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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-K



(Mark One)ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                                    to


Commission file number 001-32593

Global Partners LP(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

74-3140887(I.R.S. Employer Identification No.)


P.O. Box 9161
800 South Street
Waltham, Massachusetts 02454-9161(Address of principal executive offices, including zip code)

(781) 894-8800(Registrant's telephone number, including area code)

Securities
registered pursuant to section 12(b) of the Act:

Title of each class

Name of each exchange on which registeredCommon Units representing limited partner interests

New York Stock Exchange


Securities
registered pursuant to section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o    No ý

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o

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

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o    No ý

The aggregate market value of common units held by non-affiliates of the registrant (treating directors and executive officers of the registrant's
general partner and holders of 10% or more of the common units outstanding, for this purpose, as if they were affiliates of the registrant) as of June 30, 2008 was approximately $78,891,005,
based on a price per common unit of $15.83, the price at which the common units were last sold as reported on the New York Stock Exchange on such date.

As
of March 10, 2009, 7,428,139 common units and 5,642,424 subordinated units were outstanding.



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PART IItems 1. and 2.

Business and Properties

3Item 1A.

Risk Factors

14Item 1B.

Unresolved Staff Comments

35Item 3.

Legal Proceedings

35Item 4.

Submission of Matters to a Vote of Security Holders

37PART IIItem 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

38Item 6.

Selected Financial Data

40Item 7.

Management's Discussion and Analysis of Financial Condition and Results of
Operations

43Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

65Item 8.

Financial Statements and Supplementary Data

67Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure

67Item 9A.

Controls and Procedures

68Item 9B.

Other Information

69PART IIIItem 10.

Directors, Executive Officers and Corporate Governance

70Item 11.

Executive Compensation

73Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

96Item 13.

Certain Relationships and Related Transactions, and Director
Independence

98Item 14.

Principal Accountant Fees and Services

102PART IVItem 15.

Exhibits and Financial Statement Schedules

103


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Forward-Looking Statements

This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of the federal
securities laws. These forward-looking statements are identified as any statements that do not relate strictly to historical or current facts and can generally be identified by the use of
forward-looking terminology including "may," "believe," "expect," "anticipate," "estimate," "continue" or other similar words. Such statements may discuss future expectations for, or contain
projections of, results of operations, financial condition or our ability to make distributions to unitholders or state other forward-looking information. Forward-looking statements are not guarantees
of performance. Although we believe these forward-looking statements are based on reasonable assumptions, statements made regarding future results are subject to a number of assumptions, uncertainties
and risks, many of which are beyond our control, which may cause future results to be materially different from the results stated or implied in this document. These risks and uncertainties include,
among other things:



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Additional
information about risks and uncertainties that could cause actual results to differ materially from forward-looking statements is contained in Item 1A, "Risk Factors"
in this Annual Report on Form 10-K.

All
forward-looking statements included in this Annual Report on Form 10-K and all subsequent written or oral forward-looking statements attributable to us or persons
acting on our
behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made, other than as required by law, and we undertake no
obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Available Information

We make available free of charge through our website, www.globalp.com, our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 as soon as reasonably practicable after we electronically file or furnish such material with the Securities and Exchange Commission ("SEC"). These documents are also available at
the SEC's website at www.sec.gov. Our website also includes our Code of Business Conduct and Ethics, our Governance Guidelines and the charters of our Audit Committee and Compensation Committee.

A
copy of any of these documents will be provided without charge upon written request to the General Counsel, Global Partners LP, P.O. Box 9161, 800 South Street,
Suite 200, Waltham, MA 02454; fax (781) 398-4165.

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PART I

References in this Annual Report on Form 10-K to "Global Partners LP," "Partnership,"
"we," "our," "us" or like terms refer to Global Partners LP and its subsidiaries.

Items 1. and 2.    Business and Properties.

Overview

We are a publicly traded Delaware limited partnership formed in March 2005. We have four operating subsidiaries which are wholly owned
by Global Operating LLC, our wholly owned subsidiary: Global Companies LLC, its subsidiary, Glen Hes Corp., Global Montello Group Corp. and Chelsea Sandwich LLC.
Global GP LLC, our general partner, manages our operations and activities and employs our officers and substantially all of our personnel. In addition, GLP Finance Corp. ("GLP Finance")
was incorporated under the laws of the State of Delaware as our wholly-owned subsidiary. GLP Finance has no material assets or liabilities. Its activities will be limited to co-issuing
debt securities and engaging in other activities incidental thereto.

We
own, control or have access to one of the largest terminal networks of refined petroleum products in Massachusetts, Maine, Connecticut, Vermont, New Hampshire, Rhode Island, New York
and Pennsylvania (collectively, the "Northeast"). We are one of the largest wholesale distributors of gasoline, distillates (such as home heating oil, diesel and kerosene) and residual oil to
wholesalers, retailers and commercial customers in the Northeast. In 2008, we sold approximately $9.0 billion of refined petroleum products and small amounts of natural gas. In 2008, we owned,
leased or maintained dedicated storage facilities at 18 refined petroleum product bulk terminals, each with the capacity of more than 50,000 barrels, including 17 located throughout the Northeast,
that are supplied primarily by marine transport, pipeline, rail or truck and that collectively have approximately 8.0 million barrels of storage capacity. We also have throughput or exchange
agreements at more than 30 bulk terminals and inland storage facilities.

We
purchase our refined petroleum products primarily from domestic and foreign refiners (wholesalers), traders and producers and sell these products in two segments, Wholesale and
Commercial. In 2008, our Wholesale sales accounted for approximately 95% of our total sales and our Commercial sales accounted for approximately 5%.

As
demand for some of our refined petroleum products, specifically home heating oil and residual oil for space heating purposes, is generally greater during the winter months, sales are
generally higher during the first and fourth quarters of the calendar year which may result in significant fluctuations in our quarterly operating results. In 2008, our volume in transportation fuels,
which represents a growing portion of our sales, exceeded our heating oil volumes. The increase in the non-weather sensitive components of our business helps to partially offset the
economic impact that warmer weather conditions may have on our home heating oil and residual oil sales. In addition, portions of our heating oil are sold on a forward fixed price basis.

Business Strategies

Our primary business objective is to increase distributable cash flow per unit by continuing to execute the following
strategies:



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Product Sales



We sell our refined petroleum products in two segments, Wholesale and Commercial. The majority of products we sell can be grouped into
three categories: gasoline, distillates and residual oil. In 2008, gasoline, distillates and residual oil accounted for approximately 52%, 42% and 6%, respectively, of our total volume sold.

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Gasoline.We sell grades of unbranded gasoline that comply with seasonal and geographical requirements in the areas in which we market.
We have the
ability to blend gasoline, and we sell conventional gasoline and ethanol blended gasoline in the markets that require such products. Gasoline sales accounted for approximately 50%, 43% and 37% of
total sales for the years ended December 31, 2008, 2007 and 2006, respectively.

Distillates.Distillates are further divided into home heating oil, diesel and kerosene. In 2008, sales of home heating oil, diesel and
kerosene
accounted for approximately 78%, 20% and 2%, respectively, of our total volume of distillates sold. Distillate sales accounted for approximately 46%, 50% and 53% of total sales for the years ended
December 31, 2008, 2007 and 2006, respectively.

We
sell generic home heating oil and Heating Oil Plus®, our proprietary premium branded heating oil. Heating Oil Plus® is electronically blended at the delivery
facility. In 2008, approximately 9% of the volume of home heating oil we sold to wholesale resellers was Heating Oil Plus®. In addition, we sell the additive used to create Heating Oil
Plus® to some wholesale resellers, make injection systems available to them and provide
technical support to assist them with blending. We also educate the sales force of our customers to better prepare them for marketing our products to their customers.

We
sell generic diesel and Diesel One®, our proprietary premium diesel fuel product. We offer marketing and technical support for those customers who purchase Diesel
One®. In 2008, approximately 44% of the volume of diesel we sold to wholesale resellers was Diesel One®.

Residual Oil.We are one of three primary residual oil marketers in the Northeast. We specially blend residual oil for users in
accordance with their
individual power plant specifications. Residual oil sales accounted for approximately 4%, 7% and 10% of total sales for the years ended December 31, 2008, 2007 and 2006, respectively.

We
had one customer, ExxonMobil Oil Corporation ("ExxonMobil"), who accounted for approximately 20% of sales for the year ended December 31, 2008 and approximately 12% of accounts
receivable and 14% of sales as of and for the year ended December 31, 2007. No single customer accounted for 10% or more of sales for the year ended December 31, 2006.



In the Wholesale segment, we sell gasoline, home heating oil, diesel, kerosene and residual oil to unbranded retail gasoline stations
and other resellers of transportations fuels, home heating oil retailers and wholesale distributors. In 2008, this segment accounted for approximately 94% of our total volume sold. Generally,
customers use their own vehicles or contract carriers to take delivery of the product at bulk terminals and inland storage facilities that we own or control or with which we have throughput
arrangements. Please read "Storage."

In
2008, we sold unbranded gasoline and diesel, including Diesel One®, to approximately 950 wholesalers and retail gasoline station operators, vehicles, fleet and marine
users and other end users throughout the Northeast.

We
have marketing arrangements with a major supplier of unbranded gasoline in several northeastern states as well as two distillate suppliers in the Northeast. We enter into marketing
arrangements with third parties where we make the sales and assume the credit risk and the third party retains the commodity risk.

In
2008, we sold home heating oil, including Heating Oil Plus®, to over 1,100 wholesale distributors and retailers. We have a fixed price sales program that we market
primarily to wholesale distributors and retailers which uses the New York Mercantile Exchange ("NYMEX") heating oil contract as the pricing benchmark and as a vehicle to manage the commodity risk.
Please read "Commodity Risk Management." In 2008, approximately 30% of our home heating oil volume was

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sold
using forward fixed price contracts. A forward fixed price contract requires our customer to purchase a specific volume at a specific price during a specific period. The remaining home heating
oil was sold on either a posted price or a price based on various indices which, in both instances, reflect current market conditions.

In
2008, we sold residual oil to 25 wholesale distributors. Our Wholesale residual oil sales were accomplished through forward fixed price contracts or by using market-related prices,
either posted prices or indexed prices, to reflect current market conditions.

Financial
information with respect to the Wholesale segment, including information concerning revenues, gross profit, net product margin and total assets may be found under
Item 7, "Management's Discussion and Analysis and Results of Operations" and in Note 18 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report on
Form 10-K.



Our Commercial segment includes sales of unbranded gasoline, home heating oil, diesel, kerosene and residual oil to customers in the
public sector and to large commercial and industrial customers, primarily either through a competitive bidding process or through contracts of various terms. Our Commercial segment also includes
custom blended distillates and residual oil delivered by barges or from a terminal dock. In 2008, this segment accounted for approximately 6% of our total volume sold.

Our
commercial customers include federal and state agencies, municipalities, large industrial companies, many autonomous authorities, such as transportation authorities and water
resource authorities, colleges and universities and a select group of small utilities. Unlike our Wholesale segment, in our Commercial segment, we generally arrange the delivery of the product to the
customer's designated location. We typically hire third-party common carriers to deliver the product. Please read "Storage."

In
this segment, we respond to publicly-issued requests for product proposals and quotes. As of December 31, 2008, we had contracts as a result of this public bidding process with
the U.S. government and the states of Massachusetts and New Hampshire. We also had contracts with municipalities, autonomous authorities and institutional customers in the Northeast to meet their
various fuel requirements.

A
majority of the contracts in our bid business are for a term of one year. We offer both fixed and indexed (floating) price and volume contracts to customers. The majority of bid
activity is priced using an indexed price with the index typically chosen by the issuing authority in its solicitation for the bid proposal. The indexed prices are usually referenced to one of five
industry publications and/or the utilization of regulated exchanges.

Our
commercial customers also include cruise ships, dry and wet bulk carriers, fishing fleets and other marine vessels. We blend distillates and residual fuel to the customers'
specifications at the terminal facility or on the barge and then deliver the resulting bunker fuel directly to the ship or barge.

Financial
information with respect to the Commercial segment, including information concerning revenues, gross profit, net product margin and total assets may be found under
Item 7, "Management's Discussion and Analysis and Results of Operations" and in Note 18 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report on
Form 10-K.

Supply

Our products come from some of the major energy companies in the world. Cargos are sourced from the United States, Canada, South
America, Europe and occasionally from Asia. During 2008, we purchased an average of approximately 232,000 barrels per day of refined petroleum products from

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approximately
105 suppliers. In 2008, our top ten suppliers accounted for approximately 70% of our product purchases. We enter into supply agreements with these suppliers on a term basis or a spot
basis. With respect to trade terms, our supply purchases vary depending on the particular contract from prompt payment (usually three days) to net 30 days. Please read "Commodity
Risk Management."

Commodity Risk Management

Since we take title to the refined petroleum products that we sell, we are exposed to commodity risk. Commodity risk describes the risk
of unfavorable market fluctuations in the price of commodities such as refined petroleum products. We endeavor to minimize commodity risk in connection with our daily operations. Generally, as we
purchase and/or store refined petroleum products, we reduce commodity risk and establish a margin by selling the product for physical delivery to third parties, selling futures contracts on regulated
exchanges or using derivatives. Products are generally purchased and sold at fixed prices or at indexed prices. While we use these transactions to seek to maintain a position that is substantially
balanced between purchased volumes versus sales volumes through regulated exchanges or derivatives, we may experience net unbalanced positions for short periods of time as a result of variances in
daily sales and transportation and delivery schedules as well as logistical issues associated with inclement weather conditions or infrastructure disruptions. In connection with managing these
positions and maintaining a constant presence in the marketplace, both necessary for our business, we engage in a controlled trading program for up to an aggregate of 250,000 barrels of refined
petroleum products on any day. Our general policy is not to hold refined petroleum products, futures contracts or other derivative products and instruments for the sole purpose of speculating on price
change. While our policies are designed to minimize market risk, some degree of exposure to unforeseen fluctuations in market conditions remains.

Operating
results are sensitive to a number of factors. Such factors include commodity location, grades of product, individual customer demand for grades or location of product,
localized market price structures, availability of transportation facilities, daily delivery volumes that vary from expected quantities and timing and costs to deliver the commodity to the customer.
The term "basis risk" is used to describe the inherent market price risk created when a commodity of certain grade or location is purchased, sold or exchanged as compared to a purchase, sale or
exchange of a like commodity at a different time or place, including, without limitation, transportation costs and timing differentials. We attempt to reduce our exposure to basis risk by grouping our
purchase and sale activities by geographical region in order to stay balanced within such designated region. However, basis risk cannot be entirely eliminated.

With
respect to the pricing of commodities, we enter into futures contracts to minimize or hedge the impact of market fluctuations on our purchase and forward fixed price sales of
refined petroleum products. Any hedge ineffectiveness is reflected in our results of operations. We utilize the NYMEX, which is a regulated exchange for energy products that it trades, thereby
reducing potential delivery and supply risks. Generally, our practice is to close all NYMEX positions rather than make or receive physical deliveries. With respect to other energy products, we enter
into derivative agreements with counterparties that we believe have a strong credit profile, in order to hedge market fluctuations and/or lock-in margins relative to our commitments.

We
monitor processes and procedures to prevent unauthorized trading by our personnel and to maintain substantial balance between purchases and sales or future delivery obligations. We
can provide no assurance, however, that these steps will detect and prevent all violations of such trading policies and procedures, particularly if deception or other intentional misconduct is
involved.

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Storage

Bulk terminals and inland storage facilities play a key role in the distribution of product to our customers. We own 11 bulk terminals
in the Northeast and maintain dedicated storage facilities at another 7 bulk terminals, 6 of which are in the Northeast. Collectively, these bulk terminals provide us with approximately
8.0 million barrels of storage capacity. Additionally, we have throughput or exchange agreements at more than 30 bulk terminals and inland storage facilities.

The
bulk terminals and inland storage facilities from which we distribute product are supplied by ship, barge, truck, pipeline or rail. The inland storage facilities, which we use
exclusively to store distillates, are supplied with product delivered by truck from bulk terminals. Our customers receive product from our network of bulk terminals and inland storage facilities via
truck, barge, rail or pipeline.

Many
of our bulk terminals operate 24 hours a day and consist of multiple storage tanks and automated truck loading equipment. These automated systems monitor terminal access,
volumetric allocations, credit control and carrier certification through the remote identification of customers. In addition, some of the bulk terminals at which we market are equipped with truck
loading racks capable of providing automated blending and additive packages which meet our customers' specific requirements.

Throughput
arrangements allow storage of product at terminals owned by others. Our customers can load product at these terminals, and we pay the owners of these terminals fees for
services rendered in connection with the receipt, storage and handling of such product. Compensation to the terminal owners may be fixed or based upon the volume of our product that is delivered and
sold at the terminal.

Exchange
agreements also allow our customers to take delivery of product at a terminal or facility that is not owned or leased by us. An exchange is a contractual agreement where the
parties exchange product at their respective terminals or facilities. For example, we (or our customers) receive product that is owned by our exchange partner from such party's facility or terminal,
and we deliver the same volume of our product to such party (or to such party's customers) out of one of the terminals in our terminal network. Generally, both sides of an exchange transaction pay a
handling fee (similar to a throughput fee), and often one party also pays a location differential that covers any excess
transportation costs incurred by the other party in supplying product to the location at which the first party receives product. Other differentials that may occur in exchanges (and result in
additional payments) include product value differentials and timing differentials.

Competition

We encounter varying degrees of competition based on product and geographic locations. Our competitors include terminal companies,
major integrated oil companies and their marketing affiliates and independent marketers of varying sizes, financial resources and experience. In our core Northeast market, we compete in various
product lines and for all customers. In the residual oil markets, however, where product is heated when stored and cannot be delivered long distances, we face less competition because of the strategic
locations of the majority of our storage facilities. We also compete with natural gas suppliers and marketers in our home heating oil and residual oil product lines. Bunkering requires facilities at
ports to service vessels. In various other geographic markets, particularly the unbranded gasoline and distillates markets, we compete with integrated refiners, merchant refiners and regional
marketing companies.

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Environmental



Our business of supplying refined petroleum products involves a number of activities that are subject to extensive and stringent
environmental laws. As part of our business, we own and operate various petroleum storage and distribution facilities and must comply with environmental laws at the federal, state and local levels,
which increases the cost of operating terminals and our business generally.

Our
operations also utilize a number of petroleum storage facilities and distribution facilities that we do not own or operate, but at which refined petroleum products are stored. We
utilize these facilities through several different contractual arrangements, including leases and throughput and terminalling services agreements. If facilities with which we contract that are owned
and operated by third parties fail to comply with environmental laws, they could be shut down, requiring us to incur costs to use alternative facilities.

Environmental
laws and regulations can restrict or impact our business activities in many ways, such as:



Failure
to comply with environmental laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary
penalties, the imposition of remedial requirements and the issuance of orders enjoining future operations. Certain environmental statutes impose strict, joint and several liability for costs required
to clean up and restore sites where hydrocarbons, hazardous substances or wastes have been released or disposed of. Moreover, neighboring landowners and other third parties may file claims for
personal injury and property damage allegedly caused by the release of hydrocarbons, hazardous substances or other wastes into the environment.

The
trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment. As a result, there can be no assurance as to the amount
or timing of future expenditures for environmental compliance or remediation, and actual future expenditures may be different from the amounts we currently anticipate. We try to anticipate future
regulatory requirements that might be imposed and plan accordingly to remain in compliance with changing environmental laws and regulations and minimize the costs of such compliance.

We
do not believe that compliance with federal, state or local environmental laws and regulations will have a material adverse effect on our financial position, results of operations or
cash available for distribution to our unitholders. We can provide no assurance, however, that future events, such as changes in existing laws (including changes in the interpretation of existing
laws), the promulgation of new laws, or the development or discovery of new facts or conditions will not cause us to incur significant costs.



In most instances, the environmental laws and regulations affecting our business relate to the release of hazardous substances into the
water or soils and include measures to control pollution of the environment. For instance, the Comprehensive Environmental Response, Compensation, and Liability

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Act,
as amended, also known as CERCLA or the Superfund law, and comparable state laws impose liability, without regard to fault or the legality of the original conduct, on certain classes of persons
who are considered to be responsible for the release of hazardous substances 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. Under the Superfund law, these persons may be subject to joint and several liability for the costs of cleaning up hazardous
substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. The Superfund law also authorizes the U.S. Environmental
Protection Agency ("EPA"), and in some instances third parties, to act in response to threats to the public health or the environment and seek to recover from the responsible persons the costs they
incur. It is possible 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, store or otherwise handle materials and wastes that fall within the Superfund law's definition of a hazardous substance
and, as a result, we may be jointly and severally liable under the Superfund law for all or part of the costs required to clean up sites at which those hazardous substances have been released into the
environment.

We
currently own, lease or utilize storage or distribution facilities 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 wastes may have been disposed of or released on, under or from the properties owned or leased by us or on or under other
locations where we have contractual arrangements or 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 the Superfund law or other federal and 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, clean up contaminated property, including
groundwater
contaminated by prior owners or operators or make capital improvements to prevent future contamination.

Our
operations generate a variety of wastes, including some hazardous wastes that are subject to the federal Resource Conservation and Recovery Act, as amended ("RCRA") and comparable
state laws. By way of summary, these regulations impose detailed requirements for the handling, storage, treatment and disposal of hazardous waste. Our operations also generate solid wastes which are
regulated under state law or the less stringent solid waste requirements of the federal Solid Waste Disposal Act. We believe that we are in material compliance with the existing requirements of RCRA,
the Solid Waste Disposal Act, and similar state and local laws, and the cost involved in complying with these requirements is not material.

We
incur ongoing costs for monitoring groundwater and/or remediation of contamination at several facilities that we operate. Assuming that we will be able to continue to use common
remedial and monitoring methods or associated engineering or institutional controls to demonstrate compliance with applicable regulatory requirements, as we have in the past and regulations currently
allow, we believe that these costs will not have a material impact on our financial condition, results of operations or cash available for distribution to our unitholders.



Above ground tanks that contain petroleum and other hazardous substances are subject to comprehensive regulation under environmental
laws. Generally, these laws impose liability for releases and require secondary containment systems for tanks or that the operators take alternative precautions to ensure that no contamination results
from tank leaks or spills. We believe we are in material compliance with environmental laws and regulations applicable to above ground storage tanks.

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The
Oil Pollution Act of 1990 ("OPA") addresses three principal areas of oil pollutionprevention, containment and cleanup. In order to handle, store or transport oil, we are
required to file oil spill response plans with either the United States Coast Guard (for marine facilities) or the EPA. States in which we operate have enacted laws similar to OPA. Under OPA and
comparable state laws, responsible parties for a regulated facility from which oil is discharged may be subject to strict, joint and several liability for removal costs and certain other consequences
of an oil spill such as natural resource damages, where the spill is into navigable waters or along
shorelines. We believe we are in material compliance with regulations pursuant to OPA and similar state laws.

Under
the authority of the federal Clean Water Act, the EPA imposes specific requirements for Spill Prevention, Control and Countermeasure plans that are designed to prevent, and
minimize the impacts of, releases of oil and oil products from above ground storage tanks. We believe we are in substantial compliance with these requirements.



The federal Clean Water Act imposes restrictions regarding the discharge of pollutants, including oil and refined petroleum products,
into navigable waters. This law and comparable state laws require permits for discharging pollutants into state and federal waters and impose substantial liabilities and remedial obligations for
noncompliance. EPA regulations also require us to obtain permits to discharge certain storm water runoff. Storm water discharge permits also may be required by certain states in which we operate. We
believe that we hold the required permits and operate in material compliance with those permits. While we have experienced permit discharge exceedences at some of our terminals, we do not expect any
noncompliance with existing permits and foreseeable new permit requirements to have a material adverse effect on our financial position, results of operations or cash available for distribution to our
unitholders.



Our operations are subject to the federal Clean Air Act and comparable state and local laws. Under such laws, permits are typically
required to emit regulated air pollutants into the atmosphere. We believe that we currently hold or have applied for all necessary air permits and that we are in material compliance with applicable
air laws and regulations. Although we can give no assurances, we are aware of no changes to air quality regulations that will have a material adverse effect on our financial condition, results of
operations or cash available for distribution to our unitholders.

Various
federal, state and local agencies have the authority to prescribe product quality specifications for the refined petroleum products that we sell, largely in an effort to reduce
air pollution. Failure to comply with these regulations can result in substantial penalties. Although we can give no assurances, we believe we are currently in substantial compliance with these
regulations.

Changes
in product quality specifications could require us to incur additional handling costs or reduce our throughput volume. For instance, different product specifications for
different markets could require the construction of additional storage. Also, states in which we operate have considered limiting the sulfur content of home heating oil. If such regulations are
enacted, this could restrict the supply of available heating oil, which could increase our costs to purchase such oil or limit our ability to sell heating oil.

Efforts
at the federal and state level are currently underway to reduce the levels of greenhouse gas emissions from various sources in the United States. At the federal level,
legislation was introduced in Congress in 2007 and 2008 to reduce greenhouse gas emissions in the United States. Such or similar federal legislation could be taken up in 2009 or later years. President
Barack Obama stated in his campaign that climate change policy would be a priority of his administration, and the Democratic majority Congress has indicated that it will seek to enact legislation to
reduce greenhouse gas

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emissions.
Also, as a result of the U.S. Supreme Court's decision on April 2, 2007 inMassachusetts, et al. v. EPA, the EPA may be required to
regulate greenhouse gas emissions from mobile sources (e.g., cars and trucks) under the federal Clean Air Act even if Congress does not adopt new legislation specifically addressing emissions
of greenhouse gases. Numerous states, including many where we have operations, have already taken legal measures to reduce emissions of greenhouse gases, primarily through the planned development of
greenhouse gas emission inventories and/or regional greenhouse gas cap and trade programs. A regional cap and trade program, referred to as the Regional Greenhouse Gas Initiative, began
January 1, 2009, and is designed to stabilize and reduce greenhouse gas emissions from fossil fuel-fired power plants in many Northeastern and Mid-Atlantic states. New
federal or state restrictions on emissions of greenhouse gases that may be imposed in areas of the United States in which we conduct business and that apply to our operations could adversely affect
the demand for our products.



We maintain insurance which may cover, in whole or in part, certain costs relating to the clean up of releases of refined petroleum
products. We maintain insurance policies with insurers in amounts and with coverage and deductibles as our general partner believes are reasonable and prudent. These policies may not cover all
environmental risks and costs and may not provide sufficient coverage in the event an environmental claim is made against us.

Security Regulation

Since the September 11, 2001 terrorist attacks on the United States, the U.S. government has issued warnings that energy
infrastructure assets may be future targets of terrorist organizations. These developments have subjected our operations to increased risks. Increased security measures taken by us as a precaution
against possible terrorist attacks have resulted in increased costs to our business. Where required by federal or local laws, we have prepared security plans for the storage and distribution
facilities we operate. Terrorist attacks aimed at our facilities and any global and domestic economic repercussions from terrorist activities could adversely affect our financial condition, results of
operations and cash available for distribution to our unitholders. For instance, terrorist activity could lead to increased volatility in prices for home heating oil, gasoline and other products we
sell.

Insurance
carriers are currently required to offer coverage for terrorist activities as a result of the federal Terrorism Risk Insurance Act of 2002 ("TRIA"). We purchased this coverage
with respect to our property and casualty insurance programs, which resulted in additional insurance premiums. Pursuant to the Terrorism Risk Insurance Program Reauthorization Act of 2007, TRIA has
been extended through December 31, 2014. Although we cannot determine the future availability and cost of insurance coverage for terrorist acts, we do not expect the availability and cost of
such insurance to have a material adverse effect on our financial condition, results of operations or cash available for distribution to our unitholders.

Employee Safety

We are subject to the requirements of the Occupational Safety and Health Act ("OSHA") and comparable state statutes that regulate the
protection of the health and safety of workers. In addition, OSHA's hazard communication standards require 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 we are in substantial compliance with the applicable OSHA requirements.

We
operate a limited number of trucks for the transportation of refined petroleum products, as most of the trucks that distribute products we sell are owned and operated by third
parties. We are

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subject
to regulations promulgated under the Federal Motor Carrier Safety Act for those trucks that we do operate. These regulations cover the transportation of hazardous materials and are
administered by
the U.S. Department of Transportation. We conduct ongoing training programs to help ensure that our operations are in compliance with applicable regulations.

Title to Properties, Permits and Licenses

We believe we have all of the assets needed, including leases, permits and licenses, to operate our business in all material respects.
With respect to any consents, permits or authorizations that have not been obtained, we believe that the failure to obtain these consents, permits or authorizations will have no material adverse
effect on our financial position, results of operations or cash available for distribution to our unitholders.

We
believe we have satisfactory title to all of our assets. Title to property may be subject to encumbrances. We believe that none of these encumbrances will materially detract from the
value of our properties or from our interest in these properties, nor will they materially interfere with the use of these properties in the operation of our business.

The
name GLOBAL, our logos and the name Global Petroleum Corp. are trademarks of Global Companies LLC. In addition, we have trademarks for our premium fuels and additives, Diesel
One®, Heating Oil Plus® and SubZero®.

Facilities

We lease office space for our principal executive office in Waltham, Massachusetts. The lease expires on December 31, 2015.

Employees

To carry out our operations, our general partner and certain of our operating subsidiaries employ approximately 220
full-time employees. Certain of the employees assigned to our terminal in Chelsea, Massachusetts are employed under collective bargaining agreements that expire in 2011. Certain of the
employees assigned to our terminals in Albany, Newburgh, Glenwood Landing and Inwood, New York are employed under collective bargaining
agreements that expire in May 2010 (with respect to Albany and Newburgh) and April 2011 (with respect to Glenwood Landing and Inwood). We believe we have good relations with our employees.

We
have two shared services agreements, one with Global Petroleum Corp. and another with Alliance Energy LLC (formerly known as Alliance Energy Corp.). The services provided among
these entities by any employees shared pursuant to these agreements does not limit the ability of such employees to provide all services necessary to properly run our business. Please read
Item 13, "Certain Relationships and Related Transactions, and Director IndependenceShared Services Agreements."

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Item 1A.    Risk Factors.

Risks Related to Our Business

We may not have sufficient cash from operations to enable us to pay the minimum quarterly distribution or maintain distributions at current levels following establishment of
cash reserves and payment of fees and expenses, including payments to our general partner.

We may not have sufficient available cash each quarter to pay the minimum quarterly distribution or maintain distributions at current
levels. The amount of cash we can distribute on our units principally depends upon the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on, among
other things:



In
addition, the actual amount of cash we have available for distribution will depend on other factors such as:



The amount of cash we have available for distribution to unitholders depends primarily on our cash flow and not solely on profitability.

The amount of cash we have available for distribution depends primarily on our cash flow, including cash flow from financial reserves
and working capital borrowings, and not solely on profitability, which will be affected by non-cash items. As a result, we may make cash distributions during periods when we record losses
and may not make cash distributions during periods when we record net income.

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Our financial results are seasonal and generally lower in the second and third quarters of the calendar year, which may result in our need to borrow money in order to make
distributions to our unitholders during these quarters.

Demand for some refined petroleum products, specifically home heating oil and residual oil for space heating purposes, is generally
higher during November through March than during April through October. We obtain a significant portion of our sales of home heating oil and residual oil for space heating purposes during these winter
months. Therefore, our results of operations for the first and fourth calendar quarters are generally better than for the second and third quarters. With lower cash flow during the second and third
calendar quarters, we may be required to borrow money in order to pay the minimum quarterly distribution to our unitholders. Any restrictions on our ability to borrow money could restrict our ability
to make quarterly distributions to our unitholders.

A significant decrease in demand for refined petroleum products in the areas served by our storage facilities would reduce our ability to make distributions to our
unitholders.

A significant decrease in demand for refined petroleum products in the areas served by our storage facilities could significantly
reduce our revenues and, therefore, reduce our
ability to make or increase distributions to our unitholders. Factors that could lead to a decrease in market demand for refined petroleum products include:



Certain
of our terminal operating costs and expenses are fixed and do not vary with the volumes we store and distribute. These costs and expenses may not decrease ratably or at all
should we experience a reduction in our volumes stored and distributed. As a result, we may experience declines in our margin and profitability if our volumes decrease.

Our financial condition and results of operations are influenced by the overall forward market for refined petroleum products, and increases and/or decreases in the prices
of refined petroleum products may adversely impact the amount of borrowing available for working capital under our credit agreement, which credit agreement has borrowing base limitations and advance
rates.

Results from our supply, marketing and terminalling operations are influenced by prices for refined petroleum products, pricing
volatility and the market for such products. When prices for refined petroleum products rise, some of our customers may have insufficient credit to purchase supply from us at their historical purchase
volumes, and their customers, in turn, may adopt conservation measures which reduce consumption, thereby reducing demand for product. Furthermore, when prices increase rapidly and dramatically, we may
be unable to promptly pass our additional costs to our customers, resulting in lower margins for us which could adversely affect our results of operation. Lastly, higher prices for refined petroleum
prices may (1) diminish our access to trade credit
support and/or cause it to become more expensive and (2) decrease the amount of borrowings available for working capital under our credit agreement as a result of total available commitments,
borrowing base limitations and advance rates thereunder.

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In
addition, when prices for refined petroleum products decline, our exposure to risk of loss in the event of nonperformance by our customers of our forward contracts may be increased as
they and/or their customers may breach their contracts and purchase refined petroleum products at the then lower spot and/or retail market price. Furthermore, lower prices for refined petroleum
products may diminish the amount of borrowings available for working capital under our working capital revolving credit facility as a result of borrowing base limitations.

Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities.

We have a significant amount of debt. As of December 31, 2008, our total debt was approximately $433.5 million. We have
the ability to incur additional debt, including the capacity to borrow up to $750.0 million under our credit facilities, subject to limitations in our credit agreement. Our level of
indebtedness could have important consequences to us, including the following:



Our
ability to service our indebtedness depends upon, among other things, our financial and operating performance, which will be affected by prevailing economic conditions and financial,
business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take
actions, such as reducing distributions, reducing or delaying our business activities, acquisitions, investments and/or capital expenditures, selling assets, restructuring or refinancing our
indebtedness, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms, or at all.

We may not be able to obtain funding on acceptable terms or obtain additional requested funding in excess of total commitments under our credit agreement because of the
deterioration of the credit and capital markets, which could have a material adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders.

Global financial markets and economic conditions have been, and continue to be, disrupted and volatile. The debt and equity capital
markets have been exceedingly distressed. These issues, along with significant write-offs in the financial services sector, the re-pricing of credit risk and the current weak
economic conditions have made, and will likely continue to make, it difficult to obtain funding.

As
a result, the cost of raising money in the debt and equity capital markets has increased substantially while the availability of funds from those markets has diminished significantly.
Also, as a result of concern about the stability of financial markets generally, and the solvency of counterparties

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specifically,
the cost of obtaining money from the credit markets has increased as many lenders and institutional investors have increased interest rates, enacted tighter lending standards and reduced
and, in some cases, ceased to provide funding to borrowers.

In
addition, we may be unable to obtain adequate funding under our current credit agreement because (i) one or more of our lenders may be unable to meet its funding obligations or
(ii) our borrowing base under our current credit agreement, as redetermined from time to time, may decrease as a result of price fluctuations, counterparty risk, advance rates and borrowing
base limitations and customer nonpayment or nonperformance.

Due
to these factors, we cannot be certain that funding will be available if needed and to the extent required or requested on acceptable terms. If funding is not available when needed,
or is available only on unfavorable terms, we may be unable to maintain our core business as currently conducted, enhance our existing business, complete acquisitions or otherwise take advantage of
business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our financial condition, results of operations and cash available for distribution to
our unitholders.

Our credit agreement contains operating and financial restrictions that may restrict our business and financing activities.

The operating and financial restrictions and covenants in our credit agreement and any future financing agreements could restrict our
ability to finance future operations or capital needs or to engage, expand or pursue our business activities. For example, our credit agreement restricts our
ability to:



Our
ability to comply with the covenants and restrictions contained in our credit agreement may be affected by events beyond our control, including prevailing economic, financial and
industry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we violate any of the restrictions, covenants, ratios or tests
in our credit agreement, a significant portion of our indebtedness may become immediately due and payable, and our lenders'
commitment to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, our obligations under our credit
agreement are secured by substantially all of our assets, and if we are unable to repay our indebtedness under our credit agreement, the lenders could seek to foreclose on such assets.

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Restrictions in our credit agreement limit our ability to pay distributions upon the occurrence of certain events.

Our credit agreement limits our ability to pay distributions upon the occurrence of the following events, among
others:



Any
subsequent refinancing of our current debt or any new debt could have similar restrictions. For more information regarding our credit agreement, please read Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesCredit Agreement" and Note 9 of Notes to
Consolidated Financial Statements.

We can borrow money under our credit agreement to pay distributions, which would reduce the amount of credit available to operate our business.

