Document:

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                                                                       Exh. 10.1

                                    GUARANTEE

         This GUARANTEE dated as of June 30, 1999 (as amended, supplemented or
otherwise modified from time to time, this "Guarantee"), is made by COGENTRIX
ENERGY, INC., a North Carolina corporation (the "Guarantor"), in favor of
RATHDRUM POWER, LLC, a Delaware limited liability company (the "Obligee"). This
Guarantee is delivered pursuant to Section 44 of the EPC Agreement described
below. Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned thereto in the EPC Agreement.

                               W I T N E S S E T H

                  A. Obligee intends to construct and own the Project.

                  B. Pursuant to the Turnkey Engineering, Procurement and
Construction Agreement dated as of June 30, 1999 (as amended, supplemented,
restated or otherwise modified from time to time, the "EPC Agreement"), between
Rathdrum Construction Company, Inc., a Delaware corporation (the "Contractor"),
and Obligee, Contractor has agreed to provide design, engineering, procurement,
construction, start-up and testing for the Project on a turn-key fixed-sum
basis.

                  C. Obligee has agreed to enter into the EPC Agreement on the
condition, among others, that Guarantor executes and delivers this Guarantee.

                  D. The Guarantor, as the indirect owner of all the outstanding
shares of the capital stock of Contractor, will derive substantial economic
benefit from the EPC Agreement and is willing irrevocably and unconditionally to
guarantee certain payment obligations of Contractor under the EPC Agreement as
provided herein.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises set forth above and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Guarantor hereby consents and agrees as follows:

1.       Guarantee.

         (a)      The Guarantor hereby unconditionally and irrevocably:

                           (i) guarantees to the Obligee, and its respective
                  successors and assigns, the prompt payment in full when due of
                  any and all monetary liabilities (subject to the limitations
                  of liability specified in Section 1(c) and Section 1(d) below)
                  payable by Contractor under the EPC Agreement (such
                  obligations being

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                  referred to herein as the "Guaranteed Obligations"), strictly
                  in accordance with the terms set forth therein; and

                           (ii) agrees that if Contractor shall fail to pay in
                  full when due any of the Guaranteed Obligations, the Guarantor
                  will pay the same within ten (10) Business Days after notice
                  as provided in Section 11, and that in the case of any
                  extension of time of payment of any of the Guaranteed
                  Obligations, the same will be promptly paid in full when due
                  in accordance with the terms of such extension.

         (b) All payments made pursuant to this Guarantee shall be made free and
clear of, and without deduction or withholding for, or on account of, any Taxes,
commissions, expenses or other charges.

         (c) Notwithstanding anything to the contrary in this Guarantee, the
liability of Guarantor under this Guaranty shall not exceed:

                           (i) in the case of Guaranteed Obligations arising out
                  of (A) Capacity Liquidated Damages payable by the Contractor
                  pursuant to Section 19.3 of the EPC Agreement or (B) Heat Rate
                  Liquidated Damages payable by the Contractor pursuant to
                  Section 19.4 of the EPC Agreement, in each case an amount
                  equal to Fifteen Million Nine Hundred Thousand Dollars
                  ($15,900,000), which limit shall be reduced dollar-for-dollar
                  by the amount of payments made by Contractor to Obligee in
                  respect of Capacity Liquidated Damages or Heat Rate Liquidated
                  Damages, as applicable;

                           (ii) in the case of Guaranteed Obligations arising
                  out of Schedule Liquidated Damages payable by the Contractor
                  pursuant to Section 20.2, an amount equal to Eight Million Six
                  Hundred Thousand Dollars ($8,600,000), which limit shall be
                  reduced dollar-for-dollar by the amount of payments made by
                  Contractor to Obligee in respect of Schedule Liquidated
                  Damages; and

                           (iii) in the aggregate with respect to all payments
                  arising out of Capacity Liquidated Damages, Heat Rate
                  Liquidated Damages and Schedule Liquidated Damages,
                  notwithstanding the limits specified in clauses (i) and (ii)
                  of this Section 1(c), an amount equal to twenty percent (20%)
                  of the Contract Amount, which limit shall be reduced
                  dollar-for-dollar by the amount of payments made by Contractor
                  to Obligee in respect of Capacity Liquidated Damages, Heat
                  Rate Liquidated Damages or Schedule Liquidated Damages.

