and between Amazon.com, 
                         Inc. and certain stockholders of Junglee Corp. named therein.

          99.2           Form of Investor Rights Agreement by and between Amazon.com, 
                         Inc. and the stockholders of Sage Enterprises, Inc.

          99.3           Press Release issued August 3, 1998
</TABLE>



                                                                          PAGE 6

<PAGE>   1
                          AGREEMENT AND PLAN OF MERGER

                                      AMONG

                                AMAZON.COM, INC.,

                              AJ ACQUISITION, INC.,

                                       AND

                                  JUNGLEE CORP.







                           DATED AS OF AUGUST 3, 1998



<PAGE>   2
                                    CONTENTS


<TABLE>
<S>                                                                                     <C>
ARTICLE I - THE MERGER ................................................................  1

        1.1    The Merger .............................................................  1

        1.2    The Closing ............................................................  2

        1.3    Effective Date and Time ................................................  2

        1.4    Certificate of Incorporation of the Surviving Corporation ..............  2

        1.5    Bylaws of the Surviving Corporation ....................................  2

        1.6    Directors and Officers .................................................  3

        1.7    Conversion of Shares ...................................................  3

               1.7.1  Exchange Ratio ..................................................  3

               1.7.2  Exchange of Certificates ........................................  5

               1.7.3  No Fractional Shares ............................................  6

               1.7.4  No Further Transfers ............................................  7

        1.8    Stockholder Representative .............................................  7

        1.9    Tax Free Reorganization ................................................  7

ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............................  8

        2.1    Organization ...........................................................  8

        2.2    Enforceability .........................................................  8

        2.3    Capitalization .........................................................  9

        2.4    Subsidiaries and Affiliates ............................................ 10

        2.5    No Approvals; No Conflicts ............................................. 10

        2.6    Financial Statements ................................................... 11
</TABLE>


                                      -i-


<PAGE>   3

<TABLE>
<S>                                                                                     <C>
        2.7    Absence of Certain Changes or Events ................................... 12

        2.8    Taxes .................................................................. 13

        2.9    Property ............................................................... 16

        2.10   Contracts .............................................................. 17

        2.11   Claims and Legal Proceedings ........................................... 19

        2.12   Labor and Employment Matters ........................................... 19

        2.13   Employee Benefit Plans ................................................. 20

               2.13.1 Employee Benefit Plan Listing ................................... 20

               2.13.2 Documents Provided .............................................. 21

               2.13.3 Compliance ...................................................... 21

               2.13.4 Contributions and Premium Payments .............................. 22

               2.13.5 Related Employers ............................................... 22

               2.13.6 Multiemployer and Title IV Plans ................................ 23

               2.13.7 Post-Termination Welfare Benefits ............................... 23

               2.13.8 Suits, Claims and Investigations ................................ 23

               2.13.9 Payments Resulting From Transactions ............................ 23

        2.14   Intellectual Property .................................................. 24

               2.14.1  General ........................................................ 24

               2.14.2  Technology ..................................................... 24

               2.14.3  Third Party Technology ......................................... 25

               2.14.4  Trademarks ..................................................... 25

               2.14.5  Intellectual Property Rights ................................... 26

               2.14.6  Maintenance of Rights .......................................... 26
</TABLE>


                                      -ii-


<PAGE>   4

<TABLE>
<S>                                                                                     <C>
               2.14.7  Third Party Infringement ....................................... 26

               2.14.8  Infringement by the Company .................................... 27

               2.14.9  Confidentiality ................................................ 27

               2.14.10 Warranty Against Defects ....................................... 27

               2.14.11 Domain Names ................................................... 28

               2.14.12 Year 2000 ...................................................... 28

        2.15   Corporate Books and Records ............................................ 28

        2.16   Licenses, Permits, Authorizations, etc. ................................ 29

        2.17   Compliance With Laws ................................................... 29

        2.18   Insurance .............................................................. 29

        2.19   Brokers or Finders ..................................................... 30

        2.20   Absence of Questionable Payments ....................................... 30

        2.21   Bank Accounts .......................................................... 30

        2.22   Insider Interests ...................................................... 31

        2.23   Compliance With Environmental Laws ..................................... 31

        2.24   Information Supplied by the Company .................................... 32

        2.25   Full Disclosure ........................................................ 32

        2.26   Hart-Scott-Rodino ...................................................... 32

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF AMAZON.COM AND THE
        PURCHASER ..................................................................... 32

        3.1    Organization ........................................................... 33

        3.2    Enforceability ......................................................... 33

        3.3    Securities ............................................................. 34
</TABLE>


                                     -iii-


<PAGE>   5

<TABLE>
<S>                                                                                     <C>
        3.4    No Approvals or Notices Required; No Conflicts With
               Instruments ............................................................ 34

        3.5    Capitalization ......................................................... 35

        3.6    SEC Documents .......................................................... 35

        3.7    Absence of Certain Changes ............................................. 35

        3.8    Information Supplied by Amazon.com ..................................... 35

        3.9    Full Disclosure ........................................................ 36

ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS OF AMAZON.COM AND THE
        PURCHASER ..................................................................... 36

        4.1    Accuracy of Representations and Warranties ............................. 36

        4.2    Performance of Agreements .............................................. 36

        4.3    Opinion of Counsel for the Company ..................................... 36

        4.4    Opinion of Patent Counsel for the Company .............................. 36

        4.5    Compliance Certificate ................................................. 37

        4.6    Material Adverse Change ................................................ 37

        4.7    Approvals and Consents ................................................. 37

        4.8    Proceedings and Documents; Secretary's Certificate ..................... 37

        4.9    Nonforeign Affidavit ................................................... 38

        4.10   Compliance With Laws ................................................... 38

        4.11   Stockholder Approval ................................................... 38

        4.12   Legal Proceedings ...................................................... 38

        4.13   Escrow Agreement ....................................................... 38

        4.14   Employment and Noncompetition Arrangements ............................. 38

        4.15   Investor Rights Agreement .............................................. 38
</TABLE>


                                      -iv-


<PAGE>   6

<TABLE>
<S>                                                                                     <C>
        4.16   Affiliate Letters ...................................................... 39

        4.17   Termination of Certain Agreements ...................................... 39

        4.18   Exercise of Warrants ................................................... 39

        4.19   Repurchase Agreements .................................................. 39

        4.20   Other Approvals ........................................................ 39

ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ........................ 39

        5.1    Accuracy of Representations and Warranties ............................. 40

        5.2    Performance of Agreements .............................................. 40

        5.3    Opinion of Counsel ..................................................... 40

        5.4    Compliance Certificate ................................................. 40

        5.5    Legal Proceedings ...................................................... 40

        5.6    Material Adverse Change ................................................ 40

        5.7    Approvals and Consents ................................................. 41

        5.8    Compliance With Laws ................................................... 41

        5.9    Stockholder Approvals .................................................. 41

        5.10   Escrow Agreement ....................................................... 41

        5.11   Investor Rights Agreement .............................................. 41

        5.12   Option Letters ......................................................... 41

ARTICLE VI - COVENANTS ................................................................ 41

        6.1    Conduct of Business by the Company Pending the Merger .................. 42

        6.2    Access to Information; Confidentiality ................................. 44

        6.3    No Alternative Transactions ............................................ 44
</TABLE>


                                      -v-


<PAGE>   7

<TABLE>
<S>                                                                                     <C>
        6.4    Notification of Certain Matters ........................................ 44

        6.5    Further Action; Reasonable Best Efforts ................................ 45

        6.6    Stockholder Approval ................................................... 45

        6.7    Proxy Statement ........................................................ 45

        6.8    Listing Application .................................................... 46

        6.9    Dissenting Shares ...................................................... 46

        6.10   Publicity .............................................................. 46

        6.11   Conversion of Standardized Employee Benefit Plans ...................... 46

ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER ....................................... 47

        7.1    Termination ............................................................ 47

        7.2    Effect of Termination .................................................. 47

        7.3    Amendment .............................................................. 47

        7.4    Waiver ................................................................. 48

ARTICLE VIII - SURVIVAL AND INDEMNIFICATION ........................................... 48

        8.1    Survival ............................................................... 48

        8.2    Indemnification by the Company and Holders of Company
               Capital Stock .......................................................... 48

        8.3    Indemnification by Amazon.com .......................................... 49

        8.4    Threshold and Limitations .............................................. 49

        8.5    Procedure for Indemnification .......................................... 50

        8.6    Remedies ............................................................... 52

ARTICLE IX - GENERAL .................................................................. 52

        9.1    Tax Matters ............................................................ 52
</TABLE>


                                      -vi-


<PAGE>   8

<TABLE>
<S>                                                                                     <C>
        9.2    Expenses ............................................................... 53

        9.3    Notices ................................................................ 53

        9.4    Severability ........................................................... 54

        9.5    Entire Agreement ....................................................... 54

        9.6    Assignment ............................................................. 54

        9.7    Parties in Interest .................................................... 55

        9.8    Governing Law .......................................................... 55

        9.9    Headings ............................................................... 55

        9.10   Counterparts ........................................................... 55

        9.11   Waiver of Jury Trial ................................................... 55
</TABLE>


        EXHIBITS

<TABLE>
<S>                   <C>
        1.3      -    Certificate of Merger
        1.7.1    -    Form of Escrow Agreement
        1.9(A)   -    Amazon.com and Purchaser Tax Certificate
        1.9(B)   -    Company Tax Certificate
        2        -    Disclosure Memorandum
        2(A)     -    Form of Investor Rights Agreement
        4.3      -    Form of Opinion of Counsel for the Company
        4.4           Form of Opinion of Patent Counsel for the Company
        4.9      -    Foreign Investment in Real Property Tax Act Affidavit
        4.14     -    Form of Confidentiality, Noncompetition and Invention
                      Assignment Agreement
        4.16     -    Form of Affiliate Letter
        5.3      -    Form of Opinion of Counsel for Amazon.com and the
                      Purchaser
        5.12     -    Form of Option Letter
</TABLE>

                                     -vii-


<PAGE>   9
                          AGREEMENT AND PLAN OF MERGER


        This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of August 3, 1998, by and among Amazon.com, Inc., a Delaware corporation
("Amazon.com"), AJ Acquisition, Inc., a Delaware corporation and wholly owned
subsidiary of Amazon.com (the "Purchaser"), and Junglee Corp., a Delaware
corporation (the "Company").

                                    RECITALS

        A. The Company, Amazon.com and the Purchaser believe it advisable and in
their respective best interests to effect a merger of the Company and the
Purchaser pursuant to this Agreement (the "Merger").

        B. The Board of Directors of the Company has approved this Agreement and
the Merger as required by applicable law.

        C. The Boards of Directors of the Purchaser and the sole stockholder of
the Purchaser have approved this Agreement and the Merger as required by
applicable law.

        D. It is intended that the Merger will qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").

                                    AGREEMENT

        In consideration of the terms hereof, the parties hereto agree as
follows:

                             ARTICLE I - THE MERGER

1.1     THE MERGER

        Upon the terms and subject to the conditions hereof, (a) at the
Effective Time (as defined in Section 1.3 hereof) the separate existence of the
Purchaser shall cease and the Purchaser shall be merged with and into the
Company (the Company is sometimes referred to herein as the "Surviving
Corporation"), and (b) from and after the Effective Time, the Merger shall have
all the effects of a merger under the laws of the State of Delaware and other
applicable law.


                                      -1-


<PAGE>   10
1.2     THE CLOSING

        Subject to the satisfaction or waiver of the conditions set forth in
Articles IV and V, the closing of the Merger pursuant to this Agreement (the
"Closing") shall take place on the earliest practicable business day (the
"Closing Date") at 10:00 a.m. local time at the offices of Perkins Coie LLP,
1201 Third Avenue, 46th Floor, Seattle, Washington, or such other date, time or
location as Amazon.com and the Company shall agree.

1.3     EFFECTIVE DATE AND TIME

        On the Closing Date and subject to the terms and conditions hereof, a
certificate of merger (the "Certificate of Merger") complying with the
applicable provisions of the Delaware General Corporation Law ("Delaware Law"),
substantially in the form attached hereto as Exhibit 1.3, and in such form and
executed in such manner as required by Delaware Law, shall be delivered for
filing to the Secretary of State of the State of Delaware (the "Delaware
Secretary of State"). The Merger shall become effective on the date (the
"Effective Date") and at the time (the "Effective Time") of filing of the
Certificate of Merger or at such other time as may be specified in the
Certificate of Merger as filed. If the Delaware Secretary of State requires any
changes in the Certificate of Merger as a condition to filing or to issuing its
certificate to the effect that the Merger is effective, Amazon.com, the
Purchaser and the Company will execute any necessary revisions incorporating
such changes, provided such changes are not inconsistent with and do not result
in any material change in the terms of this Agreement.

1.4     CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION

        At the Effective Time, the Certificate of Incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation. Thereafter, the
Certificate of Incorporation of the Surviving Corporation may be amended in
accordance with its terms and as provided by law; provided, however, that
Article I thereof shall be amended to read as follows: "The name of this
corporation is Junglee Corp.."

1.5     BYLAWS OF THE SURVIVING CORPORATION

        At the Effective Time, the Bylaws of the Purchaser as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation. Thereafter, the Bylaws may be amended or repealed in accordance
with their terms and the Certificate of Incorporation of the Surviving
Corporation and as provided by law.


                                      -2-


<PAGE>   11
1.6     DIRECTORS AND OFFICERS

        At the Effective Time, the directors of the Purchaser shall continue in
office as the directors of the Surviving Corporation and the officers of the
Purchaser shall continue in office as the officers of the Surviving Corporation,
and such directors and officers shall hold office in accordance with and subject
to the Certificate of Incorporation and Bylaws of the Surviving Corporation.

1.7     CONVERSION OF SHARES

        1.7.1  EXCHANGE RATIO

        As of the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof:

               (a) All shares of any class of capital stock of the Company held
by the Company as treasury shares shall be canceled.

               (b) Each issued and outstanding share of common stock of the
Company, par value $0.001 per share (the "Company Common Stock"), including each
share of Company Common Stock issued upon conversion of each issued and
outstanding share of the Company's Series A Preferred Stock, par value $0.001
per share (the "Company Series A Stock"), Series B Preferred Stock, $0.001 par
value per share (the "Company Series B Stock"), and Series C Preferred Stock,
par value $0.001 per share (the "Company Series C Stock" and, together with the
Company Common Stock, Company Series A Stock and Company Series B Stock, the
"Company Capital Stock"), other than shares of Company Capital Stock, if any,
for which dissenters' rights have been or will be perfected in compliance with
applicable law, shall be converted into the right to receive from Amazon.com a
number of shares of Amazon.com common stock, par value $.01 per share
("Amazon.com Common Stock"), determined by dividing (i) 1,891,568 by (ii) the
total number of shares of Company Capital Stock outstanding immediately prior to
the Effective Time on a fully diluted basis, assuming for this purpose that all
outstanding options ("Options") to purchase shares of Company Capital Stock have
been validly exercised prior to the Effective Time, regardless of any vesting
limitations, other restrictions on exercisability or repurchase rights, and
issuable upon such exercise have been validly issued (such shares of Amazon.com
Common Stock being referred to herein as the "Merger Consideration" or the
"Securities" and the quotient so derived being referred to herein as the
"Exchange Ratio"). The number of Securities to be issued to each stockholder of
the Company under this Section 1.7(b) shall be calculated by aggregating all
shares of Company Capital Stock held by each such stockholder, so that such
number of Securities to be issued shall be equal to the number of shares of


                                      -3-


<PAGE>   12
Company Capital Stock held by such stockholder multiplied by the Exchange Ratio,
with cash paid in lieu of any fractional share of Amazon.com Common Stock
pursuant to Section 1.7.3 hereof.

               (c) Notwithstanding the foregoing, 190,000 shares of Amazon.com
Common Stock issued as part of the Merger Consideration (the "Escrow Shares")
shall be deposited in escrow with ChaseMellon Shareholder Services L.L.C.
("ChaseMellon" or the "Escrow Agent"), to be held and administered in accordance
with an Escrow Agreement in substantially the form attached hereto as Exhibit
1.7.1 (the "Escrow Agreement"), such Escrow Shares to be withheld and deducted,
pro rata, from the shares of Amazon.com Common Stock otherwise issuable to each
holder of Company Capital Stock at the Effective Time. Notwithstanding the
escrow of the Escrow Shares, dividends or other distributions declared and paid
on such shares shall continue to be paid by Amazon.com to the stockholders and
all voting rights with respect to such shares shall inure to the benefit of and
be enjoyed by such stockholders. Any securities received by the Escrow Agent in
respect of any Escrow Shares held in escrow as a result of any stock split or
combination of shares of Amazon.com Common Stock, payment of a stock dividend or
other stock distribution in or on shares of Amazon.com Common Stock, or change
of Amazon.com Common Stock into any other securities pursuant to or as a part of
a merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation of Amazon.com, or otherwise, shall be held by the
Escrow Agent as, and shall be included within the definition of, Escrow Shares.

               (d) Each issued and outstanding share of capital stock of the
Purchaser shall be converted into one share of common stock of the Surviving
Corporation.

               (e) Each outstanding Option to purchase shares of Company Common
Stock issued pursuant to the Company's 1996 Stock Plan and 1998 Equity Incentive
Plan (the "Company Option Plans"), whether or not vested or exercisable, shall
be assumed by Amazon.com and shall constitute an option to acquire, on the same
terms and conditions as were applicable under such assumed Option, that number
of shares of Amazon.com Common Stock equal to the product of the Exchange Ratio
and the number of shares of Company Common Stock subject to such Option, at a
price per share (rounded to the nearest $0.001) equal to the aggregate exercise
price for the shares of Company Common Stock subject to such Option divided by
the number of full shares of Amazon.com Common Stock deemed to be purchasable
pursuant to such Option; provided, however, that (i) subject to the provisions
of clause (ii) below, the number of shares of Amazon.com Common Stock that may
be purchased upon exercise of such Option shall not include any fractional
shares, and, upon the last such exercise of such Option, Amazon.com shall pay to
the holder thereof an amount of 


                                      -4-


<PAGE>   13
cash equal to such fraction multiplied by the closing price of Amazon.com Common
Stock as reported on the Nasdaq National Market on the date of such exercise,
and (ii) in the case of any Option to which Section 421 of the Code applies by
reason of its qualification under Section 422 of the Code, the option price, the
number of shares purchasable pursuant to such Option and the terms and
conditions of exercise of such Option shall be determined in order to comply
with Section 424 of the Code. Amazon.com shall assume the obligations of the
Company under the Company Option Plans and shall comply with the terms of the
Company Option Plans as they apply to the Options assumed as set forth above.
Amazon.com shall use its best efforts to cause the shares of Amazon.com Common
Stock that are issuable upon exercise of the Options assumed in accordance with
this Section 1.7.1 to be registered under the Securities Act of 1933, as amended
(the "Securities Act"), on Form S-8 ("Form S-8") within 30 days following the
Closing Date.

               (f) Holders of shares of Company Capital Stock who have complied
with all the requirements for perfecting dissenters' rights, as set forth in the
Delaware Law and in Chapter 13 of the California Corporations Code (the
"California Code") by virtue of Section 2115 of the California Code, shall be
entitled to their rights under the Delaware Law and the California Code with
respect to such shares (the "Dissenting Shares").

               (g) If, prior to the Effective Time, Amazon.com recapitalizes
through a split-up of its outstanding shares of capital stock into a greater
number, or a combination of its outstanding shares of capital stock into a
lesser number, reorganizes, reclassifies or otherwise changes its outstanding
shares of capital stock into the same or a different number of shares of other
classes of capital stock, or declares a dividend on its outstanding shares of
capital stock payable in shares or securities convertible into shares, the
number of shares of Amazon.com Common Stock into which the shares of Company
Capital Stock are to be converted, and the number of shares of Amazon.com Common
Stock issuable upon the exercise of each assumed Option, will be adjusted
appropriately so as to maintain the proportionate interests of the holders of
the Company Capital Stock and Options and the holders of shares of capital stock
of Amazon.com.

        1.7.2  EXCHANGE OF CERTIFICATES

        As soon as practicable after the Effective Date, ChaseMellon, as
exchange agent, shall make available, and each stockholder of the Company will
be entitled to receive, upon surrender to ChaseMellon of one or more
certificates representing shares of Company Capital Stock for cancellation and a
letter of transmittal in customary form, certificates representing the number of
shares of Amazon.com Common Stock that such stockholder is entitled to receive
pursuant to Section 1.7.1 hereof; provided, 


                                      -5-


<PAGE>   14
however, that the certificates representing the Escrow Shares shall be retained
by ChaseMellon in accordance with the Escrow Agreement. In the event that any
certificates representing shares of Company Capital Stock shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
stockholder of the Company claiming such certificate to be lost, stolen or
destroyed, Amazon.com shall issue in exchange for such lost, stolen or destroyed
certificate the shares of Amazon.com Common Stock that such stockholder is
entitled to receive pursuant to Section 1.7.1 hereof; provided, however, that
Amazon.com may in its discretion and as a condition precedent to the issuance
thereof, require such stockholder to provide Amazon.com with an indemnity
agreement against any claim that may be made against Amazon.com with respect to
the certificate alleged to have been lost, stolen or destroyed. The shares of
Amazon.com Common Stock that each stockholder of the Company shall be entitled
to receive pursuant to the Merger shall be deemed to have been issued at the
Effective Time. No interest shall accrue on the Merger Consideration. If the
Merger Consideration (or any portion thereof) is to be delivered to any person
other than the person in whose name the certificate or certificates representing
shares of Company Capital Stock surrendered in exchange therefor is registered,
it shall be a condition to such exchange that the person requesting such
exchange shall pay to Amazon.com any transfer or other taxes required by reason
of the payment of the Merger Consideration to a person other than the registered
holder of the certificate or certificates so surrendered, or shall establish to
the satisfaction of Amazon.com that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither Amazon.com nor any other party hereto
shall be liable to a holder of shares of Company Capital Stock for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.

        1.7.3  NO FRACTIONAL SHARES

        No certificates or scrip representing fractional shares of Amazon.com
Common Stock shall be issued upon the surrender for exchange of certificates
representing Company Capital Stock pursuant to the Merger, and no dividend,
stock split or other distribution with respect to Amazon.com Common Stock shall
relate to any such fractional interest, and any such fractional interests shall
not entitle the owner thereof to vote or to any rights of a security holder. In
lieu of each such fractional share, Amazon.com shall pay to the holder thereof,
as soon as practicable after the Effective Date, an amount in cash equal to such
fraction multiplied by the closing price of Amazon.com Common Stock as reported
on the Nasdaq National Market on the trading day prior to the Closing Date.


                                      -6-


<PAGE>   15
        1.7.4  NO FURTHER TRANSFERS

        After the Effective Time, there shall be no transfers of any shares of
Company Capital Stock on the stock transfer books of the Surviving Corporation.
If, after the Effective Time, certificates formerly representing shares of
Company Capital Stock are presented to the Surviving Corporation, they shall be
forwarded to Amazon.com and be canceled and exchanged in accordance with this
Section 1.7, subject to applicable law in the case of Dissenting Shares.

1.8     STOCKHOLDER REPRESENTATIVE

        By approving the Merger at a special meeting of stockholders or by
written consent of the stockholders, each stockholder of the Company shall have
irrevocably authorized and appointed Rakesh Mathur (the "Stockholder
Representative"), with full power of substitution and resubstitution, as his,
her or its representative and true and lawful attorney-in-fact and agent to act
with the powers set forth in the Investor Rights Agreement (as defined in the
preamble to Article II hereof) in his, her or its name, place and stead and to
execute in the name and on behalf of such stockholder the Escrow Agreement and
any other agreement, certificate, instrument or document to be delivered by the
stockholders in connection with the Escrow Agreement.

1.9     TAX FREE REORGANIZATION

        (a) Except as otherwise required by the Internal Revenue Service (the
"IRS") pursuant to a determination (as defined in Section 1313 of the Code) or
otherwise, or by applicable law, the parties shall not take a position on any
tax returns inconsistent with the treatment of the Merger for tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code by reason
of Section 368(a)(2)(E) of the Code.

        (b) In addition, Amazon.com represents, solely for tax purposes, now,
and as of the Closing Date, that it presently intends to continue the Company's
historic business or use a significant portion of the Company's business assets
in business in a manner that satisfies the continuity of business enterprise
requirement set forth in Treasury Regulation Section 1.368-1(d). At the Closing,
officers of Amazon.com and Purchaser shall execute and deliver an officers'
certificate substantially in the form of Exhibit 1.9(A) (the "Amazon.com and
Purchaser Tax Certificate") and officers of Junglee shall execute and deliver an
officer's certificate substantially in the form of Exhibit 1.9(B) (the "Company
Tax Certificate").


                                      -7-


<PAGE>   16
                 ARTICLE II - REPRESENTATIONS AND WARRANTIES OF
                                  THE COMPANY

        Except as is otherwise set forth in the Disclosure Memorandum attached
hereto as Exhibit 2 (the "Disclosure Memorandum"), and in order to induce
Amazon.com and the Purchaser to enter into and perform this Agreement, the
Escrow Agreement and the Investor Rights Agreements substantially in the form
attached hereto as Exhibit 2(A) (the "Investor Rights Agreement") to be entered
into as of the Closing among Amazon.com and each of the stockholders of the
Company, and the other agreements and certificates that are required to be
executed pursuant to this Agreement (collectively, the "Operative Documents"),
the Company represents and warrants to Amazon.com and the Purchaser as of the
date of this Agreement and as of the Closing as follows in this Article II:

2.1     ORGANIZATION

        The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has all
requisite corporate power and authority to own, operate and lease its properties
and assets, to carry on its business as now conducted and as currently proposed
to be conducted, and to enter into and perform its obligations under this
Agreement and the other Operative Documents to which the Company is a party, and
to consummate the transactions contemplated hereby and thereby. The Company is
duly qualified and licensed as a foreign corporation to do business and is in
good standing in each jurisdiction in which the character of the Company's
properties occupied, owned or held under lease or the nature of the business
conducted by the Company makes such qualification necessary, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company's business, properties or prospects (a "Company Material
Adverse Effect").

2.2     ENFORCEABILITY

        The Company has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement and each of the other Operative
Documents to which it is a party and each of the certificates, instruments and
documents executed or delivered by it pursuant to the terms of this Agreement.
All corporate action on the part of the Company and its officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other Operative Documents to which the
Company is a party, the consummation of the Merger, and the performance of all
the Company's obligations under this Agreement and the other Operative Documents
to which the Company is a party has been taken or will be taken as of or prior
to the Effective Time. This 


                                      -8-


<PAGE>   17
Agreement has been, and each of the other Operative Documents to which the
Company is a party at the Closing will have been, duly executed and delivered by
the Company, and this Agreement is, and each of the other Operative Documents to
which the Company is a party will be at the Closing, a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as to the effect, if any, of (a) applicable bankruptcy and
other similar laws affecting the rights of creditors generally, (b) rules of law
governing specific performance, injunctive relief and other equitable remedies,
and (c) the enforceability of provisions requiring indemnification in connection
with the offering, issuance or sale of securities.

2.3     CAPITALIZATION

        (a) The authorized capital stock of the Company consists of 15,000,000
shares of Company Common Stock and 5,150,000 shares of preferred stock, par
value $0.001 per share, of which 1,150,000 shares are designated as Company
Series A Stock, 2,000,000 shares are designated as Company Series B Stock and
2,000,000 shares are designated as Company Series C Stock.

        (b) As of the date of this Agreement, the issued and outstanding capital
stock of the Company consists solely of 7,511,249 shares of Company Common
Stock, 1,150,000 shares of Company Series A Stock, 1,949,726 shares of Company
Series B Stock and 1,016,787 shares of Company Series C Stock (the "Outstanding
Shares"), which are and as of the Closing will be held of record and, to the
knowledge of the Company, beneficially by the stockholders of the Company as set
forth on Schedule 2.3(b) to the Disclosure Memorandum. The Outstanding Shares
are, and immediately prior to the Closing will be, duly authorized and validly
issued, fully paid and nonassessable, and issued in compliance with all
applicable federal, state and foreign securities laws. To the knowledge of the
Company, no Person (as defined in Section 2.5 hereof) other than the
stockholders of the Company holds any interest in any of the Outstanding Shares.
True and correct copies of the stock records of the Company, showing all
issuances and transfers of shares of capital stock of the Company since
inception, have been provided to Amazon.com.

        (c) As of the date of this Agreement, other than (i) Options to purchase
up to 2,313,330 shares of Company Common Stock which have been granted under the
Company Option Plans and (ii) warrants to purchase up to 38,676 shares of
Company Series C Stock (the "Warrants"), there are no outstanding rights of
first refusal or offer, preemptive rights, options, warrants, conversion rights
or other agreements, either directly or indirectly, for the purchase or
acquisition from the Company or any stockholder of any shares of Company Capital
Stock or any securities convertible into or exchangeable for shares of Company
Capital Stock. Set forth on Schedule 2.3(c) to 


                                      -9-


<PAGE>   18
the Disclosure Memorandum is a spreadsheet accurately reflecting the number of
such Options and Warrants outstanding, the grant dates, vesting schedules and
exercise prices thereof, the principal terms of Convertible Notes, and, in each
case, the identities of the holders and an indication of their relationships to
the Company. The Company has delivered to Amazon.com true and correct copies of
the Company Option Plans, the form of stock option agreements relating to
Options granted thereunder, all Warrant certificates, all Convertible Notes and
all material deviations therefrom.

        (d) The Company is not a party or subject to any agreement or
understanding, and, to the knowledge of the Company, there is no agreement or
understanding between any Persons that affects or relates to the voting or
giving of written consents with respect to any securities of the Company or the
voting by any director of the Company. No stockholder of the Company or any
affiliate thereof is indebted to the Company, and the Company is not indebted to
any stockholder of the Company or any affiliate thereof. The Company is not
under any contractual or other obligation to register any of its presently
outstanding securities or any of its securities that may hereafter be issued.

2.4     SUBSIDIARIES AND AFFILIATES

        The Company does not own or control, and has not in the past owned or
controlled, directly or indirectly, any corporation, partnership, limited
liability company or other business entity. The Company does not own, directly
or indirectly, any ownership, equity, or voting interest in, or otherwise
control, any corporation, partnership, joint venture or other entity, and has no
agreement or commitment to purchase any such interest.

2.5     NO APPROVALS; NO CONFLICTS

        The execution, delivery and performance by the Company of this Agreement
and the other Operative Documents to which the Company is a party and the
consummation of the transactions contemplated hereby and thereby will not (a)
constitute a violation (with or without the giving of notice or lapse of time,
or both) of any provision of law or any judgment, decree, order, regulation or
rule of any court or other governmental authority applicable to the Company, (b)
require any consent, approval or authorization of, or declaration, filing or
registration with, any person, corporation, partnership, joint venture,
association, organization, other entity or governmental or regulatory authority
(a "Person"), except (i) compliance with applicable securities laws, (ii) the
filing of all documents necessary to consummate the Merger with the Delaware
Secretary of State, and (iii) the approval by the stockholders of the Company of
the transactions contemplated hereby, as provided under applicable 


                                      -10-


<PAGE>   19
law and the Certificate of Incorporation and Bylaws of the Company (all such
consents, approvals and authorizations to be duly obtained by the Company at or
prior to the Closing), (c) result in a default (with or without the giving of
notice or lapse of time, or both) under, or acceleration or termination of, or
the creation in any party of the right to accelerate, terminate, modify or
cancel, any agreement, lease, note or other restriction, encumbrance, obligation
or liability to which the Company is a party or by which it is bound or to which
any assets of the Company are subject, (d) result in the creation of any
Encumbrance (as defined in Section 2.9(d)) upon any material assets of the
Company or, to the knowledge of the Company, upon any Outstanding Shares or
other securities of the Company, (e) conflict with or result in a breach of or
constitute a default under any provision of the Restated Certificate of
Incorporation or Bylaws of the Company, or (f) invalidate or adversely affect
any permit, license or authorization currently required for the conduct of the
business of the Company.

2.6     FINANCIAL STATEMENTS

        The Company has delivered to Amazon.com (a) audited balance sheets,
statements of income and expense, statements of cash flow and statements of
stockholders' equity of the Company as of or for the fiscal years ended 1996 and
1997 and (b) an unaudited balance sheet, statement of income and expense,
statement of cash flow and statement of stockholders' equity of the Company as
of and for the six-month period ended June 30, 1998. All the foregoing financial
statements are herein referred to as the "Financial Statements." The balance
sheet of the Company as of June 30, 1998 is herein referred to as the "Company
Balance Sheet." The Financial Statements have been prepared in conformity with
generally accepted accounting principles in the United States ("GAAP") on a
basis consistent with prior accounting periods and fairly present the financial
position, results of operations and changes in financial position of the Company
as of the dates and for the periods indicated (except, solely with respect to
the unaudited Financial Statements, as to footnotes and normal period-end
adjustments). The Company has no liabilities or obligations of any nature
(absolute, contingent or otherwise) that are not fully reflected or reserved
against in the Company Balance Sheet and that would be required under GAAP to be
reflected or reserved, except liabilities or obligations incurred since the date
of the Company Balance Sheet in the ordinary course of business and consistent
with past practice that are not in excess of $50,000 in the aggregate or $20,000
individually. The Company maintains standard systems of accounting that are
adequate for its business. The Company is not a guarantor, indemnitor, surety or
other obligor of any indebtedness of any other Person. The Company's practices
with respect to capitalizing software development costs, as reflected in the
Financial Statements, are reasonable, in accordance with industry standards and
consistent with the advice of the Company's independent accountants.


                                      -11-


<PAGE>   20
2.7     ABSENCE OF CERTAIN CHANGES OR EVENTS

        Except for transactions specifically contemplated in this Agreement,
since the date of the Company Balance Sheet, neither the Company nor any of its
officers or directors in their representative capacities on behalf of the
Company have:

               (a) taken any action or entered into or agreed to enter into any
transaction, agreement or commitment other than in the ordinary course of
business;

               (b) forgiven or canceled any indebtedness or waived any claims or
rights of material value (including, without limitation, any indebtedness owing
by any stockholder, officer, director, employee or affiliate of the Company);

               (c) granted, other than in the ordinary course of business and
consistent with past practice, any increase in the compensation of directors,
officers, employees or consultants (including any such increase pursuant to any
employment agreement or bonus, pension, profit-sharing, lease payment or other
plan or commitment) or any increase in the compensation payable or to become
payable to any director, officer, employee or consultant;

               (d) suffered any change having a Company Material Adverse Effect;

               (e) borrowed or agreed to borrow any funds, incurred or become
subject to, whether directly or by way of assumption or guarantee or otherwise,
any obligations or liabilities (absolute, accrued, contingent or otherwise) in
excess of $25,000, except liabilities and obligations (i) that are incurred in
the ordinary course of business and consistent with past practice or (ii) that
would not be required to be reflected or reserved against in a balance sheet
prepared in accordance with GAAP, or increased, or experienced any change in any
assumptions underlying or methods of calculating, any bad debt, contingency or
other reserves;

               (f) paid, discharged or satisfied any material claims,
liabilities or obligations (absolute, accrued, contingent or otherwise) other
than the payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of claims, liabilities and obligations
reflected or reserved against in the Company Balance Sheet or incurred in the
ordinary course of business and consistent with past practice since the date of
the Company Balance Sheet, or prepaid any obligation having a fixed maturity of
more than 90 days from the date such obligation was issued or incurred;

               (g) knowingly permitted or allowed any of its property or assets
(real, personal or mixed, tangible or intangible) to be subjected to any
mortgage, pledge, 


                                      -12-


<PAGE>   21
lien, security interest, encumbrance, restriction or charge, except in the
ordinary course of business and consistent with past practice;

               (h) purchased or sold, transferred or otherwise disposed of any
of its material properties or assets (real, personal or mixed, tangible or
intangible);

               (i) disposed of or permitted to lapse any rights to the use of
any trademark, trade name, patent or copyright, or disposed of or disclosed to
any Person without obtaining an appropriate confidentiality agreement from any
such Person any trade secret, formula, process or know-how not theretofore a
matter of public knowledge;

               (j) made any single capital expenditure or commitment in excess
of $25,000 for additions to property, plant, equipment or intangible capital
assets or made aggregate capital expenditures in excess of $25,000 for additions
to property, plant, equipment or intangible capital assets;

               (k) made any change in any method of accounting or accounting
practice or internal control procedure;

               (l) issued any capital stock or other securities, or declared,
paid or set aside for payment any dividend or other distribution in respect of
its capital stock, or redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of capital stock or other securities of the Company, or
otherwise permitted the withdrawal by any of the holders of Company Capital
Stock of any cash or other assets (real, personal or mixed, tangible or
intangible), in compensation, indebtedness or otherwise, other than payments of
compensation in the ordinary course of business and consistent with past
practice;

               (m) paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets (real, personal or mixed, tangible or
intangible) to any of the Company's stockholders, officers, directors or
employees or any affiliate of any of the Company's stockholders, officers,
directors or employees, except compensation paid to officers and employees at
rates not exceeding the rates of compensation paid during the fiscal year last
ended; or

               (n) agreed, whether in writing or otherwise, to take any action
described in this Section 2.7.

