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As filed with the Securities and Exchange Commission on May 8, 2002

Registration Statement No. 333-86036

333-86036-01

333-86036-02

333-86036-03

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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Amendment No. 1

Form S-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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Issuer of Notes Registered Hereby:

Sunoco Logistics Partners Operations L.P.
(Exact name of Co-Registrant as specified in its charter)

Delaware 4610 23-3102657
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
_______________________________________
Guarantors of Notes Registered Hereby:
SUNOCO PIPELINE L.P. SUNOCO LOGISTICS PARTNERS L.P. SUNOCO PARTNERS MARKETING & TERMINALS
(Exact name of Co-Registrant (Exact name of Co-Registrant as L.P.
as Specified in its Charter) Specified in its Charter) (Exact name of Co-Registrant
TEXAS DELAWARE as Specified in its Charter)
(State or other jurisdiction of (State or other jurisdiction of TEXAS
incorporation or organization) incorporation or organization) (State or other jurisdiction of
23-3102656 23-3096839 incorporation or organization)
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) 23-3102655
(I.R.S. Employer Identification No.)

1801 Market Street
Philadelphia, Pennsylvania 19103
(215) 977-3000
(Address, including zip code, and telephone number, including area code, of
Co-Registrants' principal executive offices)

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JEFFREY W. WAGNER
Sunoco Logistics Partners Operations L.P.
1801 Market Street
Philadelphia, Pennsylvania 19103
(215) 977-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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Copies to:
ALLAN D. REISS
CATHERINE S. GALLAGHER
Vinson & Elkins L.L.P.
666 Fifth Avenue
26/th/ Floor
New York, New York 10103
(917) 206-8000

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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We may
not exchange the notes until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell the new notes and is not soliciting an offer to buy the new notes
in any state where the offer or sale is not permitted.

Subject to Completion, dated May 8, 2002

[LOGO] SUNOCO

Sunoco Logistics Partners Operations L.P.
Offer To Exchange
Up To $250,000,000 Of
7.25% Senior Notes Due 2012
For
Up To $250,000,000 Of
7.25% Senior Notes Due 2012
That Have Been Registered Under
The Securities Act of 1933

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Terms of the New 7.25% Senior Notes Offered in the Exchange Offer:

. The terms of the new notes are identical to the terms of the outstanding
notes, except that the new notes will be registered under the Securities
Act of 1933 and will not contain restrictions on transfer, registration
rights or provisions for additional interest.

. The new notes will be our senior unsecured obligations, ranking equally
with our existing and future senior unsecured indebtedness, including
indebtedness under our revolving credit facility. However, the new notes
will be effectively subordinated to all of our secured indebtedness to the
extent of the value of the security for that indebtedness. We currently
have approximately $5 million of secured indebtedness.

. The new notes will not be listed on any securities exchange.

Terms of the Exchange Offer:

. We are offering to exchange up to $250,000,000 of our outstanding 7.25%
Senior Notes due 2012 for new notes with materially identical terms that
have been registered under the Securities Act of 1933 and are freely
tradable.

. We will exchange all outstanding notes that you validly tender and do not
validly withdraw before the exchange offer expires for an equal principal
amount of new notes. If you fail to tender your outstanding notes, you
will continue to hold unregistered securities and your ability to transfer
them could be adversely effected.

. The exchange offer is not conditioned upon any aggregate principal amount
of the outstanding notes being tendered.

. The exchange offer expires at 5:00 p.m., New York City time, on
, 2002, unless extended.

. Tenders of outstanding notes may be withdrawn at any time prior to the
expiration of the exchange offer.

. The exchange of new notes for outstanding notes should not be a taxable
event for U.S. federal income tax purposes.

You should carefully consider the risk factors beginning on page 15 of this
prospectus before participating in the exchange offer.

- --------------------------------------------------------------------------------

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the new notes or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

- --------------------------------------------------------------------------------

The date of this prospectus is , 2002.

[Graphic A- Map of operating territory depicting the location of our Eastern
Pipeline System, Terminal Facilities, Western Pipeline System, and Sunoco R&M's
refineries]

TABLE OF CONTENTS

Prospectus Summary........................................................ 1
Risk Factors.............................................................. 15
Exchange Offer............................................................ 26
Use of Proceeds........................................................... 37
Ratio of Earnings to Fixed Charges........................................ 37
Capitalization............................................................ 38
Selected Historical Financial and Operating Data of Sunoco Logistics
(Predecessor) and Pro Forma Financial Data of Sunoco Logistics Partners. 39
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 41
Business.................................................................. 60
Management................................................................ 109
Security Ownership of Certain Beneficial Owners and Management............ 114
Description of the New Notes.............................................. 115
Our Partnership Agreement................................................. 130
Certain Relationships and Related Transactions............................ 132
Certain United States Federal Income Tax Considerations................... 137
Plan of Distribution...................................................... 138
Legal Matters............................................................. 139
Experts................................................................... 139
Where You Can Find More Information....................................... 139
Forward-Looking Statements................................................ 140
Index to Financial Statements............................................. F-1

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This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission. You should rely only upon the information
contained in this document and in the accompanying letter of transmittal. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. This prospectus is not an offer to sell nor is it seeking an
offer to buy the notes in any jurisdiction where the offer or sale is not
permitted. You should assume the information appearing in this document is
accurate only as of the date on the front page of this prospectus. Our
business, financial condition, results of operations and prospects may have
changed since that date.

SUMMARY

This summary highlights information contained elsewhere in this prospectus.
It does not contain all the information that you should consider before
investing in the new notes. You should read the entire prospectus carefully,
including the historical and pro forma financial statements and notes to those
financial statements. You should read "Risk Factors" beginning on page 15 for
more information about important factors that you should consider prior to
participating in the exchange offer.

References in this prospectus to "we," "our," or "us" refer to Sunoco
Logistics Partners Operations L.P. References in this prospectus to the "master
partnership," "our parent," or "Sunoco Logistics Partners" refer to Sunoco
Logistics Partners L.P., a Delaware limited partnership which completed its
initial public offering on February 8, 2002. References in this prospectus to
"Sunoco R&M" refer to Sunoco, Inc. (R&M), a wholly owned subsidiary of Sunoco,
Inc. through which Sunoco, Inc. conducts its refining and marketing operations.
We are the wholly owned operating subsidiary of the master partnership. Except
where the context otherwise requires, references to, and descriptions of, our
assets, operations and financial results include the assets, operations and
financial results of the master partnership and its subsidiaries and
predecessors. References to the "new notes" refer to the notes being exchanged
under the exchange offer for the outstanding notes. References to "notes" refer
to both the new notes and the outstanding notes.

Sunoco Logistics Partners Operations L.P.

We are a Delaware limited partnership recently formed by Sunoco Logistics
Partners L.P. to acquire, own, and operate a geographically diverse and
complementary group of refined product and crude oil pipelines and terminal
facilities. We have an experienced management team dedicated to a growth
strategy, and we intend to acquire additional assets in the future. Our
business comprises three segments:

. Eastern Pipeline System. Our Eastern Pipeline System primarily serves
Sunoco R&M's refining and marketing operations in the Northeast and
Midwest United States and includes 1,895 miles of refined product
pipelines, including a one-third interest in an 80-mile refined product
pipeline and 58 miles of interrefinery pipelines between two of Sunoco
R&M's refineries; a 123-mile wholly owned crude oil pipeline; and a 9.4%
interest in Explorer Pipeline Company, a joint venture that owns a
1,413-mile refined product pipeline.

. Terminal Facilities. Our Terminal Facilities consist of 32 inland refined
product terminals with an aggregate capacity of 4.8 million barrels, which
primarily serve our Eastern Pipeline System; a 2.0 million barrel refined
product terminal serving Sunoco R&M's Marcus Hook refinery near
Philadelphia, Pennsylvania; an 11.2 million barrel marine crude oil
terminal on the Texas Gulf Coast, our Nederland Terminal; one inland and
two marine crude oil terminals, with a combined capacity of 3.0 million
barrels, and related pipelines, all of which serve Sunoco R&M's
Philadelphia refinery; and a 1.0 million barrel liquefied petroleum gas,
or LPG, terminal near Detroit, Michigan.

. Western Pipeline System. Our Western Pipeline System gathers, purchases,
sells, and transports crude oil principally in Oklahoma and Texas and
consists of 1,883 miles of crude oil trunk pipelines and 870 miles of
crude oil gathering lines that supply the trunk pipelines; 143 crude oil
transport trucks; and 124 crude oil truck unloading facilities.

We transport, terminal, and store refined products and crude oil in 11
states. We generate revenues by charging tariffs for transporting refined
products and crude oil through our pipelines and by charging fees for
terminalling and storing refined products, crude oil, and other hydrocarbons
in, and for providing services at, our terminals. We also generate revenues by
purchasing domestic crude oil and selling it to Sunoco R&M and other customers.
Generally, as we purchase crude oil, we simultaneously enter into corresponding
sale transactions involving physical deliveries of crude oil, which enables us
to secure a profit on the transaction at the time of purchase and to establish
a substantially balanced position.

For the year ended December 31, 2001, on a pro forma basis, we had revenues
of $1,629.2 million, EBITDA of $90.1 million, and net income of $46.5 million.

Our Relationship with Sunoco, Inc.

We have a strong and mutually beneficial relationship with Sunoco, Inc., one
of the leading independent United States refining and marketing companies and
the largest refiner in the Northeast United States. Sunoco, Inc. operates its
businesses through a number of operating subsidiaries, the primary one being
Sunoco R&M, which operates Sunoco, Inc.'s four refineries and markets gasoline
and convenience items through approximately 4,150 retail sites. Substantially
all of our business activities with Sunoco, Inc. are conducted through Sunoco
R&M. The majority of our operations are strategically located within Sunoco
R&M's refining and marketing supply chain. Sunoco R&M relies on us to provide
transportation and terminalling services that support its refining and
marketing operations.

The following table sets forth the crude oil refining capacity in barrels
per day, or bpd, of each of Sunoco R&M's refineries and, for 2001, the
percentages of crude oil and feedstocks and refined products that we
transported or terminalled for Sunoco R&M:

Crude Oil/Feedstocks Refined Products
--------------------------------------------- ---------------------------
Transported or Transported or
Crude Oil Terminalled by Percent of Sunoco Terminalled by Percent of Sunoco
Sunoco R&M Refinery Refining Capacity Our Assets R&M Volumes Our Assets R&M Volumes
- ------------------- ----------------- -------------- ----------------- -------------- -----------------
(bpd)

Philadelphia, PA.. 330,000 Yes 100% Yes 64%
Marcus Hook, PA... 175,000 No 0% Yes 94%
Toledo, OH........ 140,000 Yes 53% Yes 87%
Tulsa, OK......... 85,000 Yes 100% Yes/(1)/ 22%/(1)/
------- ---- ---
Total.......... 730,000 67%/(2)/ 72%/(1)/
======= ==== ===

- --------
/(1)/The only refined product that we transport from the Tulsa refinery is lube
extracted feedstock. Excluding that refinery, we transported or
terminalled 77% of the total refined products from Sunoco R&M's refineries.
/(2)/Excluding the Marcus Hook refinery, we transported 87% of the total crude
oil and feedstocks to Sunoco R&M's refineries.

The success of our operations substantially depends upon the continued use
of our pipelines and terminal facilities by Sunoco R&M. For the year ended
December 31, 2001, Sunoco R&M accounted for approximately 73% of the pro forma
revenues of our Eastern Pipeline System, 65% of the pro forma revenues of our
Terminal Facilities, and 66% of the pro forma revenues of our Western Pipeline
System. The corresponding historical percentages for the year ended December
31, 2001 were 73%, 59%, and 66%, respectively. For additional information
concerning our revenues attributable to Sunoco R&M, please read "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations."

With the exception of our Nederland Terminal, Sunoco R&M accounts for
substantially all of the throughput volumes at our Terminal Facilities. In
addition, Sunoco R&M and its affiliates are the only shippers on approximately
850 miles of our Eastern Pipeline System, and Sunoco R&M is the only shipper on
approximately 45 miles of our Western Pipeline System. We expect to continue to
derive a substantial portion of our revenues from Sunoco R&M for the
foreseeable future. On February 8, 2002, the closing date of the master
partnership's initial public offering, we entered into an agreement with Sunoco
R&M under which Sunoco R&M agreed to use our pipelines and terminals for
periods generally ranging from five to seven years. A more detailed description
of this agreement begins on page 4.

Sunoco, Inc. retained a significant interest in our partnership through its
indirect ownership of a 73.2% limited partner interest and a 2% general partner
interest in the master partnership. In addition, to carry out our operations,
the master partnership's general partner and its affiliates, which are
indirectly owned by Sunoco, Inc., currently employ approximately 1,160 people
who provide direct support to our operations. We do not have any employees.
Please read "Business--Employees."

Sunoco, Inc.'s common stock trades on the New York Stock Exchange under the
symbol "SUN." The master partnership's common units trade on the New York Stock
Exchange under the symbol "SXL." Sunoco, Inc. and the master partnership are
subject to the information requirements of the Securities Exchange Act of 1934.
Please read "Where You Can Find More Information."

Business Strategies

Our primary business strategies are to:

. generate stable cash flows;

. increase our pipeline and terminal throughput;

. pursue strategic and accretive acquisitions that complement our existing
asset base; and

. continue to improve our operating efficiency and to reduce our costs.

Competitive Strengths

We believe we are well-positioned to execute our business strategies
successfully using the following competitive strengths:

. We have a unique strategic relationship with Sunoco R&M's refining and
marketing operations. Our refined product and crude oil pipelines and
terminals are directly linked to Sunoco R&M's refineries and afford Sunoco
R&M with the most cost-effective means to access crude oil and distribute
refined products. Sunoco R&M has agreed to continue using our assets to
transport, terminal, and store refined products and crude oil. Please read
"Business--Our Relationship with Sunoco, Inc."

. Our refined product pipelines and our terminals are strategically located
in areas with high demand. We have a strong presence in the Northeast and
Midwest United States, and our transportation and distribution assets in
these regions operate at high utilization rates, providing us a base of
stable cash flows.

. We have a complementary portfolio of assets that are both geographically
and operationally diverse. Our assets include refined product pipelines
and terminals in the Northeast and Midwest United States and a crude oil
terminal and pipelines in Texas, Oklahoma, and the Gulf Coast area. This
diversity contributes to our stable cash flows.

. Our pipelines and terminals are efficient and well-maintained. We have
recently made significant investments to upgrade our asset base. Our
refined product pipelines and many of our crude oil pipelines and our
terminals are automated to provide continuous, real-time operational data.
We use a state-of-the-art internal inspection program and other procedures
to monitor the integrity of our pipelines.

. Our executive officers and directors have extensive experience and include
some of the most senior officers of Sunoco, Inc. Our management team has
operated our assets for almost ten years. As a result, we believe we have
the expertise to execute our business strategies. The master partnership's
general partner has adopted compensation and incentive plans to closely
align the interests of our executive officers with the interests of our
other stakeholders.

Recent Financial Results

On April 23, 2002, the master partnership announced that its net income for
the first quarter of 2002, including the period from January 1 through February
7 before the master partnership's initial public offering, increased to $12.9
million compared to $7.0 million for the first quarter of 2001. This increase
was due principally to higher revenues from the Terminal Facilities business
segment. In the first quarter of 2001, most of the terminalling and throughput
services we provided to Sunoco R&M were at fees that enabled the master
partnership to recover costs but not to generate any profits. Effective January
1, 2002, we began to charge Sunoco, Inc. market-based fees for these
terminalling services. We also benefited from the absence of corporate income
taxes subsequent to the date of the master partnership's initial public
offering.

Offsetting these increases in revenues were incremental public company
costs, one-time costs associated with the master partnership's initial public
offering, and charges associated with a pipeline leak in January 2002. As this
leak occurred prior to the master partnership's initial public offering, and we
are indemnified by Sunoco Inc. for liabilities associated with this incident,
there was no impact on our financial results following the initial public
offering.

Our Pipelines and Terminals Storage and Throughput Agreement with Sunoco R&M

Under the pipelines and terminals storage and throughput agreement with
Sunoco R&M, Sunoco R&M has agreed to pay us fees generally comparable to those
charged by third parties to:

. transport on our refined product pipelines or throughput in our 32 inland
refined product terminals an amount of refined products that will produce
at least $75.0 million of revenue in the first year, escalating at 1.67%
per year for the next four years. In addition, Sunoco R&M will pay us to
transport on our refined product pipelines an amount of refined products
that will produce at least $54.3 million of revenue in the sixth year and
at least $55.2 million of revenue in the seventh year. Sunoco R&M will pay
the published tariffs on the pipelines and contractually agreed upon fees
at the terminals. On a pro forma basis, we would have received $84.3
million in revenue from Sunoco R&M for the use of these pipelines and
terminals during the year ended December 31, 2001;

. receive and deliver at least 130,000 bpd of refined products per year at
our Marcus Hook Tank Farm for five years. In the first year, we will
receive a fee of $0.1627 per barrel for the first 130,000 bpd and $0.0813
per barrel for volumes in excess of 130,000 bpd. These fees will escalate
at the rate of 1.67% per year. During the year ended December 31, 2001,
Sunoco R&M's throughput at the Marcus Hook Tank Farm averaged 138,490 bpd;

. store 975,734 barrels of LPG per year at our Inkster Terminal, which
represents all of our LPG storage capacity at this facility. In the first
year of this seven-year agreement, we will receive a fee of $2.04 per
barrel of committed storage, a fee of $0.204 per barrel for receipts
greater than 975,734 barrels per year and a fee of $0.204 per barrel for
deliveries greater than 975,734 barrels per year. These fees will escalate
at the rate of 1.875% per year. For the past five years, Sunoco R&M has
used the full capacity of our Inkster Terminal;

. receive and deliver at least 290,000 bpd of crude oil or refined products
per year at our Fort Mifflin Terminal Complex for seven years. In the
first year, we will receive a fee of $0.1627 per barrel for the first
180,000 bpd and $0.0813 per barrel for volumes in excess of 180,000 bpd.
These fees will escalate at the rate of 1.67% per year. Sunoco R&M's
throughput at the Fort Mifflin Terminal Complex averaged 318,545 bpd
during the year ended December 31, 2001; and

. transport or cause to be transported an aggregate of at least 140,000 bpd
of crude oil per year on our Marysville to Toledo, Nederland to Longview,
Cushing to Tulsa, Barnsdall to Tulsa, and Bad Creek to Tulsa crude oil
pipelines at the published tariffs for a term of seven years. During the
year ended December 31, 2001, we and Sunoco R&M transported 166,537 bpd on
these pipelines.

If Sunoco R&M fails to meet its minimum obligations pursuant to the contract
terms set forth above, it will be required to pay us in cash the amount of any
shortfall, which may be applied as a credit in the following year after Sunoco
R&M's minimum obligations are met.

Sunoco R&M's minimum revenue or throughput obligations may be permanently
reduced or suspended if Sunoco R&M (1) shuts down or reconfigures one of its
refineries (other than planned maintenance turnarounds), or is prohibited from
using MTBE in the gasoline it produces, and (2) reasonably believes in good
faith that such event will jeopardize its ability to satisfy these obligations.
Sunoco, Inc. has advised us that it is not currently proceeding with any
transaction or plan that it believes is likely to result in any
reconfigurations or other operational changes in any of its refineries served
by our assets that would have a material effect on Sunoco R&M's business
relationship with us. Further, Sunoco, Inc. has also advised us that it is not
considering a shutdown of any of its refineries served by our assets. Sunoco,
Inc. is, however, actively managing its assets and operations, and, therefore,
changes of some nature, possibly material to its business relationship with us,
are likely to occur at some point in the future.

To the extent Sunoco R&M does not extend or renew the pipelines and
terminals storage and throughput agreement, our financial condition and results
of operations may be adversely affected. Our assets were constructed or
purchased to service Sunoco R&M's refining and marketing supply chain and are
well-situated to suit Sunoco R&M's needs. As a result, we would expect that
even if this agreement is not renewed, Sunoco R&M would continue to use our
pipelines and terminals. However, we cannot assure you that Sunoco R&M will
continue to use our facilities or that we will be able to generate additional
revenues from third parties. Please read "Risk Factors--Risks Inherent in Our
Business."

Other Agreements with Sunoco R&M and Sunoco, Inc.

Under a 20-year lease agreement, Sunoco R&M has agreed to pay us $5.1
million in the first year to lease the 58 miles of interrefinery pipelines
between Sunoco R&M's Philadelphia and Marcus Hook refineries, escalating at
1.67% per year for the next 19 years. On a pro forma basis, Sunoco R&M would
have paid us $5.0 million for the use of these pipelines during the year ended
December 31, 2001.

Sunoco R&M has agreed to purchase from us at market-based rates particular
grades of crude oil that our crude oil acquisition and marketing business
purchases for delivery to pipelines in: Longview, Trent, Tye, and Colorado
City, Texas; Haynesville, Louisiana; Marysville and Lewistown, Michigan; and
Tulsa, Oklahoma. At Marysville and Lewiston, Michigan, we exchange Michigan
sweet and Michigan sour crude oil we own for domestic sweet crude oil supplied
by Sunoco R&M at market-based rates. The initial term of these agreements is
two months. These agreements automatically renew on a monthly basis unless
terminated by either party on 30 days' written notice. Sunoco R&M has indicated
that it has no current intention to terminate these agreements. During the year
ended December 31, 2001, Sunoco R&M purchased 70,461 bpd of crude oil from us
in these areas.

On February 8, 2002, the master partnership entered into an omnibus
agreement with Sunoco, Inc. and its affiliates under which they generally
agreed not to engage in the business of purchasing crude oil at the wellhead,
or operating crude oil pipelines or terminals, refined product pipelines or
terminals, or LPG terminals in the continental United States. In addition, this
agreement addresses our payment of a fee to Sunoco, Inc. or our master
partnership's general partner for the provision of various general and
administrative services, Sunoco R&M's reimbursement to us for certain
maintenance expenditures, Sunoco, Inc.'s indemnification of us for certain
environmental and other liabilities, and other matters.

THE EXCHANGE OFFER

On February 8, 2002, we completed a private offering of the outstanding
notes. We entered into a registration rights agreement with the initial
purchasers in the private offering in which we agreed to deliver to you this
prospectus and to use our commercially reasonable efforts to complete the
exchange offer within 210 days after the date we issued the outstanding notes.

Exchange Offer.............. We are offering to exchange new notes for
outstanding notes.

Expiration Date............. The exchange offer will expire at 5:00 p.m., New
York City time, on , 2002, unless we decide
to extend it.

Condition to the Exchange
Offer..................... The registration rights agreement does not
require us to accept outstanding notes for
exchange if the exchange offer or the making of
any exchange by a holder of the outstanding notes
would violate any applicable law or
interpretation of the staff of the Securities and
Exchange Commission. The exchange offer is not
conditioned on a minimum aggregate principal
amount of outstanding notes being tendered.

Procedures for Tendering
Outstanding Notes......... To participate in the exchange offer, you must
complete, sign and date the letter of
transmittal, or a facsimile of the letter of
transmittal, and transmit it together with all
other documents required by the letter of
transmittal, including the outstanding notes that
you wish to exchange, to Wachovia Bank, National
Association (formerly First Union National Bank)
as exchange agent, at the address indicated on
the cover page of the letter of transmittal. In
the alternative, you can tender your outstanding
notes by following the procedures for book-entry
transfer described in this prospectus.

. If your outstanding notes are held through The
Depository Trust Company and you wish to
participate in the exchange offer, you may do
so through the automated tender offer program
of The Depository Trust Company. If you tender
under this program, you will agree to be bound
by the letter of transmittal that we are
providing with this prospectus as though you
had signed the letter of transmittal.

. If a broker, dealer, commercial bank, trust
company or other nominee is the registered
holder of your outstanding notes, we urge you
to contact that person promptly to tender your
outstanding notes in the exchange offer.

For more information on tendering your
outstanding notes, please refer to the sections
in this prospectus entitled "Exchange
Offer--Terms of the Exchange Offer,"
"--Procedures for Tendering" and "--Book-Entry
Transfer."

Guaranteed Delivery
Procedures................ If you wish to tender your outstanding notes and
you cannot get your required documents to the
exchange agent on time, you may tender your
outstanding notes according to the guaranteed
delivery procedures described in "Exchange
Offer--Guaranteed Delivery Procedures."

Withdrawal of Tenders....... You may withdraw your tender of outstanding notes
at any time prior to the expiration date. To
withdraw, you must have delivered a written or
facsimile transmission notice of withdrawal to
the exchange agent at its address indicated on
the cover page of the letter of transmittal
before 5:00 p.m. New York City time on the
expiration date of the exchange offer.

Acceptance of Outstanding
Notes and Delivery of New
Notes..................... If you fulfill all conditions required for proper
acceptance of outstanding notes, we will accept
any and all outstanding notes that you properly
tender in the exchange offer on or before 5:00
p.m. New York City time on the expiration date.
We will return any outstanding note that we do
not accept for exchange to you without expense as
promptly as practicable after the expiration date
and acceptance of the outstanding notes for
exchange. Please refer to the section in this
prospectus entitled "Exchange Offer--Terms of the
Exchange Offer."

Fees and Expenses........... We, together with the guarantors, will bear all
expenses related to the exchange offer. Please
refer to the section in this prospectus entitled
"Exchange Offer--Fees and Expenses."

Use of Proceeds............. The issuance of the new notes will not provide us
with any new proceeds. We are making this
exchange offer solely to satisfy our obligations
under our registration rights agreement.

Consequences of Failure to
Exchange Outstanding Notes If you do not exchange your outstanding notes in
this exchange offer, you will no longer be able
to require us to register the outstanding notes
under the Securities Act of 1933 except in
limited circumstances provided under the
registration rights agreement. In addition, you
will not be able to resell, offer to resell or
otherwise transfer the outstanding notes unless
we have registered the outstanding notes under
the Securities Act of 1933, or unless you resell,
offer to resell or otherwise transfer them under
an exemption from the registration requirements
of, or in a transaction not subject to, the
Securities Act of 1933.

U.S. Federal Income
Tax Considerations........ The exchange of new notes for outstanding notes
in the exchange offer should not be a taxable
event for U.S. federal income tax purposes.
Please read "Certain United States Federal Income
Tax Consequences."

Exchange Agent.............. We have appointed Wachovia Bank, National
Association (formerly First Union National Bank)
as exchange agent for the exchange offer. You
should direct questions and requests for
assistance, requests for additional copies of
this prospectus or the letter of transmittal and
requests for the notice of guaranteed delivery to
the exchange agent addressed as follows: Wachovia
Bank, National Association (formerly First Union
National Bank) 1525 West W.T. Harris Boulevard,
NC1153 3C3, Charlotte, North Carolina 28262-1153,
Attention: Corporate Trust Operations. Eligible
institutions may make requests by facsimile at
(704) 590-7628.

TERMS OF THE NEW NOTES

The new notes will be identical to the outstanding notes except that the new
notes are registered under the Securities Act of 1933 and will not have
restrictions on transfer, registration rights or provisions for additional
interest. The new notes will evidence the same debt as the outstanding notes,
and the same indenture will govern the new notes and the outstanding notes.

The following summary contains basic information about the new notes. It
does not contain all information that is important to you. For a more complete
description of the new notes, please read "Description of the New Notes."

Securities.................. $250 million aggregate principal amount of 7.25%
Senior Notes due 2012.

Issuer...................... Sunoco Logistics Partners Operations L.P.

Maturity Date............... February 15, 2012.

Interest Payment Dates...... February 15 and August 15, commencing August 15,
2002.

Optional Redemption......... At any time, we may redeem all or part of the new
notes at a redemption price equal to 100% of
their principal amount, plus accrued and unpaid
interest and the applicable make-whole premium.
Please read "Description of the New
Notes--Optional Redemption."

Ranking..................... The new notes will be our senior unsecured
obligations, ranking equally with our existing
and future senior unsecured indebtedness,
including indebtedness under our revolving credit
facility. However, the new notes will be
effectively subordinated to all of our secured
indebtedness to the extent of the value of the
security for that indebtedness. At March 31,
2002, we had approximately $5 million of secured
indebtedness. Furthermore, while all our existing
subsidiaries will guarantee the new notes, the
new notes will be effectively subordinated to
indebtedness of any subsidiaries that will not
guarantee the new notes in the future.

Guarantees.................. The new notes will be our senior unsecured
obligations. The new notes will be guaranteed
unconditionally by our subsidiaries and our
parent on a senior unsecured basis so long as
they guarantee any of our other long-term
indebtedness. Their guarantees of the new notes
will rank equally with their guarantees of
indebtedness under our revolving credit facility.
If we cannot make payments on the new notes when
they are due, the guarantors must make them
instead.

Covenants................... The indenture will limit our ability and the
ability of our subsidiaries to:

. create or incur liens;

. engage in sale and leaseback transactions; or

. merge or consolidate with or transfer
substantially all our assets to another entity.

These covenants are subject to exceptions. For
more details, please read "Description of the New
Notes--Important Covenants."

Change of Control........... Upon the occurrence of a change of control to a
non-investment grade entity, we must offer to
purchase the new notes at a price equal to 100%
of their principal amount plus accrued and unpaid
interest, if any, to the date of purchase.

Transfer Restrictions;
Absence of a Public Market
for the New Notes......... The new notes generally will be freely
transferable but will also be new securities for
which there is currently no market. We cannot
assure you as to the development or liquidity of
any market for the new notes.

We do not intend to apply for listing of the new
notes on any securities exchange or for the
quotation of the new notes in any automated
dealer quotation system.

Risk Factors................ Please read "Risk Factors" for a discussion of
the material risks you should carefully consider
before deciding to participate in the exchange
offer.

PARTNERSHIP STRUCTURE AND MANAGEMENT

We are the operating subsidiary of the master partnership. We and our
subsidiaries conduct the master partnership's operations and own its operating
assets. Our general partner has sole responsibility for conducting our business
and for managing our operations. The directors and officers of our general
partner are the same as the officers and directors of Sunoco Partners LLC, the
general partner of the master partnership. Our master partnership's general
partner or Sunoco, Inc. will receive an annual administrative fee, initially in
the amount of $8.0 million, for the provision of various general and
administrative services for our benefit. The $8.0 million fee does not include
salaries of pipeline and terminal personnel or other employees of our master
partnership's general partner, including senior executives, or the cost of
their employee benefits. We also reimburse Sunoco, Inc. and its affiliates for
direct expenses they incur on our behalf. We also anticipate incurring
additional general and administrative costs, including costs related to
operating as a separate publicly held entity. Please read "Certain
Relationships and Related Transactions."

Our principal executive offices are located at 1801 Market Street,
Philadelphia, Pennsylvania 19103. Our telephone number is (215) 977-3000.

The chart on the following page depicts the organization and ownership of
our parent, Sunoco Logistics Partners L.P., and our partnership.

[FLOW CHART]

-----------------------------------------------
Ownership of
Sunoco Logistics Partners L.P.
Common Unitholders:
Public Unitholders.................. 24.8%
Sunco Partners LLC.................. 24.2%

Subordinated Unitholder:
Sunco Partners LLC.................. 49.0%

General Partner Interest................ 2.0%
-----
100%
=====
-----------------------------------------------

- ------------------------- -----------------------------
Public Unitholders Sunoco, Inc.
5,750,000 Common Units
- ------------------------- -----------------------------
|
100%
Indirect
Ownership

|
-----------------------------
24.8% Sunoco Partners LLC
Limited Partner (the General Partner of the
Interest Master Partnership)
\ 5,633,639 Common Units
\ 11,383,639 Subordinated Units
Incentive Distribution Rights
-----------------------------
| |

73.2% Limited 2.0% General
Partner Interest Partner Interest
| /
----------------------------------------
Sunoco Logistics Partners L.P.
(the Master Partnership)
(Guarantor)
----------------------------------------
/
100%
Ownership Interest
/
- ---------------------------
Sunoco Logistics Partners |
(the General Partner of the 99.99% Limited
Operating Partnership) Partner Interest
- --------------------------- |

\
0.01% General
Partner Interest
\
- --------------------------- ----------------------------------------
Noteholders Sunoco Logistics Partners Operations L.P.
$250,000,000 (the Operating Partnership)
7.25% Senior Notes due 2012 (the Issuer)
- --------------------------- ----------------------------------------
|
100%
Ownership Interest
|
----------------------------------------
Operating Subsidiaries
(Guarantors)
----------------------------------------

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA

On February 8, 2002, our parent, Sunoco Logistics Partners L.P., completed
its initial public offering and related transactions whereby we became the
successor to Sunoco Logistics (Predecessor), which consists of a substantial
portion of the wholly owned logistics operations of Sunoco, Inc. and its
subsidiaries. The following table shows summary historical financial and
operating data of Sunoco Logistics (Predecessor) and pro forma financial data
of Sunoco Logistics Partners L.P., in each case for the periods and as of the
dates indicated. The selected historical financial data for Sunoco Logistics
(Predecessor) for 1999, 2000 and 2001 are derived from the audited combined
financial statements of Sunoco Logistics (Predecessor).

The pro forma financial statements of Sunoco Logistics Partners L.P. give
pro forma effect to:

. the contribution of certain assets and liabilities of Sunoco Logistics
(Predecessor) to Sunoco Logistics Partners L.P.;

. the issuance by us of the notes;

. the establishment of the revolving credit facility;

. the completion of the initial public offering by our parent of 5,750,000
of its common units representing limited partner interests; and

. the execution of the pipelines and terminals storage and throughput
agreement with Sunoco R&M and the omnibus agreement with Sunoco R&M and
Sunoco, Inc.

The summary pro forma financial data presented below as of and for the year
ended December 31, 2001 are derived from the master partnership's unaudited pro
forma financial statements. The pro forma balance sheet assumes the initial
public offering, the notes offering and related transactions occurred as of
December 31, 2001, and the pro forma statement of income assumes the initial
public offering, the notes offering and related transactions occurred on
January 1, 2001. A more complete explanation of the pro forma data can be found
in the master partnership's Unaudited Pro Forma Financial Statements.

We define EBITDA as operating income plus depreciation and amortization.
EBITDA provides additional information for evaluating our ability to service
our debt obligations and is presented solely as a supplemental measure. You
should not consider EBITDA as an alternative to net income, income before
income taxes, cash flows from operations, or any other measure of financial
performance presented in accordance with accounting principles generally
accepted in the United States. Our EBITDA may not be comparable to EBITDA or
similarly titled measures of other entities as other entities may not calculate
EBITDA in the same manner as we do.

For the periods presented, Sunoco R&M was the primary or exclusive user of
our refined product terminals, our Fort Mifflin Terminal Complex, and our
Marcus Hook Tank Farm. Historically, most of the terminalling and throughput
services provided by Sunoco Logistics (Predecessor) for Sunoco R&M's refining
and marketing operations were at fees that enabled us to recover our costs, but
not to generate any operating income. Accordingly, historical EBITDA for those
assets was equal to their depreciation and amortization.

Maintenance capital expenditures are capital expenditures made to replace
partially or fully depreciated assets in order to maintain the existing
operating capacity of our assets and to extend their useful lives. Expansion
capital expenditures are capital expenditures made to expand the existing
operating capacity of our assets, whether through construction or acquisition.
We treat repair and maintenance expenditures that do not extend the useful life
of existing assets as operating expenses as we incur them. The maintenance
capital expenditures for the periods presented include several one-time
projects to upgrade our technology, increase reliability, and lower our cost
structure.

Throughput is the total number of barrels per day transported on a pipeline
system or through a terminal and includes barrels ultimately transported to a
delivery point on another pipeline system.

The following table should be read together with, and is qualified in its
entirety by reference to, the historical and pro forma financial statements and
the accompanying notes included elsewhere in this prospectus. The table should
be read together with "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Sunoco
Logistics
Sunoco Logistics (Predecessor) Partners L.P.
Historical Pro Forma
-------------------------------------- -------------
Year Ended December 31, Year Ended
-------------------------------------- December 31,
1999/(1)/ 2000 2001 2001
---------- ---------- ---------- -------------
(in thousands, except per unit, ratio and
operating data)

Income Statement Data:
Revenues:
Sales and other operating
revenue:
Affiliates................. $ 764,133 $1,301,079 $1,067,182 $1,078,590
Unaffiliated customers..... 210,069 507,532 545,822 545,822
Other income/(2)/............ 6,133 5,574 4,774 4,774
---------- ---------- ---------- ----------
Total revenues................ 980,335 1,814,185 1,617,778 1,629,186
---------- ---------- ---------- ----------
Costs and expenses:
Cost of products sold and
operating expenses......... 866,610 1,699,541 1,503,156 1,503,156
Depreciation and amortization 19,911 20,654 25,325 25,325
Selling, general and
administrative expenses.... 27,461 34,683 35,956 35,956
---------- ---------- ---------- ----------
Total costs and expenses...... 913,982 1,754,878 1,564,437 1,564,437
---------- ---------- ---------- ----------
Operating income.............. 66,353 59,307 53,341 64,749
Net interest cost and debt
expense...................... 6,487 10,304 10,980 18,142
---------- ---------- ---------- ----------
Income before income tax
expense...................... 59,866 49,003 42,361 46,607
Income tax expense............ 22,488 18,483 15,594 --
---------- ---------- ---------- ----------
Net income.................... $ 37,378 $ 30,520 $ 26,767 $ 46,607
========== ========== ========== ==========
Pro forma net income per unit:
Basic........................ $ 2.01
==========
Diluted...................... $ 2.00
==========
Other Financial Data:
EBITDA........................ $ 86,264 $ 79,961 $ 78,666 $ 90,074
Ratio of EBITDA to interest
expense/(3)/................. 11.81 6.48 5.75 4.67
Ratio of earnings to fixed
charges/(4)/................. 7.96 4.35 3.77 3.22
Explorer Pipeline Company
joint venture (9.4%
ownership interest):
Equity income................ $ 4,591 $ 3,766 $ 4,323
Cash dividends............... $ 4,730 $ 3,749 $ 4,254
Net cash provided by
operating activities......... $ 125,165 $ 79,116 $ 27,238
Net cash used in investing
activities................... $ (75,120) $ (77,292) $ (73,079)
Net cash provided by (used
in) financing activities..... $ (50,045) $ (1,824) $ 45,841
Capital expenditures:
Maintenance.................. $ 32,312 $ 39,067 $ 53,628
Expansion.................... 49,556/(1)/ 18,854 19,055
---------- ---------- ----------
Total capital expenditures.... $ 81,868/(1)/ $ 57,921 $ 72,683
========== ========== ==========
Operating Data (bpd): Eastern
Pipeline
System throughput/(5)/....... 542,843 535,510 544,874
Terminal Facilities throughput 1,245,189 1,281,231 1,156,927
Western Pipeline System
throughput................... 252,098 295,991 287,237
Crude oil purchases at
wellhead..................... 145,425 176,964 181,448

Sunoco Logistics Sunoco Logistics
(Predecessor) Partners L.P.
Historical Pro Forma
-------------------------- ----------------
December 31, December 31,
-------------------------- ----------------
1999/(1)/ 2000 2001 2001
-------- -------- -------- ----------------
(in thousands)

Balance Sheet Data:
Net properties, plants and equipment........ $481,967 $518,605 $566,359 $566,359
Total assets................................ $712,149 $845,956 $789,201 $837,461
Total debt, including current portion and
debt due affiliate......................... $ 95,287 $190,043 $144,781 $253,094
Net parent investment/partners' equity...... $223,083 $157,023 $274,893 $325,978

- --------
/(1)/On October 1, 1999, Sunoco Logistics (Predecessor) acquired the crude oil
transportation and marketing operations of Pride Companies, L.P. for $29.6
million in cash and the assumption of $5.3 million of debt. The purchase
price was allocated to the assets acquired and liabilities assumed based
on their fair value. The acquired assets included Pride's 800-mile crude
oil pipeline system, 800,000 barrels of tankage and related assets, and
the right to purchase 35,000 barrels per day of third party lease crude
oil. The results of operations and related operating data relating to the
acquired business have been included in the above table from the date of
acquisition. We have included the purchase price of this acquisition in
expansion capital expenditures.
/(2)/Includes equity income from our master partnership's investment in
Explorer Pipeline Company, a joint venture in which we own a 9.4% interest.
/(3)/EBITDA divided by interest cost before capitalized interest.
/(4)/Earnings represent income before income tax expense before deducting fixed
charges. Fixed charges include interest and one-third of rental expense
which is the portion deemed to be interest.
/(5)/Excludes amounts attributable to our 9.4% ownership interest in Explorer
Pipeline Company and our interrefinery pipelines. Also excludes amounts
attributable to our Toledo, Twin Oaks, and Linden transfer pipelines,
which transport large volumes over short distances and generate minimal
revenues.

RATIO OF EARNINGS TO FIXED CHARGES

For purposes of calculating the ratio of earnings to fixed charges, earnings
represent income before income tax expense before deducting fixed charges.
Fixed charges include interest and one-third of rental expense which is the
portion deemed to be interest.

Sunoco Logistics
Sunoco Logistics (Predecessor) Partners L.P.
Historical Pro Forma/(1)/
------------------------------ ----------------
Year Ended December 31, Year Ended
------------------------------ December 31,
1997 1998 1999 2000 2001 2001
---- ---- ---- ---- ---- ----------------

Ratio of earnings to fixed charges.......... 5.81 8.25 7.96 4.35 3.77 3.22

- --------

(1)Assumes the master partnership's initial public offering, the notes offering
and related transactions occurred on January 1, 2001.

RISK FACTORS

You should carefully consider the following risk factors together with all
the other information included in this prospectus before deciding to exchange
any notes.

If any of the following risks were actually to occur, our business,
financial condition, or results of operations could be materially adversely
affected, which could affect our ability to service our debt obligations.

Risks Inherent in Our Business

We are required to distribute all of our available cash to our general partner
and the master partnership.

Pursuant to our partnership agreement, we are required to distribute, on a
quarterly basis, 0.01% of available cash to our general partner and 99.99% of
available cash to the master partnership. Available cash is generally all cash
on hand, plus working capital borrowings, as adjusted for reserves. Our general
partner will determine the amount and timing of such distributions and has
broad discretion to establish and make additions to reserves, for any proper
purpose, including but not limited to reserves for the purpose of (i) complying
with the terms of any agreement or obligation (including the establishment of
reserves to fund the payment of interest and principal in the future, including
on the notes), and (ii) providing for future capital expenditure payments
deemed by the master partnership to be necessary or desirable. Please read "Our
Partnership Agreement--Cash Distributions."

Cost reimbursements, which will be determined in our master partnership's
general partner's sole discretion, and fees due our master partnership's
general partner and its affiliates will be substantial.

For three years beginning February 8, 2002, we will pay Sunoco, Inc. or our
master partnership's general partner an administrative fee of $8.0 million per
year for the provision by Sunoco, Inc. or its affiliates of various general and
administrative services for our benefit. The administrative fee may increase in
the second and third years by up to a maximum of 2.5% per year and may also
increase if we make an acquisition that requires an increase in the level of
general and administrative services that we receive from Sunoco, Inc. or its
affiliates. In addition, the master partnership's general partner is entitled
to reimbursement for all other expenses it incurs on our behalf, including the
salaries of and the cost of employee benefits for employees of our master
partnership's general partner, including senior executives, who provide
services to us. Our master partnership's general partner has sole discretion in
determining the amount of these expenses. Our master partnership's general
partner and its affiliates also may provide us other services for which we will
be charged fees as determined by our master partnership's general partner.

We depend upon Sunoco R&M for a substantial portion of the crude oil and
refined products transported on our pipelines and handled at our terminals, and
any reduction in these quantities would reduce our ability to service our debt
obligations.

For the year ended December 31, 2001, Sunoco R&M accounted for approximately
73% of the pro forma revenues of our Eastern Pipeline System, 65% of the pro
forma revenues of our Terminal Facilities, and 66% of the pro forma revenues of
our Western Pipeline System. We received the balance of our revenues from third
parties. We will continue to remain dependent on third parties for additional
revenues. Our pipelines and terminals storage and throughput agreement does not
cover our crude oil acquisition and marketing business or our Nederland
Terminal. In addition, although the contract makes provision for escalation of
the fees charged to Sunoco R&M, the increased fees may be inadequate to cover
increased costs in the future.

our revenues from Sunoco R&M for the foreseeable future. If Sunoco R&M were to
decrease the throughput transported in our pipelines for any reason, our
revenues would decline and our ability to service our debt obligations could be
reduced.

Sunoco R&M's obligations under the pipelines and terminals storage and
throughput agreement may be reduced or suspended in some circumstances which
could reduce our ability to service our debt obligations.

Sunoco R&M's obligations under the pipelines and terminals storage and
throughput agreement may be permanently reduced in some circumstances, which
could reduce our ability to service our debt obligations. These events, some of
which are within the exclusive control of Sunoco R&M, include:

. Governmental action that prohibits Sunoco R&M from using MTBE in the
gasoline it produces if Sunoco R&M reasonably believes in good faith that
this action will jeopardize its ability to satisfy its minimum revenue or
throughput obligations.

. The inability of Sunoco R&M and us to agree on the amount of any surcharge
required to be paid by Sunoco R&M to cover substantial and unanticipated
costs that we may incur in complying with new laws or governmental
regulations applicable to our Terminal Facilities.

. A decision by Sunoco R&M to shut down or reconfigure one or more of its
refineries if Sunoco R&M reasonably believes in good faith that such event
will jeopardize its ability to satisfy its minimum revenue or throughput
obligations. Factors that might lead Sunoco R&M to shut down or
reconfigure a refinery include:

- reduced demand for refined products produced at the refinery;

- increasingly stringent environmental regulations. For example, Sunoco
R&M has estimated that it will be required to make capital
expenditures of approximately $300 million to $400 million over the
next five years at its refineries to bring them into compliance with
the Environmental Protection Agency's new rules limiting the sulfur
in motor gasoline and diesel fuel;

- a catastrophic event at a refinery, such as a major fire, flood, or
explosion; and

- environmental proceedings or other litigation that could limit all or
a portion of the operations at a refinery. As part of a Clean Air Act
enforcement initiative, the EPA has requested information relating to
potential violations of the Clean Air Act from Sunoco R&M and other
refiners. The EPA has entered into consent agreements with several
refiners that require them to make significant capital expenditures
to install control equipment to reduce emissions of sulfur dioxide,
nitrogen oxides, and particulate matter. Pursuant to this enforcement
initiative, Sunoco R&M recently has received notices of violation
from the EPA relating to its Marcus Hook, Philadelphia and Toledo
refineries. Sunoco R&M is currently evaluating the notices of
violation for all three refineries to determine how it will respond.
In resolving these notices of violation, Sunoco R&M could be required
to make significant capital expenditures, operate these refineries at
reduced levels, and pay significant penalties. See
"Business--Environmental Regulation."

Depending on the ultimate cost of complying with existing and future
environmental regulations or proceedings, Sunoco R&M may determine that it is
more economical to reduce production at a refinery or shut down all or a
portion of a refinery rather than make these capital expenditures. Sunoco R&M's
obligations under the pipelines and terminals storage and throughput agreement
would be reduced in this event and our ability to service our debt obligations
could also be reduced.

Furthermore, Sunoco R&M's obligations would be temporarily suspended during
the occurrence of an event that is outside the control of the parties, which
renders performance impossible with respect to an asset for at least 30 days.
The occurrence of any of these events could reduce our revenues and cash flow,
and our ability to service our debt obligations.

Sunoco, Inc. continually considers opportunities presented by third parties
with respect to its refinery assets. These opportunities may include offers to
purchase and joint venture propositions. Sunoco, Inc. also continually
considers changes to its refineries. Those changes may involve new facilities,
reduction in certain operations or modifications of facilities or operations.
Changes may be considered to meet market demands, to satisfy regulatory
requirements or environmental and safety objectives, to improve operational
efficiency or for other reasons. Sunoco, Inc. is actively managing its assets
and operations, and, therefore, changes of some nature, possibly material to
its business relationship with us, are likely to occur at some point in the
future.

If Sunoco R&M satisfies only its minimum obligations under, or if we are unable
to renew or extend, our pipelines and terminals storage and throughput
agreement, our ability to service our debt obligations could be reduced.

Sunoco R&M may reduce the volumes it transports on our pipelines or delivers
at our terminals to the minimum amounts it is obligated to transport or deliver
under the pipelines and terminals storage and throughput agreement. In
addition, the terms of Sunoco R&M's obligations under the pipelines and
terminals storage and throughput agreement are of relatively brief duration,
ranging from five to seven years. If Sunoco R&M fails to use our facilities
after expiration of the agreement and we are unable to generate additional
revenues from third parties, our results of operations would be adversely
affected thereby reducing our ability to service our debt obligations.

A significant decrease in demand for refined products in the markets served by
our pipelines would reduce our ability to service our debt obligations.

A sustained decrease in demand for refined products in the markets served by
our pipelines would significantly reduce our revenues and our ability to
service our debt obligations. Factors that could lead to a decrease in market
demand include:

. a recession or other adverse economic condition that results in lower
spending by consumers on gasoline, diesel fuel, and travel;

. an increase in the market price of crude oil that leads to higher refined
product prices;

. higher fuel taxes or other governmental or regulatory actions that
increase, directly or indirectly, the cost of gasoline or other refined
products; and

. a shift by consumers to more fuel-efficient or alternative fuel vehicles
or an increase in fuel economy, whether as a result of technological
advances by manufacturers, pending legislation proposing to mandate higher
fuel economy, or otherwise.

Due to our lack of asset diversification, adverse developments in our pipelines
and terminals businesses could reduce our ability to service our debt
obligations.

We rely exclusively on the revenues generated from our pipelines and
terminals businesses. Due to our lack of asset diversification, an adverse
development in one of these businesses could have a significantly greater
impact on our financial condition and results of operations than if we
maintained more diverse assets.

Rate regulation may not allow us to recover the full amount of increases in our
costs, and a successful challenge to our rates may reduce our ability to
service our debt obligations.

The primary rate-making methodology of the Federal Energy Regulatory
Commission, or FERC, is price indexing. We use this methodology in all of our
interstate markets. The indexing method allows a pipeline to increase its rates
by a percentage equal to the change in the producer price index for finished
goods minus 1%. If the index rises by less than 1% or falls, we will be
required to reduce our rates that are based on the FERC's price indexing
methodology if they exceed the new maximum allowable rate. In addition, changes
in the index might not be large enough to fully reflect actual increases in our
costs. The FERC's rate-making methodologies may limit our ability to set rates
based on our true costs or may delay the use of rates that reflect increased
costs. Any of the foregoing could reduce our revenues, cash flow and ability to
service our debt obligations.

Under the Energy Policy Act adopted in 1992, our interstate pipeline rates
were deemed just and reasonable or "grandfathered." As that Act applies to our
rates, a person challenging a grandfathered rate must, as a threshold matter,
establish a substantial change since the date of enactment of the Act, in
either the economic circumstances or the nature of the service that formed the
basis for the rate. A complainant might assert that the creation of the
partnership itself constitutes such a change, an argument that has not
previously been specifically addressed by the FERC. If the FERC were to find a
substantial change in circumstances, then the existing rates could be subject
to detailed review. There is a risk that some of our rates could be found to be
in excess of levels justified by our cost of service. In such event, the FERC
would order us to reduce our rates. Any such reduction would result in lower
revenues and cash flows and may reduce our ability to service our debt
obligations. Please read "Business--Rate Regulation--Our Pipelines."

In a 1995 decision involving an unrelated oil pipeline limited partnership,
the FERC partially disallowed the inclusion of income taxes in that
partnership's cost of service. In another FERC proceeding involving a different
oil pipeline limited partnership, the FERC held that the oil pipeline limited
partnership may not claim an income tax allowance for income attributable to
non-corporate limited partners. If our rates were challenged and the FERC were
to disallow the inclusion of an income tax allowance in our cost of service, it
may be more difficult for us to justify our rates.

In addition, a state commission could also investigate our intrastate rates
or our terms and conditions of service on its own initiative or at the urging
of a shipper or other interested party. If a state commission found that our
rates exceeded levels justified by our cost of service, the state commission
could order us to reduce our rates.

Sunoco R&M has agreed not to challenge, or to cause others to challenge or
assist others in challenging, our tariff rates in effect during the term of the
pipelines and terminals storage and throughput agreement. This agreement does
not prevent other current or future shippers from challenging our tariff rates.
At the end of the term of the agreement, Sunoco R&M will be free to challenge,
or to cause other parties to challenge or assist others in challenging, our
tariff rates in effect at that time. If any party successfully challenges our
tariff rates, the effect may be to reduce our revenues and cash flow and reduce
our ability to service our debt obligations.

Potential changes to current rate-making methods and procedures may impact
the federal and state regulations under which we will operate in the future. In
addition, if the FERC's petroleum pipeline ratemaking methodology changes, the
new methodology could result in tariffs that generate lower revenues and cash
flow and reduce our ability to service our debt obligations. Please read
"Business--Rate Regulation" for more information on our tariff rates.

Our operations are subject to federal, state, and local laws and regulations
relating to environmental protection and operational safety that could require
us to make substantial expenditures.

Our pipelines, gathering systems, and terminal operations are subject to
increasingly strict environmental and safety laws and regulations. The
transportation and storage of refined products and crude oil result in a risk
that refined products, crude oil, and other hydrocarbons may be suddenly or
gradually released into the environment, potentially causing substantial
expenditures for a response action, significant government penalties, liability
to government agencies for natural resources damages, personal injury, or
property damages to private parties and significant business interruption. We
own or lease a number of properties that have been used to store or distribute
refined products and crude oil for many years. Many of these properties have
also been operated by third parties whose handling, disposal, or release of
hydrocarbons and other wastes were not under our control. We expect it will
cost approximately $8.6 million to assess, monitor, and remediate 19 sites,
identified at December 31, 2001, where releases of crude oil or petroleum
products have occurred. Please read "Business--Environmental Regulation" and
"--Environmental Remediation" for more information.

We estimate that we will spend $8.2 million on storage tank inspection and
repair over the next five years at our Nederland Terminal. We also expect to
spend approximately $8.0 million in each of the next five years to comply with
the recently adopted pipeline integrity management rule of the U.S. Department
of Transportation, or DOT. Although Sunoco, Inc. has agreed to indemnify us for
costs in excess of $8.0 million per year, up to a maximum of $15.0 million over
the next five years with regard to compliance with this DOT pipeline integrity
management rule, the cost to perform such activities may exceed these estimated
amounts and the amount of any indemnification. If we are not able to recover
the excess costs through increased tariffs and revenues, our ability to service
our debt obligations could be reduced.

If existing or future state or federal government regulations banning or
restricting the use of MTBE in gasoline take effect, this action could
adversely affect our results of operations thereby reducing our ability to
service our debt obligations.

Our Eastern refined product pipeline system transports from Sunoco R&M's
refineries gasoline containing MTBE, an oxygenate used extensively to reduce
motor vehicle tailpipe emissions. Many states, including New York and
Connecticut, have banned or restricted the use of MTBE in gasoline commencing
as early as 2003 in response to concerns about MTBE's adverse impact on ground
or surface water. Other states are considering bans or restrictions on MTBE or
opting out of the EPA's reformulated gasoline program, either of which events
would reduce the use of MTBE. Any ban or restriction on the use of MTBE may
lead to the greater use of ethanol. Unlike MTBE, which can be blended in
gasoline at the refinery, ethanol is blended at the terminal and is not
transported by our pipelines. Any revenues we would receive for blending
ethanol might not offset the loss of revenues we would suffer from the reduced
volumes we transport on our Eastern refined product pipelines. In addition,
Congress is currently considering removing or modifying the oxygenate
requirement, which could reduce the amount of gasoline transported on our
Eastern refined product pipelines thereby adversely affecting our results of
operations and reducing our ability to service our debt obligations.

When the price of foreign crude oil delivered to the United States is greater
than that of domestic crude oil, or the price for the future delivery of crude
oil falls below current prices, our customers are less likely to store crude
oil, thereby reducing our storage revenues at our Nederland Terminal.

Most of the crude oil stored at our Nederland Terminal is foreign crude oil.
When the price of foreign crude oil delivered to the United States is greater
than that of domestic crude oil, the demand for this storage capacity may
decrease. If this market condition occurs, our storage revenues will be lower,
which could reduce our ability to service our debt obligations.

When the price of crude oil in a given month exceeds the price of crude oil
for delivery in a subsequent month, the market is backwardated. When the crude
oil market is backwardated, the demand for storage capacity at our Nederland
Terminal may decrease because crude oil producers can capture a premium for
prompt deliveries rather than storing it for sale later. The market has been in
backwardation for much of the last several years. In a backwardated market, our
storage revenues may be lower, which could reduce our ability to service our
debt.

A material decrease in the supply, or increase in the price, of crude oil
available for transport through our Western Pipeline System could reduce our
ability to service our debt obligations.

The volume of crude oil we transport in our crude oil pipelines depends on
the availability of attractively priced crude oil produced in the areas
accessible to our crude oil pipelines and received from other common carrier
pipelines. If we do not replace volumes lost due to a material temporary or
permanent decrease in supply, the volumes of crude oil transported through our
pipelines would decline, reducing our revenues and cash flow and our ability to
service our debt obligations. For example, some of the gathering systems that
supply crude oil that we transport on our Western Pipeline System are
experiencing a decline in production. In addition, sustained low crude oil
prices could lead to a decline in drilling activity and production levels or
the shutting-in or abandonment of marginal wells. Similarly, a temporary or
permanent material increase in the price of crude oil supplied from any of
these sources, as compared to alternative sources of crude oil available to our
customers, could cause the volumes of crude oil transported in our pipelines to
decline, thereby reducing our revenues and cash flow and adversely affecting
our ability to service our debt obligations.

Any reduction in the capability of or the allocations to our shippers in
interconnecting, third-party pipelines could cause a reduction of volumes
transported in our pipelines and through our terminals, which could reduce our
ability to service our debt obligations.

Sunoco R&M and the other users of our pipelines and terminals are dependent
upon connections to third-party pipelines to receive and deliver crude oil and
refined products. Any reduction of capabilities of these interconnecting
pipelines due to testing, line repair, reduced operating pressures, or other
causes could result in reduced volumes transported in our pipelines or through
our terminals. Similarly, if additional shippers begin transporting volumes
over interconnecting pipelines, the allocations to our existing shippers could
be reduced, which could also reduce volumes transported in our pipelines or
through our terminals. Any reduction in volumes transported in our pipelines or
through our terminals could reduce our revenues and cash flow thereby reducing
our ability to service our debt obligations.

Our operations are subject to operational hazards and unforeseen interruptions
for which we may not be adequately insured.

Our operations are subject to operational hazards and unforeseen
interruptions such as natural disasters, adverse weather, accidents, fires,
explosions, hazardous materials releases, and other events beyond our control.
These events might result in a loss of equipment or life, injury, or extensive
property damage, as well as an interruption in our operations. We may not be
able to maintain or obtain insurance of the type and amount we desire at
reasonable rates. As a result of market conditions, premiums and deductibles
for certain of our insurance policies have increased substantially, and could
escalate further. In some instances, certain insurance could become unavailable
or available only for reduced amounts of coverage. For example, insurance
carriers are now requiring broad exclusions for losses due to war risk and
terrorist acts. If we were to incur a significant liability for which we were
not fully insured, it could have a material adverse effect on our financial
position thereby reducing our ability to service our debt obligations.

We are exposed to the credit risk of our customers in the ordinary course of
our crude oil acquisition and marketing activities.

When we purchase crude oil at the wellhead, we sometimes pay all of or a
portion of the production proceeds to an operator who distributes these
proceeds to the various interest owners, an arrangement that exposes us to
operator credit risk. Therefore, we must determine whether operators have
sufficient financial resources to make these payments and distributions and to
indemnify and defend us in case of a protest, action, or complaint. Even if our
credit review and analysis mechanisms work properly, we may experience losses
in dealings with operators and other parties.

Competing pipelines could cause us to reduce our rates.

If a competing crude oil or refined product pipeline charged lower rates
than we do, we could be forced to reduce our rates to remain competitive, which
would reduce our revenues and cash flow. Several companies have announced
pipeline expansion or conversion projects that will likely begin competing with
Explorer Pipeline Company and portions of our West Texas pipeline system this
year.

If we do not make acquisitions on economically acceptable terms, any future
growth will be limited.

Our future growth will depend principally on our ability to make
acquisitions at attractive prices. If we are unable to identify attractive
acquisition candidates or we are unable to acquire businesses on economically
acceptable terms, our future growth will be limited. Any acquisition involves
potential risks, including:

. the inability to integrate the operations of recently acquired businesses;

. the diversion of management's attention from other business concerns;

. customer or key employee loss from the acquired businesses; and

. a significant increase in our indebtedness and working capital
requirements.

Any of these factors would adversely affect our ability to achieve
anticipated levels of cash flows from our acquisitions or realize other
anticipated benefits. In addition, competition from other buyers could reduce
our acquisition opportunities or cause us to pay a higher price than we might
otherwise pay.

Restrictions in our and Sunoco, Inc.'s debt agreements may prevent us from
engaging in some beneficial transactions.

As of March 31, 2002, our total outstanding long-term indebtedness was
approximately $255 million, including $250 million of the notes and
approximately $5 million of other indebtedness. The termination of the
pipelines and terminals storage and throughput agreement prior to its
expiration will constitute an event of default under our credit facility. Our
leverage and various other limitations in our credit facility and the notes may
reduce our ability to incur additional debt, engage in some transactions, and
capitalize on acquisition or other business opportunities. Please read
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." Sunoco, Inc.'s revolving credit
facility also limits the aggregate amount of debt Sunoco, Inc. and its
consolidated subsidiaries, including us, may borrow. Since Sunoco, Inc. owns
and controls the master partnership's general partner, we may not be permitted
to incur additional debt if the effect would be to cause an event of default
under Sunoco, Inc.'s revolving credit agreement. Any subsequent refinancing of
Sunoco, Inc.'s or our current debt or any new debt could have similar or
greater restrictions.

Terrorist attacks aimed at our facilities could adversely affect our business.

On September 11, 2001, the United States was the target of terrorist attacks
of unprecedented scale. Since the September 11 attacks, the U.S. government has
issued warnings that energy assets, specifically our nation's pipeline
infrastructure, may be the future targets of terrorist organizations. These
developments have subjected our operations to increased risks. Any future
terrorist attack at our facilities, those of our customers and, in some cases,
those of our pipelines, could have a material adverse effect on our business.

Risks Inherent in an Investment in Us

Sunoco, Inc. and its affiliates have conflicts of interest which may permit
them to favor their own interests to your detriment.

Sunoco, Inc. indirectly owns the 2% general partner interest and a 73.2%
limited partner interest in the master partnership and owns and controls the
general partner of our master partnership. Conflicts of interest may arise
between Sunoco, Inc. and its affiliates, including our master partnership's
general partner, on the one hand, and us, on the other hand. As a result of
these conflicts, the general partner may favor its own interests and the
interests of its affiliates over our interests. These conflicts include, among
others, the following situations:

. Sunoco R&M, as a shipper on our pipelines, has an economic incentive not
to cause us to seek higher tariff rates or terminalling fees, even if such
higher rates or terminalling fees would reflect rates that could be
obtained in arm's-length, third-party transactions;

. neither our partnership agreement nor any other agreement requires Sunoco,
Inc. to pursue a business strategy that favors us or utilizes our assets,
including whether to increase or decrease refinery production, whether to
shut down or reconfigure a refinery, or what markets to pursue or grow.
Sunoco, Inc.'s directors and officers have a fiduciary duty to make these
decisions in the best interests of the stockholders of Sunoco, Inc.;

. the master partnership's general partner is allowed to take into account
the interests of parties other than us, such as Sunoco, Inc., in resolving
conflicts of interest;

. the master partnership's general partner determines the amount and timing
of asset purchases and sales, capital expenditures, borrowings, issuance
of additional partnership securities, and reserves, each of which can
affect the amount of cash available to service our debt obligations;

. the master partnership's general partner determines which costs incurred
by Sunoco, Inc. and its affiliates are reimbursable by us;

. the master partnership's partnership agreement does not restrict its
general partner from causing the master partnership to pay its general
partner or its affiliates for any services rendered on terms that are fair
and reasonable to us or entering into additional contractual arrangements
with any of these entities on our behalf;

. the master partnership's general partner controls the enforcement of
obligations owed to us by the master partnership's general partner and its
affiliates, including the pipelines and terminals storage and throughput
agreement with Sunoco R&M;

. the master partnership's general partner decides whether to retain
separate counsel, accountants, or others to perform services for us; and

. Sunoco, Inc. may at any time propose that we undertake a project to
develop and construct or acquire an asset, and if our general partner
determines in its good faith judgment, with the concurrence of its
conflicts committee, that the project, including the terms on which
Sunoco, Inc. would agree to use such asset, will be beneficial on the
whole to us and that proceeding with the project will not effectively
preclude us from undertaking another project that will be more beneficial
to us, we will be required to use our commercially reasonable efforts to
finance, develop, and construct or acquire the asset.

Please read "Certain Relationships and Related Transactions--Omnibus
Agreement."

Sunoco, Inc. and its affiliates may engage in limited competition with us.

Sunoco, Inc. and its affiliates may engage in limited competition with us.
Pursuant to the omnibus agreement, Sunoco, Inc. and its affiliates have agreed
not to engage in the business of purchasing crude oil at the wellhead or
operating refined product or crude oil pipelines or terminals or LPG terminals
in the continental United States. The omnibus agreement, however, does not
apply to:

. any business operated by Sunoco, Inc. or any of its subsidiaries at the
closing of the initial public offering of the master partnership;

. any logistics asset constructed by Sunoco, Inc. or any of its subsidiaries
within a manufacturing or refining facility in connection with the
operation of that facility;

. any business that Sunoco, Inc. or any of its subsidiaries acquires or
constructs that has a fair market value of less than $5.0 million; and

. any business that Sunoco, Inc. or any of its subsidiaries acquires or
constructs that has a fair market value of $5.0 million or more if we have
been offered the opportunity to purchase the business for fair market
value, and we decline to do so with the concurrence of our conflicts
committee.

Upon a change of control of Sunoco, Inc. or a sale of the general partner by
Sunoco, Inc., the non-competition provisions of the omnibus agreement may
terminate.

Risks Relating to the Notes

We may not be able to generate sufficient cash flow to meet our debt service
obligations.

Our ability to make payments on and to refinance our indebtedness, including
the notes, and to fund planned capital expenditures will depend on our ability
to generate cash in the future. This, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control.

In the future, we may not be able to generate sufficient cash flow from
operations, realize currently anticipated operating improvements or borrow
amounts under our revolving credit facility sufficient to fund our other
liquidity needs. We may need to refinance all or a portion of our indebtedness,
including the notes, on or before maturity. We may not be able to refinance any
of our indebtedness, including our revolving credit facility and the notes, on
commercially reasonable terms or at all.

We are a holding company. We conduct our operations through our subsidiaries
and depend on cash flow from our subsidiaries to make payments on the notes.

We are a holding company. We conduct our operations through our
subsidiaries. As a result, our cash flow and our ability to service our debt,
including the notes, is dependent upon the earnings of our subsidiaries. In
addition, we are dependent on the distribution of earnings, loans or other
payments from our subsidiaries to us. Any payment of dividends, distributions,
loans or other payments from our subsidiaries to us could be subject to
statutory or contractual restrictions. Payments to us by our subsidiaries also
will be contingent upon the profitability of our subsidiaries. If we are unable
to obtain funds from our subsidiaries we may not be able to pay interest or
principal on the notes when due or to obtain the necessary funds from other
sources.

Following this exchange offer, we could incur a substantial amount of debt,
which could prevent us from fulfilling our obligations under the notes.

We are permitted under our revolving credit facility and the indenture
governing the notes to incur additional debt, subject to certain limitations
under our revolving credit facility and, in the case of secured debt, under the
indenture governing the notes. If we incur additional debt following this
exchange offer, our increased leverage could, for example:

. make it more difficult for us to satisfy our obligations under the notes
or other indebtedness and, if we fail to comply with the requirements of
the other indebtedness, could result in an event of default on the notes
or such other indebtedness;

. require us to dedicate a substantial portion of our cash flow from
operations to required payments on indebtedness, thereby reducing the
availability of cash flow from working capital, capital expenditures and
other general business activities;

. limit our ability to obtain additional financing in the future for working
capital, capital expenditures and other general corporate activities;

. limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;

. detract from our ability to successfully withstand a downturn in our
business or the economy generally; and

. place us at a competitive disadvantage against less leveraged competitors.

We may not be able to repurchase the notes upon a change of control.

Upon the occurrence of a change of control to a non-investment grade entity,
we must offer to repurchase the notes. We may not have sufficient funds at the
time of the change of control to make the required repurchases of the notes.
Additionally, certain events that would constitute a "change of control" (as
defined in the indenture) would constitute an event of default under our
revolving credit facility that would, if it should occur, permit the lenders to
accelerate the debt outstanding under our revolving credit facility and that,
in turn, would cause an event of default under the indenture.

In the event of our bankruptcy or liquidation, holders of the notes will be
paid from any assets remaining after payments to any holders of secured debt
and debt of our non-guarantor subsidiaries.

The notes will be general unsecured senior obligations of us and our
subsidiary guarantors, and effectively subordinated to any secured debt that we
may have in the future to the extent of the value of the assets securing that
debt. We currently have approximately $5 million of secured indebtedness. The
indenture permits us to incur additional secured indebtedness provided certain
conditions are met. In addition, while all our existing subsidiaries have
guaranteed the notes, in the event any of our subsidiaries in the future do not
guarantee the notes, the notes will be effectively subordinated to the
liabilities of any of these non-guarantor subsidiaries.

If we are declared bankrupt or insolvent, or are liquidated, the holders of
our secured debt and any debt of our non-guarantor subsidiaries will be
entitled to be paid from our assets before any payment may be made with respect
to the notes. If any of the foregoing events occur, we cannot assure you that
we will have sufficient assets to pay amounts due on our secured debt and the
notes.

The subsidiary guarantees could be deemed fraudulent conveyances under certain
circumstances, and a court may try to subordinate or void the subsidiary
guarantees.

Under the federal bankruptcy laws and comparable provisions of state
fraudulent transfer laws, a guarantee by a subsidiary could be voided, or
claims in respect of a guarantee could be subordinated to all other debts of
that guarantor if, among other things, the guarantor, at the time it incurred
the indebtedness evidenced by its guarantee:

. received less than reasonably equivalent value or fair consideration for
the incurrence of such guarantee; and

- was insolvent or rendered insolvent by reason of such incurrence; or

- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or

- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.

In addition, any payment by that subsidiary guarantor pursuant to its
guarantee could be voided and required to be returned to the guarantor, or to a
fund for the benefit of the creditors of the guarantor. The measures of
insolvency for purposes of these fraudulent transfer laws will vary depending
upon the law applied in any proceeding to determine whether a fraudulent
transfer has occurred. Generally, however, a guarantor would be considered
insolvent if:

. the sum of its debts, including contingent liabilities were greater than
the fair saleable value of all of its assets;

. the present fair saleable value of its assets were less than the amount
that would be required to pay its probable liability, including contingent
liabilities, on its existing debts, as they become absolute and mature; or

. it could not pay its debts as they become due.

Your ability to transfer the new notes at a time or price you desire may be
limited by the absence of an active trading market, which may not develop.

The new notes are a new issue of securities for which there is no
established public market. Although we have registered the new notes under the
Securities Act of 1933, we do not intend to apply for listing of the new notes
on any securities exchange or for quotation of the new notes in any automated
dealer quotation system. In addition, although the initial purchasers of the
outstanding notes have informed us that they intend to make a market in the new
notes after the exchange offer, as permitted by applicable laws and
regulations, they are not obliged to make a market in the new notes, and they
may discontinue their market-making activities at any time without notice. An
active market for the new notes may not develop or, if developed, may not
continue. Finally, if a large number of holders of outstanding notes do not
tender outstanding notes or tender outstanding notes improperly, the limited
amount of new notes that would be issued and outstanding after we consummate
the exchange offer could limit the development of a market for these new notes.
In the absence of an active trading market, you may not be able to transfer the
new notes within the time or at the price you desire.

EXCHANGE OFFER

In connection with the issuance of the outstanding notes, we entered into a
registration rights agreement. The following description of the registration
rights agreement is a summary of the material provisions of the registration
rights agreement. For more information, you should review the provisions of the
registration rights agreement that we filed with the SEC as an exhibit to the
registration statement of which this prospectus is a part. In addition, the
information below concerning specific interpretation of, and positions taken
by, the staff of the SEC is not intended to constitute legal advice. We suggest
that you consult your own legal advisors with respect to those matters.

Purpose and Effect of the Exchange Offer

Under the registration rights agreement, we agreed that, promptly after the
effectiveness of the registration statement of which this prospectus is a part,
we would offer to the holders of outstanding notes, who are not prohibited by
any law or policy of the SEC from participating in the exchange offer, the
opportunity to exchange their outstanding notes for an issue of a new series of
notes, which we refer to as the new notes. The new notes are identical in all
material respects to the outstanding notes, except that the new notes: will not
contain transfer restrictions; will be registered under the Securities Act of
1933; will not contain provisions regarding the payment of additional interest;
and will not be subject to further registration rights. We agreed to keep the
exchange offer open for not less than 20 business days after the date on which
the registration statement, of which this prospectus is a part, is declared
effective by the SEC, or longer if required by applicable law.

