Document:

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                                                                    EXHIBIT 10.6
                              GUARANTY AGREEMENT
                              ------------------

     This Guaranty Agreement (this "Guaranty") is made as of the 31st day of
January, 2001, by International Paper Company, a New York corporation (together
with any successors or assigns permitted hereunder, "Guarantor"), to Pure
Partners, L.P., a Delaware limited partnership (together with its successors and
assigns, "Beneficiary").  Terms not defined herein shall have the meanings
assigned to them in the Note Agreement (as defined below).

                             W I T N E S S E T H:

     A.   As of the date hereof, The Branigar Organization, Inc., an Illinois
corporation (together with its successors and assigns, "Borrower"), and
Beneficiary entered into a Senior Note Agreement dated of even date herewith (as
amended, supplemented, or otherwise modified from time to time, the "Note
Agreement").

     B.   The Note Agreement requires that Guarantor execute and deliver this
Guaranty as a condition to Beneficiary's obligations to consummate the
transactions contemplated thereby.

     C.   Borrower is an Affiliate of Guarantor, and Guarantor has concluded
that it will directly or indirectly derive substantial benefit from the
transactions contemplated by the Note Agreement.

     NOW THEREFORE, in consideration of Beneficiary entering into the Note
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Guarantor hereby covenants and
agrees as follows:

                                   ARTICLE 1
                                   ---------

                                 General Terms
                                 -------------

     Section 1.1  Terms Defined Above. As used in this Guaranty, the terms
                  -------------------
"Beneficiary", "Borrower", "Guarantor", "Guaranty" and "Note Agreement" have the
meanings indicated above.

     Section 1.2  Certain Definitions. As used in this Guaranty, the following
                  -------------------
terms shall have the following meanings, unless the context otherwise requires
(terms defined in the singular shall have the same meanings when used in the
plural and vice versa):
           ---- -----

     "Default" shall mean any condition or event that constitutes an Event of
     Default under the Note Agreement or that would, with the giving of notice
     or the passing of time, or both, constitute such an Event of Default.

                                       1
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     "Guarantor Default" and "Guarantor Credit Agreement" shall have the
     meanings given to such terms in Section 4.2.

     "Liabilities" shall mean (a) any and all indebtedness, obligations and
     liabilities of Borrower pursuant to the Note Agreement, including without
     limitation the unpaid principal of and interest on the Note and any
     interest accruing subsequent to the filing of a petition or other action
     concerning bankruptcy or other similar proceeding and any amounts to be
                                                      =
     paid to purchase the Note under Section 4.4 of the Note Agreement; and (b)
     all renewals, rearrangements, increases, extensions for any period,
     amendments, supplements or reissues in whole or in part of the Note or the
     Note Agreement.

     "Note" shall mean the promissory note in the stated principal amount of
     $270,000,000 that is delivered by Borrower to Beneficiary pursuant to the
     Note Agreement, and all other promissory notes issued in renewal,
     extension, reissuance, increase, or exchange thereof or therefor and all
     supplements and amendments thereto.

     Section 1.3  Note Agreement Definitions. Unless otherwise defined herein,
                  --------------------------
all terms beginning with a capital letter which are defined in the Note
Agreement and not otherwise defined herein shall have the same meanings herein
as therein.

                                   ARTICLE 2
                                   ---------

                                 The Guaranty
                                 ------------

     Section 2.1  Liabilities Guaranteed. Guarantor hereby irrevocably and
                  ----------------------
unconditionally guarantees the prompt payment of the Liabilities when due,
whether at maturity or otherwise.