2.8     TAXES

        (a) (i) All Tax Returns (as defined below) required to be filed by or on
behalf of the Company have been filed on a timely basis with the appropriate


                                      -13-


<PAGE>   22
governmental authority in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns were (at the time they were
filed) true, correct and complete in all material respects; (ii) all Taxes (as
defined below) of the Company (whether or not reflected on any Tax Return) have
been fully and timely paid; (iii) no waivers of statutes of limitation have been
given or requested with respect to the Company in connection with any Tax
Returns covering the Company with respect to any Taxes payable by it; and (iv)
the Company has duly and timely withheld from employee salaries, wages and other
compensation and paid over to the appropriate governmental authority all amounts
required to be so withheld and paid over for all periods under all applicable
laws. There are no liens with respect to Taxes on any of the Company's property
or assets other than liens for current Taxes not yet payable.

        (b) Neither the Company nor any other Person on behalf of the Company
(i) has filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company;
(ii) has executed or entered into a closing agreement pursuant to Section 7121
of the Code or any predecessor provision thereof or any similar provision of
state, local or foreign law; or (iii) has agreed to or is required to make any
adjustments pursuant to Section 481 (a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by the Company or has notice that a governmental authority has proposed any such
adjustment or change in accounting method.

        (c) There is no dispute or claim concerning any Tax liability of the
Company either (i) claimed or raised by any authority in writing or (ii) as to
which any of the directors and officers (and employees responsible for Tax
matters) of the Company have knowledge based on personal contact with any agent
of such authority. Schedule 2.8 to the Disclosure Memorandum lists all Tax
Returns filed with respect to the Company for taxable periods ended on or after
the Company's inception that have been audited, and indicates those Tax Returns
that currently are the subject of audit. The Company has delivered to Amazon.com
correct and complete copies of all Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company since
the Company's inception.

        (d) The Company has not made any payments, is not obligated to make any
payments and is not a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under Section
280G of the Code (or any similar provision of state, local or foreign law).


                                      -14-


<PAGE>   23
        (e) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(2)(i) of the Code.

        (f) The Company is not a party to any Tax allocation or sharing
agreement. The Company (i) has not been a member of a Tax Group (as defined
below) filing a consolidated income Tax Return under Section 1501 of the Code
(or any similar provision of state, local or foreign law) and (ii) does not have
any liability for Taxes of any Person under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor by contract or otherwise.

        (g) The unpaid Taxes of the Company (i) did not, as of June 30, 1998,
exceed the reserve for Tax liability set forth on the face (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) of the Company Balance Sheet and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing Tax
Returns.

        (h) There has been no ownership change, as defined in Section 382(g) of
the Code (or any comparable provision of state, local or foreign law), with
respect to the Company during or after any taxable period in which Company
incurred a net operating loss. The Disclosure Memorandum sets forth the amount
of any net operating loss, net capital loss, net-unrealized built-in loss (as
defined under Section 382 of the Code), unused investment or other credit,
unused foreign tax or excess charitable contribution allocable to the Company.

        As used in this Agreement, the following terms shall have the following
meanings:

        "Taxes" means all foreign, federal, state, county or local taxes,
charges, fees, levies, imposts, duties, and other assessments, including, but
not limited to, any income, alternative minimum or add-on tax, estimated, gross
income, gross receipts, sales, use, transfer, transactions, intangibles, ad
valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, real property, recording, personal property, federal
highway use, commercial rent, environmental (including, but not limited to,
taxes under Section 59(a) of the Code) or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties or additions to tax.


                                      -15-


<PAGE>   24
        "Tax Group" means any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which the Company is now
or was formerly a member.

        "Tax Returns" means any return, declaration, report, claim or refund,
information return, statement, or other similar document relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.

2.9     PROPERTY

        (a) The Company owns no real property other than the leasehold interests
described on Schedule 2.9(a) to the Disclosure Memorandum, which contains a
complete and accurate list of all real property of the Company which is leased,
rented or used by the Company (the "Real Property"). The Company has delivered
to Amazon.com true and complete copies of all written leases, subleases, rental
agreements, contracts of sale, tenancies or licenses relating to the Real
Property and written summaries of the terms of any oral leases, subleases,
rental agreements, contracts of sale, tenancies or licenses to which the Real
Property is subject.

        (b) Schedule 2.9(b) to the Disclosure Memorandum contains a complete and
accurate list of each item of personal property having a value in excess of
$2,000 which is owned, leased, rented or used by the Company (the "Personal
Property"); provided that such list need not describe the Technology or the IP
Rights (as defined in Sections 2.14.2 and 2.14.5, respectively), listed on
Schedule 2.14 to the Disclosure Memorandum. The Company has delivered to
Amazon.com true and complete copies of all leases, subleases, rental agreements,
contracts of sale, tenancies or licenses to which the Personal Property is
subject.

        (c) The Real Property and the Personal Property include all the
properties and assets (whether real, personal or mixed, tangible or intangible)
(other than, in the case of the Personal Property, property rights with an
individual value of less than $2,000 and the Technology and IP Rights) reflected
in the Company Balance Sheet (except for such properties or assets sold since
the date of the Company Balance Sheet in the ordinary course of business and
consistent with past practice) and all the properties and assets purchased by
the Company since the date of the Company Balance Sheet (other than, in the case
of the Personal Property, property rights with an individual value of less than
$2,000 and the Technology and the IP Rights). The Real Property and the Personal
Property include all material property used in the business of the Company,
other than the Technology and IP Rights. The Company's offices and other
structures and its Personal Property are of a quality consistent with industry
standards, are in good operating condition and repair, normal wear and tear
excepted, 


                                      -16-


<PAGE>   25
are adequate for the uses to which they are being put, and comply in all
material respects with applicable safety and other laws and regulations.

        (d) The Company's leasehold interest in each parcel of the Real Property
is free and clear of all liens, mortgages, pledges, deeds of trust, security
interests, charges, encumbrances and other adverse claims or interests of any
kind (each, an "Encumbrance"). Each lease of any portion of the Real Property is
valid, binding and enforceable in accordance with its terms against the parties
thereto and, to the Company's knowledge, any other Person with an interest in
such Real Property, the Company has performed in all material respects all
obligations imposed upon it thereunder, and neither the Company nor, to the
Company's knowledge, any other party thereto is in default thereunder, nor is
there any event which with notice or lapse of time, or both, would constitute a
default thereunder. The Company has not granted any lease, sublease, tenancy or
license of, or entered into any rental agreement or contract of sale with
respect to, any portion of the Real Property.

        (e) The Personal Property is free and clear of all Encumbrances, and,
other than leased Personal Property which is so noted on the list supplied
pursuant to Section 2.9(b) hereof, the Company owns such Personal Property. Each
lease, license, rental agreement, contract of sale or other agreement to which
the Personal Property is subject is valid, binding and enforceable in accordance
with its terms against the parties thereto, the Company has performed in all
material respects all obligations imposed upon it thereunder, and neither the
Company nor, to the Company's knowledge, any other party thereto is in default
thereunder, nor is there any event which with notice or lapse of time, or both,
would constitute a default by the Company or, to the Company's knowledge, any
other party thereunder. The Company has not granted any lease, sublease, tenancy
or license of any portion of the Personal Property, except in the ordinary
course of business.

2.10    CONTRACTS

        Schedule 2.10 to the Disclosure Memorandum contains a complete and
accurate list (other than the IP Rights listed on Schedule 2.14 to the
Disclosure Memorandum) of all contracts, agreements and understandings, oral or
written, to which the Company is currently a party or by which the Company is
currently bound providing for potential payments by or to the Company in excess
of $25,000, including, without limitation, security agreements, license
agreements, software development agreements, distribution agreements, joint
venture agreements, reseller agreements, credit agreements and instruments
relating to the borrowing of money. All contracts set forth on Schedule 2.10 are
valid, binding and enforceable in accordance with their terms against each party
thereto, except as to the effect, if any, of (a) applicable bankruptcy and other
similar laws affecting the rights of creditors generally, (b) rules of law


                                      -17-


<PAGE>   26
governing specific performance, injunctive relief and other equitable remedies,
and (c) the enforceability of provisions requiring indemnification in connection
with the offering, issuance or sale of securities, and are in full force and
effect, the Company has performed in all material respects all obligations
imposed on it thereunder, and neither the Company nor, to the Company's
knowledge, any other party thereto is in default thereunder, nor to the
Company's knowledge is there any event which with notice or lapse of time, or
both, would constitute a default by the Company or, to the Company's knowledge,
any other party thereunder. True and complete copies of each such written
contract (or written summaries of the terms of any such oral contract) have been
heretofore delivered to Amazon.com. Except as set forth on Schedule 2.10, the
Company has no

               (a) contracts with directors, officers, stockholders, employees,
agents, consultants, advisors, salesmen, sales representatives, distributors or
dealers that are not, except as provided by law to the contrary without regard
to the express terms of such contract, cancelable by it within 30 days' notice
without liability, penalty or premium, any agreement or arrangement providing
for the payment of any bonus or commission based on sales or earnings, or any
compensation agreement or arrangement affecting or relating to former employees
of the Company;

               (b) employment agreement, whether express or implied, or any
other agreement for services that contains any severance or termination pay
liabilities or obligations;

               (c) noncompetition agreement or other restriction from carrying
on its business anywhere in the world;

               (d) notice that any party to a contract listed on Schedule 2.10
intends to cancel, terminate or refuse to renew such contract (if such contract
is renewable);

               (e) material dispute with any of its suppliers, customers,
distributors, OEM resellers, licensors or licensees;

               (f) product distribution agreement, development agreement, or
license agreement as licensor or licensee (except for standard nonexclusive
software licenses granted to end-user customers in the ordinary course of
business the form of which has been provided to Amazon.com or standard licenses
purchased by the Company for off-the-shelf software);

               (g) joint venture contract or arrangement or any other agreement
that involves a sharing of profits with other persons; and


                                      -18-


<PAGE>   27
               (h) instrument evidencing indebtedness for borrowed money by way
of a direct loan, sale of debt securities, purchase money obligation,
conditional sale or guarantee, or otherwise, except for trade indebtedness
incurred in the ordinary course of business, and except as disclosed in the
Financial Statements.

2.11    CLAIMS AND LEGAL PROCEEDINGS

        Except as set forth on Schedules 2.11 and 2.14 to the Disclosure
Memorandum, there are no claims, actions, suits, arbitrations, investigations or
proceedings pending or involving or, to the Company's knowledge, threatened
against the Company before or by any court or governmental or nongovernmental
department, commission, board, bureau, agency or instrumentality, or any other
Person. Except as set forth on Schedules 2.11 and 2.14, to the Company's
knowledge, there is no valid basis for any claim, action, suit, arbitration,
proceeding or investigation before or by any Person which could reasonably be
expected to have a Company Material Adverse Effect. There are no outstanding or
unsatisfied judgments, orders, decrees or stipulations to which the Company is a
party. Schedule 2.11 sets forth a description of any material disputes that have
been settled or resolved by litigation or arbitration since the Company's
inception.

2.12    LABOR AND EMPLOYMENT MATTERS

        There are no material labor disputes, employee grievances or
disciplinary actions pending or, to the Company's knowledge, threatened against
or involving the Company or any of its present or former employees. The Company
has complied with all provisions of law relating to employment and employment
practices, terms and conditions of employment, wages and hours. The Company is
not engaged in any unfair labor practice and has no liability for any arrears of
wages or Taxes or penalties for failure to comply with any such provisions of
law. There is no labor strike, dispute, slowdown or stoppage pending or, to the
Company's knowledge, threatened against or affecting the Company, and the
Company has not experienced any work stoppage or other labor difficulty since
its incorporation. No collective bargaining agreement is binding on the Company.
The Company has no knowledge of any organizational efforts presently being made
or threatened by or on behalf of any labor union with respect to employees of
the Company. Each employee, officer and consultant of the Company has executed a
nondisclosure agreement in the form provided to Amazon.com. To the Company's
knowledge, no employee (or person performing similar functions) of the Company
is in violation of any such agreement or any employment agreement,
noncompetition agreement, patent disclosure agreement, invention assignment
agreement, proprietary information agreement or other contract or agreement
relating to the relationship of such employee with the Company or any other
party. Schedule 2.12 to the Disclosure Memorandum sets forth a true and 


                                      -19-


<PAGE>   28
complete list of (a) the names and current compensation amounts of all directors
and officers of the Company; (b) the wage rates for nonsalaried and nonofficer
salaried employees of the Company by classification, and all labor union
contracts (if any); (c) all group insurance programs in effect for employees of
the Company; and (d) the names and current compensation packages of all
independent contractors and consultants of the Company. The Company is not in
default with respect to any of its obligations referred to in clause (b) above
and has no material obligation or liability for severance or back pay owed
through or by virtue of the Closing. Except as disclosed on Schedule 2.12, all
employees of the Company are employed on an "at will" basis.

2.13    EMPLOYEE BENEFIT PLANS

        2.13.1 EMPLOYEE BENEFIT PLAN LISTING

        Schedule 2.13.1 to the Disclosure Memorandum sets forth a true, accurate
and complete list and description of all retirement, pension, profit sharing,
deferred compensation, savings, bonus, incentive, cafeteria, flexible benefits,
medical, dental, vision, hospitalization, life insurance, group insurance,
medical expense reimbursement, dependent care assistance, tuition reimbursement,
disability, accident, sick pay, holiday, vacation, severance, stock purchase,
stock option, stock appreciation rights, fringe benefit and other employee
benefit plans, funds, policies, programs, contracts, arrangements and payroll
practices (including, but not limited to, all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all employment, consulting and personal service
contracts and agreements, whether formal or informal, whether written or
unwritten and whether legally binding or not, (a) sponsored, maintained or
contributed to by the Company, (b) covering or benefiting any current or former
officer, employee, agent, director or independent contractor of the Company (or
any dependent or beneficiary of any such individual), or (c) with respect to
which the Company has (or could have) any actual or potential obligation or
liability (such plans, funds, policies, programs, contracts, arrangements and
payroll practices are hereinafter referred to collectively as "Employee Benefit
Plans" and each individually as an "Employee Benefit Plan"). The Company does
not have any agreement, arrangement, commitment or obligation, whether formal or
informal, whether written or unwritten and whether legally binding or not, to
create (or contribute to) any additional employee benefit plan, fund, policy,
program, contract, arrangement or payroll practice or to modify or amend any
existing Employee Benefit Plan. There has been no amendment, written
interpretation or announcement (whether or not written) by the Company relating
to, or change in participation or coverage under, any Employee Benefit Plan
that, either alone or together with other such items or events, could increase
the expense of maintaining the Employee Benefit Plans above the level of expense


                                      -20-


<PAGE>   29
incurred with respect thereto for the most recent fiscal year included in the
Financial Statements.

        2.13.2 DOCUMENTS PROVIDED

        The Company has delivered to Amazon.com true, correct and complete
copies (or, in the case of unwritten Employee Benefit Plans, descriptions) of
all Employee Benefit Plans (and all amendments thereto), along with, to the
extent applicable to the particular Employee Benefit Plan, the following
information: (a) copies of the last three annual reports (Form 5500 series)
filed with respect to such Employee Benefit Plan; (b) copies of the summary plan
descriptions, summaries of material modifications and all material employee
manuals or communications filed or distributed with respect to such Employee
Benefit Plan during the last three years; and (c) copies of all contracts (and
any amendments thereto) relating to such Employee Benefit Plan, including, but
not limited to, service provider agreements, administrative service agreements,
insurance contracts, annuity contracts, investment management agreements and
record-keeping agreements.

        2.13.3 COMPLIANCE

        With respect to each Employee Benefit Plan, (a) such Employee Benefit
Plan is, and at all times since its inception has been, maintained, administered
and operated in accordance with its terms and in compliance in all material
respects with all applicable laws, statutes, orders, rules and regulations, and
all requirements prescribed thereby, including, but not limited to, ERISA and
the Code; (b) all amendments and actions required to bring such Employee Benefit
Plan into conformity with the applicable provisions of ERISA, the Code and other
applicable laws and regulations have been made or taken within the time
prescribed by law, except to the extent that such amendments or actions are not
required by law to be made or taken until after the Closing Date; (c) the
Company, each fiduciary of such Employee Benefit Plan and all other Persons
have, at all times, properly performed all obligations, whether arising by
operation of law or by contract, required to be performed by each of them in
connection with such Employee Benefit Plan; (d) all returns, reports and other
disclosures relating to such Employee Benefit Plan required to be filed with any
governmental entity or agency or furnished to any participant or beneficiary
have been properly completed or prepared and timely filed or furnished in
accordance with applicable law; (e) neither the Company nor any other fiduciary
of such Employee Benefit Plan has engaged in any transaction or acted or failed
to act in a manner that violates the fiduciary requirements of ERISA or any
other applicable law; and (f) no event has occurred or is threatened or about to
occur that constitutes or could constitute a nonexempt prohibited transaction
under Section 406 or 407 of ERISA or under Section 4975 of the Code. Each
Employee Benefit Plan that constitutes a 


                                      -21-


<PAGE>   30
"group health plan," as defined in Section 607(1) or 733(a)(1) of ERISA or
Section 4980B(g)(2) of the Code, has been maintained, administered and operated
at all times since its inception in compliance with (and the Company has never
violated any of) the requirements of Parts 6 and 7 of Subtitle B of Title I of
ERISA, Section 4980B(f) of the Code, any regulations under such ERISA and Code
sections and any other applicable federal, state, local or foreign law regarding
the provision or continuation of health insurance coverage or other welfare
benefits (within the meaning of Section 3(1) of ERISA). Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code is, and
at all times since its inception has been, so qualified and its related trust or
annuity contract is, and at all times since its inception has been, exempt from
taxation under Section 501(a) of the Code, and each such Employee Benefit Plan
(and its related trust(s) and/or annuity contract(s)) is the subject of an
unrevoked favorable determination letter from the IRS to that effect. Nothing
has occurred since the most recent favorable determination letter issued with
respect to each such Employee Benefit Plan, and no circumstances exist or are
reasonably expected by the Company to occur, that could cause the Company (or
such Employee Benefit Plan) to lose its ability to rely on such determination
letter or could cause the IRS to revoke such determination letter. No event or
omission has occurred, or is reasonably expected by the Company to occur
(including, but not limited to, any of the transactions contemplated in or by
this Agreement), with respect to any Employee Benefit Plan that has or could
subject, directly or indirectly, the Company or any other Person to a tax under
Chapter 43 of Subtitle D of the Code or a penalty under Part 5 of Subtitle B of
Title I of ERISA.

        2.13.4 CONTRIBUTIONS AND PREMIUM PAYMENTS

        All contributions, premiums and other payments due or required to be
made to each Employee Benefit Plan under the terms of such Employee Benefit
Plan, ERISA, the Code or other applicable law have been timely paid, or, if not
yet due, have been properly recorded on the books of the Company.

        2.13.5 RELATED EMPLOYERS

        The Company is not, and has never been, a member of (a) a controlled
group of corporations, within the meaning of Section 414(b) of the Code, (b) a
group of trades or businesses under common control, within the meaning of
Section 414(c) of the Code, (c) an affiliated service group, within the meaning
of Section 414(m) of the Code, or (d) any other group of Persons treated as a
single employer under Section 414(o) of the Code.


                                      -22-


<PAGE>   31
        2.13.6 MULTIEMPLOYER AND TITLE IV PLANS

        The Company does not maintain or contribute to, and has never maintained
or contributed to (or been obligated to contribute to), any multiemployer plan
as defined in Section-3(37) or Section 4001(a)(3) of ERISA or 414(f) of the
Code, any multiple employer plan within the meaning of Section 4063 or 4064 of
ERISA or Section 413(c) of the Code, or any employee benefit plan, fund,
program, contract or arrangement that is subject to Section 412 of the Code,
Section 302 of ERISA or Title IV of ERISA.

        2.13.7 POST-TERMINATION WELFARE BENEFITS

        Neither the Company nor any Employee Benefit Plan provides or has any
obligation to provide (or contribute toward the cost of) health, severance or
any other welfare benefits (within the meaning of Section 3(1) of ERISA) with
respect to any current or former officer, employee, agent, director or
independent contractor of the Company or any other entity beyond such
individual's retirement or other termination of service, other than continuation
coverage mandated by Sections 601 through 608 of ERISA or Section 4980B(f) of
the Code.

        2.13.8 SUITS, CLAIMS AND INVESTIGATIONS

        There are no actions, suits or claims (other than routine claims for
benefits) pending or, to the Company's knowledge, threatened with respect to (or
against the assets of) any Employee Benefit Plan, nor is there a basis for any
such action, suit or claim. No Employee Benefit Plan is currently under
investigation, audit or review, directly or indirectly, by the IRS, the
Department of Labor (the "DOL") or any other governmental entity or agency, and,
to the Company's knowledge, no such action is contemplated or under
consideration by the IRS, the DOL or any other governmental entity or agency.

        2.13.9 PAYMENTS RESULTING FROM TRANSACTIONS

        Neither the execution and delivery of this Agreement or any of the other
Operative Documents nor the consummation of the transactions contemplated in (or
by) this Agreement or any of the other Operative Documents will (a) entitle any
current or former officer, employee, agent, director or independent contractor
of the Company to severance pay, unemployment compensation or any other payment
from the Company or any other Person, or otherwise increase the amount of
compensation due to any such individual, or (b) result in any benefit or right
becoming established or increased, or accelerate the time of payment or vesting
of any benefit, under any 


                                      -23-


<PAGE>   32
Employee Benefit Plan, whether or not some other subsequent action or event
would be required to trigger any of the items specified in, (a) or (b) above.

2.14    INTELLECTUAL PROPERTY

        2.14.1        GENERAL

        The Company owns or is licensed and has all rights in and to the
following as required to conduct its business as now conducted and as proposed
to be conducted in any written materials furnished by the Company to Amazon.com:
(a) all products, tools, computer programs, specifications, source code, object
code, graphics, devices, techniques, algorithms, methods, processes, procedures,
packaging, trade dress, formulae, drawings, designs, improvements, discoveries,
concepts, user interfaces, "look and feel," software, development and other
tools, content, inventions (whether or not patentable or copyrightable and
whether or not reduced to practice), designs, logos, themes, know-how, concepts
and other technology that are now, during the two years prior to the date of
this Agreement have been or are currently proposed in written materials
furnished by the Company to Amazon.com to be developed, produced, used, marketed
or sold by the Company (collectively, the "Technology-Related Assets"); and (b)
all intellectual property and other proprietary rights in the Technology-Related
Assets, including, without limitation, all trade names, trademarks, domain
names, service marks, logos, brand names and other identifiers, trade secrets,
copyrights, and domestic and foreign letters patent, and the registrations,
applications, renewals, extensions and continuations (in whole or in part)
thereof, all goodwill associated therewith, and all rights and causes of action
for infringement, misappropriation, misuse, dilution or unfair trade practices
associated therewith.

        2.14.2        TECHNOLOGY

        Schedule 2.14.2 to the Disclosure Memorandum sets forth a list of all
products and tools developed, produced, used, marketed or sold by the Company
during the two years prior to the date of this Agreement, together with all
prior versions, predecessors or precursors to such products or tools
(collectively, the "Products"). Except for the Third Party Technologies (as
defined in Section 2.14.3), the Company owns all right, title and interest in
and to the following (collectively, the "Technology"), free and clear of all
Encumbrances: (a) the Products, together with any and all codes, techniques,
software tools, formats, designs, user interfaces, content and "look and feel"
related thereto; (b) any and all updates, enhancements, corrections,
modifications, improvements and new releases related to the items set forth in
clause (a) above; (c) any and all technology and work in progress related to the
items set forth in clauses (a) and (b) above; and (d) all inventions,
discoveries, processes, designs, trade secrets, know-how and other confidential
or proprietary information related to the 


                                      -24-


<PAGE>   33
items set forth in clauses (a), (b) and (c) above. The Technology, excluding the
Third Party Technologies, is sometimes referred to herein as the "Company
Technology."

        2.14.3        THIRD PARTY TECHNOLOGY

        Schedule 2.14.3 to the Disclosure Memorandum sets forth a list of all
Technology used in the Company's business for which the Company does not own all
right, title and interest (collectively, the "Third Party Technologies"), and
all license agreements or other contracts pursuant to which the Company has the
right to use (in the manner used by the Company, or intended or necessary for
use with the Company Technology) the Third Party Technologies (the "Third Party
Licenses"), indicating, with respect to each of the Third Party Technologies
listed therein, the owner thereof and the Third Party License applicable
thereto. The Company has the lawful right to use (free of any material
restriction not expressly set forth in the Third Party Licenses) (a) all Third
Party Technology that is incorporated in or used in the development or
production of the Company Technology, and (b) all other Third Party Technology
necessary for the conduct of the Company's business as now conducted and as
proposed to be conducted in any written materials furnished by the Company to
Amazon.com. All Third Party Licenses are valid, binding and in full force and
effect, the Company and, to the Company's knowledge, each other party thereto
have performed in all material respects their obligations thereunder, and
neither the Company nor, to the Company's knowledge, any other party thereto is
in default thereunder, nor to the Company's knowledge has there occurred any
event or circumstance which with notice or lapse of time or both would
constitute a default or event of default on the part of the Company or, to the
Company's knowledge, any other party thereto or give to any other party thereto
the right to terminate or modify any Third Party License. The Company has not
received notice that any party to any Third Party License intends to cancel,
terminate or refuse to renew (if renewable) such Third Party License or to
exercise or decline to exercise any option or right thereunder.

        2.14.4        TRADEMARKS

        Schedule 2.14.4 to the Disclosure Memorandum sets forth a list of all
trademarks, trade names, brand names, service marks, logos or other identifiers
for the Products or otherwise used by the Company in its business (the "Marks").
The Company has full legal and beneficial ownership, free and clear of any
Encumbrances, of all rights conferred by use of the Marks in connection with the
Products or otherwise in the Company's business and, as to those Marks that have
been registered in the United States Patent and Trademark Office, by federal
registration of the Marks.


                                      -25-


<PAGE>   34
        2.14.5        INTELLECTUAL PROPERTY RIGHTS

        Schedule 2.14.5 to the Disclosure Memorandum sets forth all patents,
patent applications, copyright registrations (and applications therefor) and
trademark registrations (and applications therefor) (collectively, the "IP
Registrations") associated with the Company Technology and the Marks. The
Company owns all right, title and interest, free and clear of any Encumbrances,
in and to the IP Registrations, together with any other rights in or to any
copyrights (registered or unregistered), rights in the Marks (registered or
unregistered), trade secret rights and other intellectual property rights
(including, without limitation, rights of enforcement) contained or embodied in
the Company Technology and the Marks (collectively, the "IP Rights").

        2.14.6        MAINTENANCE OF RIGHTS

        Except as set forth on Schedule 2.14.6 to the Disclosure Memorandum, the
Company has not conducted its business, and has not used or enforced (or, to its
knowledge, failed to use or enforce) the IP Rights, in a manner that would
result in the abandonment, cancellation or unenforceability of any item of the
IP Rights or the IP Registrations, and the Company has not taken (or, to its
knowledge, failed to take) any action that would result in the forfeiture or
relinquishment of any IP Rights or IP Registrations, in each case where such
abandonment, cancellation, unenforceability, forfeiture or relinquishment would
have a Company Material Adverse Effect. Except as set forth in Schedule 2.14.6,
the Company has not granted to any third party any rights or permissions to use
any of the Technology or the IP Rights. To the best of the Company's knowledge,
except pursuant to reasonably prudent safeguards, (a) no third party has
received any confidential information relating to the Technology or the IP
Rights, and (b) the Company is not under any contractual or other obligation to
disclose to any third party any Company Technology.

        2.14.7        THIRD PARTY INFRINGEMENT

        Except as set forth on Schedule 2.14.7 to the Disclosure Memorandum, (a)
the Company has not received any notice or claim (whether written, oral or
otherwise) challenging the Company's ownership or rights in the Company
Technology or the IP Rights or claiming that any other person or entity has any
legal or beneficial ownership with respect thereto; (b) all the IP Rights are
legally valid and enforceable without any material qualification, limitation or
restriction on their use, and the Company has not received any notice or claim
(whether written, oral or otherwise) challenging the validity or enforceability
of any of the IP Rights; and (c) to the Company's knowledge, no other person or
entity is infringing or misappropriating any part of the IP Rights or otherwise
making any unauthorized use of the Company Technology.


                                      -26-


<PAGE>   35
        2.14.8        INFRINGEMENT BY THE COMPANY

        Except as set forth on Schedule 2.14.8 to the Disclosure Memorandum, (a)
the use of any of the Technology in the Company's business does not and will not
infringe, violate or interfere with or constitute an appropriation of any right,
title or interest (including, without limitation, any patent, copyright or trade
secret right) held by any other person or entity, and there have been no claims
made with respect thereto; (b) the use of any of the Marks and other IP Rights
in the Company's business will not infringe, violate or interfere with or
constitute an appropriation of any right, title or interest (including, without
limitation, any patent, copyright, trademark or trade secret right) held by any
other person or entity, and there have been no claims made with respect thereto;
and (c) the Company has not received any notice or claim (whether written, oral
or otherwise) regarding any infringement, misappropriation, misuse, abuse or
other interference with any third party intellectual property or proprietary
rights (including, without limitation, infringement of any patent, copyright,
trademark or trade secret right of any third party) by the Company, the
Technology or the Marks or other IP Rights or claiming that any other entity has
any claim of infringement with respect thereto.

        2.14.9        CONFIDENTIALITY

        Except as set forth on Schedule 2.14.9 to the Disclosure Memorandum, (a)
the Company has not disclosed any source code regarding the Technology to any
person or entity other than an employee of the Company and under a written
nondisclosure agreement; (b) the Company has at all times maintained and
diligently enforced commercially reasonable procedures to protect all
confidential information relating to the Technology; (c) neither the Company nor
any escrow agent is under any contractual or other obligation to disclose the
source code or any other proprietary information included in or relating to the
Technology; and (d) the Company has not deposited any source code relating to
the Technology into any source code escrows or similar arrangements. If, as
disclosed on Schedule 2.14.9, the Company has deposited any source code to the
Technology into source code escrows or similar arrangements, no event has
occurred that has or could reasonably form the basis for a release of such
source code from such escrows or arrangements.

        2.14.10        WARRANTY AGAINST DEFECTS

        Except as set forth in Schedule 2.14.10 to the Disclosure Memorandum,
the Technology is free from known material defects and substantially conforms to
the applicable specifications, documentation and samples of such Technology.


                                      -27-


<PAGE>   36
        2.14.11        DOMAIN NAMES

        Schedule 2.14.11 sets forth a list of all Internet domain names used by
the Company in its business (collectively, the "Domain Names"). The Company has,
and after the Closing the Surviving Corporation will have, a valid registration
and all material rights (free of any material restriction) in and to the Domain
Names, including, without limitation, all rights necessary to continue to
conduct the Company's business as it is currently conducted.

        2.14.12        YEAR 2000

        Each hardware, software and firmware product used by the Company in its
business (collectively, the "Software") will accurately process date data
(including, but not limited to, calculating, comparing and sequencing) from,
into and between the twentieth and twenty-first centuries, including, without
limitation, leap year calculations, without a decrease in the functionality of
the Software. The Software is designed to be used prior to, during and after the
calendar year 2000 A.D. and will operate during each such time period without
error relating to date data, specifically including any error relating to, or
the product of, date data which represents or references different centuries or
more than one century. Without limiting the generality of the foregoing, the
Software (a) will not abnormally end or provide invalid or incorrect results as
a result of date data, specifically including date data which represents or
references different centuries or more than one century; (b) has been designed
to ensure year 2000 compatibility, including, but not limited to, date data
century recognition, calculations which accommodate same century and
multi-century formulas and date values, and date data interface values that
reflect the century; and (c) includes "Year 2000 Capabilities," meaning that the
Software (i) will manage and manipulate data involving dates, including single
century formulas and multicentury formulas, and will not cause an abnormally
ending scenario within the application or generate incorrect values or invalid
results involving such dates; (ii) provides that all date-related user interface
functionalities and data fields include the indication of century; and (iii)
provides that all date-related data interface functionalities include the
indication of century.

2.15    CORPORATE BOOKS AND RECORDS

        The Company has furnished to Amazon.com or its representatives for their
examination true and complete copies of (a) the Restated Certificate of
Incorporation and Bylaws of the Company as currently in effect, including all
amendments thereto, (b) the minute books of the Company, and (c) the stock
transfer books of the Company. Such minutes reflect all meetings of the
Company's stockholders, Board of Directors and any committees thereof since the
Company's inception, and such minutes 


                                      -28-


<PAGE>   37
accurately reflect in all material respects the events of and actions taken at
such meetings. Such stock transfer books accurately reflect all issuances and
transfers of shares of capital stock of the Company since its inception.

2.16    LICENSES, PERMITS, AUTHORIZATIONS, ETC.

        Except as identified on Schedules 2.1 and 2.5 to the Disclosure
Memorandum, the Company has received all currently required governmental
approvals, authorizations, consents, licenses, orders, registrations and permits
of all agencies, whether federal, state, local or foreign, the failure to obtain
of which would have a Company Material Adverse Effect. The Company has not
received any notifications of any asserted present failure by it to have
obtained any such governmental approval, authorization, consent, license, order,
registration or permit, or past and unremedied failure to obtain such items.

2.17    COMPLIANCE WITH LAWS

        Except as described on Schedule 2.17 to the Disclosure Memorandum, the
Company is in compliance with all federal, state, local and foreign laws, rules,
regulations, ordinances, decrees and orders applicable to it, to its employees
or to the Real Property and the Personal Property, including, without
limitation, all such laws, rules, regulations, ordinances, decrees and orders
relating to intellectual property protection, antitrust matters, consumer
protection, currency exchange, environmental protection, equal employment
opportunity, health and occupational safety, pension and employee benefit
matters, securities and investor protection matters, labor and employment
matters and trading-with-the-enemy matters, except where the failure of the
Company to so comply would not have a Company Material Adverse Effect. The
Company has not received any notification of any asserted present or past
unremedied failure by the Company to comply with any of such laws, rules,
ordinances, decrees or orders.

2.18    INSURANCE

        The Company maintains commercially reasonable levels of (a) insurance on
its property (including leased premises) that insures against loss or damage by
fire or other casualty and (b) insurance against liabilities, claims and risks
of a nature and in such amounts as are normal and customary in the Company's
industry for companies of similar size and financial condition. All insurance
policies of the Company are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date this representation is
made have been paid, and no notice of cancellation or termination has been
received with respect to any such policy or binder. Such policies or binders are
sufficient for compliance with all requirements of 


                                      -29-


<PAGE>   38
law currently applicable to the Company and of all agreements to which the
Company is a party, will remain in full force and effect through the respective
expiration dates of such policies or binders without the payment of additional
premiums, and will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement. The Company has not
been refused any insurance with respect to its assets or operations, nor has its
coverage been limited, by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance.

2.19    BROKERS OR FINDERS

        Except as set forth on Schedule 2.19 to the Disclosure Memorandum, the
Company has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by or on behalf of the Company, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Merger, this Agreement or any transaction contemplated
hereby.

2.20    ABSENCE OF QUESTIONABLE PAYMENTS

        Neither the Company nor any director, officer, agent, employee or other
Person acting on behalf of the Company has used any Company funds for improper
or unlawful contributions, payments, gifts or entertainment, or made any
improper or unlawful expenditures relating to political activity to domestic or
foreign government officials or others. The Company has reasonable financial
controls to prevent such improper or unlawful contributions, payments, gifts,
entertainment or expenditures. Neither the Company nor any current director,
officer, agent, employee or other Person acting on behalf of the Company has
accepted or received any improper or unlawful contributions, payments, gifts or
expenditures. The Company has at all times complied, and is in compliance, in
all respects with the Foreign Corrupt Practices Act and all foreign laws and
regulations relating to prevention of corrupt practices and similar matters.

2.21    BANK ACCOUNTS

        Schedule 2.21 to the Disclosure Memorandum sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company maintains safe deposit boxes or
accounts of any nature and the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.


                                      -30-


<PAGE>   39
2.22    INSIDER INTERESTS

        Except as set forth on Schedule 2.22 to the Disclosure Memorandum, no
stockholder or officer or director of the Company has any interest (other than
as a stockholder of the Company) (a) in any Real Property, Personal Property,
Technology or IP Rights used in or directly pertaining to the business of the
Company, including, without limitation, inventions, patents, trademarks or trade
names, or (b) in any agreement, contract, arrangement or obligation relating to
the Company, its present or prospective business or its operations. Except as
set forth on Schedule 2.22, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors,
stockholders, affiliates or any affiliate thereof. The Company and its officers
and directors have no interest, either directly or indirectly, in any entity,
including, without limitation, any corporation, partnership, joint venture,
proprietorship, firm, licensee, business or association (whether as an employee,
officer, director, stockholder, agent, independent contractor, security holder,
creditor, consultant or otherwise) that presently (i) provides any services,
produces and/or sells any products or product lines, or engages in any activity
that is the same, similar to or competitive with any activity or business in
which the Company is now engaged or proposes to engage; (ii) is a supplier,
customer or creditor; or (iii) has any direct or indirect interest in any asset
or property, real or personal, tangible or intangible, of the Company or any
property, real or personal, tangible or intangible, that is necessary or
desirable for the present or currently anticipated future conduct of the
Company's business.

