sunoco Quarterly Reports 2008 2nd

FORM 10-QSUNOCO INC - SUNFiled: August 07, 2008 (period: June 30, 2008)

Quarterly report which provides a continuing view of a company's financial position

Table of Contents

10-Q - SUNOCO INC--FORM 10-Q

PART I

Item 1. PART I.

Item 1. Financial Statements (Unaudited) Item 2. Management s Discussion and Analysis of Financial Condition and

Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures PART II.

Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits SIGNATURE EXHIBIT INDEX

EX-10.1 (LONG-TERM PERFORMANCE ENHANCEMENT PLAN II)

EX-10.2 (FORM OF COMMON STOCK UNIT AGREEMENT)




EX-10.6 (FORM OF STOCK OPTION AGREEMENT)

EX-10.7 (PENSION RESTORATION PLAN)

EX-10.8 (EXECUTIVE INCENTIVE PLAN)

EX-10.9 (EXECUTIVE RETIREMENT PLAN)

EX-10.10 (FORM OF SECOND AMENDED AND RESTATED INDEMNIFICATIONAGREEMENT)

EX-10.11 (AMENDED SCHEDULE TO THE FORMS OF INDEMNIFICATIONAGREEMENT)

EX-10.12 (DIRECTORS' DEFERRED COMPENSATION AND BENEFITS TRUSTAGREEMENT)

EX-10.13 (DEFERRED COMPENSATION AND BENEFITS TRUST AGREEMENT)

EX-12 (COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES)

EX-31.1 (CEO 302 CERTIFICATION)

EX-31.2 (CFO 302 CERTIFICATION)

EX-32.1 (CEO 906 CERTIFICATION)

EX-32.2 (CFO 906 CERTIFICATION)

Table of Contents

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

OR

� TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-6841

SUNOCO, INC.(Exact name of registrant as specified in its charter)

PENNSYLVANIA 23-1743282(State or other jurisdiction of

incorporation or organization) (I.R.S. Employer

Identification No.)

1735 MARKET STREET, SUITE LL, PHILADELPHIA, PA 19103-7583(Address of principal executive offices) (Zip Code)

(215) 977-3000(Registrant’s telephone number, including area code)

NOT APPLICABLE(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements forthe past 90 days. YES ⌧ NO �

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ⌧ Accelerated filer �Non-accelerated filer (do not check if a smaller reporting company) � Smaller reporting company �

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES � NO ⌧

At June 30, 2008, there were 116,862,264 shares of Common Stock, $1 par value outstanding.

Source: SUNOCO INC, 10-Q, August 07, 2008

Table of ContentsSUNOCO, INC.

INDEX

Page No.PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Statements of Income for the Six Months Ended June 30, 2008 and 2007 1

Condensed Consolidated Statements of Income for the Three Months Ended June 30, 2008 and 2007 2

Condensed Consolidated Balance Sheets at June 30, 2008 and December 31, 2007 3

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007 4

Notes to Condensed Consolidated Financial Statements 5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19

Item 3. Quantitative and Qualitative Disclosures About Market Risk 32

Item 4. Controls and Procedures 33

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 33

Item 1A. Risk Factors 35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35

Item 4. Submission of Matters to a Vote of Security Holders 36

Item 6. Exhibits 36

SIGNATURE 39


Table of ContentsPART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF INCOMESunoco, Inc. and Subsidiaries(Millions of Dollars and Shares, Except Per-Share Amounts)

For the Six Months

Ended June 30 2008 2007 (UNAUDITED) REVENUES Sales and other operating revenue (including consumer excise taxes) $ 28,857 $ 19,859 Interest income 12 9 Gain related to issuance of Sunoco Logistics Partners L.P. limited partnership units (Note 2) — 151 Other income, net (Notes 2 and 3) 28 50

28,897 20,069

COSTS AND EXPENSES Cost of products sold and operating expenses 26,886 16,853 Consumer excise taxes 1,225 1,310 Selling, general and administrative expenses (Note 2) 420 457 Depreciation, depletion and amortization 252 232 Payroll, property and other taxes 76 67 Provision for asset write-downs and other matters (Note 5) (18) — Interest cost and debt expense 56 67 Interest capitalized (17) (14)

28,880 18,972

Income before income tax expense (benefit) 17 1,097 Income tax expense (benefit) (Note 3) (6) 413

NET INCOME $ 23 $ 684

Earnings per share of common stock: Basic $ .20 $ 5.65 Diluted $ .20 $ 5.63

Weighted-average number of shares outstanding (Notes 4 and 7): Basic 117.0 121.1 Diluted 117.2 121.4

Cash dividends paid per share of common stock (Note 7) $ .575 $ .525

(See Accompanying Notes)

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Table of ContentsCONDENSED CONSOLIDATED STATEMENTS OF INCOMESunoco, Inc. and Subsidiaries(Millions of Dollars and Shares, Except Per-Share Amounts)

For the Three Months

Ended June 30 2008 2007 (UNAUDITED) REVENUES Sales and other operating revenue (including consumer excise taxes) $ 16,061 $ 10,724 Interest income 3 4 Other income, net (Notes 2 and 3) 20 36

16,084 10,764

COSTS AND EXPENSES Cost of products sold and operating expenses 14,951 8,865 Consumer excise taxes 635 669 Selling, general and administrative expenses (Note 2) 222 236 Depreciation, depletion and amortization 124 117 Payroll, property and other taxes 34 30 Provision for asset write-downs and other matters (Note 5) (18) — Interest cost and debt expense 28 32 Interest capitalized (8) (5)

15,968 9,944

Income before income tax expense 116 820 Income tax expense (Note 3) 34 311

NET INCOME $ 82 $ 509

Earnings per share of common stock: Basic $ .70 $ 4.21 Diluted $ .70 $ 4.20

Weighted-average number of shares outstanding (Notes 4 and 7): Basic 116.9 120.9 Diluted 117.0 121.2

Cash dividends paid per share of common stock (Note 7) $ .30 $ .275


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Table of ContentsCONDENSED CONSOLIDATED BALANCE SHEETSSunoco, Inc. and Subsidiaries(Millions of Dollars)

At

June 302008

At

December 312007

(UNAUDITED) ASSETS Current Assets Cash and cash equivalents $ 214 $ 648Accounts and notes receivable, net 4,471 2,710Inventories:

Crude oil 595 341Petroleum and chemical products 671 647Materials, supplies and other 181 162

Deferred income taxes 132 130

Total Current Assets 6,264 4,638

Investments and long-term receivables 172 175Properties, plants and equipment 11,933 11,466Less accumulated depreciation, depletion and amortization 4,580 4,427

Properties, plants and equipment, net 7,353 7,039Deferred charges and other assets 537 574

Total Assets $ 14,326 $ 12,426

LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 6,815 $ 4,812Accrued liabilities (Note 5) 588 631Short-term borrowings 100 — Current portion of long-term debt 3 4Taxes payable 329 193

Total Current Liabilities 7,835 5,640Long-term debt 1,723 1,724Retirement benefit liabilities (Note 6) 518 525Deferred income taxes 880 1,027Other deferred credits and liabilities (Note 5) 518 538Commitments and contingent liabilities (Note 5) Minority interests (Note 2) 438 439Shareholders’ equity (Note 7) 2,414 2,533

Total Liabilities and Shareholders’ Equity $ 14,326 $ 12,426


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Table of ContentsCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSSunoco, Inc. and Subsidiaries(Millions of Dollars)

For the Six Months

Ended June 30 2008 2007 (UNAUDITED) INCREASES (DECREASES) IN CASH AND CASH EQUIVALENTS CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 23 $ 684 Adjustments to reconcile net income to net cash provided by operating activities:

Gain related to issuance of Sunoco Logistics Partners L.P. limited partnership units (Note 2) — (151)Provision for asset write-downs and other matters (18) — Depreciation, depletion and amortization 252 232 Deferred income tax expense (benefit) (135) 124 Payments less than expense for retirement plans 8 2 Changes in working capital pertaining to operating activities:

Accounts and notes receivable (1,749) (129)Inventories (297) (16)Accounts payable and accrued liabilities 1,918 (128)Taxes payable 136 192

Other 15 13

Net cash provided by operating activities 153 823

CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (561) (644)Proceeds from divestments 8 30 Other 35 (23)

Net cash used in investing activities (518) (637)

CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from (repayments of) short-term borrowings 100 (82)Net proceeds from issuance of long-term debt 85 92 Repayments of long-term debt (87) (24)Cash distributions to investors in cokemaking operations (20) (12)Cash distributions to investors in Sunoco Logistics Partners L.P. (29) (27)Cash dividend payments (67) (64)Purchases of common stock for treasury (49) (100)Proceeds from issuance of common stock under management incentive plans — 6 Other (2) 2

Net cash used in financing activities (69) (209)

Net decrease in cash and cash equivalents (434) (23)Cash and cash equivalents at beginning of period 648 263

Cash and cash equivalents at end of period $ 214 $ 240


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Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. General.

The accompanying condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and U.S. generallyaccepted accounting principles for interim financial reporting. They do not include all disclosures normally made in financial statements contained in Form10-K. In management’s opinion, all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for theperiods shown have been made. All such adjustments are of a normal recurring nature, except for the gain related to Sunoco Logistics Partners L.P.’s priorissuance of limited partnership units and gains related to an insurance recovery and certain income tax matters (Notes 2, 3 and 5). Results for the three andsix months ended June 30, 2008 are not necessarily indicative of results for the full-year 2008.

2. Minority Interests.

Cokemaking Operations

Sunoco received a total of $415 million in exchange for interests in its Indiana Harbor cokemaking operations in two separate transactions in 1998 and2002. Sunoco did not recognize any gain as of the dates of these transactions because the third-party investors were entitled to a preferential return on theirrespective investments. The returns of the investors were equal to 98 percent of the cash flows and tax benefits from such cokemaking operations duringthe preferential return period, which continued until the fourth quarter of 2007 at which time the investor entitled to the preferential return recovered itsinvestment and achieved a cumulative annual after-tax return of approximately 10 percent. After payment of the preferential return, the investors are nowentitled to a minority interest in the related net income amounting to 34 percent which declines to 10 percent by 2038.

The following table sets forth the minority interest balances and the changes in these balances attributable to the third-party investors’ interests incokemaking operations (in millions of dollars):

Six Months

Ended June 30 2008 2007 Balance at beginning of year $ 83 $ 102 Nonconventional fuel credit and other tax benefits — (18)Preferential return — 11 Minority interest share of income 8 — Cash distributions to third-party investors (20) (12)

Balance at end of period $ 71 $ 83

The nonconventional fuel credit and other tax benefits that were allocated to third-party investors prior to the completion of the preferential return periodwere included as income in the Coke segment, while the investors’ preferential return was recorded as expense in the Corporate and Other segment. Thenet of these two amounts represented a noncash change in minority interests in cokemaking operations, which was recognized in other income, net, in thecondensed consolidated statements of income. Upon completion of the preferential return period, the third-party investor’s share of net income generatedby the Company’s cokemaking operations is recorded as a noncash increase in minority interest expense in the Coke segment and is included in selling,general and administrative expenses in the condensed consolidated statements of income.

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Table of ContentsThe Company indemnifies third-party investors (including a former investor in Sunoco’s Jewell cokemaking operations) for certain tax benefits that wereavailable to them during the preferential return period in the event the Internal Revenue Service disallows the tax deductions and benefits allocated to thethird parties. These tax indemnifications are in effect until the applicable tax returns are no longer subject to Internal Revenue Service review. Althoughthe Company believes the possibility is remote that it will be required to do so, at June 30, 2008, the maximum potential payment under these taxindemnifications would have been approximately $275 million.

Logistics Operations

Sunoco’s interest in Sunoco Logistics Partners L.P. (the “Partnership”), including its 2 percent general partnership interest, is 43 percent. Sunoco’s generalpartnership interest also includes incentive distribution rights which provide Sunoco, as the general partner, up to 50 percent of the Partnership’sincremental cash flow. The accounts of the Partnership are included in Sunoco’s condensed consolidated financial statements.

The Partnership’s prior issuance of common units to the public resulted in an increase in the value of Sunoco’s proportionate share of the Partnership’sequity as the issuance price per unit exceeded Sunoco’s carrying amount per unit at the time of issuance. Prior to the conversion of Sunoco’s remainingsubordinated units to common units in February 2007, the resultant gain to Sunoco on the prior issuance of common units to the public had been deferredas a component of minority interest in the Company’s condensed consolidated balance sheets as the common units issued did not represent residualinterests in the Partnership due to Sunoco’s ownership of the subordinated units. The deferred gain, which amounted to $151 million ($90 million aftertax), was recognized in income in the first quarter of 2007 when Sunoco’s remaining subordinated units converted to common units at which time thecommon units became residual interests.

The following table sets forth the minority interest balance and the changes to this balance attributable to the third-party investors’ interests in SunocoLogistics Partners L.P. (in millions of dollars):

Six Months

Ended June 30 2008 2007 Balance at beginning of year $ 356 $ 503 Gain recognized in income related to prior issuance of the Partnership’s limited partnership units — (151)Minority interest share of income* 39 22 Increase attributable to Partnership management incentive plan 1 1 Cash distributions to third-party investors** (29) (27)

Balance at end of period $ 367 $ 348

* Included in selling, general and administrative expenses in the condensed consolidated statements of income.

** During 2007 and the first six months of 2008, the Partnership increased its quarterly cash distribution per unit from $.8125 to $.935.

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Table of Contents

3. Income Tax Matters.

During the second quarter of 2008, Sunoco settled economic nexus issues pertaining to certain state corporate income tax returns filed for prior years. Inconnection with this settlement, a $6 million pretax gain ($10 million after tax) was recognized in other income, net, in the condensed consolidatedstatements of income. In addition, as a result of the settlement, unrecognized tax benefits decreased $13 million and total $55 million at June 30, 2008.

4. Earnings Per Share Data.

The following table sets forth the reconciliation of the weighted-average number of common shares used to compute basic earnings per share (“EPS”) tothose used to compute diluted EPS (in millions):

Six Months

Ended June 30 Three MonthsEnded June 30

2008 2007 2008 2007Weighted-average number of common shares outstanding – basic 117.0 121.1 116.9 120.9Add effect of dilutive stock incentive awards .2 .3 .1 .3

Weighted-average number of shares - diluted 117.2 121.4 117.0 121.2

5. Commitments and Contingent Liabilities.

Commitments

Over the years, Sunoco has sold thousands of retail gasoline outlets as well as refineries, terminals, coal mines, oil and gas properties and various otherassets. In connection with these sales, the Company has indemnified the purchasers for potential environmental and other contingent liabilities related tothe period prior to the transaction dates. In most cases, the effect of these arrangements was to afford protection for the purchasers with respect toobligations for which the Company was already primarily liable. While some of these indemnities have spending thresholds which must be exceededbefore they become operative, or limits on Sunoco’s maximum exposure, they generally are not limited. The Company recognizes the fair value of theobligations undertaken for all guarantees entered into or modified after January 1, 2003. In addition, the Company accrues for any obligations under theseagreements when a loss is probable and reasonably estimable. The Company cannot reasonably estimate the maximum potential amount of futurepayments under these agreements.

Environmental Remediation Activities

Sunoco is subject to extensive and frequently changing federal, state and local laws and regulations, including, but not limited to, those relating to thedischarge of materials into the environment or that otherwise relate to the protection of the environment, waste management and the characteristics andcomposition of fuels. As with the industry generally, compliance with existing and anticipated laws and regulations increases the overall cost of operatingSunoco’s businesses, including remediation, operating costs and capital costs to construct, maintain and upgrade equipment and facilities.

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Table of ContentsExisting laws and regulations result in liabilities and loss contingencies for remediation at Sunoco’s facilities and at formerly owned or third-party sites.The accrued liability for environmental remediation is classified in the condensed consolidated balance sheets as follows (in millions of dollars):

At

June 302008

At

December 312007

Accrued liabilities $ 36 $ 39Other deferred credits and liabilities 82 83

$ 118 $ 122

The following table summarizes the changes in the accrued liability for environmental remediation activities by category (in millions of dollars):

Refineries RetailSites

ChemicalsFacilities

Pipelines

andTerminals

Hazardous

WasteSites Other Total

Balance at January 1, 2007 $ 34 $ 69 $ 3 $ 12 $ 2 $ 1 $ 121 Accruals 2 11 — 2 1 — 16 Payments (5) (10) — (2) — — (17)

Balance at June 30, 2007 $ 31 $ 70 $ 3 $ 12 $ 3 $ 1 $ 120

Balance at January 1, 2008 $ 35 $ 67 $ 4 $ 12 $ 3 $ 1 $ 122 Accruals 3 10 — 1 1 — 15 Payments (6) (10) — (2) (1) — (19)

Balance at June 30, 2008 $ 32 $ 67 $ 4 $ 11 $ 3 $ 1 $ 118

Sunoco’s accruals for environmental remediation activities reflect management’s estimates of the most likely costs that will be incurred over an extendedperiod to remediate identified conditions for which the costs are both probable and reasonably estimable. Engineering studies, historical experience andother factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated accruals for environmentalremediation activities. Losses attributable to unasserted claims are also reflected in the accruals to the extent they are probable of occurrence andreasonably estimable.

Total future costs for the environmental remediation activities identified above will depend upon, among other things, the identification of any additionalsites, the determination of the extent of the contamination at each site, the timing and nature of required remedial actions, the nature of operations at eachsite, the technology available and needed to meet the various existing legal requirements, the nature and terms of cost-sharing arrangements with otherpotentially responsible parties, the availability of insurance coverage, the nature and extent of future environmental laws and regulations, inflation ratesand the determination of Sunoco’s liability at the sites, if any, in light of the number, participation level and financial viability of the other parties.Management believes it is reasonably possible (i.e., less than probable but greater than remote) that additional environmental remediation losses will beincurred. At June 30, 2008, the aggregate of the estimated maximum additional reasonably possible losses, which relate to numerous individual sites,totaled approximately $105 million. However, the Company believes it is very unlikely that it will realize the maximum reasonably possible loss at everysite. Furthermore, the recognition of additional losses, if and when they were to occur, would likely extend over many years and, therefore, likely wouldnot have a material impact on the Company’s financial position.

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Table of ContentsUnder various environmental laws, including the Resource Conservation and Recovery Act (“RCRA”) (which relates to solid and hazardous wastetreatment, storage and disposal), Sunoco has initiated corrective remedial action at its facilities, formerly owned facilities and third-party sites. At theCompany’s major manufacturing facilities, Sunoco has consistently assumed continued industrial use and a containment/remediation strategy focused oneliminating unacceptable risks to human health or the environment. The remediation accruals for these sites reflect that strategy. Accruals include amountsto prevent off-site migration and to contain the impact on the facility property, as well as to address known, discrete areas requiring remediation within theplants. Activities include closure of RCRA solid waste management units, recovery of hydrocarbons, handling of impacted soil, mitigation of surfacewater impacts and prevention of off-site migration.

Many of Sunoco’s current terminals are being addressed with the above containment/remediation strategy. At some smaller or less impacted facilities andsome previously divested terminals, the focus is on remediating discrete interior areas to attain regulatory closure.

Sunoco owns or operates certain retail gasoline outlets where releases of petroleum products have occurred. Federal and state laws and regulations requirethat contamination caused by such releases at these sites and at formerly owned sites be assessed and remediated to meet the applicable standards. Theobligation for Sunoco to remediate this type of contamination varies, depending on the extent of the release and the applicable laws and regulations. Aportion of the remediation costs may be recoverable from the reimbursement fund of the applicable state, after any deductible has been met.

The accrued liability for hazardous waste sites is attributable to potential obligations to remove or mitigate the environmental effects of the disposal orrelease of certain pollutants at third-party sites pursuant to the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”)(which relates to releases and remediation of hazardous substances) and similar state laws. Under CERCLA, Sunoco is potentially subject to joint andseveral liability for the costs of remediation at sites at which it has been identified as a “potentially responsible party” (“PRP”). As of June 30, 2008,Sunoco had been named as a PRP at 36 sites identified or potentially identifiable as “Superfund” sites under federal and state law. The Company is usuallyone of a number of companies identified as a PRP at a site. Sunoco has reviewed the nature and extent of its involvement at each site and other relevantcircumstances and, based upon the other parties involved or Sunoco’s level of participation therein, believes that its potential liability associated with suchsites will not be significant.

Management believes that none of the current remediation locations, which are in various stages of ongoing remediation, is individually material toSunoco as its largest accrual for any one Superfund site, operable unit or remediation area was less than $7 million at June 30, 2008. As a result, Sunoco’sexposure to adverse developments with respect to any individual site is not expected to be material. However, if changes in environmental laws orregulations occur, such changes could impact multiple Sunoco facilities, formerly owned facilities and third-party sites at the same time. As a result, fromtime to time, significant charges against income for environmental remediation may occur.

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Table of ContentsThe Company maintains insurance programs that cover certain of its existing or potential environmental liabilities, which programs vary by year, type andextent of coverage. For underground storage tank remediations, the Company can also seek reimbursement through various state funds of certainremediation costs above a deductible amount. For certain acquired properties, the Company has entered into arrangements with the sellers or others thatallocate environmental liabilities and provide indemnities to the Company for remediating contamination that occurred prior to the acquisition dates. Someof these environmental indemnifications are subject to caps and limits. No accruals have been recorded for any potential contingent liabilities that will befunded by the prior owners as management does not believe, based on current information, that it is likely that any of the former owners will not performunder any of these agreements. Other than the preceding arrangements, the Company has not entered into any arrangements with third parties to mitigateits exposure to loss from environmental contamination. Claims for recovery of environmental liabilities that are probable of realization totaled $14 millionat June 30, 2008 and are included principally in deferred charges and other assets in the condensed consolidated balance sheets.

Regulatory Matters

The U.S. Environmental Protection Agency (“EPA”) adopted rules under the Clean Air Act (which relates to emissions of materials into the air) thatphased in limitations on the sulfur content of gasoline beginning in 2004 and the sulfur content of on-road diesel fuel beginning in mid-2006 (“Tier II”).The rules include banking and trading credit systems, providing refiners flexibility through 2006 for low-sulfur gasoline and through May 2010 foron-road low-sulfur diesel. Tier II capital spending, which was completed in 2006, totaled $755 million. In addition, higher operating costs are beingincurred as the low-sulfur fuels are produced. In May 2004, the EPA adopted another rule which is phasing in limits on the allowable sulfur content inoff-road diesel fuel that began in June 2007. This rule also provides for banking and trading credit systems. The ultimate impact of this rule may dependupon the effectiveness of the credit systems, Sunoco’s flexibility to modify its production slate and the impact on any capital expenditures of technologyselection, permitting requirements and construction schedules, as well as any effect on prices created by the changes in the level of off-road diesel fuelproduction.

In connection with the phase-in of these off-road diesel fuel rules, Sunoco has initiated an approximately $400 million capital project at the Tulsa refinery,which includes a new 24 thousand barrels-per-day hydrotreating unit, sulfur recovery unit and tail gas treater. The project is scheduled for completion inmid-2010 and is designed to enable the production of diesel fuel that meets existing specifications and result in increased feedstock flexibility and anupgraded product slate. Expenditures through June 30, 2008 totaled approximately $15 million. Most of the capital for the project is expected to be spentin 2009. In December 2007, Sunoco also announced that it is considering the potential sale of this facility. This process is currently ongoing.

National Ambient Air Quality Standards (“NAAQS”) for ozone and fine particles promulgated in 2004 by the EPA have resulted in identification ofnon-attainment areas throughout the country, including Texas, Pennsylvania, Ohio, New Jersey and West Virginia, where Sunoco operates facilities. TheEPA has designated certain areas, including Philadelphia and Houston, as “moderate” non-attainment areas for ozone, which requires them to meet theozone requirements by 2010, before currently mandated federal control programs would take effect. If a region is not able to demonstrate attainment by2010, there would be more stringent offset requirements, and,

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Table of Contentsif a region cannot submit an approvable State Implementation Plan (“SIP”), there could be other negative consequences. In December 2006, the District ofColumbia Circuit Court of Appeals overturned the EPA’s ozone attainment plan, including revocation of Clean Air Act Section 185(a) fee provisions.Sunoco will likely be subject to non-attainment fees in Houston, but any additional costs are not expected to be material. In 2005, the EPA also identified21 counties which, based on 2003-2004 data, now are in attainment of the fine particles standard. Sunoco’s Toledo refinery is within one of theseattainment areas. In September 2006, the EPA issued a final rule tightening the standard for fine particles. This standard is currently being challenged infederal court by various states and environmental groups. In March 2007, the EPA issued final rules to implement the 1997 fine particle matter (PM 2.5)standards. States had until April 2008 to submit plans to the EPA demonstrating attainment by 2010 or, at the latest, 2015. However, the March 2007 ruledoes not address attainment of the September 2006 standard. In March 2008, the EPA promulgated a new, more stringent ozone standard, which waschallenged in a lawsuit in May 2008 by environmental organizations. Regulatory programs, when established to implement the EPA’s air qualitystandards, could have an impact on Sunoco and its operations. However, the potential financial impact cannot be reasonably estimated until the lawsuit isresolved, the EPA promulgates regulatory programs to attain the standards, and the states, as necessary, develop and implement revised SIPs to respond tothe new regulations.

Through the operation of its refineries, chemical plants, marketing facilities and coke plants, Sunoco’s operations emit greenhouse gases (“GHG”),including carbon dioxide. There are various legislative and regulatory measures to address GHG emissions which are in various stages of review,discussion or implementation. These include federal and state actions to develop programs for the reduction of GHG emissions. While it is currently notpossible to predict the impact, if any, that these issues will have on the Company or the industry in general, they could result in increases in costs tooperate and maintain the Company’s facilities, as well as capital outlays for new emission control equipment at these facilities. In addition, regulationslimiting GHG emissions or carbon content of products, which target specific industries such as petroleum refining or chemical or coke manufacturingcould adversely affect the Company’s ability to conduct its business and also may reduce demand for its products.

Under a law that was enacted in August 2005, a renewable fuels mandate for ethanol use in gasoline was established (immediately in California and onMay 5, 2006 for the rest of the nation). Although the act did not ban MTBE, during the second quarter of 2006, Sunoco discontinued the use of MTBE andincreased its use of ethanol in gasoline. This change by Sunoco and other refiners in the industry has price and supply implications in the marketplace. InDecember 2007, another law was enacted which increases automobile mileage standards nearly 40 percent to 35 miles per gallon by 2020 and increases therenewable fuels mandate to 36 billion gallons per year by 2022. Any additional federal and state legislation could also have a significant impact on marketconditions and the profitability of Sunoco and the industry in general.

MTBE Litigation

Sunoco, along with other refiners, manufacturers and sellers of gasoline are defendants in approximately 78 lawsuits in 18 states and the Commonwealthof Puerto Rico, which allege MTBE contamination in groundwater. Plaintiffs, who include water purveyors and municipalities responsible for supplyingdrinking water and private well owners, allege that refiners and suppliers of gasoline containing MTBE are responsible for manufacturing and distributinga defective product that contaminates groundwater. Plaintiffs

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Table of Contentsare asserting primarily product liability claims and additional claims including nuisance, trespass, negligence, violation of environmental laws anddeceptive business practices. In addition, several actions commenced by state authorities allege natural resource damages. Plaintiffs are seeking to rely ona “joint liability of industry” theory at trial, although there has been no ruling as to whether the plaintiffs will be permitted to pursue this theory. Plaintiffsare seeking compensatory damages, and in some cases injunctive relief, punitive damages and attorneys’ fees.

The majority of MTBE cases have been removed to federal court and consolidated for pretrial purposes in the U.S. District Court for the Southern Districtof New York (MDL 1358) (“MDL Litigation”). Discovery is proceeding in four focus cases. Sunoco is a defendant in three of those cases. In one of thefour focus cases, the Suffolk County Water Authority case, the court has set a trial date in September 2008. In addition, four private well owner cases inwhich Sunoco is a defendant are moving forward. Two of the cases, which are part of the MDL Litigation, could go to trial in the latter part of 2008. Theother two cases are pending in state court. The Second Circuit Court of Appeals (“Second Circuit”) recently rendered a decision in two MTBE cases thatare part of the MDL Litigation in which it held that there was no federal jurisdiction for the removal of these cases to federal court and consequently,ordered that the cases be remanded back to the state courts from which they originated. The parties and the judge in the MDL Litigation evaluated theimpact of the Second Circuit’s decision on the remaining cases that are part of the MDL Litigation and a number of additional cases were remanded backto the state court.

In December 2007, Sunoco, along with other refiners, entered into a settlement in principle pertaining to certain MTBE cases. The settling parties executeda settlement agreement in May 2008 and the settlement is subject to final court approval. The settlement will cover 53 of the cases referred to above,including the Suffolk County Water Authority case. The settlement for these cases will require a cash payment by the group of settling refiner defendants ofapproximately $422 million (which includes attorneys’ fees) plus an agreement in the future to fund costs of treating existing wells as to which MTBE hasnot currently been detected but which later is detected, over four consecutive quarters, above certain concentration levels. As MTBE is no longer used, andbased on a generally declining trend in MTBE contamination, the Company does not anticipate substantial costs associated with the future treatment ofexisting wells. Under the settlement, Sunoco was assigned an allocation percentage and will be required to make a cash payment of approximately $28million, of which $17 million will be recovered from its insurance carriers. In addition to the cash payment, Sunoco will participate on the same basis inany costs of future treatment of existing wells. The Company established a $28 million accrual ($17 million after tax) in the fourth quarter of 2007 inconnection with the settlement and recognized an $18 million gain ($11 million after tax) in the second quarter of 2008 in connection with the insurancerecovery, both of which are reflected in provision for asset write-downs and other matters in the consolidated statements of income.

For the group of MTBE cases that are not covered by the settlement, there has been insufficient information developed about the plaintiffs’ legal theoriesor the facts that would be relevant to an analysis of the ultimate liability to Sunoco. Based on the current law and facts available at this time, no accrual hasbeen established for any potential damages at June 30, 2008 and Sunoco believes that these cases will not have a material adverse effect on its consolidatedfinancial position.

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Table of ContentsConclusion

Many other legal and administrative proceedings are pending or may be brought against Sunoco arising out of its current and past operations, includingmatters related to commercial and tax disputes, product liability, antitrust, employment claims, leaks from pipelines and underground storage tanks, naturalresource damage claims, premises-liability claims, allegations of exposures of third parties to toxic substances (such as benzene or asbestos) and generalenvironmental claims. Although the ultimate outcome of these proceedings and other matters identified above cannot be ascertained at this time, it isreasonably possible that some of these matters could be resolved unfavorably to Sunoco. Management believes that these matters could have a significantimpact on results of operations for any future quarter or year. However, management does not believe that any additional liabilities which may arisepertaining to such matters would be material in relation to the consolidated financial position of Sunoco at June 30, 2008. Furthermore, management doesnot believe that the overall costs for environmental remediation activities will have a material impact over an extended period of time on Sunoco’s cashflows or liquidity.

6. Retirement Benefit Plans.

The following tables set forth the components of defined benefit plans and postretirement benefit plans expense (in millions of dollars):

Defined Benefit

Plans PostretirementBenefit Plans

Six Months

EndedJune 30

Six Months

EndedJune 30

2008 2007 2008 2007 Service cost (cost of benefits earned during the year) $ 24 $ 25 $ 4 $ 5 Interest cost on benefit obligations 40 41 13 12 Expected return on plan assets (53) (48) — — Amortization of:

Prior service cost (benefit) 1 1 (1) (1)Actuarial losses 8 16 1 2

Special termination benefits — 2 — —

Total expense $ 20 $ 37 $ 17 $ 18

Defined Benefit

Plans PostretirementBenefit Plans

Three Months

EndedJune 30

Three Months

EndedJune 30

2008 2007 2008 2007 Service cost (cost of benefits earned during the year) $ 12 $ 12 $ 2 $ 3 Interest cost on benefit obligations 20 20 7 6 Expected return on plan assets (27) (24) — — Amortization of:

Prior service cost (benefit) — 1 (1) — Actuarial losses 5 8 — 1

Special termination benefits — 2 — —

Total expense $ 10 $ 19 $ 8 $ 10

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Table of Contents

7. Shareholders’ Equity.

At

June 302008

At

December 312007

(Millions of Dollars) Common stock, par value $1 per share $ 281 $ 281 Capital in excess of par value 1,663 1,662 Retained earnings 5,328 5,372 Accumulated other comprehensive loss (219) (193)Common stock held in treasury, at cost (4,639) (4,589)

Total $ 2,414 $ 2,533

During the first six months of 2008, the Company repurchased 782 thousand shares of its common stock for $49 million. At June 30, 2008, the Companyhad a remaining authorization from its Board to repurchase up to $600 million of Company common stock from time to time depending on prevailingmarket conditions and available cash.

The Company increased the quarterly cash dividend paid on common stock from $.25 per share ($1.00 per year) to $.275 per share ($1.10 per year)beginning with the second quarter of 2007 and then to $.30 per share ($1.20 per year) beginning with the second quarter of 2008.

8. Comprehensive Income (Loss).

The following table sets forth Sunoco’s comprehensive income (loss) (in millions of dollars):

Six MonthsEnded

June 30

Three MonthsEnded

June 30 2008 2007 2008 2007 Net income $ 23 $ 684 $ 82 $ 509 Other comprehensive income (loss), net of related income taxes:

Reclassification to earnings of: Actuarial loss amortization 5 11 2 6 Prior service cost amortization — — — —

Net hedging losses (73) (46) (76) (23)Reclassifications of net hedging losses to earnings 47 9 42 14 Net increase (decrease) in availablefor-sale securities (5) 5 (3) 4

Comprehensive income (loss) $ (3) $ 663 $ 47 $ 510

Sunoco uses derivative instruments to hedge a variety of commodity price risks. Beginning in the second quarter of 2006, Sunoco increased its use ofethanol as an oxygenate component in gasoline in response to the renewable fuels mandate for ethanol and the discontinuance of the use of MTBE as agasoline blending component. Since then, most of the ethanol purchased by Sunoco was through normal fixed-price purchase contracts. To reduce themargin risk created by these fixed-price contracts, the Company entered into derivative contracts to sell gasoline at a fixed price to hedge a similar volumeof forecasted floating-price gasoline sales over the term of the ethanol contracts. In effect, these derivative contracts have locked in an acceptabledifferential between the gasoline price and the cost of the ethanol purchases for gasoline blending during this period.

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Table of ContentsAs a result of increases in the price of gasoline, the fair value of the fixed-price gasoline contracts decreased $105 and $61 million ($63 and $36 millionafter tax) in the first six months of 2008 and 2007, respectively. As these derivative contracts have been designated as cash flow hedges, these decreases infair value are not initially included in earnings but rather are reflected in the net hedging losses component of comprehensive income (loss) in the tableabove. The fair value of these contracts at the time the positions are closed is recognized in earnings when the hedged items are recognized in earnings,with Sunoco’s margin reflecting the differential between the gasoline sales prices hedged to a fixed price and the cost of fixed-price ethanol purchases. Netgains (losses) totaling $(61) and $5 million ($(36) and $3 million after tax) were reclassified to earnings in the first six months of 2008 and 2007,respectively, when these hedged items were recognized in earnings.

9. Fair Value Measurements.

Effective January 1, 2008, the Company adopted the provisions of Statement of Financial Accounting Standards No. 157, “Fair Value Measurements”(“SFAS No. 157”), which pertain to certain balance sheet items measured at fair value on a recurring basis. SFAS No. 157 defines fair value, establishes aframework for measuring fair value and expands disclosures about such measurements that are permitted or required under other accountingpronouncements. While SFAS No. 157 may change the method of calculating fair value, it does not require any new fair value measurements.

In accordance with SFAS No. 157, the Company determines fair value as the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date. As required, the Company utilizes valuation techniques that maximize the use ofobservable inputs (levels 1 and 2) and minimize the use of unobservable inputs (level 3) within the fair value hierarchy established by SFAS No. 157. TheCompany generally applies the “market approach” to determine fair value. This method uses pricing and other information generated by markettransactions for identical or comparable assets and liabilities. Assets and liabilities are classified within the fair value hierarchy based on the lowest level(least observable) input that is significant to the measurement in its entirety.

The following table sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the condensed consolidated balancesheet at June 30, 2008 (in millions of dollars):

Quoted Prices inActive Markets

for IdenticalAssets orLiabilities(Level 1)

SignificantOther

ObservableInputs

(Level 2)

SignificantUnobservable

Inputs(Level 3) Total

Assets: Cash equivalents $ 194 $ — $ — $ 194Available-for-sale securities (Note 8) 10 9 — 19Derivative contract hedging gains (Note 8) 4 11 — 15

$ 208 $ 20 $ — $ 228

Liabilities: Derivative contract hedging losses (Note 8) $ 18 $ 59 — $ 77

$ 18 $ 59 $ — $ 77

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Table of ContentsThe Company is currently evaluating the impact on its financial statements of the remaining provisions of SFAS No. 157 pertaining to measurements ofcertain nonfinancial assets and liabilities, which must be implemented effective January 1, 2009.

In addition, in February 2007, Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and FinancialLiabilities” (“SFAS No. 159”), was issued and became effective January 1, 2008. SFAS No. 159 permits entities to choose to measure many financialinstruments and certain other eligible items at fair value that were not previously required to be measured at fair value, with unrealized gains and losses onsuch items reported in earnings. The Company did not elect the use of fair value measurements for any additional items as of June 30, 2008.

10. Business Segment Information.

The following tables set forth certain income statement information concerning Sunoco’s business segments (in millions of dollars):

Sales and Other

Operating Revenue Segment Income

(Loss)(after tax) Six Months Ended June 30, 2008

UnaffiliatedCustomers

Inter-segment

Refining and Supply $ 14,002 $ 7,693 $ (91)Retail Marketing 8,612 — 26 Chemicals 1,572 — 21 Logistics 4,317 1,390 36 Coke 354 6 48 Corporate and Other — — (17)*

Consolidated $ 28,857 $ 23

Six Months Ended June 30, 2007 Refining and Supply $ 9,072 $ 5,700 $ 558 Retail Marketing 6,882 — 37 Chemicals 1,332 — 15 Logistics 2,337 841 19 Coke 236 5 24 Corporate and Other — — 31**


* Consists of $28 million of after-tax corporate expenses, $10 million of after-tax net financing expenses and other, an $11 million after-tax gain related toan insurance recovery and a $10 million after-tax gain related to income tax matters (Notes 3 and 5).

** Consists of $33 million of after-tax corporate expenses, $26 million of after-tax net financing expenses and other and a $90 million after-tax gain related tothe prior issuance of Sunoco Logistics Partners L.P. limited partnership units (Note 2).

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Table of Contents

Sales and Other

Operating Revenue Segment Income

(Loss)(after tax) Three Months Ended June 30, 2008

UnaffiliatedCustomers

Inter-segment

Refining and Supply $ 7,665 $ 4,394 $ 32 Retail Marketing 4,836 — — Chemicals 819 — 3 Logistics 2,559 756 21 Coke 182 3 23 Corporate and Other — — 3*


Three Months Ended June 30, 2007 Refining and Supply $ 4,805 $ 3,272 $ 482 Retail Marketing 3,841 — 30 Chemicals 721 — 6 Logistics 1,239 389 10 Coke 118 2 13 Corporate and Other — — (32)**


* Consists of $11 million of after-tax corporate expenses, $7 million of after-tax net financing expenses and other, an $11 million after-tax gain related to aninsurance recovery and a $10 million after-tax gain related to income tax matters (Notes 3 and 5).

** Consists of $18 million of after-tax corporate expenses and $14 million of after-tax net financing expenses and other.

11. New Accounting Pronouncements.

In December 2007, Statement of Financial Accounting Standards No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”), was issued.SFAS No. 141R retains the fundamental requirements of Statement of Financial Accounting Standards No. 141, “Business Combinations.” Under the newstandard, the acquirer must recognize the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree measured at their fairvalues as of the acquisition date. SFAS No. 141R also requires that contingent consideration be recognized at fair value on the acquisition date and thatany acquisition-related costs be recognized separately from the acquisition and expensed as incurred.

In December 2007, Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFASNo. 160”), was issued. Among other things, SFAS No. 160 amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” toestablish standards for the accounting and reporting of noncontrolling (minority) interests in consolidated financial statements. The new standard willrequire that minority interests be reported as a component of shareholders’ equity and that consolidated net income include amounts attributable to theminority interests with such amounts separately disclosed on the face of the income statement. SFAS No. 160 also will require that all changes in minorityinterests that do not result in a loss of control of the subsidiary be accounted for as equity transactions.

In March 2008, Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFASNo. 161”), was issued. SFAS No. 161 amends and expands the disclosure

17


Table of Contentsrequirements for derivative instruments and hedging activities under Statement of Financial Accounting Standards No. 133, “Accounting for DerivativeInstruments and Hedging Activities” (“SFAS No. 133”). SFAS No. 161 will require a more detailed discussion of how an entity uses derivativeinstruments and hedging activities and how such derivative instruments and related hedged items affect the entity’s financial position, financialperformance and cash flows. Among other things, the expanded disclosures will also require presentation of the fair values of derivative instruments andtheir gains and losses in tabular format and enhanced liquidity disclosures, including discussion of credit-risk-related derivative features.

In May 2008, Statement of Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”),was issued. SFAS No. 162 identifies a consistent framework, or hierarchy, for selecting accounting principles used in the preparation of financialstatements presented in conformity with generally accepted accounting principles of nongovernmental entities.

SFAS No. 141R, SFAS No. 160 and SFAS No. 161 must be implemented effective January 1, 2009 and SFAS No. 162 will be effective 60 days after theSecurities and Exchange Commission approves the Public Company Accounting Oversight Board’s amendments to Statement on Auditing StandardsNo. 69, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” Sunoco is evaluating the impact of these newaccounting principles on its financial statements.

12. Logistics Acquisition Agreement.

On April 28, 2008, Sunoco Logistics Partners L.P. entered into definitive agreements with affiliates of Exxon Mobil Corporation to acquire a 472-milerefined products pipeline system, six refined products terminal facilities with a combined storage capacity of approximately 1.2 million barrels and certainother related assets located in Texas for approximately $200 million. The transactions, which are subject to satisfaction of certain closing conditions, areexpected to be completed in the third quarter of 2008.

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Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

RESULTS OF OPERATIONS – SIX MONTHS

Earnings Profile of Sunoco Businesses (after tax)

Six MonthsEnded

June 30 Variance 2008 2007

(Millions of Dollars) Refining and Supply $ (91) $ 558 $ (649)

Retail Marketing 26 37 (11)

Chemicals 21 15 6

Logistics 36 19 17

Coke 48 24 24

Corporate and Other:

Corporate expenses (28) (33) 5

Net financing expenses and other (10) (26) 16

Asset write-downs and other matters 11 — 11

Income tax matters 10 — 10

Issuance of Sunoco Logistics Partners L.P. limited partnership units — 90 (90)

Consolidated net income $ 23 $ 684 $ (661)

Analysis of Earnings Profile of Sunoco Businesses

In the six-month period ended June 30, 2008, Sunoco earned $23 million, or $.20 per share of common stock on a diluted basis, compared to $684 million, or$5.63 per share, in the first half of 2007.

The $661 million decrease in results in the first half of 2008 was primarily due to lower margins in Sunoco’s Refining and Supply business ($546 million). Alsocontributing to the decline in earnings were the absence of a gain recognized in 2007 related to the prior issuance of Sunoco Logistics Partners L.P. limitedpartnership units ($90 million), higher expenses ($73 million), lower average retail gasoline and distillate sales volumes ($9 million), lower gains on assetdivestments ($9 million) and an unfavorable income tax consolidation adjustment in 2008 ($11 million). Partially offsetting these negative factors were lower netfinancing expenses ($16 million); higher income attributable to Sunoco’s Coke ($24 million), Chemicals ($6 million) and Logistics ($17 million) businesses; andgains recognized in 2008 related to an insurance recovery ($11 million) and certain income tax matters ($10 million).

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Table of ContentsRefining and Supply

For the Six

Months EndedJune 30

2008 2007 Income (loss) (millions of dollars) $ (91) $ 558 Wholesale margin* (per barrel):

Total Refining and Supply $ 5.23 $ 10.98 Northeast Refining $ 5.28 $ 9.00 MidContinent Refining $ 5.07 $ 16.60

Crude inputs as percent of crude unit rated capacity 85%** 88%Throughputs (thousands of barrels daily):

Crude oil 771.9 790.4 Other feedstocks 80.2 79.0

Total throughputs 852.1 869.4

Products manufactured (thousands of barrels daily): Gasoline 393.5 419.8 Middle distillates 310.2 291.4 Residual fuel 53.7 62.8 Petrochemicals 34.3 35.6 Lubricants 11.7 12.0 Other 80.4 79.2

Total production 883.8 900.8 Less: Production used as fuel in refinery operations 39.6 42.0

Total production available for sale 844.2 858.8

* Wholesale sales revenue less related cost of crude oil, other feedstocks, product purchases and terminalling and transportation divided byproduction available for sale.

** Reflects the impact of a 10 thousand barrels-per-day increase in crude unit capacity in MidContinent Refining in July 2007 attributable to a crude unitdebottleneck project at the Toledo refinery.

Refining and Supply had a loss of $91 million in the first six months of 2008 versus income of $558 million in the first half of 2007. The $649 million decreasein results was primarily due to significantly lower realized margins ($546 million). Also contributing to the decline were higher expenses ($96 million) and lowerproduction volumes ($6 million). The lower margins reflect the negative impact of much higher average crude oil costs and lower product demand than a yearago, especially for gasoline, while the higher expenses were largely the result of increased prices for purchased fuel and utilities. Production volumes decreasedslightly in the first six months of 2008 compared to the year-ago period. Planned and unplanned maintenance work and economically driven rate reductions in thecurrent period reduced production by approximately 22 million barrels throughout the refining system, while production in the first half of 2007 was negativelyimpacted by major turnaround and expansion work at the Philadelphia refinery as well as downtime at the Tulsa and Marcus Hook refineries.

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Table of ContentsRetail Marketing

For the Six

Months EndedJune 30

2008 2007Income (millions of dollars) $ 26 $ 37Retail margin* (per barrel):

Gasoline $ 3.87 $ 3.88Middle distillates $ 5.95 $ 5.52

Sales (thousands of barrels daily): Gasoline 289.2 303.4Middle distillates 37.5 43.3

326.7 346.7

Retail gasoline outlets 4,714 4,699

* Retail sales price less related wholesale price, terminalling and transportation costs and consumer excise taxes per barrel. The retail sales price is theweighted-average price received through the various branded marketing distribution channels.

Retail Marketing earned $26 million in the first half of 2008 versus $37 million in the first half of 2007. The $11 million decrease in earnings was primarily dueto lower gasoline and distillate sales volumes ($9 million) and lower divestment gains attributable to the Retail Portfolio Management program ($9 million),partially offset by lower expenses ($7 million).

Chemicals

For the Six

Months EndedJune 30

2008 2007 Income (millions of dollars) $ 21 $ 15 Margin* (cents per pound):

All products** 9.9¢ 10.1¢Phenol and related products 8.3¢ 8.6¢Polypropylene** 11.9¢ 12.0¢

Sales (millions of pounds): Phenol and related products 1,190 1,236 Polypropylene 1,131 1,124 Other 43 42

2,364 2,402

* Wholesale sales revenue less the cost of feedstocks, product purchases and related terminalling and transportation divided by sales volumes.

** The polypropylene and all products margins include the impact of a long-term supply contract with Equistar Chemicals, L.P. which is priced on acost-based formula that includes a fixed discount.

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Table of ContentsChemicals earned $21 million in the first six months of 2008 versus $15 million in the first half of 2007. The $6 million increase in earnings was due primarily tolower expenses ($13 million), partially offset by lower margins ($3 million) and lower sales volumes ($2 million). The lower expenses during the first half of2008 were largely due to the transfer of cumene and propylene splitter assets to Refining and Supply, effective January 1, 2008.

Logistics

Sunoco’s Logistics segment earned $36 million in the first half of 2008 versus $19 million in the first half of 2007. The $17 million increase was due to recordresults from Sunoco Logistics Partners L.P. primarily resulting from asset growth and strong performance in its western pipeline system. Also contributing to theincrease were higher earnings from the eastern pipeline system and terminalling operations.

On April 28, 2008, Sunoco Logistics Partners L.P. entered into definitive agreements with affiliates of Exxon Mobil Corporation to acquire a 472-mile refinedproducts pipeline system, six refined products terminal facilities with a combined storage capacity of approximately 1.2 million barrels and certain other relatedassets located in Texas for approximately $200 million. The transactions, which are subject to satisfaction of certain closing conditions, are expected to becompleted in the third quarter of 2008.

Coke

Coke earned $48 million in the first six months of 2008 versus $24 million in the first half of 2007. The $24 million increase in earnings was due primarily toincreased price realizations from coal and coke production at Jewell. Partially offsetting this positive factor were lower tax benefits from cokemaking operationsand higher minority interest, selling, general and administrative and depreciation expenses. Beginning in 2008, most of the coke production at the Jewellcokemaking operation and all of the coke production at the Indiana Harbor cokemaking operation are no longer eligible to generate nonconventional fuel taxcredits.

In February 2007, SunCoke Energy entered into an agreement with Severstal North America, Inc. (“Severstal N.A.”) and WCI Steel, Inc. (“WCI”) under which alocal affiliate of SunCoke Energy will build, own and operate a second 550 thousand tons-per-year cokemaking facility and associated cogeneration power plantat its Haverhill site. In July 2008, WCI was acquired by OAO Severstal, the parent company of Severstal N.A. Construction of these facilities, which is estimatedto cost approximately $250 million, is currently underway, and the facilities are expected to become fully operational in the second half of 2008. Expendituresthrough June 30, 2008 totaled approximately $223 million. In connection with this agreement, the customers agreed to purchase, over a 15-year period, acombined 550 thousand tons per year of coke from the cokemaking facility. In addition, the heat recovery steam generation associated with the cokemakingprocess will produce and supply steam to the 67 megawatt turbine, which will provide, on average, 46 megawatts of power into the regional power market. Withthe completion of this project and the anticipated impact of higher coal prices at Jewell in the second half of 2008, Coke’s income is expected to totalapproximately $110-$115 million after tax for the full-year 2008.

In February 2008, SunCoke Energy entered into an agreement with U.S. Steel under which SunCoke Energy will build, own and operate a 650 thousandtons-per-year cokemaking facility adjacent to U.S. Steel’s steelmaking facility in Granite City, Illinois. Construction of this facility, which is estimated to costapproximately $300 million, is currently underway and is expected to be completed in the fourth quarter of 2009. Expenditures through June 30, 2008 totaledapproximately $39 million. In connection with this agreement, U.S. Steel has agreed to purchase, over a 15-year period, such coke production as well as thesteam generated from the heat recovery cokemaking process at this facility.

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Table of ContentsIn March 2008, SunCoke Energy entered into an agreement with AK Steel under which SunCoke Energy will build, own and operate a cokemaking facility andassociated cogeneration power plant adjacent to AK Steel’s Middletown, Ohio steelmaking facility. These facilities are expected to cost approximately $350million and be capable of producing approximately 550 thousand tons of coke per year. In addition, the heat recovery steam generation associated with thecokemaking process will provide, on average, 46 megawatts of power into the regional power market. In connection with this agreement, which is contingentupon receipt of all necessary permits and available economic incentives, AK Steel has agreed to purchase, over a 20-year period, all of the coke and availableelectrical power from these facilities.

SunCoke Energy is currently discussing other opportunities for developing new heat recovery cokemaking facilities with several domestic and international steelcompanies. Such cokemaking facilities could be either wholly owned or owned through a joint venture with one or more parties. The steel company customerswould be expected to purchase coke production under long-term take-or-pay contracts or on an equivalent basis. The facilities will also generate steam, which istypically sold to the steel customer, or electrical power, which could be sold to the steel customer or into the local power market.

Corporate and Other

Corporate Expenses – Corporate administrative expenses were $28 million after tax in the first half of 2008 versus $33 million after tax in the first half of 2007.The $5 million decrease was primarily due to lower accruals for performance-related incentive compensation, partially offset by an $11 million unfavorableincome tax consolidation adjustment in 2008.

Net Financing Expenses and Other – Net financing expenses and other were $10 million after tax in the first half of 2008 versus $26 million after tax in the firstsix months of 2007. The $16 million decrease was primarily due to lower interest expense ($4 million), higher interest income ($2 million), higher capitalizedinterest ($1 million) and the absence of expense attributable to the preferential return of third-party investors in Sunoco’s Indiana Harbor cokemaking operations($6 million). The preferential return period related to Indiana Harbor ended in the fourth quarter of 2007 (see Note 2 to the condensed consolidated financialstatements).

Asset Write-Downs and Other Matters – During the second quarter of 2008, Sunoco recognized an $11 million after-tax gain on an insurance recovery related toan MTBE litigation settlement (see Note 5 to the condensed consolidated financial statements).

Income Tax Matters – During the second quarter of 2008, Sunoco recognized a $10 million after-tax gain related to the settlement of economic nexus issuespertaining to certain state corporate income tax returns filed for prior years (see Note 3 to the condensed consolidated financial statements).

Issuance of Sunoco Logistics Partners L.P. Limited Partnership Units – During the first quarter of 2007, Sunoco recognized a $90 million after-tax gain related tothe prior issuance of limited partnership units of the Partnership to the public. (See Note 2 to the condensed consolidated financial statements.)

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Table of ContentsAnalysis of Condensed Consolidated Statements of Income

Revenues — Total revenues were $28.90 billion in the first half of 2008 compared to $20.07 billion in the first half of 2007. The 44 percent increase wasprimarily due to higher refined product prices and higher crude oil sales in connection with the crude oil gathering and marketing activities of the Company’sLogistics operations. Partially offsetting these positive factors were lower refined product sales volumes.

Costs and Expenses — Total pretax costs and expenses were $28.88 billion in the current six-month period compared to $18.97 billion in the first half of 2007.The 52 percent increase was primarily due to higher crude oil and refined product acquisition costs resulting largely from price increases and higher crude oilcosts in connection with the crude oil gathering and marketing activities of the Company’s Logistics operations.

RESULTS OF OPERATIONS – THREE MONTHS

Earnings Profile of Sunoco Businesses (after tax)

Three MonthsEnded

June 30 Variance 2008 2007

(Millions of Dollars) Refining and Supply $ 32 $ 482 $ (450)

Retail Marketing — 30 (30)

Chemicals 3 6 (3)

Logistics 21 10 11

Coke 23 13 10

Corporate and Other:

Corporate expenses (11) (18) 7

Net financing expenses and other (7) (14) 7

Asset write-downs and other matters 11 — 11

Income tax matters 10 — 10

Consolidated net income $ 82 $ 509 $ (427)

Analysis of Earnings Profile of Sunoco Businesses

In the three-month period ended June 30, 2008, Sunoco earned $82 million, or $.70 per share of common stock on a diluted basis, compared to $509 million, or$4.20 per share, in the second quarter of 2007.

The $427 million decrease in results in the second quarter of 2008 was primarily due to lower margins in Sunoco’s Refining and Supply business ($377 million).Also contributing to the decline in earnings were higher expenses ($36 million), lower average retail gasoline margins ($20 million), lower production of refinedproducts ($18 million), lower chemicals margins and sales volumes ($9 million)

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Table of Contentsand lower gains on asset divestments ($11 million). Partially offsetting these negative factors were lower net financing expenses ($7 million); higher incomeattributable to Sunoco’s Coke ($10 million) and Logistics ($11 million) businesses; and gains recognized in 2008 relating to an insurance recovery ($11 million)and certain income tax matters ($10 million).

Refining and Supply

For the Three

Months EndedJune 30

2008 2007 Income (millions of dollars) $ 32 $ 482 Wholesale margin* (per barrel):

Total Refining and Supply $ 7.04 $ 14.70 Northeast Refining $ 7.13 $ 12.32 MidContinent Refining $ 6.80 $ 22.14

Crude inputs as percent of crude unit rated capacity 84%** 91%Throughputs (thousands of barrels daily):

Crude oil 765.8 819.0 Other feedstocks 82.2 78.5

Total throughputs 848.0 897.5

Products manufactured (thousands of barrels daily): Gasoline 393.5 438.1 Middle distillates 321.8 297.3 Residual fuel 51.2 64.5 Petrochemicals 35.8 36.7 Lubricants 11.3 11.0 Other 65.4 82.6

Total production 879.0 930.2 Less: Production used as fuel in refinery operations 38.9 44.2

Total production available for sale 840.1 886.0

* Wholesale sales revenue less related cost of crude oil, other feedstocks, product purchases and terminalling and transportation divided byproduction available for sale.

** Reflects the impact of a 10 thousand barrels-per-day increase in crude unit capacity in MidContinent Refining in July 2007 attributable to a crude unitdebottleneck project at the Toledo refinery.

Refining and Supply earned $32 million in the second quarter of 2008 versus $482 million in the second quarter of 2007. The $450 million decrease in resultswas primarily due to significantly lower realized margins ($377 million). Also contributing to the decline were higher expenses ($52 million) and lowerproduction volumes ($18 million). The lower margins reflect the negative impact of much higher average crude oil costs and lower product demand than a yearago, especially for gasoline, while the higher expenses were largely the result of increased prices for purchased fuel and utilities. Production volumes decreasedin the second quarter of 2008 compared to the year-ago period due to planned and unplanned maintenance work and economically driven rate reductions, whichwere partially offset by the impact of the major turnaround and expansion work at the Philadelphia refinery during the second quarter of 2007.

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Table of ContentsRetail Marketing

For the Three

Months EndedJune 30

2008 2007Income (millions of dollars) $ — $ 30Retail margin* (per barrel):

Gasoline $ 3.11 $ 4.26Middle distillates $ 4.77 $ 3.98

Sales (thousands of barrels daily): Gasoline 298.3 307.5Middle distillates 37.4 39.8

335.7 347.3

Retail gasoline outlets 4,714 4,699

* Retail sales price less related wholesale price, terminalling and transportation costs and consumer excise taxes per barrel. The retail sales price is theweighted-average price received through the various branded marketing distribution channels.

Retail Marketing had breakeven results in the second quarter of 2008 versus income of $30 million in the second quarter of 2007. The $30 million decrease inearnings was primarily due to lower average retail gasoline margins ($20 million) and lower divestment gains attributable to the Retail Portfolio Managementprogram ($11 million).

Chemicals

For the Three

Months EndedJune 30

2008 2007 Income (millions of dollars) $ 3 $ 6 Margin* (cents per pound):

All products** 9.1¢ 9.7¢Phenol and related products 7.5¢ 8.5¢Polypropylene** 11.2¢ 11.4¢

Sales (millions of pounds): Phenol and related products 591 644 Polypropylene 562 576 Other 19 22

1,172 1,242

* Wholesale sales revenue less the cost of feedstocks, product purchases and related terminalling and transportation divided by sales volumes.

** The polypropylene and all products margins include the impact of a long-term supply contract with Equistar Chemicals, L.P. which is priced on acost-based formula that includes a fixed discount.

Chemicals earned $3 million in the second quarter of 2008 versus $6 million in the second quarter of 2007. The $3 million decrease in earnings was dueprimarily to lower margins ($5 million) and sales volumes ($4 million), partially offset by lower expenses ($8 million). The lower margins were primarily due tohigher feedstock costs, while the lower expenses were largely due to the transfer of cumene and propylene splitter assets to Refining and Supply, effectiveJanuary 1, 2008.