         (d) The aggregate liability of Guarantor under this Guarantee shall not
exceed an amount equal to twenty-five percent (25%) of the Contract Amount,
which limit shall be reduced dollar-for-dollar by the amount of payments made by
Contractor in respect of its liabilities under the EPC Contract (as so reduced
from time to time, the "Maximum Guaranteed Amount"); provided that expenditures
by Contractor or Guarantor which are reimbursed or paid from the

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proceeds of Obligee's All-Risk insurance policy shall not be credited towards
the Maximum Guaranteed Amount under this Section 1(d).

         (e) This Guarantee is a guarantee of payment and not of collectibility
and is in no way conditioned on or contingent upon any attempt to enforce in
whole or in part Contractor's liabilities and obligations to Obligee subject to
Section 5(b) below and to the limitation of liability set forth in Section 1(c)
and 1(d) above. If Contractor shall fail to pay or perform any of the Guaranteed
Obligations to Obligee as and when they are due, Guarantor shall forthwith pay
(in immediately available funds) and perform such Guaranteed Obligations. Each
failure by Contractor to pay or perform any Guaranteed Obligations shall give
rise to a separate cause of action herewith, and separate suits may be brought
hereunder as each cause of action arises.

2.       Obligations Absolute and Unconditional.

         (a) The Guarantee is a primary obligation of Guarantor and shall be
irrevocable, absolute and unconditional and shall remain in full force and
effect until such time as all the covenants, terms and agreements of any kind or
nature whatsoever set forth in the EPC Agreement shall have been absolutely and
completely discharged and performed; and the Guaranteed Obligations of Guarantor
shall not be affected, modified or impaired upon the happening from time to time
of any event, including, without limitation, any one or more of the following
whether or not with notice to or consent of any of Guarantor or Contractor:

                           (i) the compromise, settlement, release (unless based
                  upon performance by Contractor), change, modification or
                  termination of any of the covenants, terms or agreements of
                  Contractor set forth in the EPC Agreement;

                           (ii) the waiver by Obligee of the payment,
                  performance or observance of any of the covenants, terms or
                  agreements of Contractor set forth in the EPC Agreement;

                           (iii) the extension of time for payment of any
                  amounts due or of the time for performance of any of the
                  covenants, terms or agreements of Contractor set forth in the
                  EPC Agreement;

                           (iv) the modification or amendment (whether material
                  or otherwise) of any covenants, terms and agreements set forth
                  in the EPC Agreement;

                           (v) the failure, omission, delay or lack on the part
                  of Obligee to enforce, ascertain or exercise any right, power
                  or remedy under or pursuant to the terms of the EPC Agreement
                  or this Guarantee;

                           (vi) the bankruptcy, insolvency or other similar or
                  dissimilar failure or financial disability of Contractor;

                           (vii) the addition, substitution or partial or entire
                  release (unless based upon performance by Contractor), of any
                  guarantor, maker or other party

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                  (including Contractor) primarily or secondarily liable or
                  responsible for the performance and observance of any of the
                  covenants, terms or agreements set forth in the EPC Agreement
                  or by any extension, waiver, amendment or thing whatsoever
                  which may release a guarantor (other than performance);

                           (viii) the invalidity, nonbinding effect or
                  unenforceability of any covenant, term or agreement set forth
                  herein or in the EPC Agreement (other than with respect solely
                  to such covenant, term or agreement); or

                           (ix) the addition, substitution, subordination, or
                  partial or entire release of any security for the performance
                  and observance of any of the covenants, terms or agreements
                  set forth in the EPC Agreement.

