<PAGE>

                                                                    EXHIBIT 4.11
                              GUARANTEE AGREEMENT

                                    between

                            DUKE CAPITAL CORPORATION

                                             (as Guarantor)

                                      and

                            THE CHASE MANHATTAN BANK

                                               (as Trustee)

                          dated as of          ,
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                   ARTICLE I

                                  Definitions
                                                                            Page
                                                                            ----
 <C>           <S>                                                          <C>
 Section 1.01. Definitions................................................    1

                                   ARTICLE II

                              Trust Indenture Act

 Section 2.01. Trust Indenture Act; Application...........................    3
 Section 2.02. Lists of Holders of Securities.............................    3
 Section 2.03. Reports by the Trustee.....................................    4
 Section 2.04. Periodic Reports to Trustee................................    4
 Section 2.05. Evidence of Compliance with Conditions Precedent...........    4
 Section 2.06. Events of Default; Waiver..................................    4
 Section 2.07. Event of Default; Notice...................................    4
 Section 2.08. Conflicting Interests......................................    4

                                  ARTICLE III

                      Powers, Duties And Rights Of Trustee

 Section 3.01. Powers and Duties of the Trustee...........................    5
 Section 3.02. Certain Rights of Trustee..................................    6
 Section 3.03. Compensation; Fees; Indemnity..............................    7

                                   ARTICLE IV

                                    Trustee

 Section 4.01. Trustee; Eligibility.......................................    8
 Section 4.02. Appointment, Removal and Resignation of Trustee............    8

                                   ARTICLE V

                                   Guarantee

 Section 5.01. Guarantee..................................................    9
 Section 5.02. Waiver of Notice and Demand................................    9
 Section 5.03. Obligations Not Affected...................................    9
 Section 5.04. Rights of Holders..........................................   10
 Section 5.05. Guarantee of Payment.......................................   10
 Section 5.06. Subrogation................................................   10
 Section 5.07. Independent Obligations....................................   11

                                   ARTICLE VI

                                 Subordination

 Section 6.01. Subordination..............................................   11
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>
                                  ARTICLE VII

                                  Termination

                                                                           Page
                                                                           ----
 <C>           <S>                                                         <C>
 Section 7.01. Termination...............................................   11

                                  ARTICLE VIII

                                 Miscellaneous

 Section 8.01. Successors and Assigns....................................   11
 Section 8.02. Amendments................................................   11
 Section 8.03. Notices...................................................   12
 Section 8.04. Benefit...................................................   12
 Section 8.05. Interpretation............................................   12
 Section 8.06. Governing Law.............................................   13
</TABLE>

                                       ii
<PAGE>

                            CROSS-REFERENCE TABLE(1)

<TABLE>
<CAPTION>
          Section of                                            Section of
     Trust Indenture Act                                         Guarantee
     of 1939, as amended                                         Agreement
     -------------------                                     -----------------
     <S>                                                     <C>
     310(a).................................................  4.01(a)
     310(b).................................................  4.01(c), 2.08
     310(c).................................................  Inapplicable
     311(a).................................................  2.02(b)
     311(b).................................................  2.02(b)
     311(c).................................................  Inapplicable
     312(a).................................................  2.02(a)
     312(b).................................................  2.02(b)
     313   .................................................  2.03
     314(a).................................................  2.04
     314(b).................................................  Inapplicable
     314(c).................................................  2.05
     314(d).................................................  Inapplicable
     314(e).................................................  1.01, 2.05, 3.02
     314(f).................................................  2.01, 3.02
     315(a).................................................  3.01(d)
     315(b).................................................  2.07
     315(c).................................................  3.01
     315(d).................................................  3.01(d)
     315(e).................................................  Inapplicable
     316(a).................................................  5.04(i), 2.06
     316(b).................................................  5.03
     316(c).................................................  2.02
     317(a).................................................  Inapplicable
     317(b).................................................  Inapplicable
     318(a).................................................  2.01(b)
     318(b).................................................  2.01
     318(c).................................................  2.01(a)
</TABLE>
--------
(1) This Cross-Reference Table does not constitute part of the Guarantee
    Agreement and shall not affect the interpretation of any of its terms or
    provisions.
<PAGE>

                              GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of           ,     ,
is executed and delivered by DUKE CAPITAL CORPORATION, a Delaware corporation
(the "Guarantor"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as trustee (the "Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of DUKE CAPITAL FINANCING TRUST [ ], a Delaware statutory business
trust (the "Trust").

WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of           ,     , among the Trustee, the other
Trustees named therein, and Duke Capital Corporation, as Depositor, and the
holders of undivided beneficial interests in the assets of the Trust, the Trust
is issuing as of the date hereof $            aggregate liquidation amount of
its      % Trust Preferred Securities (the "Preferred Securities") representing
preferred undivided beneficial interests in the assets of the Trust and having
the terms set forth in the Trust Agreement;

WHEREAS, the Preferred Securities will be issued by the Trust and the proceeds
thereof will be used to purchase Junior Subordinated Notes (as defined in the
Trust Agreement) of the Guarantor, which will be held by the Trust as trust
assets; and

WHEREAS, as incentive for the Holders to purchase the Preferred Securities, the
Guarantor desires to irrevocably and unconditionally agree, to the extent set
forth herein, to pay to the Holders the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth
herein.

NOW, THEREFORE, in consideration of the payment for Preferred Securities by
each Holder thereof, which payment the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.

                                   ARTICLE I

                                  Definitions

Section 1.01. Definitions. As used in this Guarantee Agreement, the terms set
forth below shall, unless the context otherwise requires, have the following
meanings. Capitalized or otherwise defined terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Trust Agreement as
in effect on the date hereof.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust.
<PAGE>

"Event of Default" means a failure by the Guarantor to perform any of its
payment obligations under this Guarantee Agreement.

"Guarantee Payments" shall mean the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by or on behalf of the Trust: (i) any accrued and unpaid
distributions that are required to be paid on such Preferred Securities but if
and only if and to the extent the Trust has funds legally and immediately
available therefor to make such payment; (ii) the redemption price, including
all accrued and unpaid distributions to the date of redemption (the "Redemption
Price"), with respect to the Preferred Securities called for redemption by the
Trust but if and only if and to the extent that the Trust has funds legally and
immediately available therefor sufficient to make such payment; and (iii) upon
a voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Junior Subordinated Notes to
the holders of Trust Securities or the redemption of all of the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds legally and immediately available
therefor, and (b) the amount of assets of the Trust remaining available for
distribution to Holders in liquidation of the Trust (in either case, the
"Liquidation Distribution").

"Holder" shall mean any holder, as registered on the books and records of the
Trust, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.

"Indenture" means the Subordinated Indenture, dated as of April 1, 1998 among
the Guarantor, as issuer, and The Chase Manhattan Bank, as trustee, as
heretofore supplemented and amended and as supplemented by the
Supplemental Indenture dated as of           ,     , by and between the
Guarantor and The Chase Manhattan Bank, as trustee.

"Majority in liquidation amount of Preferred Securities" means a vote by
Holder(s) of Preferred Securities, voting separately as a class, of more than
50% of the liquidation amount of all Preferred Securities outstanding at the
time of determination.

"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, and
delivered to the Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee
Agreement shall include:

(a) a statement that each officer signing the Officers' Certificate has read
such covenant or condition and the definitions herein relating thereto;

(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in the Officers'
Certificate are based;

(c) a statement that, in the opinion of each such officer, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and

                                       2
<PAGE>

(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.

"Person" means any individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization or government or any
agency or political subdivision thereof.

"Responsible Officer" means, with respect to the Trustee, any vice president,
any assistant vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, any senior trust officer, trust officer or
assistant trust officer or any other officer of the Corporate Trust Department
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.

"Successor Trustee" means a successor Trustee possessing the qualifications to
act as Trustee under Section 4.01.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

"Trust Securities" means the Preferred Securities and the Common Securities.

