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Internet grocer Peapod Inc. concluded a restructuring transaction in which it consolidated its licensing business into the newly formed Split Pea Software, Inc. and spun-off majority ownership of the new company.

During the fourth quarter of 1998, Peapod completed the installation of its Internet grocery shopping and delivery systems under its license agreement with Coles Myer Ltd., and entered into further agreements to develop additional enhancements. Coles Myer Ltd. is Australia's largest retailer. Split Pea will seek to build on the success of the Coles Myer relationship by further licensing its Internet grocery shopping systems.

In the transaction, Peapod assigned to Split Pea certain technology rights, including the perpetual license of Peapod's online grocery shopping and delivery systems.

Split Pea's marketing efforts will focus both internationally and domestically, and will include other markets requiring high-SKU, data- intensive e-commerce systems. Additionally, Split Pea will pursue licenses of its SuRF technology for multiple consumer and business-to-business applications, and will provide custom development for Internet services.

"This transaction should benefit Peapod in several ways," said John C. Walden, Peapod's chief operating officer. "First, we have built significant value in our systems that we believe can be exploited and generate meaningful future value. Split Pea, as an independent entity, now has the flexibility to invest and grow without constraints that may exist as a part of Peapod. More importantly for Peapod, the new structure allows the company to concentrate its resources on its core Internet grocery business."

Split Pea has appointed John B. Burchard, formerly vice president of sales and service for Peapod's licensing business, as president of Split Pea Software Inc.

A group of the new company's senior managers holds majority equity ownership of Split Pea, while Peapod owns a minority interest along with certain promissory and convertible notes from Split Pea. To fund future growth, the new entity is likely to pursue additional private financing from strategic or financial partners.