The registration rights agreement also provides that we will:

. make available, for a period of 180 days after the consummation of the
exchange offer, a prospectus meeting the requirements of the Securities
Act of 1933 to any broker-dealer for use in connection with any resale of
any new notes;

. pay expenses incident to the exchange offer; and

. indemnify certain holders of the outstanding notes, including any
broker-dealer, against some liabilities, including liabilities under the
Securities Act of 1933.

The new notes will bear interest at a rate of 7.25% per year, payable
semiannually on February 15 and August 15 of each year, beginning on August 15,
2002. Holders of the new notes will receive interest from the date of the
original issuance of the outstanding notes, or from the date of the last
payment of interest on the outstanding notes, whichever is later. Holders of
new notes will not receive any interest on outstanding notes tendered and
accepted for exchange.

Each holder of outstanding notes, other than specified holders, who wishes
to exchange their outstanding notes for new notes in the exchange offer will be
required to make representations, including representations that:

. it is not our affiliate;

. it is not a broker-dealer tendering notes acquired directly from us for
its own account;

. the outstanding notes being exchanged, and any new notes to be received,
by it have been or will be acquired in the ordinary course of business; and

. it has no arrangement or understanding with any person to participate in
the distribution within the meaning of the Securities Act of 1933 of the
new notes.

Shelf Registration

. If we are not permitted to consummate the exchange offer as contemplated
in this prospectus because the exchange offer is not permitted by
applicable law or SEC policy;

. if for any other reason, the exchange offer is not consummated within 240
days following the original issuance of the outstanding notes; or

. upon notice to us by any holder in specified circumstances,

then we will, in addition to or instead of effecting the registration of the
new notes pursuant to the registration statement of which this prospectus is a
part, as the case may be,

. file as promptly as practicable with the SEC, but in no event more than 60
days after so required or requested or, if later, 90 days after the
original issuance of the outstanding notes, a shelf registration statement
to cover resales of the notes by those holders who satisfy various
conditions relating to the provision of information in connection with the
shelf registration statement;

. use our best efforts to have the shelf registration statement declared
effective by the SEC as soon as practicable after it is filed, and in any
event not later than 120 days after so required to file such shelf
registration statement or, if later, 210 days after the original issuance
of the outstanding notes; and

. use our commercially reasonable efforts to keep the shelf registration
statement effective until two years after the original issuance of the
outstanding notes or until all of the notes covered by the shelf
registration statement have been sold pursuant thereto or otherwise cease
to be "registrable notes" within the meaning of the registration rights
agreement; provided, however, that we may fail to keep the shelf
registration statement effective and usable for offers and sales of notes
for specified periods under certain circumstances.

We will, in the event of the filing of a shelf registration statement,
provide to each holder of notes that are covered by the shelf registration
statement copies of the prospectus that is a part of the shelf registration
statement and notify each holder when the shelf registration statement has
become effective. A holder of notes that sells the notes pursuant to the shelf
registration statement generally will be required to be named as a selling
securityholder in the related prospectus, to deliver information to be used in
connection with the shelf registration, and to deliver a prospectus to
purchasers, will be subject to the civil liability provisions under the
Securities Act in connection with the sales and will be bound by the provisions
of the registration rights agreement that are applicable to the holder,
including indemnification rights.

Additional Interest

If any of the following events occur, each of which is referred to as a
registration default:

. the exchange offer is not consummated on or prior to the 210th calendar
day following the original issuance of the outstanding notes;

. if required, the shelf registration statement is not declared effective on
or prior to the 210th calendar day following the original issuance of the
outstanding notes; or

. if either the registration statement of which this prospectus is a part or
the shelf registration statement has been filed and declared effective but
after its effective date ceases to be effective or is unusable for its
intended purpose for more than 45 days in any twelve-month period;

then we will be obligated to pay additional interest to each holder of the
notes in addition to the rate shown on the cover page of this prospectus, from
and including the date on which any such registration default shall occur to,
but excluding the date on which the registration default has been cured, at the
rate of 0.25% per year, plus an additional 0.25% per year from and during any
period in which the registration default has continued for more than 90 days,
up to a maximum rate of 0.50% per year. In no event will the additional
interest on the notes exceed 0.50% per year. We will have no other liabilities
for monetary damages with respect to our registration obligations. With respect
to each holder, our obligations to pay additional interest remain in effect
only so long as the notes held by the holder are "registrable securities"
within the meaning of the registration rights agreement. The receipt of
additional interest will be the sole monetary remedy available to a holder if
we fail to meet these obligations.

Resales of the New Notes

Based on existing interpretations of the SEC staff in several no action
letters issued to third parties, we believe that new notes issued under the
exchange for outstanding notes may be offered for resale, resold and otherwise
transferred by you without further compliance with the registration and
prospectus delivery provisions of the Securities Act if:

. you are not our "affiliate" within the meaning of Rule 405 under the
Securities Act of 1933;

. those new notes are acquired in the ordinary course of your business; and

. you do not intend to participate in a distribution of the new notes.

The SEC, however, has not considered the exchange offer for the new notes in
the context of a no action letter, and the SEC may not make a similar
determination as in the no action letters issued to these third parties.

If you tender in the exchange offer with the intention of participating in
any manner in a distribution of the new notes, you

. cannot rely on such interpretations by the SEC staff; and

. must comply with the registration and prospectus delivery requirements of
the Securities Act of 1933 in connection with a secondary resale
transaction and that such a secondary resale transaction must be covered
by an effective registration statement containing the selling
securityholder information required by Item 507 or 508, as applicable, of
Regulation S-K.

Unless an exemption from registration is otherwise available, any
securityholder intending to distribute new notes should be covered by an
effective registration statement under the Securities Act. This registration
statement should contain the selling securityholder's information required by
Item 507 of Regulation S-K under the Securities Act of 1933. This prospectus
may be used for an offer to resell, resale or other transfer of new notes only
as specifically described in this prospectus. Only broker-dealers that acquired
the outstanding notes as a result of market-making activities or other trading
activities may participate in the exchange offer. Each broker-dealer that
receives new notes for its own account in exchange for outstanding notes, where
such outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities must acknowledge in the
letter of transmittal that it will deliver a prospectus in connection with any
resale of the new notes. Under our registration rights agreement, we are
required to allow such broker-dealers and other persons, if any, subject to
similar prospectus delivery requirements, to use this prospectus in connection
with the resale of new notes and we have agreed, for a period not to exceed 180
days following the consummation of the exchange offer, to make available a
prospectus meeting the requirements of the Securities Act to any participating
broker-dealer for use in connection with any resale of any new notes acquired
in the exchange offer. Please read the section captioned "Plan of Distribution"
for more details regarding the transfer of new notes.

A broker-dealer that delivers a prospectus to purchasers in connection with
resales of the new notes will be subject to certain of the civil liability
provisions under the Securities Act of 1933 and will be bound by the provisions
of the registration rights agreement, including indemnification rights and
obligations.

Suspension of Resales

If a broker-dealer participating in this exchange offer receives notice from
us of:

. any request by the SEC or any state securities authority for amendments or
supplements to the registration statement or prospectus or for additional
information after the registration statement has become effective;

. the issuance by the SEC or any state securities authority of any stop
order suspending the effectiveness of the registration statement or the
qualification of the new notes to be offered or sold by any participating
broker-dealer or the initiation of proceedings for that purpose;

. the happening of any event of the failure of any event to occur or the
discovery of any facts which makes any statement or related prospectus
untrue in any material respect or which causes that registration statement
or the related prospectus to omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which there were made, not misleading, as well as any other
corporate developments, public filings with the SEC or similar events
causes the registration statement not to be effective or the prospectus
not to be usable for resales; or

. our reasonable determination that a post-effective amendment to the
registration statement would be appropriate,

the participating broker-dealer will suspend the sale of notes pursuant to that
prospectus until we have either;

. amended or supplemented the prospectus to correct the misstatement or
omission and furnished copies of the amended or supplemented prospectus to
the holder, or participating broker-dealer, as the case may be; or

. given notice that the sale of the notes may be resumed.

Terms of the Exchange Offer

Subject to the terms and conditions described in this prospectus and in the
letter of transmittal, we will accept for exchange any outstanding notes
properly tendered and not withdrawn prior to 5:00 p.m. New York City time on
the expiration date. We will issue new notes in principal amount equal to the
principal amount of outstanding notes surrendered in the exchange offer.
Outstanding notes may be tendered only for new notes and only in integral
multiples of $1,000.

The exchange offer is not conditioned upon any minimum aggregate principal
amount of outstanding notes being tendered for exchange.

As of the date of this prospectus, $250,000,000 in aggregate principal
amount of the outstanding notes are outstanding. This prospectus and the letter
of transmittal are being sent to all registered holders of outstanding notes.
There will be no fixed record date for determining registered holders of
outstanding notes entitled to participate in the exchange offer.

We intend to conduct the exchange offer in accordance with the provisions of
the registration rights agreement, the applicable requirements of the
Securities Act and the Securities Exchange Act of 1934 and the rules and
regulations of the SEC. Outstanding notes that the holders thereof do not
tender for exchange in the exchange offer will remain outstanding and continue
to accrue interest. These outstanding notes will continue to be entitled to the
rights and benefits such holders have under the indenture relating to the notes.

We will be deemed to have accepted for exchange properly tendered
outstanding notes when we have given oral or written notice of the acceptance
to the exchange agent and complied with the applicable provisions of the
registration rights agreement. The exchange agent will act as agent for the
tendering holders for the purposes of receiving the new notes from us.

If you tender outstanding notes in the exchange offer, you will not be
required to pay brokerage commissions or fees or, subject to the letter of
transmittal, transfer taxes with respect to the exchange of outstanding notes.
We will pay all charges and expenses, other than certain applicable taxes
described below, in connecting with the exchange offer. It is important that
you read the section labeled "--Fees and Expenses" for more details regarding
fees and expenses incurred in the exchange offer.

We will return any outstanding notes that we do not accept for exchange for
any reason without expense to their tendering holder as promptly as practicable
after the expiration or termination of the exchange offer.

Expiration Date

The exchange offer will expire at 5:00 p.m., New York City time on ,
2002, unless, in our sole discretion, we extend it but in no event later than
60 days from the effective date of the registration statement of which this
prospectus is a part.

Extensions, Delays in Acceptance, Termination or Amendment

We expressly reserve the right, at any time or various times, to extend the
period of time during which the exchange offer is open but in no event later
than 60 days from the effective date of the registration statement of which
this prospectus is a part. We may delay acceptance of any outstanding notes by
giving oral or written notice of such extension to their holders. During any
such extensions, all outstanding notes previously tendered will remain subject
to the exchange offer, and we may accept them for exchange.

In order to extend the exchange offer, we will notify the exchange agent
orally or in writing of any extension. We will notify the registered holders of
outstanding notes of the extension no later than 9:00 a.m., New York City time,
on the business day after the previously scheduled expiration date.

If any of the conditions described below under "--Conditions to the Exchange
Offer" have not been satisfied, we reserve the right, in our sole discretion

. to delay accepting for exchange any outstanding notes,

. to extend the exchange offer, or

. to terminate the exchange offer,

by giving oral or written notice of such delay, extension or termination to the
exchange agent. Subject to the terms of the registration rights agreement, we
also reserve the right to amend the terms of the exchange offer in any manner.

Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of outstanding notes. If we amend the exchange offer in a
manner that we determine to constitute a material change, we will promptly
disclose such amendment by means of a prospectus supplement. The supplement
will be distributed to the registered holders of the outstanding notes.
Depending upon the significance of the amendment and the manner of disclosure
to the registered holders, we may extend the exchange offer but in no event
later than 60 days from the effective date of the registration statement of
which this prospectus is a part.

Conditions to the Exchange Offer

We will not be required to accept for exchange, or exchange any new notes
for, any outstanding notes if the exchange offer, or the making of any exchange
by a holder of outstanding notes, would violate applicable law or any
applicable interpretation of the staff of the SEC. Similarly, we may terminate
the exchange offer as provided in this prospectus before accepting outstanding
notes for exchange in the event of such a potential violation.

In addition, we will not be obligated to accept for exchange the outstanding
notes of any holder that has not made to us the representations described under
"--Purpose and Effect of the Exchange Offer," "--Procedures for Tendering" and
"Plan of Distribution" and such other representations as may be reasonably
necessary under applicable SEC rules, regulations or interpretations to allow
us to use an appropriate form to register the new notes under the Securities
Act.

We expressly reserve the right to amend or terminate the exchange offer, and
to reject for exchange any outstanding notes not previously accepted for
exchange, upon the occurrence of any of the conditions to the exchange offer
specified above. We will give oral or written notice of any extension,
amendment, non-acceptance or termination to the holders of the outstanding
notes as promptly as practicable.

These conditions are for our sole benefit, and we may assert them or waive
them in whole or in part at any time or at various times in our sole
discretion. If we fail at any time to exercise any of these rights, this
failure will not mean that we have waived our rights. Each such right will be
deemed an ongoing right that we may assert at any time or at various times.

In addition, we will not accept for exchange any outstanding notes tendered,
and will not issue new notes in exchange for any such outstanding notes, if at
such time any stop order has been threatened or is in effect with respect to
the registration statement of which this prospectus constitutes a part or the
qualification of the indenture relating to the notes under the Trust Indenture
Act of 1939.

Procedures for Tendering

We will only issue new notes in exchange for outstanding notes that you
timely and properly tender. Therefore, you should allow sufficient time to
ensure timely delivery of the outstanding notes and you should carefully follow
the instructions on how to tender your outstanding notes. Neither we nor the
exchange agent is required to tell you of any defects or irregularities with
respect to your tender of outstanding notes.

How to Tender Generally

Only a holder of outstanding notes may tender such outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must:

. complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal;

. have the signature on the letter of transmittal guaranteed; and

. mail or deliver such letter of transmittal or facsimile to the exchange
agent prior to 5:00 p.m. New York City time on the expiration date; or

. comply with the automated tender offer program procedures of The
Depository Trust Company, or DTC, described below.

In addition, either:

. the exchange agent must receive outstanding notes along with the letter of
transmittal;

. the exchange agent must receive, prior to 5:00 p.m. New York City time on
the expiration date, a timely confirmation of book-entry transfer of such
outstanding notes into the exchange agent's account at DTC according to
the procedure for book-entry transfer described below or a properly
transmitted agent's message; or

. the holder must comply with the guaranteed delivery procedures described
below.

To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at its
address indicated on the cover page of the letter of transmittal. The exchange
agent must receive such documents prior to 5:00 p.m. New York City time on the
expiration date.

The tender by a holder that is not withdrawn prior to 5:00 p.m. New York
City time on the expiration date will constitute an agreement between the
holder and us in accordance with the terms and subject to the conditions
described in this prospectus and in the letter of transmittal.

THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND
RISK. RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR
HAND DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE 5:00 P.M. NEW YORK CITY TIME ON THE
EXPIRATION DATE. YOU SHOULD NOT SEND THE LETTER OF TRANSMITTAL OR OUTSTANDING
NOTES TO US. YOU MAY REQUEST YOUR BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR OTHER NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR YOU.

How to Tender if You Are a Beneficial Owner

If you beneficially own outstanding notes that are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and you wish
to tender those notes, you should contact the registered holder promptly and
instruct it to tender on your behalf. If you are a beneficial owner and wish to
tender on your own behalf, you must, prior to completing and executing the
letter of transmittal and delivering your outstanding notes, either:

. make appropriate arrangements to register ownership of the outstanding
notes in your name; or

. obtain a properly completed bond power from the registered holder of
outstanding notes.

The transfer of registered ownership, if permitted under the indenture for
the notes, may take considerable time and may not be completed prior to the
expiration date.

Signatures and Signature Guarantees

You must have signatures on a letter of transmittal or a notice of
withdrawal (as described below) guaranteed by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Securities Exchange Act. In
addition, such entity must be a member of one of the recognized signature
guarantee programs identified in the letter of transmittal.

When You Need Endorsements or Bond Powers

If the letter of transmittal is signed by a person other than the registered
holder of any outstanding notes, the outstanding notes must be endorsed or
accompanied by a properly completed bond power. The endorsement or bond power,
as applicable, must be signed by the registered holder as the registered
holder's name appears on the outstanding notes. A member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an eligible guarantor institution must
guarantee the signature on the endorsement or bond power, as applicable.

If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless waived by us,
they should also submit evidence satisfactory to us of their authority to
deliver the letter of transmittal.

Tendering Through DTC's Automated Tender Offer Program

The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's automated tender offer
program to tender. Participants in the program may, instead of physically
completing and signing the letter of transmittal and delivering it to the
exchange agent, transmit their acceptance of the exchange offer electronically.
They may do so by causing DTC to transfer the outstanding notes to the exchange
agent in accordance with its procedures for transfer. DTC will then send an
agent's message to the exchange agent.

The term "agent's message" means a message transmitted by DTC, received by
the exchange agent and forming part of the book-entry confirmation, to the
effect that:

. DTC has received an express acknowledgment from a participant in its
automated tender offer program that is tendering outstanding notes that
are the subject of such book-entry confirmation;

. such participant has received and agrees to be bound by the terms of the
letter of transmittal or, in the case of an agent's message relating to
guaranteed delivery, that such participant has received and agrees to be
bound by the applicable notice of guaranteed delivery; and

. the agreement may be enforced against such participant.

Determinations Under the Exchange Offer

We will determine in our sole discretion all questions as to the validity,
form, eligibility, time of receipt, acceptance of tendered outstanding notes
and withdrawal of tendered outstanding notes. Our determination will be final
and binding. We reserve the absolute right to reject any outstanding notes not
properly tendered or any outstanding notes our acceptance of which would, in
the opinion of our counsel, be unlawful. We also reserve the right to waive any
defect, irregularities or conditions of tender as to particular outstanding
notes. Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding on all parties. Unless waived, all defects or irregularities in
connection with tenders of outstanding notes must be cured within such time as
we shall determine. Although we intend to notify holders of defects or
irregularities with respect to tenders of outstanding notes, neither we, the
exchange agent nor any other person will incur any liability for failure to
give such notification. Tenders of outstanding notes will not be deemed made
until such defects or irregularities have been cured or waived. Any outstanding
notes received by the exchange agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned to the tendering holder, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.

When We Will Issue New Notes

In all cases, we will issue new notes for outstanding notes that we have
accepted for exchange in the exchange offer only after the exchange agent
timely receives:

. outstanding notes or a timely book-entry confirmation of such outstanding
notes into the exchange agent's account at DTC; and

. a properly completed and duly executed letter of transmittal and all other
required documents or a properly transmitted agent's message.

Return of Outstanding Notes Not Accepted or Exchanged

If we do not accept any tendered outstanding notes for exchange or if
outstanding notes are submitted for a greater principal amount than the holder
desires to exchange, the unaccepted or non-exchanged outstanding notes will be
returned without expense to their tendering holder. In the case of outstanding
notes tendered by book-entry transfer in the exchange agent's account at DTC
according to the procedures described below, such non-exchanged outstanding
notes will be credited to an account maintained with DTC. These actions will
occur as promptly as practicable after the expiration or termination of the
exchange offer.

Your Representations to Us

By signing or agreeing to be bound by the letter of transmittal, you will
represent to us that, among other things:

. any new notes that you receive will be acquired in the ordinary course of
your business;

. you have no arrangement or understanding with any person or entity to
participate in the distribution of the new notes;

. you are not engaged in and do not intend to engage in the distribution of
the new notes;

. if you are a broker-dealer that will receive new notes for your own
account in exchange for outstanding notes, you acquired those notes as a
result of market-making activities or other trading activities and you
will deliver a prospectus, as required by law, in connection with any
resale of such new notes; and

. you are not our "affiliate," as defined in Rule 405 of the Securities Act.

Book-Entry Transfer

The exchange agent will establish an account with respect to the outstanding
notes at DTC for purposes of the exchange offer promptly after the date of this
prospectus. Any financial institution participating in DTC's system may make
book-entry delivery of outstanding notes by causing DTC to transfer such
outstanding notes into the exchange agent's account at DTC in accordance with
DTC's procedures for transfer. Holders of outstanding notes who are unable to
deliver confirmation of the book-entry tender of their outstanding notes into
the exchange agent's account at DTC or all other documents required by the
letter of transmittal to the exchange agent on or prior to 5:00 p.m. New York
City time on the expiration date must tender their outstanding notes according
to the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

If you wish to tender your outstanding notes but your outstanding notes are
not immediately available or you cannot deliver your outstanding notes, the
letter of transmittal or any other required documents to the exchange agent or
comply with the applicable procedures under DTC's automated tender offer
program prior to the expiration date, you may tender if:

. the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent
in the United States, or an eligible guarantor institution,

. prior to the expiration date, the exchange agent receives from such member
firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., commercial bank or trust company
having a office or correspondent in the United States, or eligible
guarantor institution either a properly completed and duly executed notice
of guaranteed delivery by facsimile transmission, mail or hand delivery or
a properly transmitted agent's message and notice of guaranteed delivery:

. setting forth your name and address, the registered number(s) of your
outstanding notes and the principal amount of outstanding notes tendered,

. stating that the tender is being made thereby, and

. guaranteeing that, within three (3) New York Stock Exchange ("NYSE")
trading days after the expiration date, the letter of transmittal or
facsimile thereof, together with the outstanding notes or a book-entry
confirmation, and any other documents required by the letter of
transmittal will be deposited by the eligible guarantor institution with
the exchange agent, and

. the exchange agent receives such properly completed and executed letter
of transmittal or facsimile thereof, as well as all tendered outstanding
notes in proper form for transfer or a book-entry confirmation, and all
other documents required by the letter of transmittal, within three (3)
NYSE trading days after the expiration date.

Upon request to the exchange agent, a notice of guaranteed delivery will be
sent you if you wish to tender your outstanding notes according to the
guaranteed delivery procedures described above.

Withdrawal of Tenders

Except as otherwise provided in this prospectus, you may withdraw your
tender at any time prior to 5:00 p.m. New York City time on the expiration date.

For a withdrawal to be effective:

. the exchange agent must receive a written notice of withdrawal at the
address indicated on the cover page of the letter of transmittal or

. you must comply with the appropriate procedures of DTC's automated tender
offer program system.

Any notice of withdrawal must:

. specify the name of the person who tendered the outstanding notes to be
withdrawn, and

. identify the outstanding notes to be withdrawn, including the principal
amount of such outstanding notes.

If outstanding notes have been tendered under the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with withdrawn outstanding notes
and otherwise comply with the procedures of DTC.

We will determine all questions as to the validity, form, eligibility and
time of receipt of notice of withdrawal. Our determination shall be final and
binding on all parties. We will deem any outstanding notes so withdrawn not to
have been validly tendered for exchange for purposes of the exchange offer.

Any outstanding notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder. In the case of outstanding notes tendered by book-entry transfer into
the exchange agent's account at DTC according to the procedures described
above, such outstanding notes will be credited to an account maintained with
DTC for the outstanding notes. This return or crediting will take place as soon
as practicable after withdrawal, rejection of tender or termination of the
exchange offer. You may retender properly withdrawn outstanding notes by
following one of the procedures described under "--Procedures for Tendering"
above at any time on or prior to the expiration date.

Fees and Expenses

We, together with the guarantors, will bear the expenses of soliciting
tenders. The principal solicitation is being made by mail; however, we may make
additional solicitation by telegraph, telephone or in person by our officers
and regular employees and those of our affiliates.

We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.

We will pay the cash expenses to be incurred in connection with the exchange
offer. They include:

. SEC registration fees;

. fees and expenses of the exchange agent and trustee;

. accounting and legal fees and printing costs; and

. related fees and expenses.

Transfer Taxes

We will pay all transfer taxes, if any, applicable to the exchange of
outstanding notes under the exchange offer. The tendering holder, however, will
be required to pay any transfer taxes, whether imposed on the registered holder
or any other person, if:

. certificates representing outstanding notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of
outstanding notes tendered;

. tendered outstanding notes are registered in the name of any person other
than the person signing the letter of transmittal; or

. a transfer tax is imposed for any reason other than the exchange of
outstanding notes in the exchange offer.

If satisfactory evidence of payment of any transfer taxes payable by a note
holder is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to that tendering holder.

Consequences of Failure to Exchange

If you do not exchange new notes for your outstanding notes under the
exchange offer, you will remain subject to the existing restrictions on
transfer of the outstanding notes. In general, you may not offer or sell the
outstanding notes unless they are registered under the Securities Act, or
unless the offer or sale is exempt from the registration under the Securities
Act and applicable state securities laws. Except as required by the
registration rights agreement, we do not intend to register resales of the
outstanding notes under the Securities Act. If you continue to hold any
outstanding notes after the exchange offer is consummated, you may have trouble
selling them because there will be fewer outstanding notes in the market.

Accounting Treatment

We will record the new notes in our accounting records at the same carrying
value as the outstanding notes. This carrying value is the aggregate principal
amount of the outstanding notes less any bond discount, as reflected in our
accounting records on the date of exchange. Accordingly, we will not recognize
any gain or loss for accounting purposes in connection with the exchange offer.

Other

Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your own decision on what action to take.

We may in the future seek to acquire untendered outstanding notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. We have no present plans to acquire any outstanding notes that
are not tendered in the exchange offer or to file a registration statement to
permit resales of any untendered outstanding notes.

USE OF PROCEEDS

The exchange offer is intended to satisfy our obligations under the
registration rights agreement. We will not receive any proceeds from the
issuance of the new notes in the exchange offer. In consideration for issuing
the new notes as contemplated by this prospectus, we will receive outstanding
notes in a like principal amount. The form and terms of the new notes are
identical in all respects to the form and terms of the outstanding notes,
except the new notes will be registered under the Securities Act of 1933 and
will not contain restrictions on transfer, registration rights or provisions
for additional interest. Outstanding notes surrendered in exchange for the new
notes will be retired and cancelled and will not be reissued. Accordingly, the
issuance of the new notes will not result in any change in outstanding
indebtedness.

We distributed the net proceeds from the sale of the outstanding notes to
the master partnership for distribution to Sunoco, Inc. and its affiliates.

RATIO OF EARNINGS TO FIXED CHARGES

Sunoco Logistics Sunoco Logistics
(Predecessor) Partners L.P.
Historical Pro Forma/(1)/
------------------------ ----------------
Year Ended December 31, Year Ended
------------------------ December 31,
1997 1998 1999 2000 2001 2001
---- ---- ---- ---- ---- ----------------

Ratio of earnings to fixed charges 5.81 8.25 7.96 4.35 3.77 3.22

- --------
/(1)/Assumes the master partnership's initial public offering, the notes
offering and related transactions occurred on January 1, 2001.

CAPITALIZATION

The following table shows:

. the historical capitalization of the predecessor to the master partnership
as of December 31, 2001; and

. the master partnership's pro forma capitalization as of December 31, 2001,
adjusted to reflect the offering by us of the notes, the initial public
offering by the master partnership of its common units, the removal of
assets and liabilities that were not contributed by Sunoco, Inc. to us and
the application of the net proceeds from the notes and the initial public
offering.

This table is derived from, should be read together with and is qualified in
its entirety by reference to the historical and pro forma financial statements
and the accompanying notes included elsewhere in this prospectus.

As of December 31, 2001
----------------------
Historical Pro Forma
---------- ---------
(in thousands)

Debt due to affiliate, including current portion............ $140,000 $ --
Notes....................................................... -- 250,000
Unamortized discount........................................ -- (1,687)
Other debt, including current portion....................... 4,781 4,781
-------- --------
Total debt............................................... 144,781 253,094
-------- --------
Equity:
Net parent investment.................................... 274,893 --
Held by public:
Common Units......................................... -- 98,337
Held indirectly by Sunoco, Inc.:
Common Units......................................... -- 73,854
Subordinated Units................................... -- 149,234
General partner interest............................. -- 4,553
-------- --------
Total equity...................................... 274,893 325,978
-------- --------
Total capitalization.............................. $419,674 $579,072
======== ========

SELECTED HISTORICAL FINANCIAL AND OPERATING DATA

OF SUNOCO LOGISTICS (PREDECESSOR) AND PRO FORMA

FINANCIAL DATA OF SUNOCO LOGISTICS PARTNERS

On February 8, 2002, our parent, Sunoco Logistics Partners L.P., completed
its initial public offering and related transactions whereby we became the
successor to Sunoco Logistics (Predecessor), which consists of a substantial
portion of the wholly owned logistics operations of Sunoco, Inc. and its
subsidiaries. The following table shows selected historical financial and
operating data of Sunoco Logistics (Predecessor) and pro forma financial data
of Sunoco Logistics Partners L.P., in each case for the periods and as of the
dates indicated. The selected historical financial data for Sunoco Logistics
(Predecessor) for 1998, 1999, 2000 and 2001 are derived from the audited
combined financial statements of Sunoco Logistics (Predecessor). The selected
historical financial data for Sunoco Logistics (Predecessor) for 1997 are
derived from the unaudited combined financial statements of Sunoco Logistics
(Predecessor).

The pro forma financial statements of Sunoco Logistics Partners L.P. give
pro forma effect to:

. the contribution of certain assets and liabilities of Sunoco Logistics
(Predecessor) to Sunoco Logistics Partners L.P.;

. the issuance by us of the notes;

. the establishment of the revolving credit facility;

. the completion of the initial public offering by our parent of 5,750,000
of its common units representing limited partner interests; and

. the execution of the pipelines and terminals storage and throughput
agreement with Sunoco R&M and the omnibus agreement with Sunoco R&M and
Sunoco, Inc.

The selected pro forma financial data presented below as of and for the year
ended December 31, 2001 are derived from the master partnership's unaudited pro
forma financial statements. The pro forma balance sheet assumes the initial
public offering, the notes offering and related transactions occurred as of
December 31, 2001, and the pro forma statement of income assumes the initial
public offering, the notes offering and related transactions occurred on
January 1, 2001. A more complete explanation of the pro forma data can be found
in the master partnership's Unaudited Pro Forma Financial Statements included
elsewhere herein.

Throughput is the total number of barrels per day transported on a pipeline
system or through a terminal and includes barrels ultimately transported to a
delivery point on another pipeline system.

Sunoco Logistics
Sunoco Logistics (Predecessor) Partners L.P.
Historical Pro Forma
-------------------------------------------------------------- ----------------
Year Ended December 31, Year Ended
-------------------------------------------------------------- December 31,
1997 1998 1999/(1)/ 2000 2001 2001
---------- ---------- ---------- ---------- ---------- ----------------
(in thousands, except per unit, ratio and operating data)

Income Statement Data:
Revenues:
Sales and other operating revenue:
Affiliates................................ $ 766,151 $ 570,332 $ 764,133 $1,301,079 $1,067,182 $1,078,590
Unaffiliated customers.................... 108,493 124,869 210,069 507,532 545,822 545,822
Other income/(2)/........................... 3,894 5,022 6,133 5,574 4,774 4,774
---------- ---------- ---------- ---------- ---------- ----------
Total revenues............................... 878,538 700,223 980,335 1,814,185 1,617,778 1,629,186
---------- ---------- ---------- ---------- ---------- ----------
Costs and expenses:
Cost of products sold and operating expenses 770,091 583,587 866,610 1,699,541 1,503,156 1,503,156
Depreciation and amortization............... 18,194 18,622 19,911 20,654 25,325 25,325
Selling, general and administrative expenses 29,811 29,890 27,461 34,683 35,956 35,956
---------- ---------- ---------- ---------- ---------- ----------
Total costs and expenses..................... 818,096 632,099 913,982 1,754,878 1,564,437 1,564,437
---------- ---------- ---------- ---------- ---------- ----------
Operating income............................. 60,442 68,124 66,353 59,307 53,341 64,749
Net interest cost and debt expense........... 8,675 7,117 6,487 10,304 10,980 18,142
---------- ---------- ---------- ---------- ---------- ----------
Income before income tax expense............. 51,767 61,007 59,866 49,003 42,361 46,607
Income tax expense........................... 19,494 23,116 22,488 18,483 15,594 --
---------- ---------- ---------- ---------- ---------- ----------
Net income................................... $ 32,273 $ 37,891 $ 37,378 $ 30,520 $ 26,767 $ 46,607
========== ========== ========== ========== ========== ==========
Pro forma net income per unit:
Basic....................................... $ 2.01
==========
Diluted..................................... $ 2.00
==========
Other Financial Data:
EBITDA....................................... $ 78,636 $ 86,746 $ 86,264 $ 79,961 $ 78,666 $ 90,074
Ratio of EBITDA to interest expense/(3)/..... 8.64 11.53 11.81 6.48 5.75 4.67
Ratio of earnings to fixed charges/(4)/...... 5.81 8.25 7.96 4.35 3.77 3.22
Explorer Pipeline Company joint venture
(9.4% ownership interest):
Equity income............................... $ 3,881 $ 3,885 $ 4,591 $ 3,766 $ 4,323
Cash dividends.............................. $ 2,958 $ 4,612 $ 4,730 $ 3,749 $ 4,254
Net cash provided by operating activities.... $ 36,313 $ 44,950 $ 125,165 $ 79,116 $ 27,238
Net cash used in investing activities........ $ (36,594) $ (36,933) $ (75,120) $ (77,292) $ (73,079)
Net cash provided by (used in) financing
activities.................................. $ 281 $ (8,017) $ (50,045) $ (1,824) $ 45,841
Capital expenditures:
Maintenance................................. $ 26,680 $ 28,420 $ 32,312 $ 39,067 $ 53,628
Expansion................................... 8,428 8,527 49,556/(1)/ 18,854 19,055
---------- ---------- ---------- ---------- ----------
Total capital expenditures................... $ 35,108 $ 36,947 $ 81,868/(1)/ $ 57,921 $ 72,683
========== ========== ========== ========== ==========
Operating Data (bpd):
Eastern Pipeline System throughput/(5)/...... 522,170 520,627 542,843 535,510 544,874
Terminal Facilities throughput............... 1,166,661 1,163,907 1,245,189 1,281,231 1,156,927
Western Pipeline System throughput........... 258,931 253,124 252,098 295,991 287,237
Crude oil purchases at wellhead.............. 163,736 155,606 145,425 176,964 181,448

Balance Sheet Data (at period end):
Net properties, plants and equipment......... $ 412,312 $ 430,848 $ 481,967 $ 518,605 $ 566,359 $ 566,359
Total assets................................. $ 596,478 $ 528,279 $ 712,149 $ 845,956 $ 789,201 $ 837,461
Total debt, including current portion and
debt due affiliate.......................... $ 90,000 $ 90,225 $ 95,287 $ 190,043 $ 144,781 $ 253,094
Net parent investment/partners' equity....... $ 205,604 $ 235,478 $ 223,083 $ 157,023 $ 274,893 $ 325,978

- --------
/(1)/On October 1, 1999, Sunoco Logistics (Predecessor) acquired the crude oil
transportation and marketing operations of Pride Companies, L.P. for $29.6
million in cash and the assumption of $5.3 million of debt. The purchase
price was allocated to the assets acquired and liabilities assumed based
on their fair value. The acquired assets included Pride's 800-mile crude
oil pipeline system, 800,000 barrels of tankage and related assets, and
the right to purchase 35,000 barrels per day of third party lease crude
oil. The results of operations and related operating data relating to the
acquired business have been included in the above table from the date of
acquisition. We have included the purchase price of this acquisition in
expansion capital expenditures.
/(2)/Includes equity income from our master partnership's investment in
Explorer Pipeline Company, a joint venture in which we own a 9.4% interest.
/(3)/EBITDA divided by interest cost before capitalized interest.
/(4)/Earnings represent income before income tax expense before deducting fixed
charges. Fixed charges include interest and one-third of rental expense
which is the portion deemed to be interest.
/(5)/Excludes amounts attributable to our master partnership's 9.4% ownership
interest in Explorer Pipeline Company and our interrefinery pipelines.
Also excludes amounts attributable to our Toledo, Twin Oaks, and Linden
transfer pipelines, which transport large volumes over short distances and
generate minimal revenues.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion of the financial condition and results of
operations of Sunoco Logistics (Predecessor) should be read in conjunction with
the historical combined financial statements of Sunoco Logistics (Predecessor)
and the pro forma financial statements of Sunoco Logistics Partners L.P.
included elsewhere in this prospectus. Among other things, those historical and
pro forma financial statements include more detailed information regarding the
basis of presentation for the following information.

Introduction

Sunoco Logistics Partners Operations L.P. is a Delaware limited partnership
formed on December 6, 2001 as the operating subsidiary of Sunoco Logistics
Partners L.P. to acquire, own, and operate, through our wholly owned
subsidiaries, refined product pipelines, terminalling and storage assets, crude
oil pipelines, and crude oil acquisition and marketing assets located in the
Northeast and Midwest United States. Most of these assets support Sunoco R&M, a
wholly owned refining and marketing subsidiary of Sunoco, Inc.

General

We conduct business through three segments: our Eastern Pipeline System, our
Terminal Facilities, and our Western Pipeline System. Our Eastern Pipeline
System primarily transports refined products in the Northeast and Midwest
United States largely for three of Sunoco R&M's refineries and transports crude
oil in Ohio and Michigan. This system also includes our interrefinery pipeline
between Sunoco R&M's Marcus Hook and Philadelphia refineries and our 9.4%
ownership interest in Explorer Pipeline Company, a joint venture that owns a
refined product pipeline located in the Midwest United States. Our Terminal
Facilities business includes our network of 32 refined product terminals in the
Northeast and Midwest United States that distribute products primarily to
Sunoco R&M's retail outlets, our Nederland marine crude oil terminal on the
Texas Gulf Coast, and a LPG storage facility in the Midwest. Our Terminal
Facilities business also owns and operates refinery related assets, including
one inland and two marine crude oil terminals and related pipelines that supply
all of the crude oil processed by Sunoco R&M's Philadelphia refinery and a
refined product storage terminal used by Sunoco R&M's Marcus Hook refinery. Our
Western Pipeline System owns and operates crude oil trunk and gathering
pipelines and purchases and markets crude oil primarily in Oklahoma and Texas
for Sunoco R&M's Tulsa, Oklahoma and Toledo, Ohio refineries and for other
customers.

Eastern Pipeline System

We generate revenue by charging shippers tariffs for transporting refined
products and crude oil through our pipelines. The amount of revenue we generate
depends on the level of these tariffs and the throughput in our pipelines. When
transporting barrels, we charge a tariff based on the point of origin and the
ultimate destination, even if the barrel moves through more than one pipeline
segment to reach its destination. For example, on the Philadelphia,
Pennsylvania to Buffalo, New York pipeline segment, we have separate tariffs
depending on whether the ultimate destination from Philadelphia is Rochester,
New York or Buffalo, New York.

The tariffs for our interstate common carrier pipelines are regulated by the
FERC. The rate-making methodology for these pipelines is price indexing. This
methodology provides for increases in tariff rates based upon changes in the
producer price index. Competition, however, may constrain the tariffs we
charge. We also lease to Sunoco R&M, for a fixed amount escalating annually at
1.67%, three pipelines between Sunoco R&M's Marcus Hook and Philadelphia
refineries, as well as a pipeline from our Paulsboro terminal to the
Philadelphia International Airport for the delivery of jet fuel.

The crude oil and refined product throughput in our pipelines is directly
affected by the level of supply and demand for crude oil and refined products
in the markets served directly or indirectly by our pipelines. Demand for
gasoline in most markets peaks during the summer driving season, which extends
from April to September,

and declines during the fall and winter months. Demand for heating oil and
other distillate fuels tends to peak during the winter heating season, and
declines during the spring and summer months. The supply of crude oil to our
Eastern Pipeline System depends upon the level of crude oil production in
Canada, which has increased in recent years. Demand for crude oil transported
to refineries for processing is driven by refining margins (the price of
refined products compared to the price of crude oil and refining costs),
unscheduled downtime at refineries and the amount of turnaround activity, when
refiners shut down selected portions of the refinery for scheduled maintenance.

The operating income generated by our Eastern Pipeline System depends not
only on the volumes transported on the pipelines and the level of the tariff
charged, but also on the fixed costs and, to a much lesser extent, the variable
costs of operating the pipelines. Fixed costs are typically related to
maintenance, insurance, control rooms, telecommunications, pipeline field and
support personnel and depreciation. Variable costs, such as fuel and power
costs to run pump stations along the pipelines, fluctuate with throughput.

Terminal Facilities

Historically, most of the terminalling and throughput services we have
provided for Sunoco R&M were at fees that enabled us to recover our costs but
not generate operating income. Upon the closing of the master partnership's
initial public offering in February 2002, we entered into a pipelines and
terminals storage and throughput agreement with Sunoco R&M under which we
charge Sunoco R&M fees comparable to those charged in arm's-length, third-party
transactions. Under this agreement, Sunoco R&M pays us a minimum level of
revenues for terminalling refined products and crude oil and agrees to certain
minimum throughputs at our Inkster Terminal, Fort Mifflin Terminal Complex, and
Marcus Hook Tank Farm. Please read "--Agreements with Sunoco R&M and Sunoco,
Inc." and "Certain Relationships and Related Transactions." Under this
agreement, operating income from terminalling and storage activities depends on
throughput and storage volume and the level of fees charged for terminalling
and storage services, as well as the fixed and variable costs of operating
these facilities.

We generate revenue at our Nederland Terminal by charging storage and
throughput fees for crude oil and other petroleum products. The operating
income generated at this facility depends on storage and throughput volumes and
the level of fees charged for these services, as well as the fixed and variable
costs of operating the terminal. The absolute price level of crude oil and
refined products does not directly affect terminalling and storage fees,
although they are affected by the absolute levels of supply and demand for
these products.

Western Pipeline System

The Western Pipeline System consists of our crude oil pipelines and
gathering systems as well as our crude oil acquisition and marketing operations.

The factors affecting the operating results of our crude oil pipelines and
gathering systems are substantially similar to the factors affecting the
operating results of our pipelines in the Eastern Pipeline System described
above. The operating results of our crude oil acquisition and marketing
operations are dependent on our ability to sell crude oil at a price in excess
of our aggregate cost. We believe gross margin, which is equal to sales and
other operating revenue less cost of products sold and operating expenses and
depreciation and amortization, is a key measure of financial performance for
the Western Pipeline System.

Our crude oil acquisition and marketing operations generate substantial
revenues and cost of sales because they reflect the sales price and cost of the
significant volumes of crude oil we buy and sell. However, the absolute price
levels for crude oil normally do not bear a relationship to gross margin,
although these price levels significantly impact revenues and cost of products
sold. As a result, period-to-period variations in revenues and cost of sales
are not generally meaningful in analyzing the variation in gross margin for our
crude oil acquisition and marketing operations.

In general, we purchase crude oil at the wellhead from local producers and
in bulk at major pipeline connection and marketing points. We also enter into
transactions with third parties in which we exchange one grade of crude oil for
another grade that more nearly matches our delivery requirement or the
preferences of our customers. Bulk purchases and sales and exchange
transactions are characterized by large volumes and much smaller margins than
are sales of crude oil purchased at the wellhead. As we purchase crude oil, we
establish a margin by selling or exchanging the crude oil for physical delivery
of other crude oil to Sunoco R&M and third-party customers, such as independent
refiners or major oil companies, thereby reducing exposure to price
fluctuations. This margin is determined by the difference between the price of
crude oil at the point of purchase and the price of crude oil at the point of
sale, minus the associated costs related to acquisition and transportation.
Changes in the absolute price level for crude oil do not materially impact our
margin, as we attempt to maintain positions that are substantially balanced
between crude oil purchases and sales.

Because we attempt to maintain balanced positions, we are able to minimize
basis risk, which occurs when crude oil is purchased based on a crude oil
specification that is different from the countervailing sales arrangement.
Specification differences include grades or types of crude oil, variability in
lease crude oil barrels produced, individual refinery demand for specific
grades of crude oil, relative market prices for the different grades of crude
oil, customer location, availability of transportation facilities, timing, and
costs (including storage) involved in delivering crude oil to the customer. Our
policy is only to purchase crude oil for which we have a market and to
structure our sales contracts so that crude oil price fluctuations do not
materially affect the margin that we receive. We do not acquire and hold any
futures contracts or other derivative products for any purpose.

We operate our crude oil acquisition and marketing activities differently as
market conditions change. During periods when there is a higher demand than
supply of crude oil in the near term, the market is in backwardation, meaning
that the price of crude oil in a given month exceeds the price of crude oil for
delivery in subsequent months. A backwardated market has a positive impact on
marketing margins because crude oil marketers can continue to purchase crude
oil from producers at a fixed premium to posted prices while selling crude oil
at a higher premium to such prices. In backwardated markets, we purchase crude
oil and contract for its sale as soon as possible. When the demand for crude
oil is weak, the market for crude oil is often in contango, meaning that the
price of crude oil in a given month is less than the price of crude oil for
delivery in subsequent months. In a contango market, marketing margins are
adversely impacted, as crude oil marketers are unable to capture the premium to
posted prices described above. However, this unfavorable market condition can
be mitigated by storing crude oil because storage owners at major trading
locations can simultaneously purchase production at current prices for storage
and sell at higher prices for future delivery. As a result, in a contango
market we will purchase crude oil and contract for its delivery in future
months to capture the price difference.

Agreements with Sunoco R&M and Sunoco, Inc.

Upon the closing of the master partnership's initial public offering, we
entered into the following agreements:

Pipelines and Terminals Storage and Throughput Agreement

Under this agreement, Sunoco R&M is paying us fees generally comparable to
those charged by third parties to:

. receive and deliver at least 290,000 bpd of crude oil or refined products
per year at our Fort Mifflin Terminal Complex for seven years. In the
first year, we will receive a fee of $0.1627 per barrel for the first
180,000 bpd and $0.0813 per barrel for volumes in excess of 180,000 bpd.
These fees will escalate at the rate of 1.67% per year. Sunoco R&M's
thoughput at the Fort Mifflin Terminal Complex averaged 318,545 bpd during
the year ended December 31, 2001; and

Sunoco R&M's obligations under this agreement may be permanently reduced or
suspended if Sunoco R&M: (1) shuts down or reconfigures one of its refineries
(other than planned maintenance turnarounds), or is prohibited from using MTBE
in the gasoline it produces; and (2) reasonably believes in good faith that
such event will jeopardize its ability to satisfy these obligations.

From time to time, Sunoco, Inc. may be presented with opportunities by third
parties with respect to its refinery assets. These opportunities may include
offers to purchase and joint venture propositions. Sunoco, Inc. is also
continually considering changes to its refineries. Those changes may involve
new facilities, reduction in certain operations or modifications of facilities
or operations. Changes may be considered to meet market demands, to satisfy
regulatory requirements or environmental and safety objectives, to improve
operational efficiency or for other reasons. Sunoco, Inc. has advised us that
although it continually considers the types of matters referred to above, it is
not currently proceeding with any transaction or plan that it believes is
likely to result in any reconfigurations or other operational changes in any of
its refineries served by our assets that would have a material effect on Sunoco
R&M's business relationship with us. Further, Sunoco, Inc. has also advised us
that it is not considering a shutdown of any of its refineries served by our
assets. Sunoco, Inc. is, however, actively managing its assets and operations,
and, therefore, changes of some nature, possibly material to its business
relationship with us, are likely to occur at some point in the future.

To the extent Sunoco R&M does not extend or renew the pipelines and
terminals storage and throughput agreement, our financial condition and results
of operations may be adversely affected. Our assets were constructed or
purchased to service Sunoco R&M's refining and marketing supply chain and are
well-situated to suit Sunoco R&M's needs. As a result, we would expect that
even if this agreement is not renewed, Sunoco R&M would continue to use our
pipelines and terminals. However, we cannot assure you that Sunoco R&M will
continue to use our facilities or that we will be able to generate additional
revenues from third parties. Please see "Risk Factors--Risks Inherent in Our
Business."

Omnibus Agreement

Historically, Sunoco, Inc. has allocated a portion of its general and
administrative expenses to its pipeline, terminalling, and storage operations
to cover costs of centralized corporate functions such as legal, accounting,
treasury, engineering, information technology, and insurance. The allocation
was $9.0 million, $10.1 million, and $10.8 million for the years ended December
31, 1999, 2000 and 2001.

Under an omnibus agreement with Sunoco, Inc. we are paying Sunoco, Inc. or
our master partnership's general partner an annual administrative fee,
initially in the amount of $8.0 million, for the provision by Sunoco, Inc. or
its affiliates of various general and administrative services for our benefit
for three years following the master partnership's initial public offering. The
$8.0 million fee includes expenses incurred by Sunoco, Inc. and its affiliates
to perform centralized corporate functions, such as legal, accounting,
treasury, engineering, information technology, insurance, and other corporate
services, including the administration of employee benefit plans. This fee does
not include salaries of pipeline and terminal personnel or other employees of
the master partnership's general partner, including senior executives, or the
cost of their employee benefits, such as 401(k), pension, and health insurance
benefits. We have no employees. We will also reimburse Sunoco, Inc. and its
affiliates for direct expenses they incur on our behalf. We are currently
incurring additional general and administrative costs, including costs for tax
return preparation, annual and quarterly reports to unitholders, investor
relations, registrar and transfer agent fees, and other costs related to
operating as a separate publicly held entity. We estimate that these
incremental costs will be approximately $4.0 million per year, including
incremental insurance costs.

The omnibus agreement also requires Sunoco R&M to: reimburse us for any
operating expenses and capital expenditures in excess of $8.0 million per year
in each year from 2002 to 2006 that are made to comply with the DOT's pipeline
integrity management rule, subject to a maximum aggregate reimbursement of
$15.0 million over the five-year period; complete, at its expense, certain tank
maintenance and inspection projects currently in progress or expected to be
completed at the Darby Creek Tank Farm within one year; and reimburse us for up
to $10.0 million of expenditures required at the Marcus Hook Tank Farm and the
Darby Creek Tank Farm to maintain compliance with existing industry standards
and regulatory requirements.

The omnibus agreement also provides that Sunoco, Inc. will indemnify us for
certain environmental, toxic tort and other liabilities. Please read
"--Environmental Matters," "Business--Environmental Regulation,"
"Business--Environmental Remediation," and "Certain Relationships and Related
Transactions" for a more complete description of these provisions.

Interrefinery Lease Agreement

Under a 20-year lease agreement, Sunoco R&M will pay us $5.1 million in the
first year to lease the 58 miles of interrefinery pipelines between Sunoco
R&M's Philadelphia and Marcus Hook refineries, escalating at 1.67% per year for
the next 19 years. On a pro forma basis, Sunoco R&M would have paid us $5.0
million for the use of these pipelines during the year ended December 31, 2001.

Crude Oil Purchase Agreement

Sunoco R&M will purchase from us at market-based rates particular grades of
crude oil that our crude oil acquisition and marketing business purchases for
delivery to pipelines in: Longview, Trent, Tye, and Colorado City, Texas;
Haynesville, Louisiana; Marysville and Lewiston, Michigan; and Tulsa, Oklahoma.
At Marysville and Lewiston, Michigan, we exchange Michigan sweet and Michigan
sour crude oil we own for domestic sweet crude oil supplied by Sunoco R&M at
market-based rates. These agreements, which will have an initial term of two
months, will automatically renew on a monthly basis unless terminated by either
party on 30 days' written notice. Sunoco R&M has indicated that it has no
current intention to terminate these agreements. During the year ended December
31, 2001, Sunoco R&M purchased 70,461 bpd of crude oil from us in these areas.

License Agreement

We have granted to Sunoco, Inc. and certain of its affiliates, including our
master partnership's general partner, a license to our intellectual property so
that the master partnership's general partner can manage our operations and
create intellectual property using our intellectual property. Our master
partnership's general partner will also assign to us the new intellectual
property it creates in operating our business. Our master partnership's general
partner also licensed to us certain of its own intellectual property for use in
the conduct of our business and we have licensed to our master partnership's
general partner certain intellectual property for use in the conduct of its
business. The license agreement also grants to us a license to use the
trademarks, trade names, and service marks of Sunoco, Inc. in the conduct of
our business.

Treasury Services Agreement

The master partnership entered into a treasury services agreement with
Sunoco, Inc. pursuant to which, among other things, we are participating in
Sunoco, Inc.'s centralized cash management program. Under this program, all of
our cash receipts and cash disbursements are processed, together with those of
Sunoco, Inc. and its other subsidiaries, through Sunoco, Inc.'s cash accounts
with a corresponding credit or charge to an intercompany account. The
intercompany balance will be settled periodically, but no less frequently than
at the end of each month. Amounts due from Sunoco, Inc. and its subsidiaries
earn interest at a rate equal to the average rate of our third-party money
market investments, while amounts due to Sunoco, Inc. and its subsidiaries bear
interest at a rate equal to the interest rate provided in our revolving credit
facility.

Results of Operations

Year Ended December 31,
------------------------------
1999 2000 2001
-------- ---------- ----------
(in thousands)

Combined Statements of Income
Sales and other operating revenue:
Affiliates......................................... $764,133 $1,301,079 $1,067,182
Unaffiliated customers............................. 210,069 507,532 545,822
Other income.......................................... 6,133 5,574 4,774
-------- ---------- ----------
Total revenues........................................ 980,335 1,814,185 1,617,778
-------- ---------- ----------
Cost of products sold and operating expenses.......... 866,610 1,699,541 1,503,156
Depreciation and amortization......................... 19,911 20,654 25,325
Selling, general and administrative expenses.......... 27,461 34,683 35,956
-------- ---------- ----------
Total costs and expenses.............................. 913,982 1,754,878 1,564,437
-------- ---------- ----------
Operating income...................................... 66,353 59,307 53,341
Net interest expense.................................. 6,487 10,304 10,980
-------- ---------- ----------
Income before income tax expense...................... 59,866 49,003 42,361
Income tax expense.................................... 22,488 18,483 15,594
-------- ---------- ----------
Net income............................................ $ 37,378 $ 30,520 $ 26,767
======== ========== ==========
Segment Operating Income:
Eastern Pipeline System
Sales and other operating revenue:....................
Affiliates......................................... $ 70,177 $ 69,027 $ 69,631
Unaffiliated customers............................. 19,472 19,323 21,059
Other income.......................................... 5,500 4,592 4,749
-------- ---------- ----------
Total revenues........................................ 95,149 92,942 95,439
-------- ---------- ----------
Cost of products sold and operating expenses.......... 38,633 41,174 42,784
Depreciation and amortization......................... 7,929 8,272 9,778
Selling, general and administrative expenses.......... 10,086 12,432 12,984
-------- ---------- ----------
Total costs and expenses.............................. 56,648 61,878 65,546
-------- ---------- ----------
Operating income...................................... $ 38,501 $ 31,064 $ 29,893
======== ========== ==========
Terminal Facilities
Sales and other operating revenue:
Affiliates......................................... $ 38,329 $ 44,356 $ 43,628
Unaffiliated customers............................. 29,166 31,042 30,273
Other income (loss)................................... 356 430 (85)
-------- ---------- ----------
Total revenues........................................ 67,851 75,828 73,816
-------- ---------- ----------
Cost of products sold and operating expenses.......... 33,588 39,390 36,488
Depreciation and amortization......................... 8,457 8,616 11,094
Selling, general and administrative expenses.......... 9,039 10,666 10,158
-------- ---------- ----------
Total costs and expenses.............................. 51,084 58,672 57,740
-------- ---------- ----------
Operating income...................................... $ 16,767 $ 17,156 $ 16,076
======== ========== ==========
Western Pipeline System
Sales and other operating revenue:
Affiliates......................................... $655,627 $1,187,696 $ 953,923
Unaffiliated customers............................. 161,431 457,167 494,490
Other income.......................................... 277 552 110
-------- ---------- ----------
Total revenues........................................ 817,335 1,645,415 1,448,523
-------- ---------- ----------
Cost of products sold and operating expenses.......... 794,389 1,618,977 1,423,884
Depreciation and amortization......................... 3,525 3,766 4,453
Selling, general and administrative expenses.......... 8,336 11,585 12,814
-------- ---------- ----------
Total costs and expenses.............................. 806,250 1,634,328 1,441,151
-------- ---------- ----------
Operating income...................................... $ 11,085 $ 11,087 $ 7,372
======== ========== ==========

Operating Highlights

Year Ended December 31,
--------------------------------
1999 2000 2001
---------- ---------- ----------

Eastern Pipeline System/(1)/:
Pipeline throughput (bpd):
Refined products/(2)/.............................. 461,379 444,046 446,648
Crude oil.......................................... 81,464 91,464 98,226
Total shipments (barrel miles per day) /(3)/.......... 56,136,819 54,910,640 55,198,189
Tariffs per barrel mile (cent)........................ 0.438 0.440 0.450

Terminal Facilities:
Terminal throughput (bpd):
Refined product terminals.......................... 251,627 266,212 272,698
Nederland Terminal................................. 544,624 566,941 427,194
Fort Mifflin Terminal Complex...................... 306,534 314,623 318,545
Marcus Hook Tank Farm.............................. 142,404 133,455 138,490

Western Pipeline System:
Crude oil pipeline throughput (bpd)................ 252,098 295,991 287,237
Crude oil purchases at wellhead (bpd).............. 145,425 176,964 181,448
Gross margin per barrel (cent)/(4)/................ 20.8 20.4 19.1

- --------
/(1)/Excludes amounts attributable to our 9.4% ownership interest in the
Explorer Pipeline Company joint venture.
/(2)/Excludes Toledo, Twin Oaks, and Linden transfer pipelines, which transport
large volumes over short distances and generate minimal revenues.
/(3)/Represents total average daily pipeline throughput multiplied by the
number of miles of pipeline through which each barrel has been shipped.
/(4)/Represents total segment sales and other operating revenue minus cost of
products sold and operating expenses and depreciation and amortization
divided by crude oil pipeline throughput.

Year Ended December 31, 2001 versus Year Ended December 31, 2000

Analysis of Combined Statements of Income

Sales and other operating revenue for 2001 were $1,613.0 million as compared
to $1,808.6 million for 2000, a decrease of $195.6 million. This decrease was
primarily due to lower crude oil sales revenue resulting from a decline in
crude oil prices. During 2001, the average price of West Texas Intermediate
("WTI") crude oil, at Cushing, Oklahoma, the benchmark crude oil in the United
States, dropped to $25.92 per barrel from $30.20 per barrel.

Other income was $4.8 million for 2001 versus $5.6 million for 2000. This
$0.8 million decrease was primarily due to lower dividend income from an
insurance consortium in which Sunoco, Inc. participates and the absence of our
allocated portion of a gain recognized in 2000 attributable to the receipt of
stock by Sunoco, Inc. in connection with an insurance company demutualization.
We allocated these insurance-related gains to each of our business segments.
Partially offsetting these lower gains was a $0.5 million increase in Explorer
equity income to $4.3 million for 2001 from $3.8 million for 2000. Cash
dividends paid to us by Explorer approximate the equity income earned by us
from that investment. The increase in Explorer equity income was due to the
absence of the adverse impact of a refined product spill that occurred in March
2000.

Total cost of products sold and operating expenses decreased $196.3 million
to $1,503.2 million for 2001 from $1,699.5 million in 2000. This decrease was
primarily due to the decline in crude oil prices described above.

Approximately 90% of our sales and other operating revenue and 95% of our
cost of products sold and operating expenses are attributable to our crude oil
acquisition and marketing activities in our Western Pipeline System. However,
the critical profitability factor for these activities is the gross margin, not
the absolute level of revenues and expenses.

Depreciation and amortization was $25.3 million for 2001 compared to $20.7
million in 2000. This $4.6 million increase was primarily due to recent capital
expenditures. A $1.4 million write-off of refined product terminal equipment
also contributed to the increase.

Selling, general and administrative expenses were $36.0 million in 2001
compared to $34.7 million in 2000. Selling, general and administrative expenses
include amounts allocated to us by Sunoco, Inc. to cover the costs of
centralized corporate functions incurred on our behalf. These costs totaled
$10.8 million and $10.1 million in 2001 and 2000, respectively.

Net interest expense was $11.0 million for 2001 versus $10.3 million in
2000. This $0.7 million increase was primarily due to lower capitalized
interest. Income tax expense decreased as a result of the decrease in pretax
earnings. The effective tax rate decreased to 37% in 2001 from 38% in 2000.

Analysis of Segment Operating Income

Eastern Pipeline System. Operating income in our Eastern Pipeline System
was $29.9 million in 2001 compared to $31.1 million in 2000. This $1.2 million
decrease was due to a $3.7 million increase in total costs and expenses,
partially offset by a $2.4 million increase in sales and other operating
revenue and a $0.1 million increase in other income. Total pipeline throughput
for 2001 increased 9,364 bpd, or 2% compared to 2000, while shipments in barrel
miles increased 1%. The average tariff per barrel mile increased to 0.450
(cent) per barrel for 2001 from 0.440 (cent) per barrel for 2000.

The $3.7 million increase in total costs and expenses was due to increases
in operating expenses of $1.6 million primarily due to additional environmental
remediation costs associated with a prior-period pipeline leak, increases in
depreciation and amortization of $1.5 million due to recent capital
expenditures, increases in selling, general and administrative expenses of $0.6
million.

The $2.4 million increase in sales and other operating revenue was primarily
due to increased tariff revenue on our Marysville to Toledo crude oil pipeline
and our Twin Oaks to Montello, Twin Oaks to Newark, and Toledo to Blawnox
refined product pipelines. The higher revenue from the Marysville to Toledo
pipeline was due to a 6,762 bpd increase in volumes resulting from higher
Canadian crude oil purchases by Sunoco R&M and third parties, a larger
percentage of higher-tariff crude oil shipments, and a tariff increase in
mid-2001. The increase in revenue on the Twin Oaks to Montello and Twin Oaks to
Newark pipelines was attributable to a 4,732 bpd increase in shipments from
Sunoco R&M's Marcus Hook refinery, which had a major catcracker turnaround in
2000. The increase in revenue on the Toledo to Blawnox pipeline was due to
higher average tariff rates.

The $0.1 million increase in other income was primarily due to the $0.5
million increase in equity income from Explorer discussed above, partially
offset by lower allocated insurance-related gains.

Terminal Facilities. Operating income in our Terminal Facilities was $16.1
million in 2001 compared to $17.2 million in 2000. This $1.1 million decrease
was primarily due to a 25% decrease in terminal throughput at our Nederland
Terminal largely resulting from the absence of Department of Energy sales of
crude oil from the Strategic Petroleum Reserve, which occurred primarily during
the fourth quarter of 2000. The decline in Nederland Terminal throughput was
also due to a reduction in low-tariff throughput at this facility attributable
to reduced volumes from one customer of approximately 75,000 bpd. Partially
offsetting these factors were storage revenue attributable to a new 660,000
barrel tank placed into service at our Nederland Terminal in September 2000 and
lower operating expenses, including costs associated with terminal repair and
upgrade projects in 2000 at the Fort Mifflin Terminal.

Historically, most of the terminalling and throughput services we have
provided for Sunoco R&M were at fees that enabled us to recover our costs, but
not to generate operating income. Accordingly, a $0.9 million

decrease in these costs and expenses during 2001 resulted in a corresponding
decrease in revenues. The primary cause for these declines was the absence of
$6.0 million in charges recognized in 2000 in connection with remediation
activities related to a February 2000 crude oil spill at one of our crude oil
transfer lines to the Darby Creek Tank Farm. Partially offsetting this factor
were higher depreciation and amortization, other environmental remediation
expenses, and other general cost increases. The increase in depreciation and
amortization was largely due to a $1.4 million write-off of refined product
terminal equipment. Recent capital expenditures also contributed to the
increase.

Throughput volumes at our inland refined product terminals increased 2% in
2001 primarily due to stronger heating oil and other distillate fuel demand
resulting from colder weather. For our refinery-related assets, the average
throughput in 2001 increased by 1% at the Fort Mifflin Terminal Complex and 3%
at the Marcus Hook Tank Farm.

Western Pipeline System. Operating income in our Western Pipeline System
was $7.4 million in 2001 compared to $11.1 million in 2000. This $3.7 million
decrease was primarily due to a $2.1 million decrease in gross margin, a $1.2
million increase in selling, general and administrative expenses and a $0.4
million decrease in other income. Crude oil pipeline throughput volumes
decreased 3% as a decline in high-tariff throughput was essentially offset by
an increase in low-tariff volumes. Gross margin per barrel of pipeline
throughput decreased by 1.3 (cent) in 2001 versus 2000.

The $2.1 million decrease in gross margin was due to a decrease in margins
from crude oil pipeline operations. Crude oil acquisition and marketing margins
were essentially unchanged versus 2000. The decline in crude oil pipeline
margins was mainly due to lower revenues in our Texas Gulf Coast and East Texas
Pipeline system and higher depreciation and amortization expense. The lower
revenues were primarily the result of reduced shipments of crude oil through
our Nederland to Longview pipeline, which delivers crude oil to the Mid-Valley
and BP pipelines at Longview, Texas. Revenues also declined due to lower
gathering volumes. The increase in depreciation and amortization expense was
primarily due to recent capital expenditures. Also contributing to the decline
in crude oil pipeline margins was an increase in pipeline operating expenses
due in part to higher electricity prices.

The $1.2 million increase in selling, general and administrative expenses
was primarily due to higher allocated costs from Sunoco, Inc. and other general
cost increases.

The $0.4 million decrease in other income was due to the lower allocated
insurance-related gains.

Year Ended December 31, 2000 versus Year Ended December 31, 1999

Analysis of Combined Statements of Income

Sales and other operating revenues for 2000 were $1,808.6 million compared
to $974.2 million for 1999, an increase of $834.4 million. This increase was
primarily due to higher crude oil prices and volumes. The average price of WTI
at Cushing increased to $30.20 per barrel in 2000 from $19.24 per barrel in
1999. Sales volumes increased 12.7 million barrels, or 32%, during 2000 in
large part due to the full-year impact of the acquisition of the crude oil
transportation and marketing assets of Pride Companies, L.P., or the West Texas
assets, in October 1999.

Other income was $5.6 million in 2000 versus $6.1 million in 1999. This $0.5
million decrease was due to an $0.8 million decline in Explorer equity income
to $3.8 million in 2000 from $4.6 million in 1999, due to costs associated with
a refined products spill that occurred in March 2000, partially offset by a
$0.4 million allocated gain on the receipt of stock by Sunoco, Inc. in
connection with an insurance company demutualization.

Total cost of products sold and operating expenses increased $832.9 million
to $1,699.5 million in 2000 from $866.6 million in 1999. This increase was
primarily due to higher crude oil acquisition prices and purchase volumes.

Depreciation and amortization was $20.7 million in 2000 versus $19.9 million
in 1999. This $0.8 million increase was primarily due to recent capital
expenditures and the acquisition of the West Texas assets in October 1999.

Selling, general and administrative expenses were $34.7 million in 2000
versus $27.5 million in 1999. This $7.2 million increase was largely due to
higher allocated costs attributable to Sunoco, Inc.'s employee incentive
compensation and benefit plans. Historically, allocated incentive compensation
costs were determined based upon Sunoco, Inc.'s overall financial performance.
Future incentive compensation will depend upon our performance.

Higher salaries and wages also contributed to the increase. Selling, general
and administrative expenses include amounts allocated to us by Sunoco, Inc.,
which were $10.1 million and $9.0 million in 2000 and 1999, respectively.

Net interest expense was $10.3 million in 2000 versus $6.5 million in 1999.
This $3.8 million increase was primarily due to higher average outstanding
borrowings from an affiliate, partially offset by higher capitalized interest.
Income tax expense decreased as a result of the decline in pretax earnings. The
effective tax rate in both 2000 and 1999 was 38%.

Analysis of Segment Operating Income

Eastern Pipeline System. Operating income in our Eastern Pipeline System
was $31.1 million in 2000 compared to $38.5 million in 1999. This $7.4 million
decrease was due to a $1.3 million decrease in sales and other operating
revenue, a $5.2 million increase in total costs and expenses, and a $0.9
million decrease in other income. Refined product pipeline throughput in 2000
decreased 17,333 bpd, or 4%, compared to 1999, and shipments in barrel miles
decreased 2% in the current period. The average tariff per barrel mile
increased to 0.440(cent) per barrel in 2000 from 0.438(cent) per barrel in 1999.

The $1.3 million decrease in sales and other operating revenue was due in
part to lower tariff revenue from most of our refined product pipelines
resulting from decreased production at Sunoco R&M's refineries related to
scheduled refinery turnarounds. Also contributing to the lower sales and other
operating revenue were decreased sales of heating oil and other distillate
fuels by Sunoco R&M at our terminals due to unseasonably warm weather and
reduced shipments on our Twin Oaks to Newark pipeline due to higher prices of
refined products, particularly gasoline, in the Philadelphia area than in the
New York Harbor market. Partially offsetting these negative factors were
increased tariff revenues resulting from increased throughput on our
Philadelphia to Linden pipeline due to the expansion of the Linden junction and
a new connection to a third-party terminal in Syracuse, New York, which allowed
Sunoco R&M to shift volumes from competitors' pipelines to our Montello to
Syracuse pipeline. Revenues also increased on our Marysville to Toledo crude
oil pipeline due to increased processing of Canadian crude oil at Sunoco R&M's
Toledo refinery.

The $5.2 million increase in total costs and expenses was due to a $2.5
million increase in operating expenses, a $2.3 million increase in selling,
general and administrative expenses, and a $0.4 million increase in
depreciation and amortization. The increase in operating expenses was primarily
due to the adverse impact of changes in volumetric gains and losses on our
pipelines and higher environmental remediation costs largely due to a pipeline
leak that occurred in January 2000. The increase in selling, general and
administrative expenses was primarily due to higher employee incentive
compensation payments and benefit costs and administrative costs allocated to
us from Sunoco, Inc.

The $0.9 million decrease in other income was primarily due to the $0.8
million decline in equity income from Explorer discussed above.

Terminal Facilities. Operating income in our Terminal Facilities was $17.2
million in 2000 compared to $16.8 million in 1999. This $0.4 million increase
was primarily due to higher revenues at our Nederland

Terminal primarily as a result of a 4% increase in terminal throughput. The
higher throughput was largely due to U.S. Department of Energy sales of crude
oil from the Strategic Petroleum Reserve primarily during the fourth quarter of
2000, which was partially offset by decreased throughput of lubricant products
by Sunoco R&M. Also partially offsetting the higher revenues was an increase in
operating and administrative expenses largely as a result of higher employee
incentive compensation payments and benefit costs and higher utility costs
attributable to increases in electricity and fuel prices.

Total costs and corresponding revenues attributable to our inland refined
product terminals and refinery-related assets increased $7.0 million as a
result of the $6.0 million of charges recognized in 2000 in connection with the
remediation activities related to the spill in February 2000 at one of our
crude oil transfer lines to the Darby Creek Tank Farm. Higher employee
incentive compensation and benefit costs also contributed to the increase.

Throughput volumes at our inland refined product terminals increased 6% in
2000 primarily due to higher Sunoco R&M retail gasoline sales volumes,
particularly in the Midwest. The average throughput of our refinery-related
assets was essentially unchanged in 2000 as increased crude oil throughput at
Sunoco R&M's Philadelphia refinery offset declines related to scheduled
turnaround activity at Sunoco R&M's Marcus Hook refinery.

Western Pipeline System. Operating income in our Western Pipeline System
was $11.1 million for both 2000 and 1999. A $3.0 million increase in gross
margin was offset by higher selling, general and administrative expenses.
Revenues and expenses in the Western Pipeline System increased significantly
during 2000 in large part due to the acquisition of the West Texas assets in
October 1999, which contributed $4.1 million and $1.3 million to operating
income (including gross margin of $4.5 million and $1.4 million) in 2000 and
1999, respectively. Excluding the West Texas assets, gross margin decreased
$0.1 million in 2000 primarily due to a decrease in margins from crude oil
acquisition and marketing activities, essentially offset by an increase in
margins from crude oil pipeline operations.

Crude oil acquisition and marketing margins declined primarily due to
increased competitive pressure in 2000 for purchasing crude oil as demand from
Midwest refineries increased and domestic production declined. We were unable
to pass all of the increase in crude oil acquisition costs on to Sunoco R&M
under the terms of a supply agreement. Also contributing to the margin decline
was the adverse impact of volumetric gains and losses in our crude oil trucking
operations. Partially offsetting these negative factors was the absence of
unfavorable litigation settlements recognized in 1999.

The higher crude oil pipeline margin reflects higher gross margin from the
10-inch East Texas pipeline reactivated in July 1999 to transport foreign crude
oil for Sunoco R&M's Toledo refinery and additional deliveries on the pipeline
to Sunoco R&M's and Sinclair Oil's Tulsa refineries. Partially offsetting these
positive factors were increases in salaries and wages, utility costs, and
rental expense.

The $3.2 million increase in selling, general and administrative expenses
was primarily due to the higher employee incentive compensation and benefit
costs and higher administrative costs allocated to us by Sunoco, Inc.

Liquidity and Capital Resources

Cash Flows and Capital Expenditures

Net cash provided by operating activities in 2001 was $27.2 million compared
to $79.1 million in 2000 and $125.2 million in 1999. The $51.9 million decrease
in net cash provided by operating activities in 2001 was primarily due to a
$57.8 million increase in working capital uses pertaining to operating
activities, partially offset by an increase in depreciation and amortization of
$4.7 million, and deferred income taxes of $3.5 million.

The $57.8 million increase in working capital uses pertaining to operating
activities was due to a $33.5 million increase in working capital in 2001
compared to a $24.3 million decrease in working capital in 2000. The increase
in working capital in 2001 was primarily a result of the impact of a decline in
crude oil prices on receivables and payables from the purchase and sale of
crude oil in the Western Pipeline System. During 2000, crude oil prices
increased, which caused working capital to decline.