Our partnership agreement allows us to borrow under our credit agreement to pay distributions. Accordingly, we can make distributions
on all our units even though cash generated by our operations may not be sufficient to pay such distributions. We are required to reduce our borrowings to zero under that portion of our credit
agreement that is available to pay the minimum quarterly distribution for a period of at least 30 consecutive days once each 12-month period. For more information, please read
Item 7, "Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesCredit Agreement" and Note 9 of
Notes to Consolidated Financial Statements.

Warmer weather conditions could adversely affect our financial condition, results of operations and cash available for distribution to our unitholders.

Weather conditions have an impact on the demand for both home heating oil and residual oil. Because we supply distributors whose
customers depend on home heating oil and residual oil for space heating purposes during the winter, warmer-than-normal temperatures during the first and fourth calendar
quarters in one or more regions in which we operate can decrease the total volume we sell and the gross profit realized on those sales and, consequently, our financial condition, results of operations
and cash available for distributions to our unitholders.

Our risk management policies cannot eliminate all commodity risk. In addition, any noncompliance with our risk management policies could result in significant financial
losses.

While our hedging policies are designed to minimize commodity risk, some degree of exposure to unforeseen fluctuations in market
conditions remains. For example, we change our hedged position

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daily
in response to movements in our inventory. If we overestimate or underestimate our sales from inventory, we may be unhedged for the amount of the overestimate or underestimate. Also, significant
increases in the costs of refined petroleum products can materially increase our costs to carry inventory. We use our credit facility as our primary source of financing to carry inventory and may be
limited on the amounts we can borrow to carry inventory.

Basis
risk describes the inherent market price risk created when a commodity of certain grade or location is purchased, sold or exchanged as compared to a purchase, sale or exchange of a
like commodity at a different time or place. Transportation costs and timing differentials are components of basis risk. For example, we use the NYMEX to hedge our commodity risk with respect to
pricing of energy products traded on the NYMEX. Physical deliveries under NYMEX contracts are made in New York Harbor. To the extent we take deliveries in other ports, such as Boston Harbor, we may
have basis risk. In a backwardated market (when prices for future deliveries are lower than current prices), basis risk is created with respect to timing. In these instances, physical inventory
generally loses value as basis declines over time. Basis risk cannot be entirely eliminated.

We
monitor processes and procedures to prevent unauthorized trading and to maintain substantial balance between purchases and sales or future delivery obligations. We can provide no
assurance,
however, that these steps will detect and/or prevent all violations of such risk management policies and procedures, particularly if deception or other intentional misconduct is involved.

We are exposed to trade credit risk and risk associated with our trade credit support in the ordinary course of our business activities.

We are exposed to risks of loss in the event of nonperformance by our customers and by counterparties of our forward and futures
contracts, options and swap agreements and by our suppliers. Some of our customers, counterparties and suppliers may be highly leveraged and subject to their own operating and regulatory risks. The
current tightening of credit in the financial markets may make it more difficult for customers and counterparties to obtain financing and, depending on the degree to which it occurs, there may be a
material increase in the nonpayment and nonperformance of our customers and counterparties. Even if our credit review and analysis mechanisms work properly, we may experience financial losses in our
dealings with other parties. Any increase in the nonpayment or nonperformance by our customers and/or counterparties and the nonperformance by our suppliers could reduce our ability to make
distributions to our unitholders.

Additionally,
our access to trade credit support could diminish and/or become more expensive. Our ability to continue to receive sufficient trade credit on commercially acceptable terms
could be adversely affected by fluctuations in refined petroleum product prices or disruptions in the credit markets or for any other reason.

We are exposed to performance risk in our supply chain.

We rely upon our suppliers to timely produce the volumes and types of refined petroleum products for which they contract with us. In
the event one or more of our suppliers does not perform in accordance with its contractual obligations, we may be required to purchase product on the open market to satisfy forward contracts we have
entered into with our customers in reliance upon such supply arrangements. We purchase refined petroleum products from a variety of suppliers under term contracts and on the spot market. In times of
extreme market demand, we may be unable to satisfy our supply requirements. Furthermore, a portion of our supply comes from other countries, which could be disrupted by political events. In the event
such supply becomes scarce, whether as a result of political events, natural disaster, logistical issues associated with delivery schedules or otherwise, we may not be able to satisfy our supply
requirements. If any of these events were to occur, we may be required to pay more for product that we purchase on the open market, which could result in financial losses and

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adversely
affect our financial condition, results of operations and cash available for distribution to our unitholders.

Some of our competitors have capital resources many times greater than ours and control greater supplies of refined petroleum products.

Our competitors include terminal companies, major integrated oil companies and their marketing affiliates and independent marketers of
varying sizes, financial resources and experience. Some of our competitors have capital resources many times greater than ours and control greater supplies of refined petroleum products. If we are
unable to compete effectively, we may lose existing customers or fail to acquire new customers, which could have a material adverse effect on our financial condition, results of operations and cash
available for distribution to our unitholders. For example, if a competitor attempts to increase market share by reducing prices, our operating results and cash available for distribution to our
unitholders could be adversely affected. We may not be able to compete successfully with these companies.

Some of our residual oil volumes are subject to customers switching or converting to natural gas which could result in loss of customers, which in turn could have an adverse
effect on our financial condition, results of operations and cash available for distribution to our unitholders.

Our residual oil business competes for customers with suppliers of natural gas. Those end users who are dual-fuel users
have the ability to switch from residual oil to natural gas. Other end users may elect to convert to natural gas. During a period of increasing residual oil prices relative to the prices of natural
gas, dual-fuel using customers may switch and other end users may convert to natural gas. Such switching and conversions could have an adverse effect on our financial condition, results of
operations and cash available for distribution to our unitholders. We could face additional competition from alternative energy sources, such as natural gas, as a result of government-mandated
controls or regulation promoting the use of cleaner fuels. Residual oil consumption has steadily declined over the last three decades.

Some of our heating oil volumes are subject to residential conversion to natural gas which could result in less demand for home heating oil and, in turn, could have an
adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders.

Our heating oil business competes for customers with suppliers of natural gas. During a period of increasing home heating oil prices
relative to prices of natural gas, home heating oil users may convert to natural gas. Such conversions could reduce our sales of home heating oil and have an adverse effect on our financial condition,
results of operations and cash flow available for distributions to our unitholders.

We face intense competition in our purchasing, terminalling and storage activities. Competition from other providers of refined petroleum products and natural gas that are
able to supply our customers with those products and services at a lower price could reduce our ability to make distributions to our unitholders.

We are subject to competition from other refined petroleum products distributors and suppliers of natural gas that may be able to
supply our customers with the same or comparable products and terminalling and storage services on a more competitive basis. We compete with terminal companies, major integrated oil companies and
their marketing affiliates and independent marketers of varying sizes, financial resources and experience. Some of these competitors are substantially larger than us, have greater financial resources
and control substantially greater storage capacity than we do. Our ability to compete could be harmed by factors including, but not limited to, price competition and the availability of alternative
and less expensive fuels, primarily natural gas.

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Energy efficiency, new technology and alternative fuels could reduce demand for our products and adversely affect our financial condition, results of operations and cash
available for distribution to our unitholders.

Increased conservation and technological advances, including installation of improved insulation and the development of more efficient
furnaces and other heating devices, have adversely affected the demand for home heating oil and residual oil. Future conservation measures or technological advances in heating, conservation, energy
generation or other devices might reduce demand and adversely affect our financial condition, results of operations and cash available for distribution to our unitholders.

A principal focus of our business strategy is to grow and expand our business through acquisitions. If we do not make acquisitions on economically acceptable terms, our
future growth may be limited.

A principal focus of our business strategy is to grow and expand our business through acquisitions. Our ability to grow depends, in
part, on our ability to make acquisitions that result in an increase in the cash generated per unit from operations. If we are unable to make these accretive acquisitions, either because we are
(1) unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts with them, (2) unable to obtain financing for these acquisitions on economically
acceptable terms or (3) outbid by competitors, then our future growth and ability to increase distributions will be limited. Furthermore, even if we do make acquisitions that we believe will be
accretive, these acquisitions may nevertheless result in a decrease in the cash generated from operations per unit.

Any
acquisition involves potential risks, including, among other things:



Our acquisition strategy involves risks that could reduce our ability to make distributions to our unitholders.

Even if we consummate acquisitions that we believe will be accretive, they may in fact result in no increase or even a decrease in cash
available for distribution to our unitholders. Any acquisition involves potential risks, including:



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If
any acquisitions we ultimately consummate do not generate expected increases in cash available for distribution to our unitholders, our ability to make such distributions will be
reduced.

We may not be able to renew our leases or our agreements for dedicated storage when they expire.

The bulk terminals we own or lease or at which we maintain dedicated storage facilities play a key role in moving product to our
customers. We lease the entirety of one bulk terminal that we operate exclusively for our business and maintain dedicated storage facilities at another six bulk terminals. The agreements governing
these arrangements are subject to expiration at various dates through 2013. These arrangements may not be renewed when they expire or, if renewed, may not be renewed at rates and on terms at least as
favorable. If these agreements are not renewed or we are unable to renew these agreements at rates and on terms at least as favorable, it could have an adverse effect on our financial condition,
results of operations and cash available for distribution to our unitholders.

A material amount of our terminalling capacity is controlled by one of our affiliates. Loss of that capacity could have an adverse effect on our financial condition, results
of operations and cash available for distribution to our unitholders.

We currently have an exclusive throughput arrangement for the terminal located in Revere, Massachusetts with one of our affiliates,
Global Petroleum Corp. (which entity is owned by Alfred A. Slifka and Richard Slifka). As of December 31, 2008, this facility accounted for approximately 26% of our storage capacity. We store
distillates and gasoline at this facility. The throughput agreement for this facility expires in 2013. After expiration of the agreement, we can provide no assurance that Global Petroleum Corp. will
continue to grant us exclusive use of the terminal or that the terms of a renegotiated agreement will be as favorable to us as the agreement it replaces. If we are unable to renew the agreement or
unable to renew on terms at least as favorable, it could have a material adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders.

Some of our sales are generated under contracts that must be renegotiated or replaced periodically. If we are unable to successfully renegotiate or replace these contracts,
our financial condition, results of operations and cash available for distribution to our unitholders could be adversely affected.

Most of our arrangements with our customers are for a single season or on a spot basis. As these contracts expire, they must be
renegotiated or replaced. We may be unable to renegotiate or replace these contracts when they expire, and the terms of any renegotiated contracts may not be as favorable as the contracts they
replace. Whether these contracts are successfully renegotiated or replaced is often subject to factors beyond our control. Such factors include fluctuations in refined petroleum product and natural
gas prices, counterparty ability to pay for or accept the contracted volumes and a competitive marketplace for the services offered by us. If we cannot successfully renegotiate or replace our
contracts or renegotiate or replace them on less favorable terms, sales from these arrangements could decline, and our financial condition, results of operations and cash available for distributions
to our unitholders could be adversely affected.

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Due to our lack of asset and geographic diversification, adverse developments in the terminals we use or in our operating areas would reduce our ability to make
distributions to our unitholders.

We rely exclusively on sales generated from products distributed from the terminals we own or control or to which we have access.
Furthermore, the majority of our assets and operations are located in the Northeast. Due to our lack of diversification in asset type and location, an adverse development in these businesses or areas,
including adverse developments due to catastrophic events or weather and decreases in demand for refined petroleum products, could have a significantly greater impact on our results of operations and
cash available for distribution to our unitholders than if we maintained more diverse assets and locations.

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, mechanical failures, disruptions in supply infrastructure or logistics and other events beyond our control. If any of these events were to occur, we
could incur substantial losses because of personal injury or loss of life, severe damage to and destruction of property and equipment, and pollution or other environmental damage resulting in
curtailment or suspension of our related operations.

We
are not fully insured against all risks incident to our business. Prior to the formation of our partnership, certain of the insurance policies covering entities that were contributed
to us and our operations also provided coverage to entities that were not contributed to us as a part of our initial public offering. The coverage available under those insurance policies has been
allocated among our partnership and those entities that were not contributed to us. This allocation may result in limiting the amount of recovery available to us for purposes of covered losses.

Furthermore,
we may be unable 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 and could escalate further. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. If we were to
incur a significant liability for which we are not fully insured, it could have a material adverse effect on our financial condition, results of operations and cash available for distributions to
unitholders.

New, stricter environmental laws and regulations could significantly increase our costs, which could adversely affect our financial condition, results of operations and cash
available for distribution to our unitholders.

Our operations are subject to federal, state and local laws and regulations regulating product quality specifications and other
environmental matters. The trend in environmental regulation is towards more restrictions and limitations on activities that may affect the environment. Our financial condition, results of operations
and cash available for distribution to our unitholders may be adversely affected by increased costs and liabilities resulting from such stricter laws and regulations. We try to anticipate future
regulatory requirements that might be imposed and to plan accordingly to remain in compliance with changing environmental laws and regulations and to minimize the costs of such compliance. However,
there can be no assurances as to the timing and type of such changes in existing laws or the promulgation of new laws or the amount of any required expenditures associated therewith.

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

The risk of substantial environmental costs and liabilities is inherent in terminal operations, and we may incur substantial
environmental costs and liabilities. Our operations involving the receipt, storage and redelivery of refined petroleum products are subject to stringent federal, state and local laws and

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regulations
governing the discharge of materials into the environment, or otherwise relating to the protection of the environment, operational safety and related matters. Compliance with these laws
and regulations increases our overall cost of business, including our capital costs to maintain and upgrade equipment and facilities. We utilize a number of terminals that are owned and operated by
third parties who are also subject to these stringent federal, state and local environmental laws in their operations. Their compliance with these requirements could increase the cost of doing
business with these facilities.

In
addition, our operations could be adversely affected if shippers of refined petroleum products incur additional costs or liabilities associated with environmental regulations. These
shippers could increase their charges to us or discontinue service altogether.

Various
governmental authorities, including the EPA, have the power to enforce compliance with these regulations and the permits issued under them, and violators are subject to
administrative, civil and criminal penalties, including fines, injunctions or both. Joint and several liability may be incurred, without regard to fault or the legality of the original conduct, under
federal and state environmental laws for the remediation of contaminated areas at our facilities and those where we do business. Private parties, including the owners of properties located near our
terminal facilities and those with whom we do business, also may have the right to pursue legal actions against us to enforce compliance with environmental laws, as well as seek damages for personal
injury or property damage. We may also be held liable for damages to natural resources.

The
possibility exists that new, stricter laws, regulations or enforcement policies could significantly increase our compliance costs and the cost of any remediation that may become
necessary, some of which may be material. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage in the event an environmental claim is made against us.
We may incur increased costs because of stricter pollution control requirements or liabilities resulting from noncompliance with required operating or other regulatory permits. New environmental
regulations, such as those related to the emissions of greenhouse gases, might adversely affect our products and activities, including the storage of refined petroleum products, as well as waste
management and our control of air emissions. President Obama stated in his campaign that climate change policy would be a priority of his administration, and the Democratic majority Congress has
indicated that it will seek to
enact legislation to reduce greenhouse gas emissions. Enactment of laws and passage of regulations regarding greenhouse gas emissions, or other actions to limit carbon dioxide emissions may reduce
demand for fossil fuels and impact our business. Federal and state agencies also could impose additional safety regulations to which we would be subject. Because the laws and regulations applicable to
our operations are subject to change, we cannot provide any assurance that compliance with future laws and regulations will not have a material effect on our results of operations. Please read
"Items 1. and 2. Business and PropertiesEnvironmental" for more information.

We are subject to federal, state and local laws and regulations that govern the product quality specifications of the refined petroleum products we purchase, store,
transport and sell.

Various federal, state and local government agencies have the authority to prescribe specific product quality specifications to the
sale of commodities. Our business includes such commodities. Changes in product quality specifications, such as reduced sulfur content in refined petroleum products, or other more stringent
requirements for fuels, could reduce our ability to procure product and our sales volume, require us to incur additional handling costs and/or require the expenditure of capital. For instance,
different product specifications for different markets could require additional storage. If we are unable to procure product or recover these costs through increased sales, we may not be able to meet
our financial obligations. Failure to comply with these regulations could result in substantial penalties. Please read "Item 3. Legal ProceedingsEnvironmental" for more
information.

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Any terrorist attacks aimed at our facilities and any global and domestic economic repercussions from terrorist activities and the government's response could adversely
affect our financial condition, results of operations and cash available for distributions to our unitholders.

Since the September 11, 2001 terrorist attacks on the United States, the U.S. government has issued warnings that energy assets
may be future targets of terrorist organizations. These developments have subjected our operations to increased risks. We incurred costs for providing facility security and may incur additional costs
in the future with respect to the receipt, storage and distribution of our products. Additional security measures could also restrict our ability to distribute refined petroleum products. Any future
terrorist attack on our facilities, or those of our customers, could have a material adverse effect on our financial condition, results of operations and cash available for distributions to our
unitholders.

Terrorist
activity could lead to increased volatility in prices for home heating oil, gasoline and other products we sell, which could decrease our customers' demand for these products.
Insurance carriers are required to offer coverage for terrorist activities as a result of federal legislation. We purchased this coverage with respect to our property and casualty insurance programs.
This additional coverage resulted in additional insurance premiums which could increase further in the future.

We depend on key personnel for the success of our business, and some of those persons face conflicts in the allocation of their time to our business.

We depend on the services of our senior management team and other key personnel. The loss of the services of any member of senior
management or key employee could have an adverse effect on our financial condition, results of operations and cash available for distributions to our unitholders. We may not be able to locate or
employ on acceptable terms qualified replacements for senior management or other key employees if their services were no longer available. Except with respect to Eric Slifka, Thomas Hollister and
Edward Faneuil, neither we, our general partner nor any affiliate thereof entered into an employment agreement with, or, except for Eric Slifka, carry key man life insurance on, any member of our
senior management team or other key personnel.

All
of the executive officers of our general partner perform services for certain of our affiliates. Please read Item 13, "Certain Relationships and Related Transactions, and
Director IndependenceRelationship of Management with Global Petroleum Corp. and Alliance Energy LLC."

We depend on unionized labor for the operation of our terminal in Chelsea, Massachusetts and our four terminals in New York and at the facility in Revere, Massachusetts
which is controlled and operated by one of our affiliates. Any work stoppages or labor disturbances at these facilities could disrupt our business.

Certain of our employees at the terminal in Chelsea, Massachusetts and truck drivers directly employed by us are employed under
collective bargaining agreements that expire in 2011. Certain of our employees at our terminals in Albany, Newburgh, Glenwood Landing and Inwood, New York are employed under collective bargaining
agreements that expire in 2010 (with respect to Albany and Newburgh) and 2011 (with respect to Glenwood Landing and Inwood). Certain of Global Petroleum Corp.'s employees at the Revere, Massachusetts
facility are similarly employed under a collective bargaining agreement that expires in 2011. Please read Items 1 and 2, "Business and PropertiesEmployees." Any work stoppages or
other labor disturbances at these facilities or by these drivers could have an adverse effect on our financial condition, results of operations and cash available for distributions to our unitholders.
In addition, employees who are not currently represented by labor unions may seek union representation in the future, and any
renegotiation of current collective bargaining agreements may result in terms that are less favorable to us.

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If we fail to maintain an effective system of internal controls, then we may not be able to accurately report our financial results or prevent fraud. As a result, current
and potential unitholders could lose confidence in our financial reporting, which would harm our business and the trading price of our common units.

Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a
public company. If our efforts to maintain internal controls are not successful or if we are unable to maintain adequate controls over our financial processes and reporting in the future or if we are
unable to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002, our operating results could be harmed or we may fail to meet our reporting obligations. Ineffective
internal controls also could cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our common units.

Risks Related to our Structure

Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to the detriment of our
unitholders.

Affiliates of our general partner, including directors and executive officers of our general partner, own a 42.9% limited partner
interest in us and the 1.73% general partner interest. Although our general partner has a fiduciary duty to manage us in a manner beneficial to us and our unitholders, the directors and officers of
our general partner have a fiduciary duty to manage our general partner in a manner beneficial to its owners. Furthermore, certain directors and officers of our general partner are directors or
officers of affiliates of our general partner. Conflicts of interest
may arise between our general partner and its affiliates, on the one hand, and us and our unitholders, on the other hand. As a result of these conflicts, our general partner may favor its own
interests and the interests of its affiliates over the interests of our unitholders. Please read "Our partnership agreement limits our general partner's fiduciary duties to unitholders
and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty." These conflicts include, among others, the
following situations:



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Please
read Item 13, "Certain Relationships and Related Transactions, and Director IndependenceOmnibus Agreement."

Our partnership agreement limits our general partner's fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by our general
partner that might otherwise constitute breaches of fiduciary duty.

Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by state
fiduciary duty law. For example, our partnership agreement:



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By
purchasing a common unit, a common unitholder will become bound by the provisions of the partnership agreement, including the provisions described above.

Unitholders have limited voting rights and are not entitled to elect our general partner or its directors or remove our general partner without its consent, which could
lower the trading price of our common units.

Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our business and,
therefore, limited ability to influence management's decisions regarding our business. Unitholders have no right to elect our general partner or its board of directors on an annual or other continuing
basis. The board of directors of our general partner is chosen entirely by its members and not by the unitholders. Furthermore, if the unitholders are dissatisfied with the performance of our general
partner, they have limited ability to remove our general partner. As a result of these limitations, the price at which the common units trade could diminish because of the absence or reduction of a
takeover premium in the trading price.

The
unitholders are currently unable to remove our general partner without its consent because affiliates of our general partner own sufficient units to be able to prevent removal of our
general partner. The vote of the holders of at least 662/3% of all outstanding common and subordinated units voting together as a single class is required to remove our general partner.
As of December 31, 2008,
affiliates of our general partner, including directors and executive officers of our general partner, owned 43.7% of our common and subordinated units. Also, if our general partner is removed without
cause during the subordination period, as defined in the partnership agreement, and units held by our general partner and its affiliates are not voted in favor of that removal, all remaining
subordinated units will automatically be converted into common units, and any existing arrearages on the common units will be extinguished. A removal of our general partner under these circumstances
would adversely affect the common units by prematurely eliminating their distribution and liquidation preference over the subordinated units, which would otherwise have continued until we had met
certain distribution and performance tests.

Cause
is narrowly defined in our partnership agreement to mean that a court of competent jurisdiction has entered a final, non-appealable judgment finding our general partner
liable for actual fraud or willful or wanton misconduct in its capacity as our general partner. Cause does not include most cases of charges of poor management of the business, so the removal of our
general partner during the subordination periods because of the unitholders' dissatisfaction with our general partner's performance in managing our partnership will most likely result in the
termination of the subordination period.

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We may issue additional units without unitholder approval, which would dilute unitholders' ownership interests.

At any time, we may issue an unlimited number of limited partner interests of any type without the approval of our unitholders. The
issuance by us of additional common units or other equity securities of equal or senior rank will have the following effects:



The market price of our common units could be adversely affected by sales of substantial amounts of our common units, including sales by our existing unitholders.

As of March 10, 2009, we had 7,428,139 common units outstanding. A substantial number of our securities may be sold in the
future either pursuant to Rule 144 under the Securities Act of 1933 (the "Securities Act") or pursuant to a registration statement filed with the SEC. Rule 144 under the Securities Act
provides that after a holding period of six months, non-affiliates may resell restricted securities of reporting companies, including the Partnership, provided that current public
information is available relating to the Partnership. After a holding period of one year, non-affiliates may resell without restriction, and affiliates may resell in compliance with the
volume, current public information and manner of sale requirements of Rule 144.

We
completed a private offering to institutional investors of an aggregate of 1,785,715 Class B units in May 2007 without registration under the Securities Act, in reliance on the
exemption from the registration requirements for transactions not involving a public offering contained in Section 4(2) of the Securities Act. The Class B units subsequently converted
into common units on a one-for-one basis. The institutional investors that are not affiliates of the Partnership currently may sell their common units pursuant to
Rule 144 under the Securities Act.

Sales
by any of our existing unitholders of a substantial number of our common units, or the perception that such sales might occur, could have a material adverse effect on the price of
our common units or could impair our ability to obtain capital through an offering of equity securities.

In
recent years, the securities market has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by
many companies for reasons unrelated to the operating performance of these companies. Future market fluctuations may result in a lower price of our common units.

An increase in interest rates may cause the market price of our common units to decline.

Like all equity investments, an investment in our common units is subject to certain risks. In exchange for accepting these risks,
investors may expect to receive a higher rate of return than would otherwise be obtainable from lower-risk investments. Accordingly, as interest rates rise, the ability of investors to
obtain higher risk-adjusted rates of return by purchasing government-backed debt securities may cause a corresponding decline in demand for riskier investments generally, including
yield-based equity investments such as publicly-traded limited partnership interests. Reduced demand for our

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common
units resulting from investors seeking other more favorable investment opportunities may cause the trading price of our common units to decline.

Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price.

If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right,
but not the obligation, which it may assign to any of its affiliates or to us, to acquire all, but not less than all, of the common units held by unaffiliated persons at a price not less than their
then-current market price. As a result, unitholders may be required to sell their common units at an undesirable time or price and may not receive any return on their investment.
Unitholders may also incur a tax liability upon a sale of their units. Our general partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it
upon exercise of the limited call right. There is no restriction in our partnership agreement that prevents our general partner from issuing additional common units and exercising its call right. If
our general partner exercises its limited call right, the effect would be to take us private and, if the units were subsequently deregistered, we would no longer be subject to the reporting
requirements of the Securities Exchange Act of 1934.

Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.

Our partnership agreement restricts unitholders' voting rights by providing that any units held by a person that owns 20% or more of
any class of units then outstanding, other than our general partner, its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our
general partner, cannot vote on any matter. Our partnership agreement also contains provisions limiting the ability of unitholders to call meetings or acquire information about our operations, as well
as other provisions limiting the unitholders' ability to influence the manner or direction of management.

Cost reimbursements due our general partner and its affiliates will reduce cash available for distribution to our unitholders.

Prior to making any distribution on the common units, we reimburse our general partner and its affiliates for all expenses they incur
on our behalf, which is determined by our general partner in its sole discretion. These expenses include all costs incurred by the general partner and its affiliates in managing and operating us,
including costs for rendering corporate staff and support services to us. We are managed and operated by directors and executive officers of our general partner. In addition, the majority of our
operating personnel are employees of our general partner. Please read Item 13, "Certain Relationships and Related Transactions, and Director Independence." The reimbursement of expenses and
payment of fees, if any, to our general partner and its affiliates could adversely affect our ability to pay cash distributions to our unitholders.

Unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business.

A general partner of a partnership generally has unlimited liability for the obligations of the partnership, except for those
contractual obligations of the partnership that are expressly made without recourse to the general partner. Our partnership is organized under Delaware law, and we conduct business in a number of
other states. The limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some of the

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other
states in which we do business. A unitholder could be liable for our obligations as if he were a general partner if:



Unitholders may have liability to repay distributions.

Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under Delaware law, we
may not make a distribution to unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. Delaware law provides that for a period of three years from the date
of the impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership
for the distribution amount. Purchasers of units who become limited partners are liable for the obligations of the transferring limited partner to make contributions to us that are known to the
purchaser of units at the time it became a limited partner and for unknown obligations if the liabilities could be determined from the partnership agreement. Liabilities to partners on account of
their partnership interests and liabilities that are
non-recourse to us are not counted for purposes of determining whether a distribution is permitted.

The control of our general partner may be transferred to a third party without unitholder consent.

Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially all of
its assets without the consent of the unitholders. Furthermore, there is no restriction in the partnership agreement on the ability of the members of our general partner from transferring their
respective membership interests in our general partner to a third party. The new members of our general partner would then be in a position to replace the board of directors and officers of our
general partner with their own choices and control the decisions taken by the board of directors and officers of our general partner.

Certain members of the Slifka family and their affiliates may engage in activities that compete directly with us.

Certain members of the Slifka family and their affiliates are subject to the noncompete provisions in the omnibus agreement. The
omnibus agreement does not prohibit certain affiliates of our general partner from owning certain assets or engaging in certain businesses that compete directly or indirectly with us. Please read
Item 13, "Certain Relationships and Related Transactions, and Director IndependenceOmnibus Agreement."

Tax Risks

Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation by
individual states. If the Internal Revenue Service were to treat us as a corporation or if we were to become subject to additional amounts of entity-level taxation for state tax purposes, our cash
available for distribution to unitholders would be substantially reduced.

The anticipated after-tax economic benefit of an investment in the common units depends largely on our being treated as a
partnership for federal income tax purposes. We have not requested, and do not plan to request, a ruling from the Internal Revenue Service ("IRS") on this or any other tax matter affecting us.

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Despite the fact that we are a limited partnership under Delaware law, it is possible in certain circumstances for a partnership such as ours to be treated as a
corporation for federal income tax purposes. Although we do not believe based upon our current operations that we are so treated, a change in our business (or a change in current law) could cause us
to be treated as a corporation for federal income tax purposes or otherwise subject us to taxation as an entity.

If
we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate, which is currently a maximum of 35%,
and would likely pay state tax at varying rates. Distributions to unitholders would generally be taxed again as corporate distributions, and no income, gains, losses, deductions or credits would flow
through to unitholders. Because a tax would be imposed upon us as a corporation, our cash available for distribution to unitholders would be substantially reduced. Thus, treatment of us as a
corporation would result in a material reduction in the anticipated cash flow and after-tax return to unitholders, likely causing a substantial reduction in the value of the common units.

Current
law may change, causing us to be treated as a corporation for federal income tax purposes or otherwise subjecting us to entity-level taxation. For example, because of widespread
state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise or other forms of
taxation. If any state were to impose a tax upon us as an entity, the cash available for distribution to unitholders would be reduced.

The
partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us
to entity-level taxation for federal, state or local income tax purposes, the minimum quarterly distribution amount and the target distribution amounts will be adjusted to reflect the impact of that
law on us.

The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and
differing interpretations, possibly on a retroactive basis.

The present federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may be
modified by administrative, legislative or judicial interpretation at any time. For example, members of Congress have recently considered substantive changes to the existing federal income tax laws
that would have affected certain publicly traded partnerships. Any modification to the federal income tax laws and interpretations thereof may or may not be applied retroactively. Although the
legislation considered would not have appeared to affect our tax treatment as a partnership, we are unable to predict whether any of these changes, or other proposals, will be reconsidered or will
ultimately be enacted. Any such changes could negatively impact the value of an investment in our common units.

We have a subsidiary that is treated as a corporation for federal income tax purposes and subject to corporate-level income taxes.

We conduct all or a portion of our operations of our end-user business through a subsidiary that is organized as a
corporation. We may elect to conduct additional operations through this corporate subsidiary in the future. This corporate subsidiary is subject to corporate-level tax, which reduces the cash
available for distribution to us and, in turn, to unitholders. If the IRS were to successfully assert that this corporation has more tax liability than we anticipate or legislation was enacted that
increased the corporate tax rate, our cash available for distribution to unitholders would be further reduced.

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If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted, and the costs of any contest will reduce our cash
available for distribution to unitholders.

We have not requested any ruling from the IRS with respect to our treatment as a partnership for federal income tax purposes or any
other matter affecting us. The IRS may adopt positions that differ from the tax positions we take. It may be necessary to resort to administrative or court proceedings to sustain some or all of the
positions we take. A court may not agree with some or all of the positions we take. Any contest with the IRS may materially and adversely impact the market for our common units and the price at which
they trade. In addition, because the costs will be borne indirectly by our unitholders and our general partner, the costs of any contest with the IRS will result in a reduction in cash available for
distribution.

Unitholders may be required to pay taxes on their share of our income even if they do not receive any cash distributions from us.

Because unitholders are treated as partners to whom we allocate taxable income, which could be different in amount than the cash we
distribute, unitholders are required to pay federal income taxes and, in some cases, state and local income taxes on their share of our taxable income, whether or not they receive cash distributions
from us. Unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax liability that results from their share of our taxable
income.

Tax gain or loss on the disposition of our common units could be different than expected.

If a unitholder sells his common units, he will recognize a gain or loss equal to the difference between the amount realized and his
tax basis in those common units. Because distributions to a unitholder in excess of the unitholder's allocable share of our net taxable income decreases the unitholder's tax basis in his common units,
the amount of such prior excess distributions will, in effect, become taxable income to him if the common units are sold at a price greater than his tax basis in the common units, even if the price he
receives is less than his original cost. Furthermore, a substantial portion of the amount realized, whether or not representing gain, may be taxed as ordinary income to the unitholder due to potential
recapture items, including depreciation recapture. In addition, because the amount realized includes a unitholder's share of our non-recourse liabilities, if a unitholder sells his units,
he may incur a tax liability in excess of the amount of cash he receives from the sale.

Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them.

Investment in common units by tax-exempt entities, such as individual retirement accounts (known as IRAs), and
non-U.S. persons raises issues unique to them. For example, virtually all of our income allocated to organizations exempt from federal income tax, including IRAs and other retirement
plans, will be unrelated business taxable income and could be taxable to them. Distributions to non-U.S. persons are reduced by withholding taxes at the highest applicable effective tax
rate, and non-U.S. persons are required to file the U.S. federal income tax returns and pay tax on their share of our taxable income. If you are a tax exempt entity or a
non-U.S. person, you should consult your tax advisor before investing in our common units.

We treat each purchaser of common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which
could decrease the value of the common units.

Because we cannot match transferors and transferees of common units and because of other reasons, we adopted depreciation and
amortization positions that may not conform with all aspects of

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existing
Treasury Regulations. A successful IRS challenge to those positions could decrease the amount of tax benefits available to unitholders. It also could affect the timing of these tax benefits
or the amount of gain from a unitholder's sale of common units and have a negative impact on the value of our common units or result in audit adjustments to unitholders' tax returns.

We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day
of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and
deduction among our unitholders.

We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the
ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The use of this proration method may not be permitted under existing
Treasury Regulations. If the IRS were to challenge this method or new Treasury Regulations were issued, we may be required to change the allocation of items of income, gain, loss and deduction among
our unitholders.

A unitholder whose units are loaned to a "short seller" to cover a short sale of units may be considered as having disposed of those units. If so, he would no longer be
treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition.

Because a unitholder whose units are loaned to a "short seller" to cover a short sale of units may be considered as having disposed of
the loaned units, he may no longer be treated for tax purposes as a partner with respect to those units during the period of the loan to the short seller and the unitholder may recognize gain or loss
from such disposition. Moreover, during the period of the loan to the short seller, any of our income, gain, loss or deduction with respect to those units may not be reportable by the unitholder and
any cash distributions received by the unitholder as to those units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain
recognition from a loan to a short seller are urged to modify any applicable brokerage account agreements to prohibit their brokers from borrowing their units.

We have adopted certain valuation methodologies that may result in a shift of income, gain, loss and deduction between the general partner and the unitholders. The IRS may
challenge this treatment, which could adversely affect the value of the common units.

When we issue additional units or engage in certain other transactions, we determine the fair market value of our assets and allocate
any unrealized gain or loss attributable to our assets to the capital accounts of our unitholders and our general partner. Although we may from time to time consult with professional appraisers
regarding valuation matters, including the valuation of our assets, we make many of the fair market value estimates of our assets ourselves using a methodology based on the market value of our common
units as a means to measure the fair market
value of our assets. Our methodology may be viewed as understating the value of our assets. In that case, there may be a shift of income, gain, loss and deduction between certain unitholders and the
general partner, which may be unfavorable to such unitholders. Moreover, under our current valuation methods, subsequent purchasers of common units may have a greater portion of their Internal Revenue
Code Section 743(b) adjustment allocated to our tangible assets and a lesser portion allocated to our intangible assets. The IRS may challenge our valuation methods, or our allocation of the
Section 743(b) adjustment attributable to our tangible and intangible assets, and allocations of income, gain, loss and deduction between the general partner and certain of our unitholders.

A
successful IRS challenge to these methods or allocations could adversely affect the amount of taxable income or loss being allocated to our unitholders. It also could affect the amount
of gain from our unitholders' sale of common units and could have a negative impact on the value of the common

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units
or result in audit adjustments to our unitholders' tax returns without the benefit of additional deductions.

The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in the termination of our partnership for federal income
tax purposes.

We will be considered to have terminated for federal income tax purposes if there is a sale or exchange of 50% or more of the total
interests in our capital and profits within a twelve-month period. For purposes of determining whether the 50% threshold has been met, multiple sales of the same interest are counted only once. Our
termination would, among other things, result in the closing of our taxable year for all unitholders, which would result in us filing two tax returns (and our unitholders could receive two
Schedules K-1) for one fiscal year and could result in a deferral of depreciation deductions allowable in computing our taxable income. In the case of a unitholder reporting on a
taxable year other than a fiscal year ending December 31, the closing of our taxable year may also result in more than twelve months of our taxable income or loss being includable in his
taxable income for the year of termination. Our termination currently would not affect our classification as a partnership for federal income tax purposes, but instead, we would be treated as a new
partnership for tax purposes. If treated as a new partnership, we must make new tax elections and could be subject to penalties if we are unable to determine that a termination occurred.

Unitholders may be subject to state and local taxes and return filing requirements in jurisdictions where they do not live as a result of investing in our common units.

