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GeoEye discloses NGA terminates OTFPP agreement

GeoEye (GEOY) disclosed in a regulatory filing after Friday's close that its wholly owned subsidiary GeoEye Imagery Collection Systems received notice from the National Geospatial-Intelligence Agency, or NGA, that, effective immediately, the NGA was terminating the Other Transaction For Prototype Project Agreement or OTFPP agreement, for convenience. The NGA had previously notified the company on June 22 that it had elected not to obligate additional funding under the OTFPP agreement for the development and launch of GeoEye- 2, scheduled for launch in the first half of 2013. At that time, the NGA proposed new payment milestones tied to the remaining $70M that had already been obligated under the OTFPP agreement. GeoEye and the NGA then entered into negotiations for an amendment to the OTFPP agreement. The NGA proposed three new milestones that would occur before the launch of GeoEye-2. To reflect the significant cuts to the amount of the cost share, the company proposed changes to the rights to GeoEye-2 which would accrue to the NGA. The parties were unable to agree on mutually acceptable terms to amend the agreement, and, as a result, the NGA opted to terminate the agreement for convenience, the company said.