The inverse relationship between crude oil prices and the level of working
capital exists because we have more crude oil payables than receivables and
because we use the last-in, first-out method of accounting for crude oil
inventories in our crude oil acquisition and marketing activities. Crude oil
payables exceed crude oil receivables largely due to the absence of a crude oil
receivable from Sunoco R&M. Historically, receivables from Sunoco R&M have been
settled immediately through the net parent investment account. The following
example illustrates this inverse relationship. As crude oil prices increase,
the carrying amount of inventory does not change under the last-in, first-out
method of accounting, while both crude oil receivables and payables increase.
Because crude oil payables exceed crude oil receivables, the impact of the
price increase on payables is greater, resulting in a reduction in working
capital. Upon completion of the master partnership's initial public offering in
February 2002, payment terms in our crude oil supply contracts with Sunoco R&M
now result in crude oil receivables, lowering the net crude oil payable and
reducing the impact of changes in crude oil prices on net cash provided by
operating activities.

The $46.1 million decrease in net cash provided by operating activities in
2000 was largely due to a $35.5 million decrease in working capital sources
pertaining to operating activities and a $6.9 million decrease in net income.
The decrease in working capital sources during 2000 was primarily due to the
impact of crude oil price changes on receivables and payables from the purchase
and sale of crude oil in the Western Pipeline System.

Net cash used in investing activities for the years ended December 31, 2001,
2000, and 1999 was $73.1 million, $77.3 million, and $75.1 million,
respectively. Capital expenditures were $72.7 million in 2001, $57.9 million in
2000, and $47.0 million in 1999. The other significant investing transactions
in the three-year period were the acquisition of the West Texas assets in 1999
for $29.6 million and a loan to The Claymont Investment Company, a wholly owned
subsidiary of Sunoco, Inc., of $20.0 million in 2000.

Net cash provided by (used in) financing activities for the years ended
December 31, 2001, 2000 and 1999 was $45.8 million, $(1.8) million, and $(50.0)
million, respectively. Contributions from (distributions to) Sunoco, Inc. and
its affiliates were $91.1 million, $(96.6) million, and $(49.8) million in
2001, 2000 and 1999, respectively. Net proceeds from (repayments of) borrowings
from The Claymont Investment Company were $(45.0) million in 2001 and $95.0
million in 2000.

The Claymont Investment Company serves as a lender and borrower of funds to
and from Sunoco, Inc. and its subsidiaries, including Sunoco Logistics
(Predecessor), to enable those entities to achieve their desired capital
structures. Amounts owed to and due from The Claymont Investment Company under
these financing arrangements included in the Predecessor's combined balance
sheets were not assumed by or contributed to Sunoco Logistics Partners L.P. We
will not engage in these types of financing arrangements with The Claymont
Investment Company or any other subsidiary of Sunoco, Inc.

Capital Requirements

The pipeline, terminalling, and crude oil storage operations are capital
intensive, requiring significant investment to upgrade or enhance existing
operations and to meet environmental and operational regulations. Our capital
requirements have consisted, and are expected to continue to consist, primarily
of:

. Maintenance capital expenditures, such as those required to maintain
equipment reliability, tankage, and pipeline integrity and safety, and to
address environmental regulations; and

. Expansion capital expenditures to acquire complementary assets to grow our
business and to expand existing facilities, such as projects that increase
storage or throughput volumes.

The following table summarizes maintenance and expansion capital
expenditures for the years presented:

Year Ended December 31,
----------------------------
1999 2000 2001
------- ------- -------
(in thousands)

Maintenance 32,312 39,067 53,628
Expansion.. 49,556/(1)/ 18,854 19,055
------- ------- -------
Total... $81,868/(1)/ $57,921 $72,683
======= ======= =======

-----
/(1)/Includes purchase of the West Texas assets for $29.6 million in cash and
the assumption of $5.3 million of long-term debt.

We estimate that our annual maintenance capital expenditures will be $27.0
million in 2002. These projected maintenance capital outlays are approximately
$14.7 million lower than the average annual outlays for 1999-2001. This prior
period included several one-time projects to upgrade our technology, increase
reliability, and lower our cost structure. We do not believe we will incur
these types of expenditures in 2002.

In the area of technology, we completed numerous automation projects,
upgraded our metering systems, enhanced various software packages, and replaced
pipeline control systems. In addition, we completed numerous asset upgrade
projects, including relocating pipelines at the Philadelphia International
Airport due to runway and terminal reconfigurations, rebuilds on three pump
stations, replacement and upgrade of vapor recovery units at our product
terminals and repair and upgrades on the crude oil transfer lines between Hog
Island Wharf and the Darby Creek Tank Farm. The crude oil transfer lines, which
were historically a part of Sunoco R&M's refining business, did not meet
pipeline standards and could not be internally inspected or maintained by
conventional leak detection devices prior to completion of this project.

In the area of transportation and safety, the DOT has recently adopted a
pipeline integrity management rule. Based on historical integrity tests
conducted since 1989, we have estimated that compliance with this rule will
cost us approximately $8.0 million per year for five years, or a total of $40.0
million, for all pipelines in our Eastern and Western Pipeline Systems that are
subject to this rule. Under the terms of the omnibus agreement, Sunoco R&M will
reimburse us for operating expenses and capital expenditures in excess of $8.0
million per year (up to an aggregate maximum of $15.0 million over a five-year
period) incurred to comply with the DOT's pipeline integrity management rule.

In addition, Sunoco R&M is, at its expense, completing for the Darby Creek
Tank Farm certain tank maintenance and inspection projects now in progress or
expected to be completed within one year from the closing of the initial public
offering. Sunoco R&M estimates total costs to complete these projects will be
approximately $4.0 million. Sunoco R&M will also reimburse us up to $10.0
million in connection with expenditures required at the Darby Creek and Marcus
Hook Tank Farms to maintain compliance with existing industry standards and
regulatory requirements.

We are reflecting outlays for these programs as operating expenses or
capital expenditures, as appropriate. Capital expenditures are being
depreciated over their useful lives. Reimbursements by Sunoco R&M are being
reflected as capital contributions.

Our typical growth projects consist of new tankage, increased throughput on
our existing pipelines, and new connections for deliveries to customers. We
anticipate pursuing similar growth projects and acquisitions.

We expect to fund our capital expenditures, including any acquisitions, from
cash provided by operations and, to the extent necessary, from the proceeds of:

. borrowing under the revolving credit facility discussed below and other
borrowings; and

. issuance of additional common units.

Initial Public Offering

On February 8, 2002, the master partnership issued 5.75 million common units
(including 750,000 units issued pursuant to the underwriters' over-allotment
option), representing a 24.8% limited partnership interest in the master
partnership, in an initial public offering at a price of $20.25 per unit.
Proceeds from this offering, which totaled approximately $98 million net of
underwriting discounts and offering expenses, were used to establish working
capital that was not contributed to us by Sunoco, Inc.

Credit Facility

In conjunction with the master partnership's initial public offering, we
entered into a three-year $150.0 million revolving credit facility, which is
available to fund our working capital requirements, to finance future
acquisitions, and for general partnership purposes. This credit facility
includes a $20.0 million distribution sublimit that is available for
distributions. We may use the credit facility to fund the minimum quarterly
distributions provided the total outstanding borrowings for distributions do
not at any time exceed $20.0 million. We will be required to reduce to zero all
borrowings under the distribution sublimit under the revolving credit facility
each year for 15 days. Currently, we have no borrowings under this credit
facility.

Our obligations under the credit facility are unsecured. Indebtedness under
the credit facility will rank equally with all the outstanding unsecured and
unsubordinated debt of our operating partnership. We may prepay all loans at
any time without penalty subject to reimbursement of breakage and redeployment
costs in the case of prepayment of LIBOR borrowings.

Indebtedness under the credit facility will bear interest, at our option, at
either (i) LIBOR plus an applicable margin or (ii) the higher of the federal
funds rate plus 0.50% or the Bank of America prime rate (each plus the
applicable margin). We will incur fees in connection with the revolving credit
facility. The revolving credit facility will mature in January 2005. At that
time, the facility will terminate and all outstanding amounts will be due and
payable.

The credit agreement prohibits us from declaring distributions to
unitholders if any event of default, as defined in the credit agreement, occurs
or would result from the declaration of distributions. In addition, the credit
facility contains various covenants limiting our ability to:

. incur indebtedness;

. grant certain liens;

. make certain loans, acquisitions, and investments;

. make any material change to the nature of our business;

. acquire another company; or

. enter into a merger or sale of assets, including the sale or transfer of
interests in our subsidiaries.

The credit facility also contains covenants requiring us to maintain on a
rolling-four-quarter basis:

. a ratio of up to 4:1 of consolidated total debt to consolidated EBITDA
(each as defined in the credit agreement); and

. an interest coverage ratio (as defined in the credit agreement) of 3.5:1.

Each of the following will be an event of default under the revolving credit
facility:

. failure to pay any principal, interest, fees, or other amounts when due;

. failure of any representation or warranty to be true and correct;

. termination of any material agreement, including the pipelines and
terminals storage and throughput agreement and the omnibus agreement;

. default under any material agreement if such default could have a material
adverse effect on us;

. bankruptcy or insolvency events involving us, our general partner, our
master partnership's general partner, or our subsidiaries;

. the entry of monetary judgments, not covered or funded by insurance,
against us, our general partner, our master partnership's general partner,
or any of our or its subsidiaries in excess of $20.0 million in the
aggregate or any non-monetary judgment having a material adverse effect;

. the sale by Sunoco, Inc. of a material portion of its refinery assets or
other assets related to its agreements with us unless the purchaser of
those assets has a minimum credit rating and fully assumes the rights and
obligations of Sunoco, Inc. under those agreements; and

. failure by Sunoco, Inc. to own, directly or indirectly, 51% of the general
partnership interest in the master partnership or to control our
management and that of the master partnership.

Senior Notes

Also in connection with the master partnership's initial public offering, we
issued $250 million of senior notes, the net proceeds of which have been
distributed to Sunoco, Inc. as additional consideration for its contribution of
assets to us. The senior notes were issued pursuant to an indenture, and our
obligations under the senior notes are unsecured. Indebtedness under the senior
notes ranks equally with the credit facility and all our outstanding unsecured
and unsubordinated debt. The senior notes and revolving credit facility have
been guaranteed by the master partnership and our subsidiaries. The senior
notes will mature on February 15, 2012 and bear interest at a rate of 7.25% per
annum, payable semi-annually on February 15 and August 15, commencing August
15, 2002. The senior notes are redeemable, at our option, at a make-whole
premium calculated on the basis of a discount rate equal to the yield on United
States treasury notes having a constant maturity comparable to the remaining
term of the senior notes, plus 25 basis points. The senior notes are not
subject to any sinking fund provisions. Please read "Description of the New
Notes" for a more detailed description of the senior notes.

Environmental Matters

Operation of our pipelines, terminals, and associated facilities are subject
to stringent and complex federal, state, and local laws and regulations
governing the discharge of materials into the environment or otherwise relating
to protection of the environment. As a result of our compliance with these laws
and regulations, we have accrued liabilities for estimated site restoration
costs to be incurred in the future at our facilities and properties, including
liabilities for environmental remediation obligations. Under our accounting
policies, we record liabilities when site restoration and environmental
remediation and cleanup obligations are either known or considered probable and
can be reasonably estimated. For a discussion of the accrued liabilities and
charges against income related to these activities, see Note 7 to the
historical financial statements of Sunoco Logistics (Predecessor).

Under the terms of the omnibus agreement and in connection with the
contribution of our assets by affiliates of Sunoco, Inc., Sunoco, Inc. has
agreed to indemnify us for 30 years from environmental and toxic tort
liabilities related to the assets contributed to us that arise from the
operation of such assets prior to closing of the master partnership's initial
public offering. Sunoco, Inc. is obligated to indemnify us for 100% of all
losses asserted within the first 21 years of closing. Sunoco, Inc.'s share of
liability for claims asserted thereafter will decrease by

10% a year. For example, for a claim asserted during the twenty-third year
after closing, Sunoco, Inc. would be required to indemnify us for 80% of our
loss. There is no monetary cap on the amount of indemnity coverage provided by
Sunoco, Inc. Any environmental and toxic tort liabilities not covered by this
indemnity will be our responsibility. Total future costs for environmental
remediation activities will depend upon, among other things, the identification
of any additional sites, the determination of the extent of the contamination
at each site, the timing and nature of required remedial actions, the
technology available and needed to meet the various existing legal
requirements, the nature and extent of future environmental laws, inflation
rates, and the determination of our liability at multi-party sites, if any, in
light of the number, participation levels, and financial viability of other
parties. We have agreed to indemnify Sunoco, Inc. and its affiliates for events
and conditions associated with the operation of our assets that occur on or
after the closing of the master partnership's initial public offering and for
environmental and toxic tort liabilities to the extent Sunoco, Inc. is not
required to indemnify us.

The use of MTBE continues to be the focus of federal and state government
attention due to public health and environmental issues that have been raised
by the use of MTBE in gasoline, and specifically the discovery of MTBE in water
supplies. MTBE is the primary oxygenate used by Sunoco R&M and other petroleum
refiners to meet reformulated gasoline requirements under the Clean Air Act.
Many states, including New York and Connecticut, have banned or restricted the
use of MTBE in gasoline commencing as early as 2003 in response to concerns
about MTBE's adverse impact on ground or surface water. Other states are
considering bans or restrictions on MTBE or opting out of the EPA's
reformulated gasoline program, either of which events would reduce the use of
MTBE. Any ban or restriction on the use of MTBE may lead to the greater use of
ethanol. Unlike MTBE, which can be blended in gasoline at the refinery, ethanol
is blended at the terminal and is not transported by our pipelines. While many
of our inland-refined product terminals currently blend ethanol, any revenues
we would receive for blending ethanol might not offset the loss of revenues we
would suffer from the reduced volumes we transport on our Eastern refined
product pipelines.

Another significant environmental uncertainty relates to Sunoco R&M's
potential capital expenditures to comply with new fuel specifications required
under the Clean Air Act, and to respond to the EPA's enforcement initiative
under the authority of the Clean Air Act, including the notices of violation
and findings of violation recently received by Sunoco R&M. It is uncertain what
Sunoco, Inc. or Sunoco R&M's responses to these emerging issues will be. We
cannot assure you that those responses will not reduce Sunoco R&M's obligations
under the pipelines and terminals storage and throughput agreement, thereby
reducing the throughput in our pipelines and our cash flow.

For more information concerning environmental matters, please read
"Business--Environmental Regulation."

Impact of Inflation

Although the impact of inflation has slowed in recent years, it is still a
factor in the United States economy and may increase the cost to acquire or
replace property, plant, and equipment and may increase the costs of labor and
supplies. To the extent permitted by competition, regulation, and existing
agreements, we have and will continue to pass along increased costs to our
customers in the form of higher fees.

Critical Accounting Policies

Disclosures of our significant accounting policies is included in Note 1 to
the historical financial statements of Sunoco Logistics (Predecessor). Certain
of these policies are particularly sensitive and require significant judgments,
estimates and assumptions to be made by us. A discussion of these policies is
set forth below.

Properties, Plants and Equipment and Impairment of Long-Lived Assets. We
calculate depreciation and amortization of our properties, plants and equipment
based on estimated useful lives and salvage values of the assets. Factors
impacting these estimates include normal wear and tear, maintenance levels and
economic

conditions impacting the demand for these assets. In addition, long-lived
assets are subject to testing for impairment whenever circumstances indicate
that their carrying amount may not be recoverable. For example, a significant
decrease in an asset's market value, a major adverse change in the business
climate in which it operates or a history of operating or cash flow losses may
be an indication of impairment. Impairment testing involves estimating future
net cash flows relating to the asset, including assumptions about future market
conditions, operating and capital expenditures and other factors.

Environmental Remediation. We accrue environmental remediation costs for
work at identified sites where an assessment has indicated that cleanup costs
are probable and reasonably estimable. Such accruals are undiscounted and are
based on currently available information, estimated timing of remedial actions
and related inflation assumptions, existing technology and presently enacted
laws and regulations. Accruals may require adjustment as new sites are
identified or additional information about current sites becomes available.
Technology changes, new environmental laws and regulations and other factors
may also impact future environmental expenditures. For a further discussion of
our environmental remediation activities, please see "--Environmental Matters."

New Accounting Pronouncements

In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," was issued and,
in June 2000, it was amended by Statement of Financial Accounting Standards No.
138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities" (collectively, "new derivative accounting"). The new derivative
accounting requires recognition of all derivative contracts in the balance
sheet at their fair value. If the derivative contracts qualify for hedge
accounting, depending on their nature, changes in their fair values are either
offset in net income against the changes in the fair values of the items being
hedged or reflected initially as a separate component of the net parent
investment and subsequently recognized in net income when the hedged items are
recognized in net income. The ineffective portions of changes in the fair
values of derivative contracts that qualify for hedge accounting as well as
changes in fair value of all other derivatives are immediately recognized in
net income. The new derivative accounting was adopted effective January 1,
2001. There was no impact on net income during 2001.

In July 2001, Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" ("SFAS No. 142"), was issued. Sunoco Logistics
Partners L.P. will adopt SFAS No. 142 effective January 1, 2002 when adoption
is mandatory. SFAS No. 142 will require the testing of goodwill and
indefinite-lived intangible assets for impairment rather than amortizing them.
We are currently assessing the impact of adopting SFAS No. 142 on our combined
financial statements. The current level of annual amortization of goodwill and
indefinite-lived intangible assets, which will be eliminated upon the adoption
of SFAS No. 142, is approximately $0.8 million.

In August 2001, Statement of Financial Accounting Standards No. 143,
"Accounting for Asset Retirement Obligations" ("SFAS No. 143"), was issued.
This statement significantly changes the method of accruing for costs
associated with the retirement of fixed assets that an entity is legally
obligated to incur. We will evaluate the impact and timing of implementing SFAS
No. 143. Implementation of this standard is required no later than January 1,
2003.

In August 2001, Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No.
144"), was issued. Sunoco Logistics Partners L.P. will adopt SFAS No. 144
effective January 1, 2002 when adoption is mandatory. Among other things, SFAS
No. 144 significantly changes the criteria that would have to be met to
classify an asset as held-for-sale. SFAS No. 144 supersedes Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the
provisions of Accounting Principles Board Opinion 30, "Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and

Extraordinary, Unusual and Infrequently Occurring Events and Transactions,"
that relate to reporting the effects of a disposal of a segment of a business.
We are currently assessing the impact of adopting SFAS No. 144 on our combined
financial statements.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks, including volatility in crude oil
commodity prices and interest rates. To manage such exposure, we monitor our
inventory levels and our expectations of future commodity prices and interest
rates when making decisions with respect to risk management. We have not
entered into derivative transactions that would expose us to price risk.

Concurrent with the master partnership's initial public offering, we entered
into a $150 million credit facility. Although currently undrawn, we would pay
interest on the drawn portion of this credit facility which would expose us to
interest rate risk, since this credit facility bears variable interest.

BUSINESS

Overview

We are a Delaware limited partnership formed as the operating company of
Sunoco Logistics Partners L.P. on December 6, 2001 to acquire, own, and
operate, through our wholly owned subsidiaries, a geographically diverse and
complementary group of refined product and crude oil pipelines and terminal
facilities. We have an experienced management team dedicated to a growth
strategy, and we intend to acquire additional assets in the future. Our
business comprises three segments:

. Eastern Pipeline System:

--1,895 miles of refined product pipelines, including a one-third interest
in an 80-mile refined product pipeline, which primarily serve Sunoco
R&M's refining and marketing operations in the Northeast and Midwest
United States, and 58 miles of interrefinery pipelines between Sunoco
R&M's Philadelphia and Marcus Hook, Pennsylvania refineries;

--a 123-mile wholly owned crude oil pipeline; and

--a 9.4% interest in the Explorer Pipeline Company, a joint venture that
owns a 1,413-mile refined product pipeline.

. Terminal Facilities:

--32 inland refined product terminals with an aggregate capacity of 4.8
million barrels, which primarily serve our Eastern Pipeline System;

--a 2.0 million barrel refined product terminal serving Sunoco R&M's
Marcus Hook refinery near Philadelphia, Pennsylvania;

--an 11.2 million barrel marine crude oil terminal on the Texas Gulf
Coast, our Nederland Terminal;

--oneinland and two marine crude oil terminals, with a combined capacity of
3.0 million barrels, and related pipelines, all of which serve Sunoco
R&M's Philadelphia refinery; and

--a 1.0 million barrel LPG terminal near Detroit, Michigan.

. Western Pipeline System:

--1,883 miles of crude oil trunk pipelines and 870 miles of crude oil
gathering lines that supply the trunk pipelines principally in Oklahoma
and Texas;

--143crude oil transport trucks; and

--124 crude oil truck unloading facilities.

We transport, terminal, and store refined products and crude oil in 11
states. We generate revenues by charging tariffs for transporting refined
products and crude oil through our pipelines and by charging fees for storing
refined products, crude oil, and other hydrocarbons in, and for providing other
services at, our terminals. We also generate revenues by purchasing domestic
crude oil and selling it to Sunoco R&M and other customers. Generally, as we
purchase crude oil, we simultaneously enter into corresponding sale
transactions involving physical deliveries of crude oil, which enables us to
secure a profit on the transaction at the time of purchase and establish a
substantially balanced position, thereby minimizing exposure to price
volatility after the initial purchase. Our practice is not to enter into
futures contracts.

For the year ended December 31, 2001, on a pro forma basis, we had revenues
of $1,629.2 million, EBITDA of $90.1 million, and net income of $46.5 million.

Our Relationship with Sunoco, Inc.

We have a strong and mutually beneficial relationship with Sunoco, Inc.
Through its subsidiaries, Sunoco, Inc. is a leading independent United States
refiner and marketer of petroleum products; a growing manufacturer of
petrochemicals; and a technologically advantaged manufacturer of
metallurgical-grade coke for use in the steel industry. Sunoco, Inc. has a
significant interest in our partnership through its indirect ownership of a
73.2% limited partner interest and a 2% general partner interest in the master
partnership.

Sunoco, Inc. conducts its refinery and marketing operations through Sunoco
R&M. Substantially all of our business activities with Sunoco, Inc. are
conducted with Sunoco R&M. Sunoco R&M is the largest refiner in the Northeast
United States and owns and operates the following four refineries, which have a
combined crude oil processing capacity of 730,000 bpd:

. the Philadelphia, Pennsylvania refinery, which can process 330,000 bpd of
crude oil, making it the largest refinery in the Northeast United States;

. the Marcus Hook, Pennsylvania refinery near Philadelphia, which can
process 175,000 bpd of crude oil;

. the Toledo, Ohio refinery, which can process 140,000 bpd of crude oil; and

. the Tulsa, Oklahoma refinery, which can process 85,000 bpd of crude oil.

Sunoco R&M markets refined products in 21 states on the East Coast and in
the Midwest through approximately 4,150 branded retail gasoline outlets,
selling nearly four billion gallons of gasoline per year. In addition, Sunoco
R&M sells refined products through wholesale and spot market sales and
exchanges refined product with other refiner-marketers to enhance distribution
efficiency.

The majority of our operations are strategically located within Sunoco R&M's
refining and marketing supply chain, but we do not own or operate any refining
or marketing assets. Sunoco R&M relies on us to provide transportation and
terminalling services that support its refining and marketing operations. For
the year ended December 31, 2001, Sunoco R&M accounted for approximately 73% of
the pro forma revenues of our Eastern Pipeline System, 65% of the pro forma
revenues of our Terminal Facilities, and 66% of the pro forma revenues of our
Western Pipeline System. We expect to continue to derive a substantial portion
of our revenues from Sunoco R&M for the foreseeable future.

The following table sets forth the crude oil refining capacity of each of
Sunoco R&M's refineries and, for the year ended December 31, 2001, the
percentages of crude oil and feedstocks and refined products that we
transported or terminalled for Sunoco R&M:

Crude Oil/Feedstocks Refined Products
-------------------------------------------- --------------------------
Transported or Transported or
Crude Oil Terminalled by Percent of Sunoco Terminalled by Percent of Sunoco
Sunoco R&M Refinery Refining Capacity Our Assets R&M Volumes Our Assets R&M Volumes
- ------------------- ----------------- -------------- ----------------- -------------- -----------------
(bpd)

Pipelines and Terminals Storage and Throughput Agreement with Sunoco R&M

Under a pipelines and terminals storage and throughput agreement entered
into with Sunoco R&M concurrent with the closing of the initial public offering
of the master partnership, Sunoco R&M will pay us fees generally comparable to
those charged by third parties to:

. transport on our refined product pipelines or throughput in our 32 inland
refined product terminals an amount of refined products that will produce
at least $75.0 million of revenue in the first year, escalating at 1.67%
per year for the next four years. In addition, Sunoco R&M will pay us to
transport on our refined product pipelines an amount of refined products
that will produce at least $54.3 million of revenue in the sixth year and
at least $55.2 million of revenue in the seventh year. Sunoco R&M will pay
the published tariffs on the pipelines and contractually agreed fees at
the terminals. On a pro forma basis, we would have received $84.3 million
in revenue from Sunoco R&M for the use of these pipelines and terminals
during the year ended December 31, 2001;

. receive and deliver at least 290,000 bpd of crude oil or refined products
per year at our Fort Mifflin Terminal Complex for seven years. In the
first year, we will receive a fee of $0.1627 per barrel for the first
180,000 bpd and $0.0813 per barrel for volumes in excess of 180,000 bpd.
These fees will escalate at the rate of 1.67% per year. Sunoco's R&M's
throughput at the Fort Mifflin Terminal Complex averaged 318,545 bpd
during the year ended December 31, 2001; and

Sunoco R&M's obligations under this agreement may be permanently reduced or
suspended if:

. Sunoco R&M (1) shuts down or reconfigures one of its refineries (other
than planned maintenance turnarounds) and (2) reasonably believes in good
faith that such event will jeopardize its ability to satisfy its minimum
revenue or throughput obligations. Sunoco R&M will be required to give at
least six months' advance notice of any shut down or reconfiguration.
Sunoco R&M will propose new minimum obligations that proportionally reduce
the affected obligations. If we do not agree with this reduction, any
change in Sunoco R&M's obligations will be determined by binding
arbitration; or

. Sunoco R&M (1) is prohibited from using MTBE in the gasoline it produces
and (2) reasonably believes in good faith that such event will jeopardize
its ability to satisfy its minimum revenue or throughput obligations.
Sunoco R&M will be required to give at least 90 days advance notice of any
planned prohibition on using MTBE in the gasoline it produces. Sunoco R&M
will propose new minimum obligations that proportionally reduce its
affected obligations. If we do not agree with this reduction, any change
in Sunoco R&M's obligations will be determined by binding arbitration.

Furthermore, if new laws or regulations are enacted that require us to make
substantial and unanticipated capital expenditures at the Terminal Facilities,
we will have the right to impose a monthly surcharge on Sunoco R&M for the use
of the Terminal Facilities to cover the cost of complying with these laws or
regulations, after we have made efforts to mitigate their effect. We and Sunoco
R&M will negotiate in good faith to agree on the level of the monthly
surcharge. If we are unable to agree, then we may terminate the agreement with
respect to the affected asset.

Sunoco R&M's obligations under this agreement may be temporarily suspended
during the occurrence of an event that is outside the control of the parties
that renders performance impossible with respect to an asset for at least 30
days.

Sunoco R&M has agreed not to challenge, or to cause others to challenge or
assist others in challenging, our tariff rates in effect during the term of the
agreement. This agreement does not prevent other current or future shippers
from challenging our tariff rates. At the end of the term of the agreement,
Sunoco R&M will be free to challenge, or to cause others to challenge or assist
others in challenging, our tariff rates in effect at that time.

Other Agreements with Sunoco R&M and Sunoco, Inc.

Sunoco R&M has also agreed to purchase from us at market-based rates
particular grades of crude oil that our crude oil acquisition and marketing
business purchases for delivery to pipelines in: Longview, Trent, Tye, and
Colorado City, Texas; Haynesville, Louisiana; Marysville and Lewiston,
Michigan; and Tulsa, Oklahoma. At Marysville and Lewiston, Michigan, we
exchange Michigan sweet and Michigan sour crude oil we own for domestic sweet
crude oil supplied by Sunoco R&M at market-based rates. The initial term of
these agreements is two months. These agreements will automatically renew on a
monthly basis unless terminated by either party on 30 days' written notice.
Sunoco R&M has indicated that it has no current intention to terminate these
agreements. During the year ended December 31, 2001, Sunoco R&M purchased
70,461 bpd of crude oil from us in these areas.

On February 8, 2002, the master partnership entered into an omnibus
agreement with Sunoco, Inc. and its affiliates under which they generally
agreed not to engage in the business of purchasing crude oil at the wellhead,
or operating crude oil pipelines or terminals, refined product pipelines or
terminals, or LPG terminals in the continental United States. In addition, this
agreement addresses our payment of a fee to Sunoco, Inc. or the master
partnership's general partner for the provision of various general and
administrative services, Sunoco R&M's reimbursement to us for certain
maintenance expenditures, Sunoco, Inc.'s indemnification of us for certain
environmental and other liabilities, and other matters.

Please read "Certain Relationships and Related Transactions."

Sunoco, Inc. Owns and Controls the General Partner of Our Master Partnership

We are a key element of Sunoco, Inc.'s business strategy, and Sunoco, Inc.
intends to use our master partnership and our partnership as the primary means
of growing its transportation and terminalling business. Sunoco, Inc. has
retained a significant interest in us through its indirect ownership of a 73.2%
limited partner interest and the 2% general partner interest in the master
partnership. While our relationship with Sunoco, Inc. and its subsidiaries
offers us many benefits, it is also a potential source of conflicts of
interest. Please read "Certain Relationships and Related Transactions."

Business Strategies

Our primary business strategies are to:

Generate stable cash flows. In our Eastern Pipeline System, Terminal
Facilities, and Western Pipeline System, our customers pay us fees based on the
volume of refined product or crude oil shipped in our pipelines under published
tariffs or stored in, or distributed from, our terminals. Our Western Pipeline
System also generates revenues by purchasing domestic crude oil and selling it
to Sunoco R&M and other third parties. We have little direct exposure to
commodity price fluctuations in our Eastern Pipeline System and Terminal
Facilities because we do not own any of the refined products or crude oil that
we transport or store in these operations. In the Western Pipeline System, we
mitigate our commodity price exposure when we purchase lease crude oil by
simultaneously entering into sale transactions that are backed by physical
delivery. The geographic and business diversity of our assets also contributes
to the stability of our cash flows. Our current intention is to focus on
businesses and assets that generate stable cash flows.

Increase our pipeline and terminal throughput. When necessary to meet
increases in demand for refined products or crude oil, we have increased and
will increase capacity in our existing pipelines and terminals. We increase
capacity in our pipelines by adding or expanding pump stations or increasing
the diameter of the pipelines. In addition to these measures, over the last two
years we have added 1.2 million barrels of new storage capacity at our
Nederland Terminal, bringing our total storage capacity at Nederland to 11.2
million barrels. We anticipate adding an additional 1.3 million barrels of
storage capacity at our Nederland Terminal over the next 18 months to meet
growing demand.

Pursue strategic and accretive acquisitions that complement our existing
asset base. Sunoco, Inc. has a long history of successfully pursuing and
consummating energy acquisitions and intends to use us in the future as a
growth vehicle for its transportation and terminalling business. We expect to
pursue strategic acquisitions both independently and jointly with Sunoco, Inc.
that will enable us to grow our distributable cash flow and enhance our service
capabilities to Sunoco, Inc. and third parties. For example, we may acquire
pipeline or terminal assets associated with any refineries acquired by Sunoco,
Inc. or its affiliates.

Continue to improve our operating efficiency and to reduce our costs. We
are focused on monitoring and controlling our cost structure. We have been able
to implement cost saving initiatives such as energy conservation, bulk
purchasing, and automation of delivery facilities and pump stations. We intend
to continue to make investments to improve our operations and pursue cost
saving initiatives.

Competitive Strengths

We believe we are well-positioned to execute our business strategies
successfully using the following competitive strengths:

We have a unique strategic relationship with Sunoco R&M's refining and
marketing operations. Our refined product and crude oil pipelines and
terminals are directly linked to Sunoco R&M's refineries and afford Sunoco R&M
with the most cost-effective means to access crude oil and distribute refined
products. For the year ended December 31, 2001, the three Sunoco R&M refineries
that we supply with crude oil and feedstocks received 87% of their crude oil
from us, and Sunoco R&M transported through our refined product pipelines or
across our Terminal Facilities approximately 72% of the refined products from
its four refineries. Sunoco R&M has agreed to continue using our assets to
transport, terminal, and store refined products and crude oil. Please read
"--Our Relationship with Sunoco, Inc." Furthermore, Sunoco, Inc. has a
significant economic incentive to see that our pipeline and terminal assets are
managed in the best interests of our unitholders because, as the ultimate owner
of our general partner, it indirectly owns a 2% general partner interest and a
73.2% limited partner interest in us. We may construct, own, and operate assets
that will be operated by us in connection with Sunoco, Inc.'s business and
pursue acquisitions jointly with Sunoco, Inc. and its subsidiaries.

Our refined product pipelines and our terminals are strategically located in
areas with high demand. We have a strong presence in the Northeast and Midwest
United States, areas where demand for refined products exceeds the supply from
local refineries. According to the Energy Information Administration, or EIA,
at the Department of Energy, or DOE, refined products transported into these
regions from other regions, including foreign countries, have increased 1.7%
annually from 1995 to 2000. As a result, our transportation and distribution
assets in these regions operate at high utilization rates, providing us a base
of stable cash flows. In the Gulf Coast region, our Nederland Terminal and
related pipeline network are strategically located to supply crude oil to local
refiners, as well as to major connecting pipelines that supply crude oil to the
Midwest United States. The Nederland Terminal is well-positioned to capitalize
on the trend of increasing foreign crude oil imports as inland domestic crude
oil production continues to decline. According to the EIA, imports of crude oil
through the Gulf Coast increased 4.8% annually from 1995 to 2000. In addition,
our Marysville, Michigan to Toledo, Ohio crude oil pipeline is one of only
three pipelines able to deliver Canadian crude oil to refineries in Michigan
and Northern Ohio. We believe this pipeline positions us to participate in the
growing market for Canadian crude oil, including synthetic crude oil, imported
to these refineries. The Canadian National Energy Board forecasts that
synthetic crude oil production will triple in the next 15 years, from 324,450
bpd to 995,400 bpd.

We have a complementary portfolio of assets that are both geographically and
operationally diverse. Our assets include our refined product pipelines and
terminals in the Northeast and Midwest United States and a crude oil terminal
and pipelines in Texas, Oklahoma, and the Texas Gulf Coast area. This diversity
contributes to our stable cash flows. Our Eastern Pipeline System, Terminal
Facilities, and Western Pipeline System represented 43%, 44%, and 13%,
respectively, of pro forma EBITDA for the year ended December 31, 2001.

Our pipelines and terminals are efficient and well-maintained. We have
recently made significant investments to upgrade our asset base. Our refined
product pipelines and many of our terminals are automated to ensure product
quality for our customers. In addition, substantially all of our pipelines
subject to regulation by the DOT are monitored by computerized control centers
that continuously track real-time operational data, including refined products
and crude oil quantities, flow rates and pressures. We utilize a
state-of-the-art internal inspection program and other procedures to monitor
the integrity of our pipelines.

Our executive officers and directors have extensive experience and include
some of the most senior officers of Sunoco, Inc. Our management team has
operated our assets for almost ten years. As a result, we believe we have the
expertise to execute our business strategies. The master partnership's general
partner has adopted compensation and incentive plans to closely align the
interests of our executive officers with the interests of our common
unitholders.

Eastern Pipeline System

Sunoco R&M accounted for approximately 73% of our Eastern Pipeline segment
revenues for the year ended December 31, 2001.

Refined Product Pipelines

Our refined product pipelines transport refined products from Sunoco R&M's
Philadelphia, Marcus Hook, and Toledo refineries, as well as from third
parties, to markets in New York, New Jersey, Pennsylvania, Ohio, and Michigan.
The refined products transported in these pipelines include conventional
gasoline, federal specification reformulated gasoline, other oxygenated
gasolines, low-octane gasoline for ethanol blending, distillates that include
high- and low-sulfur diesel and jet fuel, LPGs (such as propane, butane,
isobutane, and a butane/butylene mixture), refining feedstocks, and other
hydrocarbons (such as toluene and xylene). For the year ended December 31,
2001, gasoline and distillates represented approximately 60% and 35%,
respectively, of the total throughput in our refined product pipelines. Our
refined product pipelines were originally constructed between 1931 and 1967.
Our pipelines are regularly maintained, and we believe they are in good repair.
The FERC regulates the rates for interstate shipments on our Eastern Pipeline
System, and the Pennsylvania Public Utility Commission regulates the rates for
intrastate shipments in Pennsylvania.

[GRAPHIC B- Map depicting our Eastern Pipeline System, including the location of
Sunoco R&M refineries.]

The following table details the average aggregate daily number of barrels of
refined products transported on our refined product pipelines in each of the
years presented. The information in the following table does not include
interrefinery pipelines and transfer pipelines that transport large volumes
over short distances and generate minimal revenues.

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Refined products transported (bpd) 433,222 431,989 461,379 444,046 446,648

The mix of refined petroleum products delivered varies seasonally, with
gasoline demand peaking during the summer months, and demand for heating oil
and other distillate fuels being higher in the winter. In addition, weather
conditions in the areas served by our Eastern Pipeline System affect both the
demand for, and the mix of, the refined petroleum products delivered through
the Eastern Pipeline System, although historically any overall impact on the
total volumes shipped has been short term.

The following table sets forth, for each of our refined product pipeline
systems, the origin and destination, length, diameter, capacity, throughput,
capacity utilization, revenues, and Sunoco R&M throughput for the year
presented. Except as shown below, we own 100% of our refined product pipeline
systems. Throughput is the total number of barrels per day transported on a
pipeline system and includes barrels ultimately transported to a delivery point
on another pipeline system. Revenues reflect tariff revenues generated by
barrels shipped to a delivery point on a pipeline system and do not include
revenues from tariffs generated by barrels shipped on but delivered to a
delivery point on another of our pipeline systems. For example, we would
include in our throughput calculation, 10,000 bpd of refined products
transported on our Philadelphia, Pennsylvania to Montello, Pennsylvania
pipeline system even though that refined product is ultimately delivered to a
point on our Montello to Buffalo, New York pipeline system, where it would also
be counted in the calculation of throughput. All of the revenues from
transporting the 10,000 bpd of refined products would be recognized only by the
Montello to Buffalo pipeline system.

Year Ended December 31, 2001
----------------------------------------------------
Miles of Capacity Sunoco R&M
Origin and Destination Pipeline Diameter Capacity Throughput Utilization Revenues Throughput/(1)/
- ---------------------- -------- -------- -------- ---------- ----------- -------------- --------------
(inches) (bpd) (bpd) (in thousands)

Philadelphia, PA to Montello, PA... 210 12,8 164,400 134,490 82% $ 8,344 78%
Montello, PA to Buffalo, NY........ 300 14,8 62,400 58,660 94% 18,054 45%
Montello, PA to Kingston, PA....... 84 6 8,800 6,923 79% 1,421 88%
Montello, PA to Syracuse, NY....... 230 8,6 14,100 12,370 88% 4,792 100%
Montello, PA to Pittsburgh, PA..... 221 8 35,000 32,611 93% 6,661 100%
Toledo, OH to Blawnox, PA.......... 260 10,8 32,900 18,184 55% 3,568 92%
Toledo, OH to Sarnia, Canada....... 241 8,6 66,600 40,745 61% 7,681 57%
Twin Oaks, PA to Newark, NJ........ 118 14 140,000 102,268 73% 17,410 85%
Philadelphia, PA to Linden, NJ/(2)/ 88 16,12 60,000 35,142 59% 4,112 100%
----- ----- ------- ------- ---- ------- ----
Subtotal......................... 1,752 N.M. 584,200 441,393 76% 72,043 78%
Interrefinery Pipelines............ 58 8,6,4 62,400 37,930 61% 5,620 100%
Transfer Pipelines/(4)/............ 85 N.M. N.M. 132,838 N.M. 2,481 26%
----- ----- ------- ------- ---- ------- ----
Total............................ 1,895 N.M. N.M. 612,161 N.M. $80,144 68%
===== ===== ======= ======= ==== ======= ====

- --------
N.M.Not meaningful.
/(1)/Percentage of throughput attributable to Sunoco R&M.
/(2)/We own a one-third interest in 80 miles of this pipeline. Numerical
information, other than mileage, reflects only our ownership.
/(3)/We lease these pipelines to Sunoco R&M. The revenues represent lease
income from Sunoco R&M.
/(4)/Consists of our Toledo, Twin Oaks, and Linden transfer pipelines.

For the year ended December 31, 2001, Sunoco R&M accounted for an aggregate
of 68% of the refined product volumes transported on our Eastern Pipeline
System. For the same period, these pipelines transported approximately 80% of
the refined products transported by pipeline from the three Sunoco R&M
refineries served by our Eastern Pipeline System. The following text provides
additional information about each refined product pipeline system.

Philadelphia, Pennsylvania to Montello, Pennsylvania. The Philadelphia to
Montello refined product pipeline system is the principal means by which Sunoco
R&M moves its refined products from its Philadelphia and Marcus Hook refineries
into our Montello terminal for further transportation on our Eastern Pipeline
System. The Philadelphia to Montello pipeline system consists of four segments:

. a 12-inch, 60-mile segment from the Point Breeze pump station at Sunoco
R&M's Philadelphia refinery to Montello;

. an 8-inch, 60-mile segment from the Point Breeze pump station to Montello;

. an 8-inch, 39-mile segment from our Twin Oaks pump station, which is
adjacent to the Marcus Hook Tank Farm near Sunoco R&M's Marcus Hook
refinery, to the 8-inch Point Breeze to Montello pipeline segment; and

. an 8-inch, 51-mile segment from Boot, Pennsylvania to Fullerton,
Pennsylvania.

[GRAPHIC C- Diagram depicting location of our Montello terminal relative to
Sunoco R&M's refineries, and the Philadelphia to Montello pipeline system.]

The 12-inch Point Breeze pump station to Montello segment also serves our
Exton, Pennsylvania terminal. The 8-inch Point Breeze pump station to Montello
segment connects with the 8-inch Boot to Fullerton segment at the Boot pump
station and continues to Montello, with connections to a Phillips pipeline in
Swarthmore, Pennsylvania and our terminal in Exton along its route. The 8-inch
segment from the Twin Oaks pump station to the Point Breeze to Montello
pipeline segment serves our terminal at Malvern, Pennsylvania and our storage
facility at Icedale, Pennsylvania. The 8-inch Boot to Fullerton segment
originates at the Boot pump station and terminates at our Fullerton terminal
and Gulf Oil's Fullerton terminal. This segment also serves terminals operated
by Pipeline Petroleum Corp. and Farm & Home and delivers to Buckeye's Buckeye
pipeline in Macungie, Pennsylvania.

Sunoco R&M accounted for 78% of the volumes transported on this pipeline
system for 2001. Other shippers on this system include ExxonMobil, Gulf Oil,
Major Oil, Delphi Petroleum, CITGO, El Paso, Griffith Oil, NOCO Energy,
Pickelner, and TransMontaigne. Phillips' Trainer, Pennsylvania refinery and
Motiva's Delaware City, Delaware refinery can access the system at the Twin
Oaks pump station. Products can also enter

the system from ST Services' terminal in Philadelphia and from Valero's
Paulsboro, New Jersey refinery via ExxonMobil's Malvern terminal. Refined
products from Buckeye's Laurel pipeline can enter this system at Montello.

Montello, Pennsylvania to Buffalo, New York. The Montello to Buffalo
refined product pipeline system consists of the following segments:

. a 14-inch, 80-mile segment and an 8-inch, 3-mile segment from Montello to
Williamsport, Pennsylvania; and

. an 8-inch, 217-mile segment from Williamsport to Buffalo, including an
8-inch, 19-mile spur from Caledonia Junction, New York to the Rochester,
New York terminals.

The Montello to Williamsport segment makes deliveries to Petroleum Products
Corp., our Northumberland, Pennsylvania terminal, and to Sunoco R&M, Farm &
Home, Pickelner, and Gulf Oil terminals in the Williamsport area. The
Williamsport to Buffalo segment makes deliveries to the Rochester Gas &
Electric terminal in Big Flats, New York. At Caledonia Junction, the spur runs
to our Rochester terminal, as well as to terminals operated by ExxonMobil,
Buckeye, Alaskan Oil, and Rochester Gas & Electric. In the Buffalo area, the
pipeline serves our terminal and those of United Refining and NOCO Energy.

Sunoco R&M accounted for 45% of the volumes transported on this pipeline
system for 2001. In addition to Sunoco R&M and the other companies who are
served by this pipeline system, we also transport refined products for CITGO,
BP, Phillips, El Paso, and Motiva. We also receive refined products for
shipment into the Buffalo market through our interconnection with Buckeye's
Buckeye pipeline at Caledonia Junction.

Montello, Pennsylvania to Kingston, Pennsylvania. The Montello to Kingston
refined product pipeline system consists of an 84-mile, 6-inch pipeline serving
our terminal in Kingston, the Lehigh Oil & Gas terminal in Barnesville,
Pennsylvania, and the Travel Center of America terminal in Beach Haven,
Pennsylvania. In addition to Sunoco R&M, which accounted for 88% of the volumes
transported on this system for 2001, we also transport product for Griffith Oil
and TransMontaigne.

Montello, Pennsylvania to Syracuse, New York. The Montello to Syracuse
refined product pipeline system consists of 15 miles of 8-inch pipeline and 215
miles of 6-inch pipeline. This pipeline system serves our terminals in Tamaqua,
Pennsylvania and Binghamton, New York, and terminates at a Hess/ExxonMobil
terminal in Syracuse, New York. Sunoco R&M is the only shipper on this pipeline
system.

Montello, Pennsylvania to Pittsburgh, Pennsylvania. The Montello to
Pittsburgh refined product pipeline system consists of a 221-mile, 8-inch
pipeline supplied by our Philadelphia to Montello pipeline system and Buckeye's
Laurel pipeline at Delmont, Pennsylvania. The pipeline system serves our
terminals located in Mechanicsburg, Altoona, Delmont, Blawnox, and Pittsburgh,
Pennsylvania. This pipeline system is connected to our Toledo, Ohio to Blawnox
pipeline system, through which we can supply our Pittsburgh, Blawnox, Delmont,
and Altoona terminals with refined product from Sunoco R&M's Toledo refinery.
Sunoco R&M is the only shipper on this pipeline system.

Toledo, Ohio to Blawnox, Pennsylvania. The Toledo to Blawnox refined
product pipeline system consists of 115 miles of 10-inch pipeline and 145 miles
of 8-inch pipeline. This pipeline system transports refined products and
petrochemicals from Sunoco R&M's Toledo refinery, as well as petrochemicals
from Sarnia, Canada, to our terminals in Akron and Youngstown, Ohio and Vanport
and Blawnox, Pennsylvania. The pipeline system also makes deliveries to the
Kinder Morgan Indianola, Pennsylvania facility and accesses the Inland Pipeline
system owned by Sunoco R&M, BP, Unocal, and Equilon. Sunoco R&M accounted for
92% of the volumes transported on this pipeline system for 2001.

Toledo, Ohio to Sarnia, Canada. The Toledo to Sarnia refined product
pipeline system consists of three segments totaling 241 miles of 6-inch and
8-inch pipelines originating at Sunoco R&M's Toledo refinery and terminating at
three separate points. The system includes one 6-inch and two 8-inch pipelines
running approximately 50 miles between Toledo and our Inkster Terminal near
Detroit, Michigan. At Inkster, the 6-inch pipeline continues 11 miles to River
Rouge, Michigan, and one of the 8-inch pipelines continues 80 miles to Sarnia.

Deliveries into and out of Toledo originate from Sunoco R&M's Toledo
refinery, BP's Toledo refinery, Buckeye's Buckeye pipeline, and the Marathon
Ashland Petroleum, or MAP, Toledo terminal. The Toledo to River Rouge segment
serves the Atlas, Buckeye, and MAP terminals in Taylor, Michigan and our
Inkster Terminal and River Rouge Terminal. Product terminals in the Detroit
area served by the Toledo to Sarnia segment include those of BP, MAP, and RKA.
The Toledo to Sarnia segment serves our Inkster Terminal and the Consumers
Power Marysville, Michigan underground storage facilities and has delivery and
origin capabilities at Sarnia that include the Suncor, BP, Royal Dutch/Shell,
and Novacor refineries. Each section of this system is bi-directional and can
ship refined products or LPG.

Sunoco R&M accounted for 57% of the volume on this system for 2001. Other
shippers on this system include Suncor, CITGO, MAP, Northwest Airlines, BP, and
Kinetic Resources.

Twin Oaks, Pennsylvania to Newark, New Jersey. The Twin Oaks to Newark
refined product pipeline system consists of a 111-mile, 14-inch pipeline
originating at the Twin Oaks pump station, adjacent to our Marcus Hook Tank
Farm, and terminating in Newark and Linden, New Jersey. Motiva's Delaware City
refinery, Phillips' Trainer refinery, and Sunoco R&M's Marcus Hook refinery can
access this pipeline system at its origin. Deliveries are made to our Willow
Grove, Pennsylvania and Piscataway and Newark, New Jersey terminals, as well as
into the Linden area via a 7-mile, 12-inch spur that serves terminals owned by
Kaneb, Kinder Morgan, ExxonMobil, Phillips, and Buckeye. Our Linden transfer
facility allows transfers between these third-party terminals while we make
main-line deliveries. In Newark, the pipeline system serves terminals owned by
Lukoil and Motiva. We interconnect with Buckeye's Laurel pipeline at the Twin
Oaks pump station using a 2-mile, 16-inch spur. Shippers on this pipeline
include Sunoco R&M, which accounted for 85% of the volumes transported for
2001, Motiva, Phillips, ExxonMobil, and Kaneb.

Philadelphia, Pennsylvania to Linden, New Jersey. The Philadelphia to
Linden refined product pipeline system consists of an 80-mile, 16-inch segment
called the Harbor pipeline, and an 8-mile, 12-inch segment. We own 100% of the
12-inch segment, and we operate the 16-inch segment, which is owned jointly, in
equal percentages, by El Paso, Phillips, and us. Each owner of the 16-inch
segment has a right to 60,000 bpd of capacity. The pipeline system is connected
at its origin to the El Paso refinery in Eagle Point, New Jersey, the Phillips
tank farm in Woodbury, New Jersey, the Gulf Oil terminal in Woodbury, and
Sunoco R&M's Philadelphia refinery. Sunoco R&M can also deliver product to the
Gulf Oil terminal while other parties are shipping product to New York.
Deliveries at Linden are made to a Phillips terminal, a Gulf Oil terminal,
CITGO terminals, and Buckeye's and El Paso's pipelines. This pipeline system is
also connected and makes deliveries into our Twin Oaks, Pennsylvania to Newark
pipeline, allowing us to transport refined product to our Piscataway and
Newark, New Jersey terminals. Sunoco R&M accounted for all of our allocated
share of the volumes transported on the 16-inch segment for 2001 and for all of
the volumes transported on the 12-inch segment for the same period.

Interrefinery Pipelines. We also own and lease to Sunoco R&M for a fixed
amount three bi-directional 18-mile pipelines and a four-mile pipeline spur
extending to the Philadelphia International Airport. One pipeline and the spur
transfer jet fuel from Sunoco R&M's Philadelphia and Marcus Hook refineries to
the Philadelphia International Airport. A second pipeline transfers LPGs to and
from Sunoco R&M's Philadelphia refinery and Marcus Hook storage facility. The
third pipeline transfers gasoline blending components and intermediate
feedstocks between Sunoco R&M's Marcus Hook and Philadelphia refineries. The
third pipeline is used to optimize refinery operations, such as gasoline
blending and unit turnaround scheduling.

[GRAPHIC D- Diagram depicting our interrefinery pipelines.]

Crude Oil Pipeline. We own and operate a 123-mile, 16-inch crude oil
pipeline that runs from Marysville, Michigan to Toledo, Ohio. It has a capacity
of 140,000 bpd. This pipeline receives crude oil from the Lakehead pipeline
system for delivery to Sunoco R&M and BP refineries located in Toledo, Ohio and
to MAP's Samaria, Michigan tank farm, which supplies its refinery in Detroit,
Michigan. Marysville is also a truck injection point for local production.
Sunoco R&M is the major shipper on the pipeline, accounting for 75% of the
volumes transported for 2001. Other shippers include BP and MAP. The pipeline
was built in 1967, and its tariffs are regulated by the FERC. This pipeline is
regularly maintained, and we believe that it is in good repair.

The table below sets forth the average daily number of barrels of crude oil
transported through this crude oil pipeline in each of the years presented.

Year Ended December 31,
----------------------------------
1997 1998 1999 2000 2001
------ ------ ------ ------ ------

Crude oil transported (bpd) 88,948 88,638 81,464 91,464 98,226

Explorer Pipeline

The master partnership owns a 9.4% interest in Explorer Pipeline Company, a
joint venture that owns and operates a 1,413-mile common carrier refined
product pipeline. Other owners of Explorer include Equilon, MAP, ChevronTexaco,
Conoco, CITGO, and Phillips. The system originates from the refining centers of
Lake Charles, Louisiana and Beaumont, Port Arthur and Houston, Texas, and
extends to Chicago, Illinois, with delivery points in the Houston, Dallas/Fort
Worth, Tulsa, St. Louis, and Chicago areas. The pipeline system consists of a
12-inch segment from Lake Charles to Port Arthur, a 28-inch segment from Port
Arthur to Tulsa, and a 24-inch segment from Tulsa to Hammond, Illinois. The
28-inch segment has capacity of 560,000 bpd, and the 24-inch segment has
capacity of 350,000 bpd.

We receive a quarterly cash dividend from Explorer that is commensurate with
the master partnership's ownership interest. For 2001, we received
approximately $4.3 million in cash dividends.

The pipeline was built in 1972. Refined products transported on this system
primarily include gasoline, jet fuel, diesel fuel, and heating oil. Shippers on
the pipeline include most of the owners other than Sunoco, Inc. and several
non-affiliated customers. For the year ended December 31, 2001, interest owners
transporting refined products on the pipeline system accounted for
approximately 39% of operating revenues, and the top ten non-affiliated
customers accounted for approximately 38%. In 2000, the FERC approved
Explorer's application for market-based rates for all its tariffs.

Volumes transported on this system have increased as the refining centers in
the Gulf Coast region have increased shipments to meet higher demand. Explorer
recently announced two expansions of the system's capacity by 130,000 bpd from
Port Arthur to Tulsa and by 100,000 bpd from Tulsa to Chicago. The expansions,
planned to be completed by early 2003, are currently projected to cost more
than $100 million. Based on current plans, we will not be required to make an
equity contribution to finance these capital expenditures. A member of our
management team serves on Explorer's board of directors.

Explorer's primary competition is the TEPPCO pipeline, which transports
petroleum products from the Beaumont, Port Arthur and Houston, Texas refining
centers to Little Rock, Indianapolis, Chicago, and other markets along its
route. Another competitor is the Seaway pipeline, a large diameter pipeline
from Houston to Cushing, Oklahoma owned by BP and Phillips, which connects to
the Phillips pipeline system to Chicago. Centennial Pipeline, a 26-inch natural
gas pipeline owned by MAP, TEPPCO, and CMS Energy that is being converted into
a refined product pipeline, will also provide competition. Centennial
originates near Beaumont, Texas and terminates in southern Illinois.

Terminal Facilities

Sunoco R&M accounted for approximately 59% of our Terminal Facilities
segment revenues for the year ended December 31, 2001.

Refined Product Terminals

Our refined product terminals receive refined products from pipelines and
distribute them to Sunoco R&M and to third parties, who in turn deliver them to
end-users and retail outlets. Terminals play a key role in moving product to
the end-user market by providing the following services:

. storage and inventory management;

. distribution;

. blending to achieve specified grades of gasoline; and

. other ancillary services that include the injection of additives and
filtering of jet fuel.

Typically, our terminal facilities consist of multiple storage tanks and are
equipped with automated truck loading equipment that is available 24 hours a
day. This automated system provides for control of allocations, and credit and
carrier certification by remote input of data by our customers. In addition,
all of our terminals are equipped with truck loading racks capable of providing
automated blending to individual customer specifications.

Our refined product terminals derive most of their revenues from
terminalling fees paid by customers. A fee is charged for transferring refined
products from the terminal to trucks, barges, or pipelines. In addition to
terminalling fees, we generate revenues by charging our customers fees for
blending, injecting additives, and filtering jet fuel. We generate the balance
of our revenues from other hydrocarbons handled for Sunoco R&M in Vanport,
Pennsylvania and Toledo, Ohio and for lubricants handled for Sunoco R&M in
Cleveland, Ohio. Sunoco R&M accounts for substantially all of our refined
product terminal revenues.

The majority of our refined product terminals are supplied by our pipelines.
The remainder of our refined product terminals are supplied by third-party
pipelines. For 2001, gasoline represented approximately 68% of the total volume
of refined products distributed through our product terminals, while
distillates represented approximately 30%.

The table below sets forth the total average throughput for our inland
refined product terminals in each of the years presented:

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Refined products terminalled (bpd) 242,570 243,058 251,627 266,212 272,698

The following table outlines the location of our inland refined product
terminals and their storage capacities, number of tanks, supply source, mode of
delivery, and average throughput for the year ended December 31, 2001:

Number of Average
Storage Capacity Tanks Supply Source Mode of Delivery Throughput
---------------- --------- --------------- ---------------- ----------
(bbls) (bpd)

Akron, OH......... 98,200 8 Pipeline Truck 4,966
Altoona, PA....... 103,400 9 Pipeline Truck 3,871
Belmont, PA/(1)/.. 0 /(1)/ 0/(1)/ Refinery Truck 25,849
Binghamton, NY.... 60,000 4 Pipeline Truck 2,577
Blawnox, PA....... 72,100 4 Pipeline Truck 2,428
Buffalo, NY....... 358,500 8 Pipeline Truck 7,790
Cleveland, OH..... 255,000 10 Pipeline/Rail Truck 13,620
Columbus, OH...... 78,900 6 Pipeline Truck 7,331
Dayton, OH........ 248,700 15 Pipeline Truck 9,056
Delmont, PA....... 233,900 8 Pipeline Truck 11,131
Exton, PA......... 132,200 7 Pipeline Truck 2,589
Fullerton, PA..... 161,700 7 Pipeline Truck 6,634
Huntington, IN.... 207,000 8 Pipeline Truck 3,012
Inwood, NY/(2)/... 54,200 18 Pipeline Truck 9,964
Kingston, PA...... 148,800 7 Pipeline Truck 5,956
Malvern, PA....... 62,900 5 Pipeline Truck 5,488
Mechanicsburg, PA. 166,200 9 Pipeline Truck 9,984
Montello, PA...... 67,900 7 Pipeline Truck 8,201
Newark, NJ........ 581,100 16 Pipeline/Marine Truck/Marine 23,303
Northumberland, PA 170,300 6 Pipeline Truck 6,029
Owosso, MI........ 233,300 8 Pipeline Truck 8,021
Paulsboro, NJ..... 81,000 6 Pipeline Truck/Pipeline 14,583
Piscataway, NJ.... 95,000 4 Pipeline Truck 7,720
Pittsburgh, PA.... 205,500 5 Pipeline/Rail Truck 12,487
River Rouge, MI... 178,400 10 Pipeline Truck 14,904
Rochester, NY..... 173,000 7 Pipeline Truck 4,702
Tamaqua, PA....... 113,600 8 Pipeline Truck 2,452
Toledo, OH........ 102,400 10 Refinery/Rail Truck 15,895
Twin Oaks, PA..... 90,000 4 Refinery Truck 11,178
Vanport, PA....... 179,300 8 Pipeline/Marine Truck/Marine 1,414
Willow Grove, PA.. 85,000 7 Pipeline Truck 6,594
Youngstown, OH.... 22,700 5 Pipeline Truck 2,969
--------- --- -------
Total.......... 4,820,200....... 244........ 272,698
========= === =======

- --------
/(1)/This terminal receives product from Sunoco R&M's Philadelphia refinery and
does not have any tankage. This terminal is part of the Philadelphia
refinery and is owned by an affiliate of Sunoco, Inc. That affiliate will
lease the terminal to us until the terminal can be platted as a separate
lot. If the terminal is platted as a separate lot, the terminal will be
conveyed to us for nominal consideration.
/(2)/We have a 45% ownership interest in this terminal. The capacity represents
the proportionate share of capacity attributable to our ownership interest.

The Nederland Terminal

The Texas Gulf Coast region is the major hub for petroleum refining in the
United States, representing approximately 40% of total United States daily
refining capacity and 66% of total United States refining capacity expansion
from 1990 to 1999. The growth in Gulf Coast refining capacity has resulted in
part from consolidation in the petroleum industry in order to achieve economies
of scale from operating larger refineries. According to the EIA, imports of
crude oil through the Gulf Coast increased 4.8% annually from 1995 to 2000. The
growth in refining capacity, including new heavy oil conversion projects, and
increased product flow from the Gulf Coast region to other regions has created
a need for additional transportation, storage, and distribution facilities on
the Gulf Coast. We believe that demand for imported crude oil and for petroleum
products refined in the Gulf Coast region will continue to increase.

We own and operate the Nederland Terminal, which is located on the
Sabine-Neches waterway between Beaumont and Port Arthur, Texas. The Nederland
Terminal is a large marine terminal that provides inventory management,
storage, and distribution services for refiners and other large end-users of
crude oil. The Nederland Terminal receives, stores, and distributes crude oil,
feedstocks, lubricants, petrochemicals, and bunker oils (used for fueling ships
and other marine vessels). In addition, the Nederland Terminal also blends and
packages lubricants and is equipped with petroleum laboratory facilities.

The Nederland Terminal has a total storage capacity of approximately 11.2
million barrels in 126 above-ground storage tanks with individual capacities of
up to 660,000 barrels. The terminal currently uses its aggregate storage
capacity as follows:

. 10.3 million barrels for crude oil;

. 400,000 barrels for feedstocks;

. 272,000 barrels for lubricants;

. 150,000 barrels for bunker oils; and

. 80,000 barrels for petrochemicals.

[Graphic E- Diagram depicting our Nederland Terminal and its pipeline
connections.]

The terminal can receive crude oil at each of its five ship docks and three
barge berths, which can accommodate any vessel capable of navigating the
40-foot freshwater draft of the Sabine-Neches Ship Channel. The five ship docks
are capable of receiving a total of 1.0 million bpd of crude oil. The terminal
can also receive crude oil through a number of pipelines, including the Equilon
pipeline from Louisiana, the DOE Big Hill pipeline, the DOE West Hackberry
pipeline, the EOTT Louisiana pipeline system, and our Western Pipeline System.
The DOE pipelines connect the Nederland Terminal to the United States Strategic
Petroleum Reserve's West Hackberry caverns at Hackberry, Louisiana and Big Hill
caverns near Winnie, Texas, which have an aggregate storage capacity of 370
million barrels. The Nederland Terminal's pipeline connections to major markets
in the Lake Charles, Beaumont, Port Arthur, Houston, and Midwest areas provide
customers with maximum flexibility and liquidity.

The Nederland Terminal can deliver crude oil and other petroleum products
via pipeline, barge, ship, rail, or truck. In the aggregate, the Nederland
Terminal is capable of delivering over 1.0 million bpd of crude oil to
connecting pipelines. The table below sets forth the total average throughput
for the Nederland Terminal in each of the years presented:

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Crude oil and refined products terminalled (bpd) 467,025 475,796 544,624 566,941 427,194

The following table describes the Nederland Terminal's pipeline delivery
connections, including the destination of the pipelines to which we can
deliver, the diameter of each pipeline, the rate at which we can make
deliveries, and key delivery points along each pipeline's route:

Delivery
Pipeline Destination Diameter Rate Key Delivery Points
- -------- -------------------- -------- -------- ---------------------------------------------------
(inches) (bpd)

ExxonMobil...... Beaumont, Texas 24 300,000 ExxonMobil'sBeaumont refinery
ExxonMobil...... Wichita Falls, Texas 20 225,000 Basin'spipeline to Cushing, Oklahoma
and Patoka, Illinois ValeroEnergy Corporation's pipeline to its
McKee, Texas refinery
Valero,L.P.'s pipeline to Valero's
Ardmore, Oklahoma refinery
Conoco'spipeline to its Ponca City,
Oklahoma refinery
Pipelinessupplying Midwest refineries
Equilon......... Houston, Texas 20 200,000 Houstonarea refineries
Premcor......... Port Arthur, Texas 32 250,000 Premcor'sPort Arthur refinery
West Texas Gulf. Longview, Texas 26 250,000 Mid-Valleypipeline to Midwest refineries
CITGO'spipeline to its Lake Charles,
Louisiana refinery
BP'spipeline to Cushing
McMurrey'spipeline to Crown
Central's Tyler, Texas refinery
Alon............ Big Springs, Texas 10 25,000 Alon'sBig Springs refinery
TotalFinaElf.... Port Arthur, Texas 10 50,000 TotalFina Elf's Port Arthur refinery
8 35,000 TotalFina Elf's Port Arthur refinery
DOE............. Big Hill caverns 36 250,000 DOE'sStrategic Petroleum Reserve
DOE............. West Hackberry 42 250,000 DOE'sStrategic Petroleum Reserve
caverns
Sunoco Logistics Longview, Texas 10 50,000 Mid-Valleypipeline to Midwest refineries
CITGO'spipeline to its Lake Charles
refinery
BP'spipeline to Cushing
McMurrey'spipeline to Crown
Central's Tyler refinery
Sunoco Logistics Seabreeze, Texas 10 35,000 TEPPCO'spipeline to BASF/Fina's Port
Arthur steam cracker

We generate revenues at the Nederland Terminal primarily by providing
long-term and short-term, or spot, storage services and throughput capability
to a broad spectrum of customers such as ExxonMobil, Premcor, TotalFinaElf,
BASF/Fina, the DOE, Valero Energy Corporation, MAP, Sunoco R&M, and BP.
Approximately 88% of the terminal's total revenues in 2001 came from
unaffiliated third parties. We derive a significant portion of our Nederland
Terminal's revenues from long-term contracts, which enhance the stability and
predictability of its revenue stream. For 2001, 41% of the terminal's total
revenues were generated under contracts that expire in more than three years.
The terminal's long standing relationships with its spot-contract customers
generally lead to repeat business and the renewal of short-term contracts.

Our terminal is currently operating at or near capacity. We believe that the
strong demand for our marine terminal facilities results from our
cost-effective transportation services, efficiency, connectivity, and customer
service. Because the Nederland Terminal's docks are operating at approximately
50% capacity, we believe that we can take advantage of increasing demand for
terminalling and storage services by building additional tankage.

Fort Mifflin Terminal Complex

We own and operate the Fort Mifflin Terminal Complex located on the Delaware
River in Philadelphia. Our Fort Mifflin Terminal Complex supplies Sunoco R&M's
Philadelphia refinery with all of its crude oil. These assets include the Fort
Mifflin Terminal, the Hog Island Wharf, the Darby Creek Tank Farm, and
connecting pipelines. We generate revenues from our Fort Mifflin Terminal
Complex by charging Sunoco R&M and others a storage fee based on tank capacity
and throughput. Substantially all of our revenues are derived from Sunoco R&M.

[GRAPHIC F- Diagram depicting our Fort Mifflin Terminal Complex and its location
relative to Sunoco R&M's Philadelphia and Marcus Hook refineries]

Fort Mifflin Terminal. Our Fort Mifflin Terminal consists of two ship docks
with 40-foot freshwater drafts and nine tanks with a total storage capacity of
570,000 barrels. Six 80,000-barrel tanks are used to store crude oil, and three
30,000-barrel tanks are used to provide fuel to ships. Two of the 80,000-barrel
tanks can be used to store refined products. This terminal also has a
connection with the Colonial Pipeline System.

Crude oil and some refined products enter our Fort Mifflin Terminal
primarily from marine vessels on the Delaware River. One Fort Mifflin dock is
designed to handle crude oil from very large crude carrier-class tankers and
smaller crude oil vessels. Our other dock can accommodate only smaller crude
oil vessels.

Hog Island Wharf. Our Hog Island Wharf is located next to the Fort Mifflin
Terminal on the Delaware River. Our Hog Island Wharf receives crude oil via two
ship docks, one of which can accommodate crude oil tankers and smaller crude
oil vessels and the other of which can accommodate some smaller crude oil
vessels. Hog Island Wharf supplies our Darby Creek Tank Farm and Fort Mifflin
Terminal with crude oil. Crude oil from our Hog Island Wharf is delivered to
Sunoco R&M's Philadelphia refinery via our Darby Creek Tank Farm.

Darby Creek Tank Farm. Our Darby Creek Tank Farm is a primary crude oil
storage terminal for Sunoco R&M's Philadelphia refinery. This facility has 21
tanks with a total storage capacity of 2.4 million barrels. Darby Creek
receives crude oil from our Fort Mifflin Terminal and Hog Island Wharf via our
24-inch pipelines. The

tank farm then stores the crude oil and pumps it to the Philadelphia refinery
via our 16-inch pipeline. The multiple tanks in this storage facility provide
us with added flexibility in blending crude oil to achieve the optimal crude
oil slate for the Philadelphia refinery.

Crude Oil and Refined Product Delivery. Our Fort Mifflin Terminal Complex
includes a number of crude oil pipelines:

. one 30-inch pipeline and one 16-inch pipeline that deliver crude oil from
our Fort Mifflin Terminal to Sunoco R&M's Philadelphia refinery;

. two 24-inch pipelines that deliver crude oil from our Hog Island Wharf to
our Darby Creek Tank Farm;

. one 16-inch pipeline that delivers crude oil from our Darby Creek Tank
Farm to Sunoco R&M's Philadelphia refinery; and

. one 30-inch bi-directional pipeline that delivers crude oil between our
Hog Island Wharf and our Fort Mifflin Terminal.

Our Fort Mifflin Terminal Complex also includes several pipelines that
deliver refined products to Sunoco R&M's Philadelphia refinery:

. one 30-inch pipeline and one 16-inch pipeline that deliver refined
products from our Fort Mifflin Terminal to Sunoco R&M's Philadelphia
refinery for transportation on our Eastern Pipeline System; and

. one dual diameter, 24- and 26-inch pipeline that delivers refined products
from our Hog Island Wharf to Sunoco R&M's Philadelphia refinery.

We charge Sunoco R&M a fee for each barrel delivered to its Philadelphia
refinery via our Fort Mifflin Terminal or our Darby Creek Tank Farm. The table
below sets forth the average daily number of barrels of crude oil and refined
products delivered to Sunoco R&M's Philadelphia refinery in each of the years
presented.

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Crude oil transported (bpd)....... 310,853 306,181 297,271 306,121 309,435
Refined products terminalled (bpd) 8,540 9,316 9,263 8,502 9,110
------- ------- ------- ------- -------
Total (bpd).................... 319,393 315,497 306,534 314,623 318,545
======= ======= ======= ======= =======

Marcus Hook Tank Farm

The Marcus Hook Tank Farm stores substantially all of the refined products
that Sunoco R&M ships from its Marcus Hook refinery. This facility has 17 tanks
with a total storage capacity of approximately 2.0 million barrels. After
receipt of refined products from the Marcus Hook refinery, the tank farm either
stores them or delivers them to our Twin Oaks terminal or to the Twin Oaks pump
station, which supplies our Eastern Pipeline System.

The table below sets forth the total average throughput for our Marcus Hook
Tank Farm in each of the years presented:

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Refined products terminalled (bpd) 137,673 138,556 142,404 133,455 138,490

The Inkster Terminal

We own and operate the Inkster Terminal, a large terminal located in
Inkster, Michigan consisting of eight salt caverns with a total storage
capacity of 975,000 barrels. We use the Inkster Terminal's storage in
connection with our Toledo, Ohio to Sarnia, Canada pipeline system and for the
storage of LPGs from Sunoco R&M's Toledo refinery and from Canada. The terminal
can receive and ship LPGs in both directions at the same time and has a propane
truck loading rack that can load two trucks simultaneously. For the last five
years, Sunoco R&M has used the full capacity of our Inkster Terminal. Buckeye
has access to the terminal through our spur line to Joan Junction in Taylor,
Michigan.

The Inkster Terminal enjoys a competitive advantage with respect to volumes
from Sunoco R&M's Toledo refinery due to the relatively short distance between
Toledo and the Inkster Terminal. The short distance helps keep the
transportation cost of LPG lower than to the Consumers Power Marysville
Underground Storage Terminal or to BP's storage facility at St. Clair,
Michigan. We own three pipelines running between Toledo and the Inkster
Terminal, which provide Sunoco R&M with additional flexibility.

Western Pipeline System

Sunoco R&M accounted for approximately 66% of our Western Pipeline System
segment revenues for the year ended December 31, 2001.