         (b) This is a continuing Guarantee and all obligations to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. In the event that, notwithstanding the
provisions of Section 2(a) hereof, this Guarantee shall be deemed revocable in
accordance with applicable law, then any such revocation shall become effective
only upon receipt by Obligee of written notice of revocation signed by
Guarantor. No revocation or termination hereof shall affect in any manner rights
arising under this Guarantee with respect to Guaranteed Obligations (i) arising
prior to receipt by Obligee of written notice of such revocation or termination,
and the sole effect of revocation and termination hereof shall be to exclude
from this Guarantee those Guaranteed Obligations thereafter arising which are
unconnected with Guaranteed Obligations theretofore arising or transactions
theretofore entered into or (ii) arising as a result of an Event of Default
under the EPC Agreement occurring by reason of the revocation or termination of
this Guarantee.

3.       Representations and Warranties. Guarantor makes the representations and
warranties set forth below to Obligee as of the date hereof (all of which shall
survive the execution and delivery of this Guarantee):

         (a) Guarantor is duly formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the power and
authority to execute and deliver this Guarantee, to perform its obligations
hereunder and to own and operate its properties and to carry out its business as
now being conducted, and Guarantor is duly qualified and authorized to do
business and in good standing in all other jurisdictions in which it transacts
business or in which the failure to do so could have a material adverse effect
on its business;

         (b) Guarantor has taken all necessary corporate and legal action to
authorize the execution and delivery of this Guarantee and the performance of
its obligations hereunder;

         (c) all governmental authorizations and actions necessary in connection
with the execution and delivery by Guarantor of this Guarantee and the
performance of its obligations hereunder have been obtained or performed and
remain valid and in full force and effect;

         (d) this Guarantee has been duly executed and delivered by Guarantor
and constitutes the legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance

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with the terms of this Guarantee, subject to applicable bankruptcy, insolvency
and other similar laws affecting creditors' rights generally;

         (e) the execution, delivery and performance of this Guarantee (i) do
not and shall not contravene any provisions of Guarantor's certificate of
incorporation or bylaws, or any law, rule, regulation, order, judgment or decree
applicable to or binding on Guarantor or any of its affiliates or properties;
(ii) do not and shall not contravene, or result in any breach of or constitute
any default under, any agreement or instrument to which Guarantor is a party or
by which Guarantor or any of its properties may be bound or affected; (iii) do
not and shall not require the consent of any person, or declaration of filing
with any person, under any existing law or agreement which has not already been
obtained; and (iv) do not and shall not result in or require the creation of any
lien upon or with respect to any property now or hereafter owned by Guarantor
(except as contemplated by this Guarantee);

         (f) there is no pending or, to the best of Guarantor's knowledge,
threatened action or proceeding affecting Guarantor before any court,
governmental agency or arbitrator, which might reasonably be expected to
materially and adversely affect the financial condition, results of operations,
business or prospects of Guarantor or the ability of Guarantor to perform its
obligations under this Guarantee;

         (g) Guarantor possesses all franchises, certificates, licenses, permits
and other governmental authorizations and approvals necessary for it to own its
properties, conduct its businesses and perform its obligations under this
Guarantee;

         (h) Guarantor is not an investment company or a company controlled by
an investment company, within the meaning of the Investment Company Act of 1940;

         (i) Guarantor has established adequate means of obtaining financial and
other information pertaining to the businesses, operations and condition
(financial and otherwise) of Contractor and its properties on a continuing
basis, and Guarantor now is and hereafter shall be completely familiar with the
businesses, operations and condition (financial and otherwise) of Contractor and
its properties;

         (j) (i) Guarantor is not, and shall not as a result of the execution
and delivery of this Guarantee, be rendered insolvent, (ii) Guarantor does not
intend to incur, or believe it is incurring, obligations beyond its ability to
pay and (iii) Guarantor's property remaining after the delivery and performance
of this Guarantee shall not constitute unreasonably small capital; and

         (k) all information, reports and other data with respect to Guarantor
furnished to Obligee were, at the time the same were so furnished, complete and
correct in all material respects, to the extent necessary to give Obligee a true
and accurate description of the subject matter therein. No fact is known to
Guarantor which materially or adversely affects or in the future may (so far as
it can reasonably foresee) materially and adversely affect the business, assets
and liabilities, financial condition, results of operations or business
prospects of Guarantor which has not been otherwise disclosed in writing to
Obligee.