"Trustee" means The Chase Manhattan Bank until a Successor Trustee has been
appointed and has accepted such appointment pursuant to the terms of this
Guarantee Agreement and thereafter means each such Successor Trustee.

                                   ARTICLE II

                              Trust Indenture Act

Section 2.01. Trust Indenture Act; Application.

(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions; and

(b) If and to the extent that any provision of this Guarantee Agreement limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

Section 2.02. Lists of Holders of Securities.

(a) The Guarantor shall furnish or cause to be furnished to the Trustee (i)
semiannually, not later than June 1 and December 1 in each year, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Holders ("List of Holders") as of a date not more than 15 days prior to the
time such list is furnished, and (ii) at such other times as the Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 15 days prior to the
time such list is furnished; provided that the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from

                                       3
<PAGE>

the most recent List of Holders given to the Trustee by the Guarantor or at any
time the Trustee is the Securities Registrar under the Trust Agreement. The
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.

(b) The Trustee shall comply with its obligations under Sections 311(a), 311(b)
and 312(b) of the Trust Indenture Act.

Section 2.03. Reports by the Trustee. Within 60 days after October 1 of each
year, the Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313(a) of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust Indenture
Act. The Trustee shall also comply with the other requirements of Section 313
of the Trust Indenture Act.

Section 2.04. Periodic Reports to Trustee. The Guarantor shall provide to the
Trustee such documents, reports and information as required by Section 314 of
the Trust Indenture Act (if any) in the form, in the manner and at the times
required by Section 314 of the Trust Indenture Act, and shall provide, within
120 days after the end of each fiscal year of the Guarantor, the compliance
certificate required by Section 314(a)(4) of the Trust Indenture Act in the
form and in the manner required by such Section.

Section 2.05. Evidence of Compliance with Conditions Precedent. The Guarantor
shall provide to the Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Guarantee Agreement that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.

Section 2.06. Events of Default; Waiver. The Holders of a Majority in
liquidation amount of Preferred Securities may, by vote, on behalf of all of
the Holders, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured and not to have
existed, for every purpose of this Guarantee Agreement, but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.

Section 2.07. Event of Default; Notice.

(a) The Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first-class postage prepaid, to the Holders, notices
of all Events of Default known to the Trustee, unless such defaults have been
cured before the giving of such notice, provided that the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders.

(b) The Trustee shall not be deemed to have knowledge of any Event of Default
unless the Trustee shall have received written notice, or a Responsible Officer
charged with the administration of the Trust Agreement shall have obtained
written notice, of such Event of Default.

Section 2.08. Conflicting Interests. The Trust Agreement, the Guarantee
Agreements dated as of June 1, 1998, September 15, 1998 and August 18, 1999,
between the Guarantor, as guarantor, and

                                       4
<PAGE>

The Chase Manhattan Bank, as trustee, and the Amended and Restated Trust
Agreements dated as of June 1, 1998, September 15, 1998 and August 18, 1999,
among the Guarantor, as depositor, Chase Manhattan Bank USA, National
Association, as Delaware trustee, Robert T. Lucas III and S.L. Love, as
administrative trustees, and The Chase Manhattan Bank, as property trustee,
shall be deemed to be specifically described in this Guarantee Agreement for
the purposes of clause (i) of the first proviso contained in Section 310(b) of
the Trust Indenture Act.

                                  ARTICLE III

                      Powers, Duties and Rights of Trustee

Section 3.01. Powers and Duties of the Trustee.

(a) This Guarantee Agreement shall be held by the Trustee for the benefit of
the Holders, and the Trustee shall not transfer this Guarantee Agreement to any
Person unless the Trustee shall assign rights hereunder to a Holder to the
extent such assignment is necessary to exercise such Holder's rights pursuant
to Section 5.04 or to a Successor Trustee upon acceptance by such Successor
Trustee of its appointment to act as Successor Trustee. The right, title and
interest of the Trustee shall automatically vest in any Successor Trustee, and
such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Trustee.