Crude Oil Pipelines

We own and operate 1,883 miles of crude oil trunk pipelines and 870 miles of
crude oil gathering lines in three primary geographic regions--Oklahoma, West
Texas, and the Texas Gulf Coast and East Texas region. We are the primary
shipper on our Western Pipeline System. We also deliver crude oil for Sunoco
R&M and for various third parties from points in Texas and Oklahoma. Delivery
points on our Western Pipeline System include Sunoco R&M's and Sinclair's Tulsa
refineries and the Gary-Williams refinery in Wynnewood, Oklahoma.

Our pipelines also access several trading hubs, including the largest and
most significant trading hub for crude oil in the United States located in
Cushing, Oklahoma, as well as other trading hubs located in Colorado City and
Longview, Texas. Our crude oil pipelines also connect with other pipelines that
deliver crude oil to a number of third-party refineries. The majority of the
pipelines in our Western Pipeline System were constructed between 1925 and
1967. Our pipelines are subject to ongoing maintenance, and we believe they are
in good repair.

[Graphic G - Map of Oklahoma and Texas depicting our Western Pipeline System.]

The table below sets forth the average aggregate daily number of barrels of
crude oil transported on our crude oil pipelines in each of the years presented.

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Crude oil transported (bpd)/(1)/ 258,931 253,124 252,098 295,991 287,237

- --------
/(1)/Includes lube extracted feedstocks transported from Sunoco, Inc.'s Tulsa,
Oklahoma refinery.

In each geographic region, we have major crude oil trunk line systems that
ship crude oil across a number of different-sized trunk pipeline segments. The
following table details the mileage and volumes delivered for each major system
and, therefore, eliminates double counting of barrels transported across more
than one of our pipeline segments. We transported 72% of the crude oil and lube
extracted feedstock transported to or originating from Sunoco R&M's Tulsa,
Oklahoma, and Toledo, Ohio refineries for 2001.

Year Ended
December 31, 2001
Major System Miles of Pipeline Throughput
------------ ----------------- -----------------
(bpd)

Oklahoma:
Enid to Tulsa.......................... 316 71,033
Velma to Tulsa......................... 248 34,721
Other.................................. 129 17,246
West Texas:
Jameson and Salt Creek to Colorado City 93 28,200
Hearne to Hawley....................... 453 16,805/(1)/
Hawley to Dixon........................ 242 33,015
Other.................................. 32 1,105
Texas Gulf Coast and East Texas:
Seabreeze and Orange to Nederland...... 39 8,943
Nederland to Longview.................. 199 29,788
Baytown to Nederland................... 124 13,358
Thomas to Longview..................... 3 9,881
Other.................................. 5 -- /(2)/

- --------
/(1)/Volume excludes 16,484 bpd that is delivered to and included in the Hawley
to Dixon pipeline segment.
/(2)/Throughput included in another segment.

The following table sets forth the origin and destination, length, diameter,
and throughput for approximately 95% of our trunk pipeline segments in each of
the three regions we serve. We own 100% of these pipelines.

Year Ended
Miles of December 31, 2001
Origin and Destination Pipeline Diameter Throughput
---------------------- -------- -------- -----------------
(inches) (bpd)

Oklahoma System:
Enid to Tulsa:
Bottleman to Enid.................... 44 4,6 5,192
Ringwood to Enid..................... 28 4,6 1,496
Dover to Enid........................ 32 4,6 1,745
Oklahoma City to Douglas............. 56 8 2,913
Enid to Morris....................... 36 8 3,874
Enid to Cushing...................... 75 8 13,567
Cushing to Tulsa..................... 45 10,12 67,159
Velma to Tulsa:
Velma to Eola........................ 15 6 7,687
Eola to Maysville.................... 18 10 978
Eola to Wynnewood.................... 17 6 8,193
Maysville to Seminole................ 61 6 5,410
Seminole to Bad Creek................ 32 6,8 9,394
Fitts to Bad Creek................... 52 4,6,8 8,222
Bad Creek to Tulsa................... 53 8,10 26,123
Other:
Tulsa to Cushing..................... 45 12 14,439
Barnsdall to Tulsa................... 34 8 1,384
West Texas System:
Jameson and Salt Creek to Colorado City:
Jameson to Colorado City............. 35 8 5,458
Salt Creek to Colorado City.......... 58 6,8 22,742
Hearne to Hawley:
Hearne to Comyn...................... 143 8,12 13,905
Ballinger to Comyn................... 83 8 4,713
Comyn to Ranger...................... 30 8 5,950
Ranger to South Bend................. 52 6,8 15,320
Comyn to Hawley...................... 90 16 13,916
Hamlin to Hawley..................... 41 8 2,712
Tye to Hawley........................ 14 6 1,496
Hawley to Dixon:
Hawley to Dixon...................... 242 8,10 33,015
Texas Gulf Coast and East Texas System:
Seabreeze and Orange to Nederland:
Seabreeze to Nederland............... 28 10 5,283
Orange to Nederland.................. 11 6 3,533
Nederland to Longview:
Nederland to Longview................ 199 10,12 30,823
Baytown to Nederland:
Mt. Belvieu to Sour Lake............. 43 6,8 13,227
Sour Lake to Nederland............... 27 8 3,393
Sour Lake to Baytown................. 54 8 2,300
Thomas to Longview:
Thomas to Longview................... 3 8 9,881

Oklahoma

We own and operate a large crude oil pipeline and gathering system in
Oklahoma. This system contains 693 miles of crude oil trunk pipelines and 459
miles of crude oil gathering lines. We have the ability to deliver all of the
crude oil gathered on our Oklahoma system to Cushing. Additionally, we make
deliveries on the Oklahoma system to:

. Sunoco R&M's Tulsa refinery;

. Sinclair's Tulsa refinery;

. Gary-Williams' Wynnewood refinery; and

. Conoco's pipeline to its Ponca City refinery.

Throughput on our Oklahoma system for 2001 was 123,000 bpd. We generate
revenues on our Oklahoma system from tariffs paid by shippers utilizing our
transportation services. We file these tariffs with the Oklahoma Corporation
Commission and the FERC. We are the largest purchaser of crude oil from
producers in the state, and we are the primary shipper on our Oklahoma system.
Other significant shippers are Sunoco R&M and Sinclair, which ship primarily on
the Cushing to Tulsa segment.

Our Oklahoma crude oil pipelines consist of two major systems, the Enid to
Tulsa system and the Velma to Tulsa system, and several smaller pipelines.

[GRAPHIC H- Map of Oklahoma depicting the Oklahoma portion of our Western
Pipeline System.]

Enid, Oklahoma to Tulsa, Oklahoma. The Enid to Tulsa crude oil pipeline
system originates in Northwestern Oklahoma, connects to the Cushing, Oklahoma
trading hub, and terminates in Tulsa at the Sunoco R&M and Sinclair refineries.
This system consists of seven major segments.

Three segments deliver crude oil received from trucks and gathering systems
to Enid for further delivery on our system. Enid is a hub from which we
transport crude oil on our two east-bound pipelines to third-party pipelines
and refineries, and to the Cushing trading hub. The two east-bound pipelines
from Enid include our Enid to Morris pipeline, which connects Conoco's pipeline
to its Ponca City refinery, and our Enid to Cushing pipeline, which receives
crude oil from our Oklahoma City to Douglas segment and delivers crude oil to
our storage tanks at the Cushing trading hub.

Shippers utilizing our pipeline may also access the BP, Equilon, Plains All
American, and TEPPCO storage terminals in Cushing. Our Cushing to Tulsa
pipeline provides transportation services, under tariffs filed with the FERC,
from third-party terminals and our tanks in Cushing to the Sunoco R&M and
Sinclair refineries in Tulsa.

Velma, Oklahoma to Tulsa, Oklahoma. The Velma to Tulsa crude oil pipeline
system originates in Southwestern Oklahoma, moves eastward to the Gary-Williams
refinery at Wynnewood, and terminates at the Sunoco R&M and Sinclair refineries
in Tulsa. This system consists of seven major segments.

The Velma to Eola, Eola to Maysville, and Eola to Wynnewood segments are
used to transport crude oil from trucks and gathering systems owned by us and
third parties to Gary-Williams' Wynnewood refinery and to our pipeline that
delivers to Cushing and Sunoco R&M's Tulsa refinery. The Maysville to Seminole,
Seminole to Bad Creek, Fitts to Bad Creek, and Bad Creek to Tulsa pipelines are
primarily used to transport crude oil to the Sunoco R&M and Sinclair refineries
in Tulsa. These pipelines are supplied by our gathering systems and trucks, as
well as EOTT and STG gathering lines. We ship substantially all of the volumes
on these pipelines.

Other Oklahoma Pipelines. Our other Oklahoma pipelines include the Tulsa to
Cushing segment that transports lube extracted feedstock from Sunoco R&M's
Tulsa refinery to Cushing for ultimate delivery by third- party pipelines to
other refineries for further processing. Our Barnsdall to Tulsa segment
receives crude oil gathered by our trucks for shipment to Sunoco R&M's Tulsa
refinery.

West Texas

We own and operate approximately 820 miles of crude oil trunk pipelines and
258 miles of crude oil gathering lines in West and North Central Texas. We make
deliveries on our West Texas system to:

. a Valero, L.P. pipeline at Dixon, Texas that delivers crude oil to Valero
Energy Corporation's refinery in McKee, Texas;

. a Conoco pipeline at South Bend, Texas that makes deliveries to Conoco's
Ponca City refinery;

. a TEPPCO pipeline at South Bend that makes deliveries to Gary-Williams'
Wynnewood refinery;

. the West Texas Gulf pipeline at Tye and Colorado City, Texas that connects
to Mid-Valley pipeline in Longview, Texas, which makes deliveries to
Sunoco R&M's Toledo refinery and other Midwest refineries; and

. other third-party pipelines at Colorado City that deliver crude oil to
Sunoco R&M's Tulsa and Toledo refineries, among others.

Throughput on this system during 2001 was 79,125 bpd. We were the shipper of
substantially all of these volumes. We generate revenues in West Texas from
tariffs paid by shippers utilizing our transportation services. We file these
tariffs with the Texas Railroad Commission.

[GRAPHIC I- Map of Texas depicting the West Texas portion of our Western
Pipeline System.]

Our West Texas pipelines consist of the three following systems:

Jameson and Salt Creek, Texas to Colorado City, Texas. The Jameson and Salt
Creek to Colorado City crude oil pipeline system consists of two pipeline
segments. Crude oil is gathered or trucked into this system and transported
from Jameson to Colorado City, or from Salt Creek to Colorado City, where it
can be delivered into BP, Basin, ChevronTexaco, EOTT, or West Texas Gulf
pipelines. These connections allow us to deliver crude oil to Sunoco R&M's
Tulsa and Toledo refineries and other unaffiliated third-party destinations.

Hearne, Texas to Hawley, Texas. The Hearne to Hawley system is comprised of
seven pipeline segments. The two segments delivering into Comyn, Texas are
supplied with crude oil from our trucks, third-party trucks, and pipelines,
including the Genesis, Koch, and Plains All American pipelines located in
Hearne. From Comyn, crude oil can be shipped to:

. the West Texas Gulf pipeline at Tye;

. the Conoco and TEPPCO pipelines at South Bend; or

. our pipeline in Hawley.

At Tye, we have tankage and a bi-directional connection with the West Texas
Gulf pipeline that allows us to receive and deliver crude oil.

Hawley, Texas to Dixon, Texas. On the Hawley to Dixon system, we receive
crude oil from the following sources:

. our Hearne to Hawley system, including West Texas Gulf's system through
Tye, Texas;

. Plains All American and Equilon pipeline interconnections; and

. truck injection locations and pipeline-connected lease gathering sites.

We deliver this crude oil to Dixon, where we connect with the Valero, L.P.
pipeline that delivers crude oil to the Valero Energy Corporation refinery at
McKee. Crude oil received from our Hearne to Hawley system accounts for a
majority of the volumes transported on this system.

Texas Gulf Coast and East Texas

Our Texas Gulf Coast and East Texas pipeline system includes 370 miles of
crude oil trunk pipelines and 153 miles of crude oil gathering lines that
extend between the Texas Gulf Coast region near Beaumont and Mt. Belvieu, Texas
and the East Texas field near Longview, Texas. We transport multiple grades of
crude oil, including foreign imports, and other refinery and petrochemical
feedstocks, such as condensate and naphtha, on these pipelines. We receive
crude oil for these systems from other pipelines, our Nederland Terminal, our
trucks, third-party trucks, and our pipeline gathering systems. This system
provides access to major delivery points with interconnecting pipelines in
Texas at Longview, Sour Lake, and Nederland.

Throughput on this system for 2001 was 61,970 bpd. We generate revenues from
tariffs paid by shippers utilizing our transportation services. These tariffs
are filed with the Texas Railroad Commission and the FERC. We are the primary
shipper on the Texas Gulf Coast and East Texas system. Sunoco R&M ships on the
Nederland to Longview segment, which connects with the Mid-Valley pipeline for
deliveries to Sunoco R&M's Toledo refinery.

[GRAPHIC J- Map of East Texas depicting the Texas Gulf Coast and East Texas
portion of our Western Pipeline System.]

Our Texas Gulf Coast and East Texas system consists of these pipelines:

Seabreeze and Orange, Texas to Nederland, Texas. The Seabreeze and Orange
to Nederland crude oil pipeline system consists of two pipelines:

. a bi-directional 28-mile pipeline from Seabreeze to Nederland; and

. an 11-mile pipeline from Orange to Nederland.

The Seabreeze pipeline transports condensate received from TransTexas'
Winnie, Texas plant and by truck to our Nederland Terminal. The Seabreeze
pipeline also transports naphtha for BASF/Fina from our Nederland Terminal to
the TEPPCO pipeline for delivery to BASF/Fina's new steam cracker in Port
Arthur. Crude oil gathered or trucked to the Orange pipeline is transported to
our Nederland Terminal for delivery to a number of destinations.

Nederland, Texas to Longview, Texas. The Nederland to Longview pipeline
transports primarily foreign crude oil from our Nederland Terminal to the
240,000 bpd Mid-Valley pipeline in Longview, Texas. Other connections in the
Longview area include BP's pipeline from Longview to Cushing, Oklahoma,
McMurrey's pipeline that supplies Crown Central's Tyler, Texas refinery, and
ExxonMobil's pipeline that delivers to Wichita Falls, Texas and Patoka,
Illinois.

Baytown, Texas to Nederland, Texas. The Baytown to Nederland crude oil
pipeline passes through Sour Lake, Texas where it makes deliveries to our
Nederland to Longview pipeline, the CITGO tank farm and pipeline that supplies
CITGO's Lake Charles, Louisiana refinery. The system also delivers to the
ExxonMobil Baytown, Texas refinery.

Thomas, Texas to Longview, Texas. The Thomas to Longview crude oil pipeline
originates in Thomas, Texas and makes deliveries to all of the connections in
Longview, Texas described above. The pipeline receives crude oil from our
pipeline gathering system in the East Texas field.

Crude Oil Acquisition and Marketing

In addition to receiving tariff revenues for transporting crude oil on our
Western Pipeline System, we also generate revenues through our crude oil
acquisition and marketing operations, primarily in Oklahoma and Texas. These
activities include:

. purchasing crude oil from producers at the wellhead and in bulk from
aggregators at major pipeline interconnections and trading locations;

. transporting crude oil on our pipelines and trucks or, when necessary or
cost effective, pipelines or trucks owned and operated by third parties;
and

. marketing crude oil to refiners or resellers.

The marketing of crude oil is complex and requires detailed knowledge of the
crude oil market and a familiarity with a number of factors, including types of
crude oil, individual refinery demand for specific grades of crude oil, area
market price structures for different grades of crude oil, location of
customers, availability of transportation facilities, timing, and customers'
costs (including storage). We sell our crude oil to major integrated oil
companies, independent refiners, including Sunoco R&M for its Tulsa and Toledo
refineries, and other resellers in various types of sale and exchange
transactions, at market prices for terms generally ranging from one month to
one year.

We enter into contracts with producers at market prices generally for a term
of one year or less, with a majority of the transactions on a 30-day renewable
basis. For 2001, we purchased approximately 181,000 bpd from approximately
3,300 producers from approximately 33,000 leases.

Crude Oil Lease Purchases and Exchanges

In a typical producer's operation, crude oil flows from the wellhead to a
separator where the petroleum gases are removed. After separation, the producer
treats the crude oil to remove water, sand, and other contaminants and then
moves it to an on-site storage tank. When the tank is full, the producer
contacts our field personnel to purchase and transport the crude oil to market.
The crude oil in producers' tanks is then either delivered to our pipeline or
transported via truck to our pipeline or a third party's pipeline. Our truck
fleet generally performs the trucking service.

We also enter into exchange agreements to enhance margins throughout the
acquisition and marketing process. When opportunities arise to increase our
margin or to acquire a grade of crude oil that more nearly matches our delivery
requirement or the preferences of our refinery customers, we exchange physical
crude oil with third parties. Generally,we enter into exchanges to acquire
crude oil of a desired quality in exchange for a common grade crude oil or to
acquire crude oil at locations that are closer to our end markets, thereby
reducing transportation costs.

The following table shows our average daily volume for our crude oil lease
purchases and exchanges for the years presented.

Year Ended December 31,
------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
(in thousands of bpd)

Lease purchases:
Available for sale............. 93 98 107 141 148
Exchanges...................... 71 58 38 36 33
Other exchanges and bulk purchases 147 144 141 230 211
--- --- --- --- ---
Total.......................... 311 300 286 407 392
=== === === === ===

Our business practice is generally to purchase only crude oil for which we
have a corresponding sale agreement for physical delivery of crude oil to a
third party or a Sunoco R&M refinery. Through this process, we seek to maintain
a position that is substantially balanced between crude oil purchases and
future delivery obligations. We do not acquire and hold crude oil futures
contracts or enter into other derivative contracts for the purpose of
speculating on crude oil prices.

The following table shows our average daily sales and exchange volumes of
crude oil for the years presented:

Year Ended December 31,
------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
(in thousands of bpd)

Sunoco R&M refineries:
Toledo................. 41 30 26 29 28
Tulsa.................. 46 57 63 73 71
Third parties.......... 7 14 20 41 52
Exchanges:
Purchased at the lease. 71 58 38 36 33
Other.................. 147 141 139 227 208
--- --- --- --- ---
Total.................. 312 300 286 406 392
=== === === === ===

Market Conditions

Market conditions impact our sales and marketing strategies. During periods
when demand for crude oil is weak, the market for crude oil is often in
contango, meaning that the price of crude oil in a given month is less than the
price of crude oil for delivery in a subsequent month. In a contango market,
storing crude oil is favorable because storage owners at major trading
locations can simultaneously purchase production at low current prices for
storage and sell at higher prices for future delivery. When there is a higher
demand than supply of crude oil in the near term, the market is backwardated,
meaning that the price of crude oil in a given month exceeds the price of crude
oil for delivery in a subsequent month. A backwardated market has a positive
impact on marketing margins because crude oil marketers can continue to
purchase crude oil from producers at a fixed premium to posted prices while
selling crude oil at a higher premium to such prices.

Producer Services

Crude oil purchasers who buy from producers compete on the basis of
competitive prices and highly responsive services. Through our team of crude
oil purchasing representatives, we maintain ongoing relationships with more
than 3,300 producers. We believe that our ability to offer competitive pricing
and high-quality field and administrative services to producers is a key factor
in our ability to maintain volumes of

purchased crude oil and to obtain new volumes. Field services include efficient
gathering capabilities, availability of trucks, willingness to construct
gathering pipelines where economically justified, timely pickup of crude oil
from storage tanks at the lease or production point, accurate measurement of
crude oil volumes received, avoidance of spills, and effective management of
pipeline deliveries. Accounting and other administrative services include
securing division orders (statements from interest owners affirming the
division of ownership in crude oil purchased by us), providing statements of
the crude oil purchased each month, disbursing production proceeds to interest
owners, and calculating and paying production taxes on behalf of interest
owners. In order to compete effectively, we must maintain records of title and
division order interests in an accurate and timely manner for purposes of
making prompt and correct payment of crude oil production proceeds, together
with the correct payment of all production taxes associated with these proceeds.

Credit with Customers

When we market crude oil, we must determine the amount of any line of credit
to be extended to a customer. Since our typical sales transactions can involve
tens of thousands of barrels of crude oil, the risk of nonpayment and
nonperformance by customers is a major consideration in our business. We
believe our sales are made to creditworthy entities or entities with adequate
credit support. Credit review and analysis are also integral to our lease
purchases. Payment for substantially all of the monthly lease production is
sometimes made to the operator of the lease. The operator, in turn, is
responsible for the correct payment and distribution of such production
proceeds to the proper parties. In these situations, we must determine whether
the operator has sufficient financial resources to make such payments and
distributions and to indemnify and defend us in the event a third party brings
a protest, action, or complaint in connection with the ultimate distribution of
production proceeds by the operator.

Crude Oil Trucking

We operate 124 crude oil truck unloading facilities in Oklahoma, Texas, and
New Mexico, of which 89 are on our pipeline system and 35 are on third-party
pipeline systems. We also own and operate a one-mile crude oil gathering line
in New Mexico, which is associated with our crude oil trucking operations
there. We employ 292 crude oil truck drivers and own 143 crude oil transport
trucks. The crude oil truck drivers pick up crude oil at production lease sites
and transport it to various truck unloading facilities on our pipelines and on
third-party pipelines.

Other Business Opportunities

Although we do not currently engage in business unrelated to the
transportation or storage of crude oil and refined products and the other
businesses described above, we may in the future consider and make acquisitions
in other business areas.

Pipeline and Terminal Control Operations

All of our refined products and crude oil pipelines are operated via
satellite, microwave, and frame relay communication systems from central
control rooms located in Philadelphia and Tulsa. The Philadelphia control
center primarily monitors and controls our refined product pipelines, and the
Tulsa control center primarily monitors and controls our crude oil pipelines.
The Philadelphia control center has a backup control center at our Montello,
Pennsylvania pipeline facility located approximately 50 miles from
Philadelphia. The Nederland Terminal has its own control center.

The control centers operate with modern, state-of-the-art System Control and
Data Acquisition, or SCADA, systems. Our control centers are equipped with
computer systems designed to continuously monitor real time operational data,
including refined product and crude oil throughput, flow rates, and pressures.
In addition, the control centers monitor alarms and throughput balances. The
control centers operate remote pumps, motors,

engines, and valves associated with the delivery of refined products and crude
oil. The computer systems are designed to enhance leak-detection capabilities,
sound automatic alarms if operational conditions outside of pre-established
parameters occur, and provide for remote-controlled shutdown of pump stations
on the pipelines. Pump stations and meter-measurement points along the
pipelines are linked by satellite or telephone communication systems for remote
monitoring and control, which reduces our requirement for full-time on-site
personnel at most of these locations.

Safety and Maintenance

We perform preventive and normal maintenance on all of our pipeline systems
and make repairs and replacements when necessary or appropriate. We also
conduct routine and required inspections of our pipelines and other assets as
required by code or regulation. We inject corrosion inhibitors into our crude
oil mainlines to help control internal corrosion. Cleaning and de-waxing pigs
are also run through our crude oil pipelines to help prohibit internal
corrosion. External coatings and impressed current cathodic protection systems
are used to protect against external corrosion. We conduct all cathodic
protection work in accordance with National Association of Corrosion Engineers
standards. We continually monitor, test, and record the effectiveness of these
corrosion inhibiting systems.

We monitor the structural integrity of selected segments of our pipeline
systems through a program of periodic internal inspections using both "dent
pigs" and electronic "smart pigs." We follow these inspections with a review of
the data, and we make repairs as required to ensure the integrity of the
pipeline. We have initiated a risk-based approach to prioritizing the pipeline
segments for future smart pig runs or other approved integrity testing methods.
This will ensure that the pipelines that have the greatest risk potential
receive the highest priority in being scheduled for inspections or pressure
tests for integrity.

We started our smart pigging program in 1988. Beginning in 2002, the DOT
requires smart pigging or other integrity testing of all DOT-regulated crude
oil and refined product pipelines. This requirement will be phased in over a
five-year period. To date, we have inspected 80% of the total DOT-regulated
miles of our refined product pipelines and 35% of the total DOT-regulated miles
of our crude oil pipelines. We anticipate spending $8.0 million per year for
each of the next five years to comply with these regulations. Please read
''Certain Relationships and Related Transactions--Omnibus Agreement.''

Maintenance facilities containing equipment for pipe repairs, spare parts,
and trained response personnel are strategically located along the pipelines.
Employees participate in simulated spill deployment exercises on a regular
basis. They also participate in actual spill response boom deployment exercises
in both planned and unannounced spill scenarios in accordance with Oil
Pollution Act of 1990 requirements. We believe that all of our pipelines have
been constructed and are maintained in all material respects in accordance with
applicable federal, state, and local laws and the regulations and standards
prescribed by the American Petroleum Institute, the DOT, and accepted industry
practice.

Sunoco R&M will, at its expense, complete for the Darby Creek and Marcus
Hook Tank Farms certain tank maintenance and inspection projects now in
progress or expected to be completed within one year from the closing of the
master partnership's initial public offering. Sunoco R&M estimates total costs
to complete these projects will be approximately $4.0 million.

At our terminals, tanks designed for gasoline storage are equipped with
internal or external floating roofs that minimize emissions and prevent
potentially flammable vapor accumulation between fluid levels and the roof of
the tank. Our terminal facilities have facility response plans, spill
prevention and control plans, and other plans and programs to respond to
emergencies.

Many of our terminal loading racks are protected with water deluge systems
activated by vapor sensors, heat sensors, or an emergency switch. Several of
our terminals are also protected by foam systems that are activated in

case of fire. Our Inkster Terminal is our only terminal that stores and loads
propane. Our propane truck loading rack is protected against fire hazards with
a deluge system. This system automatically activates with heat sensors in the
event of a fire. All of our terminals are subject to participation in a
comprehensive environmental management program to assure compliance with
applicable air, solid waste, and wastewater regulations.

Competition

As a result of our physical integration with Sunoco R&M's refineries and our
contractual relationship with Sunoco, Inc. pursuant to the omnibus agreement
and Sunoco R&M pursuant to the pipelines and terminals storage and throughput
agreement, we believe that we will not face significant competition for crude
oil transported to the Philadelphia, Toledo, and Tulsa refineries, or refined
products transported from the Philadelphia, Marcus Hook, and Toledo refineries,
particularly during the term of the pipelines and terminals storage and
throughput agreement with Sunoco R&M. See "--Our Relationship with Sunoco,
Inc.--Pipelines and Terminals Storage and Throughput Agreement with Sunoco R&M"
and "Certain Relationships and Related Transactions--Omnibus Agreement." For
the year ended December 31, 2001, Sunoco R&M accounted for approximately 66% of
our combined revenues.

Eastern Pipeline System

Nearly all of our Eastern Pipeline System is directly linked to Sunoco R&M's
refineries. Sunoco R&M constructed or acquired these assets as the most
cost-effective means to access raw materials and distribute refined products.
Generally, pipelines are the lowest cost method for long-haul, overland
movement of refined products. Therefore, our most significant competitors for
large volume shipments in the area served by our Eastern Pipeline System are
other pipelines. We believe that high capital requirements, environmental
considerations, and the difficulty in acquiring rights-of-way and related
permits make it hard for other companies to build competing pipelines in areas
served by our pipelines. As a result, competing pipelines are likely to be
built only in those cases in which strong market demand and attractive tariff
rates support additional capacity in an area.

Although it is unlikely that a pipeline system comparable in size and scope
to our Eastern Pipeline System will be built in the foreseeable future, new
pipelines (including pipeline segments that connect with existing pipeline
systems, such as those operated by Colonial, Buckeye, ExxonMobil, and Inland)
could be built to effectively compete with us in particular locations.

In addition, we face competition from trucks that deliver product in a
number of areas we serve. While their costs may not be competitive for longer
hauls or large volume shipments, trucks compete effectively for incremental and
marginal volumes in many areas we serve. The availability of truck
transportation places a significant competitive constraint on our ability to
increase our tariff rates.

Terminal Facilities

Historically, except for our Nederland Terminal, essentially all of the
throughput at our terminal facilities has come from Sunoco R&M. Under the terms
of our pipelines and terminals storage and throughput agreement, we will
continue to receive a significant portion of the throughput at these facilities
from Sunoco R&M.

Our 32 inland refined product terminals compete with other independent
terminal operators as well as integrated oil companies on the basis of terminal
location, price, versatility, and services provided. Our competition primarily
comes from integrated petroleum companies, refining and marketing companies,
independent terminal companies, and distribution companies with marketing and
trading arms.

The Inkster Terminal's primary competition comes from the Marysville
Underground Storage Terminal, or MUST, which is owned by Consumers Power. MUST
is a third-party facility located in Marysville, Michigan

with approximately 6 million barrels of underground storage. This facility
serves the refining markets in Sarnia, Canada and Toledo, Ohio and has
extensive rail car loading and unloading operations, which could be used by
other refineries. In addition to MUST, MAP operates a similar LPG storage
facility in Trenton, Michigan, primarily serving its refinery in Detroit,
Michigan. BP also operates a similar facility in St. Clair, Michigan, as well
as one in Windsor, Canada that is served by pipeline and rail connections from
the Sarnia refineries. The Inkster terminal enjoys a competitive advantage with
respect to volumes from Sunoco R&M's Toledo refinery due to the relatively
short distance between Toledo and the Inkster Terminal. We own three additional
pipelines running between Toledo and the Inkster Terminal, which provide Sunoco
R&M with additional flexibility.

The primary competitors for the Nederland Terminal are its refinery
customers' docks and terminal facilities, and the Unocal terminal and the Oil
Tanking terminal, both located in Beaumont. We believe the Nederland Terminal
has superior docking capabilities and tankage facilities, and is better
connected to supply and distribution pipelines than these competing terminals.

Western Pipeline System

Our Western Pipeline System faces competition from a number of major oil
companies and smaller entities. Pipeline competition among common carrier
pipelines is based primarily on transportation charges, access to producing
areas, and demand for the crude oil by end users. We believe that high capital
costs make it unlikely for other companies to build competing crude oil
pipeline systems in areas served by our pipelines. Crude oil purchasing and
marketing competitive factors include price and contract flexibility, quantity
and quality of services, and accessibility to end markets. The principal
competitors of the Western Pipeline System are EOTT, Plains All American,
Conoco, Seminole Trading and Gathering, and TEPPCO.

Retained Assets

We do not expect any significant competition from Sunoco, Inc. utilizing the
retained assets described below under "--Pipeline, Terminalling, and Storage
Assets Retained by Sunoco, Inc."

Sunoco R&M's Refining and Marketing Operations

Although we do not own or operate any refining or marketing assets, our
pipeline systems are located within Sunoco R&M's refining and marketing supply
chain. Sunoco, Inc., through its subsidiaries, is principally a petroleum
refiner and marketer and chemicals manufacturer with interests in cokemaking.
Sunoco R&M's petroleum refining and marketing operations include the
manufacturing and marketing of a full range of petroleum products, including
fuels, lubricants, and petrochemicals. Sunoco R&M's chemical operations
comprise the manufacturing, distribution, and marketing of commodity and
intermediate petrochemicals. The petroleum refining and marketing and chemical
operations are conducted principally in the Northeast and Midwest United
States. Sunoco, Inc. currently employs approximately 14,200 people.

Sunoco R&M owns and operates four refineries located in Marcus Hook and
Philadelphia, Pennsylvania, Toledo, Ohio, and Tulsa, Oklahoma. Sunoco R&M also
markets gasoline and middle distillates, and offers a broad range of
convenience store merchandise through a network of approximately 4,150 retail
outlets in 21 states on the East Coast and in the Midwest United States.

Refineries

Our pipelines deliver crude oil to and transport refined products from
Sunoco R&M's four refineries.

Philadelphia

The Philadelphia refinery can process 330,000 bpd of crude oil and is the
largest refinery in the Northeast United States. For 2001, its total input to
crude oil processing units was 309,400 bpd, all of which was supplied

by our Fort Mifflin Terminal Complex. The refinery processes predominantly
sweet crude oils from foreign sources. The refinery produces primarily gasoline
(including reformulated and premium grades), middle distillates, residual fuel,
and petrochemical feedstocks. For 2001, 64% of the refined products produced in
the Philadelphia refinery were distributed through our refined product
pipelines or our refined product terminals.

The table below sets forth the refinery's total input to crude oil
processing units in each of the years presented.

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Input to crude oil processing units (bpd) 313,300 303,200 300,200 304,700 309,400

Marcus Hook

The Marcus Hook refinery can process 175,000 bpd of crude oil. For 2001, its
total input to crude oil processing units was 159,100 bpd. The refinery
processes predominantly light sweet crude oils from foreign sources that it
receives directly from its docks. The refinery produces primarily gasoline
(including reformulated and premium grades), middle distillates, residual fuel,
and petrochemical feedstocks. For 2001, 94% of the refined products produced in
the Marcus Hook refinery were distributed through our refined product pipelines
or our refined product terminals.

The table below sets forth the refinery's total input to crude oil
processing units in each of the years presented.

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Input to crude oil processing units (bpd) 165,300 166,200 168,700 155,800 159,100

Toledo

The Toledo refinery can process 140,000 bpd of crude oil. For 2001, its
total input of crude oil and other feedstocks to crude oil processing units was
140,600 bpd, of which 54% was supplied by our Marysville, Michigan to Toledo,
Ohio crude oil pipeline systems. The Toledo refinery is a high conversion
refinery that refines predominantly light, low-sulfur crude oil. The refinery
produces primarily gasoline, middle distillates, residual fuel, and
petrochemicals. For 2001, 87% of the refined products produced in the Toledo
refinery were distributed through our refined product pipelines or our refined
product terminals.

The table below sets forth the refinery's total input of crude oil and other
feedstocks to crude oil processing units in each of the years presented.

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Input to crude oil processing units (bpd) 132,600 132,200 133,400 133,600 140,600

The Toledo refinery has access to crude oil from a number of sources,
including foreign crude oil imported through the Gulf Coast, Canadian crude oil
through our Marysville to Toledo pipeline system, and domestic crude oil from
Texas, Louisiana, Oklahoma, and Michigan.

Tulsa

The Tulsa refinery can process 85,000 bpd of crude oil. For 2001, its total
input to crude oil processing units was 78,600 bpd, all of which was supplied
by our Western Pipeline System. The Tulsa refinery refines

predominantly light, low-sulfur crude oil and produces primarily gasoline,
middle distillates, base oil lubricants, waxes, petroleum coke, and lube
extracted feedstocks. For 2001, all lube extracted feedstocks, which
represented 22% of the petroleum products produced in the Tulsa refinery, were
transported from the refinery through our refined product pipelines. Other
refined products are transported via third-party pipelines.

The table below sets forth the refinery's total input to crude oil
processing units in each of the years presented.

Year Ended December 31,
----------------------------------
1997 1998 1999 2000 2001
------ ------ ------ ------ ------

Input to crude oil processing units (bpd) 79,700 78,800 75,900 79,200 78,600

The Tulsa refinery has access to crude oil from a number of sources,
including production from Oklahoma and Texas and foreign crude oil.

Marketing

We believe that our pipeline, terminalling, and storage assets are
well-positioned for future growth because these assets are located in
attractive market regions and many of these assets are associated with Sunoco
R&M, a significant participant in those market regions. We believe that the
population growth and the growth in demand for refined products in the
Northeast and Midwest United States will lead to increased throughput.

The table below sets forth total branded sales by Sunoco R&M in all states
in each of the years presented. Middle distillates include high- and low-sulfur
diesel, heating oil, and kerosene.

Year Ended December 31,
---------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------

Gasoline (bpd).......... 201,800 208,600 216,600 225,300 244,100
Middle distillates (bpd) 21,900 22,800 28,900 31,700 35,000
------- ------- ------- ------- -------
Total (bpd).......... 223,700 231,400 245,500 257,000 279,100
======= ======= ======= ======= =======

The following table sets forth market share information in certain key
states served by our refined product terminals and pipelines:

Total Number of Sunoco's Rank
Number of Market Branded Retail among
Branded Sites Share/(1)/ Marketers Marketers/(1)/
------------- --------- --------------- -------------

Pennsylvania 757 37% 24 1
New York.... 832 30% 21 1
Ohio........ 485 18% 14 3
Michigan.... 300 13% 18 4
New Jersey.. 278 9% 14 2

- --------
/(1)/Source: National Petroleum News (Mid-July 2001). Market share and ranking
based upon Sunoco R&M branded sites versus total branded sites in each
state.

Sunoco R&M's convenience stores are located principally in Pennsylvania, New
York, Massachusetts, Ohio, Michigan, and Florida. These stores supplement sales
of fuel products with a broad mix of high-margin merchandise such as groceries,
fast foods, and beverages. Sunoco R&M intends to grow its convenience store
business through acquisitions, new site construction, and redesign of
traditional gasoline outlets in an effort to reduce its dependence on gasoline
margins. Following this strategy, in 2001, Sunoco R&M acquired from The

Coastal Corporation 316 direct retail sites and supply contracts with 24
Coastal distributors for 157 distributor sites located in eight Eastern states
with the largest concentration in Pennsylvania, New Jersey, Virginia, and
Florida.

In the fourth quarter of 2000, Sunoco R&M entered into an agreement with
Wal-Mart Stores, Inc. that will enable Sunoco R&M to build and operate retail
gasoline outlets on sites at selected existing and future Wal-Mart locations in
nine Eastern states. During 2001, Sunoco R&M built 13 of these facilities and
expects to build approximately 50 additional facilities during 2002 at an
estimated cost of $40 million and to add up to 100 new sites per year in
subsequent years. In addition to gasoline, these sites will offer customers a
limited selection of convenience store merchandise. In conjunction with
Wal-Mart, Sunoco R&M is developing a new brand that is planned for use at these
facilities. This agreement will enable Sunoco R&M to market significantly more
of its own gasoline production directly to the consumer and to take further
advantage of our refined product pipelines and terminals in the region.

Inactive Assets

We own approximately 367 miles of inactive trunk lines. Of those inactive
trunk lines, approximately
217 miles are located in our Oklahoma pipeline system, approximately 117 miles
are located in our West Texas pipeline system and approximately 32 miles are
located in our Texas Gulf Coast and East Texas pipeline system. We are
evaluating placing some of these pipelines back in service in the future either
for the transportation of crude oil or as alternative service pipelines.

Pipeline, Terminalling, and Storage Assets Retained by Sunoco, Inc.

At the closing of the initial public offering of the master partnership,
affiliates of Sunoco, Inc. transfered to us most of the pipeline, terminalling,
storage, and related assets that support Sunoco R&M's refinery operations.
Sunoco, Inc. or its affiliates have retained the assets described below because
they are either interests in crude oil pipelines that may not provide
consistent revenues and cash flows or are inactive.

Assets That May Not Provide Consistent Revenues and Cash Flows

. Mid-Valley Pipeline. A subsidiary of Sunoco, Inc. owns a 55% interest in
the Mid-Valley Pipeline Company (a 50% voting interest), which owns and
operates a 994-mile crude oil pipeline from Longview, Texas to Samaria,
Michigan. For 2001, Mid-Valley supplied 46% of the crude oil refined by
Sunoco, Inc.'s Toledo, Ohio refinery. The Mid-Valley pipeline serves a
number of refineries in the Midwest United States. Because of our concern
that the closure of one or more of these refineries could result in a
material decline in the revenues and cash flows of Mid-Valley, we elected
not to acquire Sunoco, Inc.'s interest in Mid-Valley. We believe that
Mid-Valley could be converted to a refined product pipeline and we will
continue to evaluate its future prospects.

. West Texas Gulf Pipeline. A subsidiary of Sunoco, Inc. owns a 17%
interest in West Texas Gulf Pipeline Company, which owns and operates a
581-mile crude oil pipeline from Colorado City, Texas and Nederland, Texas
to Longview, Texas. West Texas Gulf supplies crude oil to Mid-Valley
Pipeline. We elected not to acquire Sunoco, Inc.'s interest in this
pipeline for the reasons discussed above.

. Mesa Pipeline. A subsidiary of Sunoco, Inc. owns an undivided 6% interest
in the Mesa pipeline, an 80-mile crude oil pipeline from Midland, Texas to
Colorado City. Mesa Pipeline connects to West Texas Gulf's pipeline, which
supplies crude oil to Mid-Valley. We elected not to acquire Sunoco, Inc.'s
interest in this pipeline for the reasons discussed above.

. Inland Pipeline. A subsidiary of Sunoco, Inc. owns a 10% interest in
Inland Corporation, which owns and operates a 611-mile refined products
pipeline from Lima and Toledo, Ohio to Canton, Cleveland, Columbus, and
Dayton, Ohio. This pipeline transports refined products for Sunoco R&M
from its Toledo,

Ohio refinery and for the other owners. The Inland pipeline is a private
intrastate pipeline that is operated at cost by the shipper-owners and
does not generate profits to its owners. As a result, it was not included
in the assets transferred to us.

In the omnibus agreement, Sunoco, Inc. granted us a ten-year option to
purchase its interest in any of the preceding assets for fair market value at
the time of purchase. Sunoco, Inc's interests in these assets are subject to
agreements with the other interest owners that include, among other things,
consent requirements and rights of first refusal that may be triggered upon
certain transfers. The exercise of the option with respect to any of these
assets will be subject to the terms and conditions of those agreements, which
may or may not require consents or trigger rights of first refusal, depending
on the facts and circumstances existing at the time of the option exercise. We
have no current intention to purchase these assets.

Assets That Are Inactive

. A subsidiary of Sunoco, Inc. owns an idled 370-mile, 6-inch refined
product pipeline from Icedale, Pennsylvania to Cleveland, Ohio.

. A subsidiary of Sunoco, Inc. owns various crude oil pipelines and
gathering systems in Louisiana, Oklahoma, and Texas that are no longer
used because of a lack of crude oil supply.

. A subsidiary of Sunoco, Inc. owns various refined product pipelines in the
Northeast and Midwest that are no longer used because they are no longer
economical to operate. Most of these lines have been idle for several
years.

. A subsidiary of Sunoco, Inc. owns two inactive refined product terminals
in Maryland and Pennsylvania. Sunoco, Inc. idled these terminals because
they were not economical to operate.

Sunoco, Inc. granted us a ten-year option to purchase the pipeline from
Icedale, Pennsylvania to Cleveland, Ohio for fair market value at the time of
purchase. We have no current intention to purchase this pipeline.

Both of the ten-year option agreements described above are contained in the
omnibus agreement that the master partnership entered into with Sunoco, Inc.,
Sunoco R&M and us. In accordance with this agreement, if we decide to exercise
our option to purchase any of the assets described above, we must provide
written notice to Sunoco, Inc. setting forth the fair market value we propose
to pay for the asset. If Sunoco, Inc. does not agree with our proposed fair
market value, we and Sunoco, Inc. will appoint a mutually agreed-upon,
nationally recognized investment banking firm to determine the fair market
value of the asset. Once the investment bank submits its valuation of the
asset, we will have the right, but not the obligation, to purchase the asset at
the price determined by the investment bank.

Rate Regulation

General Interstate Regulation. Our interstate common carrier pipeline
operations are subject to rate regulation by the FERC under the Interstate
Commerce Act. The Interstate Commerce Act requires that tariff rates for oil
pipelines, a category that includes crude oil, petroleum products, and
petrochemical pipelines (crude oil, petroleum product, and petrochemical
pipelines are referred to collectively as "petroleum pipelines" in this
prospectus), be just and reasonable and non-discriminatory. The Interstate
Commerce Act permits challenges to proposed new or changed rates by protest,
and challenges to rates that are already on file and in effect by complaint.
Upon the appropriate showing, a successful complainant may obtain damages or
reparations for generally up to two years prior to the filing of a complaint.

The FERC is authorized to suspend the effectiveness of a new or changed
tariff rate for a period of up to seven months and to investigate the rate. The
FERC may also permit a new or changed tariff rate to go into effect on at least
one days' notice, subject to refund and investigation. If upon the completion
of an investigation the

FERC finds that the rate is unlawful, it may require the pipeline operator to
refund to shippers, with interest, any difference between the rates the FERC
determines to be lawful and the rates under investigation. The FERC will order
the pipeline to change its rates prospectively to the lawful level. Interstate
petroleum pipeline rates may be defended on the basis of the pipeline's cost of
service, although, as discussed below, rates may also be justified based upon
the FERC's indexing methodology, or deemed "grandfathered," under the Energy
Policy Act. Settlement rates, which are rates that have been agreed to by all
shippers, are permitted, and market-based rates may be permitted in certain
circumstances.

From 1906 until October 1, 1977, the Interstate Commerce Commission, rather
than the FERC, was charged with exercising regulatory authority over petroleum
pipeline rates. During the latter years of this period, the Interstate Commerce
Commission determined pipeline rates on a "valuation" methodology under which
pipeline rate base was calculated on "fair value" rather than on depreciated
original cost. The valuation rate base approach was applied by the Interstate
Commerce Commission until 1977, when its oversight authority for petroleum
pipeline rates was transferred to the FERC. The FERC was then required by a
federal court to reevaluate its petroleum pipeline ratemaking methods.

In 1985, the FERC issued an opinion in a case involving Williams Pipe Line
Co. (Opinion No. 154-B) which adopted the trended original cost methodology for
determining the justness and reasonableness of petroleum pipeline tariff rates.
The trended original cost methodology provides that in calculating a petroleum
pipeline's rate base, after a starting rate base has been determined, the
pipeline's rate base is to be:

. increased by property additions at cost plus an amount equal to the equity
portion of the rate base multiplied or "trended" by an inflation factor;
and

. decreased by property retirements and depreciation and amortization of the
rate base write-ups reflecting inflation and amortization of the starting
rate base write-up.

The starting rate base must be determined for pipelines that previously were
regulated under the Interstate Commerce Commission valuation methodology in
order to provide a transition from the valuation methodology to the trended
original cost methodology. For these pipelines, a portion of the starting rate
base will continue to reflect reproduction costs in excess of the depreciated
original cost of the pipeline's assets. The Williams opinion provides that the
starting rate base is to be the sum of the following components:

. the depreciated original cost of the carrier's property, multiplied by the
ratio of debt to total capitalization;

. the net depreciated reproduction cost based on the FERC reproduction cost
rate base (as of 1983) derived under the Interstate Commerce Commission
valuation methodology, multiplied by the ratio of equity to total
capitalization; and

. the original cost of land, the net book value of rights-of-way and allowed
working capital.

The difference between the starting rate base and the depreciated original
cost rate base is referred to as the starting rate base write-up. This write-up
is amortized over the useful life of the facilities. The Williams opinion
expressly provides that the use of a starting rate base in excess of the
original cost of the assets is subject to challenge by showing that the
investors in the carrier had not relied on the Interstate Commerce Commission
valuation rate base methodology. Some of our rates involve rate base components
built or acquired prior to 1983, and, if our rates were challenged, defending
these rates on a cost-of-service basis may require technical rate base
calculations.

Index-Based Rates and Other Subsequent Developments. In October 1992,
Congress passed the Energy Policy Act of 1992. The Energy Policy Act deemed
interstate petroleum pipeline rates in effect for the 365-day period ending on
the date of enactment of the Energy Policy Act, or that were in effect on the
365th day preceding enactment and had not been subject to complaint, protest,
or investigation during the 365-day period,

to be just and reasonable under the Interstate Commerce Act. These rates are
commonly referred to as "grandfathered rates." All of our interstate pipeline
rates were deemed just and reasonable and therefore are grandfathered under the
Energy Policy Act. The Energy Policy Act provides that the FERC may change
grandfathered rates upon complaints only under the following limited
circumstances:

. a substantial change has occurred since enactment in either the economic
circumstances or the nature of the services that were a basis for the rate;

. the complainant was contractually barred from challenging the rate prior
to enactment of the Energy Policy Act and filed the complaint within 30
days of the expiration of the contractual bar; or

. a provision of the tariff is unduly discriminatory or preferential.

The Energy Policy Act further required the FERC to issue rules establishing
a simplified and generally applicable ratemaking methodology for interstate
petroleum pipelines and to streamline procedures in petroleum pipeline
proceedings. On October 22, 1993, the FERC responded to the Energy Policy Act
directive by issuing Order No. 561, which adopts a new indexing rate
methodology for interstate petroleum pipelines. Under the resulting
regulations, effective January 1, 1995, petroleum pipelines are able to change
their rates within prescribed ceiling levels that are tied to changes in the
Producer Price Index for Finished Goods, minus one percent. Rate increases made
under the index will be subject to protest, but the scope of the protest
proceeding will be limited to an inquiry into whether the portion of the rate
increase resulting from application of the index is substantially in excess of
the pipeline's increase in costs. The indexing methodology is applicable to any
existing rate, whether grandfathered or whether established after enactment of
the Energy Policy Act.

In Order No. 561, the FERC said that as a general rule pipelines must
utilize the indexing methodology to change their rates. Indexing includes the
requirement that, in any year in which the index is negative, pipelines must
file to lower their rates if they would otherwise be above the reduced ceiling.
However, the pipeline is not required to reduce its rates below the level
deemed just and reasonable under the Energy Policy Act. The FERC further
indicated in Order No. 561, however, that it is retaining cost-of-service
ratemaking, market-based rates, and settlement rates as alternatives to the
indexing approach. A pipeline can follow a cost-of-service approach when
seeking to increase its rates above index levels (or when seeking to avoid
lowering rates to index levels) provided that the pipeline can establish that
there is a substantial divergence between the actual costs experienced by the
pipeline and the rate resulting from application of the index. A pipeline can
charge market-based rates if it establishes that it lacks significant market
power in the affected markets. In addition, a pipeline can establish rates
under settlement if agreed upon by all current shippers. As specified in Order
561 and subsequent decisions, a pipeline can seek to establish initial rates
for new services through a cost-of-service showing, by establishing that it
lacks significant market power in the affected markets, or through an agreement
between the pipeline and at least one shipper not affiliated with the pipeline
who intends to use the new service.

The Court of Appeals for the District of Columbia Circuit affirmed Order No.
561, concluding that the general indexing methodology, along with the limited
exceptions to indexed rates, reasonably balances the FERC's dual
responsibilities of ensuring just and reasonable rates and streamlining
ratemaking through generally applicable procedures. The FERC indicated in Order
No. 561 that it would assess in 2000 how the rate-indexing method was
operating. The FERC issued a Notice of Inquiry on July 27, 2000 seeking
comments on whether to retain or to change the existing index. On December 14,
2000, the FERC issued an order concluding the initial review of the petroleum
pipeline pricing index. In this order, the FERC found that the existing index
has closely approximated the actual cost changes in the petroleum pipeline
industry and that use of the rate index continues to satisfy the mandates of
the Energy Policy Act. The Association of Oil Pipe Lines petitioned for
judicial review of that decision, arguing that the annual adjustment should be
based on the full producer price index, without the one percentage point
deduction. The U.S. Court of Appeals for the District of Columbia Circuit found
the FERC decision flawed in certain respects and remanded the matter to the
FERC for further consideration.

Another development affecting petroleum pipeline ratemaking arose in Opinion
No. 397, involving a partnership operating a crude oil pipeline. In Opinion No.
397, the FERC concluded that there should not be a

corporate income tax allowance built into a petroleum pipeline's rates for
income attributable to noncorporate partners because those partners, unlike
corporate partners, do not pay a corporate income tax on partnership
distributions. Opinion No. 397 was affirmed by the FERC on rehearing in May
1996. The parties subsequently settled the case, so no judicial review of the
tax ruling took place.

A current proceeding, however, is pending at the FERC that could result in
changes to the FERC's income tax method announced in Opinion No. 397 as well as
to other elements of the FERC's rate methods for petroleum pipelines. This
proceeding involves another publicly traded limited partnership engaged in
petroleum products pipeline transportation. More specifically, on January 13,
1999, the FERC issued Opinion No. 435 in this proceeding, which, among other
things, affirmed Opinion No. 397's determination that there should not be a
corporate income tax allowance built into a petroleum pipeline's rates for
income attributable to noncorporate partners. Requests for rehearing of Opinion
No. 435 were filed with the FERC on the tax issue and on other aspects of the
FERC's crude oil pipeline ratemaking methodology. Petitions for review of
Opinion No. 435 are before the Court of Appeals for the District of Columbia
Circuit. On May 17, 2000, the FERC issued Opinion No. 435-A which, with respect
to the substance of the income tax allowance issue, denied rehearing requests.
Petitions for review of Opinion No. 435-A are before the Court of Appeals for
the District of Columbia. Petitions for rehearing of Opinion No. 435-A were
decided by the FERC in Opinion 435-B, issued on September 13, 2001. That
decision further defined the scope of the income tax allowance for publicly
traded limited partnerships, and resolved a number of other cost of service
issues as well. Two parties sought rehearing of Opinion 435-B. On November 7,
2001, the FERC issued a decision that, among other things, further clarified
the income tax allowance issue. One party has sought rehearing of the November
7th decision; that petition will need to be resolved by the FERC before the
Court of Appeals will consider the petitions for review of Opinions 435, 435-A
and 435-B. We cannot assume that the ultimate outcome of the income tax
allowance issue and other issues subject to judicial review will not adversely
affect our pipeline rates.

Market-Based Rates. In a proceeding involving Buckeye Pipeline Company,
L.P., the FERC found that a petroleum pipeline able to demonstrate a lack of
market power may be allowed a lighter standard of regulation than that imposed
by the trended original cost methodology. In such a case, the pipeline company
has the opportunity to establish that it faces sufficient competition to
justify relief from the strict application of the cost-based principles. In
Buckeye, the FERC determined, based on the existing level of market
concentration in the pipeline's market areas, that Buckeye exercised
significant market power in only five of its 21 market areas and therefore was
entitled to charge market-based rates in the other 16 market areas. The
opportunity to charge market-based rates means that the pipeline may charge
what the market will bear. Order No. 572, a companion order to Order No. 561,
was issued by the FERC on October 25, 1994 and established procedural rules
governing petroleum pipelines' applications for a finding that the pipeline
lacks significant market power in the relevant market.

Settlement Rates. In Order No. 561, the FERC specifically held that it
would also permit changes in rates that are the product of unanimous agreement
between the pipeline and all the shippers using the service to which the rate
applies. The rationale behind allowing this type of rate change is to further
the FERC's policy of favoring settlements among parties and to lessen the
regulatory burdens on all concerned. The FERC, however, will also entertain a
challenge to settlement rates, in response to a protest or a complaint that
alleges the same circumstances required to challenge an indexed rate. An
example of this type of challenge is that there is a discrepancy between the
rate and the pipeline's cost of service that is so substantial as to render the
settlement (or indexed) rate unjust and unreasonable.

Intrastate Regulation. Some of our pipeline operations are subject to
regulation by the Texas Railroad Commission, the Pennsylvania Public Utility
Commission, the Ohio Public Utility Commission, and the Oklahoma Corporation
Commission. The applicable state statutes require that pipeline rates be
non-discriminatory and provide no more than a fair return on the aggregate
value of the pipeline property used to render services. State commissions have
generally not been aggressive in regulating common carrier pipelines and have
generally not investigated the rates or practices of petroleum pipelines in the
absence of shipper

100

complaints. Complaints to state agencies have been infrequent and are usually
resolved informally. Although we cannot assure you that our intrastate rates
would ultimately be upheld if challenged, we believe that, given this history,
the tariffs now in effect are not likely to be challenged or, if challenged,
are not likely to be ordered to be reduced.

Our Pipelines. The FERC generally has not investigated interstate rates on
its own initiative when those rates, like ours, have not been the subject of a
protest or a complaint by a shipper. In addition, as discussed above,
intrastate pipelines generally are subject to "light-handed" regulation by
state commissions and we do not believe the intrastate tariffs now in effect
are likely to be challenged. However, the FERC or a state regulatory commission
could investigate our rates at the urging of a third party if the third party
is either a current shipper or is able to show that it has a substantial
economic interest in our tariff rate level. If an interstate rate were
challenged, we would defend that rate as grandfathered under the Energy Policy
Act. As that Act applies to our rates, a person challenging a grandfathered
rate must, as a threshold matter, establish a substantial change since the date
of enactment of the Act, in either the economic circumstances or the nature of
the service that formed the basis for the rate. A complainant might assert that
the creation of the partnership itself constitutes such a change, an argument
that has not previously been specifically addressed by the FERC and to which we
believe there are valid defenses. If the FERC were to find a substantial change
in circumstances, then the existing rates could be subject to detailed review.
We believe that most such rates can be supported on a cost of service basis,
even recognizing the reduction in our income tax allowance that is likely to
result from our conversion from a corporation to a partnership. Although there
are some rates that might not be defensible on that basis, we believe that all
of those rates involve movements as to which (1) Sunoco R&M is the only
shipper, (2) the partnership has a reasonable basis to assert that it lacks
significant market power and therefore is entitled to market based rates, or
(3) the revenue amounts involved do not materially affect our performance.

If the FERC investigated our rate levels, it could inquire into our costs,
including:

. the overall cost of service, including operating costs and overhead;

. the allocation of overhead and other administrative and general expenses
to the rate;

. the appropriate capital structure to be utilized in calculating rates;

. the appropriate rate of return on equity;

. the rate base, including the proper starting rate base;

. the throughput underlying the rate; and

. the proper allowance for federal and state income taxes.

We do not believe that it is likely that there will be a challenge to our
rates by a current shipper that would materially affect our revenues or cash
flows. Sunoco R&M and its subsidiaries are the only current shippers in many of
our pipelines. Sunoco R&M agreed not to challenge, or to cause others to
challenge or assist others in challenging, our tariff rates for the term of the
pipelines and terminals storage and throughput agreement.

Because most of our pipelines are common carrier pipelines, we may be
required to accept new shippers who wish to transport in our pipelines. It is
possible that any new shippers, current shippers, or other interested parties,
may decide to challenge our tariff rates. If any rate challenge or challenges
were successful, cash available for distribution could be materially reduced.

Environmental Regulation

General

Our operation of pipelines, terminals, and associated facilities in
connection with the storage and transportation of refined products, crude oil,
and other liquid hydrocarbons are subject to stringent and complex

101

federal, state, and local laws and regulations governing the discharge of
materials into the environment, or otherwise relating to the protection of the
environment. As with the industry generally, compliance with existing and
anticipated laws and regulations increases our overall cost of business,
including our capital costs to construct, maintain, and upgrade equipment and
facilities. While these laws and regulations affect our maintenance capital
expenditures and net income, we believe that they do not affect our competitive
position in that the operations of our competitors are similarly affected. We
believe that our operations are in substantial compliance with applicable
environmental laws and regulations. However, these laws and regulations are
subject to frequent change by regulatory authorities, and we are unable to
predict the ongoing cost to us of complying with these laws and regulations or
the future impact of these laws and regulations on our operations. Violation of
environmental laws, regulations, and permits can result in the imposition of
significant administrative, civil and criminal penalties, injunctions, and
construction bans or delays. A discharge of hydrocarbons or hazardous
substances into the environment could, to the extent the event is not insured,
subject us to substantial expense, including both the cost to comply with
applicable laws and regulations and claims made by neighboring landowners and
other third parties for personal injury and property damage.

Under the terms of our omnibus agreement with Sunoco, Inc., and in
connection with the contribution of our assets by affiliates of Sunoco, Inc.,
Sunoco, Inc. agreed to indemnify us for 30 years from environmental and toxic
tort liabilities related to the assets transferred to us that arise from the
operation of such assets prior to the closing of the initial public offering of
the master partnership. Sunoco, Inc. is obligated to indemnify us for 100% of
all such losses asserted within the first 21 years of closing. Sunoco, Inc.'s
share of liability for claims asserted thereafter will decrease by 10% a year.
For example, for a claim asserted during the twenty-third year after closing,
Sunoco, Inc. would be required to indemnify us for 80% of our loss. There is no
monetary cap on the amount of indemnity coverage provided by Sunoco, Inc. Any
remediation liabilities not covered by this indemnity will be our
responsibility. Total future costs for environmental remediation activities
will depend upon, among other things, the identification of any additional
sites, the determination of the extent of the contamination at each site, the
timing and nature of required remedial actions, the technology available and
needed to meet the various existing legal requirements, the nature and extent
of future environmental laws, inflation rates, and the determination of our
liability at multi-party sites, if any, in light of the number, participation
levels, and financial viability of other parties. We have agreed to indemnify
Sunoco, Inc. and its affiliates for events and conditions associated with the
operation of our assets that occur on or after the closing of the initial
public offering and for environmental and toxic tort liabilities related to our
assets to the extent Sunoco, Inc. is not required to indemnify us.

Air Emissions

Our operations are subject to the Clean Air Act and comparable state and
local statutes. Amendments to the Clean Air Act enacted in late 1990 as well as
recent or soon to be adopted changes to state implementation plans for
controlling air emissions in regional, non-attainment areas require or will
require most industrial operations in the United States to incur capital
expenditures in order to meet air emission control standards developed by the
Environmental Protection Agency and state environmental agencies. As a result
of these amendments, our facilities that emit volatile organic compounds or
nitrogen oxides are subject to increasingly stringent regulations, including
requirements that some sources install maximum or reasonably available control
technology. In addition, the 1990 Clean Air Act Amendments established a new
operating permit for major sources, which applies to some of our facilities. We
will be required to incur certain capital expenditures in the next several
years for air pollution control equipment in connection with maintaining or
obtaining permits and approvals addressing air emission related issues.
Although we can give no assurances, we believe implementation of the 1990 Clean
Air Act Amendments will not have a material adverse effect on our financial
condition or results of operations.

Our customers are also subject to, and affected by, environmental
regulations. Since the late 1990s, the EPA has undertaken significant
enforcement initiatives under authority of the Clean Air Act. These enforcement

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initiatives have been targeted at industries that have large manufacturing
facilities and that are significant sources of emissions, such as refining,
paper and pulp, and electric power generating industries. The basic premise of
the enforcement initiative is the EPA's assertion that many of these industrial
establishments have modified or expanded their operations over time without
complying with the New Source Review regulations ("NSR/PSD") that require
permits and new emission controls in connection with any significant facility
modifications or expansions that can result in emissions increases above
certain thresholds and have violated various provisions of the Clean Air Act,
including Benzene Waste Organic National Emission Standards for Hazardous Air
Pollutants ("NESHAP"), Leak Detection and Repair ("LDAR") and flaring
requirements. Where the EPA finds that a company or facility has modified or
expanded its operations without complying with the requirements of the NSR/PSD
program or has violated these provisions of the Clean Air Act, it may bring an
enforcement action against the company or facility to require installation of
the emissions controls that the agency deems necessary, and it may also seek to
impose fines and penalties for failure to comply with these Clean Air Act
requirements.

As part of this enforcement initiative, the EPA has entered into consent
agreements with several refiners that require the refiners to pay civil fines
and penalties and make significant capital expenditures to install emissions
control equipment at selected facilities. In certain instances, these
additional controls would be required to comply with other provisions of the
Clean Air Act or other federal or state regulations at a later date, but the
effect of these consent agreements is to require the installation of air
emission controls earlier than they might otherwise be required. The cost of
the required emissions control equipment could be significant, depending on the
size, age, and configuration of the refinery. Sunoco R&M received information
requests from the EPA in 2000, 2001 and 2002 in connection with the enforcement
initiative. Sunoco R&M has received notices of violation and findings of
violation from the EPA relating to its Marcus Hook, Philadelphia, and Toledo
refineries. Sunoco R&M is currently evaluating its position. Although Sunoco
R&M does not believe that it has violated any Clean Air Act requirements as
part of this initiative, Sunoco R&M could be required to make significant
capital expenditures, operate these refineries at reduced levels, and pay
significant penalties. If Sunoco R&M determines it is uneconomical to operate
its refineries under such conditions and as a result shuts down or reconfigures
all or a portion of one or more of its refineries, its obligations under the
pipelines and terminals storage and throughput agreement would be reduced,
which would reduce our ability to service our debt obligations.

Under the Clean Air Act, the EPA and state agencies acting with authority
delegated by the EPA have announced new rules or the intent to strengthen
existing rules affecting the composition of motor vehicle fuels and automobile
emissions. The EPA's Gasoline Sulfur Control Requirements require that the
sulfur content of motor vehicle gasoline be reduced to 80 parts per million and
the corporate average sulfur content be reduced to 30 parts per million by
2006. Likewise, the EPA's Diesel Fuel Sulfur Control Requirements require that
the sulfur content of diesel fuel be reduced to 15 parts per million by 2006.
The rules include banking and trading credit systems, which could provide
refiners flexibility until 2006 for the low-sulfur gasoline and until 2010 for
the low-sulfur diesel. These rules are expected to have a significant impact on
Sunoco R&M and its operations primarily with respect to the capital and
operating expenditures at the Philadelphia, Marcus Hook, and Toledo refineries.
Most of the capital spending is likely to occur in the 2002-2006 period, while
the higher operating costs will be incurred when the low-sulfur fuels are
produced. Sunoco R&M estimates that the total capital outlays to comply with
the new gasoline and diesel requirements will be in the range of $300-$400
million. The ultimate impact of the rules may be affected by such factors as
technology selection, the effectiveness of the banking and trading credit
systems, production mix, timing uncertainties created by permitting
requirements and construction schedules, and any effect on prices created by
changes in the level of gasoline and diesel fuel production.

Pursuant to the Clean Air Act, in April 2002, the EPA issued a final rule to
reduce hazardous air pollutants ("HAP") (including organics, reduced sulfur
compounds, inorganics and particulate metals) from certain sources at petroleum
refineries, including catalytic cracking and reforming units and sulfur
recovery units ("MACT II"). The rule requires all petroleum refineries that are
major sources of hazardous air pollutants to meet emission standards reflecting
the application of the maximum achievable control technology at the affected
sources by 2005. Sunoco R&M is in the process of determining the impact of this
rule. Although the ultimate impact of

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the rule on Sunoco R&M cannot be determined at this time, it could have a
significant impact on Sunoco R&M and its operations, primarily with respect to
capital expenditures at its four refineries.

The EPA is also reportedly considering limiting the levels of benzene and
other toxic substances in gasoline as well as banning methyl tertiary-butyl
ether, also known as MTBE, in gasoline, which may require the use of other
chemical additives to serve as oxygenates instead of MTBE. Legal mandates to
use alternative fuels may also have a direct and potentially adverse impact on
our revenues. For example, under the Energy Policy Act of 1992, 75% of new
vehicles purchased by certain federal and state government fleets must use
alternative fuels and New York has adopted standards requiring that by the year
2003, 10% of fleets delivered be zero-emissions vehicles; and under the Clean
Air Act, 50% to 70% (depending on vehicle weight) of new vehicles in clean air
non-attainment areas purchased by certain federal, state, municipal, and
private fleets must use some type of alternative fuels beginning in 2001. Also,
some states and local governments, including, for example, Texas, have adopted
"boutique" fuel standards to comply with clean air requirements. "Boutique"
fuels pose distribution problems because refiners must produce different blends
for different communities.

During 2001, the EPA issued its final rule addressing emissions of toxic air
pollutants from mobile sources (the Mobile Source Air Toxics ("MSAT") Rule).
The rule is currently being challenged by certain environmental organizations
and a number of states, and by a member of the petroleum industry. It requires
refiners to produce gasoline that maintains their average 1998-2000 gasoline
toxic emission performance level. If the rule survives the challenges and if
MTBE is banned, it could result in additional expenditures by Sunoco R&M or
reductions in its reformulated gasoline production levels.

It is uncertain what Sunoco, Inc. or Sunoco R&M's responses to these
emerging issues will be. We cannot assure you that those responses will not
reduce Sunoco R&M's obligations under the pipelines and terminals storage and
throughput agreement, thereby reducing the throughput in our pipelines, our
cash flow, and our ability to service our debt obligations.

Hazardous Substances and Waste

To a large extent, the environmental laws and regulations affecting our
operations relate to the release of hazardous substances or solid wastes into
soils, groundwater, and surface water, and include measures to control
pollution of the environment. These laws generally regulate the generation,
storage, treatment, transportation, and disposal of solid and hazardous waste.
They also require corrective action, including the investigation and
remediation, of certain units at a facility where such waste may have been
released or disposed. For instance, the Comprehensive Environmental Response,
Compensation, and Liability Act, referred to as CERCLA and also known as
Superfund, and comparable state laws impose liability, without regard to fault
or the legality of the original conduct, on certain classes of persons that
contributed to the release of a "hazardous substance" into the environment.
These persons include the owner or operator of the site where the release
occurred and companies that disposed or arranged for the disposal of the
hazardous substances found at the site. Under CERCLA, these persons may be
subject to joint and several liability for the costs of cleaning up the
hazardous substances that have been released into the environment, for damages
to natural resources, and for the costs of certain health studies. CERCLA also
authorizes the EPA and, in some instances, third parties to act in response to
threats to the public health or the environment and to seek to recover from the
responsible classes of persons the costs they incur. It is not uncommon for
neighboring landowners and other third parties to file claims for personal
injury and property damage allegedly caused by hazardous substances or other
pollutants released into the environment. In the course of our ordinary
operations, we may generate waste that falls within CERCLA's definition of a
"hazardous substance" and, as a result, may be jointly and severally liable
under CERCLA for all or part of the costs required to clean up sites at which
these hazardous substances have been released into the environment. We are
currently identified as a potentially responsible party ("PRP") at two sites in
Michigan by the Michigan Department of Natural Resources and at one site in New
York by the EPA in connection with alleged past transport of petroleum product
wastes to, and subsequent release of such wastes at, these sites. We believe
that any costs incurred by us in connection with remedial action at these sites
will not have a material adverse impact

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on our operations. In addition, while we are not identified as a PRP at the
Higgins Farm Superfund site in Somerset County, New Jersey, a PRP-defendant
group has filed a suit against us, seeking contribution for remediation costs
in connection with an ongoing cleanup of that site. We believe this cost
recovery suit to be without merit and are vigorously contesting this matter.
Costs for these remedial actions, if any as well as any related claims are all
covered by an indemnity from Sunoco, Inc. For more information, please read
"--Environmental Remediation."

We also generate solid wastes, including hazardous wastes, that are subject
to the requirements of the federal Resource Conservation and Recovery Act,
referred to as RCRA, and comparable state statutes. From time to time, the EPA
considers the adoption of stricter disposal standards for non-hazardous wastes,
including crude oil and gas wastes. We are not currently required to comply
with a substantial portion of the RCRA requirements because our operations
generate minimal quantities of hazardous wastes. However, it is possible that
additional wastes, which could include wastes currently generated during
operations, will in the future be designated as "hazardous wastes." Hazardous
wastes are subject to more rigorous and costly disposal requirements than are
non-hazardous wastes. Any changes in the regulations could have a material
adverse effect on our maintenance capital expenditures and operating expenses.

We currently own or lease, and our predecessor has in the past owned or
leased, properties where hydrocarbons are being or have been handled for many
years. Although we have utilized operating and disposal practices that were
standard in the industry at the time, hydrocarbons or other waste may have been
disposed of or released on or under the properties owned or leased by us or on
or under other locations where these wastes have been taken for disposal. In
addition, many of these properties have been operated by third parties whose
treatment and disposal or release of hydrocarbons or other wastes was not under
our control. These properties and wastes disposed thereon may be subject to
CERCLA, RCRA, and analogous state laws. Under these laws, we could be required
to remove or remediate previously disposed wastes (including wastes disposed of
or released by prior owners or operators), to clean up contaminated property
(including contaminated groundwater), or to perform remedial operations to
prevent future contamination.

We are currently involved in remediation activities at numerous sites, which
involve significant expense. These remediation activities are all covered by an
indemnity from Sunoco, Inc. For more information, please read "--Environmental
Remediation."

Water

Our operations can result in the discharge of pollutants, including crude
oil. The Oil Pollution Act was enacted in 1990 and amends provisions of the
Water Pollution Control Act of 1972 and other statutes as they pertain to
prevention and response to oil spills. The Oil Pollution Act subjects owners of
covered facilities to strict, joint, and potentially unlimited liability for
removal costs and other consequences of an oil spill, where the spill is into
navigable waters, along shorelines or in the exclusive economic zone of the
United States. In the event of an oil spill into navigable waters, substantial
liabilities could be imposed upon us. States in which we operate have also
enacted similar laws. Regulations are currently being developed under the Oil
Pollution Act and state laws that may also impose additional regulatory burdens
on our operations. Spill prevention control and countermeasure requirements of
federal laws and some state laws require diking and similar structures to help
prevent contamination of navigable waters in the event of an oil overflow,
rupture, or leak. We are in substantial compliance with these laws.
Additionally, the Office of Pipeline Safety of the DOT has approved our oil
spill emergency response plans.

The Water Pollution Control Act of 1972 imposes restrictions and strict
controls regarding the discharge of pollutants into navigable waters. Permits
must be obtained to discharge pollutants into state and federal waters. The
Water Pollution Control Act of 1972 imposes substantial potential liability for
the costs of removal, remediation, and damages. In addition, some states
maintain groundwater protection programs that require permits for discharges or
operations that may impact groundwater conditions. We believe that compliance
with existing permits and compliance with foreseeable new permit requirements
will not have a material adverse effect on our financial condition or results
of operations.

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Employee Safety

We are subject to the requirements of the Occupational Safety and Health
Act, referred to as OSHA, and comparable state statutes that regulate the
protection of the health and safety of workers. In addition, the OSHA hazard
communication standard requires that information be maintained about hazardous
materials used or produced in operations and that this information be provided
to employees, state, and local government authorities and citizens. We believe
that our operations are in substantial compliance with the OSHA requirements,
including general industry standards, record keeping requirements, and
monitoring of occupational exposure to regulated substances.

