Exhibit 10.6

[Month, Year] Award

STOCK OPTION AND LIMITED RIGHTS AGREEMENT

Under the

SUNOCO, INC. LONG-TERM PERFORMANCE ENHANCEMENT PLAN II

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

W I T N E S S E T H:

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

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

WHEREAS, the Board and/or Committee has determined to make the following award
to the Participant pursuant to the terms and conditions of the Plan:

 

  (1) an option to purchase shares of common stock of Sunoco; and

 

  (2) certain limited appreciation rights in tandem with such option; and

WHEREAS, the Participant has determined to accept such award;

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

ARTICLE I

OPTION TO PURCHASE COMMON STOCK

 

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

 

(a) Participant    :   

 

(b) Date of Grant    :   

 

(c) Shares Subject To Option    :   

 

(d) Option Price (per share)    :   

 

(e) Earliest Exercise Date    :   

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

  (2) death; or

 

  (c) the 90-calendar day anniversary of the date of termination of the
Participant’s employment, other than for Just Cause, as defined in the Plan.

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

 

1.5 Method of Exercising Stock Option.

 

  (a) The Stock Option may be exercised from time to time in whole or in part,
by written notice delivered to and received by Sunoco prior to the Expiration
Date, so long as the Participant is in compliance with the Company’s insider
trading policy and the pre-clearance process. This notice must:

 

  (1) be signed by the Participant;

 

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

 

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

 

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

(i) delivering to Sunoco shares of previously owned Common Stock having an
aggregate Fair Market Value (valued as of the date of exercise) equal to the
amount of cash that would otherwise be required, in which event, the stock
certificates evidencing the shares so to be used shall accompany the notice of
exercise and shall be duly endorsed or

 

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accompanied by duly executed stock powers to transfer the same to Sunoco;
provided, however, that before they may be used as payment of the Option Price,
shares of Common Stock issued under:

 

  (a) the Plan,

 

  (b) the Sunoco, Inc. Executive Long-Term Stock Investment Plan, and/or

 

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

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

(ii) by authorizing a third party to sell a sufficient portion of the shares of
Common Stock acquired upon exercise of the Stock Option and remit to Sunoco a
sufficient portion of the sale proceeds to pay the entire Option Price and tax
withholding resulting from such exercise.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

1.6 Termination of Employment.

 

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

 

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

 

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

 

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

 

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

 

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  (B) upon the expiration of ninety (90) calendar days following the date of
termination of the Participant’s employment, other than for Just Cause;

provided, however, that the Limited Rights awarded in tandem with such Stock
Option shall not terminate and such Limited Rights shall remain exercisable
during the Exercise Period for any Participant whose employment relationship
with Sunoco or one of its Affiliates has been terminated as a result of any
Qualifying Termination.

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

 

1.7 Reduction in Number of Shares Subject to Stock Option. Pursuant to Article
II of this Agreement, upon the exercise of one or more Limited Rights, which are
related to this Stock Option, and which have been awarded to the Participant
under the Plan, the number of Shares Subject To Option shall be reduced on a
one-for-one basis.

ARTICLE II

LIMITED RIGHTS

 

2.1 Grant of Limited Rights. Subject to the terms and conditions of the Plan and
this Agreement, and effective as of the date hereof, Sunoco hereby grants to the
Participant a number of Limited Rights equal to the number of Shares Subject To
Option set forth in Section 1.1. Each such Limited Right shall be related on a
one-for-one basis to each share of Common Stock which is subject to the related
Stock Option hereunder.

 

2.2 Exercisability. Limited Rights, which vest immediately upon grant, may be
exercised ONLY during the period of seven (7) months following the date of a
Change in Control.

 

2.3 Term. The Limited Rights Expiration Date shall be the earliest to occur of:

 

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

 

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

 

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

 

  (2) death.

Limited Rights shall not be exercisable, either in whole or in part, on or after
the Limited Rights Expiration Date. Unless fully exercised by the Limited Rights
Expiration Date, the Limited Rights shall automatically be canceled to the
extent not yet exercised.

 

2.4 Method of Exercising Limited Rights. One or more Limited Rights may be
exercised during the period of exercisability as set forth in Section 2.2 above,
only by written notice delivered to and received by Sunoco. This notice must:

 

  (a) be signed by the Participant;

 

  (b) state the Participant’s election to exercise the Limited Rights;

 

  (c) specify the number of whole shares of Common Stock subject to the Stock
Option with respect to which the Limited Rights are being exercised.

 

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Within ninety (90) days after the date of exercise, Sunoco will pay to the
Participant, for each Limited Right exercised, the amount of payment as
determined pursuant to Section 2.5 below, reduced by an amount equal to the
taxes which Sunoco is required by law to withhold by reason of such exercise.