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Table of ContentsLogistics

Sunoco’s Logistics segment earned $21 million in the second quarter of 2008 versus $10 million in the second quarter of 2007. The $11 million increase was dueto record results from Sunoco Logistics Partners L.P. primarily resulting from asset growth and strong performance in its western pipeline system. Alsocontributing to the increase were higher earnings from the eastern pipeline system and terminalling operations.

Coke

Coke earned $23 million in the second quarter of 2008 versus $13 million in the second quarter of 2007. The $10 million increase in earnings was due primarilyto increased price realizations from coal and coke production at Jewell, partially offset by lower tax benefits from cokemaking operations and higher minorityinterest and selling, general and administrative expenses.

Corporate and Other

Corporate Expenses – Corporate administrative expenses were $11 million after tax in the second quarter of 2008 versus $18 million after tax in the secondquarter of 2007. The $7 million decrease was primarily due to lower accruals for performance-related incentive compensation.

Net Financing Expenses and Other – Net financing expenses and other were $7 million after tax in the second quarter of 2008 versus $14 million after tax in thesecond quarter of 2007. The $7 million decrease was primarily due to lower interest expense ($1 million), higher capitalized interest ($1 million) and the absenceof expense attributable to the preferential return of third-party investors in Sunoco’s Indiana Harbor cokemaking operations ($3 million).

Asset Write-Downs and Other Matters – During the second quarter of 2008, Sunoco recognized an $11 million after-tax gain on an insurance recovery related toan MTBE litigation settlement (see Note 5 to the condensed consolidated financial statements).

Income Tax Matters – During the second quarter of 2008, Sunoco recognized a $10 million after-tax gain related to the settlement of economic nexus issuespertaining to certain state corporate income tax returns filed for prior years (see Note 3 to the condensed consolidated financial statements).

Analysis of Condensed Consolidated Statements of Income

Revenues — Total revenues were $16.08 billion in the second quarter of 2008 compared to $10.76 billion in the second quarter of 2007. The 49 percent increasewas primarily due to higher refined product prices and higher crude oil sales in connection with the crude oil gathering and marketing activities of the Company’sLogistics operations. Partially offsetting these positive factors were lower refined product sales volumes.

Costs and Expenses — Total pretax costs and expenses were $15.97 billion in the current three-month period compared to $9.94 billion in the second quarter of2007. The 61 percent increase was primarily due to higher crude oil and refined product acquisition costs resulting largely from price increases and higher crudeoil costs in connection with the crude oil gathering and marketing activities of the Company’s Logistics operations.

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Table of ContentsFINANCIAL CONDITION

Cash and Working Capital

At June 30, 2008, Sunoco had cash and cash equivalents of $214 million compared to $648 million at December 31, 2007 and had a working capital deficit of$1,571 million compared to a working capital deficit of $1,002 million at December 31, 2007. The $434 million decrease in cash and cash equivalents was due toa $518 million net use of cash in investing activities and a $69 million net use of cash in financing activities, partially offset by $153 million of net cash providedby operating activities (“cash generation”). Management believes that the current levels of cash and working capital are adequate to support Sunoco’s ongoingoperations. Sunoco’s working capital position is considerably stronger than indicated because of the relatively low historical costs assigned under the LIFOmethod of accounting for most of the inventories reflected in the condensed consolidated balance sheets. The current replacement cost of all such inventoriesexceeded their carrying value at June 30, 2008 by $5,974 million. Inventories valued at LIFO, which consist of crude oil as well as petroleum and chemicalproducts, are readily marketable at their current replacement values. Certain recent legislative and regulatory proposals effectively could limit, or even eliminate,use of the LIFO inventory method for financial and income tax purposes. Although the final outcome of these proposals cannot be ascertained at this time, theultimate impact to Sunoco of the transition from LIFO to another inventory method could be material.

Cash Flows from Operating Activities

In the first six months of 2008, Sunoco’s cash generation was $153 million compared to $823 million in the first half of 2007. This $670 million decrease in cashgeneration was primarily due to lower operating results.

Financial Capacity

Management currently believes that future cash generation will be sufficient to satisfy Sunoco’s ongoing capital requirements, to fund its pension obligations (see“Pension Plan Funded Status” below) and to pay the current level of cash dividends on Sunoco’s common stock. However, from time to time, the Company’sshort-term cash requirements may exceed its cash generation due to various factors including reductions in margins for products sold and increases in the levelsof capital spending (including acquisitions) and working capital. During those periods, the Company may supplement its cash generation with proceeds fromfinancing activities.

The Company has a $1.3 billion revolving credit facility (the “Facility”), of which $1.2245 billion matures in August 2012 with the balance to mature in August2011. The Facility provides the Company with access to short-term financing and is intended to support the issuance of commercial paper, letters of credit andother debt. The Company also can borrow directly from the participating banks under the Facility. The Facility is subject to commitment fees, which are notmaterial. Under the terms of the Facility, Sunoco is required to maintain tangible net worth (as defined in the Facility) in an amount greater than or equal totargeted tangible net worth (targeted tangible net worth being determined by adding $1.125 billion and 50 percent of the excess of net income over sharerepurchases (as defined in the Facility) for each quarter ended after March 31, 2004). At June 30, 2008, the Company’s tangible net worth was $2.7 billion and itstargeted tangible net worth was $1.7 billion. The Facility also requires that Sunoco’s ratio of consolidated net indebtedness, including borrowings of SunocoLogistics Partners L.P., to consolidated capitalization (as those terms are defined in the Facility) not exceed .60 to 1. At June 30, 2008, this ratio was .37 to 1. AtJune 30, 2008, the Facility was being used to support $100 million of commercial paper and $103 million of floating-rate notes due in 2034.

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Table of ContentsSunoco Logistics Partners L.P. has a $400 million revolving credit facility, which expires in November 2012. This facility is available to fund the Partnership’sworking capital requirements, to finance acquisitions, and for general partnership purposes. Amounts outstanding under this facility totaled $90 and $91 millionat June 30, 2008 and December 31, 2007, respectively. The facility contains a covenant requiring the Partnership to maintain a ratio of up to 4.75 to 1 of itsconsolidated total debt (including letters of credit) to its consolidated EBITDA (each as defined in the facility). At June 30, 2008, the Partnership’s ratio of itsconsolidated debt to its consolidated EBITDA was 2.5 to 1. In connection with the pending refined product pipeline system acquisition in Texas, the Partnershipentered into an additional $100 million 364-day revolving credit facility in May 2008, which is available to fund the same activities as under its $400 millionfacility. In the event the pending acquisition is terminated, this new facility will be terminated. The new facility contains the same covenant requirement as the$400 million revolving credit facility. At June 30, 2008, there were no outstanding borrowings under the 364-day credit facility.

In November 2007, the Partnership entered into two standby letters of credit totaling $130 million. The letters of credit, which were effective January 1, 2008, arerequired in connection with certain crude oil exchange contracts in which the Partnership is a party. During the second quarter of 2008, the Partnership metcertain performance requirements defined within these contracts which reduced the letters of credit to $88 million. The letters of credit, which will expire inSeptember 2008, are subject to commitment fees, which are not material.

The following table sets forth Sunoco’s outstanding debt (in millions of dollars):

At

June 302008

At

December 312007

Short-term borrowings $ 100 $ — Current portion of long-term debt 3 4Long-term debt 1,723 1,724

Total debt* $ 1,826 $ 1,728

* Includes $514 and $515 million at June 30, 2008 and December 31, 2007, respectively, attributable to Sunoco Logistics Partners L.P.

Management believes there is sufficient borrowing capacity available to pursue strategic opportunities as they arise. In addition, the Company has the option ofissuing additional common or preference stock or selling an additional portion of its Sunoco Logistics Partners L.P. interests, and Sunoco Logistics Partners L.P.has the option of issuing additional common units.

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Table of ContentsPENSION PLAN FUNDED STATUS

The following table sets forth the components of the change in market value of the investments in Sunoco’s defined benefit pension plans (in millions of dollars):

Six Months

EndedJune 30, 2008

Year EndedDecember 31, 2007

Market value of investments at beginning of period $ 1,315 $ 1,287 Increase (reduction) in market value of investments resulting from:

Net investment income (loss) (96) 75 Company contributions 6 100 Plan benefit payments (79) (147)

$ 1,146 $ 1,315

Management currently does not anticipate making any additional voluntary contributions to its funded defined benefit plans during the remainder of 2008.Management believes that the pension plans can be funded over time without a significant impact on liquidity.

DIVIDENDS AND SHARE REPURCHASES

The Company increased the quarterly cash dividend paid on common stock from $.25 per share ($1.00 per year) to $.275 per share ($1.10 per year) beginningwith the second quarter of 2007 and then to $.30 per share ($1.20 per year) beginning with the second quarter of 2008.

During the first six months of 2008, the Company repurchased 782 thousand shares of its common stock for $49 million. At June 30, 2008, the Company had aremaining authorization from its Board to repurchase up to $600 million of Company common stock from time to time depending on prevailing marketconditions and available cash (see “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” below).

NEW ACCOUNTING PRONOUNCEMENTS

For a discussion of recently issued accounting pronouncements requiring adoption subsequent to June 30, 2008, see Note 11 to the condensed consolidatedfinancial statements.

FORWARD-LOOKING STATEMENTS

Some of the information included in this quarterly report on Form 10-Q contains “forward-looking statements” (as defined in Section 27A of the Securities Actof 1933 and Section 21E of the Securities Exchange Act of 1934). These forward-looking statements discuss estimates, goals, intentions and expectations as tofuture trends, plans, events, results of operations or financial condition, or state other information relating to the Company, based on current beliefs ofmanagement as well as assumptions made by, and information currently available to, Sunoco. Forward-looking statements generally will be accompanied bywords such as “anticipate,” “believe,” “budget,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “project,”“scheduled,” “should,” or other similar words, phrases or expressions that convey the uncertainty of future events or outcomes. Although management believesthese forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimatelyprove to be inaccurate. Forward-looking statements involve a number of

30


Table of Contentsrisks and uncertainties. Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation:

• Changes in refining, marketing and chemical margins;

• Changes in coal and coke prices;

• Variation in crude oil and petroleum-based commodity prices and availability of crude oil and feedstock supply or transportation;

• Effects of transportation disruptions;

• Changes in the price differentials between light-sweet and heavy-sour crude oils;

• Changes in the marketplace which may affect supply and demand for Sunoco’s products;

• Changes in competition and competitive practices, including the impact of foreign imports;

• Effects of weather conditions and natural disasters on the Company’s operating facilities and on product supply and demand;

• Age of, and changes in the reliability, efficiency and capacity of, the Company’s operating facilities or those of third parties;

• Changes in the level of capital expenditures or operating expenses;

• Effects of adverse events relating to the operation of the Company’s facilities and to the transportation and storage of hazardous materials (includingequipment malfunction, explosions, fires, spills, and the effects of severe weather conditions);

• Changes in the level of environmental capital, operating or remediation expenditures;

• Delays and/or costs related to construction, improvements and/or repairs of facilities (including shortages of skilled labor, the issuance of applicable permitsand inflation);

• Changes in product specifications;

• Availability and pricing of ethanol;

• Political and economic conditions in the markets in which the Company, its suppliers or customers operate, including the impact of potential terrorist acts andinternational hostilities;

• Military conflicts between, or internal instability in, one or more oil producing countries, governmental actions and other disruptions in the ability to obtaincrude oil;

• Ability to conduct business effectively in the event of an information systems failure;

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Table of Contents

• Ability to identify acquisitions, execute them under favorable terms and integrate them into the Company’s existing businesses;

• Ability to enter into joint ventures and other similar arrangements under favorable terms;

• Changes in the availability and cost of debt and equity financing;

• Changes in the credit ratings assigned to the Company’s debt securities or credit facilities;

• Changes in credit terms required by suppliers;

• Changes in insurance markets impacting costs and the level and types of coverage available;

• Changes in accounting rules and/or tax laws or their interpretations, including the method of accounting for inventories and pensions;

• Changes in financial markets impacting pension expense and funding requirements;

• Risks related to labor relations and workplace safety;

• Nonperformance or force majeure by, or disputes with, major customers, suppliers, dealers, distributors or other business partners;

• General economic, financial and business conditions which could affect Sunoco’s financial condition and results of operations;

• Changes in, or new, statutes and government regulations or their interpretations, including those relating to the environment and global warming;

• Claims of the Company’s noncompliance with statutory and regulatory requirements; and

• Changes in the status of, or initiation of new, litigation, arbitration, or other proceedings to which the Company is a party or liability resulting from suchlitigation, arbitration, or other proceedings, including natural resource damage claims.

The factors identified above are believed to be important factors (but not necessarily all of the important factors) that could cause actual results to differmaterially from those expressed in any forward-looking statement made by Sunoco. Other factors not discussed herein could also have material adverse effectson the Company. All forward-looking statements included in this quarterly report on Form 10-Q are expressly qualified in their entirety by the foregoingcautionary statements. The Company undertakes no obligation to update publicly any forward-looking statement (or its associated cautionary language) whetheras a result of new information or future events.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s exposure to market risk since December 31, 2007.

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Table of Contents

Item 4. Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this report, the Company carried out an evaluation of theeffectiveness of the design and operation of the Company’s disclosure controls and procedures. This evaluation was carried out under the supervision andwith the participation of the Company’s management, including the Company’s Chairman, Chief Executive Officer and President and the Company’sSenior Vice President and Chief Financial Officer. Based upon that evaluation, the Company’s Chairman, Chief Executive Officer and President and theCompany’s Senior Vice President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

Disclosure controls and procedures are designed to ensure that information required to be disclosed in Company reports filed or submitted under theExchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules andforms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosedin Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chairman, Chief ExecutiveOfficer and President and the Company’s Senior Vice President and Chief Financial Officer as appropriate, to allow timely decisions regarding requireddisclosure.

There have been no changes in the Company’s internal control over financial reporting during the second quarter of 2008 that have materially affected, orare reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Various lawsuits and governmental proceedings arising in the ordinary course of business are pending against the Company, as well as the lawsuits andproceedings discussed below:

Administrative Proceedings

In July 2008, Sunoco, Inc. (R&M), a wholly owned subsidiary of Sunoco, Inc., and the U. S. Environmental Protection Agency (“EPA”), Region 3, settleda Finding of Violation (“FOV”), in which EPA had alleged violations of certain requirements of the Clean Air Act and permits at Sunoco’s Frankfordchemical facility. Under the terms of the settlement, Sunoco, Inc. (R&M) paid a penalty of $200 thousand. As part of the settlement, Sunoco has agreed toconduct performance tests on specific pieces of equipment. (See also the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,2006, and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.)

The U. S. Occupational Safety and Health Administration (“OSHA”) announced a National Emphasis Program under which it is inspecting domestic oilrefinery locations. OSHA conducted an inspection at Sunoco, Inc, (R&M)’s Toledo refinery for a six-month period commencing in November 2007. Theinspection focused on the OSHA Process Safety Management requirements. The inspection resulted in the issuance of citations totaling in excess of $100thousand. Sunoco has formally contested the citations and is engaged in settlement discussions with OSHA.

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Table of ContentsMTBE Litigation

Sunoco, along with other refiners, manufacturers and sellers of gasoline are defendants in approximately 78 lawsuits in 18 states and the Commonwealthof Puerto Rico, which allege MTBE contamination in groundwater. Plaintiffs, who include water purveyors and municipalities responsible for supplyingdrinking water and private well owners, allege that refiners and suppliers of gasoline containing MTBE are responsible for manufacturing and distributinga defective product that contaminates groundwater. Plaintiffs are asserting primarily product liability claims and additional claims including nuisance,trespass, negligence, violation of environmental laws and deceptive business practices. In addition, several actions commenced by state authorities allegenatural resource damages. Plaintiffs are seeking to rely on a “joint liability of industry” theory at trial, although there has been no ruling as to whether theplaintiffs will be permitted to pursue this theory. Plaintiffs are seeking compensatory damages, and in some cases injunctive relief, punitive damages andattorneys’ fees.

The majority of MTBE cases have been removed to federal court and consolidated for pretrial purposes in the U.S. District Court for the Southern Districtof New York (MDL 1358) (“MDL Litigation”). Discovery is proceeding in four focus cases. Sunoco is a defendant in three of those cases. In one of thefour focus cases, the Suffolk County Water Authority case, the court has set a trial date in September 2008. In addition, four private well owner cases inwhich Sunoco is a defendant are moving forward. Two of the cases, which are part of the MDL Litigation, could go to trial in the latter part of 2008. Theother two cases are pending in state court. The Second Circuit Court of Appeals (“Second Circuit”) recently rendered a decision in two MTBE cases thatare part of the MDL Litigation in which it held that there was no federal jurisdiction for the removal of these cases to federal court and consequently,ordered that the cases be remanded back to the state courts from which they originated. The parties and the judge in the MDL Litigation evaluated theimpact of the Second Circuit’s decision on the remaining cases that are part of the MDL Litigation and a number of additional cases were remanded backto the state court.

In December 2007, Sunoco, along with other refiners, entered into a settlement in principle pertaining to certain MTBE cases. The settling parties executeda settlement agreement in May 2008 and the settlement is subject to final court approval. The settlement will cover 53 of the cases referred to above,including the Suffolk County Water Authority case. The settlement for these cases will require a cash payment by the group of settling refiner defendants ofapproximately $422 million (which includes attorneys’ fees) plus an agreement in the future to fund costs of treating existing wells as to which MTBE hasnot currently been detected but which later is detected, over four consecutive quarters, above certain concentration levels. As MTBE is no longer used, andbased on a generally declining trend in MTBE contamination, the Company does not anticipate substantial costs associated with the future treatment ofexisting wells. Under the settlement, Sunoco was assigned an allocation percentage and will be required to make a cash payment of approximately $28million, of which $17 million will be recovered from its insurance carriers. In addition to the cash payment, Sunoco will participate on the same basis inany costs of future treatment of existing wells. The Company established a $17 million after-tax accrual in the fourth quarter of 2007 in connection withthe settlement and recognized an $11 million after-tax gain in the second quarter of 2008 in connection with the insurance recovery.

For the group of MTBE cases that are not covered by the settlement, there has been insufficient information developed about the plaintiffs’ legal theoriesor the facts that would be relevant to an analysis of the ultimate

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Table of Contentsliability to Sunoco. Based on the current law and facts available at this time, no accrual has been established for any potential damages at June 30, 2008and Sunoco believes that these cases will not have a material adverse effect on its consolidated financial position.

Many other legal and administrative proceedings are pending or may be brought against Sunoco arising out of its current and past operations, includingmatters related to commercial and tax disputes, product liability, antitrust, employment claims, leaks from pipelines and underground storage tanks, naturalresource damage claims, premises-liability claims, allegations of exposures of third parties to toxic substances (such as benzene or asbestos) and generalenvironmental claims. Although the ultimate outcome of these proceedings cannot be ascertained at this time, it is reasonably possible that some of themcould be resolved unfavorably to Sunoco. Management of Sunoco believes that any liabilities that may arise from such matters would not be material inrelation to Sunoco’s business or consolidated financial position at June 30, 2008.

Item 1A. Risk Factors

There have been no material changes to the risk factors faced by the Company since December 31, 2007.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company did not repurchase any of its common stock during the three-month period ended June 30, 2008. As of June 30, 2008, the Company hadapproximately $600 million of its common stock that may yet be purchased under a $1 billion share repurchase program. This program, which wasapproved by the Company’s Board of Director’s on September 7, 2006, has no stated expiration date.

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Table of Contents

Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of the Company’s shareholders was held on May 1, 2008. Proxies for the meeting were solicited pursuant to Section 14(a) of theSecurities Exchange Act of 1934 and there was no solicitation in opposition to the Board’s solicitations. At this meeting, the shareholders were requestedto: (1) elect a Board of Directors; (2) approve the Sunoco, Inc. Long-Term Performance Enhancement Plan II (“LTPEP II”); and (3) ratify the appointmentof the independent registered public accounting firm for the fiscal year 2008. The following action was taken by the Company’s shareholders with respectto each of the above items:

1. Concerning the election of a Board of Directors of the Company, there was a total of 97,268,241 votes cast. The tabulation below sets forththe number of votes cast for or withheld from each director. There were no broker non-votes.

NAME Number“FOR”

Number“WITHHELD”

R. J. Darnall 93,984,878 3,283,363J. G. Drosdick 92,775,636 4,492,605G. W. Edwards 94,563,012 2,705,229U. O. Fairbairn 92,944,010 4,324,231T. P. Gerrity 91,199,623 6,068,618R. B. Greco 92,628,233 4,640,008J. P. Jones, III 94,556,496 2,711,745J. G. Kaiser 93,345,902 3,922,339R. A. Pew 93,310,368 3,957,873G. J. Ratcliffe 94,543,149 2,725,092J. W. Rowe 93,504,601 3,763,640J. K. Wulff 94,001,148 3,267,093

2. Concerning the motion to approve the LTPEP II, there was a total of 97,268,241 votes cast, with an aggregate of 88,226,945 votes cast in favor ofthe approval of the LTPEP II and 7,468,001 votes against. There were 1,573,295 abstentions. There were no broker non-votes.

3. Concerning the motion to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the

fiscal year 2008, there was a total of 97,268,241 votes cast, with an aggregate of 94,307,690 votes cast in favor of ratification of such appointmentand 1,812,929 votes against. There were 1,147,622 abstentions. There were no broker non-votes.

Item 6. Exhibits

Exhibits:

10.1 - Sunoco, Inc. Long-Term Performance Enhancement Plan II, as amended and restated effective July 2, 2008.

10.2 - Form of Common Stock Unit Agreement under the Sunoco, Inc. Long-Term Performance Enhancement Plan II.



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10.6 - Form of Stock Option Agreement under the Sunoco, Inc. Long-Term Performance Enhancement Plan II.

10.7 - Sunoco, Inc. Pension Restoration Plan, as amended and restated effective June 1, 2008.

10.8 - Sunoco, Inc. Executive Incentive Plan, as amended and restated effective July 2, 2008.

10.9 - Sunoco, Inc. Executive Retirement Plan, as amended and restated effective June 1, 2008.

10.10

-

Form of Second Amended and Restated Indemnification Agreement, individually entered into between Sunoco, Inc. and variousdirectors, officers and other key employees of the Company.

10.11 - Amended Schedule to the Forms of Indemnification Agreement.

10.12

-

Directors’ Deferred Compensation and Benefits Trust Agreement, by and among Sunoco, Inc., Mellon Trust of New England, N.A.and Towers, Perrin, Forster & Crosby, Inc., amended and restated as of November 1, 2007, including Amended Schedule 2.1.

10.13

-

Deferred Compensation and Benefits Trust Agreement, by and among Sunoco, Inc., Mellon Trust of New England, N.A. andTowers, Perrin, Forster & Crosby, Inc., amended and restated as of November 1, 2007, including Amended Schedule 2.1.

12

-

Statement re Sunoco, Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges for the Six-Month Period EndedJune 30, 2008.

31.1

-

Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-OxleyAct of 2002.

31.2

-

Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-OxleyAct of 2002.

32.1

-

Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the UnitedStates Code, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

-

Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the UnitedStates Code, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Table of ContentsWe are pleased to furnish this Form 10-Q to shareholders who request it by writing to:

Sunoco, Inc.Investor Relations1735 Market StreetPhiladelphia, PA 19103-7583

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Table of ContentsSIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

SUNOCO, INC.

By: /s/ JOSEPH P. KROTT Joseph P. Krott Comptroller (Principal Accounting Officer)

Date: August 7, 2008

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Table of ContentsEXHIBIT INDEX

ExhibitNumber Exhibit10.1 Sunoco, Inc. Long-Term Performance Enhancement Plan II, as amended and restated effective July 2, 2008.

10.2 Form of Common Stock Unit Agreement under the Sunoco, Inc. Long-Term Performance Enhancement Plan II.




10.6 Form of Stock Option Agreement under the Sunoco, Inc. Long-Term Performance Enhancement Plan II.

10.7 Sunoco, Inc. Pension Restoration Plan, as amended and restated effective June 1, 2008.

10.8 Sunoco, Inc. Executive Incentive Plan, as amended and restated effective July 2, 2008.

10.9 Sunoco, Inc. Executive Retirement Plan, as amended and restated effective June 1, 2008.

10.10

Form of Second Amended and Restated Indemnification Agreement, individually entered into between Sunoco, Inc. and various directors, officersand other key employees of the Company.

10.11 Amended Schedule to the Forms of Indemnification Agreement.

10.12

Directors’ Deferred Compensation and Benefits Trust Agreement, by and among Sunoco, Inc., Mellon Trust of New England, N.A. and Towers,Perrin, Forster & Crosby, Inc., amended and restated as of November 1, 2007, including Amended Schedule 2.1.

10.13

Deferred Compensation and Benefits Trust Agreement, by and among Sunoco, Inc., Mellon Trust of New England, N.A. and Towers, Perrin,Forster & Crosby, Inc., amended and restated as of November 1, 2007, including Amended Schedule 2.1.

12 Statement re Sunoco, Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges for the Six-Month Period Ended June 30, 2008.

31.1 Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


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31.2 Certification Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, asAdopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification Pursuant to Exchange Act Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, asAdopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


Exhibit 10.1

SUNOCO, INC.

LONG-TERM PERFORMANCE ENHANCEMENT PLAN II

(Amended and Restated effective as of July 2, 2008)


ARTICLE I

Definitions

As used in this Plan, the following terms shall have the meanings herein specified:

1.1 Affiliate - shall mean any entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common controlwith Sunoco, Inc.

1.2 Board of Directors - shall mean the Board of Directors of Sunoco, Inc.

1.3 Business Combination - shall have the meaning provided herein at Section 1.4(c).

1.4 Change in Control - shall mean the occurrence of any of the following events:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) ofbeneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then-outstanding shares ofcommon stock of Sunoco, Inc. (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then-outstanding voting securities ofSunoco, Inc. entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of thisSection (a), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from Sunoco, Inc., (B) any acquisition by Sunoco,Inc., (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Sunoco, Inc. or any company controlled by, controlling orunder common control with Sunoco, Inc., or (D) any acquisition by any entity pursuant to a transaction that complies with Sections (c)(1), (c)(2) and (c)(3) ofthis definition;

(b) Individuals who, as of September 6, 2001, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least amajority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination forelection by the shareholders of Sunoco, Inc., was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall beconsidered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption ofoffice occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation ofproxies or consents by or on behalf of a Person other than the Board of Directors;

(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving Sunoco, Inc. orany of its subsidiaries, a sale or other disposition of all or substantially all of the assets of Sunoco, Inc. or the acquisition of assets or stock of another entity bySunoco, Inc. or any of its subsidiaries (each, a “Business

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Combination”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficialowners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combinationbeneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock and the combined voting power of the then-outstandingvoting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination(including, without limitation, a corporation that, as a result of such transaction, owns Sunoco, Inc. or all or substantially all of the assets of Sunoco, Inc., eitherdirectly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of theOutstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any corporation resultingfrom such Business Combination or any employee benefit plan (or related trust) of Sunoco, Inc. or such corporation resulting from such Business Combination orany of their respective subsidiaries) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of thecorporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to theextent that such ownership existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors of the corporationresulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of theBoard of Directors providing for such Business Combination; or

(d) Approval by the shareholders of Sunoco, Inc. of a complete liquidation or dissolution of Sunoco, Inc.

1.5 Code - shall mean the Internal Revenue Code of 1986, as amended.

1.6 Committee - shall mean the committee appointed to administer this Plan by the Board of Directors, as constituted from time to time. The Committeeshall consist of at least two (2) members of the Board of Directors, each of whom shall meet applicable requirements set forth in the pertinent regulations underSection 16 of the Exchange Act and Section 162(m) of the Code.

1.7 Common Stock - shall mean the authorized and unissued or treasury shares of common stock of Sunoco, Inc.

1.8 Common Stock Units - shall have the meaning provided herein at Section 6.1.

1.9 Company - shall mean Sunoco, Inc., and any Affiliate.

1.10 Corporate Transaction - shall have the meaning provided herein at Section 7.8(b).

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1.11 CSU Payout Date - shall have the meaning provided herein at Section 6.9.

1.12 Disaffiliation – shall mean, for purposes of Section 7.8(b) hereof, a Subsidiary’s or Affiliate’s ceasing to be a Subsidiary or Affiliate for any reason(including, without limitation, as a result of a public offering, or a spinoff or sale by the Company, of the stock of the Subsidiary or Affiliate) or a sale of adivision of the Company and its Affiliates.

1.13 Dividend Equivalents - shall have the meaning provided herein at Section 6.3.

1.14 Dividend Equivalent Account - shall have the meaning provided herein at Section 6.3.

1.15 Employment Termination Date - shall mean the date on which the employment relationship between the Participant and the Company is terminated,or on which the Participant ceases to be a member of the Board of Directors.

1.16 Exchange Act – shall mean the Securities Exchange Act of 1934, as amended.

1.17 Exercise Period - shall have the meaning provided herein at Section 5.3.

1.18 Fair Market Value - shall mean, as of any date and in respect of any share of Common Stock, the opening price on such date of a share of CommonStock (which price shall be the closing price on the previous trading day of a share of Common Stock as reflected in the consolidated trading tables of the WallStreet Journal under the caption “New York Stock Exchange Composite Transactions” or any other publication selected by the Committee). If there is no sale ofshares of Common Stock on the New York Stock Exchange for more than ten (10) days immediately preceding such date, the Fair Market Value of the shares ofCommon Stock shall be as determined by the Committee in such other manner as it may deem appropriate. In no event shall the Fair Market Value of any shareof Common Stock be less than its par value.

1.19 Immediate Family Member - shall mean spouse (or common law spouse), siblings, parents, children, stepchildren, adoptive relationships and/orgrandchildren of the Participant (and, for this purpose, also shall include the Participant).

1.20 Incentive Stock Options - shall have the meaning provided herein at Section 4.1.

1.21 Incumbent Board - shall have the meaning provided herein at Section 1.4(b).

1.22 Just Cause - shall mean, for any Participant who is a participant in the Sunoco, Inc. Special Executive Severance Plan, “Just Cause” as defined in suchplan, and for any other Participant:

(a) the willful and continued failure of the Participant to perform substantially the Participant’s duties with the Company (other than any such failureresulting from incapacity due to physical or mental illness or following notice of employment termination by the Participant pursuant to Section 1.34), after awritten demand for substantial performance is delivered to the Participant

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by the Board of Directors or any employee of the Company with supervisory authority over the Participant that specifically identifies the manner in which theBoard of Directors or such supervising employee believes that the Participant has not substantially performed the Participant’s duties, or

(b) the willful engaging by the Participant in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company.

1.23 Limited Rights - shall have the meaning provided herein at Section 5.1.

1.24 Market Price - shall have the meaning provided herein at Section 5.4.

1.25 Option - shall mean Stock Option and/or Incentive Stock Option.

1.26 Option Price - shall mean the purchase price per share of Common Stock deliverable upon the exercise of an Option.

1.27 Optionee - shall mean the holder of an Option.

1.28 Outstanding Company Common Stock - shall have the meaning provided herein at Section 1.4(a).

1.29 Outstanding Company Voting Securities - shall have the meaning provided herein at Section 1.4(a).

1.30 Participant - shall have the meaning provided herein at Section 2.4(a).

1.31 Performance Factors - shall mean the various payout percentages related to the attainment levels of one or more Performance Goals, as determined bythe Committee.

1.32 Performance Goals - shall mean the specific targeted amounts of, or changes in, financial or operating goals including: revenues; expenses; netincome; operating income; equity; return on equity, assets or capital employed; working capital; shareholder return; operating capacity utilized; production orsales volumes; or throughput. Other financial or operating goals may also be used as determined by the Committee. Such goals may be applicable to theCompany as a whole or one or more of its business units and may be applied in total or on a per share, per barrel or percentage basis and on an absolute basis orrelative to other companies, industries or indices or any combination thereof, as determined by the Committee.

1.33 Performance Period - shall have the meaning provided herein at Section 6.4.

1.34 Person - shall have the meaning provided herein at Section 1.4(a).

1.35 Plan - shall have the meaning provided herein at Section 2.2.

1.36 Qualifying Termination - shall mean, with respect to the employment of any Participant who is a participant in the Sunoco, Inc. Special ExecutiveSeverance Plan, a “Qualifying Termination” as defined in such plan, and with respect to the employment of any other Participant, the following:

(a) a termination of employment by the Company within seven (7) months after a Change in Control, other than for Just Cause, death or permanentdisability;

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(b) a termination of employment by the Participant within seven (7) months after a Change in Control for one or more of the following reasons:

(1) the assignment to such Participant of any duties inconsistent in a way significantly adverse to such Participant, with such Participant’spositions, duties, responsibilities and status with the Company immediately prior to the Change in Control, or a significant reduction in the dutiesand responsibilities held by the Participant immediately prior to the Change in Control, in each case except in connection with such Participant’stermination of employment by the Company for Just Cause; or

(2) a reduction by the Company in the Participant’s combined annual base salary and guideline (target) bonus as in effect immediately prior tothe Change in Control; or

(3) the Company requires the Participant to be based anywhere other than the Participant’s present work location or a location withinthirty-five (35) miles from the present location; or the Company requires the Participant to travel on Company business to an extent substantiallymore burdensome than such Participant’s travel obligations during the period of twelve (12) consecutive months immediately preceding the Changein Control;

provided, however, that in the case of any such termination of employment by the Participant under this subparagraph (b), such termination shall not bedeemed to be a Qualifying Termination unless the termination occurs within 120 days after the occurrence of the event or events constituting the reason forthe termination; or

(c) before a Change in Control, a termination of employment by the Company, other than a termination for Just Cause, or a termination ofemployment by the Participant for one of the reasons set forth in (b) above, if the affected Participant can demonstrate that such termination orcircumstance in (b) above leading to the termination:

(1) was at the request of a third party with which the Company had entered into negotiations or an agreement with regard to a Change inControl; or

(2) otherwise occurred in connection with a Change in Control;

provided, however, that in either such case, a Change in Control actually occurs within one (1) year following the Employment Termination Date.

1.37 Share Change – shall have the meaning provided herein at Section 7.8(b).

1.38 Stock Options - shall have the meaning provided herein at Section 3.1.

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1.39 Subsidiary - shall mean any corporation of which, at the time, more than fifty percent (50%) of the shares entitled to vote generally in an election ofdirectors are owned directly or indirectly by Sunoco, Inc. or any subsidiary thereof.

1.40 Sunoco, Inc. - shall mean Sunoco, Inc., a Pennsylvania corporation, and any successor thereto by merger, consolidation, liquidation or purchase ofassets or stock or similar transaction.

ARTICLE II

Background, Purpose and Term of Plan; Participation & Eligibility for Benefits

2.1 Background. Effective on December 31, 2001, no further awards shall be made under the Sunoco, Inc. Long-Term Performance Enhancement Planadopted in May, 1997; provided, however, that any rights theretofore granted under that plan shall not be affected.

2.2 Purpose of the Plan. The purposes of this Sunoco, Inc. Long-Term Performance Enhancement Plan II (the “Plan”) are to:

(a) better align the interests of shareholders and management of the Company by creating a direct linkage between Participants’ rewards andshareholders’ gains;

(b) provide management with the ability to increase equity ownership in Sunoco, Inc.;

(c) provide competitive compensation opportunities that can be realized through attainment of performance goals; and

(d) provide an incentive to management for continuous employment with the Company.

It is intended that most awards made under the Plan will qualify as performance-based compensation under Section 162(m) of the Code.

2.3 Term of the Plan. The original Plan was approved by shareholders at Sunoco, Inc.’s 2001 Annual Meeting of Shareholders and first became effective atthat time. The amended and re-stated versions of the Plan, presented at Sunoco, Inc.’s 2003 and 2008 Annual Meetings of Shareholders, were approved by theshareholders at such meetings. No awards will be made under this Plan after December 31, 2013. The Plan and all awards made under the Plan prior to such dateshall remain in effect until such awards have been satisfied or terminated in accordance with the Plan and the terms of such awards.

2.4 Administration. The Plan shall be administered by the Committee, which shall have the authority, in its sole discretion and from time to time to:

(a) designate the employees or directors, or classes of employees or directors, eligible to participate in the Plan (each such employee or directorbeing, a “Participant”);

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(b) grant awards provided in the Plan in such form and amount as the Committee shall determine;

(c) impose such limitations, restrictions and conditions upon any such award as the Committee shall deem appropriate; and

(d) interpret the Plan, adopt, amend and rescind rules and regulations relating to the Plan, and make all other determinations and take all other actionnecessary or advisable for the implementation and administration of the Plan.

The decisions and determinations of the Committee on all matters relating to the Plan shall be in its sole discretion and shall be conclusive. No member ofthe Committee shall be liable for any action taken or not taken or decision made or not made in good faith relating to the Plan or any award thereunder.

2.5 Eligibility for Participation. Participants in the Plan shall be:

(a) non-employee members of the Board of Directors; and

(b) those officers and other key employees occupying responsible managerial or professional positions at the Company, and capable of substantiallycontributing to its success.

In making this selection and in determining the amount of awards, the Committee shall consider any factors deemed relevant, including the individual’sfunctions, responsibilities, value of services to the Company and past and potential contributions to its profitability and sound growth.

2.6 Types of Awards Under the Plan. Awards under the Plan may be in the form of any one or more of the following:

(a) Stock Options, as described in Article III;

(b) Incentive Stock Options, as described in Article IV;

(c) Limited Rights, as described in Article V; and/or

(d) Common Stock Units, as described in Article VI.

2.7 Aggregate Limitation on Awards. Shares of stock which may be issued under the Plan shall be Common Stock. The maximum number of shares ofCommon Stock authorized for issuance under the Plan as originally adopted by the shareholders at Sunoco, Inc.’s 2001 Annual Meeting was four million(4,000,000) [now eight million (8,000,000) as a result of the two-for-one stock split on August 1, 2005 (“2005 Stock Split”)]. No Option may be granted if thenumber of shares of Common Stock to which such Option relates, when added to the number of shares of Common Stock previously issued under the Plan,exceeds the number of such shares reserved under the preceding sentence. For purposes of calculating the maximum number of shares of Common Stock whichmay be issued under the Plan:

(a) all the shares issued (including the shares, if any, withheld for tax withholding requirements) shall be counted when cash is used as full paymentfor shares issued upon exercise of an Option;

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(b) only the shares issued (including the shares, if any, withheld for tax withholding requirements) net of shares of Common Stock used as full orpartial payment for such shares upon exercise of an Option, shall be counted; and

(c) only the shares issued (including the shares, if any, withheld for tax withholding) upon vesting and payment of Common Stock Units, shall becounted.

In addition to shares of Common Stock actually issued pursuant to the exercise of Options, there shall be deemed to have been issued a number of sharesequal to the number of shares of Common Stock in respect of which Limited Rights (as described in Article V) shall have been exercised. Shares tendered by aParticipant as payment for shares issued upon exercise of an Option shall be available for issuance under the Plan. Any shares distributed pursuant to an Optionmay consist, in whole or in part, of authorized and unissued shares or treasury shares including shares of Common Stock acquired by purchase in the open marketor in private transactions. Any shares of Common Stock subject to an Option, which for any reason is terminated, unexercised or expires shall again be availablefor issuance under the Plan, but shares subject to an Option that, as a result of the exercise of Limited Rights, are not issued, shall not be available for issuanceunder the Plan.

(d) The maximum number of Options that shall be granted in any calendar year to a Participant shall be four hundred thousand (400,000) [now eighthundred thousand (800,000) as a result of the 2005 Stock Split].

(e) The maximum number of Common Stock Units granted in any calendar year to a Participant shall be one hundred fifty thousand (150,000) [nowthree hundred thousand (300,000) as a result of the 2005 Stock Split].

(f) The maximum number of Common Stock Units granted under the Plan will be two million (2,000,000) [now four million (4,000,000) as a resultof the 2005 Stock Split].

The share limits set forth in this Section 2.7 shall be adjusted to reflect any capitalization changes as discussed in Section 7.8.

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ARTICLE III

Stock Options

3.1 Award of Stock Options. The Committee, from time to time, and subject to the provisions of the Plan and such other terms and conditions as theCommittee may prescribe, may grant to any Participant in the Plan one or more options to purchase for cash or shares the number of shares of Common Stock(“Stock Options”) allotted by the Committee. The date a Stock Option is granted shall mean the date selected by the Committee as of which the Committee allotsa specific number of options to a Participant pursuant to the Plan.

3.2 Stock Option Agreements. The grant of a Stock Option shall be evidenced by a written Stock Option Agreement, executed by the Company and theholder of a Stock Option, stating the number of shares of Common Stock subject to the Stock Option evidenced thereby, and in such form as the Committee mayfrom time to time determine.

3.3 Stock Option Price. The Option Price per share of Common Stock deliverable upon the exercise of a Stock Option shall be not less than the closingprice of a share of Common Stock on the date the Stock Option is granted, as reflected in the consolidated trading tables of the Wall Street Journal under thecaption ‘New York Stock Exchange Composite Transactions’ or any other publication selected by the Committee). If there is no sale of shares of Common Stockon the New York Stock Exchange for more than ten (10) days immediately preceding such date, the Option Price shall be as determined by the Committee insuch other manner as it may deem appropriate. In no event shall the Option Price of any share of Common Stock be less than its par value.

3.4 Term and Exercise. The term and the vesting schedule of the Stock Options shall be determined by the Committee. However, except as otherwiseprovided in Section 3.11, no Stock Option may be exercisable before the first anniversary of the date of grant or after the tenth anniversary of the date of grant.No Stock Option shall be exercisable after the expiration of its term.

3.5 Transferability. No Stock Option may be transferred by the Participant other than by will, by the laws of descent and distribution or, to the extent notinconsistent with the applicable provisions of the Code, pursuant to a domestic relations order under applicable provisions of law, and during the Participant’slifetime the option may be exercised only by the Participant; provided, however, that, subject to such limits as the Committee may establish, the Committee, in itsdiscretion, may allow the Participant to transfer a Stock Option for no consideration to, or for the benefit of, an Immediate Family Member or to a bona fide trustfor the exclusive benefit of such Immediate Family Members, or a partnership or limited liability company in which such Immediate Family Members are theonly partners or members.

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Such transfer may only be effected following the advance written notice from the Participant to the Committee, describing the terms and conditions of theproposed transfer, and such transfer shall become effective only when recorded in the Company’s record of outstanding Stock Options. Any such transferableStock Option is further conditioned on the Participant and such Immediate Family Member or other transferee agreeing to abide by the Company’s then-currentStock Option transfer guidelines. In the discretion of the Committee, the foregoing right to transfer a Stock Option also will apply to the right to transfer ancillaryrights associated with such Stock Option, and to the right to consent to any amendment to the applicable Stock Option Agreement.

Subsequent transfers shall be prohibited except in accordance with the laws of descent and distribution, or by will. Following transfer, any such StockOptions shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, and the terms “Optionee” or “Participant”shall be deemed to include the transferee; provided, however, that the events of termination of employment of Sections 3.8 (“Retirement or Disability”), 3.9(“Termination for Other Reasons”) and 3.10 (“Death of Optionee”) hereof shall continue to be applied with respect to the original Optionee, following which theoptions shall be exercisable by the transferee only to the extent, and for the respective periods specified therein. Neither the Committee nor the Company willhave any obligation to inform any transferee of a Stock Option or stock appreciation right of any expiration, termination, lapse or acceleration of such Option.The Company will have no obligation to register with any federal or state securities commission or agency any Common Stock issuable or issued under a StockOption or stock appreciation right that has been transferred by a Participant under this Section 3.5.

3.6 Manner of Payment. Each Stock Option Agreement shall set forth the procedure governing the exercise of the Stock Option granted thereunder, andshall provide that, upon such exercise in respect of any shares of Common Stock subject thereto, the Optionee shall pay to the Company, in full, the Option Pricefor such shares (together with payment for any taxes which the Company is required by law to withhold by reason of such exercise) with cash or with CommonStock. All shares of Common Stock issued under this Plan, or any other Company plan, must be held at least six (6) months before they may be used as paymentof the Option Price.

3.7 Issuance and Delivery of Shares. As soon as practicable after receipt of payment, the Company shall deliver to the Optionee a certificate or certificatesfor, or otherwise register the Optionee on the books and records of the Company as a holder of, such shares of Common Stock. The Optionee shall become ashareholder of Sunoco, Inc. with respect to the Common Stock so registered, or represented by share certificates so issued, and as such shall be fully entitled toreceive dividends, to vote and to exercise all other rights of a shareholder except to the extent otherwise provided in the Option award.

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(a) Notwithstanding the foregoing, and at the discretion of the Committee, any Optionee subject to minimum stock ownership guidelines (asestablished from time to time by the Committee or the Company), but failing to meet the applicable personal ownership requirement within the prescribedperiod may, upon exercise of the Options, receive a number of shares of Common Stock subject to the following restrictions which shall remain in placeuntil compliance with such ownership guidelines is attained:

(1) The number of shares subject to the restrictions shall be equal to the total number of shares received in the exercise of the Options, minusthe sum of:

(i) to the extent that shares received upon exercise of the Option are used to pay the Option Price, the number of shares which have aFair Market Value on the date of the Option exercise equal to the total amount paid for all the shares received in the Option exercise; and

(ii) to the extent that shares received upon exercise of the Option are used to pay taxes and brokerage fees, the number of shares whichhave a Fair Market Value on the date of the Option exercise equal to the applicable federal, state and local withholding tax on the totalOption exercise and any brokerage commission or interest charges, if applicable to the exercise.

(2) Other than transfers to family members or trusts that are permitted in accordance with the applicable stock ownership guidelines, and thatwill not result in a reduction in the level of ownership attributable to the Participant under such guidelines, the Optionee shall be prohibited fromeffecting the sale, exchange, transfer, pledge, hypothecation, gift or other disposition of such shares of Common Stock until the earlier of:

(i) attainment of compliance with applicable stock ownership guidelines;

(ii) the Optionee’s death, retirement, or permanent disability (as determined by the Committee); or

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(iii) occurrence of the Optionee’s Employment Termination Date, for any reason other than Just Cause.

Notwithstanding the foregoing, six (6) months after the exercise of the Stock Option, such shares of Common Stock may be used as paymentof the Option Price of shares issued upon the exercise of other Stock Options. However, all such shares issued will be restricted shares.

(3) The restrictions shall apply to any new, additional or different securities the Optionee may become entitled to receive with respect to suchshares by virtue of a stock split or stock dividend or any other change in the corporate or capital structure of the Company.

(b) Until such time as the restrictions hereunder lapse, the shares will be held in “book-entry form” and appropriate notation of these restrictions willbe maintained in the records of the Company’s transfer agent and registrar. Any share certificate representing such shares will bear a conspicuous legendevidencing these restrictions, and the Company may require the Optionee to deposit the share certificate with the Company or its agent, endorsed in blankor accompanied by a duly executed irrevocable stock power or other instrument of transfer.

3.8 Retirement or Disability. Upon termination of the Optionee’s employment by reason of retirement or permanent disability (as each is determined bythe Committee), the Optionee may, within sixty (60) months from the date of termination, exercise any Stock Options to the extent such options are exercisableduring such 60-month period.

3.9 Termination for Other Reasons.

(a) Stock Options Granted Before November 1, 2007. For Stock Options granted before November 1, 2007, except as provided in Sections 3.8 and3.10, or except as otherwise determined by the Committee, upon termination of an Optionee’s employment, all unvested Stock Options shall terminateimmediately, and all vested Stock Options shall terminate:

(1) immediately, in the case of an Optionee terminated by the Company for Just Cause; or

(2) upon the expiration of ninety (90) calendar days following the occurrence of the Optionee’s Employment Termination Date, other than forJust Cause;

provided, however, that the Limited Rights awarded in tandem with such Stock Options shall not terminate and such Limited Rights shall remain exercisableduring the Exercise Period for any Optionee whose employment relationship with the Company has been terminated as a result of any Qualifying Termination.

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(b) Stock Options Granted On and After November 1, 2007. For Stock Options granted on or after November 1, 2007, except as provided in Sections3.8 and 3.10, or except otherwise determined by the Committee, upon termination of an Optionee’s employment, all unvested Stock Options shallterminate immediately, and all vested Stock Options shall terminate:

(1) immediately, in the case of an Optionee terminated by the Company for Just Cause; or

(2) (A) if such termination of employment occurs prior to a Change in Control or following the two-year anniversary of a Change in Control,upon the expiration of ninety (90) calendar days following the occurrence of the Optionee’s Employment Termination Date and (B) if suchtermination of employment occurs within two (2) years after a Change in Control, upon the expiration of one (1) year following the occurrence ofthe Optionee’s Employment Termination Date, other than, in the case of each clause (A) and clause (B), a termination of employment for Just Cause(in which clause (1) shall apply);

provided, however, that the Limited Rights awarded in tandem with such Stock Options shall not terminate and such Limited Rights shall remain exercisableduring the Exercise Period for any Optionee whose employment relationship with the Company has been terminated as a result of any Qualifying Termination.

3.10 Death of Optionee. Any rights in respect of Stock Options to the extent exercisable on the date of the Optionee’s death may be exercised by theOptionee’s estate or by any person that acquires the legal right to exercise such Stock Option by bequest, inheritance, or otherwise by reason of the death of theOptionee. Any such exercise to be valid must occur within the remaining option term of the Stock Option. The foregoing provisions of this Section 3.10 shallapply to an Optionee who dies while employed by the Company and to an Optionee whose employment may have terminated prior to death; provided, however,that:

(a) an Optionee who dies while employed by the Company will be treated as if the Optionee had retired on the date of death. Accordingly, theOptionee’s estate or a person who acquires the right to exercise such Stock Option by bequest or inheritance will have the right to exercise the StockOption in accordance with Section 3.8; or

(b) the estate or a person who acquires the right to exercise a Stock Option by bequest or inheritance from an Optionee who dies after terminatingemployment with the Company will have the remainder of any exercise period provided under Sections 3.8 and 3.9.

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3.11 Acceleration of Options. Notwithstanding any provisions to the contrary in agreements evidencing Options granted thereunder or in this Plan, eachoutstanding Option shall become immediately and fully exercisable upon the occurrence of any Change in Control.

3.12 Effect of Exercise. The exercise of any Stock Options shall cancel that number of related Limited Rights, if any, which is equal to the number ofshares of Common Stock purchased pursuant to said Options.

ARTICLE IV

Incentive Stock Options

4.1 Award of Incentive Stock Options. The Committee, from time to time, and subject to the provisions of the Plan and such other terms and conditions asthe Committee may prescribe, may grant to any Participant in the Plan one or more “incentive stock options” (intended to qualify as such under the provisions ofSection 422 of the Code (“Incentive Stock Options”)) to purchase for cash or shares the number of shares of Common Stock allotted by the Committee. The datean Incentive Stock Option is granted shall mean the date selected by the Committee as of which the Committee allots a specific number of options to aParticipant pursuant to the Plan. Notwithstanding the foregoing, Incentive Stock Options shall not be granted to any owner of ten percent (10%) or more of thetotal combined voting power of Sunoco, Inc. and its subsidiaries (within the meaning of Section 424(f) of the Code).

4.2 Incentive Stock Option Agreements. The grant of an Incentive Stock Option shall be evidenced by a written Incentive Stock Option Agreement,executed by the Company and the holder of an Incentive Stock Option stating the number of shares of Common Stock subject to the Incentive Stock Optionevidenced thereby, and in such form as the Committee may from time to time determine.

4.3 Incentive Stock Option Price. The Option Price per share of Common Stock deliverable upon the exercise of an Incentive Stock Option shall be notless than the closing price of a share of Common Stock on the date the Incentive Stock Option is granted, as reflected in the consolidated trading tables of theWall Street Journal under the caption ‘New York Stock Exchange Composite Transactions’ or any other publication selected by the Committee). If there is nosale of shares of Common Stock on the New York Stock Exchange for more than ten (10) days immediately preceding such date, the Option Price shall be asdetermined by the Committee in such other manner as it may deem appropriate. In no event shall the Option Price of any share of Common Stock be less than itspar value.

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4.4 Term and Exercise. The term and the vesting schedule of the Incentive Stock Option shall be determined by the Committee. However, no IncentiveStock Option may be exercisable before the first anniversary of the date of grant or after the tenth anniversary of such date. No Incentive Stock Option shall beexercisable after the expiration of its term.

4.5 Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the stock on the date of grantwith respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year, under this Plan or any other stock optionplan of Sunoco, Inc. and its subsidiaries (within the meaning of Section 424(f) of the Code) exceeds One Hundred Thousand Dollars ($100,000.00), then theOption, as to the excess shall be treated as a non-qualified stock option. An Incentive Stock Option shall not be granted to any person who is not an “employee”of the Company (within the meaning of Section 424(f) of the Code).

4.6 Retirement or Disability. Upon the termination of the Optionee’s employment by reason of retirement or permanent disability (as each is determinedby the Committee), the Optionee may, within sixty (60) months from the date of such termination of employment, exercise any Incentive Stock Options to theextent such Incentive Stock Options are exercisable during such 60-month period. Notwithstanding the foregoing, the tax treatment available pursuant toSection 422 of the Code upon the exercise of an Incentive Stock Option will not be available to an Optionee who exercises any Incentive Stock Option morethan:

(a) twelve (12) months after the date of termination of employment due to permanent disability; or

(b) three (3) months after the date of termination of employment due to retirement.

4.7 Termination for Other Reasons. Except as provided in Sections 4.6 and 4.8, or except as otherwise determined by the Committee, upon termination ofan Optionee’s employment, all unvested Incentive Stock Options shall terminate immediately, and all vested Incentive Stock Options shall terminate:

(a) immediately, in the case of an Optionee terminated by the Company for Just Cause; or

(b) upon the expiration of ninety (90) calendar days following the date of termination of an Optionee’s employment other than for Just Cause;

provided, however, that the Limited Rights awarded in tandem with such Incentive Stock Options shall not terminate and such Limited Rights shall remainexercisable during the Exercise Period for any Optionee whose employment relationship with the Company has been terminated as a result of any QualifyingTermination.

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4.8 Death of Optionee. Any rights in respect of Incentive Stock Options to the extent exercisable on the date of the Optionee’s death may be exercised bythe Optionee’s estate or by any person that acquires the legal right to exercise such Stock Option by bequest, inheritance, or otherwise by reason of the death ofthe Optionee. Any such exercise to be valid must occur within the remaining option term of the Incentive Stock Option. The foregoing provisions of thisSection 4.8 shall apply to an Optionee who dies while employed by the Company and to an Optionee whose employment may have terminated prior to death;provided, however, that:

(a) an Optionee who dies while employed by the Company will be treated as if the Optionee had retired on the date of death. Accordingly, theOptionee’s estate or a person who acquires the right to exercise such Incentive Stock Option by bequest or inheritance will have the right to exercise theIncentive Stock Option in accordance with Section 4.6; or

(b) the estate or a person who acquires the right to exercise a stock option by bequest or inheritance from an Optionee who dies after terminatingemployment with the Company will have the remainder of any exercise period provided under Section 4.6 and 4.7.

4.9 Applicability of Stock Options Selections. Section 3.6 (“Manner of Payment”), Section 3.7 (“Issuance and Delivery of Shares”), Section 3.11(“Acceleration of Options”) and Section 3.12 (“Effect of Exercise”), applicable to Stock Options, shall apply equally to Incentive Stock Options. Said Sectionsare incorporated by reference in this Article IV as though fully set forth herein.

ARTICLE V

Limited Rights

5.1 Award of Limited Rights. Concurrently with or subsequent to the award of any Option, the Committee may, subject to the provisions of the Plan andsuch other terms and conditions as the Committee may prescribe, award to the Optionee with respect to each Option, a related limited right permitting theOptionee, during a specified limited time period, to be paid the appreciation on the Option in lieu of exercising the Option (“Limited Right”).

5.2 Limited Rights Agreement. Limited Rights granted under the Plan shall be evidenced by written agreements in such form as the Committee may fromtime to time determine.

5.3 Exercise Period and Time of Payment. Limited Rights are immediately exercisable in full upon the occurrence of a Change in Control through theperiod ending on the earlier of (a) seven (7) months following the date of a Change in Control or (b) seventy (70) days following the end of the calendar year inwhich the date of such Change in Control occurs (the “Exercise Period”). Payment of Limited Rights shall be made no later than two and one half (2 1/2) monthsfollowing the end of the calendar year in which the date of such Change in Control occurs.

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5.4 Amount of Payment. The amount of payment to which an Optionee shall be entitled upon the exercise of each Limited Right shall be equal to 100% ofthe amount, if any, which is equal to the difference between the Option Price of the related Option and the Market Price of a share of such Common Stock.“Market Price” is defined to be the greater of:

(a) the highest price per share of Common Stock paid in connection with any Change in Control during the period from the sixtieth (60th) calendarday immediately prior to the Change in Control through the earlier of (1) the ninetieth (90th) calendar day following the Change in Control or (2) theseventieth (70th) day following the end of the calendar year in which the date of such Change in Control occurs; and

(b) the highest trading price per share of Common Stock reflected in the consolidated trading tables of The Wall Street Journal (presently the NewYork Stock Exchange Composite Transactions quotations) during the 60-day period immediately prior to the Change in Control.

5.5 Form of Payment. Payment of the amount to which an Optionee is entitled upon the exercise of Limited Rights, as determined pursuant to Section 5.4,shall be made solely in cash.

5.6 Effect of Exercise. If Limited Rights are exercised, the Stock Options, if any, related to such Limited Rights cease to be exercisable to the extent of thenumber of shares with respect to which the Limited Rights were exercised. Upon the exercise or termination of the Options, if any, related to such LimitedRights, the Limited Rights granted with respect thereto terminate to the extent of the number of shares as to which the related Options were exercised orterminated; provided, however, that with respect to Options that are terminated as a result of the termination of the Optionee’s employment status, the LimitedRights awarded in tandem therewith shall not terminate and such Limited Rights shall remain exercisable during the Exercise Period for any Optionee whoseemployment relationship with the Company has been terminated as a result of any Qualifying Termination.

5.7 Retirement or Disability. Upon termination of the Optionee’s employment by reason of permanent disability or retirement (as each is determined bythe Committee), the Optionee may, within six (6) months from the date of termination, exercise any Limited Rights to the extent such Limited Right isexercisable during such six-month period.

5.8 Death of Optionee or Termination for Other Reasons. Except as provided in Sections 5.7 and 5.9 or except as otherwise determined by the Committee,all Limited Rights granted under the Plan shall terminate upon the termination of the Optionee’s employment or upon the death of the Optionee.

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5.9 Termination Related to a Change in Control. The requirement that an Optionee be terminated by reason of retirement or permanent disability or beemployed by the Company at the time of exercise pursuant to Sections 5.7 and 5.8 respectively, is waived during the Exercise Period as to any Optionee whoseemployment relationship with the Company has been terminated as a result of any Qualifying Termination.