2.23    COMPLIANCE WITH ENVIRONMENTAL LAWS

        Neither the Company nor, to the Company's knowledge, any other Person
(including, without limitation, any previous owner, lessee or sublessee) has
treated, stored or disposed of any material amounts of petroleum products,
hazardous waste, hazardous substances, pollutants or contaminants on the Real
Property, or any real property previously owned, leased, subleased or used by
the Company in the operation of its business, in violation of any applicable
foreign, federal, state or local statutes, regulations or ordinances, or common
law, in each case as in existence at or prior to the Closing. To the Company's
knowledge, there have been no releases of any material amounts of petroleum,
petroleum products, hazardous waste, hazardous substances, pollutants or
contaminants on, at or from any assets or properties, including, without
limitation, the Real Property, owned, leased, subleased or used by the Company
in the operation of its business during the time such assets or properties were
owned, leased, subleased or used by the Company (or, to the Company's knowledge,
prior to such time), including, without limitation, any releases of any material
amounts of petroleum, petroleum products, hazardous waste, hazardous substances,
pollutants or contaminants in violation of any law.


                                      -31-


<PAGE>   40
2.24    INFORMATION SUPPLIED BY THE COMPANY

        None of the information supplied or to be supplied by the Company for
inclusion in the information statement to be delivered to its stockholders in
connection with any written consent by or meeting of such stockholders
(collectively, "Stockholder Materials"), at the date such information was
supplied prior to the time the Company's stockholders were requested to approve
the Merger, contained or will contain any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not materially misleading; provided, however, that
the Company makes no representations or warranties regarding information
furnished by or related to Amazon.com or the Purchaser.

2.25    FULL DISCLOSURE

        No information furnished by the Company to Amazon.com or its
representatives in connection with this Agreement (including, but not limited
to, the Financial Statements and all information in the Disclosure Memorandum
and the other Exhibits hereto) or the other Operative Documents contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements so made or information so delivered not
misleading.

2.26    HART-SCOTT-RODINO

        Rakesh Mathur, Anand Rajaraman, Venkatesh Harinarayan and Ashish Gupta
(the "Founders") and the Company, respectively, are each their own ultimate
parent entity as defined under the rules and regulations promulgated under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Hart-Scott-Rodino Act"). Neither the Company nor any Founder is a $10 million
person as defined thereunder. The Washington Post Company is the only
stockholder of the Company whose acquisition of Amazon.com Common Stock would
trigger the jurisdictional tests of the Hart-Scott-Rodino Act. The Washington
Post Company has advised the Company that they lack the necessary investment
intent and that their purchase of Amazon.com Common Stock as part of the Merger
is exempt under 16 C.F.R. 802.9.

                 ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
                          AMAZON.COM AND THE PURCHASER

        In order to induce the Company to enter into and perform this Agreement
and the other Operative Documents, Amazon.com and the Purchaser jointly and
severally represent and warrant to the Company as follows in this Article III:


                                      -32-


<PAGE>   41
3.1     ORGANIZATION

        Each of Amazon.com and the Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of Amazon.com and the Purchaser has all requisite corporate power and
authority to own, operate and lease its respective properties and assets, to
carry on its respective business as now conducted and as proposed to be
conducted and to enter into and perform its obligations under this Agreement and
the other applicable Operative Documents to which Amazon.com or the Purchaser is
a party, and to consummate the transactions contemplated hereby and thereby.
Each of Amazon.com and the Purchaser is duly qualified and licensed as a foreign
corporation to do business and is in good standing in each jurisdiction in which
the character of properties occupied, owned or held under lease by Amazon.com or
Purchaser, as applicable, or the nature of the business conducted by Amazon.com
or Purchaser, as applicable, makes such qualification necessary, except where
the failure to be so qualified or in good standing would not have a material
adverse effect on the business, properties or prospects of Amazon.com (an
"Amazon.com Material Adverse Effect"). Each of Amazon.com and the Purchaser has
full corporate power and authority to execute, deliver and perform this
Agreement and the other Operative Documents to which it is a party, and to carry
out the transactions contemplated hereby and thereby. All the issued and
outstanding shares of capital stock of the Purchaser are held of record by
Amazon.com.

3.2     ENFORCEABILITY

        Amazon.com and the Purchaser each have full corporate power and
authority to execute, deliver and perform their obligations under this Agreement
and each of the other Operative Documents to which they are a party and each of
the certificates, instruments and documents executed or delivered by them
pursuant to the terms of this Agreement. All corporate action on the part of
Amazon.com and the Purchaser and their respective officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other applicable Operative Documents to
which Amazon.com or the Purchaser is a party, the consummation of the Merger and
the performance of all of their respective obligations under this Agreement and
the other applicable Operative Documents to which Amazon.com or the Purchaser is
a party has been taken or will be taken prior to the Effective Time. This
Agreement has been, and each of the other Operative Documents to which
Amazon.com is a party will have been at the Closing, duly executed and delivered
by Amazon.com, and this Agreement is, and each of the other Operative Documents
to which Amazon.com is a party will be at the Closing, a legal, valid and
binding obligation of Amazon.com, enforceable against Amazon.com in accordance
with its terms, except as to the effect, if any, of (a) applicable bankruptcy
and other similar laws affecting the rights of creditors generally, (b) rules of
law governing 


                                      -33-


<PAGE>   42
specific performance, injunctive relief and other equitable remedies, and (c)
the enforceability of provisions requiring indemnification in connection with
the offering, issuance or sale of securities. This Agreement has been, and each
of the other Operative Documents to which the Purchaser is a party will have
been at the Closing, duly executed and delivered by the Purchaser, and this
Agreement is, and each of the other Operative Documents to which the Purchaser
is a party will be at the Closing, a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except as to the effect, if any, of (i) applicable bankruptcy and other similar
laws affecting the rights of creditors generally, (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies, and (iii)
the enforceability of provisions requiring indemnification in connection with
the offering issuance or sale of securities.

3.3     SECURITIES

        The Securities to be issued pursuant to this Agreement have been duly
authorized for issuance, and such Securities, when issued and delivered to the
Company's stockholders pursuant to this Agreement, shall be validly issued,
fully paid and nonassessable.

3.4     NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS

        The execution, delivery and performance of this Agreement and the other
Operative Documents by the Purchaser and Amazon.com, as applicable, and the
consummation by them of the transactions contemplated hereby and thereby will
not (a) constitute a violation (with or without the giving of notice or lapse of
time, or both) of any provision of law applicable to Amazon.com or the
Purchaser; (b) require any consent, approval or authorization of any Person,
except compliance with applicable securities laws, the filing of all documents
necessary to consummate the Merger with the Delaware Secretary of State (all
such consents, approvals or authorizations to be duly obtained at or prior to
the Closing); (c) result in a default (with or without the giving of notice or
lapse of time, or both) under, or acceleration or termination of, or the
creation in any party of the right to accelerate, terminate, modify or cancel,
any agreement, lease, note or other restriction, encumbrance, obligation or
liability to which Amazon.com or the Purchaser is a party or by which it is
bound or to which any assets of Amazon.com or the Purchaser are subject, or (d)
conflict with or result in a breach of or constitute a default under any
provision of the Certificate of Incorporation or Bylaws of Amazon.com or the
Purchaser.


                                      -34-


<PAGE>   43
3.5     CAPITALIZATION

        The authorized capital stock of Amazon.com consists of 300,000,000
shares of Amazon.com Common Stock of which 49,756,203 shares were issued and
outstanding as of July 24, 1998 and 10,000,000 shares of preferred stock, par
value $0.01 per share, none of which are issued and outstanding. Such issued and
outstanding shares of Amazon.com Common Stock are validly issued, fully paid and
nonassessable.

3.6     SEC DOCUMENTS

        Amazon.com has furnished the stockholders with true and complete copies
of its Annual Report on Form 10-K for the fiscal year ending December 31, 1997
(the "Form 10-K"), its Quarterly Report on Form 10-Q for the fiscal quarter
ending March 31, 1998, all Form 8-Ks filed after the date of the Form 10-K, and
its Proxy Statement relating to its 1998 Annual Meeting of Stockholders on May
28, 1998 (collectively, the "SEC Documents"). As of their respective filing
dates, each of the SEC Documents complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.

3.7     ABSENCE OF CERTAIN CHANGES

        Since the March 31, 1998 financial statements included in the SEC
Documents, there has not been any change which by itself or in conjunction with
all other such changes, has had or could reasonably be expected to have an
Amazon.com Material Adverse Effect, except as disclosed in the SEC Documents to
the date of this Agreement.

3.8     INFORMATION SUPPLIED BY AMAZON.COM

        None of the information supplied or to be supplied by Amazon.com for
inclusion in the Stockholder Materials, including the SEC Documents, at the date
such information was supplied prior to the time the stockholders of the Company
were requested to approve the Merger at either a special meeting of stockholders
or by executing a written consent, contained or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not materially
misleading; provided, however, that Amazon.com makes no representations or
warranties regarding information furnished by or related to the Company.


                                      -35-


<PAGE>   44
3.9     FULL DISCLOSURE

        No information furnished by Amazon.com or the Purchaser to the Company
or its representatives in connection with this Agreement or the other Operative
Documents contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements so made or information
so delivered not misleading.

     ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS OF AMAZON.COM AND THE
                                    PURCHASER

        The obligations of Amazon.com and the Purchaser to perform and observe
the covenants, agreements and conditions hereof to be performed and observed by
them at or before the Closing shall be subject to the satisfaction of the
following conditions, which may be expressly waived only in writing signed by
Amazon.com:

4.1     ACCURACY OF REPRESENTATIONS AND WARRANTIES

        The representations and warranties of the Company contained herein
(including applicable Exhibits or Schedules to the Disclosure Memorandum) and in
the other Operative Documents shall have been true and correct in all material
respects when made and, except (a) for changes contemplated by this Agreement
and the other Operative Documents and (b) to the extent that such
representations and warranties speak as of an earlier date, shall be true and
correct in all material respects as of the Closing Date as though made on that
date.

4.2     PERFORMANCE OF AGREEMENTS

        The Company shall have performed in all material respects all
obligations and agreements and complied with all covenants contained in this
Agreement or any other Operative Document to be performed and complied with by
them at or prior to the Closing.

4.3     OPINION OF COUNSEL FOR THE COMPANY

        Amazon.com shall have received the opinion letter of Fenwick & West LLP,
counsel for the Company, dated the Closing Date, substantially in the form
attached hereto as Exhibit 4.3.

4.4     OPINION OF PATENT COUNSEL FOR THE COMPANY

        Amazon.com shall have received the opinion letter, dated the Closing
Date, of Townsend and Townsend and Crew LLP, patent counsel for the Company, in
form 


                                      -36-


<PAGE>   45
reasonably satisfactory to Amazon.com, with respect to those matters identified
and set forth on Exhibit 4.4 hereto. In addition, copies of all assignments of
patents necessary to vest in the Company the rights described in the patents
shall have been delivered to Amazon.com.

4.5     COMPLIANCE CERTIFICATE

        Amazon.com shall have received a certificate of the President and the
Chief Financial Officer of the Company, dated the Closing Date, in form and
substance satisfactory to Amazon.com, certifying that the conditions to the
obligations of Amazon.com and the Purchaser in Sections 4.1, 4.2 and 4.6 thereof
have been fulfilled.

4.6     MATERIAL ADVERSE CHANGE

        Since the date of this Agreement and through the Closing, there shall
not have occurred any change in the business, properties or prospects of the
Company that would have a Company Material Adverse Effect, except for such
changes occurring as a result of the execution or announcement of this
Agreement.

4.7     APPROVALS AND CONSENTS

        All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby,
or for the continued operation of the Company, shall have been obtained, and all
waiting periods specified by law shall have passed. All other consents,
approvals and notices referred to in this Agreement shall have been obtained or
delivered.

4.8     PROCEEDINGS AND DOCUMENTS; SECRETARY'S CERTIFICATE

        All corporate and other proceedings in connection with the transactions
contemplated hereby and by the other Operative Documents, and all documents and
instruments incident to such transactions, shall have been approved by
Amazon.com's counsel, and Amazon.com shall have received a certificate of the
Secretary of the Company, in form and substance satisfactory to Amazon.com, as
to the authenticity and effectiveness of the actions of the Board of Directors
and stockholders of the Company authorizing the Merger and the transactions
contemplated by this Agreement and the other Operative Documents.


                                      -37-


<PAGE>   46
4.9     NONFOREIGN AFFIDAVIT

        Amazon.com shall have received from the Company, pursuant to Section
1445 of the Code, a Foreign Investment in Real Property Tax Act Affidavit
substantially in the form attached hereto as Exhibit 4.9.

4.10    COMPLIANCE WITH LAWS

        The consummation of the transactions contemplated by this Agreement and
the other Operative Documents shall be legally permitted by all laws and
regulations to which Amazon.com or the Company is subject.

4.11    STOCKHOLDER APPROVAL

        The principal terms of this Agreement shall have been approved by the
holders of not less than 90% of each class of Company Capital Stock.

4.12    LEGAL PROCEEDINGS

        No order of any court or administrative agency shall be in effect which
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened which would enjoin, restrain,
condition or prevent consummation of this Agreement or any other Operative
Document.

4.13    ESCROW AGREEMENT

        A representative of the Company's stockholders, on behalf of the
Company's stockholders, shall have executed and delivered the Escrow Agreement.

4.14    EMPLOYMENT AND NONCOMPETITION ARRANGEMENTS

        Each of the Founders shall have accepted an oral offer of employment
with Amazon.com and the Founders shall have executed the Amazon.com standard
form of Confidentiality, Noncompetition and Invention Assignment Agreement
substantially in the form attached hereto as Exhibit 4.14.

4.15    INVESTOR RIGHTS AGREEMENT

        The holders of not less than 90% of each class of Company Capital Stock
shall have executed the Investor Rights Agreement.


                                      -38-


<PAGE>   47
4.16    AFFILIATE LETTERS

        The Company shall have delivered or caused to be delivered to Amazon.com
an Affiliate Letter substantially in the form attached hereto as Exhibit 4.16
from each of those Persons who were, on the date on which the requisite number
of consents has been obtained to approve the Merger, "affiliates" of the Company
within the meaning of Rule 145 of the rules and regulations promulgated under
the Securities Act.

4.17    TERMINATION OF CERTAIN AGREEMENTS

        Any and all rights of refusal, co-sale rights and registration rights
(other than pursuant hereto) for the benefit of the holders of Company Capital
Stock, if any, set forth in the Disclosure Memorandum shall have been
terminated.

4.18    EXERCISE OF WARRANTS

        Any and all Warrants shall have been exercised or converted, as the case
may be, for shares of Company Capital Stock immediately prior to the Effective
Time.

4.19    REPURCHASE AGREEMENTS

        Each of the Founders shall have amended the vesting provisions of their
respective repurchase agreements with the Company with respect to such person's
shares of Company Common Stock to (a) eliminate accelerated vesting in the event
of a move more than 30 miles from the Company's headquarters, (b) extend vesting
for an additional one-year period and (c) provide for accelerated vesting in the
event of termination without cause.

4.20    OTHER APPROVALS

        The Company shall have delivered or caused to be delivered to Amazon.com
appropriate confidentiality, nondisclosure, and assignment of inventions
agreements, in form reasonably satisfactory to Amazon.com from (a) Microland
Limited and (b) Dallan Quass. In addition, the Company shall have repaid in full
any amounts owing to Silicon Valley Bank and terminated any and all agreements
with same.

         ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY

        The obligations of the Company to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by them at or
before the Closing shall be subject to the satisfaction of the following
conditions, which may be expressly waived only in writing signed by the Company.


                                      -39-


<PAGE>   48
5.1     ACCURACY OF REPRESENTATIONS AND WARRANTIES

        The representations and warranties of Amazon.com and the Purchaser
contained herein and in the other Operative Documents shall have been true and
correct when made and, except for (a) changes contemplated by this Agreement and
the other Operative Documents and (b) to the extent that such representations
and warranties speak as of an earlier date, shall be true and correct as of the
Closing Date as though made on that date.

5.2     PERFORMANCE OF AGREEMENTS

        Amazon.com and the Purchaser shall have performed all obligations and
agreements and complied with all covenants contained in this Agreement or any
other Operative Document to be performed and complied with by them at or prior
to the Closing.

5.3     OPINION OF COUNSEL

        The Company shall have received the opinion letter of Perkins Coie LLP,
counsel for Amazon.com and the Purchaser, dated the Closing Date, substantially
in the form attached hereto as Exhibit 5.3.

5.4     COMPLIANCE CERTIFICATE

        The Company shall have received a certificate of an officer of
Amazon.com, dated the Closing Date, substantially in form and substance
satisfactory to the Company, certifying that the conditions to the obligations
of the Company have been fulfilled.

5.5     LEGAL PROCEEDINGS

        No order of any court or administrative agency shall be in effect which
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened which would enjoin, restrain,
condition or prevent consummation of this Agreement or any other Operative
Document.

5.6     MATERIAL ADVERSE CHANGE

        Since the date of this Agreement and through the Closing, there shall
not have occurred any change in the business, properties or prospects of
Amazon.com that would have an Amazon.com Material Adverse Effect, except for
such changes occurring as a direct result of the execution or announcement of
this Agreement. 


                                      -40-


<PAGE>   49
Changes in the trading prices of Amazon.com Common Stock shall not be deemed to
have an Amazon.com Material Adverse Effect under this Agreement.

5.7     APPROVALS AND CONSENTS

        All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby
or for the continued operation of the Company, shall have been obtained, and all
waiting periods specified by law shall have passed. All other consents,
approvals and notices referred to in this Agreement shall have been obtained or
delivered.

5.8     COMPLIANCE WITH LAWS

        The consummation of the transactions contemplated by this Agreement and
the other Operative Documents shall be legally permitted by all laws and
regulations to which Amazon.com or the Company is subject.

5.9     STOCKHOLDER APPROVALS

        The principal terms of this Agreement shall have been approved by the
holders of not less than 90% of each class of Company Capital Stock.

5.10    ESCROW AGREEMENT

        Amazon.com and the Escrow Agent shall have executed the Escrow
Agreement.

5.11    INVESTOR RIGHTS AGREEMENT

        Amazon.com shall have executed the Investor Rights Agreement.

5.12    OPTION LETTERS

        Amazon.com shall have executed an option letter with each of the
Founders substantially in the form attached hereto as Exhibits 5.12.

                             ARTICLE VI - COVENANTS

        Between the date of this Agreement and the Effective Time, the parties
covenant and agree as set forth in this Article VI.


                                      -41-


<PAGE>   50
6.1     CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER

        Unless Amazon.com shall otherwise agree in writing, the business of the
Company shall be conducted in and only in, and the Company shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice and in accordance with applicable law; and the Company shall
use its best efforts to preserve intact the business organization of the
Company, to keep available the services of the current officers, employees and
consultants of the Company and to preserve the current relationships of the
Company with, and the goodwill of, customers, suppliers and other Persons with
which the Company has significant business relations. By way of amplification
and not limitation, except as otherwise contemplated by this Agreement, the
Company shall not, between the date of this Agreement and the Effective Time,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Amazon.com:

               (a) amend or otherwise change its Restated Certificate of
Incorporation or Bylaws;

               (b) except for the issuance of shares of Company Capital Stock
upon the exercise or conversion of currently outstanding Options, Warrants,
Company Series A Stock, Company Series B Stock, Company Series C Stock or
Convertible Notes, issue, sell, contract to issue or sell, pledge, dispose of,
grant, encumber or authorize the issuance, sale, pledge, disposition, grant or
Encumbrance of (i) any shares of capital stock of any class of the Company, or
any options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest) of the Company, or (ii)
any assets of the Company, except in the ordinary course of business and in a
manner consistent with past practice;

               (c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock or other securities, property or otherwise,
with respect to any of its capital stock;

               (d) reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
securities;

               (e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or division thereof or any material amount of
assets; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, except in the ordinary 


                                      -42-


<PAGE>   51
course of business and consistent with past practice; (iii) enter into any
contract or agreement other than in the ordinary course of business, consistent
with past practice; (iv) authorize any single capital expenditure which is in
excess of $25,000 or capital expenditures which are, in the aggregate, in excess
of $100,000 for the Company taken as a whole; (v) enter into any agreement in
which the obligation of the Company exceeds $25,000 or which shall not terminate
or be subject to termination for convenience within 180 days following
execution; (vi) license any Technology or IP Rights other than in the ordinary
course of business, consistent with past practice; or (vii) enter into or amend
any contract, agreement, commitment or arrangement with respect to any matter
set forth in this subsection (e);

               (f) enter into or amend any employment, consulting or agency
agreement, or increase the compensation payable or to become payable to its
officers, employees, agents or consultants, or grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any director, officer or other employee of the Company, or establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance, benefit or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee;

               (g) take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with respect
to accounting methods, policies or procedures (including, without limitation,
procedures with respect to the payment of accounts payable and collection of
accounts receivable);

               (h) make any tax election or settle or compromise any federal,
state, local or foreign income tax liability;

               (i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice;

               (j) take any action that would or is reasonably likely to result
in any of the representations and warranties of the Company set forth in this
Agreement being untrue in any material respect, or in any covenant of the
Company set forth in this Agreement being breached, or in any of the conditions
to the Merger specified in Article IV hereof not being satisfied; or

               (k) agree to do any of the foregoing.


                                      -43-


<PAGE>   52
6.2     ACCESS TO INFORMATION; CONFIDENTIALITY

        From the date hereof to the Effective Time, the Company shall, and shall
cause the officers, directors, employees and agents of the Company to, afford
the officers, employees and agents of Amazon.com access at all reasonable times
to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and shall furnish Amazon.com with
all financial, operating and other data and information as Amazon.com, through
its officers, employees or agents, may reasonably request. From the date hereof
until the Effective Time, the Company shall provide Amazon.com with monthly and
other financial statements of the Company as they become available internally at
the Company, all of which financial statements shall fairly present the
financial position and results of operations of the Company as of the dates and
for the periods therein specified. No investigation pursuant to this Section 6.2
shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto. The parties
shall continue to comply with and to perform their respective obligations under
the Mutual Nondisclosure Agreement between Amazon.com and the Company entered
into as of July 16, 1998, other than with respect to Section 9 thereof.

6.3     NO ALTERNATIVE TRANSACTIONS

        Unless this Agreement shall have been terminated in accordance with its
terms, the Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any Person relating to any acquisition or purchase of
all or (other than in the ordinary course of business) any material portion of
the assets of, or any equity interest in, the Company or any business
combination with the Company or participate in any negotiations regarding, or
furnish to any other Person any information with respect to, or otherwise
cooperate or negotiate in any way with, or assist or participate in, facilitate
or encourage, any effort or attempt by any other Person to do or seek any of the
foregoing. The Company shall notify Amazon.com promptly if any such proposal or
offer, or any inquiry or contact with any Person with respect thereto, is made
and shall, in any such notice to Amazon.com, indicate in reasonable detail the
identity of the Person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact. The Company
agrees not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party.

6.4     NOTIFICATION OF CERTAIN MATTERS

        Each party shall give prompt notice to the other parties of (a) the
occurrence or nonoccurrence of any event which would be likely to cause any
representation or 


                                      -44-


<PAGE>   53
warranty made by such party contained in this Agreement to be untrue or
inaccurate in any material respect and (b) any material failure by such party to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.4 shall not limit or otherwise affect the remedies
available to the parties hereunder.

6.5     FURTHER ACTION; REASONABLE BEST EFFORTS

        Upon the terms and subject to the conditions hereof, each of the parties
hereto shall use its best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated hereby, including, without limitation, using its
best efforts to obtain all waivers, licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company as are necessary for the consummation of
the transactions contemplated hereby and to fulfill the conditions to the
Merger. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, each party
to this Agreement shall use its best efforts to take all such action. After the
Closing Date, each party hereto, at the request of and without any further cost
or expense to the other parties, will take any further actions necessary or
desirable to carry out the purposes of this Agreement or any other Operative
Document, to vest in the Surviving Corporation full title to all properties,
assets and rights of the Company and to effect the issuance of the Amazon.com
Common Stock to the stockholders of the Company pursuant to the terms and
conditions hereof.

6.6     STOCKHOLDER APPROVAL

        The Company will seek the approval at a special meeting of stockholders
or the written consent of the stockholders of the Company at the earliest
practicable date approving this Agreement, the other Operative Documents, the
Merger and related matters, which approval will be recommended by the Board of
Directors and management of the Company.

6.7     PROXY STATEMENT

        The Company will send the Stockholder Materials to the stockholders of
the Company, in a timely manner, for the purposes of considering approval of the
Merger, either at a special meeting of stockholders or by their executing a
written consent. The Company and Amazon.com each will promptly provide all
information relating to its respective business or operations necessary for
inclusion in the Stockholder Materials 


                                      -45-


<PAGE>   54
to satisfy all requirements of applicable state and federal securities laws. The
Company and Amazon.com each shall be solely responsible for any statement,
information or omission in the Stockholder Materials relating to it or its
affiliates based on written information furnished by it. The Company and
Amazon.com will not provide or publish to the stockholders of the Company any
material concerning them or their affiliates that violates the Securities Act or
the Exchange Act with respect to the transactions contemplated hereby.

6.8     LISTING APPLICATION

        Amazon.com shall promptly prepare and submit to the Nasdaq National
Market a listing application covering the shares of Amazon.com Common Stock
issuable in the Merger, and shall use its best efforts to obtain, prior to the
Effective Time, approval for the listing of such shares of Amazon.com Common
Stock, subject to official notice of issuance.

6.9     DISSENTING SHARES

        Prior to the Closing Date, the Company shall furnish Amazon.com with the
name and address of each stockholder of the Company who, prior to the Closing,
has requested appraisal rights pursuant to Delaware Law or the California Code
(the "Dissenting Stockholder") and the number of Dissenting Shares owned by such
Dissenting Stockholder.

6.10    PUBLICITY

        No party hereto shall issue any press release or otherwise make any
statements to any third party with respect to this Agreement or the transactions
contemplated hereby until the issuance by Amazon.com and the Company of a joint
press release announcing the transactions contemplated hereby which shall be
prepared by them cooperatively.

6.11    CONVERSION OF STANDARDIZED EMPLOYEE BENEFIT PLANS

        The Company shall convert any "standardized" prototype Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code to a
"non-standardized" prototype plan, with terms that are substantially similar to
those of the predecessor "standardized" prototype Employee Benefit Plan,
effective as of the date prior to Closing.


                                      -46-


<PAGE>   55
                 ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER

7.1     TERMINATION

        This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding any approval of this Agreement
by the stockholders of the Company):

               (a) by written consent of both Amazon.com and the Company;

               (b) by either the Company or Amazon.com, if the Merger has not
been consummated by September 30, 1998; provided, however, that the right to
terminate this Agreement under this subsection (b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date;

               (c) by either the Company or Amazon.com, if there shall be any
law or regulation that makes consummation of the Merger illegal or if any
judgment, injunction, order or decree enjoining Amazon.com, the Purchaser or the
Company from consummating the Merger is entered and such judgment, injunction,
order or decree shall become final and nonappealable; provided, however, that
the party seeking to terminate this Agreement pursuant to this subsection (c)
shall have used all reasonable efforts to remove such judgment, injunction,
order or decree;

               (d) by the Company, in the event of a material breach by
Amazon.com of any representation, warranty or agreement contained herein which
has not been cured or is not curable by September 30, 1998; or

               (e) by Amazon.com, in the event of a material breach by the
Company of any representation, warranty or agreement contained herein which has
not been cured or is not curable by September 30, 1998.

7.2     EFFECT OF TERMINATION

        In the event of the termination of this Agreement pursuant to Section
7.1 hereof, there shall be no further obligation on the part of any party
hereto, except that nothing herein shall relieve any party from liability for
any willful breach hereof.

7.3     AMENDMENT

        This Agreement may be amended by the parties hereto at any time before
or after approval of the Company's stockholders; but after such approval,
however, no 


                                      -47-


<PAGE>   56
amendment will be made which by applicable law requires the further approval of
the Company's stockholders without obtaining such further approval.

7.4     WAIVER

        At any time prior to the Effective Time, any party hereto may (a) extend
the time for the performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
or parties to be bound thereby.

                   ARTICLE VIII - SURVIVAL AND INDEMNIFICATION

8.1     SURVIVAL

        All representations and warranties contained in this Agreement or in the
other Operative Documents or in any certificate delivered pursuant hereto or
thereto shall survive the Closing for a period of one year, and shall not be
deemed waived or otherwise affected by any investigation made or any knowledge
acquired with respect thereto, or by any notice delivered pursuant to Section
6.4 hereof; provided, however, that any claim based on fraud shall survive the
Closing indefinitely. The covenants and agreements contained in this Agreement
or in the other Operative Documents shall survive the Closing and shall continue
until all obligations with respect thereto shall have been performed or
satisfied or shall have been terminated in accordance with their terms.

8.2     INDEMNIFICATION BY THE COMPANY AND HOLDERS OF COMPANY CAPITAL STOCK

        (a) Subject to the limitations set forth in this Article VIII, up to and
until the Closing, the Company shall indemnify and hold Amazon.com and its
officers, directors and affiliates (the "Amazon.com Indemnified Parties")
harmless from and against, and shall reimburse the Amazon.com Indemnified
Parties for, any and all losses, damages, debts, liabilities, obligations,
judgments, orders, awards, writs, injunctions, decrees, fines, penalties, taxes,
costs or expenses (including, but not limited to, any reasonable legal or
accounting fees or expenses and any Taxes or other costs or damages arising
under, caused by or related to Section 280G of the Code or any comparable
provision of state, local or foreign law) ("Losses") arising out of (i) any
inaccuracy in, or misrepresentation or breach of, any representation or warranty
made by the Company in this Agreement or in any other Operative Document or in
any certificate delivered pursuant hereto or thereto and (ii) any failure by the
Company to 


                                      -48-


<PAGE>   57
perform or comply, in whole or in part, with any covenant or agreement in this
Agreement or in any other Operative Document.

        (b) Subject to the limitations set forth in this Article VIII, from and
after the Closing, the holders of Company Capital Stock immediately prior to the
Effective Time shall indemnify and hold the Amazon.com Indemnified Parties
harmless from and against, and shall reimburse the Amazon.com Indemnified
Parties for, any and all Losses arising out of (i) any inaccuracy in, or
misrepresentation or breach of, any representation or warranty made by the
Company in this Agreement or in any other Operative Document or in any
certificate delivered pursuant hereto or thereto and (ii) any failure by the
Company to perform or comply, in whole or in part, with any covenant or
agreement in this Agreement or in any other Operative Document.

8.3     INDEMNIFICATION BY AMAZON.COM

        Amazon.com shall indemnify and hold the Company and its officers,
directors and affiliates and the holders of Company Capital Stock (the "Company
Indemnified Parties" and, together with the Amazon.com Indemnified Parties, the
"Indemnified Parties") harmless from and against, and shall reimburse the
Company Indemnified Parties for, any and all Losses arising out of or in
connection with (a) any inaccuracy in, or misrepresentation or breach of any
representation or warranty made by Amazon.com or the Purchaser in this Agreement
or in any other Operative Document or in any certificate delivered pursuant
hereto or thereto and (b) any failure by Amazon.com or the Purchaser to perform
or comply, in whole or in part, with any covenant or agreement in this Agreement
or in any other Operative Document.

8.4     THRESHOLD AND LIMITATIONS

        (a) No Indemnified Party shall be entitled to receive any
indemnification payment with respect to any claims for indemnification under
this Article VIII ("Claims") until the aggregate Losses for which such
Indemnified Parties would be otherwise entitled to receive indemnification
exceed $100,000 (the "Threshold"); provided, however, that once such aggregate
Losses exceed the Threshold, such Indemnified Parties shall be entitled to
indemnification for the aggregate amount of all Losses without regard to the
Threshold.

        (b) Except for liability based on a claim of fraud, the aggregate
liability for Losses incurred by any and all indemnified parties (i) for any
holders of Company Capital Stock immediately prior to the Effective Time shall
be limited to such holder's Escrow Shares and (ii) for any other Indemnified
Party shall be limited to a dollar amount equal to the product obtained by
multiplying the Escrow Shares by the average of the closing prices of Amazon.com
Common Stock as reported on the Nasdaq 


                                      -49-


<PAGE>   58
National Market for the three consecutive trading days immediately preceding the
Closing Date.

        (c) In seeking indemnification for Losses under Section 8.2 hereof, the
Amazon.com Indemnified Parties shall first exercise their remedies with respect
to the Escrow Shares. Except for liability based on a claim of fraud; (i) no
holder of Company Capital Stock immediately prior to the Effective Time shall
have any liability to an Amazon.com Indemnified Party under this Agreement,
except to the extent of such holder's Escrow Shares deposited under the Escrow
Agreement, and (ii) the remedies set forth in this Article VIII shall be the
exclusive remedies of Amazon.com and the other Amazon.com Indemnified Parties
against any such holder.

        (d) An indemnifying party shall not be obligated to defend and hold
harmless an Indemnified Party, or otherwise be liable to such party, with
respect to any claims made by the Indemnified Party after the expiration of the
applicable time period as set forth in Section 8.1 hereof.

        (e) The amount of any payment pursuant to a Claim under this Article
VIII shall be adjusted to reflect the net tax effect of such Claim and any
resulting payments received under this Article VIII (including payments under
this Section 8.4(e)) by the Indemnified Party, and shall further be reduced to
reflect any net insurance proceeds received by the Indemnified Party that arise
out of the Claim for which indemnification is sought.

8.5     PROCEDURE FOR INDEMNIFICATION

        (a) An Indemnified Party shall notify the indemnifying party in writing
reasonably promptly after the assertion against the Indemnified Party of any
claim by a third party (a "Third Party Claim") in respect of which the
Indemnified Party intends to base a Claim for indemnification hereunder, but the
failure or delay to so notify the indemnifying party shall not relieve it of any
obligation or liability that it may have to the Indemnified Party except to the
extent that the indemnifying party demonstrates that its ability to defend or
resolve such Third Party Claim is adversely affected thereby.

        (b) (i) Subject to the rights of or duties to any insurer or other third
party having potential liability therefor, the indemnifying party shall have the
right, upon written notice given to the Indemnified Party within 30 days after
receipt of the notice from the Indemnified Party of any Third Party Claim, to
assume the defense or handling of such Third Party Claim, at the indemnifying
party's sole expense, in which case the provisions of Section 8.5(b)(ii) hereof
shall govern.


                                      -50-


<PAGE>   59
               (ii) The indemnifying party shall select counsel reasonably
acceptable to the Indemnified Party in connection with conducting the defense or
handling of such Third Party Claim, and the indemnifying party shall defend or
handle the same in consultation with the Indemnified Party and shall keep the
Indemnified Party timely apprised of the status of such Third Party Claim. The
indemnifying party shall not, without the prior written consent of the
Indemnified Party, agree to a settlement of any Third Party Claim, unless (A)
the settlement provides an unconditional release and discharge of the
Indemnified Party and the Indemnified Party is reasonably satisfied with such
discharge and release and (B) the Indemnified Party shall not have reasonably
objected to any such settlement on the ground that the circumstances surrounding
the settlement could result in an adverse impact on the business, properties or
prospects of the Indemnified Party. The Indemnified Party shall cooperate with
the indemnifying party and shall be entitled to participate in the defense or
handling of such Third Party Claim with its own counsel and at its own expense.

        (c) (i) If the indemnifying party does not give written notice to the
Indemnified Party within 30 days after receipt of the notice from the
Indemnified Party of any Third Party Claim of the indemnifying party's election
to assume the defense or handling of such Third Party Claim, the provisions of
Section 8.5(c)(ii) hereof shall govern.

               (ii) The Indemnified Party may, at the indemnifying party's
expense (which shall be paid from time to time by the indemnifying party as such
expenses are incurred by the Indemnified Party), select counsel in connection
with conducting the defense or handling of such Third Party Claim and defend or
handle such Third Party Claim in such manner as it may deem appropriate;
provided, however, that the Indemnified Party shall keep the indemnifying party
timely apprised of the status of such Third Party Claim and shall not settle
such Third Party Claim without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld. If the Indemnified
Party defends or handles such Third Party Claim, the indemnifying party shall
cooperate with the Indemnified Party and shall be entitled to participate in the
defense or handling of such Third Party Claim with its own counsel and at its
own expense.

        (d) If the Indemnified Party intends to seek indemnification hereunder,
other than for a Third Party Claim, then it shall notify the indemnifying party
in writing 90 days after its discovery of facts upon which it intends to base
its Claim for indemnification hereunder, but the failure or delay to so notify
the indemnifying party shall not relieve the indemnifying party of any
obligation or liability that the indemnifying party may have to the Indemnified
Party except to the extent that the indemnifying party demonstrates that the
indemnifying party's ability to defend or resolve such Claim is adversely
affected thereby.


                                      -51-


<PAGE>   60
        (e) The Indemnified Party may notify the indemnifying party of a Claim
even though the amount thereof plus the amount of other Claims previously
notified by the Indemnified Party aggregate less than the Threshold.

        (f) At the Closing, the Escrow Shares shall be deposited in the escrow
account to satisfy potential claims by the Amazon.com Indemnified Parties under
this Article VIII.

8.6     REMEDIES

        Except as otherwise provided, the indemnification provisions of this
Article VIII are the sole and exclusive remedy of any party to this Agreement
for a breach of any representation, warranty or covenant contained herein.
Notwithstanding the preceding sentence, each of the parties acknowledges and
agrees that the other parties hereto would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the parties
hereto agrees that the other parties hereto shall be entitled to an injunction
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof (including the
indemnification provisions hereof) in any competent court having jurisdiction
over the parties, in addition to any other remedy to which they may be entitled
at law or in equity.

