Document:

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                                                                    Exhibit 10.3

                            Dated as of April 7, 2000

                                    GUARANTY

                                       BY

                             COGENTRIX ENERGY, INC.
                          A North Carolina Corporation
                                  ("GUARANTOR")

                                   IN FAVOR OF

               LA COMPANIA DE ELECTRICIDAD DE SAN PEDRO DE MACORIS
                                A CAYMAN COMPANY
                                   ("OBLIGEE")

                                   RELATING TO

                     A POWER GENERATION FACILITY LOCATED AT

                              SAN PEDRO DE MACORIS,
                               DOMINICAN REPUBLIC

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                                    GUARANTY

This guaranty (the "Guaranty") is made as of April 7, 2000, by Cogentrix Energy,
Inc., a North Carolina corporation ("Guarantor"), in favor of La Compania de
Electricidad de San Pedro de Macoris, a Cayman company ("Obligee").

                                    RECITALS

A.       Obligee has entered into that certain Operation and Maintenance
         Agreement (as the same may be amended, modified or supplemented
         pursuant to its terms from time to time, the "O&M Agreement"), dated as
         of April 7, 2000, with Cogentrix de la Republica Dominicana, a Cayman
         company ("Obligor").

B.       Obligee and Obligor have agreed to enter into the O&M Agreement on the
         condition, among others, that Guarantor executes and delivers this
         Guaranty.

C.       Each of Guarantor and Obligor understands and has agreed that Obligee
         will be relying on Guarantor's undertakings in this Guaranty in
         entering into the O&M Agreement.

         NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, and to induce Obligee to enter into the O&M
Agreement with Obligor, Guarantor hereby agrees as follows:

1.       Definitions. Capitalized terms used but not defined in this Guaranty
         have the respective meanings given to them in the O&M Agreement.

2.       Guaranty.  Subject to Section 18 hereof:

         (a)      Guarantor unconditionally and irrevocably guarantees to
                  Obligee the due and punctual payment of any and every sum of
                  money necessary to cause the performance, observance and
                  compliance by Obligor of and with all its duties, obligations,
                  commitments, undertakings, warranties and indemnities under or
                  pursuant to the O&M Agreement (each an "Obligation" and
                  together the "Obligations"); and

         (b)      If and whenever Obligor defaults for any reason whatsoever in
                  the performance of any Obligation or fails to discharge any or
                  all of its liabilities under or pursuant to the O&M Agreement,
                  Guarantor shall forthwith upon demand unconditionally pay any
                  and every sum of money necessary to cause the performance,
                  observance and compliance by Obligee of such Obligation or
                  liability in regard to which such default has been made in the
                  manner prescribed by the O&M Agreement and shall indemnify and
                  keep indemnified Obligee against any and all losses, damages,
                  claims, costs, charges, and expenses howsoever arising from
                  Obligor's failure timely to perform such Obligation or meet
                  such liability.

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3.       Guarantor's Obligations.

         Guarantor's obligations under this Guaranty are unconditional and
         absolute and shall not be limited, affected or impaired by:

         (i)    any extension of time, waiver, indulgence, concession or consent
                given at any time to Obligor or any other person;
         (ii)   any alteration, amendment or modification to the O&M Agreement
                or to any security or guarantee provided in connection with the
                O&M Agreement and the Guarantor hereby agrees that the guaranty
                given hereunder shall extend to the obligations and
                responsibilities of Obligor under the O&M Agreement as so
                altered, amended or modified regardless of whether the Guarantor
                has been notified of or given its consent to such alteration,
                amendment or modification;
         (iii)  any dispute or disagreement under or in relation to the O&M
                Agreement;
         (iv)   the illegality, invalidity or unenforceability of or any defect
                in any provision of the O&M Agreement or any of Obligor's
                obligations under the O&M Agreement;
         (v)    any exchange or release of, or non-perfection of any Lien on or
                in, any collateral, or any release or amendment or waiver of or
                consent to any departure from any other guaranty, for all or any
                of the Obligations;
         (vi)   any permitted assignment of the benefit of the O&M Agreement;
         (vii)  the taking or existence of any security, right of action,
                guarantee or indemnity in connection with the O&M Agreement;
         (viii) any change in the status, function, control or ownership of
                Obligor; or
         (ix)   any other circumstance which might otherwise constitute a
                defense available to, or a discharge of, the Guarantor, or any
                other guarantor in respect of the Obligations or the Guarantor
                in respect of this Guaranty.