ARTICLE VI

Common Stock Units

6.1 Award of Common Stock Units. The Committee, from time to time, and subject to the provisions of the Plan, may grant to any Participant in the Planrights to receive shares of Common Stock which are subject to a risk of forfeiture by the Participant (“Common Stock Units”). At the time it grants any CommonStock Units, the Committee shall determine whether the payment of such Common Stock Units shall be conditioned upon either:

(a) the Participant’s continued employment with the Company throughout a stated period (Section 6.4); or

(b) the attainment of certain predetermined performance objectives during a stated period (Section 6.5).

The date Common Stock Units are granted shall mean the date selected by the Committee as of which the Committee allots a specific number of CommonStock Units to a Participant pursuant to the Plan.

6.2 Common Stock Unit Agreements. Common Stock Units granted under the Plan shall be evidenced by written agreements stating the number ofCommon Stock Units evidenced thereby or in such form and as the Committee may from time to time determine.

6.3 Dividend Equivalents. A holder of Common Stock Units will be entitled to receive payment from the Company in an amount equal to each cashdividend (“Dividend Equivalent”) Sunoco, Inc. would have paid to such holder had he, on the record date for payment of such dividend, been the holder ofrecord of shares of Common Stock equal to the number of Common Stock Units which had been awarded to such holder as of the close of business on suchrecord date. The Company shall establish a bookkeeping account on behalf of each Participant in which the Dividend Equivalents that would have been paid tothe holder of Common Stock Units (“Dividend Equivalent Account”) shall be credited. The Dividend Equivalent Account will not bear interest.

6.4 Performance Period. Upon making an award, the Committee shall determine (and the Common Stock Unit Agreement shall state) the length of theapplicable period during which employment must be maintained or certain performance targets must be attained (the

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“Performance Period”). Performance Periods will normally be from three (3) to five (5) years; provided, however, that the Committee at its sole discretion mayestablish other time periods; and further provided that the Performance Period for an award conditioned upon a Participant’s continued employment with theCompany shall not be less than three (3) years.

6.5 Performance Goals. Common Stock Units and the related Dividend Equivalent Account earned may be based upon the attainment of PerformanceGoals established by the Committee in accordance with Section 162(m) of the Code. Within the first ninety (90) days of the Performance Period, the Committeeshall establish, in writing, the weighted Performance Goals and related Performance Factors for various goal achievement levels for the Company. In establishingthe weighted Performance Goals, the Committee shall take the necessary steps to insure that the Company’s ability to achieve the pre-established goals isuncertain at the time the goals are set. The established written Performance Goals, assigned weights, and Performance Factors shall be written in terms of anobjective formula, whereby any third party having knowledge of the relevant Company performance results could calculate the amount to be paid. SuchPerformance Goals may vary by Participant and by grant.

The number of Common Stock Units and Dividend Equivalents earned will be equal to the amounts awarded multiplied by the applicable PerformanceFactors. However, the Committee shall have the discretion, by Participant and by grant, to reduce (but not to increase) some or all of the amount that wouldotherwise be payable by reason of the satisfaction of the Performance Goals. In making any such determination, the Committee is authorized to take into accountany such factor or factors it determines are appropriate, including but not limited to Company, business unit and individual performance.

6.6 Payment of Common Stock Units and Dividend Equivalent Account. Payment in respect of Common Stock Units earned (as determined underSections 6.4 and 6.5) shall be made to the holder thereof within two and one-half (2 1/2) months after the Performance Period for such units has ended, but onlyto the extent that the Committee certifies in writing that the continuing employment and/or any applicable performance targets have been met.

Except as may be otherwise provided by Section 6.9, payment for Common Stock Units earned shall be made either in shares of Common Stock, or incash, at the sole discretion of the Committee. The medium of payment, whether in shares of Common Stock or in cash, shall be set forth in the Committee’sresolution granting the Common Stock Units and in the Agreement with the Participant.

For an award of Common Stock Units to be paid out in shares, the number of shares paid shall be equal to the number of Common Stock Units earned. Theholder may elect to reduce

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this amount by the number of shares of Common Stock which have, on the date the Common Stock Units are paid, a Fair Market Value equal to the applicablefederal, state and local withholding tax due on the receipt of Common Stock, in lieu of making a cash payment equal to the amount of such withholding tax due.

For an award of Common Stock Units to be settled in cash, the amount of cash paid shall be equal to the number of Common Stock Units earnedmultiplied by the average closing price for a share of Common Stock as published in the Wall Street Journal (under the caption “New York Stock ExchangeComposite Transactions”) or any other publication selected by the Committee for the period of ten (10) trading days immediately prior to such date following thelapse of the Performance Period, and the satisfaction of any other applicable conditions established by the Committee at the time of grant, that the Participant firstbecomes entitled to receive such payment. Such amount will be reduced by applicable federal, state and local withholding tax due.

A holder of Common Stock Units (whether or not such Common Stock Units are to be paid out in Common Stock, or settled in cash) will be entitled toreceive from the Company, within two and one-half (2 1/2) months after the Performance Period, payment of an amount in cash equal to the Dividend EquivalentAccount earned (as determined under Sections 6.4 and 6.5) by the holder minus applicable federal, state and local withholding tax due.

(a) Notwithstanding the foregoing, and at the discretion of the Committee, any Participant subject to minimum stock ownership guidelines (asestablished from time to time by the Committee or the Company), but failing to meet the applicable personal ownership requirement within the prescribedperiod may receive a number of shares of Common Stock upon payment of the Common Stock Units, subject to the following restrictions which shallremain in place until compliance with such ownership guidelines is attained:

(1) The number of shares subject to the restrictions shall be equal to the total number of Common Stock Units being paid out, minus thenumber of shares of Common Stock used to pay applicable federal, state and local withholding tax on the total payment of such Common StockUnits.

(2) Other than transfers to family members or trusts that are permitted in accordance with the applicable stock ownership guidelines, and thatwill not result in a reduction in the level of ownership attributable to the Participant under such guidelines, the Participant shall be prohibited fromeffecting the sale, exchange, transfer, pledge, hypothecation, gift or other disposition of such shares of Common Stock until the earlier of:


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(ii) the Participant’s death, retirement, or permanent disability (as determined by the Committee); or

(iii) occurrence of the Participant’s Employment Termination Date, for any reason other than Just Cause.

(3) These restrictions shall apply to any new, additional or different securities the Participant may become entitled to receive with respect tosuch shares by virtue of a stock split or stock dividend or any other change in the corporate or capital structure of the Company.

(b) Until such time as the restrictions hereunder lapse, the shares will be held in “book-entry form” and appropriate notation of these restrictions will bemaintained in the records of the Company’s transfer agent and registrar. Any share certificate representing such shares will bear a conspicuous legendevidencing these restrictions, and the Company may require the Participant to deposit the share certificate with the Company or its agent, endorsed inblank or accompanied by a duly executed irrevocable stock power or other instrument of transfer.

6.7 Death, Disability or Retirement.

(a) In the case of an award of Common Stock Units made pursuant to Section 6.1(a) hereof and conditioned upon the Participant’s continuedemployment, upon the occurrence of a Participant’s death or permanent disability (as determined by the Committee) prior to the end of the PerformancePeriod, the conditions to payout, if any, shall be determined by the Committee and shall be set forth in the agreement granting the Common Stock Units,and shall be paid on the first day of the second month following the date of the Participant’s death or the date of determination of permanent disability.

(b) In the case of an award of Common Stock Units made pursuant to Section 6.1(b) hereof and conditioned upon the attainment of certainpredetermined performance objectives, upon the occurrence of a Participant’s Employment Termination Date, by reason of death, permanent disability orretirement (as each is determined by the Committee) prior to the end of the Performance Period, no portion of the Participant’s Common Stock and theDividend Equivalent Account related to such award shall be forfeited, and the Common Stock Units, together with related Dividend Equivalents, shall bepaid out as though such Participant continued to be an employee or director of the Company through any applicable Performance Period, and as, if, andwhen the applicable Performance Goals have been met.

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6.8 Termination of Employment. Except as provided in Sections 6.7 and 6.9, or as determined by the Committee, 100% of all Common Stock Units of aParticipant under the Plan shall be forfeited and the Dividend Equivalent Account shall be forfeited upon the occurrence of the Participant’s EmploymentTermination Date prior to the end of the Performance Period, and in such event the Participant shall not be entitled to receive any Common Stock or any paymentof the Dividend Equivalent Account regardless of the level of Performance Goals achieved for the respective Performance Periods.

6.9 Change in Control. In the event of a Change in Control, Common Stock Units shall be paid to the Participant no later than the earlier of (i) ninety(90) days following the date of occurrence of such Change in Control or (ii) two and one-half (2 1/ 2) months following the end of the calendar year in whichoccurs the date of such Change in Control (the “CSU Payout Date”), regardless of whether the applicable Performance Period has expired or whether theapplicable Performance Goals have been met. For a Change in Control occurring within the first consecutive twelve-month period following the date of grant, thenumber of performance-based Common Stock Units paid out with regard to such grant shall be equal to the total number of Common Stock Units outstanding insuch grant as the Change in Control, not adjusted for any Performance Factors described in Section 6.5. For a Change in Control occurring after the firstconsecutive twelve-month period following the date of grant, the number of performance-based Common Stock Units paid out with regard to such grant shall bethe greater of (i) the total number of Common Stock Units outstanding in such grant as of the Change in Control, not adjusted for any Performance factorsdescribed in Section 6.5 or (ii) the total number of such Common Stock Units outstanding in such grant, multiplied by the applicable Performance Factors relatedto the Company’s actual performance immediately prior to the Change in Control. In the case of an award of Common Stock Units conditioned upon theParticipant’s continued employment, the total number of Common Stock Units outstanding in such grant as of the Change in Control shall be paid to theParticipant. The Participant’s Common Stock Units shall be payable to the Participant in cash or stock, as determined by the Committee prior to the Change inControl, as follows:

(a) if the Participant is to receive stock, the Participant will receive shares of Common Stock equal in number to the total number of Common StockUnits as stated above in this Section 6.9; or

(b) if the Participant is to receive cash, the Participant will be paid an amount in cash equal to the number of Common Stock Units stated above inthis Section 6.9 multiplied by the Market Price as defined in Section 5.4; provided that for purposes of this Section 6.9(b),

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the determination under Section 5.4(a) will be made for the period set forth in the first sentence of this Section 6.9. Such amount will be reduced by theapplicable federal, state and local withholding taxes due.

On or before the CSU Payout Date, the Participant will be paid an amount in cash equal to the applicable Dividend Equivalents on the number of CommonStock Units being paid pursuant to this Section 6.9 for the time period immediately preceding the Change in Control. Payout of Common Stock Units and theDividend Equivalents shall be made to each Participant:

(c) who is employed by the Company on the CSU Payout Date; or

(d) whose employment relationship with the Company is terminated:

(1) as a result of any Qualifying Termination prior to the CSU Payout Date; or

(2) as a result of death, permanent disability or retirement (as each is determined by the Committee), that has occurred prior to the CSUPayout Date.

The Committee may establish, at the time of the grant of Common Stock Units, other conditions which must be met for payout to occur. These conditionsshall be set forth in the Committee’s resolution granting the Common Stock Units and in the Agreement with the holders.

ARTICLE VII

Miscellaneous

7.1 General Restriction. Each award under the Plan shall be subject to the requirement that if, at any time, the Committee shall determine that:

(a) the listing, registration or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any stateor Federal law; or

(b) the consent or approval of any government regulatory body; or

(c) an agreement by the recipient of an award with respect to the disposition of shares of Common Stock,

is necessary or desirable as a condition of, or in connection with, the granting of such award or the issue or purchase of shares of Common Stock thereunder, thensuch award may not be consummated in whole or in part unless such listing, registration, qualification, consent, approval or agreement shall have been effectedor obtained free of any conditions not acceptable to the Committee.

7.2 Non-Assignability. Awards under the Plan shall not be assignable or transferable by the recipient thereof, except by will or by the laws of descent anddistribution except as otherwise determined by the Committee. Accordingly, during the life of the recipient, such award shall be exercisable only by such personor by such person’s guardian or legal representative, unless the Committee determines otherwise.

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7.3 Right to Terminate Employment; Effect of Disaffiliation. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer uponany Participant the right to continue in the employment of the Company, to continue to be nominated or serve on the Board of Directors, or affect any right whichthe Company may have to terminate the employment of such Participant. If an Affiliate ceases to be an Affiliate as a result of the sale or other disposition bySunoco, Inc. or one of its continuing Affiliates of its ownership interest in the former Affiliate, or otherwise, then individuals who remain employed by suchformer Affiliate thereafter shall be considered for all purposes under the Plan to have terminated their employment relationship with the Company.

7.4 Non-Uniform Determinations. The Committee’s determinations under the Plan (including without limitation, determinations of the persons to receiveawards, the form, amount and timing of such awards, the terms and provisions of such awards, and the agreements evidencing same) need not be uniform andmay be made by it selectively among persons who receive, or are eligible to receive, awards under the Plan, whether or not such persons are similarly situated.

7.5 Rights as a Shareholder. The recipient of any award under the Plan shall have no rights as a shareholder with respect thereto unless and until shares ofCommon Stock are issued on behalf of such recipient in “book-entry” form, in the records of the Company’s transfer agent and registrar, or certificates have beenissued for such shares.

7.6 Leaves of Absence. The Committee shall be entitled to make such rules, regulations and determinations as it deems appropriate under the Plan inrespect of any leave of absence taken by the recipient of any award. Without limiting the generality of the foregoing, the Committee shall be entitled to determine(a) whether or not any such leave of absence shall constitute a termination of employment within the meaning of the Plan and (b) the impact, if any, of any suchleave of absence on awards under the Plan theretofore made to any recipient who takes such leaves of absence.

7.7 Newly Eligible Employees. The Committee shall be entitled to make such rules, regulations, determinations and awards as it deems appropriate inrespect of any employee who becomes eligible to participate in the Plan or any portion thereof after the commencement of an award or incentive period.

7.8 Adjustments.

(a) In the event of a stock dividend, stock split, reverse stock split, share combination,

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or recapitalization or similar event affecting the capital structure of the Company (each a “Share Change”), the Committee or Board of Directors shallmake an equitable and proportionate anti-dilution adjustment to offset any resultant change in the per-share price of the Company’s Common Stock, andpreserve the intrinsic value of Stock Options, Common Stock Units and other awards theretofore granted under the Plan. Such mandatory adjustment mayinclude a change in one or more of the following: (1) the aggregate number of shares of Common Stock reserved for issuance and delivery under the Plan;(2) the number of shares of Common Stock or other securities subject to outstanding awards under the Plan; (3) the exercise price of outstanding Options;and (4) other similar matters.

(b) In the event of a merger, amalgamation, consolidation, acquisition of property or shares, separation, spinoff, other distribution of stock orproperty (including any extraordinary cash or stock dividend), reorganization, stock rights offering, liquidation, Disaffiliation, or similar event affectingthe Company or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board of Directors may in its discretion make suchsubstitutions or adjustments as it deems appropriate and equitable to (1) the aggregate number and kind of shares of Common Stock or other securitiesreserved for issuance and delivery under the Plan, (2) the number and kind of shares of Common Stock or other securities subject to outstanding awardsunder the Plan; and (3) the exercise price of outstanding Options, (4) the cancellation of outstanding awards granted under the Plan in exchange forpayments of cash, property or a combination thereof having an aggregate value equal to the value of such awards, as determined by the Committee or theBoard of Directors in its sole discretion (it being understood that in the case of a Corporate Transaction with respect to which holders of Common Stockreceive consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Committee or the Board ofDirectors that the value of an Option shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid for each shareof Common Stock pursuant to such Corporate Transaction over the exercise price of such Option shall conclusively be deemed valid); (5) the substitutionof other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for the shares ofCommon Stock subject to outstanding awards under the Plan; and (6) in connection with any Disaffiliation, arranging for the assumption of awards grantedunder the Plan, or replacement of awards granted under the Plan with new awards based on other property or other securities (including, without limitation,other securities of the Company and securities of entities other than the Company), by the affected Subsidiary, Affiliate, or division or by the entity thatcontrols such Subsidiary, Affiliate, or division following such Disaffiliation (as well as any corresponding adjustments to awards under the Plan thatremain based upon Company securities.

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7.9 Amendment of the Plan.

(a) The Committee may, without further action by the shareholders and without receiving further consideration from the Participants, amend thisPlan or condition or modify awards under this Plan in response to changes in securities or other laws or rules, regulations or regulatory interpretationsthereof applicable to this Plan or to comply with stock exchange rules or requirements.

(b) The Committee may at any time, and from time to time, modify or amend the Plan, or any award granted under the Plan, in any respect;provided, however, that, without shareholder approval the Committee may not:

(1) increase the maximum award levels established in Section 2.7, including the maximum number of shares of Common Stock which may beissued under the Plan (other than increases pursuant to Section 7.8);

(2) extend the term during which an Option may be exercised beyond ten years from the date of grant; or

(3) alter the terms of any Option to reduce the Option Price, or cancel any outstanding Option award and replace it with a new Option, havinga lower Option Price, where the economic effect would be the same as reducing the Option Price of the cancelled Option.

Except as provided in Section 7.9(a) above, no termination, modification or amendment of the Plan (or any award granted under the Plan), shall, withoutthe consent of a Participant, affect the Participant’s rights under an award previously granted.

ARTICLE VIII

Forfeiture

8.1 Forfeiture. Unless otherwise determined by the Committee, if (a) the Company is required to prepare a material negative accounting restatement due tothe noncompliance of the Company with any financial reporting requirement under the securities laws as a result of misconduct, and the Committee determinesthat (1) the Participant knowingly engaged in the misconduct, (2) was grossly negligent with respect to such misconduct or (3) knowingly or grossly negligentlyfailed to prevent the misconduct or (b) the Committee concludes that a Participant engaged in willful fraud, embezzlement or other similar misconduct materiallydetrimental to the Company, the Company may require the Participant to pay to the Company an amount (the “Forfeiture Amount”) equal to:

(i) in the case of a forfeiture pursuant to clause (a) hereof, the sum of (x) the excess, if any, of (A) the proceeds of the sale (including sales to theCompany), during the 12-month period following the first public filing of the financial document requiring restatement, of any Company securitiesacquired by the Participant pursuant to an award under the Plan, over (B) the amount, if any, paid by the Participant to purchase such Company securities,and (y) any proceeds received by the Participant upon cash settlement, during the 12-month period following the first public filing of the financialdocument requiring restatement, of any award under the Plan; or

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(ii) in the case of a forfeiture pursuant to Section clause (b) hereof, the sum of (x) the excess, if any, of (A) the proceeds of the sale (including salesto the Company), during the 12-month period following the date of the Participant’s misconduct, of any Company securities acquired by the Participantpursuant to an award under the Plan, over (B) the amount, if any, paid by the Participant to purchase such Company securities, and (y) any proceedsreceived by the Participant upon cash settlement, during the 12-month period following the date of the Participant’s misconduct, of any award under thePlan,

such Forfeiture Amount to be paid by the Participant within ten days of receipt from the Company of written notice requiring payment by the Participant of theForfeiture Amount.

8.2 Committee Determination Binding. The Committee shall make all determinations required pursuant to this Article VIII in its sole and absolutediscretion, and such determinations shall be conclusive and binding on all persons.

8.3 Committee Discretion. Notwithstanding the foregoing provisions, the Committee has sole and absolute discretion not to require a Participant to pay theForfeiture Amount, and its determination not to require any Participant to pay the Forfeiture Amount with respect to any particular act by any particularParticipant shall not in any way reduce or eliminate the Committee’s authority to require payment of the Forfeiture Amount with respect to any other act or otherParticipant.

8.4 Effect of Change in Control. Notwithstanding the foregoing, this Article VIII shall not be applicable to any Participant following a Change in Control,nor shall this Article VIII be applicable to any Participant who incurs a “Qualifying Termination.”

8.5 Prospective Application. Notwithstanding the foregoing, the provisions set forth in this Article VIII shall apply only to awards granted on or afterJuly 2, 2008.

8.6 Non-Exclusive Remedy. This Article VIII shall be a non-exclusive remedy and nothing contained in this Article VIII shall preclude the Company frompursuing any other applicable remedies available to it, whether in addition to, or in lieu of, application of this Article VIII.

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Exhibit 10.2

[Month, Year] Award

COMMON STOCK UNIT AGREEMENT

under theSUNOCO, INC. LONG-TERM PERFORMANCE ENHANCEMENT PLAN II

This Common Stock Unit Agreement (the “Agreement”), entered into as of the (“Agreement Date”), by and between Sunoco, Inc.(“Sunoco”) and , an employee of Sunoco or one of its Affiliates (the “Participant”);

W I T N E S S E T H:

WHEREAS, in order to make certain awards to key employees and directors of Sunoco and its Affiliates, Sunoco maintains the Sunoco, Inc. Long-TermPerformance Enhancement Plan II (the “Plan”), approved by shareholders at Sunoco’s 2001 Annual Meeting; and

WHEREAS, the Plan is administered by a Committee (the “Committee”) appointed by Sunoco’s Board of Directors and consisting of at least two(2) members of such Board, each of whom meets the applicable requirements of Section 16 of the Securities Exchange Act of 1934, as amended, andSection 162(m) of the Internal Revenue Code; and

WHEREAS, the Committee has determined to make an award to the Participant of Common Stock Units (“CSUs”), representing rights to receive shares ofCommon Stock which are subject to a risk of forfeiture by the Participant, pursuant to the terms and conditions of the Plan; and

WHEREAS, the Participant has determined to accept such award;

NOW, THEREFORE, Sunoco and the Participant each, intending to be legally bound hereby, agree as follows:

ARTICLE IAWARD OF COMMON STOCK UNITS

1.1 Identifying Provisions. For purposes of this Agreement, the following terms shall have the following respective meanings:

(a) Participant : _____________________________________________

(b) Date of Grant : _____________________________________________

(c) Number of CSUs : _____________________________________________

(d) Performance Period : _____________________________________________

Any initially capitalized terms and phrases used in this Agreement but not otherwise defined herein, shall have the respective meanings ascribed to them inthe Plan.

1.2 Award of CSUs. Subject to the terms and conditions of the Plan and this Agreement, the Participant is hereby granted the number of CSUs set forth hereinat Section 1.1.


1.3 Dividend Equivalents. The Participant shall be entitled to receive payment from Sunoco in an amount equal to each cash dividend (“DividendEquivalent”) payable subsequent to the Date of Grant, just as though such Participant, on the applicable record date for payment of such dividend, hadbeen the holder of record of shares of Common Stock equal to the actual number of CSUs, if any, earned and received by the Participant at the end of thePerformance Period. Sunoco shall establish a bookkeeping methodology to account for the Dividend Equivalents to be credited to the Participant. TheDividend Equivalents will not bear interest.

1.4 Performance Measures.

(a) Exhibit , attached hereto and made a part hereof, sets forth the performance measures that will be applied to determine the amount of theaward earned pursuant to this Agreement. These performance measures may be modified by the Committee during, and after the end of, the PerformancePeriod to reflect significant events that occur during the Performance Period.

(b) The number of CSUs and Dividend Equivalents earned will be equal to the amounts awarded multiplied by the applicable Performance Factors.However, the Committee has the discretion to reduce (but not increase) some or all of the amount that would otherwise be payable as a result of thesatisfaction of the Performance Goals. In making this determination, the Committee may take into account any such factor or factors it determines areappropriate, including but not limited to Company, business unit or individual performance.

1.5 Payment of CSUs and Related Dividend Equivalents.

(a) Payment in respect of the earned CSUs, and the earned Dividend Equivalents related thereto, shall be made to the Participant within two and

one-half (2-1/2) months after the Performance Period for such CSUs has ended, but only to the extent the Committee determines that the applicableperformance targets have been met.

(1) Payment in respect of CSUs earned. Except as provided by Section 1.6 hereof, all payment for CSUs earned shall be made in cash. Theamount of cash paid shall be equal to the number of Common Stock Units earned multiplied by the average closing price for a share ofCommon Stock as published in the Wall Street Journal (under the caption “New York Stock Exchange Composite Transactions”) or anyother publication selected by the Committee for the period of ten (10) trading days immediately prior to such date following the lapse of thePerformance Period, and the satisfaction of any other applicable conditions established by the Committee at the time of grant, that theParticipant first becomes entitled to receive such payment. The number of CSUs earned shall be determined in accordance with theprovisions of Exhibit .

(2) Payment of Earned Dividend Equivalents. The Participant will be entitled to receive from Sunoco, within two and one-half (2-1/2) months

after the Performance Period, payment of an amount in cash equal to the Dividend Equivalents earned as determined in accordance with theprovisions of Exhibit .

Applicable federal, state and local taxes shall be withheld in accordance with Section 2.6 hereof.

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1.6 Change in Control.

(a) Form of Payment of CSUs. For a Change in Control occurring within the first consecutive twelve-month period following the date of grant, thenumber of performance-based CSUs paid out to the Participant with regard to such grant will be equal to the total number of CSUs outstanding insuch grant as of the Change in Control, not adjusted for any Performance Factors described in Exhibit . For a Change in Controloccurring after the first consecutive twelve-month period following the date of grant, the number of performance-based CSUs paid out to theParticipant with regard to such grant will be the greater of (i) the total number of CSUs outstanding in such grant as of the Change in Control, notadjusted for any Performance Factors described in Exhibit or (ii) the total number of such CSUs outstanding in such grant, multipliedby the applicable Performance Factors related to Sunoco’s actual performance immediately prior to the Change in Control. In the case of an awardof CSUs conditioned upon the Participant’s continued employment, the total number of CSUs outstanding in such grant as of the Change in Controlwill be paid to the Participant. The Participant’s CSUs will be payable to the Participant in cash or stock, as determined by the Committee prior tothe Change in Control, as follows:

(1) if the Participant is to receive stock, the Participant will receive shares of Common Stock equal in number to the total number of CSUs asstated in this Section 1.6; or

(2) if the Participant is to receive cash, the Participant will be paid an amount in cash equal to the number of CSUs as stated above in thisSection 1.6 multiplied by the greater of:

(i) the highest price per share of Common Stock paid in connection with any Change in Control during the period starting on the sixtieth(60th) calendar day immediately prior to the Change in Control and ending on the earlier of (a) the ninetieth (90th) calendar dayfollowing the Change in Control or (b) the last day of the two and one-half (2-1/2) months following the end of the calendar year inwhich the date of the such Change in Control occurs; and

(ii) the highest trading price per share of Common Stock reflected in the consolidated trading tables of The Wall Street Journal (presently

the New York Stock Exchange Composite Transactions quotations) during the 60-day period immediately prior to the Change inControl.

Such amount will be reduced by the applicable federal, state and local withholding taxes due, as provided in Section 2.6 hereof.

(b) Timing of Payment.

(1) CSUs:

The cash or stock, as the case may be, shall be paid out to the Participant no later than the earlier of (i) ninety (90) days following the date ofoccurrence of such Change in Control or (ii) two and one-half (2-1/2) months following the end of the calendar year in which the date ofsuch Change in Control occurs (the “CSU Payout Date”), regardless of whether the applicable Performance Period has expired or whetherthe applicable Performance Goals have been met.

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(2) DIVIDEND EQUIVALENTS:

On or before the CSU Payout Date, the Participant will be paid an amount in cash equal to the applicable Dividend Equivalents on thenumber of CSUs being paid pursuant to this Section 1.6 for the time period immediately preceding the Change in Control.

(c) Eligibility for Payout. Payout of CSUs and the related earned Dividend Equivalents shall be made to each Participant:

(1) who is employed by Sunoco or one of its Affiliates on the CSU Payout Date; or

(2) whose employment relationship with Sunoco or one of its Affiliates is terminated:

(i) as a result of any Qualifying Termination prior to the CSU Payout Date; or

(ii) as a result of either of the following prior to the CSU Payout Date:

(A) death; or

(B) permanent disability or retirement (as each is determined by the Committee).

1.7 Termination of Employment.

(a) Death, Disability or Retirement. No portion of the Participant’s CSUs and the related Dividend Equivalents shall be forfeited as a result of theoccurrence, prior to the end of the Performance Period, of either of the following:

(1) the death of the Participant; or

(2) the termination of the Participant’s employment with Sunoco or one of its Affiliates by reason of permanent disability or retirement (as eachis determined by the Committee).

The Participant’s CSUs and the related Dividend Equivalents will remain subject to adjustment for any Performance Factors in accordance withExhibit hereto, and will be paid out only as, if, and when the applicable Performance Goals have been met, just as though theParticipant had continued in the employment of Sunoco or one of its Affiliates through the end of the applicable Performance Period.

(b) Other Termination of Employment. Upon termination of the Participant’s employment with Sunoco or one of its Affiliates prior to the end of thePerformance Period (except as provided in Sections 1.6 and 1.7(a) above, or as determined by the Committee), the Participant shall forfeit 100% ofsuch Participant’s CSUs, together with the related Dividend Equivalents, and the Participant shall not be entitled to receive any Common Stock orany payment of any Dividend Equivalents regardless of the level of Performance Goals achieved for the respective Performance Periods.

ARTICLE IIGENERAL PROVISIONS

2.1 Non-Assignability. The CSUs and the related Dividend Equivalents covered by this Agreement shall not be assignable or transferable by theParticipant, except by will or the laws of descent and distribution, unless otherwise provided by the Committee. During the life of the Participant,the CSUs and the related earned Dividend Equivalents covered by this Agreement shall be payable only to the Participant or the guardian or legalrepresentative of such Participant, unless the Committee provides otherwise.

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2.2 Heirs and Successors. This Agreement shall be binding upon and inure to the benefit of, Sunoco and its successors and assigns, and upon anyperson acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of Sunoco’s assets and business. In theevent of the Participant’s death prior to payment of the CSUs and/or the related Dividend Equivalents, payment may be made to the estate of theParticipant to the extent such payment is otherwise permitted by this Agreement. Subject to the terms of the Plan, any benefits distributable to theParticipant under this Agreement that are not paid at the time of the Participant’s death shall be paid at the time and in the form determined inaccordance with the provisions of this Agreement and the Plan, to the legal representative or representatives of the estate of the Participant.

2.3 No Right of Continued Employment; Effect of Disaffiliation. The receipt of this award does not give the Participant, and nothing in the Plan or in thisAgreement shall confer upon the Participant, any right to continue in the employment of Sunoco or any of its Affiliates, or to continue to be nominated orserve on the Board of Directors. Nothing in the Plan or in this Agreement shall affect any right which Sunoco or any of its Affiliates may have to terminatethe employment of the Participant. The payment of any earned CSUs, and/or related Dividend Equivalents, under this Agreement shall not give Sunoco orany of its Affiliates any right to the continued services of the Participant for any period. Upon the sale or other disposition of an Affiliate of Sunoco withthe Participant remaining employed by such former Affiliate, the Participant shall be deemed, for all purposes under the Plan, to have terminated theParticipant’s employment relationship with Sunoco and its remaining Affiliates.

2.4 Rights as a Shareholder. Neither the Participant nor any other person shall be entitled to the privileges of stock ownership, or otherwise have any rightsas a shareholder, by reason of the award of CSUs covered by this Agreement or any shares issuable in respect of such CSUs, unless and until such shareshave been validly issued to such Participant or such other person as fully paid shares.

2.5 Registration of Shares. Notwithstanding any other provision of this Agreement, the CSUs shall not be or become payable in whole or in part unless aregistration statement with respect to the shares of Common Stock subject thereto has been filed with the Securities and Exchange Commission and hasbecome effective.

2.6 Tax Withholding. All distributions under this Agreement are subject to withholding of all applicable taxes.

(a) Payment in Cash. Cash payments in respect of any earned CSUs, and/or related Dividend Equivalents, shall be made net of any applicable federal,state, or local withholding taxes.

(b) Payment in Stock. Immediately prior to the payment of any shares of Common Stock to Participant in respect of earned CSUs, the Participant shallremit an amount sufficient to satisfy any Federal, state and/or local withholding tax due on the receipt of such Common Stock. At the election of theParticipant, and subject to such rules as may be established by the Committee, such withholding obligations may be satisfied through the surrenderof shares of Common Stock (otherwise payable to Participant in respect of such earned CSUs) having a value, as of the date such earned CSUs firstbecame payable, sufficient to satisfy the applicable tax obligation.

2.7 Adjustments.

(a) In the event of a stock dividend, stock split, reverse stock split, share combination, or recapitalization or similar event affecting the capital

structure of the Company (each a “Share Change”), the Committee or Board of Directors shall make an equitable and proportionateanti-dilution adjustment to offset any resultant change in the per-share price of the Company’s

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Common Stock, and preserve the intrinsic value of Stock Options, Common Stock Units and other awards theretofore granted under the Plan. Suchmandatory adjustment may include a change in one or more of the following: (1) the aggregate number of shares of Common Stock reserved forissuance and delivery under the Plan; (2) the number of shares of Common Stock or other securities subject to outstanding awards under the Plan;(3) the exercise price of outstanding Options; and (4) other similar matters.

(b) In the event of a merger, amalgamation, consolidation, acquisition of property or shares, separation, spinoff, other distribution of stock or property(including any extraordinary cash or stock dividend), reorganization, stock rights offering, liquidation, Disaffiliation, or similar event affecting theCompany or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board of Directors may in its discretion make suchsubstitutions or adjustments as it deems appropriate and equitable to (1) the aggregate number and kind of shares of Common Stock or othersecurities reserved for issuance and delivery under the Plan, (2) the number and kind of shares of Common Stock or other securities subject tooutstanding awards under the Plan; and (3) the exercise price of outstanding Options, (4) the cancellation of outstanding awards granted under thePlan in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such awards, asdetermined by the Committee or the Board of Directors in its sole discretion (it being understood that in the case of a Corporate Transaction withrespect to which holders of Common Stock receive consideration other than publicly traded equity securities of the ultimate surviving entity, anysuch determination by the Committee or the Board of Directors that the value of an Option shall for this purpose be deemed to equal the excess, ifany, of the value of the consideration being paid for each share of Common Stock pursuant to such Corporate Transaction over the exercise price ofsuch Option shall conclusively be deemed valid); (5) the substitution of other property (including, without limitation, cash or other securities of theCompany and securities of entities other than the Company) for the shares of Common Stock subject to outstanding awards under the Plan; and(6) in connection with any Disaffiliation, arranging for the assumption of awards granted under the Plan, or replacement of awards granted under thePlan with new awards based on other property or other securities (including, without limitation, other securities of the Company and securities ofentities other than the Company), by the affected Subsidiary, Affiliate, or division or by the entity that controls such Subsidiary, Affiliate, ordivision following such Disaffiliation (as well as any corresponding adjustments to awards under the Plan that remain based upon Companysecurities.

2.8 Leaves of Absence. The Committee shall make such rules, regulations and determinations as it deems appropriate under the Plan in respect of any leave ofabsence taken by the Participant. Without limiting the generality of the foregoing, the Committee shall be entitled to determine:

(a) whether or not any such leave of absence shall constitute a termination of employment within the meaning of the Plan; and

(b) the impact, if any, of any such leave of absence on any prior awards made to the Participant under the Plan.

2.9 Administration. Pursuant to the Plan, the Committee is vested with conclusive authority to interpret and construe the Plan, to adopt rules and regulationsfor carrying out the Plan, and to make determinations with respect to all matters relating to this Agreement, the Plan and awards made pursuant thereto.The authority to manage and control the operation and administration of this Agreement shall be likewise vested in the Committee, and the Committeeshall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee, and anydecision made by the Committee with respect to this Agreement, shall be final and binding.

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2.10 Effect of Plan; Construction. The entire text of the Plan is expressly incorporated herein by this reference and so forms a part of this Agreement. In theevent of any inconsistency or discrepancy between the provisions of the CSU award covered by this Agreement and the terms and conditions of the Planunder which such CSUs are granted, the provisions in the Plan shall govern and prevail. The CSUs, the Dividend Equivalents and this Agreement are eachsubject in all respects to, and Sunoco and the Participant each hereby agree to be bound by, all of the terms and conditions of the Plan, as the same mayhave been amended from time to time in accordance with its terms; provided, however, that no such amendment shall deprive the Participant, without suchParticipant’s consent, of any rights earned or otherwise due to Participant hereunder.

2.11 Amendment. Except as otherwise provided in Section 1.4 above, this Agreement shall not be amended or modified except by an instrument in writingexecuted by both parties to this Agreement, without the consent of any other person, as of the effective date of such amendment.

2.12 Captions. The captions at the beginning of each of the numbered Sections and Articles herein are for reference purposes only and will have no legal forceor effect. Such captions will not be considered a part of this Agreement for purposes of interpreting, construing or applying this Agreement and will notdefine, limit, extend, explain or describe the scope or extent of this Agreement or any of its terms and conditions.

2.13 Governing Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT OF THIS INSTRUMENT SHALL EXCLUSIVELY BEGOVERNED BY AND DETERMINED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF PENNSYLVANIA (WITHOUTGIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF), EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW,WHICH SHALL GOVERN.

2.14 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing, by facsimile, by overnight courier orby registered or certified mail, postage prepaid and return receipt requested. Notices to Sunoco shall be deemed to have been duly given or made uponactual receipt by Sunoco. Such communications shall be addressed and directed to the parties listed below (except where this Agreement expresslyprovides that it be directed to another) as follows, or to such other address or recipient for a party as may be hereafter notified by such party hereunder:

(a) if to Sunoco: SUNOCO, INC. Compensation Committee of the Board of Directors 1735 Market Street, Ste. LL Philadelphia, Pennsylvania, 19103-7583 Attention: Corporate Secretary

(b) if to the Participant: to the address for Participant as it appears on the Sunoco’s records.

2.15 Severability. If any provision hereof is found by a court of competent jurisdiction to be prohibited or unenforceable, it shall, as to such jurisdiction, beineffective only to the extent of such prohibition or unenforceability, and such prohibition or unenforceability shall not invalidate the balance of suchprovision to the extent it is not prohibited or unenforceable, nor invalidate the other provisions hereof.

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2.16 Entire Agreement. This Agreement constitutes the entire understanding and supersedes any and all other agreements, oral or written, between the partieshereto, in respect of the subject matter of this Agreement and embodies the entire understanding of the parties with respect to the subject matter hereof.

2.17 Forfeiture. Notwithstanding any other provision of the Plan or this Agreement, any shares of Common Stock or cash payments received in respect of thisAgreement shall be subject to the provisions of Article VIII, “Forfeiture,” of the Plan. The Participant hereby acknowledges that such shares of CommonStock or cash payments shall be subject to the provisions of Article VIII of the Plan and agrees to be bound thereby and to make any payments to Sunocothat may be required thereunder.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed this Agreement as of the day first above written.

SUNOCO, INC.

By:

for the Compensation Committee of theBoard of Directors

By:

Participant

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Exhibit 10.3

[Month, Year] Award



This Common Stock Unit Agreement (the “Agreement”), entered into as of the (“Agreement Date”), by and between Sunoco, Inc.(“Sunoco”) and , an employee of Sunoco or one of its Affiliates (the “Participant”);




WHEREAS, the Committee has determined to make an award to the Participant of Common Stock Units (“CSUs”), representing rights to receive shares ofCommon Stock which are subject to a risk of forfeiture by the Participant, pursuant to the terms and conditions of the Plan; and


NOW, THEREFORE, Sunoco and the Participant each, intending to be legally bound hereby, agree as follows:



(a) Participant : _____________________________________________

(b) Date of Grant : _____________________________________________

(c) Number of CSUs : _____________________________________________

(d) Performance Period : _____________________________________________



-1-


1.3 Dividend Equivalents. The Participant shall be entitled to receive payment from Sunoco in an amount equal to each cash dividend (“DividendEquivalent”) payable subsequent to the Date of Grant, just as though such Participant, on the applicable record date for payment of such dividend, hadbeen the holder of record of shares of Common Stock equal to the actual number of CSUs, if any, earned and received by the Participant at the end of thePerformance Period. Sunoco shall establish a bookkeeping methodology to account for the Dividend Equivalents to be credited to the Participant. TheDividend Equivalents will not bear interest.

1.4 Performance Measures.

(a) Exhibit , attached hereto and made a part hereof, sets forth the performance measures that will be applied to determine the amount of the awardearned pursuant to this Agreement. These performance measures may be modified by the Committee during, and after the end of, the Performance Periodto reflect significant events that occur during the Performance Period.

(b) The number of CSUs and Dividend Equivalents earned will be equal to the amounts awarded multiplied by the applicable Performance Factors.However, the Committee has the discretion to reduce (but not increase) some or all of the amount that would otherwise be payable as a result of thesatisfaction of the Performance Goals. In making this determination, the Committee may take into account any such factor or factors it determines areappropriate, including but not limited to Company, business unit or individual performance.


(a) Payment in respect of the earned CSUs, and the earned Dividend Equivalents related thereto, shall be made to the Participant within two and

one-half (2-1/2) months after the Performance Period for such CSUs has ended, but only to the extent the Committee determines that the applicableperformance targets have been met.

(1) Payment in respect of CSUs earned. Except as provided by Section 1.6 hereof, all payment for CSUs earned shall be made in shares ofCommon Stock. The number of shares paid shall be equal to the number of CSUs earned; provided, however, that any fractional share ofstock shall be distributed as an amount of cash equal to the value of the stock under the CSU award on the date such earned CSUs firstbecame payable. The number of CSUs earned shall be determined in accordance with the provisions of Exhibit .

(2) Payment of Earned Dividend Equivalents. The Participant will be entitled to receive from Sunoco, within two and one-half (2-1/2) months

after the Performance Period, payment of an amount in cash equal to the Dividend Equivalents earned as determined in accordance with theprovisions of Exhibit .


(b) Notwithstanding the foregoing, and at the discretion of the Committee, any Participant subject to the minimum stock ownership guidelines(established from time to time by the Committee or Sunoco), but failing to meet the ownership requirement applicable to the Participant within theprescribed period may receive a number of shares of Common Stock upon payment of the Common Stock Units, subject to the following restrictionswhich will remain in place until compliance with such ownership guidelines is attained:

(1) The number of shares subject to the restrictions will be equal to the total number of Common Stock Units being paid out, minus the number

of shares of Common Stock used to pay applicable federal, state and local withholding tax on the total payment of such Common StockUnits.

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(2) Other than transfers to family members or trusts that are permitted in accordance with the applicable stock ownership guidelines, and thatwill not result in a reduction in the level of ownership attributable to the Participant under such guidelines, the Participant shall be prohibitedfrom effecting the sale, exchange, transfer, pledge, hypothecation, gift or other disposition of such shares of Common Stock until the earlierof:




(3) The restrictions will apply to any new, additional, or different securities the Participant may become entitled to receive with respect to suchshares by virtue of a stock split or stock dividend or any other change in the corporate or capital structure of Sunoco.

(c) Until the restrictions described in Section 1.5(b) above lapse, the shares will be held in “book-entry form” and appropriate notation of theserestrictions will be maintained in the records of Sunoco’s transfer agent and registrar. Any share certificate representing such shares will bear aconspicuous legend evidencing these restrictions, and Sunoco may require the Participant to deposit the share certificate with Sunoco or its agent,endorsed in blank or accompanied by a duly executed irrevocable stock power or other instrument of transfer.


(a) Form of Payment of CSUs. For a Change in Control occurring within the first consecutive twelve-month period following the date ofgrant, the number of performance-based CSUs paid out to the Participant with regard to such grant will be equal to the total number ofCSUs outstanding in such grant as of the Change in Control, not adjusted for any Performance Factors described in Exhibit . For a Change in Control occurring after the first consecutive twelve-month period following the date of grant, the numberof performance-based CSUs paid out to the Participant with regard to such grant will be the greater of (i) the total number of CSUsoutstanding in such grant as of the Change in Control, not adjusted for any Performance Factors described in Exhibit or(ii) the total number of such CSUs outstanding in such grant, multiplied by the applicable Performance Factors related to Sunoco’sactual performance immediately prior to the Change in Control. In the case of an award of CSUs conditioned upon the Participant’scontinued employment, the total number of CSUs outstanding in such grant as of the Change in Control will be paid to the Participant.The Participant’s CSUs will be payable to the Participant in cash or stock, as determined by the Committee prior to the Change inControl, as follows:

(1) if the Participant is to receive stock, the Participant will receive shares of Common Stock equal in number to the total number of CSUs asstated in this Section 1.6; or

(2) if the Participant is to receive cash, the Participant will be paid an amount in cash equal to the number of CSUs as stated above in thisSection 1.6 multiplied by the greater of:


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(1) CSUs:

The cash or stock, as the case may be, shall be paid out to the Participant no later than the earlier of (i) ninety (90) days following the date ofoccurrence of such Change in Control or (ii) two and one-half (2-1/2) months following the end of the calendar year in which the date ofsuch Change in Control occurs (the “CSU Payout Date”), regardless of whether the applicable Performance Period has expired or whetherthe applicable Performance Goals have been met.


On or before the CSU Payout Date, the Participant will be paid an amount in cash equal to the applicable Dividend Equivalents on thenumber of CSUs being paid pursuant to this Section 1.6 for the time period immediately preceding the Change in Control.





(ii) as a result of either of the following prior to the CSU Payout Date:

(A) death; or



(a) Death, Disability or Retirement. No portion of the Participant’s CSUs and the related Dividend Equivalents shall be forfeited as a result of theoccurrence, prior to the end of the Performance Period, of either of the following:


(2) the termination of the Participant’s employment with Sunoco or one of its Affiliates by reason of retirement or permanent disability (as eachis determined by the Committee).

The Participant’s CSUs and the related Dividend Equivalents will remain subject to adjustment for any Performance Factors in accordance withExhibit hereto, and will be paid out only as, if, and when the applicable Performance Goals have been met, just as though the Participanthad continued in the employment of Sunoco or one of its Affiliates through the end of the applicable Performance Period.

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(b) Other Termination of Employment. Upon termination of the Participant’s employment with Sunoco or one of its Affiliates prior to the end of thePerformance Period (except as provided in Sections 1.6 and 1.7(a) above, or as determined by the Committee), the Participant shall forfeit 100% ofsuch Participant’s CSUs, together with the related Dividend Equivalents, and the Participant shall not be entitled to receive any Common Stock orany payment of any Dividend Equivalents regardless of the level of Performance Goals achieved for the respective Performance Periods.


2.1 Non-Assignability. The CSUs and the related Dividend Equivalents covered by this Agreement shall not be assignable or transferable by theParticipant, except by will or the laws of descent and distribution, unless otherwise provided by the Committee. During the life of the Participant,the CSUs and the related earned Dividend Equivalents covered by this Agreement shall be payable only to the Participant or the guardian or legalrepresentative of such Participant, unless the Committee provides otherwise.


2.3 No Right of Continued Employment; Effect of Disaffiliation. The receipt of this award does not give the Participant, and nothing in the Plan or in thisAgreement shall confer upon the Participant, any right to continue in the employment of Sunoco or any of its Affiliates, or to continue to be nominated orserve on the Board of Directors. Nothing in the Plan or in this Agreement shall affect any right which Sunoco or any of its Affiliates may have to terminatethe employment of the Participant. The payment of any earned CSUs, and/or related Dividend Equivalents, under this Agreement shall not give Sunoco orany of its Affiliates any right to the continued services of the Participant for any period. Upon the sale or other disposition of an Affiliate of Sunoco withthe Participant remaining employed by such former Affiliate, the Participant shall be deemed, for all purposes under the Plan, to have terminated theParticipant’s employment relationship with Sunoco and its remaining Affiliates.



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(a) Payment in Cash. Cash payments in respect of any earned CSUs, and/or related Dividend Equivalents, shall be made net of any applicable federal,state, or local withholding taxes.

(b) Payment in Stock. Immediately prior to the payment of any shares of Common Stock to Participant in respect of earned CSUs, the Participant shallremit an amount sufficient to satisfy any Federal, state and/or local withholding tax due on the receipt of such Common Stock. At the election of theParticipant, and subject to such rules as may be established by the Committee, such withholding obligations may be satisfied through the surrenderof shares of Common Stock (otherwise payable to Participant in respect of such earned CSUs) having a value, as of the date such earned CSUs firstbecame payable, sufficient to satisfy the applicable tax obligation.

2.7 Adjustments.

(a) In the event of a stock dividend, stock split, reverse stock split, share combination, or recapitalization or similar event affecting the capital structureof the Company (each a “Share Change”), the Committee or Board of Directors shall make an equitable and proportionate anti-dilution adjustmentto offset any resultant change in the per-share price of the Company’s Common Stock, and preserve the intrinsic value of Stock Options, CommonStock Units and other awards theretofore granted under the Plan. Such mandatory adjustment may include a change in one or more of the following:(1) the aggregate number of shares of Common Stock reserved for issuance and delivery under the Plan; (2) the number of shares of Common Stockor other securities subject to outstanding awards under the Plan; (3) the exercise price of outstanding Options; and (4) other similar matters.


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2.10 Effect of Plan; Construction. The entire text of the Plan is expressly incorporated herein by this reference and so forms a part of this Agreement. In theevent of any inconsistency or discrepancy between the provisions of the CSU award covered by this Agreement and the terms and conditions of the Planunder which such CSUs are granted, the provisions in the Plan shall govern and prevail. The CSUs, the Dividend Equivalents and this Agreement are eachsubject in all respects to, and Sunoco and the Participant each hereby agree to be bound by, all of the terms and conditions of the Plan, as the same mayhave been amended from time to time in accordance with its terms; provided, however, that no such amendment shall deprive the Participant, without suchParticipant’s consent, of any rights earned or otherwise due to Participant hereunder.

2.11 Amendment. Except as otherwise provided in Section 1.4 above, this Agreement shall not be amended or modified except by an instrument in writingexecuted by both parties to this Agreement, without the consent of any other person, as of the effective date of such amendment.




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(b) if to the Participant: to the address for Participant as it appears on the Sunoco’s records.





SUNOCO, INC.

By:


By:

Participant

8


Exhibit 10.4

[Month, Year] Award



This Common Stock Unit Agreement (the “Agreement”), entered into as of (the “Agreement Date”), by and between Sunoco, Inc. (“Sunoco”)and , an employee of the Sunoco or one of its Affiliates (the “Participant”);


WHEREAS, in order to make certain awards to key employees of Sunoco and its Affiliates, Sunoco maintains the Sunoco, Inc. Long-Term PerformanceEnhancement Plan II (the “Plan”), approved by shareholders at Sunoco’s 2001 Annual Meeting; and

WHEREAS, the Plan is administered by a Committee (the “Committee”) appointed by the Sunoco’s Board of Directors and consisting of at least two(2) members of such Board, each of whom meets the applicable requirements of Section 16 of the Securities Exchange Act of 1934, as amended, andSection 162(m) of the Internal Revenue Code; and

WHEREAS, the Committee has determined to grant to Participant, pursuant to the terms and conditions of the Plan, an award (the “Award”) of CommonStock Units (“CSUs”), representing rights to receive shares of Common Stock which are subject to a risk of forfeiture by the Participant, with the payout of suchCSUs being conditioned upon the Participant’s continued employment with Sunoco or one of its Affiliates through the end of a [three to five]-year vestingperiod; and

WHEREAS, the Participant has determined to accept such Award;

NOW, THEREFORE, Sunoco and the Participant, each intending to be legally bound hereby, agree as follows:



(a) Participant : _____________________________________________

(b) Date of Grant : _____________________________________________

(c) Number of CSUs : _____________________________________________

(d) Vesting Period : _____________________________________________




1.3 Dividend Equivalents. The Participant shall be entitled to receive payment from Sunoco in an amount equal to each cash dividend (“DividendEquivalent”) payable subsequent to the Date of Grant, just as though such Participant, on the applicable record date for payment of such dividend, hadbeen the holder of record of shares of Common Stock equal to the actual number of CSUs, if any, earned and received by the Participant at the end of theVesting Period. Sunoco shall establish a bookkeeping methodology to account for the Dividend Equivalents to be credited to the Participant. The DividendEquivalents will not bear interest.


(a) Full payout of the Award is conditioned only upon the Participant’s continued employment with Sunoco or one of its Affiliates throughout the [threeto five]-year Vesting Period beginning on and ending on . The full Award shall become vested and payable, if theParticipant is employed by Sunoco or one of its Affiliates at such time. Actual payment in respect of the earned CSUs and the earned DividendEquivalent Account shall be made to the Participant within two and one-half (2-1/2) months after the Vesting Period for such CSUs has ended.

(1) Payment in respect of CSUs earned. Except as provided by Section 1.5 hereof, all payment for CSUs earned shall be made in shares ofCommon Stock. The number of shares paid shall be equal to the number of CSUs earned.

(2) Payment of Related Earned Dividend Equivalents. The Participant will be entitled to receive from Sunoco, within two and one-half (2-1/2)months after the end of the Vesting Period, cash payment in respect of the related Dividend Equivalents earned.







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(a) Form of Payment of CSUs. In the event of a Change in Control of Sunoco, all the Participant’s CSUs outstanding as of the Change in Control shallbe payable to the Participant in cash or stock, as determined by the Committee prior to the Change in Control, as follows:

(1) if the Participant is to receive stock, the Participant will receive shares of Common Stock equal in number to the total number of CSUsgranted to the Participant; or

(2) if the Participant is to receive cash, the Participant will be paid an amount in cash equal to the number of CSUs outstanding multiplied bythe greater of:






(1) CSUs:

The cash or stock, as the case may be, shall be paid out to the Participant no later than the earlier of (i) ninety (90) days following the date ofoccurrence of such Change in Control or (ii) two and one-half (2-1/2) months following the end of the calendar year in which the date ofsuch Change in Control occurs (the “CSU Payout Date”), regardless of whether the applicable Vesting Period has expired.

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On or before the CSU Payout Date, the Participant will be paid an amount in cash equal to the value of the Dividend Equivalent amounts, ifany, credited to the Participant immediately preceding the Change in Control.





(ii) as a result of either of the following, prior to the CSU Payout Date:

(A) death; or



(a) Death or Disability. The Committee has determined that no portion of the Participant’s CSUs and related Dividend Equivalents shall beforfeited as a result of the occurrence, prior to the end of the Vesting Period, of either of the following:


(2) the termination of the Participant’s employment with Sunoco or one of its Affiliates by reason permanent disability (as each is determinedby the Committee).

Instead, the Participant’s CSUs and related Dividend Equivalents shall remain and be paid out as though the Participant had continued in theemployment of Sunoco or one of its Affiliates through the end of the applicable Vesting Period, and shall be paid on the first day of the secondmonth folllowing the date on which the employment relationship between Participant and the Company is terminated as provided above in thisSection 1.6(a).

(b) Other Termination of Employment. Upon termination of the Participant’s employment with Sunoco or one of its Affiliates prior to the end of theVesting Period (except as provided in Sections 1.5 and 1.6(a) above, or as determined by the Committee), the Participant shall forfeit 100% of suchParticipant’s CSUs, together with the related Dividend Equivalents, and the Participant shall not be entitled to receive any Common Stock or anypayment of any Dividend Equivalents.

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2.1 Non-Assignability. The CSUs and the related earned Dividend Equivalents covered by this Agreement shall not be assignable or transferable by theParticipant, except by will or the laws of descent and distribution, unless otherwise provided by the Committee. During the life of the Participant, theCSUs and the related Dividend Equivalents covered by this Agreement shall be payable only to the Participant or the guardian or legal representative ofsuch Participant, unless the Committee provides otherwise.


2.3 No Right of Continued Employment; Effect of Disaffiliation. The receipt of this award does not give the Participant, and nothing in the Plan orin this Agreement shall confer upon the Participant, any right to continue in the employment of Sunoco or any of its Affiliates, or to continue to benominated or serve on the Board of Directors. Nothing in the Plan or in this Agreement shall affect any right which Sunoco or any of its Affiliatesmay have to terminate the employment of the Participant. The payment of earned CSUs, and the related Dividend Equivalents, under thisAgreement shall not give Sunoco or any of its Affiliates any right to the continued services of the Participant for any period. Upon the sale or otherdisposition of an Affiliate by Sunoco, with the Participant remaining employed by such former Affiliate, the Participant shall be deemed, for allpurposes under the Plan, to have terminated the Participant’s employment relationship with Sunoco and its remaining Affiliates.




(a) Payment in Cash. Cash payments in respect of any earned CSUs, and/or the related Dividend Equivalents, shall be made net of any applicablefederal, state, or local withholding taxes.

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(b) Payment in Stock. Immediately prior to the payment of any shares of Common Stock to Participant in respect of earned CSUs, the Participant shallremit an amount sufficient to satisfy any Federal, state and/or local withholding tax due on the receipt of such Common Stock. At the election of theParticipant, and subject to such rules as may be established by the Committee, such withholding obligations may be satisfied through the surrenderof shares of Common Stock (otherwise payable to Participant in respect of such earned CSUs) having a value, as of the date of such earned CSUsfirst became payable, sufficient to satisfy the applicable tax obligation.

2.7 Adjustments.



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2.10 Effect of Plan; Construction. The entire text of the Plan is expressly incorporated herein by this reference and so forms a part of this Agreement. In theevent of any inconsistency or discrepancy between the provisions of the CSU award covered by this Agreement and the terms and conditions of the Planunder which such CSUs are granted, the provisions in the Plan shall govern and prevail. The CSUs, the related Dividend Equivalents and this Agreementare each subject in all respects to, and Sunoco and the Participant each hereby agree to be bound by, all of the terms and conditions of the Plan, as the samemay have been amended from time to time in accordance with its terms; provided, however, that no such amendment shall deprive the Participant, withoutsuch Participant’s consent, of any rights earned or otherwise due to Participant hereunder.

2.11 Amendment. This Agreement shall not be amended or modified except by an instrument in writing executed by both parties to this Agreement,without the consent of any other person, as of the effective date of such amendment.



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(b) if to the Participant: to the address for Participant as it appears on Sunoco’s records.





SUNOCO, INC.

By:


By:

Participant

8


Exhibit 10.5

[Month, Year] Award



This Common Stock Unit Agreement (the “Agreement”), entered into as of (the “Agreement Date”), by and between Sunoco, Inc.(“Sunoco”) and , an employee of the Sunoco or one of its Affiliates (the “Participant”);


WHEREAS, in order to make certain awards to key employees of Sunoco and its Affiliates, Sunoco maintains the Sunoco, Inc. Long-Term PerformanceEnhancement Plan II (the “Plan”), approved by shareholders at Sunoco’s 2001 Annual Meeting; and

WHEREAS, the Plan is administered by a Committee (the “Committee”) appointed by the Sunoco’s Board of Directors and consisting of at least two(2) members of such Board, each of whom meets the applicable requirements of Section 16 of the Securities Exchange Act of 1934, as amended, andSection 162(m) of the Internal Revenue Code; and

WHEREAS, the Committee has determined to grant to Participant, pursuant to the terms and conditions of the Plan, an award (the “Award”) of CommonStock Units (“CSUs”), representing rights to receive shares of Common Stock which are subject to a risk of forfeiture by the Participant, with the payout of suchCSUs being conditioned upon the Participant’s continued employment with Sunoco or one of its Affiliates through the end of each applicable installment termwithin the specified vesting period (which vesting period shall not be less than three years); and

WHEREAS, the Participant has determined to accept such Award;

NOW, THEREFORE, Sunoco and the Participant, each intending to be legally bound hereby, agree as follows:



(a) Participant : _____________________________________________

(b) Date of Grant : _____________________________________________

(c) Number of CSUs : _____________________________________________

(d) Vesting Period : _____________________________________________




1.3 Dividend Equivalents. The Participant shall be entitled to receive payment from Sunoco in an amount equal to each cash dividend (“DividendEquivalent”) payable subsequent to the Date of Grant, just as though such Participant, on the record date for payment of such dividend, had been theholder of record of shares of Common Stock equal to the actual number of CSUs, if any, earned and received by the Participant at the end of the applicableinstallment term within the Vesting Period. Sunoco shall establish a bookkeeping methodology to account for the Dividend Equivalents to be credited tothe Participant. The Dividend Equivalents will not bear interest.