Endangered Species Act

The Endangered Species Act restricts activities that may affect endangered
species or their habitats. While some of our facilities are in areas that may
be designated as habitat for endangered species, we believe that we are in
substantial compliance with the Endangered Species Act. However, the discovery
of previously unidentified endangered species could cause us to incur
additional costs or become subject to operating restrictions or bans in the
affected area.

Hazardous Materials Transportation Requirements

The DOT regulations affecting pipeline safety require pipeline operators to
implement measures designed to reduce the environmental impact of crude oil
discharge from onshore crude oil pipelines. These regulations require operators
to maintain comprehensive spill response plans, including extensive spill
response training for pipeline personnel. In addition, the DOT regulations
contain detailed specifications for pipeline operation and maintenance. We
believe our operations are in substantial compliance with these regulations.
The DOT has recently adopted a pipeline integrity management rule. We have
analyzed the impact of this rule and, based on historical integrity tests
conducted since 1989, have estimated that compliance with this rule will cost
us approximately $8.0 million a year for five years, for a total of $40.0
million for all pipelines in our Eastern and Western Pipeline Systems that are
subject to this rule. Sunoco, Inc. has agreed to indemnify us for costs in
excess of $8.0 million per year, up to a maximum of $15.0 million over the next
five years in connection with compliance with this DOT pipeline integrity
management rule. Please read "Certain Relationships and Related
Transactions--Omnibus Agreement."

Environmental Remediation

Contamination resulting from spills of refined products and crude oil is not
unusual within the petroleum pipeline industry. Historic spills along our
pipelines, gathering systems, and terminals as a result of past operations have
resulted in contamination of the environment, including soils and groundwater.
Site conditions, including soils and groundwater, are being evaluated at a
number of our properties where operations may have resulted in releases of
hydrocarbons and other wastes.

Moreover, potentially significant assessment, monitoring, and remediation
programs are being performed at some 19 sites, identified as of December 31,
2001, in Michigan, New Jersey, New York, Ohio, and Pennsylvania. These 19 sites
include eight terminals and two tank farms owned by us (River Rouge and Owosso
Terminals in Michigan; Newark Terminal in New Jersey; Dayton Terminal in Ohio;
and Belmont, Kingston, Montello, and Pittsburgh Terminals and Darby Creek Tank
Farm and Marcus Hook Tank Farm in Pennsylvania) and nine third-party locations
(in Camden County in New Jersey; in Livingston and Chemung Counties in New
York; and in Chester, Delaware, Lancaster, Lebanon, and Luzerne Counties, in
Pennsylvania) that were impacted by pipe line or pump station releases of crude
oil or petroleum products. We estimate that the total aggregate cost of
performing the currently anticipated assessment, monitoring and remediation at
these 19 sites to be $8.6 million. This estimate assumes that we will be able
to achieve regulatory closure at these sites between the years 2002 and 2010 by
using common remedial and monitoring methods or associated engineering or
institutional controls to demonstrate compliance with applicable cleanup
standards. This estimate covers the costs of performing assessment,
remediation, and/or monitoring of impacted soils, groundwater and surface water
conditions, but does not include any costs for potential claims by others with
respect to these sites. While we do not expect any such potential claims by
others to be materially adverse to our operations, financial position, or cash
flows, we cannot assure you that the actual remediation costs or associated
remediation liabilities will not exceed this $8.6 million amount.

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With respect to the February 2000 pipeline release of crude oil into the
John Heinz National Wildlife Refuge in Philadelphia, one of the 19 sites where
potentially significant environmental liability exists, we have conducted
remedial activities at the release area and have initiated restoration efforts
in the area, including establishment of a new wetlands area. We expect the EPA
to assess a penalty with respect to the February 2000 pipeline release which
could exceed $100,000.

Sunoco, Inc. has agreed to indemnify us from environmental and toxic tort
liabilities related to the assets transferred to us to the extent such
liabilities exist or arise from operation of these assets prior to closing of
the initial public offering of the master partnership and are asserted within
30 years after the closing. This indemnity will cover the costs associated with
performance of the assessment, monitoring, and remediation programs, as well as
any related claims and penalties, at the 19 sites referenced above. See
"--Environmental Regulation--General."

We may experience future releases of refined products or crude oil into the
environment from our pipelines, gathering systems, and terminals, or discover
historical releases that were previously unidentified or not assessed. While we
maintain an extensive inspection and audit program designed, as applicable, to
prevent and to detect and address these releases promptly, damages and
liabilities incurred due to any future environmental releases from our assets
nevertheless have the potential to substantially affect our business.

Title to Properties

Substantially all of our pipelines are constructed on rights-of-way granted
by the apparent record owners of the property and in some instances these
rights-of-way are revocable at the election of the grantor. Several
rights-of-way for our pipelines and other real property assets are shared with
other pipelines and other assets owned by affiliates of Sunoco, Inc. and by
third parties. In many instances, lands over which rights-of-way have been
obtained are subject to prior liens that have not been subordinated to the
right-of-way grants. We have obtained permits from public authorities to cross
over or under, or to lay facilities in or along, watercourses, county roads,
municipal streets, and state highways and, in some instances, these permits are
revocable at the election of the grantor. We have also obtained permits from
railroad companies to cross over or under lands or rights-of-way, many of which
are also revocable at the grantor's election. In some cases, property for
pipeline purposes was purchased in fee. In some states and under some
circumstances, we have the right of eminent domain to acquire rights-of-way and
lands necessary for our common carrier pipelines. The previous owners of the
applicable pipelines may not have commenced or concluded eminent domain
proceedings for some rights-of-way. We will commence or conclude such
proceedings to the extent we deem necessary.

Some of the leases, easements, rights-of-way, permits, and licenses
transferred to us on closing of the initial public offering of the master
partnership required the consent of the grantor to transfer these rights, which
in some instances is a governmental entity. We have obtained or are in the
process of obtaining third-party consents, permits, and authorizations
sufficient for the transfer to us of the assets necessary for us to operate our
business in all material respects as described in this prospectus. With respect
to any consents, permits, or authorizations that have not been obtained, the
failure to obtain these consents, permits, or authorizations will have no
material adverse effect on the operation of our business.

We believe that we have satisfactory title to all of our assets, or we are
entitled to indemnification from Sunoco, Inc. under the omnibus agreement for
title defects to the assets contributed to us and for failures to obtain
certain consents and permits necessary to conduct our business that arise
within ten years after the closing of the initial public offering of common
units by the master partnership. Record title to some of our assets may
continue to be held by affiliates of Sunoco, Inc. until we have made the
appropriate filings in the jurisdictions in which such assets are located and
obtained any consents and approvals that were not obtained prior to closing of
the master partnership's initial public offering. We are in the process of
making these filings and obtaining these consents. Although title to these
properties is subject to encumbrances in some cases, such as customary
interests generally retained in connection with acquisition of real property,
liens that can be imposed in some jurisdictions

107

for government-initiated action to clean up environmental contamination, liens
for current taxes and other burdens, and easements, restrictions, and other
encumbrances to which the underlying properties were subject at the time of
acquisition by our predecessor or us, we believe that none of these burdens
should materially detract from the value of these properties or from our
interest in these properties or should materially interfere with their use in
the operation of our business.

Employees

To carry out our operations, the master partnership's general partner and
its affiliates employ approximately 1,160 people who provide direct support to
our operations. Approximately 660 of these employees are represented by labor
unions or associations. The master partnership's general partner considers its
employee relations to be good. Our partnership has no employees.

Legal Proceedings

With respect to a pipeline release of crude oil in February 2000 in the John
Heinz National Wildlife Refuge in Philadelphia, we have conducted remedial
activities at the release area and have initiated restoration efforts in the
area. We expect the EPA to assess a penalty with respect to this release that
could exceed $100,000. Sunoco, Inc. has agreed to indemnify us for any losses
we may suffer as a result of legal actions pending at the time of the closing
of the master partnership's initial public offering, which includes any
assessed penalty relating to the February 2000 pipeline release of crude oil.
Please read "--Agreements with Sunoco R&M and Sunoco, Inc."

There are other legal and administrative proceedings pending against our
Sunoco, Inc. affiliated predecessors and us (as successor to certain
liabilities of those predecessors). Although the ultimate outcome of these
proceedings cannot be ascertained at this time, it is reasonably possible that
some of them may be resolved unfavorably. The indemnity from Sunoco, Inc. will
cover any losses we may suffer as a result of such currently pending legal
actions. As a result, we believe that any liabilities arising from such
currently pending proceedings are unlikely to be material.

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MANAGEMENT

Management of Sunoco Logistics Partners Operations L.P. and Sunoco Logistics
Partners L.P.

We are managed by our general partner, Sunoco Logistics Partners GP LLC. Our
general partner is a wholly owned subsidiary of the master partnership, which
is managed by its general partner, Sunoco Partners LLC. The following
information describes the management of Sunoco Partners LLC, the general
partner of the master partnership. The directors and officers of Sunoco
Partners LLC are the same as the officers and directors of our general partner.
Most of our operational personnel are employees of our master partnership's
general partner. Our general partner is liable, as general partner, for all of
our debts (to the extent not paid from our assets), except for indebtedness or
other obligations that are made specifically nonrecourse to it. Whenever
possible, our general partner intends to incur indebtedness or other
obligations that are nonrecourse.

At least two members of the board of directors of our master partnership's
general partner will serve on a conflicts committee to review specific matters
that the board believes may involve conflicts of interest. The conflicts
committee will determine if the resolution of the conflict of interest is fair
and reasonable to the master partnership. The members of the conflicts
committee may not be officers or employees of our master partnership's general
partner or directors, officers, or employees of its affiliates, and must meet
the independence and experience standards to serve on an audit committee of a
board of directors established by the New York Stock Exchange. Any matters
approved by the conflicts committee will be conclusively deemed to be fair and
reasonable to us, approved by all of our master partnership's partners, and not
a breach by our master partnership's general partner of any duties it may owe
us or our unitholders. In addition, the members of the conflicts committee will
also serve on an audit committee that will review our external financial
reporting, recommend engagement of our master partnership's independent
auditors, and review procedures for internal auditing and the adequacy of our
internal accounting controls. The current members of our conflicts committee
and our audit committee are the two newly appointed independent members of the
board of directors, Stephen L. Cropper and Gary W. Edwards. The compensation
committee of the board of directors of the general partner of the master
partnership will oversee compensation decisions for the officers of our master
partnership's general partner and the administration of the compensation plans
described below. The compensation committee currently is comprised of the board
of directors of our master partnership's general partner. In the future, the
compensation committee may be comprised of a smaller group appointed by that
board.

In compliance with the rules of the New York Stock Exchange, an additional
independent member will be appointed by the board within 12 months of the
listing of the master partnership's common units on the New York Stock
Exchange. That board member will also serve on the audit committee.

The officers of Sunoco Partners LLC, other than Paul A. Mulholland, our
Treasurer, and Joseph P. Krott who is acting as Comptroller on an interim
basis, will spend substantially all of their time managing our business and
affairs. The non-executive directors will devote as much time as is necessary
to prepare for and attend board of directors and committee meetings.

Directors and Executive Officers of Sunoco Partners LLC and Sunoco Logistics
Partners GP LLC

The following table shows information for the directors and executive
officers of Sunoco Partners LLC and Sunoco Logistics Partners GP LLC. Executive
officers and directors are elected for one-year terms.

Name Age Position with the General Partner
- ---- --- -----------------------------------------------

John G. Drosdick.................. 58 Chairman and Director
Deborah M. Fretz.................. 54 President, Chief Executive Officer and Director
Cynthia A. Archer................. 48 Director
Stephen L. Cropper................ 52 Director
Michael H.R. Dingus............... 54 Director
Gary W. Edwards................... 60 Director
Bruce G. Fischer.................. 47 Director
Thomas W. Hofmann................. 51 Director
Paul S. Broker.................... 41 Vice President, Western Operations
James L. Fidler................... 55 Vice President, Business Development
David A. Justin................... 50 Vice President, Eastern Operations
Joseph P. Krott................... 38 Comptroller
Paul A. Mulholland................ 49 Treasurer
Colin A. Oerton................... 38 Vice President and Chief Financial Officer
Jeffrey W. Wagner................. 45 General Counsel and Secretary

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Mr. Drosdick was elected Chairman of our Board of Directors in October 2001.
He has been Chairman of the Board of Directors, President and Chief Executive
Officer of Sunoco, Inc. since May 2000. Prior to that, he was a director,
President and Chief Operating Officer of Sunoco, Inc. from December 1996 to May
2000. He was President and Chief Operating Officer of Ultramar Corporation from
June 1992 to August 1996. Mr. Drosdick is also a director of Hercules
Incorporated and Lincoln National Corp.

Ms. Fretz was elected our President, Chief Executive Officer and a director
in October 2001. Prior to assuming her positions with us, she was Senior Vice
President, MidContinent Refining, Marketing and Logistics of Sunoco, Inc. from
November 2000. Prior to that, she was Senior Vice President, Logistics of
Sunoco, Inc. from August 1994 to November 2000 and also held the position of
Senior Vice President, Lubricants of Sunoco, Inc. from January 1997 to November
2000. In addition, she has been President of Sun Pipe Line Company, a
subsidiary of Sunoco, Inc., since October 1991. Ms. Fretz is also a director of
GATX Corporation and Cooper Tire & Rubber Company.

Ms. Archer was elected to our Board of Directors in April 2002. Ms. Archer
has been Vice President, Marketing and Development, Sunoco, Inc. since January
2001. Prior to joining Sunoco, she was Senior Vice President, Operations for
Williams-Sonoma Inc., in charge of their direct-to-customer business from June
1999 to January 2001. Before that, she was Senior Vice President, Intermodal
Service Group for Consolidated Rail Corporation from May 1995 to May 1999.

Mr Cropper was elected to our Board of Directors in May 2002. Mr. Cropper is
currently a private investor. From January 1996 until the time of his
retirement in December 1998, he served as president and chief executive officer
of Williams Energy Services, a diversified energy company. Mr. Cropper served
as president of Williams Pipe Line Company from 1986 to 1998. He is also a
director of: Heritage Propane, QuikTrip Corporation, Berry Petroleum, Rental
Car Finance Corporation, and Fuel Spot. Mr. Cropper also has been a past
chairman of the Association of Oil Pipelines, and has served on the National
Petroleum Council as well as the Transportation and Public Policy Committees of
the American Petroleum Institute.

Mr. Dingus was elected to our Board of Directors in April 2002. He has been
Senior Vice President, Sunoco, Inc. since January 2002. Prior to that, he was
Vice President of Sunoco, Inc. from May 1999, and he has been President, Sun
Coke Company since June 1996.

Mr. Edwards was elected to our Board of Directors in May 2002. Mr. Edwards
is currently a consultant in the energy field. From November 1999 until the
time of his retirement in December 2001, he was senior executive vice
president, Corporate Strategy & Development, Conoco, Inc., and had been
executive vice president, Refining, Marketing, Supply & Transportation of
Conoco from September 1991 until November 1999. From September 1991 to October
1998, Mr. Edwards also was a senior vice president, E. I. duPont de Nemours and
Company (Conoco's parent). Mr. Edwards is a director of the American Petroleum
Institute, and a past director and vice president of the European Petroleum
Industry Association in Brussels.

Mr. Fischer was elected to our Board of Directors in April 2002. He has been
Senior Vice President, Sunoco Chemicals of Sunoco, Inc. since January 2002.
Prior to that, he was Vice President, Sunoco Chemicals from November 2000 to
January 2002, Vice President and General Manager, Sunoco MidAmerica Marketing
and Refining from January 1999 to November 2000 and General Manager, Sunoco
MidAmerica Marketing & Refining from June 1995 to January 1999.

Mr. Hofmann was elected to our Board of Directors in October 2001. He has
been Senior Vice President and Chief Financial Officer of Sunoco, Inc. since
January 2002. Prior to that he was Vice President and Chief Financial Officer
of Sunoco, Inc. from July 1998 to January 2002. He was Comptroller of Sunoco,
Inc. from July 1995 to July 1998.

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Mr. Broker was elected Vice President, Western Operations in November 2001.
Prior to that, he had been Manager, Western Area Operations for Sun Pipe Line
Company since September 2000. Mr. Broker served as an Area Superintendent of
Eastern Area Operations for Sun Pipe Line Company from March 1997 through
September 2000. From 1994 through March 1997, Mr. Broker was Manager of
Operations Engineering, Eastern Area Operations.

Mr. Fidler was elected Vice President, Business Development in November
2001. Mr. Fidler had been Vice President/General Manager of Sunoco Distribution
Operations for the Sunoco Logistics and Lubricants business units of Sunoco,
Inc. since 1995.

Mr. Justin was elected Vice President, Eastern Operations in November 2001.
From September 2000 to November 2001, Mr. Justin served as Manager, Eastern
Area Operations for Sun Pipe Line Company. Prior to that, he had been Manager,
Western Area Operations for Sun Pipe Line Company from 1998 through September
2000. Mr. Justin was Manager, Capital Projects/Engineering and Construction for
Sun Pipe Line Company from 1996 through 1998.

Mr. Krott was elected our Comptroller in October 2001. He has been
Comptroller of Sunoco, Inc. since July 1998. Prior to that, from September 1997
to July 1998, he served as Director, Compensation, Benefits & HR Systems at
Sunoco, Inc., and from July 1996 to September 1997 as Manager, Compensation &
HR Systems of Sunoco, Inc.

Mr. Mulholland was elected Treasurer in January 2002. He has been Treasurer
of Sunoco, Inc. since March 2000. Prior to that, from August 1997 through
February 2000, he was Director, Corporate Finance for Sunoco, Inc. Previously
he served as Manager of Finance, Mergers and Acquisitions for Sunoco, Inc.,
from August 1993 through July 1997.

Mr. Oerton was elected Vice President and Chief Financial Officer in January
2002. Prior to that, from August 1996 to October 2001, he was Senior Vice
President--Natural Resources Group for Lehman Brothers Holdings, Inc.
Previously he served as Vice President--Corporate Finance for Barclays de Zoete
Wedd Ltd. from 1990 through July 1996.

Mr. Wagner was elected General Counsel and Secretary in November 2001. Prior
to assuming his positions with us, Mr. Wagner had been Chief Counsel for Sun
Pipe Line Company from 1990 to 2001.

Reimbursement of Expenses

The master partnership's general partner will not receive any management fee
or other compensation for its management of the master partnership. The master
partnership's general partner and its affiliates will be reimbursed for
expenses incurred on our behalf. These expenses include the costs of employee,
officer, and director compensation and benefits properly allocable to us and
the master partnership, and all other expenses necessary or appropriate to the
conduct of the business of, and allocable to, us and the master partnership.
Our partnership agreement and the master partnership's partnership agreement
provide that the general partner will determine the expenses that are allocable
to the partnership of which it is the general partner in any reasonable manner
it determines in its sole discretion. Please read "Certain Relationships and
Related Transactions--Omnibus Agreement."

Executive Compensation

The master partnership and the master partnership's general partner were
formed in October 2001, but the general partner paid no compensation to its
directors and officers with respect to the 2001 fiscal year. We and our general
partner were formed in December 2001, but our general partner paid no
compensation to our directors with respect to the 2001 fiscal year. We have not
accrued any obligations with respect to management incentive

111

or retirement benefits for the directors and officers for the 2001 fiscal year.
Officers and employees of the master partnership's general partner may
participate in employee benefit plans and arrangements sponsored by the master
partnership's general partner or its affiliates, including plans that may be
established by the general partner or its affiliates in the future.

Compensation of Directors

Directors of the master partnership's general partner who are employees of
Sunoco Partners LLC or its affiliates receive no additional compensation for
service on the master partnership's general partner's board of directors or any
committees of the board. Non-employee directors will receive an annual retainer
of $15,000 in cash, to be paid quarterly, and a number of restricted units to
be paid quarterly under the Sunoco Partners LLC Long-Term Incentive Plan,
having an aggregate fair market value equal to $15,000 on an annual basis (the
fair market value of each such quarterly payment of restricted units being
calculated as of the date of such payment). Chairpersons of any standing
committee of the board of directors of the master partnership's general partner
will receive an annual committee chair retainer of $1,500 in cash. Non-employee
directors will receive $1,500 in cash for each board meeting attended, and
$1,000 in cash for each committee meeting attended. In addition, each non-
employee director will be reimbursed for out-of-pocket expenses in connection
with attending meetings of the board of directors or committees. Each director
will be fully indemnified by the master partnership for actions associated with
being a director to the extent permitted under Delaware law.

Long-Term Incentive Plan

The master partnership's general partner has adopted the Sunoco Partners LLC
Long-Term Incentive Plan for employees and directors of the master
partnership's general partner and employees of its affiliates who perform
services for us. The long-term incentive plan consists of two components:
restricted units and unit options. The long-term incentive plan currently
permits the grant of awards covering an aggregate of 1,250,000 common units.
The plan is administered by the compensation committee of the master
partnership's general partner's board of directors.

The master partnership's general partner's board of directors in its
discretion may terminate or amend the long-term incentive plan at any time with
respect to any units for which a grant has not yet been made. The master
partnership's general partner's board of directors also has the right to alter
or amend the long-term incentive plan or any part of the plan from time to
time, including increasing the number of units that may be granted subject to
unitholder approval as required by the exchange upon which the common units are
listed at that time. However, no change in any outstanding grant may be made
that would materially impair the rights of the participant without the consent
of the participant.

Restricted Units. A restricted unit is a "phantom" unit that entitles the
grantee to receive a common unit upon the vesting of the phantom unit or, in
the discretion of the the compensation committee, cash equivalent to the value
of a common unit. An initial grant of approximately 125,000 restricted units is
expected to be made to employees and directors of the master partnership's
general partner and employees of its affiliates who perform services for us. In
the future, the compensation committee may determine to make additional grants
under the plan to employees and directors containing such terms as the
compensation committee shall determine under the plan. The compensation
committee will determine the period over which restricted units granted to
employees and directors will vest. The compensation committee may base its
determination upon the achievement of specified financial objectives. In
addition, the restricted units will vest upon a change of control of Sunoco
Logistics Partners, the master partnership's general partner, or Sunoco, Inc.

If a grantee's employment or membership on the board of directors terminates
for any reason, the grantee's restricted units will be automatically forfeited
unless, and to the extent, the compensation committee provides otherwise.
Common units to be delivered upon the vesting of restricted units may be common
units acquired by the master partnership's general partner in the open market,
common units already owned by the master

112

partnership's general partner, common units acquired by the master
partnership's general partner directly from master partnership or any other
person or any combination of the foregoing. The master partnership's general
partner will be entitled to reimbursement by us for the cost incurred in
acquiring common units. If the master partnership issues new common units upon
vesting of the restricted units, the total number of common units outstanding
will increase. The compensation committee, in its discretion, may grant tandem
distribution equivalent rights with respect to restricted units.

The master partnership intends the issuance of the common units upon vesting
of the restricted units under the plan to serve as a means of incentive
compensation for performance and not primarily as an opportunity to participate
in the equity appreciation of the common units. Therefore, plan participants
will not pay any consideration for the common units they receive, and we will
receive no remuneration for the units.

Unit Options. The long-term incentive plan currently permits the grant of
options covering common units. In the future, the compensation committee may
determine to make grants under the plan to employees and directors containing
such terms as the committee shall determine. Unit options will have an exercise
price that, may not be less than the fair market value of the units on the date
of grant. In general, unit options granted will become exercisable over a
period determined by the compensation committee. In addition, the unit options
will become exercisable upon a change in control of the master partnership, the
master partnership's general partner, or Sunoco, Inc. or upon the achievement
of specified financial objectives.

Upon exercise of a unit option, the master partnership's general partner
will acquire common units in the open market or directly from the master
partnership or any other person or use common units already owned by the master
partnership's general partner, or any combination of the foregoing. The master
partnership's general partner will be entitled to reimbursement by the master
partnership for the difference between the cost incurred by the master
partnership's general partner in acquiring these common units and the proceeds
received by the general partner from an optionee at the time of exercise. Thus,
the cost of the unit options will be borne by the master partnership. If the
master partnership issues new common units upon exercise of the unit options,
the total number of common units outstanding will increase, and the master
partnership's general partner will pay us the proceeds it received from the
optionee upon exercise of the unit option. The unit option plan has been
designed to furnish additional compensation to employees and directors and to
align their economic interests with those of common unitholders.

Management Incentive Plan

The master partnership's general partner has adopted the Sunoco Partners LLC
Annual Incentive Compensation Plan. The management incentive plan is designed
to enhance the performance of the master partnership's general partner's key
employees by rewarding them with cash awards for achieving annual financial and
operational performance objectives. The compensation committee in its
discretion may determine individual participants and payments, if any, for each
fiscal year. The board of directors of the master partnership's general partner
may amend or change the management incentive plan at any time. We will
reimburse the master partnership's general partner for payments and costs
incurred under the plan.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The master partnership beneficially owns, directly or indirectly, all our
partner interests. The master partnership directly owns a 99.99% limited
partner interest in us. The master partnership also owns 100% of the member
interests in Sunoco Logistics Partners GP LLC, our general partner, which in
turn owns a 0.01% general partner interest in us.

The following table sets forth the beneficial ownership of units of the
master partnership, Sunoco Logistics Partners L.P., held by beneficial owners
of 5% or more of the units, by directors of Sunoco Partners LLC (the general
partner of the master partnership), by each named executive officer and by all
directors and officers of Sunoco Partners LLC as a group as of May 6, 2002.
Sunoco Partners LLC is owned by Sun Pipe Line Company of Delaware, Sunoco Texas
Pipe Line Company, Sunoco R&M, Atlantic Petroleum Corporation, and Atlantic
Refining & Marketing Corp., each of which is a direct or indirect wholly owned
subsidiary of Sunoco, Inc.

Percentage of
Common Units Common Units Percentage of Percentage of Total
Beneficially Beneficially Subordinated Units Subordinated Units Units Beneficially
Name of Beneficial Owner/(1)/ Owned Owned Beneficially Owned Beneficially Owned Owned
- ----------------------------- ------------ ------------- ------------------ ------------------ -------------------

Sunoco Partners LLC/(2)/..... 5,633,639 49.5% 11,383,639 100.0% 74.7%
John G. Drosdick............. 20,000 * 0 0 *
Deborah M. Fretz............. 1,600 * 0 0 *
Cynthia A. Archer............ 2,000 * 0 0 *
Stephen L. Cropper........... 0 0 0 0 0
Michael H.R. Dingus.......... 2,000 * 0 0 *
Gary W. Edwards.............. 0 0 0 0 0
Bruce G. Fischer............. 2,000 * 0 0 *
Thomas W. Hofmann............ 2,500 * 0 0 *
Paul S. Broker............... 500 * 0 0 *
James L. Fidler.............. 1,600 * 0 0 *
David A. Justin.............. 1,000 * 0 0 *
Joseph P. Krott.............. 2,000 * 0 0 *
Paul A. Mulholland........... 2,000 * 0 0 *
Colin A. Oerton.............. 5,000 * 0 0 *
Jeffrey W. Wagner............ 1,000 * 0 0 *
All directors and executive
officers as a group
(15 persons)............... 43,200 * 0 0 *

- --------
* Less than 0.5%.
/(1)/The address of each beneficial owner named below is 1801 Market Street,
Philadelphia, PA 19103.
/(2)/Sunoco, Inc. is the ultimate parent company of Sunoco Partners LLC and
may, therefore, be deemed to beneficially own the units held by Sunoco
Partners LLC.

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DESCRIPTION OF THE NEW NOTES

General

Our new notes will be issued under an indenture dated as of February 7,
2002. This is the same indenture pursuant to which we issued the outstanding
notes. The indenture is a contract among us, the guarantors and Wachovia Bank,
National Association (formerly First Union National Bank), which acts as
trustee. The indenture and the new notes contain the full legal text of the
matters described in this section. The indenture and the new notes are governed
by New York law. A copy of the indenture has been filed as an exhibit to the
registration statement of which this prospectus is a part and also may be
obtained from the trustee upon request.

The terms of the notes include those set forth in the indenture and those
made a part of the indenture by reference to the Trust Indenture Act of 1939.
The following description of the material provisions of the new notes and the
indenture is a summary only. Because this section is a summary, it does not
describe every aspect of those documents. This summary is subject to and
qualified in its entirety by reference to all the provisions of those
documents, including definitions of terms referenced in this prospectus.

References to the "notes" refer to both the new notes and the outstanding
notes.

If the exchange offer contemplated by this prospectus is consummated,
holders of outstanding notes who do not exchange those notes for new notes in
the exchange offer will vote together as a single class with holders of new
notes for all relevant purposes under the indenture. In determining whether
holders of the requisite percentage in principal amount have given any notice,
consent or waiver or taken any other action permitted under the indenture, any
outstanding notes that remain outstanding after the exchange offer will be
aggregated with the new notes.

Principal and Maturity

The new notes will:

. be unsecured senior obligations of Sunoco Logistics Partners Operations
L.P.;

. mature on February 15, 2012, unless sooner redeemed;

. not be entitled to the benefits of a sinking fund;

. be issuable in the future without the consent of the existing holders,
in an unlimited principal amount, and any additional new notes will form
a single series with already issued and outstanding new notes;

. be held initially in the form of one or more global notes; and

. be issued only in registered form without coupons, in denominations of
$1,000 or integral multiples thereof.

Interest

Interest on the new notes will:

. accrue at the annual rate set forth on the cover page of this prospectus;

. be payable semi-annually in arrears on February 15 and August 15 of each
year;

. be payable to noteholders in whose name the new notes are registered at
the close of business on the February 1 or August 1 (whether or not a
business day) preceding the applicable interest payment date; and

. accrue from the date of original issuance of the outstanding notes, or
from the date of the last payment of interest on the outstanding notes,
whichever is later.

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Holders of new notes will not receive any interest on outstanding notes
tendered and accepted for exchange.

If an interest payment date or a redemption date occurs on a date that is
not a business day, payment will be made on the next business day and no
additional interest will accrue. Under the indenture, a business day is any
day, other than Saturday or Sunday, that is not a day on which banking
institutions in The City of New York are authorized or obligated by law,
executive order or regulation to close.

Interest on the new notes will be computed on the basis of a 360-day year
comprised of twelve 30-day months.

Ranking

The new notes will:

. rank equally with all of our other unsecured and unsubordinated
indebtedness from time to time outstanding; and

. generally have a junior position to claims of creditors and holders of
preferred securities of our subsidiaries who do not become guarantors,
if applicable.

The indenture does not limit our ability to incur additional indebtedness.

Guaranty of Notes

We are a subsidiary of the master partnership. We are also a holding company
that conducts all of our operations through our subsidiaries, which consist of
Sunoco Pipeline L.P., which we call Pipeline LP, and Sunoco Partners Marketing
& Terminals L.P., which we call Terminals LP. Initially, the master
partnership, Pipeline LP and Terminals LP will guarantee due and punctual
payment of the principal, any premium and interest on the notes when and as it
becomes due and payable, whether at maturity or otherwise. Each of the master
partnership, Pipeline L.P. and Terminals L.P. has guaranteed our obligations
under the revolving credit facility.

The guarantors' guarantees of the notes will:

. rank equally with their other unsecured and unsubordinated indebtedness
from time to time outstanding, including their guarantees under the
revolving credit facility;

. provide that upon a default in payment of principal or any premium or
interest on a new note, the holder of the new note may institute legal
proceedings directly against Sunoco Logistics, Pipeline LP or Terminals
LP to enforce the guarantees without first proceeding against us; and

. obligate each guarantor under its guarantee only up to an amount that
would not constitute a fraudulent conveyance or fraudulent transfer
under federal, state or foreign law.

Our future subsidiaries that become guarantors or co-obligors of our Funded
Debt, as defined below, are required to fully and unconditionally guarantee our
payment obligations on the notes. In particular, those subsidiaries that become
guarantors or borrowers under our revolving credit facility must equally
guarantee the notes.

The term "subsidiary" means, with respect to any person:

. any corporation, association or other business entity of which more
than 50% of the total voting power of the equity interests entitled,
without regard to the occurrence of any contingency, to vote in the
election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that person or one or
more of the other subsidiaries of that person or a combination thereof;
or

. any partnership of which more than 50% of the partner's equity
interests, considering all partners' equity interests as a single
class, is at the time owned or controlled, directly or indirectly, by
that person or one or more of the other subsidiaries of that person or
a combination thereof.

116

"Funded Debt" means all debt:

. maturing one year or more from the date of its creation;

. directly or indirectly renewable or extendable, at the option of the
debtor, by its terms or by the terms of any instrument or agreement
relating to the debt, to a date one year or more from the date of its
creation; or

. under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of one year or more.

Addition and Release of Guarantors

If any of our subsidiaries is a guarantor or obligor of any of our Funded
Debt:

. we will cause the notes to be equally and ratably guaranteed by that
subsidiary; and

. we also will do so if the subsidiary becomes a guarantor or obligor of
any of our Funded Debt following any release of the subsidiary from its
guarantee as described below.

A guarantor may be released from its guarantee if the guarantor is not a
guarantor or obligor of any of our Funded Debt, provided that no default or
Event of Default under the indenture has occurred or is continuing. (Sections
1008 and 1409)

Optional Redemption

We may redeem the notes, in whole or in part, at our option at any time at a
redemption price equal to the greater of:

. 100% of the principal amount of the notes; and

. an amount equal to the sum of the present values of the remaining
scheduled payments for principal and interest on the notes, not
including any portion of the payments of interest accrued as of the
redemption date, discounted to the redemption date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Rate, as defined below, plus 25 basis points;

plus, in each case, accrued and unpaid interest on the notes to the redemption
date.

The Treasury Rate used to calculate the redemption price will be the rate
per year equal to the semi-annual equivalent yield to maturity of United States
treasury notes that an independent investment banker has selected as having a
maturity comparable to the remaining term of the notes, based on the criteria
set forth in the indenture. This yield to maturity will be calculated using a
price for the comparable issue of United States treasury notes that is equal to
the average reference treasury dealer quotation for that issue, after excluding
the highest and lowest quotations or, if the trustee obtains less than five
quotations, the average of all those quotations. A reference treasury dealer
quotation is the average, determined by the trustee, of the bid and asked
prices for the comparable treasury issue quoted in writing to the trustee by
each of the reference treasury dealers referred to below at 5:00 p.m., New York
City time, on the third business day preceding the redemption date. The
Treasury Rate will be calculated on the third business day preceding the
redemption date.

The independent investment banker that will select the comparable rate
treasury issue will be either Lehman Brothers Inc. or Credit Suisse First
Boston Corporation, as specified by us. These institutions were the initial

117

purchasers in the original offering of the Notes. If the firm we specify is
unwilling or unable to select a comparable treasury issue, the trustee will
appoint an independent investment banking institution after consultation with
us.

The reference treasury dealers that will provide the trustee with bid and
asked prices for the comparable treasury issue will be each of Lehman Brothers
Inc. and Credit Suisse First Boston Corporation and three other primary U.S.
government securities dealers, as specified by us. If any of these institutions
ceases to be a primary U.S. government securities dealer, we will substitute
another primary U.S. government securities dealer. If we do not select a
substitute within a reasonable period of time, the trustee will select a
substitute after consultation with us.

If less than all of the notes are to be redeemed, the trustee will select
the notes or portions of the notes to be redeemed by such method as the trustee
shall deem fair and appropriate. The trustee may select for redemption notes
and portions of notes in amounts of whole multiples of $1,000.

We will mail notice of any redemption at least 30 days but not more than 60
days before the redemption date to each holder of the notes to be redeemed.
Unless we default in payment of the redemption price, on or after the
redemption date, interest will cease to accrue on the notes called for
redemption. (Section 1101)

Important Covenants

We are subject to certain covenants under the indenture with respect to the
new notes offered by this prospectus.

Limitations on Liens

We will not, nor will we permit any subsidiary to, create, assume, incur or
suffer to exist any lien upon any Principal Property, as defined below, or upon
any shares of capital stock of any subsidiary owning or leasing any Principal
Property, whether owned or leased on the date of the indenture or thereafter
acquired, to secure any of our debt or debt of any other person, other than the
notes issued under the indenture, without making effective provision for all of
the notes outstanding under the indenture to be secured equally and ratably
with, or prior to, that debt so long as that debt is so secured.

"Principal Property" means, whether owned or leased on the date of the
indenture or thereafter acquired, any pipeline, terminal or other logistics
asset of ours or any subsidiary, including any related asset employed in the
transportation, distribution, storage, terminalling, processing or marketing of
crude oil, refined products (including gasoline, on-road and off-road diesel
fuel, liquefied petroleum gas, and petrochemicals) or fuel additives, that is
located in the United States of America or any territory or political
subdivision thereof, except:

. any of those assets consisting of inventories, furniture, office
fixtures and equipment, including data processing equipment, vehicles
and equipment used on, or with, vehicles; and

. any of those assets, plants or terminals, which, in the opinion of the
board of directors of Sunoco Logistics Partners GP LLC, our general
partner, is not material in relation to our activities or our
subsidiaries, taken as a whole.

There is excluded from this restriction:

(1) Permitted Liens, as defined below;

(2) any lien upon any property or asset created at the time of
acquisition of that property or asset by us or any subsidiary or within one
year after that time to secure all or a portion of the purchase price for
that

118

property or asset or debt incurred to finance the purchase price, whether
that debt was incurred prior to, at the time of or within one year after the
date of the acquisition;

(3) any lien upon any property or asset to secure all or part of the cost
of construction, development, repair or improvements thereon or to secure
debt incurred prior to, at the time of, or within one year after completion
of the construction, development, repair or improvements or the commencement
of full operations thereof, whichever is later, to provide funds for that
purpose;

(4) any lien upon any property or asset existing thereon at the time of
the acquisition thereof by us or any subsidiary, whether or not the
obligations secured thereby are assumed by us or any subsidiary; provided,
however, that the lien only encumbers the property or asset so acquired;

(5) any lien upon any property or asset of an entity existing thereon at
the time that entity becomes a subsidiary by acquisition, merger or
otherwise; provided, however, that the lien only encumbers the property or
asset of that entity at the time it becomes a subsidiary;

(6) any lien upon any property or asset of ours or any subsidiary in
existence on the date the outstanding notes were first issued or provided
for pursuant to agreements existing on that date, including, without
limitation, pursuant to the revolving credit facility;

(7) liens imposed by law or order as a result of any proceeding before
any court or regulatory body that is being contested in good faith, and
liens which secure a judgment or other court-ordered award or settlement as
to which we or the applicable subsidiary have not exhausted our appellate
rights;

(8) any extension, renewal, refinancing, refunding or replacement, or
successive extensions, renewals, refinancings, refundings or replacements,
of liens, in whole or in part, referred to in clauses (1) through (7) above;
provided, however, that:

. any extension, renewal, refinancing, refunding or replacement lien
shall be limited to the property or asset covered by the lien extended,
renewed, refinanced, refunded or replaced; and

. the obligations secured by any extension, renewal, refinancing,
refunding or replacement lien shall be in an amount not greater than
the amount of the obligations secured by the lien extended, renewed,
refinanced, refunded or replaced and any expenses of ours and our
subsidiaries, including any premium, incurred in connection with any
extension, renewal, refinancing, refunding or replacement; or

(9) any lien resulting from the deposit of moneys or evidence of
indebtedness in trust for the purpose of defeasing debt of ours or any
subsidiary.

However, we may, and may permit any subsidiary to, create, assume, incur, or
suffer to exist any lien upon any Principal Property to secure debt of ours or
any person, other than the notes, that is not excepted by clauses (1) through
(9) above, without securing the notes issued under the indenture; provided that
the aggregate principal amount of:

. all debt then outstanding secured by that lien and

. all similar liens, together with all Attributable Indebtedness, as
defined below, from Sale-Leaseback Transactions (excluding
Sale-Leaseback Transactions permitted by clauses (1) through (4),
inclusive, of the first paragraph of the restriction on sale-leasebacks
covenant described below)

doesnot exceed 10% of Consolidated Net Tangible Assets, as defined below.
(Section 1006)

"Permitted Liens" means:

(1) liens upon rights-of-way for pipeline purposes;

(2) any statutory or governmental lien or lien arising by operation of
law, or any mechanic's, repairman's, materialman's, supplier's, carrier's,
landlord's, warehouseman's or similar lien incurred in the

119

ordinary course of business which is not yet due or which is being contested
in good faith by appropriate proceedings and any undetermined lien which is
incidental to construction, development, improvement or repair;

(3) the right reserved to, or vested in, any municipality or public
authority by the terms of any right, power, franchise, grant, license,
permit or by any provision of law, to purchase or recapture or to designate
a purchaser of, any property;

(4) liens of taxes and assessments which are:

. for the then current year,

. not at the time delinquent, or

. delinquent but the validity of which is being contested at the time
by us or any subsidiary in good faith;

(5) liens of, or to secure performance of, leases, other than capital
leases;

(6) any lien upon, or deposits of, any assets in favor of any surety
company or clerk of court for the purpose of obtaining indemnity or stay of
judicial proceedings;

(7) any lien upon property or assets acquired or sold by us or any
subsidiary resulting from the exercise of any rights arising out of defaults
on receivables;

(8) any lien incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance, temporary disability,
social security, retiree health or similar laws or regulations or to secure
obligations imposed by statute or governmental regulations;

(9) any lien in favor of us or any subsidiary;

(10) any lien in favor of the United States of America or any state of
the United States, or any department, agency or instrumentality or political
subdivision of the United States of America or any state of the United
States, to secure partial, progress, advance, or other payments pursuant to
any contract or statute, or any debt incurred by us or any subsidiary for
the purpose of financing all or any part of the purchase price of, or the
cost of constructing, developing, repairing or improving, the property or
assets subject to the lien;

(11) any lien securing industrial development, pollution control or
similar revenue bonds;

(12) any lien securing debt of ours or any subsidiary, all or a portion
of the net proceeds of which are used, substantially concurrent with the
funding thereof (and for purposes of determining "substantial concurrence,"
taking into consideration, among other things, required notices to be given
to holders of notes outstanding under the indenture in connection with the
refunding, refinancing or repurchase, and the required corresponding
durations thereof), to refinance, refund or repurchase all notes outstanding
under the indenture, including the amount of all accrued interest thereon
and reasonable fees and expenses and premium, if any, incurred by us or any
subsidiary in connection therewith;

(13) liens in favor of any person to secure obligations under the
provisions of any letters of credit, bank guarantees, bonds or surety
obligations required or requested by any governmental authority in
connection with any contract or statute; or

(14) any lien upon or deposits of any assets to secure performance of
bids, trade contracts, leases or statutory obligations.

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"Consolidated Net Tangible Assets" means, at any date of determination, the
total amount of assets after deducting:

. all current liabilities, excluding:

-- any current liabilities that by their terms are extendable or
renewable at the option of the obligor to a time more than one year
after the time as of which the amount is being computed; and

-- current maturities of long-term debt; and

. the value, net of any applicable reserves, of all goodwill, trade
names, trademarks, patents and other like intangible assets,

all as set forth, or as on a pro forma basis would set forth, on our
consolidated balance sheet for our most recently completed fiscal quarter,
prepared in accordance with generally accepted accounting principles.

Restriction on Sale-Leasebacks

We will not, and will not permit any of our subsidiaries to, engage in the
sale or transfer by us or any subsidiary of any Principal Property to a person,
other than us or a subsidiary, and the taking back by us or any subsidiary, as
the case may be, of a lease of the Principal Property, which we call a
Sale-Leaseback Transaction, unless:

(1) the Sale-Leaseback Transaction occurs within one year from the date
of completion of the acquisition of the Principal Property subject thereto
or the date of the completion of construction, development or substantial
repair or improvement, or commencement of full operations on the Principal
Property, whichever is later;

(2) the Sale-Leaseback Transaction involves a lease for a period,
including renewals, of not more than three years;

(3) we or a subsidiary would be entitled to incur debt secured by a lien
on the Principal Property subject thereto in a principal amount equal to or
exceeding the Attributable Indebtedness from the Sale-Leaseback Transaction
without equally and ratably securing the notes; or

(4) we or a subsidiary, within a one-year period after the Sale-Leaseback
Transaction, applies or causes to be applied an amount not less than the
Attributable Indebtedness from the Sale-Leaseback Transaction to:

. the prepayment, repayment, redemption, reduction or retirement of any
of our debt or debt of any subsidiary that is not subordinated to the
notes; or

. the expenditure or expenditures for Principal Property used or to be
used in the ordinary course of our business or the business of our
subsidiaries.

However, we may, and may permit any subsidiary to, effect any Sale-Leaseback
Transaction that is not excepted by clauses (1) through (4), inclusive, of the
first paragraph above, provided that

. the Attributable Indebtedness from the Sale-Leaseback Transaction,

. together with the aggregate principal amount of outstanding debt,
other than the notes, secured by liens upon Principal Properties not
excepted by clauses (1) through (9), inclusive, of the first
paragraph of the limitation on liens covenant described above,

do not exceed 10% of the Consolidated Net Tangible Assets. (Section 1007)

"Attributable Indebtedness," when used with respect to any Sale-Leaseback
Transaction, means, as at the time of determination, the present value,
discounted at the rate set forth or implicit in the terms of the lease included
in the transaction, of:

. the total obligations of the lessee for rental payments,

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. other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating
and labor costs and other items that constitute payments for property
rights,

during the remaining term of the lease included in the Sale-Leaseback
Transaction, including any period for which the lease has been extended.

In the case of any lease that is terminable by the lessee upon the payment
of a penalty or other termination payment, the amount shall be the lesser of:

. the amount determined assuming termination upon the first date the
lease may be terminated, in which case the amount shall also include
the amount of the penalty or termination payment, but no rent shall
be considered as required to be paid under the lease subsequent to
the first date upon which it may be so terminated, or

. the amount determined assuming no termination.

Consolidation, Merger or Asset Sale

We and our subsidiaries that are guarantors generally may:

. consolidate or merge with a domestic partnership or corporation, or

. sell, lease or transfer all or substantially all of our property and
assets to a domestic partnership or corporation.

If this happens, the remaining or acquiring partnership or corporation must
assume, as applicable, all of our and our guarantor subsidiaries'
responsibilities and liabilities under the indenture, including the payment of
all amounts due on the notes and performance of the covenants in the indenture.

However, neither we nor any of our subsidiaries that are guarantors will
consolidate or merge with or into any other partnership or corporation or sell,
lease or transfer all or substantially all of our or their assets unless such
action is in accordance with the terms and conditions of the indenture, which
include the following:

. the remaining or acquiring partnership or corporation expressly assumes
the obligations under the indenture;

. the remaining or acquiring partnership or corporation is organized
under the laws of the United States, any state or the District of
Columbia;

. immediately after giving effect to the transaction, no default or Event
of Default exists; and

. we deliver to the trustee an officers' certificate and an opinion of
counsel regarding compliance with the terms of the indenture.

The remaining or acquiring partnership or corporation will:

. be substituted for us in the indenture with the same effect as if it
had been an original party to the indenture; and

. may exercise our rights and powers under the indenture, in our name or
in its own name.

If we sell or transfer all or substantially all of our assets, we will be
released from all our liabilities and obligations under the indenture and the
notes. If we lease all or substantially all of our assets, we will not be
released from our obligations under the indenture. (Sections 801 and 802)

If, at any time, any of our subsidiaries are required to guarantee the
notes, the restriction on our ability to consolidate or merge and to sell,
lease or transfer all or substantially all of our property and assets also will
apply to that subsidiary.

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Repurchase upon a Change of Control

If a Change of Control occurs, we will make an offer to purchase all or any
part, equal to $1,000 or an integral multiple thereof, of the notes pursuant to
the offer described below at a price in cash equal to 100% of the aggregate
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase. Within 30 days following any Change of Control, we will mail a
notice to each holder of notes issued under the indenture, with a copy to the
trustee, offering to purchase notes on the change of control payment date
specified in the notice, pursuant to the procedure required by the indenture
and described in the notice.

On the change of control payment date, we will, to the extent permitted by
law,

. accept for payment all notes or portions thereof properly tendered
pursuant to the change of control offer,

. deposit with the paying agent an amount equal to the aggregate change
of control payment in respect of all notes or portions thereof so
tendered, and

. deliver, or cause to be delivered, to the trustee for cancellation the
notes so accepted together with an officers' certificate stating that
such notes or portions thereof have been tendered to and purchased by
us.

The paying agent will promptly mail to each holder of notes the change of
control payment for such notes, and the trustee will promptly authenticate and
mail to each holder a new note equal in principal amount to any unpurchased
portion of the notes surrendered, if any, provided, that each such new note
will be in a principal amount of $1,000 or an integral multiple thereof. We
will publicly announce the results of the change of control offer on or as soon
as practicable after the change of control payment date. (Section 1011)

We will comply with the requirements of Rule 14e-1 and Rule 13e-4 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the
repurchase of the notes pursuant to a change of control offer. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of the indenture, we will comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations
described in the indenture by virtue thereof.

"Change of Control" means the occurrence of any transaction that results in:

. the failure of Sunoco, Inc. or an Investment Grade Person, as defined,
to own, directly or indirectly, 51% of the general partner interests in
the master partnership;

. the failure of the master partnership or an Investment Grade Person to
own, directly or indirectly, all of the general partner interests in
us; or

. the failure of the master partnership or an Investment Grade Person to
own, directly or indirectly, all of the limited partnership interests
in us.

"Investment Grade Person" means an entity that has issued unsecured senior
debt that has one of the following ratings on the date the transaction
constituting a Change of Control is consummated:

. BBB- or above, in the case of Standard & Poor's Ratings Services, a
Division of The McGraw-Hill Companies, Inc. (or its equivalent under
any successor rating categories of S&P);

. Baa3 or above, in the case of Moody's Investors Services, Inc. (or its
equivalent under any successor rating categories of Moody's); or

. the equivalent in respect of the rating categories of any rating
agencies substituted for S&P or Moody's.

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Events of Default and Remedies

An "Event of Default" means any of the following:

. failure to pay interest on any note for 30 days;

. failure to pay the principal of or any premium on any note when due,
whether at stated maturity or by declaration of acceleration, call for
redemption, required purchase or otherwise;

. failure to perform any other covenant in the indenture that continues
for 60 days after being given written notice;

. the acceleration of the maturity of any other debt of ours or any of
our subsidiaries or a default in the payment of any principal or
interest in respect of any other indebtedness of us or any of our
subsidiaries having an outstanding principal amount of $10 million or
more individually or in the aggregate and such default shall be
continuing for a period of 30 days; or

. our bankruptcy, insolvency or reorganization. (Section 501)

An Event of Default under the notes will not necessarily constitute an event
of default under our other indebtedness or vice versa. The trustee may withhold
notice to the holders of notes of any default, except in the payment of
principal or interest, if it considers such withholding of notice to be in the
best interest of the holders. (Section 602)

If an Event of Default occurs and continues, the trustee or the holders of
at least 25% in aggregate principal amount of the notes may declare the entire
principal of all the notes to be due and payable immediately. If this happens,
subject to certain conditions, the holders of a majority of the aggregate
principal amount of the notes can void the declaration. (Section 502)

Other than its duties in case of a default, the trustee is not obligated to
exercise any of its rights or powers under the indenture at the request, order
or direction of any holders, unless the holders offer the trustee reasonable
indemnity. (Section 601) If the holders provide this reasonable indemnity, the
holders of a majority in principal amount of the notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee, or exercising any power conferred upon the trustee, for the notes.
(Section 512)

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Modification of the Indenture

We may amend or supplement the indenture or waive any provision of the
indenture without the consent of any holders of notes in certain circumstances,
including amendments and supplements to:

. secure the notes;

. provide for the assumption of our obligations under the indenture by a
successor upon any merger, consolidation or asset transfer;

. add or release a subsidiary as a guarantor;

. add covenants and Events of Default that would benefit the holders of
notes or to surrender any rights we have under the indenture;

. provide for uncertificated notes in addition to or in place of
certificated notes or to provide for bearer notes;

. cure any ambiguity or correct any inconsistency;

. comply with any requirement to effect or maintain the qualification of
the indenture under the Trust Indenture Act of 1939;

. amend the indenture to issue additional notes; and

. supplement the indenture to permit or facilitate the defeasance and
discharge of the notes, provided such action does not adversely affect
the interests of the holders of the notes. (Section 901)

In addition, we may amend or supplement the indenture if the holders of a
majority in principal amount of the notes consent to it. Without the consent of
the holder of each note, however, no amendment or modification may:

. reduce the amount of notes whose holders must consent to an amendment,
supplement or waiver;

. reduce the principal of the note or change its stated maturity;

. reduce the rate of or change the time for payment of interest on the
note;

. make any change in the percentage of principal amount of notes
necessary to waive compliance with certain provisions of the indenture
or to make any change in this provision for modification;

. reduce any premium payable on the redemption of the note or change the
time at which the note may or must be redeemed;

. make payments on the note payable in currency other than as originally
stated in the note;

. impair the holder's right to institute suit for the enforcement of any
payment on the note; or

. waive a continuing default or event of default regarding any payment on
the notes. (Section 902)

The holders of a majority in principal amount of the outstanding notes may
waive any existing or past default or event of default with respect to the
notes. Those holders may not, however, waive any default or event of default in
any payment on any note or compliance with a provision that cannot be amended
or supplemented without the consent of each holder affected.

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No Personal Liability

Neither Sunoco Logistics Partners GP LLC, our general partner, nor any of
its or any of our or our guarantors' directors, officers, employees, members or
unitholders will have any liability for our or our guarantors' obligations
under the indenture or the notes. Each holder of notes by accepting a note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the notes. (Section 1201)

Discharging Our Obligations

We and the guarantors may choose to discharge some or all of our obligations
under the indenture in a defeasance. If we deposit with the trustee funds or
government securities sufficient to make payments on the notes on the dates
those payments are due and payable, then, at our option, either of the
following will occur:

. we will be discharged from our obligations with respect to the notes,
which we call a legal defeasance; or

. we will no longer have any obligation to comply with the restrictive
covenants under the indenture, and the related events of default will
no longer apply to us, which we call a covenant defeasance.

If we defease the notes, the holders of the notes will not be entitled to
the benefits of the indenture, except for our obligations to register the
transfer or exchange of notes, replace stolen, lost or mutilated notes or
maintain paying agencies and hold moneys for payment in trust. In the case of
covenant defeasance, our obligation to pay principal, premium and interest on
the notes will also survive. (Section 1302)

We will be required to deliver to the trustee an opinion of counsel that the
deposit and related defeasance would not cause the holders of the notes to
recognize income, gain or loss for federal income tax purposes. If we elect
legal defeasance, that opinion of counsel must be based upon a ruling from the
United States Internal Revenue Service or a change in law to that effect.

The Trustee

Wachovia Bank, National Association (formerly First Union National Bank)
will initially act as trustee under the indenture. The trustee performs
services for us in the ordinary course of business.

The trustee may resign or be removed by us with respect to the notes and a
successor trustee may be appointed to act with respect to the notes. The
holders of a majority in aggregate principal amount of the notes may remove the
trustee. (Section 610)

If the trustee becomes one of our creditors, it will be subject to
limitations in the indenture on its rights to obtain payment of claims or to
realize on certain property received for any such claim, as security or
otherwise. The trustee is permitted to engage in other transactions with us.
If, however, it acquires any conflicting interest, it must eliminate that
conflict or resign.

Global Notes; Book-Entry System

Global Notes

The new notes will be issued in the form of a permanent global note in fully
registered, book-entry form, without coupons, which will be deposited with the
trustee, as custodian for The Depository Trust Company ("DTC"), registered in
the name of DTC's nominee, in each case for credit to an account of a direct or
indirect participant in DTC as described below.

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A global note is a special type of individually held note. Because we will
issue the new notes only in the form of global notes, the ultimate beneficial
owners can only be indirect holders. We do this by requiring that the global
notes be registered in the name of Cede & Co. and by requiring that the notes
included in the global notes not be transferred to the name of any other direct
holder unless the special circumstances described below occur. The financial
institution that acts as the sole direct holder of the global note is called
the depositary. Any person wishing to own a new note must do so indirectly by
virtue of an account with a bank, broker or other financial institution that in
turn has an account with the DTC.

Special Investor Considerations for Global Notes

As an indirect holder, an investor's rights relating to the global notes
will be governed by the account rules of the investor's bank, broker or other
financial institution and of the depositary, as well as general laws relating
to securities transfers. We do not recognize this type of investor as a holder
of notes and instead deal only with the depositary that holds the global notes.

If you are an investor, you should be aware that:

. you cannot get notes registered in your own name;

. you cannot receive physical certificates for your interest in the notes;

. you will be a street name holder and must look to your own bank, broker
or other financial institution for payments on the notes and protection
of your legal rights relating to the notes;

. you may not be able to sell or pledge interests in the notes to some
insurance companies and other institutions that are required by law to
own their securities in the form of physical certificates; and

. the depositary's policies will govern payments, transfers, exchange and
other matters relating to your interest in the global notes. We and the
trustee have no responsibility for any aspect of the depositary's
actions or for its records of ownership interest in the global notes.
We and the trustee also do not supervise the depositary in any way.

Special Situations When Global Notes Will Be Terminated

In a few special situations described in the next paragraph, the global
notes will terminate and interests in them will be exchanged for physical
certificates representing notes. After that exchange, the choice of whether to
hold notes directly or in street name will be up to you. You must consult your
own bank, broker or other financial institution to find out how to have your
interests in the notes transferred to your own name, so that you will be a
direct holder.

The special situations for termination of the global notes are:

. when DTC notifies us that it is unwilling, unable or no longer
qualified to continue as depositary;

. when we notify the trustee that we wish to terminate the global notes;
and

. when an event of default on the notes has occurred and has not been
cured, disregarding for this purpose any requirement of notice or that
the default exist for a specified period of time.

In all cases, certificated notes delivered in exchange for any global note
or beneficial interests in such global note will be registered in the names,
and issued in any approved denominations, requested by or on behalf of the
depositary, in accordance with its customary procedures. Any certificated note
issued in exchange for an interest in a global note will bear any legend
restricting transfers that is borne by such global note. Any such exchange will
be effected through the DWAC system and an appropriate adjustment will be made
in the records of the registrar of the notes to reflect a decrease in the
principal amount of the relevant global note.

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Certain Book-Entry Procedures for the Global Notes

The descriptions of the operations and procedures of DTC set forth below are
provided solely as a matter of convenience. These operations and procedures are
solely within the control of DTC and are subject to change by them from time to
time. We do not take any responsibility for these operations or procedures, and
investors are urged to contact the relevant system or its participants directly
to discuss these matters.

DTC has advised us that it is a limited-purpose trust company organized
under the New York Banking Law, a member of the Federal Reserve System, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC holds securities that its
participants ("participants") deposit with DTC. DTC also facilitates settlement
of securities transactions among its participants, such as transfers and
pledges in deposited securities through electronic computerized book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates.

"Direct participants" in DTC include securities brokers and dealers and
banks. DTC is owned by members of the financial industry. Access to DTC's
book-entry system is also available to others, such as banks, securities
brokers and dealers that clear through or maintain a custodial relationship
with a direct participant, either directly or indirectly ("indirect
participants").

Purchases of the notes under DTC's book-entry system must be made by or
through direct participants, which will receive a credit for the notes on the
records of DTC. The ownership interest of each actual purchaser of the notes,
which we refer to as the "beneficial owner," is in turn to be recorded on the
participants' records. Beneficial owners will not receive written confirmation
from DTC of their purchase, but beneficial owners are expected to receive
written confirmations providing details of the transactions, as well as
periodic statements of their holdings from the direct or indirect participant
through which the beneficial owner entered into the transaction. Transfers of
ownership interests in the global notes will be effected only through entries
made on the books of participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing their ownership
interests in the global notes, except in the event that use of the book-entry
system for the notes is discontinued. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge beneficial interests in the global notes.

To facilitate subsequent transfers, all global notes deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of the global notes with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the notes; DTC's records reflect
only the identity of the direct participants to whose accounts such notes are
credited, which may or may not be the beneficial owners. The participants will
remain responsible for keeping account of their holdings on behalf of their
customers.

So long as DTC or its nominee is the registered owner and holder of the
global notes, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the notes represented by the global notes for all
purposes under the indenture. Except as provided below, beneficial owners of
interests in the global notes will not be entitled to have book-entry notes
represented by the notes registered in their names, will not receive or be
entitled to receive physical delivery of notes in definitive form and will not
be considered the owners or holders thereof under the indenture. Accordingly,
each beneficial owner must rely on the procedures of DTC and, if the person is
not a participant, on the procedures of the participants through which such
person owns its interest, to exercise any rights of a holder under the
indenture. We understand that under existing industry practices, in the event
that we request any action of holders of notes or that an owner of a beneficial
interest in the notes desires to give or take any action which a holder is
entitled to give or take under the indenture, DTC would authorize the
participants holding the relevant beneficial interests to give or take the
action, and the participants would authorize beneficial owners owning through
the participants to give or to take the action or would otherwise act

128

upon the instructions of beneficial owners. Conveyance of notices and other
communications by DTC to participants, by participants to indirect
participants, and by participants and indirect participants to beneficial
owners, will be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.

Payments of principal of and interest on the new notes will be made to DTC.
We will send all required reports and notices solely to DTC as long as DTC is
the registered holder of the global notes. Neither we, the trustee, nor any
other agent of ours or agent of the trustee will have any responsibility or
liability for any aspect of the records relating to, or payments made on
account of, beneficial ownership interests in global notes or for maintaining,
supervising or reviewing any records relating to the beneficial ownership
interests. DTC's practice is to credit the accounts of the direct participants
with payment in amounts proportionate to their respective holdings in principal
amount of beneficial interest in a security as shown on the records of DTC,
unless DTC has reason to believe that it will not receive payment on the
payment date. Payments by participants to beneficial owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of the participants.

Same Day Settlement

The global notes will trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in immediately available funds.
Transfers between indirect participants who hold an interest through a
participant will be effected in accordance with the procedures of such
participant but generally will settle in immediately available funds.

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OUR PARTNERSHIP AGREEMENT

The following paragraphs are a summary of the material provisions of our
partnership agreement. The discussion presented below is qualified in its
entirety by reference to our partnership agreement.

Organization and Duration

We were organized on December 6, 2001 as the operating company of Sunoco
Logistics Partners L.P. The master partnership owns a 99.99% limited partner
interest in us and our general partner owns a 0.01% general partner interest in
us. Our general partner manages and operates our business.

Cash Distributions

We will distribute to the master partnership and our general partner, on a
quarterly basis, all of our available cash, commencing with the period ended
March 31, 2002. Distributions will be made 0.01% to our general partner and
99.99% to the master partnership. Available cash is generally all cash on hand,
plus working capital borrowings, as adjusted for reserves. The timing and
amount of our distributions to the master partnership could significantly
reduce the cash available to pay the principal, premium, if any, and interest
on the notes. Our general partner will determine the amount and timing of such
distributions and has broad discretion to establish and make additions to
reserves, for any proper purpose, including but not limited to reserves for the
purpose of (i) the proper conduct of our business, (ii) complying with the
terms of any applicable law, agreement or obligation (including the
establishment of reserves to fund the payment of interest and principal in the
future, including on the notes), and (iii) providing funds for minimum
quarterly distributions by the master partnership for any one or more of the
next four quarters.

Indemnification

Our partnership agreement provides that we will indemnify our general
partner, any departing partner, any person who is or was an affiliate of our
general partner or a departing partner, any person who is or was a member,
partner, officer, director, employee, agent or trustee of our general partner,
any departing partner or any person who is or was serving at the request of our
general partner, any departing partner, or an affiliate of any such person, any
affiliate of our general partner as an officer, director, employee, member,
partner, agent, fiduciary or trustee of another person ("Indemnitees"), to the
fullest extent permitted by law, from and against any and all losses, claims,
damages, liabilities (joint or several), expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings,
whether civil, criminal, administrative or investigative, in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee; provided that in each case
the Indemnitee acted in good faith and in a manner that such Indemnitee
reasonably believed to be in, or (in the case of a person other than our
general partner) not opposed to, our best interests and, with respect to any
criminal proceedings, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification is available to the general
partner with respect to certain of its contractual obligations. Any
indemnification under these provisions will only be out of our assets, and our
general partner shall not be personally liable for, nor have any obligation to
contribute or loan money or property to us to enable us to pay the
indemnification. We are authorized to purchase and maintain (or to reimburse
our general partner or its affiliates for the cost of) insurance against
liabilities asserted against and expenses incurred by such persons in
connection with our activities, regardless of whether we would have the power
to indemnify such persons as described above.

Termination and Dissolution

We will continue in existence until our dissolution as provided in our
partnership agreement. We will be dissolved upon:

. the withdrawal of our general partner in the event no successor is
admitted;

130

. an election to dissolve us by the general partner that is approved by the
limited partners;

. the entry of a decree of judicial dissolution of us;

. the sale of all or substantially all of the assets and properties of us
and our subsidiaries; and

. the dissolution of the master partnership.

Liquidation and Distribution of Proceeds

Upon our dissolution, unless we are reconstituted and continued as a new
limited partnership, our liquidator, acting with all powers that are conferred
on our general partner, may liquidate our assets and apply the proceeds of the
liquidation as follows:

. first towards discharge of liabilities; and

. then to the master partnership and our general partner (or such other
partners as may exist at the time) in accordance with their respective
capital account balances.

Under certain circumstances and subject to certain limitations, our liquidator
may defer liquidation or distribution of our assets for a reasonable period of
time or distribute assets to our partners in kind if it determines that a sale
would be impractical or would cause undue loss to the partners.

Removal and Withdrawal of our General Partner

Our general partner may be removed as our general partner by the master
partnership. Upon removal by the master partnership, the master partnership is
to elect a successor general partner.

Our general partner is deemed withdrawn as a general partner upon:

. written notice to the other partners;

. transfer by the general partner of all of its rights as general partner;

. removal of the general partner by the master partnership;

. bankruptcy or similar event of the general partner; and

. dissolution of the general partner.

Amendment of our Partnership Agreement

Subject to certain exceptions, our partnership agreement may only be amended
by our general partner with the approval of our limited partners.

131

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As of May 6, 2002, the master partnership's general partner owned 5,633,639
common units and 11,383,639 subordinated units representing a 73.2% limited
partner interest in the master partnership. In addition, the master
partnership's general partner owns a 2% general partner interest in the master
partnership. The general partner's ability, as the master partnership's general
partner, to manage and operate us and the master partnership and its ownership
of a 73.2% limited partner interest in the master partnership effectively gives
the general partner the ability to veto some actions of Sunoco Logistics
Partners or us and to control the management of Sunoco Logistics Partners or us.

Distributions and Payments to the Master Partnership's General Partner and Its
Affiliates

The following table summarizes the distributions and payments made and to be
made by us to our master partnership's general partner and its affiliates in
connection with the ongoing operation, and liquidation of Sunoco Logistics
Partners and us. These distributions and payments were determined by and among
affiliated entities and, consequently, are not the result of arm's-length
negotiations.

Operational Stage

Payments to our master
partnership's general
partner and its
affiliates................ We will pay Sunoco, Inc. or its affiliates an
administrative fee, initially $8.0 million per
year, for the provision of various general and
administrative services for our benefit. In
addition, the master partnership's general
partner is entitled to reimbursement for all
expenses it incurs on our behalf, including other
general and administrative expenses. These
reimbursable expenses include the salaries and
the cost of employee benefits of employees of the
master partnership's general partner who provide
services to us. Please read "--Omnibus
Agreement." Our master partnership's general
partner has sole discretion in determining the
amount of these expenses.

Removal or withdrawal of our
master partnership's
general partner........... If our master partnership's general partner
withdraws or is removed, its general partner
interest and its incentive distribution rights
will either be sold to the new general partner
for cash or converted into common units, in each
case for an amount equal to the fair market value
of those interests. Please read "Our Partnership
Agreement--Removal and Withdrawal of our General
Partner."

Liquidation Stage

Liquidation................. Upon our liquidation, the partners, including our
general partner, will be entitled to receive
liquidating distributions according to their
particular capital account balances.

Agreements Governing the Transactions

In connection with its initial public offering, the master partnership and
other parties have entered into various agreements with us and our
subsidiaries. These agreements were not the result of arm's-length
negotiations, and they, or any of the transactions that they provide for, may
not be effected on terms at least as favorable to the parties to these
agreements as they could have been obtained from unaffiliated third parties. All

132

of the transaction expenses incurred in connection with these transactions,
including the expenses associated with vesting assets into our subsidiaries,
were paid from the proceeds of the initial public offering of common units by
the master partnership. The master partnership's general partner has agreed
that if, during the term of the pipelines and terminals storage and throughput
agreement, we are required by the FERC to reduce any of our tariffs, the master
partnership's general partner will contribute an amount to us equal to the
resulting shortfall in revenues from Sunoco R&M movements for the remaining
term of the agreement.

Omnibus Agreement

On February 8, 2002, the master partnership entered into an omnibus
agreement with Sunoco, Inc., Sunoco R&M, and our master partnership's general
partner that addresses the following matters:

. Sunoco R&M's obligation to reimburse us for specified operating expenses
and capital expenditures or otherwise to complete certain tank maintenance
and inspection projects;

. our obligation to pay our master partnership's general partner or Sunoco,
Inc. an annual administrative fee, initially in the amount of $8.0
million, for the provision by Sunoco, Inc. of certain general and
administrative services;

. Sunoco, Inc.'s and its affiliates' agreement not to compete with us under
certain circumstances;

. our agreement to undertake to develop and construct or acquire an asset if
requested by Sunoco, Inc.;

. an indemnity by Sunoco, Inc. for certain environmental, toxic tort and
other liabilities;

. our obligation to indemnify Sunoco, Inc. and its affiliates for events and
conditions associated with the operation of our assets that occur on or
after the closing of this offering and for environmental and toxic tort
liabilities related to our assets to the extent Sunoco, Inc. is not
required to indemnify us; and

. our option to purchase certain pipeline, terminalling, and storage assets
retained by Sunoco, Inc. or its affiliates.

Reimbursement of Expenses and Completion of Certain Projects by Sunoco, Inc.

The omnibus agreement requires Sunoco R&M to:

. reimburse us for any operating expenses and capital expenditures in excess
of $8.0 million per year in each year from 2002 to 2006 that are made to
comply with the DOT's pipeline integrity management rule, subject to a
maximum aggregate reimbursement of $15.0 million over this five-year
period;

. complete, at its expense, certain tank maintenance and inspection projects
currently in progress or expected to be completed at the Darby Creek Tank
Farm within one year; and

. reimburse us for up to $10.0 million of expenditures required at the
Marcus Hook Tank Farm and the Darby Creek Tank Farm to maintain compliance
with existing industry standards and regulatory requirements, including:

- --cathodicprotection upgrades at these facilities;

- --raisingtank farm pipelines above ground level at these facilities; and

- --repairingor demolishing two riveted tanks at the Marcus Hook Tank Farm.

We will reflect outlays for these programs as operating expenses or capital
expenditures, as appropriate. Capital expenditures would be depreciated over
their useful lives. The reimbursement by Sunoco R&M will be reflected as a
capital contribution.

133

Payment of General and Administrative Services Fee

In addition, under the omnibus agreement we will pay Sunoco, Inc. or our
master partnership's general partner an annual administrative fee, initially in
the amount of $8.0 million, for the provision of various general and
administrative services for our benefit. The contract provides that this amount
may be increased in the second and third years following the master
partnership's initial public offering by the lesser of 2.5% or the consumer
price index for the applicable year. Our master partnership's general partner,
with the approval and consent of its conflicts committee, will also have the
right to agree to further increases in connection with expansions of our
operations through the acquisition or construction of new assets or businesses.
After this three-year period, our general partner will determine the general
and administrative expenses that will be allocated to us. Please read "Risk
Factors--Risks Inherent in an Investment in Us."

The $8.0 million fee includes expenses incurred by Sunoco, Inc. and its
affiliates to perform centralized corporate functions, such as legal,
accounting, treasury, engineering, information technology, insurance, and other
corporate services, including the administration of employee benefit plans. The
fee does not include salaries of pipeline and terminal personnel or other
employees of our general partner, including senior executives, or the cost of
their employee benefits, such as 401(k), pension, and health insurance
benefits. We will also reimburse Sunoco, Inc. and its affiliates for direct
expenses they incur on our behalf. In addition, we anticipate incurring
approximately $4 million of additional general and administrative costs,
including costs relating to operating as a separate publicly held entity, such
as costs for tax return preparation, annual and quarterly reports to
unitholders, and investor relations and registrar and transfer agent fees, as
well as incremental insurance costs.

Development or Acquisition of an Asset By Us

The omnibus agreement also contains a provision pursuant to which Sunoco,
Inc. may at any time propose to us that we undertake a project to develop and
construct or acquire an asset. If our general partner determines in its good
faith judgment, with the concurrence of its conflicts committee, that the
project, including the terms on which Sunoco, Inc. would agree to use such
asset, will be beneficial on the whole to us and that proceeding with the
project will not effectively preclude us from undertaking another project that
will be more beneficial to us, we will be required to use commercially
reasonable efforts to finance, develop, and construct or acquire the asset.