Without prejudice (i) to the waiver by the Guarantor as to its obligations
hereunder as set out in this Section 3, and (ii) the limitations on release,
discharge and impairment of the Guarantor hereunder as set out in Section 9
hereof, the Guarantor shall be entitled to assert as a defense to any claim for
payment in connection with the Obligations, (a) that such Obligations are not
currently due under the terms of the O&M Agreement, (b) that such Obligations
have previously been paid or performed in full, and (c) any defenses and
circumstances excusing payment or performance which the Obligor would be
entitled to assert under and pursuant to the O&M Agreement; provided, however,
that if any such defense or circumstance has been asserted by the Obligor and
the validity thereof has been resolved under and pursuant to the O&M Agreement,
the Guarantor shall not be entitled to reassert such defense or circumstance.

The Guarantor's obligations as guarantor are primary, independent of the
obligations of Obligor under the O&M Agreement, and are in addition to and
independent of any other security, right of action or other guarantee or
indemnity at any time existing in favor of the Obligee, whether from the
Guarantor or otherwise. A separate action may be brought to enforce this
Guaranty whether or not Obligor is made a party to such action; provided,
however, that no beneficiary of the Guaranty shall maintain simultaneous actions
against the Obligor and the Guarantor with respect to the same Obligation.

4.       Notices. Except as otherwise specified in this Guaranty, all notices
         and invoices under this Agreement shall be in writing and shall be
         deemed given when (i) (a) delivered in person or by international
         courier, or (b) sent by facsimile on the date of receipt of a

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         facsimile, provided the sender can and does provide evidence of
         successful transmission before 5:00 p.m. on a Business Day of the
         receiving party, and (ii) addressed as set forth below, or to such
         other address as may be hereafter designated by a party after providing
         written notice to the other party. Any notice or other communication
         sent by facsimile and received after 5:00 p.m. on a Business Day of the
         receiving party shall be deemed given on the next following Business
         Day of the receiving party.

         Guarantor:

                  Cogentrix Energy Inc.
                  9405 Arrowpoint Boulevard
                  Charlotte, NC 28273-8110
                  Attention:  General Counsel
                  Facsimile:  (704) 527-4413

         Obligor:

                  Cogentrix de la Republica Dominicana
                  c/o Pellerano & Herrera
                  Av. John F. Kennedy 10, piso 4
                  P.O. Box 20682
                  Santo Domingo, Republica Dominicana
                  Facsimile:  (809) 567-0773

         Obligee:

                  La Compania de Electricidad de San Pedro de Macoris
                  c/o Pellerano & Herrera
                  Av. John F. Kennedy 10, piso 4
                  P.O. Box 20682
                  Santo Domingo, Republica Dominicana
                  Facsimile:  (809) 567-0773

5.       Financial Statements. On the date hereof, and for so long as any of the
         Obligations under the O&M Agreement have not been satisfied in full,
         within one hundred twenty (120) Days after the close of each fiscal
         year of Guarantor, Guarantor shall deliver to Obligee its audited
         annual balance sheet for the fiscal year then ended; provided that
         Obligee shall treat such balance sheets as confidential.

6        Cooperation. Guarantor shall, upon request of Obligee, execute such
         further documents and instruments as Obligee may reasonably request
         from time to time to effect the purpose of this Guaranty.

7.       Existence, Conduct of Business. Guarantor shall maintain and preserve
         (a) its existence as a corporation, and (b) all material rights,
         privileges and franchises necessary in the normal conduct of its
         business to avoid any material and adverse change in its ability to
         satisfy the Obligations.

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8.       Representations and Warranties. Guarantor represents and warrants as
         follows:

         (a)      Guarantor is a corporation duly organized, validly existing
                  and in good standing under the laws of the State of North
                  Carolina and has full power, authority and ability to execute
                  and deliver this Guaranty and to satisfy the Obligations.

         (b)      Guarantor has duly authorized, executed and delivered this
                  Guaranty, and neither Guarantor's execution and delivery
                  hereof, nor the consummation of the transactions contemplated
                  hereby, nor its compliance with the terms of this Guaranty,
                  does or will (i) contravene its certificate of incorporation
                  or bylaws, or any law applicable to or binding on it or any of
                  its properties; (ii) contravene, or result in any material
                  breach of, or constitute any material default under, any
                  material agreement or instrument to which it is a party or by
                  which it or any of its properties are bound, or (iii) require
                  the consent or approval of any Person, which consent or
                  approval has not already been obtained.