     Section 2.2  Nature of Guaranty.
                  ------------------

          (a)     This Guaranty is an absolute, irrevocable, complete, and
continuing guaranty of payment and not a guaranty of collection, and no notice
of the Liabilities or any extension of credit already or hereafter contracted by
or extended to Borrower need be given to Guarantor. This Guaranty may not be
revoked by Guarantor and shall continue to be effective with respect to
Liabilities arising or created after any attempted revocation by Guarantor and
shall remain in full force and effect until the Liabilities are paid in full and
the Commitment is terminated, notwithstanding that from time to time prior
thereto no Liabilities may be outstanding. Borrower and Beneficiary may modify,
alter, rearrange, or extend the Liabilities for any period and/or renew the
Liabilities from time to time, and Beneficiary may waive any Events of Default
or Defaults without notice to Guarantor, and in such event Guarantor will remain
fully bound hereunder with respect to the Liabilities. This Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of the Liabilities is rescinded or must otherwise be returned by
Beneficiary upon the insolvency, bankruptcy or reorganization of Borrower or
otherwise, all as though such payment had not been made. This Guaranty may be
enforced by Beneficiary and any subsequent holder of any of the Liabilities and
shall not be discharged by the assignment or negotiation of all or part of the
Liabilities. Guarantor hereby expressly waives presentment, demand,

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notice of non-payment, protest and notice of protest and dishonor, notice of
Default or Event of Default, notice of intent to accelerate the maturity and
notice of acceleration of the maturity and any other notice in connection with
the Liabilities, and also notice of acceptance of this Guaranty, acceptance on
the part of Beneficiary being conclusively presumed by Beneficiary's request for
this Guaranty and delivery of the same to Beneficiary.

          (b)     Guarantor's liability under this Guaranty in respect of the
Liabilities shall be and is specifically limited to payments expressly required
to be made under the Note and the Note Agreement (even if such payments are
deemed to be damages) and, except to the extent, if any, specifically provided
herein or in the Note or the Note Agreement, in no event shall Guarantor be
subject hereunder to consequential, exemplary, equitable, loss of profits,
punitive, tort, or any other damages, costs, or attorneys' fees.

     Section 2.3  Beneficiary's Rights. Guarantor authorizes Beneficiary,
                  --------------------
without notice or demand and without affecting Guarantor's liability hereunder,
to receive and hold security for the payment of this Guaranty and/or the
Liabilities, and exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale thereof as
Beneficiary in its discretion may determine; and to obtain a guaranty of the
Liabilities from any one or more Persons and at any time or times to enforce,
waive, rearrange, modify, limit or release any of such other Persons from their
obligations under such guaranties.

     Section 2.4  Guarantor's Waivers.
                  -------------------

          (a)     General. Guarantor waives any right to require Beneficiary to
                  -------
(i) proceed against Borrower or any other Person liable on the Liabilities, (ii)
enforce any of its rights against any other guarantor of the Liabilities, (iii)
proceed or enforce any of its rights against or exhaust any security given to
secure the Liabilities, (iv) have Borrower joined with Guarantor in any suit
arising out of this Guaranty and/or the Liabilities, or (v) pursue any other
remedy in Beneficiary's powers whatsoever. Beneficiary shall not be required to
mitigate damages or take any action to reduce, collect or enforce the
Liabilities. Guarantor waives any defense arising by reason of any disability,
lack of corporate authority or power, or other defense of Borrower or any other
guarantor of the Liabilities, and shall remain liable hereon regardless of
whether Borrower or any other guarantor be found not liable thereon for any
reason. Whether and when to exercise any of the remedies of Beneficiary under
the Note Agreement shall be in the sole and absolute discretion of Beneficiary,
and no delay by Beneficiary in enforcing any remedy, including delay in
conducting a foreclosure sale, shall be a defense to Guarantor's liability under
this Guaranty. To the extent allowed by applicable law, Guarantor hereby waives
any good faith duty on the part of Beneficiary in exercising any remedies
provided in the Note Agreement or the Note.

          (b)     Subrogation. Until the Liabilities have been paid in full,
                  -----------
Guarantor waives all rights of subrogation or reimbursement against Borrower,
whether arising by contract or operation of law (including, without limitation,
any such right arising under any federal or state bankruptcy or insolvency laws)
and waives any right to enforce any remedy which Beneficiary now have or may
hereafter have against Borrower, and waives any benefit or any right to
participate in any security now or hereafter held by Beneficiary.

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     Section 2.5  Maturity of Liabilities; Payment. Guarantor agrees that if
                  --------------------------------
the maturity of any of the Liabilities is accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for the purpose of
this Guaranty without demand or notice to Guarantor. Guarantor will, forthwith
upon notice from Beneficiary of Borrower's failure to pay any Liabilities
following such acceleration, pay to Beneficiary the amount due and unpaid by
Borrower and guaranteed hereby. The failure of Beneficiary to give this notice
shall not in any way release Guarantor hereunder.