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4.       Covenants. So long as any Guaranteed Obligations are outstanding,
Guarantor agrees that:

         (a) it shall maintain in full force and effect all consents of any
governmental or other authority that are required to be obtained by it with
respect to this Guarantee and shall obtain any that may become necessary in the
future;

         (b) it shall comply in all material respects with all applicable laws
and orders to which it may be subject if failure so to comply would materially
impair its ability to perform its obligations under this Guarantee;

         (c) promptly, and in any event within thirty (30) business days after
obtaining knowledge thereof, it shall give to Obligee notice of the occurrence
of any event or of any litigation or governmental proceeding pending (i) against
Guarantor or any of its affiliates which could affect the business, operations,
property, assets or condition (financial or otherwise) of Guarantor so as to
materially and adversely affect the ability of Guarantor to perform its
obligations hereunder or (ii) with respect to this Guarantee, which event or
pending proceeding is likely to materially and adversely affect the business,
operations, property, assets or condition (financial or otherwise) of Guarantor
taken as a whole; and

         (d) it shall comply with its certificate of incorporation.

5.       Waiver.

         (a) To the extent permitted by applicable law, Guarantor hereby waives
and relinquishes all rights and remedies accorded by applicable law to sureties
or guarantors and agrees not to assert or take advantage of any such rights or
remedies, including without limitation (i) any right to require Obligee to
proceed against Contractor or any other person or to proceed against or exhaust
any security held by Obligee at any time or to pursue any other remedy in
Obligee's power before proceeding against Guarantor, (ii) any defense that may
arise by reason of the incapacity, lack of power or authority, death,
dissolution, merger, termination or disability of Contractor or any other Person
or the failure of Obligee to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of Contractor or any other
Person, (iii) demand, presentment, protest and notice of any kind, including,
without limitation, notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of Contractor, Obligee, any endorser or creditor of Contractor or Guarantor or
on the part of any other person under this or any other instrument in connection
with any obligation or evidence of indebtedness held by Obligee as collateral or
in connection with any Guaranteed Obligations, (iv) any defense based upon an
election of remedies by Obligee, (v) any defense based on any offset against any
amounts which may be owed by any Person to Guarantor for any reason whatsoever,
other than offsets to which Contractor is entitled under the EPC Agreement, (vi)
any defense based on any act, failure to act, delay or omission whatsoever on
the part of Contractor or the failure by Contractor to do any act or thing or to
observe or perform any covenant, condition or agreement to be observed or
performed by it under the EPC Agreement, (vii) any defense based upon any
statute or rule of law which

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provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal, provided that, upon
payment in full of the Guaranteed Obligations, this Guarantee shall no longer be
of any force or effect, (viii) any duty on the part of Obligee to disclose to
Guarantor any facts Obligee may now or hereafter know about Contractor,
regardless of whether Obligee has reason to believe that any such facts
materially increase the risk beyond that which Guarantor intends to assume, or
has reason to believe that such facts are unknown to Guarantor, or has a
reasonable opportunity to communicate such facts to Guarantor, since Guarantor
acknowledges that it is fully responsible for being and keeping informed of the
financial condition of Contractor and of all circumstances bearing on the risk
of non-payment of any obligations and liabilities hereby guaranteed, (ix) the
fact that Guarantor may at any time in the future dispose of all or part of its
direct or indirect interest in Contractor, (x) any defense based on any change
in the time, manner or place of any payment under, or in any other term of, the
EPC Agreement or any other amendment, renewal, extension, acceleration,
compromise or waiver of or any consent or departure from the terms of the EPC
Agreement, (xi) any defense arising because of Obligee's election, in any
proceeding instituted under the Federal Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Law, or equivalent provisions of the laws
or regulations of any other jurisdiction with respect to actions or other
proceedings, or any successor provision of law of similar import, (xii) any
defense based upon any borrowing or grant of a security interest under Section
364 of the Bankruptcy Law, or equivalent provisions of the laws or regulations
of any other jurisdiction with respect to actions or other proceedings, or any
successor provision of law of similar import, or (xiii) any protection it may be
entitled to under Sections 365 (c)(1) and 365 (c)(2) of the Bankruptcy Law, or
equivalent provisions of the laws or regulations of any other jurisdiction with
respect to actions or other proceedings, or any successor provision of law of
similar import.