In addition to federal income taxes, unitholders may be subject to other taxes, such as state and local income taxes, unincorporated
business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we do business or own property even if they do not live in any of those jurisdictions.
Unitholders may be required to file state and local income tax returns and pay state and local income taxes in some or all of these various jurisdictions. Further, unitholders may be subject to
penalties for failure to comply with those requirements. As of December 31, 2008, we conducted business in 16 states, some of which may impose a state income tax. We may own property or conduct
business in other states or foreign countries in the future. It is the unitholder's responsibility to file all federal, state and local tax returns. Unitholders are encouraged to consult their
professional tax advisors regarding the state and local tax implications to their ownership of our common units.

Item 1B.    Unresolved Staff Comments.

None.

Item 3.    Legal Proceedings.



Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of
business, we do not believe that we are a party to any litigation that will have a material adverse impact on our financial condition, results of operations or cash available for distribution to our
unitholders. Except as described below, we are not aware of any significant legal or governmental proceedings against us, or contemplated to be brought against us. We maintain insurance policies with
insurers in amounts and with coverage and deductibles as our
general partner believes are reasonable and prudent. However, we can provide no assurance that this insurance will be adequate to protect us from all material expenses related to potential future
claims or that these levels of insurance will be available in the future at economically acceptable prices.

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In connection with the November 2007 acquisition of ExxonMobil's Glenwood Landing and Inwood, New York terminals, we assumed certain
environmental liabilities, including the remediation obligations under remedial action plans submitted by ExxonMobil to and approved by the New York Department of Environmental Conservation ("NYDEC")
with respect to both terminals. As a result, we recorded total environmental liabilities of approximately $1.2 million. The remedial action plans submitted by ExxonMobil have been implemented
by Global Companies LLC. We do not believe that compliance with the terms thereof will result in material costs in excess of the environmental reserve or have a material impact on our
operations. See Note 10 of Notes to Consolidated Financial Statements included elsewhere in this report.

In
connection with the May 2007 acquisition of ExxonMobil's Albany and Newburgh, New York and Burlington, Vermont terminals, we assumed certain environmental liabilities, including the
remediation obligations under a proposed remedial action plan submitted by ExxonMobil to NYDEC with respect to the Albany, New York terminal. As a result, we recorded total environmental liabilities
of approximately $8.0 million. In June 2008, we submitted a remedial action work plan to NYDEC, implementing NYDEC's conditional approval of the remedial action plan submitted by ExxonMobil.
Although NYDEC has not yet officially approved the remedial action work plan submitted by us, we have responded to NYDEC's requests for additional information and conducted pilot tests for the
remediation outlined in the work plan. Based on the results of such pilot tests, the total environmental liabilities were estimated at approximately $5.1 million as of December 31, 2008.
Subject to NYDEC's approval of the proposed remedial action work plan, we do not believe that compliance with the terms thereof will result in material costs in excess of the environmental reserve or
have a material impact on our operations. See Note 10 of Notes to Consolidated Financial Statements included elsewhere in this report.

In
connection with the 2006 acquisition of our Macungie, Pennsylvania terminal (the "Global Macungie Terminal"), we assumed certain existing environmental liabilities at the terminal. We
did not accrue for these contingencies as we believe that the aggregate amount of these liabilities cannot be reasonably estimated at this time. We also executed an Administrative Order on Consent
("AOC") with the Environmental Protection Agency, Region III requiring certain investigatory activities at the Global Macungie Terminal. Although we cannot predict the outcome of the investigation of
the Global
Macungie Terminal, based upon current information, we do not anticipate that the outcome will have a material adverse effect on our financial condition, results of operations or cash available for
distribution to our unitholders. Furthermore, we do not believe that compliance with the terms of the AOC will result in material costs or have a material impact on our financial condition, results of
operations or cash available for distribution to our unitholders. See Note 10 of Notes to Consolidated Financial Statements included elsewhere in this report.

Global
Companies LLC, in addition to several affiliates, has been named as one of over 50 defendants in two lawsuits alleging methyl tertiary-butyl ether ("MTBE") contamination of
groundwater in Massachusetts. MTBE is an oxygenate that has been used extensively to reduce motor vehicle tailpipe emissions. In the cases of Town of Duxbury, et al. v. Amerada Hess Corp., et al.,
filed December 31, 2003, and City of Lowell v. Amerada Hess Corp., et al., filed December 30, 2004, plaintiffs allege that manufacturers, refiners and others involved in the distribution
of gasoline containing MTBE are liable for the costs of investigating possible MTBE groundwater contamination, treating such contaminated groundwater where found, and related relief including treble
damages and injunctive relief. The plaintiffs in these cases generally claim to be public water providers or municipal or other government authorities. These cases have been consolidated in
multi-district litigation with over 60 other MTBE cases in federal court in the Southern District of New York. We entered into an agreement, in principle, to settle these cases and, as a result, we
recorded $0.9 million as a current environmental liability on the accompanying consolidated balance sheet at December 31, 2008. We do

36

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not
believe that settlement of these cases will have a material impact on our operations. See Note 10 of Notes to Consolidated Financial Statements included elsewhere in this report.



On September 17, 2008, the Office of the Attorney General of the State of Connecticut issued Interrogatories and Subpoena Duces
Tecum (the "Subpoena") in connection with an investigation of gasoline wholesalers in Connecticut in the wake of Hurricane Ike. We responded to the Subpoena on behalf of Global Companies LLC.
According to the press release issued by the Attorney General's office, similar subpoenas were also issued to other gasoline wholesalers in Connecticut. We have taken steps to comply with the demand.
While we cannot predict the outcome of the investigation, we do not expect that the outcome will have a material adverse effect on our financial condition, results of operations or cash available for
distribution to our unitholders.

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

No matter was submitted to a vote of security holders during the fourth quarter of 2008.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common units trade on the New York Stock Exchange under the symbol "GLP." The closing sale price per common unit on March 3,
2009 was $9.85. At the close of business on March 10, 2009, based upon information received from our transfer agent and brokers and nominees, we had 3,654 common unitholders, including
beneficial owners of common units held in street name. The following table sets forth the range of the daily high and low sales prices per common unit as quoted on the New York Stock Exchange and the
cash distributions per common unit for the periods indicated.

Price RangeCash Distribution
Per Common Unit(1)High

Low2008Fourth Quarter

$
14.01

$
5.89

$
0.4875
(2)Third Quarter


16.40


8.29


0.4875Second Quarter


22.16


15.52


0.4875First Quarter


29.14


17.39


0.48752007Fourth Quarter

$
31.38

$
24.52

$
0.4875Third Quarter


41.29


25.95


0.4800Second Quarter


38.75


32.02


0.4725First Quarter


38.14


23.53


0.4650


---

We
intend to consider regular cash distributions to unitholders on a quarterly basis, although there is no assurance as to the future cash distributions since they are dependent upon
future cash flows, capital requirements, financial condition and other factors. Our credit agreement prohibits us from making cash distributions if any potential default or event of default, as
defined in the credit agreement, occurs or would result from the cash distribution.

Within
45 days after the end of each quarter, we will distribute all of our available cash (as defined in our partnership agreement) to unitholders of record on the applicable
record date. The amount of available cash is all cash on hand at the end of the quarter:



Working
capital borrowings (as defined in our partnership agreement) are generally borrowings that are made under our credit agreement and in all cases are used solely for working
capital purposes or to pay distributions to partners.

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Affiliates
of the Slifka family own 5,642,424 subordinated units. During the subordination period, the common units will have the right to receive distributions of available cash from
operating surplus in an amount equal to the minimum quarterly distribution of $0.4125 per quarter, plus any arrearages in the payment of the minimum quarterly distribution on the common units from
prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. These units are deemed "subordinated" units because for a period of time,
referred to as the subordination period, the subordinated units will not be entitled to receive any distributions until the common units have received the minimum quarterly distribution and any
arrearages from prior quarters. Furthermore, no arrearages will be paid on the subordinated units. The practical effect of the subordinated units is to increase the likelihood that during the
subordination period there will be available cash to be distributed on the common units.

The
subordination period will extend until the first day of any quarter beginning after September 30, 2010 that each of the following tests are met: (1) distributions of
available cash from operating surplus on each of the outstanding common units and subordinated units and general partner units equaled or exceeded the minimum quarterly distribution for each of the
three consecutive, non-overlapping four-quarter periods immediately preceding that date; (2) the "adjusted operating surplus" (as defined in our partnership agreement)
generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly
distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted basis and the related distribution on the general partner units during those
periods; and (3) there are no arrearages in payment of the minimum quarterly distribution on the common units. If the unitholders remove the general partner without cause, the subordination
period may end before September 30, 2010.

In
addition, if the tests for ending the subordination period are satisfied for any three consecutive four-quarter periods ending on or after September 30, 2008, 25%
of the subordinated units will convert into an equal number of common units. Similarly, if those tests are also satisfied for any three consecutive four-quarter periods ending on or after
September 30, 2009, an additional 25% of the subordinated units will convert into an equal number of common units. The second early conversion of subordinated units may not occur, however,
until at least one year following
the end of the period for the first early conversion of subordinated units. As of December 31, 2008, no subordinated units had been converted.

We
will make distributions of available cash from operating surplus for any quarter during the subordination period (as defined in our partnership agreement) in the following manner:
firstly, 98.27% to the common unitholders, pro rata, and 1.73% to the general partner, until we distribute for each outstanding common unit an amount equal to the minimum quarterly distribution for
that quarter; secondly, 98.27% to the common unitholders, pro rata, and 1.73% to the general partner, until we distribute for each outstanding common unit an amount equal to any arrearages in payment
of the minimum quarterly distribution on the common units for any prior quarters during the subordination period; thirdly, 98.27% to the subordinated unitholders, pro rata, and 1.73% to the general
partner, until we distribute for each subordinated unit an amount equal to the minimum quarterly distribution for that quarter; and thereafter, cash in excess of the minimum quarterly distributions is
distributed to the unitholders and the general partner based on the percentages as provided below.

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Table of Contents

As
holder of the incentive distribution rights, the general partner is entitled to incentive distributions if the amount we distribute with respect to any quarter exceeds specified
target levels shown below:

Marginal Percentage
Interest in DistributionsTotal Quarterly Distribution
Target Amount

Unitholders

General PartnerMinimum Quarterly Distribution

$0.4125


98.27
%

1.73
%First Target Distribution

up to $0.4625


98.27
%

1.73
%Second Target Distribution

above $0.4625 up to $0.5375


85.27
%

14.73
%Third Target Distribution

above $0.5375 up to $0.6625


75.27
%

24.73
%Thereafter

above $0.6625


50.27
%

49.73
%


The
equity compensation plan information required by Item 201(d) of Regulation S-K in response to this item is incorporated by reference from Item 12,
"Security Ownership of Certain Beneficial Owners and ManagementEquity Compensation Plan Table."

Recent Sales of Unregistered Securities

On May 9, 2007, we issued 1,785,715 unregistered Class B units in a private placement from which we received gross
proceeds of $50.0 million. The Class B units were convertible into common units on a one-for-one basis. In connection with the issuance of the Class B
units, we agreed to a discount in the purchase price of approximately $0.8 million, which is the approximate amount of the product of (i) the 1,785,715 Class B units, and
(ii) $0.4650, the amount of our first quarter 2007 per unit distribution that was paid to the common and subordinated unitholders on May 15, 2007. We paid this discount to the purchasers
of the Class B units substantially contemporaneously with the payment of our first quarter 2007 distribution and resulted in proceeds of $49.2 million. On May 22, 2007, the
Class B units converted into common units on a one-for-one basis. See Note 16 of Notes to Consolidated Financial Statements included elsewhere in this report for
additional information on the private placement.

Issuer Purchases of Equity Securities

We did not repurchase any of our common units during the quarter ended December 31, 2008 or at any time during the year ended
December 31, 2008.

Item 6.    Selected Financial Data.

The following table presents selected historical financial and operating data of Global Partners LP and our predecessor for the
periods and as of the dates indicated. The selected historical financial data is derived from the historical consolidated/combined financial statements of Global Partners LP.

This
table should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical consolidated
financial statements of Global Partners LP and the notes thereto included elsewhere in this report. In addition, this table presents non-GAAP financial measures which we use in our
business. These measures are not calculated or presented in accordance with generally accepted accounting principles in the United States ("GAAP"). We explain these measures and present
reconciliations to their most directly

40

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comparable
financial measures calculated in accordance with GAAP in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Consolidated

Combined(1)

Successor

PredecessorYear Ended
December 31,
2008

Year Ended
December 31,
2007

Year Ended
December 31,
2006

Year Ended
December 31,
2005

October 4
through
December 31,
2005

January 1
through
October 31,
2005

Year Ended
December 31,
2004(dollars in millions except per unit amounts)Statement of Income Data:Sales

$
9,019.1

$
6,757.8

$
4,472.4

$
4,045.8

$
1,248.9

$
2,796.9

$
3,187.6Cost of sales


8,899.3


6,630.8


4,359.2


3,954.1


1,220.0


2,734.1


3,111.7Gross profit


119.8


127.0


113.2


91.7


28.9


62.8


75.9Selling, general and administrative expenses


42.1


45.5


43.0


40.4


10.5


29.9


33.5Operating expenses


31.8


27.7


22.2


19.7


4.9


14.8


19.6Amortization expense


2.9


2.3


1.5


1.6


0.4


1.2


0.8Total operating costs and expenses


76.8


75.5


66.7


61.7


15.8


45.9


53.9Operating income


43.0


51.5


46.5


30.0


13.1


16.9


22.0Interest expense


(20.8
)

(17.4
)

(11.9
)

(10.0
)

(2.7
)

(7.3
)

(4.7
)Other income (expense), net








0.5


(0.9
)




(0.9
)

Gain on sale of investment(2)





14.1














Income before income tax expense


22.2


48.2


35.1


19.1


10.4


8.7


17.3Income tax expense(3)


(1.1
)

(1.2
)

(1.6
)

(1.0
)

(1.0
)




Net Income


21.1


47.0


33.5

$
18.1


9.4

$
8.7

$
17.3Less: General partner's interest in net income


(0.4
)

(0.9
)

(0.7
)




(0.2
)




Limited partners' interest in net income

$
20.7

$
46.1

$
32.8




$
9.2





Net income per limited partner unit, basic and diluted(4)

$
1.40

$
1.38

$
2.46




$
0.70





Weighted average limited partner' units outstanding, basic and diluted


13.1


12.4


11.3





11.3





Cash Flow Data:Net cash provided by (used in)Operating activities

$
99.2

$
(115.0
)
$
(54.5
)
$
(28.4
)
$
(34.1
)
$
5.7

$
(82.0
)Investment activities


(11.5
)

(136.5
)

(12.4
)

(1.6
)

(0.7
)

(0.9
)

1.2Financing activities(5)


(88.9
)

249.7


69.0


28.4


(31.4
)

(3.0
)

83.0Other Financial Data:EBITDA(6)

$
58.1

$
75.2

$
51.5

$
33.5

$
14.4

$
19.1

$
25.6Adjusted EBITDA(6)


58.1


61.1


51.5


33.5


14.4


19.1


25.6Distributable cash flow(7)


34.1


38.6


36.0





10.0





Capital expenditures(8)


11.5


13.7


5.9


1.8


0.7


1.1


1.3Cash distributions paid(9)


1.95


1.87


1.72











Operating Data:Normal heating degree days(10)


5,630


5,630


5,630


5,630


1,875


3,755


5,630Actual heating degree days


5,426


5,656


5,007


5,875


1,876


3,999


5,748Variance from normal heating degree days


(4)%


1%


(11)%


4%





7%


2%Variance from prior year actual degree days


(4)%


13%


(15)%


2%


1%


3%


(5)%Total gallons sold (in millions)


3,550


3,288


2,486


2,674


758


1,916


2,929Variance in volume sold from prior year


8%


32%


(7)%


9%








3%Balance Sheet Data (at period end):Cash and cash equivalents

$
0.9

$
2.1

$
3.9

$
1.8

$
1.8




$
3.3Property and equipment, net


162.0


161.7


31.7


22.0


22.0





22.6Total assets


889.3


1,159.2


638.9


554.7


554.7





393.0Total debt


433.5


496.2


272.3


183.5


183.5





193.0Total liabilities


745.8


998.9


535.7


478.4


478.4





369.8Equity


143.5


160.3


103.2


76.3


76.3





23.2


---

41

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Table of Contents

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations of Global
Partners LP should be read in conjunction with the historical consolidated financial statements of Global Partners LP and the notes thereto included elsewhere in this
report.

Overview



We own, control or have access to one of the largest terminal networks of refined petroleum products in the Northeast. We are one of
the largest wholesale distributors of gasoline, distillates (such as home heating oil, diesel and kerosene) and residual oil to wholesalers, retailers and commercial customers in the Northeast. In
2008, we sold approximately $9.0 billion of refined petroleum products and small amounts of natural gas.

We
purchase our refined petroleum products primarily from domestic and foreign refiners (wholesalers), traders and producers and sell these products in two segments, Wholesale and
Commercial. Like most independent marketers of refined petroleum products, we base our pricing on spot physical prices and routinely use the NYMEX or derivatives to hedge our commodity risk inherent
in buying and selling energy commodities. Through the use of regulated exchanges or derivatives, we maintain a position that is substantially balanced between purchased volumes and sales volumes or
future delivery obligations. We earn a margin by selling the product for physical delivery to third parties.



Our products include gasoline, distillates and residual oil. We sell gasoline to unbranded retail gasoline stations and other resellers
of transportation fuels. The distillates we sell are used primarily for fuel for trucks and off-road construction equipment and for space heating of residential and commercial buildings.
We sell residual oil to major housing units, such as public housing authorities, colleges and hospitals and large industrial facilities that use processed steam in their manufacturing processes. In
addition, we sell bunker fuel, which we can custom blend, to cruise ships, bulk carriers and fishing fleets. We have increased our sales in the non-weather sensitive components of our
business, such as transportation fuels; however, we are still subject to the impact that warmer weather conditions may have on our home heating oil and residual oil sales.

Our
business is divided into two segments:



Our
business activities are substantially comprised of purchasing, storing, terminalling and selling refined petroleum products. In a contango market (when product prices for future
deliveries are higher than for current deliveries), we may use our storage capacity to improve our margins by storing products we have purchased at lower prices in the current market for delivery to
customers at higher prices in the future. In a backwardated market (when product prices for future deliveries are lower than current deliveries), we attempt to minimize our inventories to reduce
commodity risk and

43

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Table of Contents

maintain
or increase net product margins. See Part I, Item 1A, "Risk Factors," for additional information related to commodity risk.



This section identifies certain risks and certain economic or industry-wide factors that may affect our financial
performance and results of operations in the future, both in the short-term and in the long-term. Our results of operations and financial condition depend, in part, upon the
following:



44

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Table of Contents



Results of Operations



Our management uses a variety of financial and operational measurements to analyze our performance. These measurements include:
(1) net product margin, (2) gross profit, (3) selling, general and administrative expenses ("SG&A"), (4) operating expenses, (5) degree days, (6) adjusted net
income per diluted limited partner unit, (7) EBITDA, adjusted EBITDA and net income as adjusted for one-time gains and (8) distributable cash flow.

45

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Table of Contents



We view net product margin as an important performance measure of the core profitability of our operations. We review net product
margin monthly for consistency and trend analysis. We define net product margin as our sales minus product costs. Sales include sales of
unbranded gasoline, distillates, residual oil and natural gas. Product costs include the cost of acquiring the refined petroleum products and natural gas that we sell and all associated costs
including shipping and handling costs to bring such products to the point of sale. Net product margin is a non-GAAP financial measure used by management and external users of our
consolidated financial statements to assess our business. Net product margin should not be considered as an alternative to net income, operating income, cash flow from operations, or any other measure
of financial performance presented in accordance with GAAP. In addition, our net product margin may not be comparable to net product margin or a similarly titled measure of other companies.



We define gross profit as our sales minus product costs and terminal depreciation expense allocated to cost of sales. Sales include
sales of unbranded gasoline, distillates, residual oil and natural gas. Product costs include the cost of acquiring the refined petroleum products and natural gas that we sell and all associated costs
to bring such products to the point of sale.



Our SG&A expenses include marketing costs, corporate overhead, employee salaries and benefits, pension and 401(k) plan expenses,
discretionary bonuses, non-interest financing costs, professional fees and information technology expenses. Employee-related expenses including employee salaries, discretionary bonuses and
related payroll taxes, benefits, and pension and 401(k) plan expenses are paid by our general partner which, in turn, is reimbursed for these expenses by us.



Operating expenses are costs associated with the operation of the terminals used in our business. Lease payments and storage expenses,
maintenance and repair, utilities, taxes, labor and labor-related expenses comprise the most significant portion of our operating expenses. These expenses remain relatively stable independent of the
volumes through our system but fluctuate slightly depending on the activities performed during a specific period.



A "degree day" is an industry measurement of temperature designed to evaluate energy demand and consumption. Degree days are based on
how far the average temperature departs from a human comfort level of 65°F. Each degree of temperature above 65°F is counted as one cooling degree day, and each degree of
temperature below 65°F is counted as one heating degree day. Degree days are accumulated each day over the course of a year and can be compared to a monthly or a long-term
(multi-year) average, or normal, to see if a month or a year was warmer or cooler than usual. Degree days are officially observed by the National Weather Service and officially archived by
the National Climatic Data Center. For purposes of evaluating our results of operations, we use the normal heating degree day amount as reported by the National Weather Service at its Logan
International Airport station in Boston, Massachusetts.



We use adjusted net income per diluted limited partner unit to measure our financial performance on a per-unit basis.
Adjusted net income per diluted limited partner unit is defined as net income after adding back the theoretical amount allocated to the general partner's interest as provided under

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Emerging
Issues Task Force ("EITF") 03-06, "Participating Securities and the Two-Class Method under FASB Statement No. 128" ("EITF 03-06") and a
non-cash reduction in net income available to limited partners under EITF 98-05, "Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios" ("EITF 98-05"), divided by the weighted average number of outstanding diluted common and subordinated units, or limited partner units,
during the period.

Net
income per diluted limited partner unit as dictated by EITF 03-06 is theoretical and pro forma in nature and does not reflect the economic probabilities of whether
earnings for an accounting period would or could be distributed to unitholders. The partnership agreement does not provide for the quarterly distribution of net income; rather, it provides for the
distribution of available cash, which is a contractually defined term that generally means all cash on hand at the end of each quarter after establishment of sufficient cash reserves required to
operate our business. Accordingly, the distributions we historically paid and will pay in future periods are not impacted by net income per diluted limited partner unit as dictated by
EITF 03-06.

The
non-cash reduction under EITF 98-05 for the year ended December 31, 2007 was the result of accounting for the sale of Class B units (see
Note 16 of Notes to Consolidated Financial Statements included elsewhere in this report). Although EITF 98-05 affected net income available to limited partners, it did not
affect net income or distributable cash flow to limited partners, nor did it affect total partners' equity.

Adjusted
net income per diluted limited partner unit is a non-GAAP financial measure and should not be considered as an alternative to net income per diluted limited partner
unit or any other measure of financial performance presented in accordance with GAAP. In addition, our adjusted net income per diluted limited partner unit may not be comparable to the adjusted net
income per diluted limited partner unit or similarly titled measure of other companies.



EBITDA, adjusted EBITDA and net income as adjusted for one-time gains are non-GAAP financial measures used as
supplemental financial measures by management and external users of our consolidated financial statements, such as investors, commercial banks and research analysts, to
assess:



Adjusted
EBITDA and net income as adjusted for one-time gains reflect the exclusion of the $14.1 million gain on investment for the year ended December 31, 2007
(see Note 8 of Notes to Consolidated Financial Statements included elsewhere in this report). EBITDA, adjusted EBITDA and net income as adjusted for one-time gains should not be
considered alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA,
adjusted EBITDA and net income as adjusted for one-time gains exclude some, but not all, items that affect net income, and these measures may vary among other companies. Therefore, EBITDA,
adjusted EBITDA and net income as adjusted for one-time gains may not be comparable to similarly titled measures of other companies.

47

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Distributable cash flow is an important non-GAAP financial measure for our limited partners since it serves as an indicator
of our success in providing a cash return on their investment. Distributable cash flow means our net income plus depreciation and amortization less our maintenance capital expenditures. Specifically,
this financial measure indicates to investors whether or not we have generated sufficient cash flow on a current or historic level that can sustain or support an increase in our quarterly cash
distribution. Distributable cash flow is a quantitative standard used by the investment community with respect to publicly traded partnerships. Distributable cash flow for the year ended
December 31, 2007 reflects the exclusion of the $14.1 million gain on investment (see Note 8 of Notes to Consolidated Financial Statements included elsewhere in this report).
Distributable cash flow should not be considered as an alternative to net income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP. In
addition, our distributable cash flow may not be comparable to distributable cash flow or similarly titled measure of other companies.



In 2008, we continued to expand our presence in Providence, Rhode Island. We entered into two separate sublease agreements in November
2007 for land located at the Port of Providence. In January 2008, the terminal at one parcel opened for business and has storage capacity of 244,000 barrels for distillates. In November 2008, the
terminal at the other parcel opened for business and has storage capacity of 230,000 barrels for refined petroleum products. These facilities will enable us to more effectively supply existing
wholesale and commercial customers across Rhode Island and southeastern Massachusetts and cultivate new customers in the region.

In
2008, we experienced higher revenues and higher gasoline sales volumes, primarily due to our 2007 acquisitions of five refined petroleum products terminals from ExxonMobil. Refined
petroleum product and natural gas prices were higher during the first nine months of the year compared to 2007 and generally peaked in July of 2008 before dramatically decreasing during the fourth
quarter as evidenced in the table below. Specifically, prices for heating oil, gasoline, residual oil and natural gas peaked at $4.11, $3.57, $119.70 and $18.34, respectively. Prices hit their lowest
point in December at $1.20, $0.79, $28.40 and $6.02 for heating oil, gasoline, residual oil and natural gas, respectively.

The
following table provides the percentage increases (decreases) in refined petroleum product and natural gas prices at the end of each quarter in 2008 as compared to each comparable
quarter in 2007:

Period:

Heating
Oil
$ per
gallon

Gasoline
$ per
gallon

Residual
Oil
$ per
barrel

Natural
Gas
$ per
barrelAt March 31, 2008

$
3.05

$
2.62

$
72.75

$
64.38At March 31, 2007

$
1.88

$
2.11

$
45.80

$
50.27Change


62%


24%


59%


28%At June 30, 2008

$
3.90

$
3.50

$
111.30

$
86.37At June 30, 2007

$
2.03

$
2.29

$
55.15

$
46.24Change


92%


53%


102%


87%At September 30, 2008

$
2.86

$
2.48

$
83.55

$
47.44At September 30, 2007

$
2.24

$
2.07

$
58.15

$
42.65Change


28%


20%


44%


11%At December 31, 2008

$
1.41

$
1.01

$
35.65

$
47.56At December 31, 2007

$
2.64

$
2.48

$
75.15

$
48.07Change


(47)%


(59)%


(53)%


(1)%


48

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Table of Contents

During
the fourth quarter of 2008, we experienced the following events:



During
the year ended December 31, 2008, we experienced the following events which led to a significant negative impact on our results of operations:



In
the year ended December 31, 2007, we continued to broaden and strengthen our distribution network with the acquisitions of five refined products terminals and the leasing of an
additional terminal. In addition, we continued to broaden the non-weather sensitive components of our business. In May 2007, we acquired three refined products terminals in Albany and
Newburgh, New York and Burlington, Vermont from ExxonMobil. Products distributed from these terminals primarily include gasoline, ultra low sulfur diesel and heating oil. In November 2007, we acquired
two refined products terminals in Glenwood Landing and Inwood, New York from ExxonMobil. Products distributed from these terminals also include gasoline, ultra low sulfur diesel and heating oil. Also
in November 2007, we leased a terminal in Providence, Rhode Island which has access to deepwater marine facilities.

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Refined petroleum product and natural gas prices rose throughout 2007. At December 31, 2007, prices for gasoline, heating oil, residual oil and natural gas
increased 55%, 65%, 102% and 25%, respectively, compared to prices at December 31, 2006. Temperatures were less than 1% colder than normal for 2007 and 13% colder than 2006 as measured by
aggregate heating degree days.

In
the year ended December 31, 2006, we continued to expand our higher margin product lines and broaden the non-weather sensitive components of our business. We
completed two acquisitions in 2006: (1) our Bridgeport, Connecticut terminal which is used as a distribution point for diesel and home heating oil, and (2) our Macungie, Pennsylvania
terminal which is used as a distribution point for diesel, gasoline and home heating oil. Refined petroleum product prices rose throughout most of 2006 but experienced significant declines in
September and December. At December 31, 2006, prices for gasoline, distillates and residual oil decreased 6%, 8% and 24%, respectively. Temperatures were 11% warmer than normal for 2006.



The following table provides a summary of some of the key performance indicators that may be used to assess our results of operations.
These comparisons are not necessarily indicative of future results (gallons and dollars in thousands, except per unit data):

Years Ended December 31,2008

2007

2006Net income as adjusted for one-time gains(1)

$
21,055

$
32,895

$
33,461Adjusted net income per diluted limited partner unit(2)

$
1.59

$
3.92

$
2.91Adjusted EBITDA(3)

$
58,132

$
61,107

$
51,541Distributable cash flow(4)

$
34,061

$
38,638

$
36,003Wholesale Segment:Volume (gallons)


3,348,238


3,043,278


2,196,978Sales

$
8,589,180

$
6,376,749

$
4,071,608Net product margin(5)Distillates

$
70,045

$
86,358

$
58,285Gasoline


36,451


11,463


22,812Residual oil


11,671


23,667


20,896Total

$
118,167

$
121,488

$
101,993Commercial Segment:Volume (gallons)


202,088


244,343


288,970Sales

$
429,943

$
381,085

$
400,810Net product margin(5)

$
11,835

$
11,485

$
13,151Combined sales and net product margin:Sales

$
9,019,123

$
6,757,834

$
4,472,418Net product margin(5)

$
130,002

$
132,973

$
115,144Depreciation allocated to cost of sales


10,211


5,989


1,918Combined gross profit

$
119,791

$
126,984

$
113,226Weather conditions:Normal heating degree days


5,630


5,630


5,630Actual heating degree days


5,426


5,656


5,007Variance from normal heating degree days


(4)%


1%


(11)%Variance from prior period actual heating degree days


(4)%


13%


(15)%


---

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Table of Contents

The following table presents a reconciliation of net income as adjusted for one-time gains to the most directly comparable GAAP
financial measure on a historical basis (in thousands):

Years Ended December 31,2008

2007

2006Reconciliation of net income to net income as adjusted for one-time gains:Net income

$
21,055

$
47,013

$
33,461Gain on sale of investment(1)





(14,118
)

Net income as adjusted for one-time gains

$
21,055

$
32,895

$
33,461


---

The
following table presents a reconciliation of adjusted net income per diluted limited partner unit to the most directly comparable GAAP financial measure on a historical basis:

Years Ended December 31,2008

2007

2006Reconciliation of net income per diluted limited partner unit to adjusted net income per diluted limited partner unit:Net income per diluted limited partner unit under EITF 03-06 and EITF 98-05

$
1.40

$
1.38

$
2.46Dilutive impact of theoretical distribution of earnings under EITF 03-06


0.19


1.21


0.45Dilutive impact of non-cash reduction under EITF 98-05





1.33


Adjusted net income per diluted limited partner unit

$
1.59

$
3.92

$
2.91


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The following table presents reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP financial measures on a historical basis (in
thousands):

Years Ended December 31,2008

2007

2006Reconciliation of net income to EBITDA and adjusted EBITDA:Net income

$
21,055

$
47,013

$
33,461Depreciation and amortization


15,126


9,613


4,513Interest expense


20,799


17,408


11,901Income tax expense


1,152


1,191


1,666EBITDA


58,132


75,225


51,541Gain on sale of investment(1)





(14,118
)

Adjusted EBITDA

$
58,132

$
61,107

$
51,541Reconciliation of cash flow provided by (used in) operating activities to EBITDA and adjusted EBITDA:Cash flow provided by (used in) operating activities

$
99,220

$
(115,045
)
$
(54,479
)Net changes in operating assets and liabilities


(63,039
)

171,671


92,453Interest expense


20,799


17,408


11,901Income tax expense


1,152


1,191


1,666EBITDA


58,132


75,225


51,541Gain on sale of investment(1)





(14,118
)

Adjusted EBITDA

$
58,132

$
61,107

$
51,541


---

The
following table presents reconciliations of distributable cash flow to the most directly comparable GAAP financial measures on a historical basis (in thousands):

Years Ended December 31,2008

2007

2006Reconciliation of net income to distributable cash flow:Net income

$
21,055

$
47,013

$
33,461Depreciation and amortization


15,126


9,613


4,513Gain on sale of investment(1)





(14,118
)

Maintenance capital expenditures


(2,120
)

(3,870
)

(1,971
)Distributable cash flow

$
34,061

$
38,638

$
36,003Reconciliation of cash flow provided by (used in) operating activities to distributable cash flow:Cash flow provided by (used in) operating activities

$
99,220

$
(115,045
)
$
(54,479
)Net changes in operating assets and liabilities


(63,039
)

171,671


92,453Gain on sale of investment(1)





(14,118
)

Maintenance capital expenditures


(2,120
)

(3,870
)

(1,971
)Distributable cash flow

$
34,061

$
38,638

$
36,003


---

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Our total sales for 2008 increased by $2,261.3 million, or 33%, to $9,019.1 million compared to $6,757.8 million
for 2007. The increase was driven primarily by higher refined petroleum product prices for most of 2008 compared to 2007 and our terminal acquisitions in Albany and Newburgh, New York and Burlington,
Vermont in May 2007 and in Glenwood Landing and Inwood, New York in November 2007. Our aggregate volume of product sold increased by approximately 263 million gallons, or 8%, to
3,550 million gallons. The increase in volume was due to an increase of approximately 457 million gallons in gasoline, mostly due to our 2007 terminal acquisitions, offset by decreases
of 105 million and 87 million gallons in distillates and residual oil, respectively. These decreases were primarily due to conservation by users of home heating oil,
warmer-than-normal temperatures and conversion and fuel switching related to increased residual oil prices for most of 2008 relative to the prices of natural gas and
intensified competition in the marketplace. The number of actual heating degree days decreased 4% to 5,426 for 2008 compared to 5,656 for 2007. Our gross profit for 2008 was $119.8 million, a
decrease of $7.2 million, or 6%, compared to $127.0 million for 2007. The decrease was primarily due to lower net product margins in distillates and residual oil and an increase in
depreciation on our terminals, which is included in cost of sales, as a result of our 2007 terminal acquisitions. The decrease was significantly offset by a higher net product margin in our Wholesale
segment for gasoline also mostly as a result of our 2007 terminal acquisitions.

Our
total sales for 2007 increased by $2,285.4 million, or 51%, to $6,757.8 million compared to $4,472.4 million for 2006. The increase was driven primarily by our
terminal acquisitions in Albany and Newburgh, New York and Burlington, Vermont in May 2007 and, to a lesser extent, in Glenwood Landing and Inwood, New York in November 2007 and in Bridgeport,
Connecticut and Macungie, Pennsylvania in 2006 and an increase in refined petroleum product prices for 2007 compared to the prior year. Our aggregate volume of product sold increased by approximately
801 million gallons, or 32%, to 3,287 million gallons. The increase in volume primarily includes increases of 497 million and 361 million gallons in gasoline and
distillates, respectively, as a result of our terminal acquisitions and colder temperatures in 2007 compared to 2006. The increase in volume was offset by a 36 million gallon decrease in
residual oil, primarily due to conversion and fuel switching related to increased residual oil prices relative to the prices of natural gas and intensified competition in the marketplace. The number
of actual heating degree days increased by approximately 13% to 5,656 compared to 5,007 for 2006. Our gross profit for 2007 was $127.0 million, an increase of $13.8 million, or 12%,
compared to $113.2 million for 2006, primarily due to higher net product margins in distillates and residual oil. The increase was offset by a decline in gasoline net product margins and an
increase in depreciation on our terminals, which is included in cost of sales, as a result of our terminal acquisitions.



Distillates.    Wholesale distillate sales for 2008 were $4,044.0 million compared to $3,354.6 million for
2007. The increase of $689.4 million, or 21%, was due to increases in refined petroleum product prices for most of 2008 compared to 2007. Although we experienced an increase in distillate
sales, our distillate volume sold was negatively impacted by the higher price for heating oil for most of 2008, warmer than normal temperatures, meaningful energy conservation and less favorable
buying opportunities in 2008 compared to 2007. In addition, we had fewer fixed priced sales of heating oil in 2008 compared to 2007, which we believe was due to higher refined petroleum product
prices. Primarily due to these same factors, our net product margin contribution from distillate sales decreased by $16.4 million, or 19%, to $70.0 million for 2008 compared to
$86.4 million for 2007. For the year ended December 31, 2008, the decrease in net product margin for Wholesale distillates also reflected an increase of $2.5 million related to a
change in estimate of our inventory reserve account recorded in the second quarter of 2008.

