<PAGE>   1
                                                                   EXHIBIT 10.23

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                                   GUARANTEE
                         dated as of December 23, 1997
                                      from
                             CHASE INDUSTRIES INC.
                                   as Obligor
                                       to
                              ABN AMRO BANK N.V.,
                                    as Agent

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<PAGE>   2

                                   GUARANTEE

                 THIS GUARANTEE (this "Guarantee"), dated as of December 23,
1997, is made by CHASE INDUSTRIES INC., a Delaware corporation ("Obligor"), in
favor of ABN AMRO BANK N.V., as Agent for the Participants referred to below.

                              W I T N E S S E T H:

         WHEREAS, ABN AMRO Bank, N.V., a bank organized under the laws of The
Netherlands (together with its permitted successors and assigns, the "Lessor")
is to acquire title to certain property to be delivered and installed on real
property as contemplated by the Participation Agreement, dated as of the date
hereof (as amended, modified or supplemented after the date hereof, the
"Participation Agreement"), among the Lessor, Chase Brass & Copper Company,
Inc., a Delaware corporation (together with its permitted successors and
assigns, the "Lessee"), ABN AMRO Bank N.V., as a participant and agent (in such
capacities, a "Participant" and the "Agent", respectively) and the other
Participants a party thereto, which Property shall in turn be leased to the
Lessee; and

         WHEREAS, it is a condition precedent to the obligations of the Lessor,
the Agent and the Participants under the Participation Agreement that the
Obligor shall have executed and delivered this Guarantee to the Agent; and

         WHEREAS, it is in the best interests of Obligor to execute this
Guarantee inasmuch as Obligor derives synergistic benefits from its affiliation
with Lessee and Obligor will derive substantial direct and indirect benefits
from the transactions in favor of Lessee evidenced by the Operative Documents.

         NOW, THEREFORE, in consideration of the premises and to induce the
Lessor to enter into the Lease and the other Operative Documents to which it is
a party and the Participants to enter into the Participation Agreement and to
purchase their Participation Interests, the Obligor hereby agrees as follows:

                                   ARTICLE I
                                 DEFINED TERMS

                 SECTION 1.1.     Certain Terms.  The following terms (whether
or not underscored) when used in this Guarantee, including its preamble and
recitals, shall have the following respective meanings:

                 "Agent" is defined in the first recital.

                 "Guarantee" is defined in the preamble.

                 "Lessee" is defined in the first recital.





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                 "Obligations" means each and every obligation, liability, or
indebtedness, of any nature whatsoever, of Lessee (in any capacity), whether
direct or indirect, primary or secondary, joint or several, absolute or
contingent, due or to become due, now existing or hereafter incurred, which may
arise under, out of, or in connection with, the Participation Agreement or any
other Operative Document, or any other document made, delivered or given in
connection therewith (and whether on account of Advances, interest, premium,
reimbursement obligations, guarantee obligations, fees or disbursements of
counsel to the Agent or to the Participants, or otherwise, and including
without limitation all obligations, liabilities, and indebtedness arising or
asserted after the filing of any petition in bankruptcy or the commencement of
any insolvency, reorganization or like proceeding relating to any party to any
Operative Document, whether or not a claim for post-filing or post-petition
interest or other payments is allowed in such proceeding).

                 "Obligor" is defined in the preamble.

                 "Obligor Guarantee Event of Default" shall mean any of the
events specified in Section 6.1; provided, however, that any requirement for
the giving of notice, the lapse of time, or both, or any other condition, has
been satisfied.

                 "Participation Agreement" is defined in the first recital.

                 "Unmatured Event of Default" shall mean an event, act,
condition or occurrence which with the giving of notice or the lapse of time
(or both) would become an Obligor Guarantee Event of Default.


                                   ARTICLE II
                             ADDITIONAL DEFINITIONS

                 SECTION 2.1.   Additional Definitions.

                 Unless otherwise defined herein, terms defined in Appendix 1
to the Participation Agreement and used herein shall have the respective
meanings set forth in Appendix 1 to the Participation Agreement.

                 The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision of this Guarantee; Section references
are to this Guarantee unless otherwise specified; and, the word, "including,"
is not a term of limitation and means "including without limitation."

                 The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.