         (c)      This Guaranty is a legal, valid and binding obligation of
                  Guarantor, enforceable against Guarantor in accordance with
                  the terms hereof, subject to bankruptcy, insolvency,
                  reorganization or similar laws affecting creditors' rights
                  generally or the application of general principals of equity
                  (regardless of whether considered in a proceeding at law or in
                  equity).

         (d)      There are no pending or, to the best of Guarantor's knowledge,
                  threatened actions or proceedings of any kind, including
                  without limitation actions or proceedings of or before any
                  arbitrator or any national, state or municipal court or other
                  local governmental authority, agency, or instrumentality
                  thereof to which Guarantor is subject or by which it or any of
                  its properties are or may be bound that, if determined
                  adversely, would reasonably be expected to have a material and
                  adverse effect on this Guaranty or on Guarantor's ability to
                  satisfy the Obligations.

9.       Waivers.

         (a)      Guarantor, to the extent it legally may do so, waives any
                  right now or hereafter existing requiring Obligee, as a
                  condition to proceeding against Guarantor hereunder, to: (i)
                  proceed against Obligor or any other Person; (ii) proceed
                  against or exhaust any security held from Obligor or from any
                  other Person; (iii) pursue any remedy in Obligee's power; or
                  (iv) give notice of any sale of personal property, collateral
                  or security held from Obligor or any other Person.

         (b)      GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING BY REASON OF
                  ANY DISABILITY, LEGAL LIMITATION, INCAPACITY OR SIMILAR
                  CIRCUMSTANCE RELATING TO OBLIGOR OR ANY OTHER PERSON.

         (c)      For so long as the Obligations shall not have been satisfied
                  in full, Guarantor shall not exercise any right of subrogation
                  to Obligor and waives all rights to enforce any remedy which
                  Obligee now or hereafter may have against Obligor for any

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                  performance by Guarantor under this Guaranty; provided that
                  such agreement not to exercise such rights shall not apply to
                  the extent any such exercise by Guarantor could not in
                  Obligee's reasonable opinion be expected to materially and
                  adversely affect Obligee's rights and interests under the O&M
                  Agreement.

         (d)      Guarantor shall not assert the bankruptcy, reorganization,
                  amalgamation or any analogous matter of either Obligee or
                  Obligor or any other Person as a defense to its obligations
                  hereunder, and further agrees that in the event a court orders
                  or causes a rescission or revision of the O&M Agreement, or
                  releases Obligor from any of its obligations under the O&M
                  Agreement by reason of bankruptcy or otherwise by operation of
                  law other than performance in full by Obligor in accordance
                  with the O&M Agreement, Guarantor shall remain fully liable
                  hereunder for the Obligations. Guarantor waives any rights or
                  defenses it may otherwise have pursuant to any action under
                  any relevant bankruptcy laws to the extent such waiver is
                  permitted by applicable law.

         (e)      Guarantor waives any and all demands for performance,
                  promptness, diligence, protest, presentment, demand, notices
                  of dishonor, notices of default or delinquency, notices of
                  non-payment, notice of acceptance, notice of the amounts from
                  time to time owing to Obligee under the O&M Agreement, or any
                  other facts that may come to Obligee's attention regarding the
                  financial position of Obligor.

         (f)      Guarantor waives, to the extent applicable and to the extent
                  permitted by applicable laws, all suretyship and Guarantor's
                  defenses.

10.      Payments. All payments made by Guarantor hereunder shall be made
         without withholding, deduction, counterclaim or set-off for any reason
         (including, without limitation, exchange charges, bank transfer charges
         or taxes (which term shall include all present and future taxes,
         levies, imposts, duties or charges)) of whatsoever nature or, if
         Guarantor is obliged to make any withholding or deduction, Guarantor
         shall gross up such payments so that the net sum received by Obligee
         shall include the sum demanded hereunder.

11.      Interest and Attorney's Fees. Any amount required to be paid by
         Guarantor to Obligee under this Guaranty shall bear interest at a rate
         of interest equal to the Base Rate plus two percent (2%) (or, if less,
         the maximum rate of interest allowed by applicable law) from the date
         due pursuant to the O&M Agreement until the date on which such amount
         is paid in full. All reasonable costs and expenses, including but not
         limited to court costs, reasonable attorneys' fees and expenses and
         collection costs, incurred by Obligee to enforce this Guaranty or the
         Obligations, shall be paid or reimbursed by Guarantor.