     Section 2.6  Beneficiary's Expenses. If Guarantor fails to pay the
                  ----------------------
Liabilities after notice from Beneficiary of Borrower's failure to pay any
Liabilities at maturity, and if Beneficiary obtains the services of an attorney
for collection of amounts owing by Guarantor hereunder, or obtaining advice of
counsel in respect of any of its rights under this Guaranty, or if suit is filed
to enforce this Guaranty, or if proceedings are had in any bankruptcy, probate,
receivership or other judicial proceedings for the establishment or collection
of any amount owing by Guarantor hereunder, or if any amount owing by Guarantor
hereunder is collected through such proceedings, Guarantor agrees to pay to
Beneficiary its reasonable attorneys' fees.

     Section 2.7  Liability. It is expressly agreed that the liability of
                  ---------
Guarantor for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.

     Section 2.8  Events and Circumstances Not Reducing or Discharging
                  ----------------------------------------------------
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
-----------------------
following to the fullest extent permitted by applicable law, and agrees that
Guarantor's obligations under this Guaranty shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
rights (including without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:

          (a)     Modifications, etc. Any renewal, extension, modification,
                  ------------------
     increase, decrease, alteration or rearrangement of all or any part of the
     Liabilities, or of the Note, the Note Agreement or any instrument executed
     in connection therewith, or any contract or understanding between Borrower
     and Beneficiary, or any other Person, pertaining to the Liabilities;

          (b)     Adjustment, etc. Any adjustment, indulgence, forbearance or
                  ----------------
     compromise that might be granted or given by Beneficiary to Borrower or
     Guarantor or any Person liable on the Liabilities;

          (c)     Condition of Borrower or Guarantor. The insolvency, bankruptcy
                  ----------------------------------
     arrangement, adjustment, composition, liquidation, disability, dissolution,
     death or lack of power of Borrower or Guarantor or any other Person at any
     time liable for the payment of all or part of the Liabilities; or any
     dissolution of Borrower or Guarantor, or any sale, lease or transfer of any
     or all of the assets of Borrower or Guarantor, or any changes in the
     shareholders, partners, or members of Borrower or Guarantor; or any
     reorganization of Borrower or Guarantor;

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          (d)  Invalidity of Liabilities. The invalidity, illegality or
               -------------------------
     unenforceability of all or any part of the Liabilities, or any document or
     agreement executed in connection with the Liabilities, for any reason
     whatsoever, including without limitation the fact that the Liabilities, or
     any part thereof, exceed the amount permitted by applicable law, the act of
     creating the Liabilities or any part thereof is ultra vires, the officers
                                                     ----- -----
     or representatives executing the documents or otherwise creating the
     Liabilities acted in excess of their authority, the Liabilities violate
     applicable usury laws, Borrower has valid defenses, claims or offsets
     (whether at law, in equity or by agreement) which render the Liabilities
     wholly or partially uncollectible from Borrower, the creation, performance
     or repayment of the Liabilities (or the execution, delivery and performance
     of any document or instrument representing part of the Liabilities or
     executed in connection with the Liabilities, or given to secure the
     repayment of the Liabilities) is illegal, uncollectible, legally impossible
     or unenforceable, or the Note Agreement or other documents or instruments
     pertaining to the Liabilities have been forged or otherwise are irregular
     or not genuine or authentic;

          (e)  Release of Obligors. Any full or partial release of the liability
               -------------------
     of Borrower on the Liabilities, or any part thereof, or of any co-
     guarantors or any other Person now or hereafter liable, whether directly or
     indirectly, jointly, severally, or jointly and severally, to pay, perform,
     guarantee or assure the payment of the Liabilities, or any part thereof, it
     being recognized, acknowledged and agreed by Guarantor that Guarantor may
     be required to pay the Liabilities in full without assistance or support of
     any other Person, and Guarantor has not been induced to enter into this
     Guaranty on the basis of a contemplation, belief, understanding or
     agreement that other parties other than Borrower will be liable to perform
     the Liabilities, or Beneficiary will look to other parties to perform the
     Liabilities;

