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Ground Lease

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Sectors: Services
Effective Date: November 10, 1999
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Exhibit 10.12








NOVEMBER 10, 1999


THIS GROUND LEASE (the "Lease") is made and entered into as of November 10, 1999, (the "Effective Date") by and between TENASKA, INC., a Delaware corporation ("Lessor"), and TENASKA GEORGIA PARTNERS, L.P., a Delaware limited partnership ("Lessee").


A. Lessor owns that certain real property located in Heard County, State of Georgia, which consists of approximately 13.13 acres of unimproved land which is more particularly described in EXHIBIT "A" attached hereto (the "Property").

B. Lessee desires to lease the Property for the purpose of constructing a laydown area in connection with the construction of a power generation facility on and/or adjacent to the Property;

NOW, THEREFORE, in consideration of the rents to be paid hereunder, covenants and conditions contained herein, the parties hereby agree as follows:


The following is a summary of basic lease information. Each term or item in this Article I shall be deemed to incorporate all of the provisions set forth below pertaining to such term or item and to the extent there is any conflict between the provisions of this Article I and any more specific provision of this Lease, the more specific provision shall control.

Lessor: Tenaska, Inc.

Address of Lessor: 1044 North 115th Street, Suite 400
Omaha, Nebraska 68154
Attn: Law and Contract Administration Departments

Lessee: Tenaska Georgia Partners, L.P.

Address of Lessee: 1044 North 115th Street, Suite 400
Omaha, Nebraska 68154
Attn: Law and Contract Administration Departments

Commencement Date: Effective Date

Expiration Date: December 31, 2002

Term: Effective Date - December 31, 2002

Base Rent: $13,130.00 per year, payable in equal monthly
installments of $1,094.17 per month.


2.1 PROPERTY. Lessor hereby leases the Property to Lessee, Lessee hereby hires the Property from Lessor, on the term and conditions set forth in this Lease.


Except as otherwise specifically provided in this Lease, Lessee hereby agrees to take the Property in its existing condition and acknowledges that in entering into this Lease, Lessee does not rely on, and Lessor does not make, any express or implied representations or warranties as to any matters including, without limitation, the suitability of the soil or subsoil, any characteristics of the Property or improvements thereon, the suitability of the Property for Lessee's intended use, the economic feasibility of the business Lessee intends to conduct on the Property, title to the Property, or any other matter. Lessee hereby leases the Property subject to all matters of record, including, without limitation the Permitted Title Encumbrances identified on EXHIBIT "B" attached hereto and made a part hereof.


4.1 INITIAL TERM. The term of this Lease (the "Term") shall be for the period stated in the Basic Lease Information, commencing on the Commencement Date and expiring on the Expiration Date (as identified pursuant to Section 5.1), unless terminated earlier or extended as hereinafter provided. Regardless of the length of the term of this Lease, both Lessor and Lessee agree that an estate in land, and not a usufruct, is hereby created by this Lease.


5.1 RENT COMMENCEMENT. Rent shall commence on the Effective Date (the "Rent Commencement Date").

5.2 BASE RENT. Commencing upon the Rent Commencement Date and continuing throughout the Term, Lessee shall pay Base Rent to Lessor, at Lessor's address stated in the Basic Lease Information, in equal monthly payments of $1,094.17, without prior notice, demand, abatement or set off. Base Rent shall be paid on the first day of each calendar month, in advance, without deduction or offset. If the Rent Commencement Date or the Expiration Date occur on other than the first day of a month, the installment of Base Rent due for such partial month shall be prorated based on a 30-day month.


5.3 LATE PAYMENT. If Lessee fails to pay any installment of Base Rent or any Additional Rental (as defined in Article 6) within ten (10) days after notice of non-receipt from Lessor, such unpaid amounts shall be subject to a late payment charge equal to five percent (5%) of the unpaid amounts in each instance. The late payment charge has been agreed upon by Lessor and Lessee after negotiation, as a reasonable estimate of the additional administrative costs and detriment that will be incurred by Lessor as a result of any such failure by Lessee, the actual costs thereof being extremely difficult if not impossible to determine.