12.      Transfer of Interests. Neither this Guaranty nor the rights and
         obligations hereunder may be assigned by Obligee or Guarantor at any
         time without the prior written consent of the other; provided that
         Obligee shall have the right to assign this Guaranty without the prior

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         written consent of the Guarantor as collateral security pursuant to the
         Loan Agreements to be entered into by the Obligee.

13.      Severability. If any provision hereof is invalid or unenforceable in
         any jurisdiction, then, to the fullest extent permitted by law, (i) the
         other provisions hereof shall remain in full force and effect in such
         jurisdiction and shall be liberally construed in order to carry out the
         intentions of the Guarantor and the Obligee in respect of and including
         any provision hereof which is invalid or unenforceable as nearly as may
         be possible, and (ii) the invalidity or unenforceability of any
         provision hereof in any jurisdiction shall not affect the validity or
         enforceability of such provision in any other jurisdiction.

14.      Delay; Remedies Cumulative. No delay or failure by the parties to
         exercise any right or remedy hereunder shall be construed as a waiver
         of that right or remedy, and no individual waiver shall be construed as
         a general waiver of that right or remedy. All remedies under this
         Guaranty are cumulative and in addition to any other remedy provided
         hereunder, under the O&M Agreement or under applicable law.

15.      Reinstatement. This Guaranty shall continue to be effective or be
         reinstated, as the case may be, if at any time any payment to Obligee
         by or on behalf of Obligor or Guarantor in respect of the O&M Agreement
         or this Guaranty is rescinded or otherwise must be returned by Obligee
         in connection with any action or proceedings in connection with the
         insolvency, bankruptcy, reorganization, dissolution or liquidation of
         Obligor or otherwise by operation of law all as though such payment to
         Obligee had not been made.

16.      Modification. No modification shall be made of any part of this
         Guaranty except in writing and signed by Guarantor and Obligee.

17.      Miscellaneous. The provisions of this Guaranty will bind and benefit
         the successors and assigns of Guarantor and Obligee. Whenever the
         context requires, all terms used in the singular will be construed in
         the plural and vice versa, and each gender will include the other
         gender. The term "Obligor" means both Obligor and its successors and
         permitted assigns pursuant to the O&M Agreement, the term "Obligee"
         means Obligee and its successors and permitted assigns and the term
         "Guarantor" means Guarantor and its successors and permitted assigns.
         Captions used in this Guaranty are for convenience of reference only
         and shall not be used to construe the provisions hereof.

18.      Limitation on Liability. Notwithstanding anything to the contrary
         contained or implied herein, and if called upon to perform hereunder,
         it is expressly agreed that the Guarantor's obligations under this
         Guaranty shall be subject to the limitations set forth in the O&M
         Agreement (including, without limitation, Section 23 thereof), and the
         aggregate liability of Guarantor under this Guaranty shall not exceed
         the amount of three million Dollars (US$3,000,000), adjusted annually
         in accordance with the U.S. GDP Implicit Price Deflator for the twelve
         (12) month period preceding such adjustment, with the first such
         adjustment commencing on January 1, 1999.

19.      Release of Guaranty. Upon the earliest of (a) the replacement or
         substitution of Obligor by a Person that is not an Affiliate of
         Operator and all of the obligations and liabilities of

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         Obligor under or pursuant to the O&M Agreement having been fully
         discharged and there being no unresolved Dispute thereunder, and (b)
         the date on which the aggregate limit of Guarantor's liability set
         forth in Section 18 hereof shall have been reached, or (c) termination
         by Obligor or Obligee of the O&M Agreement (provided all of the
         Obligations and liabilities of Obligor under or pursuant to the O&M
         Agreement shall have been fully discharged and all Disputes thereunder
         resolved), Obligee shall immediately release this Guaranty in a written
         document reasonably satisfactory to Obligee and Guarantor.

20.      Counterparts. This Guaranty may be executed in any number of
         counterparts, each of which shall be an original but all of which when
         taken together shall constitute one instrument.

21.      Governing Law. This Guaranty shall be governed by and construed
         according to the laws of the State of New York, U.S.A.

22       Entire Agreement. This Guaranty constitutes the entire agreement
         between the parties hereto and supersedes any understandings,
         agreements or representations by or between such parties, written or
         oral, made at any time prior to the date hereof, that may relate in any
         way to the subject matter hereof.