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                                  ARTICLE III

                              GUARANTY PROVISIONS

                 SECTION 3.1.     Guarantee.  Obligor hereby absolutely,
unconditionally and irrevocably

                 (a)      guarantees to the Agent, for the benefit of the
         Participants and their respective successors, indorsees, transferees
         and assigns, the full and punctual payment and performance when due,
         whether at stated maturity, by required prepayment, declaration,
         acceleration, demand or otherwise, of all Obligations (including,
         without limitation, all such amounts which would become due but for
         the operation of the automatic stay under Section 362(a) of the United
         States Bankruptcy Code, 11 U.S.C. Section 362(a), or any similar
         foreign law to which any Obligor is subject), and

                 (b)      indemnifies and holds harmless each of the Agent and
         each of the Participants for any and all costs and expenses (including
         reasonable attorneys' fees and expenses) incurred by any of the Agent
         or any Participant in enforcing any rights under this Guarantee.

provided, however, that Obligor shall only be liable under this Guarantee for
the maximum amount of such liability that can be hereby incurred without
rendering this Guarantee, as it relates to Obligor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount.  This Guarantee constitutes a guaranty of payment when due and
not of collection, and Obligor specifically agrees that it shall not be
necessary or required that any Agent or any Participant exercise any right,
assert any claim or demand or enforce any remedy whatsoever against the Lessee
or any other obligor (or any other Person) before or as a condition to the
obligations of Obligor hereunder.

                 SECTION 3.2.     Acceleration of Guarantee.  Obligor agrees
that, in the event of the dissolution or insolvency of the Lessee or Obligor,
or the inability or failure of the Lessee or Obligor to pay debts as they
become due, or an assignment by the Lessee or Obligor for the benefit of
creditors, or the commencement of any case or proceeding in respect of the
Lessee or Obligor under any bankruptcy, insolvency or similar laws, and if such
event shall occur at a time when any of the Obligations (including any future
Rent) may not then be due and payable, Obligor will pay to the Lenders
forthwith the full amount which would be payable hereunder by Obligor if all
such Obligations were then due and payable.

                 SECTION 3.3.     Guarantee Absolute, etc.  This Guarantee
shall in all respects be a continuing, absolute, unconditional and irrevocable
guaranty of payment, and shall remain in full force and effect until all
Obligations have been paid and performed in full, all obligations of Obligor
hereunder shall have been paid and performed in full, and all Operative
Documents (including all indemnity and reimbursement provisions thereof) shall
have terminated.  Obligor guarantees that the Obligations will be paid and
performed strictly in accordance with the terms of each of the Operative
Documents under which they arise, regardless of any law, regulation or





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order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of any of the Participants, Agent, Lessor, or Lessee with
respect thereto.  The liability of Obligor under this Guarantee shall be
absolute, unconditional and irrevocable irrespective of:

                 (a)      any lack of validity, legality or enforceability of
         any of the Operative Documents;

                 (b)      the failure of any of the Agent, any Participant, or
         Lessor

                          (i)     to assert any claim or demand or enforce any
                 right or remedy against the Lessee or any other Person
                 (including any other guarantor or obligor) under the
                 provisions of any of the Operative Documents or otherwise, or

                          (ii)    to exercise any right or remedy against any
                 other obligor on, guarantor of, or collateral securing, any
                 Obligation;

                 (c)      any change in the time, manner or place of payment or
         performance of, or in any other term of, all or any of the Obligations
         or any other extension, compromise or renewal of any Obligation;

                 (d)      any reduction, limitation, impairment or termination
         of the Obligations for any reason, including any claim of waiver,
         release, surrender, alteration or compromise, and the liability of
         Obligor under this Guarantee shall not be subject to (and Obligor
         hereby waives any right to or claim of) any defense or set- off,
         counterclaim, recoupment or termination whatsoever by reason of the
         invalidity, illegality, nongenuiness, irregularity, compromise,
         unenforceability of, or any other event or occurrence affecting, the
         Obligations or otherwise;

                 (e)      any amendment to, rescission, waiver, or other
         modification of, or any consent to departure from, any of the terms of
         any of the Operative Documents;

                 (f)      any addition, exchange, release, surrender or
         nonperfection of any collateral, or any amendment to or waiver or
         release or addition of, or consent to departure from, any other
         guaranty held by any of the Agent, any Participant, or Lessor securing
         any of the Obligations; or

                 (g)      any other circumstance which might otherwise
         constitute a defense available to, or a legal or equitable discharge
         of, the Lessee, any surety or Obligor.