          (f)  Security. The taking or accepting of any security, collateral or
               --------
     guaranty, or other assurance of payment, for all or any part of the
     Liabilities;

          (g)  Release of Collateral, etc. Any release, surrender, exchange,
               --------------------------
     subordination, deterioration, waste, loss or impairment (including without
     limitation negligent, willful, unreasonable or unjustifiable impairment) of
     any collateral, property or security, at any time existing in connection
     with, or assuring or securing payment of, all or any part of the
     Liabilities;

          (h)  Care and Diligence. The failure of Beneficiary or any other
               ------------------
     Person to exercise diligence or reasonable care in the preservation,
     protection, enforcement, sale or other handling or treatment of all or any
     part of such collateral, property or security;

          (i)  Status of Liens. The fact that any collateral, security, security
               ---------------
     interest or lien contemplated or intended to be given, created or granted
     as security for the repayment of the Liabilities shall not be properly
     perfected or created, or shall prove to be unenforceable or subordinate to
     any other security interest or lien, it being recognized and agreed by
     Guarantor that Guarantor is not entering into this Guaranty in reliance on,
     or in contemplation of the benefits of, the validity, enforceability,
     collectibility or value of any of the collateral for the Liabilities;

                                       5
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          (j)     Payments Rescinded. Any payment by Borrower to Beneficiary is
                  ------------------
     held to constitute a preference under the bankruptcy laws, or for any
     reason Beneficiary is required to refund such payment or pay such amount to
     Borrower or someone else; or

          (k)     Other Actions Taken or Omitted. Any other action taken or
                  ------------------------------
     omitted to be taken with respect to the Note Agreement, the Liabilities, or
     the security and collateral therefor, whether or not such action or
     omission prejudices Guarantor or increases the likelihood that Guarantor
     will be required to pay the Liabilities pursuant to the terms hereof; it
     being the unambiguous and unequivocal intention of Guarantor that Guarantor
     shall be obligated to pay the Liabilities when due, notwithstanding any
     occurrence, circumstance, event, action, or omission whatsoever, whether
     contemplated or uncontemplated, and whether or not otherwise or
     particularly described herein, except for the full and final payment and
     satisfaction of the Liabilities.

                                   ARTICLE 3
                                   ---------

                        Representations and Warranties
                        ------------------------------

     Section 3.1  By Guarantor. In order to induce Beneficiary to accept this
                  ------------
Guaranty, Guarantor represents and warrants to Beneficiary (which
representations and warranties will survive the creation of the Liabilities and
any extension of credit under the Note) that:

          (a)     Benefit to Guarantor. Guarantor's guaranty pursuant to this
                  --------------------
     Guaranty reasonably may be expected to benefit, directly or indirectly,
     Guarantor.

          (b)     Existence. Guarantor has been duly organized and is validly
                  ---------
     existing under the laws of New York, its chief executive office and
     principal place of business is located in New York, and it is duly
     qualified and authorized to do business where it is required to be so
     qualified, except where the failure to be so qualified would not have a
     material adverse effect upon the financial condition, operations, or
     business of Guarantor.

          (c)     Power and Authorization. Guarantor has full power and
                  -----------------------
     authority to enter into and perform its obligations under this Guaranty and
     to carry on its business as currently conducted, and the execution,
     delivery, and performance of this Guaranty have been duly authorized by all
     necessary action on the part of Guarantor.

          (d)     Binding Obligations. This Guaranty has been duly executed and
                  -------------------
     delivered by Guarantor and constitutes the legal, valid, and binding
     obligation of Guarantor, enforceable against Guarantor in accordance with
     its terms, except as the enforceability hereof may be limited by (i)
     applicable bankruptcy, insolvency, moratorium, or other similar laws
     affecting the enforcement of creditors' rights generally, and (ii) the
     application of general principles of equity.