                              ARTICLE IX - GENERAL

9.1     TAX MATTERS

        (a) Amazon.com, the Purchaser and the Company shall cooperate, as and to
the extent reasonably requested, in connection with the preparation and filing
of Tax Returns pursuant to this Section 9.1 and any audit, investigation,
litigation or other action with respect to Taxes that may be instituted after
the Closing. Amazon.com, the Purchaser and the Company shall use commercially
reasonable efforts to retain all books and records with respect to Tax matters
pertinent to the Company relating to any Tax period beginning before the Closing
Date until the expiration of the applicable statute of limitations (and, to the
extent notified by Amazon.com, the Purchaser or the Company, any extensions
thereof) and shall provide any such records to the other party as may be
reasonably requested.

        (b) Except as otherwise contained in Section 1.9(b) or the Amazon.com
and Purchaser Tax Certificates, neither Amazon.com nor the Purchaser makes any
representation or warranty with respect to, and expressly disclaims any
responsibility for, any Tax consequences to the Company or its stockholders
arising out of the 


                                      -52-


<PAGE>   61
structure or terms of this Agreement (including, without limitation, the
qualification or failure of the purchase and sale of the shares to qualify as a
reorganization under Section 368 of the Code), or the negotiation or
consummation hereof. The Company and its stockholders have consulted with its,
his or her own tax advisor in such matters and is solely responsible for any
such Tax consequences.

9.2     EXPENSES

        Regardless of whether the transactions contemplated by this Agreement
are consummated, each party shall pay its own fees and expenses incident to the
negotiation, preparation and execution of this Agreement and the other Operative
Documents (including legal and accounting fees and expenses); provided, however,
that, should any action be brought hereunder, the attorneys' fees and expenses
of the prevailing party shall be paid by the other party to such action; and
provided, further, that the professional fees incurred by the Company in excess
of $250,000 of legal and accounting fees shall be paid by the stockholders of
the Company.

9.3     NOTICES

        Any notice or demand desired or required to be given hereunder shall be
in writing given by personal delivery, certified or registered mail, confirmed
facsimile transmission, or overnight courier service, in each case addressed as
respectively set forth below or to such other address as any party shall have
previously designated by such a notice. The effective date of any notice or
request shall be the date of personal delivery, four days after the date of
mailing by certified or registered mail, the date on which successful facsimile
transmission is confirmed or the date undertaken for delivery by a reputable
overnight courier service, as the case may be, in each case properly addressed
as provided herein and with all charges prepaid.

        TO AMAZON.COM OR THE PURCHASER:

               Amazon.com, Inc.
               Fourth Floor, 1515 Second Avenue
               Seattle, Washington  98101
               Fax: (206) 694-2082
               Attention: Randy J. Tinsley, Treasurer

        with a copy to:

               Perkins Coie LLP
               1201 Third Avenue, 40th Floor
               Seattle, Washington  98101-3099


                                      -53-


<PAGE>   62
               Fax: (206) 583-8500
               Attention:  Scott L. Gelband

        TO THE COMPANY:

               Junglee Corp.
               1309 S. Mary Ave.
               Sunnyvalle, California  94087
               Fax: (408) 522-9470
               Attention: Rakesh Mathur

        with a copy to:

               Fenwick & West LLP
               Two Palo Alto Square
               Palo Alto, California  94306
               Fax: (650) 494-1417
               Attention:  Mark C. Stevens

9.4     SEVERABILITY

        If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.

9.5     ENTIRE AGREEMENT

        This Agreement, the Mutual Nondisclosure Agreement and the other
Operative Documents constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and thereof.

9.6     ASSIGNMENT

        This Agreement shall not be assigned by operation of law or otherwise.


                                      -54-


<PAGE>   63
9.7     PARTIES IN INTEREST

        This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.

9.8     GOVERNING LAW

        This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts executed in and to be
performed in that state. All actions and proceedings arising out of or relating
to this Agreement shall be heard and determined in any Delaware state or federal
court thereof.

9.9     HEADINGS

        The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

9.10    COUNTERPARTS

        This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. To expedite the process of entering into this Agreement,
the parties acknowledge that Transmitted Copies of this Agreement will be
equivalent to original documents until such time as original documents are
completely executed and delivered. "Transmitted Copies" will mean copies that
are reproduced or transmitted via photocopy, facsimile or other process of
complete and accurate reproduction and transmission.

9.11    WAIVER OF JURY TRIAL

        Amazon.com, the Company and the Purchaser hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Agreement or
the actions of such parties in the negotiation, administration, performance and
enforcement thereof.


                                      -55-


<PAGE>   64
        IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.

                                       AMAZON.COM, INC.



                                       By    Jeffrey P. Bezos
                                          __________________________________
                                       Its   Chief  Executive Officer
                                          _________________________________



                                       AJ ACQUISITION, INC.



                                       By    Randy Tinsley
                                          __________________________________
                                       Its   Treasurer
                                          _________________________________



                                       JUNGLEE CORP.


                                            Kavitark R. Shriram 
                                       By__________________________________
                                            President
                                       Its_________________________________





<PAGE>   1












                          AGREEMENT AND PLAN OF MERGER

                                      AMONG

                                AMAZON.COM, INC.,

                            PACIFIC ACQUISITION, INC.

                                       AND

                             SAGE ENTERPRISES, INC.









                           DATED AS OF AUGUST 3, 1998





<PAGE>   2

                                    CONTENTS


<TABLE>
<S>     <C>                                                                          <C>
ARTICLE I - THE MERGER ............................................................   1

        1.1    The Merger .........................................................   1

        1.2    The Closing ........................................................   2

        1.3    Effective Date and Time ............................................   2

        1.4    Articles of Organization of the Surviving Corporation ..............   2

        1.5    Bylaws of the Surviving Corporation ................................   2

        1.6    Directors and Officers .............................................   3

        1.7    Conversion of Shares ...............................................   3
               1.7.1    Exchange Ratio ............................................   3
               1.7.2     Exchange of Certificates .................................   6
               1.7.3     No Fractional Shares .....................................   7
               1.7.4     No Further Transfers .....................................   7

        1.8    Tax Free Reorganization ............................................   7

        1.9     Stockholder Representatives .......................................   7

ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........................   8

        2.1    Organization .......................................................   8

        2.2    Enforceability .....................................................   9

        2.3    Capitalization .....................................................   9

        2.4    Subsidiaries and Affiliates ........................................  10

        2.5    No Approvals; No Conflicts .........................................  10

        2.6    Financial Statements ...............................................  11

        2.7    Absence of Certain Changes or Events ...............................  12

        2.8    Taxes ..............................................................  14
</TABLE>





                                      -i-

<PAGE>   3

<TABLE>
<S>     <C>                                                                          <C>
        2.9    Property ...........................................................  16

        2.10   Contracts ..........................................................  17

        2.11   Claims and Legal Proceedings .......................................  19

        2.12   Labor and Employment Matters .......................................  19

        2.13   Employee Benefit Plans .............................................  20
               2.13.1    Employee Benefit Plan Listing ............................  20
               2.13.2    Documents Provided .......................................  21
               2.13.3    Compliance ...............................................  21
               2.13.4    Contributions and Premium Payments .......................  22
               2.13.5    Related Employers ........................................  22
               2.13.6    Multiemployer and Title IV Plans .........................  22
               2.13.7    Post-Termination Welfare Benefits ........................  23
               2.13.8    Suits, Claims and Investigations .........................  23
               2.13.9    Payments Resulting From Transactions .....................  23

        2.14   Intellectual Property ..............................................  24
               2.14.1    Technology ...............................................  24
               2.14.2   Third Party Technology ....................................  24
               2.14.3   Trademarks ................................................  25
               2.14.4   Intellectual Property Rights ..............................  25
               2.14.5   Maintenance of Rights .....................................  25
               2.14.6   Third Party Infringement ..................................  26
               2.14.7   Infringement by the Company ...............................  26
               2.14.8   Confidentiality ...........................................  27
               2.14.9   Warranty Against Defects ..................................  27
               2.14.10  Domain Names ..............................................  27
               2.14.11  Year 2000 .................................................  27

        2.15   Corporate Books and Records ........................................  28

        2.16   Licenses, Permits, Authorizations, etc. ............................  28

        2.17   Compliance With Laws ...............................................  28

        2.18   Insurance ..........................................................  29

        2.19   Brokers or Finders .................................................  29

        2.20   Absence of Questionable Payments ...................................  29
</TABLE>





                                      -ii-
<PAGE>   4

<TABLE>
<S>     <C>                                                                          <C>
        2.21   Bank Accounts ......................................................  30

        2.22   Customers and Suppliers ............................................  30

        2.23   Accounts Receivable ................................................  30

        2.24   Creditors' List ....................................................  31

        2.25   Insider Interests ..................................................  31

        2.26   Compliance With Environmental Laws .................................  31

        2.27   Pooling Matters ....................................................  32

        2.28   Buyer Stock Ownership ..............................................  32

        2.29   Hart-Scott-Rodino ..................................................  32

        2.30   Information Supplied by the Company ................................  32

        2.31   Full Disclosure ....................................................  33

        2.32   Sole Representations and Warranties ................................  33

ARTICLE III - REPRESENTATIONS AND WARRANTIES  OF AMAZON.COM AND THE PURCHASER .....  33

        3.1    Organization .......................................................  33

        3.2    Enforceability .....................................................  34

        3.3    Securities .........................................................  34

        3.4    No Approvals or Notices Required; No Conflicts With Instruments ....  35

        3.5    Capitalization .....................................................  35

        3.6    SEC Documents ......................................................  35

        3.7    Absence of Certain Changes .........................................  35

        3.8    Information Supplied by Amazon.com .................................  36

        3.9    Pooling Matters ....................................................  36
</TABLE>





                                     -iii-

<PAGE>   5

<TABLE>
<S>     <C>                                                                          <C>
        3.10   Seller Stock Ownership .............................................  36

        3.11   Brokers or Finders .................................................  36

ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS  OF AMAZON.COM AND THE
        PURCHASER .................................................................  36

        4.1    Accuracy of Representations and Warranties .........................  37

        4.2    Performance of Agreements ..........................................  37

        4.3    Opinion of Counsel for the Company .................................  37

        4.4    Consents to Merger .................................................  37

        4.5    Compliance Certificate .............................................  37

        4.6    Material Adverse Change ............................................  37

        4.7    Approvals and Consents .............................................  38

        4.8    Proceedings and Documents; Clerk's Certificate .....................  38

        4.9    Nonforeign Affidavit ...............................................  38

        4.10   Compliance With Laws ...............................................  38

        4.11   Stockholder Approvals ..............................................  38

        4.12   Dissenting Shares ..................................................  39

        4.13   Legal Proceedings ..................................................  39

        4.14   Escrow Agreement ...................................................  39

        4.15   Employment and Noncompetition Arrangements .........................  39

        4.16   Employee Benefit Plans .............................................  39

        4.17   Investor Rights Agreement ..........................................  39

        4.18   Affiliate Letters ..................................................  39

        4.19   Termination of Certain Agreements ..................................  40
</TABLE>





                                      -iv-

<PAGE>   6


<TABLE>
<S>     <C>                                                                          <C>
        4.20   Pooling ............................................................  40

ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS  OF THE COMPANY ...................  40

        5.1    Accuracy of Representations and Warranties .........................  40

        5.2    Performance of Agreements ..........................................  40

        5.3    Opinion of Counsel .................................................  40

        5.4    Compliance Certificate .............................................  41

        5.5    Legal Proceedings ..................................................  41

        5.6    Material Adverse Change ............................................  41

        5.7    Approvals and Consents .............................................  41

        5.8    Compliance With Laws ...............................................  41

        5.9    Stockholder Approvals ..............................................  42

        5.10   Escrow Agreement ...................................................  42

        5.11   Investor Rights Agreement ..........................................  42

        5.12   Option Agreements ..................................................  42

ARTICLE VI - COVENANTS ............................................................  42

        6.1    Conduct of Business by the Company Pending the Merger ..............  42

        6.2    Access to Information; Confidentiality .............................  44

        6.3    No Alternative Transactions ........................................  45

        6.4    Notification of Certain Matters ....................................  45

        6.5    Further Action; Reasonable Best Efforts ............................  46

        6.6    Stockholders Approval ..............................................  46

        6.7    Proxy Statement ....................................................  46
</TABLE>





                                      -v-

<PAGE>   7


<TABLE>
<S>     <C>                                                                          <C>
        6.8    Listing Application ................................................  47

        6.9    Pooling; Reorganization ............................................  47

        6.10   Dissenting Shares ..................................................  47

        6.11   Publicity ..........................................................  47

        6.12   Indemnification and Insurance ......................................  48

ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER ...................................  48

        7.1    Termination ........................................................  48

        7.2    Effect of Termination ..............................................  49

        7.3    Amendment ..........................................................  49

        7.4    Waiver .............................................................  49

ARTICLE VIII - SURVIVAL AND INDEMNIFICATION .......................................  49

        8.1    Survival ...........................................................  49

        8.2    Indemnification by the Company and Holders of Company Capital
               Stock or Options ...................................................  50

        8.3    Indemnification by Amazon.com ......................................  50

        8.4    Threshold and Limitations ..........................................  51

        8.5    Procedure for Indemnification ......................................  52

        8.6    Remedies ...........................................................  53

ARTICLE IX - GENERAL ..............................................................  54

        9.1    Tax Matters ........................................................  54

        9.2    Expenses ...........................................................  54

        9.3    Notices ............................................................  54

        9.4    Severability .......................................................  56
</TABLE>





                                      -vi-

<PAGE>   8


<TABLE>
<S>     <C>                                                                          <C>
        9.5    Entire Agreement ...................................................  56

        9.6    Assignment .........................................................  56

        9.7    Parties in Interest ................................................  56

        9.8    Governing Law ......................................................  57

        9.9    Headings ...........................................................  57

        9.10   Counterparts .......................................................  57

EXHIBITS
- --------

      1.3      -  Articles of Merger
      1.7.1    -  Form of Escrow Agreement
      2        -  Disclosure Memorandum
      2(A)     -  Form of Investor Rights Agreement
      4.3      -  Form of Opinion of Counsel for the Company
      4.9      -  Foreign Investment in Real Property Tax Act Affidavit
      4.15     -  Form of Confidentiality Agreement
      4.18     -  Affiliate Letter
      5.3      -  Form of Opinion of Counsel for Amazon.com
      5.12     -  Forms of Option Agreement
</TABLE>




























                                     -vii-

<PAGE>   9

                          AGREEMENT AND PLAN OF MERGER

        This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of August 3, 1998, by and among Amazon.com, Inc., a Delaware corporation
("Amazon.com"), Pacific Acquisition, Inc., a Massachusetts corporation and
wholly owned subsidiary of Amazon.com (the "Purchaser"), and Sage Enterprises,
Inc., a Massachusetts corporation (the "Company").


                                    RECITALS

        A. The Company, Amazon.com and the Purchaser believe it advisable and in
their respective best interests to effect a merger of the Company and the
Purchaser pursuant to this Agreement (the "Merger").

        B. The Board of Directors of the Company has approved the Merger as
required by applicable law.

        C. The Boards of Directors of Amazon.com and the Purchaser have approved
the Merger as required by applicable law.

        D. It is intended that the Merger will qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and as a "pooling of interests" for accounting purposes.


                                    AGREEMENT

        In consideration of the terms hereof, the parties hereto agree as
follows:

ARTICLE I - THE MERGER

        1.1    THE MERGER

        Upon the terms and subject to the conditions hereof, (a) at the
Effective Time (as defined in Section 1.3 hereof), the separate existence of the
Purchaser shall cease and the Purchaser shall be merged with and into the
Company (the Company is sometimes referred to herein as the "Surviving
Corporation"), and (b) from and after the Effective Time, the Merger shall have
all the effects of a merger under the laws of the Commonwealth of Massachusetts
and other applicable law.





                                      -1-
<PAGE>   10

        1.2    THE CLOSING

        The closing of the Merger pursuant to this Agreement (the "Closing")
shall take place on the earliest practicable business day after the conditions
to the Closing set forth in Articles IV and V hereof are satisfied or waived
(the "Closing Date") at 10:00 a.m. local time at the offices of Perkins Coie
LLP, 1201 Third Avenue, 46th Floor, Seattle, Washington, or such other time or
location as Amazon.com and the Company shall agree. At the Closing, each of the
parties hereto shall deliver all such documents, instruments, certificates and
other items as may be required under this Agreement or the other Operative
Documents (as defined in Article II hereof) or otherwise.

        1.3    EFFECTIVE DATE AND TIME

        On the Closing Date and subject to the terms and conditions hereof,
articles of merger (the "Articles of Merger") complying with the applicable
provisions of the Massachusetts Business Corporation Law (the "Massachusetts
Law"), substantially in the form or forms attached hereto as Exhibit 1.3, and in
such form and executed in such manner as required by Massachusetts Law, shall be
delivered for filing to the Secretary of State of the Commonwealth of
Massachusetts (the "Massachusetts Secretary of State"). The Merger shall become
effective on the date (the "Effective Date") and at the time (the "Effective
Time") of filing of the Articles of Merger or at such other time as may be
specified in the Articles of Merger as filed. If the Massachusetts Secretary of
State requires any changes in the Articles of Merger as a condition to filing or
to issuing its certificate to the effect that the Merger is effective,
Amazon.com, the Purchaser and the Company will execute any necessary revisions
incorporating such changes, provided such changes are not inconsistent with and
do not result in any substantial change in the terms of this Agreement.

        1.4    ARTICLES OF ORGANIZATION OF THE SURVIVING CORPORATION

        At the Effective Time, the Articles of Organization of the Purchaser, as
in effect immediately prior to the Effective Time, shall be the Articles of
Organization of the Surviving Corporation. Thereafter, the Articles of
Organization of the Surviving Corporation may be amended in accordance with
their terms and as provided by law; provided, however, that Article 1 thereof
shall be amended to read as follows: "The name of this corporation is Pacific
Corporation."

        1.5    BYLAWS OF THE SURVIVING CORPORATION

        At the Effective Time, the Bylaws of the Purchaser as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation.





                                      -2-
<PAGE>   11

Thereafter, the Bylaws may be amended or repealed in accordance with their terms
and the Articles of Organization of the Surviving Corporation and as provided by
law.

        1.6    DIRECTORS AND OFFICERS

        At the Effective Time, the directors of the Purchaser shall continue in
office as the directors of the Surviving Corporation, and the officers of
Purchaser shall continue in office as the officers of the Surviving Corporation,
and such directors and officers shall hold office in accordance with and subject
to the Articles of Organization and Bylaws of the Surviving Corporation.

        1.7    CONVERSION OF SHARES

               1.7.1  EXCHANGE RATIO

        As of the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof:

        (a) All shares of any class of capital stock of the Company held by the
Company as treasury shares shall be canceled.

        (b) Each issued and outstanding share of common stock of the Company,
par value $.01 per share (the "Company Common Stock"), and each issued and
outstanding share of the Company's Series A Preferred Stock, par value $.01 per
share (the "Company Series A Stock"), and the Company's Series B Preferred
Stock, $.01 par value per share (the "Company Series B Stock", and, together
with the Company Common Stock, the Company Series A Stock and the Company Series
B Stock (the "Company Capital Stock")), other than shares of Company Capital
Stock, if any, for which dissenters' rights have been or will be perfected in
compliance with applicable law, shall be converted into the right to receive
from Amazon.com a number of shares of Amazon.com common stock, par value $.01
per share ("Amazon.com Common Stock"), determined by dividing 900,000 by the
total number of shares of Company Capital Stock outstanding immediately prior to
the Effective Time on a fully diluted basis, assuming for this purpose that all
outstanding options ("Options") and all outstanding warrants ("Warrants") to
purchase shares of Company Common Stock have been validly exercised prior to the
Effective Time, regardless of any vesting limitations, other restrictions on
exercisability or repurchase rights, and that the shares of Company Common Stock
issuable upon such exercise have been validly issued (such shares of Amazon.com
Common Stock being referred to herein as the "Merger Consideration" or the
"Securities" and the quotient so derived being referred to herein as the
"Exchange Ratio"). The number of Securities to be issued to each stockholder of
the Company under this Section 1.7.1(c) shall be calculated by aggregating all





                                      -3-
<PAGE>   12

shares of Company Capital Stock held by each such stockholder, so that such
number of Securities to be issued shall be equal to the number of shares of
Company Capital Stock held by such stockholder multiplied by the Exchange Ratio,
with cash paid in lieu of any fractional share of Amazon.com Common Stock
pursuant to Section 1.7.3 hereof.

        (c) Notwithstanding the foregoing, certificates representing ten percent
(10%) of the Securities issuable to each holder of Company Capital Stock under
Section 1.7.1(b) (the "Escrow Shares") shall be deposited in escrow with
ChaseMellon Shareholder Services L.L.C. ("ChaseMellon"), to be held and
administered in accordance with an Escrow Agreement in substantially the form
attached hereto as Exhibit 1.7.1 (the "Escrow Agreement"). Notwithstanding the
escrow of the Escrow Shares, dividends or other distributions declared and paid
on such shares shall continue to be paid by Amazon.com to the Company
stockholders and all voting rights with respect to such shares shall inure to
the benefit of and be enjoyed by such stockholders. Any securities received by
the escrow agent in respect of any Escrow Shares held in escrow as a result of
any stock split or combination of shares of Amazon.com Common Stock, payment of
a stock dividend or other stock distribution in or on shares of Amazon.com
Common Stock, or change of shares of Amazon.com Common Stock into any other
securities pursuant to or as part of a merger, consolidation, acquisition of
property or stock, or separation, reorganization or liquidation of Amazon.com,
or otherwise, shall be held by the escrow agent as, and shall be included within
the definition of, Escrow Shares, as the case may be.

        (d) Each issued and outstanding share of capital stock of the Purchaser
shall be converted into one share of common stock of the Surviving Corporation.

        (e)Each outstanding Option to purchase shares of Company Capital Stock
issued pursuant to the Company's 1997 Amended Stock Option Plan and the
Company's MVP Stock Option Plan (the "Company Option Plans"), whether or not
vested or exercisable, shall be assumed by Amazon.com and shall constitute an
option to acquire, on the same terms and conditions as were applicable under
such assumed Option, a number of shares of Amazon.com Common Stock equal to the
product of the Exchange Ratio and the number of shares of Company Capital Stock
subject to such Option (the "Option Shares"), at a price per share (rounded up
to the nearest $.001) equal to the aggregate exercise price for the shares of
Company Capital Stock subject to such Option divided by the number of full
shares of Amazon.com Common Stock deemed to be purchasable pursuant to such
Option; provided, however, that (i) subject to the provisions of clause (ii)
below, the number of shares of Amazon.com Common Stock that may be purchased
upon exercise of such Option shall not include any fractional shares and, upon
the last such exercise of such Option, Amazon.com





                                      -4-
<PAGE>   13

shall pay to the holder thereof an amount of cash equal to such fraction
multiplied by the closing price of Amazon.com Common Stock as reported on the
Nasdaq National Market on the date of such exercise, and (ii) in the case of any
Option to which Section 421 of the Code applies by reason of its qualification
under Section 422 of the Code, the option price, the number of shares
purchasable pursuant to such Option and the terms and conditions of exercise of
such Option shall be determined in order to comply with Section 424 of the Code.
Amazon.com shall assume the obligations of the Company under the Company Option
Plans and each Option and shall comply with the terms of the Company Option
Plans and each Option as they apply to the Options assumed as set forth above.
Amazon.com shall use its best efforts to cause the shares of Amazon.com Common
Stock that are issuable upon exercise of the Options assumed in accordance with
this Section 1.7.1 to be registered under the Securities Act of 1933, as amended
(the "Securities Act"), on Form S-8 ("Form S-8") within 30 days following the
Closing Date. The Company will cooperate with Amazon.com in the preparation of
the Form S-8.

        (f) Each outstanding Warrant to purchase shares of Company Common Stock
shall be assumed by Amazon.com and shall constitute a warrant to acquire, on the
same terms and conditions as were applicable under such assumed Warrant, that a
number of shares of Amazon.com Common Stock equal to the product of the Exchange
Ratio and the number of shares of Company Common Stock subject to such Warrant,
at a price per share equal to the aggregate exercise price for the shares of
Company Common Stock subject to such Warrant divided by the number of full
shares of Amazon.com Common Stock deemed to be purchasable pursuant to such
Warrant; provided, however, that the number of shares of Amazon.com Common Stock
that may be purchased upon exercise of such Warrant shall not include any
fractional shares and, upon the last such exercise of such Warrant, Amazon.com
shall pay to the holder thereof an amount of cash equal to such fraction
multiplied by the closing price of Amazon.com Common Stock as reported in the
Nasdaq National Market on the date of such exercise. Promptly after the
Effective Date, Amazon.com shall deliver to holders of Warrants appropriate
warrant agreements representing the right to acquire shares of Amazon.com Common
Stock on the same terms and conditions as contained in the outstanding Warrants
(subject to any adjustments required by the preceding sentence), upon surrender
of the outstanding Warrants.

        (g) Holders of shares of Company Capital Stock who have complied with
all the requirements for perfecting dissenters' rights, as set forth in the
Massachusetts Law, shall be entitled to their rights under the Massachusetts Law
with respect to such shares (the "Dissenting Shares").





                                      -5-
<PAGE>   14

        (h) If, prior to the Effective Time, Amazon.com recapitalizes through a
split-up of its outstanding shares of capital stock into a greater number, or a
combination of its outstanding shares of capital stock into a lesser number,
reorganizes, reclassifies or otherwise changes its outstanding shares of capital
stock into the same or a different number of shares of other classes of capital
stock, or declares a dividend on its outstanding shares of capital stock payable
in shares or securities convertible into shares, the number of shares of
Amazon.com Common Stock into which the shares of Company Capital Stock are to be
converted, and the number of shares of Amazon.com Common Stock issuable upon the
exercise of each Assumed Option and each Warrant, will be adjusted appropriately
so as to maintain the proportionate interests of the holders of the Company
Capital Stock, Warrants and Options and the holders of shares of capital stock
of Amazon.com.

               1.7.2  EXCHANGE OF CERTIFICATES

        As soon as practicable after the Effective Date but in any event within
15 business days after the Effective Date, ChaseMellon, as exchange agent, shall
make available, and each stockholder of the Company will be entitled to receive,
upon surrender to ChaseMellon of one or more certificates representing shares of
Company Capital Stock for cancellation and a letter of transmittal containing
appropriate representations, certificates representing the number of shares of
Amazon.com Common Stock that such stockholder is entitled to receive pursuant to
Section 1.7.1 hereof; provided, however, that the certificates representing the
Escrow Shares shall be retained by ChaseMellon in accordance with the Escrow
Agreement. The shares of Amazon.com Common Stock that each stockholder of the
Company shall be entitled to receive pursuant to the Merger shall be deemed to
have been issued at the Effective Time. No interest shall accrue on the Merger
Consideration. If the Merger Consideration (or any portion thereof) is to be
delivered to any person other than the person in whose name the certificate or
certificates representing shares of Company Capital Stock surrendered in
exchange therefor is registered, it shall be a condition to such exchange that
the person requesting such exchange shall pay to Amazon.com any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of the certificate or certificates so
surrendered, or shall establish to the satisfaction of Amazon.com that such tax
has been paid or is not applicable. Notwithstanding the foregoing, neither
Amazon.com nor any other party hereto shall be liable to a holder of shares of
Company Capital Stock for any Merger Consideration delivered to a public
official pursuant to applicable abandoned property, escheat and similar laws.





                                      -6-
<PAGE>   15

               1.7.3  NO FRACTIONAL SHARES

        No certificates or scrip representing fractional shares of Amazon.com
Common Stock shall be issued upon the surrender for exchange of certificates
representing Company Capital Stock pursuant to the Merger, and no dividend,
stock split or other distribution with respect to Amazon.com Common Stock shall
relate to any such fractional interest, and any such fractional interests shall
not entitle the owner thereof to vote or to any rights of a security holder. In
lieu of each such fractional share, Amazon.com shall pay to the holder thereof,
as soon as practicable after the Effective Date, an amount in cash equal to such
fraction multiplied by the closing price of Amazon.com Common Stock as reported
on the Nasdaq National Market on the trading day prior to the Closing Date.

               1.7.4  NO FURTHER TRANSFERS

        After the Effective Time, there shall be no transfers of any shares of
Company Capital Stock on the stock transfer books of the Surviving Corporation.
If, after the Effective Time, certificates formerly representing shares of
Company Capital Stock are presented to the Surviving Corporation, they shall be
forwarded to Amazon.com and be canceled and exchanged in accordance with this
Section 1.7, subject to applicable law in the case of the Dissenting Shares.

        1.8    TAX FREE REORGANIZATION

        (a) Except as otherwise required by the Internal Revenue Service
pursuant to a determination (as defined in Section 1313 of the Code) or
otherwise, or by applicable law, the parties shall not take a position on any
tax returns inconsistent with the treatment of the Merger for tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code by reason
of Section 368(a)(2)(E) of the Code.

        (b) In addition, Amazon.com represents, solely for tax purposes, now,
and as of the Closing Date, that it presently intends to continue the Company's
historic business or use a significant portion of the Company's business assets
in business in a manner that satisfies the continuity of business enterprise
requirement set forth in Treasury Regulation Section 1.368-1(d).

        1.9  STOCKHOLDER REPRESENTATIVES

        By approving the Merger at a special meeting of stockholders or by
written consent of the stockholders, each stockholder of the Company shall have
irrevocably authorized and appointed Warren Adams, Guy Bradley and Thomas Hoegh
(the "Stockholder Representatives"), with full power of substitution and
resubstitution, as





                                      -7-
<PAGE>   16

his, her or its representative and true and lawful attorney-in-fact and agent to
act with the powers set forth in the Investor Rights Agreement in his, her or
its name place and stead and to execute in the name and on behalf of such
stockholder the Escrow Agreement and any other agreement, certificate,
instrument or document to be delivered by the stockholders in connection with
the Escrow Agreement or Article VIII of this Agreement.

ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        Except as is otherwise set forth in the Disclosure Memorandum attached
hereto as Exhibit 2 (the "Disclosure Memorandum"), each of which exceptions
shall specifically identify or cross-reference the provision of this Article II
to which such exception relates, and which shall constitute in its entirety a
representation and warranty under this Article II, and in order to induce
Amazon.com and the Purchaser to enter into and perform this Agreement, the
Escrow Agreement and the Investor Rights Agreement in substantially the form
attached hereto as Exhibit 2(A) (the "Investor Rights Agreement") to be entered
into as of the Closing among Amazon.com and each of the stockholders of the
Company, and the other agreements and certificates that are required to be
executed pursuant to this Agreement (collectively, the "Operative Documents"),
the Company represents and warrants to Amazon.com and the Purchaser as of the
date of this Agreement and as of the Closing as follows in this Article II. For
the purposes of this Article II, unless the context otherwise requires,
references to the Company will be deemed to include all predecessors of the
Company.

        2.1    ORGANIZATION

        The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts. The Company
has all requisite corporate power and authority to own, operate and lease its
properties and assets, to carry on its business as now conducted and as proposed
to be conducted, and to enter into and perform its obligations under this
Agreement and the other Operative Documents to which the Company is a party, and
to consummate the transactions contemplated hereby and thereby. The Company is
duly qualified and licensed as a foreign corporation to do business and is in
good standing in each jurisdiction in which the character of the Company's
properties occupied, owned or held under lease or the nature of the business
conducted by the Company makes such qualification necessary, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company's business, properties or prospects (a "Company Material
Adverse Effect").





                                      -8-
<PAGE>   17

        2.2    ENFORCEABILITY

        The Company has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement and each of the other Operative
Documents to which it is a party and each of the certificates, instruments and
documents executed or delivered by it pursuant to the terms of this Agreement.
All corporate action on the part of the Company and its officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other Operative Documents to which the
Company is a party, the consummation of the Merger, and the performance of all
the Company's obligations under this Agreement and the other Operative Documents
to which the Company is a party has been taken or will be taken as of or prior
to the Effective Time. This Agreement has been, and each of the other Operative
Documents to which the Company is a party at the Closing will have been, duly
executed and delivered by the Company, and this Agreement is, and each of the
other Operative Documents to which the Company is a party will be at the
Closing, a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.

        2.3    CAPITALIZATION

        (a) The authorized capital stock of the Company consists of 20,000,000
shares of Company Common Stock and 10,400,000 shares of preferred stock, of
which 5,000,000 shares are designated as Company Series A Stock and, 5,400,000
shares are designated as Company Series B Stock.

        (b) The issued and outstanding capital stock of the Company consists
solely of 3,816,458 shares of Company Common Stock, 4,941,616 shares of Company
Series A Stock and 5,363,985 shares of Company Series B Stock (the "Outstanding
Shares"), which are and as of the Closing will be held of record and
beneficially by the stockholders of the Company as set forth on Schedule 2.3(b)
to the Disclosure Memorandum. The Outstanding Shares are, and immediately prior
to the Closing will be, duly authorized and validly issued, fully paid and
nonassessable, and issued in compliance with all applicable federal, state and
foreign securities laws. No Person (as defined in Section 2.5 hereof) other than
the stockholders of the Company holds any interest in any of the Outstanding
Shares. True and correct copies of the stock records of the Company, showing all
issuances and transfers of shares of capital stock of the Company since
inception, have been provided to Amazon.com.

        (c) Other than outstanding Options to purchase up to 1,762,296 shares of
Company Common Stock that have been granted under the Company Option Plans, and
Warrants to purchase up to 253,146 shares of Company Common Stock, there are





                                      -9-
<PAGE>   18

no outstanding rights of first refusal or offer, preemptive rights, options,
warrants, conversion rights or other agreements, either directly or indirectly,
for the purchase or acquisition from the Company or any stockholder of any
shares of Company Capital Stock or any securities convertible into or
exchangeable for shares of Company's Capital Stock. Set forth on Schedule 2.3(c)
to the Disclosure Memorandum is a spreadsheet accurately reflecting the number
of such Options and Warrants outstanding, the grant dates, vesting schedules and
exercise prices thereof, the identities of the holders thereof and an indication
of their relationships to the Company. The Company has delivered to Amazon.com
true and correct copies of the Company Option Plans, the form of stock option
letter agreement relating to Options granted thereunder and all material
deviations therefrom as well as the true and correct copies of all outstanding
Warrants.

        (d) Other than as set forth on Schedule 2.3(d), the Company is not a
party or subject to any agreement or understanding, and, to the knowledge of the
Company, there is no agreement or understanding between any Persons, that
affects or relates to the voting or giving of written consents with respect to
any securities of the Company or the voting by any director of the Company. No
stockholder of the Company or any affiliate thereof is indebted to the Company,
and the Company is not indebted to any stockholder of the Company or any
affiliate thereof. Other than as set forth on Schedule 2.3(d), the Company is
not under any contractual or other obligation to register any of its presently
outstanding securities or any of its securities that may hereafter be issued.

        2.4    SUBSIDIARIES AND AFFILIATES

        The Company does not own or control, and has not in the past owned or
controlled, directly or indirectly, any corporation, partnership, limited
liability company or other business entity. The Company does not own, directly
or indirectly, any ownership, equity, profits or voting interest in, or
otherwise control, any corporation, partnership, joint venture or other entity,
and has no agreement or commitment to purchase any such interest.

        2.5    NO APPROVALS; NO CONFLICTS

        The execution, delivery and performance by the Company of this Agreement
and the other Operative Documents to which the Company is a party and the
consummation of the transactions contemplated hereby and thereby will not (a)
constitute a violation (with or without the giving of notice or lapse of time,
or both) of any provision of law or any judgment, decree, order, regulation or
rule of any court or other governmental authority applicable to the Company, (b)
require any consent, approval or authorization of, or declaration, filing or
registration with, any





                                      -10-
<PAGE>   19

person, corporation, partnership, joint venture, association, organization,
other entity or governmental or regulatory authority (a "Person"), except (i)
compliance with applicable securities laws, (ii) the filing of all documents
necessary to consummate the Merger with the Massachusetts Secretary of State,
and (iii) the approval by the stockholders of the Company of the transactions
contemplated hereby, as provided under applicable law and the Articles of
Organization and Bylaws of the Company (all such consents, approvals and
authorizations to be duly obtained by the Company at or prior to the Closing),
(c) result in a default (with or without the giving of notice or lapse of time,
or both) under, or acceleration or termination of, or the creation in any party
of the right to accelerate, terminate, modify or cancel, any agreement, lease,
note or other restriction, encumbrance, obligation or liability to which the
Company is a party or by which it is bound or to which any assets of the Company
are subject, (d) result in the creation of any Encumbrance (as defined in
Section 2.9(d) hereof) upon the assets of the Company or upon any Outstanding
Shares or other securities of the Company, (e) conflict with or result in a
breach of or constitute a default under any provision of the Articles of
Organization or Bylaws of the Company, or (f) invalidate or adversely affect any
material permit, license, authorization or status used in the conduct of the
Company's business.