(a) Payout of this Award is conditioned only upon the Participant’s continued employment with Sunoco or one of its Affiliates through the vesting datesas set forth below:

Installment Terms within the Vesting Period

Percent of Award Vested

Number of CSUs Earned and Payable

Begin End

Each respective installment of the Award shall become vested and payable only if the Participant is employed by Sunoco or one of its Affiliatesthrough the end of the applicable installment term within the Vesting Period.

Actual payment in respect of the earned CSUs and the earned Dividend Equivalent Account shall be made to the Participant within two and one-half(2-1/2) months after the end of the applicable installment term within the Vesting Period.

(1) Payment in respect of CSUs earned. Except as provided by Section 1.5 hereof, all payment for CSUs earned shall be made in shares ofCommon Stock. The number of shares paid shall be equal to the number of CSUs earned.

(2) Payment of Related Earned Dividend Equivalents. The Participant will be entitled to receive from Sunoco, within two and one-half (2-1/2)

months after the end of the applicable installment term within the Vesting Period, cash payment in respect of the related DividendEquivalents earned for such installment term.





2









(a) Form of Payment of CSUs. In the event of a Change in Control of Sunoco, all the Participant’s CSUs outstanding as of the Change in Control shallbe payable to the Participant in cash or stock, as determined by the Committee prior to the Change in Control, as follows:

(1) if the Participant is to receive stock, the Participant will receive shares of Common Stock equal in number to the total number of CSUsgranted to the Participant; or

(2) if the Participant is to receive cash, the Participant will be paid an amount in cash equal to the number of CSUs outstanding multiplied bythe greater of:




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(1) CSUs:

The cash or stock, as the case may be, shall be paid out to the Participant no later than the earlier of (i) ninety (90) days following the date ofoccurrence of such Change in Control or (ii) two and one-half (2-1/2) months following the end of the calendar year in which the date ofsuch Change in Control occurs (the “CSU Payout Date”), regardless of whether the applicable Vesting Period has expired.


On or before the CSU Payout Date, the Participant will be paid an amount in cash equal to the value of the Dividend Equivalent amounts, ifany, credited to the Participant immediately preceding the Change in Control.





(ii) as a result of either of the following, prior to the CSU Payout Date:

(A) death; or



(a) Death or Disability. The Committee has determined that no portion of the Participant’s CSUs and related Dividend Equivalents shall beforfeited as a result of the occurrence, prior to the end of the Vesting Period, of either of the following:


(2) the termination of the Participant’s employment with Sunoco or one of its Affiliates by reason permanent disability (as each is determinedby the Committee).

Instead, the Participant’s CSUs and related Dividend Equivalents shall remain and be paid out as though the Participant had continued in theemployment of Sunoco or one of its Affiliates through the end of the applicable Vesting Period, and shall be paid on the first day of the secondmonth following the date on which the employment relationship between Participant and the Company is terminated as provided above in thisSection 1.6(a).

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(b) Other Termination of Employment. Except as otherwise provided in Sections 1.5 and 1.6(a) above, or as determined by the Committee, upontermination of the Participant’s employment with Sunoco or one of its Affiliates prior to the end of any applicable installment term within theVesting Period, the Participant shall forfeit 100% of such Participant’s CSUs that have not become payable, together with the related DividendEquivalents, and the Participant shall not be entitled to receive any Common Stock or any payment of any Dividend Equivalents.


2.1 Non-Assignability. The CSUs and the related earned Dividend Equivalents covered by this Agreement shall not be assignable or transferable by theParticipant, except by will or the laws of descent and distribution, unless otherwise provided by the Committee. During the life of the Participant, theCSUs and the related Dividend Equivalents covered by this Agreement shall be payable only to the Participant or the guardian or legal representative ofsuch Participant, unless the Committee provides otherwise.


2.3 No Right of Continued Employment; Effect of Disaffiliation. The receipt of this award does not give the Participant, and nothing in the Plan orin this Agreement shall confer upon the Participant, any right to continue in the employment of Sunoco or any of its Affiliates, or to continue to benominated or serve on the Board of Directors. Nothing in the Plan or in this Agreement shall affect any right which Sunoco or any of its Affiliatesmay have to terminate the employment of the Participant. The payment of earned CSUs, and the related Dividend Equivalents, under thisAgreement shall not give Sunoco or any of its Affiliates any right to the continued services of the Participant for any period. Upon the sale or otherdisposition of an Affiliate by Sunoco, with the Participant remaining employed by such former Affiliate, the Participant shall be deemed, for allpurposes under the Plan, to have terminated the Participant’s employment relationship with Sunoco and its remaining Affiliates.


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(a) Payment in Cash. Cash payments in respect of any earned CSUs, and/or the related Dividend Equivalents, shall be made net of any applicablefederal, state, or local withholding taxes.

(b) Payment in Stock. Immediately prior to the payment of any shares of Common Stock to Participant in respect of earned CSUs, the Participant shallremit an amount sufficient to satisfy any Federal, state and/or local withholding tax due on the receipt of such Common Stock. At the election of theParticipant, and subject to such rules as may be established by the Committee, such withholding obligations may be satisfied through the surrenderof shares of Common Stock (otherwise payable to Participant in respect of such earned CSUs) having a value, as of the date of such earned CSUsfirst became payable, sufficient to satisfy the applicable tax obligation.

2.7 Adjustments.


(b) In the event of a merger, amalgamation, consolidation, acquisition of property or shares, separation, spinoff, other distribution of stock or property(including any extraordinary cash or stock dividend), reorganization, stock rights offering, liquidation, Disaffiliation, or similar event affecting theCompany or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board of Directors may in its discretion make suchsubstitutions or adjustments as it deems appropriate and equitable to (1) the aggregate number and kind of shares of Common Stock or othersecurities reserved for issuance and delivery under the Plan, (2) the number and kind of shares of Common Stock or other securities subject tooutstanding awards under the Plan; and (3) the exercise price of outstanding Options, (4) the cancellation of outstanding awards granted under thePlan in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such awards, asdetermined by the Committee or the Board of Directors in its sole discretion (it being understood that in the case of a Corporate Transaction withrespect to which holders of Common Stock receive consideration other than publicly traded equity securities of the ultimate surviving entity, anysuch determination by the Committee or the Board of Directors that the value of an Option shall for this purpose be deemed to equal the excess, ifany, of the value of the consideration being paid for each share of Common Stock pursuant to such Corporate Transaction over the exercise price ofsuch Option shall conclusively be deemed valid); (5) the substitution of other property (including, without limitation, cash or other securities of theCompany and securities of entities

6


other than the Company) for the shares of Common Stock subject to outstanding awards under the Plan; and (6) in connection with anyDisaffiliation, arranging for the assumption of awards granted under the Plan, or replacement of awards granted under the Plan with new awardsbased on other property or other securities (including, without limitation, other securities of the Company and securities of entities other than theCompany), by the affected Subsidiary, Affiliate, or division or by the entity that controls such Subsidiary, Affiliate, or division following suchDisaffiliation (as well as any corresponding adjustments to awards under the Plan that remain based upon Company securities.





2.10 Effect of Plan; Construction. The entire text of the Plan is expressly incorporated herein by this reference and so forms a part of this Agreement. In theevent of any inconsistency or discrepancy between the provisions of the CSU award covered by this Agreement and the terms and conditions of the Planunder which such CSUs are granted, the provisions in the Plan shall govern and prevail. The CSUs, the related Dividend Equivalents and this Agreementare each subject in all respects to, and Sunoco and the Participant each hereby agree to be bound by, all of the terms and conditions of the Plan, as the samemay have been amended from time to time in accordance with its terms; provided, however, that no such amendment shall deprive the Participant, withoutsuch Participant’s consent, of any rights earned or otherwise due to Participant hereunder.

2.11 Amendment. This Agreement shall not be amended or modified except by an instrument in writing executed by both parties to this Agreement,without the consent of any other person, as of the effective date of such amendment.


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SUNOCO, INC.

By:


By:

Participant

8


Exhibit 10.6

[Month, Year] Award

STOCK OPTION AGREEMENT

Under theSUNOCO, INC. LONG-TERM PERFORMANCE ENHANCEMENT PLAN II

This Stock Option Agreement (the “Agreement”) entered into as of (the “Agreement Date”), by and between Sunoco, Inc. (“Sunoco”) and , who is an employee of Sunoco or one of its Affiliates (the “Participant”);




WHEREAS, the Board and/or Committee has determined to make an award of an option to purchase shares of common stock of Sunoco to the Participantpursuant to the terms and conditions of the Plan; and


NOW, THEREFORE, Sunoco and the Participant each intending to be legally bound hereby, agree as follows:

ARTICLE IOPTION TO PURCHASE COMMON STOCK


(a) Participant : _____________________________________________

(b) Date of Grant : _____________________________________________

(c) Shares Subject To Option : _____________________________________________

(d) Option Price (per share) : _____________________________________________

(e) Earliest Exercise Date : _____________________________________________


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1.2 Award of Stock Option. Subject to the terms and conditions of the Plan and this Agreement, the Participant is hereby granted an option (the “StockOption”) to purchase up to the number of Shares Subject To Option of Sunoco’s common stock (the “Common Stock”), at the Option Price set forth hereinat Section 1.1. The Stock Option is not intended to be, and shall not be treated as, an “incentive stock option” as such term is defined under Section 422 ofthe Internal Revenue Code of 1986, as amended.

1.3 Exercisability. The Stock Option shall become exercisable in whole or in part with respect to all of the shares of Common Stock subject thereto on thetwo-year anniversary of the Date of Grant; provided, however, that, upon the occurrence of any Change in Control, the Stock Option shall becomeimmediately and fully exercisable, notwithstanding any provision to the contrary in this Agreement or in the Plan, and without regard to any period of timethen elapsed from the Date of Grant.

1.4 Term. The Stock Option shall not be exercisable, either in whole or in part, on or after the Expiration Date. Unless fully exercised by the Expiration Date,the Stock Option shall automatically be canceled to the extent not yet exercised. The Expiration Date shall be the earliest to occur of:

(a) , which is the ten-year anniversary of the Date of Grant; or

(b) the sixty-month anniversary of the date of termination of the Participant’s employment, if such termination occurs by reason of:

(1) retirement or permanent disability (as each is determined by the Committee); or

(2) death; or

(c) (1) the 90-calendar day anniversary of the date of termination of the Participant’s employment, if the termination of employment occursprior to a Change in Control for following the two-year anniversary of a Change in Control, and (2) the one-year anniversary of the date oftermination of the Participant’s employment, if the termination of employment occurs with two years after a Change in Control, other thanin the case of a termination of employment for Just Cause, as defined in the Plan.

Notwithstanding anything herein to the contrary, however, the Stock Option will be canceled immediately where the Participant’s employment has beenterminated at any time for Just Cause.

1.5 Method of Exercising Stock Option.

(a) The Stock Option may be exercised from time to time in whole or in part, by written notice delivered to and received by Sunoco prior to the

Expiration Date, so long as the Participant is in compliance with the Company’s insider trading policy and the pre-clearance process. This noticemust:

(1) be signed by the Participant;

(2) state the Participant’s election to exercise the Stock Option;

(3) specify the number of whole shares of Common Stock with respect to which the Stock Option is being exercised;

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(4) be accompanied by a check payable to Sunoco, in the amount of the full Option Price for the number of shares purchased. Alternatively, theParticipant may pay all or a portion of the Option Price by:

(i) delivering to Sunoco shares of previously owned Common Stock having an aggregate Fair Market Value (valued as of the date ofexercise) equal to the amount of cash that would otherwise be required, in which event, the stock certificates evidencing the shares soto be used shall accompany the notice of exercise and shall be duly endorsed or accompanied by duly executed stock powers totransfer the same to Sunoco; provided, however, that before they may be used as payment of the Option Price, shares of CommonStock issued under:

(a) the Plan, and/or

(b) the Sunoco, Inc. Long-Term Performance Enhancement Plan,

must have been held by the Participant at least six (6) months.

(ii) by authorizing a third party to sell a sufficient portion of the shares of Common Stock acquired upon exercise of the Stock Option and

remit to Sunoco a sufficient portion of the sale proceeds to pay the entire Option Price and tax withholding resulting from suchexercise.

(b) As soon as practicable after Sunoco receives such notice and payment, and following receipt from the Participant of payment for any taxes whichSunoco is required by law to withhold by reason of such exercise, Sunoco will deliver to the Participant either:

(1) a certificate or certificates for the shares of Stock so purchased; or

(2) other evidence of the appropriate registration of such shares on Sunoco’s books and records.

(c) Notwithstanding the foregoing, and at the discretion of the Committee, any Participant subject to minimum stock ownership guidelines (asestablished from time to time by the Committee or Sunoco), but failing to meet the applicable ownership requirement within the prescribed timeperiod may, upon exercise of the Stock Option, receive shares of Common Stock subject to the following restrictions which shall remain in placeuntil compliance with the ownership guidelines are attained:

(1) The number of shares subject to the restrictions shall be equal to the total number of shares received in the exercise of the Stock Option,minus the sum of:

(i) to the extent that shares received upon the exercise of the Stock Option are used to pay the Stock Option Price, the number of shares

which have a Fair Market Value on the date of the Stock Option exercise equal to the total amount paid for all the shares received inthe Stock Option exercise; and

(ii) to the extent that shares received upon exercise of the Stock Option are used to pay taxes and brokerage fees, the number of shares

which have a Fair Market Value on the date of the Stock Option exercise equal to the applicable federal, state, and local withholdingtax on the total Stock Option exercise and any brokerage commission or interest charges, if applicable to the exercise.

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(i) attainment of compliance with the applicable stock ownership guidelines;

(ii) the Participant’s death, retirement, or permanent disability (as determined by the Committee);

(iii) occurrence of the Participant’s Employment Termination Date, as defined in the Plan, for any reason other than Just Cause.

Notwithstanding the foregoing, six (6) months after the exercise of the Stock Option, such shares of Common Stock may be used aspayment of the Option Price of shares issued upon the exercise of other Stock Options. However, the shares will be issued as restrictedshares.

(3) The restrictions will apply to any new, additional or different securities the Participant may become entitled to receive with respect to theshares by virtue of a stock split or stock dividend or any other change in the corporate or capital structure of Sunoco.

(d) Until the restrictions described in Section 1.5(c) above lapse, the shares will be held in book-entry form and appropriate notation of these restrictionswill be maintained in the records of Sunoco’s transfer agent and registrar. Any share certificate representing such shares will bear a conspicuouslegend evidencing these restrictions, and Sunoco may require the Participant to deposit the share certificate with Sunoco or its agent, endorsed inblank or accompanied by a duly executed irrevocable stock power or other instrument of transfer.


(a) Retirement, Permanent Disability, or Death. Upon termination of the Participant’s employment by reason of retirement, permanentdisability or death (as determined by the Committee), all unvested stock options shall continue to vest and all vested Stock Options shallcontinue to be outstanding. The Participant (or in the case of death, the Participant’s estate, or any person who acquires the right to exercisethe Stock Option by bequest or inheritance or otherwise by reason of Participant’s death) may, within sixty (60) months from the date oftermination, exercise the Stock Option, to the extent that it is exercisable during the sixty-month period. At the end of the sixty-monthperiod, all unexercised stock options shall terminate.

(b) Other. Except as provided under Section 1.6(a) above, or except as otherwise determined by the Committee, upon termination of a Participant’semployment:

(1) on or prior to the two-year anniversary of the Date of Grant, (i.e., while the Stock Option remains unvested), then the Stock Option shall becanceled automatically upon termination of the Participant’s employment; and

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(2) after the two-year anniversary of the Date of Grant, (i.e., once the Stock Option has vested), then the Stock Option shall be canceled asfollows:

(A) immediately, in the case of the Participant terminated by Sunoco or one of its Affiliates for Just Cause; or

(B) (1) if the termination of employment occurs prior to a Change in Control or following the two-year anniversary of a Change inControl, upon the expiration of ninety (90) calendar days following the occurrence of the Participant’s Employment Termination Dateand (2) if the termination of employment occurs within two (2) years after a Change in Control, upon the expiration of one (1) yearfollowing the occurrence of the Participant’s Employment Termination Date, other than, in the case of each clause (1) and clause(2) of this subparagraph (B), a termination of employment for Just Cause (in which case subparagraph (A) above will apply).

Under no circumstances shall the exercise period set forth in this Section 1.6 extend to or beyond the Expiration Date.


2.1 Non-Assignability. Unless otherwise determined by the Committee, the Stock Option shall be assignable or transferable by the Participant,except by will or the laws of descent and distribution (and then, only as set forth in Section 1.6(b) hereof). During the life of the Participant, theStock Option shall be exercisable only by the Participant or by the Participant’s guardian or legal representative, unless the Committeedetermines otherwise.

2.2 Heirs and Successors. This Agreement shall be binding upon and inure to the benefit of, Sunoco and its successors and assigns, and upon any personacquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of Sunoco’s assets and business. In the event of theParticipant’s death prior to exercise of the Stock Option, the Stock Option may be exercised by the estate of the Participant to the extent such exercise isotherwise permitted by this Agreement. Subject to the terms of the Plan, any benefits distributable to the Participant under this Agreement that are not paidat the time of the Participant’s death shall be paid at the time and in the form determined in accordance with the provisions of this Agreement and the Plan,to the legal representative or representatives of the estate of the Participant.

2.3 No Right of Continued Employment; Effect of Disaffiliation. The receipt of this Stock Option does not give the Participant, and nothing in the Plan orin this Agreement shall confer upon the Participant, any right to continue in the employment of Sunoco or any of its Affiliates. Nothing in the Plan or inthis Agreement shall affect any right which Sunoco or any of its Affiliates may have to terminate Participant’s employment. The granting of this StockOption and the issuance of shares upon the exercise thereof shall not give Sunoco or any of its Affiliates any right to the continued services of theParticipant for any period. Upon the sale or other disposition of an Affiliate of Sunoco with the Participant remaining employed by such former Affiliate,the Participant shall be deemed, for all purposes under the Plan, to have terminated the Participant’s employment relationship with Sunoco and itsremaining Affiliates.

2.4 Rights as a Shareholder. Neither the Participant nor any other person shall be entitled to the privileges of stock ownership, or otherwise have any rightsas a shareholder, by reason of the Stock Option or the shares issuable upon the exercise of the Stock Option, unless and until such shares have been validlyissued to such Participant or such other person as fully paid shares.

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2.5 Registration of Shares. Notwithstanding any other provision of this Agreement, the Stock Option shall not be or become exercisable in whole or in partunless a registration statement with respect to the shares of Common Stock subject thereto has been filed with the Securities and Exchange Commissionand has become effective.

2.6 Tax Withholding. All distributions under this Agreement are subject to withholding of all applicable taxes. Upon the exercise of the Stock Option, theParticipant shall remit an amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery of any certificate orcertificates for such shares. At the election of the Participant, and subject to such rules as may be established by the Committee, such withholdingobligations may be satisfied through the surrender of shares of Common Stock which the Participant already owns, or to which the Participant is otherwiseentitled under the Plan, having a value as of the date of exercise sufficient to satisfy the applicable tax obligation.

2.7 Adjustments.


(b) In the event of a merger, amalgamation, consolidation, acquisition of property or shares, separation, spinoff, other distribution of stock or property(including any extraordinary cash or stock dividend), reorganization, stock rights offering, liquidation, Disaffiliation, or similar event affecting theCompany or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board of Directors may in its discretion make suchsubstitutions or adjustments as it deems appropriate and equitable to (1) the aggregate number and kind of shares of Common Stock or othersecurities reserved for issuance and delivery under the Plan, (2) the number and kind of shares of Common Stock or other securities subject tooutstanding awards under the Plan; and (3) the exercise price of outstanding Options, (4) the cancellation of outstanding awards granted under thePlan in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such awards, asdetermined by the Committee or the Board of Directors in its sole discretion (it being understood that in the case of a Corporate Transaction withrespect to which holders of Common Stock receive consideration other than publicly traded equity securities of the ultimate surviving entity, anysuch determination by the Committee or the Board of Directors that the value of an Option shall for this purpose be deemed to equal the excess, ifany, of the value of the consideration being paid for each share of Common Stock pursuant to such Corporate Transaction over the exercise price ofsuch Option shall conclusively be deemed valid); (5) the substitution of other property (including, without limitation, cash or other securities of theCompany and securities of entities other than the Company) for the shares of Common Stock subject to outstanding awards under the Plan; and(6) in connection with any Disaffiliation, arranging for the

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assumption of awards granted under the Plan, or replacement of awards granted under the Plan with new awards based on other property or othersecurities (including, without limitation, other securities of the Company and securities of entities other than the Company), by the affectedSubsidiary, Affiliate, or division or by the entity that controls such Subsidiary, Affiliate, or division following such Disaffiliation (as well as anycorresponding adjustments to awards under the Plan that remain based upon Company securities.


(a) whether or not any such leave of absence shall constitute a termination of such Participant’s employment within the meaning of the Plan; and



2.10 Effect of Plan; Construction. The entire text of the Plan is expressly incorporated herein by this reference and so forms a part of this Agreement. In theevent of any inconsistency or discrepancy between the provisions of the Stock Option and the terms and conditions of the Plan under which the StockOption is granted, the provisions in the Plan shall govern and prevail. The Stock Option and this Agreement are each subject in all respects to, and Sunocoand the Participant each hereby agree to be bound by, all of the terms and conditions of the Plan, as the same may have been amended from time to time inaccordance with its terms; provided, however, that no such amendment shall deprive the Participant, without such Participant’s consent, of the StockOption or any rights hereunder.

2.11 Amendment. This Agreement shall not be amended or modified except by an instrument in writing executed by both parties to this Agreement. Noconsent of any other person shall be required in order to amend or modify this Agreement.


2.13 Governing Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT OF THIS INSTRUMENT SHALL BE GOVERNEDEXCLUSIVELY BY, AND DETERMINED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF PENNSYLVANIA (WITHOUTGIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF), EXCEPT TO THE EXTENT PRE-EMPTED BY FEDERAL LAW,WHICH SHALL GOVERN.

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SUNOCO, INC.

By:


By:

Participant

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Exhibit 10.7

SUNOCO, INC.

PENSION RESTORATION PLANAmended and Restated effective June 1, 2008

PURPOSE

Sunoco, Inc. (the “Company”) hereby amends and restates this Pension Restoration Plan effective June 1, 2008 for the purpose of providing to Participants(as hereinafter defined) retirement benefits which would otherwise be provided by either the Sunoco, Inc. Retirement Plan or the Puerto Rico Sun Oil CompanyRetirement Plan but for the restrictions on benefits payable under these plans by Sections 401(a)(17) and 415 of the Code. This Plan is intended to constitute an“excess benefit plan” within the meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) and an unfundedplan maintained primarily to provide deferred compensation for a select group of management or highly compensated employees within the meaning of Sections201(2), 301(a)(3) and 401(a)(1) of ERISA.

ARTICLE I

DEFINITIONS

1.01 “Actuarial Equivalent” means a benefit of equivalent current value to the benefit which would otherwise have been provided to the Participant, determinedon the same basis as determined under the Applicable Sunoco Retirement Plan.

1.02 “Affiliated Company” means the Company and:

(a) Any other corporation which is included within a “controlled group of corporations” within which Sunoco, Inc., is also included as determinedunder Section 1563 of the 1954 Internal Revenue Code without regard to subsections (a)(4) and (e)(3)(C) of said Section 1563;

(b) Any other trades or businesses (whether or not incorporated) which, based on principles similar to those defining a “controlled group ofcorporations” for purposes of (a) above, are under common control; and

(c) Any other organization so designated by the Board Committee.

1.03 “Applicable Sunoco Retirement Plan” means the Sunoco, Inc. Retirement Plan or the Puerto Rico Sun Oil Company Retirement Plan, whichever plan theParticipant will receive benefits under.


1.04 “Beneficiary” means the person or persons, other than a contingent annuitant, designated by a Participant or retired Participant pursuant to Article IV.

1.05 “Board of Directors” means the Board of Directors of Sunoco, Inc.

1.06 “Board Committee” means those individual Directors who have been appointed by the Board of Directors with the powers and responsibilities specified inArticle V and to which has been delegated any fiduciary responsibilities of the Board of Directors with respect to the Plan.

1.07 “Code” means the Internal Revenue Code of 1986, as amended.

1.08 “Company” means Sunoco, Inc. or any corporation which succeeds to the position of Sunoco, Inc. as common parent of the Sun Affiliated Group, withinthe meaning of regulations issued under the Internal Revenue Code.

1.09 “Effective Date” means September 2, 1974; as to this amendment and restatement, June 1, 2008; and as to any amendment, the effective date specified bythe Board of Directors.

1.10 “Employee” means any individual who is employed by the Company or an Affiliated Company.

1.11 “Participant” means any Employee who is a participant in an Applicable Sunoco Retirement Plan, who: (i) has had his retirement benefit under that planreduced due to Statutory Limitations or (ii) has received Restricted Stock Unit Income.

1.12 “Plan” means the Sunoco, Inc. Pension Restoration Plan as set forth in this document and as it may from time to time be amended.

1.13 “Plan Administrator” means the individual or entity designated as such by the Board Committee pursuant to Article V.

1.14 “Plan Year” means the annual period beginning on January 1 of any year and ending on the following December 31.

1.15 “Spouse” means the individual who is the legally married husband or wife of a Participant.

1.16 “Statutory Limitations” means the limitations placed on the benefits that can be accrued under a qualified pension plan pursuant to Section 401(a)(17) and415 of the Code.

1.17 “Termination Date” means the date on which a Participant separates from service as defined in Code Section 409A and the regulations promulgatedthereunder. Notwithstanding the foregoing, pursuant to Treasury Regulation Section 1.409A-1(h)(1)(ii), where it is reasonably anticipated that there willbe a permanent reduction in the level of bona fide services of the Participant after a certain date to 49% or less of the average level of bona fide servicesperformed by the Participant during the immediately preceding 12 months, such Participant shall be treated for purposes of this Plan as having on suchdate a termination of employment and a separation from service.

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ARTICLE II

CONTRIBUTIONS

2.01 Employer Contributions. All benefits payable under this Plan will be paid by the Company. A Participant will have no right, title or interest whatsoever inor to any investments which the Company may make to aid in meeting such obligations as may arise under the Plan. Nothing contained in the Plan, norany action taken pursuant to its provisions, will create or be construed to create a trust or a fiduciary relationship between the Company and any Participantor any other person. To the extent that any person acquires a right to benefits under this Plan, such right will be no greater than the right of an unsecuredgeneral creditor of the Company. All payments to be made under the Plan will be paid from the general funds of the Company and no special or separatefund will be established and no segregation of assets will be made to assure payment of such amounts.

2.02 Participant Contributions. No contributions by Participants will be required or permitted under this Plan.

2.03 Expenses of Administration. All expenses of administering this Plan will be paid by the Company.

ARTICLE III

RETIREMENT BENEFITS

3.01 Amount of Benefits. Benefits under the Plan will be determined as follows effective January 1, 2005.

(a) Except as provided in Section 3.01(b), the benefit payable to a Participant or his Beneficiary will be equal to the excess of:

(i) The benefits which would have been paid to the Participant or his Beneficiary under the Applicable Sunoco Retirement Plan, if theprovisions of that plan were administered without regard to the Statutory Limitations, over

(ii) The benefits payable to the Participant or his Beneficiary under the Applicable Sunoco Retirement Plan.

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(b) In the case of a Participant who is eligible for a benefit determined under Section 3.10 of the Sunoco, Inc. Retirement Plan or Section 6.11 of the

Puerto Rico Sun Oil Company Retirement Plan (i.e., a “Rule of 60” benefit) on his Termination Date, and has not commenced such benefit at thetime that benefits under this Plan commence, the benefit payable to a Participant or his Beneficiary will be equal to the excess of:

(i) The benefit expressed as an Actuarial Equivalent lump sum that would be paid to the Participant or his Beneficiary under

Section 3.10 of the Sunoco, Inc. Retirement Plan or Section 6.11 of the Puerto Rico Sun Oil Company Retirement Plan at age 55, ifthe provisions of that plan were administered without regard to the Statutory Limitations, over

(ii) The benefit expressed as an Actuarial Equivalent lump sum that would be paid to the Participant or his Beneficiary under Section 3.10 of theSunoco, Inc. Retirement Plan or Section 6.11 of the Puerto Rico Sun Oil Company Retirement Plan at age 55.

The benefit determined under this Section 3.01(b) will be discounted to the date of commencement of benefits under the Plan using the same interest rateused in determining the Actuarial Equivalent lump sum under this Section 3.01(b).

3.02 Normal Form of Payment. Effective for benefits commencing on or after January 1, 2005, retirement benefits under this Plan will be in the form of a lumpsum payment of the Actuarial Equivalent of the benefit determined under Section 3.01, except as otherwise provided below.

(a) Participants with a Termination Date before April 1, 2005 may elect an optional form of retirement income as provided in Article IV.

(b) A Participant may elect an optional form of retirement income for retirement benefits that are not in pay status and not otherwise payable beforeJanuary 1, 2009, as provided in Article IV.

(c) An individual who first becomes a Participant on or after January 1, 2008, may elect an optional form of retirement income as provided in ArticleIV.

3.03 Commencement of Payments. The following provisions are effective November 1, 2007.

(a) A Participant’s retirement income will commence the first day of the month following the Termination Date, except as provided in Section 3.03(b).

(b) Payment of any retirement income (that is deferred compensation for purposes of IRC Section 409A) to any Participant who is a specified employee

(specified employees being those Participants who are Executive Resource Employees (employees in Grades 14 and above designated by theCompany as members of the Company’s Executive Resource group), pursuant to the election of an

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alternative method specified in Treasury Regulation Sections 1.409A-1(i)(5) and 1.409A-1(i)(8)) shall be made as follows. Retirement income thatis scheduled to be paid for the period which begins on such Participant’s Termination Date and ends on the date six months from such Participant’sTermination Date, shall not be paid as scheduled, but shall be accumulated and paid in a lump sum on the date six months after the Participant’sTermination Date. Simple interest will be paid on retirement income delayed hereunder from the date such payments would have been made to theParticipant but for this subsection (b), to the date of actual payment, at the interest rate used to determine Actuarial Equivalent lump sum paymentsunder the Plan as of the Participant’s Termination Date.

ARTICLE IV

OPTIONAL FORMS OF RETIREMENT INCOME

4.01 Election of an Optional Form of Payment.

(a) Effective for benefits commencing before April 1, 2005, not later than thirty (30) days prior to a Participant’s retirement date a Participant may electin lieu of the normal form of retirement income, an optional form of retirement income which is the Actuarial Equivalent of the monthly incomedetermined under Section 3.01. Each election, designation and revocation of an option will be made in writing and in conformity with such rules asmay be prescribed by the Plan Administrator.

(b) Effective for benefits that are not in pay status and not otherwise payable before January 1, 2009, not later than August 31, 2008, pursuant toSection 3.02 of IRS Notice 2006-79, as modified by Section 3.01(B)(1) of IRS Notice 2007-86, a Participant may elect in lieu of the normal form ofretirement income, an optional form of retirement income which is the Actuarial Equivalent of the monthly income determined under Section 3.01.The election of an option will be made in writing and in conformity with such rules as may be prescribed by the Plan Administrator.

(c) An individual who first becomes a Participant on or after January 1, 2008, not later than thirty (30) days following the first day of calendar year

immediately following the first Plan Year the Participant accrues a benefit under the Plan, may elect in lieu of the normal form of retirement income,an optional form of

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retirement income which is the Actuarial Equivalent of the monthly income determined under Section 3.01. The election of an option will be madein writing and in conformity with such rules as may be prescribed by the Plan Administrator.

4.02 Optional Forms of Payment.

(a) Effective for benefits commencing before April 1, 2005, a Participant may elect to receive an optional form of retirement income in the same formand manner as the Participant is receiving under the Applicable Sunoco Retirement Plan.

(b) A Participant meeting the requirements of Sections 4.01(b) or 4.01(c) may elect an optional form of retirement income available under the Sunoco,Inc. Retirement Plan.

ARTICLE V

ADMINISTRATION OF THE PLAN

5.01 Allocation and Delegation of Fiduciary Responsibilities. Fiduciary responsibilities with respect to the Plan are to be allocated as set forth in this Article V.A fiduciary will have only those specific powers, duties, responsibilities and obligations as are specifically given him under this Plan. It is intended thateach fiduciary be responsible for the proper exercise of his own powers, duties, responsibilities and obligations under this Plan, and generally will not beresponsible for any act or failure to act of another fiduciary. A fiduciary may delegate to any person or entity, who may or may not be a fiduciary, any ofits powers or duties under the Plan.

5.02 Powers and Responsibilities of the Board of Directors. The Board of Directors has the following powers and responsibilities:

(a) To authorize amendments to the Plan;

(b) To terminate the Plan; and

(c) To appoint and remove members of the Board Committee, as set forth in Section 5.03, below.

5.03 Board Committee.

(a) The Board Committee will consist of at least three Directors who will be appointed by and serve at the pleasure of the Board of Directors. TheBoard of Directors will also appoint one member of the Board Committee to act as Chairman of such Committee. Vacancies will be filled in thesame manner as appointments. Any member of the Board Committee may resign by delivering a written resignation to the Board of Directors, tobecome effective upon delivery or at any other date specified therein.

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(b) The members of the Board Committee will appoint a Secretary who may, but need not be, a member of the Board Committee. The Board

Committee may, in writing, delegate some or all of its powers and responsibilities as specified in Section 5.03(d) to any other person or entity, whomay or may not be a fiduciary.

(c) The Board Committee will hold meetings upon such notice, at such time or times, and at such place or places as it may determine. The majority of

the members of the Board Committee at the time in office will constitute a quorum for the transaction of business at all meetings and a majority voteof those present at any meeting will be required for action. The Board Committee may also act by written consent of a majority of its members.

(d) The Board Committee will have the following powers and responsibilities:

(i) To prepare periodic administration reports to the Board of Directors which will show, in reasonable detail, the administrative operations ofthe Plan;

(ii) To appoint and remove the Plan Administrator; and

(iii) To appoint and remove other fiduciaries.

5.04 Plan Administrator.

(a) The Plan Administrator will be appointed by and serve at the pleasure of the Board Committee. The Plan Administrator may resign by delivering a

written resignation to the Board Committee, to be effective on delivery or at any other date specified therein. Upon the resignation or removal of thePlan Administrator, a successor Plan Administrator will be appointed by the Board Committee.

(b) The Plan Administrator may, in writing, delegate some or all of his powers and responsibilities as set forth in Section 5.04(c) to any other person orentity, who may or may not be a fiduciary.

(c) The Plan Administrator will adopt such rules for administration of the Plan as he considers desirable, provided they do not conflict with the Plan.

Records of administration of the Plan will be kept, and Participants and their Spouses, Beneficiaries and contingent annuitants may examine recordspertaining directly to themselves. The Plan Administrator will have the following powers and responsibilities:

(i) To select and terminate an actuary for the Plan.

(ii) To establish and maintain claims review procedures.

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(iii) To construe the Plan, correct defects, supply omissions and reconcile inconsistencies to the extent necessary to administer the Plan, with anyinstructions or interpretation of the Plan made in good faith by the Plan Administrator to be final and conclusive for all purposes.

(iv) To comply with any requirements of the Employee Retirement Income Security Act of 1974 with respect to filing reports with governmentalagencies.

(v) To provide Employees with any and all information required by the Employee Retirement Income Security Act of 1974.

(vi) To approve any actuarial assumptions.

(vii) To coordinate any necessary audit process with respect to reports on administration data.

(viii) To conduct routine Plan administration.

5.05 Employment of Agents. The fiduciaries may retain such counsel, actuarial, medical, accounting, clerical and other services as they may require to carry outthe provisions and purposes of the Plan.

5.06 Reliance on Reports and Certificates. Fiduciaries under the Plan and the officers and managers and Employees of the Company and any AffiliatedCompany will be entitled to rely upon all tables, valuations, certificates and reports furnished by a duly appointed actuary, insurance company, or by anyduly appointed accountant, and upon all opinions given by any duly appointed legal counsel.

5.07 Compensation. Fiduciaries under the Plan will not receive any compensation for their services as such.

5.08 Fiduciary’s Own Participation. A fiduciary may not act, vote or otherwise influence a decision specifically relating to his own participation under the Plan.

5.09 Liability for Administration of the Plan. In the administration of the Plan, neither a fiduciary, nor any officers, directors or Employees of the Company orany Affiliated Company or their agents will be liable jointly or severally for any loss due to his or its error or acts of omission or commission, except forhis or its own individual misconduct. The Company will indemnify each fiduciary, officer, director or Employee of the Company and any AffiliatedCompany from any and all expenses arising out of his or its responsibilities under the Plan, excepting such expenses and liabilities arising out of his or itsown individual willful misconduct.

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ARTICLE VI

GENERAL PROVISIONS

6.01 Right to Amend or Terminate. The Company expects and intends to continue the Plan indefinitely, but necessarily reserves the right, by action of theBoard of Directors, to amend, alter, suspend or terminate the Plan in whole or in part, and at any time. However, if the Board of Directors should amend,alter, suspend or terminate the Plan, the Company will be liable for any benefits accrued under this Plan (determined on the basis of each employee’spresumed termination of employment as of the date of such amendment, alteration, suspension or termination) as of the date of such action.

6.02 Alienation of Benefits. No benefits payable under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge,encumbrance or charge, and any action by way of anticipating, alienating, selling, transferring, assigning, pledging, encumbering or charging the same willbe void and of no effect nor will any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of theperson entitled to such benefit.

6.03 Payment to Minors and Incompetents. If a Participant, Spouse, contingent annuitant or Beneficiary entitled to receive any benefits hereunder is a minor, oris deemed by the Plan Administrator or is adjudged to be legally incapable of giving a valid receipt and discharge for such benefits, they will be paid to theduly appointed guardian or committee of such minor or incompetent, or they may be paid to such person or persons who the Plan Administrator believes isor are caring for or supporting such minors or incompetents. Any such payments, to the extent thereof, will be a complete discharge for the payment ofsuch benefit.

6.04 Unclaimed Benefits. If any benefit under the Plan had been payable to and unclaimed by any person for a period of four years since the whereabouts orexistence of such person was last known to the Plan Administrator, the Plan Administrator may direct that all rights of such person to payments accruedand to future payments be terminated absolutely, provided that if such person subsequently appears and identifies himself to the satisfaction of the PlanAdministrator, then the liability will be reinstated.

6.05 Plan Voluntary. The Plan is purely voluntary on the part of the Company. Neither the establishment of the Plan, nor any amendment thereto, nor thecreation of any fund or account, nor the payment of any benefit will be construed as conferring upon any Employee or Participant the right to be retainedin the employ of the Company or any Affiliated Company, and all Employees and Participants will remain subject to discharge, discipline or termination tothe same extent as if the Plan had never been established.

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6.06 Gender. Whenever used herein, the masculine pronoun will include the feminine and the singular the plural, unless a different meaning is plainly requiredby the context.

6.07 Construction. The Plan will be construed, enforced and administered according to the laws of the Commonwealth of Pennsylvania to the extent notpreempted by Federal law, which shall otherwise control. In the event any provision of the Plan is held illegal or invalid for any reason, it will not affectthe remaining provisions of the Plan, but the Plan will be construed and enforced as if such illegal and invalid provision had not been included therein.

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Exhibit 10.8

SUNOCO, INC.

EXECUTIVE INCENTIVE PLAN

(As Amended and Restated effective as of July 2, 2008)


ARTICLE I

Background and Purpose

1.1 Purpose. The purpose of the Executive Incentive Plan is to promote the achievement of the Company’s short-term, targeted business objectives byproviding competitive incentive reward opportunities to those employees who can significantly impact the Company’s performance. The Plan enhances theCompany’s ability to attract, develop and motivate individuals as members of a talented management team while aligning their interest with those of theshareholders. As described herein, the awards made under the Plan may recognize Company, business unit, team and/or individual performance.

1.2 Effective Date. The initial amended and restated Plan was approved by the shareholders at Sunoco, Inc.’s 2001 Annual Meeting of Shareholders inaccordance with Section 162(m) of the Code. The amended and restated version of the Plan to be presented at Sunoco, Inc.’s 2006 Annual Meeting ofShareholders will continue to be effective upon requisite shareholder approval at such meeting. No awards shall be made under this Plan with respect to yearsafter December 31, 2011, unless this date is extended by shareholder approval to a date no later than December 31, 2016.

1.3 Administration. The Committee shall have full power and authority to construe, interpret and administer the Plan and to make rules and regulationssubject to the provisions of the Plan. All decisions, actions, determinations or interpretations of the Committee shall be made in its sole discretion and shall befinal, conclusive and binding on all parties.

1.4 Eligibility and Participation. Participation in the Plan is limited to Executive Resources Employees and other employees evaluated in positions withGrades 11, 12 and 13 at any time during the Plan Year.

ARTICLE II

Definitions

As used in this Plan, the following terms shall have the meanings herein specified:

2.1 Board of Directors—shall mean the Board of Directors of the Company.

2.2 Business Combination—shall have the meaning provided herein at Section 2.4(c).

2.3 CEO—shall mean the Chief Executive Officer of the Company.

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2.4 Change in Control—shall mean the occurrence of any of the following events:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) ofbeneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then-outstanding shares ofcommon stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then-outstanding voting securitiesof the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, forpurposes of this Section (a), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) anyacquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any companycontrolled by, controlling or under common control with the Company, or (D) any acquisition by any entity pursuant to a transaction that complies withSections (c)(1), (c)(2) and (c)(3) of this definition;

(b) Individuals who, as of September 6, 2001, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least amajority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nominationfor election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall beconsidered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initialassumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual orthreatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors;

(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company orany of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of anotherentity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (1) all orsubstantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding CompanyVoting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding sharesof common stock and the combined voting power of the then-outstanding

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voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination(including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assetseither directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such BusinessCombination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (2) no Person (excludingany corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resultingfrom such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock ofthe corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation,except to the extent that such ownership existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors ofthe corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or ofthe action of the Board of Directors providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

2.5 CIC Incentive Award—shall mean the incentive award payable in cash following a Change in Control, as such award is described herein at Article VII.

2.6 CIC Participant—shall mean a Participant described in any of the following:

(a) a Participant who was employed by the Company on the date of the Change in Control and who does not incur a termination for Just Causebefore payment of the CIC Incentive Award;

(b) a Participant who was, immediately before the Change in Control, eligible for a prorated award under the provisions of Section 5.2;

(c) a Participant who is a participant in the Company’s Special Executive Severance Plan and incurs a “Qualifying Termination” as defined in suchplan before the Change in Control;

(d) a Participant whose employment was terminated by the Company (other than for Just Cause) before the Change in Control, or a Participant whoterminated employment for one of the reasons set forth in Sections 2.6(d)(1), (2), and (3) below, if the Participant can demonstrate that

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such termination or circumstance in Section 2.6(d)(1), (2), or (3) below leading to the termination was at the request of a third party with which theCompany had entered into negotiations or an agreement with regard to a Change in Control or otherwise occurred in connection with a Change in Control;provided, however, that in either such case, the Change in Control actually occurs within one (1) year following the Employment Termination Date:




provided, however, that in the case of a Participant whose employment terminates under this subparagraph (d), such Participant shall not be deemed to be a CICParticipant on the basis of such termination unless the termination occurs within 120 days after the occurrence of the event or events constituting the reason forthe termination.

2.7 CIC Short Period—shall mean the portion of the Plan Year from January 1 to the date of the occurrence of a Change in Control.

2.8 Code—shall mean the Internal Revenue Code of 1986, as amended.

2.9 Committee—shall mean the committee appointed to administer this Plan by the Board of Directors of the Company, as constituted from time to time.The Committee shall consist of at least two (2) members of the Board of Directors, each of whom shall meet applicable requirements set forth in the pertinentregulations under Section 16 of the Exchange Act and Section 162(m) of the Code.

2.10 Company—shall mean Sunoco, Inc., a Pennsylvania corporation. The term “Company” shall include any successor to Sunoco, Inc., any subsidiary oraffiliate which has adopted the Plan, or

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a corporation succeeding to the business of Sunoco, Inc., or any subsidiary or affiliate, by merger, consolidation or liquidation or purchase of assets or stock orsimilar transaction.

2.11 Exchange Act—shall mean the Securities Exchange Act of 1934, as amended.

2.12 Executive Resources Employee—shall mean any individual who has been designated by the Company as a member of the Company’s ExecutiveResources group. Generally, such group shall include employees in Grades 14 and above and all other employees subject to Section 16 of the Exchange Act.

2.13 Executive Team—shall mean the senior executives who have significant operating and/or strategic responsibilities for the Company as designated bythe CEO.

2.14 Guideline Incentive Award—shall mean the result of the individual Participant’s actual annualized salary multiplied by the guideline percentage, asdetermined under Article III.

2.15 Incentive Award—shall mean the award granted to a Participant.

2.16 Incumbent Board—shall have the meaning provided herein at Section 2.4(b).

2.17 Just Cause—shall mean, for any Participant who is a participant in the Company’s Special Executive Severance Plan, “Just Cause” as defined in suchplan, and for any other Participant:

(a) the willful and continued failure of the Participant to perform substantially the Participant’s duties with the Company (other than any such failureresulting from incapacity due to physical or mental illness or following notice of employment termination by the Participant pursuant to Section 2.6(c),(d) or (e)), after a written demand for substantial performance is delivered to the Participant by the Board of Directors or any employee of the Companywith supervisory authority over the Participant that specifically identifies the manner in which the Board of Directors or such supervising employeebelieves that the Participant has not substantially performed the Participant’s duties, or


2.18 Outstanding Company Common Stock—shall have the meaning provided herein at Section 2.4(a).

2.19 Outstanding Company Voting Securities—shall have the meaning provided herein at Section 2.4(a).

2.20 Participant—shall mean a person participating or eligible to participate in the Plan, as determined under Section 1.4.

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2.21 Performance Factor—shall mean:

(a) for a Participant who is one of the top five most highly compensated officers of the Company during the applicable Plan Year: the various payoutpercentages related to the attainment levels of one or more Performance Goals, as determined by the Committee; and

(b) for a Participant who is not one of the top five most highly compensated officers of the Company during the applicable Plan Year: such payoutpercentages related to the attainment levels of one or more Performance Goals, as determined by the CEO, or any authorized delegate thereof.

2.22 Performance Goals—shall mean:

(a) for a Participant who is one of the top five most highly compensated officers of the Company during the applicable Plan Year: the objectivefinancial or operating goals established by the Committee in accordance with Section 162(m) of the Code. Such Performance Goals may include specifictargeted amounts of, or changes in, revenues; expenses; net income; operating income; equity; return on equity, assets or capital employed; workingcapital; shareholder return; operating capacity utilized; production or sales volumes; throughput; or other objective criteria; and

(b) for a Participant who is not one of the top five most highly compensated officers of the Company during the applicable Plan Year: such annualfinancial, operating, or other goals and objectives as may be established from time to time in the sole discretion of the CEO, or any authorized delegatethereof.

Such goals may be applicable to the Company as a whole, to one or more of the Company’s business units or teams, or to an individual Participant in thePlan. Performance Goals may be applied in total or on a per share, per barrel or percentage basis and on an absolute basis or relative to other companies,industries or indices or any combination thereof, as determined by the Committee (in the case of Performance Goals established by the Committee with respect toa Participant who is one of the top five most highly compensated officers of the Company during the applicable Plan Year) or by the CEO, or any authorizeddelegate thereof (in the case of a Participant who is not one of the top five most highly compensated officers of the Company during the applicable Plan Year).

2.23 Person—shall have the meaning provided herein at Section 2.4(a).

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2.24 Plan—shall mean the Company’s Executive Incentive Plan as amended and restated effective as of July 2, 2008.

2.25 Plan Year—shall mean the performance (calendar) year.

2.26 Pro-rated Bonus Award—

(a) For purposes of Section 5.2(a) shall mean an amount equal to the Incentive Award otherwise payable to a Participant for the Plan Year in whichthe Participant’s initiation of employment with the Company (new hires) or termination of employment with the Company (other than for Just Cause) iseffective, multiplied by a fraction, the numerator of which is the number of days in the applicable Plan Year beginning on the date such Participant’semployment with the Company began or through the date of termination of such Participant’s employment, as applicable, and the denominator of which is365 (366 days in a leap year).

(b) For purposes of Section 5.2(b) shall mean an amount of Incentive Award equal to the sum of (i) the Participant’s actual salary on the last day ofthe final pay period of the Participant’s previous position during the applicable Plan Year multiplied by the applicable guideline percentage in his or herprevious position, multiplied by a fraction, the numerator of which is the number of days in the applicable Plan Year in which the Participant was in theprevious position, and the denominator of which is 365 days (366 days in a leap year), and (ii) the Participant’s actual salary on the last day of the final payperiod of the Participant’s new position during the applicable Plan Year multiplied by the applicable guideline percentage in his or her new position,multiplied by a fraction, the numerator of which is the number of days in the applicable Plan Year in which the Participant has been in the new position,and the denominator of which is 365 days (366 days in a leap year).

(c) Pro-rated Bonus Awards shall be determined in accordance with and subject to the provisions of Article III.

ARTICLE III

Determination of Guideline Incentive Awards

3.1 Guideline Percentages. Within the time prescribed by Section 162(m) of the Code, the Committee will establish, in writing, for the applicable PlanYear, the guideline incentive

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opportunities for Participants as a percentage of actual salary in effect on the last day of the final pay period of the current Plan Year.

3.2 Guideline Incentive Award. The Guideline Incentive Award is calculated for each Participant by multiplying the individual Participant’s actual salaryrange in effect on the last day of the final pay period of the Current Plan Year by the applicable guideline percentage established by the Committee.

Actual incentive awards to individual Participants may be greater or lesser than this guideline depending on Company and, as necessary, business unit,team and/or individual Participant performance.

ARTICLE IV

Determination of Incentive Award

4.1 Performance Goals.

(a) Five Most Highly Compensated Officers: For a Participant who is one of the top five most highly compensated officers of the Company duringthe applicable Plan Year, the amount of any Incentive Award earned will be based upon the attainment of Performance Goals established by theCommittee in accordance with Section 162(m) of the Code. Within the time prescribed by Section 162(m) of the Code, the Committee will establish, inwriting, the weighted Performance Goals and related Performance Factors for various goal achievement levels for the applicable Plan Year, and willdetermine the appropriate methodology for including Company, business unit, team and/or individual performance in the Incentive Award computationsfor such year.

In establishing the weighted Performance Goals, the Committee shall take the necessary steps to insure that the ability to achieve the pre-establishedgoals is uncertain at the time the goals are set. The established written Performance Goals, assigned weights, and Performance Factors shall be written interms of an objective formula, whereby any third party having knowledge of the relevant Company, business unit, team and/or individual performanceresults could calculate the amount to be paid. Such Performance Goals may vary by Participant and by award.

(1) Adjustment or Modification of Performance Goals. The Committee, in its discretion (and within the time prescribed by Section 162(m) ofthe Code), may

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adjust or modify the calculation of Performance Goals to prevent dilution or enlargement of the rights of Participants:

(i) in the event of, in recognition of, or in anticipation of, any unanticipated, unusual nonrecurring or extraordinary corporate item,transaction, event, or development; or

(ii) in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.

Unless otherwise determined by the Committee, if any provision of the Plan or any Incentive Award granted to an individual who is one of the topfive most highly compensated officers of the Company hereunder would not comply with Section 162(m) of the Code, such provision or Incentive Awardshall be construed or deemed amended to conform to Section 162(m) of the Code.

(2) Determination of Performance Factor. After the end of each Plan Year, the Committee will determine:

(i) the extent to which the Company, business unit and/or team performance goals have been met; and

(ii) the Company, business unit and/or team Performance Factor (each of which may vary from 0% to 200%), appropriate to the levelof performance achieved with respect to each Performance Goal.

(b) Other Participants: For a Participant who is not one of the top five most highly compensated officers of the Company during the applicablePlan Year, the amount of any Incentive Award earned will be based upon the attainment of Performance Goals established as provided in thisSection 4.1(b). For each Plan Year, the CEO, and if so delegated, other members of the Executive Team will determine the appropriate methodology forincluding Company, business unit, team and individual performance in the Incentive Award computations for such year. While Company Performance willalways be included in the computation, the other factors may or may not be included as deemed appropriate by the Executive Team. The applicablePerformance Factors shall be determined as follows:

(1) Determination of Performance Factor Applicable to Company. For each Plan Year, the Compensation Committee shall establish annualPerformance Goal(s) for the Company, based on one or more criteria that the Compensation

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Committee, in its sole discretion, determines to be applicable.

After the end of each calendar year, the Compensation Committee will determine the extent to which such Performance Goals have been metand the appropriate Company Performance Factor, from 0% to 200%, that is appropriate with the varying levels of performance for each goal.

(2) Determination of Business Unit and Team Performance Factors. The CEO, and if so delegated, other members of the Executive Teamshall determine the annual business unit Performance Goal(s) and the applicable levels of performance based on one or more factors. Business unitleaders will establish annual Performance Goal(s) for any teams within their respective business units.

After the end of each calendar year, the CEO, and if so delegated, other members of the Executive Team will determine the extent to whichthe business unit Performance Goals have been met and the business unit Performance Factor, from 0% to 200%, that is appropriate with the varyinglevels of performance for each goal. Business unit leaders will similarly evaluate the performance of any teams to determine the appropriatePerformance Factor applicable to such team.

4.2 Individual Performance Factors. Incentive Awards under this Plan may be based, in whole or in part, upon the attainment of individual performanceobjectives or targets. For a Participant who is one of the top five most highly compensated officers of the Company during the applicable Plan Year, theCommittee will establish, in writing, individual performance objectives or targets in accordance with Section 162(m) of the Code and Section 4.1 hereof. For allother Participants, the recommended individual performance assessment process is briefly outlined as follows:

(a) Prior to the beginning of each Plan Year or other appropriate time, the Participant and his or her manager will agree on individual performancetargets or objectives (which may be related to the Participant’s collaboration on a work team) to be attained during the Plan Year.

(b) Progress toward attainment of such individual targets or objectives will be formally reviewed on a periodic basis.

(c) At the end of the year, the manager will assess the degree to which the individual performance targets or objectives have been achieved, keepingin mind environmental or circumstantial changes that may have affected the original targets or objectives. Specifically, consideration should be given to:

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(1) level of contributions relative to peers.

(2) degree of difficulty of performance targets.

(3) reaction to unanticipated changes in the business environment.

(4) unplanned contributions.

(5) team performance, as appropriate.

(d) While the level of individual performance for the Plan should be based primarily on annual targets and objectives, the performance factorsutilized for this program should be consistent with appraisals used for the purposes of salary administration as updated to reflect performance since the lastappraisal.

(e) The performance appraisal should be documented in such a way as to identify the performance targets and objectives, the assessment ofindividual performance against such targets and objectives, and any other significant information to support the recommendation.

(f) The Participant’s individual performance factor should be determined based upon the individual performance assessment as outlined below:

Individual PerformanceAssessments

Adjustment to IndividualPerformance Components *

Exceed all performance targets 150% to 200%Exceed most performance targets 115% to 145%Met most performance targets 90% to 110%Met some/few performance targets 50% to 85%Completely unacceptable performance 0% * All assessments should be multiples of 5%.

(g) The Participant’s individual performance assessment will be determined by his or her manager and approved by the appropriate member of theExecutive Team and, where appropriate, the CEO.

ARTICLE V

Forfeiture and/or Proration of Incentive Award

5.1 Forfeiture. Provided that no Change in Control of the Company has occurred, if a Participant voluntarily terminates his or her employment with theCompany (for any reason other than retirement, death, permanent disability, approved leave of absence) prior to December 31 of any Plan Year, such Participantwill not receive payment of any Incentive Award for such Plan Year.

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Likewise, a Participant will not receive payment of any Incentive Award for a particular Plan Year if no Change in Control has occurred and the Participant’semployment with the Company is terminated for Just Cause before March 15 of the succeeding calendar year.

5.2 Proration.

(a) A Pro-rated Bonus Award, reflecting participation for a portion of the Plan Year, will be paid to any Participant whose employment statuschanged during the year as a result of death or permanent disability (as determined by the Committee), or due to retirement, approved leave of absence, ortermination at the Company’s request (other than for Just Cause). New hires and part-time employees also will receive a Pro-rated Bonus Award.

(b) If a Participant has a change in level of employment after the beginning of the Plan Year, the Participant will receive a Pro-rated Bonus Award,pro-rated based on the length of time, actual salary and applicable guideline percentage in the previous and new positions, as described in Section 2.26.

(c) Unless otherwise required by applicable law, any Pro-rated Bonus Award payable hereunder will be paid on the date when Incentive Awards areotherwise payable as provided in the Plan.

ARTICLE VI

Timing and Form of Payment

6.1 Timing and Form of Payment.(a) Certification in Writing. Prior to the payment of any Incentive Award under this Plan, the Committee will certify in writing that the applicable

Performance Goals, and any other material terms or conditions of such award, have been satisfied. In making this certification, the Committee will beentitled to rely upon an appropriate officer’s certificate from the Company’s Chief Financial Officer. Upon approval by the Committee of the individualIncentive Awards for the top five most highly compensated officers of the Company and the aggregate amount of all Incentive Awards for the Plan Year,payment of the individual awards will be made in cash less the withholding of appropriate taxes. Payment will be made within two and one-half (2 1/2)months after the end of the Plan Year to which the Incentive Award relates.

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(b) Negative Discretion. The Committee will have the discretion, by Participant and by grant, to reduce (but not to increase) some or all of theamount of any Incentive Award that would otherwise be payable by reason of the satisfaction of the Performance Goals. In making any suchdetermination, the Committee is authorized to take into account any such factor or factors it determines are appropriate, including but not limited toCompany, business unit and individual performance; provided, however, the exercise of such negative discretion with respect to one executive may not beused to increase the amount of any award otherwise payable to another executive.

ARTICLE VII

Change in Control

7.1 Effect of Change in Control. The terms of this Article VII shall immediately become operative, without further action or consent by any person orentity, upon a Change in Control, and once operative shall supersede and control over any other provisions of this Plan.

7.2 Acceleration. The CIC Incentive Award shall be payable in cash within thirty (30) days following the occurrence of a Change of Control (or as soon asit is practicable to determine the level of attainment of applicable Performance Factors under subsection (a) below, but in no event later than two and one-half (2 1/2) months following the end of the Plan Year in which the Change of Control occurred) to all CIC Participants. Such award shall be calculated according to theterms of the Plan, except as follows:

(a) The applicable Performance Factors shall be determined based upon performance of the Company, business unit and/or team, as the case may be,from January 1 through the end of the most recent quarter (prior to the Change in Control) for which the Company has reported its earnings to the public.Notwithstanding the methodology established by the Committee for the Plan Year, there shall be no adjustment for individual performance factors in thedetermination of the CIC Incentive Award. If a specified percentage of the Guideline Incentive Award was to be based upon individual performance, suchpercentage will be adjusted using the weighted average of the Performance Factors applicable to Company and, as necessary, business unit and/or teamperformance used to determine the non-individual performance components of the CIC Participant’s award.