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          (e)     Governmental Approvals; No Conflicts. Guarantor's execution,
                  ------------------------------------
     delivery, and performance of this Guaranty do not (i) conflict with or
     contravene or constitute a default under: (A) the articles of incorporation
     and by-laws of Guarantor; (B) any material agreement or instrument to which
     Guarantor is a party or by which it or its properties is bound ("material"
     for the purposes of this representation meaning creating a liability of
     $100,000,000 or more); or (C) any law, regulation, judgment, order, license
     or permit applicable to Guarantor; or (ii) result in, or require, the
     creation or imposition of any lien of any nature upon or with respect to
     any of the properties owned by Guarantor.

          (f)     No Guarantor Default. No event or circumstance has occurred
                  --------------------
     and is continuing that constitutes, or with notification or with the lapse
     of time or otherwise would constitute, a Guarantor Default.

          (g)     No Missing Governmental Consents. No authorization, consent,
                  --------------------------------
     approval, license or formal exemption from, nor any filing, declaration or
     registration with, any court, governmental agency or regulatory authority
     is required in connection with execution, delivery and performance by
     Guarantor of this Guaranty (except for such authorizations, consents,
     approvals, licenses, exemptions, filings, declarations or registrations, if
     any, which have been duly obtained or made and that are in full force and
     effect).

          (h)     Solvency. Guarantor (i) is not insolvent as of the date hereof
                  --------
     and will not be rendered insolvent as a result of this Guaranty, (ii) is
     not engaged in a business or a transaction, or about to engage in a
     business or a transaction, for which any property or assets remaining with
     such Guarantor is unreasonably small capital, and (iii) does not intend to
     incur, or believe it will incur, debts that will be beyond its ability to
     pay as such debts mature.

          (i)     Public Utility Holding Company Act. Neither Guarantor nor any
                  ----------------------------------
     of its Affiliates is subject to, or not exempt from, regulation as a
     "public utility company," an "electric utility company," a "public utility
     holding company," a "holding company," a "subsidiary company," or an
     "affiliate" of any of any of the foregoing, as such terms are defined in
     the Public Utility Holding Company Act of 1935.

     Section 3.2  No Representation by Beneficiary. Neither Beneficiary nor any
                  --------------------------------
other Person has made any representation, warranty or statement to Guarantor in
order to induce Guarantor to execute this Guaranty.

                                       7
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                                   ARTICLE 4
                                   ---------

                       Covenants and Guarantor Defaults
                       --------------------------------

     4.1  Covenants. While any amount under the Loans is outstanding or
          ---------
available to Borrower, Guarantor covenants with Beneficiary that:

          (a)  Notices. Guarantor shall provide prompt notice to Beneficiary of
               -------
     (i) any change by S&P or Moody's in their credit rating for Guarantor's
     long-term unsecured senior debt or any placement of Guarantor on negative
     credit watch, negative outlook, or the equivalent thereof by S&P or
     Moody's, to the extent that Guarantor has knowledge thereof, and (ii) the
     occurrence of any material and adverse change in the financial condition of
     Guarantor or in its ability to perform hereunder.

          (b)  Financial Statements. Guarantor will make available either on
               --------------------
     "EDGAR," within the time limits required by applicable federal securities
     laws, or will otherwise transmit to Beneficiary promptly after sending or
     filing thereof (i) a copy of each of Guarantor's reports on Form 8-K (or
     any comparable form), (ii) no more than 75 days after the end of each of
     the first three fiscal quarters of each of Guarantor's fiscal years, a copy
     of Guarantor's report on Form 10-Q (or any comparable form) for such
     quarter, which report will include Guarantor's quarterly unaudited
     consolidated financial statements as of the end of and for such quarter,
     and (iii) within 135 days after the end of each of Guarantor's fiscal year-
     end, a copy of Guarantor's report on Form 10-K (or any comparable form) for
     such year, which annual report will include Guarantor's annual audited
     consolidated financial statements as of the end of an for such year.

          (c)  Further Assurances. Guarantor shall, within 30 days after notice
               ------------------
     thereof from Beneficiary, do all such further acts and things and execute
     and deliver all such further documents as shall be reasonably requested by
     Beneficiary in order to ensure that each provision hereof is and continues
     to be a valid and binding obligation of Guarantor.