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         IN WITNESS WHEREOF, Guarantor has executed this Guaranty by its
authorized officer as of the date first written above.

                                       COGENTRIX ENERGY, INC.

                                           By:    /s/ Dennis W. Alexander
                                                  ------------------------------
                                           Name:  Dennis W. Alexander
                                           Title: Group Senior Vice Pres.

                                       ACKNOWLEDGED AND AGREED BY:

                                           LA COMPANIA DE ELECTRICIDAD
                                           DE SAN PEDRO DE MACORIS

                                           By:    /s/ Andrew C. Aldridge
                                                  ------------------------------
                                           Name:  Andrew C. Aldridge
                                           Title: Director<PAGE>   1

                                                                    Exhibit 10.4

                      COGENTRIX CONTINGENT EQUITY GUARANTEE

                  COGENTRIX CONTINGENT EQUITY GUARANTEE (this "Guarantee") dated
as of April 7, 2000, made by COGENTRIX ENERGY, INC., a North Carolina
corporation (the "Guarantor"), in favor of (i) LA COMPANIA DE ELECTRICIDAD DE
SAN PEDRO DE MACORIS, a Cayman Islands company limited by shares (the
"Borrower") and (ii) THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK, as
offshore collateral agent under the Collateral Agency and Intercreditor
Agreement (in such capacity, the "Offshore Collateral Agent") (collectively, the
"Beneficiaries").

                                    RECITALS

                  A. In order to obtain construction and permanent financing for
the Project, the Borrower has, among other things, entered into the Common
Agreement, dated as of April 7, 2000 (the "Common Agreement"), among the
Borrower, the Lenders, IDB, ECGD, the Administrative Agents and the Collateral
Agents, pursuant to which the Lenders have agreed to make loans to the Borrower.

                  B. The Guarantor, as a Sponsor, will derive substantial
benefit from the extensions of credit to the Borrower described in the Common
Agreement.

                  C. It is a condition precedent to such extensions of credit
that the Guarantor shall have executed and delivered this Guarantee to the
Beneficiaries.

                  NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Guarantor hereby agrees with the Beneficiaries, as follows:

                  (i)I   Defined Terms. Capitalized terms not otherwise defined
herein shall have the meanings assigned to them in Annex A to the Common
Agreement or, if not defined therein, as defined in the Equity Contribution
Agreement (CIL) (the "Equity Contribution Agreement"). The Rules of
Interpretation and Construction set forth in Annex A to the Common Agreement
shall apply to this Guarantee.

                  II   Guarantee 2.0.1 The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment by Cogentrix
International, Ltd. ("Shareholder") when due of all Contingent Equity
Contributions required to be made by Shareholder pursuant to the terms of
Section 2.2 of the Equity Contribution Agreement (the "Guaranteed Obligations");
provided that the maximum amount that the Guarantor shall be required to pay
under this Section 2(a), in the aggregate, shall not exceed the Contingent
Equity Commitment (plus any additional amounts payable pursuant to paragraph (b)
below and Section 7). In case Shareholder shall fail to pay or perform duly,
completely and punctually any Guaranteed Obligation when and as the same shall

<PAGE>   2

be due and payable in accordance with the terms of the Equity Contribution
Agreement, the Guarantor shall immediately pay the same in accordance with the
terms of the Equity Contribution Agreement.

                  2.0.2 The Guarantor further agrees to pay any and all
expenses (including all documented and reasonable fees and disbursements of
counsel) which may be paid or incurred by any Beneficiary in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Guaranteed Obligations and/or enforcing any rights
with respect to, or collecting against, the Guarantor under this Guarantee. This
Guarantee shall remain in full force and effect until all of the Guaranteed
Obligations and all amounts owing under this paragraph (b) and Section 7 have
been paid in full, notwithstanding that from time to time prior thereto
Shareholder may be free from any Guaranteed Obligations, at which time this
Guarantee shall terminate.

                  2.0.3 No payment or payments made by Shareholder, the
Guarantor or any other Person or received or collected by any Beneficiary from
Shareholder, the Guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Guaranteed Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of the
Guarantor hereunder which shall, notwithstanding any such payment or payments,
remain liable for the Guaranteed Obligations until all of the Guaranteed
Obligations and all amounts owing under paragraph (b) above and Section 7 shall
have been paid in full, at which time this Guarantee shall terminate.