(b) If an Event of Default has occurred and is continuing, the Trustee shall
enforce this Guarantee Agreement for the benefit of the Holders.

(c) The Trustee, before the occurrence of any Event of Default and after the
curing or waiving of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.06), the Trustee shall
exercise such of the rights and powers vested in it by this Guarantee
Agreement, and use the same degree of care and skill in its exercise thereof,
as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.

(d) No provision of this Guarantee Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:

(i) prior to the occurrence of any Event of Default and after the curing or
waiving of all such Events of Default that may have occurred:

(A) the duties and obligations of the Trustee shall be determined solely by the
express provisions of this Guarantee Agreement, and the Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement; and

(B) in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates

                                       5
<PAGE>

or opinions furnished to the Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Guarantee Agreement;

(ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts upon which such
judgment was made;

(iii) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of a Majority in liquidation amount of the Preferred Securities
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee under this Guarantee Agreement; and

(iv) no provision of this Guarantee Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its rights or
powers, if the Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.

Section 3.02. Certain Rights of Trustee.

(a) Subject to the provisions of Section 3.01:

(i) the Trustee may rely and shall be fully protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties;

(ii) any direction or act of the Guarantor contemplated by this Guarantee
Agreement shall be sufficiently evidenced by an Officers' Certificate;

(iii) whenever, in the administration of this Guarantee Agreement, the Trustee
shall deem it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
is herein specifically prescribed) may, in the absence of bad faith on its
part, request and rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Guarantor;

(iv) the Trustee may consult with counsel of its choice, and the written advice
or opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such advice or
opinion; such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees; the Trustee shall have the right at any
time to seek instructions concerning the administration of this Guarantee
Agreement from any court of competent jurisdiction;

                                       6
<PAGE>

(v) the Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Guarantee Agreement at the request or direction of
any Holder, unless such Holder shall have provided to the Trustee such adequate
security and indemnity as would satisfy a reasonable person in the position of
the Trustee, against the costs, expenses (including attorneys' fees and
expenses) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by
the Trustee; provided that nothing contained in this Section 3.02(a)(v) shall
be taken to relieve the Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this Guarantee
Agreement;

(vi) the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;

(vii) the Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys, and
the Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder; and

(viii) whenever in the administration of this Guarantee Agreement the Trustee
shall deem it desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the Trustee (i) may
request instructions from the Holders, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in acting in accordance with such
instructions.

(b) No provision of this Guarantee Agreement shall be deemed to impose any duty
or obligation on the Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any jurisdiction in
which it shall be illegal, or in which the Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Trustee shall be construed to be a duty.

Section 3.03. Compensation; Fees; Indemnity.

The Guarantor agrees:

(a) to pay to the Trustee from time to time reasonable compensation for all
services rendered by the Trustee hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust);

(b) except as otherwise expressly provided herein, to reimburse the Trustee
upon request for all reasonable expenses, disbursements and advances incurred
or made by the Trustee in accordance with any provision of this Guarantee
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and

(c) to indemnify the Trustee for, and to hold the Trustee harmless against, any
and all loss, damage, claims, liability or expense incurred without negligence
or bad faith on its part, arising out of or in

                                       7
<PAGE>

connection with the acceptance or administration of this Guarantee Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder.


The provisions of this Section 3.03 shall survive the termination of this
Guarantee Agreement.

                                   ARTICLE IV

                                    Trustee

Section 4.01. Trustee; Eligibility.

(a) There shall at all times be a Trustee which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for the purposes of
this Section 4.01(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.

(b) If at any time the Trustee shall cease to be eligible to so act under
Section 4.01(a), the Trustee shall immediately resign in the manner and with
the effect set out in Section 4.02(c).

(c) If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act, subject to the rights of the Trustee under the penultimate
paragraph thereof.

Section 4.02. Appointment, Removal and Resignation of Trustee.

(a) Subject to Section 4.02(b), the Trustee may be appointed or removed without
cause at any time by the Guarantor.