          (d)  Existence. Except as provided in the following subsection (e),
               ---------
     Guarantor will preserve and maintain its corporate existence and its good
     standing in its state of incorporation and the state of its chief executive
     office and principal place of business.

          (e)  Merger. Guarantor will not merge, amalgamate, or consolidate with
               ------
     or into any other Person (with a sale or other transfer of substantially
     all of Guarantor's assets being deemed a merger of Guarantor into the
     transferee) unless (i) the survivor is a United States corporation,
     partnership, or business trust that has its chief executive office or
     principal place of business located in a jurisdiction in the United States,
     and (ii) the survivor expressly assumes, by an amendment hereto in form and
     substance reasonably satisfactory to Beneficiary, all duties and
     obligations of Guarantor under this Guaranty.

                                       8
<PAGE>

          (f)     Ranking and Equal and Ratable Security. The indebtedness of
                  --------------------------------------
     Guarantor under this Guaranty does rank and will rank in priority of
     payment pari passu to all other unsecured and unsubordinated indebtedness
     of Guarantor.

     Section 4.2  Guarantor Defaults. The term "Guarantor Default" shall mean
                  ------------------
the occurrence and continuance of either of the following:

          (a)     Guarantor shall fail to perform or observe any term, covenant,
     or agreement contained herein if such failure shall remain unremedied for
     30 days after the earlier of the date written notice thereof shall have
     been given to Guarantor by or on behalf of Beneficiary and the earliest
     date any executive officer of Guarantor has knowledge of such failure;

          (b)     any representation or warranty made or deemed made by
     Guarantor or any of its officers herein or in connection herewith shall
     prove to have been incorrect in any respect that is material and adverse to
     Beneficiary when made or deemed made and such materiality is continuing;
     provided, however, that no Guarantor Default shall occur pursuant to this
     --------  -------
     this Section 4.2(b) if the circumstances resulting in the incorrect
     representation or warranty can be eliminated or otherwise addressed to the
     reasonable satisfaction of Beneficiary within 30 days after delivery of a
     written notice of such incorrect representation or warranty from
     Beneficiary, or in the event that such circumstances cannot be eliminated
     or otherwise addressed to the reasonable satisfaction of Beneficiary within
     such 30-day period, efforts have been diligently commenced to eliminate
     such circumstances or otherwise address them to the reasonable satisfaction
     of Beneficiary and they have been eliminated or otherwise addressed to the
     reasonable satisfaction of Beneficiaries within 60 days after delivery of
     such written notice;

          (c)     if Guarantor shall (i) fail to pay any principal of or premium
     or interest on any Funded Debt which is outstanding in the principal amount
     of at least $200,000,000 in the aggregate when the same becomes due and
     payable (whether by scheduled maturity, required prepayment, acceleration,
     demand or otherwise), and such failure shall continue after the applicable
     grace period specified in the agreement or instrument relating to such
     Funded Debt (or, if no grace period is applicable thereto, such failure
     shall continue for a period of five consecutive Business Days), or (ii)
     suffer any event to occur or condition to exist under any agreement or
     instrument relating to any such Funded Debt that in substance is
     customarily considered a default in loan documents (in each case, other
     than a failure to pay that is specified in clause (i) of this paragraph
     (c)) and the effect of such event is to cause such Funded Debt to become
     due, or to be prepaid in full (whether by redemption, purchase, or
     otherwise), prior to its stated maturity; or

          (d)     if a Voluntary Bankruptcy or an Involuntary Bankruptcy shall
     occur with respect Guarantor; or

          (e)     if the Guaranty shall be held in any judicial proceeding to be
     unenforceable or invalid or shall cease for any reason to be in full force
     and effect or Guarantor, or any

                                       9
<PAGE>

     Person acting on behalf of Guarantor, shall deny or disaffirm its
     obligations under the Guaranty (other than by reason of termination of the
     Note Agreement).

                                   ARTICLE 5
                                   ---------

                                 Miscellaneous
                                 -------------

     Section 5.1  Successors and Assigns; No Third Party Beneficiaries. This
                  ----------------------------------------------------
Guaranty is and shall be in every particular available to the successors and
assigns of Beneficiary and is and shall always be fully binding upon the
successors and assigns of Guarantor, notwithstanding that some or all of the
monies, the repayment of which this Guaranty applies, may be actually advanced
after any bankruptcy, receivership, reorganization, or other event affecting
Guarantor.  There are no third party beneficiaries to this Guaranty.