                  III   No Subrogation. Notwithstanding any payment or payments
made by the Guarantor hereunder or any set-off or application of funds of the
Guarantor by any Beneficiary, the Guarantor shall not be entitled to exercise or
enforce any subrogation rights of any Beneficiary against Shareholder or any
other Person or any collateral security or guarantee or right of offset held by
any Beneficiary for the payment of the Guaranteed Obligations, nor shall the
Guarantor seek or be entitled to seek any contribution or reimbursement from
Shareholder or any other Person in respect of payments made by the Guarantor
hereunder, until all amounts owing to the Beneficiaries by Shareholder on
account of the Guaranteed Obligations and all amounts owing hereunder are paid
in full. If any amount shall be paid to the Guarantor on account of such
subrogation rights at any time when all amounts owing hereunder shall not have
been paid in full, such amount shall be held by the Guarantor in trust for the
Beneficiaries, segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Offshore
Collateral Agent in the exact form received by the Guarantor (duly indorsed by
the Guarantor to the Offshore Collateral Agent, if required), to be applied
against the Guaranteed Obligations, whether matured or unmatured, in such order
as the Offshore Collateral Agent is instructed in writing by an Administrative
Agent and in accordance with the provisions of the Security Documents.

                  IV   Amendments, etc. with respect to the Guaranteed
Obligations; Waiver of Rights. The Guarantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against the Guarantor
and without notice to or further assent by the Guarantor, any demand for payment
of any of the Guaranteed Obligations made by any Beneficiary may be rescinded by
such party and any of the Guaranteed Obligations continued, and the Guaranteed
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to

<PAGE>   3

time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary, and any
Transaction Document may be amended, modified, supplemented or terminated, in
whole or in part, and any collateral security, guarantee or right of offset at
any time held by any Beneficiary for the payment of the Guaranteed Obligations
may be sold, exchanged, waived, surrendered or released. None of the
Beneficiaries shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Guaranteed Obligations or
for this Guarantee or any property subject thereto. When making any demand
hereunder against the Guarantor, any Beneficiary may, but shall be under no
obligation to, make a similar demand on Shareholder or any other guarantor, and
any failure by any Beneficiary to make any such demand or to collect any
payments from Shareholder or any other guarantor or any release of Shareholder
or such other guarantor shall not relieve the Guarantor, and shall not impair or
affect the rights and remedies, express or implied, or as a matter of law, of
any Beneficiary against the Guarantor. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.

                  V   Guarantee Absolute and Unconditional; Waiver of Rights.
The Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Guaranteed Obligations and notice of or proof of reliance
by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the
Guaranteed Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended or waived,
in reliance upon this Guarantee; and all dealings between Shareholder and the
Guarantor, on the one hand, and among the Beneficiaries, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Guarantee. To the extent permitted by applicable Requirements
of Law, the Guarantor waives diligence, presentment, protest, demand for payment
and notice of default or nonpayment to or upon Shareholder or the Guarantor with
respect to the Guaranteed Obligations. The Guarantor understands and agrees that
this Guarantee shall be construed as a continuing, absolute and unconditional
guarantee without regard to (a) the validity, regularity or enforceability of
the Equity Contribution Agreement or any other Transaction Documents, any of the
Guaranteed Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense
of payment or performance) which may at any time be available to or be asserted
by Shareholder or the Guarantor against any Beneficiary, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of Shareholder
or the Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of Shareholder for the Guaranteed Obligations, or
of the Guarantor under this Guarantee, in bankruptcy or in any other instance.
When pursuing its rights and remedies hereunder against the Guarantor, any
Beneficiary may, but shall be under no obligation to, pursue such rights and
remedies as it may have against Shareholder or any other Person or against any
collateral security or guarantee for the Guaranteed Obligations or any right of
offset with respect thereto, and any failure by any Beneficiary to pursue such
other rights or remedies or to collect any payments from Shareholder or any such
other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of Shareholder or any such
other Person or any such collateral security, guarantee or right of offset,
shall not relieve the Guarantor of any liability hereunder, and shall not impair
or affect the rights and remedies, whether express, implied or available as a
matter of law, of the Beneficiaries against the Guarantor. This Guarantee shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms upon the Guarantor and the successors and assigns thereof,
and shall inure to the benefit of the Beneficiaries, and their respective
successors, indorsees,

<PAGE>   4

transferees and assigns, until the obligations of the Guarantor under this
Guarantee shall have been satisfied by payment in full, notwithstanding that
from time to time during the term of the Equity Contribution Agreement, as the
case may be, Shareholder may be free from any Guaranteed Obligations.