(b) The Trustee shall not be removed until a Successor Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Trustee and delivered to the Guarantor.

(c) The Trustee appointed to office shall hold office until a Successor Trustee
shall have been appointed or until its removal or resignation. The Trustee may
resign from office (without need for

                                       8
<PAGE>

prior or subsequent accounting) by an instrument in writing executed by the
Trustee and delivered to the Guarantor, which resignation shall not take effect
until a Successor Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Trustee and delivered to
the Guarantor and the resigning Trustee.

(d) If no Successor Trustee shall have been appointed and accepted appointment
as provided in this Section 4.02 within 60 days after delivery to the Guarantor
of an instrument of resignation, the resigning Trustee may petition any court
of competent jurisdiction for appointment of a Successor Trustee. Such court
may thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Successor Trustee.

                                   ARTICLE V

                                   Guarantee

Section 5.01. Guarantee. The Guarantor irrevocably and unconditionally agrees
to pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by or on behalf of the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the Guarantor
may have or assert against any person. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Trust to pay such amounts to the
Holders.

Section 5.02. Waiver of Notice and Demand. The Guarantor hereby waives notice
of acceptance of this Guarantee Agreement and of any liability to which it
applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.

Section 5.03. Obligations Not Affected. The obligation of the Guarantor to make
the Guarantee Payments under this Guarantee Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:

(a) the release or waiver, by operation of law or otherwise, of the performance
or observance by the Trust of any express or implied agreement, covenant, term
or condition relating to the Preferred Securities to be performed or observed
by the Trust;

(b) the extension of time for the payment by the Trust of all or any portion of
the Distributions, Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or the extension of time
for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Junior Subordinated Notes permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;

                                       9
<PAGE>

(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;

(e) any invalidity of, or defect or deficiency in, the Preferred Securities;

(f) the settlement or compromise of any obligation guaranteed hereby or hereby
incurred; or

(g) any other circumstance whatsoever that might otherwise constitute a legal
or equitable discharge or defense of a guarantor, it being the intent of this
Section 5.03 that the obligations of the Guarantor hereunder shall be absolute
and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.

Section 5.04. Rights of Holders. The Guarantor expressly acknowledges that: (i)
this Guarantee Agreement will be deposited with the Trustee to be held for the
benefit of the Holders; (ii) the Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority
in liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee in respect of this Guarantee Agreement or to direct the exercise of
any trust or power conferred upon the Trustee under this Guarantee Agreement,
provided that such direction shall not be in conflict with any rule of law or
with this Guarantee Agreement, and could not involve the Trustee in personal
liability in circumstances where reasonable indemnity would not be adequate;
and (iv) any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement, without first
instituting a legal proceeding against or requesting or directing that action
be taken by the Trustee or any other person; it being understood and intended
that no one or more of such Holders shall have any right in any manner
whatsoever by virtue of, or by availing of, any provision of this Guarantee
Agreement to affect, disturb or prejudice the rights of any other of such
Holders or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Guarantee Agreement, except
in the manner herein provided and for the equal and ratable benefit of all of
such Holders.

Section 5.05. Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not
be discharged except by payment of the Guarantee Payments in full (without
duplication) or upon the distribution of Junior Subordinated Notes to the
Holders in exchange for all of the Preferred Securities.

Section 5.06. Subrogation. The Guarantor shall be subrogated to all (if any)
rights of the Holders against the Trust in respect of any amounts paid to the
Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts of Guarantee Payments are due
and unpaid under this Guarantee Agreement. If any amount shall be

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paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.

Section 5.07. Independent Obligations. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Trust with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.

                                   ARTICLE VI

                                 Subordination

Section 6.01. Subordination. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, including the
Junior Subordinated Notes, except those obligations or liabilities made pari
passu or subordinate by their terms, (ii) pari passu with the most senior
preferred stock now or hereafter issued by the Guarantor, and (iii) senior to
all common stock of the Guarantor. This Guarantee Agreement ranks pari passu
with each other substantially similar guarantee agreement entered into by the
Guarantor in respect of trust or other preferred securities issued by an
Affiliate of the Guarantor.