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Wholesale
distillate sales for 2007 were $3,354.6 million compared to $2,313.6 million for 2006. The increase of $1,041.0 million, or 45%, was due to an increase in
volume sold and in refined petroleum product prices for 2007 compared to 2006. We attribute the increase in volume sold primarily to the terminal acquisitions in Albany and Newburgh, New York and
Burlington, Vermont in May 2007 and, to a lesser extent, in Glenwood Landing and Inwood, New York in November 2007, and in Bridgeport, Connecticut and Macungie, Pennsylvania in 2006, as well as to
temperatures that were 13% colder for 2007 compared to 2006. Our net product margin contribution from distillate sales increased by $28.1 million, or 48%, to $86.4 million for 2007
compared to $58.3 million for 2006, primarily as the result of margin expansion, volume expansion related to our 2007 and 2006 terminal acquisitions and additional volume expansion due to
colder weather during 2007 compared to 2006. Despite the increase in net product margin for 2007, we had fewer fixed priced sales of heating oil in 2007 compared to 2006, which we believe was due to
higher refined petroleum product prices.

Gasoline.    Wholesale
gasoline sales for 2008 were $4,469.8 million compared to $2,906.9 million for 2007. The increase of $1,562.9 million, or 54%, was
due primarily to our 2007 terminal acquisitions, an increase in gasoline volume sold and higher prices for most of 2008. Our net product margin
contribution from gasoline sales increased by $25.0 million to $36.5 million for 2008 compared to $11.5 million for 2007. We attribute the increase in net product margin to the
new business generated by our 2007 terminal acquisitions, better margins overall in our gasoline business, and the prior year gasoline business start-up costs associated with our Albany
and Newburgh, New York and Burlington, Vermont terminal acquisition in May of 2007 that were not incurred in 2008. Although we experienced an increase in gasoline sales, volume sold and net product
margin, these results were negatively impacted for 2008 as a result of the following first quarter 2008 events: (1) the opportunistic conversion of certain gasoline markets to ethanol which put
us in a temporarily disadvantaged competitive position while our terminal infrastructure was being converted; and (2) the temporary logistical supply issues related to rail capacity which
adversely affected the performance of our Burlington, Vermont facility. We have since successfully completed the conversion to ethanol at our facilities which are now fully operational, and full rail
service to our Burlington, Vermont facility has resumed.

Wholesale
gasoline sales for 2007 were $2,906.9 million compared to $1,654.4 million for 2006. The increase of $1,252.5 million, or 76%, was due primarily to our
acquisition of the Albany and Newburgh, New York and Burlington, Vermont terminals, our 2006 acquisition of the Macungie, Pennsylvania terminal, an increase in gasoline volume sold and higher prices.
Our net product margin from gasoline sales decreased by $11.3 million, or 50%, to $11.5 million for 2007 compared to $22.8 million for 2006. We attribute the decrease in net
product margin to the return of margins to more historical norms as the industry adjusted to the introduction of ethanol-based gasoline, narrower net product margins generally, some initial
start-up supply costs at the Albany and Newburgh, New York and Burlington, Vermont terminals and general market conditions.

Residual
Oil.    Wholesale residual oil sales for 2008 were $75.4 million compared to $115.3 million for 2007. The decrease of $39.9 million, or 35%, was
primarily due to declines in residual oil volume sold despite an increase in refined petroleum product prices for most of 2008. Our net product margin contribution from residual oil sales decreased by
$12.0 million, or 51%, to $11.7 million for 2008 compared to $23.7 million for 2007 due to conversion and fuel switching related to increased residual oil prices for most of 2008
relative to the prices of natural gas and intensified competition in the marketplace.

Wholesale
residual oil sales for 2007 were $115.3 million compared to $103.6 million for 2006. The increase of $11.7 million, or 11%, was due to an increase in
refined petroleum product prices, despite a decrease in residual oil volume sold, primarily due to conversion and fuel switching related to increased residual oil prices relative to the prices of
natural gas and intensified competition in the marketplace. Our net product margin contribution from residual oil sales increased by $2.8 million, or 13%, to $23.7 million for 2007
compared to $20.9 million for 2006.

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In our Commercial segment, residual oil accounted for approximately 67%, 75% and 80% of total commercial volume sold in 2008, 2007 and
2006, respectively. Distillates, gasoline and natural gas accounted for the remainder of the total volume sold.

Commercial
residual oil sales and volume sold for 2008 decreased by 1% and 27%, respectively, compared to 2007. We attribute the decrease in volume sold to the competitive pricing from
natural gas and reductions in production by certain industry participants who are contracting their business activities in our territory.

Commercial
residual oil sales for 2007 decreased by 10% compared to 2006 due to a 20% decrease in volume sold. We attribute the decrease in volume sold to the competitive pricing from
natural gas and reductions in production by certain industry participants in our territory. Specifically, for 2007 compared to 2006, prices for residual oil and heating oil increased 102% and 65%,
respectively, while the price for natural gas increased 25%.



SG&A expenses for 2008 decreased by $3.4 million, or 7%, to $42.1 million compared to $45.5 million for 2007. The
decrease was primarily due to decreases of $4.0 million in accrued bonuses, $0.6 million in professional fees, $0.4 million in insurance premiums and $0.3 million in other
SG&A expenses, offset by increases of $0.8 million in bank fees, $0.7 million in salaries and employee benefits and $0.4 million in compensation cost on our long-term
incentive plan.

SG&A
expenses increased by $2.5 million, or 6%, to $45.5 million for 2007 compared to $43.0 million for 2006. The increase was primarily due to increases of
approximately $1.7 million in salaries and $0.7 million in employee-related benefits, partly due to additional employees to support our recent terminal acquisitions, $0.3 million
in compensation cost on our long-term incentive plan and $0.3 million in other SG&A expenses. The increase in SG&A expenses was offset by a decrease of approximately
$0.5 million in legal fees as a result of insurance reimbursement from insurance carriers for previously expensed legal fees.



Operating expenses increased by $4.1 million, or 15%, to $31.8 million for 2008 compared to $27.7 million for
2007. The increase was primarily due to $4.2 million in costs associated with operating our Glenwood Landing and Inwood, New York terminals acquired in November 2007, $2.9 million in
costs associated with operating our Albany and Newburgh, New York and Burlington, Vermont terminals acquired in May 2007, and $1.3 million in costs associated with our leased terminal in
Providence, Rhode Island, offset by decreases of $0.8 million in costs related to the non-renewal of the terminal lease in New Haven, Connecticut and $0.6 million in
miscellaneous operating expenses. For the year ended December 31, 2008, the increase in operating expenses also reflected a decrease of $2.8 million related to a change in estimate of
our remediation obligations under a proposed remedial action work plan submitted by us to NYDEC with respect to the Albany, New York terminal (see Note 10 of Notes to Consolidated Financial
Statements included elsewhere in this report).

Operating
expenses for 2007 increased by $5.5 million, or 25%, to $27.7 million compared to $22.2 million for 2006. The increase was primarily due to
$3.3 million in costs associated with operating our Albany and Newburgh, New York and Burlington, Vermont terminals, $0.8 million in costs associated with operating our Bridgeport,
Connecticut and Macungie, Pennsylvania facilities, $0.6 million in increased costs at our Chelsea terminal, $0.5 million in costs associated with operating our newly acquired Glenwood
Landing and Inwood, New York terminals, $0.4 million in increased rent for additional storage and repair expenses at the Capital Terminal in East Providence, Rhode Island, $0.3 million
in increased rent at our Gateway terminal, $0.3 million in additional costs at our South

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Portland
terminal, $0.2 million in additional costs at our Wethersfield terminal and $0.4 million in other operating expenses. The increase in expenses was offset by
non-recurring charges of approximately $1.3 million at our New Bedford terminal and pipeline repair and other expenses at our Chelsea terminal incurred during 2006.



Amortization expense was $2.9 million, $2.3 million and $1.5 million for the years ended December 31, 2008,
2007 and 2006, respectively. The increases of $0.6 million in 2008 compared to 2007 and $0.8 million in 2007 compared to 2006 were primarily the result of amortization related to
intangible assets recognized as part of the Albany, Newburgh, Glenwood Landing and Inwood, New York and Burlington, Vermont terminal acquisitions in 2007. See Note 5 of Notes to Consolidated
Financial Statements included elsewhere in this report.



Interest expense for 2008 increased by $3.4 million, or 19%, to $20.8 million compared to $17.4 million for 2007.
We attribute the increase primarily to higher average balances on our working capital credit facility from carrying higher average balances of inventories and accounts receivable due to increased
refined petroleum product prices for most of 2008, despite the overall interest rate environment. In addition, the costs of borrowings under the credit agreement were increased commencing with the
July 18, 2008 amendment to the credit agreement. Also, we had increased borrowings on our working capital and acquisition facilities to fund our terminal acquisitions in May and November of
2007.

Interest
expense for 2007 increased by $5.5 million, or 46%, to $17.4 million compared to $11.9 million for 2006. We attribute the increase primarily to borrowing on
our acquisition facility to fund the Albany, Newburgh, Glenwood Landing and Inwood, New York and Burlington, Vermont terminal acquisitions in 2007, higher average balances on our revolving line of
credit due to higher refined petroleum product prices, increased inventory levels and, to a lesser extent, an increase in the average interest rate for 2007 compared to 2006.



Other income of approximately $515,000 for the year ended December 31, 2006 represented dividend income from our ownership
interest in NYMEX Holdings, Inc. along with our NYMEX seats. In March 2007, we sold our investment in NYMEX Holdings, Inc. along with our NYMEX seats and, as a result, other income was
not recognized for the years ended December 31, 2008 and 2007. See Note 8 of Notes to Consolidated Financial Statements included elsewhere in this report.



The $14.1 million gain on sale of investment for the year ended December 31, 2007 represented the amount we realized on
the March 2007 sale of our NYMEX Holdings, Inc. and related seats. See Note 8 of Notes to Consolidated Financial Statements included elsewhere in this report.

Liquidity and Capital Resources



Our primary liquidity needs are to fund our working capital requirements and our capital expenditures. Cash generated from operations
and our working capital revolving credit facility provide our primary sources of liquidity. Working capital increased by $27.6 million to $198.6 million at December 31, 2008
compared to $171.0 million at December 31, 2007.

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On February 13, 2009, we paid a cash distribution to our common and subordinated unitholders and our general partner of approximately $6.5 million
for the fourth quarter of 2008.



We have contractual obligations that are required to be settled in cash. The amounts of our contractual obligations at
December 31, 2008 are as follows (in thousands):

Payments due by periodTotal

Less than
1 year

1-3 years

4-5 years

More than
5 yearsRevolver loan obligations(1)(2)

$
466,663

$
228,053

$
238,610

$


$
Operating lease obligations


81,327


15,775


30,922


20,052


14,578Capital lease obligations


907


329


485


93


Other long-term liabilities


11,433


454


1,102


1,757


8,120Total

$
560,330

$
244,611

$
271,119

$
21,902

$
22,698


---

In
addition to the obligations described in the above table, we have minimum volume purchase requirements at December 31, 2008. Pricing is based on spot prices at the time of
purchase. Please read Note 14, Commitments and Contingencies, of Notes to Consolidated Financial Statements with respect to purchase commitments and sublease information related to certain
lease agreements.



Our terminalling operations require investments to expand, upgrade and enhance existing operations and to meet environmental and
operations regulations. Our capital requirements primarily consist of maintenance capital expenditures and expansion capital expenditures. Maintenance capital expenditures represent capital
expenditures to replace partially or fully depreciated assets to maintain the operating capacity of, or sales generated by, existing assets and extend their useful lives, such as expenditures required
to maintain equipment reliability, tankage and pipeline integrity and safety, and to address environmental regulations. We had approximately $2.1 million, $3.9 million and
$2.0 million in maintenance capital expenditures for the years ended December 31, 2008, 2007 and 2006, respectively, which are included in capital expenditures in the accompanying
consolidated statements of cash flows. Repair and maintenance expenses associated with existing assets that are minor in nature and do not extend the useful life of existing assets are charged to
operating expenses as incurred.

Expansion
capital expenditures include expenditures to acquire assets to grow our business and to expand existing facilities, such as projects that increase operating capacity by
increasing tankage, diversifying product availability at various terminals and adding terminals. We generally fund our expansion capital expenditures through our cash generated from operations or our
acquisition and working capital revolving credit facilities or by issuing additional equity. We had approximately

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$9.4 million,
$147.8 million and $10.4 million in expansion capital expenditures for the years ended December 31, 2008, 2007 and 2006, respectively, to increase our
operating capacity and capabilities. Specifically, in 2008, expansion capital expenditures consisted of approximately $6.4 million in costs primarily related to the second phase of construction
of our terminal in Providence, Rhode Island, $1.2 million related to conversion expenditures to handle ethanol-based gasoline and $1.8 million in other expansion capital expenditures
primarily related to additional terminal equipment at the Albany and Newburgh, New York and Burlington, Vermont terminals.

During
2007, expansion capital expenditures included the May 2007 acquisition of three refined petroleum products terminals in Albany and Newburgh, New York and Burlington, Vermont for
approximately $102.6 million ($101.5 million cash consideration plus $1.1 million in acquisition costs) and the November 2007 acquisition of two refined petroleum products
terminals in Glenwood Landing and Inwood, New York for approximately $35.4 million ($34.7 million cash consideration plus $0.7 million in acquisition costs), bringing the total
for terminal acquisitions to $138.0 million. In addition, we had $6.2 million in expansion capital expenditures related to construction in process on our terminal in Providence, Rhode
Island and $3.6 million in other expansion capital expenditures, which are included in capital expenditures in the accompanying consolidated statements of cash flows.

During
2006, we acquired the Bridgeport, Connecticut facility for approximately $2.4 million and the Macungie, Pennsylvania facility for approximately $4.1 million,
bringing the total for terminal acquisitions to $6.5 million. In addition, we had $3.9 million in other expansion capital expenditures, which are included in capital expenditures in the
accompanying consolidated statements of cash flows, to increase our operating capacity and capabilities.

We
anticipate that maintenance capital expenditures will be funded with cash generated by operations. We believe that we will have sufficient liquid assets, cash flow from operations,
borrowing capacity under our credit agreement and the ability to issue additional common units and/or debt securities to meet our financial commitments, debt service obligations, contingencies and
anticipated capital expenditures. However, we are subject to business and operational risks that could adversely affect our cash flow. A material decrease in our cash flows would likely produce an
adverse effect on our borrowing capacity.



Years Ended December 31,2008

2007

2006Net cash provided by (used in) operating activities

$
99,220

$
(115,045
)
$
(54,479
)Net cash used in investing activities

$
(11,510
)
$
(136,464
)
$
(12,442
)Net cash (used in) provided by financing activities

$
(88,875
)
$
249,758

$
69,013


Cash
flow from operating activities generally reflects our net income, the purchasing patterns of inventory, the timing of collections on our accounts receivable, the seasonality of our
business, fluctuations in refined petroleum product prices, our working capital requirements related to acquisitions and general market conditions.

Net
cash provided by operating activities was $99.2 million for the year ended December 31, 2008 compared to cash used in operating activities of $115.0 million for
the year ended December 31, 2007, for a year-over-year increase in cash provided by operating activities of $214.2 million.

While
refined petroleum product prices were higher for most of 2008, they declined significantly during the fourth quarter of 2008, thereby causing the carrying values of our accounts
receivable, inventories and accounts payable at December 31, 2008 to be less than the carrying values we experienced at the beginning of the year. As a result, we had decreases of
$243.9 million in inventories,

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$189.7 million
in accounts receivable, $151.6 million in accounts payable and $15.7 million accrued expenses and all other current liabilities.

During
the year ended December 31, 2007, we experienced increases in refined petroleum products prices, and we funded additional working capital requirements due to our
acquisition of the Albany and Newburgh, New York and Burlington, Vermont terminals in May of 2007. As a result, for the year ended December 31, 2007, we had increases of $196.2 million
in inventories, $236.6 million in accounts
receivable, $149.3 million in accounts payable and $34.2 million in accrued expenses and all other current liabilities.

The
increase in cash provided by operating activities is also reflected in the year-over-year decrease in net income of $25.9 million, offset by
$14.1 million representing the gain on the sale of our NYMEX Holdings, Inc. shares and related NYMEX seats in the first quarter of 2007, and a $302.2 million change in the fair
value of our forward fixed price contracts and other derivatives. For the year ended December 31, 2008, contracts supporting our forward fixed price hedge program required margin payments of
approximately $195.0 million to the NYMEX due to market direction while for the year ended December 31, 2007, similar hedging activity provided funds from the NYMEX of approximately
$107.3 million.

Net
cash used in operating activities increased by $60.6 million for the year ended December 31, 2007 compared to the year ended December 31, 2006 and primarily
reflects the following (1) the $13.6 million increase in net income offset by $14.1 million representing the gain on the sale of our NYMEX Holdings, Inc. shares and related
NYMEX seats; (2) changes of $265.0 million in accounts receivable, $168.8 million in inventories and $8.3 million in prepaids and other assets, offset by changes of
$179.8 million in accounts payable and $26.3 million in accrued expenses and other current liabilities, primarily the result of our acquisitions of refined petroleum products terminals
in Albany, Newburgh, Glenwood Landing and Inwood, New York and Burlington, Vermont in 2007 and in Macungie, Pennsylvania and Bridgeport, Connecticut in 2006 and the related supply and throughput
contracts as well as increases in refined petroleum product prices year over year; and (3) a $174.4 million change in the fair value of our forward fixed price contracts. For the year
ended December 31, 2006, contracts supporting our forward fixed price hedge program required margin payments of approximately $67.1 million to the NYMEX due to market direction while for
the year December 31, 2007, similar hedging activity provided funds of approximately $107.3 million.

Net
cash used in investing activities decreased by $125.0 million for the year ended December 31, 2008 compared to the year ended December 31, 2007 and included
$11.5 million in total capital expenditures comprised of $2.1 million in maintenance capital expenditures and $9.4 million in expansion capital expenditures ($6.4 million
related to construction in process on our leased terminal in Providence, Rhode Island, $1.2 million related to conversion expenditures to handle ethanol-based gasoline and $1.8 million
in other expansion capital expenditures).

Net
cash used in investing activities increased by $124.0 million for year ended December 31, 2007 compared to the year ended December 31, 2006 and included
$151.7 million in total capital expenditures comprised of $3.9 million in maintenance capital expenditures and $147.8 million in expansion capital expenditures. Expansion capital
expenditures included $102.6 million to acquire the Albany and Newburgh, New York and Burlington, Vermont terminals and $35.4 million to acquire the Glenwood Landing and Inwood, New York
terminals (for a total of $138.0 million in terminal acquisitions), $6.2 million related to construction in process on our leased terminal in Providence, Rhode Island and
$3.6 million in other expansion capital expenditures. The net cash used in investing activities was offset by gross proceeds of $15.3 million from the sale of our investment in NYMEX
Holdings, Inc. and related NYMEX seats.

Net
cash used in financing activities increased by $338.6 million for the year ended December 31, 2008 compared to year ended December 31, 2007. Net cash used in
financing activities was

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$88.9 million
for the year ended December 31, 2008 and included $61.5 million in net payments on our credit facilities, $26.1 million in cash distributions to our common
and subordinated unitholders and our general partner, and $1.2 million in payments on our note payable. Comparatively, net cash provided by financing activities was $249.7 million for
the year ended December 31, 2007 included net borrowings on our credit facilities of $224.3 million, consisting of $153.1 million in borrowings on our revolving line of credit and
$71.2 million in borrowings from our acquisition facility to fund the purchase of the Albany, Newburgh, Glenwood Landing and Inwood, New York and Burlington, Vermont terminals, and net proceeds
of $49.1 million from the issuance of Class B units, offset by $23.3 million in cash distributions to our common and subordinated unitholders.



We, our general partner, our operating company and our operating subsidiaries have a four-year senior secured credit
agreement with total available commitments of $750.0 million. We repay amounts outstanding and reborrow funds based on our working capital requirements and, therefore, classify as a current
liability the portion of the working capital revolving credit facility we expect to pay down during the course of the year. The long-term portion of the working capital revolving credit
facility is the amount we expect to be outstanding during the entire year.

The
credit agreement will mature on April 22, 2011. There are three facilities under our credit agreement:



In
addition, the credit agreement has an accordion feature whereby we may request on the same terms and conditions of our then existing credit agreement, provided no Event of Default (as
defined in the credit agreement) then exists, an increase to: (1) the acquisition facility by up to another $50.0 million, for a total acquisition facility of up to
$135.0 million; and (2) the working capital revolving credit facility by up to another $200.0 million, for a total working capital revolving credit facility of up to
$850.0 million. Any such request for an increase by us must be in a minimum amount of $5.0 million, and no more than three such requests may be made for each facility. We, however,
cannot provide assurance that our lending group will agree to fund any request by us for additional amounts in excess of the total available commitments of $750.0 million.

Availability
under our working capital revolving credit facility is subject to a borrowing base which is redetermined from time to time and based on specific advance rates on eligible
current assets. Under the credit agreement, we can borrow only up to the level of our then current borrowing base. Availability under our borrowing base may be affected by events beyond our control,
such as changes in refined petroleum product prices, collection cycles, counterparty performance, advance rates and limits and deteriorating economic conditions. These and other events could require
us to seek waivers or amendments of covenants or alternative sources of financing or to reduce expenditures. We can provide

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no
assurance that such waivers, amendments or alternative financing could be obtained, or if obtained, would be on terms acceptable to us.

During
the period from January 1, 2008 through July 20, 2008 and for the years ended December 31, 2007 and 2006, borrowings under our working capital revolving
credit, acquisition and revolving credit facilities bore interest at our option at (1) the Eurodollar rate, plus 1%, 11/2% and 11/2%, respectively (for 2006, the
rate for the acquisition facility was the Eurodollar rate, plus 13/4%), (2) the cost of funds rate, plus 1%, 13/4% and 11/2%, respectively, or
(3) the bank's base rate. Commencing July 21, 2008, borrowings under the working capital revolving credit facility bear interest at (1) the Eurodollar rate plus 1.75% to 2.25%,
(2) the cost of funds rate plus 1.75% to 2.25%, or (3) the base rate plus 0.75% to 1.25%, each depending on the pricing level provided in the credit agreement, which in turn depends upon
the Combined Interest Coverage Ratio (as defined in the credit agreement). Commencing July 21, 2008, borrowings under the acquisition and revolving credit facilities bear interest at
(1) the Eurodollar rate
plus 2.25% to 2.75%, (2) the cost of funds rate plus 1.75% to 2.25%, or (3) the base rate plus 0.75% to 1.25%, each depending on the pricing level provided in the credit agreement, which
in turn depends upon the Combined Interest Coverage Ratio. The average interest rates for the years ended December 31, 2008, 2007 and 2006 were 4.58%, 6.3% and 6.0%, respectively.

We
incur a letter of credit fee of 2% per annum for each letter of credit issued. In addition, we incur a commitment fee on the unused portion of the three facilities under the credit
agreement (including the unused portion of either of the seasonal overline facilities exercised by us) equal to 0.3% to 0.375% per annum, depending on the pricing level and the Combined Interest
Coverage Ratio provided in the credit agreement. We also incur a facility fee of 0.1% per annum on any unexercised seasonal overline facility during the period between September 1 and
June 30 and a seasonal overline fee of $30,000 each time we elect to exercise either of the seasonal overline facilities.

As
of December 31, 2008, we had total borrowings outstanding under our credit agreement of $433.5 million, including $71.2 million outstanding on our acquisition
facility. In addition, we had outstanding letters of credit of $105.2 million. The total remaining availability for borrowings and letters of credit at December 31, 2008 and 2007 was
$211.3 million and $86.6 million, respectively.

The
credit agreement imposes covenants that require us to maintain certain minimum working capital amounts, capital expenditure limits, a minimum EBITDA ratio, a minimum interest
coverage ratio and a maximum leverage ratio. On July 18, 2008, the credit agreement was amended whereby the minimum EBITDA as at the end of the June 30, 2008 fiscal quarter and each
fiscal quarter ending thereafter is required to be not less than $30.0 million for the period of four consecutive fiscal quarters most recently ended. In addition, the minimum combined interest
coverage ratio was reduced to 1.75:1.00 for the quarter ended December 31, 2008. We were in compliance with all covenants at December 31, 2008. The Credit Agreement also contains a
representation whereby there can be no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect (as defined in the
Credit Agreement).

The
credit agreement provides that in each calendar year the outstanding amount under the working capital revolving credit facility must be equal to or less than $263.0 million
for a period of ten consecutive calendar days. On September 26, 2008, the credit agreement was amended to include, among other things, acknowledgment of compliance of this provision for the
year ended December 31, 2008. The Partnership has complied with this provision for the year ending December 31, 2009. It is anticipated that the seasonal decrease in working capital as
we exit our heating season will contribute to a decrease in borrowings outstanding under our credit agreement.

The
credit agreement limits distributions to our unitholders to available cash and permits borrowings to fund such distributions only under the $15.0 million revolving credit
facility. The revolving credit facility is subject to an annual "clean-down" period, requiring us to reduce the amount

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outstanding
under the revolving credit facility to $0 for 30 consecutive calendar days in each calendar year.

Our
obligations under the credit agreement are secured by substantially all of our assets and the assets of our operating company and operating subsidiaries.

The
lending group under the credit agreement includes the following institutions: Bank of America, N.A.; Standard Chartered Bank; JPMorgan Chase Bank, N.A.; Societe Generale; RBS
Citizens, National Association; Sovereign Bank; Fortis Capital Corp.; Webster Bank National Association; KeyBank National Association; TD Bank, N.A. (f/k/a TD BankNorth, N.A.); Wells
Fargo Bank, N.A.; Wachovia Bank, National Association; and Calyon New York Branch.



We have no off-balance sheet arrangements.

Impact of Inflation

Inflation in the United States has been relatively low in recent years and did not have a material impact on our results of operations
for the years ended December 31, 2008, 2007 and 2006.

Environmental Matters

Our business of supplying refined petroleum products involves a number of activities that are subject to extensive and stringent
environmental laws. For a complete discussion of the environmental laws and regulations affecting our business, please read Items 1 and 2, "Business and PropertiesEnvironmental."

Critical Accounting Policies and Estimates

A summary of the significant accounting policies that we have adopted and followed in the preparation of our consolidated financial
statements is detailed in Note 2 of Notes to Consolidated Financial Statements. Certain of these accounting policies require the use of estimates. These estimates are based on our knowledge and
understanding of current conditions and actions that we may take in the future. Changes in these estimates will occur as a result of the passage of time and the occurrence of future events. Subsequent
changes in these estimates may have a significant impact on our financial condition and results of operations. We have identified the following estimates that, in our opinion, are subjective in
nature, require the exercise of judgment and involve complex analysis:



We hedge substantially all of our inventory purchases through futures and swap agreements. Hedges are executed when inventory is
purchased and are identified with that specific inventory. Changes in the fair value of these contracts, as well as the offsetting gain or loss on the hedged inventory item, are recognized currently
in earnings. All hedged inventory is valued using the lower of cost, as determined by specific identification, or market. Prior to sale, hedges are removed from specific barrels of inventory, and the
then unhedged inventory is sold and accounted for on a first-in, first-out basis. In addition to our own inventory, we have exchange agreements with unrelated third party
suppliers, whereby we may draw inventory from these other suppliers and replace it at a later date. Similarly, these suppliers may draw inventory from us and replace it at a later date. Positive
exchange balances are accounted for as accounts receivable. Negative exchange balances are accounted for as accounts payable. Exchange transactions are valued using current quoted market prices.

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We have a throughput agreement with Global Petroleum Corp., one of our affiliates, with respect to its terminal in Revere,
Massachusetts. This agreement is accounted for as an operating lease. Please read Item 13, "Certain Relationships and Related Transactions, and Director IndependenceThroughput
Agreement with Global Petroleum Corp." We also have entered into terminal and throughput lease arrangements with various unrelated oil terminals, certain of which arrangements have minimum usage
requirements. Please read Items 1 and 2, "Business and PropertiesStorage."

We
have future commitments, principally for office space and computer equipment, under the terms of operating lease arrangements, and we have lease income from office space leased to an
unrelated third party at one of our terminals. Additionally, we have capital leases for other computer equipment. Our leases are accounted for under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 13, "Accounting for Leases," as amended, which requires that leases be evaluated and classified as operating or capital leases for financial reporting purposes. The lease
term used for lease evaluation includes option periods only in instances in which the exercise of the option period can be reasonably assured and failure to exercise such options would result in an
economic penalty.



Sales relate primarily to the sale of refined petroleum products and natural gas and are recognized along with the related receivable
upon delivery, net of applicable provisions for discounts and allowances. Allowances for cash discounts are recorded as a reduction of sales at the time of sale based on the estimated future outcome.
We also provide for shipping costs at the time of sale, which are included in cost of sales. The amounts recorded for bad debts are generally based upon historically derived percentages while also
factoring in any new business conditions that might impact the historical analysis, such as market conditions and bankruptcies of particular customers. Bad debt provisions are included in selling,
general and administrative expenses.

Revenue
is not recognized on exchange agreements, which are entered into primarily to acquire various refined petroleum products of a desired quality or to reduce transportation costs by
taking delivery of
products closer to our end markets. In accordance with EITF No. 04-13, "Accounting for Purchases and Sales of Inventory with the Same Counterparty," any net differential for
exchange agreements is recorded as an adjustment of inventory costs in the purchases component of cost of sales in the statement of income.



We account for our derivatives in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
as amended ("SFAS No. 133"). SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities and requires that an entity recognize
derivatives as either assets or liabilities on the balance sheet and measure the instruments at fair value. Changes in the fair value of the derivative are to be recognized currently in earnings,
unless specific hedge accounting criteria are met.

Fair Value HedgesThe fair value of our derivatives is determined through the use of independent markets and is based upon the
prevailing market prices of such instruments at the date of valuation. We enter into futures contracts for the receipt or delivery of refined petroleum products in future periods. The contracts are
entered into in the normal course of business to reduce risk of loss of inventory on hand, which could result through fluctuations in market prices. Changes in the fair value of these contracts, as
well as the offsetting gain or loss on the hedged inventory item, are recognized currently in earnings.

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We
also use futures contracts and swap agreements to hedge exposure under forward purchase and sale commitments. These agreements are intended to hedge the cost component of virtually
all of our forward purchase and sale commitments. Changes in the fair value of these contracts, as well as offsetting gains or losses on the forward fixed price purchase and sale commitments, are
recognized currently in earnings. Gains and losses on net product margin from forward fixed price purchase and sale contracts are reflected in earnings as these contracts mature.

We
also market and sell natural gas. We generally conduct business by entering into forward purchase commitments for natural gas only when we simultaneously enter into arrangements for
the sale of product for physical delivery to third-party users. We generally take delivery under our purchase commitments at the same location as we deliver to third-party users. Through these
transactions, which establish an immediate margin, we seek to maintain a position that is substantially balanced between firm forward purchase and sales commitments. Natural gas is generally purchased
and sold at fixed
prices and quantities. Current price quotes from actively traded markets are used in all cases to determine the contracts' fair value. Changes in the fair value of these contracts are recognized
currently in earnings as an increase or decrease in cost of sales.

Interest Rate HedgeWe executed two zero premium interest rate collars, and each collar is designated as a cash flow hedge.
The first collar, which expires on May 14, 2011, is used to hedge the variability in interest payments due to changes in the three-month LIBOR rate with respect to $100.0 million of
long-term three-month LIBOR-based borrowings. Under the first collar, we capped our exposure at a maximum three-month LIBOR rate of 5.75% and established a minimum floor rate of 3.75%.
Changes in the fair value of the collar are recorded as either an asset or a liability with a corresponding amount recorded in accumulated other comprehensive income in the accompanying consolidated
balance sheet. The second collar, which expires on October 2, 2013, is used to hedge the variability in cash flows in monthly interest payments made on our $100.0 million
one-month LIBOR-based borrowings (and subsequent refinancings thereof) due to changes in the one-month LIBOR rate. Under the second collar, we capped our exposure at a maximum
one-month LIBOR rate of 5.50% and established a minimum floor rate of 2.70%. The changes in the fair value of the second collar are expected to be highly effective in offsetting the
changes in interest rate payments attributable to fluctuations in the one-month LIBOR rate above and below the second collar's strike rates.



We record accrued liabilities for all direct costs associated with the estimated resolution of contingencies at the earliest date at
which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated. Costs accrued are estimated based upon an analysis of potential results,
assuming a combination of litigation and settlement strategies and outcomes.

Estimated
losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Loss accruals are adjusted as further
information becomes available or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental
remediation costs from other parties are recognized as assets when their receipt is deemed probable.

We
are subject to other contingencies, including legal proceedings and claims arising out of our businesses that cover a wide range of matters, including, among others, environmental
matters, contract and employment claims. Environmental and other legal proceedings may also include matters with respect to businesses we previously owned. Further, due to the lack of adequate
information and the potential impact of present regulations and any future regulations, there are certain circumstances in which no range of potential exposure may be reasonably estimated.

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Recent Accounting Pronouncements

A description and related impact expected from the adoption of certain new accounting pronouncements is provided in Note 2 of
Notes to Consolidated Financial Statements included elsewhere in this report.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk.

Market risk is the risk of loss arising from adverse changes in market rates and prices. The principal market risks to which we are
exposed are interest rate risk and commodity risk. We utilize two interest rate collars to manage exposure to interest rate risk and various derivative instruments to manage exposure to commodity
risk.



We utilize variable rate debt and are exposed to market risk due to the floating interest rates on our credit facility. Therefore, from
time to time, we utilize interest rate collars to hedge interest obligations on specific and anticipated debt issuances.

During
the period from January 1, 2008 through July 20, 2008 and for the years ended December 31, 2007 and 2006, borrowings under our working capital revolving
credit, acquisition credit and revolving credit facilities bore interest at our option at (1) the Eurodollar rate, plus 1%, 11/2% and 11/2%, respectively (for
2006, the rate for the acquisition facility was the Eurodollar rate, plus 13/4%), (2) the cost of funds rate, plus 1%, 13/4% and 11/2%,
respectively, or (3) the bank's base rate. Commencing July 21, 2008, borrowings under the working capital revolving credit facility bear interest at (1) the Eurodollar rate plus
1.75% to 2.25%, (2) the cost of funds rate plus 1.75% to 2.25%, or (3) the base rate plus 0.75% to 1.25%, each depending on the pricing level provided in the credit agreement, which in
turn depends upon the Combined Interest Coverage Ratio (as defined in the credit agreement). Commencing July 21, 2008, borrowings under the acquisition and revolving credit facilities bear
interest at (1) the Eurodollar rate plus 2.25% to 2.75%, (2) the cost of funds rate plus 1.75% to 2.25%, or (3) the base rate plus 0.75% to 1.25%, each depending on the pricing
level provided in the credit agreement, which in turn depends upon the Combined Interest Coverage Ratio. The average interest rates for the years ended December 31, 2008, 2007 and 2006 were
4.58%, 6.3% and 6.0%, respectively.

As
of December 31, 2008, we had total borrowings outstanding under the credit agreement of $433.5 million. The impact of a 1% increase in the interest rate on this amount
of debt would have resulted in an increase in interest expense, and a corresponding decrease in our results of operations, of approximately $4.3 million annually, assuming, however, that our
indebtedness remained constant throughout the year.

We
executed two zero premium interest rate collars with major financial institutions. Each collar is designated as a cash flow hedge and accounted for under the provisions of SFAS
No. 133. The first collar, which became effective on May 14, 2007 and expires on May 14, 2011, is used to hedge the variability in interest payments due to changes in the
three-month LIBOR rate with respect to $100.0 million of long-term three-month LIBOR-based borrowings. Under the first collar, we capped our exposure at a maximum three-month LIBOR
rate of 5.75% and established a minimum floor rate of 3.75%. Whenever the three-month LIBOR rate is greater than the cap, we receive from the respective financial institution the difference between
the cap and the current three-month LIBOR rate on the $100.0 million of long-term three-month LIBOR-based borrowings. Conversely, whenever the three-month LIBOR rate is lower than
the floor, we remit to the respective financial institution the difference between the floor and the current three-month LIBOR rate on the $100.0 million of long-term three-month
LIBOR-based borrowings. As of December 31, 2008, the three-month LIBOR rate of 2.13% was lower than the floor rate. As a result, we will remit to the respective financial

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institution
the difference between the floor rate and the current rate which amounted to approximately $216,000.

On
September 29, 2008, we executed our second zero premium interest rate collar. The second collar, which became effective on October 2, 2008 and expires on
October 2, 2013, is used to hedge the variability in cash flows in monthly interest payments made on our $100.0 million one-month LIBOR-based borrowings (and subsequent
refinancings thereof) due to changes in the one-month LIBOR rate. Under the second collar, we capped our exposure at a maximum one-month LIBOR rate of 5.50% and established a
minimum floor rate of 2.70%. Whenever the one-month LIBOR rate is greater than the cap, we receive from the respective financial institution the difference between the cap and the current
one-month LIBOR rate on the $100.0 million of long-term one-month LIBOR-based borrowings. Conversely, whenever the one-month LIBOR rate is lower
than the floor, we remit to the respective financial institution the difference between the floor and the current one-month LIBOR rate on the $100.0 million of long-term
one-month LIBOR-based borrowings. As of December 31, 2008, the one-month LIBOR rate of 1.90% was lower than the floor rate. As a result, we will remit to the respective
financial institution the difference between the floor rate and the current rate which amounted to approximately $67,000. See Note 3 of Notes to Consolidated Financial Statements for further
discussion on the interest rate collars.



