Return after recording to:
Moore & Van Allen (MEC)
3000 NCNB Plaza
Charlotte, NC 28280

                             STATE OF NORTH CAROLINA

COUNTY OF DUPLIN

                         FIRST AMENDMENT TO GROUND LEASE
                         -------------------------------

         THIS FIRST  AMENDMENT  TO GROUND  LEASE dated the 16th day of December,
1991, by and between  GUILFORD  MILLS,  INC., a Delaware  corporation  having an
address  at  Post  Office  Box  26969,  Greensboro,  North  Carolina  27419-6969
(hereinafter referred to as "Landlord") and

         UNITED  STATES  TRUST  COMPANY  OF NEW  YORK,  not  in  its  individual
capacity,  but solely as owner Trustee under that certain Trust  Agreement dated
as of November 1, 1984 between General Electric Capital Corporation, (then known
as General  Electric Credit  Corporation) and United States Trust Company of New
York,  as amended and  restated as of December  16, 1985 (in such  capacity  the
"Kenansville Owner Trustee") (hereinafter referred to as "Tenant").

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS,  Landlord and  Cogentrix of North  Carolina,  Inc.  (formerly,
Cogentrix  Leasing  Corporation),  a North  Carolina  corporation  ("Cogentrix")
entered into that certain  Ground Lease dated November 30, 1984, a memorandum of
which is recorded with the Duplin County,  North  Carolina  Register of Deeds in
Book 937, at Page 169 (the  "Lease"),  pursuant to which  Cogentrix  leased from
Landlord  all that  certain  tract,  piece or parcel of land  situated in Duplin
County, North Carolina, and more particularly described on Exhibit A attached to
the Lease and incorporated herein by reference (the "Demised Premises");

         WHEREAS, Cogentrix assigned all of its right, title and interest in and
to the Lease to Tenant  pursuant  to a Bill of Sale,  Assignment  of Interest in
Ground Lease and General  Assignment  dated as of May 1, 1986 and recorded  with
the Duplin County Register of Deeds in Book 962, at Page 131; and

         WHEREAS,  the  parties  hereto  desire  to  amend  said  Lease  as more
particularly set forth below.

         NOW,  THEREFORE,  in consideration  of $10.00,  other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
the mutual covenants contained herein, and intending to be legally bound hereby,
Landlord and Tenant hereby agree with each other as follows:


<PAGE>

         1. Assignment and Subletting  Article XI of the Lease is hereby amended
by the addition of new Section 11.2, to read as follows:

                  Section  11, 2.  Tenant may  sublet,  subject  -to  Landlord's
         consent, which consent shall not be unreasonably  withheld,  delayed or
         denied,  any portion of the Demised Premises for use as a manufacturing
         plant in accordance  with Section 5.1;  provided  however,  that if the
         qualification  of  Tenant's  cogeneration  facility  under  PURPA is in
         jeopardy  under  the  circumstances  described  in  Section  5.1,  then
         Landlord's consent shall not be required.

         2.  Ratification.  Except  as  modified  hereby,  all of the  terms and
provisions of the Lease shall remain in full force and effect and shall continue
to apply to the Demised Premises.

         3. Effective  Date.  This  Amendment  shall be effective as of the date
first set forth above on execution by each of the parties hereto.

         4. Governing Law. The Lease and this Amendment shall be governed by and
construed in accordance  with the laws and court decisions of the State of North
Carolina.

         5.  Definitions.  Any defined  term used herein but not defined  herein
shall have such meaning ascribed to it in the Lease.

























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<PAGE>

IN WITNESS WHEREOF, the Parties have hereunto executed this document under seal
by their duly authorized corporate officers.

                                                 LANDLORD:

                                                 GUILFORD MILLS, INC.
ATTEST:

By:______________________________                BY:____________________________

Title:_______________Secretary                   Title:________________President

       (Corporate Seal)

                                                 TENANT:

                                                 UNITED STATES TRUST COMPANY OF
                                                    NEW YORK, not in its
                                                    individual-capacity, but
                                                    solely as the Kenansville
Attest:__________________________                   Owner Trustee
       Title: Assistant Secretary



                                                 BY:____________________________

                                                 Title: Vice President




The  undersigned  joins  in the  execution  hereof  solely  for the  purpose  of
consenting to the terms hereof as the sublessee of the Demised Premises.

                                                  COGENTRIX OF NORTH CAROLINA,
                                                  INC.

ATTEST:

By:_____________________________                  By:___________________________

Title:Assistant Secretary                         Title: SR Vice President

(Corporate Seal)






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