Each and every sum payable to Lessor pursuant to this Lease (other than Base Rent), each and every sum Lessee pays to any third party pursuant to this Lease, and each and every sum which Lessor pays to any third party to cure a default of Lessee shall be additional rent ("Additional Rental"). Lessor shall be entitled to the same rights and remedies with respect to recovery of Additional Rental as it shall be with respect to Base Rent. Base Rent and Additional Rental are collectively referred to herein as "Rent".


7.1 NET LEASE. The Base Rent and Additional Rental due to Lessor hereunder shall be absolutely net to Lessor and shall be paid without assertion of any counterclaim, setoff, deduction or defense and without abatement, suspension, deferment or reduction. Except as expressly provided to the contrary in this Lease, Lessor will not be required to make any expenditure, incur any obligation, or incur any liability of any kind in connection with this Lease or the ownership, construction, maintenance, operation or repair of the Property.

7.2 INDEPENDENT COVENANTS. The obligations of Lessee hereunder shall be separate and independent covenants and agreements. Each agreement of Lessee shall be both a covenant and a condition. Lessee hereby waives, to the full extent permitted by applicable law, all rights now or hereafter conferred by statute to quit, terminate or surrender this Lease or the Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of any Rent hereunder.


The Property shall be used as a laydown area in connection with the construction of a power generation facility on a separate tract of land in the vicinity of the Property, or any other lawful use permitted by applicable zoning and land use restrictions.



9.1 IMPROVEMENTS AND ACTIVITIES. Lessee is permitted to construct the following improvements and engage in the following activities on the Property:

(i) to grade and lay down aggregate on the Property;

(ii) to construct roads and access ways on the Property;

(ii) to construct security fencing and gates around the boundary of
the Property;

(iii) to construct temporary parking and temporary storage areas;

(iv) to construct temporary warehouses and construction equipment
maintenance areas, both of which may have concrete slab

(v) to construct and/or install temporary office facilities;

(vi) to receive and unload permanent materials and consumable

(vii) to store permanent materials and consumable supplies in the
temporary warehouse structures and on aggregate surfaced
storage areas;

(viii) to fabricate and assemble permanent materials;

(ix) to receive, assemble, disassemble, maintain and store
construction equipment;

(x) to construct temporary structures for brass-in and brass-out
of workers;

(xi) to construct or install temporary restroom facilities for

(xii) installation of holding tanks to hold waste water discharged
from temporary office facilities, and for the installation of
temporary sanitary sewer lines needed to discharge waste water
into any available sanitary sewer system; and

(xiii) installation of temporary utility pipes and lines (both
underground and overhead).

9.2 All costs of design, engineering, permitting and construction of any Improvements to the Property shall be at Lessee's sole cost and expense.

9.3 PERMITS AND APPROVAL. Lessee shall be solely responsible at its sole cost and expense for obtaining the approval of any necessary governmental agency with jurisdiction over the Property for any general plan approval or amendment, rezoning, variance, conditional use permit, building, electrical and plumbing permits, environmental impact analysis and mitigations imposed thereby, or other governmental action necessary to permit the construction and


operation of the laydown area in accordance with this Lease. Any fees or other assessments imposed as part of the approval process shall be paid by Lessee.

9.4 INSURANCE REQUIREMENTS. Before commencing to perform any of the activities permitted by Section 9.1 hereof and before any building materials have been delivered to the Property by Lessee or under Lessee's authority, Lessee shall procure or cause to be procured the insurance coverage described below in the limits hereinafter provided, and shall provide Lessor with certificates of such insurance:

(i) Comprehensive liability insurance covering Lessee, Lessor and each contractor and subcontractor engaged in any work on the Property, which insurance may be effected by endorsement if obtainable, on the policy required to be carried pursuant to Article 18, covering Lessor and Lessee, and in a liability amount not less than Twenty Million Dollars ($20,000,000) under Lessee's Comprehensive Liability Insurance Policy and Umbrella Liability Insurance Policy. Such coverage may be provided on a "claims made" basis.

All insurance required pursuant to this Section 9.5 shall meet the requirements of Section 18.6.

9.5 GENERAL CONSTRUCTION REQUIREMENTS. All construction and other work shall be done in a good and workmanlike manner and consistent with all existing and future applicable local, state and federal statutes, rules, regulations, codes (including, without limitation, zoning and building codes), ordinances, permits, orders and other applicable law, and all amendments and modifications thereto (collectively "Applicable Laws").