We hedge our exposure to price fluctuations with respect to refined petroleum products in storage and expected purchases and sales of
these commodities. The derivative instruments utilized consist primarily of futures contracts traded on the NYMEX and over-the-counter transactions, including swap agreements
entered into
with established financial institutions and other credit-approved energy companies. Our policy is generally to purchase only products for which we have a market and to structure our sales contracts so
that price fluctuations do not materially affect our profit. While our policies are designed to minimize market risk, some degree of exposure to unforeseen fluctuations in market conditions remains.
Except for the controlled trading program discussed below, we do not acquire and hold futures contracts or other derivative products for the purpose of speculating on price changes that might expose
us to indeterminable losses.

While
we seek to maintain a position that is substantially balanced within our product purchase activities, we may experience net unbalanced positions for short periods of time as a
result of variances in daily sales and transportation and delivery schedules as well as logistical issues associated with inclement weather conditions. In connection with managing these positions and
maintaining a constant presence in the marketplace, both necessary for our business, we engage in a controlled trading program for up to an aggregate of 250,000 barrels of refined petroleum products.

We
enter into futures contracts to minimize or hedge the impact of market fluctuations on our purchases and forward fixed price sales of refined petroleum products. Any hedge
ineffectiveness is reflected in our results of operations. We utilize the NYMEX, which is a regulated exchange for energy products that it trades, thereby reducing potential delivery and supply risks.
Generally, our practice is to close all NYMEX positions rather than to make or receive physical deliveries. With respect to other energy products, we enter into derivative agreements with
counterparties that we believe have a strong credit profile, in order to hedge market fluctuations and/or lock-in margins relative to our commitments.

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At
December 31, 2008, the fair value of all of our commodity risk derivative instruments and the change in fair value that would be expected from a 10% price increase are shown in
the table below (in thousands):

(Loss)
gain:

Fair Value at December 31, 2008

Fair Value After Effect of
10% Price IncreaseNYMEX contracts

$
(51,650
)
$
(2,363
)Swaps, options and other, net


4,838


3,404$
(46,812
)
$
1,041


The
fair values of the futures contracts are based on quoted market prices obtained from the NYMEX. The fair value of the swaps and option contracts are estimated based on quoted prices
from various sources such as independent reporting services, industry publications and brokers. These quotes are compared to the contract price of the swap, which approximates the gain or loss that
would have been realized if the contracts had been closed out at December 31, 2008. For positions where independent quotations are not available, an estimate is provided, or the prevailing
market price at which the positions could be liquidated is used. All hedge positions offset physical exposures to the spot market; none of these offsetting physical exposures are included in the above
table. Price-risk sensitivities were calculated by assuming an across-the-board 10% increase in price regardless of term or historical relationships between the
contractual price of the instruments and the underlying commodity price. In the event of an actual 10% change in prompt month prices, the fair value of our derivative portfolio would typically change
less than that shown in the table due to lower volatility in out-month prices. We have a daily margin requirement to maintain a cash deposit with our broker based on the prior day's market
results on open futures contracts. The balance of this deposit will fluctuate based on our open market positions and the commodity exchange's requirements. The required brokerage margin balance was
$9.0 million at December 31, 2008.

We
are exposed to credit loss in the event of nonperformance by counterparties of futures contracts, forward contracts and swap agreements. We anticipate some nonperformance by some of
these counterparties which, in the aggregate, we do not believe at this time will have a material adverse effect on our financial condition, results of operations or cash available for distribution to
our unitholders. Futures contracts, the primary derivative instrument utilized, are traded on regulated exchanges, greatly reducing potential credit risks. Exposure on swap and certain option
agreements is limited to the amount of the recorded fair value as of the balance sheet dates. We utilize primarily one clearing broker, a major financial institution, for all NYMEX derivative
transactions and the right of offset exists. Accordingly, the fair value of all derivative instruments is displayed on a net basis.

Item 8.    Financial Statements and Supplementary Data.

The information required here is included in the report as set forth in the "Index to Financial Statements" on
page F-1.

Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

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Item 9A.    Controls and Procedures.



We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed by us in the
reports we file or submit under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and
that information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding
required disclosure. Under the supervision and with the participation of our principal executive officer and principal financial officer, management evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act). Based on that evaluation, our principal executive officer and principal
financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2008.



We are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Rules 13a-15(f) or 15d-15(f) of the Exchange Act). Internal control over financial reporting is the process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. There are inherent limitations in the effectiveness of internal control
over financial reporting, including the possibility that misstatements may not be prevented or detected. Accordingly, even effective internal controls over financial reporting can provide only
reasonable assurance with respect to financial statement preparation.

Under
the supervision and with the participation of our principal executive officer and principal financial officer, management conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the framework inInternal Control-Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, management believes that our internal control over
financial reporting was effective as of December 31, 2008.

Ernst &
Young LLP, our independent registered public accounting firm, has issued an attestation report on management's assessment of the effectiveness of our internal
control over financial reporting, as stated in their report which is included herein.



There has not been any change in our internal control over financial reporting that occurred during the quarter ended
December 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm

The
Board of Directors of Global GP LLC
and Unitholders of Global Partners LP

We
have audited Global Partners LP's internal control over financial reporting as of December 31, 2008, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Global Partners LP's management is responsible for
maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's
Annual Report. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, Global Partners LP maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO
criteria.

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Global Partners LP, as
of December 31, 2008 and 2007, and the related consolidated statements of income, partners' equity and cash flows for each of the three years in the period ended December 31, 2008, and
our report dated March 13, 2009 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP


Boston,
Massachusetts
March 13, 2009

Item 9B.    Other Information.

None.

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PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

Global GP LLC, our general partner, manages our operations and activities on our behalf. Our general partner is not
elected by our unitholders and will not be subject to re-election in the future. Affiliates of the Slifka family own 100% of the ownership interests in our general partner. Our general
partner is controlled by Alfred A. Slifka and Richard Slifka through their beneficial ownership of entities that own ownership interests in our general partner. Eric Slifka beneficially owns an
interest in our general partner. Unitholders are not entitled to elect the directors of our general partner or directly or indirectly participate in our management or operation. Our general partner
owes a fiduciary duty to our unitholders. 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.

Three
members of the board of directors of our general partner serve on a conflicts committee to review specific matters that the board believes may involve conflicts of interest. The
conflicts committee determines if the resolution of the conflict of interest is fair and reasonable to us. Members of the conflicts committee may not be officers or employees of our general partner or
directors, officers or employees of its affiliates and must meet the independence and experience standards established by the New York Stock Exchange ("NYSE") and the Securities Exchange Act of 1934.
Any matters approved by the conflicts committee will be conclusively deemed to be fair and reasonable to us, approved by all of our partners and not a breach by our general partner of any duties it
may owe us or our unitholders. In addition, we have a separately-designated standing audit committee established in accordance with the Securities Exchange Act of 1934 and a compensation committee.
The three independent members of the board of directors of our general partner, Messrs. McKown, McCool and Watchmaker, serve as members of the conflicts, audit and compensation committees.

Even
though most companies listed on the NYSE are required to have a majority of independent directors serving on the board of directors of the listed company and establish and maintain
an audit committee, a compensation committee and a nominating/corporate governance committee, each consisting solely of independent directors, the NYSE does not require a listed limited partnership
like us to have a majority of independent directors on the board of directors of our general partner or establish a compensation committee or a nominating/corporate governance committee.

No
member of the audit committee is an officer or employee of our general partner or director, officer or employee of any affiliate of our general partner. Furthermore, each member of
the audit committee is independent as defined in the listing standards of the NYSE. The board of directors of our general partner has determined that a member of the audit committee, namely Kenneth
Watchmaker, is an "audit committee financial expert" as defined by the SEC.

Among
other things, the audit committee is responsible for reviewing our external financial reporting, including reports filed with the SEC, engaging and reviewing our independent
auditors and reviewing procedures for internal auditing and the adequacy of our internal accounting controls.

We
are managed and operated by the directors and executive officers of our general partner. Our operating personnel are employees of our general partner or certain of our operating
subsidiaries.

All
of our executive officers devote substantially all of their time managing our business and affairs, but from time to time perform services for certain of our affiliates.
Messrs. Eric Slifka, Hollister, Faneuil and Rudinsky spend a portion of their time providing services to certain of our affiliates. Please read Item 13, "Certain Relationships and
Related Transactions, and Director IndependenceRelationship of Management with Global Petroleum Corp. and Alliance Energy LLC."

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Our
non-executive directors devote as much time as is necessary to prepare for and attend board of directors and committee meetings.

The
following table shows information for the directors and executive officers of our general partner.

Name

Age

Position with Global GP LLCAlfred A. Slifka


76

ChairmanRichard Slifka


68

Vice ChairmanEric Slifka


43

President, Chief Executive Officer and DirectorThomas J. Hollister


54

Chief Operating Officer and Chief Financial OfficerEdward J. Faneuil


56

Executive Vice President, General Counsel and SecretaryCharles A. Rudinsky


61

Executive Vice President, Treasurer and Chief Accounting OfficerDavid K. McKown


71

DirectorRobert J. McCool


70

DirectorKenneth I. Watchmaker


66

Director


Alfred A. Slifkawas elected Chairman of the Board of our general partner in March 2005. He has been employed with Global
Companies LLC or its predecessors for over fifty years. Mr. Slifka served as Chairman of the Board of Global Companies LLC since its formation in December 1998.

Richard Slifkawas elected Vice Chairman of the Board of our general partner in March 2005. He has been employed with Global
Companies LLC or its predecessors since 1963. Mr. Slifka served as Treasurer and director of Global Companies LLC since its formation in December 1998. Alfred A. Slifka and
Richard Slifka are brothers.

Eric Slifkawas elected President, Chief Executive Officer and director of our general partner in March 2005. He has been employed with
Global Companies LLC or its predecessors since 1987. Mr. Slifka served as President and Chief Executive Officer and director of Global Companies LLC since July 2004 and as Chief
Operating Officer and director of Global Companies LLC from its formation in December 1998 to July 2004. Prior to 1998, Mr. Slifka held various senior positions in the accounting,
supply, distribution and marketing departments of the predecessors to Global Companies LLC. Mr. Slifka is the son of Alfred A. Slifka and the nephew of Richard Slifka.

Thomas J. Hollisterhas served as Chief Operating Officer and Chief Financial Officer of our general partner since January 2007 and Chief
Financial Officer of our general partner since July 2006, when he was first employed with our general partner. From 2005 to March 2006, Mr. Hollister served as Vice Chairman of Citizens
Financial Group and as Chairman, President and Chief Executive Officer of Citizens Capital, Inc., Citizens Financial Group's private equity and venture capital business. From 2004 to 2005, he
served as President and Chief Executive Officer of Charter One Bank. From 1998 to 2004 he served as President and Chief Executive Officer of Citizens Bank of Massachusetts.

Edward J. Faneuilwas elected Executive Vice President, General Counsel and Secretary of our general partner in March 2005. He has been
employed with Global Companies LLC or its predecessors since 1991. Mr. Faneuil served as General Counsel and Secretary of Global Companies LLC since its formation in December
1998.

Charles A. Rudinskyhas served as Executive Vice President, Treasurer and Chief Accounting Officer of our general partner since January
2007. He has been employed with Global Companies LLC or its predecessors since 1988. Mr. Rudinsky served as Assistant Controller from 1988 to 1997 and as the Senior Controller and Chief
Accounting Officer of Global Companies LLC since its formation in December 1998.

David K. McKownwas elected to serve as a director of our general partner and as a member of the conflicts committee, the compensation
committee and the audit committee of the board of directors

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of
our general partner in October 2005. He has been a Senior Advisor to Eaton Vance Management, whose principal business is creating, marketing and managing investment funds and providing investment
management services to institutions and individuals, since 2000. Mr. McKown retired in March 2000 having served as a Group Executive with BankBoston since 1993. Mr. McKown has been in
the banking industry for over 40 years, worked for BankBoston for over 33 years and had previously been the head of BankBoston's real estate department and corporate finance department
and a managing director of BankBoston's private equity unit. He also serves as a director of Safety Insurance Group, Newcastle Investment Co. and several private companies.

Robert J. McCoolwas elected to serve as a director of our general partner and as a member of the conflicts committee, the compensation
committee and the audit committee of the board of directors of our general partner in October 2005. He has been an Advisor to Tetco Inc., a privately held company in the energy industry, since
1967. Mr. McCool has been in the refined petroleum industry for over 40 years. He worked for Mobil Oil for 33 years and retired in 1998 having served as Executive Vice President
being responsible for its North and South America marketing and refining business.

Kenneth I. Watchmakerwas elected to serve as a director of our general partner and as a member of the conflicts committee, the
compensation committee and the audit committee of the board of directors of our general partner in October 2005. He served as Executive Vice President and Chief Financial Officer of Reebok
International Ltd. from 1995 until March 2006, when he elected to retire in connection with the sale of Reebok International Ltd to adidas-Salomon AG. Mr. Watchmaker joined Reebok
International Ltd. in July 1992 as Executive Vice President, Operations and Finance, of the Reebok Brand. Prior to joining Reebok International Ltd., he was an audit partner at
Ernst & Young LLP. He also serves as a director of American Biltrite Inc.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires directors and executive officers of our general partner and
persons who beneficially own more than 10% of a class of our equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 to file certain reports with the SEC and
the NYSE concerning their beneficial ownership of such securities. Based solely upon a review of the copies of reports on Forms 3, 4 and 5 and amendments thereto furnished to us, or written
representations that no reports on Form 5 were required, we believe that during the year ended December 31, 2008, the officers and directors of our general partner and beneficial owners
of more than 10% of our equity securities registered pursuant to Section 12 were in compliance with the applicable requirements of Section 16(a), except one Form 4 filing with
respect to phantom units awarded to Mr. Eric Slifka which was filed on January 9, 2009.

Executive Sessions

The board of directors of our general partner holds executive sessions for the non-management directors on a regular basis
without management present. Since the non-management directors include directors who are not independent directors, the independent directors also meet in separate executive sessions
without the other directors or management at least once each year to discuss such matters as the independent directors consider appropriate. In addition, any director may call for an executive session
of non-management or independent directors at any board meeting. A majority of the independent directors selects a presiding director for any such executive session.

Communications with Unitholders, Employees and Others

Unitholders, employees and other interested persons who wish to communicate with the board of directors of our general partner,
non-management or independent directors as a group, a committee of the board or a specific director may do so by transmitting correspondence addressed to the Board of

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Directors,
Name of Director, Group or Committee, c/o Corporate Secretary, Global Partners LP, P.O. Box 9161, 800 South Street, Suite 200, Waltham, MA
02454-9161, Fax: 781-398-4165.

Letters
addressed to the board of directors of our general partner in general will be reviewed by the corporate secretary and relayed to the chairman of the board or the chair of the
appropriate committee. Letters addressed to the non-management or independent directors in general will be relayed unopened to the chair of the audit committee. Letters addressed to a
committee of the board of directors or a specific director will be relayed unopened to the chair of the committee or the specific director to whom they are addressed. All letters regarding accounting,
accounting policies, internal accounting controls and procedures, auditing matters, financial reporting processes or disclosure controls and procedures are to be forwarded by the recipient director to
the chair of the audit committee.

Code of Ethics

Our general partner has adopted a code of business conduct and ethics that applies to all officers, directors and employees of our
general partner, including the principal executive officer, principal financial officer and principal accounting officer and our subsidiaries.

A
copy of our code of business conduct and ethics is available on our website atwww.globalp.comor may be obtained without charge upon
written request to the General Counsel at: Global Partners LP, P.O. Box 9161, 800 South Street, Suite 200, Waltham, MA 02454-9161.

Corporate Governance Matters

The NYSE requires the Chief Executive Officer of each listed company to certify annually that he is not aware of any violation by the
company of the NYSE corporate governance listing standards as of the date of the certification, qualifying the certification to the extent necessary. The Chief Executive Officer of our general partner
provided such certification to the NYSE in 2008.

The
certifications of our general partner's Chief Executive Officer and Chief Financial Officer required by the Securities Exchange Act of 1934 are included as exhibits to this Annual
Report on Form 10-K.

Item 11.    Executive Compensation.

All of our executive officers and substantially all of our employees are employed by our general partner. Our general partner does not
receive any management fee or other compensation for its management of Global Partners LP. Our general partner and its affiliates are reimbursed for expenses incurred on our behalf. These
expenses include the costs of employee, executive officer and director compensation and benefits properly allocable to Global Partners LP, and all other expenses necessary or appropriate to the
conduct of the business of, and allocable to, Global Partners LP. Our partnership agreement provides that our general partner will determine the expenses that are allocable to Global
Partners LP.

Compensation Discussion and Analysis

We are managed and operated by the directors and executive officers of our general partner. Executive officers of our general partner
receive compensation in the form of salaries and short-term incentive awards (contractual and/or discretionary) and long-term incentive awards, and they are eligible to
participate in employee benefit plans and arrangements sponsored by our general partner or its affiliates, including plans that may be established by our general partner or its affiliates in the
future. Our named executive officers (defined below) serve as executive officers of our general partner and each of our subsidiaries, and the compensation described herein reflects their total
compensation for services to us, our general partner and our subsidiaries.

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Our "named executive officers" include Mr. Eric Slifka, our Chief Executive Officer ("CEO"), Mr. Thomas J. Hollister, our Chief Financial Officer
("CFO") and Chief Operating Officer, and the two other most highly compensated executive officers during 2008, which are Mr. Charles A. Rudinsky, our Treasurer and Chief Accounting Officer, and
Mr. Edward J. Faneuil, our Executive Vice President and General Counsel. Three of our four named executive officers are parties to employment agreements with our general partner. Our Treasurer
and Chief Accounting Officer is an employee at will with no employment agreement.

The
compensation committee of the board of directors of our general partner (the "Compensation Committee") has direct responsibility for the compensation of our CEO based upon
(i) contractual obligations pursuant to the employment agreement between our CEO and our general partner, and (ii) compensation parameters established by the Compensation Committee with
respect to salary adjustments, incentive plans and discretionary bonuses, if any. The Compensation Committee also has oversight and approval authority for the compensation of our named executive
officers other than our CEO based upon our CEO's recommendations, including awards under any incentive plans in which the named executive officers participate, and our general partner's contractual
obligations pursuant to employment agreements with two of our named executive officers.

Compensation Objectives

The objectives of our compensation program with respect to our executive officers are to attract, engage and retain individuals with
the requisite knowledge, experience and skill sets required for our future success. Our compensation program is intended to motivate and inspire employee behavior that fosters high performance, and to
support our overall business objectives. To achieve these objectives, we aim to provide each executive officer with a competitive total compensation program. We currently utilize the following
compensation components:



Compensation Methodology

Our general partner uses third-party consultants to study and supply market comparable compensation data and to assist our management
and the Compensation Committee in formulating competitive compensation plans. In 2008, our general partner engaged W.F. Conover III, Ltd. ("Conover") as an independent compensation consultant.
Conover provided advice and assistance to the Compensation Committee on matters related to named executive officer and senior management compensation as well as our general compensation programs
(i.e., short-term and long-term incentive programs).

During
2008 Conover worked with our management and the Compensation Committee to update and enhance the comparative market data prepared by our former consultant, Wilson
Group. This project included supplementing market data with respect to the original peer group of 17 energy related organizations with related business operations and comparable ownership
structure (e.g., publicly traded limited partnerships) that was developed in prior years by Wilson Group in collaboration with our CEO. Conover supplemented the original peer group
data with market information from two additional groups of companies that are comparable to us in terms of their size and complexity of structure, as described in more detail below. Conover also
examined the responsibilities assigned to each of our executive officer positions in relation to the external positions to

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which
they were compared, exercised judgment in terms of the relevance of each of the market data sources, and made adjustments to arrive at a competitive market benchmark for each executive position.

Our
original (2006) peer group of companies was determined using two primary sources of data: proxy and other public filings from the peer group of comparable energy companies; and
compensation survey market information from approximately 59 energy industry companies compiled by Watson Wyatt Worldwide. Our original peer group of companies included:



In
2007 and 2008, we refined the external comparisons used to assess the competitiveness of our executive compensation program. The 2006 peer group contained the highly-specialized
companies most similar to us in terms of business operations and ownership structure. However, considerable diversity in annual revenue, market capitalization and number of employees among these
companies limits the comparisons that can be made for the same executive position from one company to another in the group due to significant differences in responsibility levels and related
compensation. For this reason, we elected not to rely solely upon data from our 2006 peer group of comparable energy companies and the 59 energy industry companies from Watson Wyatt Worldwide, but
instead to undertake a more comprehensive, broad-based analysis of market information. Specifically, we updated compensation data for our peer group of comparable energy companies and utilized the
following as additional data sources to develop overall consensus values for executive compensation: (i) data from the Watson Wyatt Worldwide Executive Compensation Survey: Energy (2008 Report)
for 15 energy companies with revenues from $4 billion to $8 billion; (ii) data with respect to a group of more than 220 companies with market capitalizations of
$200 million to $600 million, a range which was comparable to our market capitalization at the time of the study; and (iii) data with respect to a multi-factor based group of 17
energy and non-energy companies which had market capitalizations of $200 million to $600 million and between 100 to 600 employees.

The
15 energy companies with revenues from $4 billion to $8 billion referenced above are a subset of the energy companies included in the Watson Wyatt Worldwide Executive
Compensation Survey: Energy (2008 Report). In this report, data are provided with respect to these companies as a group, but not individually by name, and, therefore, we are unable to provide a list
of these 15 companies.

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The
multi-factor based group of 17 energy and non-energy companies referenced above includes:



In
2008, Conover also worked with our senior management and the Compensation Committee to revise the structure of our CEO's compensation by reducing his base salary, establishing an
annual short-term incentive program with both performance-based and discretionary components, and granting him phantom units that vest over the term of his new multi-year
employment agreement with our general partner. Our general partner's employees (including the other three named executive officers) also are eligible to participate in the new short-term
incentive program, and in 2009 were granted phantom units with elapsed time and applicable performance-based vesting requirements.

Elements of Compensation

The elements of 2008 executive officer compensation of our general partner are base salary, long-term incentive awards,
retirement and health benefits, and perquisites consistent with those provided to executive officers generally and as may be approved by the Compensation Committee from time to time. In 2008, there
were no salary increases (except for a contractual cost of living adjustment for our CEO), no bonuses paid, and no Long-Term Incentive Plan ("LTIP") awards granted to any of our named
executive officers (except for a contractual award to our CEO pursuant to his new employment agreement with our general partner).

Our
executive compensation structure utilizes complementary components to align our compensation with the needs of our business and to provide for desired levels of pay that
competitively compensate our executive management personnel. We administer the program on the basis of total compensation. When our performance goals are achieved, we expect the total compensation
levels (i.e., salary plus short and long-term incentives) for our named executive officers to fall between the median (50th percentile) and 75th percentile of salary
levels in our competitive marketplace.

A
description of the components of the compensation program and principles used to guide their administration appears below:

Salaries

Base salaries for three of our four named executive officers are set by their respective negotiated employment agreements with our
general partner. The base salary of our remaining named executive officer, Mr. Rudinsky, was approved by the Compensation Committee based upon our CEO's recommendation in 2007, prior to the
implementation of our new compensation program.

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Under
our new executive compensation structure, our goal is for our executive salaries to fall between the median (50th percentile) and
75th percentile of competitive salary levels following any adjustments made to marketplace pay levels in order to account for significant responsibilities that are assigned to our
named executive officers and that exceed the scope of responsibilities generally associated with the external benchmark positions to which they are compared, specifically:



Terms
of the employment agreements negotiated with three of our four named executive officers contain provisions that place their salaries above our positioning goal. However, salaries
for our named executive officers were not increased in 2008 (except for a contractual cost of living adjustment for our CEO). In addition, effective as of January 1, 2009, our CEO's base salary
was reduced and the contractual annual cost of living adjustment was eliminated in his new employment agreement. These decisions reflect our commitment to manage salaries toward our goal in the
future.

Short-Term Incentive AwardsContractual

Eric Slifka, our CEO, was not entitled to a contractual bonus in 2008 or 2007. In 2006, Mr. Slifka was entitled to a contractual
bonus of $0.5 million based upon our achievement of a specific target identified in his employment agreement with our general partner. Under his employment agreement, Mr. Slifka was
entitled to receive a cash bonus to the extent (up to $0.5 million) that our aggregate amount of Available Cash (as defined in our partnership agreement) that was deemed to be Operating Surplus
(as defined in our partnership agreement) for the four consecutive calendar quarters ended December 31, 2006 exceeded $19.0 million.

Thomas
Hollister, our COO and CFO, was not entitled to a contractual bonus in 2008 because the distributable cash flow target established by the Compensation Committee for 2008 was not
achieved. Mr. Hollister was entitled to contractual bonuses in 2007 and 2006 based upon our achievement of specific targets identified in his employment agreement with our general partner.
Under his employment agreement, Mr. Hollister was entitled to receive a bonus of $130,000 to the extent that our distributable cash flow was in excess of the distributable cash flow target
established by the Compensation Committee for the 2007 calendar year. Mr. Hollister also was entitled to receive a bonus of $130,000, prorated for his tenure of employment with our general
partner, based upon our achievement of targeted annual distributable cash flow in excess of $21.0 million for the 2006 calendar year. For purposes of determining whether the specified target
was achieved, "distributable cash flow" (a non-GAAP financial measure used by management) means our net income plus depreciation and amortization, less our maintenance capital
expenditures.

Mr. Faneuil
and Mr. Rudinsky did not receive any contractual bonuses in 2008 or prior years.

Annual BonusesDiscretionary

Our general partner historically has established a cash bonus pool each year to fund discretionary bonus awards. Historically, this
bonus pool has been set in an amount equal to approximately 10% of our pre-tax, pre-bonus accrual net income, as adjusted by the Compensation Committee, taking into account our
performance during the then preceding calendar year. The Compensation Committee

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determines
discretionary bonus awards to our CEO. Discretionary bonus awards for all other named executive officers are determined by the Compensation Committee based upon recommendations by our CEO,
taking into account our performance and the individual performance of each of our named executive officers. Our performance is measured by distributable cash flow, by the organic development of our
existing markets, and by the achievement of accretive acquisitions that are "bolt-on" and/or "step-out" in nature. "Bolt-on" acquisitions expand our geographic
reach into markets that are adjacent to our existing markets, and allow us to leverage our existing expertise and customer and supplier relationships. "Step-out" transactions involve our
acquisition of physical assets and expansion into new markets. In addition to considering the nature and scope of the transactional work performed by our named executive officers in 2007 and 2006,
review of their individual performance included consideration for each named executive officer's role in (i) effecting the transitional requirements of a newly public company including, without
limitation, achieving compliance with applicable securities and corporate governance requirements such as Section 404 of the Sarbanes-Oxley Act of 2002, (ii) developing and deepening our
investor relations, and (iii) advancing our growth strategies. The discretionary bonus payments awarded to each of Messrs. Eric Slifka, Hollister, Faneuil and Rudinsky for their
performance in 2007 were $675,000, $220,000, $125,000 and $125,000, respectively, and in 2006 were $1,000,000, $94,466, $160,000 and $160,000, respectively.

The
Compensation Committee elected to not award any discretionary bonus payments in respect of 2008. Consequently, no discretionary bonus payments were awarded to our named executive
officers for 2008.

Our
general partner has established a cash bonus pool for 2009 to fund short-term incentive awards for each of our named executive officers. In establishing our general
partner's 2009 short-term incentive plans for our named executive officers, the Compensation Committee determined that 60% of each target award would be performance-based, based upon a
comparison of actual distributable cash flow results and targeted performance goals, and 40% of each target award would be discretionary, taking into account business conditions and management's
performance including, without limitation, results of operations.

Long-Term Incentive Plan

2007 Awards.Commencing in 2006 and continuing into 2007, Wilson Group made recommendations to management and the Compensation
Committee
with respect to the development and implementation of our LTIP as a performance-based non-cash incentive for our named executive officers, non-executive officers, managers and
independent directors.

On
August 14, 2007, the Compensation Committee made the initial grant of awards of phantom units and associated distribution equivalent rights ("DERs") under the LTIP to the named
executive officers and the independent directors of our general partner (see "Employment and Related AgreementsEquity Award" below). The phantom units granted will cliff vest on
December 31, 2009 and become payable on a one-for-one basis in our common units (or cash equivalent) upon (i) the achievement of a performance goal over the
vesting period, and (ii) the continued employment/service of the recipient. The performance goal for January 1, 2007 through December 31, 2009 (the "Restricted Period") has two
components: (a) quarterly distributions to the holders of our limited partner units cannot decrease at any time during the Restricted Period; and (b) cumulative distributable cash flow
over the Restricted Period must equal or exceed the cumulative amount necessary to have achieved a certain coverage over pro forma average annual distribution increases of a certain percentage per
limited partner unit (determined on a fully diluted basis, and giving effect to distributions to the general partner, including incentive distributions).

The
DERs that were granted in tandem with the phantom units will vest and become payable in cash simultaneously with the vesting of the phantom units. Any phantom units and associated
DERs

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that
have not vested as of the end of the cliff vesting period will be forfeited. We currently intend and reasonably expect to issue and deliver the common units upon vesting. Notwithstanding the
foregoing, upon a change of control event (as defined in the grant agreement), all outstanding phantom units and associated DERs that have been granted and are not then vested automatically will
become fully vested without regard to the achievement of the performance goal.

2008 CEO Award.On December 31, 2008, pursuant to a contractual commitment in Eric Slifka's employment agreement with our general
partner, the Compensation Committee granted to Mr. Slifka 99,700 phantom units together with a contingent right to receive an amount in cash equal to the number of then outstanding phantom
units granted to Mr. Slifka multiplied by the cash distributions per
common unit made by the Partnership from time to time during the period the phantom units are outstanding. The phantom units will vest in six equal installments on June 30 and
December 31 of 2009, 2010 and 2011; provided, however, that in accordance with the terms of Mr. Slifka's employment agreement, if Mr. Slifka's employment is terminated
(i) for reason of death or disability, or (ii) without cause or for constructive termination, in either case within 12 months following a change in control, then all unvested
phantom units shall vest on the applicable termination date. Additionally, if Mr. Slifka's employment is terminated without cause or for constructive termination but such termination does not
occur within 12 months following a change in control, then a prorated portion of the phantom units scheduled to vest at the end of the then applicable six-month period will vest on
the date of termination, such proration to be based upon the number of full months' service provided by Mr. Slifka during such six-month period.

2009 Awards.On January 20, 2009, the Compensation Committee approved grants of 88,183, 61,728, 48,501 and 17,637 phantom units
(without DERs) under the LTIP, respectively, to Messrs. Eric Slifka, Hollister, Faneuil and Rudinsky. These phantom units will vest and become payable on a one-for-one
basis in common units (and/or cash in lieu thereof) on December 31, 2013 (or potentially sooner as described below). All or a portion of the phantom units granted to our named executive
officers may vest earlier than December 31, 2013 if the Average Unit Price (as defined below) equals or exceeds specified target prices during specified periods. Specifically, if the Average
Unit Price equals or exceeds: (i) $21.00 at any time prior to December 31, 2013, then 25% of the phantom units will automatically vest; (ii) $27.00 at any time during the period
from January 20, 2011 through December 31, 2013, then an additional 25% of the phantom units will automatically vest; and (iii) $34.00 at any time during the period from
May 20, 2012 through December 31, 2013, then all of the remaining phantom units will automatically vest. "Average Unit Price" means the average closing price per common unit for any
10-consecutive trading day period.

The
phantom units granted to Mr. Slifka on January 20, 2009 that do not otherwise vest early as described above will be subject to a performance goal. Specifically, any
unvested phantom units held by Mr. Slifka on December 31, 2013 will vest only if the Partnership makes cumulative distributions on all units of the Partnership outstanding during the 20
consecutive quarters ending December 31, 2013 in an amount equal to or exceeding the minimum quarterly distribution (as defined in the Partnership's Agreement of Limited Partnership) on all
such units.

Any
phantom units granted on January 20, 2009 that have not vested as of the end of the five year cliff vesting period will be forfeited. Additionally, upon a change of control
event (as defined in the grant, as amended), all outstanding phantom units that were granted on January 20, 2009 to Messrs. Slifka, Hollister and Faneuil only and that have not otherwise
vested automatically will become fully vested (in the case of the phantom units awarded to Mr. Slifka, without regard to the achievement of the performance goal.)

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Retirement and Health Benefits; Perquisites

Each of our named executive officers is eligible to participate in our general partner's health insurance plans, pension plans, 401(k)
savings and profit sharing plan and other employee benefit plans in accordance with our general partner's policies and on the same general basis as other employees of our general partner. Under the
general partner's pension plan, an employee becomes fully vested in his or her pension benefits after completing five years of service or upon termination due to death, disability or retirement. See
"Other BenefitsPension Benefits" for information with respect to eligibility standards and calculations of estimated annual pension
benefits payable upon retirement under the pension plan. Our general partner's 401(k) savings and profit sharing plan provides for discretionary matching contributions by our general partner equal to
50% of each employee's contribution, up to a maximum contribution of 3% of the employee's pre-tax annual compensation, subject to certain limitations under federal law. See "Other
Benefits401(k) Savings and Profit Sharing Plan" for additional information with respect to eligibility and permitted contributions to this
plan. Additional perquisites for our named executive officers may include payment of premiums for supplemental life and/or long-term disability insurance, automobile fringe benefits, club
membership dues and payment of fees for professional financial planning and/or tax advice.

Relationship of Compensation Elements to Compensation Objectives

We use base salaries to provide financial stability and to compensate our executive officers for fulfillment of their respective job
duties. We previously have used annual bonuses and, in connection with our developing compensation program, in 2009 we are implementing short-term incentive plans with performance-based
and discretionary components to align a portion of our executive officers' compensation with annual business performance and success, and to provide rewards and recognition for key annual business and
financial results such as achieving increased quarterly distributions, expanding our terminalling storage capacity and the geographic markets that we serve, and diversifying our product mix to enhance
profitability and effectively manage weather sensitivity in our business. Short-term performance-based incentives also allow flexibility to reward performance and individual success
consistent with such criteria as may be established from time to time by our CEO and the Compensation Committee. We offer a mix of traditional perquisites, such as automobile fringe benefits and
country/golf club memberships, and additional benefits, such as payment of professional financial planning and tax advice fees that are tailored to address our executive officers' individual needs to
facilitate the performance of their job duties and to be competitive with the total compensation packages available to executive officers generally.

The
objective of the LTIP is to provide incentive and reward eligible participants for the achievement of long-term objectives, to facilitate the retention of key employees
by investing in our
long-term performance, to continue to make our compensation mix more competitive, and to align the interests of management with those of our unitholders.

Compensation of Named Executive Officers

The following table sets forth certain information with respect to compensation of our Chief Executive Officer, our Chief Financial
Officer and the two other most highly compensated executive officers during 2008, 2007 and 2006.

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Summary Compensation Table

Name and Principal Position

Year

Salary
($)

Bonus
($) (2)

Stock Awards
($) (3)

Non-Equity
Incentive Plan
Compensation
($) (5)

Change in
Pension
Value
($)

All Other
Compensation
($)

Total
($)Eric Slifka


2008


1,049,889





291,958





39,908


82,576


1,464,331President and CEO (1)(4)(6)(8)


2007


1,030,000


675,000


112,860





17,098


90,485


1,925,4432006


1,000,000


1,000,000





500,000


(457
)

88,666


2,588,209Thomas J. Hollister


2008


577,500





108,498





25,680


26,779


738,457COO and CFO (6)(7)(9)


2007


563,750


220,000


41,580


130,000


17,077


27,903


1,000,3102006


275,000


94,466





65,534





12,239


447,239Edward J. Faneuil


2008


375,953





94,889





64,782


27,783


563,407EVP, General Counsel and


2007


367,001


125,000


35,640





35,634


24,760


588,035Secretary (6)(10)


2006


358,050


160,000








16,045


21,871


555,966Charles A. Rudinsky


2008


273,000





46,719





136,180


15,272


471,171EVP, Treasurer and Chief


2007


266,500


125,000


17,820





43,727


12,626


465,673Accounting Officer (6)(11)


2006


260,000


160,000








49,593


14,463


484,056


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Grants of Plan-Based Awards

The following table sets forth information regarding awards made to our named executive officers during the year ended
December 31, 2008.