                 SECTION 3.4.     Reinstatement, etc.  Obligor agrees that this
Guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any of the Agent, any Participant,
or Lessor upon the insolvency, bankruptcy or reorganization of the Lessee or
otherwise, all as though such payment had not been made.





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                 SECTION 3.5.     Waiver, etc.  Obligor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Obligations and any requirement that any of the Agent, any
Participant, or Lessor protect, record, secure, perfect or insure any lease,
mortgage, security interest, or Lien, or any property subject thereto, or
exhaust any right or take any action against the Lessee, any other Obligor or
any other Person (including any other guarantor) or any collateral, securing
the Obligations.

                 SECTION 3.6.     Subrogation.  Notwithstanding any payment or
payments made by the Obligor hereunder or any setoff or application of funds of
the Obligor by the Agent, the Obligor shall be entitled to be subrogated to any
of the rights of the Agent against the Lessor, the Lessee or any other Person
or any collateral security or guarantee or right of offset held by the Agent
for the payment of the Obligations, and the Obligor shall be entitled to seek
any contribution or reimbursement from the Lessor, the Lessee or any other
Person in respect of payments made by the Obligor hereunder, after, but not
before, all amounts owing to the Agent hereunder are paid in full.  If any
amount shall be paid to the Obligor on account of such subrogation rights at
any time when all of the Obligations and all amounts owing hereunder shall not
have been paid in full, such amount shall be held by the Obligor in trust for
the Agent, segregated from other funds of the Obligor, and shall, forthwith
upon receipt by the Obligor, be turned over to the Agent in the exact form
received by the Obligor (duly indorsed by the Obligor to the Agent, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as the Agent may determine.

                 SECTION 3.7.     Successors, Transferees and Assigns; etc.
This Guarantee shall:

                 (a)      be binding upon Obligor, and its successors,
         transferees and assigns; and

                 (b)      inure to the benefit of and be enforceable by each of
         the Participants, the Agent, on behalf of itself and the Participants,
         and each of their respective successors, transferees, and assigns.

                 SECTION 3.8.     Payments Free and Clear of Taxes, etc.
Obligor hereby agrees that:

                 (a)      Any and all payments made by Obligor hereunder shall
         be made free and clear of, and without deduction for, any and all
         present or future Impositions.  In the event that any withholding or
         deduction from any payment to be made by Obligor hereunder is required
         in respect of any Impositions pursuant to any applicable law, rule or
         regulation, then Obligor will

                          (i)     pay directly to the relevant authority the
                 full amount required to be so withheld or deducted;





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                          (ii)    promptly forward to Agent an official receipt
                 or other documentation satisfactory to Agent evidencing such
                 payment to such authority; and

                          (iii)   pay to the Agent such additional amount or
                 amounts as is necessary to ensure that the net amount actually
                 received by Agent, on behalf of itself or the relevant
                 Participant will equal the full amount Agent or such relevant
                 Participant would have received had no such withholding or
                 deduction been required.

Without prejudice to the survival of any other agreement of Obligor hereunder,
the agreements and obligations of Obligor contained in this Section 3.8 shall
survive the payment and performance in full of the Obligations and the
termination, cancellation or expiration of all of the Operative Documents..

                 SECTION 3.9.     Judgment.  Obligor hereby agrees that:

                 (a)      If, for the purposes of obtaining judgment in any
         court, it is necessary to convert a sum due hereunder in Dollars into
         another currency, Obligor agrees, to the fullest extent permitted by
         law, that the rate of exchange used shall be that which in accordance
         with normal banking procedures the Agent could purchase Dollars with
         such other currency on the Business Day preceding that on which final
         judgment is given.

                 (b)      The obligation of Obligor in respect of any sum due
         from it to Agent or any Participant shall, notwithstanding any
         judgment in a currency other than Dollars, be discharged only to the
         extent that on the Business Day following receipt by Agent or such
         Participant of any sum adjudged to be so due in such other currency
         Agent or such Participant may, in accordance with normal banking
         procedures, purchase Dollars with such other currency; in the event
         that the Dollars so purchased are less than the sum originally due to
         Agent or such Participant in Dollars, Obligor, as a separate
         obligation and notwithstanding any such judgment, hereby indemnifies
         and holds harmless Agent or such Participant against such loss, and if
         the Dollars so purchased exceed the sum originally due to Agent or
         such Participant, Agent or such Participant shall remit to Obligor
         such excess.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

                 SECTION 4.1.     Representations and Warranties.  Obligor
hereby represents and warrants to Agent and each Participant as set forth in
this Article.