        2.6    FINANCIAL STATEMENTS

        The Company has delivered to Amazon.com (a) audited balance sheets,
statements of operations, statements of cash flow, and statements of
stockholders' equity of the Company as of or for the fiscal year ended December
31, 1997 and the period from inception (September 5, 1996) to December 31, 1996
and (b) an unaudited balance sheet, statement of operations, statement of cash
flow and statement of stockholders' equity of the Company as of and for the
six-month period ended June 30, 1998. All the foregoing financial statements are
herein referred to as the "Financial Statements." The balance sheet of the
Company as of June 30, 1998 is herein referred to as the "Company Balance
Sheet." The Financial Statements have been prepared in conformity with generally
accepted accounting principles in the United States ("GAAP") on a basis
consistent with prior accounting periods and fairly present the financial
position, results of operations and changes in financial position of the Company
as of the dates and for the periods indicated (except, solely with respect to
the unaudited Financial Statements, as to footnotes and normal period-end
adjustments). The Company has no liabilities or obligations of any nature
(absolute, contingent or otherwise) that are not fully reflected or reserved
against in the Company Balance Sheet and that would be required under GAAP to be
reflected or reserved, except liabilities or obligations incurred since the date
of the Company Balance Sheet in the ordinary course of business and consistent
with past practice and except for liabilities or obligations that are not
material to the Company's financial





                                      -11-
<PAGE>   20

condition. The Company maintains standard systems of accounting that are
adequate for its business. The Company is not a guarantor, indemnitor, surety or
other obligor of any indebtedness of any other Person. The Company's practices
with respect to capitalizing software development costs, as reflected in the
Financial Statements, are reasonable, in accordance with industry standards.

        2.7    ABSENCE OF CERTAIN CHANGES OR EVENTS

        Except for transactions specifically contemplated in this Agreement,
since the date of the Company Balance Sheet, neither the Company nor any of its
officers or directors in their representative capacities on behalf of the
Company have:

        (a) taken any action or entered into or agreed to enter into any
transaction, agreement or commitment other than in the ordinary course of
business;

        (b) forgiven or canceled any indebtedness or waived any claims or rights
of material value (including, without limitation, any indebtedness owing by any
stockholder, officer, director, employee or affiliate of the Company);

        (c) granted, other than in the ordinary course of business and
consistent with past practice or as required with the terms of any Employee
Benefit Plan listed in Schedule 2.13.1 of the Disclosure Memorandum, any
increase in the compensation of directors, officers, employees or consultants
(including any such increase pursuant to any employment agreement or bonus,
pension, profit-sharing, lease payment or other plan or commitment) or any
increase in the compensation payable or to become payable to any director,
officer, employee or consultant;

        (d) suffered any change having a Company Material Adverse Effect;

        (e) borrowed or agreed to borrow any funds or incurred or become subject
to, whether directly or by way of assumption or guarantee or otherwise, any
liabilities or obligations (absolute, accrued, contingent or otherwise) in
excess of $25,000, except liabilities and obligations incurred in the ordinary
course of business and consistent with past practice, or increased, or
experienced any change in any assumptions underlying or methods of calculating,
any bad debt, contingency or other reserves;

        (f) paid, discharged or satisfied any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of claims, liabilities and obligations reflected or reserved against in
the Company Balance Sheet or incurred in the ordinary course of business and
consistent with past





                                      -12-
<PAGE>   21

practice since the date of the Company Balance Sheet, or prepaid any obligation
having a fixed maturity of more than 90 days from the date such obligation was
issued or incurred;

        (g) permitted or allowed any of its property or assets (real, personal
or mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge, except in the ordinary
course of business and consistent with past practice;

        (h) purchased or sold, transferred or otherwise disposed of any of its
material properties or assets (real, personal or mixed, tangible or intangible);

        (i) disposed of or permitted to lapse any rights to the use of any
trademark, trade name, patent or copyright, or disposed of or disclosed to any
Person without obtaining an appropriate confidentiality agreement from any such
Person any trade secret, formula, process or know-how not theretofore a matter
of public knowledge;

        (j) made any single capital expenditure or commitment in excess of
$25,000 for additions to property, plant, equipment or intangible capital assets
or made aggregate capital expenditures in excess of $25,000 for additions to
property, plant, equipment or intangible capital assets;

        (k) made any change in any method of accounting or accounting practice
or internal control procedure;

        (l) issued any capital stock or other securities (other than the grant
of 548,435 options under the Company Option Plan), or declared, paid or set
aside for payment any dividend or other distribution in respect of its capital
stock, or redeemed, purchased or otherwise acquired, directly or indirectly, any
shares of capital stock or other securities of the Company, or otherwise
permitted the withdrawal by any of the holders of capital stock of the Company
of any cash or other assets (real, personal or mixed, tangible or intangible),
in compensation, indebtedness or otherwise, other than payments of compensation
in the ordinary course of business and consistent with past practice;

        (m) paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of the
Company's stockholders, officers, directors or employees or any affiliate of any
of the Company's stockholders, officers, directors or employees, except
compensation paid to officers and employees at rates not exceeding the rates of
compensation paid during the fiscal year last ended or the compensation referred
to in Schedule 2.12 of the Disclosure Memorandum; or





                                      -13-
<PAGE>   22

        (n) agreed, whether in writing or otherwise, to take any action
described in this Section 2.7.

        2.8    TAXES

        (a) (i) All Tax Returns (as defined below) required to be filed by or on
behalf of the Company have been filed on a timely basis with the appropriate
governmental authority in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns were true, correct and complete
in all material respects; (ii) all Taxes (as defined below) of the Company
(whether or not reflected on any Tax Return) have been fully and timely paid;
(iii) no waivers of statutes of limitation have been given or requested with
respect to the Company in connection with any Tax Returns covering the Company
with respect to any Taxes payable by it; and (iv) the Company has duly and
timely withheld from employee salaries, wages and other compensation and paid
over to the appropriate governmental authority all amounts required to be so
withheld and paid over for all periods under all applicable laws. There are no
liens with respect to Taxes on any of the Company's property or assets other
than liens for current Taxes not yet payable.

        (b) Neither the Company nor any other Person on behalf of the Company
(i) has filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company;
(ii) has executed or entered into a closing agreement pursuant to Section 7121
of the Code or any predecessor provision thereof or any similar provision of
state, local or foreign law; or (iii) has agreed to or is required, except as
may be required as a result of the transactions contemplated hereby, to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by the Company or has notice that a governmental authority has proposed any such
adjustment or change in accounting method.

        (c) There is no dispute or claim concerning any Tax liability of the
Company either (i) claimed or raised by any authority in writing or (ii) as to
which any of the directors and officers (and employees responsible for Tax
matters) of the Company have knowledge based on personal contact with any agent
of such authority. Schedule 2.8 to the Disclosure Memorandum lists all Tax
Returns filed with respect to the Company for taxable periods ended on or after
the Company's inception that have been audited, and indicates those Tax Returns
that currently are the subject of audit. The Company has delivered to Amazon.com
correct and complete copies of all Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company since
the Company's inception.





                                      -14-
<PAGE>   23

        (d) The Company has not made any payments, is not obligated to make any
payments and is not a party to any agreement that will obligate it to make any
payments that will not be deductible under Section 280G of the Code (or any
similar provision of state, local or foreign law) as a result of the Merger or
the other transactions contemplated hereby.

        (e) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(2)(i) of the Code.

        (f) The Company is not a party to any Tax allocation or sharing
agreement. The Company (i) has not been a member of a Tax Group (as defined
below) filing a consolidated income Tax Return under Section 1501 of the Code
(or any similar provision of state, local or foreign law) and (ii) does not have
any liability for Taxes of any Person under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor by contract or otherwise.

        (g) The unpaid Taxes of the Company (i) did not, as of June 30, 1998,
exceed the reserve for Tax liability set forth on the face (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) of the Company Balance Sheet and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing Tax
Returns.

        (h) The Disclosure Memorandum sets forth the amount of any net operating
loss, net capital loss, net-unrealized built-in loss (as defined under Section
382 of the Code), unused investment or other credit, unused foreign tax or
excess charitable contribution allocable to the Company.

        As used in this Agreement, the following terms shall have the following
meanings:

        "Taxes" means all foreign, federal, state, county or local taxes,
charges, fees, levies, imposts, duties and other assessments, including, but not
limited to, any income, alternative minimum or add-on tax, estimated, gross
income, gross receipts, sales, use, transfer, transactions, intangibles, ad
valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, real property, recording, personal property, federal
highway use, commercial rent, environmental (including, but not limited to,
taxes under Section 59(a) of the Code) or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties or additions to tax.





                                      -15-
<PAGE>   24

        "Tax Group" means any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which the Company is now
or was formerly a member.

        "Tax Returns" means any return, declaration, report, claim or refund,
information return, statement, or other similar document relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.

        2.9    PROPERTY

        (a) The Company owns no real property other than the leasehold interests
described on Schedule 2.9(a) to the Disclosure Memorandum, which contains a
complete and accurate list of all real property of the Company that is leased,
rented or used by the Company (the "Real Property"). The Company has delivered
to Amazon.com true and complete copies of all written leases, subleases, rental
agreements, contracts of sale, tenancies or licenses relating to the Real
Property and written summaries of the terms of any oral leases, subleases,
rental agreements, contracts of sale, tenancies or licenses relating to the Real
Property.

        (b) Schedule 2.9(b) to the Disclosure Memorandum contains a complete and
accurate list of each item of personal property having a value in excess of
$5,000 that is owned, leased, rented or used by the Company (the "Personal
Property"); however, such list need not describe the Technology and the IP
Rights (as defined in Section 2.14) listed on Schedule 2.14 to the Disclosure
Memorandum. The Company has delivered to Amazon.com true and complete copies of
all leases, subleases, rental agreements, contracts of sale, tenancies or
licenses relating to the Personal Property.

        (c) The Real Property and the Personal Property include all properties
and assets (whether real, personal or mixed, tangible or intangible) (other
than, in the case of the Personal Property, property rights with an individual
value of less than $5,000 and the Technology and the IP Rights listed on
Schedule 2.14 to the Disclosure Memorandum) reflected in the Company Balance
Sheet and all the properties and assets purchased by the Company since the date
of the Company Balance Sheet (except for such properties or assets sold since
the date of the Company Balance Sheet in the ordinary course of business and
consistent with past practice). The Real Property and the Personal Property
include all material property used in the business of the Company, other than
the Technology and the IP Rights listed on Schedule 2.14 to the Disclosure
Memorandum. The Company's offices and other structures and the Personal Property
are of a quality consistent with industry standards, are in good operating
condition and repair, normal wear and tear excepted, are adequate for the uses
to which they are being put and comply in all material respects with applicable
safety and other laws and regulations.





                                      -16-
<PAGE>   25

        (d) The Company's leasehold interest in each parcel of the Real Property
is free and clear of all liens, mortgages, pledges, deeds of trust, security
interests, charges, encumbrances and other adverse claims or interests of any
kind (each, an "Encumbrance"). Each lease of any portion of the Real Property is
valid, binding and enforceable in accordance with its terms against the parties
thereto and any other Person with an interest in such Real Property, the Company
has performed in all material respects all obligations imposed on it thereunder,
and neither the Company nor any other party thereto is in default thereunder,
nor is there any event that with notice or lapse of time, or both, would
constitute a default thereunder. The Company has not granted any lease,
sublease, tenancy or license of, or entered into any rental agreement or
contract of sale with respect to, any portion of the Real Property.

        (e) The Personal Property is free and clear of all Encumbrances, and,
other than leased Personal Property that is so noted on the list supplied
pursuant to Section 2.9(b), the Company owns such Personal Property. Each lease,
license, rental agreement, contract of sale or other agreement to which the
Personal Property is subject is valid, binding and enforceable in accordance
with its terms against the parties thereto, the Company has performed in all
material respects all obligations imposed on it thereunder, and neither the
Company nor, to the best of the Company's knowledge, any other party thereto is
in default thereunder, nor is there any event that with notice or lapse of time,
or both, would constitute a default by the Company or, to the best of the
Company's knowledge, any other party thereunder. The Company has not granted any
lease, sublease, tenancy or license of any portion of the Personal Property,
except in the ordinary course of business.

        2.10   CONTRACTS

        Schedule 2.10 to the Disclosure Memorandum contains a complete and
accurate list (other than the IP Rights listed on Schedule 2.14 to the
Disclosure Memorandum) of all contracts, agreements and understandings, oral or
written, to which the Company is currently a party or by which the Company is
currently bound providing for potential payments by or to the Company in excess
of $25,000, including, without limitation, security agreements, license
agreements, software development agreements, distribution agreements, joint
venture agreements, reseller agreements, credit agreements and instruments
relating to the borrowing of money. All contracts set forth on Schedule 2.10 are
valid, binding and enforceable in accordance with their terms against each party
thereto, and are in full force and effect, the Company has performed in all
material respects all obligations imposed on it thereunder, and neither the
Company nor, to the best of





                                      -17-
<PAGE>   26

the Company's knowledge, any other party thereto is in default thereunder, nor
is there any event that with notice or lapse of time, or both, would constitute
a default by the Company or, to the best of the Company's knowledge, any other
party thereunder. True and complete copies of each such written contract (or
written summaries of the terms of any such oral contract) have been heretofore
delivered to Amazon.com. Except as specifically set forth on Schedule 2.10, the
Company has no

        (a) contracts with directors, officers, stockholders, employees, agents,
consultants, advisors, salespersons, sales representatives, distributors or
dealers that are not, except as provided by law to the contrary without regard
to the express terms of such contract, cancelable by it within 30 days' notice
without liability, penalty or premium, any agreement or arrangement providing
for the payment of any bonus or commission based on sales or earnings, or any
compensation agreement or arrangement affecting or relating to former employees
of the Company;

        (b) employment agreement, whether express or implied, or any other
agreement for services that contains any severance or termination pay
liabilities or obligations;

        (c) noncompetition agreement or other restriction from carrying on its
business anywhere in the world;

        (d) notice that any party to a contract listed on Schedule 2.10 intends
to cancel, terminate or refuse to renew such contract or to exercise or decline
to exercise any option or right thereunder;

        (e) material disagreement with any of its suppliers, customers,
distributors, OEM resellers, licensors or licensees;

        (f) product distribution agreement, development agreement, or license
agreement as licensor or licensee (except for standard nonexclusive software
licenses granted to end-user customers in the ordinary course of business the
form of which has been provided to Amazon.com or standard licenses purchased by
the Company for off-the-shelf software), and except as otherwise set forth on
Schedule 2.14.2 to the Disclosure Memorandum);

        (g) joint venture contract or arrangement or any other agreement that
involves a sharing of profits with other persons; and

        (h) instrument evidencing or related in any way to indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise, except for trade
indebtedness incurred in the ordinary course of business, and except as
disclosed in the Financial Statements.





                                      -18-
<PAGE>   27

        2.11   CLAIMS AND LEGAL PROCEEDINGS

        Except as set forth on Schedules 2.11 and 2.14 to the Disclosure
Memorandum, there are no claims, actions, suits, arbitrations, investigations or
proceedings pending against the Company or, to the best of the Company's
knowledge, threatened against the Company before or by any court or governmental
or nongovernmental department, commission, board, bureau, agency or
instrumentality, or any other Person. There are no outstanding or unsatisfied
judgments, orders, decrees or stipulations to which the Company is a party.
Schedule 2.11 sets forth a description of any material disputes that have been
settled or resolved by litigation or arbitration since the Company's inception.

        2.12   LABOR AND EMPLOYMENT MATTERS

        There are no material labor disputes, employee grievances or
disciplinary actions pending or, to the best of the Company's knowledge,
threatened against or involving the Company or any of its present or former
employees. The Company has complied with all provisions of law relating to
employment and employment practices, terms and conditions of employment, wages
and hours. The Company is not engaged in any unfair labor practice and has no
liability for any arrears of wages or Taxes or penalties for failure to comply
with any such provisions of law. There is no labor strike, dispute, slowdown or
stoppage pending or, to the best of the Company's knowledge, threatened against
or affecting the Company, and the Company has not experienced any work stoppage
or other labor difficulty since its incorporation. No collective bargaining
agreement is binding on the Company. The Company has no knowledge of any
organizational efforts presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company. Each employee, officer and
consultant of the Company has executed a nondisclosure agreement in the form
provided to Amazon.com. To the best of the Company's knowledge, no employee (or
person performing similar functions) of the Company is in violation of any such
agreement or any employment agreement, noncompetition agreement, patent
disclosure agreement, invention assignment agreement, proprietary information
agreement or other contract or agreement relating to the relationship of such
employee with the Company or any other party, and the Company will use its best
efforts to prevent any such violation. Schedule 2.12 to the Disclosure
Memorandum sets forth a true and complete list of (a) the names and current
compensation amounts of all directors and officers of the Company; (b) the wage
rates for nonsalaried and nonofficer salaried employees of the Company by
classification, and all labor union contracts (if any); (c) all group insurance
programs in effect for employees of the Company (other than any Employee Benefit
Plan listed on Schedule 2.13.1 to the Disclosure Memorandum); and (d) the names
and current





                                      -19-
<PAGE>   28

compensation packages of all independent contractors and consultants of the
Company. The Company is not in default with respect to any of its obligations
referred to in clause (b) above and has no obligation or liability for severance
or back pay owed through or by virtue of the Closing. Except as disclosed on
Schedule 2.12, all employees of the Company are employed on an "at will" basis.

        2.13   EMPLOYEE BENEFIT PLANS

               2.13.1 EMPLOYEE BENEFIT PLAN LISTING

        Schedule 2.13.1 to the Disclosure Memorandum sets forth a true, accurate
and complete list of all retirement, pension, profit sharing, deferred
compensation, savings, bonus, incentive, cafeteria, flexible benefits, medical,
dental, vision, hospitalization, life insurance, group insurance, medical
expense reimbursement, dependent care assistance, tuition reimbursement,
disability, accident, sick pay, holiday, vacation, severance, stock purchase,
stock option, stock appreciation rights, fringe benefit and other employee
benefit plans, funds, policies, programs, contracts, arrangements and payroll
practices (including, but not limited to, all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all employment, consulting and personal service
contracts and agreements, whether formal or informal, whether written or
unwritten and whether legally binding or not, (a) sponsored, maintained or
contributed to by the Company, (b) covering or benefiting any current or former
officer, employee, agent, director or independent contractor of the Company (or
any dependent or beneficiary of any such individual), or (c) with respect to
which the Company has (or could have) any actual or potential obligation or
liability (such plans, funds, policies, programs, contracts, arrangements and
payroll practices are hereinafter referred to collectively as "Employee Benefit
Plans" and each individually as an "Employee Benefit Plan"). The Company does
not have any agreement, arrangement, commitment or obligation, whether formal or
informal, whether written or unwritten and whether legally binding or not, to
create (or contribute to) any additional employee benefit plan, fund, policy,
program, contract, arrangement or payroll practice or to modify or amend any
existing Employee Benefit Plan. There has been no amendment, written
interpretation or announcement (whether or not written) by the Company relating
to, or change in participation or coverage under, any Employee Benefit Plan
that, either alone or together with other such items or events, could materially
increase the expense of maintaining the Employee Benefit Plans above the level
of expense incurred with respect thereto for the most recent fiscal year
included in the Financial Statements.





                                      -20-
<PAGE>   29

               2.13.2 DOCUMENTS PROVIDED

        The Company has delivered to Amazon.com true, correct and complete
copies (or, in the case of unwritten Employee Benefit Plans, descriptions) of
all Employee Benefit Plans (and all amendments thereto), along with, to the
extent applicable to the particular Employee Benefit Plan, the following
information: (a) copies of the last three annual reports (Form 5500 series)
filed with respect to such Employee Benefit Plan; (b) copies of the summary plan
descriptions, summary annual reports, summaries of material modifications and
all material employee manuals or communications filed or distributed with
respect to such Employee Benefit Plan during the last three years; and (c)
copies of all contracts (and any amendments thereto) relating to such Employee
Benefit Plan, including, but not limited to, service provider agreements,
administrative service agreements, insurance contracts, annuity contracts,
investment management agreements and record-keeping agreements.

               2.13.3 COMPLIANCE

        Except as set forth on Schedule 2.13.3 to the Disclosure Memorandum,
with respect to each Employee Benefit Plan: (a) such Employee Benefit Plan is,
and at all times since its inception has been, maintained, administered and
operated in accordance with its terms and in compliance in all material respects
with all applicable laws, statutes, orders, rules and regulations, and all
requirements prescribed thereby, including, but not limited to, ERISA and the
Code; (b) all amendments and actions required to bring such Employee Benefit
Plan into conformity with the applicable provisions of ERISA, the Code and other
applicable laws and regulations have been made or taken within the time
prescribed by law, except to the extent that such amendments or actions are not
required by law to be made or taken until after the Closing Date and are
disclosed on Schedule 2.13.3 to the Disclosure Memorandum; (c) the Company and,
to the knowledge of the Company, each fiduciary of such Employee Benefit Plan
have, at all times, properly performed all obligations, whether arising by
operation of law or by contract, required to be performed by each of them in
connection with such Employee Benefit Plan, and there have been no defaults or
violations of law by the Company, any fiduciary or any other Person with respect
to such Employee Benefit Plan; (d) all returns, reports and other disclosures
relating to such Employee Benefit Plan required to be filed with any
governmental entity or agency or furnished to any participant or beneficiary
have been properly completed or prepared and timely filed or furnished in
accordance with applicable law; (e) neither the Company nor any other fiduciary
of such Employee Benefit Plan has engaged in any transaction or acted or failed
to act in a manner that violates the fiduciary requirements of ERISA or any
other applicable law; (f) no event has occurred or is threatened or about to
occur that would constitute a nonexempt prohibited transaction





                                      -21-
<PAGE>   30

under Section 406 or 407 of ERISA or under Section 4975 of the Code; and (g) no
event or omission has occurred, or is about to occur, that could subject,
directly or indirectly, the Company or any other Person to a tax under Chapter
43 of Subtitle D of the Code or a penalty under Part 5 of Subtitle B of Title I
of ERISA. Each Employee Benefit Plan that constitutes a "group health plan," as
defined in Section 607(1) or Section 733(a)(1) of ERISA or Section 4980B(g)(2)
of the Code, has been maintained, administered and operated at all times since
its inception in compliance in all material respects with the requirements of
Parts 6 and 7 of Subtitle B of Title I of ERISA, Section 4980B(f) of the Code,
any regulations under such ERISA and Code sections and any other applicable
federal, state, local or foreign law regarding the provision or continuation of
health insurance coverage or other welfare benefits (within the meaning of
Section 3(1) of ERISA).

               2.13.4 CONTRIBUTIONS AND PREMIUM PAYMENTS

        All contributions, premiums and other payments due or required to be
made to each Employee Benefit Plan under the terms of such Employee Benefit
Plan, ERISA, the Code or other applicable law have been timely paid, or, if not
yet due, have been properly recorded on the books of the Company.

               2.13.5 RELATED EMPLOYERS

        The Company is not, and has never been, a member of (a) a controlled
group of corporations, within the meaning of Section 414(b) of the Code, (b) a
group of trades or businesses under common control, within the meaning of
Section 414(c) of the Code, (c) an affiliated service group, within the meaning
of Section 414(m) of the Code, or (d) any other group of Persons treated as a
single employer under Section 414(o) of the Code.

               2.13.6 MULTIEMPLOYER AND TITLE IV PLANS

        The Company does not maintain or contribute to, and has never maintained
or contributed to (or been obligated to contribute to), any multiemployer plan
as defined in Section 3(37) or 4001(a)(3) of ERISA or 414(f) of the Code, any
multiple employer plan within the meaning of Section 4063 or 4064 of ERISA or
Section 413(c) of the Code, or any employee benefit plan, fund, program,
contract or arrangement that is subject to Section 412 of the Code, Section 302
of ERISA or Title IV of ERISA.

               2.13.7 POST-TERMINATION WELFARE BENEFITS

        Except as set forth on Schedule 2.13.7 to the Disclosure Memorandum,
neither the Company nor any Employee Benefit Plan provides or has any obligation
to





                                      -22-
<PAGE>   31

provide (or contribute toward the cost of) health, severance or any other
welfare benefits (within the meaning of Section 3(1) of ERISA) with respect to
any current or former officer, employee, agent, director or independent
contractor of the Company or any other entity beyond such individual's
retirement or other termination of service, other than continuation coverage
mandated by Sections 601 through 608 of ERISA or Section 4980B(f) of the Code or
other applicable law.

               2.13.8 SUITS, CLAIMS AND INVESTIGATIONS

        There are no actions, suits or claims (other than routine claims for
benefits) pending or, to the best of the Company's knowledge, threatened with
respect to (or against the assets of) any Employee Benefit Plan, nor, to the
best of the Company's knowledge, is there a basis for any such action, suit or
claim. No Employee Benefit Plan is currently under investigation, audit or
review, directly or indirectly, by the Internal Revenue Service (the "IRS"), the
Department of Labor (the "DOL") or any other governmental entity or agency, and,
to the best of the Company's knowledge, no such action is contemplated or under
consideration by the IRS, the DOL or any other governmental entity or agency.

               2.13.9 PAYMENTS RESULTING FROM TRANSACTIONS

        Except as set forth on Schedule 2.13.9 to the Disclosure Memorandum,
neither the execution and delivery of this Agreement or any of the other
Operative Documents nor the consummation of the transactions contemplated in (or
by) this Agreement or any of the other Operative Documents will (a) entitle any
current or former officer, employee, agent, director or independent contractor
of the Company to severance pay, unemployment compensation or any other payment
from the Company or any other Person, or otherwise increase the amount of
compensation due to any such individual, or (b) result in any benefit or right
becoming established or increased, or accelerate the time of payment or vesting
of any benefit, under any Employee Benefit Plan, whether or not some other
subsequent action or event would be required to trigger any of the items
specified in clause (a) or (b) of this Section 2.13.9.

        2.14   INTELLECTUAL PROPERTY

               2.14.1 TECHNOLOGY

        Except for the Third Party Technologies (as defined in Section 2.14.2),
the Company owns all right, title and interest in and to the following
(collectively, the "Technology"), free and clear of all Encumbrances: (a) all
products, computer programs, specifications, source code, object code, graphics,
devices, techniques, algorithms, methods, technology, processes, procedures,
packaging, trade dress,





                                      -23-
<PAGE>   32

formulae, drawings, designs, concepts, user interfaces, "look and feel,"
software or development tools and content that are now or during the two (2)
years prior to the date of this Agreement have been, or are currently proposed
to be, developed, produced, used, marketed and/or sold in the Company's
business, including, without limitation, the items listed in Schedule 2.14.1 to
the Disclosure Memorandum; (b) any and all updates, enhancements, corrections,
modifications, improvements and new releases related to the items set forth in
(a), above; (c) any and all technology and work in progress related to the items
set forth in (a) and (b), above; and (d) all inventions, discoveries, processes,
designs, trade secrets, know-how and other confidential or proprietary
information related to the items set forth in (a), (b) and (c), above. The
Technology, excluding the Third Party Technologies, is sometimes referred to
herein as the "Company Technology."

               2.14.2   THIRD PARTY TECHNOLOGY

        Schedule 2.15.2 to the Disclosure Memorandum sets forth a list of all
Technology used in the Company's business for which the Company does not own all
right, title and interest (collectively, the "Third Party Technologies"), and
all license agreements or other contracts pursuant to which the Company has the
right to use (in the manner used by the Company, or intended or necessary for
use with the Company Technology) the Third Party Technologies (the "Third Party
Licenses"), indicating, with respect to each of the Third Party Technologies
listed therein, the owner thereof and the Third Party License applicable
thereto. The Company has the lawful right to use (free of any material
restriction) (a) all Third Party Technology that is incorporated in or used in
the development or production of the Company Technology, and (b) all other Third
Party Technology necessary for the conduct of the Company's business as now
conducted and as proposed to be conducted. All Third Party Licenses are valid,
binding and in full force and effect, the Company and, to the best of the
Company's knowledge, each other party thereto have performed in all material
respects their obligations thereunder, and neither the Company nor, to the best
of the Company's knowledge, any other party thereto is in default thereunder,
nor to the best of the Company's knowledge has there occurred any event or
circumstance which with notice or lapse of time or both would constitute a
default or event of default, on the part of the Company or, to the best of the
Company's knowledge, any other party thereto or give to any other party thereto
the right to terminate or modify any Third Party License. The Company has not
received notice that any party to any Third Party License intends to cancel,
terminate or refuse to renew (if renewable) such Third Party License or to
exercise or decline to exercise any option or right thereunder.





                                      -24-
<PAGE>   33

               2.14.3   TRADEMARKS

        Schedule 2.14.3 to the Disclosure Memorandum sets forth a list of all
trademarks, trade names, brand names, service marks, logos or other identifiers
used by the Company in its business (the "Marks"). The Company has full legal
and beneficial ownership, free and clear of any Encumbrances, of all rights
conferred by use of the Marks in the Company's business and, as to those Marks
that have been registered in the United States Patent and Trademark Office, by
federal registration of the Marks.

               2.14.4   INTELLECTUAL PROPERTY RIGHTS

        Schedule 2.14.4 to the Disclosure Memorandum sets forth all patents,
patent applications, copyright registrations (and applications therefor) and
trademark registrations (and applications therefor) (collectively, the "IP
Registrations") associated with the Company Technology and the Marks. The
Company owns all right, title and interest, free and clear of any Encumbrances,
in and to the IP Registrations, together with any other rights in or to any
copyrights (registered or unregistered), rights in the Marks (registered or
unregistered), trade secret rights and other intellectual property rights
(including, without limitation, rights of enforcement) associated with the
Company Technology and the Marks (collectively, the "IP Rights").

               2.14.5   MAINTENANCE OF RIGHTS

        Except as set forth in Schedule 2.14.5 to the Disclosure Memorandum, the
Company has not conducted its business, and has not used or enforced (or failed
to use or enforce) the IP Rights, in a manner that would result in the
abandonment, cancellation or unenforceability of any item of the IP Rights or
the IP Registrations, and the Company has not taken (or failed to take) any
action that would result in the forfeiture or relinquishment of any IP Rights or
IP Registrations, in each case where such abandonment, cancellation,
unenforceability, forfeiture or relinquishment would have a Company Material
Adverse Effect. Except as set forth in Schedule 2.14.5, the Company has not
granted to any third party any rights or permissions to use any of the
Technology or the IP Rights. To the best of the Company's knowledge, except
pursuant to reasonably prudent safeguards, (a) no third party has received any
confidential information relating to the Technology or the IP Rights, and (b)
the Company is not under any contractual or other obligation to disclose to any
third party any Company Technology.





                                      -25-
<PAGE>   34

               2.14.6   THIRD PARTY INFRINGEMENT

        Except as set forth in Schedule 2.14.6 to the Disclosure Memorandum, (a)
the Company has not received any notice or claim (whether written, oral or
otherwise) challenging the Company's ownership or rights in the Company
Technology or the IP Rights or claiming that any other person or entity has any
legal or beneficial ownership with respect thereto; (b) all IP Rights are
legally valid and enforceable without any material qualification, limitation or
restriction on their use, and the Company has not received any notice or claim
(whether written, oral or otherwise) challenging the validity or enforceability
of any IP Rights; and (c) to the best of the Company's knowledge, no other
person or entity is infringing or misappropriating any part of the IP Rights or
otherwise making any unauthorized use of the Company Technology.

               2.14.7   INFRINGEMENT BY THE COMPANY

        Except as set forth in Schedule 2.14.7 to the Disclosure Memorandum, (a)
the use of any of the Technology in the Company's business does not and will, to
the knowledge of the Company, not conflict with, infringe, violate or interfere
with or constitute an appropriation of any right, title or interest (including,
without limitation, any patent, copyright or trade secret right) held by any
other person or entity, and there have been no claims made with respect thereto,
(b) the use of any of the Marks and other IP Rights in the Company's business
will not conflict with, infringe, violate or interfere with or constitute an
appropriation of any right, title or interest (including, without limitation,
any patent, copyright, trademark or trade secret right) held by any other person
or entity, and there have been no claims made with respect thereto, and (c) the
Company has not received any notice or claim (whether written, oral or
otherwise) regarding any infringement, misappropriation, misuse, abuse or other
interference with any third party intellectual property or proprietary rights
(including, without limitation, infringement of any patent, copyright, trademark
or trade secret right of any third party) by the Company, the Technology or the
Marks or other IP Rights or claiming that any other entity has any claim of
infringement with respect thereto.

               2.14.8   CONFIDENTIALITY

        Except as set forth in Schedule 2.14.8 to the Disclosure Memorandum, (a)
the Company has not disclosed any source code regarding the Technology to any
person or entity other than an employee of the Company and under a written
nondisclosure agreement; (b) the Company has at all times maintained and
diligently enforced commercially reasonable procedures to protect all
confidential information relating to the Technology; (c) neither the Company nor
any escrow agent is under any





                                      -26-
<PAGE>   35

contractual or other obligation to disclose the source code or any other
proprietary information included in or relating to the Technology; and (d) the
Company has not deposited any source code relating to the Technology into any
source code escrows or similar arrangements. If, as disclosed on Schedule
2.14.8, the Company has deposited any source code to the Technology into source
code escrows or similar arrangements, no event has occurred that has or could
reasonably form the basis for a release of such source code from such escrows or
arrangements.

               2.14.9   WARRANTY AGAINST DEFECTS

        Except as set forth in Schedule 2.14.9 to the Disclosure Memorandum, the
Technology is free from known material defects and substantially conforms to the
applicable specifications, documentation and samples of such Technology.

               2.14.10  DOMAIN NAMES

        Schedule 2.14.10 sets forth a list of all Internet domain names used by
the Company in its business (collectively, the "Domain Names"). The Company has,
and after the Closing the Surviving Corporation will have, a valid registration
and all material rights (free of any material restriction) in and to the Domain
Names, including without limitation all rights necessary to continue to conduct
the Company's business as it is currently conducted.

               2.14.11  YEAR 2000

        Each hardware, software and firmware product used by the Company in its
business (collectively, the "Software") will accurately process date data
(including, but not limited to, calculating, comparing and sequencing) from,
into and between the twentieth and twenty-first centuries, including, without
limitation, leap year calculations, without a decrease in the functionality of
the Software. The Software is designed to be used prior to, during and after the
calendar year 2000 A.D. and will operate during each such time period without
error relating to date data, specifically including any error relating to, or
the product of, date data which represents or references different centuries or
more than one century. Without limiting the generality of the foregoing, the
Software (a) will not abnormally end or provide invalid or incorrect results as
a result of date data, specifically including date data which represents or
references different centuries or more than one century, (b) has been designed
to ensure year 2000 compatibility, including, but not limited to, date data
century recognition, calculations which accommodate same century and
multi-century formulas and date values, and date data interface values that
reflect the century, and (c) includes "Year 2000 Capabilities," meaning that the
Software (i) will manage and manipulate data involving dates, including single
century formulas and





                                      -27-
<PAGE>   36

multi-century formulas, and will not cause an abnormally ending scenario within
the application or generate incorrect values or invalid results involving such
dates, (ii) provides that all date-related user interface functionalities and
data fields include the indication of century, and (iii) provides that all
date-related data interface functionalities include the indication of century.

        2.15   CORPORATE BOOKS AND RECORDS

        The Company has furnished to Amazon.com or its representatives for their
examination true and complete copies of (a) the Articles of Organization and
Bylaws of the Company as currently in effect, including all amendments thereto,
(b) the minute books of the Company, and (c) the stock transfer books of the
Company. Such minutes reflect all meetings of the Company's stockholders, Board
of Directors and any committees thereof since the Company's inception, and such
minutes accurately reflect in all material respects the events of and actions
taken at such meetings. Such stock transfer books accurately reflect all
issuances and transfers of shares of capital stock of the Company since its
inception.

        2.16   LICENSES, PERMITS, AUTHORIZATIONS, ETC.

        Except as identified on Schedules 2.1 and 2.5 to the Disclosure
Memorandum, the Company has received all currently required governmental
approvals, authorizations, consents, licenses, orders, registrations and permits
of all agencies, whether federal, state, local or foreign, the failure to obtain
of which would have a Company Material Adverse Effect. The Company has not
received any notifications of any asserted present failure by it to have
obtained any such governmental approval, authorization, consent, license, order,
registration or permit, or past and unremedied failure to obtain such items.

        2.17   COMPLIANCE WITH LAWS

        Except as described on Schedule 2.17 to the Disclosure Memorandum, the
Company has at all times complied, and is in compliance, with all federal,
state, local and foreign laws, rules, regulations, ordinances, decrees and
orders applicable to it, to its employees, or to the Real Property and the
Personal Property, including, without limitation, all such laws, rules,
ordinances, decrees and orders relating to intellectual property protection,
antitrust matters, consumer protection, currency exchange, environmental
protection, equal employment opportunity, health and occupational safety,
pension and employee benefit matters, securities and investor protection
matters, labor and employment matters and trading-with-the-enemy matters except
where its noncompliance would not have a Company Material Adverse Effect. The
Company has not received any notification of any asserted present or past
unremedied





                                      -28-
<PAGE>   37

failure by the Company to comply with any of such laws, rules, regulations,
ordinances, decrees or orders.

        2.18   INSURANCE

        The Company maintains (a) insurance on all of its property (including
leased premises) that insures against loss or damage by fire or other casualty
(including extended coverage) and (b) insurance against liabilities, claims and
risks of a nature and in such amounts listed on Schedule 2.18. All insurance
policies of the Company are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date this representation is
made have been paid, and no notice of cancellation or termination has been
received with respect to any such policy or binder. Such policies or binders are
sufficient for compliance with all agreements to which the Company is a party,
will remain in full force and effect through the respective expiration dates of
such policies or binders without the payment of additional premiums and will not
in any way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. The Company has not been refused any insurance
with respect to its assets or operations, nor has its coverage been limited, by
any insurance carrier to which it has applied for any such insurance or with
which it has carried insurance.