     Section 5.2  Notices. Any notice or demand to Guarantor under or in
                  -------
connection with this Guaranty may be given and shall conclusively be deemed and
considered to have been given and received in accordance with the Note
Agreement, addressed to Guarantor at the address on the signature page hereof or
at such other address provided to Beneficiary in writing.

     Section 5.3  Construction. This Guaranty shall be construed in accordance
                  ------------
with and governed by the laws of the State of New York.

     Section 5.4  Invalidity. In the event that any one or more of the
                  ----------
provisions contained in this Guaranty shall, for any reason, be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Guaranty.

     Section 5.5  Entire Agreement. This written Guaranty embodies the entire
                  ----------------
agreement and understanding between Beneficiary and Guarantor with respect to
the subject matter hereof and supersedes all other agreements and understandings
between such parties relating to the subject matter hereof and thereof.  This
written Guaranty represents the final agreement between the parties and may not
be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties.  There are no unwritten oral agreements between the
parties.

                           [Signature page follows.]

                                       10
<PAGE>

     WITNESS THE EXECUTION HEREOF, as of the 31st day of January, 2001.

                              INTERNATIONAL PAPER COMPANY

                              By: /s/ JAMES R MONTAGUE
                                  ---------------------------------------
                              Name:  James R. Montague
                              Title:  Agent and Attorney-in-Fact

                              Address:

                              6600 LBJ Freeway, Suite 200
                              Dallas, Texas 75240
                              Attention: Legal Department
                              Fax No.: (972) 934-4529

                                       11<PAGE>

                                                                    Exhibit 10.7

                            MASTER OFFSET AGREEMENT

       This Master Offset Agreement (this "Agreement") is entered into and shall
be effective as of January 31, 2001 among IP PETROLEUM COMPANY, INC., a Delaware
corporation, and SOUTHLAND ENERGY COMPANY, a Texas corporation (collectively,
the "Limited Partners"), THE BRANIGAR ORGANIZATION, INC., an Illinois
corporation, and PURE PARTNERS, L.P. ("Pure Partners"), a Delaware limited
partnership.

       Reference is made to the Amended and Restated Agreement of Limited
Partnership of Pure Partners, dated January 31, 2001, between the Limited
Partners, International Paper Realty Corporation, Transtates Properties
Incorporated, PK I, L.P., PK II, L.P., PK III, L.P., PK IV, L.P., all as limited
partners, and Pure Resources I, Inc., as general partner (the "LP Agreement")
and the other Operative Documents.  Capitalized terms used herein and not
defined herein shall have the meanings given such terms in the LP Agreement.

       In consideration of the mutual promises, covenants and agreements set
forth in the LP Agreement, the parties hereto hereby agree as follows:

   1.  Distributions for Claims. In connection with any Redemption of the
       Limited Partners' Partnership Interests by Pure Partners, a Liquidation
       of Pure Partners or the maturity of other amounts due and payable from
       Pure Partners under the LP Agreement with respect to such Redemption or
       Liquidation (any such amount due from Pure Partners to a Limited Partner
       under the LP Agreement being sometimes hereinafter referred to as
       "Limited Partner Receivables"), Pure Partners shall have the legally
       enforceable right to require the Limited Partner holding such Limited
       Partner Receivables to relinquish its claim against Pure Partners with
       respect to such Limited Partner Receivables by (i) distributing or
       transferring to such Limited Partner all or a portion of the BOI Note (or
       any obligation arising therefrom) or its right to other amounts due from
       the Limited Partner (such BOI Note and other amounts due from the Limited
       Partner to Pure Partners being sometimes hereinafter referred to as
       "Limited Partner Payables"), and (ii) to the extent required by the LP
       Agreement, tendering a payment to such Limited Partner equal to the
       amount by which the contractual balance due on such Limited Partner
       Receivables exceeds the contractual balance due on such Limited Partner
       Payables.