                 SECTION 4.1.1.   Organization, etc.  Obligor is a corporation
validly organized and existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction





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where the nature of its business requires such qualification, except for those
jurisdictions in which the failure to be so qualified could not reasonably be
likely to result in a Material adverse effect.

                 SECTION 4.1.2.   Due Authorization, Non-Contravention, etc.
The execution, delivery and performance by Obligor of this Guarantee have been
duly authorized by all necessary corporate action, and do not

                 (a)      contravene Obligor's bylaws, articles or certificate
         of incorporation, or other organizational documents;

                 (b)      contravene any contractual restriction (other than
         any contravention that would not result in a Material adverse effect),
         law or government regulation or court decree or order binding on or
         affecting Obligor; or

                 (c)      result in, or require the creation or imposition of,
         any Lien on any of Obligor's properties.

                 SECTION 4.1.3.   Authorization, Approval, etc.  No
authorization, approval or other action by, and no notice to or filing with,
any governmental authority, regulatory body or any other Person is required for
the due execution, delivery or performance by Obligor of this Guarantee.

                                   ARTICLE V
                                COVENANTS, ETC.

                 SECTION 5.1.     Covenants, etc.  The Guarantor shall comply
with each of the following covenants as if made herein in favor of Lessor,
Agent, and each Participant (and the Guarantor hereby promises, covenants and
restates to Lessor, Agent and each Participant those covenants) contained in
Sections 8.1(g), (h), 8.2(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k),
(l), (m), (n), (o), (p), (q), (r), (s) and 8.3 (a), (b), (c), (d), (e), (f),
(g), (h) and (i) of the Credit Agreement which, together with their associated
definitions, are incorporated herein by reference, mutatis mutandis; provided,
that

                 (i)      the covenants contained in Section 8.2(i) of the
         Credit Agreement shall terminate as it applies under this Guarantee
         and no longer be deemed incorporated into this Guarantee at such time
         as the Credit Agreement shall have expired or terminated in accordance
         with the terms thereof or otherwise as a result of full payment of all
         amounts due thereunder;

                 (ii)     the covenants contained in Section 8.2(j) and 8.2(p)
         of the Credit Agreement shall apply only to activities described
         therein undertaken or effected by





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         Lessee or any subsidiary of Lessee (provided that Guarantor shall
         continue to be subject to the provisions of Section 8.2(j)(2) of the
         Credit Agreement);

                 (iii)    Lessor, Agent and each Participant agree to treat any
         and all information delivered pursuant to any such covenants in
         accordance with Section 15.13 of the Participation Agreement; and

                 (iv)     the following terms when used in the Credit Agreement
         shall have the meanings set forth opposite such terms for purposes of
         the Operative Documents:

<TABLE>
<CAPTION>
         Credit Agreement                         Equivalent Operative
             Definition                            Document Definition
         ----------------                         -------------------
         <S>                                      <C>
         "Borrower"                               "Obligor"
         "Loans"                                  "Lease Balance"
         "Default"                                "Default"
         "Event of Default"                       "Event of Default"
         "Closing Date"                           "Closing Date"
         "Material Adverse Change"                "Material Adverse Effect";
</TABLE>

                 (ii)     neither the limitation on indebtedness to be created,
         incurred, assumed or suffered set forth in Section 8.2(d) of the
         Credit Agreement nor any other provision of the Credit Agreement shall
         be deemed to restrict the Guarantor's ability to execute, deliver and
         perform its obligations under this Guarantee and the other Operative
         Agreements; and

                 (iii)    Guarantor shall provide prompt written notice to each
         of Agent, Lessor, and each Participant in the event of any amendment
         or modification to, any expiration or termination of or any waiver of
         any provision of, the Credit Agreement, or any breach, default, or
         event of default of or under the Credit Agreement.