        2.19   BROKERS OR FINDERS

        Except as set forth on Schedule 2.19 to the Disclosure Memorandum, the
Company has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by or on behalf of the Company, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Merger, this Agreement or any transaction contemplated
hereby.

        2.20   ABSENCE OF QUESTIONABLE PAYMENTS

        Neither the Company nor, to the Company's knowledge, any director,
officer, agent, employee or other Person acting on behalf of the Company has
used any Company funds for improper or unlawful contributions, payments, gifts
or entertainment, or made any improper or unlawful expenditures relating to
political activity to domestic or foreign government officials or others. The
Company has adequate financial controls to present such improper or unlawful
contributions, payments, gifts, entertainment or expenditures. Neither the
Company nor, to the Company's knowledge, any current director, officer, agent,
employee or other Person acting on behalf of the Company has accepted or
received any improper or unlawful contributions, payments, gifts or
expenditures. The Company has at all times complied, and is in compliance, in
all respects with the Foreign Corrupt Practices Act





                                      -29-
<PAGE>   38

and all foreign laws and regulations relating to prevention of corrupt practices
and similar matters.

        2.21   BANK ACCOUNTS

        Schedule 2.21 to the Disclosure Memorandum sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company maintains safe deposit boxes or
accounts of any nature and the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.

        2.22   CUSTOMERS AND SUPPLIERS

        Schedule 2.22 to the Disclosure Memorandum sets forth (a) a complete and
accurate list of the customers of the Company accounting for 5% or more of the
Company's sales during the fiscal year last ended showing the approximate total
sales by the Company to each such customer during the fiscal year last ended and
(b) a complete and accurate list of the suppliers of the Company from whom the
Company has purchased 5% or more of the goods or services purchased by the
Company in the fiscal year last ended. The Company has no reasonable basis to
expect any material modification to its relationship with any customer or
supplier named on Schedule 2.22 to the Disclosure Memorandum.

        2.23   ACCOUNTS RECEIVABLE

        All accounts receivable of the Company reflected in the Company Balance
Sheet, or existing at the Effective Time, represent sales actually made in the
ordinary course of business and were recorded in the Company's books consistent
with the presentation applied in the Financial Statements for the year ended
December 31, 1997. Except as described on Schedule 2.23 to the Disclosure
Memorandum, the bad debt reserves and sales return allowances reflected in the
Company Balance Sheet are adequate in all material respects. Set forth on
Schedule 2.23 to the Disclosure Memorandum are a full and complete list and
aging study of all consolidated accounts receivable of the Company existing as
of June 30, 1998.

        2.24   CREDITORS' LIST

        The Disclosure Memorandum sets forth a full, complete and accurate list
of all creditors of Company, with the amount payable to each such creditor as of
the date hereof and the Closing Date.





                                      -30-
<PAGE>   39

        2.25   INSIDER INTERESTS

        Except as set forth on Schedule 2.25 to the Disclosure Memorandum, no
stockholder or officer or director or other representative of the Company has
any interest (other than as a stockholder of the Company) (a) in any Real
Property, Personal Property, Technology or IP Rights used in or directly
pertaining to the business of the Company, including, without limitation,
inventions, patents, trademarks or trade names, or (b) in any agreement,
contract, arrangement or obligation relating to the Company, its present or
prospective business or its operations. Except as set forth on Schedule 2.25,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, holders, affiliates or any affiliate
thereof. The Company and its officers and directors have no interest, either
directly or indirectly, in any entity, including, without limitation, any
corporation, partnership, joint venture, proprietorship, firm, licensee,
business or association (whether as an employee, officer, director, stockholder,
agent, independent contractor, security holder, creditor, consultant or
otherwise) that presently (a) provides any services, produces and/or sells any
products or product lines or engages in any activity that is the same, similar
to or competitive with any activity or business in which the Company is now
engaged or proposes to engage; (b) is a supplier, customer or creditor, or has
an existing contractual relationship with any of the Company's employees (or
persons performing similar functions); or (c) has any direct or indirect
interest in any asset or property (real, personal or mixed, tangible or
intangible) of the Company or any property (real, personal or mixed, tangible or
intangible) that is necessary or desirable for the present or anticipated future
conduct of the Company's business.

        2.26   COMPLIANCE WITH ENVIRONMENTAL LAWS

        Neither the Company nor, to the best of the Company's knowledge, any
other Person (including, without limitation, any previous owner, lessee or
sublessee) has treated, stored or disposed of any material amounts of petroleum,
petroleum products, hazardous waste, hazardous substances, pollutants or
contaminants on the Real Property, or any real property previously owned,
leased, subleased or used by the Company in the operation of its business, in
violation of any applicable foreign, federal, state or local statutes,
regulations or ordinances, or common law, in each case as in existence at or
prior to the Closing. There have been no releases of any material amounts of
petroleum, petroleum products, hazardous waste, hazardous substances, pollutants
or contaminants on, at or from any assets or properties, including, without
limitation, the Real Property, owned, leased, subleased or used by the Company
in the operation of its business during the time such assets or properties were
owned, leased, subleased or used by the Company (or, to the best of the
Company's knowledge, prior





                                      -31-
<PAGE>   40

to such time), including, without limitation, any releases of any material
amounts of petroleum, petroleum products, hazardous waste, hazardous substances,
pollutants or contaminants in violation of any law.

        2.27   POOLING MATTERS

        To the best knowledge of Company, the Company has not taken or failed to
take any action that would prevent the accounting for the Merger as a pooling of
interests in accordance with Accounting Principles Board Opinion No. 16, the
interpretive releases issued pursuant thereto and the pronouncements of the
Securities and Exchange Commission (the "SEC").

        2.28   BUYER STOCK OWNERSHIP

        The Company does not own any shares of Amazon.com Common Stock or other
securities convertible into Amazon.com Common Stock.

        2.29   HART-SCOTT-RODINO

        The Company and Warren Adams, respectively, are each their own ultimate
parent entity as defined under the rules and regulations promulgated under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Hart-Scott-Rodino Act"). Neither the Company nor Warren Adams is a $10 million
person as defined thereunder. Lycos and CMG @Ventures II LLC ("@Ventures") are
the only stockholders of the Company whose acquisition of Amazon.com Common
Stock would trigger the jurisdictional tests of the Hart-Scott-Rodino Act. Both
Lycos and @Ventures have advised the Company that they are acquiring the
Amazon.com Common Stock solely for purposes of investment within the meaning of
16 C.F.R. 802.9.

        2.30   INFORMATION SUPPLIED BY THE COMPANY

        None of the information supplied or to be supplied by the Company for
inclusion in the information statement to be delivered to its stockholders in
connection with any written consent by or meeting of such stockholders
(collectively, "Stockholder Materials"), at the date such information was
supplied prior to the time the Company's stockholders were requested to approve
the Merger, contained or will contain any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not materially misleading; provided, however, that
the Company makes no representations or warranties regarding information
furnished by or related to Amazon.com or Purchaser.





                                      -32-
<PAGE>   41

        2.31   FULL DISCLOSURE

        None of this Agreement, the Financial Statements, the Disclosure
Memorandum, and the Exhibits hereto or the other Operative Documents, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements so made, in light of the circumstances
under which they are made, not misleading.

        2.32   SOLE REPRESENTATIONS AND WARRANTIES

        The representations and warranties contained in this Article II are the
only representations and warranties made by the Company in connection with the
transactions contemplated by this Agreement and supersede any and all previous
written or oral statements made by the Company to Amazon.com.

ARTICLE III - REPRESENTATIONS AND WARRANTIES
        OF AMAZON.COM AND THE PURCHASER

        In order to induce the Company to enter into and perform this Agreement
and the other Operative Documents, Amazon.com and the Purchaser jointly and
severally represent and warrant to the Company as follows in this Article III:

        3.1    ORGANIZATION

        Amazon.com is a corporation validity existing and in good standing under
the laws of the state of Delaware. The Purchaser is a corporation validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts. Each of Amazon.com and the Purchaser has all requisite corporate
power and authority to own, operate and lease its respective properties and
assets, to carry on its respective business as now conducted, and as proposed to
be conducted and to enter into and perform its obligations under this Agreement
and the other applicable Operative Documents to which Amazon.com or the
Purchaser is a party, and to consummate the transactions contemplated hereby and
thereby. Each of Amazon.com and the Purchaser is duly qualified and licensed as
a foreign corporation to do business and is in good standing in each
jurisdiction in which the character of properties occupied, owned or held under
lease by Amazon.com or the Purchaser, as applicable, or the nature of the
business conducted by Amazon.com or the Purchaser, as applicable, makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the business, operations,
assets, liabilities (absolute, accrued, contingent or otherwise), condition
(financial or other) or prospects of Amazon.com (an "Amazon.com Material Adverse
Effect") or the Purchaser, as applicable. Each of Amazon.com and the Purchaser
has full





                                      -33-
<PAGE>   42

corporate power and authority to execute, deliver and perform this Agreement and
the other Operative Documents to which it is a party, and to carry out the
transactions contemplated hereby and thereby.

        3.2    ENFORCEABILITY

        All corporate action on the part of Amazon.com and the Purchaser and
their respective officers, directors and stockholders necessary for the
authorization, execution, delivery and performance of this Agreement and the
other applicable Operative Documents to which Amazon.com or the Purchaser is a
party, the consummation of the Merger, and the performance of all of their
respective obligations under this Agreement and the other applicable Operative
Documents to which Amazon.com or the Purchaser is a party has been taken or will
be taken prior to the Effective Time. This Agreement has been, and each of the
other Operative Documents to which Amazon.com is a party will have been at the
Closing, duly executed and delivered by Amazon.com, and this Agreement is, and
each of the other Operative Documents to which Amazon.com is a party will be at
the Closing, a legal, valid and binding obligation of Amazon.com, enforceable
against Amazon.com in accordance with its terms. This Agreement has been, and
each of the other Operative Documents to which the Purchaser is a party will
have been at the Closing, duly executed and delivered by the Purchaser, and this
Agreement is, and each of the other Operative Documents to which the Purchaser
is a party will be at the Closing, a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms.

        3.3    SECURITIES

        The Securities (including the Option Shares) to be issued pursuant to
this Agreement have been duly authorized for issuance, and such Securities
(including the Option Shares), when issued and delivered to the Company's
stockholders pursuant to this Agreement, shall be validly issued, fully paid and
nonassessable.

        3.4    NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS

        The execution, delivery and performance of this Agreement and the other
Operative Documents by the Purchaser and Amazon.com, as applicable, and the
consummation by them of the transactions contemplated hereby and thereby will
not (a) constitute a violation (with or without the giving of notice or lapse of
time, or both) of any provision of law applicable to Amazon.com or the
Purchaser, (b) require any consent, approval or authorization of any Person,
except compliance with applicable securities laws and the filing of all
documents necessary to consummate the





                                      -34-
<PAGE>   43

Merger with the Massachusetts Secretary of State (all such consents, approvals
or authorizations to be duly obtained at or prior to the Closing), or (c)
conflict with or result in a breach of or constitute a default under any charter
provision of the Articles of Organization or Bylaws of Amazon.com or the
Purchaser.

        3.5    CAPITALIZATION

        The authorized capital stock of Amazon.com consists of 300,000,000
shares of Amazon.com Common Stock of which 49,756,203 shares were issued and
outstanding as of July 24, 1998 and 10,000,000 shares of preferred stock, par
value $0.01 per share, none of which are issued and outstanding. Such issued and
outstanding shares of Amazon.com Common Stock are validly issued, fully paid and
nonassessable.

        3.6    SEC DOCUMENTS

        Amazon.com has furnished the stockholders of the Company with true and
complete copies of its Annual Report on Form 10-K for the fiscal year ending
December 31, 1997 (the "Form 10-K"), its Quarterly Reports on Form 10-Q filed
after the date of the Form 10-K, all Form 8-Ks filed after the date of the Form
10-K and its Proxy Statement relating to its 1998 Annual Meeting of Stockholders
on May 28, 1998 (collectively, the "SEC Documents"). As of their respective
filing dates, each of the SEC Documents complied in all material respects with
the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the SEC promulgated
thereunder.

        3.7    ABSENCE OF CERTAIN CHANGES

        Since the March 31, 1998 financial statements included in the SEC
Documents, there has not been any change that by itself or in conjunction with
all other such changes has had an Amazon.com Material Adverse Effect, except as
disclosed in the SEC Documents to the date of this Agreement.

        3.8    INFORMATION SUPPLIED BY AMAZON.COM

        None of the information supplied or to be supplied by Amazon.com for
inclusion in the Stockholder Materials, including the SEC Documents, at the date
such information was supplied prior to the time the stockholders of the Company
were requested to approve the Merger at either a special meeting of stockholders
or by executing a written consent, contained or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not materially
misleading; provided,





                                      -35-
<PAGE>   44

however, that Amazon.com makes no representations or warranties regarding
information furnished by or related to the Company.

        3.9    POOLING MATTERS

        To the best of Amazon.com's knowledge, Amazon.com has not taken or
failed to take any action that would prevent the accounting for the Merger as a
pooling of interests in accordance with Accounting Principles Board Opinion No.
16, the interpretive releases issued pursuant thereto and the pronouncements of
the SEC.

        3.10   SELLER STOCK OWNERSHIP

        Neither Amazon.com nor any of its subsidiaries own any shares of Company
Capital Stock or other securities convertible into shares of Company Capital
Stock.

        3.11   BROKERS OR FINDERS

        Except as set forth on Schedule 3.11 to the Disclosure Memorandum,
Amazon.com has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by or on behalf of Amazon.com, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Merger, this Agreement or any transaction contemplated
hereby.

ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS
        OF AMAZON.COM AND THE PURCHASER

        The obligations of Amazon.com and the Purchaser to perform and observe
the covenants, agreements and conditions hereof to be performed and observed by
them at or before the Closing shall be subject to the satisfaction of the
following conditions, which may be expressly waived only in writing signed by
Amazon.com:

        4.1    ACCURACY OF REPRESENTATIONS AND WARRANTIES

        The representations and warranties of the Company contained herein
(including applicable Exhibits or Schedules to the Disclosure Memorandum) and in
the other Operative Documents shall have been true and correct when made and
shall be true and correct as of the Closing Date as though made on that date.

        4.2    PERFORMANCE OF AGREEMENTS

        The Company shall have performed all obligations and agreements and
complied with all covenants and conditions contained in this Agreement or any
other





                                      -36-
<PAGE>   45

Operative Document to be performed and complied with by it at or prior to the
Closing.

        4.3    OPINION OF COUNSEL FOR THE COMPANY

        Amazon.com shall have received the opinion letter of Hutchins, Wheeler &
Dittmar, counsel for the Company, dated the Closing Date, substantially in the
form attached hereto as Exhibit 4.3.

        4.4    CONSENTS TO MERGER

        The Company shall have received and shall have delivered to Amazon.com
written consents to the Merger from each of the parties (other than the Company)
to those agreements, leases, notes or other documents identified on Schedules
2.5, 2.10 and 2.14 to the Disclosure Memorandum that treat the Merger as an
assignment or otherwise by their terms require consent. In addition, the Company
shall have received and shall have delivered to Amazon.com consents from Lycos,
Inc., Puma Technologies, Inc., NaviSite Internet Services, GeoCities, EMC2, and
FAR VII, Inc., which consents shall be reasonably satisfactory in all respects
to Amazon.com.

        4.5    COMPLIANCE CERTIFICATE

        Amazon.com shall have received a certificate of the President and the
Chief Financial Officer of the Company, dated the Closing Date, in form and
substance satisfactory to Amazon.com, certifying that the conditions to the
obligations of Amazon.com and the Purchaser have been fulfilled.

        4.6    MATERIAL ADVERSE CHANGE

        Since the date of this Agreement and through the Closing, there shall
not have occurred any change that would have a Company Material Adverse Effect,
except for such changes occurring as a direct result of the execution or
announcement of this Agreement.

        4.7    APPROVALS AND CONSENTS

        All transfers of material permits or licenses and all approvals of or
notices to public agencies, federal, state, local or foreign, the granting or
delivery of which is necessary for the consummation of the transactions
contemplated hereby, or for the continued operation of the Company, shall have
been obtained, and all waiting periods specified by law shall have passed. All
other consents, approvals and notices referred to in this Agreement shall have
been obtained or delivered.





                                      -37-
<PAGE>   46

        4.8    PROCEEDINGS AND DOCUMENTS; CLERK'S CERTIFICATE

        All corporate and other proceedings in connection with the transactions
contemplated hereby and by the other Operative Documents, and all documents and
instruments incident to such transactions, shall have been approved by
Amazon.com's counsel, and Amazon.com shall have received a certificate of the
Clerk of the Company, in form and substance satisfactory to Amazon.com, as to
the authenticity and effectiveness of the actions of the Board of Directors and
stockholders of the Company authorizing the Merger and the transactions
contemplated by this Agreement and the other Operative Documents, and such other
documents as are specified by Amazon.com's counsel.

        4.9    NONFOREIGN AFFIDAVIT

        Amazon.com shall have received from the Company, pursuant to Section
1445 of the Code, a Foreign Investment in Real Property Tax Act Affidavit in
substantially the form attached hereto as Exhibit 4.9.

        4.10   COMPLIANCE WITH LAWS

        The consummation of the transactions contemplated by this Agreement and
the other Operative Documents shall be legally permitted by all laws and
regulations to which Amazon.com or the Company is subject.

        4.11   STOCKHOLDER APPROVALS

        The principal terms of this Agreement shall have been approved by the
holders of not less than 90% of each class of Company Capital Stock.

        4.12   DISSENTING SHARES

        The Dissenting Shares shall not constitute more than 10% of the Company
Capital Stock.

        4.13   LEGAL PROCEEDINGS

        No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened that would enjoin, restrain, condition
or prohibit consummation of this Agreement or any other Operative Document.





                                      -38-
<PAGE>   47

        4.14   ESCROW AGREEMENT

        ChaseMellon and a representative of the Company's stockholders on behalf
of the Company's stockholders shall have executed and delivered the Escrow
Agreement.

        4.15   EMPLOYMENT AND NONCOMPETITION ARRANGEMENTS

        Each of the Company's employees set forth on Schedule 4.15 shall have
accepted an oral offer of employment with Amazon.com and executed the Amazon.com
standard form of Confidentiality, Noncompetition and Invention Agreement
substantially in the form attached hereto as Exhibit 4.15.

        4.16   EMPLOYEE BENEFIT PLANS

        The Company shall convert any "standardized" prototype Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code to a
"non-standardized" prototype plan, in a form satisfactory to Amazon.com and
Purchaser and with terms that are substantially similar to those of the
predecessor "standardized" Employee Benefit Plan, effective as of a date prior
to Closing.

        4.17   INVESTOR RIGHTS AGREEMENT

        Each of the Company's stockholders shall have executed the Investor
Rights Agreement.

        4.18   AFFILIATE LETTERS

        The Company shall have delivered or caused to be delivered to Amazon.com
an Affiliate Letter in the form attached hereto as Exhibit 4.18. from each of
those Persons who were, at the record date for the Company's stockholders
meeting (or the date on which the requisite number of consents has been
obtained) to approve the Merger, "affiliates" of the Company within the meaning
of Rule 145 of the rules and regulations promulgated under the Securities Act.

        4.19   TERMINATION OF CERTAIN AGREEMENTS

        Any and all rights of refusal, co-sale rights and registration rights
(other than pursuant hereto) for the benefit of the holders of the Company
Common Stock, the Company Series A Stock or the Company Series B Stock shall
have been terminated.





                                      -39-
<PAGE>   48

        4.20   POOLING

        Ernst & Young LLP and KPMG Peat Marwick LLP each shall have delivered to
Amazon.com and the Purchaser an opinion in form and substance reasonably
satisfactory to Amazon.com that the Merger will qualify for "pooling of
interests" treatment under applicable accounting standards.

ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS
        OF THE COMPANY

        The obligations of the Company to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by them at or
before the Closing shall be subject to the satisfaction of the following
conditions, which may be expressly waived only in writing signed by the Company.

        5.1    ACCURACY OF REPRESENTATIONS AND WARRANTIES

        The representations and warranties of Amazon.com and the Purchaser
contained herein and in the other Operative Documents shall have been true and
correct when made and shall be true and correct as of the Closing Date as though
made on that date.

        5.2    PERFORMANCE OF AGREEMENTS

        Amazon.com and the Purchaser shall have performed all obligations and
agreements and complied with all covenants and conditions contained in this
Agreement or any other Operative Document to be performed and complied with by
them at or prior to the Closing.

        5.3    OPINION OF COUNSEL

        The Company shall have received the opinion letter of Perkins Coie LLP,
counsel for Amazon.com, dated the Closing Date, substantially in the form
attached hereto as Exhibit 5.3.

        5.4    COMPLIANCE CERTIFICATE

        The Company shall have received a certificate of an officer of
Amazon.com, dated the Closing Date, substantially in form and substance
satisfactory to the Company, certifying that the conditions to the obligations
of the Company have been fulfilled.





                                      -40-
<PAGE>   49

        5.5    LEGAL PROCEEDINGS

        No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened that would enjoin, restrain, condition
or prohibit consummation of this Agreement or any other Operative Document.

        5.6    MATERIAL ADVERSE CHANGE

        Since the date of this Agreement and through the Closing, there shall
not have occurred any change in the business, operations, assets, liabilities
(absolute, accrued, contingent or otherwise), sales, margins, profitability,
condition (financial or other) or prospects of Amazon.com that would have an
Amazon.com Material Adverse Effect, except for such changes occurring as a
direct result of the execution or announcement of this Agreement. Changes in the
trading prices of Amazon.com Common Stock shall not be deemed to have an
Amazon.com Material Adverse Effect under this Agreement.

        5.7    APPROVALS AND CONSENTS

        All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby
or for the continued operation of the Company, shall have been obtained, and all
waiting periods specified by law shall have passed. All other consents,
approvals and notices referred to in this Agreement shall have been obtained or
delivered.

        5.8    COMPLIANCE WITH LAWS

        The consummation of the transactions contemplated by this Agreement and
the other Operative Documents shall be legally permitted by all laws and
regulations to which Amazon.com or the Company is subject.

        5.9    STOCKHOLDER APPROVALS

        The principal terms of this Agreement shall have been approved by the
holders of not less than 90% of each class of Company Capital Stock (measured on
a fully diluted basis).

        5.10   ESCROW AGREEMENT

        Amazon.com shall have executed the Escrow Agreement.





                                      -41-
<PAGE>   50

        5.11   INVESTOR RIGHTS AGREEMENT

        Amazon.com shall have executed the Investor Rights Agreement.

        5.12   OPTION AGREEMENTS

        Amazon.com shall have executed an option agreement substantially in the
forms of Exhibit 5.12 with each of the individuals set forth on Schedule 5.12 in
which each individual will be granted options to purchase the number of shares
of Amazon.com Common Stock set forth opposite his name on such Schedule.

ARTICLE VI - COVENANTS

        Between the date of this Agreement and the Effective Time, the parties
covenant and agree as set forth in this Article VI.

        6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER

        Unless Amazon.com shall otherwise agree in writing, the business of the
Company shall be conducted in and only in, and the Company shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice and in accordance with applicable law; and the Company shall
use its best efforts to preserve intact the business organization of the
Company, to keep available the services of the current officers, employees and
consultants of the Company and to preserve the current relationships of the
Company with, and the goodwill of, customers, suppliers and other Persons with
which the Company has significant business relations. By way of amplification
and not limitation, except as otherwise contemplated by this Agreement, the
Company shall not, between the date of this Agreement and the Effective Time,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Amazon.com:

        (a) amend or otherwise change its Articles of Organization or Bylaws or
equivalent organizational documents;

        (b) except for the issuance to a purchaser of no more than 10,000 shares
of Company Series B Stock upon a sale that closes prior to the Closing Date and
except for the issuance of shares of capital stock of the Company upon the
exercise or conversion of currently outstanding Options, Warrants, Company
Series A Stock or Company Series B Stock, issue, sell, contract to issue or
sell, pledge, dispose of, grant, encumber or authorize the issuance, sale,
pledge, disposition, grant or Encumbrance of (i) any shares of capital stock of
any class of the Company, or any options, warrants, convertible securities or
other rights of any kind to acquire any





                                      -42-
<PAGE>   51

shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or (ii) any assets of
the Company, except for sales in the ordinary course of business and in a manner
consistent with past practice;

        (c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock or other securities, property or otherwise, with respect
to any of its capital stock;

        (d) reclassify, combine, split, subdivide, redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock or other securities;

        (e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or division thereof or any material amount of
assets; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, except in the ordinary course of business and consistent with past
practice; (iii) enter into any contract or agreement other than in the ordinary
course of business, consistent with past practice; (iv) authorize any single
capital expenditure that is in excess of $25,000 or capital expenditures that
are, in the aggregate, in excess of $100,000 for the Company taken as a whole;
(v) enter into any agreement in which the obligation of the Company exceeds
$25,000 or that shall not terminate or be subject to termination for convenience
within 180 days following execution; (vi) license any Technology or IP Rights
other than in the ordinary course of business, consistent with past practice; or
(vii) enter into or amend any contract, agreement, commitment or arrangement
with respect to any matter set forth in this Section 6.1(e);

        (f) enter into or amend any employment, consulting or agency agreement,
or, except as required by any Employee Benefit Plan listed on Schedule 2.13.1 to
the Disclosure Memorandum, increase the compensation payable or to become
payable to its officers, employees, agents or consultants, or grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance, benefit
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee;

        (g) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect to
accounting





                                      -43-
<PAGE>   52

methods, policies or procedures (including, without limitation, procedures with
respect to the payment of accounts payable and collection of accounts
receivable);

        (h) make any tax election or settle or compromise any federal, state,
local or foreign income tax liability;

        (i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against in
the Company Balance Sheet or subsequently incurred in the ordinary course of
business and consistent with past practice;

        (j) take any action that would or is reasonably likely to result in any
of the representations and warranties of the Company set forth in this Agreement
being untrue, or in any covenant of the Company set forth in this Agreement
being breached, or in any of the conditions to the Merger specified in Article
IV hereof not being satisfied; or

        (k) take or agree to take any action specified in Section 2.7 hereof, or
enter into any other material transaction other than those specified above, or
agree to do any of the foregoing.

        6.2    ACCESS TO INFORMATION; CONFIDENTIALITY

        From the date hereof to the Effective Time, the Company shall, and shall
cause the officers, directors, employees, auditors and agents of the Company to,
afford the officers, employees and agents of Amazon.com complete access at all
reasonable times to the officers, employees, agents, properties, offices, plants
and other facilities, books and records of the Company and shall furnish
Amazon.com with all financial, operating and other data and information as
Amazon.com, through its officers, employees or agents, may reasonably request.
From the date hereof until the Effective Time, the Company shall provide
Amazon.com with monthly and other financial statements of the Company as they
become available internally at the Company, all of which financial statements
shall fairly present the financial position and results of operations of the
Company as of the dates and for the periods therein specified. No investigation
pursuant to this Section 6.2 shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the parties
hereto. The parties shall continue to comply with and to perform their
respective obligations under the Mutual Nondisclosure Agreement between
Amazon.com and the Company entered into as of July 16, 1998 other than with
respect to Section 9 thereof.





                                      -44-
<PAGE>   53

        6.3    NO ALTERNATIVE TRANSACTIONS

        Unless this Agreement shall have been terminated in accordance with its
terms, the Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any Person relating to any acquisition or purchase of
all or (other than in the ordinary course of business) any portion of the assets
of, or, subject to Section 6.1(b) hereof, any equity interest in, the Company or
any business combination with the Company or participate in any negotiations
regarding, or furnish to any other Person any information with respect to, or
otherwise cooperate or negotiate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or seek
any of the foregoing. The Company shall notify Amazon.com promptly if any such
proposal or offer, or any inquiry or contact with any Person with respect
thereto, is made and shall, in any such notice to Amazon.com, indicate in
reasonable detail the identity of the Person making such proposal, offer,
inquiry or contact and the terms and conditions of such proposal, offer, inquiry
or contact. The Company agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which the Company
is a party.

        6.4    NOTIFICATION OF CERTAIN MATTERS

        The Company shall give prompt notice to Amazon.com of (a) the occurrence
or nonoccurrence of any event that would be likely to cause any representation
or warranty of the Company contained in this Agreement to be untrue or
inaccurate and (b) any failure of the Company to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, and Amazon.com shall give prompt notice to the Company of any of the
foregoing of which an officer of Amazon.com obtains actual knowledge prior to
the Closing; provided, however, that the delivery of any notice pursuant to this
Section 6.4 shall not limit or otherwise affect the remedies available to
Amazon.com hereunder.

        6.5    FURTHER ACTION; REASONABLE BEST EFFORTS

        Upon the terms and subject to the conditions hereof, each of the parties
hereto shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, including, without limitation,
using its reasonable best efforts to obtain all waivers, licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Company as are necessary for the
consummation of the transactions contemplated hereby and to fulfill the
conditions to the Merger. In case at any time after the





                                      -45-
<PAGE>   54

Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, each party to this Agreement shall use its
reasonable best efforts to take all such action. No Significant Stockholder will
undertake any course of action inconsistent with this Agreement or which would
make any representations, warranties or agreements made by such party in this
Agreement or any other Operative Documents untrue or any conditions precedent to
this Agreement unable to be satisfied at or prior to the Closing. After the
Closing Date, each party hereto, at the request of and without any further cost
or expense to the other parties, will take any further actions necessary or
desirable to carry out the purposes of this Agreement or any other Operative
Document, to vest in the Surviving Corporation full title to all properties,
assets and rights of the Company and to effect the issuance of the Amazon.com
Common Stock to the stockholders of the Company pursuant to the terms and
conditions hereof.

        6.6    STOCKHOLDERS APPROVAL

        The Company will obtain either the approval at a special meeting of
stockholders or the written consent of the stockholders of the Company at the
earliest practicable date approving this Agreement, the other Operative
Documents, the Merger and related matters, which approval will be unanimously
recommended by the Company's Board of Directors and management.

        6.7    PROXY STATEMENT

        The Company will send the Stockholder Materials to the stockholders of
the Company, in a timely manner, for the purposes of considering approval of the
Merger, either at a special meeting of stockholders or by executing a written
consent. The Company will promptly provide all information relating to its
business or operations necessary for inclusion in the Stockholder Materials to
satisfy all requirements of applicable state and federal securities laws. The
Company and Amazon.com each shall be solely responsible for any statement,
information or omission in the Stockholder Materials relating to it or its
affiliates based on written information furnished by it. The Company and
Amazon.com will not provide to or publish for the stockholders of the Company
any material concerning it or its affiliates that violates the Securities Act or
the Exchange Act with respect to the transactions contemplated hereby.

        6.8    LISTING APPLICATION

        Amazon.com shall promptly prepare and submit to the Nasdaq National
Market a listing application covering the shares of Amazon.com Common Stock
issuable in the Merger, and shall use its best efforts to obtain, prior to the
Effective Time,





                                      -46-
<PAGE>   55

approval for the listing of such shares of Amazon.com Common Stock, subject to
official notice of issuance.

        6.9    POOLING; REORGANIZATION

        From and after the date hereof and until the Effective Time, neither
Amazon.com nor the Company will take any action or fail to take any action or
enter into any contract, agreement, commitment or arrangement that would
jeopardize the treatment of the Merger as a "pooling of interests" for
accounting purposes, including, without limitation, any action by the Company or
Amazon.com with respect to their representations and warranties in Sections 2.27
and 3.9 hereof, respectively, that would cause such representations not to be
true in all material respects from and after the date hereof until the Effective
Time.

        6.10   DISSENTING SHARES

        As promptly as practicable after the date of the special meeting of
stockholders or the written consent of the Company's stockholders and prior to
the Closing Date, the Company shall furnish Amazon.com with the name and address
of each stockholder of the Company who requests appraisal rights pursuant to the
Massachusetts Law (the "Dissenting Stockholder") and the number of Dissenting
Shares owned by such Dissenting Stockholder.

        6.11   PUBLICITY

        No party hereto shall issue any press release or otherwise make any
statements to any third party with respect to this Agreement or the transactions
contemplated hereby until the issuance by Amazon.com and the Company of a joint
press release announcing the transactions contemplated hereby that shall be
prepared by them in cooperation.

        6.12   INDEMNIFICATION AND INSURANCE

        Amazon.com agrees that all rights to indemnification or exculpation now
existing in favor of the employees, agents, directors or officers of the Company
(the "Company Indemnified Parties") as provided in its Articles of organization
or By-Laws, or otherwise in effect on the date hereof shall continue in full
force and effect for a period of not less than one year from the Closing Date;
provided, however, that, in the event any claim or claims are asserted or made
within such one-year period, all rights to indemnification in respect of any
such claim or claims shall continue until disposition of any and all such
claims. Any determination required to be made with respect to whether a Company
Indemnified Party's conduct complies with the





                                      -47-
<PAGE>   56

standards set forth in the Articles of Organization or By-Laws of the Company or
otherwise shall be made by independent counsel selected by the Company
Indemnified Party reasonably satisfactory to Amazon.com (whose fees and expenses
shall be paid by Amazon.com).

ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER

        7.1    TERMINATION

        This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding any approval of this Agreement
by the stockholders of the Company):

        (a)    by mutual written consent;

        (b) by either the Company or Amazon.com, if the Merger has not been
consummated by August 31, 1998; provided, however, that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before such
date;

        (c) by either the Company or Amazon.com, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise prohibited
or if any judgment, injunction, order or decree enjoining Amazon.com, the
Purchaser or the Company from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and nonappealable;
provided, however, that the party seeking to terminate this Agreement pursuant
to this Section 7.1(c) shall have used all reasonable efforts to remove such
judgment, injunction, order or decree;

        (d) by the Company, in the event of a material breach by Amazon.com of
any representation, warranty or agreement contained herein which has not been
cured or is not curable by August 31, 1998; or

        (e) by Amazon.com, in the event of a material breach by the Company of
any representation, warranty or agreement contained herein which has not been
cured or is not curable by August 31, 1998.

        7.2    EFFECT OF TERMINATION

        In the event of the termination of this Agreement pursuant to Section
7.1 hereof, there shall be no further obligation on the part of any party
hereto, except that nothing herein shall relieve any party from liability for
any willful breach hereof.





                                      -48-
<PAGE>   57

        7.3    AMENDMENT

        This Agreement may be amended by the parties hereto at any time before
or after approval of the Company's stockholders; but after such approval, no
amendment will be made that by applicable law requires the further approval of
the Company's stockholders without obtaining such further approval.

        7.4    WAIVER

        At any time prior to the Effective Time, any party hereto may (a) extend
the time for the performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
or parties to be bound thereby.

ARTICLE VIII - SURVIVAL AND INDEMNIFICATION

        8.1    SURVIVAL

        All representations and warranties contained in this Agreement or in the
other Operative Documents or in any certificate delivered pursuant hereto or
thereto shall survive the Closing for a period of one year, except that those
representations set forth in Sections 2.6, 2.7, 2.22, 2.23 and 2.24 shall
survive until the date of the completion of the independent audit of financial
statements of Amazon.com for the fiscal year ending December 31, 1998 (the
"Expiration Date"), and shall not be deemed waived or otherwise affected by any
investigation made or any knowledge acquired with respect thereto, or by any
notice delivered pursuant to Section 6.4 hereof; provided, however, that any
claim based on fraud shall survive the Closing indefinitely. The covenants and
agreements contained in this Agreement or in the other Operative Documents shall
survive the Closing and shall continue until all obligations with respect
thereto shall have been performed or satisfied or shall have been terminated in
accordance with their terms.

        8.2    INDEMNIFICATION BY THE COMPANY AND HOLDERS OF COMPANY CAPITAL
               STOCK OR OPTIONS

        (a) Up to and until the Closing, the Company shall indemnify and hold
Amazon.com and its officers, directors and affiliates (the "Amazon.com
Indemnified Parties") harmless from and against, and shall reimburse the
Amazon.com Indemnified Parties for, any and all losses, damages, debts,
liabilities, obligations, judgments, orders, awards, writs, injunctions,
decrees, fines, penalties, taxes, costs or





                                      -49-
<PAGE>   58

expenses (including, but not limited to, any legal or accounting fees or
expenses) ("Losses") arising out of or in connection with (i) any inaccuracy in,
or misrepresentation or breach of any representation or warranty made by the
Company in this Agreement or in any other Operative Document or in any
certificate delivered pursuant hereto or thereto and (ii) any failure by the
Company to perform or comply, in whole or in part, with any covenant or
agreement in this Agreement or in any other Operative Document.

        (b) From and after the Closing, the holders of Company Capital Stock,
shall severally and pro rata to the extent of their pro rata portion of the
Escrow Shares indemnify and hold the Amazon.com Indemnified Parties harmless
from and against, and shall reimburse the Amazon.com Indemnified Parties for,
any and all Losses arising out of or in connection with (i) any inaccuracy in,
or misrepresentation or breach of any representation or warranty made by the
Company in this Agreement or in any certificate delivered pursuant hereto and
(ii) any failure by the Company to perform or comply, in whole or in part, with
any covenant or agreement in this Agreement to be performed on or prior to the
Closing Date.