Estimated Future Payouts Under Equity Incentive Plan Awards (1)Grant Date
Fair Value of
Stock and
Option Awards
($)(2)Name

Grant
Date

Threshold
(#)

Target
(#)

Maximum
(#)Eric Slifka(1)


12/31/08





99,700


99,700


1,126,610


---

Employment and Related Agreements

Eric Slifkais employed as President and Chief Executive Officer pursuant to an
employment agreement with our general partner. The term of his initial employment agreement commenced on October 4, 2005 and continued through December 31, 2008. Effective
December 31, 2008, Mr. Slifka entered into a new employment agreement with our general partner which amends, restates and supersedes his initial employment agreement. Unless terminated
earlier in accordance with the terms of his new employment agreement, the term of the agreement ends on December 31, 2011 and, unless either party sends a notice of non-renewal to
the other party, the agreement will automatically renew for an additional 36 months commencing January 1, 2012.

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The agreement provides for a base salary of $800,000 per year, subject to increase as of each January 1 during the term, as may be determined by the
Compensation Committee. In addition, the agreement provides that Mr. Slifka: is (a) eligible to receive a cash bonus, payable annually, no later than two and one-half months
after each fiscal year end in an amount to be determined at the discretion of the Compensation Committee; (b) entitled to participate in our general partner's short-term incentive
compensation plan, pursuant to which he shall be entitled to receive cash incentive amounts to be determined based upon the achievement of financial metrics to be established by the Compensation
Committee in the first month of each fiscal year during the term of the agreement, with the annual "award target" amount being 100% of his base salary and the annual maximum cash incentive amount
being 200% of his base salary; any such awards to be paid within two and one-half months after the applicable fiscal year end; and (c) entitled to participate in our general
partner's LTIP, including without limitation (i) the December 31, 2008 grant to Mr. Slifka of 99,700 phantom units (with a contingent right to receive cash in amounts equal to the
number of awarded phantom units outstanding multiplied by the cash distributions per common unit made by the Partnership from time to time), and (ii) the January 20, 2009 grant to
Mr. Slifka of 88,183 performance-restricted phantom units under the LTIP. See "Elements of CompensationLong-Term Incentive
Plan." As determined by the Compensation Committee, Mr. Slifka also may be eligible to participate in any other incentive plans in which management employees may
participate. He is entitled to participate in such other benefit plans and programs as the General Partner may provide for its executives in general.

Mr. Slifka's
employment agreement includes a confidentiality provision which, subject to typical exceptions for requirement of law and public knowledge (other than as a result of
unauthorized disclosure by Mr. Slifka), will continue for two years following Mr. Slifka's termination of employment.
The agreement also includes a nonsolicitation provision, which will continue for one year following Mr. Slifka's termination of employment. The agreement is subject to the
non-competition provisions included in the Omnibus Agreement dated October 4, 2005 (and filed as Exhibit 10.1 to the Partnership's Form 8-K filed on
October 11, 2005), which non-competition obligations shall continue to apply to Mr. Slifka throughout the term of his employment agreement (including the renewal term, if
any) and, in the event Mr. Slifka's employment with our general partner is terminated (x) by our general partner without cause or by Mr. Slifka for reasons constituting
constructive termination, (y) by our general partner for cause, or (z) by Mr. Slifka for reasons other than constructive termination, the non-competition provisions
included in the Omnibus Agreement shall remain in effect for one year following Mr. Slifka's termination of employment. See "Potential Payments Upon Termination or Change of Control" for a
discussion of the provisions in Mr. Slifka's employment agreement relating to termination, change in control and related payment obligations.

Thomas J. Hollisteris employed as Chief Operating Officer and Chief Financial Officer of our general partner. Mr. Hollister's
employment commenced effective July 1, 2006 and is on an "at will" basis, meaning that Mr. Hollister's employment has no specific duration and that, subject to the provisions of his
employment agreement, either Mr. Hollister or our general partner may terminate his employment at any time for any reason. The agreement provides for a base salary of $550,000 for the initial
12-month period commencing July 1, 2006, and subsequent review by the Compensation Committee no less frequently than annually, at which time Mr. Hollister's base salary may
be increased at the discretion of the Compensation Committee. In 2008, Mr. Hollister's base salary was $577,500. Mr. Hollister also is eligible to receive an annual cash bonus amount of
$130,000 for each 12-month period that he is employed by our general partner, provided that we achieve a distributable cash flow target set by the Compensation Committee. No such bonus was
earned in respect of calendar year 2008. Under the short-term incentive plan established by our general partner in 2009, Mr. Hollister's 2009 target award has been set at an amount that exceeds
his contractual bonus amount. The employment agreement provides that Mr. Hollister also is entitled to participate in the LTIP and in such other benefit plans and programs as our general
partner may provide for its employees in general. The agreement includes a confidentiality provision which, subject to typical exceptions for requirement

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of
law and public knowledge (other than as a result of unauthorized disclosure by Mr. Hollister), will continue for two years following Mr. Hollister's termination of employment. The
agreement also includes non-competition provisions which continue during the term of the agreement and for a period of two years thereafter. Also see "Potential Payments Upon Termination
or Change of Control" for a discussion of the provisions in Mr. Hollister's employment agreement relating to termination, change of control and related payment obligations.

Edward J. Faneuilis employed as Executive Vice President, General Counsel and Secretary pursuant to an employment agreement with our
general partner. Mr. Faneuil's employment agreement became effective as of July 1, 2006 and continues through December 31, 2011 unless terminated earlier in accordance with the
terms of the agreement. The agreement provides for an annual base salary of $358,050 for the 12-month period commencing July 1, 2006. Thereafter, Mr. Faneuil's base salary
will be reviewed by the Compensation Committee at least annually. In 2008, Mr. Faneuil's base salary was $375,953. Mr. Faneuil also is entitled to receive bonuses in accordance with the
then
applicable short-term incentive plan as authorized by the Compensation Committee to be paid no later than March 15 of the calendar year immediately following the calendar year in which such
bonuses are earned. Mr. Faneuil is eligible to participate in our general partner's health insurance, pension, 401(k) and other employee benefit plans and will also receive additional fringe
benefits consistent with benefits previously provided to him under prior arrangements. Mr. Faneuil is eligible to participate in the LTIP on the same general basis as the other executive
officers of our general partner. The agreement includes a confidentiality provision which, subject to typical exceptions for requirement of law and public knowledge (other than as a result of
unauthorized disclosure by Mr. Faneuil), will continue for two years following Mr. Faneuil's termination of employment. The agreement also includes non-competition and
non-solicitation provisions which continue during the term of the agreement and for a period of two years thereafter. Mr. Faneuil also has entered into a deferred compensation
agreement with our general partner. See "Deferred Compensation Agreement" below for a description of this non-qualified deferred compensation plan. See "Potential Payments
Upon Termination or Change of Control" for a discussion of the provisions in Mr. Faneuil's employment agreement, as amended, and in his amended and restated deferred compensation agreement
relating to termination, change of control and related payment obligations.

Charles A. Rudinsky,Executive Vice President, Treasurer and Chief Accounting Officer, is an at will employee and does not have an
employment agreement with our general partner. In 2008, Mr. Rudinsky's base salary was $273,000.



On December 31, 2008, our general partner and Edward J. Faneuil entered into a deferred compensation agreement pursuant to which
Mr. Faneuil will be subject to terms and conditions relating to confidential information, non-solicitation and non-competition, as provided therein. See "Potential
Payments Upon Termination or Change of Control" for a discussion of the provisions in Mr. Faneuil's deferred compensation agreement relating to termination, change of control and related
payment obligations.



The following table presents equity awards (i) granted under the LTIP on August 14, 2007, and (ii) granted under
the LTIP to Mr. Slifka on December 31, 2008 pursuant to his employment

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agreement
with our general partner. The awards shown on the table below are all of the equity awards held by the named executive officers at the end of the last fiscal year:

Stock AwardsName

Number
of Shares
or Units
of Stock
That Have
Not Vested
(#)

Market
Value of
Shares or
Units of Stock
That Have
Not Vested
(#)

Equity Incentive
Plan Awards:
Number of Unearned
Shares, Units
or Other Rights
That Have
Not Vested
(#)

Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights
That Have
Not Vested
($)(1)Eric Slifka








124,241


1.403,923Thomas J. Hollister








9,120


103,056Edward J. Faneuil








7,976


90,129Charles A. Rudinsky








3,927


44,375


---

See"Elements of CompensationLong-Term Incentive Plan"for a discussion
of the plan.

Potential Payments upon a Change of Control or Termination

The following table shows potential payments to our named executive officers under existing contracts, agreements, plans or
arrangements, whether written or unwritten, for various scenarios involving a change of control or termination of employment of each such named executive officer assuming a December 31, 2008
termination date.

Termination by general partner without Cause / Constructive Termination / Breach by general partnerName

Change in
Control
($)

Death
($)

Disability
($)

No Change
in Control
($)

with a Change
In Control
($)

Nonrenewal
($)Eric Slifka(1)Severance Amount





3,200,000


3,200,000


3,200,000


4,800,000


800,000LTIP awards(5)


1,463,558








1,463,558


1,463,558


Fringe benefits





30,606


30,606


30,606


30,606


Life insurance benefits





210,000











Total


1,463,558


3,440,606


3,230,606


4,694,164


6,294,164


800,000Thomas J. Hollister(2)Severance Amount











1,155,000


1,830,000


LTIP awards(5)


125,218











125,218


Fringe benefits











15,303


15,303


Life insurance benefits





210,000











Total


125,218


210,000





1,170,303


1,970,521


Edward J. Faneuil(3)Severance Amount











751,906


1,026,906


Deferred Compensation


892,140


892,140


892,140








LTIP awards(5)


109,511











109,511


Fringe benefits











15,303


15,303


Life insurance benefits





210,000











Total


1,001,651


1,102,140


892,140


767,209


1,151,720


Charles A. Rudinsky(4)LTIP awards(5)


53,918














Life insurance benefits





210,000











Total


53,918


210,000














---

Mr. Slifka's original employment agreement with our general partner terminated on December 31, 2008, on which date Mr. Slifka entered into a
new employment agreement with our general partner for

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an
initial term commencing January 1, 2009 and continuing through December 31, 2012. We prepared the above table based upon the terms of the new (December 31, 2008) employment
agreement, as subsequently amended. For purposes of the above table, we have assumed that the short-term incentive plan established by our general partner in February 2009 was in effect at
December 31, 2008.

This
employment agreement may be terminated at any time by either party with proper notice. Under the employment agreement, assuming Mr. Slifka's employment was terminated on
December 31, 2008 for any reason, he would have been entitled to receive (i) all amounts of his base salary due and owing up through the date of termination, (ii) any earned but
unpaid bonus, (iii) all reimbursements of expenses appropriately and timely submitted, and (iv) any and all other amounts that may be due to him as of the date of termination (the
"Accrued Obligations").

If
Mr. Slifka's employment had been terminated by death or "Disability" (defined below) on December 31, 2008, within 10 days following such termination he (or his
estate) would have been entitled to receive in addition to any Accrued Obligations:



Additionally,
our general partner would have continued the monthly payment of all group health and similar insurance premiums on behalf of his spouse and dependents for 24 months
following the date of termination. For purposes of Mr. Slifka's employment agreement, "Disability" is defined as a physical or mental condition which (a) renders Mr. Slifka, with
or without reasonable accommodation, unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death
or can be expected to last for a continuous period of not less than 12 months, or (b) by reason of any medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less than 12 months, results in Mr. Slifka receiving income replacement benefits for a period of not less than
3 months under an accident and health plan covering employees of our general partner.

Assuming
Mr. Slifka's employment had been terminated by our general partner without cause or by Mr. Slifka for reasons constituting "Constructive Termination" (defined
below) on December 31, 2008, within 10 days following such termination he would have been entitled to receive in addition to any Accrued Obligations:



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Also, our general partner would have continued the monthly payment of all group health and similar insurance premiums on behalf of Mr. Slifka's spouse and
dependents for 24 months following the date of termination. For purposes of Mr. Slifka's employment agreement, "Constructive Termination" means termination of employment as a result of
(a) any substantial diminution, without Mr. Slifka's written consent, in his working conditions consisting of (i) a material reduction in his duties and responsibilities,
(ii) any change in the reporting structure so that he no longer reports solely to our Board of Directors, or (iii) a relocation of his place of work further than forty (40) miles
from Waltham, Massachusetts, or (b) an uncured breach by the general partner of a material provision of the employment agreement, as amended. Pursuant to Mr. Slifka's employment
agreement, a "Change in Control" would be deemed to have occurred upon (1) the date that any one person, entity or group (other than Alfred Slifka, Richard Slifka or Eric Slifka, or their
respective family members or entities they control, individually or in the aggregate, directly or indirectly) acquires ownership of the membership interests of our general partner that, together with
the membership interests of our general partner already held by such person, entity or group, constitutes more than 50% of the total voting power of the membership interests of our general partner;
(2) a consolidation or merger (in one transaction or a series of related transactions) of our general partner pursuant to which the holders of our general partner's equity securities
immediately prior to such transaction or series of related transactions would not be the holders immediately after such transaction or series of related transactions of at least 50% of the voting
power of the entity surviving such transaction or series of related transactions; or (3) the sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of
all or substantially all of our business and/or assets to a person other than Alfred Slifka, Richard Slifka or the Executive, or their respective family members or entities they control, individually
or in the aggregate, directly or indirectly.

With
respect to Mr. Slifka's interests in our general partner's long-term incentive plans:





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In
the event of termination "for Cause" (defined below), assuming a termination date of December 31, 2008, Mr. Slifka would have been entitled to receive the Accrued
Obligations only. For purposes of Mr. Slifka's employment agreement, "Cause" is defined as (a) engaging in gross negligence or willful misconduct in the performance of duties,
(b) committing an act of fraud, embezzlement or willful breach of a fiduciary duty to us including our general partner and any of our subsidiaries (including the unauthorized disclosure of any
of our material secret, confidential and/or proprietary information, knowledge or data), (c) being convicted of a crime involving fraud, dishonesty or moral turpitude or any felony, or
(d) breaching any material provision of the employment agreement or of the Omnibus Agreement, which agreement contains non-competition provisions applicable to Mr. Slifka.

Although
not relevant with respect to a December 31, 2008 termination date, if Mr. Slifka's employment agreement is not renewed by our general partner effective
January 1, 2013 and he does not continue to serve as our general partner's President and Chief Executive Officer following the expiration of the current term of his employment agreement, he
will be entitled to be paid a lump sum payment equal to 100% of his then base salary plus any Accrued Obligations. For purposes of the above table we have assumed that Mr. Slifka's employment
agreement was due to be renewed as of December 31, 2008 and we used Mr. Slifka's current base salary.

(2)Thomas J. Hollister

For purposes of the above table, we have assumed that the short-term incentive plan established by our general partner in February 2009 was in effect at
December 31, 2008.

The
employment agreement between our general partner and Mr. Hollister provides, upon termination of his employment for any reason, that Mr. Hollister will receive payment
through the date of termination of his employment of (i) any earned, but unpaid, base salary as then in effect, (ii) all earned, but unpaid, bonuses, and (iii) all accrued
vacation, expense reimbursements and other benefits (other than severance benefits, except as provided below) due Mr. Hollister in accordance with the established plans and policies of our
general partner or applicable law (the "Accrued Obligations").

In
the event of a change in control (defined below), Mr. Hollister's employment agreement provides for accelerated vesting on any and all outstanding Partnership options,
restricted units, phantom units, unit appreciation rights and other similar rights (under the LTIP or otherwise) held by him as in effect on the date of termination. On August 14, 2007, the
Compensation Committee granted to Mr. Hollister 9,120 phantom units and associated DERs under the LTIP. No other such options, restricted units, phantom units, unit appreciation rights and
other similar rights had been granted to Mr. Hollister as of December 31, 2008. Assuming a change of control event (as defined in the grant) had occurred on December 31, 2008, all
outstanding and unvested phantom units and associated DERs that were granted to Mr. Hollister on August 14, 2007 automatically would become fully vested. Using the closing market price
of $11.30 per unit at December 31, 2008, the fair value of these phantom units would have been $103,056 and the value of the associated DERs would have been $22,162, for a total

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value
of $125,218. Pursuant to Mr. Hollister's employment agreement, a "change in control" is deemed to occur on the date that any one person, entity or group (other than Alfred Slifka, Richard
Slifka or Eric Slifka, or their respective family members or entities they control, individually or in the aggregate, directly or indirectly) acquires ownership of the membership interests of our
general partner that, together with the membership interests of our general partner already held by such person, entity or group, constitutes more than 50% of the total voting power of the membership
interests of our general partner.

At
December 31, 2008, Mr. Hollister had not yet received the January 20, 2009 grant of 61,728 phantom units under the LTIP, so he would not have been entitled to
receive any payment in respect thereof assuming his employment had been terminated effective December 31, 2008. The phantom units granted to Mr. Hollister on January 20, 2009 are,
however, subject to automatic vesting upon the occurrence of a change of control event (as defined in the grant).

Assuming
Mr. Hollister's employment had been terminated on December 31, 2008 (i) by our general partner for "Cause" (defined below), (ii) by
Mr. Hollister voluntarily (for reasons other than Constructive Termination), or (iii) by reason of Mr. Hollister's death or "Disability" (defined below), then following such
termination Mr. Hollister (or his estate, if applicable) would have been entitled to the Accrued Obligations. For purposes of Mr. Hollister's employment agreement, "Cause" is defined as
(1) engaging in gross negligence or willful misconduct in the performance of duties, (2) committing an act of fraud, embezzlement or willful breach of a fiduciary duty to us including
our general partner and any of our subsidiaries (including the unauthorized disclosure of any material secret, confidential and/or proprietary information, knowledge or data of the Company or any of
its subsidiaries), (3) being convicted of (or pleading no contest to) a crime involving fraud, dishonesty or moral turpitude or any felony, or (4) an uncured breach of any material
provision of the agreement. Pursuant to Mr. Hollister's employment agreement, "Disability" means a physical or mental disability or impairment which renders Mr. Hollister unable, with or
without reasonable accommodation, to perform the essential functions of his duties for a period of at least 90 consecutive days and, following the expiration of the initial 90-day period,
a medical doctor or other appropriate health care provider, in either case selected solely by our general partner, has delivered an opinion to our general partner that such physical or mental
disability or impairment is expected to continue for at least an additional 90 consecutive days.

Assuming
Mr. Hollister's employment had been terminated on December 31, 2008 by our general partner without Cause, or by Mr. Hollister for reasons constituting
"Constructive Termination" (defined below), Mr. Hollister would have been entitled to receive a severance payment in an amount equal to the sum of (i) twice his then base salary
($1,155,000), plus (ii) if such termination had occurred within 12 months following a Change in Control, an additional amount equal to twice his target incentive amount under the then
applicable short-term incentive for the fiscal year ($675,000) for a total severance amount of $1,830,000. Such severance payment would be payable monthly in 24 equal installments. During
such severance payment payout period, Mr. Hollister would remain eligible to participate in our general partner's health insurance, pension, 401(k) and other employee benefit plans in
accordance with our general partner's policies and on the same general basis as other employees. Mr. Hollister's employment agreement defines "Constructive Termination" as the termination of
employment by Mr. Hollister as a result of (i) an uncured breach by the general partner of a material provision of the employment agreement, as amended, (ii) the failure of any
successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of our business and/or assets to expressly assume and agree to perform the employment agreement, as
amended or (iii) any material diminution, without Mr. Hollister's written consent, in his working conditions consisting of (a) a material reduction in his duties and
responsibilities as the Chief Operating Officer or Chief Financial Officer, (b) any change in the reporting structure so that he no longer reports to the President or Chief Executive Officer of
our general partner, or (c) a relocation of his place of work further than 40 miles

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from
Waltham, Massachusetts. Assuming a December 31, 2008 termination date, in the event Mr. Hollister elected to terminate his employment for constructive termination at any time within
three months before a change in control and 12 months after a change in control, then in addition to the foregoing severance and benefits Mr. Hollister also would have been entitled to
the accelerated vesting provisions described above.

Our
general partner is obligated to reimburse Mr. Hollister for any and all federal excise taxes and penalties (other than penalties imposed as a result of Mr. Hollister's
actions), and any taxes imposed upon such reimbursement amounts, including, but not limited to, any federal, state and local income taxes, employment taxes, and other taxes, if any, which may become
due pursuant to the application of Sections 4999 and/or 409A of the Internal Revenue Code of 1986 (the "Code") on any payments to Mr. Hollister in connection with the employment
agreement, as amended.

(3)Edward J. Faneuil

For purposes of the above table, we have assumed that the short-term incentive plan established by our general partner in February 2009 was in effect at
December 31, 2008.

The
employment agreement between our general partner and Mr. Faneuil provides that, upon termination of his employment for any reason, Mr. Faneuil will receive payment
through the date of termination of his employment of (i) any earned, but unpaid, base salary as then in effect, (ii) all earned, but unpaid, bonuses, and (iii) all accrued
vacation, expense reimbursements and other benefits (other than severance benefits, except as provided below) due Mr. Faneuil in accordance with the established plans and policies of our
general partner or applicable law (the "Accrued Obligations").

In
the event of a change in control (defined below), Mr. Fanueil's employment agreement provides for accelerated vesting on any and all outstanding Partnership options, restricted
units, phantom units, unit appreciation rights and other similar rights (under the LTIP or otherwise) held by him as in effect on the date of termination. On August 14, 2007, the Compensation
Committee granted to Mr. Faneuil 7,976 phantom units and associated DERs under the LTIP. No other such options, restricted units, phantom units, unit appreciation rights and other similar
rights had been granted to Mr. Faneuil as of December 31, 2008. Assuming a change of control event (as defined in the grant) had occurred on December 31, 2008, all outstanding and
unvested phantom units and associated DERs that were granted to Mr. Faneuil on August 14, 2007 automatically would become fully vested. Using the closing market price of $11.30 per unit
at December 31, 2008, the fair value of these phantom units would have been $90,129 and the value of the associated DERs would have been $19,382, for a total value of $109,511. Pursuant to
Mr. Faneuil's employment agreement, a "change in control" is deemed to occur on the date that any one person, entity or group (other than Alfred Slifka, Richard Slifka or Eric Slifka, or their
respective family members or entities they control, individually or in the aggregate, directly or indirectly) acquires ownership of the membership interests of our general partner that, together with
the membership interests of our general partner already held by such person, entity or group, constitutes more than 50% of the total voting power of the membership interests of our general partner.

At
December 31, 2008, Mr. Faneuil had not yet received the January 20, 2009 grant of 48,501 phantom units under the LTIP, so he would not have been entitled to
receive any payment in respect thereof assuming his employment had been terminated effective December 31, 2008. The phantom units granted to Mr. Faneuil on January 20, 2009 are,
however, subject to automatic vesting upon the occurrence of a change of control event (as defined in the grant).

Assuming
Mr. Faneuil's employment had been terminated on December 31, 2008 (i) by our general partner for "Cause" (defined below), (ii) by Mr. Faneuil
voluntarily (for reasons other than Constructive Termination), or (iii) by reason of Mr. Faneuil's death, then following such termination Mr. Faneuil (or his estate, if
applicable) would have been entitled to the Accrued Obligations. For

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purposes
of Mr. Faneuil's employment agreement, "Cause" is defined as (1) engaging in gross negligence or willful misconduct in the performance of duties, (2) committing an act of
fraud, embezzlement or willful breach of a fiduciary duty to us including our general partner and any of our subsidiaries (including the unauthorized disclosure of any material secret, confidential
and/or proprietary information, knowledge or data of the Company or any of its subsidiaries), (3) being convicted of (or pleading no contest to) a crime involving fraud, dishonesty or moral
turpitude or any felony, or (4) an uncured breach of any material provision of the agreement.

Assuming
Mr. Faneuil's employment had been terminated on December 31, 2008 by our general partner without Cause, or by Mr. Faneuil for reasons constituting
"Constructive Termination" (defined below), Mr. Faneuil would have been entitled to receive a severance payment in an amount equal to the sum of (i) twice his then base salary
($751,906), plus (ii) if such termination had occurred within 12 months following a Change in Control, an additional amount equal to twice his target incentive amount under the then
applicable short-term incentive for the fiscal year ($275,000), for a total severance amount of $1,026,906. Such severance payment would be payable monthly in 24 equal installments. In
addition, the general partner would provide health care continuation coverage benefits to Mr. Faneuil pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and would
continue to pay the applicable percentage of the medical insurance premium that it pays for active employees during the applicable COBRA coverage period. Mr. Faneuil's employment agreement
defines "Constructive Termination" as the termination of employment by Mr. Faneuil as a result of (i) an uncured breach by the general partner of a material provision of the employment
agreement, as amended, (ii) the failure of any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of our business and/or assets to expressly
assume and agree to perform the employment agreement, as amended or (iii) any material diminution, without Mr. Faneuil's written consent, in his working conditions consisting of
(a) a material reduction in his duties and responsibilities as the Executive Vice-President and General Counsel, (b) any change in the reporting structure so that he no
longer reports to the President or Chief Executive Officer of our general partner, or (c) a relocation of his place of work further than 40 miles from Waltham, Massachusetts. For purposes of
Mr. Faneuil's employment agreement, however, Constructive Termination does not include a change in reporting structure as a result of our general partner becoming a subsidiary of an unrelated
entity, including, without limitation, a change whereby Mr. Faneuil is not the chief legal officer or general counsel of the acquiring or parent entity or must report to the chief legal officer
or general counsel of a currently unaffiliated parent corporation or entity. Assuming a December 31, 2008 termination date, in the event Mr. Faneuil elected to terminate his employment
for constructive termination at any time within three months before a change in control and 12 months after a change in control, then in addition to the foregoing severance Mr. Faneuil
also would have been entitled to the accelerated vesting provisions described above.

Our
general partner and Mr. Faneuil also entered into an amended and restated deferred compensation agreement, pursuant to which Mr. Faneuil will be paid the sum of $70,000
per year (the "Deferred Compensation") in equal monthly installments of $5,833.33 on the first business day of each month for 15 years (180 months) commencing on the earlier of:
(i) August 1, 2014, and (ii) the first business day of the month following Mr. Faneuil's "separation from service" (as defined in the Code) with our general partner for
reasons other than "Cause" (as defined in the deferred compensation agreement), subject to earlier termination as provided in the agreement. In the event of an unforeseeable emergency as referenced in
the deferred compensation agreement, our general partner will pay Mr. Faneuil within 15 days of the occurrence of the unforeseeable emergency the maximum amount allowable in a lump sum
promptly following the occurrence of such unforeseeable emergency. The Deferred Compensation will be forfeited in its entirety in the event that our general partner terminates Mr. Faneuil's
employment prior to August 1, 2014 for Cause or Mr. Faneuil terminates his employment for any reason other than death, disability or a Change in Control (as defined in the deferred
compensation agreement). On and after the date on which Deferred Compensation payments

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commence,
our general partner may terminate its obligations under the deferred compensation agreement for Cause or if our general partner subsequently determines within 18 months of
Mr. Faneuil's termination that circumstances which would give rise to a for Cause termination of Mr. Faneuil otherwise existed at the time of his earlier termination. In the event of
Mr. Faneuil's death prior to his receiving any or all of the aggregate amount of the Deferred Compensation (including the event of Mr. Faneuil's death before August 1, 2014), our
general partner will pay Mr. Faneuil's beneficiary within 60 days of the date of his death a single lump sum payment in an amount equal to the present value of the remaining payments
that would have been paid to Mr. Faneuil. If there is a Change in Control or Mr. Faneuil is determined to have become disabled prior to his receiving any or all of the aggregate amount
of the Deferred Compensation (including if the Change of Control occurred or the determination that Mr. Faneuil became disabled were made before August 1, 2014), our general partner will
pay to Mr. Faneuil within 60 days of the effective date of the Change in Control or the determination that Mr. Faneuil became disabled a single lump sum payment in an amount equal
to the present value of the remaining payments that would have been paid to him had the Change in Control not occurred or had Mr. Faneuil not become disabled. For purposes of the deferred
compensation agreement. "Cause" means (a) any uncured material breach by Mr. Faneuil of his obligations under the deferred compensation agreement, (b) any breach by
Mr. Faneuil of his confidentiality, non-competition and non-solicitation obligations set forth on Exhibit "A" to the deferred compensation agreement or included
in his employment agreement with our general partner, (c) engagement in gross negligence or willful misconduct in the performance of his duties, (d) a conviction or plea of no contest to
a crime involving fraud, dishonesty or moral turpitude or any felony, or (e) the commission of an act of embezzlement or willful breach of a fiduciary duty to our general partner, the
Partnership or any of its Affiliates

Our
general partner is obligated to reimburse Mr. Faneuil for any and all federal excise taxes and penalties (other than penalties imposed as a result of Mr. Faneuil's
actions), and any taxes imposed upon such reimbursement amounts, including, but not limited to, any federal, state and local income taxes, employment taxes, and other taxes, if any, which may become
due pursuant to the application of Sections 4999 and/or 409A of the Code on any payments to Mr. Faneuil in connection with the employment agreement, as amended. Mr. Faneuil and
our general partner have agreed to reform any provision of the deferred compensation agreement, as amended, between them in a manner mutually agreeable to avoid imposition of any additional tax under
the provisions of Section 409A of the Internal Revenue Code and related regulations and Treasury pronouncements.

(4)Charles A. Rudinsky

On August 14, 2007, the Compensation Committee granted Mr. Rudinsky 3,927 phantom units and associated DERs under the LTIP. Upon a change of control
event (as defined in the grant, as amended), all of the then outstanding phantom units and associated DERs under this grant that have not otherwise vested automatically will become fully vested
without regard to the achievement of the performance goal provided in the grant. Using the closing market price of $11.30 per unit at December 31, 2008, the fair value of these phantom units
would have been $44,375 and the value of the associated DERs would have been $9,543, for a total value of $53,918.

(5)LTIP Awards

On January 20, 2009, the Compensation Committee approved additional grants of 88,183, 61,728, 48,501 and 17,637 phantom units under the LTIP, respectively,
to Messrs. Eric Slifka, Hollister, Faneuil and Rudinsky. Upon a change of control event (as defined in the grant, as amended), all outstanding phantom units that were granted on
January 20, 2009 to Messrs. Slifka, Hollister and Faneuil only and that have not otherwise vested automatically will become fully vested (in the case of the phantom units awarded to
Mr. Slifka, without regard to the achievement of the performance goal.). See "Elements of

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CompensationLong-Term Incentive Plan" for information regarding performance restrictions and additional vesting terms.

Other Benefits

Pension Benefits

The table below sets forth information regarding the present value as of December 31, 2008 of the accumulated benefits of our
named executive officers under the Global Partners LP Pension Plan.

Pension Benefits at December 31, 2008

Name

Plan Name

Number of Years
Credited Service

Present Value of
Accumulated Benefit

Payments During
Last Fiscal Year(#)

($)

($)Eric Slifka


(1
)

22


228,888


Thomas J. Hollister


(1
)

3


58,453


Edward J. Faneuil


(1
)

18


373,954


Charles A. Rudinsky(2)


(1
)

25


677,933





---

All
employees who (1) are 21 years of age or older, (2) are not covered by a collective bargaining agreement, (3) have been employed by our predecessor, our
general partner or one of our operating
subsidiaries for one year prior to enrollment in the Pension Plan and (4) have worked for our predecessor, our general partner or one of our operating subsidiaries at least 1,000 hours
during the applicable plan year are eligible to participate in the Global Partners LP Pension Plan (the "Pension Plan"). An employee is fully vested in benefits under the Pension Plan after
completing five years of service or upon termination due to death, disability or retirement. When an employee retires at age 65, the employee can elect to receive either a lump sum distribution or
monthly benefit payments under the Pension Plan equal to (1) 23% of the employee's average monthly compensation for the five consecutive calendar years during which the employee received the
highest amount of pay ("Average Compensation") plus (2) 19.5% of the employee's Average Compensation in excess of his monthly "covered compensation" for Social Security purposes, as provided in
the Pension Plan. However, if an employee completes less than 30 years of service on his termination at or after reaching age 65, the monthly benefit will be reduced by 1/30th for each
year less than 30 years completed by the employee. If an employee is terminated before age 65, his benefit beginning at age 65 would be based on his Average Compensation multiplied by a
fraction, the numerator of which is a number of years of service at termination (not to exceed 30) and the denominator of which is the number of years such employee would have served (not to
exceed 30) had he stayed until age 65. An employee who is terminated after completing at least five years of service will be eligible for an early retirement benefit determined as described in
the preceding sentence at any time after attaining age 60.

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The
following table sets forth the estimated annual pension benefits payable upon retirement under the Global Partners LP Pension Plan formula to persons in the specified
compensation and years of service classifications:

Estimated Annual Pension for
Representative Years of Credited ServiceHighest Consecutive 5-Year
Average Compensation $

5 Years

10 Years

15 Years

20 Years

25 Years

30 Years
& Over$

$

$

$

$

$125,000


6,924


13,849


20,773


27,697


34,621


41,546150,000


8,695


17,390


26,085


34,780


43,475


52,171175,000


10,466


20,932


31,398


41,864


52,330


62,796200,000


12,237


24,474


36,710


48,947


61,184


73,421225,000


14,008


28,015


42,023


56,030


70,038


84,046245,000 and above


15,424


39,849


46,273


61,697


77,121


92,546


Benefits under the formula are based upon the employee's highest consecutive five-year average compensation and are not subject to
offset for social security benefits. Compensation for such purposes means compensation including overtime, but excluding bonuses, commissions, any program of deferred compensation, employee benefits,
moving expense, transportation allowances, salary continuation, and additional forms of remuneration.

401(k) Savings and Profit Sharing Plan

The 401(k) Savings and Profit Sharing Plan permits all eligible employees to make voluntary pre-tax contributions to the
plan, subject to applicable tax limitations. Our general partner may make a discretionary matching contribution to the plan for each eligible employee equal to 50% of each employee's contribution, up
to a maximum contribution of 3% of the employee's pre-tax annual compensation, subject to certain limitations under federal law. Eligible employees may elect to contribute up to 60% of
their compensation to the plan for each plan year. Employee contributions are subject to annual dollar limitations, which are periodically adjusted by the cost of living index. Participants in the
plan are always fully vested in any matching contributions under the plan; however, additional discretionary contributions are subject to a vesting schedule ranging from two to six years. The plan is
intended to be tax-qualified under Section 401(a) of the Internal Revenue Code so that contributions to the plan, and income earned on plan contributions, are not taxable to
employees until withdrawn from the plan, and so that contributions, if any, will be deductible when made.

Compensation of Directors

The following table sets forth (i) certain information concerning the compensation earned by our directors in 2008, and
(ii) the aggregate amounts of stock awards and option awards, if any, held by each director at the end of the last fiscal year:

Name

Fees Earned
or Paid
in Cash
($)

Stock Awards
($)(1)

Change in
Pension Value
and Nonqualified
Deferred
Compensation Earnings

Total
($)Alfred Slifka


41,000








41,000Richard Slifka


42,000








42,000Eric Slifka(2)








39,908


Robert J. McCool


55,000


14,597





70,113David McKown(3)


55,000


14,597





70,113Kenneth I. Watchmaker


56,000


14,597





71,113


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Employees of our general partner who also serve as directors do not receive additional compensation. In 2008, directors who are not employees of
our general partner (1) received: (a) $30,000 annual cash retainer; (b) $1,000 for each meeting of the board of directors attended; (c) $2,000 for each audit committee
meeting attended (limited to payment for one committee meeting per day); and (d) $1,000 for each committee meeting other than the audit committee meeting attended (limited to payment for one
committee meeting per day), and (2) are eligible to participate in the LTIP. In 2009, the annual cash retainer for each director who is not an employee of our general partner will be increased
to $50,000 and the chair of the audit committee will receive an additional $7,500.

Each
director also is 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 us for actions associated with being a director to the extent permitted under Delaware law.

Compensation Committee Interlocks and Insider Participation

Since the formation of Global GP LLC and throughout the fiscal year ended December 31, 2008, the Compensation
Committee of Global GP LLC's board of directors has comprised Robert J. McCool, David McKown and Kenneth I. Watchmaker, none of whom are officers
or employees of our general partner or any of its affiliates. Mr. Alfred Slifka serves as the Chairman of the board of directors and is an employee of Alliance Energy LLC, which is a
related party to (and customer of) the Partnership. Mr. Richard Slifka serves as Vice Chairman of our general partner's board of directors and is the Treasurer and an employee of Alliance
Energy LLC. Mr. Eric Slifka serves as a director of Alliance Energy LLC.

Compensation Committee Report

The Compensation Committee of Global GP LLC held seven meetings during fiscal year 2008. The Compensation Committee has
reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based upon such review, the related discussions and
such other matters deemed relevant and appropriate by the Compensation Committee, the Compensation Committee has recommended to the board of directors that the Compensation Discussion and Analysis be
included in this Form 10-K.