                                   ARTICLE VI
                          EVENTS OF DEFAULT; REMEDIES

                 SECTION 6.1.     Events of Default.  Each of the following
events shall constitute an "Obligor Guarantee Event of Default" (whether any
such event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any governmental
authority) and each such Obligor Guarantee Event of Default shall continue so
long as, but only as long as, it shall not have been remedied:

                 SECTION 6.1.1.   The Obligor shall default in the payment when
due of any amount owing hereunder; or





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                 SECTION 6.1.2.   The Obligor shall fail to observe or perform
any term, covenant or condition of the Obligor under this Guarantee (other than
those described in Section 6.1.1), or any representation or warranty set forth
in this Guarantee or in any document entered into by the Obligor or the Lessee
or in any document, certificate or financial or other statement delivered by
the Lessee in connection herewith shall be false or inaccurate when made or
deemed=made in any Material way, and such failure or misrepresentation or
breach of warranty shall remain uncured for a period of thirty (30) days after
written notice thereof is given to the Obligor by the Agent; provided, that if
such failure to perform is not capable of being cured within such period but is
capable of being cured within one hundred eighty (180) days after the
occurrence of such default and the Obligor is proceeding diligently to cure
such default, the Obligor shall be entitled to request an additional period
(not to exceed one hundred eighty (180) days from the date of such default) to
cure such default, consent to which request shall not be unreasonably withheld;
or

                 SECTION 6.1.3.   The Obligor shall (i) admit in writing its
inability to pay its debts generally as they become due, (ii) file a petition
under the United States bankruptcy laws or any other applicable insolvency law
or statute of the United States of America or any State or Commonwealth thereof
or of any other jurisdiction, (iii) make a general assignment for the benefit
of its creditors, (iv) consent to the appointment of a receiver of itself or
the whole or any substantial part of its property, or (v) file a petition or
answer seeking or consenting to reorganization under the United States
bankruptcy laws or any other applicable insolvency law or statute of the United
States of America or any State or Commonwealth thereof or of any other
jurisdiction; or

                 SECTION 6.1.4.   Insolvency proceedings or a petition under
the United States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth thereof or
of any other jurisdiction shall be filed against the Obligor and shall remain
undismissed or unstayed and in effect for a period of sixty (60) consecutive
days from the date of this filing, or a court of competent jurisdiction shall
enter an order or decree appointing, without the consent of the Obligor, a
custodian, trustee or receiver for the Obligor or the whole or a substantial
part of its property, and such order or decree shall not be vacated or set
aside within sixty (60) days from the date of the entry thereof; or

                 SECTION 6.1.5.   A final judgment for the payment of money in
excess of $3,000,000 shall be entered against the Obligor or any Subsidiary and
such judgment or order is not discharged, vacated, bonded or stayed pending
appeal (pursuant to laws, rules or court orders) within a period of thirty (30)
days from the date of entry of such judgment; or

                 SECTION 6.1.6.   The Obligor or any of its Subsidiaries (i)
shall default in the payment when due, whether at stated maturity or otherwise,
of principal or interest in respect of Indebtedness having an aggregate
principal amount in excess of $3,000,000 and such payment default continues
unremedied until the expiration of any applicable grace period(s); or (ii)
shall fail to perform or observe any other condition or covenant, or any other
event shall occur or condition exist, under any agreement or instrument
relating to any such Indebtedness, if the





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effect of any such failure, event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity, or cash collateral in respect
thereof to be demanded; or

                 SECTION 6.1.7.   An Event of Default (as such term is defined
in the Credit Agreement) shall have occurred and be continuing.

                 SECTION 6.2.     Remedies.  Upon the occurrence of any Obligor
Guarantee Event of Default and so long as the same shall be continuing, the
Agent or its successors, indorsees, transferees and assigns, as the case may
be, may, at its option, and shall, at the request of the Required Participants,
declare a default by written notice to the Obligor and at any time thereafter
the Agent or such other authorized person may:

                 SECTION 6.2.1.   Exercise any right or remedy that may be
available hereunder or under any other Operative Document; or

                 SECTION 6.2.2    Exercise any other right or remedy that may
be available under applicable law or proceed by appropriate court action to
enforce the terms hereof or to recover damages for the breach hereof.

