THIRD AMENDMENT TO GROUND LEASE

         THIRD  AMENDMENT TO GROUND  LEASE dated as of December  29, 2000,  (the
"Third  Amendment"),  to the Ground Lease dated as of November  30,  1984,  (the
"Ground Lease") by and between  GUILFORD MILLS,  INC.  ("Landlord"),  a Delaware
corporation,  and COGENTRIX EASTERN CAROLINA,  LLC ("Tenant"),  a North Carolina
limited  liability  company and the  successor  to  Cogentrix  Carolina  Leasing
Corporation.  Terms used  herein that are not defined are used as defined in the
Ground Lease.

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

         WHEREAS, the Landlord and Tenant have agreed to extend the initial term
of the Ground Lease.

         NOW,  THEREFORE,  in consideration of the mutual  agreements  contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Landlord and Tenant hereby agree as follows:

         1.  Amendments to Ground Lease.  The Ground Lease is hereby  amended by
deleting Section 2.1 in its entirety and substituting the following therefor:

                  Section 2.1 The initial  term of this Lease shall  commence as
         of the 30th day of November, 1984 (the "Commencement Date") and, unless
         extended pursuant to the following  Section 2.2.1 through 2.2.4,  shall
         end at midnight on March 31, 2002.

         2. Full  Force and  Effect.  Except as  modified  hereby,  by the First
Amendment to Ground Lease dated December 16, 1991,  and by the Second  Amendment
to Ground  Lease dated July 6, 2000,  the Ground  Lease has not been  amended or
modified and is and shall remain in full force and effect.

         3. Definitions. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to them in the Ground Lease.

         4. Counterparts.  This Third Amendment may be executed in any number of
counterparts,  each of which when so executed and  delivered  shall be deemed an
original,  and it shall not be necessary in making proof of this Third Amendment
to produce or account for more than one such counterpart.

         5.  Governing  Law.  This  Third  Amendment  and the Ground  Lease,  as
amended,  shall be deemed to be  contracts  made  under the laws of the State of
North  Carolina and for all purposes  shall be construed in accordance  with the
laws of the State of North Carolina.


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IN WITNESS WHEREOF,  the undersigned have each caused this Third Amendment to be
duly executed by the duly  authorized  officers and their  corporate  seal to be
here unto affixed and attached, all as of the year and day first above written.

                             GUILFORD MILLS, INC.

                             By: __________________________________

                             Title: _______________________________

ATTEST:

By: __________________________________

Title:________________________________

             [Corporate Seal]



                             COGENTRIX EASTERN CAROLINA, LLC
                             By: Cogentrix of North Carolina, Inc. , its Manager

                             By: __________________________________

                             Title: _______________________________

ATTEST:

By: __________________________________

Title:________________________________

             [Corporate Seal]











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