(b) The amount of the CIC Incentive Award shall be equal to the respective annual

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Guideline Incentive Award adjusted to reflect the Performance Factors applicable to Company and, as necessary, business unit and/or team performance(calculated in accordance with subsection (a) hereof), multiplied by the number of full and partial months in the CIC Short Period divided by twelve (12).Such result shall be further adjusted to reflect participation for only a portion of the CIC Short Period in accordance with Section 5.2.

(c) Notwithstanding the provisions of Section 8.3 hereof, no action taken by the Committee or the Board of Directors after a Change in Control, orbefore, but in connection with, a Change in Control, may (1) terminate or reduce the CIC Incentive Award or prospective CIC Incentive Award payable toany Participant in connection with such Change in Control without the express written consent of such Participant, or (2) adversely affect a Participant’srights under Section 7.3 in connection with such Change in Control.

7.3 Attorney’s Fees. The Company shall pay all legal fees and related expenses incurred by or with respect to a Participant during his lifetime or within ten(10) years after his death in seeking to obtain or enforce payment of the CIC Incentive Award to which such Participant may be entitled under the Plan after aChange in Control; provided, however, that the Participant (or a Participant’s representative) shall be required to repay any such amounts to the Company to theextent a court of competent jurisdiction issues a final and non-appealable order setting forth the determination that the position taken by the Participant (or theParticipant’s representative) was frivolous or advanced in bad faith. Reimbursement shall be made on or before the close of the calendar year following thecalendar year in which the expense was incurred. The amount of expenses eligible for reimbursement under this provision in one calendar year may not affect theamount of expenses eligible for reimbursement under this provision in any other calendar year.

ARTICLE VIII

Miscellaneous

8.1 Funding of Plan. In a meeting to be held not later than December 31st of each Plan Year, the Committee may determine, by appropriate resolution, anestimate of the amount of monies, if any, that should be set aside for the current Plan Year for payment to Participants in the following

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calendar year.

8.2 Construction. Nothing in this Plan or in any agreement or other instrument executed pursuant thereto shall be construed as conferring upon anyParticipant the right to receive executive incentive compensation or to be continued in the employ of the Company and any rights conferred by this Plan may notbe transferred, sold, assigned, pledged, anticipated or otherwise disposed of other than by will or intestate laws.

8.3 Amendment. This Plan may be amended at any time by the Committee and may be terminated in whole or in part at any time by the Board of Directors(except as set forth in Sections 1.2 and 7.2(c)).

ARTICLE IX

Forfeiture

9.1 Forfeiture. Unless otherwise determined by the Committee, if (a) the Company is required to prepare a material negative accounting restatement due tothe noncompliance of the Company with any financial reporting requirement under the securities laws as a result of misconduct, and the Committee determinesthat (1) the Participant knowingly engaged in the misconduct, (2) was grossly negligent with respect to such misconduct or (3) knowingly or grossly negligentlyfailed to prevent the misconduct or (b) the Committee concludes that a Participant engaged in willful fraud, embezzlement or other similar misconduct materiallydetrimental to the Company, the Company may require the Participant to pay to the Company an amount (the “Forfeiture Amount”) equal to (i) in the case of aforfeiture pursuant to clause (a) hereof, the sum of all amounts paid in settlement of any Incentive Award granted to the Participant that pertains to performanceduring the Plan Year that includes the period covered by the financial restatement or (ii) in the case of a forfeiture pursuant to clause (b) hereof, the sum of allamounts paid in settlement of any Incentive Award granted to the Participant during any Plan Year that includes the period during which such misconductoccurred, such Forfeiture Amount to be paid in each case by the Participant within ten days of receipt from the Company of written notice requiring payment bythe Participant of the Forfeiture Amount.

9.2 Committee Determination Binding. The Committee shall make all determinations required pursuant to this Article IX in its sole and absolutediscretion, and such determinations shall be conclusive and binding on all persons.

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9.3 Committee Discretion. Notwithstanding the foregoing provisions, the Committee has sole and absolute discretion not to require a Participant to pay aForfeiture Amount, and its determination not to require any Participant to pay the Forfeiture Amount with respect to any particular Incentive Award or anyparticular act by any particular Participant shall not in any way reduce or eliminate the Committee’s authority to require payment of any Forfeiture Amount withrespect to any other Incentive Award, other act or other Participant.

9.4 Effect of Change in Control. Notwithstanding the foregoing, this Article IX shall not be applicable to any Participant following a Change in Control,nor shall this Article IX be applicable to any Participant who is a participant in the Company’s Special Executive Severance Plan and incurs a “QualifyingTermination” (as defined in such plan) before a Change in Control.

9.5 Prospective Application. Notwithstanding the foregoing, the provisions set forth in this Article IX shall apply only to awards granted on or after July 2,2008.

9.6 Non-Exclusive Remedy. This Article IX shall be a non-exclusive remedy and nothing contained in this Article IX shall preclude the Company frompursuing any other applicable remedies available to it, whether in addition to, or in lieu of, application of this Article IX.

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Exhibit 10.9

SUNOCO, INC.

EXECUTIVE RETIREMENT PLAN

(amended and restated effective June 1, 2008)


ARTICLE I

Definitions

1.01 95% Withdrawal - shall have the meaning set forth herein at Section 6.04(c).

1.02 Actuarial Equivalent - shall mean, except as otherwise provided in this Section, a benefit of equivalent value to the benefit which would otherwisehave been provided to the Participant, determined on the same basis as determined under the Sunoco, Inc. Retirement Plan. Notwithstanding the precedingsentence, for purposes of determining the Actuarial Equivalent lump-sum value for payment of benefits under Section 3.09, the mortality table described inTreasury Regulation Section 1.417(e)-1(d)(2) and the applicable interest rate described in Treasury Regulation Section 1.417(e)-1(d)(3) as specified for thesecond month preceding the calendar quarter in which the annuity starting date occurs shall be used. For purposes of determining the lump-sum ActuariallyEquivalent value of retirement income pursuant to Section 3.02, 3.03, 3.04, 3.05, 3.07 or 3.08, the value of early retirement and survivor benefits under the Planshall be reflected in such lump-sum amounts.

1.03 Affiliated Company - shall mean:

(a) Any corporation which is included within a “controlled group of corporations” within which Sunoco, Inc., is also included as determined underSection 1563 of the Internal Revenue Code of 1986 without regard to subsections (a)(4) and (e)(3)(C) of said Section 1563;

(b) Any other trades or businesses (whether or not incorporated) which, based on principles similar to those defining a “controlled group ofcorporations” for purposes of (a) above, are under common control; and

(c) Any other organization so designated by the Board Committee.

1.04 Affiliated Company Benefit - shall mean the monthly amount of benefit (or the Actuarial Equivalent of such benefit) to which a Participant and/orSpouse is or was entitled under any qualified or nonqualified defined contribution or defined benefit plan that is or was maintained by an Affiliated Company asthe primary source of employer-provided retirement income for participants of such plan, including the Base Plan, calculated without reduction for any offsetsfor pensions payable by employers not affiliated with Sunoco, Inc.; provided, however, that in the case of a defined contribution plan, the value of such benefitwill be determined based on the aggregate contributions made on behalf of the Participant (whether or not subsequently withdrawn by the Participant),accumulated at a rate or rates of interest as determined by the Plan Administrator, which determination will be made in a uniform and consistent manner.

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1.05 Base Plan - shall mean the Sunoco, Inc. Retirement Plan.

1.06 Beneficiary - shall mean the person or persons, other than a contingent annuitant, designated by a Participant or retired Participant pursuant to ArticleIV.

1.07 Board of Directors - shall mean the Board of Directors of Sunoco, Inc.

1.08 Board Committee - shall mean those individual members of the Board of Directors who have been appointed by the Board of Directors with thepowers and responsibilities specified in Article VIII and to which has been delegated any fiduciary responsibilities of the Board of Directors with respect to thePlan.

1.09 Business Combination - shall have the meaning set forth herein at Section 1.10(c).


(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) ofbeneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then-outstanding shares ofcommon stock of Sunoco, Inc. (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then-outstanding voting securities ofSunoco, Inc. entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes ofthis Section (a), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from Sunoco, Inc., (B) any acquisition bySunoco, Inc., (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Sunoco, Inc. or any company controlled by,controlling or under common control with Sunoco, Inc., or (D) any acquisition by any entity pursuant to a transaction that complies with Sections (c)(1),(c)(2) and (c)(3) of this definition;

(b) Individuals who, as of January 1, 2005, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least amajority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nominationfor election by the shareholders of Sunoco, Inc., was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shallbe considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initialassumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual orthreatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors;

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(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving Sunoco, Inc. orany of its subsidiaries, a sale or other disposition of all or substantially all of the assets of Sunoco, Inc., or the acquisition of assets or stock of anotherentity by Sunoco, Inc. or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (1) all orsubstantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding CompanyVoting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding sharesof common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the casemay be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction,owns Sunoco, Inc. or all or substantially all of the assets of Sunoco, Inc. either directly or through one or more subsidiaries) in substantially the sameproportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the OutstandingCompany Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Business Combination or any employeebenefit plan (or related trust) of Sunoco, Inc. or such corporation resulting from such Business Combination or any of their respective subsidiaries)beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from suchBusiness Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that suchownership existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors of the corporation resulting fromsuch Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board ofDirectors providing for such Business Combination; or

(d) Approval by the shareholders of Sunoco, Inc. of a complete liquidation or dissolution of Sunoco, Inc.

1.11 Change in Control Election - shall have the meaning set forth in Section 6.04(b).

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1.12 Chief Executive Officer Participant - shall mean the Chief Executive Officer of Sunoco, Inc. on January 1, 2003.

1.13 Company - shall mean Sunoco, Inc., and any Affiliated Company.

1.14 Credited Service - subject to the limitations hereinafter described, shall mean the following:

(a) For an Executive Participant, the actual amount, in completed years and months, of the Participant’s Service at the date of termination ofExecutive status; and

(b) For a Principal Officer Participant, the actual amount, in completed years and months, of the Participant’s Executive Service; and

(c) For a Participant retiring on or before January 1, 2003, an additional one month for each full year of such Service completed at the time thedetermination is being made; provided, however, that:

(1) the maximum number of months credited under this provision will be thirty-six (36);

(2) when the Participant attains his 62nd birthday, the number of months credited under this provision will automatically become thirty-six(36), regardless of the length of the Participant’s Service; and

(3) after the Participant’s 62nd birthday, the number of months credited under this provision will be reduced from month to month so that atany time a determination is being made, the maximum number of months credited under this provision will not exceed the number of monthsremaining until the Participant’s 65th birthday.

Credited Service will not include any periods of employment with an Affiliated Company before or after it becomes or ceases to be an AffiliatedCompany. For purposes of determining benefits, each completed month of Service shall equal 1/12 of one year of Service.

1.15 Earnings - shall mean the sum of:

(a) base salary paid or payable to a Participant by Sunoco, Inc. or an Affiliated Company; and

(b) the actual incentive awards granted to a Participant pursuant to the Sunoco, Inc. Executive Incentive Plan (the “EIP”) or the equivalent thereofpursuant to an incentive plan sponsored by Sunoco, Inc. or an Affiliated Company.

1.16 Effective Date - shall mean January 1, 1980, and as to any amendment or restatement, the effective date specified by the Board of Directors.

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1.17 Employee - shall mean any individual who is employed by Sunoco, Inc. or an Affiliated Company.

1.18 Exchange Act - shall mean the Securities Exchange Act of 1934, as amended.

1.19 Executive - shall mean any Employee who is employed by the Company as a Principal Officer, or in a job which, in accordance with the Company’sjob evaluation program, has been assigned 1400 or more Hay points.

1.20 Executive Participant - shall mean an Employee who became a Participant before January 1, 2003.

1.21 Executive Service - shall mean that part of a Participant’s Service rendered while he was an Executive; provided, however, that in the case of aPrincipal Officer Participant, Executive Service shall include only that part of a Participant’s Service rendered while he was a Principal Officer. In the case of aParticipant who is not an Executive or a Principal Officer, Executive Service shall include all periods of participation pursuant to designation by the BoardCommittee.

1.22 Final Average Earnings - shall mean the arithmetic monthly average of the Participant’s aggregate Earnings during the thirty-six (36) calendar monthsof the last 120-consecutive calendar month period of Service immediately preceding the earlier of actual retirement or Termination Date (or the actual number ofsuch months if less than thirty-six (36)) which produces the highest average).

1.23 Incumbent Board - shall have the meaning set forth herein at Section 1.10(b).

1.24 Just Cause - shall mean, for any Participant who is a participant in the Sunoco, Inc. Special Executive Severance Plan, “Just Cause” as defined in suchplan, and for any other Participant:

(a) the willful and continued failure of the Participant to perform substantially the Participant’s duties with the Company (other than any such failureresulting from incapacity due to physical or mental illness or following notice of employment termination by the Participant pursuant to Section 1.37),after a written demand for substantial performance is delivered to the Participant by the Board of Directors or any employee of the Company withsupervisory authority over the Participant that specifically identifies the manner in which the Board of Directors or such supervising employee believesthat the Participant has not substantially performed the Participant’s duties, or


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1.25 Nonaffiliated Employer Benefit - shall mean the monthly amount of benefit, payable at the Participant’s Normal Retirement Date (or the ActuarialEquivalent of such benefit) to which a Participant and/or Spouse is or was entitled as a result of prior employment with any employer other than Sunoco, Inc. oran Affiliated Company under all qualified and nonqualified defined benefit retirement plans that are or were maintained by such employer.

1.26 Normal Retirement Date - shall mean the first day of the calendar month coincident with or next following the Participant’s 65th birthday.

1.27 Outstanding Company Common Stock - shall have the meaning set forth herein at Section 1.10(a).

1.28 Outstanding Company Voting Securities - shall have the meaning set forth herein at Section 1.10(a).

1.29 Participant - shall mean any Employee who is a Participant in the Sunoco, Inc. Retirement Plan, who has not waived his rights to participate in thisPlan, and who is either:

(a) a Principal Officer; or

(b) an Executive who was participating in the Plan on January 1, 2003; or

(c) designated as a Participant by the Board Committee.

Except as provided in Sections 6.01, 6.02 or 6.04, if any Participant ceases to be a Principal Officer, or an Executive, he will thereupon cease to be aParticipant (unless otherwise designated by the Board Committee), and will forfeit all rights to benefits under this Plan.

1.30 Person - shall have the meaning set forth herein at Section 1.10(a).

1.31 Plan - shall mean the Sunoco, Inc. Executive Retirement Plan as set forth in this document and as it may from time to time be amended.

1.32 Plan Administrator - shall mean the individual or entity designated as such by the Board Committee pursuant to Article VIII.

1.33 Plan Year - shall mean the annual period beginning on January 1 of any year and ending on the following December 31.

1.34 Preretirement Spouse’s Death Benefit - shall mean the benefit payable upon the Participant’s death to the Spouse of a Participant pursuant toSection 5.01.

1.35 Principal Officer - shall mean the President, Chief Operating Officer and Chief Executive Officer of Sunoco, Inc., Executives reporting directly to thePresident, Chief Operating Officer or Chief Executive Officer of Sunoco, Inc., and any other Executive designated by the Board Committee as being a PrincipalOfficer.

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1.36 Principal Officer Participant - shall mean a Principal Officer who becomes a Participant on or after January 1, 2003.

1.37 Qualifying Termination - shall mean, with respect to the employment of any Participant who is a participant in the Sunoco, Inc. Special ExecutiveSeverance Plan, a “Qualifying Termination” as defined in such plan, and with respect to the employment of any other Participant, the following:

(a) a termination of employment by the Company within two (2) years after a Change in Control, other than for Just Cause, death or disability;

(b) a termination of employment by the Participant within two (2) years after a Change in Control for one or more of the following reasons:




provided, however, that in the case of any such termination of employment by the Participant under this subparagraph (b), such termination shall notbe deemed to be a Qualifying Termination unless the termination occurs within 120 days after the occurrence of the event or events constituting thereason for the termination; or

(c) before a Change in Control, a termination of employment by the Company, other than a termination for Just Cause, or a termination ofemployment by the Participant for one of the reasons set forth in (b) above, if the affected Participant can demonstrate that such termination orcircumstance in (b) above leading to the termination:

(1) was at the request of a third party with which the Company had entered into negotiations or an agreement with regard to a Change inControl; or

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(2) otherwise occurred in connection with a Change in Control;

provided, however, that in either such case, a Change in Control actually occurs within one (1) year following the Employment Termination Date.

1.38 Service - shall mean the completed years and months of an Employee’s employment by Sunoco, Inc. or an Affiliated Company, whether or notcontinuous.

1.39 Social Security Benefit - shall mean the Primary Insurance Amount to which a Participant becomes entitled at age sixty-five (65) under SocialSecurity legislation in effect on the earliest of his Normal Retirement Date, early retirement date or Termination Date.

1.40 Specified Employee - shall mean those Participants who are Executive Resource Employees (employees in Grades 14 and above designated by theCompany as members of the Company’s Executive Resource group), pursuant to the election of an alternative method specified in Treasury Regulation Sections1.409A-1(i)(5) and 1.409A-1(i)(8).

1.41 Spouse - shall mean the individual who is the legally married husband or wife of a Participant.

1.42 Statutory Benefit - shall mean the monthly amount of any benefit (or the Actuarial Equivalent of such benefit) from any country other than the UnitedStates to which a Participant, upon proper application, is or would be entitled.

1.43 Sunoco, Inc. - shall mean Sunoco, Inc. or any corporation which succeeds to the position of Sunoco, Inc. as common parent of the Sunoco AffiliatedGroup, within the meaning of regulations issued under the Internal Revenue Code.

1.44 Termination Date - shall mean the date on which a Participant separates from service as defined in Section 409A and the regulations promulgatedthereunder. Notwithstanding the foregoing, pursuant to Treasury Regulation Section 1.409A-1(h)(1)(ii), where it is reasonably anticipated that there will be apermanent reduction in the level of bona fide services of the Participant after a certain date to 49% or less of the average level of bona fide services performed bythe Participant during the immediately preceding 12 months, such Participant shall be treated for purposes of this Plan as having on such date a termination ofemployment and a separation from service.

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ARTICLE II

Contributions

2.01 Employer Contributions. All benefits payable under this Plan will be paid by the Company. A Participant will have no right, title, or interestwhatsoever in or to any investments which the Company may make to aid in meeting such obligations as may arise under the Plan. Nothing contained in the Plan,nor any action taken pursuant to its provisions, will create or be construed to create a trust or a fiduciary relationship between the Company and any Participantor any other person. To the extent that any person acquires a right to benefits under this Plan, such right will be no greater than the right of an unsecured generalcreditor of the Company. All payments to be made under the Plan will be paid from the general funds of the Company and no special or separate fund will beestablished and no segregation of assets will be made to assure payment of such amounts.

2.02 Participant Contributions. No contributions by Participant will be required or permitted under this Plan.

2.03 Expenses of Administration. All expenses of administering this Plan will be paid by the Company.

ARTICLE III

Retirement Benefits

3.01 Normal Retirement. Except as provided in Section 3.06, each Participant will be retired on his Normal Retirement Date.

3.02 Normal Retirement Income – Principal Officer Participants. A Principal Officer Participant who retires on or after his Normal Retirement Date andafter the completion of five years of Executive Service will be entitled to a monthly normal retirement income, payable in the normal form of payment pursuantto Section 3.09, equal to (a) reduced by (b):

(a) 2.25% of his Final Average Earnings multiplied by his Executive Service;

(b) the sum of:

(1) 100% of his Affiliated Company Benefit, plus

(2) 100% of his Statutory Benefit;

provided, however, that the monthly normal retirement income that a Principal Officer Participant would otherwise be entitled to receive under Section 3.02(a)shall not exceed 50% of his Final Average Earnings.

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3.03 Normal Retirement Income – Executive Participants. An Executive Participant who retires on or after his Normal Retirement Date and after thecompletion of five years of Executive Service will be entitled to a monthly normal retirement income, payable in the normal form of payment pursuant toSection 3.09, equal to the greater of (a) or (b), reduced by (c):

(a) a monthly normal retirement income, payable in the normal form of payment pursuant to Section 3.09, equal to 2.25% of his Final AverageEarnings multiplied by his Executive Service; provided, however, that the benefit that an Executive Participant would otherwise be entitled to receiveunder this Section 3.03(a) (before reduction for any Affiliated Company Benefit or Statutory Benefit under Section 3.03(c)) shall not exceed fifty percent(50%) of his Final Average Earnings; or

(b) subject to the provisions of Sections 3.04 and 3.05, the excess of (1) over (2), where:

(1) equals the sum of:

(a) 1-2/3% of his Final Average Earnings multiplied by his Credited Service up to a maximum of 30 years, plus

(b) 3/4% of his Final Average Earnings multiplied by his Credited Service in excess of 30 years, and

(2) equals 1-2/3% of his Social Security Benefit multiplied by his Service up to a maximum of 30 years;

(c) the sum of:

(1) 100% of his Affiliated Company Benefit (determined as of the annuity starting date of the benefit payable under Section 3.03(a) orSection 3.03(b) above), plus

(2) 100% of his Statutory Benefit;

3.04 Maximum Normal Retirement Income – Executive Participants. The monthly normal retirement income which an Executive Participant wouldotherwise be entitled to receive under Section 3.03(b) will not exceed fifty percent (50%) of his Final Average Earnings.

3.05 Minimum Normal Retirement Income – Executive Participants. Notwithstanding the foregoing, the monthly normal retirement income which anExecutive Participant would otherwise be entitled to receive under Section 3.03 will not be less than the excess of (a) over (b), where

(a) equals 3-1/3% of his Final Average Earnings multiplied by his Credited Service up to a maximum of twelve (12) such years, and

(b) equals the sum of:

(1) 100% of his Affiliated Company Benefit,

(2) 100% of his Nonaffiliated Employer Benefit, plus

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(3) 100% of his Statutory Benefit.

3.06 Early Retirement Date. A Participant will be eligible to retire on an early retirement date which will be the first day of any calendar month coincidentwith or next following his 55th birthday if he has then completed at least five (5) years of Executive Service.

3.07 Early Retirement Income. The monthly early retirement income payable to the Participant commencing on his early retirement date will be equal tothe monthly normal retirement income that would otherwise be applicable under Sections 3.02, 3.03, 3.04 and 3.05, adjusted as follows:

(a) The amount calculated in Sections 3.02(a) and 3.03(a) will be reduced by 5/12% for each full month by which actual retirement precedes theNormal Retirement Date by more than three (3) years.

(b) The Social Security Benefit referred to in Section 3.03(b)(2) will be determined by projecting the Participant’s Service to his Normal RetirementDate and assuming constant Earnings, at his last rate in effect, to Normal Retirement Date, and will then be multiplied by a fraction, the numerator ofwhich will be his Service to the date of actual retirement and the denominator of which will be his projected Service to Normal Retirement Date.

(c) The amount calculated in Sections 3.03(b)(1), 3.04 and 3.05 will be reduced by 5/12% for each full month by which actual retirement precedesthe Normal Retirement Date by more than five (5) years, and the offset for Social Security Benefits calculated in Section 3.03(b)(2) will be reduced by7/12% for each full month that actual retirement precedes the Normal Retirement Date during the five-year period immediately preceding the NormalRetirement Date, and 7/24% for each full month that actual retirement precedes the Normal Retirement Date by more than five (5) years.

(d) In determining the benefit payable under this Section 3.07, any Affiliated Company Benefit will be the amount payable as of the annuity startingdate of the early retirement income payable hereunder.

3.08 Special Retirement Income – Chief Executive Officer Participant. The Chief Executive Officer Participant will be entitled to benefits under thisSection 3.08 if such benefits are greater than the benefits payable pursuant to Sections 3.02, 3.03, 3.04, 3.05 or 3.07, and benefits under this Section 3.08 arepayable in the normal form of payment pursuant to Section 3.09. The Chief Executive Officer Participant who retires on or after his Normal Retirement Datewith ten years of Executive Service will be entitled to a monthly special retirement income equal to 60% of his Final Average Earnings. The monthly specialretirement income of a Chief Executive Officer Participant

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who retires before his Normal Retirement Date with ten years of Executive Service will be the amount determined in the preceding sentence reduced by 5/12%for each month that his Termination Date precedes his Normal Retirement Date. The benefit payable under this Section 3.08 shall be reduced by the AffiliatedCompany Benefit determined as of the annuity starting date of the benefit payable under this Section 3.08. If benefits are payable under this Section 3.08, nobenefits will be payable to the Chief Executive Officer Participant under Sections 3.02, 3.03, 3.04, 3.05 or 3.07.

3.09 Normal Form of Benefit. Except as provided in Article IV, retirement benefits under this Plan will be in the form of a lump sum payment of theActuarial Equivalent of the retirement income determined under Sections 3.02, 3.03, 3.04, 3.05, 3.07 and 3.08, whichever is applicable. For purposes ofdetermining the lump sum Actuarial Equivalent of retirement income pursuant to Sections 3.02, 3.03, 3.04, 3.05, 3.07 and 3.08, the value of early retirement andsurvivor benefits under the Plan shall be reflected in such lump sum amounts.

3.10 Time of Payment. The following provisions are effective January 1, 2005.

(a) The payment of a Participant’s retirement benefits shall be made or commence on the first day of the month following the Termination Date,except as provided in Section 3.10(b).

(b) Payment of any retirement benefits (that are deferred compensation for purposes of Code Section 409A) to any Participant who is a SpecifiedEmployee shall be made as follows. Retirement benefits that are scheduled to be paid for the period which begins on such Participant’s Termination Dateand ends on the date six months from such Participant’s Termination Date, shall not be paid as scheduled, but shall be accumulated and paid in a lump sumon the date six months after the Participant’s Termination Date. Simple interest will be paid on retirement income delayed hereunder from the date suchpayments would have been made to the Participant but for this subsection (b), to the date of actual payment, at the interest rate used to determine ActuarialEquivalent lump sum payments under the Plan as of the Participant’s Termination Date.

3.11 Increase in Monthly Benefits. Effective July 1, 1998, the monthly benefits of

(a) retirees who retired prior to January 1, 1981, as a result of normal retirement under Section 3.01 or early retirement under Section 3.06,

(b) surviving Spouses, contingent annuitants or Beneficiaries of the retirees described in subsection 3.10(a) who are receiving benefits on July 1,1998, or

(c) surviving Spouses who began receiving surviving Spouse’s benefits under Article V prior to January 1, 1990, shall be increased by the amountdetermined in the following sentence, subject, however, to the limitation that the combined increases under the Base Plan and the Plan effective July 1,1998, shall not exceed $85.00.

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The monthly benefit increase shall be the excess of the sum of twenty percent (20%) of the combined monthly benefit under the Base Plan and thePlan up to $250.00, ten percent (10%) of the combined monthly benefit under the Base Plan and the Plan in excess of $250.00 up to $500.00, three percent(3%) of the combined monthly benefit under the Base Plan and the Plan in excess of $500.00 up to $750.00, and one percent (1%) of the combinedmonthly benefit under the Base Plan and the Plan in excess of $750.00 up to $1,000, over the monthly benefit increase effective July 1, 1998 under theBase Plan. Benefits payable on account of disability shall not be increased. Fifty percent (50%) of these retiree benefit increases shall be continued to thesurviving Spouse; provided, however, that any such increases in retirement income shall not be subject to adjustments in effect at the time of the electionor retirement reflecting the cost of benefit increases under this Section.

ARTICLE IV

Optional Forms of Retirement Income

4.01 Election of an Optional Form of Payment. The provisions of this Section 4.01 are effective January 1, 2005 for elections of optional forms of paymentunder Article IV, except as otherwise provided herein, and all elections under Sections 4.02 through 4.05 are subject to the provisions of this Section 4.01.

(a) With respect to retirement benefits accrued prior to January 1, 2005 that are not deferred compensation for purposes of Code Section 409A, notlater than thirty (30) days prior to a Participant’s retirement date, a Participant may elect, in lieu of the normal form of retirement benefits, an optional formof retirement income. A Participant may not change or revoke an elected option unless such change is made thirty (30) days prior to the Participant’sretirement date. Each election, designation and revocation of an option will be made in writing and in conformity with such rules as may be prescribed bythe Plan Administrator. Notwithstanding the foregoing, a Spouse may not elect an optional form of receiving any benefit payable under Article V.

(b) With respect to retirement benefits that are accrued prior to January 1, 2005 and are deferred compensation for purposes of Code Section 409A,and with respect to retirement benefits accrued between January 1, 2005 and December 31, 2005, on or before December 31, 2005, a

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Participant may elect, in accordance with IRS Notice 2005-1 Q&A 19(c), and in lieu of the normal form of retirement benefits, an optional form ofretirement income with respect to such Participant’s retirement income. Such election shall become irrevocable on December 31, 2005. Each election willbe made in writing and in conformity with such rules as may be prescribed by the Plan Administrator. Notwithstanding the foregoing, a Spouse may notelect an optional form of receiving any benefit payable under Article V.

(c) Subject to the provisions of Sections 4.01(d) and (e), all retirement benefits accrued after December 31, 2005 will be paid in the form of a lumpsum.

(d) Subject to the provisions of Section 4.01(e), all retirement benefits accrued after December 31, 2005, and all retirement benefits accrued beforeJanuary 1, 2006 that are deferred compensation for purposes of Code Section 409A, and that are not in pay status and not otherwise payable beforeJanuary 1, 2009, will be paid in a lump sum unless pursuant to Section 3.02 of IRS Notice 2006-79, as modified by Section 3.01(B)(1) of IRS Notice2007-86, the Participant elects, on or before August 31, 2008, in lieu of the normal form of retirement benefits, an optional form of retirement income.

(e) An individual who first becomes a Participant on or after June 1, 2008, not later than the earlier of thirty (30) days after the date such Participantfirst become eligible to participate in the Plan or the last date to elect an optional form of payment under any plan aggregated with the Plan under TreasuryRegulation Section 1.409A-1(c)(2)(i)(C), may elect, in lieu of the normal form of retirement benefits, an optional form of retirement income. Such electionshall apply to benefits accrued with respect to compensation paid after the election and shall be irrevocable.

4.02 Monthly Annuity Option. A Participant may elect to receive an annuity which is equal to the monthly normal retirement income determined underSections 3.02, 3.03, 3.04, 3.05, 3.07 and 3.08, whichever is applicable.

4.03 Contingent Annuity Option. A Participant may elect to receive a reduced retirement income, the amount of which will be determined by applicationof appropriate Actuarially Equivalent factors adopted by the Plan Administrator for the age and sex of the Participant and the contingent annuitant. Thecontingent annuity option provides:

(a) payments to the Participant for life; and

(b) continuation of such payments, or any part of them designated by the Participant, to the contingent annuitant, if surviving, for life.

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4.04 Ten-Year Certain Option. A Participant may elect to receive a retirement income of Actuarially Equivalent value payable for life, provided that suchincome will be paid to such Participant or to the Beneficiary of such Participant for ten (10) years after the Participant’s retirement regardless of whether theParticipant or Beneficiary survives such period. At the discretion of the Plan Administrator, any benefit payable hereunder to a Beneficiary may be commutedand paid in one sum.

4.05 Other Forms of Pension. A Participant may elect to receive a benefit payable over a period not less than the remaining lifetime of such Participantand, if the Participant so further elects, thereafter to the designated Beneficiary for as long as such designated Beneficiary survives the Participant in such otherform having an Actuarially Equivalent value as may be approved by, and be subject to such conditions as may be prescribed by, the Plan Administrator.

4.06 Rules Applicable to Contingent Annuity Option.

(a) If the Participant should die before the effective date of the contingent annuity option, no benefit will be payable to the contingent annuitant.

(b) If the contingent annuitant should die before the effective date of the contingent annuity option, the option will automatically be cancelled andthe normal monthly retirement income will be payable to the Participant as if the option had not been elected.

(c) If the contingent annuitant should die before the Participant but after the effective date of the contingent annuity option, benefits will be payableor continue to be paid to the Participant on the reduced basis; provided, however, that if the contingent annuitant should die during the first four yearsfollowing commencement of the retirement income payments to the Participant, the amount of the reduced retirement income payable to the survivingretired Participant will be increased by restoring a percentage of the reduction amount as follows:

Death of Contingent Annuitant During Percentage of

Discount Restored First Year 80%Second Year 60%Third Year 40%Fourth Year 20%Fifth and Subsequent Years 0%

(d) If the retirement date is earlier than the effective date of the contingent annuity option, retirement benefits commencing at the actual retirementdate will be made on the normal form of retirement income. If the Participant and the contingent annuitant are living on such effective date, the retirementbenefit will be adjusted to provide retirement income on and after such date in the optional form.

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ARTICLE V

Death Benefits

5.01 Preretirement Spouse’s Death Benefit. In the event of the death of a Participant during active employment and after having become eligible to elect anearly retirement date, the Participant’s Spouse will be entitled to a death benefit payable in the normal form of payment pursuant to Section 5.02 in the amounthereinafter set forth. The amount of such monthly income will be fifty percent (50%) of the monthly early retirement income that would have been payable to theParticipant under Section 3.07 or Section 3.08 (if greater) had he retired on the date of his death; provided, however, that:

(a) the reduction specified in Section 3.03(c)(2) with respect to the Participant’s Affiliated Company Benefit will not be applicable;

(b) the early retirement reduction percentage described in Sections 3.07(a) and 3.07(c) will be applied only to the offset for Social Security Benefits;

(c) the monthly income payments to the Spouse will be reduced by 1/2% for each year that the Spouse is more than ten (10) years younger than theParticipant;

(d) the amount payable to the Spouse will be reduced by any amount of Affiliated Company Benefits that are attributable to Affiliated Companycontributions and that are payable to such Spouse; and

(e) the benefit that would have been payable under Section 3.08 shall be payable without regard to whether the Chief Executive Officer Participanthas ten years of Service at the date of his death.

5.02 Normal Form of Preretirement Spouse’s Death Benefit. Except as otherwise elected pursuant to Section 5.03, the Preretirement Spouse’s DeathBenefit will be in the form of a lump sum payment of the Actuarial Equivalent of the Preretirement Spouse’s Death Benefit determined under Section 5.01payable no later than the first day of the calendar month following the month in which the Participant died.

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5.03 Election of Optional Form of Preretirement Spouse’s Death Benefit. The provisions of this Section 5.03 are effective January 1, 2005 for elections ofan optional form of payment of a Preretirement Spouse’s Death Benefit.

(a) With respect to retirement benefits accrued prior to January 1, 2005 that are not deferred compensation for purposes of Code Section 409A, aParticipant who is eligible to elect an early retirement date may elect to have the Preretirement Spouse’s Death Benefit (with respect to such retirementbenefits) paid in an annuity pursuant to this Section. If this form of payment is elected by the Participant, the Participant’s Spouse shall receive aPreretirement Spouse’s Death Benefit (with respect to such retirement benefits) in the form of monthly payments commencing no later than the last day ofthe calendar month following the month in which the Participant died, payable over the lifetime of the Spouse. A Participant may change or revoke anelection of this option at any time prior to his actual retirement. Each election, designation and revocation of an option will be made in writing and inconformity with such rules as may be prescribed by the Plan Administrator.

(b) With respect to retirement benefits that are accrued prior to January 1, 2005 and are deferred compensation for purposes of Code Section 409A,and with respect to retirement benefits accrued between January 1, 2005 and December 31, 2005, on or before December 31, 2005, a Participant may electin accordance with IRS Notice 2005-1 Q&A 19(c), to have the Preretirement Spouse’s Death Benefit (with respect to such retirement benefits) paid in anannuity pursuant to this Section. If this form of payment is elected by the Participant, the Participant’s Spouse shall receive a Preretirement Spouse’s DeathBenefit (with respect to such retirement benefits) in the form of monthly payments commencing no later than the last day of the calendar month followingthe month in which the Participant died, payable over the lifetime of the Spouse. Such election shall become irrevocable on December 31, 2005. Eachelection will be made in writing and in conformity with such rules as may be prescribed by the Plan Administrator.

(c) Subject to the provisions of Sections 5.03(d) and (e), the Preretirement Spouse’s Death Benefit with respect to all benefits accrued afterDecember 31, 2005 will be paid in the form of a lump sum on the first day of the calendar month following the month in which the Participant died.

(d) Subject to the provisions of Section 5.03(e), the Preretirement Spouse’s Death Benefit with respect to all benefits accrued after December 31,2005, and that are not in pay status and not otherwise payable before January 1, 2009, will be paid in a lump sum unless pursuant to

17


Section 3.02 of IRS Notice 2006-79, as modified by Section 3.01(B)(1) of IRS Notice 2007-86, the Participant elects on or before August 31, 2008 to havethe Preretirement Spouse’s Death Benefit (with respect to such retirement benefits) paid in an annuity. If this form of payment is elected by the Participant,the Participant’s Spouse shall receive a Preretirement Spouse’s Death Benefit (with respect to such retirement benefits) in the form of monthly paymentscommencing no later than the last day of the calendar month following the month in which the Participant died, payable over the lifetime of the Spouse.Each election will be made in writing and in conformity with such rules as may be prescribed by the Plan Administrator.

(e) An individual who first becomes a Participant on or after June 1, 2008, not later that the earlier of thirty (30) days after the date such Participantfirst becomes eligible to participate in the Plan or the last date to elect an optional form of payment under any plan aggregated with the Plan underTreasury Regulation Section 1.409A-1(c)(2)(i)(C), may elect, in lieu of a lump sum, to have the Preretirement Spouse’s Death Benefit paid in an annuity.If this form of payment is elected by the Participant, the Participant’s Spouse shall receive a Preretirement Spouse’s Death Benefit (with respect to allretirement benefits accrued under the Plan) in the form of monthly payments commencing no later than the last day of the calendar month following themonth in which the Participant died, payable over the lifetime of the Spouse. Each election will be made in writing and in conformity with such rules asmay be prescribed by the Plan Administrator. Such election shall apply to benefits accrued with respect to compensation paid after the election and shall beirrevocable.

5.04 Postretirement Spouse’s Death Benefit. In the event a Participant who has elected to receive a retirement benefit in one of the optional forms outlinedin Article IV, dies after retiring or after attaining Normal Retirement Date, the Spouse at the time of commencement of the distribution of such retirement benefitwill receive a monthly retirement income payable for the lifetime of such Spouse in an amount equal to fifty percent (50%) of the retirement income being paidor payable to the Participant (before giving effect to any reduction in income required by the election of an optional form of payment under Article IV); provided,however, that:

(a) the reduction specified in Section 3.03(c)(1) with respect to the Participant’s Affiliated Company Benefit will not be applicable;

(b) the monthly income payable to the Spouse will be reduced by 1/2% for each year that the Spouse is more than ten years younger than theParticipant; and

18


(c) the amount payable to the Spouse will be reduced by any amount of Affiliated Company Benefits that are attributable to Affiliated Companycontributions and that are payable to such Spouse.

The Spouse’s death benefit payable under this Section 5.04 will be in addition to any benefits otherwise payable under Article IV.

ARTICLE VI

Termination of Employment or Status as Executive or Principal Officer; Re-employment


(a) Voluntary Termination. A Participant whose employment is terminated for any reason other than death or retirement, including early retirement,will not be entitled to benefits under this Plan, except as provided in subsection 6.01(b) and Section 6.04 hereof.

(b) Involuntary Termination. The provisions of this Section 6.01(b) are effective for involuntary terminations with a Termination Date on or afterJanuary 1, 2005.

Notwithstanding any other provision of the Plan (and except as discussed herein), a Participant whose employment is involuntarily terminated prior to hisEarly Retirement Date, other than for Just Cause, and who executes a release and discharge of the Company from any and all claims, demands or causes ofaction other than as to amounts or benefits due to the Participant under any plan, program or contract provided by, or entered into with, the Company willbe entitled to benefits in accordance with this subsection 6.01(b). Such release and discharge shall be in such form as prescribed by the Committee andshall be executed prior to the payment of any benefits due hereunder. In addition, no benefits due hereunder shall be paid to a Participant who is requiredby Company guidelines to execute an agreement governing the assignment of patents or the disclosure of confidential information unless an executed copyof such agreement is on file with the Company.

(i) This subsection (i) applies with respect to involuntary termination benefits attributableto retirement benefits that are accrued prior to January 1, 2005 and are deferred compensation for purposes of Code Section 409A, and with respect

to involuntary termination benefits attributable to retirement benefits accrued between January 1, 2005 and December 31, 2005.

(A) The benefits under this Section 6.01(b)(i) shall consist of a nonforfeitable percentage (not to exceed 100%) in the benefits calculated underSection 3.07 (including the minimum benefit defined under Section 3.05, in the case of Executive Participants) equal to 1-2/3% times the number ofcompleted months of Executive Service, as modified in subsections (B) through (D) below.

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(B) Such benefits shall commence coincident with or next following the first day of the calendar month in which the Participant attains agefifty-five (55), or if the Participant elects, on or before December 31, 2005 in accordance with IRS Notice 2005-1 Q&A 19(c), the benefit will bepaid at the first day of the month following the Termination Date, in an Actuarial Equivalent lump sum payment of the age fifty-five (55) retirementincome determined under Section 3.07, with an additional reduction of such benefit by discounting it to the date of payment using the interest rateused in Section 1.02, as modified pursuant to subsections (C) and (D). Such election shall become irrevocable on December 31, 2005.

(C) Except as provided in subsection (D), if the Participant elects to commence the benefit prior to age fifty-five (55), the Actuarial Equivalentlump sum payment in subsection (B) above will be calculated prior to reduction for any Affiliated Company Benefit and discounted to the date ofpayment as provided in subsection (B), and then such discounted Actuarially Equivalent lump sum payment will be reduced by the AffiliatedCompany Benefit payable immediately.

(D) In the case of a Participant who is eligible for a benefit determined under Section 3.10 of the Sunoco, Inc. Retirement Plan or Section 6.11of the Puerto Rico Sun Oil Company Retirement Plan (i.e., a “Rule of 60” benefit) on his Termination Date, and has not commenced such benefit atthe time that benefits under this Plan commence, the Actuarial Equivalent lump sum payment in subsection (B) above will be reduced by theActuarial Equivalent lump sum Affiliated Company Benefit (attributable to the qualified plan in which the Participant participates) payable at age 55before discounting to the date of payment. Such Actuarial Equivalent lump sum payment shall be discounted to the date of payment as provided insubsection (B). The Actuarial Equivalent lump sum payment determined in the preceding sentence will then be reduced by any Affiliated CompanyBenefit from a nonqualified plan payable on the date of payment of the benefit under this Section 6.01(b).

(E) Any Participant who also is eligible to receive benefits under Section 6.04 shall not receive benefits hereunder but shall instead receive thebenefits under Section 6.04. If the Participant has not elected to receive a lump sum payment under this Section 6.01(b), and dies prior tocommencement of the payment of the benefit under this Section 6.01(b), then the Participant’s Spouse will be entitled to a preretirement deathbenefit in accordance with Sections 5.01, 5.02 and 5.03.

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(ii) This subsection (ii) applies with respect to involuntary termination benefits attributable to retirement benefits that are accrued after December 31,2005.

(A) The benefits under this Section 6.01(b)(ii) shall consist of a nonforfeitable percentage (not to exceed 100%) in the benefits calculatedunder Section 3.07 (including the minimum benefit defined under Section 3.05, in the case of Executive Participants) equal to 1-2/3% times thenumber of completed months of Executive Service, as modified in subsections (B) through (D) below.

(B) Such benefits shall be paid at the first day of the month following the Termination Date, in an Actuarial Equivalent lump sum payment ofthe age fifty-five (55) retirement income determined under Section 3.07, with an additional reduction of such benefit by discounting it to the date ofpayment using the interest rate used in Section 1.02, as modified pursuant to subsections (C) and (D).

(C) Except as provided in subsection (D), the Actuarial Equivalent lump sum payment in subsection (B) above will be calculated prior toreduction for any Affiliated Company Benefit and discounted to the date of payment as provided in subsection (B), and then such discountedActuarially Equivalent lump sum payment will be reduced by the Affiliated Company Benefit payable immediately.

(D) In the case of a Participant who is eligible for a benefit determined under Section 3.10 of the Sunoco, Inc. Retirement Plan or Section 6.11of the Puerto Rico Sun Oil Company Retirement Plan (i.e., a “Rule of 60” benefit) on his Termination Date, and has not commenced such benefit atthe time that benefits under this Plan commence, the Actuarial Equivalent lump sum payment in subsection (B) above will be reduced by theActuarial Equivalent lump sum Affiliated Company Benefit (attributable to the qualified plan in which the Participant participates) payable at age 55before discounting to the date of payment. Such Actuarial Equivalent lump sum payment shall be discounted to the date of payment as provided insubsection (B). The Actuarial Equivalent lump sum payment determined in the preceding sentence will then be reduced by any Affiliated CompanyBenefit from a nonqualified plan payable on the date of payment of the benefit under this Section 6.01(b).

(E) Any Participant who also is eligible to receive benefits under Section 6.04 shall not receive benefits hereunder but shall instead receive thebenefits under Section 6.04

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(iii) Payment of any benefits under this Section 6.01(b) (that are deferred compensation for purposes of Code Section 409A) to any Participant whois a Specified Employee shall be made as follows. Benefits that are scheduled to be paid for the period which begins on such Participant’s TerminationDate and ends on the date six months from such Participant’s Termination Date, shall not be paid as scheduled, but shall be accumulated and paid in alump sum on the date six months after the Participant’s Termination Date. Simple interest will be paid on retirement income delayed hereunder from thedate such payments would have been made to the Participant but for this subsection (iii), to the date of actual payment, at the interest rate used todetermine Actuarial Equivalent lump sum payments under the Plan as of the Participant’s Termination Date.

6.02 Termination of Executive or Principal Officer Status. If a Participant remains employed by the Company but ceases to be an Executive or a PrincipalOfficer, he will forfeit the right to all benefits under this Plan unless otherwise designated to remain as a Participant by the Board Committee or unless he hadattained his 55th birthday and completed at least five (5) years of Executive Service at the time he ceased to be an Executive or a Principal Officer, except asotherwise provided in this Section 6.02. If any such Participant is designated at the Board Committee as being eligible to remain a Participant even though nolonger an Executive or a Principal Officer, the Participant will continue as such for all purposes of this Plan. If the Participant is not so designated by the BoardCommittee but has completed at least five years of Executive Service, he will remain a Participant, but will be entitled to benefits based only upon his Service,Credited Service as of the date he ceased to be an Executive or Principal Officer, and Final Average Earnings as of his Termination Date.

6.03 Reemployment. If a retired Participant is reemployed by the Company, his benefits will thereupon cease, and upon again becoming such an Employeehe will have his prior period of Service, Credited Service and Executive Service restored to him only as designated by the Board Committee.


(a) Notwithstanding any other provisions in the Plan (including any minimum age and/or length of service requirements for vesting of benefits), aParticipant shall become fully and irrevocably vested upon the earliest of:

(1) the Participant’s Qualifying Termination;

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(2) a termination of the Participant’s employment by the Company after a Change in Control by reason of death or disability;

(3) the termination of this Plan after a Change in Control; or

(4) any amendment of this Plan after a Change in Control in a manner that purports to reduce any benefit due under this Plan.

As a result of such vesting, each such Participant shall become entitled to benefits calculated as follows:

(i) Except for purposes of Section 1.14(c), Service and Credited Service shall be increased by 36 months, with the number of months credited underthis Section 6.04(a)(i) reduced by one month for each completed month of Service of the Participant after the date of the Change in Control, but not belowzero.

(ii) If at the Termination Date, the Participant has attained his Normal Retirement Date, he shall be entitled to a benefit calculated in accordance withSection 3.02 (for Principal Officer Participants) or Section 3.03 (for Executive Participants).

(iii) If at the Termination Date, the Participant has not attained his Normal Retirement Date, or has not attained his Early Retirement Date, he shallbe entitled to benefits calculated under Section 3.07 (including the minimum benefit defined under Section 3.05 in the case of Executive Participants).

(iv) Final Average Earnings shall be determined using the greater of:

(A) the amount determined under Section 1.21 without reference to this Section 6.04(a)(iv); or

(B) the amount determined under Section 1.21 as of the end of the calendar month preceding the date of a Change in Control.

(v) The provisions of this Section 6.04(a)(v) are effective for a Participant with a Termination Date on or after January 1, 2005, and who has notattained his Early Retirement Date at the Termination Date.

(A) This subsection (A) applies with respect to benefits attributable to retirement benefits that are accrued prior to January 1, 2005 and are deferredcompensation for purposes of Code Section 409A, and with respect to benefits attributable to retirement benefits accrued between January 1, 2005and December 31, 2005.

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(I) The benefits under this Section 6.04(a)(v)(A) shall consist of the benefits calculated under Section 3.07, as modified in subsections (II)through (IV) below.

(II) Such benefits shall commence coincident with or next following the first day of the calendar month in which the Participant attains agefifty-five (55), or if the Participant elects, on or before December 31, 2005 in accordance with IRS Notice 2005-1 Q&A 19(c), the benefit will bepaid at the first day of the month following the Termination Date, in an Actuarial Equivalent lump sum payment of the age fifty-five (55) retirementincome determined under Section 3.07, with an additional reduction of such benefit by discounting it to the date of payment using the interest rateused in Section 1.02, as modified pursuant to subsections (III) and (IV). Such election shall become irrevocable on December 31, 2005.

(III) Except as provided in subsection (IV), if the Participant elects to commence the benefit prior to age fifty-five (55), the ActuarialEquivalent lump sum payment in subsection (II) above will be calculated prior to reduction for any Affiliated Company Benefit and discounted tothe date of payment as provided in subsection (II), and then such discounted Actuarially Equivalent lump sum payment will be reduced by theAffiliated Company Benefit payable immediately.

(IV) In the case of a Participant who is eligible for a benefit determined under Section 3.10 of the Sunoco, Inc. Retirement Plan orSection 6.11 of the Puerto Rico Sun Oil Company Retirement Plan (i.e., a “Rule of 60” benefit) on his Termination Date, and has not commencedsuch benefit at the time that benefits under this Plan commence, the Actuarial Equivalent lump sum payment in subsection (II) above will bereduced by the Actuarial Equivalent lump sum Affiliated Company Benefit (attributable to the qualified plan in which the Participant participates)payable at age 55 before discounting to the date of payment. Such Actuarial Equivalent lump sum payment shall be discounted to the date ofpayment as provided in

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subsection (II). The Actuarial Equivalent lump sum payment determined in the preceding sentence will then be reduced by any Affiliated CompanyBenefit from a nonqualified plan payable on the date of payment of the benefit under this Section 6.04(a)(v).

(B) This subsection (B) applies with respect to benefits attributable to retirement benefits that are accrued after December 31, 2005.

(I) The benefits under this Section 6.04(a)(v)(B) shall consist of the benefits calculated under Section 3.07, as modified in subsections (II)through (IV) below.

(II) Such benefits shall be paid at the first day of the month following the Termination Date, in an Actuarial Equivalent lump sum payment ofthe age fifty-five (55) retirement income determined under Section 3.07, with an additional reduction of such benefit by discounting it to the date ofpayment using the interest rate used in Section 1.02, as modified pursuant to subsections (III) and (IV).

(III) Except as provided in subsection (IV), the Actuarial Equivalent lump sum payment in subsection (II) above will be calculated prior toreduction for any Affiliated Company Benefit and discounted back to the date of payment as provided in subsection (II), and then such discountedActuarially Equivalent lump sum payment will be reduced by the Affiliated Company Benefit payable immediately.

(IV) In the case of a Participant who is eligible for a benefit determined under Section 3.10 of the Sunoco, Inc. Retirement Plan orSection 6.11 of the Puerto Rico Sun Oil Company Retirement Plan (i.e., a “Rule of 60” benefit) on his Termination Date, and has not commencedsuch benefit at the time that benefits under this Plan commence, the Actuarial Equivalent lump sum payment in subsection (II) above will bereduced by the Actuarial Equivalent lump sum Affiliated Company Benefit (attributable to the qualified plan in which the Participant participates)payable at age 55 before discounting to the date of payment. Such Actuarial Equivalent lump sum payment shall be discounted to the date ofpayment as provided in subsection (II). The Actuarial Equivalent lump sum payment determined in the preceding sentence will then be reduced byany Affiliated Company Benefit from a nonqualified plan payable on the date of payment of the benefit under this Section 6.04(a)(v).

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(C) Payment of any benefits under this Section 6.04(a)(v) (that are deferred compensation for purposes of Code Section 409A) to any Participantwho is a Specified Employee shall be made as follows. Benefits that are scheduled to be paid for the period which begins on such Participant’sTermination Date and ends on the date six months from such Participant’s Termination Date, shall not be paid as scheduled, but shall beaccumulated and paid in a lump sum on the date six months after the Participant’s Termination Date. Simple interest will be paid on retirementincome delayed hereunder from the date such payments would have been made to the Participant but for this subsection (C), to the date of actualpayment, at the interest rate used to determine Actuarial Equivalent lump sum payments under the Plan as of the Participant’s Termination Date.

(iv) In the event the Chief Executive Officer Participant has not attained his Normal Retirement Date at the Termination Date (regardless of whetherhe has ten years of Service at the Termination Date), the benefits under Section 3.08 will be a monthly special retirement income equal to 60% of his FinalAverage Earnings (with such income reduced by 5/12% for each month that his Termination Date precedes his Normal Retirement Date). The benefitpayable under this Section 6.04(b)(vi) shall be reduced by the Affiliated Company Benefit determined as of the annuity starting date of the benefit payableunder this Section 6.04(b)(vi).

In addition, a Participant who terminates his employment for any reason after a Change in Control and who is not described in the first sentence ofSection 6.04(a), shall become entitled to the benefits set forth at Section 6.04(a)(4)(ii), (iii), (iv) and (v), to the extent the Participant meets the agerequirements set forth in each such subsection.

(b) The provisions of this Section 6.04(b) are effective January 1, 2005 for making a “Change in Control Election”.

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(i) With respect to retirement benefits accrued prior to January 1, 2005 that are not deferred compensation for purposes of Code Section 409A,notwithstanding any other provisions in this Plan, at any time, a Participant or Beneficiary may make a “Change in Control Election.” If a Participant orBeneficiary makes a Change in Control Election that remains in force in accordance with the rules described below, the Participant or Beneficiary will beentitled to receive, in a single lump sum payment upon the occurrence of a Change in Control, the Actuarial Equivalent of the remaining payments ofretirement income (attributable to benefits accrued before January 1, 2005 that are not deferred compensation for purposes of Code Section 409A) towhich he or she is entitled under the Plan as of the Change in Control. In order for a Change in Control Election to be effective, however, the Participant orBeneficiary must be receiving Plan benefits pursuant to Article IV at the time that a Change in Control occurs. In addition, any Change in Control Electionor revocation of an existing Change in Control Election shall be null and void if a Change in Control occurs within 12 months after it is made, and theParticipant’s or Beneficiary’s most recent preceding Change in Control Election, if timely made and not revoked at least 12 months before the Change inControl, shall remain in force. Each such election or revocation shall be made in writing and in conformity with such rules as may be prescribed by thePlan Administrator.

(ii) With respect to retirement benefits that are accrued prior to January 1, 2005 and are deferred compensation for purposes of Code Section 409A,and with respect to retirement benefits accrued between January 1, 2005 and December 31, 2005, on or before December 31, 2005, a Participant may electin accordance with IRS Notice 2005-1 Q&A 19(c), to make a “Change in Control Election.” Such election will be irrevocable as of December 31, 2005. Ifa Participant or Beneficiary makes a Change in Control Election the Participant or Beneficiary will be entitled to receive, in a single lump sum paymentupon the occurrence of a Change in Control (provided that the Change in Control is also a change in control for purposes of Code Section 409A and theregulations issued thereunder), the Actuarial Equivalent of the remaining payments of retirement income to which he or she is entitled under the Plan as ofthe Change in Control. In order for a Change in Control Election to be effective, however, the Participant or Beneficiary must be receiving Plan benefitspursuant to Article IV at the time that a Change in Control occurs. Each such election shall be made in writing and in conformity with such rules as may beprescribed by the Plan Administrator.

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(c) With respect to retirement benefits accrued prior to January 1, 2005 that are not deferred compensation for purposes of Code Section 409A, fromthe date of a Change in Control and for twelve (12) months thereafter, each Participant or Beneficiary who is receiving retirement benefits pursuant toArticle IV and who does not have a Change in Control Election in force, shall have the right to withdraw, in a single lump-sum cash payment, an amountequal to ninety-five percent (95%) of the Actuarial Equivalent of the remaining payments of retirement income to which the Participant is then entitledunder this Plan (a “95% Withdrawal”); provided, however, that if this option is exercised, such Participant or Beneficiary will forfeit to the Company theremaining five percent (5%) of the Actuarial Equivalent of such payments. Payments pursuant to a 95% Withdrawal shall be made as soon as practicable,but no later than thirty (30) days after the Participant or Beneficiary notifies the Plan Administrator in writing that he is exercising his right to elect a 95%Withdrawal. This provision is not effective for any retirement benefits that are deferred compensation for purposes of Code Section 409A.

(d) The Company shall pay all legal fees and related expenses incurred by or with respect to a Participant during his lifetime or within ten (10) yearsafter his death in seeking to obtain or enforce any payment, benefit or other right such Participant may be entitled to under the Plan after a Change inControl; provided, however, that the Participant (or the Participant’s representative) shall be required to repay any such amounts to the Company to theextent a court of competent jurisdiction issues a final non-appealable order setting forth the determination that the position taken by the Participant (or theParticipant’s representative) was frivolous or advanced in bad faith. Reimbursement shall be made on or before the close of the calendar year following thecalendar year in which the expense was incurred. The amount of the expense eligible for reimbursement under this provision in one calendar year may notaffect the amount of expense eligible for reimbursement under this provision in any other calendar year.

ARTICLE VII

Disability Benefits

7.01 Participants Receiving Disability Benefits. A Participant receiving disability benefits under the Sun Executive Disability Income Program will remaina Participant. Such a Participant will be entitled to a monthly normal retirement income, to commence at his Normal Retirement Date, computed in accordancewith Sections 3.02, 3.03, 3.04 or 3.05 as applicable, assuming

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constant Earnings and annual guideline (target) bonus to Normal Retirement Date, Social Security benefits as calculated under the Social Security Act in effecton the Participant’s date of disability, and including as Service, Credited Service and Executive Service, the period during which he qualifies for and receivesdisability benefits under the Sun Executive Disability Income Program. Such determination will be made as of Normal Retirement Date. Notwithstanding theforegoing, for purposes of determining the benefit provided to the Chief Executive Officer Participant pursuant to Section 3.08, Service, Credited Service andExecutive Service shall not include the period during which he qualifies for and receives disability benefits under the Sun Executive Disability Income Program.The normal form for the payment of retirement income to the Participant will be as set forth in Section 3.09.