Noncompetition

Sunoco, Inc. agreed, and will cause its affiliates to agree, for so long as
Sunoco, Inc. controls the master partnership's general partner, not to engage
in, whether by acquisition or otherwise, the business of purchasing crude oil
at the wellhead or operating crude oil pipelines or terminals, refined products
pipelines or terminals, or LPG terminals in the continental United States. This
restriction does not apply to:

. any business operated by Sunoco, Inc. or any of its subsidiaries at the
closing of the master partnership's initial public offering;

. any logistics asset constructed by Sunoco, Inc. or any of its subsidiaries
within a manufacturing or refining facility in connection with the
operation of that facility;

. any business that Sunoco, Inc. or any of its subsidiaries acquires or
constructs that has a fair market value of less than $5.0 million; and

. any business that Sunoco, Inc. or any of its subsidiaries acquires or
constructs that has a fair market value of $5.0 million or more if we have
been offered the opportunity to purchase the business for fair market
value not later than six months after completion of such acquisition or
construction, and we decline to do so with the concurrence of our
conflicts committee.

In addition, the limitations on the ability of Sunoco, Inc. and its
affiliates to compete with us will terminate upon a change of control of
Sunoco, Inc.

134

Options to Purchase Assets Retained by Sunoco, Inc.

The omnibus agreement also contains the terms under which we have the
options to purchase Sunoco, Inc.'s direct or indirect interests in Mid-Valley
Pipeline Company, West Texas Gulf Pipeline Company, Mesa Pipeline and Inland
Corporation, as well as the Icedale pipeline, as described under
"Business--Pipeline, Terminalling, and Storage Assets Retained by Sunoco, Inc."

Indemnification

Under the omnibus agreement, Sunoco, Inc. agreed to indemnify us for 30
years after the closing of the master partnership's initial public offering
against certain environmental and toxic tort liabilities associated with the
operation of the assets and occurring before the closing date of the initial
public offering. This indemnity obligation will be reduced by 10% per year
beginning with the 22nd year after the closing of the initial public offering.
We agreed to indemnify Sunoco, Inc. and its affiliates for events and
conditions associated with the operation of our assets that occur on or after
the closing of the initial public offering and for environmental and toxic tort
liabilities related to our assets to the extent Sunoco, Inc. is not required to
indemnify us. Please read "Business--Environmental Regulation--General."

Sunoco, Inc. also agreed to indemnify us for liabilities relating to:

. the assets contributed to us, other than environmental and toxic tort
liabilities, that arise out of the operation of the assets prior to the
closing of the initial public offering and that are asserted within ten
years after the closing of the initial public offering;

. certain defects in title to the assets contributed to us and failure to
obtain certain consents and permits necessary to conduct our business that
arise within ten years after the closing of the initial public offering;

. legal actions currently pending against Sunoco, Inc. or its affiliates; and

. events and conditions associated with any assets retained by Sunoco, Inc.
or its affiliates.

Pipelines and Terminals Storage and Throughput Agreement

Concurrently with the closing of the master partnership's initial public
offering, we entered into a pipelines and terminals storage and throughput
agreement with Sunoco R&M as described under "Business--Our Relationship with
Sunoco, Inc."

Sunoco R&M's obligations under this agreement do not terminate if Sunoco,
Inc. and its affiliates no longer own the master partnership's general partner.
This agreement may be assigned by Sunoco R&M only with the consent of the
master partnership's general partner's conflicts committee.

Other Agreements with Sunoco R&M and Sunoco, Inc.

Under a 20-year lease agreement, Sunoco R&M will pay us $5.1 million in the
first year to lease 58 miles of interrefinery pipelines between Sunoco R&M's
Philadelphia and Marcus Hook refineries, escalating at 1.67% per year, for the
next 19 years.

Sunoco R&M agreed to purchase from us at market-based rates particular
grades of crude oil that our crude oil acquisition and marketing business
purchases for delivery to pipelines in: Longview, Trent, Tye, and Colorado
City, Texas; Haynesville, Louisiana; Marysville and Lewiston, Michigan; and
Tulsa, Oklahoma. At Marysville and Lewiston, Michigan, we exchange Michigan
sweet and Michigan sour crude oil we own for domestic sweet crude oil supplied
by Sunoco R&M at market-based rates. The initial term of these agreements is
two months. These agreements will automatically renew on a monthly basis unless
terminated by either party on 30 days' written notice. Sunoco R&M has indicated
that it has no current intention to terminate these agreements.

135

We entered into a license agreement with Sunoco R&M and certain of its
affiliates, including the master partnership's general partner, pursuant to
which the master partnership's general partner and its affiliates were granted
a license to our intellectual property so they can manage our operations and
create intellectual property using our intellectual property. The master
partnership's general partner will also assign to us the new intellectual
property it creates in operating our business. The master partnership's general
partner also licensed to us certain of its own intellectual property for use in
the conduct of our business and we license to the master partnership's general
partner certain of our intellectual property for use in the conduct of its
business. The license agreement also granted to us a license to use the
trademarks, trade names, and service marks of Sunoco, Inc. in the conduct of
our business.

The master partnership entered into a treasury services agreement with
Sunoco, Inc. pursuant to which, among other things, we are participating in
Sunoco, Inc.'s centralized cash management program. Under this program, all of
our cash receipts and cash disbursements are processed, together with those of
Sunoco, Inc. and its other subsidiaries, through Sunoco, Inc.'s cash accounts
with a corresponding credit or charge to an intercompany account. The
intercompany balances will be settled periodically, but no less frequently than
at the end of each month. Amounts due from Sunoco, Inc. and its subsidiaries
will earn interest at a rate equal to the average rate of our third-party money
market investments, while amounts due to Sunoco, Inc. and its subsidiaries bear
interest at a rate equal to the interest rate provided in our revolving credit
facility.

136

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of outstanding notes for new notes, but
does not purport to be a complete analysis of all potential tax effects. The
discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations, Internal Revenue Service rulings and
pronouncements and judicial decisions now in effect, all of which may be
subject to change at any time by legislative, judicial or administrative
action. These changes may be applied retroactively in a manner that could
adversely affect a holder of new notes. The description does not consider the
effect of any applicable foreign, state, local or other tax laws or estate or
gift tax considerations.

We believe that the exchange of outstanding notes for new notes should not
be an exchange or otherwise a taxable event to a holder for United States
federal income tax purposes. Accordingly, a holder should have the same
adjusted issue price, adjusted basis and holding period in the new notes as it
had in the outstanding notes immediately before the exchange.

137

PLAN OF DISTRIBUTION

Based on interpretations by the staff of the SEC in no action letters issued
to third parties, we believe that you may transfer new notes issued under the
exchange offer in exchange for the outstanding notes if:

. you acquire the new notes in the ordinary course of your business; and

. you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of such new notes.

You may not participate in the exchange offer if you are:

. our "affiliate" within the meaning of Rule 405 under the Securities Act of
1933; or

. a broker-dealer that acquired outstanding notes directly from us.

Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. In other transactions involving
an exchange offer the staff of the SEC has taken the position that
broker-dealers may fulfill their prospectus delivery requirements, other than
in connection with a resale of an unsold allotment from an original sale of
outstanding securities, with a prospectus prepared in connection with the
exchange offer. We believe that this prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for outstanding notes where such
outstanding notes were acquired as a result of market-making activities or
other trading activities. We have agreed that, for a period of up to 180 days
after the consummation of this exchange offer, we will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until such date, all dealers effecting
transactions in new notes may be required to deliver a prospectus.

If you wish to exchange new notes for your outstanding notes in the exchange
offer, you will be required to make representations to us as described in
"Exchange Offer--Purpose and Effect of the Exchange Offer" and "--Procedures
for Tendering--Your Representations to Us" in this prospectus and in the letter
of transmittal. In addition, if you are a broker-dealer who receives new notes
for your own account in exchange for outstanding notes that were acquired by
you as a result of market-making activities or other trading activities, you
will be required to acknowledge that you will deliver a prospectus in
connection with any resale by you of such new notes.

We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market:

. in negotiated transactions;

. through the writing of options on the new notes or a combination of such
methods of resale;

. at market prices prevailing at the time of resale; and

. at prices related to such prevailing market prices or negotiated prices.

Any such resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such new
notes. Any broker-dealer that resells new notes that were received by it for
its own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933. The letter of
transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act of 1933.

138

For a period of 180 days after the consummation of this exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to
the exchange offer (including the expenses of one counsel for the holders of
the outstanding notes) other than commissions or concessions of any
broker-dealers and will indemnify the holders of the outstanding notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act of 1933.

LEGAL MATTERS

Vinson & Elkins L.L.P. will pass upon certain legal matters with respect to
the notes.

EXPERTS

The balance sheets of Sunoco Logistics Partners L.P. and Sunoco Partners LLC
as of December 31, 2001 appearing in this prospectus and the registration
statement of which this prospectus forms a part have been audited by Ernst &
Young LLP, independent auditors, to the extent indicated in their reports
thereon appearing elsewhere herein, and have been included herein in reliance
upon such reports given on the authority of such firm as experts in accounting
and auditing.

The financial statements of Sunoco Logistics (Predecessor) as of December
31, 2001 and 2000 and for each of the three years in the period ended December
31, 2001 appearing in this prospectus and the registration statement of which
this prospectus forms a part have been audited by Ernst & Young LLP,
independent auditors, to the extent indicated in their report thereon appearing
elsewhere herein, and have been included herein in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

From and after the effective date of the exchange offer registration
statement of which this prospectus is a part of or, if applicable, the shelf
registration statement, so long as the new notes are outstanding, we will be
required to file periodic reports and other information with the SEC pursuant
to certain provisions of the Exchange Act.

In addition, the master partnership is subject to the informational
requirements to the Exchange Act and files annual and quarterly reports and
other information with the SEC.

Sunoco, Inc.'s and the master partnership's SEC filings are, and our SEC
filings will be, available to the public over the Internet at the SEC's web
site at http://www.sec.gov. You also may read and copy any document filed at
the public reference facilities maintained by the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information about the public reference facilities.

You may request a copy of any of the documents summarized in this
prospectus, which we will provide to you at no cost, by writing or telephoning
us at the following address:

Sunoco Logistics Partners Operations L.P.
1801 Market Street
Philadelphia, Pennsylvania 19103
(215) 977-3000

139

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this prospectus, excluding historical
information, include forward-looking statements that discuss our expected
future results based on current and pending business operations.
Forward-looking statements can be identified by words such as "anticipates",
"believes", "expects", "planned", "scheduled" or similar expressions. Although
we believe these forward-looking statements are based on reasonable
assumptions, statements made regarding future results are subject to numerous
assumptions, uncertainties and risks that may cause future results to be
materially different from the results stated or implied in this document. The
following are among the important factors that could cause actual results to
differ materially from any results projected, forecasted, estimated or budgeted:

. Changes in demand for crude oil and refined petroleum products that we
store and distribute;

. Changes in demand for storage in our petroleum product terminals;

. The loss of Sunoco, Inc. (R&M) as a customer or a significant reduction in
its current level of throughput and storage with us;

. An increase in the competition encountered by our petroleum products
terminals, pipelines and crude oil acquisition and marketing operations;

. Changes in the throughput on petroleum product pipelines owned and
operated by third parties and connected to our petroleum product pipelines
and terminals;

. Changes in the general economic conditions in the United States;

. Changes in laws and regulations to which we are subject, including
federal, state, and local tax laws, safety, environmental and employment
laws;

. Changes to existing or future state or federal government regulations
banning or restricting the use of MTBE in gasoline;

. Improvements in energy efficiency and technology resulting in reduced
demand;

. Our ability to manage rapid growth;

. Our ability to control costs;

. The effect of changes in accounting principles;

. Global and domestic economic repercussions from terrorist activities and
the government's response thereto;

. The occurrence of operational hazards or unforeseen interruptions for
which we may not be adequately insured;

. Changes in the reliability and efficiency of our operating facilities or
those of Sunoco, Inc. (R&M) or third parties;

. Changes in the expected level of environmental remediation spending;

. Changes in insurance markets resulting in increased costs and reductions
in the level and types of coverage available; and

. Changes in the status of litigation to which we are a party.

These factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in any of our
forward-looking statements. Other unknown or unpredictable factors could also
have material adverse effects on future results. We undertake no obligation to
update publicly any forward-looking statement whether as a result of new
information or future events.

140

INDEX TO FINANCIAL STATEMENTS

Page
----

SUNOCO LOGISTICS PARTNERS L.P.
PRO FORMA FINANCIAL STATEMENTS (Unaudited)
Introduction............................................................................. F-2
Pro Forma Balance Sheet as of December 31, 2001.......................................... F-3
Pro Forma Statement of Income for the Year Ended December 31, 2001....................... F-4
Notes to Pro Forma Financial Statements.................................................. F-5

SUNOCO LOGISTICS (PREDECESSOR)
HISTORICAL COMBINED FINANCIAL STATEMENTS
Report of Independent Auditors........................................................... F-11
Combined Balance Sheets as of December 31, 2000 and 2001................................. F-12
Combined Statements of Income and Net Parent Investment for the Years Ended December 31,
1999, 2000 and 2001.................................................................... F-13
Combined Statements of Cash Flows for the Years Ended December 31, 1999, 2000 and 2001... F-14
Notes to Historical Combined Financial Statements........................................ F-15

SUNOCO LOGISTICS PARTNERS L.P.
HISTORICAL BALANCE SHEET
Report of Independent Auditors........................................................... F-30
Balance Sheet as of December 31, 2001.................................................... F-31
Note to Balance Sheet.................................................................... F-32

SUNOCO PARTNERS LLC
HISTORICAL BALANCE SHEET
Report of Independent Auditors........................................................... F-33
Balance Sheet as of December 31, 2001.................................................... F-34
Note to Balance Sheet.................................................................... F-35

F-1

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

Introduction

Effective with the closing of the initial public offering, the assets and
liabilities of Sunoco Logistics (Predecessor) were transferred to Sunoco
Logistics Partners L.P. (the "Partnership"), a newly formed Delaware limited
partnership. The accompanying unaudited pro forma financial statements give
effect to this transfer, the initial public offering, the notes offering and
related transactions. The pro forma information assumes that these transactions
occurred on December 31, 2001 for the pro forma balance sheet and January 1,
2001 for the pro forma statement of income. The transfer will be recorded at
historical cost as it is considered to be a reorganization of entities under
common control. Please read Note 1: Basis of Presentation, the Offerings and
Other Transactions in the accompanying notes to pro forma financial statements
for further explanation of the initial public offering, the notes offering, the
transfer and the related transactions.

Sunoco Logistics Partners L.P.'s unaudited pro forma financial statements
and accompanying notes should be read together with the historical financial
statements and related notes of Sunoco Logistics (Predecessor) included
elsewhere in this prospectus. The pro forma balance sheet and the pro forma
statement of income were derived by adjusting the historical financial
statements of Sunoco Logistics (Predecessor). The adjustments are based on
currently available information and certain estimates and assumptions;
therefore, the actual amounts may differ from the pro forma adjustments.
However, management believes that the assumptions provide a reasonable basis
for presenting the significant effects of the initial public offering, the
notes offering and the other transactions effected at the closing and that the
pro forma adjustments give appropriate effect to the assumptions made and are
properly applied in the pro forma financial statements.

The unaudited pro forma financial statements do not purport to present the
financial position or results of operations of Sunoco Logistics Partners L.P.
had the initial public offering, the notes offering and the related
transactions effected at the closing actually been completed as of the dates
indicated. Moreover, they do not project Sunoco Logistics Partners L.P.'s
financial position or results of operations for any future date or period.

F-2

SUNOCO LOGISTICS PARTNERS L.P.

PRO FORMA BALANCE SHEET (Unaudited)

DECEMBER 31, 2001

(in thousands)

Sunoco Offerings and
Logistics Related
(Predecessor) Transaction
Historical Eliminations(A) Adjustments Pro Forma
------------- --------------- ------------- ---------

Assets
Current Assets:
Cash..................... $ -- $ -- $ 116,438 (B) $ --
248,313 (C)
(18,101) (D)
(2,200) (D)
(246,113) (E)
(98,337) (F)
Accounts receivable,
affiliated companies.... 6,245 -- 62,673 (F) 68,918
Accounts receivable, net. 151,264 (21,967) 21,967 (F) 151,264
Note receivable from
affiliate............... 20,000 (20,000) -- --
Inventories.............. 20,606 (7,489) 13,697 (F) 26,814
Deferred income taxes.... 2,821 (2,821) -- --
-------- -------- --------- --------
Total Current Assets.. 200,936 (52,277) 98,337 246,996
Properties, plants and
equipment, net.......... 566,359 -- -- 566,359
Deferred charges and
other assets............ 21,906 -- 2,200 (D) 24,106
-------- -------- --------- --------
Total Assets.......... $789,201 $(52,277) $ 100,537 $837,461
======== ======== ========= ========
Liabilities and Equity
Current Liabilities:
Accounts payable......... $235,061 $ -- $ -- $235,061
Accrued liabilities...... 26,628 (10,602) -- 16,026
Current portion of
long-term debt due
affiliate............... 75,000 (75,000) -- --
Current portion of
long-term debt.......... 228 -- -- 228
Taxes payable............ 20,373 (14,033) -- 6,340
-------- -------- --------- --------
Total Current
Liabilities......... 357,290 (99,635) -- 257,655
Long-term debt due
affiliate............... 65,000 (65,000) -- --
Long-term debt........... 4,553 -- 248,313 (C) 252,866
Deferred income taxes.... 78,140 (78,140) -- --
Other deferred credits
and liabilities......... 9,325 (8,363) -- 962

Equity:
Net parent investment.... 274,893 198,861 (246,113) (E) --
(227,641) (G)
Held by Public:
Common units (subject to
a limited call right if
more than 80% of all
outstanding
common units are held
by the general partner
and its affiliates)..... -- -- 116,438 (B) 98,337
(18,101) (D)
Held Indirectly by
Sunoco, Inc.:
Common units............. -- -- 73,854 (G) 73,854
Subordinated units....... -- -- 149,234 (G) 149,234
General partner interest. -- -- 4,553 (G) 4,553
-------- -------- --------- --------
Total Equity.......... 274,893 198,861 (147,776) 325,978
-------- -------- --------- --------
Total Liabilities and
Equity.............. $789,201 $(52,277) $ 100,537 $837,461
======== ======== ========= ========

(See Accompanying Notes)

F-3

SUNOCO LOGISTICS PARTNERS L.P.

PRO FORMA STATEMENT OF INCOME (Unaudited)

YEAR ENDED DECEMBER 31, 2001

(in thousands, except unit data)

Sunoco Offerings and
Logistics Related
(Predecessor) Transaction
Historical Eliminations(H) Adjustments Pro Forma
------------- --------------- ------------- -----------

Revenues
Sales and other operating revenue:
Affiliates......................................... $1,067,182 $ -- $ 11,408 (I) $ 1,078,590
Unaffiliated customers............................. 545,822 -- -- 545,822
Other income......................................... 4,774 -- -- 4,774
---------- -------- -------- -----------
Total Revenues................................... 1,617,778 -- 11,408 1,629,186
Costs and Expenses
Cost of products sold and operating expenses......... 1,503,156 -- -- 1,503,156
Depreciation and amortization........................ 25,325 -- -- 25,325
Selling, general and administrative expenses......... 35,956 -- -- 35,956
---------- -------- -------- -----------
Total Costs and Expenses......................... 1,564,437 -- -- 1,564,437
---------- -------- -------- -----------
Operating Income..................................... 53,341 -- 11,408 64,749
Net interest cost paid to affiliates................. 11,727 (11,727) -- --
Other interest cost and debt expense................. 393 -- 18,294 (J) 19,282
375 (K)
220 (L)
Capitalized interest................................. (1,140) -- -- (1,140)
---------- -------- -------- -----------
Income before income tax expense..................... 42,361 11,727 (7,481 ) 46,607
Income tax expense................................... 15,594 (15,594) -- --
---------- -------- -------- -----------
Net Income....................................... $ 26,767 $ 27,321 $ (7,481) 46,607
========== ======== ========
General partner's interest in net income............. (932)
-----------
Limited partners' interest in net income............. $ 45,675
===========
Net income per unit:
Basic.............................................. $ 2.01
===========
Diluted............................................ $ 2.00
===========
Weighted average limited partners' units outstanding:
Basic.............................................. 22,767,278
===========
Diluted............................................ 22,892,278
===========

(See Accompanying Notes)

F-4

SUNOCO LOGISTICS PARTNERS L.P.

NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited)

Note 1: Basis of Presentation, the Offerings and Other Transactions

The historical financial information is derived from the historical
financial statements of Sunoco Logistics (Predecessor) (the "Predecessor"). The
Predecessor consists of a substantial portion of the wholly owned logistics
operations of Sunoco, Inc. and subsidiaries (collectively, "Sunoco"). The
combined financial statements also include the Predecessor's 9.4% investment in
Explorer Pipeline Company, a corporate joint venture which is accounted for by
the equity method. The equity income from this investment is included in other
income in the pro forma statement of income. Most of the assets of Sunoco
Logistics (Predecessor) support Sunoco, Inc.'s refining and marketing
operations which are conducted primarily by Sunoco, Inc. (R&M) ("Sunoco R&M").
Sunoco Logistics (Predecessor) operates in three principal business segments:
Eastern Pipeline System, Terminal Facilities and Western Pipeline System.

The pro forma financial statements reflect the following transactions:

. The contribution of certain assets and liabilities of Sunoco Logistics
(Predecessor) to Sunoco Logistics Partners L.P. in exchange for the
issuance by Sunoco Logistics Partners L.P. to Sunoco Partners LLC of
5,633,639 common units, 11,383,639 subordinated units, the 2% general
partner interest in Sunoco Logistics Partners L.P. and the incentive
distribution rights;

. The issuance by Sunoco Logistics Partners L.P. of 5,750,000 common units
to the public (including 750,000 common units issued pursuant to the
underwriters' over-allotment option) at an initial public offering price
of $20.25 per common unit resulting in aggregate gross proceeds to Sunoco
Logistics Partners L.P. of $116.4 million;

. The issuance by Sunoco Logistics Partners Operations L.P., the operating
partnership of Sunoco Logistics Partners L.P., of $250 million of ten-year
senior notes (the "Senior Notes") at 99.325% of par and the establishment
of a three-year $150 million revolving credit facility;

. The payment of estimated underwriting commissions and offering expenses of
$18.1 million and debt financing fees of $2.2 million;

. The distribution to Sunoco of the net proceeds from the Senior Notes; and

. The execution of a pipelines and terminals storage and throughput
agreement with Sunoco R&M and an omnibus agreement with Sunoco R&M and
Sunoco, Inc. as described in Note 5 below.

In connection with the transfer of the operations of Sunoco Logistics
(Predecessor) to the Partnership, the employees who work in the pipeline,
terminalling, storage and crude oil gathering operations, including senior
executives, have become employees of Sunoco Partners LLC or its affiliates,
wholly owned subsidiaries of Sunoco, Inc. The Partnership has no employees.

Upon completion of the initial public offering, Sunoco Logistics Partners
L.P. anticipates incurring incremental general and administrative costs (e.g.,
cost of tax return preparation, annual and quarterly reports to unitholders,
investor relations and registrar and transfer agent fees) at an annual rate of
approximately $4.0 million, including incremental insurance costs. The pro
forma financial statements do not reflect any adjustment for these estimated
incremental costs or adjustments in the general and administrative costs
allocated to Sunoco Logistics Partners L.P. by Sunoco, Inc. as described in
Note 5 below.

Note 2: Pro Forma Adjustments and Assumptions

(A) Reflects elimination of assets and liabilities that were not contributed
by Sunoco, Inc. to Sunoco Logistics Partners L.P. and the removal of current
and deferred income tax liabilities which were retained by

F-5

Sunoco, Inc. Income taxes are the responsibility of the unitholders and not
Sunoco Logistics Partners L.P. The amounts eliminated from accrued liabilities
and other deferred credits and liabilities consist of $16.3 million of
environmental liabilities and $2.7 million of other liabilities for which the
Partnership has been indemnified by Sunoco, Inc. (see Note 5 below).

(B) Reflects the estimated proceeds of $116.4 million from the issuance and
sale of 5,750,000 common units to the public at an initial public offering
price of $20.25 per unit.

(D) Reflects the payment of underwriting commissions and offering expenses
of $18.1 million and debt financing fees of $2.2 million. The underwriting
commissions and offering expenses have been allocated to the common units
issued in the public offering and the debt financing fees have been capitalized
and will be amortized over the life of the Senior Notes.

(E) Represents the distribution of $246.1 million to Sunoco, Inc., the
estimated net proceeds from the issuance of the Senior Notes.

(F) Reflects the use of net proceeds of $98.3 million from the issuance and
sale of the common units to establish the anticipated ongoing level of working
capital for the Partnership. The adjustment reflects the replenishment of
accounts receivable and inventory which were not contributed to the Partnership
by Sunoco, Inc. as well as the establishment of accounts receivable from Sunoco
R&M to reflect the payment terms included in the crude oil supply contracts.
Previously, the amounts related to the crude oil supply contracts were settled
immediately through the net parent investment account.

(G) Represents the allocation of $227.6 million of net partnership equity
contributed by the general partner of which $4.6 million, representing 2% of
the contributed amount, is allocated to the general partner interest, $73.8
million is allocated to the 5,633,639 common units, and $149.2 million is
allocated to the 11,383,639 subordinated units. The amounts allocated to the
common and subordinated units were allocated pro rata based upon the number of
such units issued to Sunoco Partners LLC.

(H) Reflects removal of net interest cost paid to affiliates as the debt due
affiliate was not contributed by Sunoco, Inc. to the Partnership (see Note A
above) and the elimination of income tax expense. Income taxes are the
responsibility of the unitholders and not the Partnership.

(I) Reflects an adjustment to terminalling and storage service revenues
generated by the 32 inland refined product terminals, the Marcus Hook Tank
Farm, the Inkster LPG terminal, and the Fort Mifflin Terminal Complex, and
lease revenue attributable to the interrefinery pipeline. Pursuant to a
pipelines and terminals storage and throughput agreement with Sunoco R&M,
Sunoco Logistics Partners L.P. is charging Sunoco R&M fees for these services
generally comparable to those charged in arm's-length, third-party
transactions. Historically, most of the terminalling and throughput services
provided by the Predecessor for Sunoco R&M's refining and marketing operations
were at fees that enabled it to recover its costs but not to generate operating
income. The pro forma sales and other operating revenue for terminalling and
throughput services was determined using the rates provided in the pipelines
and terminals storage and throughput agreement and the actual throughput
amounts in the respective periods. The 2002 rates in the contract were reduced
to the appropriate rates for 2001 using the escalation factors provided in the
contract. Please read "Business--Our Relationship with Sunoco, Inc.--Pipelines
and Terminals Storage and Throughput Agreement with Sunoco R&M.''

F-6

The following table summarizes the historical and pro forma sales and other
operating revenue attributable to these assets (in thousands of dollars):

Year Ended
December 31, 2001
-----------------

Sales and other operating revenue attributable to certain terminalling
and throughput services and an interrefinery lease:.................
Historical (costs incurred in these activities).................... $47,180
Adjustment......................................................... 11,408
-------
Pro Forma.......................................................... $58,588
=======

(J) Reflects interest expense as if the Senior Notes were issued on January
1, 2001 (see Note C above). The interest adjustments were computed using the
interest rate for the Senior Notes of 7.25%. Also includes amortization of the
issuance discount.

(K) Reflects expense attributable to an annual facility fee on the $150
million revolving credit facility.

(L) Reflects amortization of debt financing fees over the life of the Senior
Notes (see Note C above).

Note 3: Pro Forma Net Income Per Unit

Pro forma net income per unit is determined by dividing the pro forma net
income that would have been allocated to the common and subordinated
unitholders, which is 98% of pro forma net income, by the number of common and
subordinated units outstanding at the closing of the offering. For purposes of
the basic net income per unit calculation, the number of common and
subordinated units assumed to be outstanding was 22,767,278, while the diluted
net income per unit calculation assumed 22,892,278 units were outstanding. The
diluted amount includes 125,000 units expected to be granted under the Sunoco
Partners LLC Long-Term Incentive Plan. All units were assumed to have been
outstanding since January 1, 2001. Pursuant to the partnership agreement, to
the extent that the quarterly distribution exceeds certain targets, the general
partner is entitled to certain incentive distributions which will result in
less net income proportionately being allocated to the holders of the common
units and subordinated units. The pro forma net income per unit calculations
assume that no incentive distributions were made to the general partner because
no such distribution would have been paid based upon the pro forma available
cash from operating surplus for the respective periods.

Note 4: Description of Equity Interest in Sunoco Logistics Partners L.P.

The common units and the subordinated units represent limited partner
interests in Sunoco Logistics Partners L.P. The holders of units are entitled
to participate in partnership distributions and exercise the rights and
privileges available to limited partners under the Sunoco Logistics Partners
L.P. partnership agreement.

The common units have the right to receive a minimum quarterly distribution
of available cash from operating surplus of $0.45 per unit, or $1.80 on an
annualized basis, plus any arrearages on the common units, before any
distribution is made to the holders of subordinated units. In addition, if at
any time Sunoco, Inc. and its affiliates own more than 80% of the outstanding
common units, the general partner has the right to purchase all of the
remaining common units at a price not less than the then-current market price
of the common units.

The subordinated units generally receive quarterly cash distributions only
when the common units have received a minimum quarterly distribution of $0.45
per unit for each quarter since the commencement of operations. When the
subordination period ends, all subordinated units will convert into common
units on a one-for-one basis and the common units will no longer be entitled to
arrearages. The subordination period will end

F-7

when Sunoco Logistics Partners L.P. meets financial tests specified in the
partnership agreement but generally cannot end before December 31, 2006.
However, if Sunoco Logistics Partners L.P. meets the financial tests for any
quarter ending on or after December 31, 2004, 25% of the subordinated units
will convert into common units. If these tests are met for any quarter ending
on or after December 31, 2005, an additional 25% of the subordinated units will
convert into common units. The early conversion of the second 25% of the
subordinated units may not occur until at least one year after the early
conversion of the first 25% of the subordinated units.

The general partner interest is entitled to at least 2% of all distributions
made by Sunoco Logistics Partners L.P. In addition, the general partner holds
incentive distribution rights, which allow the general partner to receive a
higher percentage of quarterly distributions of available cash after the
minimum quarterly distributions have been achieved, and as additional target
levels are met. The higher percentages range from 15% up to 50%. The pro forma
financial statements assume that no incentive distributions were made to the
general partner. In subsequent periods, Sunoco Logistics Partners L.P. will
apply the hypothetical liquidation at book value method in allocating income to
the various partnership interests.

Note 5: Agreements with Sunoco R&M and Sunoco, Inc.

Concurrent with the closing of the initial public offering, Sunoco, Inc. and
its affiliates and Sunoco Logistics Partners L.P. entered into the following
agreements:

Pipelines and Terminals Storage and Throughput Agreement with Sunoco
R&M. Under this agreement, Sunoco R&M has agreed to pay Sunoco Logistics
Partners L.P. a minimum level of revenues for transporting and terminalling
refined products. Sunoco R&M has also agreed to minimum throughputs of refined
products and crude oil in the Partnership's Inkster Terminal, Fort Mifflin
Terminal Complex, Marcus Hook Tank Farm and certain crude oil pipelines. Please
read "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Overview--Agreements with Sunoco R&M and Sunoco, Inc.''

Omnibus Agreement. Historically, Sunoco, Inc. has allocated a portion of
its general and administrative expenses to its pipeline, terminalling and
storage operations to cover costs of centralized corporate functions such as
legal, accounting, treasury, engineering, information technology and insurance.
The allocation was $9.0 million, $10.1 million and $10.8 million for the years
ended December 31, 1999, 2000 and 2001, respectively.

Under the omnibus agreement, Sunoco, Inc. will continue to provide these
services for three years for an annual administrative fee initially in the
amount of $8.0 million, which may be increased in the second and third years
following the initial public offering by the lesser of 2.5% or the consumer
price index for the applicable year. These costs may also increase if the
Partnership makes an acquisition or constructs additional assets that require
an increase in the level of general and administrative services received by the
Partnership from the general partner or Sunoco, Inc. The $8.0 million fee
includes expenses incurred by Sunoco, Inc. and its affiliates to perform
centralized corporate functions, such as legal, accounting, treasury,
engineering, information technology, insurance and other corporate services,
including the administration of employee benefit plans. This fee does not
include salaries of pipeline and terminal personnel or other employees of the
general partner, including senior executives, or the cost of their employee
benefits, such as 401(k), pension, and health insurance benefits. The
Partnership is also reimbursing Sunoco, Inc. and its affiliates for these costs
and other direct expenses incurred on the Partnership's behalf. The Partnership
has no employees. In addition, the Partnership is currently incurring
additional general and administrative costs, including costs for tax return
preparation, annual and quarterly reports to unitholders, investor relations,
registrar and transfer agent fees, and other costs related to operating as a
separate publicly held entity. The Partnership estimates that these incremental
costs will be approximately $4.0 million per year, including incremental
insurance costs.

Under the omnibus agreement, Sunoco R&M is reimbursing Sunoco Logistics
Partners L.P. for operating expenses and capital expenditures in excess of $8.0
million per year (up to an aggregate maximum of $15.0 million over a five-year
period) incurred to comply with the U.S. Department of Transportation's pipeline

F-8

integrity management rule. Based on historical integrity tests conducted since
1989, Sunoco Logistics Partners L.P. estimates that compliance with this rule
will cost the Partnership approximately $8.0 million per year for five years,
or a total of $40.0 million, for all pipelines in its Eastern and Western
Pipeline Systems that are subject to this rule. In addition, Sunoco R&M is, at
its expense, completing for Sunoco Logistics Partners L.P.'s Darby Creek Tank
Farm certain tank maintenance and inspection projects now in progress or
expected to be completed within one year from the closing of the initial public
offering. Sunoco R&M estimates total costs to complete these projects will be
approximately $4.0 million. Sunoco R&M is also reimbursing Sunoco Logistics
Partners L.P. for up to $10.0 million of expenditures required at the Darby
Creek and Marcus Hook Tank Farms to maintain compliance with existing industry
standards and regulatory requirements. The Partnership is reflecting outlays
for these programs as operating expenses or capital expenditures, as
appropriate. Capital expenditures are being depreciated over their useful
lives. Reimbursements by Sunoco R&M are being reflected as capital
contributions.

Sunoco, Inc. has agreed to indemnify Sunoco Logistics Partners L.P. for 30
years from environmental and toxic tort liabilities related to the assets
contributed to the Partnership that arise from the operation of such assets
prior to the closing of the initial public offering. Sunoco, Inc. is obligated
to indemnify the Partnership for 100% of all losses asserted within the first
21 years of closing. Sunoco, Inc.'s share of liability for claims asserted
thereafter will decrease by 10% a year. For example, for a claim asserted
during the twenty-third year after closing, Sunoco, Inc. would be required to
indemnify the Partnership for 80% of its loss. There is no monetary cap on the
amount of indemnity coverage provided by Sunoco, Inc. Sunoco Logistics Partners
L.P. has agreed to indemnify Sunoco, Inc. and its affiliates for events and
conditions associated with the operation of the Partnership's assets that occur
on or after the closing of this offering and for environmental and toxic tort
liabilities to the extent Sunoco, Inc. is not required to indemnify the
Partnership.

Sunoco, Inc. also has indemnified Sunoco Logistics Partners L.P. for
liabilities, other than environmental and toxic tort liabilities related to the
assets contributed to the Partnership, that arise out of Sunoco, Inc. and its
affiliates' ownership and operation of the assets prior to the closing of the
initial public offering and that are asserted within 10 years after closing. In
addition, Sunoco, Inc. has indemnified the Partnership from liabilities
relating to certain defects in title to the assets contributed to the
Partnership and associated with failure to obtain certain consents and permits
necessary to conduct its business that arise within 10 years after closing as
well as from liabilities relating to legal actions currently pending against
Sunoco, Inc. or its affiliates and events and conditions associated with any
assets retained by Sunoco, Inc. or its affiliates.

In addition, Sunoco, Inc. and its affiliates have agreed, subject to certain
exceptions, not to engage in, whether by acquisition or otherwise, the business
of purchasing crude oil at the wellhead, or operating crude oil pipelines or
terminals, refined products pipelines or terminals, or LPG terminals in the
continental United States.

Other Agreements with Sunoco R&M and Sunoco, Inc. Under various other
agreements, Sunoco R&M is, among other things, purchasing from the Partnership
at market-based rates particular grades of crude oil that the Partnership's
crude oil acquisition and marketing business purchases for delivery to
pipelines in: Longview, Trent, Tye, and Colorado City, Texas; Haynesville,
Louisiana; Marysville and Lewiston, Michigan; and Tulsa, Oklahoma. At
Marysville and Lewiston, Michigan, the Partnership exchanges Michigan sweet and
Michigan sour crude oil it owns for domestic sweet crude oil supplied by Sunoco
R&M at market-based rates. The initial term of these agreements is two months.
These agreements will automatically renew on a monthly basis unless terminated
by either party on 30 days' written notice. Sunoco R&M has also agreed to lease
from the Partnership the 58 miles of interrefinery pipelines between Sunoco
R&M's Philadelphia and Marcus Hook refineries for a term of 20 years. The
Partnership has entered into a license agreement with Sunoco, Inc. and certain
of its affiliates, including Sunoco Partners LLC, pursuant to which the
Partnership has granted to Sunoco Partners LLC a license to the Partnership's
intellectual property so that Sunoco Partners LLC can manage the Partnership's
operations and create intellectual property using the Partnership's
intellectual property. Sunoco Partners LLC will assign to the Partnership the
new intellectual property it creates in operating the Partnership's business.
Sunoco Partners LLC has also licensed to the Partnership certain of its own
intellectual property for use in the conduct of the Partnership's business and
the Partnership has licensed to Sunoco Partners LLC certain of the

F-9

Partnership's intellectual property for use in the conduct of its business. The
license agreement also grants to the Partnership a license to use the
trademarks, trade names, and service marks of Sunoco, Inc. in the conduct of
the Partnership's business. The Partnership has also entered into a treasury
services agreement with Sunoco, Inc. pursuant to which it, among other things,
participates in Sunoco, Inc.'s centralized cash management program. Under this
program, all of the Partnership's cash receipts and cash disbursements are
processed, together with those of Sunoco, Inc. and its other subsidiaries,
through Sunoco, Inc.'s cash accounts with a corresponding credit or charge to
an intercompany account. The intercompany balances are settled periodically,
but no less frequently than at the end of each month. Amounts due from Sunoco,
Inc. and its subsidiaries earn interest at a rate equal to the average rate of
the Partnership's third-party money market investments, while amounts due to
Sunoco, Inc. and its subsidiaries bear interest at a rate equal to the interest
rate provided in the Partnership's revolving credit facility.

Note 6: Guarantee of Senior Notes

The Senior Notes issued by Sunoco Logistics Partners Operations L.P. have
been guaranteed by its parent, Sunoco Logistics Partners L.P., and by its
operating subsidiaries. The guarantees are full and unconditional, and on a
joint and several basis.

Sunoco Logistics Partners L.P. has no operations and its only assets are its
investments in its wholly owned partnerships and subsidiaries. Sunoco Logistics
Partners Operations L.P. also has no operations and its assets are limited to
its investments in its wholly owned operating subsidiaries. Except for amounts
associated with the Senior Notes, the assets and liabilities in the pro forma
balance sheet at December 31, 2001 and the revenues and expenses in the pro
forma statement of income for the year then ended are attributable to the
operating subsidiaries.

F-10

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of
Sunoco Partners LLC:

We have audited the accompanying combined balance sheets of Sunoco Logistics
(Predecessor) (the "Predecessor") as of December 31, 2001 and 2000 and the
related combined statements of income and net parent investment and of cash
flows for each of the three years in the period ended December 31, 2001. These
financial statements are the responsibility of the Predecessor's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Sunoco Logistics
(Predecessor) at December 31, 2001 and 2000 and the combined results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

ERNST & YOUNG LLP

Philadelphia, Pennsylvania
March 15, 2002

F-11

SUNOCO LOGISTICS (PREDECESSOR)

COMBINED BALANCE SHEETS
(in thousands)

December 31,
-----------------
2000 2001
-------- --------

Assets
Current Assets
Accounts receivable, affiliated companies (Note 2)........ $ 6,753 $ 6,245
Accounts receivable, net.................................. 258,044 151,264
Note receivable from affiliate (Note 2)................... -- 20,000
Inventories (Note 3)...................................... 18,683 20,606
Deferred income taxes (Note 4)............................ 4,426 2,821
-------- --------
Total Current Assets................................... 287,906 200,936
Properties, plants and equipment, net (Note 5)............ 518,605 566,359
Note receivable from affiliate (Note 2)................... 20,000 --
Deferred charges and other assets......................... 19,445 21,906
-------- --------
Total Assets........................................... $845,956 $789,201
======== ========
Liabilities and Net Parent Investment
Current Liabilities
Accounts payable.......................................... $372,460 $235,061
Accrued liabilities....................................... 26,299 26,628
Short-term borrowings due affiliate (Note 2).............. 45,000 --
Current portion of long-term debt due affiliate (Note 2).. -- 75,000
Current portion of long-term debt (Note 6)................ 205 228
Taxes payable............................................. 18,958 20,373
-------- --------
Total Current Liabilities.............................. 462,922 357,290
Long-term debt due affiliate (Note 2)..................... 140,000 65,000
Long-term debt (Note 6)................................... 4,838 4,553
Deferred income taxes (Note 4)............................ 70,932 78,140
Other deferred credits and liabilities.................... 10,241 9,325
Commitments and contingent liabilities (Note 7)
Net parent investment (Note 2)............................ 157,023 274,893
-------- --------
Total Liabilities and Net Parent Investment............ $845,956 $789,201
======== ========

(See Accompanying Notes)

F-12

SUNOCO LOGISTICS (PREDECESSOR)

COMBINED STATEMENTS OF INCOME AND NET PARENT INVESTMENT
(in thousands)

Year Ended December 31,
--------------------------------
1999 2000 2001
-------- ---------- ----------

Revenues
Sales and other operating revenue:
Affiliates (Note 2)........................... $764,133 $1,301,079 $1,067,182
Unaffiliated customers........................ 210,069 507,532 545,822
Other income..................................... 6,133 5,574 4,774
-------- ---------- ----------
Total Revenues............................ 980,335 1,814,185 1,617,778
Costs And Expenses
Cost of products sold and operating expenses..... 866,610 1,699,541 1,503,156
Depreciation and amortization.................... 19,911 20,654 25,325
Selling, general and administrative expenses..... 27,461 34,683 35,956
-------- ---------- ----------
Total Costs and Expenses.................. 913,982 1,754,878 1,564,437
-------- ---------- ----------
Operating Income................................. 66,353 59,307 53,341
Net interest cost paid to affiliates (Note 2).... 7,196 11,537 11,727
Other interest cost.............................. 110 426 393
Capitalized interest............................. (819) (1,659) (1,140)
-------- ---------- ----------
Income before income tax expense................. 59,866 49,003 42,361
Income tax expense (Note 4)...................... 22,488 18,483 15,594
-------- ---------- ----------
Net Income....................................... $ 37,378 $ 30,520 $ 26,767
======== ========== ==========
Net Parent Investment
At beginning of period........................... $235,478 $ 223,083 $ 157,023
Net income....................................... 37,378 30,520 26,767
Contributions from (distributions to) parent..... (49,773) (96,580) 91,103
-------- ---------- ----------
At end of period................................. $223,083 $ 157,023 $ 274,893
======== ========== ==========

(See Accompanying Notes)

F-13

SUNOCO LOGISTICS (PREDECESSOR)

COMBINED STATEMENTS OF CASH FLOWS
(in thousands)

Year Ended December 31,
------------------------------
1999 2000 2001
--------- -------- ---------

Increases (Decreases) in Cash....................
Cash Flows from Operating Activities:
Net Income....................................... $ 37,378 $ 30,520 $ 26,767
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................. 19,911 20,654 25,325
Deferred income tax expense................... 4,046 5,340 8,813
Changes in working capital pertaining to
operating activities:.......................
Accounts receivable, affiliated
companies............................... (5,556) 2,253 508
Accounts receivable....................... (125,624) (70,052) 106,780
Inventories............................... 9,943 (6,014) (1,923)
Accounts payable and accrued
liabilities............................. 177,054 96,408 (140,340)
Taxes payable............................. 3,930 1,668 1,415
Other......................................... 4,083 (1,661) (107)
--------- -------- ---------
Net cash provided by operating activities........ 125,165 79,116 27,238
--------- -------- ---------
Cash Flows from Investing Activities:
Capital expenditures............................. (46,958) (57,921) (72,683)
Acquisition of crude oil transportation and
marketing operations of Pride Companies,
L.P., net of debt assumed of $5,334 (Note
10)............................................ (29,576) -- --
Loan to affiliate................................ -- (20,000) --
Other............................................ 1,414 629 (396)
--------- -------- ---------
Net cash used in investing activities............ (75,120) (77,292) (73,079)
--------- -------- ---------
Cash Flows from Financing Activities:
Net proceeds from (repayments of) short-term
borrowings due affiliate....................... -- 45,000 (45,000)
Proceeds from issuance of long-term debt to
affiliate...................................... -- 50,000 --
Repayments of long-term debt..................... (272) (244) (262)
Contributions from (distributions to) parent..... (49,773) (96,580) 91,103
--------- -------- ---------
Net cash provided by (used in) financing
activities..................................... (50,045) (1,824) 45,841
--------- -------- ---------
Net change in cash............................... -- -- --
Cash at beginning of year........................ -- -- --
--------- -------- ---------
Cash at end of year.............................. $ -- $ -- $ --
========= ======== =========

(See Accompanying Notes)

F-14

SUNOCO LOGISTICS (PREDECESSOR)

NOTES TO HISTORICAL COMBINED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Combination

Sunoco Logistics Partners L.P. (the "Partnership") is a Delaware limited
partnership formed by Sunoco, Inc. in October 2001 to acquire, own and operate
a substantial portion of Sunoco, Inc.'s logistics business, consisting of
refined product pipelines, terminalling and storage assets, crude oil
pipelines, and crude oil acquisition and marketing assets located in the
Northeast and Midwest United States (collectively, "Sunoco Logistics
(Predecessor)" or the "Predecessor"). In February 2002, Sunoco, Inc., through
its subsidiary Sunoco Partners LLC, the general partner of the Partnership,
contributed the Predecessor to the Partnership in exchange for: (i) its 2%
general partner interest in the Partnership; (ii) incentive distribution rights
(as defined in the Partnership Agreement); (iii) 5,633,639 common units; (iv)
11,383,639 subordinated units; and (v) a special interest representing the
right to receive from the Partnership on the closing of the Offering the net
proceeds from the issuance of $250 million of ten-year senior notes by Sunoco
Logistics Partners Operations L.P. (the "Operating Partnership"). The net
proceeds are estimated to be $245.3 million. The Partnership concurrently
issued 5.75 million common units (including 750,000 units issued pursuant to
the underwriters' over-allotment option), representing a 24.8% limited
partnership interest in the Partnership, in an initial public offering (the
"Offering") at a price of $20.25 per unit. Proceeds from the Offering, which
totalled approximately $102 million net of underwriting discounts and offering
expenses, were used by the Partnership to establish working capital that was
not contributed to the Partnership by Sunoco, Inc.

The accompanying combined financial statements of Sunoco Logistics
(Predecessor) consist of the historical cost-basis accounts of the Predecessor,
after elimination of all balances and transactions within the combined group of
operations. The combined financial statements also include the Predecessor's
9.4% investment in Explorer Pipeline Company, a corporate joint venture which
is accounted for by the equity method. The equity income from this investment
is included in other income in the combined statements of income and net parent
investment. The financial statements include charges from Sunoco, Inc. and its
subsidiaries (collectively, "Sunoco") for direct costs and allocations of
indirect corporate overhead. Management of the Predecessor believes that the
allocation methods are reasonable, and that the allocations are representative
of the costs that would have been incurred on a stand-alone basis.

Description of Business

Most of the assets of the Predecessor support Sunoco, Inc.'s refining and
marketing operations which are conducted primarily by Sunoco, Inc. (R&M)
("Sunoco R&M"). The Predecessor operates in three principal business segments:
Eastern Pipeline System, Terminal Facilities and Western Pipeline System.

The Eastern Pipeline System transports refined products in the Northeast and
Midwest largely for Sunoco R&M's Philadelphia, PA, Marcus Hook, PA and Toledo,
OH refineries. The Eastern Pipeline System also transports crude oil on a
pipeline in Ohio and Michigan that supplies both Sunoco R&M's Toledo refinery
and third-party refineries. This segment also includes an interrefinery
pipeline between Sunoco R&M's Marcus Hook and Philadelphia refineries and the
equity interest in Explorer Pipeline Company, which transports refined products
from the Gulf Coast to numerous terminals throughout the Midwest.

The Terminal Facilities segment includes a network of 32 refined product
terminals in the Northeast and Midwest that distribute products primarily to
Sunoco R&M's retail outlets, an 11.2 million-barrel marine crude oil terminal
on the Texas Gulf Coast and a one million barrel liquefied petroleum gas
("LPG") storage facility near Detroit, MI. This segment also owns and operates
one inland and two marine crude oil terminals and the related storage
facilities and pipelines that supply all of the crude oil processed by Sunoco
R&M's Philadelphia

F-15

refinery. Finally, this segment includes a two million barrel refined product
storage terminal in Marcus Hook, PA that is used by Sunoco R&M's Marcus Hook
refinery to source barrels to the Predecessor's pipelines.

The Western Pipeline System acquires, transports and markets crude oil
principally in Oklahoma and Texas for Sunoco R&M's Tulsa, OK and Toledo, OH
refineries and also for other customers.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual amounts could differ from these
estimates.

Revenue Recognition

Crude oil gathering and marketing revenues are recognized when title to the
crude oil is transferred to the customer. Revenues are not recognized for crude
oil exchange transactions which are entered into primarily to acquire crude oil
of a desired quality or to reduce transportation costs by taking delivery
closer to the Predecessor's end markets. Any net differential for exchange
transactions is recorded as an adjustment of inventory costs in the purchases
component of cost of products sold and operating expenses in the combined
statements of income and net parent investment. Such amounts are not deemed to
be material. Terminalling and storage revenues are recognized at the time the
services are provided. Pipeline revenues are recognized upon delivery of the
barrels to the location designated by the shipper.

Affiliated revenues consist of sales of crude oil as well as the provision
of crude oil and refined product pipeline transportation, terminalling and
storage services to Sunoco R&M. Affiliated revenues reflect transfer prices
consistently used to prepare segment information for Sunoco, Inc.'s historical
consolidated financial statements. Sales of crude oil to affiliates are
computed using the formula-based pricing mechanism of a supply agreement with
Sunoco R&M. Management of the Predecessor believes these terms to be comparable
to those that could be negotiated with an unrelated third party. Pipeline
revenues from affiliates are generally determined using posted third-party
tariffs. Affiliated revenues from terminalling and storage are generally equal
to all of the costs incurred for these activities, including operating,
maintenance and environmental remediation expenditures.

Inventories

Inventories are valued at the lower of cost or market. Crude oil reflects an
allocation to the Predecessor by Sunoco R&M of the Predecessor's share of
Sunoco R&M's crude oil inventory, the cost of which has been determined using
the last-in, first-out method ("LIFO"). Under this allocation methodology, the
cost of products sold consists of the actual crude oil acquisition costs of the
Predecessor. Such costs are adjusted to reflect increases or decreases in crude
oil inventory quantities, which are valued based on the changes in Sunoco,
Inc.'s LIFO inventory layers. Effective with the transfer of the Predecessor's
operations to the Partnership, the Partnership is maintaining a separate LIFO
pool and all LIFO computations are being made on a stand-alone basis. The cost
of materials, supplies and other inventories is determined using principally
the average cost method.

Properties, Plants and Equipment

Properties, plants and equipment are stated at cost. Additions to
properties, plants and equipment, including replacements and improvements, are
recorded at cost. Repair and maintenance expenditures are charged to

F-16

expense as incurred. Depreciation is provided principally using the
straight-line method based on the estimated useful lives of the related assets.
For certain interstate pipelines, the depreciation rate is applied to the net
asset value based on FERC requirements. When FERC-regulated property, plant and
equipment is retired or otherwise disposed of, the cost less net proceeds is
charged to accumulated depreciation and amortization, except that gains and
losses for those groups are reflected in other income in the combined
statements of income and net parent investment for unusual disposals. Gains and
losses on the disposal of non-FERC properties, plants and equipment are
reflected in other income in the combined statements of income and net parent
investment.

Impairment of Long-Lived Assets

Long-lived assets other than those held for sale are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of the assets may not be recoverable. An asset is considered to be impaired
when the undiscounted estimated net cash flows expected to be generated by the
asset are less than its carrying amount. The impairment recognized is the
amount by which the carrying amount exceeds the fair market value of the
impaired asset. Long-lived assets held for sale are carried at the lower of
their carrying amount or fair market value less cost to sell the assets.
Effective January 1, 2002, the Partnership will adopt Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," which changes the method of accounting for the impairment
of long-lived assets (see New Accounting Principles below).

Environmental Remediation

The Predecessor accrues environmental remediation costs for work at
identified sites where an assessment has indicated that cleanup costs are
probable and reasonably estimable. Such accruals are undiscounted and are based
on currently available information, estimated timing of remedial actions and
related inflation assumptions, existing technology and presently enacted laws
and regulations.

Income Taxes

The Predecessor is included in the consolidated federal income tax return
filed by Sunoco, Inc. However, the provision for federal income taxes included
in the combined statements of income and net parent investment and the deferred
tax amounts reflected in the combined balance sheets have been determined on a
separate-return basis. Any current federal income tax amounts due on a
separate-return basis are settled with Sunoco, Inc. through the net parent
investment account. Effective with the Offering, substantially all income taxes
are the responsibility of the unitholders and not the Partnership.

New Accounting Principles

F-17

In July 2001, Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" ("SFAS No. 142"), was issued. The Partnership will
adopt SFAS No. 142 effective January 1, 2002 when adoption is mandatory. SFAS
No. 142 will require the testing of goodwill and indefinite-lived intangible
assets for impairment rather than amortizing them. The Partnership is currently
assessing the impact of adopting SFAS No. 142 on its combined financial
statements. The current level of annual amortization of goodwill and
indefinite-lived intangible assets, which will be eliminated upon the adoption
of SFAS No. 142, is approximately $0.8 million.

In August 2001, Statement of Financial Accounting Standards No. 143,
"Accounting for Asset Retirement Obligations" ("SFAS No. 143"), was issued.
This statement significantly changes the method of accruing for costs
associated with the retirement of fixed assets that an entity is legally
obligated to incur. The Partnership will evaluate the impact and timing of
implementing SFAS No. 143. Implementation of this standard is required no later
than January 1, 2003.

In August 2001, Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No.
144"), was issued. The Partnership will adopt SFAS No. 144 effective January 1,
2002 when adoption is mandatory. Among other things, SFAS No. 144 significantly
changes the criteria that would have to be met to classify an asset as
held-for-sale. SFAS No. 144 supersedes Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" and the provisions of Accounting
Principles Board Opinion 30, "Reporting the Results of Operations--Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions," that relate to reporting
the effects of a disposal of a segment of a business. The Partnership is
currently assessing the impact of adopting SFAS No. 144 on its combined
financial statements.

2. Related Party Transactions

Accounts Receivable, Affiliated Companies

Substantially all of the related party transactions discussed below were
settled immediately through the net parent investment account. The balance in
accounts receivable from affiliated companies represents the net amount owed to
the Predecessor by Sunoco R&M related to the remaining intercompany
transactions.

Affiliated revenues in the combined statements of income and net parent
investment consist of sales of crude oil as well as the provision of crude oil
and refined product pipeline transportation, terminalling and storage services
to Sunoco R&M. Affiliated revenues reflect transfer prices consistently used to
prepare segment information for Sunoco, Inc.'s historical consolidated
financial statements. Sales of crude oil are computed using the formula-based
pricing mechanism of a supply agreement with Sunoco R&M. Management of the
Predecessor believes these terms to be comparable to those that could be
negotiated with an unrelated third party. Pipeline revenues are generally
determined using posted third-party tariffs. Revenues from terminalling and
storage were generally equal to all of the costs incurred for these activities,
including operating, maintenance and environmental remediation expenditures.

Concurrently with the closing of the Offering, the Partnership entered into
a pipelines and terminals storage and throughput agreement and various other
agreements with Sunoco R&M under which the Partnership is charging Sunoco R&M
fees for services provided under these agreements comparable to those charged
in arm's-length, third-party transactions. Under the pipelines and terminals
storage and throughput agreement, Sunoco R&M has agreed to pay the Partnership
a minimum level of revenues for transporting and terminalling refined products.
Sunoco R&M also has agreed to minimum throughputs of refined products and crude
oil in the Partnership's Inkster Terminal, Fort Mifflin Terminal Complex,
Marcus Hook Tank Farm and certain crude oil

F-18

pipelines. In addition, effective January 1, 2002, Sunoco, Inc. adopted fee
arrangements consistent with this contract as the basis for the transfer prices
to be used in preparation of its segment information. Accordingly, such fees
will be reflected in the Predecessor's financial statements for the period
January 1, 2002 through the closing of the Offering.

Under various other agreements entered into at the closing of the Offering,
Sunoco R&M is, among other things, purchasing from the Partnership at
market-based rates particular grades of crude oil that the Partnership's crude
oil acquisition and marketing business purchases for delivery to pipelines in:
Longview, Trent, Tye, and Colorado City, Texas; Haynesville, Louisiana;
Marysville and Lewiston, Michigan; and Tulsa, Oklahoma. At Marysville and
Lewiston, Michigan, the Partnership exchanges Michigan sweet and Michigan sour
crude oil it owns for domestic sweet crude oil supplied by Sunoco R&M at
market-based rates. The initial term of these agreements is two months. These
agreements will automatically renew on a monthly basis unless terminated by
either party on 30 days' written notice. Sunoco R&M has also agreed to lease
from the Partnership the 58 miles of interrefinery pipelines between Sunoco
R&M's Philadelphia and Marcus Hook refineries for a term of 20 years.

Selling, general and administrative expenses in the combined statements of
income and net parent investment include costs allocated to the Predecessor
totaling $9.0 million, $10.1 million and $10.8 million for the years ended
December 31, 1999, 2000 and 2001, respectively. These expenses incurred by
Sunoco cover costs of centralized corporate functions such as legal,
accounting, treasury, engineering, information technology, insurance and other
corporate services. Such expenses are based on amounts negotiated between the
parties, which approximate Sunoco's cost of providing such services.

Under an omnibus agreement with Sunoco, Inc. that the Partnership entered
into at the closing of the Offering, Sunoco, Inc. is continuing to provide
these services for three years for an annual administrative fee initially in
the amount of $8.0 million, which may be increased in the second and third
years following the Offering by the lesser of 2.5% or the consumer price index
for the applicable year. These costs may also increase if the Partnership makes
an acquisition or constructs additional assets that require an increase in the
level of general and administrative services received by the Partnership from
the general partner or Sunoco, Inc. The $8.0 million fee includes expenses
incurred by Sunoco, Inc. and its affiliates to perform the centralized
corporate functions described above. This fee does not include salaries of
pipeline and terminal personnel or other employees of the general partner,
including senior executives, or the cost of their employee benefits, such as
401(k), pension, and health insurance benefits. The Partnership is also
reimbursing Sunoco, Inc. and its affiliates for these costs and other direct
expenses incurred on the Partnership's behalf. In addition, the Partnership
anticipates incurring additional general and administrative costs, including
costs for tax return preparation, annual and quarterly reports to unitholders,
investor relations, registrar and transfer agent fees, and other costs related
to operating as a separate publicly held entity. The Partnership estimates that
these incremental costs will be approximately $4.0 million (unaudited) per
year, including incremental insurance costs.

The Partnership entered into a treasury services agreement with Sunoco, Inc.
at the closing of the Offering pursuant to which it, among other things,
participates in Sunoco, Inc.'s centralized cash management program. Under this
program, all of the Partnership's cash receipts and cash disbursements are
processed, together with those of Sunoco, Inc. and its other subsidiaries,
through Sunoco, Inc.'s cash accounts with a corresponding credit or charge to
an intercompany account. The intercompany balances are settled periodically,
but no less frequently than at the end of each month. Amounts due from Sunoco
earn interest at a rate equal to the average rate of the Partnership's
third-party money market investments, while amounts due to Sunoco bear interest
at a rate equal to the interest rate provided in the Partnership's revolving
credit facility.

The Partnership entered into a license agreement at the closing of the
Offering with Sunoco, Inc. and certain of its affiliates, including its general
partner, Sunoco Partners LLC, pursuant to which the Partnership granted to
Sunoco Partners LLC a license to the Partnership's intellectual property so
that Sunoco Partners LLC can

F-19

manage the Partnership's operations and create intellectual property using the
Partnership's intellectual property. Sunoco Partners LLC will assign to the
Partnership the new intellectual property it creates in operating the
Partnership's business. Sunoco Partners LLC has also licensed to the
Partnership certain of its own intellectual property for use in the conduct of
the Partnership's business and the Partnership licensed to Sunoco Partners LLC
certain of the Partnership's intellectual property for use in the conduct of
its business. The license agreement also grants to the Partnership a license to
use the trademarks, trade names, and service marks of Sunoco, Inc. in the
conduct of the Partnership's business.

Costs of employees who work in the pipeline, terminalling, storage and crude
oil gathering operations, including senior executives, are charged directly to
the Predecessor and such charges include salary and employee benefit costs.
Employee benefits include non-contributory defined benefit retirement plans,
defined contribution 401(k) plans, employee and retiree medical, dental and
life insurance plans, incentive compensation plans (i.e., cash and stock
awards) and other such benefits. The Predecessor's share of allocated Sunoco
employee benefit plan expenses was $13.3 million, $18.7 million and $19.6
million for the years ended December 31, 1999, 2000 and 2001, respectively.
These expenses are reflected primarily in cost of products sold and operating
expenses in the combined statements of income and net parent investment. In
connection with the transfer of the Predecessor's operations to the
Partnership, these employees, including senior executives, became employees of
the Partnership's general partner or its affiliates, wholly owned subsidiaries
of Sunoco, Inc. The Partnership has no employees.

Note Receivable from Affiliate

Effective October 1, 2000, the Predecessor loaned $20.0 million to Sunoco.
The loan, which was evidenced by a note repaid on January 1, 2002, earned
interest at a rate based on the short-term applicable federal rate established
by the Internal Revenue Service. The interest rate on this note at December 31,
2001 was 5.41%.

Short-Term Borrowings due Affiliate

At December 31, 2000, the Predecessor had two short-term notes totaling
$45.0 million due Sunoco, which were repaid during 2001. The notes bore
interest at a rate based on the short-term applicable federal rate established
by the Internal Revenue Service. The weighted-average interest rate related to
these notes was 6.86% at December 31, 2000.

Long-term Debt due Affiliate

The Predecessor has the following notes payable to Sunoco (in thousands of
dollars):

December 31,
-----------------
2000 2001
-------- --------

Variable-rate note due 2002 (5.12% at December 31, 2001) $ 50,000 $ 50,000
Variable-rate note due 2002 (4.75% at December 31, 2001) 25,000 25,000
Variable-rate note due 2004 (4.75% at December 31, 2001) 25,000 25,000
Variable-rate note due 2005 (4.75% at December 31, 2001) 40,000 40,000
-------- --------
140,000 140,000
Less: current portion................................... -- 75,000
-------- --------
$140,000 $ 65,000
======== ========

F-20

The 5.12% note bears interest at a rate based on the short-term applicable
federal rate established by the Internal Revenue Service, while the 4.75% notes
bear interest based on the prime rate. This debt was not assumed by the
Partnership.

Net Parent Investment

The net parent investment represents a net balance resulting from the
settlement of intercompany transactions (including federal income taxes)
between the Predecessor and Sunoco as well as Sunoco's ownership interest in
the net assets of the Predecessor. It also reflects the Predecessor's
participation in Sunoco's central cash management program, wherein all of the
Predecessor's cash receipts are remitted to Sunoco and all cash disbursements
are funded by Sunoco. There are no terms of settlement or interest charges
attributable to this balance. The net parent investment excludes amounts loaned
to/borrowed from Sunoco evidenced by interest-bearing notes.

3. Inventories

The components of inventories were as follows (in thousands of dollars):

December 31,
---------------
2000 2001
------- -------

Crude oil.................... $17,456 $19,367
Materials, supplies and other 1,227 1,239
------- -------
$18,683 $20,606
======= =======

The current replacement cost of all crude oil inventory exceeded its
carrying value by $34.4 million and $16.0 million at December 31, 2000 and
2001, respectively.

4. Income Taxes

The components of income tax expense are as follows (in thousands of
dollars):

1999 2000 2001
------- ------- -------

Income taxes currently payable:
U.S. federal................ $15,386 $10,965 $ 5,657
State....................... 3,056 2,178 1,124
------- ------- -------
18,442 13,143 6,781
------- ------- -------
Deferred taxes:
U.S. federal................ 3,376 4,455 7,352
State....................... 670 885 1,461
------- ------- -------
4,046 5,340 8,813
------- ------- -------
$22,488 $18,483 $15,594
======= ======= =======

F-21

The reconciliation of the income tax expense at the U.S. statutory rate to
the income tax expense is as follows (in thousands of dollars):

1999 2000 2001
------- ------- -------

Income tax expense at U.S. statutory rate of 35%........... $20,953 $17,151 $14,826
Increase (reduction) in income taxes resulting from:
State income taxes net of Federal income tax effects.... 2,422 1,991 1,680
Dividend exclusion for joint venture pipeline operation. (1,125) (923) (1,059)
Other................................................... 238 264 147
------- ------- -------
$22,488 $18,483 $15,594
======= ======= =======

The effects of temporary differences that comprise the net deferred income
tax liability are as follows (in thousands of dollars):

December 31,
------------------
2000 2001
-------- --------

Deferred tax assets:
Environmental remediation liabilities. $ 6,519 $ 6,742
Other liabilities not yet deductible.. 4,426 4,895
Other................................. 3,426 2,390
-------- --------
14,371 14,027
-------- --------
Deferred tax liabilities:
Inventories........................... (1,836) (2,930)
Properties, plants and equipment...... (79,041) (86,416)
-------- --------
(80,877) (89,346)
-------- --------
Net deferred income tax liability........ $(66,506) $(75,319)
======== ========

Cash payments for income taxes (including amounts paid to Sunoco) amounted
to $16.7 million, $11.9 million and $6.2 million in 1999, 2000 and 2001,
respectively.

The net deferred income tax liability is classified in the combined balance
sheets as follows (in thousands of dollars):

December 31,
------------------
2000 2001
-------- --------

Current asset....... $ 4,426 $ 2,821
Noncurrent liability (70,932) (78,140)
-------- --------
$(66,506) $(75,319)
======== ========

F-22

5. Properties, Plants and Equipment

The components of net properties, plants and equipment were as follows (in
thousands of dollars):

December 31,
Estimated -----------------
Useful Lives 2000 2001
------------ -------- --------

Land and land improvements (including rights of way).. 20-60 $ 50,183 $ 52,033
Pipeline and related assets........................... 38-60 425,093 461,425
Terminals and storage facilities...................... 5-44 296,898 314,228
Other................................................. 5-48 61,542 70,473
Construction-in-progress.............................. -- 38,249 39,146
-------- --------
871,965 937,305
Less: Accumulated depreciation and amortization....... 353,360 370,946
-------- --------
$518,605 $566,359
======== ========

6. Long-Term Debt

In connection with the acquisition of the crude oil transportation and
marketing operations of Pride Companies, L.P. on October 1, 1999 (Note 10), the
Predecessor assumed a $5.3 million note. The note is due in 2014 with interest
payable at an annual rate of 8%. The note is secured by certain of the acquired
assets. The amount of this note and the long-term debt due affiliate (Note 2)
maturing in the years 2002 through 2006 is as follows (in thousands of dollars):

Pride Long-Term Debt
Note Due Affiliate Total
----- -------------- -------

2002................................... $228 $75,000 $75,228
2003................................... $246 $ -- $ 246
2004................................... $269 $25,000 $25,269
2005................................... $289 $40,000 $40,289
2006................................... $313 $ -- $ 313

The long-term debt due affiliate was not assumed by the Partnership. In
conjunction with the Offering, Sunoco Logistics Partners Operations L.P., the
operating partnership of the Partnership, issued $250.0 million of ten-year
senior notes and established a three-year $150.0 million revolving credit
facility. The net proceeds of the senior notes were distributed to Sunoco, Inc.
in connection with the contribution by Sunoco, Inc. of the Predecessor to the
Partnership. The Partnership and the operating subsidiaries of Sunoco Logistics
Partners Operations L.P. serve as guarantors of the ten-year senior notes and
of any borrowings under the revolving credit facility.

Cash payments for interest related to the Pride note and amounts due
affiliates were $7.3 million, $12.4 million and $13.7 million in 1999, 2000 and
2001, respectively.

7. Commitments and Contingent Liabilities

The Predecessor, as lessee, has noncancelable operating leases for land,
office space and equipment. Total rental expense for 1999, 2000 and 2001
amounted to $3.6 million, $5.4 million and $3.7 million, respectively.

F-23

The aggregate amount of future minimum annual rentals as of December 31, 2001
applicable to noncancelable operating leases is as follows (in thousands of
dollars):

Year Ending December 31:
2002................. $1,744
2003................. 1,336
2004................. 841
2005................. 231
2006................. 3
------
Total................ $4,155
======

The Predecessor is subject to numerous federal, state and local laws which
regulate the discharge of materials into the environment or that otherwise
relate to the protection of the environment. These laws result in liabilities
and loss contingencies for remediation at the Predecessor's facilities and at
third-party or formerly owned sites. The accrued liability for environmental
remediation is classified in the combined balance sheets as follows (in
thousands of dollars):

December 31,
---------------
2000 2001
------- -------

Accrued liabilities................... $ 6,333 $ 8,363
Other deferred credits and liabilities 9,082 7,888
------- -------
$15,415 $16,251
======= =======

The accrued liability for environmental remediation does not include any
amounts attributable to unasserted claims, nor have any recoveries from
insurance been assumed. It is expected that the amounts accrued will be paid
over approximately ten years.

Pretax charges against income for environmental remediation totaled $3.9
million, $8.5 million and $6.2 million in the years ended December 31, 1999,
2000 and 2001, respectively.

Total future costs for environmental remediation activities will depend
upon, among other things, the identification of any additional sites, the
determination of the extent of the contamination at each site, the timing and
nature of required remedial actions, the technology available and needed to
meet the various existing legal requirements, the nature and extent of future
environmental laws, inflation rates and the determination of the Predecessor's
liability at multi-party sites, if any, in light of uncertainties with respect
to joint and several liability, and the number, participation levels and
financial viability of other parties. As discussed below, the Partnership's
future costs will also be impacted by an indemnification from Sunoco, Inc.

The Predecessor is a party to certain pending and threatened claims.
Although the ultimate outcome of these claims cannot be ascertained at this
time, it is reasonably possible that some portion of them could be resolved
unfavorably to the Predecessor. Management of the Predecessor does not believe
that any liabilities which may arise from such claims and the environmental
matters discussed above would be material in relation to the financial position
of the Predecessor at December 31, 2001. Furthermore, management of the
Partnership does not believe that the overall costs for such matters will have
a material impact, over an extended period of time, on the Partnership's
operations, cash flows or liquidity.

Under the omnibus agreement entered into at the closing of the Offering,
Sunoco R&M is reimbursing Sunoco Logistics Partners L.P. for operating expenses
and capital expenditures in excess of $8.0 million per year (up to an aggregate
maximum of $15.0 million over a five-year period) incurred to comply with the
U.S.

F-24

Department of Transportation's pipeline integrity management rule. In addition,
Sunoco R&M is, at its expense, completing for Sunoco Logistics Partners L.P.'s
Darby Creek Tank Farm certain tank maintenance and inspection projects expected
to be completed within one year from the closing of the Offering. Sunoco R&M is
also reimbursing Sunoco Logistics Partners L.P. for up to $10.0 million of
expenditures required at the Darby Creek and Marcus Hook Tank Farms to maintain
compliance with existing industry standards and regulatory requirements. The
Partnership is reflecting outlays for these programs as operating expenses or
capital expenditures, as appropriate. Capital expenditures are being
depreciated over their useful lives. Reimbursements by Sunoco R&M are being
reflected as capital contributions.

Sunoco, Inc. has indemnified Sunoco Logistics Partners L.P. for 30 years
from environmental and toxic tort liabilities related to the assets contributed
to the Partnership that arise from the operation of such assets prior to the
closing of the Offering. Sunoco, Inc. has indemnified the Partnership for 100%
of all losses asserted within the first 21 years of closing. Sunoco, Inc.'s
share of liability for claims asserted thereafter will decrease by 10% a year.
For example, for a claim asserted during the twenty-third year after closing,
Sunoco, Inc. would be required to indemnify the Partnership for 80% of its
loss. There is no monetary cap on the amount of indemnity coverage provided by
Sunoco, Inc. Sunoco Logistics Partners L.P. has agreed to indemnify Sunoco,
Inc. and its affiliates for events and conditions associated with the operation
of the Partnership's assets that occur on or after the closing of the Offering
and for environmental and toxic tort liabilities to the extent Sunoco, Inc. is
not required to indemnify the Partnership.