                                  ARTICLE VII

                                  Termination

Section 7.01. Termination. This Guarantee Agreement shall terminate and be of
no further force and effect upon: (i) full payment of the Redemption Price of
all Preferred Securities, (ii) the distribution of Junior Subordinated Notes to
the Holders in exchange for all of the Preferred Securities, or (iii) full
payment of the amounts payable in accordance with the Trust Agreement upon
liquidation of the Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with
respect to Preferred Securities or under this Guarantee Agreement.

                                  ARTICLE VIII

                                 Miscellaneous

Section 8.01. Successors and Assigns. All guarantees and agreements contained
in this Guarantee Agreement shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders then outstanding. Except in connection with a consolidation,
merger, conveyance, transfer, or lease involving the Guarantor that is
permitted under Article Eight of the Indenture, the Guarantor shall not assign
its obligations hereunder.

Section 8.02. Amendments. Except with respect to any changes which do not
materially and adversely affect the rights of Holders (in which case no consent
of Holders will be required), this Guarantee Agreement may only be amended with
the prior approval of the Holders of not less than

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66 2/3% in liquidation amount of all the outstanding Preferred Securities. The
provisions of Article Six of the Trust Agreement concerning meetings of Holders
shall apply to the giving of such approval.

Section 8.03. Notices. Any notice, request or other communication required or
permitted to be given hereunder shall be in writing, duly signed by the party
giving such notice, and delivered, telecopied or mailed by first-class mail as
follows:

(a) if given to the Guarantor, to the address set forth below or such other
address as the Guarantor may give notice of to the Trustee and the Holders:

Duke Capital Corporation
526 South Church Street
Charlotte, North Carolina 28202
Attention: Corporate Secretary

(b) if given to the Trust, in care of the Trustee, or to the Trustee at the
Trust's (and the Trustee's) address set forth below or such other address as
the Trustee on behalf of the Trust may give notice to the Holders:

Duke Capital Financing Trust [ ]
c/o The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Capital Markets Fiduciary Services

with a copy, in the case of a notice to the Trust (other than a notice from the
Guarantor), to the Guarantor.

(c) if given to any Holder, at the address set forth on the books and records
of the Trust.

All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first-class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

Section 8.04. Benefit. This Guarantee Agreement is solely for the benefit of
the Holders and, subject to Section 3.01(a), is not separately transferable
from the Preferred Securities.

Section 8.05. Interpretation. In this Guarantee Agreement, unless the context
otherwise requires:

(a) capitalized terms used in this Guarantee Agreement but not defined in the
preamble hereto have the respective meanings assigned to them in Section 1.01;

(b) a term defined anywhere in this Guarantee Agreement has the same meaning
throughout;

(c) all references to "the Guarantee Agreement" or "this Guarantee Agreement"
are to this Guarantee Agreement as modified, supplemented or amended from time
to time;

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<PAGE>

(d) all references in this Guarantee Agreement to Articles and Sections are to
Articles and Sections of this Guarantee Agreement unless otherwise specified;

(e) a term defined in the Trust Indenture Act has the same meaning when used in
this Guarantee Agreement unless otherwise defined in this Guarantee Agreement
or unless the context otherwise requires;

(f) a reference to the singular includes the plural and vice versa; and

(g) the masculine, feminine or neuter genders used herein shall include the
masculine, feminine and neuter genders.

Section 8.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK. THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY
COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS GUARANTEE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER, OR THAT THIS GUARANTEE AGREEMENT OR ANY DOCUMENT OR ANY
INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED
IN OR BY SUCH COURTS. THE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE
UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN
THIS GUARANTEE AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.

This instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.

                                          Duke Capital Corporation

                                          By: _________________________________

                                          Name: _______________________________

                                          Title: ______________________________



                                          The Chase Manhattan Bank,
                                           as Trustee

                                          By: _________________________________

                                          Name: _______________________________

                                          Title: ______________________________

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