        8.3    INDEMNIFICATION BY AMAZON.COM

        Amazon.com shall indemnify and hold the Company and its officers,
directors and affiliates and the holders of Company Capital Stock and Options
(the "Company Indemnified Parties" and, together with the Amazon.com Indemnified
Parties, the "Indemnified Parties") harmless from and against, and shall
reimburse the Company Indemnified Parties for, any and all Losses arising out of
or in connection with (i) any inaccuracy, misrepresentation or breach in any
representation or warranty made by Amazon.com or the Purchaser in this Agreement
or in any other Operative Document or in any certificate delivered pursuant
hereto or thereto and (ii) any failure by Amazon.com or the Purchaser to perform
or comply, in whole or in part, with any covenant or agreement in this Agreement
or in any other Operative Document.

        8.4    THRESHOLD AND LIMITATIONS

        (a) No Indemnified Party shall be entitled to receive any
indemnification payment with respect to any claims for indemnification under
this Article VIII ("Claims") until the aggregate Losses for which such
Indemnified Parties would be otherwise entitled to receive indemnification
exceed $250,000, (the "Threshold"); provided, however, that once such aggregate
Losses exceed the Threshold, such Indemnified Parties shall be entitled to
indemnification for the aggregate amount of all Losses without regard to the
Threshold.





                                      -50-
<PAGE>   59

        (b) Except for liability based on fraud, the aggregate liability of an
indemnifying party hereunder for Losses incurred by any and all Indemnified
Parties shall, in the case of the indemnification obligations of the holders of
Company Capital Stock be limited to a dollar amount equal to the product
obtained by multiplying the pro rata portion of the Escrow Shares held by the
indemnifying party by the average of the closing prices of Amazon.com Common
Stock as reported on the Nasdaq National Market for the three consecutive
trading days immediately preceding the Closing Date. Except for liability based
on fraud, the indemnification obligations of the holders of Company Common Stock
and Options pursuant to this Article VIII shall be limited to the Escrow Shares.
Except for liability based on fraud, Amazon.com shall not be entitled to pursue
any claims for indemnification under this Article VIII against the holders of
Company Common Stock directly or personally and the sole recourse of Amazon.com
shall be to make claims against the Escrow in accordance with the terms of the
Escrow Agreement.

        (c) Except for liability based on fraud, (i) no holder of Company
Capital Stock or Options shall have any liability to an Amazon.com Indemnified
Party under this Agreement, except to the extent of such holder's Escrow Shares
deposited under the Escrow Agreement, and (ii) the remedies set forth in this
Article VIII shall be the exclusive remedies of Amazon.com and the other
Amazon.com Indemnified Parties hereunder against any such holder.

        (d) The Escrow Shares shall be held for a period ending on the
Expiration Date, except that, to the extent permitted under the Escrow
Agreement, Escrow Shares may be withheld after the Expiration Date to satisfy
claims for indemnification which are the subject of an indemnity claim by an
Amazon.com Indemnified Party pursuant to a notice of such claim delivered to the
Representative prior to the Expiration Date.

        8.5    PROCEDURE FOR INDEMNIFICATION

        (a) An Indemnified Party shall notify the indemnifying party in writing
reasonably promptly after the assertion against the Indemnified Party of any
claim by a third party (a "Third Party Claim") in respect of which the
Indemnified Party intends to base a Claim for indemnification hereunder, but the
failure or delay so to notify the indemnifying party shall not relieve it of any
obligation or liability that it may have to the Indemnified Party except to the
extent that the indemnifying party demonstrates that its ability to defend or
resolve such Third Party Claim is adversely affected thereby.

        (b) (i) Subject to the rights of or duties to any insurer or other third
party having potential liability therefor, the indemnifying party shall have the
right, upon written notice given to the Indemnified Party within 30 days after
receipt of the





                                      -51-
<PAGE>   60

notice from the Indemnified Party of any Third Party Claim, to assume the
defense or handling of such Third Party Claim, at the indemnifying party's sole
expense, in which case the provisions of Section 8.5(b)(ii) hereof shall govern.

               (ii) The indemnifying party shall select counsel reasonably
acceptable to the Indemnified Party in connection with conducting the defense or
handling of such Third Party Claim, and the indemnifying party shall defend or
handle the same in consultation with the Indemnified Party and shall keep the
Indemnified Party timely apprised of the status of such Third Party Claim. The
indemnifying party shall not, without the prior written consent of the
Indemnified Party, agree to a settlement of any Third Party Claim, unless (A)
the settlement provides an unconditional release and discharge of the
Indemnified Party and the Indemnified Party is reasonably satisfied with such
discharge and release and (B) the Indemnified Party shall not have reasonably
objected to any such settlement on the ground that the circumstances surrounding
the settlement could result in an adverse impact on the business properties or
prospects of Amazon.com. The Indemnified Party shall cooperate with the
indemnifying party and shall be entitled to participate in the defense or
handling of such Third Party Claim with its own counsel and at its own expense.

        (c) (i) If the indemnifying party does not give written notice to the
Indemnified Party within 30 days after receipt of the notice from the
Indemnified Party of any Third Party Claim of the indemnifying party's election
to assume the defense or handling of such Third Party Claim, the provisions of
Section 8.5(c)(ii) hereof shall govern.

               (ii) The Indemnified Party may, at the indemnifying party's
expense (which shall be paid from time to time by the indemnifying party as such
expenses are incurred by the Indemnified Party), select counsel in connection
with conducting the defense or handling of such Third Party Claim and defend or
handle such Third Party Claim in such manner as it may deem appropriate;
provided, however, that the Indemnified Party shall keep the indemnifying party
timely apprised of the status of such Third Party Claim and shall not settle
such Third Party Claim without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld. If the Indemnified
Party defends or handles such Third Party Claim, the indemnifying party shall
cooperate with the Indemnified Party and shall be entitled to participate in the
defense or handling of such Third Party Claim with its own counsel and at its
own expense.

        (d) If the Indemnified Party intends to seek indemnification hereunder,
other than for a Third Party Claim, then it shall notify the indemnifying party
in writing 90 days after its discovery of facts upon which it intends to base
its Claim for





                                      -52-
<PAGE>   61

indemnification hereunder, but the failure or delay so to notify the
indemnifying party shall not relieve the indemnifying party of any obligation or
liability that the indemnifying party may have to the Indemnified Party except
to the extent that the indemnifying party demonstrates that the indemnifying
party's ability to defend or resolve such Claim is adversely affected thereby.

        (e) The Indemnified Party may notify the indemnifying party of a Claim
even though the amount thereof plus the amount of other Claims previously
notified by the Indemnified Party aggregate less than the Threshold.

        (f) At the Closing, the Escrow Shares shall be deposited in the Escrow
Account to satisfy potential claims by the Amazon.com Indemnified Parties under
this Article VIII.

        8.6    REMEDIES

        Except as otherwise provided, the indemnification provisions of this
Article VIII are the sole and exclusive remedy of any party to this Agreement
for a breach of any representation, warranty or covenant contained herein.
Notwithstanding the preceding sentence, each of the parties acknowledges and
agrees that the other parties hereto would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the parties
hereto agrees that the other parties hereto shall be entitled to an injunction
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof (including the
indemnification provisions hereof) in any competent court having jurisdiction
over the parties, in addition to any other remedy to which they may be entitled
at law or in equity.

ARTICLE IX - GENERAL

        9.1    TAX MATTERS

        (a) Amazon.com, the Purchaser and the Company shall cooperate, as and to
the extent reasonably requested, in connection with the preparation and filing
of Tax Returns pursuant to this Section 9.1 and any audit, investigation,
litigation or other action with respect to Taxes that may be instituted after
the Closing. Amazon.com, the Purchaser and the Company shall use commercially
reasonable efforts to retain all books and records with respect to Tax matters
pertinent to the Company relating to any Tax period beginning before the Closing
Date until the expiration of the applicable statute of limitations (and, to the
extent notified by Amazon.com, the





                                      -53-
<PAGE>   62

Purchaser or the Company, any extensions thereof) and shall provide any such
records to the other party as may be reasonably requested.

        (b) Except as set forth in Section 1.8(b), neither Amazon.com nor the
Purchaser makes any representation or warranty with respect to, and expressly
disclaims any responsibility for, any Tax consequences to the Company or its
stockholders arising out of the structure or terms of this Agreement (including,
without limitation, the qualification or failure of the purchase and sale of the
shares to qualify as a reorganization under Section 368 of the Code), or the
negotiation or consummation hereof. The Company and its stockholders have
consulted with its, his or her own tax advisor in such matters and are solely
responsible for any such Tax consequences.

        9.2    EXPENSES

        Regardless of whether the transactions contemplated by this Agreement
are consummated, each party shall pay its own fees and expenses incident to the
negotiation, preparation and execution of this Agreement and the other Operative
Documents (including legal and accounting fees and expenses); provided, however,
that, should any action be brought hereunder, the attorneys' fees and expenses
of the prevailing party shall be paid by the other party to such action; and
provided, further, that the professional fees and expenses incurred by the
Company in excess of $200,000 of legal, accounting and other professional fees
shall be paid by the stockholders of the Company.

        9.3    NOTICES

        Any notice or demand desired or required to be given hereunder shall be
in writing given by personal delivery, certified or registered mail, confirmed
facsimile transmission, or overnight courier service, in each case addressed as
respectively set forth below or to such other address as any party shall have
previously designated by such a notice. The effective date of any notice or
request shall be the date of personal delivery, four days after the date of
mailing by certified or registered mail, the date on which successful facsimile
transmission is confirmed or the date undertaken for delivery by a reputable
overnight courier service, as the case may be, in each case properly addressed
as provided herein and with all charges prepaid.


TO AMAZON.COM OR THE PURCHASER:


Amazon.com, Inc.
1516 Second Avenue





                                      -54-
<PAGE>   63

Seattle, Washington  98101
Fax: (206) 694-2082
Attention:  Randy J. Tinsley, Treasurer

with a copy to:

Perkins Coie LLP
1201 Third Avenue, 40th Floor
Seattle, Washington  98101-3099
Fax:  (206) 583-8500
Attention:  Scott L. Gelband

TO THE SIGNIFICANT STOCKHOLDERS:

At their respective addresses set forth on Schedule 2.32 to the
Disclosure Memorandum.

TO THE COMPANY:

Sage Enterprises, Inc.
17 Sellers Street
Cambridge, Massachusetts  02139
Fax: (617) 354-7325
Attention:  Jim Savage, Chief Executive Officer

with a copy to:

Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, Massachusetts  02110
Fax: (617) 951-1295
Attention:  Michael J. Riccio, Jr.

        9.4    SEVERABILITY

        If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order





                                      -55-
<PAGE>   64

that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.

        9.5    ENTIRE AGREEMENT

        This Agreement, the Mutual Nondisclosure Agreement and the other
Operative Documents constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and thereof.

        9.6    ASSIGNMENT

        This Agreement shall not be assigned by operation of law or otherwise,
except that Amazon.com may assign all or any of its rights and obligations
hereunder to any of its affiliates, provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations, and further provided that any such assignment
shall not change the consideration due to the stockholders of the Company
hereunder.

        9.7    PARTIES IN INTEREST

        This Agreement shall be binding on and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.

        9.8    GOVERNING LAW

        This Agreement shall be governed by, and construed in accordance with,
the laws of the state of Delaware applicable to contracts executed in and to be
performed in that state. All actions and proceedings arising out of or relating
to this Agreement shall be heard and determined in any Delaware state or federal
court thereof.

        9.9    HEADINGS

        The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.








                                      -56-
<PAGE>   65

        9.10   COUNTERPARTS

        This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.


































                                      -57-

<PAGE>   66

        IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.


                                        AMAZON.COM, INC.


                                        By Jeffrey P. Bezos
                                           ____________________________________
                                               
                                           Its Chief Exeutive Officer
                                               ________________________________



                                        PACIFIC ACQUISITION, INC.


                                        By Randy Tinsley
                                           ____________________________________
                                           
                                           Its Treasurer
                                               ________________________________



                                        SAGE ENTERPRISES, INC.


                                        By James J. Savage
                                           ____________________________________
                                           
                                           Its Chief Executive Officer
                                               ________________________________





















                                      -58-





<PAGE>   1
                                                                    EXHIBIT 2(A)
                                                         TO THE MERGER AGREEMENT


                            INVESTOR RIGHTS AGREEMENT


        This Investor Rights Agreement (this "Agreement") is made and entered
into as of _____________, 1998 (the "Effective Date") by and between Amazon.com,
Inc., a Delaware corporation ("Amazon.com"), and the persons and entities listed
on Exhibit A hereto who have executed a counterpart signature page hereto, who
immediately prior to the effective time of the Merger (as such term is defined
below) represented holders of at least 90% of each outstanding class of capital
stock of Junglee Corp., a Delaware corporation ("Junglee") (collectively, the
"Stockholders" and each individually a "Stockholder").


                                    RECITALS

        A. Amazon.com, Junglee, and AJ Acquisition, Inc. ("Purchaser") have
entered into an Agreement and Plan of Merger (the "Merger Agreement") dated as
of August 3, 1998, pursuant to which Purchaser will merge with and into Junglee
in a reverse triangular merger with Junglee to be the surviving corporation of
the Merger (the "Merger").

        B. As a condition precedent to the consummation of the Merger, Sections
4.15 and 5.11 of the Merger Agreement provide that Amazon.com and holders of at
least 90% of each outstanding class of capital stock of shall execute an
Investor Rights Agreement pursuant to which the Stockholders shall be granted
certain registration rights with respect to the shares of the common stock of
Amazon.com, par value $0.01 per share (the "Amazon.com Common Stock"), that are
issued to the Stockholders in the Merger (the "Merger Shares"), subject to the
terms and conditions set forth in this Agreement.

        C. Capitalized terms used herein and not otherwise defined shall have
the meaning set forth in the Merger Agreement.

        NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:

1.      REGISTRATION RIGHTS

        1.1    DEFINITIONS

               For purposes of this Section 1:



<PAGE>   2

               (a) Registration. The terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing with the
SEC a registration statement in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the declaration or ordering of effectiveness
of such registration statement by the SEC.

               (b) Registrable Securities. The term "Registrable Securities"
means: (i) the Merger Shares and (ii) any shares of Amazon.com Common Stock
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, the Merger Shares; excluding in all cases (x) any
Registrable Securities transferred by a person in a transaction in which rights
under this Section 1 are not assigned in accordance with Section 5 or (y) any
Registrable Securities sold in a public offering pursuant to a registration
statement filed with the SEC.

               (c) Prospectus. The term "Prospectus" shall mean the prospectus
included in any Registration Statement filed pursuant to the provisions hereof
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement (including, without
limitation, any prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such Registration
Statement), and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

               (d) Holder. For purposes of this Agreement, the term "Holder"
means any person owning of record Registrable Securities that have not been sold
to the public pursuant to an effective registration statement or any assignee of
record of such Registrable Securities to whom rights under this Section 1 have
been duly assigned in accordance with this Agreement.

               (e) SEC. The term "SEC" means the U.S. Securities and Exchange
Commission.

        1.2    REGISTRATION

               (a) Initial Registration. Amazon.com shall prepare and file with
the SEC within 90 days following the Closing Date, and use its best efforts to
have declared effective as soon as practicable thereafter, a registration
statement (a "Registration Statement") providing for the resale by the Holders
of all of the Registrable Securities then owned by the Holders in accordance
with the manner of sale provisions set forth in Rule 144(f) under the Securities
Act or otherwise in customary brokerage transactions on the Nasdaq National
Market or other public market on which shares of Amazon.com 





                                      -2-
<PAGE>   3

Common Stock are traded. Amazon.com shall use its best efforts to keep the
Registration Statement continuously effective, pursuant to the rules,
regulations or instructions under the Securities Act applicable to the
registration statement used by Amazon.com for such Registration Statement, for
such period (the "Effectiveness Period") ending on the earlier of the date (i)
that is one year after the date of the Closing Date, (ii) upon which all
Registrable Securities have been registered and sold pursuant to the
Registration Statement filed pursuant to this Agreement, or (iii) upon which all
of the Registrable Securities originally issued pursuant to the Merger Agreement
cease to meet the definition of Registrable Securities pursuant to Section
1.1(b).

               (b) Notice and Approval. If one or more Holders shall propose to
sell Registrable Securities pursuant to the Registration Statement, such Holder
or Holders shall deliver to Amazon.com at least three full trading days prior to
such proposed sale a written notice (a "Stockholder Sale Notice") notifying
Amazon.com of their intent to sell (including the proposed manner and timing of
all sales), and the provision of such notice to Amazon.com shall conclusively be
deemed to establish and confirm an agreement by such Holder or Holders to sell
such Registrable Securities, in whole, in part or not at all (without the
necessity to provide a new Stockholder Sale Notice to Amazon.com), within a
period ending on the tenth trading day following the first such sale and to
comply with the other registration provisions set forth in this Agreement.
Unless otherwise specified in the Stockholder Sale Notice, such Stockholder Sale
Notice shall be deemed to constitute a representation that any information
previously supplied to such Holder expressly for inclusion in the Registration
Statement (as the same may have been superseded by subsequent such information)
is accurate as of the date of such Stockholder Sale Notice. At any time within
such three trading day period, Amazon.com may exercise its rights under Section
1.2(c) hereof. To the extent Amazon.com shall not exercise its rights pursuant
to Section 1.2(c) hereof, Amazon.com shall provide written notice to each of the
other Holders regarding the availability of such ten trading day period;
provided, however, that if any such Holder does not receive such written notice
within three trading days of the Stockholder Sale Notice, such Holder may sell
his, her or its Registrable Securities pursuant to the terms hereof.

               (c) Right of Suspension. Notwithstanding any other provision of
this Section 1.2, Amazon.com shall have the right at any time to prohibit or
suspend offers and sales of Registrable Securities whenever, and for so long as,
in the reasonable judgment of Amazon.com after consultation with counsel (i)
there exists a material development or a potential material development with
respect to or involving Amazon.com that Amazon.com would be obligated to
disclose in the Prospectus contained in the Registration Statement, which
disclosure would in the good faith judgment of Amazon.com be premature or
otherwise inadvisable at such time and would have a material adverse effect upon
Amazon.com and its stockholders, or (ii) an event has occurred that makes any
statement made in the Registration Statement or related 



                                      -3-
<PAGE>   4

Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or which requires the making of any
changes in the Registration Statement or Prospectus so that it will not contain
any untrue statement of a material fact required to be stated therein or
necessary to make the statements therein not misleading or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. To effect such suspension or prohibition, Amazon.com shall deliver a
certificate in writing to the Holders and, upon receipt of such certificate, the
use of the Registration Statement and Prospectus will be deferred or suspended
and will not recommence until (x) such Holders' receipt from Amazon.com of
copies of the supplemented or amended Prospectus or (y) such Holders are advised
in writing by Amazon.com that the Prospectus may be used. Amazon.com will use
its best efforts to ensure that the use of the Registration Statement and
Prospectus may be resumed as soon as practicable and, in the case of a pending
development referred to in (i) above, as soon as, in the judgment of Amazon.com,
disclosure of the material information relating to such pending development
would not have a materially adverse effect on Amazon.com's ability to consummate
the transaction, if any, to which such development relates. Notwithstanding the
foregoing, Amazon.com will use reasonable efforts to ensure that in any event
the Holders shall have ten trading days (prorated for partial fiscal quarters)
available to sell Registrable Securities during each fiscal quarter (or portion
thereof) during the Effectiveness Period.

               (d) Expenses. All reasonable expenses, other than broker's
commissions and similar charges, and legal fees and disbursements of counsel for
the selling Holders, incurred in connection with the Registration Statement
shall be borne by Amazon.com.

        1.3    OBLIGATIONS OF AMAZON.COM

               Whenever required to effect the registration of any Registrable
Securities under this Agreement, Amazon.com shall, as expeditiously as
reasonably possible:

               (a) Prepare promptly and file with the SEC the Registration
Statement as provided in Section 1.2(a), which Registration Statement (including
any amendments or supplements thereto and Prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, and cause
such Registration Statement to become effective as soon as practicable.



                                      -4-
<PAGE>   5

               (b) Prepare promptly and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.

               (c) Furnish to Holders such number of copies of a Prospectus,
including a preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents as reasonably requested in order to
facilitate the disposition of the Registrable Securities owned by it that are
included in such registration.

               (d) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by Holders;
provided, however, that Amazon.com shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.

               (e) Notify Holders promptly (i) of any request by the SEC or any
other federal or state governmental authority during the Effectiveness Period of
the Registration Statement for amendments or supplements to such Registration
Statement or related Prospectus or for additional information, (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iii) of the receipt by
Amazon.com of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (iv) of the happening of any event which makes any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or which requires the making of any changes in the Registration
Statement or Prospectus so that it will not contain any untrue statement of a
material fact required to be stated therein or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, and (v) of
Amazon.com's determination that a post-effective amendment to the Registration
Statement would be appropriate.

        1.4    INFORMATION TO BE FURNISHED

               It shall be a condition precedent to the obligations of
Amazon.com to take any action pursuant to Section 1.2 that each Holder shall
furnish to Amazon.com such information regarding Holder, the Registrable
Securities held by Holder, and the intended 



                                      -5-
<PAGE>   6

method of disposition of such securities as shall be required to timely effect
the registration of Holder's Registrable Securities.

        1.5    INDEMNIFICATION

               (a)     By Amazon.com. To the extent permitted by law and subject
to Section 1.5(d), Amazon.com will indemnify and hold harmless each of the
Holders, officers, directors, employees and agents of a Holder or underwriters
(as defined in the Securities Act) and each person, if any, who controls a
Holder within the meaning of the Securities Act or the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), against any losses, claims, damages or
liabilities (joint or several) to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"):

                       (i)     any untrue statement or alleged untrue statement 
of a material fact contained in the Registration Statement, including any
preliminary Prospectus or final Prospectus contained therein or in any
amendments or supplements thereto;

                       (ii)    the omission or alleged omission to state in the
Registration Statement, including any preliminary Prospectus or final Prospectus
contained therein or in any amendments or supplements thereto, a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; or

                      (iii)    any violation or alleged violation by Amazon.com 
of the Securities Act, the Exchange Act, any federal or state securities law or
any rule or regulation promulgated under the Securities Act, the Exchange Act or
any federal or state securities law in connection with the offering covered by
such Registration Statement.

Amazon.com will reimburse each Holder, such officer, director, employee or
agent, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 1.5(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Amazon.com (which consent shall
not be unreasonably withheld), nor shall Amazon.com be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with 



                                      -6-
<PAGE>   7

such registration by Holder, or by such officer, director, employee, agent,
underwriter or controlling person of Holder.

               (b) By Holders. To the extent permitted by law and subject to
Section 1.5(d), each Holder will indemnify and hold harmless Amazon.com, each of
its directors, each of its officers who have signed the Registration Statement,
each person, if any, who controls Amazon.com within the meaning of the
Securities Act, any other employee or agent of Amazon.com, each other Holder,
each person, if any, who controls such Holder within the meaning of the
Securities Act, and any other employee or agent of such Holder against any
losses, claims, damages or liabilities (joint or several) to which Amazon.com or
any such director, officer or controlling person, employee or agent may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and such Holder will reimburse any
legal or other expenses reasonably incurred by Amazon.com or any such director,
officer or controlling person, employee or agent in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 1.5(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of such
Holder, which consent shall not be unreasonably withheld; and provided, further,
that the total amounts payable in indemnity by any Holder under this Section
1.5(b) in respect of any Violation shall not exceed the net proceeds received by
such Holder in the registered offering out of which such Violation arises.

               (c) Notice. Promptly after receipt by an indemnified party under
this Section 1.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party
under this Section 1.5, deliver to the indemnifying party a written notice of
the commencement of such an action, and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, 



                                      -7-
<PAGE>   8

shall (to the extent of such prejudice) relieve such indemnifying party of any
liability to the indemnified party under this Section 1.5, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 1.5.

               (d) Defect Eliminated in Final Prospectus. The foregoing
indemnity agreements of Amazon.com and the Holders are subject to the condition
that, insofar as they relate to any Violation made in a preliminary Prospectus
but eliminated or remedied in the amended Prospectus on file with the SEC at the
time the registration statement in question becomes effective or in the amended
Prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreements shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities Act.

               (e) Contribution. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder (and/or any officer, director, employee, agent,
underwriter or controlling person who may be indemnified under Section 1.5(a))
makes a claim for indemnification pursuant to this Section 1.5 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such
case, notwithstanding the fact that this Section 1.5 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of such Holder (and/or any officer, director, employee,
agent, underwriter or controlling person who may be indemnified under Section
1.5 (a)) in circumstances for which indemnification is provided under this
Section 1.5; then, and in each such case, Amazon.com and such Holder (and/or
such other person) will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
proportion to their relative fault as determined by a court of competent
jurisdiction; provided, however, that in no event, except in instances of fraud
by Holder in which case there is no limitation, (x) shall any Holder be
responsible for more than the portion represented by the percentage that the
public offering price of its Registrable Securities offered by and sold under
the Registration Statement bears to the public offering price of all securities
offered by and sold under such Registration Statement or (y) shall a Holder be
required to contribute any amount in excess of the public offering price of all
such securities offered and sold by such Holder pursuant to such Registration
Statement; and in any event, no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.



                                      -8-
<PAGE>   9

               (f) Survival. The obligations of Amazon.com and such Holder under
this Section 1.5 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.


2.      OBLIGATIONS OF THE STOCKHOLDERS

        2.1    REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

               Each Stockholder represents with respect to himself, herself or
itself that:

               (a) Good Title. (i) Such Stockholder owns, beneficially and of
record, the shares of capital stock of Junglee listed opposite such
Stockholder's name on Exhibit A hereto, (ii) such shares of capital stock of
Junglee are free and clear of any lien, encumbrance, adverse claim, mortgage,
pledge, deed of trust, security interest, charge, restriction on sale or
transfer (other than restrictions imposed by applicable securities laws or by
any contract with Junglee), preemptive right, option or other adverse claim or
interest of any kind, (iii) such Stockholder has all necessary power, right and
authority to enter into this Agreement and each of the agreements, certificates,
instruments and documents executed or delivered pursuant to the terms of the
Merger Agreement by such Stockholder and to consummate the transactions
contemplated hereby and thereby, and (iv) this Agreement has been duly
authorized, executed and delivered by such Stockholder and is a legal, valid and
binding obligation of such Stockholder, enforceable in accordance with its
terms.

               (b) Ability to Bear Risk. Such Stockholder is in a financial
position to hold the Amazon.com Common Stock for an indefinite period of time
and is able to bear the economic risk and withstand a complete loss of his, her
or its investment in the Amazon.com Common Stock.

               (c) SEC Documents. Such Stockholder acknowledges that he, she or
it has received and had the opportunity to review to such Stockholder's
satisfaction the materials disseminated by Junglee in connection with the
written consent or special meeting of Stockholders to approve the Merger and the
transactions contemplated thereby, including those filings and reports of
Amazon.com filed with the SEC since the completion of Amazon.com's most recent
fiscal year, consisting of Amazon.com's Annual Report on Form 10-K for the
fiscal year ending December 31, 1997 (the "Form 10-K"), its Quarterly Report on
Form 10-Q for the fiscal quarter ending March 31, 1998, all Form 8-Ks filed
after the date of the Form 10-K, and its Proxy Statement relating to its 1998
Annual Meeting of Stockholders on May 28, 1998.



                                      -9-
<PAGE>   10

               (d) Professional Advice. Such Stockholder has obtained, to the
extent that he, she or it deems necessary, professional advice with respect to
the risks inherent in acquiring the Amazon.com Common Stock, the financial
condition of Amazon.com and the suitability of an investment in the Amazon.com
Common Stock in light of such Stockholder's financial condition and investment
needs.

               (e) Sophistication. Such Stockholder, either alone or with the
assistance of his, her or its professional advisors, is a sophisticated
investor, is able to fend for himself, herself or itself in the transactions
contemplated by this Agreement relating to the Amazon.com Common Stock and has
such knowledge and experience in financial and business matters that he, she or
it is capable of evaluating the merits and risks of the prospective investment
in the Amazon.com Common Stock.

               (f) Accredited Investor. Except as set forth on Schedule A
hereto, such Stockholder is an "accredited investor" as defined in Rule 501(a)
of Regulation D under the Securities Act (an "Accredited Investor").

               (g) Investment for Own Account. The Amazon.com Common Stock is
being acquired by such Stockholder for investment for his, her or its respective
account, not as a nominee or agent, and not with a view to the distribution of
any part thereof; such Stockholder has no present intention of selling, granting
any participation in or otherwise distributing any of the Amazon.com Common
Stock in a manner contrary to the Securities Act or to any applicable state
securities or Blue Sky law, nor does Stockholder have any contract, undertaking,
agreement or arrangement with any person or entity to sell, transfer or grant a
participation to such person or entity with respect to any of the Amazon.com
Common Stock.

               (h) Restricted Securities. Such Stockholder acknowledges that the
Amazon.com Common Stock has not been and will not prior to issuance be
registered under the Securities Act and that the Amazon.com Common Stock is
characterized under the Securities Act as "restricted securities" and,
therefore, cannot be sold or transferred until such sale or transfer is
registered under the Securities Act as provided in this Agreement or an
exemption from such registration is available.

               (i) Exemption Reliance. Such Stockholder has been advised that
the Amazon.com Common Stock is being issued under this Agreement pursuant to
exemptions from applicable federal and state securities laws, and that
Amazon.com's reliance on such exemptions is predicated in part on such
Stockholder's representations contained herein.

               (j) Residence. For purposes of the application of state
securities laws, each Stockholder is a resident of the state as set forth on the
signature page hereto.



                                      -10-
<PAGE>   11

               (k) Legend. Each holder understands that, prior to the
effectiveness of the Registration Statement, certificates or other instruments
representing any of the Registrable Securities acquired by Holder will bear
legends substantially similar to the following, in addition to any other legends
required by federal or state laws:

               THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
               "ACT"), OR APPLICABLE STATE LAW, AND NO INTEREST THEREIN MAY BE
               SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
               TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
               STATEMENT UNDER THE ACT COVERING ANY SUCH TRANSACTION INVOLVING
               SAID SECURITIES, (ii) THIS CORPORATION RECEIVES AN OPINION OF
               LEGAL COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO
               THIS CORPORATION STATING THAT SUCH TRANSACTION IS EXEMPT FROM
               REGISTRATION, OR (iii) THIS CORPORATION OTHERWISE SATISFIES
               ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.

Each holder agrees that, in order to ensure and enforce compliance with the
restrictions imposed by applicable law and those referred to in the foregoing
legends, or elsewhere herein, Amazon.com may, prior to the effectiveness of the
Registration Statement, issue appropriate "stop transfer" instructions to its
transfer agent, if any, with respect to any certificate or other instrument
representing Registrable Securities, or if Amazon.com transfers its own
securities, that it may make appropriate notations to the same effect in
Amazon.com's records.


        2.2    INVESTOR QUESTIONNAIRE

               Each Stockholder who is not an Accredited Investor shall complete
and execute an Investor Questionnaire in the form attached hereto as Exhibit B.



                                      -11-
<PAGE>   12

3.      STOCKHOLDER REPRESENTATIVE

               (a) Each undersigned Stockholder hereby irrevocably authorizes
and appoints Rakesh Mathur (the "Stockholder Representative"), with full power
of substitution and resubstitution, as his, her or its representative and true
and lawful attorney-in-fact and agent to act in his, her or its name, place and
stead and to execute in the name and on behalf of such Stockholder the Escrow
Agreement, dated as of the date hereof, between Amazon.com, the Stockholder
Representative and ChaseMellon Shareholder Services L.L.C. (the "Escrow
Agreement") and any other agreement, certificate, instrument or document to be
delivered by the Stockholders in connection with the Escrow Agreement.

               (b) Each of the undersigned Stockholders agrees that the
Stockholder Representative shall have the full power, authority and right to
perform, do and take any and all actions and the making of any decisions that
are required or permitted to be taken by him under the Escrow Agreement all
without liability to such Stockholder (except as expressly stated herein or
therein), so long as the same are carried out by the Stockholder Representative
in good faith and the Stockholders are treated, in all material respects, in the
same manner (taking into account their relative pro rata interests). Such
actions include the power to amend, modify or waive any provision of the Escrow
Agreement in the name of each Stockholder as if such Stockholder had himself,
herself or itself amended, modified or waived such provision of the Escrow
Agreement. In particular, but not by way of limitation, the Stockholder
Representative shall have the power to make decisions, carry out decisions and
settle claims under the Escrow Agreement on behalf of each Stockholder and to
sign documents and make filings on behalf of each Stockholder in connection
therewith as if such Stockholder had himself, herself or itself signed or filed
such document.

               (c) Each Stockholder understands that this appointment is
irrevocable.

               (d) Each Stockholder agrees to pay a pro rata portion of the
reasonable costs and expenses of such Stockholder Representative in connection
with this Agreement.

               (e) The Stockholder Representative may resign at any time. Upon
such resignation, each Stockholder hereby authorizes the Stockholder
Representative to appoint a new Stockholder Representative to replace such
resigning Stockholder Representative with the same powers and duties as such
resigning Stockholder Representative; provided, however, that such newly
appointed Stockholder Representative shall have been a member of the Board of
Directors of Junglee immediately prior to the Closing Date and, if the Survival
Period (as defined in the 



                                      -12-
<PAGE>   13

Escrow Agreement) has not yet expired, the Escrow Agent shall be notified of
such appointment forthwith.

               (f) If the Stockholder Representative or any successor shall die,
or become unable to act as the Stockholder Representative, a replacement shall
promptly be appointed by a writing signed by the Stockholders who initially
received a majority of the Merger Consideration; provided, however, that such
newly appointed Stockholder Representative shall have been a member of the Board
of Directors of Junglee immediately prior to the Closing Date and, if the
Survival Period has not yet expired, the Escrow Agent shall be notified of such
appointment forthwith.

               (g) Unless and until Amazon.com, and if the Survival Period has
not yet expired, the Escrow Agent, shall have received written notice of the
appointment of a successor Stockholder Representative for the Stockholders,
Amazon.com and the Escrow Agent shall be entitled to rely on, and shall be fully
protected in relying on, the power and authority of the Stockholder
Representative to act on behalf of the Stockholders.


4.      ESTABLISHMENT AND ENFORCEMENT OF INDEMNIFICATION OBLIGATION

               Each Stockholder, by his, her or its signature below, represents
that he, she or it has read Article VIII of the Merger Agreement as well as
Section 1.5 of this Agreement with respect to the indemnification rights and
obligations of the Stockholders stated therein and herein and agrees for the
benefit of Junglee and the surviving corporation pursuant to the Merger
Agreement to abide by such provisions (as well as those with respect to specific
performance).


5.      ASSIGNMENT

               Notwithstanding anything herein to the contrary, the registration
rights of a Holder under Section 1 hereof may be assigned only to a party who
acquires from Holder at least 50,000 shares of Amazon.com Common Stock that
constitute the original number of Registrable Securities (as such number may be
adjusted to reflect subdivisions, combinations and stock dividends of Amazon.com
Common Stock) or as a distribution made by a Holder which is a partnership to
the limited partners of such Holder of Registrable Securities; provided,
however, that no party may be assigned any of the foregoing rights until
Amazon.com is given written notice by the assigning party at the time of such
assignment stating the name and address of the assignee and identifying the
securities of Amazon.com as to which the rights in question are being assigned;
provided, further, that any such assignee shall receive such assigned rights
subject to all the terms and conditions of this Agreement, including without
limitation the provisions of this Section 5.



                                      -13-
<PAGE>   14

6.      GENERAL PROVISIONS

        6.1    NOTICES

               Any notice or demand desired or required to be given hereunder
shall be in writing given by personal delivery, certified or registered mail,
confirmed facsimile transmission, or overnight courier service, in each case
addressed as respectively set forth below or to such other address as any party
shall have previously designated by such a notice. The effective date of any
notice or request shall be the date of personal delivery, four days after the
date of mailing by certified or registered mail, the date on which successful
facsimile transmission is confirmed, or the date undertaken for delivery by a
reputable overnight courier service, as the case may be, in each case properly
addressed as provided herein and with all charges prepaid.

                      If to Amazon.com :

                      Amazon.com, Inc.
                      Fourth Floor
                      1516 Second Avenue
                      Seattle, Washington  98101
                      Attention: Randy J. Tinsley, Treasurer
                      Facsimile: (206) 694-2082

                      with a copy to:

                      Perkins Coie LLP
                      1201 Third Avenue, 40th Floor
                      Seattle, Washington  98101
                      Attention: Scott L. Gelband
                      Facsimile: (206) 583-8500

                      If to the Stockholders:

                      At their respective addresses set forth on the signature
                      pages attached hereto.

                      with a copy to:

                      Fenwick & West LLP
                      Two Palo Alto Square
                      Palo Alto, California  94306
                      Attention: Mark C. Stevens
                      Facsimile: (650) 494-1417



                                      -14-
<PAGE>   15

        6.2    SEVERABILITY

               If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.

        6.3    ENTIRE AGREEMENT

               This Agreement, the Merger Agreement and each of the agreements,
certificates, instruments and documents to be executed or delivered pursuant to
the terms of the Merger Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof and thereof.

        6.4    SUCCESSORS AND ASSIGNS

               Subject to the provisions of Section 5, the provisions of this
Agreement shall inure to the benefit of, and shall be binding upon, the
successors and permitted assigns of the parties hereto.

        6.5    GOVERNING LAW

               This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in and
to be performed in that State. All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any Delaware state
or federal court thereof.

        6.6    THIRD PARTIES

               This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.