7.02 Status During Disability. A Participant receiving Sun Executive Disability Income Program benefits prior to his Normal Retirement Date will beentitled to benefits under Section 5.01 and, if applicable, Section 5.02. After his Normal Retirement Date, he will be deemed to have retired. Such a Participant, ifotherwise eligible, may also elect to retire early under the provisions of Section 3.06.

ARTICLE VIII

Administration of the Plan

8.01 Allocation and Delegation of Fiduciary Responsibilities. Fiduciary responsibilities with respect to the Plan are to be allocated as set forth in thisArticle VIII. A fiduciary will have only those specific powers, duties, responsibilities and obligations as are specifically given him under this Plan. It is intendedthat each fiduciary be responsible for the proper exercise of his own powers, duties, responsibilities and obligations under this Plan, and generally will not beresponsible for any act or failure to act of another fiduciary. A fiduciary may delegate to any person or entity, who may or may not be a fiduciary, any of itspowers or duties under the Plan.

8.02 Powers and Responsibilities of the Board of Directors. The Board of Directors has the following powers and responsibilities:

(a) To authorize amendments to the Plan;

(b) To terminate the Plan; and

(c) To appoint and remove members of the Board Committee, as set forth in Section 8.03, below.

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8.03 Board Committee.

(a) The Board Committee will consist of at least three Directors who will be appointed by and serve at the pleasure of the Board of Directors. TheBoard of Directors will also appoint one member of the Board Committee to act as Chairman of such Committee. Vacancies will be filled in the samemanner as appointments. Any member of the Board Committee may resign by delivering a written resignation to the Board of Directors, to becomeeffective upon delivery or at any other date specified therein.

(b) The members of the Board Committee will appoint a Secretary who may, but need not be, a member of the Board Committee. The BoardCommittee may, in writing, delegate some or all of its powers and responsibilities as specified in subsection 8.03(d) to any other person or entity, who mayor may not be a fiduciary.

(c) The Board Committee will hold meetings upon such notice, at such time or times, and at such place or places as it may determine. The majorityof the members of the Board Committee at the time in office will constitute a quorum for the transaction of business at all meetings and a majority vote ofthose present at any meeting will be required for action. The Board Committee will also act by written consent of a majority of its members.

(d) The Board Committee will have the following powers and responsibilities:

(1) To prepare periodic administration reports to the Board of Directors which will show, in reasonable detail, the administrative operations ofthe Plan;

(2) To appoint and remove the Plan Administrator; and

(3) To appoint and remove other fiduciaries.

8.04 Plan Administrator.

(a) The Plan Administrator will be appointed by and serve at the pleasure of the Board Committee. The Plan Administrator may resign by deliveringa written resignation to the Board Committee, to be effective on delivery or at any other date specified therein. Upon the resignation or removal of the PlanAdministrator, a successor Plan Administrator will be appointed by the Board Committee.

(b) The Plan Administrator may, in writing, delegate some or all of his powers and responsibilities as set forth in subsection 8.04(c) to any otherperson or entity, who may or may not be a fiduciary.

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(c) The Plan Administrator will adopt such rules for administration of the Plan as he considers desirable, provided they do not conflict with the Plan.Records of administration of the Plan will be kept, and Participants and their Spouses, Beneficiaries and contingent annuitants may examine recordspertaining directly to themselves. The Plan Administrator will have the following powers and responsibilities:

(1) To select and terminate an actuary for the Plan.

(2) To establish and maintain claims review procedures.

(3) To construe the Plan, correct defects, supply omissions and reconcile inconsistencies to the extent necessary to administer the Plan, withany instructions or interpretation of the Plan made in good faith by the Plan Administrator to be final and conclusive for all purposes.

(4) To comply with any requirements of the Employee Retirement Income Security Act of 1974 with respect to filing reports withgovernmental agencies.

(5) To provide Employees with any and all information required by the Employee Retirement Income Security Act of 1974.

(6) To approve any actuarial assumptions.

(7) To coordinate any necessary audit process with respect to reports on administration data.

(8) To conduct routine Plan administration.

8.05 Employment of Agents. The fiduciaries may retain such counsel, actuarial, medical, accounting, clerical and other services as they may require tocarry out the provisions and purposes of the Plan.

8.06 Reliance on Reports and Certificates. Fiduciaries under the Plan and the officers and managers and Employees of the Company and any AffiliatedCompany will be entitled to rely upon all tables, valuations, certificates and reports furnished by any duly appointed actuary, insurance company, or by any dulyappointed accountant, and upon all opinions given by any duly appointed legal counsel.

8.07 Compensation. Fiduciaries under the Plan will not receive any compensation for their services as such.

8.08 Fiduciary’s Own Participation. A fiduciary may not act, vote or otherwise influence a decision specifically relating to his own participation under thePlan.

8.09 Liability for Administration of the Plan. In the administration of the Plan, neither a fiduciary, not any officers, directors or employees of the Companyor any Affiliated Company or their agents will be liable jointly or severally for any loss due to his or its error or acts of omission or

31


commission, except for his or its own individual misconduct. The Company will indemnify each fiduciary, officer, director or employee of the Company and anyAffiliated Company from any and all expenses arising out of his or its responsibilities under the Plan, excepting such expenses and liabilities arising out of his orits own individual willful misconduct.

ARTICLE IX

General Provisions

9.01 Right to Amend or Terminate. The Company expects and intends to continue the Plan indefinitely, but necessarily reserves the right, by action of theBoard of Directors, to amend, alter, suspend or terminate the Plan in whole or in part, and at any time; provided, however, that, without the written consent of theParticipant, no such amendment or termination shall adversely affect the rights of such Participants, or the beneficiaries of such Participant, with respect tobenefits accrued by that Participant under the Plan prior to the date on which final action is taken with respect to such amendment or termination, and in the eventthat such amendment or termination adversely affects the rights of such Participant, or the beneficiaries of such Participant, the accrued benefits of suchParticipant under the Plan immediately prior to such amendment or termination shall become nonforfeitable, and provided, further, that the provisions of the Planrelating to a Change in Control, including, without limitation, Sections 1.10, 1.37 and 6.04, may not be amended in a manner adverse to Participants after aChange in Control or before, but in connection with, a Change in Control.

9.02 Alienation of Benefits. No benefits payable under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge,encumbrance or charge, and any action by way of anticipating, alienating, selling, transferring, assigning, pledging, encumbering or charging the same will bevoid and of no effect nor will any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitledto such benefit.

9.03 Payment to Minors and Incompetents. If a Participant, Spouse, contingent annuitant or Beneficiary entitled to receive any benefits hereunder is aminor, or is deemed by the Plan Administrator or is adjudged to be legally incapable of giving a valid receipt and discharge for such benefits, they will be paid tothe duly appointed guardian or committee of such minor or incompetent, or they may be paid to such person or persons who the Plan Administrator believes is orare caring for or supporting such minors or incompetents. Any such payments, to the extent thereof, will be a complete discharge for the payment of such benefit.

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9.04 Unclaimed Benefit. If any benefit under the Plan had been payable to and unclaimed by any person for a period of four years since the whereabouts orexistence of such person was last known to the Plan Administrator, the Plan Administrator may direct that all rights of such person to payments accrued and tofuture payments be terminated absolutely, provided that if such person subsequently appears and identifies himself to the satisfaction of the Plan Administrator,then the liability will be reinstated.

9.05 Plan Voluntary. The Plan is purely voluntary on the part of the Company. Neither the establishment of the Plan, nor any amendment thereto, nor thecreation of any fund or account, nor the payment of any benefit will be construed as conferring upon any Employee or Participant the right to be retained in theemploy of the Company or any Affiliated Company, and all Employees and Participants will remain subject to discharge, discipline or termination to the sameextent as if the Plan had never been established.

9.06 Gender. Whenever used herein, the masculine pronoun will include the feminine and the singular the plural, unless a different meaning is plainlyrequired by the context.

9.07 Construction. The Plan will be construed, enforced and administered according to the laws of the Commonwealth of Pennsylvania. In the event anyprovision of the Plan is held illegal or invalid for any reason, it will not affect the remaining provisions of the Plan, but the Plan will be construed and enforced asif such illegal and invalid provision had not been included therein.

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Exhibit 10.10

SECOND AMENDED AND RESTATEDINDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made as of this ___ day of _________, 200_, by and between Sunoco, Inc., a Pennsylvaniacorporation (the “Company”) and _____________________________ (“Indemnitee”).

WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining directors’ and officers’ liability insurance, the significantincreases in the cost of such insurance and the general reduction in the coverage of such insurance; and

WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation, in general, subjecting officers and directors toexpensive litigation risks at the same time as liability insurance has been severely limited; and

WHEREAS, Indemnitee does not regard the current protection available as adequate given the present circumstances, and Indemnitee and other officersand directors of the Company may not be willing to serve as officers and directors without adequate protection; and

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve as officers and directors ofthe Company and to indemnify its officers and directors so as to provide them with the maximum protection permitted by law.

NOW, THEREFORE, the Company and Indemnitee, intending to be legally bound, hereby agree as follows:

1. Indemnification.

(a) Third Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party toany threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative

1


(other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director, officer, trustee,fiduciary, employee or agent of the Company, or any affiliate of the Company, by reason of any action or inaction on the part ofIndemnitee while an officer or director, or by reason of the fact that Indemnitee is or was serving at the request of the Company as adirector, officer, trustee, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or other enterprise,against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement (if such settlement is approvedpursuant to Section 2(f) hereof) actually and reasonably incurred by Indemnitee in connection with such action, suit or proceeding ifIndemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of theCompany, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct wasunlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolocontendere or its equivalent, shall not, in and of itself, create a presumption that (i) Indemnitee did not act in good faith and in amanner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, (ii) with respect toany criminal action or proceeding, Indemnitee did not have reasonable cause to believe his conduct was lawful.

(b) Proceedings By or in the Right of the Company. The Company shall indemnify Indemnitee if Indemnitee was or is a party or isthreatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company or any subsidiary ofthe Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, trustee, fiduciary,employee or agent of the Company, or any affiliate of the Company, by reason of any action or inaction on the part of Indemnitee while anofficer or director or by reason of the fact that Indemnitee is or was serving at the request of

2


the Company as a director, officer, trustee, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or otherenterprise, against expenses (including attorneys’ fees) and amounts paid in settlement (if such settlement is approved pursuant toSection 2(f) hereof) actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action or suit ifIndemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company,except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to beliable to the Company unless and only to the extent that the court in which such action or suit was brought shall determine upon applicationthat, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled toindemnity for such expenses which the court shall deem proper.

(c) Mandatory Indemnification. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit orproceeding referred to in Sections 1(a) and 1(b) or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified againstexpenses (including attorneys’ fees) actually and reasonably incurred by Indemnitee in connection therewith. For purposes of thisSection 1(c), the term “successful on the merits or otherwise” shall include, but not be limited to, (i) any termination, withdrawal, ordismissal (with or without prejudice) of any claim, action, suit or proceeding against Indemnitee without any express finding of liability orguilt against him, or (ii) the expiration of a reasonable period of time after the making of any claim or threat of an action, suit or proceedingwithout the institution of the same and without any promise or payment made to induce a settlement.

2. Expenses and Indemnification Procedure.

(a) Advancement of Expenses. The Company shall advance all reasonable expenses incurred by Indemnitee in connection with theinvestigation, defense,

3


settlement or appeal of any civil or criminal action, suit or proceeding referenced in Section 1(a) or Section 1(b) hereof. For purposes of anyadvancement hereunder, the Indemnitee shall be deemed to have acted (i) in good faith and in a manner he reasonably believed to be in ornot opposed to the best interest of the Company, and (ii) with respect to any criminal action or procedure, to have had no reasonable cause tobelieve his conduct was unlawful if, under either (i) or (ii), his action is based on the records or books of account of the Company, or therecords or books of account of another corporation, partnership, joint venture, trust or other enterprise (collectively, the “other enterprises”),including financial statements, or on information supplied to him by the officers of the Company or other enterprises in the course of theirduties, or on the advice of legal counsel for the Company or other enterprises or on information or records given or reports made to theCompany or other enterprises by an independent certified public accountant or by an appraiser or other expert selected with reasonable careby the Company or other enterprises. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shallultimately be determined that Indemnitee is not entitled to be indemnified by the Company as authorized hereby.

(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to his right to be indemnified under this Agreement, givethe Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could besought under this Agreement. Notice to the Company shall be directed to Sunoco, Inc., Inc., 1735 Market Street, Philadelphia, PA 19103,Attention: Senior Vice President and General Counsel (or such other address as the Company may from time to time designate in writing toIndemnitee). Notice shall be deemed received on the third business day after the date postmarked if sent by domestic certified or registeredmail, properly addressed; otherwise, notice shall be deemed received when such notice shall actually be received by the Company.

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In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be withinIndemnitee’s power.

(c) Procedure. Any indemnification and advances provided for in Section 1 hereof and this Section 2 shall be made no later than forty-five(45) days after receipt of the written request of Indemnitee, coupled with appropriate documentation to support the requested payment. If aclaim under this Agreement, under any statute, or under any provision of the Company’s Articles of Incorporation or Bylaws providing forindemnification is not paid in full by the Company within forty-five (45) days after receipt of a fully documented written request forpayment thereof has first been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action against theCompany to recover the unpaid amount of the claim and, subject to Section 13 hereof, Indemnitee shall also be entitled to be paid for theexpenses (including attorneys’ fees) of bringing such action. It shall be a defense to any such action (other than an action brought to enforcea claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has notmet the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amountclaimed, but the burden of proving such defense shall be on the Company, and Indemnitee shall be entitled to receive interim payments ofexpenses pursuant to Section 2(a) hereof unless and until such defense may be finally adjudicated by court order or judgment from which nofurther right of appeal exists. It is the parties’ intention that if the Company contests Indemnitee’s right to indemnification, the question ofIndemnitee’s right to indemnification shall be for the court to decide, and neither the failure of the Company (including its Board ofDirectors, any committee or subgroup of the Board of Directors, independent legal counsel, or its shareholders) to have made adetermination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the

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applicable standard of conduct required by applicable law, nor an actual determination by the Company (including its Board of Directors,any committee or subgroup of the Board of Directors, independent legal counsel, or its shareholders) that Indemnitee has not met suchapplicable standard of conduct, shall create a presumption that Indemnitee has or has not, as the case may be, met the applicable standard ofconduct.

(d) Notice to Insurers. If, at the time of the receipt of a notice of claim pursuant to Section 2(b) hereof, the Company has directors’ andofficers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers inaccordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action tocause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of suchpolicies.

(e) Selection of Counsel. If the Company shall be obligated under Section 1 or Section 2 hereof to pay the expenses of any proceeding againstIndemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee,upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel byIndemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for anyfees of counsel subsequently incurred by Indemnitee with respect to the same proceeding; provided that (i) Indemnitee shall have the right toemploy separate counsel in any such proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has beenpreviously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between theCompany and Indemnitee in the conduct of any such defense, or (C) the Company shall not, in fact, have

6


employed counsel to assume the defense of such proceeding, then the reasonable fees and expenses of Indemnitee’s counsel shall be at theexpense of the Company.

(f) Settlements. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any action or claimeffected without its written consent. The Company shall not settle any action or claim in any manner which would impose any penalty orlimitation on Indemnitee without Indemnitee’s written consent. Neither the Company nor Indemnitee will unreasonably withhold consent toany proposed settlement.

(g) Change in Control. If, at any time subsequent to the date of this Agreement, members of the Incumbent Board (as defined in Section 18) donot constitute a majority of the members of the Board of Directors, or there is otherwise a Change in Control (as defined in Section 18), thenupon the request of Indemnitee, the Company shall cause the determination of indemnification and advances required by Section 2 hereof tobe made by a third-party (mutually agreed upon by the parties or failing such agreement, as determined by the Chief Judge of the FederalDistrict Court for the Eastern District of Pennsylvania). The fees and expenses incurred by the third party in making the determination ofindemnification and advances shall be borne solely by the Company. If such third party is unwilling and/or unable to make thedetermination of indemnification and advances, then the Company shall cause the indemnification and advances to be made by a majorityvote or consent of a Board of Directors committee consisting solely of members of the Incumbent Board.

(h) Payment of Indemnifications and Advances. Notwithstanding any other provision in this Agreement, all claims of the Indemnitee forexpenses, indemnifications and advances under this Agreement shall be paid for items incurred by or with respect to the Indemnitee onlyduring Indemnitee’s lifetime or within ten (10) years after Indemnitee’s death. All such payments shall be made on or before the close of thecalendar

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year following the calendar year in which the item was incurred, or at such earlier time as otherwise provided in this Agreement. Theamounts eligible for reimbursement under this Agreement in one calendar year may not affect the amount of expenses eligible forreimbursement under this provision in any other calendar year.

3. Additional Indemnification Rights:

(a) Scope. Notwithstanding any other provision of this Agreement, the Company shall indemnify Indemnitee to the fullest extent permitted bylaw, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’sArticles of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the date of this Agreement, in anyapplicable law, statute, or rule which expands the right of a Pennsylvania corporation to indemnify a member of its board of directors or anofficer, such changes shall be, ipso facto, within the purview of Indemnitee’s rights and Company’s obligations under this Agreement. In theevent of any change in any applicable law, statute or rule which narrows the right of a Pennsylvania corporation to indemnify a member ofits board of directors or an officer, such changes (to the extent not otherwise required by such law, statute or rule to be applied to thisAgreement) shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

(b) Non-exclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which an Indemnitee maybe entitled under the Company’s Articles of Incorporation, its Bylaws, any agreement, any vote of Shareholders or disinterested directors,the Pennsylvania Business Corporation Law of 1988, as amended, or otherwise, both as to action in Indemnitee’s official capacity and as toaction in another capacity while holding such office.

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4. Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is adirector, officer, employee or agent of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent ofother enterprises) and shall continue thereafter, so long as Indemnitee shall be subject to any possible claim or threatened, pending or completedaction, suit or proceeding, whether civil, criminal or investigative, by reason of the fact that Indemnitee was a director, officer, employee or agent ofthe Company or serving in any other capacity referred to herein.

5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portionof the expenses, judgments, fines or penalties actually or reasonably incurred by him in the investigation, defense, appeal or settlement of any civilor criminal action, suit or proceeding, but not for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion ofsuch expenses, judgments, fines or penalties to which Indemnitee is entitled.

6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that, in certain instances, federal law or public policy mayoverride applicable state law and prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise.For example, the Company and Indemnitee acknowledge that the Securities and Exchange Commission (the “SEC”) has taken theposition that indemnification is not permissible for liabilities arising under certain federal securities laws, and federal legislationprohibits indemnification for certain ERISA violations. Indemnitee understands and acknowledges that the Company has undertakenwith the SEC to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s rightunder public policy to indemnify Indemnitee.

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7. Officer and Director Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it ispracticable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers anddirectors of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligationsunder this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protectionafforded by such coverage. In all policies of directors’ and officers’ liability insurance, Indemnitee shall be insured in such a manner as to provideIndemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if Indemnitee is a director; or ofthe Company’s officers, if Indemnitee is not a director of the Company but is an officer; or one of the Company’s key employees, if Indemnitee isnot an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain suchinsurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance aredisproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide aninsufficient benefit, or if Indemnitee is covered by similar insurance maintained by an affiliate of the Company.

8. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violationof applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach ofthis Agreement. The provisions of this Agreement shall be severable as provided in this Section 8. If this Agreement or any portion hereof shall beinvalidated on any ground by any court of competent jurisdiction, then the Company shall

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nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, andthe balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

9. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of thisAgreement:

(a) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated orbrought voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right toindemnification under this Agreement or any other statute or law or otherwise as required under the Pennsylvania Business Corporation Actof 1988, as amended, but such indemnification or advancement of expenses may be provided by Company in specific cases if the Board ofDirectors, at its sole discretion, finds it to be appropriate;

(b) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any proceeding instituted by

Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions madeby Indemnitee in such proceeding was not made in good faith or was frivolous;

(c) Insured Claims. To indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines,

ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to Indemnitee by an insurance carrier undera policy of officers’ and directors’ liability insurance maintained by the Company or other enterprise; or

(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses or the payment of profits arising from the purchase and sale byIndemnitee of securities in violation of Section 16(b) of the Exchange Act (as defined in Section 18), or any similar successor statute.

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10. Construction of Certain Phrases.

(a) For purposes of this Agreement, references to the “Company” shall include, in addition to the resulting corporation, any constituentcorporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued,would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director,officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director,officer, employee or agent of other enterprises, Indemnitee shall stand in the same position under the provisions of this Agreement withrespect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separateexistence had continued.

(b) For purposes of this Agreement, references to “other enterprises” shall include employee benefit plans; references to “fines” shall includeany excise taxes assessed on Indemnitee with respect to an employee benefit plan; and reference to “serving at the request of the Company”shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by,Indemnitee with respect to an employee benefit plan, its participants, or beneficiaries; and, if Indemnitee acted in good faith and in a mannerIndemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall bedeemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

(c) For the purposes of this Agreement, references to “affiliates” shall mean any entity which, directly or indirectly, is in the control of, iscontrolled by, or is under common control with, the Company.

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11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

12. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, andIndemnitee and Indemnitee’s estate, heirs, legal representatives and assigns.

13. Attorneys’ Fees. If any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall beentitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee with respect to such action, unless as apart of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such actionwas not made in good faith or was frivolous. In the event of an action instituted by or in the name of the Company under this Agreement or toenforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys’fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee’s counterclaims and cross-claims made in such action),unless as a part of such action the court determines that each of Indemnitee’s material defenses to such action was made in bad faith or wasfrivolous.

14. Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and, unless otherwise provided, shall bedeemed duly given (a) if delivered by hand and receipted for by the party addressee, on the date of such receipt, or (b) if mailed by domesticcertified or registered mail with postage prepaid, on the third business day after the date postmarked. The address for notice to the Company shall beas set forth in Section 2(b) hereof, and the address for notice to Indemnitee shall be as set forth on the signature page of this Agreement, or assubsequently modified by written notice.

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15. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the Commonwealth of

Pennsylvania for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement. Any action or proceedinginstituted under or to enforce this Agreement shall be brought only in the state courts of the Commonwealth of Pennsylvania.

16. Subrogation. In the event of payment under this Agreement, Company shall be subrogated to the extent of such payment to all of the rights of

recovery of the Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including theexecution of such documents necessary to enable Company effectively to bring suit to enforce such rights.

17. Choice of Law. This Agreement shall be governed by and its provisions construed in accordance with the laws of the Commonwealth ofPennsylvania, as applied to contracts between Pennsylvania residents entered into and to be performed within Pennsylvania.

18. Definition of Change in Control. For purposes of this Agreement, “Change in Control” means the occurrence of any of the following events:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under theExchange Act) of 20% or more of either (1) the then-outstanding shares of common stock of the Company (the “Outstanding CompanyCommon Stock”) or (2) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally inthe election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section (a), thefollowing acquisitions shall not constitute a

14


Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by anyemployee benefit plan (or related trust) sponsored or maintained by the Company or any company controlled by, controlling or undercommon control with the Company, or (D) any acquisition by any entity pursuant to a transaction that complies with Sections (c)(1), (c)(2)and (c)(3) of this definition;

(b) Individuals who, as of September 6, 2001, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute atleast a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whoseelection, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors thencomprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, forthis purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respectto the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other thanthe Board of Directors;

(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving theCompany or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition ofassets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, followingsuch Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the OutstandingCompany Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficiallyown, directly or indirectly, more than 60% of the then-outstanding shares of common stock and the combined voting power of thethen-outstanding

15


voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such BusinessCombination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially allof the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownershipimmediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company VotingSecurities, as the case may be, (2) no Person (excluding any corporation resulting from such Business Combination or any employee benefitplan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly orindirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such BusinessCombination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that suchownership existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors of the corporationresulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or ofthe action of the Board of Directors providing for such Business Combination; or

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

ACCEPTED AND AGREED TO:

INDEMNITEE: SUNOCO, INC.

By: (signature) Printed Name:

Title: (name)

(address)

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Exhibit 10.11

Amended Schedule to the Forms ofIndemnification Agreement

Sunoco, Inc. has entered into Indemnification Agreements with the directors, executive officers, trustees, fiduciaries, employees or agents named below:

Employee Date of Agreement

Michael J. Colavita September 2, 2004John F. Carroll March 4, 2004Terence P. Delaney March 4, 2004John G. Drosdick March 4, 2004Bruce G. Fischer March 4, 2004Michael J. Hennigan February 2, 2006Thomas W. Hofmann March 4, 2004Vincent J. Kelley February 2, 2006Joseph P. Krott March 4, 2004Michael S. Kuritzkes March 4, 2004Michael J. McGoldrick March 4, 2004Ann C. Mulé March 4, 2004Paul A. Mulholland March 4, 2004Rolf D. Naku March 4, 2004Marie A. Natoli March 3, 2006Robert W. Owens March 4, 2004Alan J. Rothman March 4, 2004Michael J. Thomson May 30, 2008Charles K. Valutas March 4, 2004

Robert M. Aiken, Jr.* February 1, 1996Robert H. Campbell* February 1, 1996Michael H. R. Dingus* March 4, 2004Jack L. Foltz* February 1, 1996David E. Knoll* February 1, 1996Deborah M. Fretz* September 6, 2001Joel H. Maness* March 4, 2004Malcolm I. Ruddock, Jr.* February 1, 1996David C. Shanks* February 17, 1997Sheldon L. Thompson* February 1, 1996Ross S. Tippin, Jr.* March 4, 2004

* In a different position or no longer with the Company.


Director Date of Agreement

Robert J. Darnall March 4, 2004Gary W. Edwards May 1, 2008Ursula O. Fairbairn March 4, 2004Thomas P. Gerrity March 4, 2004Rosemarie B. Greco March 4, 2004John P. Jones, III September 8, 2006James G. Kaiser March 4, 2004R. Anderson Pew March 4, 2004G. Jackson Ratcliffe March 4, 2004John W. Rowe March 4, 2004John K. Wulff March 8, 2004

Raymond E. Cartledge** September 6, 2001Robert E. Cawthorn** February 1, 1996Mary J. Evans** September 6, 2001Robert D. Kennedy** September 6, 2001Richard H. Lenny** February 8, 2002Norman S. Matthews** September 6, 2001William B. Pounds** February 1, 1996

**No longer serving on the Board.

2


Exhibit 10.12

DIRECTORS’DEFERRED COMPENSATION AND BENEFITS

TRUST AGREEMENT

by and among

SUNOCO, INC.,

MELLON TRUST OF NEW ENGLAND, N.A.

and

TOWERS, PERRIN, FORSTER & CROSBY, INC.

Amended and Restated Effective as of November 1, 2007


TABLE OF CONTENTS

ARTICLE I Definitions 2

1.1 Account 21.2 Benefits Fund 21.3 Benefits Fund Amount 21.4 Board of Directors 21.5 Change in Control 21.6 Chief Executive Officer 41.7 CIC Date 41.8 Committee 41.9 Company 41.10 ERISA 41.11 Exchange Act 41.12 Group 41.13 Incumbent Board 41.14 Insolvent or Insolvency 41.15 Legal Defense Fund 41.16 Legal Defense Fund Amount 41.17 Payment Schedule 41.18 Plan 41.19 Plan Participant 51.20 Potential Change in Control 51.21 Recordkeeper 51.22 Required Funding Amount 51.23 Trust 61.24 Trust Agreement 61.25 Trust Corpus 61.26 Trustee 6

ARTICLE II The Plans 6

2.1 Plans & Agreements Subject to Trust 62.2 Liability for Payments 6

ARTICLE III Establishment of Trust 6

3.1 Principal of Trust 63.2 Term and Revocability 73.3 Grantor Trust 73.4 Segregation of Funds; Rights of Creditors 7

ARTICLE IV Administration of Trust 7

4.1 Authority and Duties of the Committee 74.2 Action by the Committee 84.3 Records, Reporting and Disclosure 84.4 Bonding 9

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ARTICLE V Potential Change in Control; Change in Control 9

5.1 Potential Change in Control 95.2 Change in Control 9

5.3 Method of Funding 95.4 Additional Contributions; Sufficiency of Funds 105.5 Additional Plans 105.6 Calculation of Required Funding Amount 105.7 Payment of Required Funding Amount 115.8 Sunset Provision 12

ARTICLE VI Legal Defense Fund 12

6.1 Legal Defense Fund 126.2 Trustee’s Duties 126.3 Claims 136.4 Insufficient Funds 13

ARTICLE VII The Benefits Fund 14

7.1 Benefits Fund 147.2 Company Information 147.3 Payment Schedule 157.4 Entitlement to Benefits 157.5 Payment of Benefits 157.6 Notice of Benefits Payable 167.7 Source of Payments 167.8 Tax on Amounts Held in Trust Prior to Distribution 17

ARTICLE VIII Investment Authority 17

8.1 Investment Authority of Trustee 178.2 Trustee’s Powers and Duties 188.3 Investment of Trust Income 218.4 Contractual Settlement and Income; Market Practice Settlements 218.5 Losses Charged Against Trust Corpus 22

ARTICLE IX Payments to Trust Beneficiary When Company Is Insolvent 22

9.1 Responsibilities of Trustee in Insolvency 229.2 Resumption of Discontinued Payments 23

ARTICLE X Payments to the Company 23

10.1 Reversion of Funds to Company 2310.2 Limitation Upon Company’s Ability to Direct Payments 2410.3 Limitation on Reversion of Legal Defense Fund Amount 24

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ARTICLE XI Powers, Duties & Responsibilities of Trustee 24

11.1 Limitation of Liability 2411.2 Maintenance of Administrative Records 2511.3 Trustee Compensation and Reimbursement of Costs & Expenses 2511.4 Indemnification of Trustee by Company 2611.5 Powers of Trustee 2611.6 Responsibility of Trustee 27

ARTICLE XII Resignation and Removal of Trustee 28

12.1 Resignation of Trustee 2812.2 Removal and Substitution of Trustee 2812.3 Appointment of Successor Trustee 2812.4 Failure to Appoint Successor Trustee 2912.5 Statements of Account Upon Removal or Resignation 2912.6 Transfer of Trust Corpus to Successor Trustee 30

ARTICLE XIII The Recordkeeper 30

13.1 Appointment of Recordkeeper 3013.2 Maintenance of Records 3013.3 Indemnification of Recordkeeper by Company 3013.4 Resignation, Discharge & Replacement of Recordkeeper 31

ARTICLE XIV Authorization 31

14.1 Actions by Board of Directors; Committee 3114.2 Actions by Chief Executive Officer; Treasurer 3214.3 Other Actions of Company 3214.4 Actions by the Committee 3214.5 Authorized Parties 32

ARTICLE XV Notices 33

15.1 Notices 33

ARTICLE XVI Miscellaneous 34

16.1 No Contract of Employment 3416.2 Rights of Plan Participants 3416.3 Amendment or Waiver 3416.4 Severability of Provisions 3516.5 Non-Alienability of Benefits 3516.6 Further Assurances 3516.7 Successors, Heirs, Assigns, and Personal Representatives 3516.8 Headings and Captions 3516.9 Gender and Number 36

16.10 Payments to Incompetent Persons, Etc. 36

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16.11 Governing Law; Situs of Trust 3616.12 Counterparts 3616.13 Acceptance by Trustee 3616.14 Insurance Policies 3616.15 Survival 3616.16 Entire Understanding 3716.17 Reliance on Representations 37

Schedules:

Schedule 2.1 - Benefit Plans and Other Arrangements Subject to Trust 39Schedule 16.17 - Customer Identification Program Notice 40

iv


DIRECTORS’ DEFERRED COMPENSATION AND BENEFITSTRUST AGREEMENT

This Directors’ Deferred Compensation and Benefits Trust Agreement, Amended and Restated effective as of November 1, 2007, (the “Trust Agreement”), is byand among SUNOCO, INC., a Pennsylvania corporation (the “Company”), MELLON TRUST OF NEW ENGLAND, N.A., a national association (the“Trustee”), and TOWERS PERRIN, FORSTER & CROSBY, INC., a Pennsylvania corporation (the “Recordkeeper”).

W I T N E S S E T H

WHEREAS, the Company is or may become obligated under the terms of certain benefit plans, agreements, or other arrangements, to make payments tocertain persons who at any time prior to the occurrence of a Change in Control of the Company were members of the Company’s Board of Directors (the “PlanParticipants”), and their beneficiaries; and

WHEREAS, in order to: (1) provide an alternative source of funds to assist the Company in meeting its liabilities under the applicable director benefitplans, agreements, or other arrangements; and (2) assure that future payment of such amounts would not be improperly withheld in the event of a Change inControl of the Company, the Company has established a Trust (the “Trust”) and contributes certain assets held therein, subject to the claims of the Company’screditors in the event of the Company’s Insolvency until paid to Plan Participants and their beneficiaries in the manner and at the times specified in the applicabledirector benefit plans, agreements, or other arrangements; and

WHEREAS, Bankers Trust Company has resigned as trustee; and

WHEREAS, Mellon Trust of New England, N.A. has been appointed as Trustee in its stead, and is willing to act as Trustee of the Trust, upon all of theterms and conditions hereinafter set forth.

NOW THEREFORE, in consideration of the mutual terms, covenants, and conditions herein contained, the mutual benefits to be derived hereunder, andother good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the parties hereto agree asfollows:

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ARTICLE I

Definitions

As used in this Trust Agreement, the following terms shall have the meanings herein specified:

1.1 Account - shall have the meaning provided herein at Section 5.7(c).

1.2 Benefits Fund - shall mean that portion of the Trust Corpus that is not in the Legal Defense Fund.

1.3 Benefits Fund Amount - shall have the meaning provided herein at Section 1.22(a).

1.4 Board of Directors - shall mean the Board of Directors of Sunoco, Inc., or any successor thereto.


(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) ofbeneficial ownership (within the meaning of Rule 13d 3 promulgated under the Exchange Act) of 20% or more of either (1) the then-outstanding shares ofcommon stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then-outstanding voting securitiesof the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, forpurposes of this Section (a), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) anyacquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any companycontrolled by, controlling or under common control with the Company, or (D) any acquisition by any entity pursuant to a transaction that complies withSections (c)(1), (c)(2) and (c)(3) of this definition;

(b) Individuals who, as of September 6, 2001, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least amajority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nominationfor election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall beconsidered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such

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individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal ofdirectors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors;

(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company orany of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of anotherentity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (1) all orsubstantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding CompanyVoting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding sharesof common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the casemay be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction,owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the sameproportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the OutstandingCompany Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Business Combination or any employeebenefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly,20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combinedvoting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the BusinessCombination, and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination weremembers of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board of Directors providing for suchBusiness Combination; or


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1.6 Chief Executive Officer - shall mean the Chief Executive Officer of Sunoco, Inc. as of the date of reference.

1.7 CIC Date - shall have the meaning provided herein at Section 5.2.

1.8 Committee - shall mean the Governance Committee (or any successor thereof) of the Board of Directors of Sunoco, Inc.; provided, that upon theoccurrence of any Change in Control, the membership of the Committee shall become fixed as the members in office at the time of the Change in Control, andshall remain unchanged for the duration of this Trust Agreement; and provided, further, that in the event one or more members of the Committee resigns orotherwise terminates his or her membership in the Committee after a Change in Control, the remaining members of the Committee shall appoint a replacement bysimple majority vote.

1.9 Company - shall have the meaning set forth in the introduction to this Trust Agreement.

1.10 ERISA - shall have the meaning set forth in the introduction to this Trust Agreement.


1.12 Group - shall mean persons who act in concert as described in Sections 13(d)(3) and/or 14(d)(2) of the Exchange Act.


1.14 Insolvent or Insolvency - shall mean, with respect to the Company, that either:

(a) the Company is unable to pay its debts as they become due; or

(b) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

1.15 Legal Defense Fund - shall have the meaning provided herein at Section 6.1.

1.16 Legal Defense Fund Amount - shall mean an amount equal to the greater of ten percent (10%) of the Benefits Fund Amount and $5,000,000.

1.17 Payment Schedule - shall have the meaning provided herein at Section 7.3.


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1.19 Plan Participant - shall have the meaning set forth in the introduction to this Trust Agreement.

1.20 Potential Change in Control - shall mean the occurrence of any of the following events or transactions:

(a) any person (other than Sunoco, Inc., or any affiliate or subsidiary thereof) makes a tender offer for capital stock of Sunoco, Inc.;

(b) any person:

(1) becomes the beneficial owner, directly or indirectly, of capital stock of Sunoco, Inc. in an amount which requires the filing of Schedule13D or its equivalent form pursuant to the Rules and Regulations under the Exchange Act; and

(2) indicates in such Schedule 13D or equivalent filing that the purpose of such capital stock acquisition is part of a plan or proposal thatreasonably could lead to a Change in Control of Sunoco, Inc.;

(c) the submission of a nominee or nominees for the position of director of Sunoco, Inc. by a shareholder or Group of shareholders in a proxysolicitation or otherwise which, in its judgment, the Board of Directors by subsequent adoption of a resolution, determines might result in a Change inControl of Sunoco, Inc.;

(d) any person files a pre-merger notification for the acquisition of capital stock of Sunoco, Inc. pursuant to the Hart-Scott-Rodino Act; or

(e) the Board of Directors in its judgment determines by adoption of a resolution that a Potential Change in Control of Sunoco, Inc. for purposes ofthis Trust Agreement has occurred.

1.21 Recordkeeper - shall have the meaning set forth in the introduction to this Trust Agreement.

1.22 Required Funding Amount - shall mean the aggregate of the amounts described in the following subparagraphs (a) and (b) of this Section 1.22:

(a) an amount sufficient to provide all benefits accrued for each Plan Participant (and any beneficiaries) under the Plans (including any interest orearnings due on such accrual) through the date of the contribution, to the extent not previously contributed; and

(b) the Legal Defense Fund Amount.

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1.23 Trust - shall have the meaning set forth in the introduction to this Trust Agreement.

1.24 Trust Agreement - shall have the meaning set forth in the introduction to this Trust Agreement.

1.25 Trust Corpus - shall mean the amounts delivered to the Trustee pursuant to the terms hereof, less amounts distributed from the Trust pursuant to theterms hereof, plus all income earned by the Trust, in whatever form held or invested as provided herein.

1.26 Trustee - shall have the meaning set forth in the introduction to this Trust Agreement.

ARTICLE II

The Plans

2.1 Plans & Agreements Subject to Trust. The plans, agreements, and other arrangements that are subject to this Trust (each a “Plan” and, collectively the“Plans”) are listed on Schedule 2.1 hereto. Prior to a Change in Control, the Committee may from time to time designate such additional plans, agreements, andother arrangements to be subject to this Trust, or delete any Plan from this Trust. The Company shall immediately notify the Trustee and the Recordkeeper inwriting of any such changes. No Plans may be added or deleted from this Trust at any time after a Change in Control.

2.2 Liability for Payments. The Company shall continue to be liable to the Plan Participants to make all payments required under the terms of the Plans tothe extent such payments have not been made pursuant to this Trust Agreement. Distributions made from the Trust to or for Plan Participants in respect of thePlans pursuant to Article VII hereof, shall, to the extent of such distributions, satisfy the Company’s (or certain of its subsidiaries’) obligation to pay benefits tosuch Plan Participants under the Plans.

ARTICLE III

Establishment of Trust

3.1 Principal of Trust. The Trustee shall hold such sums of money and other property as from time to time deposited by the Company and accepted by theTrustee in trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement.

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3.2 Term and Revocability. The Trust hereby established is revocable by the Company but shall become irrevocable upon the occurrence of a Change inControl. At any time prior to a Change in Control, this Trust may be terminated by the Committee. Upon or after a Change in Control, this Trust shall notterminate until the date on which Plan Participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plans. Upon terminationof the Trust any assets remaining in the Trust shall be returned to the Company.

3.3 Grantor Trust. The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part I, subchapter J,chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. The Company represents and warrants to the Trusteethat the Plans for which benefits are or may become payable under this Trust are not subject to Part 4 of Title I of ERISA. The Company shall indemnify andhold harmless the Trustee, its parent, subsidiaries and affiliates and each of their respective officers, directors, employees and agents from and against allliability, loss and expense, including reasonable attorneys’ fees and expenses suffered or incurred by any of the foregoing indemnitees as a result of a breach ofthe foregoing representation and warranty. The provisions of this subsection shall survive termination of this Agreement.

3.4 Segregation of Funds; Rights of Creditors. The principal of the Trust, and any earnings thereon shall be separate and apart from other funds of theCompany and shall be used exclusively for the uses and purposes of Plan Participants and general creditors as herein set forth. Plan Participants and theirbeneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trustshall be mere unsecured contractual rights of Plan Participants and their beneficiaries against the Company. Any assets held by the Trust will be subject to theclaims of the Company’s general creditors under federal and state law in the event of Insolvency.

ARTICLE IV

Administration of Trust

4.1 Authority and Duties of the Committee. It shall be the duty of the Committee, on the basis of information supplied to it by the Company, to determine:

(a) the eligibility of each Plan Participant to receive payment of benefits under this Trust with respect to each Plan; and

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(b) the manner and time of payment of the benefits payable hereunder.

The Recordkeeper shall determine, on behalf of the Committee, the amount of any benefit payable under this Trust to which each Plan Participant may beentitled.

The Trustee, on behalf of the Company, shall make such payments as the Committee instructs the Trustee to pay, to Plan Participants from the BenefitsFund, as provided in Article VII. The Committee shall have the full power and authority to manage claims and appeals as set forth in the respective Plan, and toconstrue, interpret and administer such Plan in accordance with its terms and provisions.

4.2 Action by the Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business at a meeting of theCommittee. Any action of the Committee may be taken upon the affirmative vote of a majority of the members of the Committee at a meeting, or without ameeting by mail, telegraph, telephone or electronic communication device; provided, however, that all of the members of the Committee are informed of theirright to vote on the matter before the Committee and of the outcome of the vote thereon.

4.3 Records, Reporting and Disclosure. The Committee shall keep all individual and group records relating to Plan Participants and former PlanParticipants and all other records necessary for the proper administration and operation of the Trust. Such records shall be made available to the Company and toeach Plan Participant for examination during business hours except that a Plan Participant shall examine only such records as pertain exclusively to theexamining Plan Participant and to the Plan, in general. The Committee shall prepare and shall file as required by law or regulation all reports, forms, documentsand other items required by the Internal Revenue Code, and every other applicable statute, each as amended, and all regulations thereunder (except that theCompany, as payer of the benefits, shall prepare and distribute to the proper recipients all forms relating to withholding of income or wage taxes, Social Securitytaxes, and other amounts which may be similarly reportable).

All income, deductions and credits attributable to the Trust belong to the Company and will be included on the Company’s income tax returns. TheCompany shall pay any federal, state, local, or other taxes imposed or levied with respect to the assets and/or income of the Trust or any part thereof underexisting or future laws. Upon furnishing the Trustee with evidence reasonably required by the Trustee of any such tax payments made directly by the Company,the Company shall be entitled to receive reimbursement from the assets of the Trust for the full amount of such taxes paid by it.

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4.4 Bonding. The Committee shall arrange any bonding that may be required by law, but no amount in excess of the amount required by law (if any) shallbe required by the Trust.

ARTICLE V

Potential Change in Control; Change in Control

5.1 Potential Change in Control. If a Potential Change in Control occurs, the Company shall immediately notify the Trustee and Recordkeeper and shallcause the Required Funding Amount to be remitted to the Trustee as a contribution to the Trust. The Required Funding Amount shall be paid to the Trust notlater than thirty (30) days after the Potential Change in Control.

5.2 Change in Control. Whenever a Change in Control is expected to occur, if the date it will occur (the “CIC Date”) is reasonably ascertainable, then(i) the Company shall notify the Trustee and the Recordkeeper of the CIC Date, (ii) the Required Funding Amount shall be determined as of the CIC Date, and(iii) to the extent that the amount then held in the Benefits Fund and Legal Defense Fund is less than the Benefits Fund Amount or Legal Defense Fund Amount,respectively, the Company shall cause the amount of the shortfall to be remitted to the Trustee as an irrevocable contribution to the Trust not later than one(1) business day before the CIC Date. If a Change in Control occurs, the Company shall immediately notify the Trustee and Recordkeeper. In addition, theRequired Funding Amount shall be determined as of the actual date of the Change in Control and, to the extent that the amount then held in the Trust Corpus(other than the Legal Defense Fund) is less than the Required Funding Amount, the Company shall immediately cause the amount of the shortfall to be remittedto the Trustee, as an irrevocable contribution to the Trust, not later than one (1) business day after the Change in Control. The Trustee may rely conclusively on anotice from the Company that a Change of Control has occurred, and the Trustee shall be fully protected in failing to act in the absence of such notice from theCompany.

5.3 Method of Funding. The contribution of the Required Funding Amount shall be made in (1) cash or in property acceptable to the Trustee having a fairmarket value equal to the Required Funding Amount, or in a combination of the two and/or (2) a standby, irrevocable (except as provided in Section 9.1) letter ofcredit, drawn on a bank acceptable to the Trustee, provided that the fair market value of the contribution in the aggregate shall equal the Required FundingAmount.

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5.4 Additional Contributions; Sufficiency of Funds. The Company shall be obligated to continue to cause additional contributions (or increases to theamount that may be drawn against the letter of credit) to be made as may be necessary from time to time to insure that at all times following a Change in Controlthe Trust contains sufficient funds, on a current basis, to pay all benefits due to the Plan Participants (or their designated beneficiaries) under the Plans, togetherwith all reasonably anticipated claims against the Legal Defense Fund. The Trustee shall be under no duty to determine the sufficiency, or to enforce the making,of such contributions by the Company.

5.5 Additional Plans. In the event the Committee designates additional Plans that are subject to this Trust Agreement, or the Plans subject to this TrustAgreement are amended, after a Potential Change in Control or Change in Control, the Treasurer of the Company shall, unless the Trust Corpus shall theretoforehave been released pursuant to Section 9.1 hereof, recalculate the Benefits Fund Amount. If the amount so calculated exceeds the fair market value of the assetsthen held in trust in the Benefits Fund, the Company shall promptly (and in no event later than thirty (30) days from the date of such recalculation):

(a) pay to the Trustee an amount of cash (or property acceptable to the Trustee having a fair market value equal to such amount, or somecombination thereof) equal to such excess; or

(b) increase the amount that may be drawn against the letter of credit described in Section 5.3, above, to cover such excess.

If the Benefits Fund Amount so calculated is less than the fair market value of the assets held in trust, the Trustee shall retain such difference.

5.6 Calculation of Required Funding Amount. As soon as practicable, but in no event later than fifteen (15) days following the occurrence of any PotentialChange in Control, the Treasurer of the Company shall compute the Required Funding Amount. Immediately thereafter, the Recordkeeper shall review theTreasurer’s calculations of the Required Funding Amount (including without limitation the calculations under Section 5.5 hereof). The Recordkeeper shallcomplete its review prior to the thirtieth (30th) day following any Potential Change in Control. If the Recordkeeper concludes that the amounts calculated by theTreasurer are not sufficient to permit the Trustee to make all

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payments due or to become due under the Plans, together with the fees and expenses described in Sections 6.2 and 6.3 below, the Treasurer shall increase theRequired Funding Amount to the amount so calculated by the Recordkeeper. The Company agrees not to challenge the calculations of the Treasurer, and both theCompany and the Treasurer agree not to challenge the calculations of the Recordkeeper, and the Trustee shall have no right or obligation to challenge or questionsuch calculation with regard to the Required Funding Amount (including, without limitation, the amount determined under Section 5.5 hereof) upon and after aPotential Change in Control or Change in Control. No Plan Participant shall have the right to challenge the calculations of either the Treasurer or theRecordkeeper with respect to the Required Funding Amount.

5.7 Payment of Required Funding Amount.

(a) Interest on Delinquent Payments. The Company agrees to pay interest on any delinquent payment of the Required Funding Amount from the dateon which such payment is required to be made pursuant to this Article V, based upon the daily average of the prime rate charged by Trustee, during theperiod of such deficiency.

(b) Discount Rate for Distributions Due Later. In determining the Required Funding Amount with respect to any payment or series of paymentsexpected to be due more than one (1) year after the date as of which the Required Funding Amount is to be determined, the present value of such paymentor series of payments shall be calculated by using a discount rate equal to one percentage point less than the then lowest annual yield to maturity on UnitedStates Treasury obligations having then remaining maturities approximately equal to the maturity of the payment or payments being valued.

(c) Schedule of Accounts. Each payment by the Company pursuant to this Article V shall be accompanied by a schedule delivered to theRecordkeeper (as described in Section 7.3 hereof) of the individual Plans for whose accounts such payment is being made, which schedule sets forth theamounts delivered in respect of each of the Plans. The Recordkeeper shall maintain in an equitable manner an account for each Plan (the “Account”). EachAccount shall consist of contributions to and payments from the Benefits Fund which are allocable to the Plan, and earnings thereon, less disbursementstherefrom attributable to the interest of the Plan in the entire Benefits Fund. On a monthly basis, the Trustee shall advise the Recordkeeper in writingregarding the actual amounts received by the Trust from the Company, and paid out from the Trust, in respect of each of the Plans.

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5.8 Sunset Provision. Subject to Section 10.3, anything to the contrary in this Trust Agreement or the Plans notwithstanding, in the event of a PotentialChange in Control, the procedures, rules and responsibilities that apply under this Article V and under Sections 7.3, 8.5 and 11.2 hereof solely as a result of theoccurrence of such Potential Change in Control shall cease to apply six (6) months after delivery of the Required Funding Amount to the Trustee if no Change inControl shall have occurred during such six-month period, and the Board of Directors determines, and so certifies to the Trustee, that a Change in Control is notimminent, pending, or reasonably expected to occur (or upon such certification by the Board of Directors acting unanimously before the expiration of suchsix-month period), or upon the earlier termination of this Trust in a manner consistent with Section 3.2 hereof. Such new six-month period shall commence in theevent of and upon the date of any subsequent Potential Change in Control.

ARTICLE VI

Legal Defense Fund

6.1 Legal Defense Fund. The Trustee shall establish within the Trust a separate fund, hereinafter referred to as the Legal Defense Fund. The Legal DefenseFund shall consist of the portion of the Company’s contributions to the Trust that represent the Legal Defense Fund Amount, or are otherwise designated for theLegal Defense Fund in writing at the time of contribution, together with all income, gains and losses and proceeds from the investment, reinvestment and salethereof, less all payments therefrom and expenses charged thereto in accordance with the provisions of this Article. The Legal Defense Fund shall be held andadministered by the Trustee for the purpose of defraying the costs and expenses incurred by Participants and beneficiaries associated with the enforcement oftheir rights under the Plans by litigation or other legal action and the Trustee in performing its duties under this Article. The Legal Defense Fund shall bemaintained and administered as a separate segregated account, provided, however, that the assets of the Legal Defense Fund may be commingled with all otherassets of the Trust solely for investment purposes.

6.2 Trustee’s Duties. If, at any time after a Change in Control or during a Potential Change in Control, legal proceedings are brought against the Trustee bythe Company or any other party seeking to invalidate any of the provisions of this Trust Agreement as they relate to the Trust, or seeking to enjoin the Trusteefrom paying any amounts from any Trust or from taking any other action otherwise required or permitted

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to be taken by the Trustee under this Trust Agreement with respect to any Plan, the Trustee shall take all steps that may be necessary in such proceeding touphold the validity and enforceability of the provisions of this Trust Agreement as they relate to such Plan. The Trustee shall be empowered to retain counsel andother appropriate experts, including actuaries, and accountants, to assist it in making any determination under this Section. All costs and expenses incurred by theTrustee in connection with any such proceeding (including, without limitation, the payment of reasonable fees, costs and disbursements of any counsel, actuaries,accountants or other experts retained by the Trustee in connection with such proceeding) shall be charged to and paid from the Legal Defense Fund. To the extentthe Trustee’s legal fees and expenses exceed the amount available in the Legal Defense Fund and the Company does not pay them upon demand by the Trustee,such fees and expenses shall be paid by the Trustee from the assets of the Trust Corpus.

6.3 Claims. If, at any time after a Change in Control, a Plan Participant or beneficiary notifies the Trustee in writing that the Company has refused to pay aclaim asserted by such Plan Participant or beneficiary under any Plan, the Plan Participant or beneficiary (“Claimant”) may demand payment from the LegalDefense Fund with respect to expenses incurred in connection with the initiation or defense of any litigation or other legal action by or against the Company orany director, officer, stockholder or other person affiliated with the Company, with respect to such claim. Such demand shall be made in writing by delivering tothe Trustee within 90 days of the date the Claimant incurs such expenses (i) a certification signed by the Claimant that the Company is in default in paying itsobligations under the Plan, and (ii) itemizing in reasonable detail in a form acceptable to the Trustee the expenses payable by the Legal Defense Fund.

6.4 Insufficient Funds. In the event that on the date a Claimant’s expenses are to be paid from the Legal Defense Fund other expenses have been claimedbut not yet paid and the aggregate amount of all claims exceeds the amount available in the Legal Defense Fund, the Company shall be obligated to make anadditional contribution to the Legal Defense Fund. In the event the Company fails to make such additional contribution, the Trustee shall promptly advise theClaimant and shall pay only that portion of the amount of the claim to each Claimant determined by multiplying such Claimant’s expenses by a fraction thenumerator of which is the amount held in the Legal Defense Fund, and the denominator of which is the amount of the aggregate expenses claimed by allClaimants. Notwithstanding any provision herein to the contrary, the Trustee shall be required to act under this Section only to the extent there are sufficientamounts available in the Legal Defense Fund to defray the costs and expenses the Trustee reasonably anticipates will be incurred in connection with such action.

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ARTICLE VII

The Benefits Fund

7.1 Benefits Fund. The Trustee shall establish within the Trust a separate fund, hereinafter referred to as the “Benefits Fund”. The Benefits Fund shallconsist of the portion of the Company’s contributions to the Trust that represent the Benefit Amount, or are otherwise designated for the Benefits Fund in writingat the time of contribution, together with all income, gains and losses and proceeds from the investment, reinvestment and sale thereof, less all paymentstherefrom and expenses charged thereto in accordance with the provisions of this Article VII. The Benefits Fund shall be held and administered by the Trusteefor the purpose of paying Plan Participants benefits under the Plans in accordance with the provisions of this Article VII.

7.2 Company Information. As soon as practicable, but in no event later than thirty (30) days following the establishment of this Trust, the Recordkeepershall identify to the Company in writing the information deemed necessary to enable the Recordkeeper to determine the amount of benefits payable to or withrespect to each Plan Participant in each Plan, including any benefits payable after the Plan Participant’s death, and the recipient. The Company shall furnish theinformation needed by the Recordkeeper in order to determine the amount of any such benefit, and shall deliver to the Recordkeeper a letter of instructions:

(a) describing the terms of each Plan;

(b) enclosing a copy of each Plan;

(c) listing the names, addresses, and Hay points or grade levels under the salary administration program then in effect, for the Plan Participants (andbeneficiaries) covered by each Plan;

(d) setting forth the timing, form of distributions, and formula or other methodology for determining the amounts to be paid to each Plan Participantand beneficiary under each Plan; and

(e) instructing the Recordkeeper how and from whom to get any other information needed to compute benefits under each Plan.

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The Company shall regularly, at least annually, furnish revised, up-dated information to the Recordkeeper. In the event the Company refuses or neglects toprovide updated Plan Participant information, as contemplated herein, the Recordkeeper shall be entitled to rely upon the most recent information furnished to itby the Company.

7.3 Payment Schedule. Within forty-five (45) days following a Change in Control or Potential Change in Control (or when the Company otherwise makescontributions to the Trust), the Recordkeeper, on behalf of the Company, shall deliver to the Trustee a schedule (the “Payment Schedule”) that indicates in thecase of all Plans, the amounts payable (including the fees and expenses incurred by the Plans) in respect of each Plan Participant (and his or her beneficiaries).The Payment Schedule shall be updated by the Recordkeeper as necessary, but on at least an annual basis, in order to reflect changes therein. Except as otherwiseprovided herein, the Trustee shall make payments to the Plan Participants and their beneficiaries in accordance with such Payment Schedule and shall pay suchfees and expenses, unless paid by the Company. The Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that maybe required to be withheld with respect to any payment of benefits from the Trust and shall pay amounts withheld to the appropriate taxing authorities except tothe extent that the Trustee shall have been previously advised in writing that such amounts have been reported, withheld and paid by the Company.

7.4 Entitlement to Benefits. The entitlement of a Plan Participant or his or her beneficiaries to benefits under the Plans shall be determined promptly by theCommittee, and any claim for such benefits shall be considered and reviewed by the Committee under the procedures set out in the Plans. As soon as isreasonably practicable following any such review or determination by the Committee, the Committee shall give notice of its findings to the Recordkeeper,together with updated information as needed, in order to permit the Recordkeeper to make a final determination of the benefits to be paid. Upon notice of suchfindings by the Committee, the Recordkeeper promptly will make a final determination of the amounts payable and will notify the Committee.

7.5 Payment of Benefits. The Company may make payment of benefits directly to Plan Participants or their beneficiaries as they become due under theterms of the Plans. The Company shall notify the Trustee and Recordkeeper of its decision to make payment of benefits directly within a reasonable time prior tothe time amounts are payable to Plan Participants or their beneficiaries. Within thirty (30) days of making any

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such direct payment, the Company shall provide the Trustee and the Recordkeeper with a certification, in a form acceptable to each, indicating the date andamount of such direct payment of benefits by the Company. The Trustee shall pay benefits to Plan Participants and beneficiaries at the time provided in thePayment Schedule, unless advised by the Company of its decision to pay the benefit. If after the Company has indicated its intention to pay a benefit, the Trusteedoes not receive certification of payment from the Company, as provided in this Section, the Trustee shall pay such benefit to the Plan Participant or beneficiaryin accordance with the Payment Schedule. The Trustee shall be completely protected in making any payment hereunder in accordance with the PaymentSchedule.

7.6 Notice of Benefits Payable. The Recordkeeper shall notify the Plan Participant or the beneficiary of a deceased Plan Participant that the PlanParticipant’s benefits under a Plan have become payable. Such notice shall include the amount of such benefits, the manner of payment (or, where appropriate,the various payment options available) and the name, address and social security number of the Plan Participant. Neither the Trustee nor the Recordkeeper shallhave any responsibility for determining whether any Plan Participant or beneficiary has become entitled to any benefit under any of the Plans, or whether anyPlan Participant or beneficiary has died, and each of the Trustee and the Recordkeeper shall be entitled to rely solely upon information furnished by theCommittee.

7.7 Source of Payments. All benefits payable from the Benefits Fund to a Plan Participant or his beneficiary under a Plan shall be paid solely from theAccount of such Plan. Upon the satisfaction of all liabilities under a Plan in respect of Plan Participants under a Plan, the Recordkeeper shall prepare and deliverto the Trustee a certification showing the balance, if any, remaining in the Account for such Plan. Such balance shall thereupon be reallocated ratably by theRecordkeeper to the Accounts of other Plans covered by this Trust (including Accounts which may have previously been reduced to a zero balance) in the ratiothat liabilities in respect of each such Plan bear to the total liabilities of all such Plans. Upon the satisfaction of all liabilities of the Company under all Plans, theRecordkeeper shall prepare and deliver a certification to the Trustee and the Trustee shall thereupon distribute the Trust Corpus to the Company.