In any instance where this Lease provides for the arbitration of disputes, such disputes shall be resolved through arbitration to be conducted in accordance with the commercial arbitration rules of the American Arbitration Association then in effect as supplemented by the terms of this Agreement. Discovery shall be available to the parties in such arbitration proceedings as prescribed by law for civil actions in the state courts having jurisdiction over disputes, including without limitation subpoenas requiring attendance of witnesses, subpoenas duces tecum for the production of books, records, documents and other evidence, interrogatories and depositions. All arbitration proceedings shall be held in Omaha, Nebraska before one neutral arbitrator having at least five years' real estate experience. The arbitrator shall be selected by mutual agreement of Lessor and Lessee, or, if the parties are unable to agree on an arbitrator within thirty (30) days after arbitration is first requested either party shall have the right to petition any court with jurisdiction to appoint an arbitrator. The non-prevailing party shall bear all costs and expenses of the arbitration, including without limitation the prevailing party's reasonable attorneys' fees and costs as provided in Section 34.6. The arbitrator shall have no power to alter or modify any of the terms of this Lease and the arbitrators jurisdiction shall be limited accordingly. Judgment upon the award may be entered in any court having jurisdiction.



11.1 NO LIENS. Lessee covenants and agrees to keep all of the Property and every part thereof and all improvements thereon free and clear of and from any and all mechanics', material supplier's and other liens for work or labor done, services performed, materials, appliances, or power contributed, used or furnished to be used in or about the Property for or in connection with any operations of Lessee, any improvements that Lessee may make or permit or cause to be made, or any work or construction by, for or permitted by Lessee on or about the Property, and at all times promptly and fully to pay and discharge any and all claims upon which any such lien may or could be based, and to save and hold Lessor and all of the Property and the improvements thereon free and harmless of and from any and all such liens and claims of liens and suits or other proceedings pertaining thereto.

11.2 RIGHT TO CONTEST LIENS. Lessee shall have the right to contest, in good faith, the amount or validity of any lien of the nature described in Section 11.1 above, provided that Lessee shall give Lessor written notice of Lessee's intention to do so within ten (10) days after the recording of such lien, and provided further, that Lessee shall, at its expense, defend itself and Lessor against the same and shall pay and satisfy any adverse judgment that may be rendered thereon before the enforcement thereof against the Property. In addition, at the request of Lessor, Lessee shall procure and record the bond as required by Applicable Law for purposes of freeing the Property from the effect of such lien or claim or action thereof. Lessee shall pay all reasonable attorneys' fees, consultants fees, travel expenses, and other costs incurred by Lessor in connection with any such contest.

11.3 NO EFFECT ON LESSOR'S INTERESTS. No mechanics' or material suppliers' liens or other liens of any character whatsoever created or suffered by Lessee shall in any way, or to any extent, affect the interests, right or title of Lessor in and to the Property.

11.4 LESSOR'S RIGHT TO CAUSE RELEASE OF LIENS. If Lessee shall not within ten (10) days following the imposition of any such lien which is not being contested by Lessee in accordance with Section 11.2 cause the lien to be released of record by payment or posting of a proper bond, Lessor shall have the right but not the obligation to cause the same to be released by such means as Lessor shall deem appropriate and the amount paid by Lessor together with all expenses incurred by Lessor in connection therewith (including without limitation reasonable attorneys' fees and expenses), plus interest at eighteen percent (18%) per annum or the maximum rate allowed by law, whichever is less, from the date of payment by Lessor, shall be Additional Rental, immediately due and payable by Lessee to Lessor upon demand.


All improvements constructed, installed or placed by Lessee on the Property shall be the property of Lessee during the Term. Prior to expiration of the Term, and within sixty (60) days after any earlier termination of this Lease if terminated pursuant to any provision hereof, Lessee shall have the right to remove, at Lessee's sole cost and expense, any improvements originally installed on the Property at Lessee's expense, provided that all work to remove such


improvements is performed in compliance with Applicable Laws, and the Property left in compliance with Applicable Laws, free of any liens. Upon expiration of this Lease, or on the date sixty (60) days after any earlier termination of this Lease, all of Lessee's right, title and interest in the improvements shall cease and terminate and title to the improvements shall immediately vest in Lessor. Lessee shall surrender the Property to Lessor as provided in Article 25. No further deed or other instrument shall be necessary to confirm the vesting in Lessor of title to the improvements.