Sunoco, Inc. also has indemnified Sunoco Logistics Partners L.P. for
liabilities, other than environmental and toxic tort liabilities related to the
assets contributed to the Partnership, that arise out of Sunoco, Inc. and its
affiliates' ownership and operation of the assets prior to the closing of the
Offering and that are asserted within 10 years after closing. In addition,
Sunoco, Inc. has indemnified the Partnership from liabilities relating to
certain defects in title to the assets contributed to the Partnership and
associated with failure to obtain certain consents and permits necessary to
conduct its business that arise within 10 years after closing as well as from
liabilities relating to legal actions currently pending against Sunoco, Inc. or
its affiliates and events and conditions associated with any assets retained by
Sunoco, Inc. or its affiliates.

8. Investment in Explorer Pipeline Company

The following table provides summarized financial information on a 100%
basis for Explorer Pipeline Company (in thousands of dollars):

1999 2000 2001
-------- -------- --------

Income Statement Data:
Total revenues...................... $150,776 $146,719 $178,082
Income before income taxes.......... $ 78,886 $ 61,655 $ 80,047
Net income.......................... $ 50,170 $ 38,859 $ 50,610
Balance Sheet Data (as of year end):
Current assets...................... $ 27,601 $ 35,012 $ 44,075
Non-current assets.................. $132,010 $129,935 $132,327
Current liabilities................. $ 17,328 $ 24,320 $ 20,976
Non-current liabilities............. $140,573 $139,953 $149,407
Net equity.......................... $ 1,710 $ 674 $ 6,019

F-25

9. Financial Instruments and Concentration of Credit Risk

The Predecessor's current assets (other than inventories and deferred income
taxes) and current liabilities are financial instruments. The estimated fair
value of these financial instruments approximates their carrying amounts. The
estimated fair values of the long-term debt (primarily amounts due affiliate)
at December 31, 2000 and 2001 were $146.6 million and $71.7 million,
respectively, compared to the carrying amounts of $144.8 million and $69.6
million, respectively. The estimated fair value of the $20.0 million note
receivable from affiliate was $19.9 million at December 31, 2000. The estimated
fair values were based upon the current interest rates at the balance sheet
dates for similar issues.

Approximately 66% of the sales and other operating revenue recognized by the
Predecessor during 2001 is derived from Sunoco R&M. The Predecessor sells crude
oil to Sunoco R&M, transports crude oil and refined products to/from Sunoco
R&M's refineries and provides terminalling and storage services for Sunoco R&M.
The Predecessor does not believe that the transactions with Sunoco R&M expose
it to significant credit risk.

The Predecessor's other trade relationships are primarily with major
integrated oil companies, independent oil companies and other pipelines and
wholesalers. These concentrations of customers may affect the Predecessor's
overall credit risk in that the customers (including Sunoco R&M) may be
similarly affected by changes in economic, regulatory or other factors. The
Predecessor's customers' credit positions are analyzed prior to extending
credit. The Predecessor manages its exposure to credit risk through credit
analysis, credit approvals, credit limits and monitoring procedures, and for
certain transactions may utilize letters of credit, prepayments and guarantees.

10. Acquisition of Pride Companies, L.P. Crude Oil Transportation and
Marketing Operations

On October 1, 1999, the Predecessor acquired the crude oil transportation
and marketing operations of Pride Companies, L.P. ("Pride") for $29.6 million
in cash and the assumption of $5.3 million of debt. The acquisition included
Pride's 800-mile crude oil pipeline system, 800,000 barrels of tankage and
related assets, and the right to purchase 35,000 barrels per day of third-party
lease crude oil.

The acquisition has been accounted for as a purchase. The results of
operations have been included in the combined statements of income and net
parent investment since the date of acquisition. The purchase price has been
allocated to the assets acquired and liabilities assumed based on their
relative fair market values at the acquisition date. The following is a summary
of the effects of this transaction on the Predecessor's financial position as
of the acquisition date (in thousands of dollars):

Allocation of purchase price:
Inventories................................ $10,246
Properties, plants and equipment........... 25,486
Deferred charges and other assets.......... 1,839
Accrued liabilities........................ (822)
Long-term debt (including current portion). (5,334)
Deferred income taxes...................... (1,839)
-------
Cash paid on acquisition date.............. $29,576
=======

The unaudited pro forma net income for the year ended December 31, 1999,
assuming the acquisition had occurred on January 1, 1999, was $34.8 million.
The pro forma information does not purport to be indicative of the results that
actually would have been obtained if the combined operations had been conducted
during the periods presented and is not intended to be a projection of future
results.

F-26

11. Business Segment Information

The Predecessor is comprised of a substantial portion of the logistics
operations of Sunoco, Inc. The Predecessor operates in three principal business
segments: Eastern Pipeline System, Terminal Facilities and Western Pipeline
System. A detailed description of each of these segments is contained in Note 1.

Segment Information (in thousands)

Year Ended December 31, 1999
---------------------------------------------------
Eastern Western
Pipeline Terminal Pipeline
System Facilities System Total
-------- ---------- -------- --------

Sales and other operating revenue:
Affiliates..................... $ 70,177 $ 38,329/(1)/ $655,627 $764,133
======== ======== ======== ========
Unaffiliated customers......... $ 19,472 $ 29,166 $161,431 $210,069
======== ======== ======== ========
Operating income.................. $ 38,501/(2)/ $ 16,767 $ 11,085 $ 66,353
======== ======== ========
Net interest expense.............. (6,487)
Income tax expense................ (22,488)
--------
Net income........................ $ 37,378
========
Depreciation and amortization..... $ 7,929 $ 8,457 $ 3,525 $ 19,911
======== ======== ======== ========
Capital expenditures.............. $ 20,697 $ 16,858 $ 9,403/(3)/ $ 46,958
======== ======== ======== ========
Identifiable assets............... $256,842 $151,497 $301,680 $712,149/(4)/
======== ======== ======== ========

- --------
/(1)/ Substantially all of these revenues reflect transfer prices which are
equal to the costs incurred for these activities. Includes $450 thousand
reimbursement of costs incurred for environmental remediation and other
unusual items.
/(2)/ Includes equity income of $4,591 thousand attributable to the
Predecessor's ownership interest in the Explorer Pipeline Company
corporate joint venture.
/(3)/ Excludes $34,910 thousand acquisition of the crude oil transportation and
marketing operations of Pride Companies, L.P.
/(4)/ Identifiable assets include the Predecessor's unallocated $2,130 thousand
deferred income tax asset.

F-27

Segment Information (in thousands)

Year Ended December 31, 2000
--------------------------------------------------
Eastern Western
Pipeline Terminal Pipeline
System Facilities System Total
-------- ---------- ---------- ----------

Sales and other
operating revenue:
Affiliates............. $ 69,027 $ 44,356/(1)/ $1,187,696 $1,301,079
======== ======== ========== ==========
Unaffiliated customers. $ 19,323 $ 31,042 $ 457,167 $ 507,532
======== ======== ========== ==========
Operating income.......... $ 31,064/(2)/ $ 17,156 $ 11,087 $ 59,307
======== ======== ========== ==========
Net interest expense...... (10,304)
Income tax expense........ (18,483)
----------
Net income................ $ 30,520
==========
Depreciation and
amortization............ $ 8,272 $ 8,616 $ 3,766 $ 20,654
======== ======== ========== ==========
Capital expenditures...... $ 21,894 $ 28,488 $ 7,539 $ 57,921
======== ======== ========== ==========
Identifiable assets....... $286,319 $175,376 $ 379,835 $ 840,956/(3)/
======== ======== ========== ==========

- --------
/(1)/ Substantially all of these revenues reflect transfer prices which are
equal to the costs incurred for these activities. Includes $5,671
thousand reimbursement of costs incurred for environmental remediation
and other unusual items.
/(2)/ Includes equity income of $3,766 thousand attributable to the
Predecessor's ownership interest in the Explorer Pipeline Company
corporate joint venture.
/(3)/ Identifiable assets include the Predecessor's unallocated $4,426 thousand
deferred income tax asset.

Segment Information (in thousands)

Year Ended December 31, 2001
------------------------------------------------
Eastern Western
Pipeline Terminal Pipeline
System Facilities System Total
-------- ---------- -------- ----------

Sales and other
operating revenue:
Affiliates............. $ 69,631 $ 43,628/(1)/ $953,923 $1,067,182
======== ======== ======== ==========
Unaffiliated customers. $ 21,059 $ 30,273 $494,490 $ 545,822
======== ======== ======== ==========
Operating income.......... $ 29,893/(2)/ $ 16,076 $ 7,372 $ 53,341
======== ======== ======== ==========
Net interest expense...... (10,980)
Income tax expense........ (15,594)
----------
Net income................ $ 26,767
==========
Depreciation and
amortization............ $ 9,778 $ 11,094 $ 4,453 $ 25,325
======== ======== ======== ==========
Capital expenditures...... $ 28,618 $ 25,203 $ 18,862 $ 72,683
======== ======== ======== ==========
Identifiable assets....... $303,685 $189,378 $293,317 $ 789,201/(3)/
======== ======== ======== ==========

- --------
/(1)/ Substantially all of these revenues reflect transfer prices which are
equal to the costs incurred for these activities. Includes $3,008
thousand reimbursement of costs incurred for environmental remediation
and other unusual items.
/(2)/ Includes equity income of $4,323 thousand attributable to the
Predecessor's ownership interest in the Explorer Pipeline Company
corporate joint venture.
/(3)/ Identifiable assets include the Predecessor's unallocated $2,821 thousand
deferred income tax asset.

F-28

The following table sets forth the Predecessor's total sales and other
operating revenue by product or service (in thousands of dollars):

Year Ended December 31,
------------------------------
1999 2000 2001
-------- ---------- ----------

Affiliates:
Crude oil.............. $651,805 $1,178,004 $ 944,400
Pipeline............... 73,999 78,719 79,154
Terminalling and other. 38,329 44,356 43,628
-------- ---------- ----------
$764,133 $1,301,079 $1,067,182
======== ========== ==========
Unaffiliated Customers:
Crude oil.............. $155,997 $ 452,650 $ 491,238
Pipeline............... 24,906 23,840 24,311
Terminalling and other. 29,166 31,042 30,273
-------- ---------- ----------
$210,069 $ 507,532 $ 545,822
======== ========== ==========

12. Quarterly Financial Data (Unaudited)

Summarized quarterly financial data is as follows (in thousands):

First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------

2000
Sales and other operating revenue:
Affiliates..................... $304,945 $315,382 $344,558 $336,194
Unaffiliated customers......... $104,458 $128,888 $131,129 $143,057
Gross margin/(1)/................. $ 15,829 $ 26,502 $ 24,409 $ 21,676
Operating income.................. $ 9,549 $ 18,740 $ 16,512 $ 14,506
Net income........................ $ 4,922 $ 10,426 $ 8,402 $ 6,770

2001
Sales and other operating revenue:
Affiliates..................... $290,538 $310,220 $236,366 $230,058
Unaffiliated customers......... $123,866 $133,395 $156,126 $132,435
Gross margin/(1)/................. $ 20,763 $ 26,327 $ 21,358 $ 16,075
Operating income.................. $ 13,637 $ 18,028 $ 14,044 $ 7,632
Net income........................ $ 6,989 $ 9,068 $ 7,228 $ 3,482

- --------
/(1)/ Gross margin equals sales and other operating revenue less cost of
products sold and operating expenses and depreciation and amortization.

F-29

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of
Sunoco Partners LLC:

We have audited the accompanying balance sheet of Sunoco Logistics Partners
L.P. (a Delaware limited partnership) (the "Partnership") as of December 31,
2001. This balance sheet is the responsibility of the Partnership's management.
Our responsibility is to express an opinion on this balance sheet based on our
audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the balance sheet is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Sunoco Logistics Partners L.P. at
December 31, 2001 in conformity with accounting principles generally accepted
in the United States.

ERNST & YOUNG LLP

Philadelphia, Pennsylvania
March 15, 2002

F-30

SUNOCO LOGISTICS PARTNERS L.P.

BALANCE SHEET

December 31, 2001

Assets
Current Assets
Cash.................... $1,000
------
Total Assets......... $1,000
======
Equity
Limited partner's equity $ 980
General partner's equity 20
------
Total Equity......... $1,000
======

(See Accompanying Note)

F-31

SUNOCO LOGISTICS PARTNERS L.P.

NOTE TO BALANCE SHEET

1. Nature of Operations

Sunoco Logistics Partners L.P., a Delaware limited partnership (the
"Partnership"), was formed on October 15, 2001 to ultimately acquire a
substantial portion of the refined product pipelines, terminalling and storage
assets, crude oil pipelines, and crude oil acquisition and marketing assets of
Sunoco, Inc. (the "Predecessor"). These assets are located in the Northeast and
Midwest United States. Sunoco Partners LLC (the Partnership's general partner)
and the Partnership's limited partner are both wholly owned subsidiaries of
Sunoco, Inc. The Partnership has adopted a January 1 to December 31 fiscal
year. Sunoco Partners LLC contributed $20 and the wholly owned subsidiary of
Sunoco, Inc. contributed $980 to the Partnership on October 18, 2001. There
have been no other transactions involving the Partnership as of December 31,
2001.

On February 8, 2002, Sunoco, Inc., through Sunoco Partners LLC, contributed
the Predecessor to the Partnership in exchange for: (i) a 2% general partner
interest in the Partnership; (ii) incentive distribution rights (as defined in
the partnership agreement); (iii) 5,633,639 common units; (iv) 11,383,639
subordinated units; and (v) a special interest representing the right to
receive from the Partnership on the closing of the initial public offering the
net proceeds from the issuance of $250 million aggregate principal amount of
ten-year senior notes by Sunoco Logistics Partners Operations L.P., a
subsidiary of the Partnership. The Partnership guarantees these notes. The net
proceeds are estimated to be $245.3 million. The Partnership concurrently
issued 5.75 million common units (including 750,000 units issued pursuant to
the underwriters' over-allotment option), representing a 24.8% limited
partnership interest in the Partnership, in an initial public offering at a
price of $20.25 per unit. Proceeds from the initial public offering, which
totalled approximately $102 million net of underwriting discounts and offering
expenses, were used by the Partnership to establish working capital that was
not contributed to the Partnership by Sunoco, Inc.

Sunoco Partners LLC, as general partner, manages the operations and
activities of the Partnership and owes a fiduciary duty to the Partnership's
unitholders. Most of the Partnership's operations personnel are employees of
Sunoco Partners LLC. Sunoco Partners LLC is liable, as general partner, for all
of the Partnership's debts (to the extent not paid from the Partnership's
assets), except for indebtedness or other obligations that are made
specifically nonrecourse to the general partner.

Sunoco Partners LLC does not receive any management fee or other
compensation for its management of the Partnership. Sunoco Partners LLC and its
affiliates are reimbursed for expenses incurred on the Partnership's behalf.
These expenses include the costs of employee, officer, and director
compensation and benefits properly allocable to the Partnership, and all other
expenses necessary or appropriate to the conduct of the business of, and
allocable to, the Partnership. The partnership agreement provides that Sunoco
Partners LLC, as general partner, will determine the expenses that are
allocable to the Partnership in any reasonable manner determined by Sunoco
Partners LLC in its sole discretion.

F-32

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
Sunoco Partners LLC:

We have audited the accompanying balance sheet of Sunoco Partners LLC as of
December 31, 2001. This balance sheet is the responsibility of Sunoco Partners
LLC's management. Our responsibility is to express an opinion on this balance
sheet based on our audit.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Sunoco Partners LLC at December
31, 2001 in conformity with accounting principles generally accepted in the
United States.

ERNST & YOUNG LLP

Philadelphia, Pennsylvania
March 15, 2002

F-33

SUNOCO PARTNERS LLC

BALANCE SHEET
DECEMBER 31, 2001

Assets
Current Assets
Cash........................................ $ 980
Investment in Sunoco Logistics Partners L.P. 20
------
Total Assets............................. $1,000
======
Equity
Net parent investment....................... $1,000
------
Total Equity............................. $1,000
======

(See Accompanying Note)

F-34

SUNOCO PARTNERS LLC

NOTE TO BALANCE SHEET

1. Nature of Operations

Sunoco Partners LLC (the "Company") is a Delaware limited liability company
formed on October 12, 2001 to become the general partner of Sunoco Logistics
Partners L.P. (the "Partnership"). The Company is a wholly owned subsidiary of
Sunoco, Inc. On October 18, 2001, another wholly owned subsidiary of Sunoco,
Inc. contributed $1,000 to the Company in exchange for a 100% ownership
interest. The Company has invested $20 in the Partnership for its 2% general
partner interest. There have been no other transactions involving the Company
as of December 31, 2001.

The Partnership is a Delaware limited partnership formed by Sunoco, Inc. on
October 15, 2001 to acquire, own and operate a substantial portion of Sunoco
Inc.'s logistics business, consisting of refined product pipelines,
terminalling and storage assets, crude oil pipelines, and crude oil acquisition
and marketing assets located in the Northeast and Midwest United States (the
"Predecessor").

On February 8, 2002, Sunoco, Inc., through the Company, contributed the
Predecessor to the Partnership in exchange for: (i) a 2% general partner
interest in the Partnership; (ii) incentive distribution rights (as defined in
the partnership agreement); (iii) 5,633,639 common units; (iv) 11,383,639
subordinated units; and (v) a special interest representing the right to
receive from the Partnership on the closing of the initial public offering the
net proceeds from the issuance of $250 million aggregate principal amount of
ten-year senior notes by Sunoco Logistics Partners Operations L.P., a
subsidiary of the Partnership. The Partnership guarantees these notes. The net
proceeds are estimated to be $245.3 million. The Partnership concurrently
issued 5.75 million common units (including 750,000 units issued pursuant to
the underwriters' over-allotment option), representing a 24.8% limited
partnership interest in the Partnership, in an initial public offering at a
price of $20.25 per unit. Proceeds from the initial public offering, which
totalled approximately $102 million net of underwriting discounts and offering
expenses, were used by the Partnership to establish working capital that was
not contributed to the Partnership by Sunoco, Inc.

The Company, as general partner, manages the operations and activities of
the Partnership and owes a fiduciary duty to the Partnership's unitholders.
Most of the Partnership's operations personnel are employees of the Company.
The Company is liable, as general partner, for all of the Partnership's debts
(to the extent not paid from the Partnership's assets), except for indebtedness
or other obligations that are made specifically nonrecourse to the general
partner.

The Company does not receive any management fee or other compensation for
its management of the Partnership. The Company and its affiliates are
reimbursed for expenses incurred on the Partnership's behalf. These expenses
include the costs of employee, officer, and director compensation and benefits
properly allocable to the Partnership, and all other expenses necessary or
appropriate to the conduct of the business of, and allocable to, the
Partnership. The partnership agreement provides that the Company, as general
partner, will determine the expenses that are allocable to the Partnership in
any reasonable manner determined by the Company in its sole discretion.

F-35

$250,000,000

[LOGO] SUNOCO

Sunoco Logistics Partners

Operations L.P.

7.25% Senior Notes due 2012

-----------------

PROSPECTUS

, 2002

-----------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

The section of the Prospectus entitled "Our Partnership
Agreement--Indemnification" discloses that we generally indemnify officers,
directors and affiliates of the general partner to the fullest extent permitted
by the law against all losses, claims, damages or similar events and is
incorporated herein by this reference. Subject to any terms, conditions or
restrictions set forth in the Partnership Agreement, Section 17-108 of the
Delaware Revised Uniform Limited Partnership Act empowers a Delaware limited
partnership to indemnify and hold harmless any partner or other persons from
and against all claims and demands whatsoever.

Item 21. Exhibits and Financial Statement Schedules.

(a) The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated by reference to a prior filing
under the Securities Act or the Exchange Act as indicated in parentheses:

Exhibit
Number Description
- ------ -----------

3.1* Certificate of Limited Partnership of Sunoco Logistics Partners L.P. (incorporated by reference to
Exhibit 3.1 to the Form S-1 Registration Statement, File No. 333-71968, filed October 22, 2001)

3.2* First Amended and Restated Agreement of Limited Partnership of Sunoco Logistics Partners L.P.,
dated as of February 8, 2002 (incorporated by reference to Exhibit 3.2 to the Form 10-K, File
No. 1-31219, filed April 1, 2002)

3.3* Certificate of Limited Partnership of Sunoco Logistics Partners Operations L.P. (incorporated by
reference to Exhibit 3.3 to Amendment No. 1 to the Form S-1 Registration Statement, File No. 333-
71968, filed December 18, 2001).

3.4* First Amended and Restated Agreement of Limited Partnership of Sunoco Logistics Partners
Operations L.P., dated as of February 8, 2002 (incorporated by reference to Exhibit 3.4 to the
Form 10-K, File No. 1-31219, filed April 1, 2002)

3.5* Certificate of Organization of Sunoco Partners LLC (incorporated by reference to Exhibit 3.5 to the
Form S-1 Registration Statement, File No. 333-71968, filed October 22, 2001)

3.6 Second Amended and Restated Limited Liability Company Agreement of Sunoco Partners LLC
dated as of April 30, 2002

3.7** Certificate of Limited Partnership of Sunoco Pipeline L.P. dated December 10, 2001

3.8** Certificate of Amendment of Certificate of Limited Partnership of Sunoco Pipeline L.P. dated
February 8, 2002

3.9** Certificate of Amendment of Certificate of Limited Partnership of Sunoco Pipeline L.P. dated
February 8, 2002

3.10** Seconded Amended and Restated Agreement of Limited Partnership of Sunoco Pipeline L.P. dated
February 8, 2002

3.11** Certificate of Limited Partnership of Sunoco Partners Marketing & Terminals L.P. dated December
12, 2001

3.12** Certificate of Amendment of Certificate of Limited Partnership of Sunoco Partners Marketing &
Terminals L.P. dated February 8, 2002

II-1

Exhibit
Number Description
- ------ -----------

3.13** Certificate of Amendment of Certificate of Limited Partnership of Sunoco Partners Marketing &
Terminals L.P. dated February 8, 2002

3.14** First Amended and Restated Agreement of Limited Partnership of Sunoco Partners Marketing &
Terminals L.P. dated February 8, 2002

3.15** Certificate of Formation of Sunoco Logistics Partners Operations GP LLC dated December 12,
2001

4.1* Indenture, dated as of February 7, 2002, between Sunoco Logistics Partners Operations L.P. and
First Union National Bank (incorporated by reference to Exhibit 10.2 to the Form 10-K, File
No. 1-31219, filed April 1, 2002)

4.2* Registration Rights Agreement, dated as of February 8, 2002, among Sunoco Logistics Partners
Operations L.P., Sunoco Logistics Partners L.P., Sunoco Pipeline L.P., Sunoco Partners Marketing
& Terminals L.P., and the following Initial Purchasers: Lehman Brothers Inc., Credit Suisse First
Boston Corporation, Banc of America Securities LLC, Salomon Smith Barney Inc., UBS Warburg
LLC and First Union Securities, Inc. (incorporated by reference to Exhibit 10.3 to the Form 10-K,
File No. 1-31219, filed April 1, 2002)

5.1** Opinion of Vinson & Elkins L.L.P. as to the legality of the securities issued

10.1* Credit Agreement dated as of February 1, 2002, among Sunoco Logistics Partners Operations L.P.,
Sunoco Logistics Partners L.P., Bank of America, N.A., First Union National Bank, Credit Suisse
First Boston, Lehman Commercial Paper Inc., Citibank, N.A., and UBS AG (incorporated by
reference to Exhibit 10.1 to the Form 10-K, File No. 1-31219, filed April 1, 2002)

10.2* Contribution, Conveyance and Assumption Agreement, dated as of February 8, 2002, among
Sunoco, Inc., Sun Pipe Line Company of Delaware, Sunoco, Inc. (R&M), Atlantic Petroleum
Corporation; Sunoco Texas Pipe Line Company, Sun Oil Line of Michigan (Out) LLC,
Mid-Continent Pipe Line (Out) LLC, Sun Pipe Line Services (Out) LLC, Atlantic Petroleum
Delaware Corporation, Atlantic Pipeline (Out) L.P, Sunoco Partners LLC, Sunoco Partners Lease
Acquisition & Marketing LLC, Sunoco Logistics Partners L.P., Sunoco Logistics Partners GP LLC,
Sunoco Logistics Partners Operations L.P, Sunoco Logistics Partners Operations GP LLC, Sunoco
Pipeline L.P., Sunoco Partners Marketing & Terminals L.P., Sunoco Mid-Con (In) LLC, Atlantic
(In) L.P, Atlantic R&M (In) L.P., Sun Pipe Line Services (In) L.P., Sunoco Michigan (In) LLC,
Atlantic (In) LLC, Sun Pipe Line GP LLC, Sunoco R&M (In) LLC, and Atlantic
Refining & Marketing Corp. (incorporated by reference to Exhibit 10.4 to the Form 10-K,
File No. 1-31219, filed April 1, 2002)

10.3* Omnibus Agreement, dated as of February 8, 2002, among Sunoco, Inc., Sunoco, Inc. (R&M), Sun
Pipe Line Company of Delaware, Atlantic Petroleum Corporation, Sunoco Texas Pipe Line
Company, Sun Pipe Line Services (Out) LLC, Sunoco Logistics Partners L.P., Sunoco Logistics
Partners Operations L.P., and Sunoco Partners LLC (incorporated by reference to Exhibit 10.5 to the
Form 10-K, File No. 1-31219, filed April 1, 2002)

10.4* Pipelines and Terminals Storage and Throughput Agreement, dated as of February 8, 2002, among
Sunoco, Inc. (R&M), Sunoco Logistics Partners L.P., Sunoco Logistics Partners Operations L.P.,
Sunoco Partners LLC, Sunoco Partners Marketing & Terminals L.P., Sunoco Pipeline L.P., Sunoco
Logistics Partners GP LLC, and Sunoco Logistics Partners Operations GP LLC (incorporated by
reference to Exhibit 10.6 to the Form 10-K, File No. 1-31219, filed April 1, 2002)

10.5* Treasury Services Agreement, dated as of February 8, 2002, among Sunoco, Inc., Sunoco Logistics
Partners L.P., and Sunoco Logistics Partners Operations L.P. (incorporated by reference to
Exhibit 10.7 to the Form 10-K, File No. 1-31219, filed April 1, 2002)

II-2

Exhibit
Number Description
- ------ -----------

10.6* Intellectual Property and Trademark License Agreement, dated as of February 8, 2002 among
Sunoco, Inc., ("Sunoco"), Sunoco, Inc. (R&M), Sunmarks, Inc., Sunoco Logistics Partners L.P.,
Sunoco Logistics Partners Operations L.P., Sunoco Partners Marketing & Terminals L.P., Sunoco
Pipeline L.P., and Sunoco Partners LLC (incorporated by reference to Exhibit 10.8 to the
Form 10-K, File No. 1-31219, filed April 1, 2002)

10.7* Interrefinery Lease, dated as of February 8, 2002, between Sunoco Pipeline L.P., and Sunoco, Inc.
(R&M) (incorporated by reference to Exhibit 10.9 to the Form 10-K, File No. 1-31219, filed
April 1, 2002)

10.8* Sunoco Partners LLC Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to
Amendment No. 2 to the Form S-1 Registration Statement, File No. 333-71968, filed
January 11, 2002).

10.9* Sunoco Partners LLC Annual Incentive Plan (incorporated by reference to Exhibit 10.4 to Amendment
No. 2 to the Form S-1 Registration Statement, File No. 333-71968, filed January 11, 2002).

10.10* Revolving Credit Agreement of Sunoco, Inc. (incorporated by reference to Exhibit 10.7 to Amendment
No. 1 to the Form S-1 Registration Statement, File No. 333-71968, filed December 18, 2001).

10.10.1* Amendment to Revolving Credit Agreement of Sunoco, Inc. (incorporated by reference to
Exhibit 10.7.1 to Amendment No. 1 to the Form S-1 Registration Statement, File No. 333-71968,
filed December 18, 2001).

12.1 Statements re Computation of Ratio of Earnings to Fixed Charges

21.1** List of Subsidiaries of Sunoco Logistics Partners Operations L.P.

23.1 Consent of Ernst & Young LLP

23.2** Consent of Vinson & Elkins (contained in Exhibit 5.1)

24.1** Powers of Attorney

25.1** Statement of Eligibility on Form T-1 of First Union National Bank

99.1 Form of Letter of Transmittal

99.2** Form of Letter to Clients

99.3** Form of Letter to Registered Holders and DTC Participants

99.4** Form of Notice of Guaranteed Delivery

99.5** Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.

- --------
* Each such exhibit has heretofore been filed with the Securities and Exchange
Commission as part of the filing indicated and is incorporated herein by
reference.

**Previously filed with the Registration Statement on April 11, 2002.

(b) Financial Statement Schedules.

Schedules are omitted because they either are not required or are not
applicable or because equivalent information has been included in the financial
statements, the notes thereto or elsewhere herein.

II-3

Item 22. Undertakings.

The co-registrants hereby undertake:

(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
derivation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

(4) That prior to any public reoffering of the securities registered
hereunder through use of prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form
with respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.

(5) That every prospectus: (i) that is filed pursuant to Paragraph (4)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is issued in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(6) To supply by means of a post-effective amendment all the information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it
became effective.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, each registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No 1 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Philadelphia, Commonwealth of Pennsylvania on the 8th day of May, 2002.

SUNOCO LOGISTICS PARTNERS OPERATIONS
L.P.
By: Sunoco Logistics Partners GP
LLC its General Partner

/s/ COLIN A. OERTON

By: _______________________________

Name: Colin A. Oerton

Title: Vice President and Chief
Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities indicated and on the dates indicated.

Signature Title Date
--------- ----- ----

* President, Chief Executive Officer May 8, 2002
-------------------- and Director (Principal Executive
Deborah M. Fretz Officer)

* Director May 8, 2002
--------------------
Cynthia A. Archer

-------------------- Director May 8, 2002
Stephen L. Cropper

-------------------- Director May 8, 2002
Michael H. R. Dingus

* Director May 8, 2002
--------------------
John G. Drosdick

-------------------- Director May 8, 2002
Gary W. Edwards

* Director May 8, 2002
--------------------
Bruce G. Fischer

* Director May 8, 2002
--------------------
Thomas W. Hofmann

/s/ COLIN A. OERTON Vice President and Chief Financial May 8, 2002
-------------------- Officer (Principal Financial
Colin A. Oerton Officer)

/s/ JOSEPH P. KROTT Comptroller (Principal Accounting May 8, 2002
-------------------- Officer)
Joseph P. Krott

*By: /s/ COLIN A. OERTON _____________________________________________________

Name: Colin A. Oerton

Title: Attorney-In-Fact

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Philadelphia, Commonwealth of Pennsylvania on the 8th day of May,
2002.

SUNOCO PIPELINE L.P.
By: Sunoco Logistics Partners
Operations GP LLC its General
Partner

/s/ COLIN A. OERTON

By: _______________________________

Name: Colin A. Oerton

Title: Vice President and Chief
Financial Officer

Signature Title Date
--------- ----- ----

* President and Director (Principal Executive May 8, 2002
- --------------------- Officer)
Deborah M. Fretz

/s/ COLIN A. OERTRON Vice President and Chief Financial Officer May 8, 2002
- --------------------- (Principal Financial Officer)
Colin A. Oerton

/s/ JOSEPH P. KROTT Comptroller (Principal Accounting Officer) May 8, 2002
- ---------------------
Joseph P. Krott

/s/ COLIN A. OERTON
*By: ______________________
Name: Colin A. Oerton
Title: Attorney-in-Fact

II-6

SIGNATURES

SUNOCO PARTNERS MARKETING & TERMINALS
L.P.
By: Sunoco Logistics Partners
Operations GP LLC its General
Partner

/s/ COLIN A. OERTON

By: _______________________________

Name: Colin A. Oerton

Title: Vice President and Chief
Financial Officer

Signature Title Date
--------- ----- ----

* President and Director (Principal Executive May 8, 2002
- -------------------- Officer)
Deborah M. Fretz

/S/ COLIN A. OERTON Vice President and Chief Financial Officer May 8, 2002
- -------------------- (Principal Financial Officer)
Colin A. Oerton

/S/ JOSEPH P. KROTT Comptroller (Principal Accounting Officer) May 8, 2002
- --------------------
Joseph P. Krott

* By: /s/ COLIN A. OERTON
-----------------------
Name: Colin A. Oerton
Title: Attorney-In-Fact

II-7

SIGNATURES

SUNOCO LOGISTICS PARTNERS L.P.
By: Sunoco Partners LLC its General
Partner

/s/ COLIN A. OERTON

By: _______________________________

Name: Colin A. Oerton

Title: Vice President and Chief
Financial Officer

Signature Title Date
--------- ----- ----

* President, Chief Executive Officer May 8, 2002
-------------------- and Director (Principal Executive
Deborah M. Fretz Officer)

* Director May 8, 2002
--------------------
Cynthia A. Archer

-------------------- Director May 8, 2002
Stephen L. Cropper

-------------------- Director May 8, 2002
Michael H. R. Dingus

* Director May 8, 2002
--------------------
John G. Drosdick

-------------------- Director May 8, 2002
Gary W. Edwards

* Director May 8, 2002
--------------------
Bruce G. Fischer

* Director May 8, 2002
--------------------
Thomas W. Hofmann

/s/ COLIN A. OERTON Vice President and Chief Financial May 8, 2002
-------------------- Officer (Principal Financial
Colin A. Oerton Officer)

/s/ JOSEPH P. KROTT Comptroller (Principal Accounting May 8, 2002
-------------------- Officer)
Joseph P. Krott

/s/ COLIN A. OERTON
*By:_______________________
Name: Colin A. Oerton
Title: Attorney-In-Fact

II-8

INDEX TO EXHIBITS

Exhibit
Number Description
- ------ -----------

3.1* Certificate of Limited Partnership of Sunoco Logistics Partners L.P. (incorporated by reference to
Exhibit 3.1 to the Form S-1 Registration Statement, File No. 333-71968, filed October 22, 2001)

3.5* Certificate of Organization of Sunoco Partners LLC (incorporated by reference to Exhibit 3.5 to the
Form S-1 Registration Statement, File No. 333-71968, filed October 22, 2001)

3.6 Second Amended and Restated Limited Liability Company Agreement of Sunoco Partners LLC
dated April 30, 2002

3.7** Certificate of Limited Partnership of Sunoco Pipeline L.P. dated December 10, 2001

3.8** Certificate of Amendment of Certificate of Limited Partnership of Sunoco Pipeline L.P. dated
February 8, 2002

3.9** Certificate of Amendment of Certificate of Limited Partnership of Sunoco Pipeline L.P. dated
February 8, 2002

3.10** Seconded Amended and Restated Agreement of Limited Partnership of Sunoco Pipeline L.P. dated
February 8, 2002

3.11** Certificate of Limited Partnership of Sunoco Partners Marketing & Terminals L.P. dated
December 12, 2001

3.12** Certificate of Amendment of Certificate of Limited Partnership of Sunoco Partners Marketing &
Terminals L.P. dated February 8, 2002

3.13** Certificate of Amendment of Certificate of Limited Partnership of Sunoco Partners Marketing &
Terminals L.P. dated February 8, 2002

3.14** First Amended and Restated Agreement of Limited Partnership of Sunoco Partners Marketing &
Terminals L.P. dated February 8, 2002

3.15** Certificate of Formation of Sunoco Logistics Partners Operations GP LLC dated December 12, 2001

5.1** Opinion of Vinson & Elkins L.L.P. as to the legality of the securities issued

II-9

Exhibit
Number Description
- ------ -----------

10.2* Contribution, Conveyance and Assumption Agreement, dated as of February 8, 2002, among
Sunoco, Inc., Sun Pipe Line Company of Delaware, Sunoco, Inc. (R&M), Atlantic Petroleum
Corporation; Sunoco Texas Pipe Line Company, Sun Oil Line of Michigan (Out) LLC, Mid-
Continent Pipe Line (Out) LLC, Sun Pipe Line Services (Out) LLC, Atlantic Petroleum Delaware
Corporation, Atlantic Pipeline (Out) L.P, Sunoco Partners LLC, Sunoco Partners Lease Acquisition
& Marketing LLC, Sunoco Logistics Partners L.P., Sunoco Logistics Partners GP LLC, Sunoco
Logistics Partners Operations L.P, Sunoco Logistics Partners Operations GP LLC, Sunoco Pipeline
L.P., Sunoco Partners Marketing & Terminals L.P., Sunoco Mid-Con (In) LLC, Atlantic (In) L.P,
Atlantic R&M (In) L.P., Sun Pipe Line Services (In) L.P., Sunoco Michigan (In) LLC, Atlantic (In)
LLC, Sun Pipe Line GP LLC, Sunoco R&M (In) LLC, and Atlantic Refining & Marketing Corp.
(incorporated by reference to Exhibit 10.4 to the Form 10-K, File No. 1-31219, filed April 1, 2002)

10.3* Omnibus Agreement, dated as of February 8, 2002, among Sunoco, Inc., Sunoco, Inc. (R&M), Sun
Pipe Line Company of Delaware, Atlantic Petroleum Corporation, Sunoco Texas Pipe Line
Company, Sun Pipe Line Services (Out) LLC, Sunoco Logistics Partners L.P., Sunoco Logistics
Partners Operations L.P., and Sunoco Partners LLC (incorporated by reference to Exhibit 10.5 to
the Form 10-K, File No. 1-31219, filed April 1, 2002)

10.8* Sunoco Partners LLC Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to
Amendment No. 2 to the Form S-1 Registration Statement, File No. 333-71968, filed January 11, 2002).

10.9* Sunoco Partners LLC Annual Incentive Plan (incorporated by reference to Exhibit 10.4 to Amendment
No. 2 to the Form S-1 Registration Statement, File No. 333-71968, filed January 11, 2002).

10.10* Revolving Credit Agreement of Sunoco, Inc. (incorporated by reference to Exhibit 10.7 to Amendment
No. 1 to the Form S-1 Registration Statement, File No. 333-71968, filed December 18, 2001).

II-10

Exhibit
Number Description
- ------ -----------

12.1 Statements re Computation of Ratio of Earnings to Fixed Charges

21.1** List of Subsidiaries of Sunoco Logistics Partners Operations L.P.

23.1 Consent of Ernst & Young LLP

23.2** Consent of Vinson & Elkins (contained in Exhibit 5.1)

24.1** Powers of Attorney

25.1** Statement of Eligibility on Form T-1 of First Union National Bank

99.1 Form of Letter of Transmittal

99.2** Form of Letter to Clients

99.3** Form of Letter to Registered Holders and DTC Participants

99.4** Form of Notice of Guaranteed Delivery

99.5** Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9

- --------

* Each such exhibit has heretofore been filed with the Securities and Exchange
Commission as part of the filing indicated and is incorporated herein by
reference.

** Previously filed with the Registration Statement on April 11, 2002.

II-11



                                                                     Exhibit 3.6


================================================================================






                           SECOND AMENDED AND RESTATED

                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                               SUNOCO PARTNERS LLC

                    A Pennsylvania Limited Liability Company

                                   Dated as of

                                 April 30, 2002



================================================================================








                             TABLE OF CONTENTS

                                ARTICLE I.
                               DEFINITIONS

Section 1.01   Definitions .................................................  2
Section 1.02   Construction ................................................  9

                               ARTICLE II.
                               ORGANIZATION

Section 2.01   Formation ...................................................  9
Section 2.02   Name ........................................................  9
Section 2.03   Registered Office; Registered Agent; Principal Office. ......  9
Section 2.04   Purposes .................................................... 10
Section 2.05   Foreign Qualification. ...................................... 10
Section 2.06   Term ........................................................ 11
Section 2.07   No State Law Partnership .................................... 11
Section 2.08   Power of Attorney ........................................... 11

                               ARTICLE III.
                                MEMBERSHIP

Section 3.01   Membership Interests; Additional Members .................... 12
Section 3.02   Access to Information ....................................... 12
Section 3.03   Liability ................................................... 12
Section 3.04   Withdrawal .................................................. 13

                               ARTICLE IV.
                   DISPOSITION OF MEMBERSHIP INTERESTS

Section 4.01   General Restriction ......................................... 13
Section 4.02   Admission of Assignee as a Member ........................... 13
Section 4.03   Requirements Applicable to All Dispositions and Admissions .. 13

                                ARTICLE V.
                           CAPITAL CONTRIBUTIONS

Section 5.01   Initial Capital Contributions ............................... 14
Section 5.02   Loans ....................................................... 15
Section 5.03   Return of Contributions ..................................... 15
Section 5.04   Capital Accounts ............................................ 15

                                  ARTICLE VI.
                       DISTRIBUTIONS AND ALLOCATIONS

Section 6.01   Distributions ............................................... 15
Section 6.02   Distributions on Dissolution and Winding Up. ................ 15
Section 6.03   Allocations ................................................. 16
Section 6.04   Varying Interests ........................................... 18
Section 6.05   Tax Distributions ........................................... 18
Section 6.06   Withheld Taxes .............................................. 18



Section 6.07   Limitations on Distributions ................................ 19

                               ARTICLE VII.
                                MANAGEMENT

Section 7.01   Management by Board of Directors and Officers ............... 19
Section 7.02   Number; Qualification; Tenure ............................... 19
Section 7.03   Regular Meetings ............................................ 19
Section 7.04   Special Meetings ............................................ 19
Section 7.05   Notice ...................................................... 20
Section 7.06   Action by Consent of Board or Committee of Board ............ 20
Section 7.07   Conference Telephone Meetings ............................... 20
Section 7.08   Quorum ...................................................... 20
Section 7.09   Vacancies; Increases in the Number of Directors ............. 20
Section 7.10   Committees .................................................. 21
Section 7.11   Removal ..................................................... 21
Section 7.12   Administration of Incentive Plans ........................... 21

                               ARTICLE VIII.
                                 OFFICERS

Section 8.01   Elected Officers ............................................ 22
Section 8.02   Election and Term of Office ................................. 22
Section 8.03   Chairman of the Board ....................................... 22
Section 8.04   Chief Executive Officer ..................................... 22
Section 8.05   President ................................................... 23
Section 8.06   Chief Financial Officer ..................................... 23
Section 8.07   Vice Presiden ............................................... 23
Section 8.08   Treasurer ................................................... 23
Section 8.09   Secretary ................................................... 24
Section 8.10   Powers ofAttorney ........................................... 24
Section 8.11   Delegation of Authority ..................................... 24
Section 8.12   Compensation ................................................ 24
Section 8.13   Removal. .................................................... 24
Section 8.14   Vacancies ................................................... 25

                               ARTICLE IX.
                             MEMBER MEETINGS

Section 9.01   Meetings .................................................... 25
Section 9.02   Notice of a Meeting ......................................... 25
Section 9.03   Action by Consent of Members ................................ 25

                                ARTICLE X.
                      INDEMNIFICATION OF DIRECTORS,
                      OFFICERS, EMPLOYEES AND AGENTS

Section 10.01  Indemnification ............................................. 25
Section 10.02  Liability of Indemnitees .................................... 27



                               ARTICLE XI.
                                  TAXES

Section 11.01  Tax Returns ................................................. 27
Section 11.02  Tax Elections ............................................... 28
Section 11.03  Tax Matters Partner ......................................... 28

                                  ARTICLE XII.
                BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS

Section 12.01  Maintenance of Books ........................................ 29
Section 12.02  Reports ..................................................... 29
Section 12.03  Bank Accounts ............................................... 30

                              ARTICLE XIII.
                 DISSOLUTION, WINDING-UP AND TERMINATION

Section 13.01  Dissolution ................................................. 30
Section 13.02  Winding-Up and Termination .................................. 30
Section 13.03  Deficit Capital Accounts .................................... 31
Section 13.04  Certificate of Dissolution .................................. 31

                               ARTICLE XIV.
                            GENERAL PROVISIONS

Section 14.01  Offset ...................................................... 31
Section 14.02  Notices ..................................................... 32
Section 14.03  Entire Agreement; Superseding Effect ........................ 33
Section 14.04  Effect of Waiver or Consent ................................. 33
Section 14.05  Amendment or Restatement .................................... 33
Section 14.06  Binding Effect .............................................. 33
Section 14.07  Governing Law; Severability ................................. 34
Section 14.08  Further Assurances .......................................... 34
Section 14.09  Waiver of Certain Rights .................................... 34
Section 14.10  Counterparts ................................................ 34
Section 14.11  Jurisdiction ................................................ 35




                                                                     EXHIBIT 3.6

                           SECOND AMENDED AND RESTATED
                       LIMITED LIABILITY COMPANY AGREEMENT
                                       OF
                               SUNOCO PARTNERS LLC
                    A Pennsylvania Limited Liability Company

         This SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of
SUNOCO PARTNERS LLC (the "Company"), dated as of April 30, 2002, is adopted,
                          -------
executed and agreed to by Sun Pipe Line Company of Delaware, a Delaware
corporation ("Sun Delaware"), Sun Pipe Line Company, a Texas corporation ("Sun
              ------------                                                 ---
Pipe Line"), Sunoco, Inc. (R&M), a Pennsylvania corporation ("Sunoco R&M"),
- ---------                                                     ----------
Atlantic Petroleum Corporation, a Delaware corporation ("Atlantic Petroleum"),
                                                         ------------------
and Atlantic Refining & Marketing Corp., a Delaware corporation ("Atlantic
                                                                  --------
Refining"), as the Members (as defined herein) of the Company.
- --------

                                R E C I T A L S:
                                - - - - - - - -

         WHEREAS, the Company was formed as a Pennsylvania limited liability
company under and pursuant to the Pennsylvania Limited Liability Company Law of
1994, as amended (the "Act"), on October 12, 2001 (the "Original Filing Date")
                                                        --------------------
by the filing of a Certificate of Organization of a Domestic Limited Liability
Company (the "Pennsylvania Certificate") with the Pennsylvania Department of
              ------------------------
State on such date;

         WHEREAS, Sun Delaware, as the sole member, adopted, executed and agreed
to a Limited Liability Company Agreement (the "Prior Agreement") relating to the
                                               ---------------
Company on October 15, 2001;

         WHEREAS, on February 8, 2002, Sun Delaware and the Company admitted Sun
Pipe Line, Sunoco R&M, Atlantic Petroleum and Atlantic Refining as members of
the Company in exchange for their capital contributions as set forth in Section
5.01 and amended and restated the Prior Agreement (as amended and restated, the
"First Amended and Restated Limited Liability Company Agreement") to, among
 --------------------------------------------------------------
other things, provide for a board of directors and officers of the Company; and

         WHEREAS, the Members desire to further amend and restate the First
Amended and Restated Limited Liability Company Agreement to, among other things,
modify the composition of the compensation committee of the Board of Directors.

         NOW, THEREFORE, in consideration of the covenants, conditions and
agreements contained herein, the parties hereto hereby amend the First Amended
and Restated Limited Liability Company Agreement and, as so amended, restate it
in its entirety as follows:



                                   ARTICLE I.
                                   DEFINITIONS

         Section 1.01 Definitions.

         (a) As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Sections referred to below:

         "Act" has the meaning given such term in the Recitals.
          ---

         "Adjusted Capital Account Deficit" means, with respect to any Member,
          --------------------------------
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments:

                  (i)  credit to such Capital Account any amounts that such
         Member is obligated to restore pursuant to any provision of this
         Agreement or pursuant to Treasury Regulation Section
         1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant
         to the penultimate sentences of Treasury Regulation Sections
         1.704-2(g)(1) and 1.704-2(i)(5); and

                  (ii) debit to such Capital Account the items described in
         Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
         1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).

         The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)
(2)(ii)(d) and shall be interpreted consistently therewith.

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

         "Agreement" means this Second Amended and Restated Limited Liability
          ---------
Company Agreement of Sunoco Partners LLC, as amended from time to time.

         "Applicable Law" means (a) any United States federal, state, local or
          --------------
foreign law, statute, rule, regulation, order, writ, injunction, judgment,
decree or permit of any Governmental Authority and (b) any rule or listing
requirement of any applicable national securities exchange or listing
requirement of any national securities exchange or Securities and Exchange
Commission recognized trading market on which securities issued by the MLP are
listed or quoted.

         "Assignee" means any Person that acquires a Membership Interest or any
          --------
portion thereof through a Disposition; provided, however, that an Assignee shall
have no right to be admitted to the Company as a Member except in accordance
with Article IV. The Assignee of a dissolved Member is the shareholder, partner,
member or other equity owner or owners of the dissolved



Member to whom such Member's Membership Interest is assigned by the Person
conducting the liquidation or winding up of such Member. The Assignee of a
Bankrupt Member is (a) the Person to whom such Bankrupt Member's Membership
Interest is assigned by order of the court or other Governmental Authority
having jurisdiction over the related Bankruptcy, or (b) in the event of a
general assignment for the benefit of creditors, the creditor to which such
Membership Interest is assigned.

         "Atlantic Petroleum" has the meaning given such term in the
          ------------------
introductory paragraph of this Agreement.

         "Atlantic Refining" has the meaning given to such term in the
          -----------------
introductory paragraph of this Agreement.

         "Bankruptcy" or "Bankrupt" means, with respect to any Person, that (a)
          ----------      --------
such Person (i) makes a general assignment for the benefit of creditors; (ii)
files a voluntary bankruptcy petition; (iii) becomes the subject of an order for
relief or is declared insolvent in any federal or state bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any Applicable Law; (v) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against such Person in a proceeding of the type described in subclauses
(i) through (iv) of this clause (a); or (vi) seeks, consents to or acquiesces in
the appointment of a trustee, receiver or liquidator of such Person or of all or
any substantial part of such Person's properties; or (b) a proceeding seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any Applicable Law has been commenced against such
Person and 120 Days have expired without dismissal thereof or with respect to
which, without such Person's consent or acquiescence, a trustee, receiver or
liquidator of such Person or of all or any substantial part of such Person's
properties has been appointed and 90 Days have expired without the appointment's
having been vacated or stayed, or 90 Days have expired after the date of
expiration of a stay, if the appointment has not previously been vacated.

         "Board" has the meaning given such term in Section 7.01.
          -----

         "Business Day" means any day other than a Saturday, a Sunday or a day
          ------------
when banks in New York, New York are authorized or required by Applicable Law to
be closed.

         "Capital Account" means, with respect to any Member, the Capital
          ---------------
Account maintained for such Member in accordance with the following provisions:

                  (i)  To each Member's Capital Account there shall be credited
         such Member's Capital Contributions, such Member's distributive share
         of Profits and any items in the nature of income or gain that are
         specially allocated pursuant to Section 6.03, and the amount of any
         Company liabilities assumed by such Member or that are secured by any
         property (other than money) distributed to such Member.

                  (ii) To each Member's Capital Account there shall be debited
         the amount of cash and the Gross Asset Value of any property (other
         than money) distributed to such Member pursuant to any provision of
         this Agreement, such Member's distributive share



         of Losses and any items in the nature of expenses or losses that are
         specially allocated pursuant to Section 6.03, and the amount of any
         liabilities of such Member assumed by the Company or that are secured
         by any property (other than money) contributed by such Member to the
         Company.

                  (iii) In the event all or a portion of a Membership Interest
         is transferred in accordance with the terms of this Agreement, the
         transferee shall succeed to the Capital Account of the transferor to
         the extent it relates to the Membership Interest so transferred.

                  (iv)  In determining the amount of any liability for purposes
         of the foregoing subparagraphs (i) and (ii) of this definition of
         "Capital Account," there shall be taken into account Section 752(c) of
         the Code and any other applicable provisions of the Code and the
         Treasury Regulations.

         The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulation Section 1.704-1(b) and shall be interpreted and applied in a
manner consistent with the Treasury Regulations.

         "Capital Contribution" means, with respect to any Member, the amount of
          --------------------
money and the net agreed value of any property (other than money) contributed to
the Company by such Member. Any reference in this Agreement to the Capital
Contribution of a Member shall include a Capital Contribution of its
predecessors in interest.

         "Certified Public Accountants" means a firm of independent public
          ----------------------------
accountants selected from time to time by the Board.

         "Claim" means any and all judgments, claims, causes of action, demands,
          -----
lawsuits, suits, proceedings, Governmental investigations or audits, losses,
assessments, fines, penalties, administrative orders, obligations, costs,
expenses, liabilities and damages (whether actual, consequential or punitive),
including interest, penalties, reasonable attorneys' fees, disbursements and
costs of investigations, deficiencies, levies, duties and imposts.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
          ----
time.
         "Common Units" means the common units of the MLP.
          ------------

         "Company" has the meaning given such term in the introductory paragraph
          -------
of this Agreement.

         "Compensation Committee" has the meaning given such term in Section
          ----------------------
7.12.

         "Conflicts Committee" has the meaning given such term in Section
          -------------------
7.10(c).

         "Contribution Agreement" means that certain Contribution, Conveyance
          ----------------------
and Assumption Agreement, dated as of February 8, 2002, among the Company, the
MLP, the Operating Partnership and certain other parties, together with the
additional conveyance documents and instruments contemplated or referenced
thereunder.



         "Day" means a calendar day; provided, however, that, if any period of
          ---
Days referred to in this Agreement shall end on a Day that is not a Business
Day, then the expiration of such period shall be automatically extended until
the end of the next succeeding Business Day.

         "Depreciation" means, for each fiscal year or other period, an amount
          ------------
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period,
"Depreciation" shall be an amount that bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization or other
cost recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that, if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Board.

         "Director" or "Directors" has the meaning given such term in Section
          --------      ---------
7.02.

         "Dispose," "Disposing" or "Disposition" means, with respect to any
          -------    ---------      -----------
asset (including a Membership Interest or any portion thereof), a sale,
assignment, transfer, conveyance, gift, exchange or other disposition of such
asset, whether such disposition be voluntary, involuntary or by operation of
Applicable Law.

         "Disposing Member" has the meaning given such term in Section 4.02.
          ----------------

         "Dissolution Event" has the meaning given such term in Section
          -----------------
13.01(a).

         "Encumber," "Encumbering" or "Encumbrance" means the creation of a
          --------    -----------      -----------
security interest, lien, pledge, mortgage or other encumbrance, whether such
encumbrance be voluntary, involuntary or by operation of Applicable Law.

         "GAAP" means generally accepted accounting principles.
          ----

         "Governmental Authority" or "Governmental" means any federal, state,
          ----------------------      ------------
local or foreign court or governmental or regulatory agency or authority or any
arbitration board, tribunal or mediator having jurisdiction over the Company or
its assets or Members.

         "Gross Asset Value" means, with respect to any asset, the asset's
          -----------------
adjusted basis for federal income tax purposes, except as follows:

                  (i)  the initial Gross Asset Value of any asset contributed by
         a Member to the Company shall be the gross fair market value of said
         asset, as determined by the contributing Member and the Board, in a
         manner that is consistent with Section 7701(g) of the Code;

                  (ii) the Gross Asset Values of all Company assets shall be
         adjusted to equal their respective gross fair market values, as
         determined by the Board, in a manner that is consistent with Section
         7701(g) of the Code, as of the following times: (a) the acquisition of
         an additional Membership Interest by any new or existing Member in
         exchange for



         more than a de minimis Capital Contribution; (b) the distribution by
         the Company to a Member of more than a de minimis amount of property
         other than money as consideration for a Membership Interest; and (c)
         the liquidation of the Company within the meaning of Treasury
         Regulation Section 1.704-1(b)(2)(ii)(g); provided, however, that
         adjustments pursuant to clauses (a) and (b) above shall be made only
         if the Tax Matters Partner reasonably determines that such adjustments
         are necessary or appropriate to reflect the relative economic
         interests of the Members in the Company;

                  (iii) the Gross Asset Value of any Company asset distributed
         to any Member shall be the gross fair market value (taking Section
         7701(g) of the Code into account) of such asset on the date of
         distribution; and

                  (iv)  the Gross Asset Values of any Company assets shall be
         increased (or decreased) to reflect any adjustments to the adjusted
         basis of such assets pursuant to Section 734(b) of the Code or Section
         743(b) of the Code, but only to the extent that such adjustments are
         taken into account in determining Capital Accounts pursuant to Treasury
         Regulation Section 1.704-1 (b)(2)(iv)(m) and the definition of Capital
         Account hereof; provided, however, that Gross Asset Values shall not be
         adjusted pursuant to this subparagraph (iv) to the extent the Tax
         Matters Partner determines that an adjustment pursuant to the foregoing
         subparagraph (ii) of this definition is necessary or appropriate in
         connection with a transaction that would otherwise result in an
         adjustment pursuant to this subparagraph (iv).

         If the Gross Asset Value of an asset has been determined or adjusted
pursuant to the foregoing subparagraphs (i), (ii) or (iv), such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.

         "First Amended and Restated Limited Liability Company Agreement" has
          --------------------------------------------------------------
the meaning given such term in the Recitals.

         "Incentive Plan" means any plan or arrangement pursuant to which the
          --------------
Company may compensate its employees, consultants, directors and/or service
providers.

         "Indemnitee" means (a) any Person who is or was an Affiliate of the
          ----------
Company, (b) any Person who is or was a member, partner, officer, director,
employee, agent or trustee of the Company or any Affiliate of the Company and
(c) any Person who is or was serving at the request of the Company or any
Affiliate of the Company as an officer, director, employee, member, partner,
agent, fiduciary or trustee of another Person; provided, that a Person shall not
be an Indemnitee by reason of providing, on a fee-for-services basis, trustee,
fiduciary or custodial services.

         "Independent Director" has the meaning given such term in Section
          --------------------
7.10(b).

         "Majority Interest" means greater than 50% of the Sharing Ratios.
          -----------------

         "Member" means any Person executing this Agreement as of the date of
          ------
this Agreement as a member of the Company or hereafter admitted to the Company
as a member as provided in



this Agreement, but such term does not include any Person who has ceased to be a
member in the Company.

         "Membership Interest" means, with respect to any Member, (a) that
          -------------------
Member's status as a Member; (b) that Member's share of the income, gain, loss,
deduction and credits of, and the right to receive distributions from, the
Company; (c) all other rights, benefits and privileges enjoyed by that Member
(under the Act, this Agreement or otherwise) in its capacity as a Member,
including that Member's rights to vote, consent and approve and otherwise to
participate in the management of the Company, including through the Board; and
(d) all obligations, duties and liabilities imposed on that Member (under the
Act, this Agreement or otherwise) in its capacity as a Member, including any
obligations to make Capital Contributions.

         "MLP" means Sunoco Logistics Partners L.P., a Delaware limited
          ---
partnership, and any successors thereto.

         "Notices" has the meaning given such term in Section 14.02.
          -------

         "NYSE" has the meaning given such term in Section 7.02.
          ----

         "Operating Partnership" means Sunoco Logistics Partners Operations
          ---------------------
L.P., a Delaware limited partnership, and any successors thereto.

         "Original Filing Date" has the meaning given such term in the Recitals.
          --------------------

         "Partnership Agreement" means the First Amended and Restated Agreement
          ---------------------
of Limited Partnership of the MLP, dated February 8, 2002, as amended, or any
successor agreement.

         "Pennsylvania Certificate" has the meaning given such term in the
          ------------------------
Recitals.

         "Person" means any individual, firm, partnership, corporation, limited
          ------
liability company, association, joint-stock company, unincorporated
organization, joint venture, trust, court, Governmental agency or any political
subdivision thereof, or any other entity.

         "Prior Agreement" has the meaning given such term in the Recitals.
          ---------------

         "Profits" and "Losses" means, for each fiscal year or other period, an
          -------       ------
amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Section 703(a) of the Code (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income or
loss), with the following adjustments:

                  (i)  any income of the Company that is exempt from federal
         income tax and not otherwise taken into account in computing Profits or
         Losses pursuant to this definition shall be added to such taxable
         income or loss;

                  (ii) any expenditures of the Company described in
         Section 705(a)(2)(B) of the Code and not otherwise taken into account
         in computing Profits or Losses pursuant to this definition shall be
         subtracted from such taxable income or loss;




                  (iii) in the event the Gross Asset Value of any Company asset
         is adjusted pursuant to subparagraph (ii) or (iv) of the definition of
         Gross Asset Value hereof, the amount of such adjustment shall be taken
         into account as gain or loss from the disposition of such asset for
         purposes of computing Profits or Losses;

                  (iv)  gain or loss resulting from any disposition of property
         (other than money) with respect to which gain or loss is recognized for
         federal income tax purposes shall be computed by reference to the Gross
         Asset Value of the property disposed of notwithstanding that the
         adjusted tax basis of such property differs from its Gross Asset Value;

                  (v)   in lieu of the depreciation, amortization and other cost
         recovery deductions taken into account in computing such taxable income
         or loss, there shall be taken into account Depreciation for such fiscal
         year or other period, computed in accordance with the definition of
         Depreciation hereof; and

                  (vi)  notwithstanding any other provision of this definition
         of "Profits" and "Losses," any items that are specially allocated
         pursuant to Section 6.03(d) and Section 6.03(e) shall not be taken into
         account in computing Profits or Losses.

         "Proper Officers" means those officers of the Company authorized by the
          ---------------
Board to act on behalf of the Company.

         "Retained Assets" has the meaning given such term in the Partnership
          ---------------
Agreement.

         "Sharing Ratio" means, subject in each case to adjustments in
          -------------
accordance with this Agreement or in connection with Dispositions of Membership
Interests, (a) in the case of a Member executing this Agreement as of the date
of this Agreement or a Person acquiring such Member's Membership Interest, the
percentage specified for that Member as its Sharing Ratio on Exhibit A, and (b)
                                                             ---------
in the case of Membership Interests issued pursuant to Section 3.01, the Sharing
Ratio established pursuant thereto; provided, however, that the total of all
Sharing Ratios shall always equal 100%.

         "Sun Delaware" has the meaning given such term in the introductory
          ------------
paragraph of this Agreement.

         "Sunoco R&M" has the meaning given such term in the introductory
          ----------
paragraph of this Agreement.

         "Sun Pipe Line" has the meaning given such term in the introductory
          -------------
paragraph of this Agreement.

         "Target Capital Account Amount" means, with respect to a Member, the
          -----------------------------
distribution the Member would receive pursuant to Section 6.02 if the amount to
be distributed to the Member equaled the product of (i) the amount described in
Section 13.02(a)(iii)(C) multiplied by (ii) the Member's Sharing Ratio.

         "Tax Matters Partner" has the meaning given such term in Section
          -------------------
11.03(a).



         "Term" has the meaning given such term in Section 2.06.
          ----

         "Treasury Regulations" means the regulations (including temporary
          --------------------
regulations) promulgated by the United States Department of the Treasury
pursuant to and in respect of provisions of the Code. All references herein to
sections of the Treasury Regulations shall include any corresponding provision
or provisions of succeeding, similar or substitute, temporary or final, Treasury
Regulations.

         "Withdraw," "Withdrawing" or "Withdrawal" means the withdrawal,
          --------    -----------      ----------
resignation or retirement of a Member from the Company as a Member. Such terms
shall not include any Dispositions of a Membership Interest (which are governed
by Article IV), even though the Member making a Disposition may cease to be a
Member as a result of such Disposition.

         (b)  Other terms defined herein have the meanings so given them.

         Section 1.02  Construction.

         Unless the context requires otherwise, (a) the gender of all words used
in this Agreement includes the masculine, feminine and neuter, (b) the singular
forms of nouns, pronouns and verbs shall include the plural and vice versa, (c)
all references to Articles and Sections refer to articles and sections in this
Agreement, each of which is made a part for all purposes, and (d) the term
"include" or "includes" means includes, without limitation, and "including"
means including, without limitation.

                                  ARTICLE II.
                                  ORGANIZATION

         Section 2.01  Formation.

         Sun Delaware formed the Company as a Pennsylvania limited liability
company by the filing of the Pennsylvania Certificate, dated as of the Original
Filing Date, with the Pennsylvania Department of State pursuant to the Act.

         Section 2.02  Name.

         The name of the Company is "Sunoco Partners LLC" and all Company
business must be conducted in that name or such other names that comply with
Applicable Law as the Board may select.

         Section 2.03  Registered Office; Registered Agent; Principal Office.

         The name of the Company's registered agent for service of process is CT
Corporation System, and the address of the Company's registered office in the
Commonwealth of Pennsylvania is 1515 Market Street, #1210, Philadelphia,
Pennsylvania 19103. The principal place of business of the Company shall be
located at 1801 Market Street, Philadelphia, Pennsylvania 19103. The Board may
change the Company's registered agent or the location of the Company's
registered office or principal place of business as the Board may from time to
time determine.



         Section 2.04  Purposes.

         (a) The Company may carry on any lawful business or activity permitted
by the Act. The Company shall be authorized to engage in any and all other
activities, whether or not related to the foregoing, that in the judgment of the
Board may be beneficial or desirable.

         (b) Subject to the limitations expressly set forth in this Agreement,
the Company shall have the power and authority to do any and all acts and things
deemed necessary or desirable by the Board to further the Company's purposes and
carry on its business, including, without limitation, the following:

                  (i)      acting as the general partner of the MLP;

                  (ii)     operating, maintaining and administering the Retained
         Assets and the businesses conducted by or related to them;

                  (iii)    entering into any kind of activity and performing
         contracts of any kind necessary or desirable for the accomplishment of
         its business (including the business of the MLP);

                  (iv)     acquiring any property, real or personal, in fee or
         under lease or license, or any rights therein or appurtenant thereto,
         necessary or desirable for the accomplishment of its business;

                  (v)      borrowing money and issuing evidences of indebtedness
         and securing any such indebtedness by mortgage or pledge of, or other
         lien on, the assets of the Company;

                  (vi)     entering into any such instruments and agreements as
         the Board may deem necessary or desirable for the ownership,
         management, operation, leasing and sale of the Company's property; and

                  (vii)    negotiating and concluding agreements for the sale,
         exchange or other disposition of all or substantially all of the
         properties of the Company, or for the refinancing of any loan or
         payment obtained by the Company.

         The Members hereby specifically consent to and approve the execution
and delivery by the Proper Officers on behalf of the Company of all loan
agreements, guarantees, notes, security agreements or other documents or
instruments, if any, as required by any lender providing funds to the Company,
the MLP or the Operating Partnership and ancillary documents contemplated
thereby.

         Section 2.05  Foreign Qualification.

         Prior to the Company's conducting business in any jurisdiction other
than Pennsylvania, the Board shall cause the Company to comply, to the extent
procedures are available and those matters are reasonably within the control of
the Board, with all requirements necessary to qualify the Company as a foreign
limited liability company in that jurisdiction. At the request of the Board, the
Members shall execute, acknowledge, swear to and deliver all certificates and
other



instruments conforming with this Agreement that are necessary or appropriate to
qualify, continue and terminate the Company as a foreign limited liability
company in all such jurisdictions in which the Company may conduct business.

         Section 2.06  Term.

         The period of existence of the Company (the "Term") commenced on the
                                                      ----
Original Filing Date and shall end at such time as a certificate of dissolution
is filed with the Pennsylvania Department of State in accordance with Section
13.04.

         Section 2.07  No State Law Partnership.

         The Members intend that the Company not be a partnership (including a
limited partnership) or joint venture, and that no Member be a partner or joint
venturer of any other Member, for any purposes other than federal, state, local
and foreign income tax purposes, and this Agreement may not be construed to
suggest otherwise.

         Section 2.08  Power of Attorney.

         (a) Each Member and each Assignee hereby constitutes and appoints the
Chief Executive Officer, President and each Vice President, with full power of
substitution, as his true and lawful agent and attorney-in-fact, with full power
and authority in his name, place and stead, to:

             (i)  execute, swear to, acknowledge, deliver, file and record
         in the appropriate public offices (A) all certificates, documents and
         other instruments (including this Agreement and the Organizational
         Certificate and all amendments or restatements thereof) that the Board
         deems necessary or appropriate to form, qualify or continue the
         existence or qualification of the Company in the Commonwealth of
         Pennsylvania and in all other jurisdictions in which the Company may
         conduct business or own property; (B) all certificates, documents and
         other instruments that the Board deems necessary or appropriate to
         reflect, in accordance with its terms, any amendment, change,
         modification or restatement of this Agreement; (C) all certificates,
         documents and other instruments (including conveyances and a
         certificate of cancellation) that the Board deems necessary or
         appropriate to reflect the dissolution and liquidation of the Company
         pursuant to the terms of this Agreement; (D) all certificates,
         documents and other instruments relating to the transfer of any
         Membership Interests; (E) all certificates, documents and other
         instruments relating to the determination of the rights, preferences
         and privileges of any class or series of Membership Interests; and (F)
         all certificates, documents and other instruments (including agreements
         and certificates of merger) relating to a merger or consolidation of
         the Company; and

             (ii) execute, swear to, acknowledge, deliver, file and record
         all ballots, consents, approvals, waivers, certificates, documents and
         other instruments necessary or appropriate, in the sole discretion of
         the Board, to make, evidence, give, confirm or ratify any vote,
         consent, approval, agreement or other action that is made or given by
         the Members hereunder or is consistent with the terms of this Agreement
         or is necessary to effectuate the terms or intent of this Agreement.



         Nothing contained in this Section 2.08 shall be construed as
authorizing the Board or any officer to do any of the following except as
expressly provided for in this Agreement: (A) amend, change, modify or restate
this Agreement; (B) dissolve or liquidate the Company, (C) determine the rights,
preferences and privileges of any class or series of Membership Interests, or
(D) enter into a merger or consolidation of the Company.

         (b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of any Member or the transfer of any
Membership Interests and shall extend to a Member's heirs, successors, assigns
and representatives.

                                  ARTICLE III.
                                   MEMBERSHIP

         Section 3.01  Membership Interests; Additional Members.

         The Members own Membership Interests in the Company as reflected in
Exhibit A attached hereto. Persons may be admitted to the Company as Members, on
such terms and conditions as the Board determines at the time of admission. The
terms of admission or issuance must specify the Sharing Ratios applicable
thereto and may provide for the creation of different classes or groups of
Members having different rights, powers and duties. The Board may reflect the
creation of any new class or group in an amendment to this Agreement indicating
the different rights, powers and duties, and such an amendment shall be approved
by the Board and executed by the Proper Officers. Any such admission is
effective only after such new Member has executed and delivered to the Members
and the Company an instrument containing the notice address of the new Member,
the Member's ratification of this Agreement and agreement to be bound by it.

         Section 3.02  Access to Information.

         Each Member shall be entitled to receive any information that it may
request concerning the Company; provided, however, that this Section 3.02 shall
not obligate the Company to create any information that does not already exist
at the time of such request (other than to convert existing information from one
medium to another, such as providing a printout of information that is stored in
a computer database). Each Member shall also have the right, upon reasonable
notice and at all reasonable times during usual business hours, to inspect the
properties of the Company and to audit, examine and make copies of the books of
account and other records of the Company. Such right may be exercised through
any agent or employee of such Member designated in writing by it or by an
independent public accountant, engineer, attorney or other consultant so
designated. All costs and expenses incurred in any inspection, examination or
audit made on such Member's behalf shall be borne by such Member.

         Section 3.03  Liability.

         (a) No Member or Assignee shall be liable for the debts, obligations or
liabilities of the Company.



         (b) The Company and the Members agree that the rights, duties and
obligations of the Members in their capacities as members of the Company are
only as set forth in this Agreement and as otherwise arise under the Act.
Furthermore, the Members agree that the existence of any rights of a Member, or
the exercise or forbearance from exercise of any such rights, shall not create
any duties or obligations of the Member in their capacities as members of the
Company, nor shall such rights be construed to enlarge or otherwise alter in any
manner the duties and obligations of the Members.

         Section 3.04  Withdrawal.

         A Member does not have the right or power to Withdraw.

                                  ARTICLE IV.
                       DISPOSITION OF MEMBERSHIP INTERESTS

         Section 4.01  General Restriction.

         A Member may not Dispose of all or any portion of its Membership
Interests except in strict accordance with this Article IV. References in this
Article IV to Dispositions of a Membership Interest shall also refer to
Dispositions of a portion of a Membership Interest. Any attempted Disposition of
a Membership Interest, other than in strict accordance with this Article IV,
shall be, and is hereby declared, null and void ab initio. The Members agree
that a breach of the provisions of this Article IV may cause irreparable injury
to the Company and to the other Members for which monetary damages (or other
remedies at law) are inadequate in view of (a) the complexities and
uncertainties in measuring the actual damages that would be sustained by reason
of the failure of a Member to comply with such provisions and (b) the uniqueness
of the business and the relationship among the Members. Accordingly, the Members
agree that the provisions of this Article IV may be enforced by specific
performance.

         Section 4.02  Admission of Assignee as a Member.

         An Assignee has the right to be admitted to the Company as a Member,
with the Membership Interests (and attendant Sharing Ratio) so transferred to
such Assignee, only if (a) the Member making the Disposition (a "Disposing
                                                                 ---------
Member") has granted the Assignee either (i) all, but not less than all, of such
- ------
Disposing Member's Membership Interests or (ii) the express right to be so
admitted; and (b) such Disposition is effected in strict compliance with this
Article IV.

         Section 4.03  Requirements Applicable to All Dispositions and
Admissions.

         Any Disposition of Membership Interests and any admission of an
Assignee as a Member shall also be subject to the following requirements, and
such Disposition (and admission, if applicable) shall not be effective unless
such requirements are complied with; provided, however, that the Board, in its
sole and absolute discretion, may waive any of the following requirements:

         (a) Disposition Documents. The following documents must be delivered to
the Board and must be satisfactory, in form and substance, to the Board:




                  (i)      Disposition Instrument. A copy of the instrument
                           ----------------------
         pursuant to which the Disposition is effected.