         (b) Except as expressly waived hereunder, Guarantor retains the right
to assert and take advantage of any right or remedy not expressly waived
pursuant hereto, including without limitation the defenses, offsets or claims
available to Contractor under the EPC Agreement but excluding any defense, right
or remedy that would otherwise be available to Guarantor (but not Contractor) by
virtue of Guarantor's status as a surety or guarantor hereunder.

6.       No Subrogation. Unless and until all obligations of Contractor under
the EPC Agreement have been indefeasibly paid in full, Guarantor shall not have
any right of subrogation and Guarantor waives any claim, right or remedy which
Guarantor may now have or hereafter acquire against Contractor that arises
hereunder and/or from the performance by Guarantor hereunder whether or not such
claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise.

7.       Bankruptcy.

         (a) So long as any of the Guaranteed Obligations are owed to Obligee,
Guarantor shall not, without the prior written consent of Obligee, commence, or
join with any other Person in commencing, any bankruptcy, reorganization, or
insolvency proceeding against Contractor. The obligations of Guarantor under
this Guarantee shall not be altered, limited or affected by any proceeding,
voluntary or involuntary, involving the bankruptcy, reorganization, insolvency,

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receivership, liquidation or arrangement of Contractor, or by any defense which
Contractor may have by reason of any order, decree or decision of any court or
administrative body resulting from any such proceeding.

         (b) So long as any Guaranteed Obligations are owed to Obligee, to the
extent of such Guaranteed Obligations, Guarantor shall file, in any bankruptcy
or other proceeding in which the filing of claims is required or permitted by
law, all claims which Guarantor may have against Contractor relating to any
indebtedness of Contractor to Guarantor, and hereby assigns to Obligee all
rights of Guarantor thereunder. If Guarantor does not file any such claim,
Obligee, as attorney-in-fact for Guarantor, is hereby authorized to do so in the
name of Guarantor or, in Obligee's discretion, to assign the claim to a nominee
and to cause proofs of claim to be filed in the name of Obligee's nominee. The
foregoing power of attorney is coupled with an interest and cannot be revoked.
Obligee or its nominee shall have the sole right to accept or reject any plan
proposed in any such proceeding and to take any other action which a party
filing a claim is entitled to take. In all such cases, whether in
administration, bankruptcy or otherwise, the person authorized to pay such a
claim shall pay the same to Obligee to the extent of any Guaranteed Obligations
which then remain unpaid, and, to the full extent necessary for that purpose,
Guarantor hereby assigns to Obligee all of Guarantor's rights to all such
payments or distributions to which Guarantor would otherwise be entitled;
provided, however, that Guarantor's obligations hereunder shall not be satisfied
except to the extent that Obligee receives cash by reason of any such payment or
distribution. If Obligee receives anything hereunder other than cash, the same
shall be held as collateral for amounts due under this Guarantee.

8.       Successions or Assignments.

         (a) This Guarantee shall inure to the benefit of the successors or
assigns of Obligee who shall have, to the extent of their interest, the rights
of Obligee hereunder. Obligee is entitled to assign its rights under this
Guarantee to any person without the consent of Guarantor.