                 SECTION 6.3.     Costs and Expenses.  The Obligor shall be
liable for any and all accrued and unpaid amounts due hereunder before, after
or during the exercise of any of the foregoing remedies, including all
reasonable legal fees and other reasonable costs and expenses incurred by the
Agent or its successors, indorsees, transferees or assigns by reason of the
occurrence of any Obligor Guarantee Event of Default or the exercise of
remedies with respect thereto.

                 SECTION 6.4.     Remedies Cumulative.  Except as expressly
provided above, no remedy under this Section 6 is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy provided under
this Section 6 or otherwise available at law or in equity.  The exercise by the
Agent or its successors, indorsees, transferees or assigns of any one or more
of such remedies shall not preclude the simultaneous or later exercise by any
such Person or any other Person so entitled of any other remedy or remedies.
No express or implied waiver by the Agent or its successors, indorsees,
transferees or assigns of any Obligor Guarantee Event of Default shall in any
way be, or be construed to be, a waiver of any future or subsequent Obligor
Guarantee Event of Default.  The failure or delay of the Agent or its
successors, indorsees, transferees or assigns in exercising any rights granted
it hereunder upon any occurrence of any of the contingencies set forth herein
shall not constitute a waiver of any such right upon the continuation or
recurrence of any such contingencies or similar contingencies and any single or
partial exercise of any particular right by the Agent or its successors,
indorsees, transferees or assigns shall not exhaust the same or constitute a
waiver of any other right provided herein.





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<PAGE>   12

                                  ARTICLE VII
                            MISCELLANEOUS PROVISIONS

                 SECTION 7.1.     Operative Document.  This Guarantee is an
Operative Document executed pursuant to the Participation Agreement and the
other Operative Documents and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including Section 15 of the Participation Agreement.

                 SECTION 7.2.     Binding on Successors, Transferees and
Assigns; Assignments.  In addition to, and not in limitation of, Section 3.7,
this Guarantee shall be binding upon Obligor and its successors, transferees
and assigns and shall inure to the benefit of and be enforceable by Agent and
each Participant and each of their respective successors, transferees and
assigns (to the full extent provided pursuant to Section 3.7); provided,
however, that Obligor may not assign any of its obligations hereunder without
the prior written consent of the Agent.

                 SECTION 7.3.     Amendments etc.  No amendment to or waiver of
any provision of this Guarantee, nor consent to any departure by Obligor
herefrom, shall be effective unless the same shall be in writing and signed by
the Agent with the written consent of the Required Participants, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

                 SECTION 7.4.     Addresses for Notices to Obligor.  All
notices and other communications hereunder shall be in writing (including
telegraphic and telecopy communication) and mailed, telecopied, delivered by
reputable overnight delivery service, telegraphed or delivered (i) in the case
of Obligor, addressed to it at the address or telecopy number set forth below
its signature hereto, (ii) in the case of the Agent, at its address or telecopy
number specified in the Participation Agreement or (iii) in each case, at such
other address or telecopy number as shall be designated by such party in a
written notice to the other party complying as to delivery with the terms of
this Section.  All such notices and other communications shall, when mailed,
telecopied, or telegraphed, respectively, be effective when deposited in the
mails, telecopied with confirmation of transmittal, or delivered to the
telegraph company, respectively, addressed as aforesaid, provided that notices
to the Agent shall not be effective until actually received by the Agent.

                 SECTION 7.5.     No Waiver; Remedies.  In addition to, and not
in limitation of, Section 3.3 and Section 3.5, no failure on the part of Agent
or any Participant to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.  The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.





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<PAGE>   13
                 SECTION 7.6.     Section Captions.  Section captions used in
this Guarantee are for convenience of reference only and shall not affect the
construction of this Guarantee.

                 SECTION 7.7.     Set-off.  In addition to, and not in
limitation of, any rights of Agent or any Participant under applicable law,
each of Agent and each Participant shall, upon the occurrence of any Event of
Default, have the right to appropriate and apply to the payment of the
obligations of Obligor owing to it hereunder, irrespective of whether or not
the Agent or any Participant shall have made any demand hereunder and although
said obligations, liabilities or claims, or any of them, shall be contingent or
unmatured, and Obligor hereby grants to Agent and each Participant a continuing
security interest in any and all balances, credits, deposits, accounts or
moneys of Obligor then or thereafter maintained with such Person.