                  (ii)     Ratification of this Agreement. With respect to any
                           ------------------------------
         Disposition, an instrument, executed by the Disposing Member and its
         Assignee, containing the following information and agreements, to the
         extent they are not contained in the instrument described in Section
         4.03(a)(i): (A) the notice address of the Assignee; (B) the Sharing
         Ratios after the Disposition of the Disposing Member and its Assignee
         (which together must total the Sharing Ratio of the Disposing Member
         before the Disposition); (C) the Assignee's ratification of this
         Agreement and agreement to be bound by it; and (D) representations and
         warranties by the Disposing Member and its Assignee that (1) the
         Disposition and admission is being made in accordance with Applicable
         Laws, and (2) the matters set forth in Section 4.03(a)(i) and this
         Section 4.03(a)(ii) are true and correct.

                  (iii)    Opinions. With respect to any Disposition, such
                           --------
         opinions of counsel regarding tax and securities law matters as the
         Board, in its sole discretion, may require.

         (b) Payment of Expenses. The Disposing Member and its Assignee shall
pay, or reimburse the Company for, all reasonable costs and expenses incurred by
the Company in connection with the Disposition and admission of the Assignee as
a Member, including the legal fees incurred in connection with the legal
opinions referred to in Section 4.03(a)(iii).

         (c) No Release. No Disposition of Membership Interests shall effect a
release of the Disposing Member from any liabilities to the Company or the other
Members arising from events occurring prior to the Disposition.

                                   ARTICLE V.
                             CAPITAL CONTRIBUTIONS

         Section 5.01  Initial Capital Contributions.

         At the time of the formation of the Company or contemporaneously with
the adoption by the Members of this Agreement, as appropriate, each Member, as a
result of its initial Capital Contribution, shall be deemed to have the
Membership Interest in the Company as set forth next to the Member's name on
Exhibit A.
- ---------

         The Members hereby agree that their Membership Interests shall be
adjusted to reflect a final determination of the value of their Capital
Contributions and the Company's assets. Any such adjustment shall be effective
as of February 8, 2002 and shall be implemented by the revision of Exhibit A
                                                                   ---------
hereto to reflect the final determination of the value of the Members' Capital
Contributions and the Company's assets. The final determination of the value of
the Members' Capital Contributions and the Company's assets shall be made upon
the unanimous agreement of the Members and the Company.



         Section 5.02  Loans.

         If the Company does not have sufficient cash to pay its obligations,
any Member(s) that may agree to do so with the consent of the Board may advance
all or part of the needed funds to or on behalf of the Company. An advance
described in this Section 5.02 constitutes a loan from the Member to the
Company, bears interest at a rate determined by the Board from the date of the
advance until the date of payment and is not a Capital Contribution.

         Section 5.03  Return of Contributions.

         Except as expressly provided herein, no Member is entitled to the
return of any part of its Capital Contributions or to be paid interest in
respect of either its Capital Account or its Capital Contributions. An unrepaid
Capital Contribution is not a liability of the Company or of any Member. A
Member is not required to contribute or to lend any cash or property to the
Company to enable the Company to return any Member's Capital Contributions.

         Section 5.04  Capital Accounts.

         An individual Capital Account shall be established and maintained for
each Member. A Member that has more than one class or series of Membership
Interest shall have a single Capital Account that reflects all such class,
classes or series of Membership Interests, regardless of the classes or series
of Membership Interests owned by such Member and regardless of the time or
manner in which such Membership Interests were acquired. Upon the Disposition of
all or a portion of a Membership Interest, the Capital Account of the Disposing
Member that is attributable to such Membership Interest shall carry over to the
Assignee in accordance with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(l).

                                  ARTICLE VI.
                          DISTRIBUTIONS AND ALLOCATIONS

         Section 6.01  Distributions.

         Except as otherwise provided in Section 6.02 and Section 6.05,
distributions to the Members shall be made only to all Members simultaneously in
proportion to their respective Sharing Ratios (at the time the amounts of such
distributions are determined) and in such aggregate amounts and at such times as
shall be determined by the Board; provided, however, any loans from Members
pursuant to Section 5.02 shall be repaid prior to any distributions to Members
pursuant to this Section 6.01.

         Section 6.02  Distributions on Dissolution and Winding Up.

         Upon the dissolution and winding up of the Company, after adjusting the
Capital Accounts for all distributions made under Section 6.01 and all
allocations under this Article VI, all available proceeds distributable to the
Members as determined under Section 13.02 shall be distributed to all of the
Members in amounts equal to the Members' positive Capital Account balances.



         Section 6.03  Allocations.

         Subject to the allocation rules of Section 6.03(c), (d) and (e),
Profits and Losses of the Company for any fiscal year shall be allocated as
follows:

         (a)      Profits for any fiscal year shall be allocated in the
following order of priority:

                  (i)  first, to all Members, in proportion to the deficit
         balances (if any) in their Capital Accounts, in an amount necessary to
         eliminate any deficits in the Members' Capital Accounts and restore
         such Capital Accounts balances to zero;

                  (ii)  second, to the Members until each Member has been
         allocated an amount equal to the amount distributed to such Member
         pursuant to Section 6.01 in the current and in all previous fiscal
         years in excess of amounts previously allocated to such Members
         pursuant to this Section 6.03(a)(ii);

                  (iii) third, to the Members, to the greatest extent possible,
         an amount required to cause the positive Capital Account balances of
         each of the Members to be in the same proportion as the Member's
         respective Sharing Ratios; and

                  (iv)  thereafter, to the Members in proportion to their
         respective Sharing Ratios.

         (b)      Losses for any fiscal year shall be allocated in the following
 order of priority:

                  (i)   first, to the Members, to the greatest extent possible,
         an amount required to cause the positive Capital Account balances of
         each of the Members to be in the same proportion as the Member's
         respective Sharing Ratios;

                  (ii)  next, to the Members in proportion to their respective
         Sharing Ratios until the Capital Account balances of such Members have
         been reduced to zero;

                  (iii) next, to any Member that has a positive Capital Account
         balance until the Capital Account balances of all of the Members have
         been reduced to zero; and

                  (iv)  thereafter, to the Members in proportion to their
         respective Sharing Ratios.

         (c) Notwithstanding the allocation provisions of Section 6.03(a) and
(b), if the allocation of Profits or Losses to a Member pursuant to Sections
6.03(a) and (b) in the current fiscal year would cause a Member to have a
positive Capital Account balance that is greater than or less than the amount
that has been distributed to such Member in the current fiscal year pursuant to
Section 6.01, then the allocations of Profits and Losses in the current fiscal
year shall be adjusted, to the greatest extent possible, to cause the positive
Capital Account balances of each Member to equal the amount of distributions
made to such Member in the current fiscal year. In addition, in the event of the
dissolution of the Company pursuant to Section 13.01, if the allocation of
Profits or Losses to a Member pursuant to Sections 6.03(a) and (b) would cause a
Member to have a Capital Account balance in an amount that is greater than or
less than the Member's Target Capital Account Amount, then the allocations of
Profits and Losses shall be



adjusted, to the greatest extent possible, to cause the positive Capital Account
balances of each Member to equal such an amount.

         (d)      The following special allocations shall be made in the
following order:

                  (i)   Qualified Income Offset. In the event any Member
                        -----------------------
         unexpectedly receives any adjustments, allocations or distributions
         described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
         1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company
         income and gain shall be specially allocated to such Member in an
         amount and manner sufficient to restore, to the extent required by the
         Treasury Regulations, the Adjusted Capital Account Deficit of such
         Member as quickly as possible, provided that an allocation pursuant to
         this Section 6.03(d)(i) shall be made only if and to the extent that
         such Member would have an Adjusted Capital Account Deficit after all
         other allocations provided for in this Article VI have been tentatively
         made as if this Section 6.03(d)(i) was not in this Agreement.

                  (ii)  Gross Income Allocation. In the event any Member has a
                        -----------------------
         deficit Capital Account at the end of any Company fiscal year that is
         in excess of the sum of (x) the amount such Member is obligated to
         restore pursuant to any provision of this Agreement and (y) the amount
         such Member is deemed to be obligated to restore pursuant to the
         penultimate sentence of Treasury Regulation Sections 1.704-2(g)(1) and
         1.704-2(i)(5), such Member shall be specially allocated items of
         Company income and gain in the amount of such excess as quickly as
         possible, provided that an allocation pursuant to this Section
         6.03(d)(ii) shall be made only if and to the extent that such Member
         would have a deficit Capital Account balance in excess of such sum
         after all other allocations provided for in this Article VI have been
         made as if Section 6.03(d)(i) hereof and this Section 6.03(d)(ii) were
         not in this Agreement.

                  (iii) Section 754 Adjustments. To the extent an adjustment of
                        -----------------------
         the adjusted tax basis of any Company asset pursuant to Section 734(b)
         of the Code or Section 743(b) of the Code is required, pursuant to
         Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into
         account in determining Capital Accounts, the amount of such adjustment
         to the Capital Accounts shall be treated as an item of gain (if the
         adjustment increases the basis of the asset) or loss (if the adjustment
         decreases such basis) and such gain or loss shall be specially
         allocated to the Members in a manner consistent with the manner in
         which their Capital Accounts are required to be adjusted pursuant to
         such section of the Treasury Regulations.

         (e) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial Gross Asset Value (computed in accordance with the
definition of same under this Agreement). In the event the Gross Asset Value of
any Company asset is adjusted pursuant to subparagraph (ii) of the definition of
Gross Asset Value hereof, subsequent allocations of income, gain, loss and
deduction with respect to such asset shall take account of any variation between
the adjusted basis of such asset for federal income tax purposes



and its Gross Asset Value in the same manner as under Section 704(c) of the Code
and the Treasury Regulations thereunder. Any elections or other decisions
relating to such allocations shall be made by the Tax Matters Partner in any
manner that reasonably reflects the purpose and intention of this Agreement,
provided that the Company shall use the remedial allocation method set forth in
Treasury Regulation Section 1.704-3(d). Allocations pursuant to this Section
6.03(e) are solely for purposes of federal, state, local and foreign taxes and
shall not affect, or in any way be taken into account in computing, any Member's
Capital Account or share of Profits, Losses, other items or distributions
pursuant to any provision of this Agreement.

         Section 6.04  Varying Interests.

         All items of income, gain, loss, deduction or credit shall be
allocated, and all distributions shall be made, to the Persons shown on the
records of the Company to have been Members as of the last calendar day of the
period for which the allocation or distribution is to be made. Notwithstanding
the foregoing, if during any taxable year there is a change in any Member's
Sharing Ratio, the Members agree that their allocable shares of such items for
the taxable year shall be determined on any method determined by the Board to be
permissible under Code Section 706 and the related Treasury Regulations to take
account of the Members' varying Sharing Ratios.

         Section 6.05  Tax Distributions.

         To the extent the Board, in good faith, determines the Company has
sufficient funds, the Company shall make distributions on quarterly basis after
the end of each fiscal quarter of the Company, beginning with the first quarter
for the fiscal year ending December 31, 2002, to each Member in an amount equal
to (i) the total amount of taxable income allocated to such Member for such
fiscal year that exceeds the aggregate allocation of Losses pursuant to Sections
6.03(b) and (c) for the preceding fiscal years multiplied by (ii) a tax rate
reasonably selected by the Board; provided, however, that subsequent
distributions to the Members made during such fiscal year and subsequent fiscal
years shall be adjusted as necessary to ensure that, over the entire term of the
Company, the aggregate cash distributed to a Member shall be equal to the amount
to which such Member would have been entitled had there been no distributions
made pursuant to this Section 6.05.

         Section 6.06  Withheld Taxes.

         All amounts withheld pursuant to the Code or any provision of any
state, local or foreign tax law with respect to any payment, distribution or
allocation to the Company or the Members shall be treated as amounts distributed
to the Members pursuant to this Article VI for all purposes of this Agreement.
The Board is authorized to withhold from distributions, or with respect to
allocations, to the Members and to pay over to any federal, state, local or
foreign government any amounts required to be so withheld pursuant to the Code
or any provision of any other federal, state, local or foreign law and shall
allocate such amounts to those Members with respect to which such amounts were
withheld.



         Section 6.07  Limitations on Distributions.

         Notwithstanding any provision to the contrary contained in this
Agreement, the Company shall not make a distribution to any Member on account of
its interest in the Company if such distribution would violate any Applicable
Law.

                                  ARTICLE VII.
                                   MANAGEMENT

         Section 7.01  Management by Board of Directors and Officers.

         The business and affairs of the Company shall be fully vested in, and
managed by, a Board of Directors (the "Board") and subject to the discretion of
                                       -----
the Board, officers elected pursuant to Article VIII. The Directors and officers
shall collectively constitute "managers" of the Company within the meaning of
the Act. Except as otherwise specifically provided in this Agreement, the
authority and functions of the Board, on the one hand, and of the officers, on
the other hand, shall be identical to the authority and functions of the board
of directors and officers, respectively, of a corporation organized under the
Business Corporation Law of 1988, as amended, of the Commonwealth of
Pennsylvania. The officers shall be vested with such powers and duties as are
set forth in Article VIII and as are specified by the Board. Accordingly, except
as otherwise specifically provided in this Agreement, the business and affairs
of the Company shall be managed under the direction of the Board, and the
day-to-day activities of the Company shall be conducted on the Company's behalf
by the officers who shall be agents of the Company.

         Section 7.02  Number; Qualification; Tenure.

         The number of directors constituting the Board shall be between three
and nine (each a "Director" and, collectively, the "Directors"), unless
                  --------                          ---------
otherwise fixed from time to time pursuant to a resolution adopted by a majority
of the Directors. A Director need not be a Member. Each Director shall be
elected or approved by the Members at an annual meeting of the Members and shall
serve as a Director of the Company for a term of one year (or their earlier
death or removal from office) or until their successors are elected and
qualified.

         The initial Directors of the Company shall be Deborah M. Fretz, John G.
Drosdick and Thomas W. Hofmann. The Members will appoint two Independent
Directors within three months of the listing of the MLP's common units on the
New York Stock Exchange, Inc. (the "NYSE") and one additional Independent
                                    ----
Director within 12 months of such listing.

         Section 7.03  Regular Meetings.

         The Board shall meet at least quarterly, and a regular quarterly and
annual meeting of the Board shall be held at such time and place as shall be
designated from time to time by resolution of the Board. Notice of such regular
quarterly and annual meetings shall not be required.

         Section 7.04  Special Meetings.

         A special meeting of the Board may be called at any time at the written
request of (a) the Chairman of the Board or (b) any three Directors.



         Section 7.05  Notice.

         Written notice of all special meetings of the Board must be given to
all Directors at least two Business Days prior to any special meeting of the
Board. All notices and other communications to be given to Directors shall be
sufficiently given for all purposes hereunder if in writing and delivered by
hand, courier or overnight delivery service or three days after being mailed by
certified or registered mail, return receipt requested, with appropriate postage
prepaid, or when received in the form of a telegram or facsimile, and shall be
directed to the address or facsimile number as such Director shall designate by
notice to the Company. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board need be specified in the notice
of such meeting, except for amendments to this Agreement, as provided herein.
Attendance of a Director at a meeting shall constitute waiver of notice of such
meeting, except where such Director attends the meeting for the express purpose
of objecting to the transaction of any business on the ground that the meeting
is not lawfully called or convened. A meeting may be held at any time without
notice if all the Directors are present or if those not present waive notice of
the meeting either before or after such meeting.

         Section 7.06  Action by Consent of Board or Committee of Board.

         To the extent permitted by Applicable Law, the Board, or any committee
of the Board, may act without a meeting so long as all members of the Board or
committee shall have executed a written consent with respect to any action taken
in lieu of a meeting.

         Section 7.07  Conference Telephone Meetings.

         Directors or members of any committee of the Board may participate in a
meeting of the Board or such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.

         Section 7.08  Quorum.

         A majority of all Directors, present in person or participating in
accordance with Section 7.07, shall constitute a quorum for the transaction of
business, but if at any meeting of the Board there shall be less than a quorum
present, a majority of the Directors present may adjourn the meeting from time
to time without further notice. Except as otherwise required by Applicable Law,
all decisions of the Board, or any committee of the Board, shall require the
affirmative vote of a majority of all Directors of the Board, or any committee
of the Board, respectively. The Directors present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Directors to leave less than a quorum.

         Section 7.09  Vacancies; Increases in the Number of Directors.

         Unless otherwise provided in this Agreement, vacancies and newly
created directorships resulting from any increase in the number of Directors may
be filled by a majority of the Directors then in office, although less than a
quorum, or a sole remaining Director; and any



Director so chosen shall hold office until the next annual election and until
his successor shall be duly elected and shall qualify, unless sooner displaced.

         Section 7.10 Committees.

         (a) The Board may establish committees of the Board and may delegate
any of its responsibilities, except as otherwise prohibited by Applicable Law,
to such committees.

         (b) The Board shall have an audit committee comprised of three
Directors, all of whom shall be Independent Directors. Such audit committee
shall establish a written audit committee charter in accordance with the rules
of the NYSE, as amended from time to time. "Independent Director" shall mean
                                            --------------------
Directors meeting the independence and experience requirements as set forth most
recently by the NYSE.

         (c) The Board shall have a conflicts committee (the "Conflicts
                                                              ---------
Committee") comprised of at least two Directors, all of whom shall be
- ---------
Independent Directors and none of whom shall be (i) security holders, officers
or employees of the Company, (ii) officers, directors or employees of any
Affiliate of the Company or (iii) holders of any ownership interest in the MLP,
the Operating Partnership or any of its subsidiaries other than Common Units.
The Conflicts Committee shall review transactions between the MLP and Sunoco,
Inc., or any of its Affiliates, and any other transactions involving the MLP or
its Affiliates, that the Board believes may involve conflicts of interest. Any
matter approved by the Conflicts Committee in the manner provided for in the
Partnership Agreement shall be conclusively deemed to be fair and reasonable to
the MLP, and not a breach by the Company or the Directors of any fiduciary or
other duties owed to the MLP by the Company or the Directors.

         (d) A majority of any committee, present in person or participating in
accordance with Section 7.07, shall constitute a quorum for the transaction of
business of such committee.

         (e) A majority of any committee may determine its action and fix the
time and place of its meetings unless the Board shall otherwise provide. Notice
of such meetings shall be given to each member of the committee in the manner
provided for in Section 7.05. The Board shall have power at any time to fill
vacancies in, to change the membership of or to dissolve any such committee.
Nothing herein shall be deemed to prevent the Board from appointing one or more
committees consisting in whole or in part of persons who are not Directors;
provided, however, that no such committee shall have or may exercise any
authority of the Board.

         Section 7.11  Removal.

         Any Director or the entire Board may be removed, with or without cause,
by the holders of a Majority Interest then entitled to vote at an election of
Directors.

         Section 7.12  Administration of Incentive Plans.

         Incentive Plans shall be administered by the Board acting as an
administrative committee of the whole or by another administrative committee
comprised of Directors appointed from time to time by the Board (in each case
the "Compensation Committee").
     ----------------------



                                 ARTICLE VIII.
                                    OFFICERS

         Section 8.01  Elected Officers.

         The officers of the Company shall serve at the pleasure of the Board.
Such officers shall have the authority and duties delegated to each of them,
respectively, by the Board from time to time. The elected officers of the
Company shall be a Chairman of the Board, a Chief Executive Officer, a
President, a Chief Financial Officer, a Secretary, a Treasurer and such other
officers (including, without limitation, Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents) as the Board from time to time may deem proper.
The Chairman of the Board shall be chosen from among the Directors. All officers
elected by the Board shall each have such powers and duties as generally pertain
to their respective offices, subject to the specific provisions of this Article
VIII. The Board or any committee thereof may from time to time elect or appoint,
as the case may be, other officers (including one or more Assistant Secretaries
and Assistant Treasurers) and agents, as may be necessary or desirable for the
conduct of the business of the Company. Such other officers and agents shall
have such duties and shall hold their offices for such terms as shall be
provided in this Agreement or as may be prescribed by the Board or such
committee, as the case may be.

         Section 8.02  Election and Term of Office.

         The names and titles of the initial officers of the Company are set
forth on Exhibit B hereto. Thereafter, the officers of the Company shall be
         ---------
elected annually by the Board at the regular meeting of the Board held after the
annual meeting of the Members or at such time and for such term as the Board
shall determine. Each officer shall hold office until such person's successor
shall have been duly elected and shall have qualified or until such person's
death or until he shall resign or be removed pursuant to Section 8.13.

         Section 8.03  Chairman of the Board.

         The Chairman of the Board shall preside at all meetings of the Members
and of the Board. If the Chairman is unable to preside at a meeting of the Board
and the Chief Executive Officer is also unable to preside at such meeting
pursuant to Section 8.04, then the Directors may appoint another Director to
preside at such meeting. The Directors also may elect a Vice-Chairman to act in
the place of the Chairman upon his absence or inability to act.

         Section 8.04  Chief Executive Officer.

         The Chief Executive Officer shall be responsible for the general
management of the affairs of the Company and shall perform all duties incidental
to such person's office that may be required by law and all such other duties as
are properly required of him by the Board. He shall make reports to the Board
and the Members and shall see that all orders and resolutions of the Board and
of any committee thereof are carried into effect. The Chief Executive Officer
shall have full authority to execute all deeds, mortgages, bonds, contracts,
documents or other instruments except in cases where the execution thereof shall
be expressly delegated by the Board or by this Agreement to some other officer
or agent of the Company or shall be required by law to be otherwise executed.
The Chairman of the Board may serve in the capacity of Chief



Executive Officer. If the Chairman of the Board does not so serve, then the
Chief Executive Officer, if he is also a Director, shall, in the absence of or
because of the inability to act of the Chairman of the Board, perform all duties
of the Chairman of the Board and preside at all meetings of the Board.

         Section 8.05  President.

         The Chief Executive Officer may serve in the capacity of President. If
the Chief Executive Officer does not so serve, then the President shall assist
the Chief Executive Officer in the administration and operation of the Company's
business and general supervision of its policies and affairs. The President
shall have full authority to execute all deeds, mortgages, bonds, contracts,
documents or other instruments, except in cases where the execution thereof
shall be expressly delegated by the Board or this Agreement to some other
officer or agent of the Company or shall be required by law to be otherwise
executed.

         Section 8.06  Chief Financial Officer.

         The Chief Financial Officer shall be responsible for financial
reporting for the Company and shall perform all duties incidental to such
person's office that may be required by law and all such other duties as are
properly required of him by the Board. He shall make reports to the Board and
shall see that all orders and resolutions of the Board and of any committee
thereof relating to financial reporting are carried into effect.

         Section 8.07  Vice Presidents.

         Each Executive Vice President and Senior Vice President and any Vice
President, in the order of seniority, unless otherwise determined by the Board,
shall have such of the authority and perform such of the duties of the President
as may be provided in this Agreement or assigned to them by the Board or the
President. Vice Presidents shall assist the President in the performance of the
duties assigned to the President and, in assisting the President, each Vice
President shall for such purpose have the powers of the President.

         Section 8.08  Treasurer.

         (a) The Treasurer shall exercise general supervision over the receipt,
custody and disbursement of corporate funds. The Treasurer shall cause the funds
of the Company to be deposited in such banks as may be authorized by the Board,
or in such banks as may be designated as depositories in the manner provided by
resolution of the Board. The Treasurer shall, in general, perform all duties
incident to the office of Treasurer and shall have such further powers and
duties and shall be subject to such directions as may be granted or imposed from
time to time by the Board.

         (b) Assistant Treasurers shall have such of the authority and perform
such of the duties of the Treasurer as may be provided in this Agreement or
assigned to them by the Board or the Treasurer. Assistant Treasurers shall
assist the Treasurer in the performance of the duties assigned to the Treasurer
and, in assisting the Treasurer, each Assistant Treasurer shall for such purpose
have the powers of the Treasurer.



         Section 8.09  Secretary.

         (a) The Secretary shall keep or cause to be kept, in one or more books
provided for that purpose, the minutes of all meetings of the Board, the
committees of the Board and the Members. The Secretary shall (i) see that all
notices are duly given in accordance with the provisions of this Agreement and
as required by law; (ii) be custodian of the records and the seal of the Company
and affix and attest the seal to all documents to be executed on behalf of the
Company under its seal; (iii) see that the books, reports, statements,
certificates and other documents and records required by law to be kept and
filed are properly kept and filed; and (iv) in general, perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to the Secretary by the Board.

         (b) Assistant Secretaries shall have such of the authority and perform
such of the duties of the Secretary as may be provided in this Agreement or
assigned to them by the Board or the Secretary. Assistant Secretaries shall
assist the Secretary in the performance of the duties assigned to the Secretary
and, in assisting the Secretary, each Assistant Secretary shall for such purpose
have the powers of the Secretary.

         Section 8.10  Powers of Attorney.

         The Company may grant powers of attorney or other authority as
appropriate to establish and evidence the authority of the officers and other
Persons.

         Section 8.11  Delegation of Authority.

         Unless otherwise provided by resolution of the Board, only the Chief
Executive Officer and President shall have the power or authority to delegate to
any Person such officer's rights and powers as an officer to execute ordinary
course of business contracts on behalf of the Company.

         Section 8.12  Compensation.

         The officers shall receive such compensation for their services as may
be approved by the Board. In addition, the officers and agents shall be entitled
to be reimbursed for out-of-pocket costs and expenses incurred in the course of
their service hereunder. The Directors shall be entitled to be reimbursed for
out-of-pocket costs and expenses reasonably incurred in the course of their
service hereunder.

         Section 8.13  Removal.

         Any officer elected, or agent appointed, by the Board may be removed by
the affirmative vote of a majority of the Board whenever, in their judgment, the
best interests of the Company would be served thereby. No elected officer shall
have any contractual rights against the Company for compensation by virtue of
such election beyond the date of the election of such person's successor, such
person's death, such person's resignation or such person's removal, whichever
event shall first occur, except as otherwise provided in an employment contract
or under an employee deferred compensation plan.



     Section 8.14 Vacancies.

     A newly created elected office and a vacancy in any elected office because
of death, resignation or removal may be filled by the Board for the unexpired
portion of the term at any meeting of the Board.

                                   ARTICLE IX.
                                 MEMBER MEETINGS

     Section 9.01 Meetings.

     Except as otherwise provided in this Agreement, all acts of the Members to
be taken hereunder shall be taken in the manner provided in this Article IX. An
annual meeting of the Members for the transaction of such business as may
properly come before the meeting shall be held at such time and place as the
Board shall specify in the notice of the meeting, which shall be delivered to
each Member at least 10 and not more than 60 days prior to such meeting. Special
meetings of the Member may be called by the Board or by any Member. A Member
shall call a meeting by delivering to the Board one or more requests in writing
stating that the signing Member wishes to call a meeting and indicating the
general or specific purposes for which the meeting is to be called.

     Section 9.02 Notice of a Meeting.

     Notice of a meeting called pursuant to Section 9.01 shall be given to the
Members in writing by mail or other means of written communication in accordance
with Section 14.02. The notice shall be deemed to have been given at the time
when deposited in the mail or sent by other means of written communication.
Attendance of a Member at a meeting shall constitute a waiver of notice of such
meeting, except where a Member attends the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

     Section 9.03 Action by Consent of Members.

     Any action that may be taken at a meeting of the Members may be taken
without a meeting if an approval in writing setting forth such action is signed
by the Members holding not less than the minimum percentage of the Membership
Interests that would be necessary to authorize or take such action at a meeting
at which all the Members entitled to vote on such matter were present and voted.

                                   ARTICLE X.
                          INDEMNIFICATION OF DIRECTORS,
                         OFFICERS, EMPLOYEES AND AGENTS

     Section 10.01 Indemnification.

     (a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, all Indemnitees shall be indemnified and
held harmless by the Company from and against any and all losses, claims,
damages, liabilities, joint or several,



expenses (including legal fees and expenses), judgments, fines, penalties,
interest, settlements or other amounts arising from any and all claims, demands,
actions, suits or proceedings, whether civil, criminal, administrative or
investigative, in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as an Indemnitee;
provided, that in each case the Indemnitee acted in good faith and in a manner
that such Indemnitee reasonably believed to be in, or not opposed to, the best
interests of the Company and, with respect to any criminal proceeding, had no
reasonable cause to believe its conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
the Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 10.01 shall be made only out of the
assets of the Company.

     (b) To the fullest extent permitted by law, expenses (including legal fees
and expenses) incurred by an Indemnitee who is indemnified pursuant to Section
10.01(a) in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Company of any
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 10.01.

     (c) The indemnification provided by this Section 10.01 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
as a matter of law or otherwise, both as to actions in the Indemnitee's capacity
as an Indemnitee and as to actions in any other capacity, and shall continue as
to an Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.

     (d) The Company may purchase and maintain insurance on behalf of the
Company, its Affiliates and such other Persons as the Company shall determine,
against any liability that may be asserted against or expense that may be
incurred by such Person in connection with the Company's activities or such
Person's activities on behalf of the Company, regardless of whether the Company
would have the power to indemnify such Person against such liability under the
provisions of this Agreement.

     (e) For purposes of this Section 10.01, (i) the Company shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Company also imposes duties
on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; (ii) excise taxes assessed on an Indemnitee with
respect to an employee benefit plan pursuant to applicable law shall constitute
"fines" within the meaning of Section 10.01(a); and (iii) action taken or
omitted by the Indemnitee with respect to any employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be
for a purpose that is in, or not opposed to, the best interests of the Company.

     (f) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 10.01 because the Indemnitee had an interest in the
transaction with respect to which the



indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.

     (g) The provisions of this Section 10.01 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.

     (h) No amendment, modification or repeal of this Section 10.01 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Company, nor the
obligations of the Company to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 10.01 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.

     Section 10.02 Liability of Indemnitees.

     (a) Notwithstanding anything to the contrary set forth in this Agreement,
no Indemnitee shall be liable for monetary damages to the Company or any other
Persons who have acquired membership interests in the Company, for losses
sustained or liabilities incurred as a result of any act or omission if such
Indemnitee acted in good faith.

     (b) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Company,
such Indemnitee acting in connection with the Company's business or affairs
shall not be liable to the Company or to any Member for its good faith reliance
on the provisions of this Agreement. The provisions of this Agreement, to the
extent that they restrict or otherwise modify the duties and liabilities of an
Indemnitee otherwise existing at law or in equity, are agreed by the Members to
replace such other duties and liabilities of such Indemnitee.

     (c) Any amendment, modification or repeal of this Section 10.02 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Company, and the Company's directors,
officers and employees under this Section 10.02 as in effect immediately prior
to such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.

                                  ARTICLE XI.
                                      TAXES

     Section 11.01 Tax Returns.

     The Tax Matters Partner of the Company shall prepare and timely file (on
behalf of the Company) all federal, state, local and foreign tax returns
required to be filed by the Company. Each Member shall furnish to the Company
all pertinent information in its possession relating to the Company's operations
that is necessary to enable the Company's tax returns to be timely prepared and
filed. The Company shall bear the costs of the preparation and filing of its
returns.



     Section 11.02 Tax Elections.

     (a)  The Company shall make the following elections on the appropriate tax
returns:

          (i)   to adopt as the Company's fiscal year the calendar year;

          (ii)  to adopt the accrual method of accounting;

          (iii) if a distribution of the Company's property as described in
     Section 734 of the Code occurs or upon a transfer of Membership Interest as
     described in Section 743 of the Code occurs, on request by notice from any
     Member, to elect, pursuant to Section 754 of the Code, to adjust the basis
     of the Company's properties;

          (iv)  to elect to amortize the organizational expenses of the Company
     ratably over a period of 60 months as permitted by Section 709(b) of the
     Code; and

          (v)   any other election the Board may deem appropriate.

     (b)  Neither the Company nor any Member shall make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state, local or foreign law and no provision of this Agreement (including
Section 2.07) shall be construed to sanction or approve such an election.

Section 11.03 Tax Matters Partner.

     (a)  The Board shall select Sun Pipe Line to act as the "tax matters
partner" of the Company pursuant to Section 6231(a)(7) of the Code (the "Tax
                                                                         ---
Matters Partner"). The Tax Matters Partner shall take such action as may be
- ---------------
necessary to cause to the extent possible each Member to become a "notice
partner" within the meaning of Section 6223 of the Code. The Tax Matters Partner
shall inform each Member of all significant matters that may come to its
attention in its capacity as Tax Matters Partner by giving notice thereof on or
before the fifth Business Day after becoming aware thereof and, within that
time, shall forward to each Member copies of all significant written
communications it may receive in that capacity.

     (b)  The Tax Matters Partner shall take no action without the authorization
of the Board, other than such action as may be required by Applicable Law. Any
cost or expense incurred by the Tax Matters Partner in connection with its
duties, including the preparation for or pursuance of administrative or judicial
proceedings, shall be paid by the Company.

     (c)  The Tax Matters Partner shall not enter into any extension of the
period of limitations for making assessments on behalf of the Members without
first obtaining the consent of the Board. The Tax Matters Partner shall not bind
any Member to a settlement agreement without obtaining the consent of such
Member. Any Member that enters into a settlement agreement with respect to any
Company item (as described in Section 6231(a)(3) of the Code) shall notify the
other Members of such settlement agreement and its terms within 90 Days from the
date of the settlement.



     (d) No Member shall file a request pursuant to Section 6227 of the Code for
an administrative adjustment of Company items for any taxable year without first
notifying the other Members. If the Board consents to the requested adjustment,
the Tax Matters Partner shall file the request for the administrative adjustment
on behalf of the Members. If such consent is not obtained within 30 Days from
such notice, or within the period required to timely file the request for
administrative adjustment, if shorter, any Member may file a request for
administrative adjustment on its own behalf. Any Member intending to file a
petition under Sections 6226, 6228 or other Section of the Code with respect to
any item involving the Company shall notify the other Members of such intention
and the nature of the contemplated proceeding. In the case where the Tax Matters
Partner is intending to file such petition on behalf of the Company, such notice
shall be given within a reasonable period of time to allow the Members to
participate in the choosing of the forum in which such petition will be filed.

     (e) If any Member intends to file a notice of inconsistent treatment under
Section 6222(b) of the Code, such Member shall give reasonable notice under the
circumstances to the other Members of such intent and the manner in which the
Member's intended treatment of an item is (or may be) inconsistent with the
treatment of that item by the other Members.

                                  ARTICLE XII.
                    BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS

     Section 12.01 Maintenance of Books.

     (a) The Board shall cause to be kept a record containing the minutes of the
proceedings of the meetings of the Board and of the Members, appropriate
registers and such books of records and accounts as may be necessary for the
proper conduct of the business of the Company.

     (b) The books of account of the Company shall be (i) maintained on the
basis of a fiscal year that is the calendar year, (ii) maintained on an accrual
basis in accordance with GAAP, consistently applied, and (iii) audited by the
Certified Public Accountants at the end of each calendar year.

     Section 12.02 Reports.

     With respect to each calendar year, the Board shall prepare, or cause to be
prepared, and deliver, or cause to be delivered, to each Member:

     (a) Within 120 Days after the end of such calendar year, a profit and loss
statement and a statement of cash flows for such year, a balance sheet and a
statement of each Member's Capital Account as of the end of such year, together
with a report thereon of the Certified Public Accountants; and

     (b) Such federal, state, local and foreign income tax returns and such
other accounting, tax information and schedules as shall be necessary for the
preparation by each Member on or before June 15 following the end of each
calendar year of its income tax return with respect to such year.



     Section 12.03 Bank Accounts.

     Funds of the Company shall be deposited in such banks or other depositories
as shall be designated from time to time by the Board. All withdrawals from any
such depository shall be made only as authorized by the Board and shall be made
only by check, wire transfer, debit memorandum or other written instruction.

                                 ARTICLE XIII.
                     DISSOLUTION, WINDING-UP AND TERMINATION

     Section 13.01 Dissolution.

     (a) The Company shall dissolve and its affairs shall be wound up on the
first to occur of the following events (each, a "Dissolution Event"):
                                                 -----------------

          (i)  the unanimous consent of the Members; or

          (ii) entry of a decree of judicial dissolution of the Company under
     Section 8972 of the Act.

     (b)  No other event shall cause a dissolution of the Company.

     Section 13.02 Winding-Up and Termination.

     (a)  On the occurrence of a Dissolution Event of the type described in
Section 13.01(a)(i) or Section 13.01(a)(ii), the Board shall act as liquidator.
The liquidator shall proceed diligently to wind up the affairs of the Company
and make final distributions as provided herein and in the Act. The costs of
winding up shall be borne as a Company expense. Until final distribution, the
liquidator shall continue to operate the Company properties with all of the
power and authority of the Members. The steps to be accomplished by the
liquidator are as follows:

          (i)   as promptly as possible after dissolution and again after final
     winding up, the liquidator shall cause a proper accounting to be made by a
     recognized firm of certified public accountants of the Company's assets,
     liabilities and operations through the last day of the month in which the
     dissolution occurs or the final winding up is completed, as applicable;

          (ii)  the liquidator shall discharge from Company funds all of the
     debts, liabilities and obligations of the Company (including all expenses
     incurred in winding up) or otherwise make adequate provision for payment
     and discharge thereof (including the establishment of a cash escrow fund
     for contingent liabilities in such amount and for such term as the
     liquidator may reasonably determine); and

          (iii) all remaining assets of the Company shall be distributed to the
     Members as follows:

                (A) the liquidator may sell any or all Company property,
          including to Members, and any resulting gain or loss from each sale
          shall be computed and



          allocated to the Capital Accounts of the Members in accordance with
          the provisions of Article VI;

               (B) with respect to all Company property that has not been sold,
          the fair market value of that property shall be determined and the
          Capital Accounts of the Members shall be adjusted to reflect the
          manner in which the unrealized income, gain, loss and deduction
          inherent in property that has not been reflected in the Capital
          Accounts previously would be allocated among the Members if there were
          a taxable disposition of that property for the fair market value of
          that property on the date of distribution; and

               (C) Company property (including cash) shall be distributed among
          the Members in accordance with Section 6.02; and those distributions
          shall be made by the end of the taxable year of the Company during
          which the liquidation of the Company occurs (or, if later, 90 Days
          after the date of the liquidation).

     (b)  The distribution of cash or property to a Member in accordance with
the provisions of this Section 13.02 constitutes a complete return to the Member
of its Capital Contributions and a complete distribution to the Member of its
Membership Interest and all the Company's property. To the extent that a Member
returns funds to the Company, it has no claim against any other Member for those
funds.

     Section 13.03 Deficit Capital Accounts.

     No Member will be required to pay to the Company, to any other Member or to
any third party any deficit balance that may exist from time to time in the
Member's Capital Account.

     Section 13.04 Certificate of Dissolution.

     On completion of the distribution of Company assets as provided herein, the
Members (or such other Person or Persons as the Act may require or permit) shall
file a certificate of dissolution with the Pennsylvania Department of State,
cancel any other filings made pursuant to Section 2.05 and take such other
actions as may be necessary to terminate the existence of the Company. Upon the
filing of such certificate of dissolution, the existence of the Company shall
terminate (and the Term shall end), except as may be otherwise provided by the
Act or by Applicable Law.

                                  ARTICLE XIV.
                               GENERAL PROVISIONS

     Section 14.01 Offset.

     Whenever the Company is to pay any sum to any Member, any amounts that
Member owes the Company may be deducted from that sum before payment.



     Section 14.02 Notices.

     All notices, demands, requests, consents, approvals or other communications
(collectively, "Notices") required or permitted to be given hereunder or that
                -------
are given with respect to this Agreement shall be in writing and shall be
personally served, delivered by reputable air courier service with charges
prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given upon delivery of such notice:

     To the Company:

     Sunoco Partners LLC
     1801 Market Street
     Philadelphia, Pennsylvania 19103-1699
     Attn: General Counsel and Secretary
     Telephone:        (215) 977-3868
     Fax:              (215) 977-6878

     To Sun Delaware:

     Sun Pipe Line Company of Delaware
     P.O. Box 398
     Claymont, Delaware 19703-0398
     Attn: Secretary
     Telephone:        (302) 798-7245
     Fax:              (610) 859-1327

     To Sun Pipe Line:

     Sun Pipe Line Company
     1801 Market Street
     Philadelphia, Pennsylvania 19103-1699
     Attn: Secretary
     Telephone:        (215) 977-6648
     Fax:              (215) 977-6733

     To Sunoco R&M:

     Sunoco, Inc. (R&M)
     1801 Market Street
     Philadelphia, Pennsylvania  19103-1699
     Attn: Assistant General Counsel and Corporate Secretary
     Telephone:        (215) 977-6430
     Fax:              (215) 977-6733



     To Atlantic Petroleum:

     Atlantic Petroleum Corporation
     P.O. Box 398
     Claymont, Delaware 19703-0398
     Attn: Secretary
     Telephone:        (302) 798-7245
     Fax:              (610) 859-1327

     To Atlantic Refining:

     Atlantic Refining & Marketing Corp.
     P.O. Box 398
     Claymont, Delaware 19703-0398
     Attn: Secretary
     Telephone:        (302) 798-7245
     Fax:              (610) 859-1327

     Section 14.03 Entire Agreement; Superseding Effect.

     This Agreement constitutes the entire agreement of the Members and their
Affiliates relating to the Company and the transactions contemplated hereby, and
supersedes all provisions and concepts contained in all prior contracts or
agreements among the Members or any of their Affiliates with respect to the
Company, whether oral or written.

     Section 14.04 Effect of Waiver or Consent.

     Except as otherwise provided in this Agreement, a waiver or consent,
express or implied, to or of any breach or default by any Member in the
performance by that Member of its obligations with respect to the Company is not
a consent or waiver to or of any other breach or default in the performance by
that Member of the same or any other obligations of that Member with respect to
the Company. Except as otherwise provided in this Agreement, failure on the part
of a Member to complain of any act of any Member or to declare any Member in
default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Member of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

     Section 14.05 Amendment or Restatement.

     This Agreement or the Pennsylvania Certificate may be amended or restated
only by a written instrument executed (or, in the case of the Pennsylvania
Certificate, approved) by all Members.

     Section 14.06 Binding Effect.

     Subject to the restrictions on Dispositions set forth in this Agreement,
this Agreement is binding on and shall inure to the benefit of the Members and
their respective successors and permitted assigns.



     Section 14.07 Governing Law; Severability.

     THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE COMMONWEALTH OF PENNSYLVANIA, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR
PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT
TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict between
the provisions of this Agreement and any mandatory, non-waivable provision of
the Act, such provision of the Act shall control. If any provision of the Act
provides that it may be varied or superseded in a limited liability company
agreement (or otherwise by agreement of the members or managers of a limited
liability company), such provision shall be deemed superseded and waived in its
entirety if this Agreement contains a provision addressing the same issue or
subject matter. If any provision of this Agreement or the application thereof to
any Member or circumstance is held invalid or unenforceable to any extent, (a)
the remainder of this Agreement and the application of that provision to other
Members or circumstances is not affected thereby, and (b) the Members shall
negotiate in good faith to replace that provision with a new provision that is
valid and enforceable and that puts the Members in substantially the same
economic, business and legal position as they would have been in if the original
provision had been valid and enforceable.

     Section 14.08 Further Assurances.

     In connection with this Agreement and the transactions contemplated
hereby, each Member shall execute and deliver any additional documents and
instruments and perform any additional acts that may be necessary or appropriate
to effectuate and perform the provisions of this Agreement and those
transactions.

     Section 14.09 Waiver of Certain Rights.

     Each Member irrevocably waives any right it may have to maintain any action
for dissolution of the Company or for partition of the property of the Company.

     Section 14.10 Counterparts.

     This Agreement may be executed in any number of counterparts with the same
effect as if all signing parties had signed the same document. All counterparts
shall be construed together and constitute the same instrument.



     Section 14.11 Jurisdiction.

     Any and all Claims arising out of, in connection with or in relation to (i)
the interpretation, performance or breach of this Agreement, or (ii) any
relationship before, at the time of entering into, during the term of, or upon
or after expiration or termination of this Agreement, between the parties
hereto, shall be brought in any court of competent jurisdiction in the
Commonwealth of Pennsylvania. Each party hereto unconditionally and irrevocably
consents to the jurisdiction of any such court over any Claims and waives any
objection that such party may have to the laying of venue of any Claims in any
such court.

                  [Remainder of Page Intentionally Left Blank]




     IN WITNESS WHEREOF, the Members have executed this Agreement as of the date
first set forth above.

                           MEMBERS

                           SUN PIPE LINE COMPANY OF DELAWARE


                           By:  /s/ David A. Justin
                                ----------------------------------------
                                Name: David A. Justin
                                Title: President

                           SUN PIPE LINE COMPANY


                           By:  /s/ Deborah M. Fretz
                                ----------------------------------------
                                Name: Deborah M. Fretz
                                Title: President

                           SUNOCO, INC. (R&M)


                           By:  /s/ Thomas W. Hofmann
                                ----------------------------------------
                                Name: Thomas W. Hofmann
                                Title: Senior Vice President, Treasurer

                           ATLANTIC PETROLEUM CORPORATION


                           By:  /s/ Barry H. Rosenberg
                                ---------------------------------------
                                Name: Barry H. Rosenberg
                                Title: President and Treasurer

                           ATLANTIC REFINING & MARKETING CORP.


                           By:  /s/ Robert H. Owens
                                ----------------------------------------
                                Name: Robert H. Owens
                                Title: President




                                    EXHIBIT A
                                    ---------
                                                              Effective Capital
                                                              -----------------
 Member                           Membership Interest*          Contribution*
 ------                           -------------------           ------------

Sun Pipe Line Company of Delaware           13%                   $________
Sun Pipe Line Company                       45%                   $________
Sunoco, Inc. (R&M)                          25%                   $________
Atlantic Petroleum Corporation              10%                   $________
Atlantic Refining & Marketing Corp.          7%                   $________

- -------------------
* To be adjusted and/or determined pursuant to Section 5.01 of the Second
Amended and Restated Limited Liability Company Agreement of Sunoco Partners LLC.



                                    EXHIBIT B
                                    ---------

John G. Drosdick                   Chairman of the Board
Deborah M. Fretz                   President and Chief Executive Officer
Colin A. Oerton                    Vice President and Chief Financial Officer
Paul S. Broker                     Vice President, Western Operations
James L. Fidler                    Vice President, Business Development
David A. Justin                    Vice President, Eastern Operations
Jeffrey W. Wagner                  Secretary
Paul A. Mulholland                 Treasurer
Joseph P. Krott                    Comptroller



                                                                    Exhibit 23.1

                        Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated:

   . March 15, 2002 with respect to the combined balance sheets of Sunoco
     Logistics (Predecessor), as of December 31, 2001 and 2000 and the related
     combined statements of income and net parent investment and of cash flows
     for each of the three years in the period ended December 31, 2001;

   . March 15, 2002 with respect to the balance sheet of Sunoco Logistics
     Partners L.P. as of December 31, 2001; and

   . March 15, 2002 with respect to the balance sheet of Sunoco Partners LLC as
     of December 31, 2001

in Amendment No. 1 to the Registration Statement (Form S-4 No. 333-86036) and
related Prospectus of Sunoco Logistics Partners Operations L.P. for the
registration of $250,000,000 7.25% Senior Notes due 2012.


                                                           /s/ Ernst & Young LLP


Philadelphia, Pennsylvania
May 8, 2002



                                                                   Exhibit 99.1

                             LETTER OF TRANSMITTAL

                                   To Tender
                    Outstanding 7.25% Senior Notes due 2012
                                      of

                   Sunoco Logistics Partners Operations L.P.

        Pursuant to the Exchange Offer and Prospectus dated      , 2002

  The Exchange Offer and Withdrawal Rights will expire at 5:00 p.m., New York
City time, on      , 2002 (the "Expiration Date"), unless the Exchange Offer is
                           extended by the Company.

                 THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:

                      Wachovia Bank, National Association
                     (formerly First Union National Bank)

           By Mail:         By Overnight Courier and      By Facsimile:
   Wachovia Bank, National       Hand Delivery:           (704) 590-7628
         Association        Wachovia Bank, National       (For Eligible
    (formerly First Union         Association           Institutions Only)
        National Bank)       (formerly First Union
    1525 West W.T. Harris        National Bank)       Confirm By Telephone:
          Boulevard          1525 West W.T. Harris        (704) 590-7410
          NC1153 3C3               Boulevard
       Charlotte, North            NC1153 3C3
     Carolina 28262-1153        Charlotte, North
     Attention: Corporate     Carolina 28262-1153
       Trust Operations       Attention: Corporate
                                Trust Operations

 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER
      OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

   IF YOU WISH TO EXCHANGE CURRENTLY OUTSTANDING 7.25% SENIOR NOTES DUE 2012
(THE "OUTSTANDING NOTES") FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT AT MATURITY
OF NEW 7.25% SENIOR NOTES DUE 2012 PURSUANT TO THE EXCHANGE OFFER, YOU MUST
VALIDLY TENDER (AND NOT WITHDRAW) OUTSTANDING NOTES TO THE EXCHANGE AGENT PRIOR
TO THE EXPIRATION DATE.

                               -----------------



   The undersigned hereby acknowledges receipt and review of the Prospectus,
dated      , 2002 (the "Prospectus"), of Sunoco Logistics Partners Operations
L.P., a Delaware limited partnership (the "Company"), and this Letter of
Transmittal (the "Letter of Transmittal"), which together describe the
Company's offer (the "Exchange Offer") to exchange its 7.25% Senior Notes due
2012 (the "New Notes") that have been registered under the Securities Act of
1933, as amended (the "Securities Act"), for a like principal amount of its
issued and outstanding 7.25% Senior Notes due 2012 (the "Outstanding Notes").
Capitalized terms used but not defined herein have the respective meaning given
to them in the Prospectus.

   The Company reserves the right, at any time or various times, to extend the
Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest date to which the Exchange Offer is extended. The Company
shall notify the Exchange Agent and each registered holder of the Outstanding
Notes of any extension by oral or written notice no later than 9:00 a.m., New
York City time, on the business day after the previously scheduled Expiration
Date.

   This Letter of Transmittal is to be used by a holder of Outstanding Notes if
Outstanding Notes are to be forwarded herewith. An Agent's Message (as defined
in the next sentence) is to be used if delivery of Outstanding Notes is to be
made by book-entry transfer to the account maintained by the Exchange Agent at
The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedures set forth in the Prospectus under the caption "Exchange
Offer--Procedures for Tendering." The term "Agent's Message" means a message,
transmitted by the Book-Entry Transfer Facility and received by the Exchange
Agent and forming a part of the confirmation of a book-entry transfer
("Book-Entry Confirmation"), which states that the Book-Entry Transfer Facility
has received an express acknowledgment from a participant tendering Outstanding
Notes that are the subject of such Book-Entry Confirmation and that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Company may enforce such agreement against such
participant. Holders of Outstanding Notes whose Outstanding Notes are not
immediately available, or who are unable to deliver their Outstanding Notes and
all other documents required by this Letter of Transmittal to the Exchange
Agent on or prior to the Expiration Date, or who are unable to complete the
procedure for book-entry transfer on a timely basis, must tender their
Outstanding Notes according to the guaranteed delivery procedures set forth in
the Prospectus under the caption "Exchange Offer--Guaranteed Delivery
Procedures." Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.

   The term "holder" with respect to the Exchange Offer means any person in
whose name Outstanding Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from such
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their
Outstanding Notes must complete this Letter of Transmittal in its entirety.

                                      2



                         SIGNATURES MUST BE PROVIDED.
             PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

Ladies and Gentlemen:

   1.  The undersigned hereby tenders to the Company the Outstanding Notes
described in the box entitled "Description of Outstanding Notes Tendered"
pursuant to the Company's offer of $1,000 principal amount at maturity of New
Notes in exchange for each $1,000 principal amount at maturity of the
Outstanding Notes, upon the terms and subject to the conditions contained in
the Prospectus, receipt of which is hereby acknowledged, and in this Letter of
Transmittal.

   2.  The undersigned hereby represents and warrants that it has full
authority to tender the Outstanding Notes described above. The undersigned
will, upon request, execute and deliver any additional documents deemed by the
Company to be necessary or desirable to complete the tender of Outstanding
Notes.

   3.  The undersigned acknowledges that the tender of the Outstanding Notes
pursuant to all of the procedures set forth in the Prospectus will constitute
an agreement between the undersigned and the Company as to the terms and
conditions set forth in the Prospectus.

   4.  The undersigned acknowledge(s) that the Exchange Offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission (the "SEC"),
including Exxon Capital Holdings Corp., SEC No-Action Letter (available April
13, 1989), Morgan Stanley & Co., Inc., SEC No-Action Letter (available June 5,
1991) and Shearman & Sterling, SEC No-Action Letter (available July 2, 1993),
that the New Notes issued in exchange for the Outstanding Notes pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
holders thereof (other than a broker-dealer who purchased Outstanding Notes
exchanged for such New Notes directly from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act of 1933, as
amended (the "Securities Act"), and any such holder that is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders are not participating in, and
have no arrangement with any person to participate in, the distribution of such
New Notes.

   5.  Unless the box under the heading "Special Registration Instructions" is
checked, the undersigned hereby represents and warrants that:

      a. the New Notes acquired pursuant to the Exchange Offer are being
   obtained in the ordinary course of business of the undersigned, whether or
   not the undersigned is the holder;

      b. neither the undersigned nor any such other person is engaging in or
   intends to engage in a distribution of such New Notes;

      c. neither the undersigned nor any such other person has an arrangement
   or understanding with any person to participate in the distribution of such
   New Notes; and

      d. neither the holder nor any such other person is an "affiliate," as
   such term is defined under Rule 405 promulgated under the Securities Act, of
   the Company.

   6.  The undersigned may, if unable to make all of the representations and
warranties contained in Item 5 above and as otherwise permitted in the
Registration Rights Agreement (as defined below), elect to have its Outstanding
Notes registered in the shelf registration statement described in the
Registration Rights Agreement, dated as of February 8, 2002 (the "Registration
Rights Agreement"), by and among the Company and the Initial Purchasers (as
defined therein). Such election may be made by checking the box below entitled
"Special Registration Instructions." By making such election, the undersigned
agrees, as a holder of Outstanding Notes participating in a shelf registration,
to indemnify and hold harmless the Company and its affiliates, their respective
officers, directors, employees, representatives and agents and each person who
controls the Company within the meaning of either the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all losses, claims, damages or liabilities caused by any untrue
statement or

                                      3



alleged untrue statement of a material fact contained in any shelf registration
statement or prospectus, or in any supplement thereto or amendment thereof, or
caused by the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; but
only with respect to information relating to the undersigned furnished in
writing by or on behalf of the undersigned expressly for use in a shelf
registration statement, a prospectus or any amendments or supplements thereto.
Any such indemnification shall be governed by the terms and subject to the
conditions set forth in the Registration Rights Agreement, including, without
limitation, the provisions regarding notice, retention of counsel, contribution
and payment of expenses set forth therein. The above summary of the
indemnification provision of the Registration Rights Agreement is not intended
to be exhaustive and is qualified in its entirety by the Registration Rights
Agreement.

   7.  If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Outstanding Notes that were acquired as a
result of market-making activities or other trading activities, it acknowledges
that it will deliver a prospectus in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. If the undersigned is a broker-dealer and
Outstanding Notes held for its own account were not acquired as a result of
market-making or other trading activities, such Outstanding Notes cannot be
exchanged pursuant to the Exchange Offer.

   8.  Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and
legal and personal representatives of the undersigned.

   9.  Unless otherwise indicated herein under "Special Delivery Instructions,"
please issue the certificates for the New Notes in the name of the undersigned.

                                      4



   List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space below is inadequate, list the registered numbers and
principal amounts on a separate signed schedule and affix the list to this
Letter of Transmittal.

                           DESCRIPTION OF OUTSTANDING
                                 NOTES TENDERED
- --------------------------------------------------------------------------------
Name(s) and Address(es)
of Registered Holder(s)
       Exactly as
  Name(s) Appear(s) on
   Outstanding Notes
  (Please Fill In, If
         Blank)                        Outstanding Note(s) Tendered
- ----------------------------------------------------------------------
                                     Aggregate Principal   Principal
                         Registered   Amount Represented     Amount
                         Number(s)* by Outstanding Note(s) Tendered**
                         --------------------------------------------
                         --------------------------------------------
                         --------------------------------------------
                         --------------------------------------------
                         --------------------------------------------
                         --------------------------------------------
                         --------------------------------------------
- ---------------------------------------------------------------------
   * Need not be completed by book-entry holders.
  ** Unless otherwise indicated, any tendering holder of Outstanding
     Notes will be deemed to have tendered the entire aggregate
     principal amount represented by such Outstanding Notes. All
     tenders must be in integral multiples of $1,000.

                               METHOD OF DELIVERY

  [_]Check here if tendered Outstanding Notes are enclosed herewith.

  [_]Check here if tendered Outstanding Notes are being delivered by
     book-entry transfer made to an account maintained by the
     Exchange Agent with a Book-Entry Transfer Facility and complete
     the following:

  Name of Tendering Institution:  ___________________________________

  Account Number:  __________________________________________________

  Transaction Code Number:  _________________________________________

  [_]Check here if tendered Outstanding Notes are being delivered
     pursuant to a Notice of Guaranteed Delivery and complete the
     following:

  Name(s) of Registered Holder(s): ________________________________

  Date of Execution of Notice of Guaranteed Delivery: _____________

  Window Ticket Number (if available): ____________________________

  Name of Eligible Institution that guaranteed delivery: __________

  Account Number (If delivered by book-entry transfer): ___________

                                      5



                                                            
- -------------------------------------------------------------  ------------------------------------------------------------
            SPECIAL ISSUANCE INSTRUCTIONS                                  SPECIAL DELIVERY INSTRUCTIONS
             (See Instructions 5 and 6)                                     (See Instructions 5 and 6)

   To be completed ONLY (i) if Outstanding Notes                  To be completed ONLY if the New Notes are to
in a principal amount not tendered, or New Notes               be issued or sent to someone other than the
issued in exchange for Outstanding Notes accepted for          undersigned or to the undersigned at an address other
exchange, are to be issued in the name of someone              than as indicated above.
other than the undersigned, or (ii) if Outstanding
Notes tendered by book-entry transfer that are not             Mail[_] Issue  [_] (check appropriate boxes)
exchanged are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility. Issue          Name ________________________________________________
New Notes and/or Outstanding Notes to:                                            (Type or Print)

                                                               Address _____________________________________________
Name ________________________________________________
                   (Type or Print)                             _____________________________________________________
                                                                                        (Zip Code)
Address _____________________________________________
                                                               _____________________________________________________
_____________________________________________________             (Tax Identification or Social Security Number)
                         (Zip Code)
                                                               _____________________________________________________
_____________________________________________________
   (Tax Identification or Social Security Number)
           (Complete Substitute Form W-9)

  Credit Unexchanged Outstanding Notes Delivered by
   Book-Entry Transfer to the Book-Entry Transfer
              Facility Set Forth Below:

_____________________________________________________

    Book-Entry Transfer Facility Account Number:

_____________________________________________________
- -------------------------------------------------------------  ------------------------------------------------------------



                                                            
- ------------------------------------------------------------   ------------------------------------------------------------
                                                                        SPECIAL BROKER-DEALER INSTRUCTIONS
           SPECIAL REGISTRATION INSTRUCTIONS
                                                               [_]Check here if you are a broker-dealer and wish to
   To be completed ONLY if (i) the undersigned                    receive 10 additional copies of the Prospectus
satisfies the conditions set forth in Item 6 above, (ii)          and 10 copies of any amendments or supplements
the undersigned elects to register its Outstanding                thereto.
Notes in the shelf registration statement described in
the Registration Rights Agreement and (iii) the                Name: ______________________________________________
undersigned agrees to indemnify certain entities and                              (Please Print)
individuals as set forth in Item 6 above. (See Item 6.)
                                                               Address: ___________________________________________
[_]By checking this box, the undersigned hereby (i)
   represents that it is unable to make all of the             ____________________________________________________
   representations and warranties set forth in Item 5                                   (Include Zip Code)
   above, (ii) elects to have its Outstanding Notes
   registered pursuant to the shelf registration
   statement described in the Rights Agreement and
   (iii) agrees to indemnify certain entities and
   individuals identified in, and to the extent
   provided in, Item 6 above.
- ------------------------------------------------------------   ------------------------------------------------------------



                                      6



                                   IMPORTANT
                        PLEASE SIGN HERE WHETHER OR NOT
            OUTSTANDING NOTES ARE BEING PHYSICALLY TENDERED HEREBY
                  (Complete Accompanying Substitute Form W-9)

                                                      
- ------------------------------------------------------------------------------------------------------------------------------
Signature(s) of Registered Holders of Outstanding Notes: __________________________________________________________________

___________________________________________________________________________________________________________________________
Dated: ____________________________________________________________________________________________________________________

   (The above lines must be signed by the registered holder(s) of Outstanding Notes as name(s) appear(s) on the
Outstanding Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by a
properly completed bond power from the registered holder(s), a copy of which must be transmitted with this Letter of
Transmittal. If Outstanding Notes to which this Letter of Transmittal relate are held of record by two or more joint
holders, then all such holders must sign this Letter of Transmittal. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then
such person must (i) set forth his or her full title below and (ii) unless waived by the Company, submit evidence
satisfactory to the Company of such person's authority so to act. See Instruction 5 regarding completion of this Letter of
Transmittal, printed below.)

Name(s) ___________________________________________________________________________________________________________________
                                                  (Please Type or Print)

Capacity: _________________________________________________________________________________________________________________

Address: __________________________________________________________________________________________________________________
                                                    (Include Zip Code)

Area Code and Telephone Number: ___________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------



                                                      
- ---------------------------------------------------------------------------------
                     SIGNATURE GUARANTEE (SEE INSTRUCTION 5)

        CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION

_________________________________________________________________________________
             (Name of Eligible Institution Guaranteeing Signatures)

_________________________________________________________________________________
(Address (including zip code) and Telephone Number (including area code) of Firm)

_________________________________________________________________________________
                             (Authorized Signature)

_________________________________________________________________________________
                                 (Printed Name)

_________________________________________________________________________________
                                     (Title)

Dated:___________________________________________________________________________
- ---------------------------------------------------------------------------------



                                      7



                                 INSTRUCTIONS
        FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

1.  Delivery of This Letter of Transmittal and Outstanding Notes or Book-Entry
Confirmations.

   All physically delivered Outstanding Notes or any confirmation of a
book-entry transfer to the Exchange Agent's account at the Book-Entry Transfer
Facility of Outstanding Notes tendered by book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or Agent's Message or facsimile hereof or thereof, and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date.

   The method of delivery of the tendered Outstanding Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If such delivery is by mail, it is recommended that registered
mail, properly insured, with return receipt requested, be used. Instead of
delivery by mail, it is recommended that the holder use an overnight or hand
delivery service. In all cases, sufficient time should be allowed to assure
delivery to the Exchange Agent before the Expiration Date. No Letter of
Transmittal or Outstanding Notes should be sent to the Company.

2.  Guaranteed Delivery Procedures.

   Holders who wish to tender their Outstanding Notes and whose Outstanding
Notes are not immediately available or who cannot deliver their Outstanding
Notes, this Letter of Transmittal or any other documents required hereby to the
Exchange Agent prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis and deliver an Agent's
Message, must tender their Outstanding Notes according to the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedures, a
tender may be effected if the Exchange Agent has received at its office, on or
prior to the Expiration Date, a properly completed and duly executed Notice of
Guaranteed Delivery by facsimile transmission, mail or hand delivery or a
properly transmitted Agent's Message and Notice of Guaranteed Delivery from an
Eligible Institution (defined as a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Securities Exchange Act) setting
forth the name and address of the tendering holder, the name(s) in which the
Outstanding Notes are registered, the certificate number(s) and the principal
amount of the Outstanding Notes to be tendered, and stating that the tender is
being made thereby and guaranteeing that, within three New York Stock Exchange
trading days after the expiration date, such properly completed and executed
Letter of Transmittal or facsimile transmission thereof by the Eligible
Institution, such Outstanding Notes, in proper form for transfer (or a
confirmation of book-entry transfer of such Outstanding Notes into the Exchange
Agent's account at DTC), will be delivered by such Eligible Institution
together with any other required documents to the Exchange Agent. Unless
Outstanding Notes being tendered by the above-described method are deposited
with the Exchange Agent within the time period set forth above (accompanied or
preceded by a properly completed Letter of Transmittal and any other required
documents), the Company may, at its option, reject the tender.

   Any holder of Outstanding Notes who wishes to tender Outstanding Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00
p.m., New York City time, on the Expiration Date. Upon request of the Exchange
Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to
tender their Outstanding Notes according to the guaranteed delivery procedures
set forth above. See "Exchange Offer--Guaranteed Delivery Procedures" section
of the Prospectus.

3.  Tender by Holder.

   Only a registered holder of Outstanding Notes may tender such Outstanding
Notes in the Exchange Offer. Any beneficial holder of Outstanding Notes who is
not the registered holder and who wishes to tender should arrange with the
registered holder to execute and deliver this Letter of Transmittal on his
behalf or must, prior to completing and executing

                                      8



this Letter of Transmittal and delivering his Outstanding Notes, either make
appropriate arrangements to register ownership of the Outstanding Notes in such
holder's name or obtain a properly completed bond power from the registered
holder.

4.  Partial Tenders.

   Tenders of Outstanding Notes will be accepted only in integral multiples of
$1,000. If less than the entire principal amount of any Outstanding Notes is
tendered, the tendering holder should fill in the principal amount tendered in
the third column of the box entitled "Description of Outstanding Notes
Tendered" above. The entire principal amount of Outstanding Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire principal amount of all Outstanding Notes is not
tendered, then Outstanding Notes for the principal amount of Outstanding Notes
not tendered and New Notes issued in exchange for any Outstanding Notes
accepted will be sent to the holder at his or her registered address, unless a
different address is provided in the appropriate box on this Letter of
Transmittal, promptly after the Outstanding Notes are accepted for exchange.

5.  Signatures on this Letter of Transmittal; Bond Powers and Endorsements;
Guarantee of Signatures.

   If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder(s) of the Outstanding Notes tendered hereby, the signature
must correspond with the name(s) as written on the face of the Outstanding
Notes without alteration, enlargement or any change whatsoever. If this Letter
of Transmittal (or facsimile hereof) is signed by a participant in the
Book-Entry Transfer Facility, the signature must correspond with the name as it
appears on the security position listing as the holder of the Outstanding Notes.

   If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder or holders of Outstanding Notes listed and tendered hereby
and the New Notes issued in exchange therefor are to be issued (or any
untendered principal amount of Outstanding Notes is to be reissued) to the
registered holder, the said holder need not and should not endorse any tendered
Outstanding Notes, nor provide a separate bond power. In any other case, such
holder must either properly endorse the Outstanding Notes tendered or transmit
a properly completed separate bond power with this Letter of Transmittal, with
the signatures on the endorsement or bond power guaranteed by an Eligible
Institution.

   If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered holder or holders of any Outstanding Notes listed,
such Outstanding Notes must be endorsed or accompanied by appropriate bond
powers, in each case signed as the name of the registered holder or holders
appears on the Outstanding Notes.

   If this Letter of Transmittal (or facsimile hereof) or any Outstanding Notes
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority to act must be submitted with this Letter of Transmittal.

   Endorsements on Outstanding Notes and signatures on bond powers required by
this Instruction 5 must be guaranteed by an Eligible Institution. All
signatures on this Letter of Transmittal (or facsimile hereof) must be
guaranteed by an Eligible Institution.

6.  Special Registration and Delivery Instructions.

   Tendering holders should indicate, in the applicable box or boxes, the name
and address (or account at the Book-Entry Transfer Facility) to which New Notes
or substitute Outstanding Notes for principal amounts not tendered or not
accepted for exchange are to be issued or sent, if different from the name and
address of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated.

                                      9



   Tax law requires that a holder of any Outstanding Notes that are accepted
for exchange must provide the Company (as payor) with its correct taxpayer
identification number ("TIN"), which, in the case of a holder who is an
individual is his or her social security number. If the Company is not provided
with the correct TIN, the holder may be subject to a $50 penalty imposed by
Internal Revenue Service. (If withholding results in an overpayment of taxes, a
refund may be obtained). Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.

   To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of
failure to report all interest or dividends or (ii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to backup
withholding. If the Outstanding Notes are registered in more than one name or
are not in the name of the actual owner, see the enclosed "Guidelines for
Certification of Taxpayer Identification Number of Substitute Form W-9" for
information on which TIN to report.

   The Company reserves the right in its sole discretion to take whatever steps
necessary to comply with the Company's obligations regarding backup withholding.

7.  Validity of Tenders.

   All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Outstanding Notes will be
determined by the Company, in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any or all
tenders not in proper form or the acceptance for exchange of which may, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
absolute right to waive any of the conditions of the Exchange Offer or any
defect or irregularity in the tender of any Outstanding Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions on the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of Outstanding Notes must be cured within such time as the Company
shall determine. Although the Company intends to notify holders of defects or
irregularities with respect to tenders of Outstanding Notes, neither the
Company, the Exchange Agent, nor any other person shall be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give such notification. Tenders of Outstanding Notes
will not be deemed to have been made until such defects or irregularities have
been cured or waived. Any Outstanding Notes received by the Exchange Agent that
are not properly tendered and as to which the defects or irregularities have
not been cured or waived will be returned by the Exchange Agent to the
tendering holders, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.

8.  Waiver of Conditions.

   The Company reserves the absolute right to waive, in whole or part, any of
the conditions to the Exchange Offer set forth in the Prospectus or in this
Letter of Transmittal.

9.  No Conditional Tender.

   No alternative, conditional, irregular or contingent tender of Outstanding
Notes on transmittal of this Letter of Transmittal will be accepted.

10.  Mutilated, Lost, Stolen or Destroyed Outstanding Notes.

   Any holder whose Outstanding Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.

                                      10



11.  Request for Assistance or Additional Copies.

   Requests for assistance or for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address or
telephone number set forth on the cover page of this Letter of Transmittal.
Holders may also contact their broker, dealer, commercial bank, trust company
or other nominee for assistance concerning the Exchange Offer.

12.  Withdrawal.

   Tenders may be withdrawn only pursuant to the limited withdrawal rights set
forth in the Prospectus under the caption "Exchange Offer--Withdrawal of
Tenders."

   IMPORTANT:  This Letter of Transmittal or a manually signed facsimile hereof
(together with the outstanding notes delivered by book-entry transfer or in
original hard copy form) must be received by the Exchange Agent, or the Notice
of Guaranteed Delivery must be received by the Exchange Agent, prior to the
Expiration Date.

                                      11



                                                                                  
                              Part 1--PLEASE PROVIDE YOUR TIN IN THE BOX                ______________________________
SUBSTITUTE                    AT THE RIGHT AND CERTIFY BY SIGNING AND                       Social Security Number
Form W-9                      DATING BELOW.                                                           or
                              _________________________________________________________
Department of the             Name                                                      ______________________________
Treasury Internal Revenue                                                                   Employer Identification
Service                       _________________________________________________________             Number
                              Business Name
Payer's Request for Taxpayer  Please check appropriate box
Identification Number ("TIN") [_] Individual/Sole Proprietor  [_] Corporation
                              [_] Partnership    [_] Other

                              _________________________________________________________
                              Address

                              _________________________________________________________
                              City, State, Zip Code
                              --------------------------------------------------------------------------------------------------
                              Part 2--For Payees exempt from back-up withholding, see the enclosed Guidelines for
                              Certification of Taxpayer Identification Number on Substitute Form W-9, check the Exempt
                              box below and complete the Substitute Form W-9
                                                                         Exempt: [_]
                              ---------------------------------------------------------------------------------------------------
                              Part 3--Certification--Under penalties of perjury, I certify that:
                              (1) The number shown on this form is my correct Taxpayer Identification Number (or I am
                                  waiting for a number to be issued to me); and
                              (2) I am not subject to backup withholding because: (a) I am exempt from backup
                                  withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS")
                                  that I am subject to backup withholding as a result of a failure to report all interest on
                                  dividends, or (c) the IRS has notified me that I am no longer subject to backup
                                  withholding; and
                              (3) I am a U.S. person (including a U.S. resident alien).

                              Certification Instructions--You must cross out item (2) above if you have been notified by
                              the IRS that you are currently subject to backup withholding because of under reporting
                              interest or dividends on your tax return.
                              ---------------------------------------------------------------------------------------------------
                              Signature _______________________________________________            Part 4--
                              Date ____________________________________________________        Awaiting TIN [_]
                                                                                        Please complete the Certificate
                                                                                        of Authority Taxpayer
                                                                                        Identification Numbers below.



   NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF ANY PAYMENTS MADE TO YOU PURSUANT TO AN OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING
CERTIFICATE IF YOU CHECKED THE BOX IN PART 4 OF SUBSTITUTE FORM W-9.

   YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED PART 4 OF THE
SUBSTITUTE FORM W-9

- --------------------------------------------------------------------------------
            CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

 I certify under penalty of perjury that a taxpayer identification number has
 not been issued to me, and either (a) I have mailed or delivered an
 application to receive a taxpayer identification number to the appropriate
 Internal Revenue Service Center or Social Security Administration Office or
 (b) I intend to mail or deliver an application in the near future. I
 understand that if I do not provide a taxpayer identification number within 60
 days of the payment date the withholding amount will be remitted to the IRS.

 Signature ____________________              Date _________________, 2002
- --------------------------------------------------------------------------------

                                      12