         (b) This Guarantee is binding upon Guarantor and its successors and
assigns. Guarantor is not entitled to assign its obligations hereunder to any
other person without the written consent of Obligee, and any purported
assignment in violation of this provision shall be void.

9.       Waivers.

         (a) No delay on the part of Obligee in exercising any of its rights
(including those hereunder) and no partial or single exercise thereof and no
action or non-action by Obligee with or without notice to Guarantor or anyone
else shall constitute a waiver of any rights or shall affect or impair this
Guarantee.

         (b) GUARANTOR HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTEE OR RELATING TO THE
SUBJECT MATTER OF THIS GUARANTEE AND THE RELATIONSHIP BETWEEN GUARANTOR AND
OBLIGEE THAT IS BEING

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ESTABLISHED. GUARANTOR ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT OBLIGEE HAS ALREADY RELIED ON THE
WAIVER IN ENTERING INTO THIS GUARANTEE, AND THAT OBLIGEE SHALL CONTINUE TO RELY
ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. GUARANTOR FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

10.      Interpretation. The section headings in this Guarantee are for
convenience of reference only and shall not affect the meaning or construction
of any provision hereof.

11.      Notices. All notices in connection with this Guarantee shall be given
by telex or cable or by notice in writing hand-delivered or sent by facsimile
transmission or by certified mail return-receipt requested (airmail, if
overseas), postage prepaid. All such notices shall be sent to the appropriate
telex or telecopier number or address, as the case may be, set forth in Section
15 below or to such other number or address as shall have been subsequently
specified by written notice to the other party, and shall be sent with copies,
if any, as indicated below. All such notices shall be effective upon receipt,
and confirmation by answerback of any such notice so sent by telex shall be
sufficient evidence of receipt thereof.

12.      Amendments. This Guarantee may be amended only with the written consent
of the parties hereto.

13.      Jurisdiction; Governing Law.

         (a) Any action or proceeding relating in any way to this Guarantee may
be brought and enforced in the courts of the State of New York sitting in the
County of New York or of the United States for the Southern District of New
York. Any such process or summons in connection with any such action or
proceeding may be served by mailing a copy thereof by certified or registered
mail, or any substantially similar form of mail, or in any other manner
permitted by law addressed to Guarantor as provided for notices hereunder.

         (b) This Guarantee and the rights and obligations of Obligee and of
Guarantor shall be governed by and construed in accordance with the law of the
State of New York without reference to principles of conflicts of laws (other
than Section 5-1401 of the New York General Obligations Law).

14.      Integration of Terms. This Guarantee contains the entire agreement
between Guarantor and Obligee relating to the subject matter hereof and
supersedes all oral statements and prior writings with respect hereto.

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15.      Addresses.

         The address of Guarantor for notices is:

                  Cogentrix Energy, Inc.
                  9405 Arrowpoint Boulevard
                  Charlotte, North Carolina 28273-8110
                  Attention:  General Counsel
                  Telephone Number:  (704) 525-3800
                  Telecopier Number: (704) 529-1006

         The address of Obligee for notices is:

                  Rathdrum Power, LLC
                  9405 Arrowpoint Boulevard
                  Charlotte, North Carolina 28273-8110
                  Attention:  General Counsel
                  Telephone Number:  (704) 525-3800
                  Telecopier Number: (704) 529-1006

                  with a copy to:

                  Avista Rathdrum, LLC
                  201 W. North River Drive, Suite 610
                  Spokane, Washington 99201
                  Attn:  President
                  Phone:  (509) 495-8700
                  Telefax:(509) 495-8103

                  and

                  Cogentrix of Rathdrum, Inc.
                  9405 Arrowpoint Boulevard
                  Charlotte, North Carolina 28273-8110
                  Attn:  General Counsel
                  Phone:  (704) 525-3800
                  Telefax:(704) 529-1006

16.      Interest; Collection Expenses. Any amount required to be paid by
Guarantor pursuant to the terms hereof shall bear interest at the maximum rate
permitted by law from the date due until paid in full. If Obligee is required to
pursue any remedy against Guarantor hereunder, Guarantor shall pay to Obligee,
upon demand, all reasonable attorneys' fees and expenses and all other costs and
expenses incurred by Obligee in enforcing this Guarantee.