Kenneth
I. Watchmaker (Chairman)
Robert J. McCool
David McKown

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Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth as of March 10, 2009 the beneficial ownership of units of Global Partners LP held by
certain beneficial owners of more than 5% of the units, by each director and named executive officer of our general partner and by all directors and executive officers of our general partner as a
group:

Name of Beneficial Owner(1)

Common
Units
Beneficially
Owned

Percentage of
Common
Units
Beneficially
Owned

Subordinated
Units
Beneficially
Owned

Percentage of
Subordinated
Units
Beneficially
Owned

Percentage of
Total Units
Beneficially
OwnedKayne Anderson Capital Advisors L.P.(2)


2,526,241

34.0%








19.3
%Richard A. Kayne(2)


2,526,241

34.0%








19.3
%Global Petroleum Corp.(3)


2,267

*


1,723,196


30.5
%

13.2
%Larea Holdings LLC(4)


742

*


564,242


10.0
%

4.3
%Larea Holdings II LLC(5)


371

*


282,121


5.0
%

2.2
%Montello Oil Corporation(6)


3,086

*


2,344,992


41.6
%

17.9
%Sandwich Terminal, L.L.C.(7)


11

*


8,464


*


*Chelsea Terminal Limited Partnership(8)


947

*


719,409


12.8
%

5.5
%Amy Cook(5)


6,171

*


282,121


5.0
%

2.2
%Karen Dattilo(5)


6,171

*


282,121


5.0
%

2.2
%Andrew Slifka(5)


6,171

*


282,121


5.0
%

2.2
%Alfred A. Slifka(3)(6)(7)(8)(9)


6,411

*


4,796,061


85.0
%

36.7
%Richard Slifka(3)(6)(7)(8)(9)


6,311

*


4,796,061


85.0
%

36.7
%Eric Slifka(4)


27,842

*


564,242


10.0
%

4.5
%Thomas J. Hollister


5,000

*








*Edward J. Faneuil


12,400

*








*Charles A. Rudinsky


5,000

*








*David K. McKown













Robert J. McCool


8,800

*








*Kenneth I. Watchmaker













All directors and executive officers as a group (9 persons)


65,453

0.9%


5,360,303


95.0
%

41.5
%


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Equity Compensation Plan Table

The following table summarizes information about our equity compensation plans as of December 31, 2008:

Plan Category

Number of
Securities to be
issued upon
exercise of
outstanding options,
warrants and right

Weighted average
exercise price of
outstanding options,
warrants and rights

Number of securities
remaining available
for future issuance
under equity compensation plans
(excluding securities
reflected in column
(a))(a)

(b)

(c)Equity compensation plans approved by security holders








Equity compensation plans not approved by security holders(1)








564,242Total








564,242


---

Item 13.    Certain Relationships and Related Transactions, and Director Independence.

Affiliates of our general partner, including directors and executive officers of our general partner, own 65,824 common units and
5,642,424 subordinated units representing a 42.9% limited partner interest in us. In addition, our general partner owns a 1.73% general partner interest in us.

Distributions and Payments to Our General Partner and Its Affiliates

The following table summarizes the distributions and payments to be made by us to our general partner and its affiliates in connection
with the ongoing operation and liquidation of Global Partners LP. These distributions and payments were determined by and among affiliated entities and, consequently, are not the result of
arm's-length negotiations.

Operational Stage

Distributions of available cash to our general partner and its affiliates

We will generally make cash distributions 98.27% to the unitholders, including affiliates of our general partner (including directors and executive officers of our general partner), as the holders of an aggregate of
65,824 common units and all of the subordinated units, and 1.73% to our general partner. In addition, if distributions exceed the minimum quarterly distribution and other higher target levels, our general partner will be entitled to increasing
percentages of the distributions, up to 49.73% of the distributions above the highest target level.


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Assuming we have sufficient available cash to pay the full minimum quarterly distribution on all of our outstanding units for four quarters, our general partner and its affiliates, including directors and executive
officers of our general partner, would receive an annual distribution of approximately $0.4 million on the 1.73% general partner interest and $9.4 million on their common units and subordinated units.Payments to our general partner and its affiliates

Our general partner does not receive a management fee or other compensation for its management of Global Partners LP. Our general partner and its affiliates are reimbursed for expenses incurred on our behalf. Our
partnership agreement provides that our general partner determines the amount of these expenses.Withdrawal or removal of our general partner

If our 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.Liquidation StageLiquidation

Upon our liquidation, the partners, including our general partner, will be entitled to receive liquidating distributions according to their particular capital account balances.


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Omnibus Agreement

We are a party to an omnibus agreement with certain members of the Slifka family and our general partner that addresses the following
matters:



This
agreement is not the result of arm's-length negotiations and may not have been effected on terms at least as favorable to the parties to this agreement as could have been obtained
from unaffiliated third parties.



Each of Alfred A. Slifka, Chairman of our general partner, and Richard Slifka, Vice Chairman of our general partner, agreed, and caused
their affiliates to agree, for so long as such individual, Eric Slifka, President, Chief Executive Officer and a director of our general partner, or controlled affiliates thereof, individually or as
part of a group, control our general partner, and Eric Slifka agreed, and caused his affiliates to agree, through December 31, 2011, not to engage in, acquire or invest in any business having
assets engaged in the following businesses: (1) the wholesale marketing, sale, distribution and transportation (other than transportation by truck) of refined petroleum products in the United
States, provided such activity generates qualifying income (as defined in Section 7704 of the Internal Revenue Code); (2) the storage of refined petroleum products in connection with any
of the activities described in (1); and (3) bunkering. These restrictions will not apply to:



Eric
Slifka further agreed, pursuant to his employment agreement with our general partner, that the noncompetition obligations contained in the omnibus agreement shall continue to apply
to him throughout the term of his employment agreement (including the renewal term, if any) and, in the event his employment is terminated (a) by our general partner without cause or by
Mr. Slifka for reasons constituting constructive termination, (b) by our general partner for cause, or (c) by Mr. Slifka for reasons other than constructive termination,
for one additional year from the date of such termination.

In
addition, pursuant to Eric Slifka's employment agreement, Eric Slifka also agreed that for a period of one year following his date of termination, he will not solicit or induce any
employee of our general partner to terminate his/her employment with, or otherwise cease his/her relationship with our general partner.

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Under the omnibus agreement, Global Petroleum Corp. and certain of its affiliates and our general partner (collectively, the
"Indemnitors") will indemnify us for five years after the closing of our initial public offering against certain potential environmental liabilities associated with the operation of the assets and
occurring before the closing date of our initial public offering and indefinitely against claims for covered environmental liabilities made before the fifth anniversary of the closing of our initial
public offering and indefinitely against potential liabilities resulting from the two lawsuits alleging MTBE contamination in the groundwater in Massachusetts in which Global Companies LLC is a
named defendant. Please read Item 3, "Legal ProceedingsEnvironmental." The obligation of the Indemnitors will not exceed $7.5 million and they do not have any
indemnification obligation in any 12-month period (starting with the closing date of our initial public offering) until our losses for that period exceed $400,000 in the aggregate and then
only to the extent such aggregate losses exceed $400,000. Any unused amounts, including carried over unused amounts, will be carried over to the next 12-month period. After the fifth
anniversary of the closing of our initial public offering, the annual deductible (not including carried over amounts) will be reduced to $150,000. The Indemnitors have no indemnification obligations
with respect to environmental matters for claims made as a result of changes in environmental laws promulgated after the closing date of our initial public offering.

Additionally,
the Indemnitors will indemnify us for losses attributable to title defects, retained assets and liabilities (including environmental liabilities at the Revere terminal) and
income taxes attributable to pre-closing operations and the formation transactions. Furthermore, we will indemnify
the Indemnitors for all losses attributable to the post-closing operations of the assets contributed to us, to the extent not subject to their indemnification obligations.

Shared Services Agreements

We are party to shared services agreements with Global Petroleum Corp. and with Alliance Energy LLC. We believe the terms of
these agreements are at least as favorable as could have been obtained from unaffiliated third parties. Under each agreement, we provide Global Petroleum Corp. and Alliance Energy LLC with
certain accounting, treasury, legal, information technology, human resources and financial operations support for which Global Petroleum Corp. and Alliance Energy LLC, as applicable, pay us an
amount based upon the cost associated with provision of such services. In addition, Global Petroleum Corp. provides us with certain terminal, environmental and operational support services, for which
we pay a fee based on an agreed assessment of the cost associated with provision of such services. We paid to Global Petroleum Corp. a net total of $86,000, $74,000 and $78,000 and received from
Alliance Energy LLC a total of $866,000, $626,000 and $757,000 for the years ended December 31, 2008, 2007 and 2006, respectively.

Throughput Agreement with Global Petroleum Corp.

We have an exclusive throughput agreement with Global Petroleum Corp., one of our affiliates, with respect to the Revere terminal in
Revere, Massachusetts. We believe the terms of this agreement are at least as favorable as could have been obtained from unaffiliated third parties. We retain the title of all products stored at this
terminal. The term of this agreement ends December 31, 2013. The agreement automatically renews annually unless it is terminated by either party by giving 90 days notice. We pay a
monthly fee to Global Petroleum Corp., which is adjusted according to the Consumer Price Index for the Northeast region and for certain contractual costs. Including increases in certain contractual
costs but excluding amortization of deferred rent, we paid to Global Petroleum Corp. a total of $8.5 million, $8.2 million and $8.0 million for the years ended December 31,
2008, 2007 and 2006, respectively. Throughout the term of the throughput agreement with Global Petroleum Corp., we will have a right of first refusal through September 30, 2014 to purchase or
lease the Revere terminal if Global Petroleum Corp. desires to sell or lease the Revere terminal to a third party.

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Relationship of Management with Global Petroleum Corp. and Alliance Energy LLC

Some members of our management team are also officers and/or directors of two of our affiliates, Global Petroleum Corp. and Alliance
Energy LLC. Global Petroleum Corp. is wholly owned by ASRS Global General Partnership, an entity that is owned equally by Alfred A. and Richard Slifka. Messrs. Hollister, Faneuil and
Rudinsky spend a portion of their time providing services to Global Petroleum Corp. under a shared services agreement. Please read "Shared Services Agreements." In 2008, Edward J.
Faneuil, the Partnership's Executive Vice President and General Counsel, received from Alliance Energy LLC a one-time payment for services rendered in 2008.

Alliance
Energy LLC is wholly owned by AE Holdings Corp., which is approximately 95% owned by members of the Slifka family. Alfred A. and Richard Slifka each own approximately 16%
of AE Holdings Corp. and they together control another 63% of this entity through voting trusts for the benefit of their six children, each of whom owns approximately 10.5% of AE Holdings Corp. The
remaining 5% ownership interest is held by a former employee of Global Companies LLC, Willard Poires. Under a shared services agreement, Messrs. Eric Slifka, Hollister, Faneuil and
Rudinsky spend a portion of their time providing services to Alliance Energy LLC. Please read "Shared Services Agreements."

Director Independence

Please see Item 10, "Directors, Executive Officers and Corporate Governance" for information regarding director independence.

Item 14.    Principal Accountant Fees and Services.

The audit committee of the board of directors of Global GP LLC selected Ernst & Young LLP, Independent
Registered Public Accounting Firm, to audit the books, records and accounts of Global Partners LP for the 2008 and 2007 calendar years. The audit committee's charter, which is available on our
website at www.globalp.com, requires the audit committee to approve in advance all audit and non-audit services to be provided by our independent registered public accounting firm. All
services reported in the audit, audit-related, tax and all other fees categories below were approved by the audit committee.

Fees
paid to Ernst & Young LLP were as follows (in thousands):

2008

2007Audit Fees(1)

$
1,489

$
1,313Audit Related Fees


36


29Tax Fees(2)


810


524Total

$
2,335

$
1,866


---

102

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Table of Contents

PART IV

Item 15.    Exhibits and Financial Statement Schedules.



3.1




Second Amended and Restated Agreement of Limited Partnership of Global Partners LP dated as of May 9, 2007 (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on
May 10, 2007).3.2




Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership of Global Partners LP dated April 14, 2008 (incorporated herein by reference to Exhibit 3.1 to the Current Report on
Form 8-K filed on April 17, 2008).4.1




Registration Rights Agreement, dated May 9, 2007, by and between Global Partners LP and the purchasers named therein (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K
filed on May 10, 2007).4.2




Class B Unit Purchase Agreement, dated March 17, 2007, by and among Global Partners LP and the purchasers named therein (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on
Form S-3 filed on August 6, 2007).10.1




Omnibus Agreement, dated October 4, 2005, by and among Global Petroleum Corp., Montello Oil Corporation, Global Revco Dock, L.L.C., Global Revco Terminal, L.L.C., Global South Terminal, L.L.C., Sandwich Terminal,
L.L.C., Chelsea Terminal Limited Partnership, Global GP LLC, Global Partners LP, Global Operating LLC, Alfred A. Slifka, Richard Slifka and Eric Slifka (incorporated herein by reference to Exhibit 10.1 to the Current Report
on Form 8-K filed on October 11, 2005).10.2^




Global Partners GP Long-Term Incentive Plan effective as of October 4, 2005 (incorporated herein by reference to Exhibit 10.4 to Amendment No. 1 to Form S-1 (File No. 333-124755) filed on
July 1, 2005).10.3




Amended and Restated Services Agreement, dated October 4, 2005, by and among Global Petroleum Corp., Global Companies LLC, Global Montello Group LLC, and Chelsea Sandwich LLC (incorporated herein by
reference to Exhibit 10.3 to the Current Report on Form 8-K filed on October 11, 2005).10.4




Amended and Restated Services Agreement, dated October 4, 2005, by and between Alliance Energy Corp. and Global Companies LLC (incorporated herein by reference to Exhibit 10.4 to the Current Report on
Form 8-K filed on October 11, 2005).


103

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Table of Contents

10.5




Second Amended and Restated Terminal Storage and Throughput Agreement, dated October 4, 2005 by and among Global Petroleum Corp., Global Companies LLC and Global Montello Group LLC (incorporated herein by
reference to Exhibit 10.5 to the Current Report on Form 8-K filed on October 11, 2005).10.6




Credit Agreement, dated October 4, 2005, among Global Operating LLC, Global Companies LLC, Global Montello Group LLC, Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers, Global Partners LP
and Global GP LLC, as guarantors, each lender from time to time party thereto and Bank of America, N.A., as administrative agent and L/C issuer (incorporated herein by reference to Exhibit 10.8 to the Current Report on Form 8-K
filed on October 11, 2005).10.7




First Amendment to Credit Agreement, dated as of November 10, 2005, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP, Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on November 14, 2005).10.8^




Employment Agreement dated April 19, 2006, by and between Global GP LLC and Thomas J. Hollister (incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8-K filed on
May 11, 2006).10.9




Second Amendment to Credit Agreement, dated as of August 2, 2006, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on August 3, 2006).10.10^




Employment Agreement dated February 1, 2007, by and between Global GP LLC and Edward J. Faneuil (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on
February 6, 2007).10.11




Third Amendment to Credit Agreement, dated as of April 24, 2007, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on April 26, 2007).10.12




Terminals Sale and Purchase Agreement, dated March 16, 2007 by and between Global Partners LP and ExxonMobil Oil Corporation (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on
Form 10-Q filed on August 9, 2007).10.13




Forms of LTIP Grant Agreements dated August 14, 2007 (Named Executive Officers who are party to an employment agreement with Global GP LLC) (incorporated herein by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed on August 20, 2007).10.14




Form of LTIP Grant Agreement (Directors) (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on August 20, 2007).10.15




Form of LTIP Grant Agreement (General) (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on August 20, 2007).


104

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Table of Contents

10.16




Fourth Amendment to Credit Agreement, dated as of August 21, 2007, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on August 24, 2007).10.17




Fifth Amendment to Credit Agreement, dated as of October 23, 2007, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on October 24, 2007).10.18




Sixth Amendment to Credit Agreement, dated as of November 29, 2007, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on December 3, 2007).10.19




Terminals Sale and Purchase Agreement, dated July 9, 2007 by and between Global Partners LP and ExxonMobil Oil Corporation (incorporated herein by reference to Exhibit 10.21 to the Annual Report on
Form 10-K filed on March 14, 2008).10.20




Waiver Letter and Seventh Amendment to Credit Agreement, dated as of March 13, 2008, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea
Sandwich LLC, as borrowers, Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on August 8, 2008).10.21




Eighth Amendment to Credit Agreement, dated as of June 13, 2008, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on June 17, 2008).10.22




Ninth Amendment to Credit Agreement, dated as of July 18, 2008, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on July 21, 2008).10.23




Tenth Amendment to Credit Agreement and Limited Waiver, dated as of September 26, 2008, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea
Sandwich LLC, as borrowers, Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed on October 1, 2008).


105

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Table of Contents

10.24^




Employment Agreement dated December 31, 2008, by and between Global GP LLC and Eric S. Slifka (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on
January 7, 2009).10.25^




Amendment No. 1 to Employment Agreement dated December 31, 2008, by and between Global GP LLC and Thomas Hollister (incorporated herein by reference to Exhibit 10.2 to the Current Report on
Form 8-K filed on January 7, 2009).10.26^




Amendment No. 1 to Employment Agreement dated December 31, 2008, by and between Global GP LLC and Edward J. Faneuil (incorporated herein by reference to Exhibit 10.3 to the Current Report on
Form 8-K filed on January 7, 2009).10.27^




Amended and Restated Deferred Compensation Agreement dated December 31, 2008, by and between Global GP LLC and Edward J. Faneuil (incorporated herein by reference to Exhibit 10.4 to the Current Report
on Form 8-K filed on January 7, 2009).10.28^




First Amendment to LTIP Grant Agreement dated December 31, 2008 for Eric Slifka (incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on January 7,
2009).10.29^




First Amendment to LTIP Grant Agreement (Named Executive Officers who are party to an employment agreement with Global GP LLC (except Mr. Slifka)), LTIP Grant Agreement (Directors) and LTIP Grant Agreement
(General) dated December 31, 2008 (incorporated herein by reference to Exhibit 10.6 to the Current Report on Form 8-K filed on January 7, 2009).10.30*^




Amendment No. 1 to Employment Agreement dated February 4, 2009, by and between Global GP LLC and Eric S. Slifka.10.31*^




Amendment No. 2 to Employment Agreement dated February 4, 2009, by and between Global GP LLC and Thomas Hollister.10.32*^




Amendment No. 2 to Employment Agreement dated February 4, 2009, by and between Global GP LLC and Edward J. Faneuil.10.33*^




Amendment No. 3 to Employment Agreement dated March 11, 2009, by and between Global GP LLC and Edward J. Faneuil.21.1*




List of Subsidiaries of Global Partners LP.23.1*




Consent of Ernst & Young LLP.31.1*




Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of Global GP LLC, general partner of Global Partners LP.31.2*




Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of Global GP LLC, general partner of Global Partners LP.32.1




Section 1350 Certification of Chief Executive Officer of Global GP LLC, general partner of Global Partners LP.32.2




Section 1350 Certification of Chief Financial Officer of Global GP LLC, general partner of Global Partners LP.


---

106

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Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.

GLOBAL PARTNERS LPBy:

Global GP LLC,
its general partnerDated: March 13, 2009

By:

/s/ ERIC SLIFKA Eric Slifka President and Chief Executive Officer


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
indicated on March 13, 2009.

Signature

Title/s/ ERIC SLIFKA Eric Slifka

President, Chief Executive Officer and Director
(Principal Executive Officer)/s/ THOMAS J. HOLLISTER Thomas J. Hollister

Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)/s/ CHARLES A. RUDINSKY Charles A. Rudinsky

Executive Vice President, Treasurer
and Chief Accounting Officer
(Principal Accounting Officer)/s/ ALFRED A. SLIFKA Alfred A. Slifka

Chairman/s/ RICHARD SLIFKA Richard Slifka

Vice Chairman/s/ DAVID K. MCKOWN David K. McKown

Director/s/ ROBERT J. MCCOOL Robert J. McCool

Director/s/ KENNETH I. WATCHMAKER Kenneth I. Watchmaker

Director


107

---





Table of Contents

INDEX TO FINANCIAL STATEMENTS



GLOBAL PARTNERS LP FINANCIAL STATEMENTSReport of Independent Registered Public Accounting Firm


F-2Consolidated Balance Sheets as of December 31, 2008 and 2007


F-3Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006


F-4Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006


F-5Consolidated Statements of Partners' Equity for the years ended December 31, 2008, 2007 and 2006


F-6Notes to Financial Statements


F-7


F-1

---







Report of Independent Registered Public Accounting Firm

The
Board of Directors of Global GP LLC
and Unitholders of Global Partners LP

We
have audited the accompanying consolidated balance sheets of Global Partners LP ("the Partnership") as of December 31, 2008 and 2007, and the related consolidated
statements of income, partners' equity and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the
Index at Item 15(a). These financial statements and schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements
and schedule based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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 consolidated financial position of Global Partners LP at
December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S.
generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Global Partners LP's internal control over financial
reporting as of December 31, 2008, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated March 13, 2009 expressed an unqualified opinion thereon.

/s/ERNST&YOUNGLLP


Boston,
Massachusetts
March 13, 2009

F-2

---







GLOBAL PARTNERS LP        CONSOLIDATED BALANCE SHEETS        (In thousands, except unit data)

December 31,2008

2007AssetsCurrent assets:Cash and cash equivalents

$
945

$
2,110Accounts receivable less allowance of $2,974 and $2,650 as of December 31, 2008 and 2007, respectively


249,418


439,165Accounts receivableaffiliates


2,518


4,308Inventories


240,346


484,259Brokerage margin deposits


8,991


12,545Fair value of forward fixed price contracts


161,787


742Prepaid expenses and other current assets


29,302


17,736Total current assets


693,307


960,865Property and equipment, net


161,988


161,734Intangible assets, net


31,403


34,168Other assets


2,564


2,460Total assets

$
889,262

$
1,159,227Liabilities and partners' equityCurrent liabilities:Accounts payable

$
219,783

$
371,341Working capital revolving credit facilitycurrent portion


208,210


304,800Environmental liabilitiescurrent portion


4,191


876Note payable





1,239Accrued expenses and other current liabilities


54,054


69,762Income taxes payable


520


Obligations on forward fixed price contracts and other derivatives


7,954


41,892Total current liabilities


494,712


789,910Working capital revolving credit facilityless current portion


154,090


119,000Acquisition facility


71,200


71,200Environmental liabilitiesless current portion


2,377


8,340Accrued pension benefit cost


8,853


5,236Deferred compensation


1,663


1,481Other long-term liabilities


12,899


3,709Total liabilities


745,794


998,876Commitments and contingencies (See Note 14)





Partners' equityCommon unitholders (7,428,139 units issued and outstanding at December 31, 2008 and 2007)


163,351


165,330Subordinated unitholders (5,642,424 units issued and outstanding at December 31, 2008 and 2007)


(4,189
)

(2,116
)General partner interest (1.73% interest with 230,303 equivalent units outstanding at December 31, 2008 and 2007)


(431
)

(147
)Accumulated other comprehensive loss


(15,263
)

(2,716
)Total partners' equity


143,468


160,351Total liabilities and partners' equity

$
889,262

$
1,159,227


The accompanying notes are an integral part of these consolidated financial statements.

F-3

---







GLOBAL PARTNERS LP        CONSOLIDATED STATEMENTS OF INCOME        (In thousands, except per unit data)

Years Ended December 31,2008

2007

2006Sales

$
9,019,123

$
6,757,834

$
4,472,418Cost of sales


8,899,332


6,630,850


4,359,192Gross profit


119,791


126,984


113,226Costs and operating expenses:Selling, general and administrative expenses


42,060


45,537


43,027Operating expenses


31,788


27,703


22,158Amortization expenses


2,937


2,250


1,528Total costs and operating expenses


76,785


75,490


66,713Operating income


43,006


51,494


46,513Interest expense


(20,799
)

(17,408
)

(11,901
)Other income








515Gain on sale of investment





14,118


Income before income tax expense


22,207


48,204


35,127Income tax expense


(1,152
)

(1,191
)

(1,666
)Net income


21,055


47,013


33,461Less: General partner's interest in net income


(364
)

(903
)

(669
)Limited partners' interest in net income

$
20,691

$
46,110

$
32,792Net income per limited partner unit, basic and diluted(1)

$
1.40

$
1.38

$
2.46Weighted average limited partners' units outstanding, basic and diluted


13,071


12,444


11,285Distributions per limited partner unit

$
1.95

$
1.87

$
1.72


---

The
accompanying notes are an integral part of these consolidated financial statements.

F-4

---





Table of Contents



GLOBAL PARTNERS LP        CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousands)

Years Ended December 31,2008

2007

2006Cash flows from operating activitiesNet income

$
21,055

$
47,013

$
33,461Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization


14,188


9,150


4,110Amortization of deferred financing fees


938


463


403Loss on disposition of property and equipment and other


5


5


177Stock-based compensation expense


745


297


Gain on sale of investment





(14,118
)

Changes in operating assets and liabilities:Accounts receivable


189,748


(236,585
)

35,281Accounts receivableaffiliate


1,790


(2,320
)

17Inventories


243,913


(196,192
)

(27,353
)Broker margin deposits


3,554


(11,920
)

8,585Prepaid expenses, all other current assets and other assets


(13,041
)

337


(11,867
)Accounts payable


(151,559
)

149,307


(37,429
)Income taxes payable


778


(1,424
)

(35
)Change in fair value of forward fixed price contracts


(194,983
)

107,265


(67,152
)Accrued expenses, all other current liabilities and other long-term liabilities


(17,911
)

33,677


7,323Net cash provided by (used in) operating activities


99,220


(115,045
)

(54,479
)Cash flows from investing activitiesTerminal acquisitions





(138,020
)

(6,551
)Capital expenditures


(11,524
)

(13,720
)

(5,915
)Proceeds from sale of investment





15,262


Proceeds from sale of property and equipment


14


14


24Net cash used in investing activities


(11,510
)

(136,464
)

(12,442
)Cash flows from financing activities(Payments on) proceeds from credit facilities, net


(61,500
)

224,300


89,100Proceeds from common unit issuance, net of discount and fees





49,099


Payments on note payable, other


(1,239
)

(319
)

(298
)Distributions to partners


(26,136
)

(23,322
)

(19,789
)Net cash (used in) provided by financing activities


(88,875
)

249,758


69,013Cash and cash equivalents(Decrease) increase in cash and cash equivalents


(1,165
)

(1,751
)

2,092Cash and cash equivalents at beginning of year


2,110


3,861


1,769Cash and cash equivalents at end of year

$
945

$
2,110

$
3,861Supplemental informationCash paid during the year for interest

$
20,703

$
16,581

$
11,780


The
accompanying notes are an integral part of these consolidated financial statements.

F-5

---







GLOBAL PARTNERS LP        CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY        (In thousands)

Common
Unitholders

Class B
Units

Subordinated
Unitholders

General
Partner
Interest

Accumulated
Other
Comprehensive
Income

Total
Partners'
EquityBalance December 31, 2005

$
97,512

$


$
(20,372
)
$
(832
)
$


$
76,308Distributions to partners


(9,696
)




(9,696
)

(397
)




(19,789
)Adjustment to initially apply SFAS No. 158














422


422Comprehensive income:Net income


16,396





16,396


669





33,461Other comprehensive income:Unrealized gain on NYMEX shares














12,837


12,837Total comprehensive income

















46,298Balance December 31, 2006


104,212





(13,672
)

(560
)

13,259


103,239Proceeds of issuance of Class B units, net





49,099











49,099Non-cash reduction under EITF 98-05 on issuance of Class B units (Note 16)


(16,400
)

16,400











Conversion of Class B units


65,499


(65,499
)










Stock-based compensation


297














297Distributions to partners


(12,267
)




(10,565
)

(490
)




(23,322
)Comprehensive income:Net income


23,989





22,121


903





47,013Other comprehensive income:Realized gain on NYMEX shares














(12,837
)

(12,837
)Change in fair value of interest rate collar














(1,328
)

(1,328
)Change in pension liability














(1,810
)

(1,810
)Total comprehensive income

















31,038Balance December 31, 2007


165,330





(2,116
)

(147
)

(2,716
)

160,351Stock-based compensation


745














745Distributions to partners


(14,484
)




(11,004
)

(648
)




(26,136
)Comprehensive income:Net income


11,760





8,931


364





21,055Other comprehensive income:Change in fair value of interest rate collars














(9,518
)

(9,518
)Change in pension liability














(3,029
)

(3,029
)Total comprehensive income

















8,508Balance December 31, 2008

$
163,351

$


$
(4,189
)
$
(431
)
$
(15,263
)
$
143,468


The accompanying notes are an integral part of these consolidated financial statements.

F-6

---







GLOBAL PARTNERS LP        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Organization and Nature of Business

Global Partners LP (the "Partnership") is a publicly traded master limited partnership that engages in the wholesale and commercial distribution of refined petroleum products and
small amounts of natural gas and provides ancillary services to companies domestically and, on a limited basis, internationally.

The
Partnership has four operating subsidiaries: Global Companies LLC, its subsidiary, Glen Hes Corp., Global Montello Group Corp. and Chelsea Sandwich LLC (the four
operating subsidiaries, collectively, the "Companies"). The Companies (other than Glen Hes Corp.) are wholly owned by Global Operating LLC, a wholly owned subsidiary of the Partnership. In
addition, GLP Finance Corp. ("GLP Finance") is a wholly owned subsidiary of the Partnership. GLP Finance has no material assets or liabilities. Its activities will be limited to co-issuing
debt securities and engaging in other activities incidental thereto.

On
May 9, 2007, the Partnership issued 1,785,715 unregistered Class B units in a private placement from which it received gross proceeds of $50.0 million. The
Class B units were convertible into common units on a one-for-one basis. In connection with the issuance of the Class B units, the Partnership agreed to a
discount in the purchase price of approximately $0.8 million, which is the approximate amount of the product of (i) the 1,785,715 Class B units, and (ii) $0.4650, the
amount of the Partnership's first quarter 2007 per unit distribution that was paid to the common and subordinated unitholders on May 15, 2007. Such discount was paid by the Partnership to the
purchasers of the Class B units substantially contemporaneously with the payment of the Partnership's first quarter 2007 distribution and resulted in proceeds of $49.2 million. On
May 22, 2007, the Class B units converted into common units on a one-for-one basis. See Note 16 for additional information on the private placement.

The
Partnership's 1.73% general partner interest (reduced from 2% following the private placement of Class B units discussed above and in Note 16) is held by
Global GP LLC, the Partnership's general partner (the "General Partner"). The General Partner, which is owned by affiliates of the Slifka family, manages the Partnership's operations and
activities and employs its officers and substantially all of its
personnel. Affiliates of the General Partner, including its directors and executive officers, own 65,824 common units and 5,642,424 subordinated units, representing a combined 42.9% limited partner
interest.

Note 2.    Summary of Significant Accounting Policies

Basis of Consolidation and Presentation

The accompanying consolidated financial statements as of December 31, 2008 and 2007 and for the years ended December 31,
2008, 2007 and 2006 reflect the accounts of the Partnership. All intercompany balances and transactions have been eliminated. Due to changes in operating procedures and efficiencies, the Partnership
changed its estimate of the inventory reserve account by approximately $2.5 million. In addition, the Partnership changed its estimate of the environmental liability with respect to the Albany,
New York terminal by approximately $2.8 million (see Note 10). The total change in estimates resulted in an increase in net income of approximately $5.3 million, or $0.41 per
limited partner unit, for the year ended December 31, 2008.

F-7

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (continued)

Reclassification

Certain prior year amounts in the consolidated financial statements have been reclassified to conform to the current year presentation.

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 reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates under different assumptions or conditions.

Cash and Cash Equivalents

The Partnership considers highly liquid investments with original maturities of three months or less at the time of purchase to be cash
equivalents. The carrying value of cash and cash equivalents approximates fair value.

Accounts Receivable

The Partnership's accounts receivable result from sales of refined petroleum products to its customers. The majority of the
Partnership's accounts receivable relates to its petroleum marketing activities that can generally be described as high volume and low margin activities. The Partnership makes a determination of the
amount, if any, of a line of credit it may extend to a customer based on the form and amount of financial performance assurances the Partnership requires. Such financial assurances are commonly
provided to the Partnership in the form of standby letters of credit, personal guarantees or corporate guarantees.

The
Partnership reviews all accounts receivable balances on a monthly basis and records a reserve for estimated amounts it expects will not be fully recovered. At December 31,
2008 and 2007, substantially all of the Partnership's accounts receivable classified as current assets were within payment terms.

Inventories

The Partnership hedges substantially all of its inventory purchases through futures contracts and swap agreements. Hedges are executed
when inventory is purchased and are identified with that specific inventory. Changes in the fair value of these contracts, as well as the offsetting gain or loss on the hedged inventory item, are
recognized currently in earnings. All hedged inventory is valued using the lower of cost, as determined by specific identification, or market. Prior to sale, hedges are removed from specific barrels
of inventory, and the then unhedged inventory is sold and accounted for on a first-in, first-out basis.

F-8

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (continued)

Inventories
consisted of the following at December 31 (in thousands):

2008

2007Distillates: home heating oil, diesel and kerosene

$
160,000

$
344,984Residual oil


24,878


50,054Gasoline


40,183


71,916Blend stock


15,285


17,305Total

$
240,346

$
484,259


In
addition to its own inventory, the Partnership has exchange agreements with unrelated third-party suppliers, whereby it may draw inventory from these other suppliers
(seeRevenue Recognition) and suppliers may draw inventory from the Partnership. Positive exchange balances are accounted for as accounts receivable and
amounted to $14.8 million and $36.8 million at December 31, 2008 and 2007, respectively. Negative exchange balances are accounted for as accounts payable and amounted to
$8.4 million and $11.1 million at December 31, 2008 and 2007, respectively. Exchange transactions are valued using current quoted market prices.

Property and Equipment

Property and equipment are stated at cost. Expenditures for routine maintenance, repairs and renewals are charged to expense as
incurred, and major improvements are capitalized. Depreciation is charged to cost of sales and selling, general and administrative expenses over the estimated useful lives of the applicable assets,
using principally straight-line methods. The Partnership capitalizes interest on qualified long-term projects and depreciates it over the life of the related asset. The
estimated useful lives are as follows:

Buildings, docks, terminal facilities and improvements

1525 yearsFixtures, equipment and automobiles

37 years


Long-Lived Assets

Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," addresses financial accounting and reporting for the impairment or disposal of long-lived assets other than goodwill or indefinite lived intangible assets.
Accordingly, the Partnership evaluates for impairment whenever indicators of impairment are identified. The impairment evaluation is based on the projected cash flows of the particular asset. No
impairments of long-lived assets were recorded during 2008, 2007 and 2006.

Environmental and Other Liabilities

The Partnership accrues for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it
is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated. Costs accrued are estimated based upon an analysis of potential results, assuming a
combination of litigation and settlement strategies and outcomes.

Estimated
losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Loss accruals are adjusted as further
information

F-9

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (continued)

becomes
available or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value.

Recoveries
of environmental remediation costs from other parties are recognized as assets when their receipt is deemed probable.

The
Partnership is subject to other contingencies, including legal proceedings and claims arising out of its businesses that cover a wide range of matters, including, among others,
environmental matters and contract and employment claims. Environmental and other legal proceedings may also include matters with respect to businesses previously owned. Further, due to the lack of
adequate information and the potential impact of present regulations and any future regulations, there are certain circumstances in which no range of potential exposure may be reasonably estimated.
See Notes 10 and 20.

Leases

The Partnership leases office space and computer equipment and also has entered into terminal and throughput lease arrangements with
various unrelated oil terminals. Leases are accounted for under the provisions of SFAS No. 13, "Accounting for Leases," as amended, which requires that leases be evaluated and classified as
operating or capital leases for financial reporting purposes. The lease term used for lease evaluation includes option periods only in instances in which the exercise of the option period can be
reasonably assured and failure to exercise such options would result in an economic penalty.

Revenue Recognition

Sales relate primarily to the sale of refined petroleum products and natural gas and are recognized along with the related receivable
upon delivery, net of applicable provisions for discounts and allowances. Allowances for cash discounts are recorded as a reduction of sales at the time of sale based on the estimated future outcome.
The Partnership also provides for shipping costs at the time of sale, which are included in cost of sales. The amounts recorded for bad debts are generally based upon historically derived percentages
while also factoring in any new business conditions that might impact the historical analysis, such as market conditions and bankruptcies of particular customers. Bad debt provisions are included in
selling, general and administrative expenses.

Revenue
is not recognized on exchange agreements, which are entered into primarily to acquire various refined petroleum products of a desired quality or to reduce transportation costs by
taking delivery of products closer to the Partnership's end markets. In accordance with Emerging Issues Task Force ("EITF") No. 04-13, "Accounting for Purchases and Sales of
Inventory with the Same Counterparty," any net differential for exchange agreements is recorded as an adjustment of inventory costs.

The
Partnership collects trustee taxes, which consist of various pass through taxes collected from customers on behalf of taxing authorities, and remits such taxes directly to those
taxing authorities. As such, it is the Partnership's policy to exclude trustee taxes from revenues and cost of sales and account for them as liabilities. Trustee taxes are included in accrued expenses
and other current liabilities in the accompanying balance sheets.