13.1 MAINTENANCE AND REPAIRS. During the Term, Lessee shall, at its own cost and expense and without any cost or expense to Lessor, keep and maintain the Property in good condition and repair and shall allow no nuisances to exist or be maintained thereon. Lessee shall promptly make all repairs, replacements and alterations (whether structural or nonstructural, foreseen or unforeseen or ordinary or extraordinary) necessary to maintain the Property in good condition and in compliance with all Applicable Laws.

13.2 NO WASTE. Lessee shall not commit or permit waste upon the Property, other than the removal of trees and clearing and grading of the Property as Lessee determines is needed in order for Lessee to conduct its business operations on the Property.

13.3 NO LESSOR OBLIGATIONS. Lessor shall not be obligated to make to the Property any repairs, replacements or renewals of any kind, nature or description whatsoever and Lessee hereby expressly waives any right to terminate this Lease and any right to make repairs at Lessor's expense under Applicable Laws, if any, or any amendments thereof or any similar law, statute or ordinance now or hereafter in effect.


Lessee shall be solely responsible for, shall make all arrangements for, and shall pay for all utilities and services furnished to or used at the Property including without limitation, gas, electricity, other power, water, telephone, cable and other communication services, security services, sewage, sewage service fees, trash collection, and any taxes or impositions thereon. Lessee shall maintain, repair and replace all such utility services located on or connected to the Property at no cost or expense to Lessor.

ARTICLE 15. [Intentionally Deleted]


16.1 COMPLIANCE WITH APPLICABLE LAWS. Lessee, at Lessee's sole cost and expense, shall comply with all Applicable Laws related to the use or occupancy of the Property by Lessee.


16.2 COMPLIANCE WITH INSURANCE REQUIREMENTS. Lessee shall not do anything, or permit anything to be done, in or about the Property that would, (i) invalidate or be in conflict with the provisions of any fire or other insurance policies covering the Property or any property located therein.


17.1 LESSEE'S ENVIRONMENTAL COVENANT AND INDEMNIFICATION. Lessee shall not handle, store, manufacture, treat, release, dispose of, or cause or permit to be brought upon the Property any Hazardous Substances on or in the Property, except in the ordinary course of Lessee's business, and shall not discharge any Hazardous Substances onto the land or any surface water or ground water at or near the Property, except in compliance with Applicable Laws. Lessee shall indemnify, defend and hold harmless Lessor from and against any and all claims, demands, actions, suits, orders, proceedings, judgments, injunctions, liabilities, losses, liens, costs, expenses, (including reasonable attorneys' fees and fees of other experts and consultants), and damages, of any kind or nature, threatened, made, brought or entered against Lessor or any of its officers, directors, agents or employees, to the extent arising out of Hazardous Substances in, on or under the Property that directly resulted from the activities of Lessee or any of its agents or employees on the Property.

17.2 ENVIRONMENTAL NOTICES. Lessor and Lessee shall each immediately advise the other in writing of (a) any and all governmental agency regulatory proceedings or enforcement actions instituted or threatened which presently require or could require investigation, mitigation, clean-up, alteration or abatement of conditions at the Property, and (b) all claims made or threatened by any party against either party or the Property relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Substance.

17.3 DEFINITIONS. For purposes of this Article 17, "Hazardous Substances" shall mean any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any Environmental Law, as currently in effect or as hereafter amended or enacted, (ii) a petroleum hydrocarbon including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) asbestos, (v) flammable, explosive, toxic, or otherwise regulated pursuant to Environmental Laws, or (vi) infectious, (vii) radioactive, (viii) carcinogenic, or (ix) a reproductive toxic. "Environmental Law(s)" shall mean the comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601, ET. SEQ., the Resource Conservation and Recovery Act of 1979, 42 U.S.C. sections 6901 ET. SEQ., the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 ET. SEQ., the Clean Water Act, 33 U.S.C. Sections 1251 ET. SEQ., as said laws have been supplemented or amended to date, the regulations promulgated pursuant to said laws and any other federal, state or local law, statute, rule, regulation, ordinance, decree, order, permit, license, approval or authorization which regulates or proscribes the use, storage, disposal, presence, cleanup, transportation or release or threatened release into the environment of Hazardous Substances or pertaining to the protection of human health and safety of the environment.


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