17.      Reinstatement of Guarantee. This Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time any payment to or
on behalf of Contractor or to

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Obligee by Contractor under the EPC Agreement or by Guarantor hereunder is
rescinded or must otherwise be returned by Obligee upon the insolvency,
bankruptcy, reorganization, dissolution or liquidation of Contractor or
otherwise, all as though such payment had not been made.

18.      Further Assurances. Guarantor and Obligee hereby agree to execute and
deliver such other instruments, and take such other action, as the other party
may reasonably request in furtherance of the transactions contemplated by this
Guarantee.

19.      Tax. In addition to any amount due to Obligee by Contractor under the
EPC Agreement, and payable by Guarantor under the terms of this Guarantee,
Guarantor shall be liable for any duty, impost, levy, charge, fee, or tax of
whatsoever nature ("Tax") levied or imposed by a governmental entity on or with
regard to any payment hereunder unless the payment, if made by Contractor, would
itself have been subject to the Tax. If under applicable law Guarantor is unable
to pay the Tax and Obligee is required to pay the Tax, the amount to be paid to
Obligee hereunder shall be increased by an amount sufficient so that such
payment, net of the Tax, would equal the payment Obligee would have received
from Contractor, net of any Taxes applicable to payment from Contractor to
Obligee. Obligee agrees to take all reasonable steps to mitigate or eliminate
any tax payable by Guarantor under this Section 19.

20.      Counterparts. The Guarantee may be executed in one or more duplicate
counterparts, and when executed and delivered by all of the parties listed below
shall constitute a single binding agreement.

         IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be duly
executed and delivered as of the day and year first written above.

                             COGENTRIX ENERGY, INC.,
                             as Guarantor

                             By:
                                ------------------------------
                                Name:
                                Title:

Agreed to and accepted by:

RATHDRUM POWER, LLC,
as Obligee

By:      Cogentrix of Rathdrum, Inc.,
         its Manager

By:
   ---------------------------
         Name:
         Title:

                                       11<PAGE>   1

                                                                    Exh. 10.1(a)

                          FIRST AMENDMENT TO GUARANTEE

                  This FIRST AMENDMENT TO GUARANTEE (this "First Amendment"),
dated as of March 8, 2000, by Cogentrix Energy, Inc., a North Carolina
corporation ("Guarantor"), and Rathdrum Power, LLC, a Delaware limited liability
company ("Obligee").

                              W I T N E S S E T H:

                  WHEREAS, Pursuant to the Turnkey Engineering, Procurement and
Construction Agreement dated as of June 30, 1999 (as amended, supplemented,
restated or otherwise modified from time to time, the "EPC Agreement"), between
Rathdrum Construction Company, Inc., a Delaware corporation ("Contractor") and
Obligee, Contractor has agreed to provide design, engineering, procurement,
construction, start-up and testing for the Project on a turn-key fixed-sum
basis.

                  WHEREAS, Guarantor is the 100% indirect owner of Contractor.

                  WHEREAS, Guarantor has executed and delivered a Guarantee in
favor of Obligee dated as of June 30, 1999, (as amended, supplemented, restated
or otherwise modified from time to time, the "Parent Guarantee"); and

                  WHEREAS Guarantor and Obligee desire to amend the Parent
Guarantee pursuant to the terms set forth herein.

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree to amend the Parent
Guarantee as follows:

                                A G R E E M E N T:

         SECTION 1. DEFINITIONS AND INTERPRETATION. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned to them in Section
1.1 of the EPC Agreement.