                                      -15-
<PAGE>   16

        6.7    HEADINGS

               The descriptive headings contained in this Agreement are included
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

        6.8    COUNTERPARTS

               This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed and
delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement. To expedite the process of entering
into this Agreement, the parties acknowledge that Transmitted Copies of this
Agreement will be equivalent to original documents until such time as original
documents are completely executed and delivered. "Transmitted Copies" will mean
copies that are reproduced or transmitted via photocopy, facsimile or other
process of complete and accurate reproduction and transmission. This Agreement
shall be deemed effective when signed by Amazon.com, the Stockholder
Representative and the Stockholders holding at least 90% of each outstanding
class of capital stock of Junglee.

        6.9    ABANDONMENT OF MERGER

               In the event that the Merger Agreement is terminated and the
Merger abandoned pursuant to Article VII of the Merger Agreement, no party
hereto not in breach of its obligations hereunder shall have any liability to
any other party, including, but not limited to, liability for expenses incurred
by any such other party in connection with this Agreement.

        6.10   AMENDMENT OF RIGHTS

               Subject to the following sentence, this Agreement may not be
amended except by an instrument signed by Amazon.com and the Stockholder
Representative and each undersigned Stockholder hereby grants expressly to the
Stockholder Representative the authority and discretion, so long as such
authority and discretion are exercised in good faith, to enter into such
amendments as he chooses in the exercise of such authority and discretion.
Notwithstanding the fact that the Effective Time of the Merger may have
occurred, those holders of capital stock of Junglee that prior to such time were
entitled or required to but did not execute or deliver this Agreement may so do
(and shall automatically become a party to this Agreement without the need for
any act of any other party hereto) without requirement for amendment hereunder
and without jeopardizing the rights of any party hereto.



                                      -16-
<PAGE>   17

        6.11   SPECIFIC PERFORMANCE

               Each of the parties acknowledges and agrees that the other
parties hereto would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties hereto agrees the other
parties hereto will be entitled to an injunction to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions of this Agreement (including the indemnification provisions
hereof) in any competent court having jurisdiction over the parties, in addition
to any other remedy to which they might be entitled at law or in equity.







                                      -17-
<PAGE>   18

               IN WITNESS WHEREOF, the parties hereto have entered into and
signed this Agreement as of the date and year first above written.

                                    AMAZON.COM, INC.


                                    By:
                                        ----------------------------------------
                                        Name:
                                             -----------------------------------
                                        Its:
                                             -----------------------------------








                                      -18-
<PAGE>   19

                   SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT



                                        STOCKHOLDER


                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------

                                           Address:
                                                   -----------------------------

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

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

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

                                           Number of Shares:
                                                            --------------------








                                      -19-

<PAGE>   1
                                                                    EXHIBIT 2(A)
                                                         TO THE MERGER AGREEMENT



                            INVESTOR RIGHTS AGREEMENT

        This Investor Rights Agreement (this "Agreement") is made and entered
into as of _____________, 1998 (the "Effective Date") by and between Amazon.com,
Inc., a Delaware corporation ("Amazon.com"), and the persons and entities listed
on Exhibit A hereby (collectively, the "Stockholders" and each individually a
"Stockholder"), who immediately prior to the effective time of the Merger (as
such term is defined below) represented all of the stockholders of Sage
Enterprises, Inc., a Massachusetts corporation ("Company").


                                    RECITALS

        A. Amazon.com, Company, Pacific Acquisition, Inc. ("Purchaser") and
certain stockholders of Company have entered into an Agreement and Plan of
Merger (the "Merger Agreement") dated as of August 3, 1998, pursuant to which
Purchaser will merge with and into Company in a reverse triangular merger, with
Company to be the surviving corporation of the Merger (the "Merger").

        B. As a condition precedent to the consummation of the Merger, Sections
4.17 and 5.11 of the Merger Agreement provide that Amazon.com and each of the
Stockholders shall execute an Investor Rights Agreement pursuant to which the
Stockholders shall be granted certain registration rights with respect to the
shares of the common stock of Amazon.com, par value $0.01 per share (the
"Amazon.com Common Stock"), that are issued to the Stockholders in the Merger
(the "Merger Shares"), subject to the terms and conditions set forth in this
Agreement.

        C. Capitalized terms used herein and not otherwise defined shall have
the meaning set forth in the Merger Agreement.

        NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:


1.      REGISTRATION RIGHTS

        1.1    DEFINITIONS

        For purposes of this Section 1:

               (a) Registration. The terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing with the
SEC a registration statement in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the declaration or ordering of effectiveness
of such registration statement by the SEC.

               (b) Registrable Securities. The term "Registrable Securities"
means: (i) the Merger Shares and (ii) any shares of Amazon.com Common Stock
issued as a dividend 




<PAGE>   2

or other distribution with respect to, or in exchange for or in replacement of,
the Merger Shares (other than those shares of Amazon.com Common Stock issued as
a dividend or other distribution with respect to, or in exchange for or in
replacement of, those Merger Shares subject to such right of repurchase);
excluding in all cases (x) any Registrable Securities transferred by a person in
a transaction in which rights under this Section 1 are not assigned in
accordance with Section 6 of this Agreement or (y) any Registrable Securities
sold in a public offering pursuant to a registration statement filed with the
SEC.

               (c) Prospectus. The term "Prospectus" shall mean the prospectus
included in any Registration Statement filed pursuant to the provisions hereof
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance on Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement (including, without
limitation, any prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such Registration
Statement), and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

               (d) Holder. For purposes of this Agreement, the term "Holder"
means any person owning of record Registrable Securities that have not been sold
to the public pursuant to an effective Registration Statement or any assignee of
record of such Registrable Securities to whom rights under this Section 1 have
been duly assigned in accordance with this Agreement.

               (e) SEC. The term "SEC" means the U.S. Securities and Exchange
Commission.

        1.2    REGISTRATION

        (a)    Initial Registration. Amazon.com shall prepare and file with the 
SEC within 45 days following the Closing Date, and use its best efforts to have
declared effective as soon as practicable thereafter, a registration statement
(a "Registration Statement") providing for the resale by the Holders of all the
Registrable Securities then owned by the Holders in accordance with the manner
of sale provisions set forth in Rule 144(f) under the Securities Act or
otherwise in customary brokerage transactions on the Nasdaq National Market or
other public market on which shares of Amazon.com Common Stock are traded.
Amazon.com shall use its best efforts to keep the Registration Statement
continuously effective, pursuant to the rules, regulations or instructions under
the Securities Act applicable to the registration statement used by Amazon.com
for such Registration Statement, for such period (the "Effectiveness Period")
ending on the earlier of the date (i) that is one year after the date of the
Closing Date, (ii) upon which all Registrable Securities have been registered
and sold pursuant to the Registration Statement filed pursuant to this
Agreement, (iii) upon which all the Registrable Securities originally issued
pursuant to the Merger Agreement cease 



                                      -2-
<PAGE>   3

to meet the definition of Registrable Securities pursuant to Section 1.1(b) or
(iv) upon which Amazon.com's obligations hereunder terminate.

        (b) Notice and Approval. If one or more Holders shall propose to sell
Registrable Securities pursuant to the Registration Statement, such Holder or
Holders shall deliver to Amazon.com at least three trading days prior to such
proposed sale a single written notice (a "Stockholder Sale Notice") notifying
Amazon.com of their intent to sell (including the proposed manner and timing of
all sales), and the provision of such notice to Amazon.com shall conclusively be
deemed to establish and confirm an agreement by such Holder or Holders to sell
such Registrable Securities in whole, or in part or not at all (without the
necessity to provide a new Stockholder Sale Notice to Amazon.com) within a
period ending on the tenth trading day following the first such sale and to
comply with the other registration provisions set forth in this Agreement.
Unless otherwise specified in the Stockholder Sale Notice, such Stockholder Sale
Notice shall be deemed to constitute a representation that any information
previously supplied to such Holder expressly for inclusion in the Registration
Statement (as the same may have been superseded by subsequent such information)
is accurate as of the date of such Stockholder Sale Notice. At any time within
such three-trading-day period, Amazon.com may, pursuant to Section 1.2(c),
refuse to permit the Holder to resell any Registrable Securities pursuant to the
Registration Statement. To the extent Amazon.com shall not exercise its rights
pursuant to Section 1.2(c) hereof, Amazon.com shall provide written notice to
each of the other Holders regarding the availability of such ten trading day
period; provided, however, that if any such Holder does not receive such written
Notice within three trading days of the Stockholder Sale Notice, such Holder may
sell his, her or its Registrable Securities pursuant to the terms hereof.

        (c) Right of Suspension. Notwithstanding any other provision of this
Section 1.2, Amazon.com shall have the right at any time to prohibit or suspend
offers and sales of Registrable Securities whenever, and for so long as, in the
reasonable judgment of Amazon.com after consultation with counsel (i) there
exists a material development or a potential material development with respect
to or involving Amazon.com that Amazon.com would be obligated to disclose in the
Prospectus contained in the Registration Statement, which disclosure would in
the good faith judgment of Amazon.com be premature or otherwise inadvisable at
such time, or (ii) an event has occurred that makes any statement made in the
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
which requires the making of any changes in the Registration Statement or
Prospectus so that it will not contain any untrue statement of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that Amazon.com shall not
be permitted to prohibit or suspend sales of Registrable Securities unless all
"affiliates" (as defined in Rule 501 promulgated under the Securities Act) of
Amazon.com are also prohibited from selling shares during such period. To effect
such suspension or prohibition, Amazon.com shall deliver a certificate in
writing to the Holders and, upon receipt of such certificate, the use of the



                                      -3-
<PAGE>   4

Registration Statement and Prospectus will be deferred or suspended and will not
recommence until (x) such Holders' receipt from Amazon.com of copies of the
supplemented or amended Prospectus or (y) such Holders are advised in writing by
Amazon.com that the Prospectus may be used. Amazon.com will use reasonable
efforts to ensure that the use of the Registration Statement and Prospectus may
be resumed, as soon as practicable and, in the case of a pending development
referred to in (i) above, as soon as, in the judgment of Amazon.com, disclosure
of the material information relating to such pending development would not have
a materially adverse effect on Amazon.com's ability to consummate the
transaction, if any, to which such development relates. Notwithstanding the
foregoing, Amazon.com will use reasonable efforts to ensure that in any event
the Holders shall have at least ten trading days (prorated for partial fiscal
quarters) available to sell Registrable Securities during each fiscal quarter
(or portion thereof) during the Effectiveness Period.

        (d) Expenses. All expenses, other than brokers' commissions and similar
charges, and legal fees and disbursements of counsel for the selling Holders,
incurred in connection with the Registration Statement shall be borne by
Amazon.com.

        1.3    OBLIGATIONS OF AMAZON.COM

        Whenever required to effect the registration of any Registrable
Securities under this Agreement, Amazon.com shall, as expeditiously as
reasonably possible:

               (a) Prepare promptly and file with the SEC the Registration
Statement as provided in Section 1.2(a), which Registration Statement (including
any amendments or supplements thereto and Prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, and cause
such Registration Statement to become effective as soon as practicable.

               (b) Prepare promptly and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.

               (c) Furnish to Holders such number of copies of a Prospectus,
including a preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents and legal opinions as reasonably
requested in order to facilitate the disposition of the Registrable Securities
owned by it that are included in such registration.

               (d) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by Holders;
provided, however, that Amazon.com shall not be 



                                      -4-
<PAGE>   5

required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.

               (e) Notify Holders promptly (i) of any request by the SEC or any
other federal or state governmental authority during the Effectiveness Period of
the Registration Statement for amendments or supplements to such Registration
Statement or related Prospectus or for additional information, (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, and (iii) of the receipt by
Amazon.com of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.

        1.4    FURNISH INFORMATION

        It shall be a condition precedent to the obligations of Amazon.com to
take any action pursuant to Section 1.2 that each Holder shall furnish to
Amazon.com such information regarding Holder, the Registrable Securities held by
Holder and the intended method of disposition of such securities as shall be
required to timely effect the registration of Holder's Registrable Securities.

        1.5    INDEMNIFICATION

        (a)    By Amazon.com. To the extent permitted by law and subject to 
Section 1.5(d), Amazon.com will indemnify and hold harmless each of the Holders,
officers, directors, employees and agents of a Holder or underwriters (as
defined in the Securities Act) and each person, if any, who controls a Holder
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against any losses, claims, damages or
liabilities (joint or several) to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based on any of the following statements, omissions
or violations (collectively a "Violation"):

               (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement filed, including any
preliminary Prospectus or final Prospectus contained therein or in any
amendments or supplements thereto;

              (ii) the omission or alleged omission to state in the Registration
Statement, including any preliminary Prospectus or final Prospectus contained
therein or in any amendments or supplements thereto, a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; or



                                      -5-
<PAGE>   6

             (iii)     any violation or alleged violation by Amazon.com of the
Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
Registration Statement.

Amazon.com will reimburse each Holder, and each officer, director, employee or
agent, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 1.5(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Amazon.com (which consent shall
not be unreasonably withheld), nor shall Amazon.com be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based on a Violation which occurs in reliance on and in
conformity with written information furnished expressly for use in connection
with such registration by Holder, or by such officer, director, employee, agent,
underwriter or controlling person of Holder.

               (b) By Holders. To the extent permitted by law and subject to
Section 1.5(d), each Holder, severally and not jointly, will indemnify and hold
harmless Amazon.com, each of its directors, each of its officers who have signed
the registration statement, each person, if any, who controls Amazon.com within
the meaning of the Securities Act, any other employee or agent of Amazon.com,
each other Holder, each person, if any, who controls such Holder within the
meaning of the Securities Act, and any other employee or agent of such Holder
against any losses, claims, damages or liabilities (joint or several) to which
Amazon.com or any such director, officer or controlling person, employee or
agent may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based on any Violation, in each
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and such Holder
will reimburse any legal or other expenses reasonably incurred by Amazon.com or
any such director, officer or controlling person, employee or agent in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 1.5(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of such Holder, which consent shall not be unreasonably withheld;
and provided, further, that the total amounts payable in indemnity by any Holder
under this Section 1.5(b) in respect of any Violation shall not exceed the net
proceeds received by such Holder in the registered offering out of which such
Violation arises.

               (c) Notice. Promptly after receipt by an indemnified party under
this Section 1.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party
under this Section 1.5, deliver to the indemnifying party a 



                                      -6-
<PAGE>   7

written notice of the commencement of such an action, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall (to the
extent of such prejudice) relieve such indemnifying party of any liability to
the indemnified party under this Section 1.5, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 1.5.

               (d) Defect Eliminated in Final Prospectus. The foregoing
indemnity agreements of Amazon.com and the Holders are subject to the condition
that, insofar as they relate to any Violation made in a preliminary Prospectus
but eliminated or remedied in the amended Prospectus on file with the SEC at the
time the registration statement in question becomes effective or in the amended
Prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreements shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities Act.

               (e) Contribution. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder (and/or any officer, director, employee, agent,
underwriter or controlling person who may be indemnified under Section 1.5(a))
makes a claim for indemnification pursuant to this Section 1.5 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 1.5 provides for indemnification in
such case, or (ii) contribution under the Securities Act may be required on the
part of such Holder (and/or any officer, director, employee, agent, underwriter
or controlling person who may be indemnified under Section 1.5 (a)) in
circumstances for which indemnification is provided under this Section 1.5;
then, and in each such case, Amazon.com and such Holder (and/or such other
person) will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in proportion to
their relative fault as determined by a court of competent jurisdiction;
provided, however, that in no event, except in instances of fraud by Holder in
which there is no limitation, (x) shall any Holder be responsible for more than
the portion represented by the percentage that the public offering price of its
Registrable Securities offered by and sold under the Registration Statement
bears to the public offering price of all securities offered by and sold under
such Registration Statement or (y) shall a 



                                      -7-
<PAGE>   8

Holder be required to contribute any amount in excess of the public offering
price of all such securities offered and sold by such Holder pursuant to such
Registration Statement; and in any event, no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.

               (f) Survival. The obligations of Amazon.com and such Holder under
this Section 1.5 shall survive the completion of any offering of Registrable
Securities in a Registration Statement, and otherwise.


2.      OBLIGATIONS OF THE STOCKHOLDERS

        2.1    REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

        Each Stockholder represents with respect to himself, herself or itself
that:

               (a) Good Title. (i) Such Stockholder owns, beneficially and of
record, the shares of capital stock of Company listed opposite such
Stockholder's name on Exhibit A hereto, (ii) such shares of capital stock of
Company are free and clear of any lien, encumbrance, adverse claim, mortgage,
pledge, deed of trust, security interest, charge, restriction on sale or
transfer (other than restrictions imposed by applicable securities laws),
preemptive right, option or other adverse claim or interest of any kind, (iii)
such Stockholder has all necessary power, right and authority to enter into this
Agreement and each of the agreements, certificates, instruments and documents
executed or delivered pursuant to the terms of the Merger Agreement by such
Stockholder and to consummate the transactions contemplated hereby and thereby
and (iv) this Agreement has been duly authorized, executed and delivered by
Stockholder and is a legal, valid and binding obligation of Stockholder,
enforceable in accordance with its terms.

               (b) Ability to Bear Risk. Such Stockholder is in a financial
position to hold the Amazon.com Common Stock for an indefinite period of time
and is able to bear the economic risk and withstand a complete loss of his, her
or its investment in the Amazon.com Common Stock.

               (c) SEC Documents. Such Stockholder acknowledges that he, she or
it has received and had the opportunity to review to such Stockholder's
satisfaction the materials disseminated by Company in connection with the
written consent or special meeting of Stockholders to approve the Merger and the
transactions contemplated thereby, including those filings and reports of
Amazon.com filed with the SEC since the completion of Amazon.com's most recent
fiscal year, consisting of Amazon.com's Annual Report on Form 10-K for the
fiscal year ending December 31, 1997 (the "Form 10-K"), its Quarterly Report on
Form 10-Q for the fiscal quarter ending March 31, 1998, all Form 8-Ks filed
after the date of the Form 10-K, and its Proxy Statement relating to its 1998
Annual Meeting of Stockholders on May 28, 1998.



                                      -8-
<PAGE>   9

               (d) Professional Advice. Such Stockholder has obtained, to the
extent that he, she or it deems necessary, professional advice with respect to
the risks inherent in acquiring the Amazon.com Common Stock, the financial
condition of Amazon.com and the suitability of an investment in the Amazon.com
Common Stock in light of such Stockholder's financial condition and investment
needs.

               (e) Sophistication. Such Stockholder, either alone or with the
assistance of his, her or its professional advisors, is a sophisticated
investor, is able to fend for himself, herself or itself in the transactions
contemplated by this Agreement relating to the Amazon.com Common Stock and has
such knowledge and experience in financial and business matters that he, she or
it is capable of evaluating the merits and risks of the prospective investment
in the Amazon.com Common Stock.

               (f) Accredited Investor. Except as set forth on Schedule A
hereto, such Stockholder is an "accredited investor" as defined in Rule 501(a)
of Regulation D under the Securities Act (an "Accredited Investor").

               (g) Investment for Own Account. The Amazon.com Common Stock is
being acquired by such Stockholder for investment for his, her or its account,
not as a nominee or agent, and not with a view to the distribution of any part
thereof; such Stockholder has no present intention of selling, granting any
participation in or otherwise distributing any of the Amazon.com Common Stock in
a manner contrary to the Securities Act or to any applicable state securities or
Blue Sky law, nor does Stockholder have any contract, undertaking, agreement or
arrangement with any person or entity to sell, transfer or grant a participation
to such person or entity with respect to any of the Amazon.com Common Stock.

               (h) Restricted Securities. Such Stockholder acknowledges that the
Amazon.com Common Stock has not been and will not prior to issuance be
registered under the Securities Act and that the Amazon.com Common Stock is
characterized under the Securities Act as "restricted securities" and,
therefore, cannot be sold or transferred until such sale or transfer is
registered under the Securities Act as provided in this Agreement or an
exemption from such registration is available.

               (i) Exemption Reliance. Such Stockholder has been advised that
the Amazon.com Common Stock is being issued under this Agreement pursuant to
exemptions from applicable federal and state securities laws, and that
Amazon.com's reliance on such exemptions is predicated in part on such
Stockholder's representations contained herein.

               (j) Residence. For purposes of the application of state
securities laws, each Stockholder is a resident of the state as set forth on the
signature page hereto.

               (k) Legend. Each holder understands that prior to the
effectiveness of the Registration Statement certificates or other instruments
representing any of the Registrable 



                                      -9-
<PAGE>   10

Securities acquired by Holder will bear legends substantially similar to the
following, in addition to any other legends required by federal or state laws:

               THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE
               STATE LAW, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED,
               ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (a)
               THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
               COVERING ANY SUCH TRANSACTION INVOLVING THESE SECURITIES OR (b)
               THE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER
               OF THESE SECURITIES (CONCURRED IN BY LEGAL COUNSEL FOR THE
               COMPANY) STATING THAT SUCH TRANSACTION IS EXEMPT FROM
               REGISTRATION, OR THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH
               TRANSACTION IS EXEMPT FROM REGISTRATION.

Each holder agrees that, in order to ensure and enforce compliance with the
restrictions imposed by applicable law and those referred to in the foregoing
legends, or elsewhere herein, Amazon.com may, prior to the effectiveness of the
Registration Statement, issue appropriate "stop transfer" instructions to its
transfer agent, if any, with respect to any certificate or other instrument
representing Registrable Securities, or if Amazon.com transfers its own
securities, that it may make appropriate notations to the same effect in
Amazon.com's records.


        2.2    INVESTOR QUESTIONNAIRE

        Each Stockholder who is not an Accredited Investor shall complete and
execute an Investor Questionnaire in the form attached hereto as Exhibit B.


3.      STOCKHOLDER REPRESENTATIVE

        (a) Each undersigned Stockholder hereby irrevocably authorizes and
appoints Warren Adams, Guy Bradley and Thomas Hoegh (the "Stockholder
Representatives"), with full power of substitution and resubstitution, as his,
her or its representative and true and lawful attorney-in-fact and agent to act
in his, her or its name, place and stead and to execute in the name and on
behalf of such Stockholder the Escrow Agreement, dated as of the date hereof,
between Amazon.com, the Stockholder Representative and ChaseMellon Shareholder
Services L.L.C. (the "Escrow Agreement") and any other agreement, certificate,
instrument or document to be delivered by the Stockholders in connection with
the Merger. The Stockholder Representatives shall in all instances act by
majority vote.

        (b) Each of the undersigned Stockholders agrees that the Stockholder
Representatives shall have the full power, authority and right to perform, do
and take any and 



                                      -10-
<PAGE>   11

all actions they deem necessary or advisable to carry out the purposes of the
Merger Agreement and each Operative Document all without liability to such
Stockholder (except as expressly stated herein or therein), so long as same are
carried out by the Stockholder Representatives in good faith. Such actions
include the power to amend, modify or waive any agreement in the name of each
Stockholder as if such Stockholder had himself, herself or itself amended,
modified or waived such agreement; provided, however, that the Stockholder
Representatives shall have no power to alter any term of the Merger Agreement
which would change the consideration to be received by any Stockholder in
respect of the Merger unless a majority of the Stockholders of each class of
securities of Company (or such other number, if any, as is otherwise required by
Company's Articles of Organization, as amended, or other contractual
arrangement) shall so agree. In particular, but not by way of limitation, the
Stockholder Representatives shall have the power to make and carry out decisions
under the Merger Agreement, the Escrow Agreement and this Agreement on behalf of
each Stockholder and to sign documents and make filings on behalf of each
Stockholder as if such Stockholder had himself, herself or itself signed or
filed such document.

        (c) Each Stockholder understands that this appointment is irrevocable.

        (d) Each Stockholder agrees to pay a pro rata portion of the reasonable
costs and expenses of such Stockholder Representatives, all or a portion of
which amount may be paid out of the Escrow Shares in accordance with the terms
of the Escrow Agreement.

        (e) Any one of the Stockholder Representatives may resign at any time.
Upon such resignation, each Stockholder hereby authorizes the remaining
Stockholder Representatives to appoint a new Stockholder Representative to
replace such resigning Stockholder Representative with the same powers and
duties as such resigning Stockholder Representative, provided, however, that
such newly appointed Stockholder Representative shall have been a member of the
Board of Directors of Company immediately prior to the Closing Date and, if the
Survival Period (as defined in the Escrow Agreement) has not yet expired, the
Escrow Agent shall be notified of such appointment forthwith.

        (f) If any one of the Stockholder Representatives or any successor shall
die, or become unable to act as the Stockholder Representative, a replacement
shall promptly be appointed by the remaining Stockholder Representatives;
provided, however, that such newly appointed Stockholder Representative shall
have been a member of the Board of Directors of Company immediately prior to the
Closing Date and, if the Survival Period has not yet expired, the Escrow Agent
shall be notified of such appointment forthwith.

        (g) Unless and until Amazon.com, and if the Survival Period has not yet
expired, the Escrow Agent, shall have received written notice of the appointment
of a successor Stockholder Representative for the Stockholders, Amazon.com and
the Escrow Agent shall be entitled to rely on, and shall be fully protected in
relying on, the power and authority of the remaining Stockholder Representatives
to act on behalf of the Stockholders.



                                      -11-
<PAGE>   12

        (h) The Stockholder Representatives shall not be liable for any error of
judgment, or any action taken or omitted to be taken hereunder in good faith
except in the case of their bad faith, gross negligence or willful misconduct.
The Stockholder Representatives shall be entitled to consult with counsel of
their choosing which is competent in matters governed by this Agreement and
shall not be liable for any acts suffered or omitted by them in good fair in
accordance with the advice of such counsel.


4.      ESTABLISHMENT AND ENFORCEMENT OF INDEMNIFICATION OBLIGATION

        Each Stockholder, by his, her or its signature below, represents that
he, she or it has read Article VIII of the Merger Agreement as well as Section
1.5 of this Agreement with respect to the indemnification rights and obligations
of the Stockholders stated therein and herein and agrees for the benefit of
Company and the surviving corporation pursuant to the Merger Agreement to abide
by such provisions (as well as those with respect to specific performance),
including with respect to the potential loss of the benefit of the shares of
Amazon.com Common Stock to be received as a result of the Merger.


5.      ASSIGNMENT

        Notwithstanding anything herein to the contrary, the registration rights
of a Holder under Section 1 hereof may be assigned only to a party who acquires
from Holder at least 50,000 shares of Amazon.com Common Stock that constitute
the original number of Registrable Securities (as such number may be adjusted to
reflect subdivisions, combinations and stock dividends of Amazon.com Common
Stock) or as a distribution made by a Holder which is a partnership or limited
liability company to the partners or members of such Holder of Registrable
Securities; provided, however, that no party may be assigned any of the
foregoing rights until Amazon.com is given written notice by the assigning party
at the time of such assignment stating the name and address of the assignee and
identifying the securities of Amazon.com as to which the rights in question are
being assigned; provided, further, that any such assignee shall receive such
assigned rights subject to all the terms and conditions of this Agreement,
including without limitation the provisions of this Section 5.


6.      GENERAL PROVISIONS

        6.1    NOTICES

        Any notice or demand desired or required to be given hereunder shall be
in writing given by personal delivery, certified or registered mail, confirmed
facsimile transmission, or overnight courier service, in each case addressed as
respectively set forth below or to such other address as any party shall have
previously designated by such a notice. The effective date of any notice or
request shall be the date of personal delivery, four days after the date of
mailing by certified or registered mail, the date on which successful facsimile
transmission is 



                                      -12-
<PAGE>   13

confirmed, or the date undertaken for delivery by a reputable overnight courier
service, as the case may be, in each case properly addressed as provided herein
and with all charges prepaid.

                      If to Amazon.com:

                      Amazon.com, Inc.
                      1516 Second Avenue
                      Seattle, WA 98101
                      Attention: Randy J. Tinsley, Treasurer
                      Facsimile: 206-694-2082

                      with a copy to:

                      Perkins Coie LLP
                      1201 Third Avenue, 40th Floor
                      Seattle, Washington 98101
                      Attention: Scott L. Gelband
                      Facsimile: 206/583-8500

               If to the Stockholders:

                      At their respective addresses set forth on the signature
                      pages attached hereto.

                      with a copy to:

                      Hutchins, Wheeler & Dittmar
                      101 Federal Street
                      Boston, Massachusetts 02110
                      Attention: Michael J. Riccio
                      Facsimile: (617) 951-1295

        6.2    SEVERABILITY

        If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.



                                      -13-
<PAGE>   14

        6.3    ENTIRE AGREEMENT

        This Agreement, the Merger Agreement and each of the agreements,
certificates, instruments and documents to be executed or delivered pursuant to
the terms of the Merger Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof and thereof.

        6.4    SUCCESSORS AND ASSIGNS

        Subject to the provisions of Section 5, the provisions of this Agreement
shall inure to the benefit of, and shall be binding upon, the successors and
permitted assigns of the parties hereto.

        6.5    GOVERNING LAW

        This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts executed in and to be
performed in that State. All actions and proceedings arising out of or relating
to this Agreement shall be heard and determined in any Delaware state or federal
court thereof.

        6.6    THIRD PARTIES

        This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.

        6.7    HEADINGS

        The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

        6.8    SPECIFIC PERFORMANCE

        Each of the parties acknowledges and agrees that the other parties
hereto would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the parties hereto agrees the other parties
hereto will be entitled to an injunction to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions of this Agreement (including the indemnification provisions hereof)
in any competent court having jurisdiction over the parties, in addition to any
other remedy to which they might be entitled at law or in equity.



                                      -14-
<PAGE>   15

        6.9    COUNTERPARTS

        This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement. To expedite
the process of entering into this Agreement, the parties acknowledge that
Transmitted Copies of this Agreement will be equivalent to original documents
until such time as original documents are completely executed and delivered.
"Transmitted Copies" will mean copies that are reproduced or transmitted via
photocopy, facsimile or other process of complete and accurate reproduction and
transmission.

        6.10   ABANDONMENT OF MERGER

        In the event that the Merger Agreement is terminated and the Merger
abandoned pursuant to Article VII of the Merger Agreement, no party hereto not
in breach of its obligations hereunder shall have any liability to any other
party, including, but not limited to, liability for expenses incurred by any
such other party in connection with this Agreement.

        6.11   AMENDMENT OF RIGHTS

        This Agreement may not be amended except by an instrument signed by
Amazon.com and the Stockholder Representative and each undersigned Stockholder
hereby grants expressly to the Stockholder Representative the authority and
discretion, so long as such authority and discretion are exercised in good
faith, to enter into such amendments as he, she or it chooses in the exercise of
such authority and discretion.

        IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.

                                        AMAZON.COM, INC.


                                        By:
                                           -------------------------------------

                                        Name:
                                             -----------------------------------

                                        Its:
                                            ------------------------------------




                                      -15-
<PAGE>   16

                   SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT

                                        STOCKHOLDER


                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------

                                        Address:
                                                --------------------------------

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

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

                                        Number of Shares:
                                                         -----------------------









                                      -16-

<PAGE>   1
TO BUSINESS AND TECHNOLOGY EDITORS:


               AMAZON.COM ACQUIRES TWO LEADING INTERNET COMPANIES

   INNOVATORS PLANETALL AND JUNGLEE TO ENRICH CUSTOMERS' E-COMMERCE EXPERIENCE

SEATTLE, Aug. 4 /PRNewswire/ -- Leading online retailer Amazon.com, Inc.
(NASDAQ: AMZN), today announced the signing of definitive agreements to acquire
two innovative Internet companies to enrich its e-commerce experience for
customers.

        In separate transactions Amazon.com has agreed to acquire:

        o       PlanetAll, based in Cambridge, Mass., which provides a unique
                Web-based address book, calendar, and reminder service at
                http://www.PlanetAll.com. PlanetAll has 1.5 million members, and
                thousands of new members are joining each day to use the secure,
                free service to organize and automatically update information
                about friends, business associates, relatives, and alumni.
 
        o       Junglee Corp., based in Sunnyvale, Calif., the leading provider
                of advanced Web-based virtual database (VDB) technology that can
                help shoppers find millions of products on the Internet.
 
        "PlanetAll is the most innovative use of the Internet I've seen," said
Amazon.com founder and CEO Jeff Bezos. "It's simply a breakthrough in doing
something as fundamental and important as staying in touch. The reason PlanetAll
has over 1.5 million members -- and is growing even faster than the Internet --
is simple: it creates extraordinary value for its users. I believe PlanetAll
will prove to be one of the most important online applications."

        PlanetAll is not only the best way to keep in touch with business
associates and friends but also to get back in touch with old friends. Users
have complete control over their own contact information and decide what
information they want to share with others on a person-by-person basis.
PlanetAll's service is compatible with personal information managers (PIMs) and
personal digital assistants (PDAs), such as Microsoft Outlook and 3Com Palm
Pilot.

        "PlanetAll's goal is to make staying in touch with friends and business
contacts effortless," said Jim Savage, CEO of PlanetAll. "Amazon.com allows us
to take the vision of PlanetAll's founders, Warren Adams and Brian Robertson, to
an even larger audience. We're thrilled to join Amazon.com's world-class team
that cares as deeply as we do about providing meaningful services that enrich
people's lives."

           "As an investor and partner, we recognized early on that this
technology has enormous promise with widespread applicability," said Bob Davis,
CEO of Lycos, which holds a stake in PlanetAll. "We look forward to continuing
to provide PlanetAll's secure and feature-rich service to Lycos users."

           PlanetAll has integrated its service within the sites of a number of
Internet leaders, including Lycos and GeoCities, as well as numerous
universities and 


<PAGE>   2


professional associations. Amazon.com intends to operate PlanetAll as a wholly
owned subsidiary located in Cambridge. Savage and the two cofounders will remain
with the company.

        Junglee has developed breakthrough database technology that can
dramatically enhance customers' ability to discover and choose from among
millions of products online. To date, two of the markets Junglee has targeted
have been online retailing and online recruitment. Junglee's customers and
partners in these markets include Yahoo!, Compaq, Snap!, six of the top seven
newspaper companies, and many other new-media companies. All founders of Junglee
will remain with the company.

        "Junglee has assembled an extraordinary team of people," Bezos said.
"Together we'll empower customers to find and discover the products they want to
buy."

        "This is a significant opportunity for all of us at Junglee to extend
our technology well beyond our current base," said Ram Shriram, President and
COO of Junglee. "With Amazon.com, we can address the larger challenges of
e-commerce sooner -- and on a broader scale -- than we could have alone."

        Amazon.com will acquire 100 percent of the outstanding shares and assume
all outstanding options of Junglee and PlanetAll in exchange for equity having
an aggregate value of approximately $280 million. Amazon.com will issue
approximately 800,000 shares and assume all outstanding options in connection
with the acquisition of PlanetAll and anticipates accounting for this
transaction as a pooling of interests. Amazon.com will issue approximately 1.6
million shares and assume all outstanding options in connection with the
acquisition of Junglee and anticipates accounting for this transaction under the
purchase method of accounting. Each transaction is expected to close within the
quarter, subject to customary closing conditions.

About Amazon.com

        Amazon.com, Inc., offers more than 3 million book, music, and other
titles, plus easy-to-use search and browse features, secure credit card payment,
personalized recommendations, and direct shipping. Amazon.com has virtually
unlimited online shelf space to offer customers a vast selection easily accessed
through an efficient search-and-retrieval interface, as well as streamlined
ordering through 1-Click (SM) technology. Amazon.com pioneered the concept of
syndicated selling on the Internet and has more than 100,000 members in its
Associates Program, including AOL.com, Yahoo!, Netscape, Excite, the AltaVista
Search Service, the @Home Network, and iVillage.

About PlanetAll

        PlanetAll provides a unique Web-based address book, calendar, and
reminder service at http://www.PlanetAll.com. PlanetAll has 1.5 million members,
and thousands of new members are joining each day to use the secure, free
service to organize and automatically update information about friends, business
associates, relatives, and alumni. The service was launched in November 1996,
and its investors include CMG @Ventures, Arts Alliance, Lycos, and Puma
Technology.

About Junglee

        Founded in June 1996, Junglee Corp.'s breakthrough virtual database
(VDB) technology is based on award-winning doctoral research by the company's
founders at Stanford University. Junglee's first deployment was CareerPost.com,
the Washington Post Company's online recruitment site, in January 1997. Junglee
carries more than 15 

<PAGE>   3



million items in the Junglee Shopping Guide and over 90,000 job listings in its
Job Canopy.

        This announcement contains forward-looking statements that involve risks
and uncertainties that include, among others, Amazon.com's limited operating
history, the unpredictability of its future revenues, and risks associated with
capacity constraints, management of growth, new business opportunities,
international expansion and business combinations. More information about
factors that potentially could affect Amazon.com's financial results is included
in the company's Annual Report on Form 10-K for the year ended December 31,
1997, and quarterly report on Form 10-Q for the quarter ended March 31, 1998,
both filed with the Securities and Exchange Commission. 

        Amazon.com, Earth's Biggest Bookstore, and 1-Click are either registered
trademarks or trademarks of Amazon.com, Inc. All other names mentioned herein
may be trademarks of their respective owners.

        -0-

        Note to Editors: Members of the news media may participate in a
conference-call demonstration of PlanetAll.com at 11:00 a.m. EDT today, August
4. Call (888) 618-8003 and request Conference No. 3234077. Please go to
http:///www.planetall.com in preparation for the demonstration.

        /CONTACT: Bill Curry, Amazon.com, (206) 834-7180/


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