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7.8 Tax on Amounts Held in Trust Prior to Distribution. Except as otherwise provided herein, in the event of any final determination by the InternalRevenue Service or a court of competent jurisdiction, which determination is not appealable or with respect to which the time for appeal has expired, or thereceipt by the Trustee of a substantially unqualified opinion of tax counsel selected by the Trustee, which determination determines, or which opinion opines, thatthe Plan Participants or any particular Plan Participant is subject to federal income taxation on amounts held in trust hereunder prior to the distribution to the PlanParticipants or Plan Participant of such amounts, the Trustee, on receipt by the Trustee of such opinion or notice of such determination, shall pay to each PlanParticipant the portion of the Trust Corpus includable in such Plan Participant’s federal gross income, less applicable taxes. The Trustee shall not be required toobtain such opinion of tax counsel unless the Internal Revenue Service, the Company, or the Recordkeeper suggests to the Trustee that any of the PlanParticipants may be subject to income taxation on amounts held in the Trust prior to a distribution hereunder and Trustee has doubts with respect thereto.

ARTICLE VIII

Investment Authority

8.1 Investment Authority of Trustee.

(a) Prior to a Change in Control: (1) the Company shall direct the Trustee, or appoint one or more investment managers from time to time to directthe Trustee, with respect to investment of the Trust Fund; (2) the Company and each investment manager shall designate in writing the persons who areauthorized to represent such party in dealing with the Trustee; (3) the Trustee shall have no investment duties for the Trust Fund; (4) the Trustee shall haveno duty to inquire whether investment directions received from the Company or an investment manager are in accordance with the Plan, or to review theassets purchased, retained or sold; and (5) the Trustee shall be fully indemnified by the Company for any action taken in accordance with, or any failure toact in the absence of, the Company’s or an investment manager’s directions.

(b) Upon and after a Change in Control: (1) the Trustee shall, subject to, and to the extent provided in this Section and Section 8.2 below, have andexercise sole investment discretion with respect to all of the Trust Corpus, and shall use its good faith efforts to invest or reinvest all or such part of theTrust Corpus as the Trustee believes prudent under the circumstances (taking into account, among other things, the anticipated cash requirements for thepayment of benefits under the Plans based on information received from the

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Recordkeeper) solely in: (A) direct obligations of the United States of America or agencies thereof, (B) obligations unconditionally and fully guaranteed asto principal and interest by the United States of America, or (C) any registered investment fund, including a fund for which the Trustee serves asinvestment manager and/or custodian, established and maintained as a vehicle for short term investment; and (2) with respect to such investments, theTrustee shall have the powers and duties set forth in Section 8.2 below, in addition to those conferred by law: provided, however, that the Trustee shall notbe liable for any loss of income due to liquidation of any investment which liquidation is necessaryto make payments or to reimburse expenses under the terms of this Trust Agreement.

8.2 Trustee’s Powers and Duties.

(a) The Trustee shall have the powers and duties provided in this Section 8.2, subject, prior to a Change in Control, to the direction of the Committeeand or investment managers appointed by the Committee in accordance with Section 8.1(a), provided, however, that in no event may the Trustee invest in(i) securities (including stock or rights to acquire stock) or obligations issued by the Company, other than a de minimis amount held in common investmentvehicles in which the Trustee invests, (ii) any asset settled or held in safekeeping outside of the United States, or (iii) real estate. For this purpose, “realestate” includes, but is not limited to, real property, leaseholds, mineral interests, and any form of asset which is secured by any of the foregoing. All rightsassociated with assets of the Trust Corpus shall be exercised by the Trustee or the person designated by the Trustee, and shall in no event be exercisable byor rest with the Plan Participants.

(b) To invest and reinvest the Trust Corpus, without distinction between principal and income, in any form of domestic property, whether or notproductive of income or consisting of wasting assets, provided that investments shall be so as to minimize the risk of large losses, unless under thecircumstances it is clearly prudent not to do so;

(c) To invest all or any part of the Trust Corpus in interests in registered investment companies, for which the Trustee or an affiliate of the Trusteereceives compensation for providing custodial, transfer agency, investment advisory or other services (the Company acknowledges that interests in suchinvestment companies are not bank deposits and are not insured by, guaranteed by, obligations of, or otherwise supported by the United States of America,the Federal Deposit Insurance Corporation, or any bank or government entity);

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(d) To sell, convey, redeem, exchange, grant options for the purchase or exchange of, or otherwise dispose of, any property, at public or private sale,for cash or upon credit, with or without security, without obligation on the part of any person dealing with the Trustee to see to the application of theproceeds of, or to inquire into the propriety of, any such disposition;

(e) To hold, purchase and maintain, as owner, life insurance policies as provided in Section 16.14 of this Trust Agreement;

(f) To exercise, personally or by general or limited proxy or power of attorney, all voting and other rights appurtenant to any investment held in theTrust Corpus and to delegate discretionary power to exercise all or any such rights to trustees of a voting trust for any period of time;

(g) To join in or oppose any reorganization, recapitalization, consolidation, merger or liquidation of any plan thereof, or any lease, mortgage or saleof the property of any organization the securities of which are held in the Trust Corpus; to pay from the Trust Corpus any assessments, charges orcompensation specified in any plan of reorganization, recapitalization, consolidation, merger or liquidation; to deposit any property with any committee ordepository; and to retain any property allotted to the Trust Corpus in any reorganization, recapitalization, consolidation, merger or liquidation;

(h) To exercise or sell, personally or by general or limited power of attorney, any conversion, subscription or other rights, including the right to vote,appurtenant to any investment held in the Trust Corpus;

(i) To borrow money for purposes of this Trust Agreement in any amount and upon any reasonable terms and conditions from any lender (includingthe Trustee in its individual capacity), and to pledge any property held in the Trust Corpus to secure the repayment of any such loan;

(j) To compromise, settle or arbitrate any claim, debt, or obligation of or against the Trust Corpus; to enforce or abstain from enforcing any right,claim, debt or obligation; and to abandon any property determined by it to be worthless;

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(k) To settle, compromise, or submit to arbitration any claims, debts, or damage due or owing to or from the Trust Corpus, to commence or defendsuits or legal or administrative proceedings, and to represent the Trust in all legal and administrative proceedings, provided, however, the Trustee shall notbe obligated to take any action or to appear and participate in any action that would subject it to expense or liability unless the Company agrees toindemnify the Trustee against the Trustee’s cost, expenses and liabilities (including without limitation, attorneys’ fees and expenses) relating thereto and tobe primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee mayobtain payments from the Trust Corpus;

(l) To engage any legal counsel, including counsel to the Company, any enrolled actuary, or any other suitable agents; to consult with such counsel,enrolled actuary, or agents with respect to the construction of this Trust Agreement, the duties of the Trustee hereunder, the transactions contemplated bythis Trust Agreement or any act which the Trustee proposes to take or omit; to rely upon the advice of such counsel, enrolled actuary or agents and to payfrom the Trust Corpus all reasonable fees, expenses and compensations of such counsel, actuary or agents;

(m) To organize and incorporate under the laws of any state one or more corporations (and to acquire an interest in any such corporation that it mayhave organized and incorporated) for the purpose of acquiring and holding title to any property, interest or rights that the Trustee is authorized to acquire;

(n) To appoint custodians, subcustodians or subtrustees (including affiliates of the Trustee), as to part or all of the Trust Corpus as necessary to fulfillits duties and responsibilities under this Trust Agreement. The Trustee shall not be responsible or liable for any losses or damages suffered by theCompany arising as a result of the insolvency of any custodian, subcustodian or subtrustee, except to the extent the Trustee was negligent in its selection orcontinued retention of such custodian, subcustodian or subtrustee. In no event shall the Trustee be liable for the acts or omissions of any custodian,subcustodian or subtrustee appointed pursuant to the direction of the Committee or an investment manager;

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(o) To hold property in nominee name, in bearer form, or in book entry form, in a clearinghouse corporation or in a depository (including an affiliateof the Trustee), so long as the Trustee’s records clearly indicate that the assets held are a part of the Trust Corpus. The Trustee shall not be responsible forany losses resulting from the deposit or maintenance of securities or other property (in accordance with market practice, custom, or regulation) with anyrecognized clearing facility, book-entry system, centralized custodial depository, or similar organization;

(p) To hold any part or all of the Trust Corpus uninvested;

(q) To take all action necessary to pay for authorized transactions, including borrowing or raising monies from any lender, including the Trustee, inits corporate capacity in conjunction with its duties under this Trust Agreement and upon such terms and conditions as the Trustee may deem advisable tosettle security purchases and/or foreign exchange or contracts for foreign exchange, and securing the repayments thereof by pledging all or any part of theAccount; and

(r) To do all acts, whether or not expressly authorized, which the Trustee may deem necessary or desirable for the protection of the Trust Corpus.

8.3 Investment of Trust Income. During the term of this Trust, income received by the Trust, net of expenses and taxes, shall be accumulated andreinvested.

8.4 Contractual Settlement and Income; Market Practice Settlements.

(a) In accordance with the Trustee’s standard operating procedure, the Trustee shall credit the Trust Corpus with income and maturity proceeds onsecurities, net of any taxes, on contractual payment date or upon actual receipt. To the extent the Trustee credits income on contractual payment date, theTrustee may reverse such accounting entries to the contractual payment date if the Trustee reasonably believes that such amount will not be received.

(b) In accordance with the Trustee’s standard operating procedure, the Trustee will attend to the settlement of securities transactions on the basis ofeither contractual settlement date accounting or actual settlement date accounting. To the extent the Trustee settles certain securities transactions on thebasis of contractual settlement date accounting, the Trustee may reverse to the contractual settlement date any entry relating to such contractual settlementif the Trustee reasonably believes that such amount will not be received.

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(c) Settlements of transactions may be effected in trading and processing practices customary in the jurisdiction or market where the transactionoccurs. The Company acknowledges that this may, in certain circumstances, require the delivery of cash or securities (or other property) without theconcurrent receipt of securities (or other property) or cash. In such circumstances, the Trustee shall have no responsibility for nonreceipt of payment (orlate payment) or nondelivery of securities or other property (or late delivery) by the counterparty.

8.5 Losses Charged Against Trust Corpus. All losses of income or principal in respect of, and expenses (including without limitation taxes and, asprovided in Article XI hereof, any expenses of the Trustee) charged against, the Trust Corpus shall be for the account of the Company and the Company shall beobligated to reimburse the Trust Corpus following a Potential Change in Control or a Change in Control for any loss in principal amount of, or expense chargedagainst, the Trust Corpus except to the extent that the fair market value of the Trust Corpus as of that date equals or exceeds the Required Funding Amount as ofthat date. The Trustee shall promptly notify the Company in writing of the amount of such reimbursement. The Company agrees that, upon receipt of such notice,it will deliver to the Trustee to be held in the Trust an amount in cash equal to any reimbursement amount specified by the Trustee, together with interest fromthe date of receipt of such notice based upon the daily average of the prime rate charged by the Trustee.

ARTICLE IX

Payments to Trust Beneficiary When Company Is Insolvent

9.1 Responsibilities of Trustee in Insolvency. At all times during the continuance of this Trust as provided in Section 3.2 hereof, the principal and incomeof the Trust shall be subject to claims of general creditors of Company under federal and state law, as set forth below:

(a) The Board of Directors and the Chief Executive Officer of the Company shall have the duty to immediately inform the Trustee in writing of theCompany’s Insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, theTrustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment of benefits to PlanParticipants or their beneficiaries.

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(b) Unless the Trustee has actual knowledge of the Company’s Insolvency, or has received notice from the Company or a person claiming to be acreditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. In all cases, the Trustee shallbe entitled to conclusively rely upon the written certification of the Board of Directors or the Chief Executive Officer of the Company when determiningwhether the Company is insolvent.

(c) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to Plan Participants or theirbeneficiaries and shall hold the assets of the Trust for the benefit of the Company’s general creditors. Nothing in this Trust Agreement shall in any waydiminish any rights of Plan Participants or their beneficiaries to pursue their rights as general creditors of the Company with respect to benefits due underthe Plans or otherwise.

(d) The Trustee shall resume the payments of benefits to Plan Participants or their beneficiaries in accordance with Article VII of this TrustAgreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent).

9.2 Resumption of Discontinued Payments. Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trustpursuant to Section 9.1 hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount ofall payments due to Plan Participants or their beneficiaries under the terms of the Plans for the period of such discontinuance, less the aggregate amount of anypayments made to Plan Participants or their beneficiaries by the Company in lieu of the payments provided for hereunder during any such period ofdiscontinuance.

ARTICLE X

Payments to the Company

10.1 Reversion of Funds to Company. Subject to Section 10.3, in the event the Company delivers the Required Funding Amount to the Trustee because ofa Potential Change in Control, the Trust Corpus shall be returned to the Company six (6) months after delivery of the Required Funding Amount to the Trustee ifno Change in Control shall have occurred during such six-month period, and the Board of Directors determines, and so certifies to the Trustee, that a Change inControl is not imminent, pending, or reasonably expected to occur (or upon such earlier certification by the Board of Directors acting unanimously), or upon theearlier termination of this Trust in a manner

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consistent with Section 3.2 hereof. Such six-month period shall recommence in the event of and upon the date of any subsequent Potential Change in Control. Ifanother Potential Change in Control should occur after the Trust Corpus has been returned to the Company as provided in this Section 10.1, the Company shalldeliver a new Required Funding Amount to the Trustee pursuant to Article V above. The Company shall notify the Trustee of the occurrence of a PotentialChange in Control and Change in Control and the Trustee may rely on such notice.

10.2 Limitation upon Company’s Ability to Direct Payments. After the Trust has become irrevocable, the Company shall have no right or power to directthe Trustee to return to the Company or to divert to others any of the Trust assets before all payments of benefits have been made to Plan Participants and theirbeneficiaries pursuant to the terms of the Plans.

10.3 Limitation on Reversion of Legal Defense Fund Amount. If the Trustee has knowledge of any legal claims that would entitle a Plan Participant toreimbursement of expenses under Article VI, or the Trustee reasonably believes that such claims are likely to be made, no part of the Legal Defense FundAmount shall be returned to the Company at a time that any such claim is pending or any expense associated with such claim has not been reimbursed. Inaddition, in no event shall the Legal Defense Fund Amount be returned to the Company earlier than the expiration of the six-month period described in the firstsentence of Section 10.1.

ARTICLE XI

Powers, Duties & Responsibilities of Trustee

11.1 Limitation of Liability. The duties and responsibilities of the Trustee shall be limited to those expressly set forth in this Trust Agreement, and noimplied covenants or obligations shall be read into this Trust Agreement against the Trustee. The Trustee shall not be liable for any act taken or omitted to betaken hereunder if taken or omitted to be taken by it in good faith. The Trustee shall also be fully protected in relying upon any notice given hereunder which it ingood faith believes to be genuine and executed and delivered in accordance with this Trust Agreement. The Trustee may consult with legal counsel to be selectedby it, and the Trustee shall not be liable for any action taken or suffered by it in good faith in accordance with the advice of such counsel.

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11.2 Maintenance of Administrative Records. The Trustee shall maintain such books, records and accounts as may be necessary for the properadministration of the Trust Corpus and shall render to the Company on a monthly basis commencing on the first day of the month following the date the TrustCorpus includes more than the initial deposit and earnings thereon, and for each month thereafter until the termination of the Trust (and as of the date of suchtermination), an accounting with respect to the Trust Corpus as of the end of such month (and as of the date of such termination). After a Change in Control or aPotential Change in Control has occurred, and once the Required Funding Amount has been contributed to the Trust, the Trustee shall also provide theRecordkeeper with a copy of such monthly accounting. Unless the Company shall have filed with the Trustee written exceptions or objections to any suchstatement and account within one hundred eighty (180) days after receipt thereof, the Company and all Plan Participants shall be deemed to have approved suchstatement and account, and in such case the Trustee shall be forever released and discharged with respect to all matters and things reported in such statement andaccount as though it had been settled by a decree of a court of competent jurisdiction in an action or proceeding to which the Company and all Plan Participantswere parties.

The Trustee shall have the right, at the expense of the Trust, to apply at any time to a court of competent jurisdiction for judicial settlement of any accountof the Trustee not previously settled as herein provided or for the determination of any question of construction or for instructions. In any such action orproceeding it shall be necessary to join as parties only the Trustee and the Company (although the Trustee may also join such Plan Participants as it may deemappropriate), and any judgment or decree entered therein shall be conclusive.

11.3 Trustee Compensation and Reimbursement of Costs & Expenses. The Company shall pay all administrative costs, and Trustee’s fees and expenses. Ifnot so paid, the fees and expenses shall be paid from the Trust Corpus, first from the Legal Defense Fund and then, if necessary, from the Benefit Fund. TheTrustee shall be entitled to fees for services and expenses as mutually agreed. The Company acknowledges that as part of the Trustee’s compensation, the Trusteemay earn interest on balances including disbursement balances and balances arising from purchase and sale transactions. If the Trustee advances cash orsecurities to the Trust for any purpose set forth in this Trust Agreement, any property at any time held as part of the Trust Corpus shall be security therefor andthe Trustee shall be entitled to collect from the Trust sufficient cash for reimbursement, and if such cash is insufficient, dispose of the assets of the Trust Corpusto the extent necessary to obtain reimbursement. To the

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extent the Trustee advances funds to the Trust for disbursements or to effect the settlement of purchase transactions, the Trustee shall be entitled to collect fromthe Trust reasonable charges established under the Trustee’s standard overdraft terms, conditions and procedures. After a Change in Control has occurred, thefees of the Trustee shall be determined by the application of the current rates then charged by the Trustee for the provision of the types of investment and Trusteeservices contemplated in this Trust Agreement to trusts of a similar character. The Trustee’s entitlement to reimbursement hereunder shall not be affected by theresignation or removal of the Trustee or the termination of the Trust.

11.4 Indemnification of Trustee by Company. The Company agrees to indemnify and hold harmless the Trustee, its parent, subsidiaries and affiliates, andeach of their respective officers, directors, employees and agents from and against any and all liabilities, damages, losses, claims or expenses as incurred by theTrustee or any of the foregoing indemnitees (including expenses of investigation and fees and disbursements of counsel to the Trustee and any taxes imposed onthe Trust Corpus or income of the Trust) arising out of or in connection with the performance by the Trustee of its duties hereunder. This indemnification shallsurvive the termination of this Trust Agreement. Any amount payable to the Trustee under this Section 11.4, and not previously paid by the Company shall bepaid by the Company promptly upon demand therefor by the Trustee or, if the Trustee so chooses in its sole discretion, from the Trust Corpus. In the event thatpayment is made hereunder to the Trustee from the Trust Corpus, the Trustee shall promptly notify the Company, in writing of the amount of such payment. TheCompany agrees that, upon receipt of such notice, it will deliver to the Trustee to be held in the Trust an amount in cash equal to any payments made from theTrust Corpus to the Trustee pursuant to this Section 11.4, together with interest from the date of receipt of such notice based upon the daily average of the primerate charged by the Trustee. The failure of the Company to transfer any such amount shall not in any way impair the Trustee’s right to indemnification,reimbursement and payment pursuant to Section 10.3 hereof, or pursuant to this Section 11.4.

11.5 Powers of Trustee. The Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly providedotherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust upon direction of the Company, the Trustee shall have no powerto name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy

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to a different form) other than to a successor trustee, or to loan to any person the proceeds of any borrowing against such policy. Notwithstanding any powersgranted to the Trustee pursuant to this Trust Agreement or applicable law, the Trustee shall not have any power that could give this Trust the objective ofcarrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgatedpursuant to the Internal Revenue Code.

11.6 Responsibility of Trustee.

(a) The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in likecapacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that theTrustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval which is contemplated by, and in conformitywith, the terms of this Trust Agreement.

(b) The Trustee is not a party to, and has no duties or responsibilities under, the Plans other than those that may be expressly contained in this TrustAgreement. In any case in which a provision of this Trust Agreement conflicts with any provision in the Plans, this Trust Agreement shall control.

(c) The Trustee shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered byit pursuant to this Trust Agreement and shall be held harmless in acting upon any notice, request, direction, instruction, consent, certification or otherinstrument believed by it to be genuine and delivered by the proper party or parties.

(d) Notwithstanding anything in this Trust Agreement to the contrary, the Trustee shall not be responsible or liable for its failure to perform underthis Trust Agreement or for any losses to the Trust resulting from any event beyond the reasonable control of the Trustee, its agents or custodians,including but not limited to nationalization, strikes, expropriation, devaluation, seizure, or similar action by any governmental authority, de facto or dejure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, levies orother charges affecting the Trust’s property; or the breakdown, failure or malfunction of any utilities or telecommunications systems; or any order orregulation of any banking or

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securities industry including changes in market rules and market conditions affecting the execution or settlement of transactions; or acts of war, terrorism,insurrection or revolution; or acts of God; or any other similar event. This Section shall survive the termination of this Trust Agreement.

(e) The Trustee shall not be liable for any act or omission of any other person in carrying out any responsibility imposed upon such person and underno circumstances shall the Trustee be liable for any indirect, consequential, or special damages with respect to its role as Trustee.

ARTICLE XII

Resignation and Removal of Trustee

12.1 Resignation of Trustee. The Trustee may resign at any time by written notice to the Company, which shall be effective sixty (60) days after receipt ofsuch notice unless the Company and Trustee agree otherwise. If a Change in Control shall previously have occurred, the Trustee shall give such resignationnotice, in writing, to the Company and the members of the Incumbent Board then serving on the Board of Directors, specifying a date (not less than sixty(60) days after the giving of such notice) when such resignation shall take effect.

12.2 Removal and Substitution of Trustee. The Company, or if a Change in Control shall previously have occurred, the members of the Incumbent Boardthen serving on the Board of Directors (or, if there are no members of the Incumbent Board then serving on the Board of Directors, then by affirmative vote of atleast three-fourths (3/4) of the then-current Board of Directors), may at any time remove the Trustee by giving written notice thereof to the Trustee, which shallbe effective sixty (60) days after receipt by the Trustee, unless the Trustee and the party removing the Trustee agree otherwise.

12.3 Appointment of Successor Trustee. Promptly after the giving of notice of resignation by the Trustee under Section 12.1 hereof, the Company, or if aChange in Control shall previously have occurred, the members of the Incumbent Board then serving on the Board of Directors (or, if there are no members ofthe Incumbent Board then serving on the Board of Directors, then by affirmative vote of at least three-fourths (3/4) of the then-current Board of Directors), shallappoint a successor trustee, such successor trustee to become Trustee hereunder upon the effective date specified in the Notice of Resignation, or Notice ofRemoval, or such earlier date as agreed upon by the Trustee and the party appointing the successor trustee.

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On or after a Change in Control, any successor trustee appointed or otherwise designated under any provision of this Article XII, shall be a bank trustdepartment or other third party that, on the date of appointment:

(a) may be granted corporate trustee powers under the federal or state law of the United States of America and is, in fact, duly qualified andauthorized to do trust business;

(b) has total assets of at least Ten Billion Dollars ($10,000,000,000); and

(c) has a credit rating of “A” or better from Moody’s Investors Service (or other comparable credit rating from another similarly well-recognizedcredit rating service).

12.4 Failure to Appoint Successor Trustee. If a successor trustee is not appointed within sixty (60) days after the date of the Trustee’s notice of resignationunder Section 12.1 above, or the Company’s notice of removal under Section 12.3 above, then the Trustee shall be entitled to petition a United States DistrictCourt, or any court of competent jurisdiction in the state in which the Trustee maintains its principal place of business, to appoint a successor trustee or provideinstructions. All expenses incurred by the Trustee in connection with such petition shall be allowed as administrative expenses of the Trust.

12.5 Statements of Account Upon Removal or Resignation. In the event of such removal or resignation, the Trustee shall duly file with the Company and,on and after a Change in Control, the members of the Incumbent Board then serving on the Board of Directors if any, a written statement or statements ofaccounts and proceedings as provided in Section 11.2 hereof for the period since the last annual accounting of the Trustee, or if there has been no previous annualaccounting, for the period beginning on the date that the Trust Corpus consisted of more than the initial contribution and earnings thereon. If written objections tosuch account are not filed as provided in Section 11.2 hereof, the Trustee shall to the maximum extent permitted by applicable law be forever released anddischarged from all liability and accountability with respect to the propriety of its acts and transactions shown in such Account.

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12.6 Transfer of Trust Corpus to Successor Trustee. Upon resignation or removal of the Trustee and appointment of a successor trustee, all assets shall betransferred to the successor trustee as soon as practical following the successor trustee’s appointment and acceptance, but in no event later than thirty (30) daysafter such appointment and acceptance, unless a longer period is agreed upon by the Trustee and such successor trustee, with the consent of the Company. TheTrustee shall continue to serve until the successor trustee accepts the Trust and receives delivery of the Trust Corpus.

ARTICLE XIII

The Recordkeeper

13.1 Appointment of Recordkeeper. The Recordkeeper shall keep the records provided in Section 13.2 and otherwise carry out the duties of theRecordkeeper in this Trust Agreement. It is recognized that the Trustee shall have no responsibility hereunder for any duty assigned to the Recordkeeperhereunder, or its performance thereof. The Company shall pay the fees and expenses of the Recordkeeper directly. After a Change of Control, the Trustee isauthorized and directed to pay the fees and expenses of the Recordkeeper from the Legal Defense Fund, to the extent any invoice to the Company for suchamounts shall remain unpaid for 30 days.

13.2 Maintenance of Records. Except for the records dealing solely with the Trust Corpus and its investment, which shall be maintained by the Trustee, theRecordkeeper shall maintain all the records contemplated by this Trust Agreement, including the maintenance of records for the separate Accounts of each Planunder this Trust Agreement and the maintenance of Plan Participants’ interests. The Recordkeeper shall maintain individual records with respect to each PlanParticipant’s interest under each Plan.

13.3 Indemnification of Recordkeeper by Company. The Company agrees to indemnify and hold harmless the Recordkeeper from and against any and alldamages, losses, claims, fees or expenses as incurred (including expenses of investigation and fees and disbursements of counsel to the Recordkeeper) arising outof or in connection with the performance by the Recordkeeper of its duties hereunder. In the event that payment is required to be made to the Recordkeeper fromthe Trust Corpus, as provided in Section 13.1 hereof, or this Section 13.3, the Trustee shall promptly pay such amount and notify the Company in writing of theamount of such payment. The Company agrees that, upon receipt of such notice, it will deliver to the Trustee to be held in the Trust an amount in cash equal toany payments made from the Trust Corpus to the Recordkeeper pursuant to this Section 13.3, together with interest from the date of receipt of such

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notice based upon the daily average of the prime rate charged by the Trustee. The failure of the Company to transfer any such amount shall not in any way impairthe Recordkeeper’s right to indemnification, reimbursement and payment pursuant to Section 13.1 hereof or this Section 13.3.

13.4 Resignation, Discharge & Replacement of Recordkeeper. The Recordkeeper may resign and be discharged from its duties hereunder at any time bygiving notice in writing of such resignation to the Company or, if a Change in Control shall previously have occurred, to the Company and the Trustee,specifying a date (not less than sixty (60) days after the giving of such notice) when such resignation shall take effect. Promptly after such notice, the Companyor, if a Change in Control shall previously have occurred, the Trustee shall appoint a successor recordkeeper, such successor recordkeeper to becomeRecordkeeper hereunder upon the resignation date specified in such notice. If a successor recordkeeper is not appointed within sixty (60) days after such notice,the Recordkeeper shall be entitled, at the expense of the Company, to petition a United States District Court or any court of competent jurisdiction in the state inwhich the Recordkeeper maintains its principal place of business to appoint its successor. The Recordkeeper shall continue to serve until its successor accepts theresponsibility of recordkeeper. The Company or, if a Change in Control shall previously have occurred, the Trustee may at any time substitute a newrecordkeeper by giving fifteen (15) days’ notice thereof to the Recordkeeper then acting. In the event of such removal or resignation, the Recordkeeper shallprovide its successor with the records and information in its possession relating to the performance of its duties under this Trust Agreement.

On or after a Change in Control, any successor recordkeeper appointed under this Section 13.4 shall be an actuarial firm (or other third party providingsuch services) by reputation and experience comparable to the former Recordkeeper.

ARTICLE XIV

Authorization

14.1 Actions by Board of Directors; Committee. Any action of the Board of Directors or of the Committee pursuant to this Trust Agreement shall beevidenced by a resolution adopted by the Board of Directors (or a duly authorized committee thereof) or the Committee that is certified to the Trustee by theSecretary or an Assistant Secretary of the Company under its corporate seal, and the Trustee shall be fully protected in

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acting in accordance with such resolution. Upon a Change in Control, the Secretary or an Assistant Secretary of the Company shall certify the names of all “NonEmployee Members of the Board of Directors” and all of the “Members of the Incumbent Board of Directors then serving on the Board of Directors,” and shallprovide to the Trustee a written list of the names, signatures and extent of authority of all persons authorized to direct the Trustee on behalf of the Non EmployeeMembers of the Board of Directors and Members of the Incumbent Board of Directors then serving on the Board of Directors.

14.2 Actions by Chief Executive Officer; Treasurer. Any action of the Chief Executive Officer or Treasurer pursuant to this Trust Agreement shall beevidenced by a written notice or direction to such effect over the signature of such officer.

14.3 Other Actions of Company. The Chief Executive Officer, President, Treasurer or Secretary (or any Assistant Secretary) of the Company shall provideto the Trustee in writing from time to time the names and specimen signatures of the officers and other representatives authorized to act on behalf of theCompany. Any action of the Company pursuant to this Trust Agreement shall be evidenced by a written notice or direction to such effect over the signature ofany person on such list.

14.4 Actions by the Committee. The Committee shall furnish the Trustee with a written list of names, signatures and extent of authority of all personsauthorized to act on behalf of the Committee under the terms of the Trust Agreement.

14.5 Authorized Parties. The Company shall cause each investment manager appointed in accordance with Section 8.1 to furnish the Trustee with a writtenlist of the names and signatures of the person or persons who are authorized to represent the investment manager. The individuals whose names appear on thelists provided pursuant to Sections 14.1, 14.3 and 14.4 above, and those individuals otherwise identified pursuant to Sections 14.1 and 14.2 above, shall all beAuthorized Parties. The Trustee and Recordkeeper shall be entitled to rely on, and shall be fully protected in acting upon, direction from an Authorized Party,within the authority of such Authorized Party, until notified in writing by the Company, the Committee or investment manager, as appropriate, of a change in theidentity or authority of such Authorized Party.

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ARTICLE XV

Notices

15.1 Notices. All notices, requests, reports, demands and waivers to or upon the respective parties hereto to be effective shall be in writing, by messenger,by overnight courier or by registered or certified mail, postage prepaid and return receipt requested, or shall be an electronic transmission subject to the Trustee’spractices, and shall be deemed to have been duly given or made upon:

(a) delivery by hand; or

(b) upon receipt, provided the Trustee may, in its discretion, accept oral directions and instructions and may require confirmation in writing.

Such communications shall be addressed and directed to the parties listed below (except where this Trust Agreement expressly provides that it be directedto another) as follows, or to such other address or recipient for a party as may be hereafter notified by such party hereunder:

If to the Company (or any directors or officers thereof), or to the Committee:

SUNOCO, INC.1735 Market Street – Suite LLPhiladelphia, PA 19103- 7583Attention: General Counsel

If to the Trustee:

MELLON TRUST OF NEW ENGLAND, N.A.135 Santilli HighwayEverett, MA 02149-1950Attention: Timothy Brennan

Relationship Manager c/o Mellon Global Securities Services

If to the Recordkeeper:

TOWERS, PERRIN, FORSTER & CROSBY, INC.Centre Square East1500 Market StreetPhiladelphia, PA 19102Attention: Sunoco, Inc. Retirement Plan Actuary

c/o Philadelphia Consulting Office Manager

If to a Plan Participant, to the address of such Plan Participant provided by the Recordkeeper.

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ARTICLE XVI

Miscellaneous

16.1 No Contract of Employment. Neither the establishment of this Trust, nor any modification thereof, nor the payment of any benefits in connectionherewith, shall be construed as giving any Plan Participant, or any person whosoever, the right to be retained in the service of the Company, and all PlanParticipants shall remain subject to discharge to the same extent as if this Trust had never been established.

16.2 Rights of Plan Participants. Nothing in this Trust Agreement shall in any way diminish any rights of any Plan Participant to pursue his or her rights asa general creditor of the Company (or certain of its subsidiaries) under the Plans.

16.3 Amendment or Waiver.

(a) Amendment Prior to Change in Control. This Trust Agreement may be amended only by a written instrument executed by the Trustee, theRecordkeeper and the Company. In case of conflict between the terms of this Trust Agreement and the terms of the Plans, the terms of the TrustAgreement shall control; provided, however, that:

(1) provisions that, in the determination of the Company, affect solely the Trustee may, at the option of both the Trustee and the Company, beamended by a writing executed only by the Company and the Trustee, with a copy of such writing being provided to the Recordkeeper; and

(2) provisions that, in the determination of the Company, affect solely the Recordkeeper may, at the option of both the Recordkeeper and theCompany, be amended by a writing executed only by the Company and the Recordkeeper, with a copy of such writing being provided to theTrustee.

(b) Amendment Following Change in Control. Upon and after a Change in Control, and unless otherwise required by applicable statute or regulation,the following rules will govern amendments and waivers:

(1) this Trust Agreement may not be amended except by an instrument in writing signed on behalf of the parties hereto together with thewritten consent of at least eighty percent (80%) of the Plan Participants then entitled to receive payments hereunder;

34


(2) the parties hereto, together with the consent of not less than eighty percent (80%) of the Plan Participants then entitled to receive paymentshereunder, may at any time waive compliance with any of the agreements or conditions contained herein; and

(3) any agreement on the part of a party hereto or any Plan Participant to any such waiver shall be valid if set forth in an instrument in writingsigned on behalf of such party or Plan Participant.

16.4 Severability of Provisions. If any provision of this Trust Agreement or the application thereof to any person or circumstances shall be determined by acourt of proper jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not affect either:

(a) the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable; or

(b) any other provisions of this Trust Agreement (in which case, this Trust Agreement shall be construed and enforced as if such invalid orunenforceable provisions had not been included), and this Trust Agreement shall be otherwise valid and enforced to the fullest extent permitted by law.

16.5 Non-Alienability of Benefits. Except as otherwise required by law, the interests of the Plan Participants and their beneficiaries under this Trust maynot be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal orequitable process.

16.6 Further Assurances. The Company shall, at any time and from time to time, upon the reasonable request of the Trustee and/or Recordkeeper, executeand deliver such other instruments and do such further acts as may be necessary or proper to effectuate the purposes of this Trust Agreement.

16.7 Successors, Heirs, Assigns, and Personal Representatives. This Trust Agreement shall be binding upon the administrators, successors and permittedassigns of the parties.

16.8 Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the TrustAgreement, and shall not be employed in the construction of the Trust Agreement.

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16.9 Gender and Number. Except where otherwise clearly indicated by context, the masculine and the neuter shall include the feminine and the neuter, thesingular shall include the plural, and vice-versa.

16.10 Payments to Incompetent Persons, Etc. Any benefit payable hereunder to or for the benefit of a minor, an incompetent person, or other personincapable of receipting therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for thecare of such person, and such payment shall fully discharge the Company, the Recordkeeper, the Trustee and all other parties with respect thereto.

16.11 Governing Law; Situs of Trust. TO THE EXTENT NOT PREEMPTED BY APPLICABLE FEDERAL LAW, THIS TRUST SHALL BECONSTRUED AND ENFORCED ACCORDING TO THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TOANY PROVISIONS OF SUCH LAWS REGARDING CHOICE OF LAWS OR CONFLICTS OF LAWS). THE PARTIES HEREBY EXPRESSLY WAIVE,TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY JUDICIAL PROCEEDINGARISING FROM OR RELATED TO THIS TRUST AGREEMENT.

16.12 Counterparts. This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and suchcounterparts shall constitute but one and the same instrument.

16.13 Acceptance by Trustee. The Trustee by joining in the execution of this Trust Agreement hereby signifies its acceptance of the Trust hereby created.

16.14 Insurance Policies. Anything in this Trust Agreement to the contrary notwithstanding, the Company may direct the Trustee to purchase one or morepaid up life insurance policies insuring the lives of one or more Plan Participants. In such event, the Trustee will purchase such policies and shall not beresponsible under this Trust Agreement, or otherwise, in any way respecting the acquisition, form, terms, payment provisions or issuer of such contract (otherthan the execution of any documents incidental thereto, upon discretion of the Company). The proceeds of any policy shall be credited to the applicable Planupon death of the insured Plan Participant.

16.15 Survival. The Company agrees that the provisions of Sections 11.3 and 11.4 hereof shall be binding on its successors and assigns and shall survivetermination, amendment or restatement of this Trust Agreement, or the resignation or removal of the Trustee, and that this paragraph shall be construed as acontract between the Company and the Trustee according to the laws of the Commonwealth of Massachusetts.

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16.16 Entire Understanding. This Trust Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof andsupersedes any and all prior agreements, arrangements and understandings relating thereto. This Trust Agreement shall be binding upon and inure to the benefitof the parties and their respective successors and legal representatives.

16.17 Reliance on Representations.

(a) The Company, and the Trustee each acknowledge that the others will be relying, and shall be entitled to rely, on the representations, undertakingsand acknowledgments of each of them as set forth in this Trust Agreement. The Company, and the Trustee each agree to notify the others promptly if anyof its representations, undertakings, or acknowledgments set forth in this Trust Agreement ceases to be true.

(b) Each of the parties represents and warrants to the other parties that it has full authority to enter into this Trust Agreement upon the terms andconditions hereof and that the individuals executing this Trust Agreement on its behalf have the requisite authority to bind such party to this TrustAgreement. The Company acknowledges that it has received and read the “Customer Identification Program Notice,” a copy of which is attached to thisAgreement as Schedule 16.17.

[COUNTERPART SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties have executed this Trust Agreement effective as of the date first written above.

SUNOCO, INC.(the “Company”)

By: /s/ PAUL A. MULHOLLANDName: Paul A. MulhollandTitle: Treasurer

MELLON TRUST OF NEW ENGLAND, N.A.(the “Trustee”)

By: /s/ TIMOTHY M. BRENNANName: Timothy M. BrennanTitle: Vice President

TOWERS, PERRIN, FORSTER & CROSBY, INC.(the “Recordkeeper”)

By: /s/ MATHIEU LUSSIERName: Mathieu LussierTitle: Principal

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Schedule 2.1to the

Directors’ Deferred Compensation and BenefitsTrust Agreement

Benefit Plans and Other Arrangements Subject to Trust

(1) Sunoco, Inc. Directors’ Deferred Compensation Plan I;

(2) Sunoco, Inc. Directors’ Deferred Compensation Plan II;

(3) The entire funding for all the Indemnification Agreements with the directors set forth below shall be Five Million Dollars ($5,000,000.00) in theaggregate upon a Potential Change in Control, and an amount upon a Change in Control calculated on the basis of the Indemnification Agreements with thefollowing directors:

(a) Robert J. Darnall

(b) Gary W. Edwards

(c) Ursula O. Fairbairn

(d) Thomas P. Gerrity

(e) Rosemarie B. Greco

(f) John P. Jones, III

(g) James G. Kaiser

(h) R. Anderson Pew

(i) G. Jackson Ratcliffe

(j) John W. Rowe

(k) John K. Wulff

(4) Benefits payable to former directors of the Company (or their beneficiaries) in pay status as of the date of termination of the Sunoco, Inc.Non-Employee Directors’ Retirement Plan.

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Schedule 16.17Customer Identification Program Notice

CUSTOMER IDENTIFICATION PROGRAM NOTICE

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEWACCOUNT

To help the government fight the funding of terrorism and money laundering activities, all financial institutions are required by law to obtain, verify and recordinformation that identifies each individual or entity that opens an account.

What this means for you: When you open an account, we will ask you for your name, address, taxpayer or other government identification number andother information, such as date of birth for individuals, that will allow us to identify you. We may also ask to see identification documents such as a driver’slicense, passport or documents showing existence of the entity.

Rev. 09/03

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Exhibit 10.13

DEFERRED COMPENSATION AND BENEFITS TRUST AGREEMENT

by and among

SUNOCO, INC.,

MELLON TRUST OF NEW ENGLAND, N.A.

and

TOWERS, PERRIN, FORSTER & CROSBY, INC.

Amended and Restated Effective as of November 1, 2007


TABLE OF CONTENTS

ARTICLE I Definitions 2

1.1 Account 21.2 Benefit Fund 21.3 Benefit Fund Amount 21.4 Board of Directors 21.5 Change in Control 21.6 Chief Executive Officer 31.7 CIC Date 31.8 Committee 41.9 Company 41.10 Compensation Committee 41.11 ERISA 41.12 Exchange Act 41.13 Group 41.14 Incumbent Board 41.15 Insolvent or Insolvency 41.16 Legal Defense Fund 41.17 Legal Defense Fund Amount 41.18 Payment Schedule 41.19 Plan 41.20 Plan Participant 41.21 Potential Change in Control 41.22 Recordkeeper 51.23 Required Funding Amount 51.24 Trust 51.25 Trust Agreement 51.26 Trust Corpus 61.27 Trustee 6

ARTICLE II The Plans 6

2.1 Plans & Agreements Subject to Trust 62.2 Liability for Payments 6

ARTICLE III Establishment of Trust 6

3.1 Principal of Trust 63.2 Term and Revocability 73.3 Grantor Trust 73.4 Segregation of Funds; Rights of Creditors 7

ARTICLE IV Administration of Trust 8

4.1 Authority and Duties of the Committee 84.2 Action by the Committee 84.3 Records, Reporting and Disclosure 94.4 Bonding 9

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ARTICLE V Potential Change in Control; Change in Control 9

5.1 Potential Change in Control 95.2 Change in Control 95.3 Method of Funding 105.4 Additional Contributions; Sufficiency of Funds 105.5 Additional Plans 105.6 Calculation of Required Funding Amount 115.7 Payment of Required Funding Amount 115.8 Sunset Provision 12

ARTICLE VI Legal Defense Fund 12

6.1 Legal Defense Fund 126.2 Trustee’s Duties 136.3 Claims 136.4 Insufficient Funds 14

ARTICLE VII The Benefits Fund 14

7.1 Benefit Fund 147.2 Company Information 147.3 Payment Schedule 157.4 Entitlement to Benefits 167.5 Payment of Benefits 167.6 Notice of Benefits Payable 167.7 Source of Payments 177.8 Tax on Amounts Held in Trust Prior to Distribution 17

ARTICLE VIII Investment Authority 18

8.1 Authority of Trustee 188.2 Trustee’s Powers and Duties 188.3 Investment of Trust Income 218.4 Contractual Settlement and Income, Market Practice Settlements 218.5 Losses Charged Against Trust Corpus 22

ARTICLE IX Payments to Trust Beneficiary When Company Is Insolvent 23

9.1 Responsibilities of Trustee in Insolvency 239.2 Resumption of Discontinued Payments 23

ARTICLE X Payments to the Company 24

10.1 Reversion of Funds to Company 2410.2 Limitation Upon Company’s Ability to Direct Payments 2410.3 Limitation on Reversion of Legal Defense Fund Amount 24

ARTICLE XI Powers, Duties & Responsibilities of Trustee 25

11.1 Limitation of Liability 2511.2 Maintenance of Administrative Records 2511.3 Trustee Compensation and Reimbursement of Costs & Expenses 2611.4 Indemnification of Trustee by Company 2611.5 Powers of Trustee 2711.6 Responsibility of Trustee 27

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ARTICLE XII Resignation and Removal of Trustee 28

12.1 Resignation of Trustee 2812.2 Removal and Substitution of Trustee 2812.3 Appointment of Successor Trustee 2912.4 Failure to Appoint Successor Trustee 2912.5 Statements of Account Upon Removal or Resignation 2912.6 Transfer of Trust Corpus to Successor Trustee 30

ARTICLE XIII The Recordkeeper 30

13.1 Appointment of Recordkeeper 3013.2 Maintenance of Records 3013.3 Indemnification of Recordkeeper by Company 3013.4 Resignation, Discharge & Replacement of Recordkeeper 31

ARTICLE XIV Authorization 32

14.1 Actions by Board of Directors; Compensation Committee 3214.2 Actions by Chief Executive Officer; Treasurer 3214.3 Other Actions of Company 3214.4 Actions by the Committee 3214.5 Authorized Parties 32

ARTICLE XV Notices 33

15.1 Notices 33

ARTICLE XVI Miscellaneous 34

16.1 No Contract of Employment 3416.2 Rights of Plan Participants 3416.3 Amendment or Waiver 3416.4 Severability of Provisions 3516.5 Non-Alienability of Benefits 3516.6 Further Assurances 3516.7 Successors, Heirs, Assigns, and Personal Representatives 3516.8 Headings and Captions 3616.9 Gender and Number 3616.10 Payments to Incompetent Persons, Etc. 3616.11 Governing Law; Situs of Trust 3616.12 Counterparts 3616.13 Acceptance by Trustee 3616.14 Insurance Policies 3616.15 Survival 3616.16 Entire Understanding 3716.17 Reliance on Representations 37

Schedules: Schedule 2.1 - Benefit Plans and Other Arrangements Subject to Trust 39 Schedule 16.17 Customer Identification Program Notice 40

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DEFERRED COMPENSATION AND BENEFITS TRUST AGREEMENT

This Deferred Compensation and Benefits Trust Agreement, dated as of January 11, 1999 and Amended and Restated effective as of the 1st day ofNovember, 2007 (the “Trust Agreement”), is by and among SUNOCO, INC., a Pennsylvania corporation (the “Company”), MELLON TRUST OF NEWENGLAND, N.A., a national association (the “Trustee”), and TOWERS, PERRIN, FORSTER & CROSBY, INC., a Pennsylvania corporation (the“Recordkeeper”).

W I T N E S S E T H

WHEREAS, the Company (or certain of its subsidiaries) is or may become obligated under certain employee benefit plans, agreements, or otherarrangements, to make payments to certain persons who at any time prior to the occurrence of a change in control of the Company were employees of theCompany (or certain of its subsidiaries) (the “Plan Participants”) and their beneficiaries; and

WHEREAS, in order to: (1) provide an alternative source of funds to assist the Company in meeting its liabilities under the applicable employee benefitplans, agreements, or other arrangements; and (2) assure that future payment of such amounts would not be improperly withheld in the event of a change incontrol of the Company, the Company has established a Trust (the “Trust”) and contributed certain assets held therein, subject to the claims of the Company’screditors in the event of the Company’s insolvency until paid to Plan Participants and their beneficiaries in the manner and at the times specified in the applicableemployee benefit plans, agreements, or other arrangements; and

WHEREAS, Bankers Trust Company has resigned as trustee; and

WHEREAS, The Mellon Trust of New England, N.A. has been appointed as Trustee in its stead, and is willing to act as Trustee of the Trust, upon all ofthe terms and conditions hereinafter set forth.

NOW THEREFORE, in consideration of the mutual terms, covenants, and conditions herein contained, the mutual benefits to be derived hereunder, andother good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the parties hereto agree asfollows:

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ARTICLE I

Definitions

As used in this Trust Agreement, the following terms shall have the meanings herein specified:

1.1 Account - shall have the meaning provided herein at Section 5.7.

1.2 Benefits Fund - shall mean that portion of the Trust Corpus that is not in the Legal Defense Fund.

1.3 Benefits Fund Amount - shall have the meaning provided herein at Section 1.23(a).

1.4 Board of Directors - shall mean the Board of Directors of Sunoco, Inc., or any successor thereto.


(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) ofbeneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then-outstanding shares ofcommon stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then-outstanding voting securitiesof the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, forpurposes of this Section (a), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) anyacquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any companycontrolled by, controlling or under common control with the Company, or (D) any acquisition by any entity pursuant to a transaction that complies withSections (c)(1), (c)(2) and (c)(3) of this definition;

(b) Individuals who, as of September 6, 2001, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least amajority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nominationfor election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall beconsidered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initialassumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual orthreatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors;

2


(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company orany of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of anotherentity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (1) all orsubstantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding CompanyVoting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding sharesof common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the casemay be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction,owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the sameproportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the OutstandingCompany Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Business Combination or any employeebenefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly,20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combinedvoting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the BusinessCombination, and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination weremembers of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board of Directors providing for suchBusiness Combination; or


1.6 Chief Executive Officer - shall mean the Chief Executive Officer of Sunoco, Inc. as of the date of reference.

1.7 CIC Date - shall have the meaning provided herein at Section 5.2.

3


1.8 Committee - shall mean the administrative committee consisting of three (3) or more persons, not necessarily employees of the Company, appointedprior to a Change in Control by the Compensation Committee to administer the Sunoco, Inc. Special Executive Severance Plan. Upon the occurrence of anyChange in Control, the size of the Committee shall become fixed at the number of members in office at the time of the Chance in Control, and shall remainunchanged for the duration of this Agreement. In the event one or more members of the Committee resigns or otherwise terminates his or her membership in theCommittee after a Change in Control, the remaining members of the Committee shall appoint a replacement by simple majority vote.

1.9 Company - shall have the meaning set forth in the introduction to this Trust Agreement.

1.10 Compensation Committee - shall have the meaning provided herein at Section 2.1.

1.11 ERISA - shall have the meaning set forth in the introduction to this Trust Agreement.


1.13 Group - shall mean persons who act in concert as described in Sections 13(d)(3) and/or 14(d)(2) of the Exchange Act.


1.15 Insolvency or Insolvent - shall mean, with respect to the Company, that either:

(a) the Company is unable to pay its debts as they become due; or

(b) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

1.16 Legal Defense Fund - shall have the meaning provided herein at Section 6.1.

1.17 Legal Defense Fund Amount - shall mean an amount equal to the greater of ten percent (10%) of the Benefits Fund Amount and $5,000,000.

1.18 Payment Schedule - shall have the meaning provided herein at Section 7.3.


1.20 Plan Participant - shall have the meaning set forth in the introduction to this Trust Agreement.

1.21 Potential Change in Control - shall mean the occurrence of any of the following events or transactions:

(a) any person (other than Sunoco, Inc., or any affiliate or subsidiary thereof) makes a tender offer for capital stock of Sunoco, Inc.;

4


(b) any person:

(1) becomes the beneficial owner, directly or indirectly, of capital stock of Sunoco, Inc. in an amount which requires the filing of Schedule13D or its equivalent form pursuant to the Rules and Regulations under the Exchange Act; and

(2) indicates in such Schedule 13D or equivalent filing that the purpose of such capital stock acquisition is part of a plan or proposal thatreasonably could lead to a Change in Control of Sunoco, Inc. ;

(c) the submission of a nominee or nominees for the position of director of Sunoco, Inc. by a shareholder or Group of shareholders in a proxysolicitation or otherwise which, in its judgment, the Board of Directors by subsequent adoption of a resolution, determines might result in a Change inControl of Sunoco, Inc.;

(d) any person files a pre-merger notification for the acquisition of capital stock of Sunoco, Inc. pursuant to the Hart-Scott-Rodino Act; or

(e) the Board of Directors in its judgment determines by adoption of a resolution that a Potential Change in Control of Sunoco, Inc. for purposes ofthis Trust Agreement has occurred.

1.22 Recordkeeper - shall have the meaning set forth in the introduction to this Trust Agreement.

1.23 Required Funding Amount - shall mean the aggregate of the amounts described in the following subparagraphs (a) and (b) of this Section 1.23:

(a) except as otherwise provided in Schedule 2.1 hereof, an amount sufficient to provide all benefits accrued for each Plan Participant (and anybeneficiaries) under the Plans (including any interest or earnings due on such accrual) through the date of the contribution, to the extent not previouslycontributed (the “Benefits Fund Amount”); and

(b) the Legal Defense Fund Amount.

1.24 Trust - shall have the meaning set forth in the introduction to this Trust Agreement.

1.25 Trust Agreement - shall have the meaning set forth in the introduction to this Trust Agreement.

5


1.26 Trust Corpus - shall mean the amounts delivered to the Trustee pursuant to the terms hereof, less amounts distributed from the Trust pursuant to theterms hereof, plus all income earned by the Trust, in whatever form held or invested as provided herein.

1.27 Trustee - shall have the meaning set forth in the introduction to this Trust Agreement.

ARTICLE II

The Plans

2.1 Plans & Agreements Subject to Trust. The plans, agreements, and other arrangements that are subject to this Trust (each a “Plan” and, collectively the“Plans”) are listed on Schedule 2.1 hereto. Prior to a Change in Control, the Compensation Committee of the Board of Directors of the Company (the“Compensation Committee”) may from time to time designate such additional plans, agreements, and other arrangements to be subject to this Trust. Prior to aPotential Change in Control, the Compensation Committee may delete any Plan from this Trust. The Company shall immediately notify the Trustee and theRecordkeeper in writing of any such changes. No Plans may be added or deleted from this Trust at any time after a Change in Control. No Plans may be deletedfrom this Trust at any time after a Potential Change of Control.

2.2 Liability for Payments. The Company (or certain of its subsidiaries) shall continue to be liable to the Plan Participants to make all payments requiredunder the terms of the Plans to the extent such payments have not been made pursuant to this Trust Agreement. Distributions made from the Trust to or for PlanParticipants in respect of the Plans pursuant to Article VII hereof, shall, to the extent of such distributions, satisfy the Company’s (or certain of its subsidiaries’)obligation to pay benefits to such Plan Participants under the Plans.

ARTICLE III

Establishment of Trust

3.1 Principal of Trust. The Trustee shall hold such sums of money and other property as from time to time deposited by the Company and accepted by theTrustee in trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement.

6


3.2 Term and Revocability. The Trust hereby established is revocable by the Company, but shall become irrevocable upon the occurrence of a PotentialChange in Control or a Change in Control. At any time following the occurrence of a Potential Change in Control, this Trust may not be terminated either by theCompany or the Board of Directors (or any member or committee thereof). Upon or after a Change in Control, this Trust shall not terminate until the date onwhich Plan Participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plans. Upon termination of the Trust any assetsremaining in the Trust shall be returned to the Company.

3.3 Grantor Trust. The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part I, subchapter J,chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. The Company represents and warrants to the Trusteethat: (i) the Plans for which benefits are or may become payable under this Trust are not subject to Part 4 of Title I of ERISA; and (ii) each of the Plans meets andwill meet one of the following requirements: (A) the Plan covers, and will cover, only a select group of management or highly compensated employees ascontemplated by Section 401(a) of ERISA and interpretations, opinions, and rulings of the Department of Labor thereunder; (B) the Plan is an excess benefit planunder Section 3(36) of ERISA; or (C) the Plan is an employee welfare benefit plan under Section 3(1) of ERISA. The Company shall indemnify and holdharmless the Trustee, its parent, subsidiaries and affiliates and each of their respective officers, directors, employees and agents from and against all liability, lossand expense, including reasonable attorneys’ fees and expenses suffered or incurred by any of the foregoing indemnitees as a result of a breach of the foregoingrepresentation and warranty. The provisions of this subsection shall survive termination of this Agreement.

3.4 Segregation of Funds; Rights of Creditors. The principal of the Trust, and any earnings thereon shall be separate and apart from other funds of theCompany and shall be used exclusively for the uses and purposes of Plan Participants and general creditors as herein set forth. Plan Participants and theirbeneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trustshall be mere unsecured contractual rights of Plan Participants and their beneficiaries against the Company. Any assets held by the Trust will be subject to theclaims of the Company’s general creditors under federal and state law in the event of Insolvency.

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ARTICLE IV

Administration of Trust

4.1 Authority and Duties of the Committee. It shall be the duty of the Committee, on the basis of information supplied to it by the Company, to determine

(a) the eligibility of each Plan Participant to receive payment of benefits under this Trust with respect to each Plan; and

(b) the manner and time of payment of the benefits payable hereunder.

The Recordkeeper shall determine, on behalf of the Committee, the amount of any benefit payable under this Trust to which each Plan Participant may beentitled. The Trustee, on behalf of the Company, shall make such payments as the Committee instructs the Trustee to pay, to Plan Participants from the BenefitsFund, as provided in Article VII. The Committee shall have the full power and authority to manage claims and appeals as set forth in the respective Plan, and toconstrue, interpret and administer such Plan in accordance with its terms and provisions.

Prior to any Change in Control, the non-employee members of the Committee (if any) shall be compensated by the Company at a rate to be determined bythe Chief Executive Officer. Following a Change in Control, any member of the Committee whose employment with the Company has terminated in connectionwith the Change in Control shall be compensated by the Company for services performed under this Trust at the rate in effect for any non-employee membersimmediately preceding a Change in Control, or, if no such rate is in effect, in an amount not to exceed 25% of such individual’s annual base salary as paid by theCompany immediately prior to his or her employment termination date; provided, that if the Company fails to pay such compensation promptly following ademand therefor and the Committee so directs the Trustee, such compensation shall be paid by the Trustee from the Legal Defense Fund.

4.2 Action by the Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business at a meeting of theCommittee. Any action of the Committee may be taken upon the affirmative vote of a majority of the members of the Committee at a meeting, or without ameeting by mail, telegraph, telephone or electronic communication device; provided, however, that all of the members of the Committee are informed of theirright to vote on the matter before the Committee and of the outcome of the vote thereon.

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4.3 Records, Reporting and Disclosure. The Committee shall keep all individual and group records relating to Plan Participants and former PlanParticipants and all other records necessary for the proper administration and operation of the Trust. Such records shall be made available to the Company and toeach Plan Participant for examination during business hours except that a Plan Participant shall examine only such records as pertain exclusively to theexamining Plan Participant and to the Plan, in general. The Committee shall prepare and shall file as required by law or regulation all reports, forms, documentsand other items required by the Internal Revenue Code, and every other applicable statute, each as amended, and all regulations thereunder (except that theCompany, as payer of the benefits, shall prepare and distribute to the proper recipients all forms relating to withholding of income or wage taxes, Social Securitytaxes, and other amounts which may be similarly reportable).

All income, deductions and credits attributable to the Trust belong to the Company and will be included on the Company’s income tax returns. TheCompany shall pay any federal, state, local, or other taxes imposed or levied with respect to the assets and/or income of the Trust or any part thereof underexisting or future laws. Upon furnishing the Trustee with evidence reasonably required by the Trustee of any such tax payments made directly by the Company,the Company shall be entitled to receive reimbursement from the assets of the Trust for the full amount of such taxes paid by it.

4.4 Bonding. The Committee shall arrange any bonding that may be required by law, but no amount in excess of the amount required by law (if any) shallbe required by the Trust.

ARTICLE V

Potential Change in Control; Change in Control

5.1 Potential Change in Control. If a Potential Change in Control occurs, the Company shall immediately notify the Trustee and Recordkeeper and shallcause the Required Funding Amount to be remitted to the Trustee as a contribution to the Trust. The Required Funding Amount shall be paid to the Trust notlater than thirty (30) days after the Potential Change in Control.