         SECTION 2. GUARANTEE. Section 1 of the Parent Guarantee is hereby
amended by:

         (a) replacing the phrase "any and all monetary liabilities" in Section
1(a)(i) thereof with the phrase "any and all payments that are required to be
made by Contractor", and by deleting the phrase "payable by Contractor" in such
Section 1(a)(i)";

         (b) replacing the phrase "ten (10) Business days" in Section 1(a)(ii)
thereof with the phrase "five (5) Business Days";

<PAGE>   2

         (c) deleting the phrase "an amount equal to twenty percent (20%) of the
Contract Amount" in Section 1(c)(iii) thereof and replacing it with the
following:

         "an amount equal to twenty three percent (23%) of the Contract Amount";
and

         (d) deleting Section 1(d) in its entirety and replacing it with the
following:

                  (e) The aggregate liability of Guarantor under this Guarantee,
         including, without limitation, its maximum liability for liquidated
         damages set forth in Section 1(c)(iii), shall not exceed an amount
         equal to one hundred percent (100%) of the Contract Amount, which limit
         shall be reduced dollar-for-dollar by the amount of payments made by
         Contractor in respect of its liabilities under the EPC Contract (as so
         reduced from time to time, the "Maximum Guaranteed Amount"). Any
         expenditures by Contractor or Guarantor which are reimbursed or paid
         from the proceeds of Obligee's All-Risk insurance policy shall not be
         credited towards the Maximum Guaranteed Amount under this Section 1(d).

         SECTION 3. OBLIGATIONS ABSOLUTE AND UNCONDITIONAL. Section 2(b) of the
Parent Guarantee is hereby amended by deleting the second and third sentences
thereof.

         SECTION 4. MISCELLANEOUS.

         (a) Execution and Effectiveness of this First Amendment. This First
Amendment is executed and shall be construed as a first amendment to the Parent
Guarantee and, as provided in the Parent Guarantee, this First Amendment forms a
part thereof. This First Amendment shall be effective as of the date hereof upon
the execution and delivery of this First Amendment by Guarantor and Obligee.

         (b) Representations and Warranties. Guarantor and Obligee hereby
represent and warrant to each other that (i) all consents, approvals and
authorizations necessary for such Person's execution, delivery and performance
of this First Amendment have been obtained or made and (ii) this First Amendment
has been duly executed and delivered by, and constitutes a legal, valid and
binding obligation of, such Person enforceable against such Person in accordance
with its terms.

         (c) Waiver. This First Amendment is made in amendment and modification
of, but not extinguishment of, the obligations set forth in the Parent Guarantee
and, except as specifically modified pursuant to the terms of this First
Amendment, the terms and conditions of the Parent Guarantee remain in full force
and effect.

         (d) Counterparts. This First Amendment may be executed in counterparts,
all of which shall constitute one agreement binding on all parties hereto and
shall have the same

                                       2

<PAGE>   3

force and effect as an original instrument, notwithstanding that each party may
not be signatories to the same original or the same counterpart.

         (e) Severability. If any term or provision of this First Amendment or
the application thereof to any Person or circumstance is held to be illegal,
invalid or unenforceable under any present or future Applicable Law or by any
governmental authority, (i) such term or provision shall be fully severable,
(ii) this First Amendment shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (iii) the
remaining provisions of this First Amendment shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) the parties shall negotiate in
good faith to enter into such modifications of this First Amendment as may be
necessary to preserve the economic and other benefits of this First Amendment to
the affected party to the greatest extent possible and permissible.

         (f) Governing Law. This First Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York (exclusive of
conflicts of laws provisions).

         (g) Headings. The headings contained in this First Amendment are solely
for the convenience of the parties hereto and should not be used or relied upon
in any manner in the construction or interpretation of this First Amendment.

                                       3

<PAGE>   4

         IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed by their respective authorized officers as of the day and
year first above written.

                             COGENTRIX ENERGY, INC.

                             By:
                                --------------------------------------
                                Name:
                                Title:

                             RATHDRUM POWER, LLC

                             By:    Cogentrix of Rathdrum, Inc.,
                                    its Manager

                                     By:
                                        ------------------------------
                                        Name:
                                        Title:

                                       4

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