 

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

 

 

(a)

the highest price per share of Common Stock paid in connection with any Change
in Control during the period from the sixtieth (60th) calendar day immediately
prior to the Change in Control through the ninetieth (90th) calendar day
following the Change in Control; and

 

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

 

2.6 Form of Payment. Payment of the amount to which the Participant is entitled
upon exercise of Limited Rights, as determined pursuant to Section 2.5 above,
shall be made solely in cash.

 

2.7 Cancellation of Limited Rights.

 

  (a) Expiration of Term. Limited Rights which have not been exercised by the
Limited Rights Expiration Date shall be automatically canceled.

 

  (b) Death or Termination of Participant. Except as provided in Sections 2.7(c)
and (d) hereof, or except as otherwise determined by the Committee, all Limited
Rights shall terminate upon:

 

  (1) the death of the Participant; or

 

  (2) upon the termination of the Participant’s employment with Sunoco or any of
its Affiliates for any reason.

 

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

 

  (d) Termination Related to a Change in Control. If the Participant was
employed by Sunoco or any of its Affiliates at the time of the Change in
Control, and the Participant’s employment relationship with Sunoco or one of its
Affiliates is subsequently terminated as a result of any Qualifying Termination,
then:

 

  (1) the Limited Rights shall not terminate, but shall remain fully exercisable
by the Participant during the seven-month period following the Change in
Control; and

 

  (2) the requirement that the Participant be terminated by reason of retirement
or permanent disability or be employed by Sunoco or one of its Affiliates at the
time of exercise, is waived during the seven-month period following a Change in
Control of Sunoco.

 

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2.8 Reduction in Number of Limited Rights. Upon the purchase by the Participant
of one or more shares of Common Stock pursuant to the exercise of a Stock
Option, as provided in Article I, the number of related Limited Rights awarded
under this Agreement shall be reduced on a one-for-one basis.

ARTICLE III

GENERAL PROVISIONS

 

3.1 Non-Assignability. Unless otherwise determined by the Committee, neither the
Stock Option nor the Limited Rights shall be assignable or transferable by the
Participant, except by will or the laws of descent and distribution (and then,
only as set forth in Section 1.6(b) hereof). During the life of the Participant,
the Stock Option and the Limited Rights shall be exercisable only by the
Participant or by the Participant’s guardian or legal representative, unless the
Committee determines otherwise.

 

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

 

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

 

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

 

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

 

3.6 Tax Withholding. All distributions under this Agreement are subject to
withholding of all applicable taxes. Upon the exercise of the Stock Option, the
Participant shall remit an amount sufficient to satisfy any federal, state
and/or local

 

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withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. At the election of the Participant, and subject to
such rules as may be established by the Committee, such withholding obligations
may be satisfied through the surrender of shares of Common Stock which the
Participant already owns, or to which the Participant is otherwise entitled
under the Plan, having a value as of the date of exercise sufficient to satisfy
the applicable tax obligation.

 

3.7 Adjustments. In the event of any change in the outstanding Common Stock by
reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like, an
equitable and proportionate anti-dilution adjustment will be made to offset any
resultant change in the per-share price of the Company’s Common Stock, and
preserve the intrinsic value of Stock Options, Common Stock Units and other
awards theretofore granted under the Plan. Such mandatory adjustment may include
a change in one or more of the following: the number of shares of Common Stock
that may be issued under the Plan; the number of shares of Common Stock subject
to Options outstanding; the Option Price of Options outstanding; the number of
Common Stock Units outstanding; and other similar matters.

 

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

 

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

 

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

 

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

 

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

 

3.11 Amendment. This Agreement shall not be amended or modified except by an
instrument in writing executed by both parties to this Agreement. No consent of
any other person shall be required in order to amend or modify this Agreement.

 

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

 

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3.13 Governing Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT OF
THIS INSTRUMENT SHALL BE GOVERNED EXCLUSIVELY BY, AND DETERMINED IN ACCORDANCE
WITH THE LAW OF THE COMMONWEALTH OF PENNSYLVANIA (WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF), EXCEPT TO THE EXTENT PRE-EMPTED BY FEDERAL
LAW, WHICH SHALL GOVERN.

 

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

 

(a) if to the Sunoco:   SUNOCO, INC.,   Compensation Committee of the Board of
Directors   1735 Market Street, Ste. LL   Philadelphia, Pennsylvania, 19103-7583
  Attention:    Corporate Secretary (b) if to the Participant:   to the address
for Participant as it appears on Sunoco’s records.

 

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

 

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

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

 

SUNOCO, INC. By:  

 

  for the Compensation Committee of the   Board of Directors By:  

 

  Participant

 

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