5.2 Change in Control. Whenever a Change in Control is expected to occur, if the date it will occur (the “CIC Date”) is reasonably ascertainable, then(i) the Company shall notify the Trustee and the Recordkeeper of the CIC Date, (ii) the Required Funding Amount shall be determined as of the CIC Date, and(iii) to the extent that the amount then held in the Benefits Fund and Legal Defense Fund is less than the Benefits Fund Amount or Legal Defense Fund Amount,respectively, the Company shall cause the amount of the

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shortfall to be remitted to the Trustee as an irrevocable contribution to the Trust not later than one (1) business day before the CIC Date. If a Change in Controloccurs, the Company shall immediately notify the Trustee and Recordkeeper. In addition, the Required Funding Amount shall be determined as of the actual dateof the Change in Control and, to the extent that the amount then held in the Trust Corpus (other than the Legal Defense Fund) is less than the Required FundingAmount, the Company shall immediately cause the amount of the shortfall to be remitted to the Trustee, as an irrevocable contribution to the Trust, not later thanone (1) business day after the Change in Control. The Trustee may rely conclusively on a notice from the Company that a Change in Control has occurred, andthe Trustee shall be fully protected in failing to act in the absence of such notice from the Company.

5.3 Method of Funding. The contribution of the Required Funding Amount shall be made in (1) cash or in property acceptable to the Trustee having a fairmarket value equal to the Required Funding Amount, or in a combination of the two and/or (2) a standby, irrevocable (except as provided in Section 9.1) letter ofcredit, drawn on a bank acceptable to the Trustee, provided that the fair market value of the contribution in the aggregate shall equal the Required FundingAmount.

5.4 Additional Contributions; Sufficiency of Funds. The Company shall be obligated to continue to cause additional contributions (or increases to theamount that may be drawn against the letter of credit) to be made as may be necessary from time to time to insure that at all times following a Change in Control,the Trust contains sufficient funds, on a current basis, to pay all benefits due to the Plan Participants (or their designated beneficiaries) under the Plans, togetherwith all reasonably anticipated claims against the Legal Defense Fund. The Trustee shall be under no duty to determine the sufficiency, or to enforce the making,of such contributions by the Company.

5.5 Additional Plans. In the event the Compensation Committee designates additional Plans that are subject to this Trust Agreement, or the Plans subject tothis Trust Agreement are amended, after a Potential Change in Control or Change in Control, the Treasurer of the Company shall, unless the Trust Corpus shalltheretofore have been released pursuant to Section 9.1 hereof, recalculate the Benefits Fund Amount. If the amount so calculated exceeds the fair market value ofthe assets then held in trust in the Benefits Fund, the Company shall promptly (and in no event later than thirty (30) days from the date of such recalculation):

(a) pay to the Trustee an amount of cash (or property acceptable to the Trustee having a fair market value equal to such amount, or somecombination thereof) equal to such excess; or

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(b) increase the amount that may be drawn against the letter of credit described in Section 5.3, above, to cover such excess.

If the Benefits Fund Amount so calculated is less than the fair market value of the assets held in trust, the Trustee shall retain such difference.

5.6 Calculation of Required Funding Amount. As soon as practicable, but in no event later than fifteen (15) days following the occurrence of any PotentialChange in Control, the Treasurer of the Company shall compute the Required Funding Amount. Immediately thereafter, the Recordkeeper shall review theTreasurer’s calculations of the Required Funding Amount (including without limitation the calculations under Section 5.5 hereof). The Recordkeeper shallcomplete its review prior to the thirtieth (30th) day following any Potential Change in Control. If the Recordkeeper concludes that the amounts calculated by theTreasurer are not sufficient to permit the Trustee to make all payments due or to become due under the Plans, together with the fees and expenses described inSections 6.2 and 6.3, the Treasurer shall increase the Required Funding Amount to the amount so calculated by the Recordkeeper. The Company agrees not tochallenge the calculations of the Treasurer, and both the Company and the Treasurer agree not to challenge the calculations of the Recordkeeper, and the Trusteeshall have no right or obligation to challenge or question such calculation with regard to the Required Funding Amount (including, without limitation, the amountdetermined under Section 5.5 hereof) upon and after a Potential Change in Control or Change in Control. No Plan Participant shall have the right to challenge thecalculations of either the Treasurer or the Recordkeeper with respect to the Required Funding Amount.

5.7 Payment of Required Funding Amount.

(a) Interest on Delinquent Payments. The Company agrees to pay interest on any delinquent payment of the Required Funding Amount from the dateon which such payment is required to be made pursuant to this Article V, based upon the daily average of the prime rate charged by Trustee during theperiod of such deficiency.

(b) Discount Rate for Distributions Due Later. In determining the Required Funding Amount with respect to any payment or series of paymentsexpected to be due more than one (1) year after the date as of which the Required Funding Amount is to be determined, the present value of such paymentor series of payments shall be calculated

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by using a discount rate equal to one percentage point less than the then lowest annual yield to maturity on United States Treasury obligations having thenremaining maturities approximately equal to the maturity of the payment or payments being valued.

(c) Schedule of Accounts. Each payment by the Company pursuant to this Article V shall be accompanied by a schedule delivered to theRecordkeeper (as described in Section 7.3 hereof) of the individual Plans for whose accounts such payment is being made, which schedule sets forth theamounts delivered in respect of each of the Plans. The Recordkeeper shall maintain in an equitable manner an account for each Plan (the “Account”). EachAccount shall consist of contributions to and payments from the Benefits Fund which are allocable to the Plan, and earnings thereon, less disbursementstherefrom attributable to the interest of the Plan in the entire Benefits Fund. On a monthly basis, the Trustee shall advise the Recordkeeper in writingregarding the actual amounts received by the Trust from the Company, and paid out from the Trust, in respect of each of the Plans.

5.8 Sunset Provision. Subject to Section 10.3, anything to the contrary in this Trust Agreement or the Plans notwithstanding, in the event of a PotentialChange in Control, the procedures, rules and responsibilities that apply under this Article V and under Sections 2.1, 3.2, 7.2, 7.3, 8.5, 11.2 and 16.3 hereof solelyas a result of the occurrence of such Potential Change in Control shall cease to apply six (6) months after delivery of the Required Funding Amount to theTrustee if no Change in Control shall have occurred during such six-month period, and the Board of Directors determines, and so certifies to the Trustee, that aChange in Control is not imminent, pending, or reasonably expected to occur (or upon such certification by non-employee members of the Board of Directorsacting unanimously before the expiration of such six-month period), or upon the earlier termination of this Trust in a manner consistent with Section 3.2 hereof.Such new six-month period shall commence in the event of and upon the date of any subsequent Potential Change in Control.

ARTICLE VI

Legal Defense Fund

6.1 Legal Defense Fund. The Trustee shall establish within the Trust a separate fund, hereinafter referred to as the “Legal Defense Fund”. The LegalDefense Fund shall consist of the portion of the Company’s contributions to the Trust that represent the Legal Defense Fund Amount, or are otherwise designatedfor the Legal Defense Fund in writing at the time of contribution, together with all income, gains and losses and proceeds from

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the investment, reinvestment and sale thereof, less all payments therefrom and expenses charged thereto in accordance with the provisions of this Article. TheLegal Defense Fund shall be held and administered by the Trustee for the purpose of defraying the costs and expenses incurred by Plan Participants andbeneficiaries associated with the enforcement of their rights under the Plans by litigation or other legal action and the Trustee in performing its duties under thisArticle. The Legal Defense Fund shall be maintained and administered as a separate segregated account, provided, however, that the assets of the Legal DefenseFund may be commingled with all other assets of the Trust solely for investment purposes.

6.2 Trustee’s Duties. If, at any time after a Change in Control or during a Potential Change in Control, legal proceedings are brought against the Trustee bythe Company or any other party seeking to invalidate any of the provisions of this Trust Agreement as they relate to the Trust, or seeking to enjoin the Trusteefrom paying any amounts from any Trust or from taking any other action otherwise required or permitted to be taken by the Trustee under this Trust Agreementwith respect to any Plan, the Trustee shall take all steps that may be necessary in such proceeding to uphold the validity and enforceability of the provisions ofthis Trust Agreement as they relate to such Plan. The Trustee shall be empowered to retain counsel and other appropriate experts, including actuaries, andaccountants, to assist it in making any determination under this Section. All costs and expenses incurred by the Trustee in connection with any such proceeding(including, without limitation, the payment of reasonable fees, costs and disbursements of any counsel, actuaries, accountants or other experts retained by theTrustee in connection with such proceeding) shall be charged to and paid from the Legal Defense Fund. To the extent the Trustee’s legal fees and expensesexceed the amount available in the Legal Defense Fund and the Company does not pay them upon demand by the Trustee, such fees and expenses shall be paidby the Trustee from the assets of the Trust Corpus.

6.3 Claims. If, at any time after a Change in Control, a Plan Participant or beneficiary notifies the Trustee in writing that the Company has refused to pay aclaim asserted by such Plan Participant or beneficiary under any Plan, the Plan Participant or beneficiary (“Claimant”) may demand payment from the LegalDefense Fund with respect to expenses incurred in connection with the initiation or defense of any litigation or other legal action by or against the Company orany director, officer, stockholder or other person affiliated with the Company, with respect to such claim. Such demand shall be made in writing by delivering tothe Trustee within 90 days of the date the Claimant incurs such expenses (i) a certification signed by the Claimant that the Company is in default in paying itsobligations under the Plan, and (ii) itemizing in reasonable detail in a form acceptable to the Trustee the expenses payable by the Legal Defense Fund.

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6.4 Insufficient Funds. In the event that on the date a Claimant’s expenses are to be paid from the Legal Defense Fund other expenses have been claimedbut not yet paid and the aggregate amount of all claims exceeds the amount available in the Legal Defense Fund, the Company shall be obligated to make anadditional contribution to the Legal Defense Fund. In the event the Company fails to make such additional contribution, the Trustee shall promptly advise theClaimant and shall pay only that portion of the amount of the claim to each Claimant determined by multiplying such Claimant’s expenses by a fraction, thenumerator of which is the amount held in the Legal Defense Fund, and the denominator of which is the amount of the aggregate expenses claimed by allClaimants.

Notwithstanding any provision herein to the contrary, the Trustee shall be required to act under this Section only to the extent there are sufficient amountsavailable in the Legal Defense Fund to defray the costs and expenses the Trustee reasonably anticipates will be incurred in connection with such action.

ARTICLE VII

The Benefits Fund

7.1 Benefits Fund. The Trustee shall establish within the Trust a separate fund, hereinafter referred to as the “Benefits Fund”. The Benefits Fund shallconsist of the portion of the Company’s contributions to the Trust that represent the Benefit Amount, or are otherwise designated for the Benefits Fund in writingat the time of contribution, together with all income, gains and losses and proceeds from the investment, reinvestment and sale thereof, less all paymentstherefrom and expenses charged thereto in accordance with the provisions of this Article VII. The Benefits Fund shall be held and administered by the Trusteefor the purpose of paying Participants benefits under the Plans in accordance with the provisions of this Article VII.

7.2 Company Information. As soon as practicable, but in no event later than fifteen (15) days following the occurrence of any Potential Change in Control,the Recordkeeper shall identify to the Company in writing the information deemed necessary to enable the Recordkeeper to determine the amount of benefitspayable to or with respect to each Plan Participant in each Plan, including any benefits payable after the Plan Participant’s death,

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and the recipient. As soon as reasonably practicable after receiving such communication from the Recordkeeper following any Potential Change in Control, theCompany shall furnish the information needed by the Recordkeeper in order to determine the amount of any such benefit, and shall deliver to the Recordkeeper aletter of instructions:

(a) describing the terms of each Plan;

(b) enclosing a copy of each Plan;

(c) listing the names, addresses, and Hay points or grade levels under the salary administration program then in effect, for the Plan Participants (andbeneficiaries) covered by each Plan;

(d) setting forth the timing, form of distributions, and formula or other methodology for determining the amounts to be paid to each Plan Participantand beneficiary under each Plan; and

(e) instructing the Recordkeeper how and from whom to get any other information needed to compute benefits under each Plan.

Thereafter, the Company shall regularly, at least annually, furnish revised up-dated information to the Recordkeeper. In the event the Company refuses orneglects to provide updated Plan Participant information, as contemplated herein, the Recordkeeper shall be entitled to rely upon the most recent informationfurnished to it by the Company.

7.3 Payment Schedule. Within forty-five (45) days following a Change in Control or Potential Change in Control (or when the Company otherwise makescontributions to the Trust), the Recordkeeper, on behalf of the Company, shall deliver to the Trustee a schedule (the “Payment Schedule”) that indicates:

(a) in the case of all Plans, except the Special Employee Severance Plan, the amounts payable (including the fees and expenses incurred by thePlans) in respect of each Plan Participant (and his or her beneficiaries); and

(b) in the case of the Special Employee Severance Plan, the amount reasonably expected to be payable thereunder, in order to fully fund the benefitsdue to those Participants then in grades 11 through 13, together with an explanation of the assumptions used by the Recordkeeper in performing itscalculation.

The Payment Schedule shall be updated by the Recordkeeper as necessary, but on at least an annual basis, in order to reflect changes therein. Upon thetermination of employees entitled to benefits under the Plans, the Company will notify the Recordkeeper, and the Recordkeeper will update the PaymentSchedule to indicate those Plan Participants to whom benefits have become payable. Except as otherwise provided

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herein, the Trustee shall make payments to the Plan Participants and their beneficiaries in accordance with such Payment Schedule and shall pay such fees andexpenses, unless paid by the Company. The Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may berequired to be withheld with respect to any payment of benefits from the Trust and shall pay amounts withheld to the appropriate taxing authorities except to theextent that the Trustee shall have been previously advised in writing that such amounts have been reported, withheld and paid by the Company.

7.4 Entitlement to Benefits. The entitlement of a Plan Participant or his or her beneficiaries to benefits under the Plans shall be determined promptly by theCommittee, and any claim for such benefits shall be considered and reviewed by the Committee under the procedures set out in the Plans. As soon as isreasonably practicable following any such review or determination by the Committee, the Committee shall give notice of its findings to the Recordkeeper,together with updated information as needed, in order to permit the Recordkeeper to make a final determination of the benefits to be paid. Upon notice of suchfindings by the Committee, the Recordkeeper promptly will make a final determination of the amounts payable and will notify the Committee.

7.5 Payment of Benefits. The Company may make payment of benefits directly to Plan Participants or their beneficiaries as they become due under theterms of the Plans. The Company shall notify the Trustee and Recordkeeper of its decision to make payment of benefits directly within a reasonable time prior tothe time amounts are payable to Plan Participants or their beneficiaries. Within thirty (30) days of making any such direct payment, the Company shall providethe Trustee and the Recordkeeper with a certification, in a form acceptable to each, indicating the date and amount of such direct payment of benefits by theCompany. The Trustee shall pay benefits to Participants and beneficiaries at the time provided in the Payment Schedule, unless advised by the Company of itsdecision to pay the benefit. If after the Company has indicated its intention to pay a benefit, the Trustee does not receive certification of payment from theCompany, as provided in this Section, the Trustee shall pay such benefit to the Plan Participant or beneficiary in accordance with the Payment Schedule. TheTrustee shall be completely protected in making any payment hereunder in accordance with the Payment Schedule.

7.6 Notice of Benefits Payable. The Recordkeeper shall notify the Plan Participant or the beneficiary of a deceased Plan Participant that the PlanParticipant’s benefits under a Plan have become payable. Such notice shall include the amount of such benefits, the manner of payment (or, where appropriate,the various payment options available) and the

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name, address and social security number of the Plan Participant. Neither the Trustee nor the Recordkeeper shall have any responsibility for determining whetherany Plan Participant or beneficiary has become entitled to any benefit under any of the Plans, or whether any Plan Participant or beneficiary has died, and each ofthe Trustee and the Recordkeeper shall be entitled to rely solely upon information furnished by the Committee.

7.7 Source of Payments. All benefits payable from the Benefits Fund to a Plan Participant or his beneficiary under a Plan shall be paid solely from theAccount of such Plan. Upon the satisfaction of all liabilities under a Plan in respect of Plan Participants under a Plan, the Recordkeeper shall prepare and deliverto the Trustee a certification showing the balance, if any, remaining in the Account for such Plan. Such balance shall thereupon be reallocated ratably by theRecordkeeper to the Accounts of other Plans covered by this Trust (including Accounts which may have previously been reduced to a zero balance) in the ratiothat liabilities in respect of each such Plan bear to the total liabilities of all such Plans. Upon the satisfaction of all liabilities of the Company under all Plans, theRecordkeeper shall prepare and deliver a certification to the Trustee and the Trustee shall thereupon distribute the Trust Corpus to the Company.

7.8 Tax on Amounts Held in Trust Prior to Distribution. Except as otherwise provided herein, in the event of any final determination by the InternalRevenue Service or a court of competent jurisdiction, which determination is not appealable or with respect to which the time for appeal has expired, or thereceipt by the Trustee of a substantially unqualified opinion of tax counsel selected by the Trustee, which determination determines, or which opinion opines, thatthe Plan Participants or any particular Plan Participant is subject to federal income taxation on amounts held in trust hereunder prior to the distribution to the PlanParticipants or Plan Participant of such amounts, the Trustee, on receipt by the Trustee of such opinion or notice of such determination, shall pay to each PlanParticipant the portion of the Trust Corpus includable in such Plan Participant’s federal gross income, less applicable taxes. The Trustee shall not be required toobtain such opinion of tax counsel unless the Internal Revenue Service, the Company, or the Recordkeeper suggests to the Trustee that any of the PlanParticipants may be subject to income taxation on amounts held in the Trust prior to a distribution hereunder and Trustee has doubts with respect thereto.

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ARTICLE VIII

Investment Authority

8.1 Investment Authority of Trustee.

(a) Prior to a Change in Control: (1) the Company shall direct the Trustee, or appoint one or more investment managers from time to time to directthe Trustee, with respect to investment of the Trust Fund; (2) the Company and each investment manager shall designate in writing the persons who areauthorized to represent such party in dealing with the Trustee; (3) the Trustee shall have no investment duties for the Trust Fund; (4) the Trustee shall haveno duty to inquire whether investment directions received from the Company or an investment manager are in accordance with the Plan, or to review theassets purchased, retained or sold; and (5) the Trustee shall be fully indemnified by the Company for any action taken in accordance with, or any failure toact in the absence of, the Company’s or an investment manager’s directions.

(b) Upon and after a Change in Control: (1) the Trustee shall, subject to, and to the extent provided in this Section and Section 8.2 below, have andexercise sole investment discretion with respect to all of the Trust Corpus, and shall use its good faith efforts to invest or reinvest all or such part of theTrust Corpus as the Trustee believes prudent under the circumstances (taking into account, among other things, the anticipated cash requirements for thepayment of benefits under the Plans based on information received from the Recordkeeper) solely in: (A) direct obligations of the United States ofAmerica or agencies thereof, (B) obligations unconditionally and fully guaranteed as to principal and interest by the United States of America, or (C) anyregistered investment fund, including a fund for which the Trustee serves as investment manager and/or custodian, established and maintained as a vehiclefor short term investment; and (2) with respect to such investments, the Trustee shall have the powers and duties set forth in Section 8.2 below, in additionto those conferred by law: provided, however, that the Trustee shall not be liable for any loss of income due to liquidation of any investment whichliquidation is necessary to make payments or to reimburse expenses under the terms of this Trust Agreement.

8.2 Trustee’s Powers and Duties.

(a) The Trustee shall have the powers and duties provided in this Section 8.2, subject, prior to a Change in Control, to the direction of the Committeeand/or investment managers appointed by the Committee in accordance with Section 8.1(a), provided, however, that in no event may the Trustee invest in(i) securities (including stock or rights

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to acquire stock) or obligations issued by the Company, other than a de minimis amount held in common investment vehicles in which the Trustee invests,(ii) any asset settled or held in safekeeping outside of the United States, or (iii) real estate. For this purpose, “real estate” includes, but is not limited to, realproperty, leaseholds, mineral interests, and any form of asset which is secured by any of the foregoing. All rights associated with assets of the Trust Corpusshall be exercised by the Trustee or the person designated by the Trustee, and shall in no event be exercisable by or rest with the Participants.

(b) To invest and reinvest the Trust Corpus, without distinction between principal and income, in any form of domestic property, whether or notproductive of income or consisting of wasting assets, provided that investments shall be so as to minimize the risk of large losses, unless under thecircumstances it is clearly prudent not to do so;

(c) To invest all or any part of the Trust Corpus in interests in registered investment companies, for which the Trustee or an affiliate of the Trusteereceives compensation for providing custodial, transfer agency, investment advisory or other services (the Company acknowledges that interests in suchinvestment companies are not bank deposits and are not insured by, guaranteed by, obligations of, or otherwise supported by the United States of America,the Federal Deposit Insurance Corporation, or any bank or government entity);

(d) To sell, convey, redeem, exchange, grant options for the purchase or exchange of, or otherwise dispose of, any property, at public or private sale,for cash or upon credit, with or without security, without obligation on the part of any person dealing with the Trustee to see to the application of theproceeds of, or to inquire into the propriety of, any such disposition;

(e) To hold, purchase and maintain, as owner, life insurance policies as provided in Section 16.14 of this Trust Agreement;

(f) To exercise, personally or by general or limited proxy or power of attorney, all voting and other rights appurtenant to any investment held in theTrust Corpus and to delegate discretionary power to exercise all or any such rights to trustees of a voting trust for any period of time;

(g) To join in or oppose any reorganization, recapitalization, consolidation, merger or liquidation of any plan thereof, or any lease, mortgage or saleof the property of any organization the securities of which are held in the Trust Corpus; to pay from the Trust Corpus any assessments, charges orcompensation specified in any plan of

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reorganization, recapitalization, consolidation, merger or liquidation; to deposit any property with any committee or depository; and to retain any propertyallotted to the Trust Corpus in any reorganization, recapitalization, consolidation, merger or liquidation;

(h) To exercise or sell, personally or by general or limited power of attorney, any conversion, subscription or other rights, including the right to vote,appurtenant to any investment held in the Trust Corpus;

(i) To borrow money for purposes of this Trust Agreement in any amount and upon any reasonable terms and conditions from any lender (includingthe Trustee in its individual capacity), and to pledge any property held in the Trust Corpus to secure the repayment of any such loan;

(j) To compromise, settle or arbitrate any claim, debt, or obligation of or against the Trust Corpus; to enforce or abstain from enforcing any right,claim, debt or obligation; and to abandon any property determined by it to be worthless;

(k) To settle, compromise, or submit to arbitration any claims, debts, or damage due or owing to or from the Trust Corpus, to commence or defendsuits or legal or administrative proceedings, and to represent the Trust in all legal and administrative proceedings, provided, however, the Trustee shall notbe obligated to take any action or to appear and participate in any action that would subject it to expense or liability unless the Company agrees toindemnify the Trustee against the Trustee’s cost, expenses and liabilities (including without limitation, attorneys’ fees and expenses) relating thereto and tobe primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee mayobtain payments from the Trust Corpus;

(l) To engage any legal counsel, including counsel to the Company, any enrolled actuary, or any other suitable agents; to consult with such counsel,enrolled actuary, or agents with respect to the construction of this Trust Agreement, the duties of the Trustee hereunder, the transactions contemplated bythis Trust Agreement or any act which the Trustee proposes to take or omit; to rely upon the advice of such counsel, enrolled actuary or agents and to payfrom the Trust Corpus all reasonable fees, expenses and compensations of such counsel, actuary or agents;

(m) To organize and incorporate under the laws of any state one or more corporations (and to acquire an interest in any such corporation that it mayhave organized and incorporated) for the purpose of acquiring and holding title to any property, interest or rights that the Trustee is authorized to acquire;

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(n) To appoint custodians, subcustodians or subtrustees (including affiliates of the Trustee), as to part or all of the Trust Corpus as necessary to fulfillits duties and responsibilities under this Trust Agreement. The Trustee shall not be responsible or liable for any losses or damages suffered by theCompany arising as a result of the insolvency of any custodian, subcustodian or subtrustee, except to the extent the Trustee was negligent in its selection orcontinued retention of such custodian, subcustodian or subtrustee. In no event shall Trustee be liable for the acts or omissions of any custodian,subcustodian or subtrustee appointed pursuant to the direction of the Committee or an investment manager;

(o) To hold property in nominee name, in bearer form, or in book entry form, in a clearinghouse corporation or in a depository (including an affiliateof the Trustee), so long as the Trustee’s records clearly indicate that the assets held are a part of the Trust Corpus. The Trustee shall not be responsible forany losses resulting from the deposit or maintenance of securities or other property (in accordance with market practice, custom, or regulation) with anyrecognized clearing facility, book-entry system, centralized custodial depository, or similar organization.

(p) To hold any part or all of the Trust Corpus uninvested;

(q) To take all action necessary to pay for authorized transactions, including borrowing or raising monies from any lender, including the Trustee, inits corporate capacity in conjunction with its duties under this Trust Agreement and upon such terms and conditions as the Trustee may deem advisable tosettle security purchases and/or foreign exchange or contracts for foreign exchange, and securing the repayments thereof by pledging all or any part of theAccount; and

(r) To do all acts, whether or not expressly authorized, which the Trustee may deem necessary or desirable for the protection of the Trust Corpus.

8.3 Investment of Trust Income. During the term of this Trust, income received by the Trust, net of expenses and taxes, shall be accumulated andreinvested.

8.4 Contractual Settlement and Income; Market Practice Settlements.

(a) In accordance with the Trustee’s standard operating procedure, the Trustee shall credit the Trust Corpus with income and maturity proceeds onsecurities, net of any taxes, on contractual payment date or upon actual receipt. To the extent the Trustee credits income on contractual payment date, theTrustee may reverse such accounting entries to the contractual payment date if the Trustee reasonably believes that such amount will not be received.

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(b) In accordance with the Trustee’s standard operating procedure, the Trustee will attend to the settlement of securities transactions on the basis ofeither contractual settlement date accounting or actual settlement date accounting. To the extent the Trustee settles certain securities transactions on thebasis of contractual settlement date accounting, the Trustee may reverse to the contractual settlement date any entry relating to such contractual settlementif the Trustee reasonably believes that such amount will not be received.

(c) Settlements of transactions may be effected in trading and processing practices customary in the jurisdiction or market where the transactionoccurs. The Company acknowledges that this may, in certain circumstances, require the delivery of cash or securities (or other property) without theconcurrent receipt of securities (or other property) or cash. In such circumstances, the Trustee shall have no responsibility for nonreceipt of payment (orlate payment) or nondelivery of securities or other property (or late delivery) by the counterparty.

8.5 Losses Charged Against Trust Corpus. All losses of income or principal in respect of, and expenses (including without limitation taxes and, asprovided in Article XI hereof, any expenses of the Trustee) charged against, the Trust Corpus shall be for the account of the Company and the Company shall beobligated to reimburse the Trust Corpus following a Potential Change in Control or a Change in Control for any loss in principal amount of, or expense chargedagainst, the Trust Corpus except to the extent that the fair market value of the Trust Corpus as of that date equals or exceeds the Required Funding Amount as ofthat date. The Trustee shall promptly notify the Company in writing of the amount of such reimbursement. The Company agrees that, upon receipt of such notice,it will deliver to the Trustee to be held in the Trust an amount in cash equal to any reimbursement amount specified by the Trustee, together with interest fromthe date of receipt of such notice based upon the daily average of the prime rate charged by the Trustee.

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ARTICLE IX

Payments to Trust Beneficiary When Company Is Insolvent

9.1 Responsibilities of Trustee in Insolvency. At all times during the continuance of this Trust as provided in Section 3.2 hereof, the principal and incomeof the Trust shall be subject to claims of general creditors of Company under federal and state law, as set forth below:

(a) The Board of Directors and the Chief Executive Officer of the Company shall have the duty to immediately inform the Trustee in writing of theCompany’s Insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, theTrustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment of benefits to PlanParticipants or their beneficiaries.

(b) Unless the Trustee has actual knowledge of the Company’s Insolvency, or has received notice from the Company or a person claiming to be acreditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. In all cases, the Trustee shallbe entitled to conclusively rely upon the written certification of the Board of Directors or the Chief Executive Officer of the Company when determiningwhether the Company is insolvent.

(c) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to Plan Participants or theirbeneficiaries and shall hold the assets of the Trust for the benefit of the Company’s general creditors. Nothing in this Trust Agreement shall in any waydiminish any rights of Plan Participants or their beneficiaries to pursue their rights as general creditors of the Company with respect to benefits due underthe Plans or otherwise.

(d) The Trustee shall resume the payments of benefits to Plan Participants or their beneficiaries in accordance with Article VII of this TrustAgreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent).

9.2 Resumption of Discontinued Payments. Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trustpursuant to Section 9.1 hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount ofall payments due to Plan Participants or their beneficiaries under the terms of the Plans for the period of such discontinuance, less the aggregate amount of anypayments made to Plan Participants or their beneficiaries by the Company in lieu of the payments provided for hereunder during any such period ofdiscontinuance.

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ARTICLE X

Payments to the Company

10.1 Reversion of Funds to Company. Subject to Section 10.3, in the event the Company delivers the Required Funding Amount to the Trustee because ofa Potential Change in Control, the Trust Corpus shall be returned to the Company six (6) months after delivery of the Required Funding Amount to the Trustee ifno Change in Control shall have occurred during such six-month period, and the Board of Directors determines, and so certifies to the Trustee, that a Change inControl is not imminent, pending, or reasonably expected to occur (or upon such earlier certification by the non-employee members of the Board of Directorsacting unanimously), or upon the earlier termination of this Trust in a manner consistent with Section 3.2 hereof. Such six-month period shall recommence in theevent of and upon the date of any subsequent Potential Change in Control. If another Potential Change in Control should occur after the Trust Corpus has beenreturned to the Company as provided in this Section 10.1, the Company shall deliver a new Required Funding Amount to the Trustee pursuant to Article Vabove. The Company shall notify the Trustee of the ocurrence of a Potential Change in Control and Change in Control and the Trustee may rely on such notice.

10.2 Limitation upon Company’s Ability to Direct Payments. After the Trust has become irrevocable, the Company shall have no right or power to directthe Trustee to return to the Company or to divert to others any of the Trust assets before all payments of benefits have been made to Plan Participants and theirbeneficiaries pursuant to the terms of the Plans.

10.3 Limitation on Reversion of Legal Defense Fund Amount. If the Trustee has knowledge of any legal claims that would entitle a Plan Participant toreimbursement of expenses under Article VI, or the Trustee reasonably believes that such claims are likely to be made, no part of the Legal Defense FundAmount shall be returned to the Company at a time that any such claim is pending or any expense associated with such claim has not been reimbursed. Inaddition, in no event shall the Legal Defense Fund Amount be returned to the Company earlier than the expiration of the six-month period described in the firstsentence of Section 10.1.

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ARTICLE XI

Powers, Duties & Responsibilities of Trustee

11.1 Limitation of Liability. The duties and responsibilities of the Trustee shall be limited to those expressly set forth in this Trust Agreement, and noimplied covenants or obligations shall be read into this Trust Agreement against the Trustee. The Trustee shall not be liable for any act taken or omitted to betaken hereunder if taken or omitted to be taken by it in good faith. The Trustee shall also be fully protected in relying upon any notice given hereunder which it ingood faith believes to be genuine and executed and delivered in accordance with this Trust Agreement. The Trustee may consult with legal counsel to be selectedby it, and the Trustee shall not be liable for any action taken or suffered by it in good faith in accordance with the advice of such counsel.

11.2 Maintenance of Administrative Records. The Trustee shall maintain such books, records and accounts as may be necessary for the properadministration of the Trust Corpus and shall render to the Company on a monthly basis commencing on the first day of the month following the date the TrustCorpus includes more than the initial deposit and earnings thereon, and for each month thereafter until the termination of the Trust (and as of the date of suchtermination), an accounting with respect to the Trust Corpus as of the end of such month (and as of the date of such termination). After a Change in Control or aPotential Change in Control has occurred, and once the Required Funding Amount has been contributed to the Trust, the Trustee shall also provide theRecordkeeper with a copy of such monthly accounting. Unless the Company shall have filed with the Trustee written exceptions or objections to any suchstatement and account within one hundred eighty (180) days after receipt thereof, the Company and all Plan Participants shall be deemed to have approved suchstatement and account, and in such case the Trustee shall be forever released and discharged with respect to all matters and things reported in such statement andaccount as though it had been settled by a decree of a court of competent jurisdiction in an action or proceeding to which the Company and all Plan Participantswere parties.

The Trustee shall have the right, at the expense of the Trust, to apply at any time to a court of competent jurisdiction for judicial settlement of any accountof the Trustee not previously settled as herein provided or for the determination of any question of construction or for instructions. In any such action orproceeding it shall be necessary to join as parties only the Trustee and the Company (although the Trustee may also join such Plan Participants as it may deemappropriate), and any judgment or decree entered therein shall be conclusive.

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11.3 Trustee Compensation and Reimbursement of Costs & Expenses. The Company shall pay all administrative costs, and Trustee’s fees and expenses. Ifnot so paid, the fees and expenses shall be paid from the Trust Corpus, first from the Legal Defense Fund and then, if necessary, from the Benefit Fund. TheTrustee shall be entitled to fees for services and expenses as mutually agreed. The Company acknowledges that as part of the Trustee’s compensation, the Trusteemay earn interest on balances including disbursement balances and balances arising from purchase and sale transactions. If the Trustee advances cash orsecurities to the Trust for any purpose set forth in this Trust Agreement, any property at any time held as part of the Trust Corpus shall be security therefor andthe Trustee shall be entitled to collect from the Trust sufficient cash for reimbursement, and if such cash is insufficient, dispose of the assets of the Trust Corpusto the extent necessary to obtain reimbursement. To the extent the Trustee advances funds to the Trust for disbursements or to effect the settlement of purchasetransactions, the Trustee shall be entitled to collect from the Trust reasonable charges established under the Trustee’s standard overdraft terms, conditions andprocedures. After a Change in Control has occurred, the fees of the Trustee shall be determined by the application of the current rates then charged by the Trusteefor the provision of the types of investment and Trustee services contemplated in this Trust Agreement to Trusts of a similar character. The Trustee’s entitlementto reimbursement hereunder shall not be affected by the resignation or removal of the Trustee or the termination of the Trust.

11.4 Indemnification of Trustee by Company. The Company agrees to indemnify and hold harmless the Trustee, its parent, subsidiaries and affiliates, andeach of their respective officers, directors, employees and agents from and against any and all liabilities, damages, losses, claims or expenses as incurred by theTrustee or any of the foregoing indemnitees (including expenses of investigation and fees and disbursements of counsel to the Trustee and any taxes imposed onthe Trust Corpus or income of the Trust) arising out of or in connection with the performance by the Trustee of its duties hereunder. This indemnification shallsurvive the termination of this Trust Agreement. Any amount payable to the Trustee under this Section 11.4, and not previously paid by the Company shall bepaid by the Company promptly upon demand therefor by the Trustee or, if the Trustee so chooses in its sole discretion, from the Trust Corpus. In the event that

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payment is made hereunder to the Trustee from the Trust Corpus, the Trustee shall promptly notify the Company in writing of the amount of such payment. TheCompany agrees that, upon receipt of such notice, it will deliver to the Trustee to be held in the Trust an amount in cash equal to any payments made from theTrust Corpus to the Trustee pursuant to this Section 11.4, together with interest from the date of receipt of such notice based upon the daily average of the primerate charged by the Trustee. The failure of the Company to transfer any such amount shall not in any way impair the Trustee’s right to indemnification,reimbursement and payment pursuant to this Section 11.4.

11.5 Powers of Trustee. The Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly providedotherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust upon direction of the Company, the Trustee shall have no power toname a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successortrustee, or to loan to any person the proceeds of any borrowing against such policy. Notwithstanding any powers granted to the Trustee pursuant to this TrustAgreement or applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gainstherefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.

11.6 Responsibility of Trustee.

(a) The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in likecapacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that theTrustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval which is contemplated by, and in conformitywith, the terms of this Trust Agreement.

(b) The Trustee is not a party to, and has no duties or responsibilities under, the Plans other than those that may be expressly contained in this TrustAgreement. In any case in which a provision of this Trust Agreement conflicts with any provision in the Plans, this Trust Agreement shall control.

(c) The Trustee shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered byit pursuant to this Trust Agreement and shall be held harmless in acting upon any notice, request, direction, instruction, consent, certification or otherinstrument believed by it to be genuine and delivered by the proper party or parties.

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(d) Notwithstanding anything in this Trust Agreement to the contrary, the Trustee shall not be responsible or liable for its failure to perform underthis Trust Agreement or for any losses to the Trust resulting from any event beyond the reasonable control of the Trustee, its agents or custodians,including but not limited to nationalization, strikes, expropriation, devaluation, seizure, or similar action by any governmental authority, de facto or dejure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, levies orother charges affecting the Trust’s property; or the breakdown, failure or malfunction of any utilities or telecommunications systems; or any order orregulation of any banking or securities industry including changes in market rules and market conditions affecting the execution or settlement oftransactions; or acts of war, terrorism, insurrection or revolution; or acts of God; or any other similar event. This Section shall survive the termination ofthis Trust Agreement.

(e) The Trustee shall not be liable for any act or omission of any other person in carrying out any responsibility imposed upon such person and underno circumstances shall the Trustee be liable for any indirect, consequential, or special damages with respect to its role as Trustee.

ARTICLE XII

Resignation and Removal of Trustee

12.1 Resignation of Trustee. The Trustee may resign at any time by written notice to the Company, which shall be effective sixty (60) days after receipt ofsuch notice unless the Company and Trustee agree otherwise. If a Change in Control shall previously have occurred, the Trustee shall give such resignationnotice, in writing, to the Company and the members of the Incumbent Board then serving on the Board of Directors, specifying a date (not less than sixty(60) days after the giving of such notice) when such resignation shall take effect.

12.2 Removal and Substitution of Trustee. The Company, or if a Change in Control shall previously have occurred, the members of the Incumbent Boardthen serving on the Board of Directors (or, if there are no members of the Incumbent Board then serving on the Board of Directors, then by affirmative vote of atleast three-fourths (3/4) of the then-current Board of Directors), may at any time remove the Trustee by giving written notice thereof to the Trustee, which shallbe effective sixty (60) days after receipt by the Trustee, unless the Trustee and the party removing the Trustee agree otherwise.

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12.3 Appointment of Successor Trustee. Promptly after the giving of notice of resignation by the Trustee under Section 12.1 hereof, the Company, or if aChange in Control shall previously have occurred, the members of the Incumbent Board then serving on the Board of Directors (or, if there are no members ofthe Incumbent Board then serving on the Board of Directors, then by affirmative vote of at least three-fourths (3/4) of the then-current Board of Directors), shallappoint a successor trustee such successor trustee to become Trustee hereunder upon the effective date specified in the Notice of Resignation, or Notice ofRemoval, or such earlier date as agreed upon by the Trustee and the party appointing the successor trustee. On or after a Change in Control, any successor trusteeappointed or otherwise designated under any provision of this Article XII, shall be a bank trust department or other third party that, on the date of appointment:

(a) may be granted corporate trustee powers under the federal or state law of the United States of America and is, in fact, duly qualified andauthorized to do trust business;

(b) has total assets of at least Ten Billion Dollars ($10,000,000,000); and

(c) has a credit rating from Moody’s Investors Service of “A” or better (or other comparable credit rating from another similarly well-recognizedcredit rating service).

12.4 Failure to Appoint Successor Trustee. If a successor trustee is not appointed within sixty (60) days after the date of the Trustee’s notice of resignationunder Section 12.1 above, or the Company’s notice of removal under Section 12.3 above, then the Trustee shall be entitled to petition a United States DistrictCourt, or any court of competent jurisdiction in the state in which the Trustee maintains its principal place of business, to appoint a successor trustee or provideinstructions. All expenses incurred by the Trustee in connection with such petition shall be allowed as administrative expenses of the Trust.

12.5 Statements of Account Upon Removal or Resignation. In the event of such removal or resignation, the Trustee shall duly file with the Company and,on and after a Change in Control, the members of the Incumbent Board then serving on the Board of Directors if any, a written statement or statements ofaccounts and proceedings as provided in Section 11.2 hereof for the period since the last annual accounting of the Trustee, or if there has been no previous annualaccounting, for the period beginning on the date that the Trust Corpus consisted of more than the initial contribution and earnings

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thereon. If written objections to such account are not filed as provided in Section 11.2 hereof, the Trustee shall to the maximum extent permitted by applicablelaw be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions shown in such Account.

12.6 Transfer of Trust Corpus to Successor Trustee. Upon resignation or removal of the Trustee and appointment of a successor trustee all assets shall betransferred to the successor trustee as soon as practical following the successor trustee’s appointment and acceptance, but in no event later than thirty (30) daysafter such appointment and acceptance, unless a longer period is agreed upon by the Trustee and such successor trustee, with the consent of the Company. TheTrustee shall continue to serve until the successor trustee accepts the Trust and receives delivery of the Trust Corpus.

ARTICLE XIII

The Recordkeeper

13.1 Appointment of Recordkeeper. The Recordkeeper shall keep the records provided in Section 13.2 and otherwise carry out the duties of theRecordkeeper in this Trust Agreement. It is recognized that the Trustee shall have no responsibility hereunder for any duty assigned to the Recordkeeperhereunder, or its performance thereof. The Company shall pay the fees and expenses of the Recordkeeper directly. After a Change of Control, the Trustee isauthorized and directed to pay the fees and expenses of the Recordkeeper from the Legal Defense Fund, to the extent any invoice to the Company for suchamounts shall remain unpaid for 30 days.

13.2 Maintenance of Records. Except for the records dealing solely with the Trust Corpus and its investment, which shall be maintained by the Trustee, theRecordkeeper shall maintain all the records contemplated by this Trust Agreement, including the maintenance of records for the separate Accounts of each Planunder this Trust Agreement and the maintenance of Plan Participants’ interests. The Recordkeeper shall maintain individual records with respect to each PlanParticipant’s interest under each Plan.

13.3 Indemnification of Recordkeeper by Company. The Company agrees to indemnify and hold harmless the Recordkeeper from and against any and alldamages, losses, claims, fees or expenses as incurred (including expenses of investigation and fees and disbursements of counsel to the Recordkeeper) arising outof or in connection with the performance by the Recordkeeper of its duties hereunder. In the event that payment is

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required to be made to the Recordkeeper from the Trust Corpus, as provided in Section 13.1 hereof, or this Section 13.3, the Trustee shall promptly pay suchamount and notify the Company in writing of the amount of such payment. The Company agrees that, upon receipt of such notice, it will deliver to the Trustee tobe held in the Trust an amount in cash equal to any payments made from the Trust Corpus to the Recordkeeper pursuant to this Section 13.3, together withinterest from the date of receipt of such notice based upon the daily average of the prime rate charged by the Trustee. The failure of the Company to transfer anysuch amount shall not in any way impair the Recordkeeper’s right to indemnification, reimbursement and payment pursuant to Section 13.1 hereof or thisSection 13.3.

13.4 Resignation, Discharge & Replacement of Recordkeeper. The Recordkeeper may resign and be discharged from its duties hereunder at any time bygiving notice in writing of such resignation to the Company, or if a Change in Control shall previously have occurred, to the Company and the Trustee,specifying a date (not less than sixty (60) days after the giving of such notice) when such resignation shall take effect. Promptly after such notice, the Company,or if a Change in Control shall previously have occurred, the Trustee shall appoint a successor recordkeeper, such successor recordkeeper to becomeRecordkeeper hereunder upon the resignation date specified in such notice. If a successor recordkeeper is not appointed within sixty (60) days after such notice,the Recordkeeper shall be entitled, at the expense of the Company, to petition a United States District Court or any court of competent jurisdiction in the state inwhich the Recordkeeper maintains its principal place of business to appoint its successor. The Recordkeeper shall continue to serve until its successor accepts theresponsibility of recordkeeper. The Company, or if a Change in Control shall previously have occurred, the Trustee may at any time substitute a newrecordkeeper by giving fifteen (15) days’ notice thereof to the Recordkeeper then acting. In the event of such removal or resignation, the Recordkeeper shallprovide its successor with the records and information in its possession relating to the performance of its duties under this Trust Agreement.

On or after a Change in Control, any successor recordkeeper appointed under this Section 13.4, shall be an actuarial firm (or other third party providingsuch services) by reputation and experience comparable to the former Recordkeeper.

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ARTICLE XIV

Authorization

14.1 Actions by Board of Directors; Compensation Committee. Any action of the Board of Directors or of the Compensation Committee pursuant to thisTrust Agreement shall be evidenced by a resolution adopted by the Board of Directors (or a duly authorized committee thereof) or the Compensation Committeethat is certified to the Trustee by the Secretary or an Assistant Secretary of the Company under its corporate seal, and the Trustee shall be fully protected in actingin accordance with such resolution. Upon a Change in Control, the Secretary or an Assistant Secretary of the Company shall certify the names of all “NonEmployee Members of the Board of Directors” and all of the “Members of the Incumbent Board of Directors then serving on the Board of Directors,” and shallprovide to the Trustee a written list of the names, signatures and extent of authority of all persons authorized to direct the Trustee on behalf of the Non EmployeeMembers of the Board of Directors and Members of the Incumbent Board of Directors then serving on the Board of Directors.

14.2 Actions by Chief Executive Officer; Treasurer. Any action of the Chief Executive Officer or Treasurer pursuant to this Trust Agreement shall beevidenced by a written notice or direction to such effect over the signature of such officer.

14.3 Other Actions of Company. The Chief Executive Officer, President, Treasurer or Secretary (or any Assistant Secretary) of the Company shall provideto the Trustee in writing from time to time the names and specimen signatures of the officers and other representatives authorized to act on behalf of theCompany. Any action of the Company pursuant to this Trust Agreement shall be evidenced by a written notice or direction to such effect over the signature ofany person on such list.

14.4 Actions by the Committee. The Committee shall furnish the Trustee with a written list of names, signatures and extent of authority of all personsauthorized to act on behalf of the Committee under the terms of the Trust Agreement.

14.5 Authorized Parties. The Company shall cause each investment manager appointed in accordance with Section 8.1 to furnish the Trustee with a writtenlist of the names and signatures of the person or persons who are authorized to represent the investment manager. The individuals whose names appear on thelists provided pursuant to Sections 14.1, 14.3 and 14.4 above, and those individuals otherwise identified pursuant to Sections 14.1 and 14.2 above, shall all beAuthorized Parties. The Trustee and

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Recordkeeper shall be entitled to rely on, and shall be fully protected in acting upon, direction from an Authorized Party, within the authority of such AuthorizedParty, until notified in writing by the Company, the Committee or investment manager, as appropriate, of a change in the identity or authority of such AuthorizedParty.

ARTICLE XV

Notices

15.1 Notices. All notices, requests, reports, demands and waivers to or upon the respective parties hereto to be effective shall be in writing, by messenger,by overnight courier or by registered or certified mail, postage prepaid and return receipt requested, or shall be an electronic transmission subject to the Trustee’spractices, and shall be deemed to have been duly given or made upon: (a) delivery by hand; or (b) upon receipt, provided the Trustee may, in its discretion,accept oral directions and instructions and may require confirmation in writing.

Such communications shall be addressed and directed to the parties listed below (except where this Trust Agreement expressly provides that it be directedto another) as follows, or to such other address or recipient for a party as may be hereafter notified by such party hereunder:

If to the Company (or any directors or officers thereof), or to the Committee:

SUNOCO, INC.1735 Market Street – Suite LLPhiladelphia, PA 19103- 7583Attention: General Counsel

If to the Trustee:

MELLON TRUST OF NEW ENGLAND, N.A135 Santilli HighwayEverett, MA 02149-1950Attention: Timothy Brennan

Relationship Manager

If to the Recordkeeper:

TOWERS, PERRIN, FORSTER & CROSBY, INC.Centre Square East1500 Market StreetPhiladelphia, PA 19102Attention: Sunoco, Inc. Retirement Plan Actuary

c/o Philadelphia Consulting Office Manager

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If to a Plan Participant, to the address of such Plan Participant provided by the Recordkeeper.

ARTICLE XVI

Miscellaneous

16.1 No Contract of Employment. Neither the establishment of this Trust, nor any modification thereof, nor the payment of any benefits in connectionherewith, shall be construed as giving any Plan Participant, or any person whosoever, the right to be retained in the service of the Company, and all PlanParticipants shall remain subject to discharge to the same extent as if this Trust had never been established.

16.2 Rights of Plan Participants. Nothing in this Trust Agreement shall in any way diminish any rights of any Plan Participant to pursue his or her rights asa general creditor of the Company (or certain of its subsidiaries) under the Plans.

16.3 Amendment or Waiver.

(a) Amendment Prior to Potential Change in Control. Prior to the occurrence of any Potential Change in Control, this Trust Agreement may beamended only by a written instrument executed by the Trustee, the Recordkeeper and the Company. In case of conflict between the terms of this TrustAgreement and the terms of the Plans, the terms of the Trust Agreement shall control; provided, however, that:

(1) provisions that, in the determination of the Company, affect solely the Trustee may, at the option of both the Trustee and the Company, beamended by a writing executed only by the Company and the Trustee, with a copy of such writing being provided to the Recordkeeper; and

(2) provisions that, in the determination of the Company, affect solely the Recordkeeper may, at the option of both the Recordkeeper and theCompany, be amended by a writing executed only by the Company and the Recordkeeper, with a copy of such writing being provided to theTrustee.

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(b) Amendment Following Potential Change in Control. Upon and after the occurrence of any Potential Change in Control, and unless otherwiserequired by applicable statute or regulation, the following rules will govern amendments and waivers:

(1) this Trust Agreement may not be amended except by an instrument in writing signed on behalf of the parties hereto together with thewritten consent of at least eighty percent (80%) of the Plan Participants then entitled to receive payments hereunder;

(2) the parties hereto, together with the consent of not less than eighty percent (80%) of the Plan Participants then entitled to receive paymentshereunder, may at any time waive compliance with any of the agreements or conditions contained herein; and

(3) any agreement on the part of a party hereto or a Plan Participant to any such waiver shall be valid if set forth in an instrument in writingsigned on behalf of such party or Plan Participant.

16.4 Severability of Provisions. If any provision of this Trust Agreement or the application thereof to any person or circumstances shall be determined by acourt of proper jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not affect either:

(a) the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable; or

(b) any other provisions of this Trust Agreement (in which case, this Trust Agreement shall be construed and enforced as if such invalid orunenforceable provisions had not been included), and this Trust Agreement shall be otherwise valid and enforced to the fullest extent permitted by law.

16.5 Non-Alienability of Benefits. Except as otherwise required by law, the interests of the Plan Participants and their beneficiaries under this Trust maynot be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal orequitable process.

16.6 Further Assurances. The Company shall, at any time and from time to time, upon the reasonable request of the Trustee and/or Recordkeeper, executeand deliver such other instruments and do such further acts as may be necessary or proper to effectuate the purposes of this Trust Agreement.

16.7 Successors, Heirs, Assigns, and Personal Representatives. This Trust Agreement shall be binding upon the administrators, successors and permittedassigns of the parties.

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16.8 Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the TrustAgreement, and shall not be employed in the construction of the Trust Agreement.

16.9 Gender and Number. Except where otherwise clearly indicated by context, the masculine and the neuter shall include the feminine and the neuter, thesingular shall include the plural, and vice-versa.

16.10 Payments to Incompetent Persons, Etc. Any benefit payable hereunder to or for the benefit of a minor, an incompetent person, or other personincapable of receipting therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for thecare of such person, and such payment shall fully discharge the Company, the Recordkeeper, the Trustee and all other parties with respect thereto.

16.11 Governing Law; Situs of Trust. TO THE EXTENT NOT PREEMPTED BY APPLICABLE FEDERAL LAW, THIS TRUST SHALL BECONSTRUED AND ENFORCED ACCORDING TO THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TOANY PROVISIONS OF SUCH LAWS REGARDING CHOICE OF LAWS OR CONFLICTS OF LAWS). THE PARTIES HEREBY EXPRESSLY WAIVE,TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY JUDICIAL PROCEEDINGARISING FROM OR RELATED TO THIS TRUST AGREEMENT.

16.12 Counterparts. This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and suchcounterparts shall constitute but one and the same instrument.

16.13 Acceptance by Trustee. The Trustee by joining in the execution of this Trust Agreement hereby signifies its acceptance of the Trust hereby created.

16.14 Insurance Policies. Anything in this Trust Agreement to the contrary notwithstanding, the Company may direct the Trustee to purchase one or morepaid up life insurance policies insuring the lives of one or more Plan Participants. In such event, the Trustee will purchase such policies and shall not beresponsible under this Trust Agreement, or otherwise, in any way respecting the acquisition, form, terms, payment provisions or issuer of such contract (otherthan the execution of any documents incidental thereto, upon discretion of the Company). The proceeds of any policy shall be credited to the applicable Planupon death of the insured Plan Participant.

16.15 Survival. The Company agrees that the provisions of Sections 11.3 and 11.4 hereof shall be binding on its successors and assigns and shall survivetermination, amendment or restatement of this Trust Agreement, or the resignation or removal of the Trustee, and that this paragraph shall be construed as acontract between the Company and the Trustee according to the laws of the Commonwealth of Massachusetts.

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16.16 Entire Understanding. This Trust Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof andsupersedes any and all prior agreements, arrangements and understandings relating thereto. This Trust Agreement shall be binding upon and inure to the benefitof the parties and their respective successors and legal representatives.

16.17 Reliance on Representations.

(a) The Company, and the Trustee each acknowledge that the others will be relying, and shall be entitled to rely, on the representations, undertakingsand acknowledgments of each of them as set forth in this Trust Agreement. The Company, and the Trustee each agree to notify the others promptly if anyof its representations, undertakings, or acknowledgments set forth in this Trust Agreement ceases to be true.

(b) Each of the parties represents and warrants to the other parties that it has full authority to enter into this Trust Agreement upon the terms andconditions hereof and that the individuals executing this Trust Agreement on its behalf have the requisite authority to bind such party to this TrustAgreement. The Company acknowledges that it has received and read the “Customer Identification Program Notice,” a copy of which is attached to thisAgreement as Schedule 16.17.

[COUNTERPART SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties have executed this Trust Agreement effective as of the date first written above.

SUNOCO, INC.(the “Company”)

By: /s/ PAUL A. MULHOLLANDName: Paul A. MulhollandTitle: Treasurer

MELLON TRUST OF NEW ENGLAND, N.A(the “Trustee”)

By: /s/ TIMOTHY M. BRENNANName: Timothy M. BrennanTitle: Vice President

TOWERS, PERRIN, FORSTER & CROSBY, INC.(the “Recordkeeper”)

By: /s/ MATHIEU LUSSIERName: Mathieu LussierTitle: Principal

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Schedule 2.1 to the Deferred Compensation and Benefits Trust AgreementBenefit Plans and Other Arrangements Subject to Trust

(1) Sunoco, Inc. Executive Retirement Plan (“SERP”);

(2) Sunoco, Inc. Deferred Compensation Plan;

(3) Sunoco, Inc. Pension Restoration Plan;

(4) Sunoco, Inc. Savings Restoration Plan.

(5) Sunoco, Inc. Special Executive Severance Plan;

(6) The funding of the Sunoco, Inc. Special Employee Severance Plan necessary to provide benefits in accordance with the terms of such Plan to onlythose employees then in grades 11 through 13.

(7) The entire funding for all the Indemnification Agreements with the executives set forth below shall be Five Million Dollars ($5,000,000) in theaggregate:

(a) Michael J. Colavita

(b) John F. Carroll

(c) Terence P. Delaney(d) Michael H. R. Dingus 1

(e) John G. Drosdick

(f) Bruce G. Fisher

(g) Thomas W. Hofmann

(h) Joseph P. Krott

(i) Michael S. Kuritzkes(j) Joel H. Maness 2

(k) Michael J. McGoldrick

(l) Ann C. Mulé

(m) Paul A. Mulholland

(n) Rolf D. Naku

(o) Marie A. Natoli

(p) Robert W. Owens

(q) Alan J. Rothman

(r) Michael J. Thomson

(s) Charles K. Valutas NOTES:

1. Mr. Dingus retired as a Senior Vice President of Sunoco, Inc., effective June 1, 2008.

2. Mr. Maness stepped down as an Executive Vice President of Sunoco, Inc., effective July 9, 2007. He continued on a part-time basis as Strategic Advisoron refining and supply issues reporting directly to the Company’s President, until his retirement from the Company, effective January 1, 2008.

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SCHEDULE 16.17

CUSTOMER IDENTIFICATION PROGRAM NOTICE

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, all financial institutions are required by law to obtain, verify and recordinformation that identifies each individual or entity that opens an account.

What this means for you: When you open an account, we will ask you for your name, address, taxpayer or other government identification number and otherinformation, such as date of birth for individuals, that will allow us to identify you. We may also ask to see identification documents such as a driver’s license,passport or documents showing existence of the entity.

Rev. 09/03

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EXHIBIT 12

STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(a)Sunoco, Inc. and Subsidiaries

(Millions of Dollars, Except Ratio)

For the SixMonths EndedJune 30, 2008

(UNAUDITED) Fixed Charges:

Consolidated interest cost and debt expense $ 56 Interest allocable to rental expense(b) 38

Total $ 94

Earnings: Consolidated income before income tax expense $ 17 Minority interest in net income of subsidiaries having fixed charges 39 Proportionate share of income tax expense of 50 percent-owned-but-not-controlled investees 3 Equity income of less-than-50-percent-owned-but-not-controlled investees (8)Dividends received from less-than-50-percent-owned-but-not-controlled investees 8 Fixed charges 94 Interest capitalized (17)Amortization of previously capitalized interest 3

Total $ 139

Ratio of Earnings to Fixed Charges 1.48

(a) The consolidated financial statements of Sunoco, Inc. and subsidiaries contain the accounts of all entities that are controlled and variable interest entitiesfor which the Company is the primary beneficiary. Corporate joint ventures and other investees over which the Company has the ability to exercisesignificant influence that are not consolidated are accounted for by the equity method.

(b) Represents one-third of total operating lease rental expense which is that portion deemed to be interest.


Exhibit 31.1

CertificationPursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John G. Drosdick, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sunoco, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure

that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our

supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal

quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.

Date: August 7, 2008 /s/ John G. Drosdick John G. Drosdick Chairman, Chief Executive Officer and President


Exhibit 31.2

CertificationPursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Thomas W. Hofmann, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sunoco, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure

that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our

supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal

quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.

Date: August 7, 2008 /s/ Thomas W. Hofmann Thomas W. Hofmann Senior Vice President and Chief Financial Officer


Exhibit 32.1

Certificationof

Periodic Financial ReportPursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, John G. Drosdick, Chairman, Chief Executive Officer and President of Sunoco, Inc., hereby certify that the Quarterly Report on Form 10-Q for thequarter ended June 30, 2008 fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the informationcontained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of Sunoco, Inc.

Date: August 7, 2008 /s/ John G. Drosdick John G. Drosdick Chairman, Chief Executive Officer and President


Exhibit 32.2

Certificationof

Periodic Financial ReportPursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Thomas W. Hofmann, Senior Vice President and Chief Financial Officer of Sunoco, Inc., hereby certify that the Quarterly Report on Form 10-Q for thequarter ended June 30, 2008 fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the informationcontained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of Sunoco, Inc.

Date: August 7, 2008 /s/ Thomas W. Hofmann Thomas W. Hofmann Senior Vice President and Chief Financial Officer

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Economy & Finance

sunoco Quarterly Reports 2008 2nd