   2.  Rights of Holders of Limited Partner Receivables. Upon the maturity of
       any Limited Partner Payables, a Limited Partner holding Limited Partner
       Receivables shall have the legally enforceable right to require Pure
       Partners to relinquish its claim with respect to any such Limited Partner
       Payables by requiring or causing (i) satisfaction by offset of its
       Limited Partner Receivables against such Limited Partner Payables to the
       extent that the contractual balance due on such Limited Partner Payables
       does not exceed the contractual balance due on such Limited Partner
       Receivables, and (ii) the obligor under such Limited Partner Payables to
       tender to Pure Partners a payment equal to the amount by which the
       contractual balance due on such Limited Partner Payables exceeds the
       contractual balance due on such Limited Partner Receivables. In the event
       that the amounts due from Pure

                                       1
<PAGE>

       Partners on the Limited Partner Receivables satisfied in accordance
       herewith exceed amounts due to Pure Partners on the Limited Partner
       Payables distributed or transferred in accordance herewith, Pure Partners
       shall be required, to the extent required by the LP Agreement, to make a
       payment to the Limited Partner in the amount of such difference.

   3.  Valuation of Limited Partner Receivables and Limited Partner Payables.
       For purposes hereof, the contractual balance due on any Limited Partner
       Payables or Limited Partner Receivables shall be determined based on the
       governing documents and shall equal the value thereof at any time the
       contractual balance must be determined prior to the maturity of any such
       Limited Partner Payable or Limited Partner Receivable. Specifically, (i)
       the contractual balance due at any time on the Class A Limited
       Partnership Interests shall equal its Capital Account balance as adjusted
       from time to time in accordance with the terms of the LP Agreement, and
       (ii) the contractual balance due on the BOI Note shall equal the Carrying
       Value thereof as determined in accordance with the LP Agreement.

   4.  Governing Law. The laws of the State of New York shall govern the
       validity of this Agreement, the construction of its terms, and the
       interpretation of the rights and duties of the parties hereto.

   5.  Severability. Every provision of this Agreement is intended to be
       serverable, and, if any terms or provision of this Agreement is illegal
       or invalid for any reason whatsoever, such illegality or invalidity shall
       not affect the validity or legality of the remainder of this Agreement.
       The preceding sentence of this Section 5 shall be of no force or effect
       if the consequence of enforcing the remainder of this Agreement without
       such illegal or invalid term or provision would cause any party hereto to
       lose the benefit of its economic bargain.

    6.  Successors and Assigns. This Agreement shall be binding upon the parties
        hereto and their successors and permitted assigns (including, without
        limitation, assignees of the Limited Partners).

    7.  Counterpart Execution. This Agreement may be executed in any number of
        counterparts with the same effect as if all the other parties had signed
        the same document. All counterparts shall be construed together and
        shall constitute one agreement.

    8.  Entire Agreement. This Agreement (i) constitutes the entire agreement
        and supersedes all prior agreements and understandings, both written and
        oral, among the parties with respect to the subject matter hereof and
        (ii) is not intended to confer upon any person other than the parties
        hereto any rights or remedies hereunder.

                                       2
<PAGE>

     IN WITNESS WHEREOF, the parties named below have caused this Agreement to
     be executed by their duly authorized officers and representatives on the
     date first above written.

                                   IP PETROLEUM COMPANY, INC.

                                   By: /s/ JAMES R. MONTAGUE
                                       --------------------------------
                                   Name: James R. Montague
                                   Title: Agent and Attorney-in-Fact

                                   SOUTHLAND ENERGY COMPANY

                                   By: /s/ JAMES R. MONTAGUE
                                       --------------------------------
                                   Name: James R. Montague
                                   Title: Agent and Attorney-in-Fact

                                   THE BRANIGAR ORGANIZATION, INC.

                                   By: /s/ JAMES R. MONTAGUE
                                       --------------------------------
                                   Name: James R. Montague
                                   Title: Agent and Attorney-in-Fact

                                   PURE PARTNERS, L.P.

                                   By: /s/ JACK HIGHTOWER
                                       --------------------------------
                                   Name: Jack Hightower
                                   Title: President

                                       3

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