                  VI   Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by any Beneficiary upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Shareholder or the
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, Shareholder or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.

                  VII  Payments. All payments hereunder shall be made in
Dollars in immediately available funds, at the place, time and manner specified
in the Equity Contribution Agreement, together with interest (in the amount and
to the extent required of Shareholder under the Equity Contribution Agreement)
on any Guaranteed Obligations due and owing from Shareholder, and shall be paid
without regard to any set-off, counterclaim, deduction or defense that the
Guarantor may have or assert.

                  VIII Representations, Warranties. In order to induce the
Beneficiaries to enter into the Financing Documents and to make the Loans, the
Guarantor hereby represents and warrants to each Beneficiary as follows, all of
which shall survive the execution and delivery of this Guarantee, the Equity
Contribution Agreement and the making of the Loans:

                  8.0.1 The Guarantor has been duly created and is validly
existing and in good standing as a corporation under the laws of the State of
North Carolina.

                  8.0.2 The Guarantor has all requisite power and authority,
and the legal right, to enter into, deliver and perform this Guarantee and to
consummate the transactions contemplated hereby and has taken all action
necessary to authorize the execution, delivery and performance of this Guarantee
and to consummate the transactions contemplated hereby. This Guarantee has been
duly executed and delivered by the Guarantor and constitutes a valid and legally
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally.

                  8.0.3 The execution, delivery and performance by the
Guarantor of this Guarantee and the consummation of the transactions
contemplated hereby (A) will not violate, result in the breach of, or constitute
a default under, any Requirement of Law or material Contractual Obligation
applicable to the Guarantor and (B) will not result in, or require, the creation
or imposition of any Lien on any property of the Guarantor pursuant to any such
Requirement of Law or Contractual Obligation.

                  8.0.4 Each financial statement of the Guarantor delivered
pursuant to Section 3.1(h) of the Common Agreement is true, complete and correct
in all material respects as of the date of such statement and fairly presents
the financial condition, results of operations and cash

<PAGE>   5

flow of the Guarantor as of the date thereof. Such financial statements have
been prepared in accordance with U.S. GAAP.

                  8.0.5 None of the Guarantor or any of its officers,
directors, employees, agents or Affiliates, acting on its behalf, has taken any
action in connection with the Project that violates the Foreign Corrupt
Practices Act of the United States or any similar law of the Dominican Republic,
including Article 179 of the Dominican Penal Code, or any other jurisdiction, if
applicable.

                  8.0.6 The Guarantor owns, directly or indirectly, all the
issued and outstanding Capital Stock of Shareholder.

                  (g) The claims and rights of each Beneficiary against the
Guarantor under this Guarantee shall not be subordinate to, and shall rank at
lease pari passu in all respects with, the claims and rights of any other
holders of senior unsecured indebtedness of the Guarantor.

                  IX  Affirmative Covenants of the Guarantor. The Guarantor
hereby, so long as this Guarantee is in effect and until all Guaranteed
Obligations and all amounts owing under Section 2(b) and Section 7 are paid in
full, covenants and agrees as follows:

                  9.0.1  it shall maintain its corporate existence;

                  9.0.2 it shall not cause or permit any transfer of its
Interest in the Borrower except as permitted pursuant to Section 5.2(v) of the
Common Agreement.

                  9.0.3 it shall not commence or join with any other Person in
commencing any proceeding against Shareholder under any bankruptcy,
reorganization, liquidation or insolvency law, or vote its shares of Capital
Stock of Shareholder to direct Shareholder to commence any proceeding with
respect to Shareholder under any bankruptcy, reorganization, liquidation or
insolvency law.