                 SECTION 7.8.     Severability. Any provision of this Guarantee
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

                 SECTION 7.9.     Counterparts; Telecopy Signatures.  This
Guarantee may be executed by the parties hereto in several counterparts, each
of which shall be deemed to be an original and all of which shall constitute
but one and the same Guarantee.  Delivery of executed signature pages hereof by
telecopy transmission from Obligor to Agent shall constitute effective and
binding execution and delivery hereof by Obligor.

                 SECTION 7.10.    Integration.  This Guarantee represents the
agreement of the Obligor with respect to the subject matter hereof and there
are no promises or representations by the Agent relative to the subject matter
hereof not reflected herein.

                 SECTION 7.11.    Section Headings.  The section headings used
in this Guarantee are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.

                 SECTION 7.12.    Indemnity.  The Obligor agrees to indemnify
the Agent and the Participants and their respective officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred
by any of them as a result of, or arising out of, or in any way related to, or
by reason of, any investigation, litigation or other proceeding (whether or not
the Agent is a party thereto) related to the entering into and/or performance
of any Operative Document, the use by the Lessee of the proceeds of the
Participation Interests or the Advances or the consummation of any other
transactions contemplated in any Operative Document, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified). The agreements in this Section 7.12 shall survive





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payment and performance of the Obligations and all other amounts payable
hereunder or under the other Operative Documents.

                 SECTION 7.13.    GOVERNING LAW.  THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF
ILLINOIS.  FOR PURPOSES OF ANY ACTION OR PROCEEDING INVOLVING THIS GUARANTEE,
OBLIGOR HEREBY EXPRESSLY SUBMITS TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS AND OF
ANY ILLINOIS STATE COURT SITTING IN COOK COUNTY AND EXPRESSLY CONSENTS THAT IT
MAY BE SERVED WITH ANY PROCESS OR PAPER BY REGISTERED MAIL OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.

                 SECTION 7.14.    WAIVER OF JURY TRIAL. OBLIGOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS GUARANTEE. OBLIGOR ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND EACH PARTICIPANT
ENTERING INTO THE PARTICIPATION AGREEMENT.

                                  ARTICLE VIII
                             NATURE OF TRANSACTION

                 SECTION 8.1.1.   The Obligor acknowledges that it is the
intent of the parties to the Participation Agreement and the Lease that:  (i)
the Lease constitutes an "operating lease" pursuant to Statement of Financial
Accounting Standards No. 13, as amended, for purposes of the Lessee's financial
reporting, and (ii) for purposes of federal, state, and local income or
franchise taxes and for any other tax imposed on or measured by income, the
transaction contemplated by the Lease is a financing arrangement and preserves
ownership in the Property in the Lessee.  Nevertheless, the Obligor
acknowledges and agrees that neither the Agent, the Lessor nor any Participant
has made any representations or warranties to the Obligor concerning the tax,
accounting or legal characteristics of the Operative Documents and that the
Obligor has obtained and relied upon such tax, accounting and legal advice
concerning the Operative Documents as it deems appropriate.

                 SECTION 8.1.2.   Anything to the contrary in the Operative
Documents notwithstanding, the Obligor further acknowledges that the Agent and
the Lessee intend and have agreed that with respect to the nature of the
transactions evidenced by the Lease, the Lease grants a security interest and
mortgage or deed of trust or lien, as the case may be, in the Property to the
Lessor and the Participants to secure the Lessee's performance under and
payment of all amounts under the Lease and the other Operative Documents.




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                 SECTION 8.1.3.   Obligor hereby agrees not to take any action
or to assert any position in any insolvency, receivership, bankruptcy or
similar proceedings which is contrary to the intentions and agreements with
respect to the nature of the Lease set forth in Section 8.1.1 and Section 8.1.2
and Section 8.1.3 hereof and waives any and all of such rights.

                            [SIGNATURE PAGE FOLLOWS]





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                 IN WITNESS WHEREOF, Obligor has caused this Guarantee to be
duly executed and delivered, by its officer thereunto duly authorized, as of
the date first above written.



Obligor:

CHASE INDUSTRIES INC.,
a Delaware corporation

By: /s/ M.T. SEGRAVES     [SEAL]
   -----------------------
   Name: M.T. Segraves
        -------------------
   Title: CFO
         ------------------

Telecopier No.:  (    ) 419-485-8150
                       --------------




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