<PAGE>

                                                                    Exhibit 4-N



                              GUARANTEE AGREEMENT

                                    between

                            DUKE ENERGY CORPORATION

                                (as Guarantor)

                                      and

                           THE CHASE MANHATTAN BANK

                                 (as Trustee)

                             Dated as of     ,
<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.

                                       i
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                       Page
 <C>              <S>                                                                  <C>
 ARTICLE I        Definitions........................................................    1

    Section 1.01. Definitions........................................................    1

 ARTICLE II       Trust Indenture Act................................................    3

    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..............................................    5

 ARTICLE III      Powers, Duties and Rights of Trustee...............................    5

    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............................................................    8

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

 ARTICLE V        Guarantee..........................................................    9

    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......................................................   11

    Section 6.01. Subordination......................................................   11

 ARTICLE VII      Termination........................................................   11

    Section 7.01. Termination........................................................   11

 ARTICLE VIII     Miscellaneous......................................................   11

    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>

                              GUARANTEE AGREEMENT

  This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of       ,   , is
executed and delivered by DUKE ENERGY CORPORATION, a North Carolina 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 ENERGY CAPITAL 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 Energy 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.

                                       1
<PAGE>

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

  "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 December 1, 1997,
among the Guarantor, as issuer, and The Chase Manhattan Bank, as trustee, as
supplemented to the date hereof, including 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;

                                       2
<PAGE>

    (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

    (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 (a)
semiannually, not later than June 1 and December 1 in each year, a list, in
such form as the Trustee may reasonably

                                       3
<PAGE>

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 (b) 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 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.

                                       4
<PAGE>

  (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 Guarantee Agreements dated as of
December 8, 1997 and June 14, 1999, between the Guarantor, as guarantor, and
The Chase Manhattan Bank, as trustee, the Amended and Restated Trust Agreements
dated as of December 8, 1997 and June 14, 1999, among the Guarantor, as
depositor, Chase Manhattan Bank Delaware, as Delaware trustee, Robert T. Lucas
III and S.L. Love, as administrative trustees, and The Chase Manhattan Bank, as
property trustee, and the Trust Agreement, 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

                                       5
<PAGE>

    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 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

                                       6
<PAGE>

  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;

    (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

                                       7
<PAGE>

  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
  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.

                                       8
<PAGE>

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

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  terms of the Preferred Securities, or any action on the part of the Trust
  granting indulgence or extension of any kind;

    (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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<PAGE>

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 preferred stock
or preferred stock A 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 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.

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<PAGE>

  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 Energy Corporation
           526 South Church Street
           Charlotte, North Carolina 28202
           Attn: 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 Energy Capital Trust [ ]
           c/o The Chase Manhattan Bank
           450 West 33rd Street
           New York, New York 10001
           Attn: 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;

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

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<PAGE>

    (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.

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

                                          Duke Energy Corporation

                                          By: _________________________________
                                             Name:
                                             Title:

                                          The Chase Manhattan Bank, as Trustee

                                          By: _________________________________
                                             Name:
                                             Title:

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