                  X   Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be considered as
properly given (a) if delivered in person, (b) if sent by overnight delivery
service (including Federal Express, ETA, Emery, DHL, Airborne and other similar
overnight delivery services), or (c) if sent by prepaid telex, facsimile or by
telecopy provided the sender can and does provide evidence of successful
transmission. Notice so given shall be effective upon receipt by the addressee,
except that communication or notice so transmitted by telex, facsimile or
telecopy shall be deemed to have been validly and effectively given on the day
(if a Business Day and, if not, on the next following Business Day) on which it
is validly transmitted if transmitted before 4:00 p.m., recipient's time, and if
transmitted after that time, on the next following Business Day; provided,
however, that if any notice is tendered to an addressee in accordance with this
Section 10 and the delivery thereof is refused by such addressee, such notice
shall be effective upon such tender. All such notices shall be addressed as
follows.

         if to the Guarantor:              Cogentrix Energy, Inc.
                                           9405 Arrowpoint Blvd.
                                           Charlotte, North Carolina 28273
                                           Attention:  General Counsel
                                           Telephone:  704-525-3800
                                           Telecopy:  704-529-1006

<PAGE>   6

         if to the Borrower:               La Compania de Electricidad de
                                              San Pedro de Macoris
                                           c/o Pellerano & Herrera
                                           Av. John F. Kennedy 10, piso 4
                                           Apartado Postal 20682
                                           Santo Domingo
                                           Republica Dominicana
                                           Attention:  Luis R. Pellerano P.
                                           Telephone:  809-541-5200
                                           Telecopy:  809-567-0773

         if to the Offshore
         Collateral Agent:                 The Bank of Nova Scotia Trust Company
                                              of New York
                                           One Liberty Plaza, 23rd Floor
                                           New York, NY  10006
                                           Attention:  Trust Administration
                                           Telephone:  212-225-5422
                                           Telecopy:  212-225-5279

The Guarantor or any Beneficiary may change its address for notices, requests
and demands by notice to the other parties in the manner provided in this
Section 10.

                  XI   Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

                  XII  Amendments in Writing; No Waiver; Cumulative Remedies
12.0.1 None of the terms or provisions of this Guarantee may be waived,
amended, supplemented or otherwise modified except in accordance with the
provisions of Section 11.1 of the Common Agreement.

                  12.0.2 None of the Beneficiaries shall, by any act (except by
a written instrument pursuant to Section 12(a) hereof), delay, indulgence,
omission or otherwise, be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Contingent Equity Contribution Payment Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of any Beneficiary, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any Beneficiary of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which such Beneficiary
would otherwise have on any future occasion.

                  12.0.3 The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.

<PAGE>   7

                  XIII Section Headings. The section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.

                  XIV  Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of the Guarantor and shall inure to the benefit
of the Beneficiaries and their successors and assigns.

                  XV   Governing Law. This Guarantee shall be governed by the
laws of the State of New York.

                  XVI  Authority of Offshore Collateral Agent. The Guarantor
acknowledges that the rights and responsibilities of the Offshore Collateral
Agent under this Guarantee with respect to any action taken by the Offshore
Collateral Agent or the exercise or non-exercise by the Offshore Collateral
Agent of any option, right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Guarantee shall, as between the
Offshore Collateral Agent and the other Beneficiaries, be governed by the
Security Documents and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Offshore Collateral
Agent and the Guarantor, the Offshore Collateral Agent shall be conclusively
presumed to be acting with full and valid authority so to act or refrain from
acting, and the Guarantor shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.

                  XVII Submission to Jurisdiction; Waivers. The Guarantor hereby
irrevocably and unconditionally:

                  17.0.1 submits for itself and its property in any legal
action or proceeding relating to this Agreement, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York located in the City of New
York and the federal courts of the U.S. for the Southern District of New York
located in the City of New York;

                  17.0.2 consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same; and

                  17.0.3 waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or proceeding
referred to in this Section 17 any special, exemplary, punitive or consequential
damages.

                  XVIII WAIVER OF JURY TRIAL. THE GUARANTOR AND EACH BENEFICIARY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.

<PAGE>   8

                  IN WITNESS WHEREOF, the undersigned has caused this Contingent
Equity Guarantee to be duly executed and delivered by its duly authorized
officer as of the day and year first above written.

                                        COGENTRIX ENERGY, INC.

                                        By:  /s/ Dennis W. Alexander
                                             -----------------------------------
                                             Name:  Dennis W. Alexander
                                             Title: Group Senior Vice President

ACCEPTED AND AGREED:

LA COMPANIA DE ELECTRICIDAD DE SAN
  PEDRO DE MACORIS

By:  /s/ Steven J. Doyon
     ------------------------------
     Name:  Steven J. Doyon
     Title: Director

THE BANK OF NOVA SCOTIA TRUST
  COMPANY OF NEW YORK, as
  Offshore Collateral Agent

By:  /s/ Warren A. Goshine
     ------------------------------
     Name:  Warren A. Goshine
     Title: Secretary

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