F-10

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (continued)

Income Taxes

Section 7704 of the Internal Revenue Code provides that publicly-traded partnerships are, as a general rule, taxed as
corporations. However, an exception, referred to as the "Qualifying Income Exception," exists under Section 7704(c) with respect to publicly-traded partnerships of which 90% or more of the
gross income for every taxable year consists of "qualifying income." Qualifying income includes income and gains derived from the transportation, storage and marketing of
crude oil, natural gas and products thereof. Other types of qualifying income include interest (other than from a financial business), dividends, gains from the sale of real property and gains from
the sale or other disposition of capital assets held for the production of income that otherwise constitutes qualifying income.

Substantially
all of the Partnership's income is "qualifying income" for federal and state income tax purposes and, therefore, is not subject to federal and state income taxes at the
partnership level. Accordingly, no provision has been made for income taxes on the qualifying income in the Partnership's financial statements. Net income for financial statement purposes may differ
significantly from taxable income reportable to unitholders as a result of differences between the tax bases and financial reporting bases of assets and liabilities and the taxable income allocation
requirements under the Second Amended and Restated Agreement of Limited Partnership of Global Partners LP, as amended. Individual unitholders have different investment bases depending upon the
timing and price at which they acquired their Partnership units. Further, each unitholder's tax accounting, which is partially dependent upon the unitholder's tax position, differs from the accounting
followed in the Partnership's consolidated financial statements. Accordingly, the aggregate difference in the basis of the Partnership's net assets for financial and tax reporting purposes cannot be
readily determined because information regarding each unitholder's tax attributes in the Partnership is not available to the Partnership.

Global
Montello Group Corp. ("Global Montello") is a taxable entity for federal and state income tax purposes. Current and deferred income taxes are recognized on the separate earnings
of Global Montello for the years ended December 31, 2008, 2007 and 2006. The after-tax earnings of Global Montello are included in the earnings of the Partnership. Deferred income
taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes for
Global Montello. See Note 4.

On
January 1, 2007, the Partnership adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial
statements in accordance with SFAS No. 109, "Accounting for Income Taxes." It also prescribes a recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return, and it provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure and transition.

The
Partnership performed an evaluation of all material tax positions for the tax years that remain subject to examination by major tax jurisdictions as of December 31, 2008 (tax
years ended December 31, 2008, 2007 and 2006). Tax positions that do not meet the more-likely-than-not recognition threshold at the financial statement date
may not be recognized or continue to be recognized under FIN 48. Based on such evaluation, the Partnership concluded that there were no significant uncertain tax positions requiring adjustment
regarding recognition in its financial statements as of December 31, 2008.

F-11

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (continued)

Concentration of Risk

Financial instruments that potentially subject the Partnership to concentration of credit risk consist primarily of cash, cash
equivalents, accounts receivable, firm commitments and, under certain circumstances, futures contracts, options and swap agreements. The Partnership invests excess cash primarily in investment-grade
securities and, by policy, limits the amount of credit exposure to any one financial institution. The Partnership provides credit, in the normal course of business, primarily to other wholesale and
retail petroleum companies and generally does not require collateral. The Partnership performs ongoing credit evaluations of its customers and provides for credit losses based on specific information
and historical trends. Credit risk on trade receivables is minimized as a result of the Partnership's large customer base. Losses have historically been within management's expectations. See
Note 3 for a discussion regarding risk of credit loss related to futures contracts, options and swap agreements.

As
demand for some of the Partnership's refined petroleum products, specifically home heating oil and residual oil for space heating purposes, is generally greater during the winter
months, sales are generally higher during the first and fourth quarters of the calendar year which may result in significant fluctuations in the Partnership's quarterly operating results.

The
Partnership's gasoline sales accounted for approximately 50%, 43% and 37% of total sales for the years ended December 31, 2008, 2007 and 2006, respectively. Distillate sales
accounted for approximately 46%, 50% and 53% of total sales for the years ended December 31, 2008, 2007 and 2006, respectively, and residual oil sales accounted for approximately 4%, 7% and 10%
of total sales for the years ended December 31, 2008, 2007 and 2006, respectively.

The
Partnership had one customer, ExxonMobil Oil Corporation ("ExxonMobil") who accounted for approximately 20% of sales for the year ended December 31, 2008 and approximately 12%
of accounts receivable and 14% of sales as of and for the year ended December 31, 2007. No single customer accounted for 10% or more of sales for the year ended December 31, 2006.

Derivative Financial Instruments

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended ("SFAS No. 133"), establishes
accounting and reporting standards for derivative instruments and hedging activities and requires that an entity recognize derivatives as either assets or liabilities on the balance sheet and measure
the instruments at fair value. Changes in the fair value of the derivative are to be recognized currently in earnings, unless specific hedge accounting criteria are met.



The fair value of the Partnership's derivatives is determined through the use of independent markets and is based upon the prevailing
market prices of such instruments at the date of valuation. The Partnership enters into futures contracts for the receipt or delivery of refined petroleum products in future periods. The contracts are
entered into in the normal course of business to reduce risk of loss of inventory on hand, which could result through fluctuations in market prices. Changes in the fair value of these contracts, as
well as the offsetting gain or loss on the hedged inventory item, are recognized currently in earnings. Ineffectiveness related to these hedging activities was immaterial as of December 31,
2008, 2007 and 2006.

F-12

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (continued)

The
Partnership also uses futures contracts and swap agreements to hedge exposure under forward purchase and sale commitments. These agreements are intended to hedge the cost component
of virtually all of the Partnership's forward purchase and sale commitments. Changes in the fair value of these contracts, as well as offsetting gains or losses on the forward fixed price purchase and
sale commitments, are recognized currently in earnings. Gains and losses on net product margin from forward fixed price purchase and sale contracts are reflected in earnings as these contracts mature.

The
Partnership also markets and sells natural gas. The Partnership generally conducts business by entering into forward purchase commitments for natural gas only when it simultaneously
enters into arrangements for the sale of product for physical delivery to third-party users. The Partnership generally takes delivery under its purchase commitments at the same location as it delivers
to third-party users. Through these transactions, which establish an immediate margin, the Partnership seeks to maintain a position that is substantially balanced between firm forward purchase and
sales
commitments. Natural gas is generally purchased and sold at fixed prices and quantities. Current price quotes from actively traded markets are used in all cases to determine the contracts' fair value.
Changes in the fair value of these contracts are recognized currently in earnings as an increase or decrease in cost of sales. See Note 3 for additional information on fair value hedges.



The Partnership links all hedges that are designated as cash flow hedges to forecasted transactions. To the extent such hedges are
effective, the changes in the fair value of the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged
transaction affects earnings. The Partnership executed two zero premium interest rate collars with major financial institutions. Each collar is designated as a cash flow hedge and accounted for under
the provisions of SFAS No. 133. The first collar, which became effective on May 14, 2007 and expires on May 14, 2011, is used to hedge the variability in interest payments due to
changes in the three-month LIBOR rate with respect to $100.0 million of long-term three-month LIBOR-based borrowings. The second collar, which became effective on October 2,
2008 and expires on October 2, 2013, is used to hedge the variability in cash flows in monthly interest payments made on the Partnership's $100.0 million one-month
LIBOR-based borrowings (and subsequent refinancings thereof) due to changes in the one-month LIBOR rate. See Note 3 for additional information on the interest rate collars.

Financial Instruments

The fair value of the Partnership's financial instruments approximated the carrying value as of December 31, 2008 and 2007, in
each case due to the short-term and the variable interest rate nature of the financial instruments.

Net Income Per Limited Partner Unit

The computation of net income per limited partner unit is based on the weighted average number of common and subordinated units, or
limited partner units, outstanding during the year. Basic and diluted net income per limited partner unit are determined by dividing net income after deducting the amount allocated to the general
partner interest (including incentive distributions on the incentive distribution rights held by the General Partner) by the weighted average number of outstanding limited partner units during the
period in accordance with EITF 03-06, "Participating Securities and the

F-13

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (continued)

Two-Class
Method under FASB Statement No. 128" ("EITF 03-06"). EITF 03-06 addresses the computation of earnings per share (in the Partnership's
case, net income per limited partner unit) by an entity that has issued securities other than common stock (in the Partnership's case, limited partner units) that contractually entitle the holder to
participate in dividends and earnings of the entity when, and if, it declares dividends on its common stock (in the Partnership's case, distributions on its limited partner units). Essentially,
EITF 03-06 provides that in any accounting period where the Partnership's aggregate net income exceeds its aggregate distribution for such period, the Partnership is required to
present net income per limited partner unit as if all of the earnings for the periods were distributed, regardless of whether those earnings would actually be distributed during a particular period
from an economic or practical perspective. EITF 03-06 does not impact the Partnership's overall net income or other financial results; however, for periods in which the
Partnership's aggregate net income exceeds its aggregate distributions for such period, it will have the impact of reducing the net income per limited partner unit. This result occurs as a larger
portion of the Partnership's aggregate earnings is allocated to the incentive distribution rights held by the General Partner, as if distributed, even though the Partnership makes cash distributions
on the basis of cash available for distribution, not earnings, in any given accounting period. In accounting periods where aggregate net income does not exceed aggregate distributions for such period,
EITF 03-06 does not have any impact on the Partnership's net income per limited partner unit calculation.

The
following sets forth the net income allocation and per unit data using this method for the years ended December 31 (in thousands, except per unit data):

2008

2007

2006Net income

$
21,055

$
47,013

$
33,461Less:General Partner's general partner interest(1)


(364
)

(903
)

(669
)Non-cash reduction under EITF 98-05 allocated to limited partners(2)





(16,400
)

Net income available to limited partners


20,691


29,710


32,792Dilutive impact of theoretical distribution of earnings


(2,429
)

(13,786
)

(5,085
)Net income available to limited partners under EITF 03-06 and EITF 98-05

$
18,262

$
15,924

$
27,707Per unit data:Net income available to limited partners

$
1.59

$
2.59

$
2.91Dilutive impact of theoretical distribution of earnings


(0.19
)

(1.21
)

(0.45
)Net income available to limited partners under EITF 03-06 and EITF 98-05(3)

$
1.40

$
1.38

$
2.46Weighted average limited partner units outstanding


13,071


12,444


11,285


---

F-14

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2. Summary of Significant Accounting Policies (continued)

On
April 23, 2008, the board of directors of our General Partner declared a quarterly cash distribution of $0.4875 per unit for the period from January 1, 2008 through
March 31, 2008. On July 21, 2008, the board declared a quarterly cash distribution of $0.4875 per unit for the period from April 1, 2008 through June 30, 2008. On
October 22, 2008, the board declared a quarterly cash distribution of $0.4875 per unit for the period from July 1, 2008 through September 30, 2008. On January 21, 2009, the
board declared a quarterly cash distribution of $0.4875 per unit for the period from October 1, 2008 through December 31, 2008.

These
declared cash distributions resulted in incentive distributions to the General Partner, as the holder of the incentive distribution rights, as indicated above, and enabled the
Partnership to reach its second target distribution with respect to such incentive distribution rights. See Note 15, "Partners' Equity, Allocation and Cash Distributions" for further
information.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consisted of the following:

Investments

Pension
Plan

Derivatives

TotalBalance at December 31, 2006

$
12,837

$
422

$


$
13,259Realized gain on investment in NYMEX Holdings, Inc. and NYMEX seats


(12,837
)







(12,837
)Change in fair value of interest rate collar








(1,328
)

(1,328
)Change in pension liability





(1,810
)




(1,810
)Balance at December 31, 2007





(1,388
)

(1,328
)

(2,716
)Change in fair value of interest rate collars








(9,518
)

(9,518
)Change in pension liability





(3,029
)




(3,029
)Balance at December 31, 2008

$


$
(4,417
)
$
(10,846
)
$
(15,263
)


F-15

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2. Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157. This statement defines fair value, establishes guidelines for measuring fair
value and requires additional disclosures regarding fair value measurements. SFAS No. 157 applies only to fair value measurements currently required or permitted by other accounting standards
and is expected to increase the consistency of those measurements. In February 2008, the FASB deferred the effective date of SFAS No. 157 for all non-financial assets and
non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until January 1, 2009.
The Partnership is in the process of evaluating the impact of SFAS No. 157 on its non-recurring fair value measurements. The Partnership adopted SFAS No. 157 on
January 1, 2008 for its financial assets and liabilities measured at fair value on a recurring basis. The partial adoption of SFAS No. 157 for financial assets and liabilities did not
have a material impact on the Partnership's consolidated financial statements. See Note 15.

In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159") which provides entities with an
option to measure many financial instruments and certain other items at fair value that are not currently measured at fair value. The election to use the fair value option is available when an entity
first recognizes a financial asset or financial liability or upon entering into a firm commitment. Subsequent changes in fair value must be recorded in earnings. This statement also establishes
presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The Partnership
adopted SFAS No. 159 on January 1, 2008 and elected not to use the fair value option for its existing financial assets and liabilities and, therefore, the adoption of SFAS No. 159
did not have an impact on the Partnership's consolidated financial statements.

In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business Combinations" ("SFAS No. 141(R)") which retains the fundamental requirements of the original
pronouncement requiring that the purchase method be used for all business combinations. SFAS No. 141(R) defines the acquirer as the entity that obtains control of one or more businesses in the
business combination, establishes the acquisition date as the date that the acquirer achieves control and requires the acquirer to recognize the assets acquired, liabilities assumed and any
noncontrolling interest at their fair values as of the acquisition date. SFAS No. 141(R) also requires that acquisition-related costs be recognized separately from the acquisition. SFAS
No. 141(R) applies prospectively to business combinations for which the acquisition date occurs in fiscal years beginning after December 15, 2008. The Partnership will adopt SFAS
No. 141(R) on January 1, 2009 and does not believe SFAS No. 141(R) will have a material impact on its consolidated financial statements.

In
March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging ActivitiesAn Amendment of FASB Statement No. 133" ("SFAS
No. 161") which enhances the requirements under SFAS No. 133, "Accounting for Derivatives and Hedging Activities." SFAS No. 161 requires enhanced disclosures about an entity's
derivatives and hedging activities and how
they affect an entity's financial position, financial performance and cash flows. SFAS No. 161 will be effective for fiscal years and interim periods beginning after November 15, 2008.
The Partnership will adopt SFAS No. 161 on January 1, 2009 and does not believe SFAS No. 161 will have a material impact on its consolidated financial statements.

In
March 2008, the EITF approved consensus on EITF Issue No. 07-04, "Application of the Two-Class Method under FASB Statement No. 128 to Master
Limited Partnerships" ("EITF 07-04") which specifies the treatment of earnings per unit calculations when incentive distributions rights exist

F-16

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2. Summary of Significant Accounting Policies (continued)

in
master limited partnerships. Under EITF 07-04, when earnings exceed cash distributions, undistributed earnings are to be allocated to the general partner, limited partners and
holders of the incentive distribution rights based on the distribution formula for available cash set forth in the partnership agreement. Conversely, when cash distributions exceed earnings, net
income (or loss) would be reduced (or increased) by distributions to the general partner, limited partners and holders of incentive distribution rights. The excess of distributions over earnings would
be allocated to the general partner and limited partners based on their respective sharing of losses set forth in the partnership agreement. EITF 07-04 will be effective for fiscal
years and interim periods beginning after December 15, 2008 and will be applied retrospectively. The Partnership will adopt EITF 07-04 on January 1, 2009 and is in the
process of evaluating the impact of EITF 07-04 on its computation of earnings per unit.

In
April 2008, the FASB issued FASB Staff Position No. FAS 142-3, "Determination of the Useful Life of Intangible Assets" ("FSP FAS 142-3"). FSP
FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB
Statement No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). The objective of FSP FAS 142-3 is to improve the consistency between the useful life of a
recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other GAAP. FSP
FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. The Partnership will adopt
FSP FAS 142-3 on January 1, 2009 and does not believe FSP FAS 142-3 will have a material impact on its consolidated financial statements.

In
May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS No. 162"). SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP in the
United States. The Partnership adopted SFAS No. 162 as of December 31, 2008 which did not have a material impact on the Partnership's consolidated financial statements.

In
June 2008, the FASB issued FASB Staff Position EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 states that unvested share-based payment awards that contain nonforfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities (as defined in EITF 03-06) and, therefore, should be included in the computation of
earnings per share pursuant to the two-class method. However, the award would not be considered a participating security if the holder forfeits the right to receive dividends or dividend
equivalents in the event that the award does not vest. FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15,
2008 and interim periods within those years. Upon adoption, FSP EITF 03-6-1 requires that all prior-period earnings per share data presented be adjusted retrospectively.
The Partnership will adopt FSP EITF 03-6-1 on January 1, 2009. The adoption of FSP EITF 03-6-1 is not expected to have an impact on
the Partnership's earnings per unit because the distribution equivalent rights granted under the Partnership's Long-Term Incentive Plan (see Note 13) are not considered
participating securities.

In
September 2008, the FASB issued EITF 08-05, "Issuer's Accounting for Liabilities Measured at Fair Value with a Third Party Credit Enhancement"
("EITF 08-05") which provides guidelines for the determination of the unit of accounting for a liability issued with an inseparable third-party credit

F-17

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2. Summary of Significant Accounting Policies (continued)

enhancement
when it is measured or disclosed at fair value on a recurring basis. The effect of the credit enhancement is to be excluded in the fair value measurement of the liability, and entities are
required to disclose the existence of the inseparable third-party credit enhancement on the issued liability. EITF 08-05 is effective on a prospective basis beginning in the first
reporting period on or after December 15, 2008, with the effect of initial application included in the change in fair value of the liability in the period of adoption. The Partnership will
adopt EITF 08-05 on January 1, 2009 and is in the process the evaluating the impact of EITF 08-05 on its consolidated financial statements.

Note 3. Derivative Financial Instruments



The composition and fair value of derivative instruments relating to forward fixed price purchase and sale contracts on the
Partnership's consolidated balance sheet consisted of the following at December 31 (in thousands):

2008

2007Futures contracts

$
138,741

$
(37,355
)Swaps, options and other, net


15,092


(3,795
)Total

$
153,833

$
(41,150
)


The
Partnership formally documents all relationships between hedging instruments and hedged items after its risk management objectives and strategy for undertaking the hedge are
determined. The Partnership calculates hedge effectiveness on a quarterly basis. This process includes specific identification of the hedging instrument and the hedged transaction, the nature of the
risk being hedged and how the hedging instrument's effectiveness will be assessed. Both at the inception of the hedge and on an ongoing basis, the Partnership assesses whether the derivatives that are
used in hedging transactions are highly effective in offsetting changes in fair value of hedged items. The derivative instruments that qualify for hedge accounting are fair value hedges.

The
Partnership has a daily margin requirement with its broker based on the prior day's market results on open futures contracts. The required brokerage margin balance was
$9.0 million and $12.5 million at December 31, 2008 and 2007, respectively.

The
Partnership is exposed to credit loss in the event of nonperformance by counterparties of futures contracts, options and swap agreements, but the Partnership has no current reason to
expect any material nonperformance by any of these counterparties. Futures contracts, the primary derivative instrument utilized by the Partnership, are traded on regulated exchanges, greatly reducing
potential credit risks. Exposure on swap and certain option agreements is limited to the amount of the recorded fair value as of the balance sheet dates. The Partnership utilizes primarily one
clearing broker, a major financial institution, for all New York Mercantile Exchange ("NYMEX") derivative transactions and the right of offset exists. Accordingly, the fair value of all derivative
instruments is presented on a net basis on the consolidated balance sheets. See Note 2 for additional information on fair value hedges.



The Partnership executed two zero premium interest rate collars with major financial institutions. Each collar is designated as a cash
flow hedge and accounted for under the provisions of SFAS No. 133. The first collar, which became effective on May 14, 2007 and expires on May 14, 2011, is used

F-18

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 3. Derivative Financial Instruments (continued)

to
hedge the variability in interest payments due to changes in the three-month LIBOR rate with respect to $100.0 million of long-term three-month LIBOR-based borrowings. Under the
first collar, the Partnership capped its exposure at a maximum three-month LIBOR rate of 5.75% and established a minimum floor rate of 3.75%. As of December 31, 2008, the three-month LIBOR rate
of 2.13% was lower than the floor rate. As a result, the Partnership will remit to the respective financial institution the difference between the floor rate and the current rate which amounted to
approximately $216,000 and was recorded in accrued expenses and other current liabilities on the accompanying balance sheet. The fair values of the first collar were liabilities of approximately
$5.3 million and $1.3 million as of December 31, 2008 and 2007, respectively, and were recorded in both other
long-term liabilities and accumulated other comprehensive income. Hedge effectiveness was assessed at inception and is assessed quarterly, prospectively and retrospectively. The changes in
the fair value of the first collar are expected to be highly effective in offsetting the changes in interest rate payments attributable to fluctuations in the three-month LIBOR rate above and below
the first collar's strike rates. Ineffectiveness related to the first collar was immaterial at December 31, 2008.

On
September 29, 2008, the Partnership executed its second zero premium interest rate collar. The second collar, which became effective on October 2, 2008 and expires on
October 2, 2013, is used to hedge the variability in cash flows in monthly interest payments made on the Partnership's $100.0 million one-month LIBOR-based borrowings (and
subsequent refinancings thereof) due to changes in the one-month LIBOR rate. Under the second collar, the Partnership capped its exposure at a maximum one-month LIBOR rate of
5.50% and established a minimum floor rate of 2.70%. As of December 31, 2008, the one-month LIBOR rate of 1.90% was lower than the floor rate. As a result, the Partnership will
remit to the respective financial institution the difference between the floor rate and the current rate which amounted to approximately $67,000 and was recorded in accrued expenses and other current
liabilities on the accompanying balance sheet. As of December 31, 2008, the fair value of the second collar was a liability of approximately $5.5 million and was recorded in both other
long-term liabilities and accumulated other comprehensive income in the accompanying consolidated balance sheet. Hedge effectiveness was assessed at inception and is assessed quarterly,
prospectively and retrospectively, using the regression analysis. The changes in the fair value of the second collar are expected to be highly effective in offsetting the changes in interest rate
payments attributable to fluctuations in the one-month LIBOR rate above and below the second collar's strike rates. Ineffectiveness related to the second collar was immaterial at
December 31, 2008.

Note 4. Income Taxes

The following table presents a reconciliation of the difference between the statutory federal income tax rate and the effective income tax rate for the years ended December 31:

2008

2007

2006Federal statutory income tax rate


34.0
%

34.0
%

34.0
%State income tax rate, net of federal tax benefit


6.4
%

6.3
%

6.3
%Partnership income not subject to tax


(35.2
)%

(37.8
)%

(35.5
)%Effective income tax rate


5.2
%

2.5
%

4.8
%


F-19

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4. Income Taxes (continued)

The
following table presents the components of the provision for income taxes for the years ended December 31 (in thousands):

2008

2007

2006Current:Federal

$
903

$
984

$
1,195State


279


288


221Total current


1,182


1,272


1,416Deferred:Federal


(23
)

(62
)

226State


(7
)

(19
)

24Total deferred


(30
)

(81
)

250Total

$
1,152

$
1,191

$
1,666


At
December 31, 2008 and 2007, the Partnership had net deferred tax assets of approximately $80,000 and $50,000, respectively, which primarily represent the difference between tax
and book amortization.

The
following presents a reconciliation of the differences between income before income tax expense and income subject to income tax expense for the years ended December 31 (in
thousands):

2008

2007

2006Income before income tax expense

$
22,207

$
48,204

$
35,127Non-taxable income


(19,669
)

(45,560
)

(31,856
)Income subject to income tax expense

$
2,538

$
2,644

$
3,271


The
Partnership made approximately $0.4 million, $2.7 million and $1.4 million in income tax payments during 2008, 2007 and 2006, respectively.

Note 5. Terminal Acquisitions

On May 9, 2007, the Partnership acquired three refined petroleum products terminals located in Albany and Newburgh, New York and Burlington, Vermont from ExxonMobil for cash
consideration of approximately $101.5 million plus $1.1 million in acquisition costs, for an aggregate purchase price of $102.6 million. The Partnership financed the acquisition
through an expansion of its credit facility, proceeds from the sale of its NYMEX Holdings, Inc. shares and related NYMEX seats (Note 8) and the private placement of Class B units
(Note 16). This acquisition was accounted for as an asset acquisition.

On
November 14, 2007, the Partnership acquired two refined petroleum products terminals located in Glenwood Landing and Inwood, New York from ExxonMobil for cash consideration of
approximately $34.7 million plus $0.7 million in acquisition costs, for an aggregate purchase price of $35.4 million. The Partnership financed the acquisition through an expansion
of its credit facility. This acquisition was accounted for as an asset acquisition.

F-20

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5. Terminal Acquisitions (continued)

Final
purchase price allocations based on fair market values of acquired assets have been completed. The following table presents the allocation of the aggregate purchase price of the
assets acquired and environmental liabilities assumed during 2007 (in thousands):

Assets purchased:Buildings, docks, terminal facilities and improvements

$
99,571Land


20,692Fixtures, equipment and automobiles


251Intangible assets (see Note 7)


26,722Total assets purchased


147,236Less environmental liabilities assumed (see Note 10)


(9,216
)Total purchase price

$
138,020


In
May 2006, the Partnership acquired a terminal in Bridgeport, Connecticut for approximately $2.2 million and incurred approximately $0.2 million of buyer-related costs
for an aggregate purchase price of approximately $2.4 million.

In
September 2006, the Partnership acquired a terminal in Macungie, Pennsylvania for approximately $3.9 million and incurred approximately $0.2 million of buyer-related
costs for an aggregate purchase price of approximately $4.1 million.

Note 6. Property and Equipment

Property and equipment consisted of the following at December 31 (in thousands):

2008

2007Buildings, docks, terminal facilities and improvements

$
148,815

$
132,429Land


26,110


26,110Fixtures, equipment and automobiles


7,639


6,465Construction in process


2,361


8,451184,925


173,455Less accumulated depreciation


(22,937
)

(11,721
)Total

$
161,988

$
161,734




In November 2007, the Partnership entered into two separate sublease agreements for land located at the Port of Providence in Rhode
Island. The terminal at one parcel opened for business in January 2008 and provides the Partnership with storage for distillates and biofuels. The terminal at the other parcel opened for business in
November 2008 and provides the Partnership with storage for refined petroleum products. The initial term of each sublease began on November 1, 2007 and will expire on April 29, 2012.
Each sublease is being accounted for as an operating lease and has option terms that, if exercised, would extend the sublease through August 29, 2036. Total expenses under the subleases were
approximately $586,000 and $127,000 for the years ended December 31, 2008 and 2007, respectively.

F-21

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 6.    Property and Equipment (continued)

As of December 31, 2008 and 2007, the Partnership was in the application development stage of internally developing software currently intended for internal use. The capitalized
balance related to the development of this software was $1.8 million and $0.9 million as of December 31, 2008 and 2007, respectively. As the software has not been implemented for
its intended use, no amortization was recorded for the years ended December 31, 2008 and 2007.

The
Partnership had other construction in process of approximately $0.5 million as of December 31, 2008 and 2007.



Depreciation expense allocated to cost of sales was approximately $10.2 million, $6.0 million and $1.9 million for
the years ended December 31, 2008, 2007 and 2006, respectively.

Depreciation
expense allocated to selling, general and administrative expenses was approximately $1.0 million, $1.0 million and $0.7 million for the years ended
December 31, 2008, 2007 and 2006, respectively.

The
Partnership wrote off fully depreciated assets that were no longer in service in the amounts of approximately $18,000 and $412,000 for the years ended December 31, 2007 and
2006, respectively. There were no fully depreciated assets written off for the year ended December 31, 2008.

Note 7.    Intangible Assets

Intangible assets consisted of the following at December 31 (in thousands):

Gross Carrying
Amount

Accumulated
Amortization

Net Intangible
Assets

Amortization
PeriodDecember 31, 2008Intangible assets subject to amortization:Terminalling services

$
26,365

$
(2,061
)
$
24,305

20 yearsWorkforce


347


(24
)

323

20 yearsCustomer relationships


11,462


(5,632
)

5,830

8-12 yearsSoftware


1,139


(1,025
)

114

5 yearsCovenants not to compete


803


(240
)

563

3-5 yearsCustomer contracts


307


(307
)



2 yearsTotal


40,423


(9,289
)

31,134Brand names, not subject to amortization


269





269

IndefiniteTotal intangible assets

$
40,692

$
(9,289
)
$
31,403


F-22

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7.    Intangible Assets (continued)

Gross Carrying
Amount

Accumulated
Amortization

Net Intangible
Assets

Amortization
PeriodDecember 31, 2007Intangible assets subject to amortization:Terminalling services

$
26,365

$
(742
)
$
25,623

20 yearsWorkforce


347


(7
)

340

20 yearsCustomer relationships


11,462


(4,429
)

7,033

8-12 yearsSoftware


1,139


(797
)

342

5 yearsCovenants not to compete


630


(69
)

561

3-5 yearsCustomer contracts


307


(307
)



2 yearsTotal


40,250


(6,351
)

33,899Brand names, not subject to amortization


269





269

IndefiniteTotal intangible assets

$
40,519

$
(6,351
)
$
34,168


The
aggregate amortization expense was approximately $2.9 million, $2.3 million and $1.5 million for the years ended December 31, 2008, 2007
and 2006, respectively.

The
estimated annual intangible asset amortization expense for future years ending December 31 is as follows (in thousands):

2009

$
2,8592010


2,7222011


2,6462012


2,2022013


1,764Thereafter


18,941Total intangible assets subject to amortization


31,134Brand names, not subject to amortization


269Total intangible assets

$
31,403


Note 8.    Investment in Equity Securities

The Partnership held an investment in NYMEX Holdings, Inc. which was accounted for under the provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." The Partnership recorded an unrealized gain of $12.8 million in other comprehensive income and related dividend income of $515,000 in the accompanying statements of income
for the year ended December 31, 2006.

On
March 6, 2007, the Partnership sold its investment in NYMEX Holdings, Inc. along with its NYMEX seats for approximately $15.3 million and realized a gain of
approximately $14.1 million in the accompanying statements of income for the year ended December 31, 2007.

F-23

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 9.    Debt

Credit Agreement

The Partnership has a senior secured credit agreement (the "Credit Agreement") with total available commitments of
$750.0 million. There are three facilities under the Credit Agreement:



In
addition, the Credit Agreement has an accordion feature whereby the Partnership may request on the same terms and conditions of its then existing Credit Agreement, provided no Event
of Default (as defined in the Credit Agreement) then exists, an increase to: (1) the acquisition facility by up to another $50.0 million, for a total acquisition facility of up to
$135.0 million; and (2) the working capital revolving credit facility by up to another $200.0 million, for a total working capital revolving credit facility of up to
$850.0 million. Any such request for an increase by the Partnership must be in a minimum amount of $5.0 million, and no more than three such requests may be made for each facility. The
Partnership, however, cannot provide assurance that its lending group will agree to fund any request by the Partnership for additional amounts in excess of the total available commitments of
$750.0 million.

Availability
under our working capital revolving credit facility is subject to a borrowing base which is redetermined from time to time and based on specific advance rates on eligible
current assets. Under the credit agreement, we can borrow only up to the level of our then current borrowing base. Availability under our borrowing base may be affected by events beyond our control,
such as changes in refined petroleum product prices, collection cycles, counterparty performance, advance rates and limits and deteriorating economic conditions. These and other events could require
us to seek waivers or amendments of covenants or alternative sources of financing or to reduce expenditures. We can provide no assurance that such waivers, amendments or alternative financing could be
obtained, or if obtained, would be on terms acceptable to us.

During
the period from January 1, 2008 through July 20, 2008 and for the years ended December 31, 2007 and 2006, borrowings under the Partnership's working capital
revolving credit, acquisition and revolving credit facilities bore interest at the Partnership's option at (1) the Eurodollar rate, plus 1%, 11/2% and 11/2%,
respectively (for 2006, the rate for the acquisition facility was the Eurodollar rate, plus 13/4%), (2) the cost of funds rate, plus 1%, 13/4% and
11/2%, respectively, or (3) the bank's base rate.

Commencing
July 21, 2008, borrowings under the working capital revolving credit facility bear interest at (1) the Eurodollar rate plus 1.75% to 2.25%, (2) the cost
of funds rate plus 1.75% to 2.25%, or (3) the base rate plus 0.75% to 1.25%, each depending on the pricing level provided in the Credit Agreement, as amended, which in turn depends upon the
Combined Interest Coverage Ratio (as such

F-24

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 9.    Debt (continued)

term
is defined in the Credit Agreement). Commencing July 21, 2008, borrowings under the acquisition and revolving credit facilities bear interest at (1) the Eurodollar rate plus 2.25%
to 2.75%, (2) the cost of funds rate plus 1.75% to 2.25%, or (3) the base rate plus 0.75% to 1.25%, each depending on the pricing level provided in the Credit Agreement, as amended,
which in turn depends upon the Combined Interest Coverage Ratio. The average interest rates for the years ended December 31, 2008, 2007 and 2006 were 4.58%, 6.3%, and 6.0%, respectively.

In
addition, the Partnership executed two zero premium interest rate collars with major financial institutions. The first collar, which became effective on May 14, 2007, is used
to hedge the variability in interest payments due to changes in the three-month LIBOR rate with respect to $100.0 million of long-term three-month LIBOR-based borrowings. The second
collar, which became effective on October 2, 2008, is used to hedge the variability in cash flows in monthly interest payments made on the Partnership's $100.0 million
one-month LIBOR-based borrowings (and subsequent refinancings thereof) due to changes in the one-month LIBOR rate (see Note 3 for further discussion on the interest rate
collars).

The
Partnership incurs a letter of credit fee of 2% per annum for each letter of credit issued. In addition, the Partnership incurs a commitment fee on the unused portion of the three
facilities under the Credit Agreement (including the unused portion of either of the seasonal overline facilities exercised by the Partnership) equal to 0.3% to 0.375% per annum, depending on the
pricing level and the Combined Interest Coverage Ratio provided in the Credit Agreement. The Partnership also incurs a facility fee of 0.1% per annum on any unexercised seasonal overline facility
during the period between September 1 and June 30 and a seasonal overline fee of $30,000 each time the Partnership elects to exercise either of the seasonal overline facilities.

The
Credit Agreement will mature on April 22, 2011. The Partnership classifies a portion of its working capital revolving credit facility as a long-term liability
because the Partnership has a multi-year, long-term commitment from its bank group. The long-term portion of the working capital revolving credit facility was
$154.1 million and $119.0 million at December 31, 2008 and 2007, respectively, representing the amounts expected to be outstanding during the year. In addition, the Partnership
classifies a portion of its working capital revolving credit facility as a current liability because it repays amounts outstanding and reborrows funds based on its working capital requirements. The
current portion of the working capital revolving credit facility was approximately $208.2 million and $304.8 million at December 31, 2008 and 2007, respectively, representing the
amounts the Partnership expects to pay down during the course of the year.

As
of December 31, 2008, the Partnership had total borrowings outstanding under the Credit Agreement of $433.5 million, including $71.2 million outstanding on the
acquisition facility. In addition, we had outstanding letters of credit of $105.2 million. The total remaining availability for borrowings and letters of credit at December 31, 2008 and
2007 was $211.3 million and $86.6 million, respectively.

The
Credit Agreement is secured by substantially all of the assets of the Partnership and each of the Companies and is guaranteed by the General Partner. The Credit Agreement imposes
certain requirements including, for example, a prohibition against distributions if any potential default or Event of Default (as defined in the Credit Agreement) would occur, and limitations on the
Partnership's ability to grant liens, make certain loans or investments, incur additional indebtedness or guarantee other indebtedness, make any material change to the nature of the Partnership's
business or undergo a fundamental change, make any material dispositions, acquire another company, enter into a merger,

F-25

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 9.    Debt (continued)

consolidation,
sale leaseback transaction or purchase of assets, or make capital expenditures in excess of specified levels.

The
Credit Agreement imposes covenants that require the Partnership to maintain certain minimum working capital amounts, capital expenditure limits, a minimum EBITDA ratio, a minimum
interest coverage ratio and a maximum leverage ratio. On July 18, 2008, the Credit Agreement was amended whereby the Minimum EBITDA (as defined in the Credit Agreement) as at the end of the
June 30, 2008 fiscal quarter and each fiscal quarter ending thereafter is required to be not less than $30.0 million for the period of four consecutive fiscal quarters most recently
ended. In addition, the minimum combined interest coverage ratio was reduced to 1.75:1.00 for the quarter ended December 31, 2008. The Partnership was in compliance with all covenants at
December 31, 2008. The Credit Agreement also contains a representation whereby there can be no event or circumstance, either individually or in the aggregate, that has had or could reasonably
be expected to have a Material Adverse Effect (as defined in the Credit Agreement).

The
Credit Agreement also requires that in each calendar year, the outstanding amount under the working capital revolving credit facility must be equal to or less than
$263.0 million for a period of ten consecutive calendar days. On September 26, 2008, the Credit Agreement was amended which included, among other things, acknowledgment of compliance of
this provision for the year ended December 31, 2008.

The
Credit Agreement limits distributions by the Partnership to its unitholders to the amount of the Partnership's available cash and permits borrowings to fund such distributions only
under the $15.0 million revolving credit facility. The revolving credit facility is subject to an annual "clean-down" period, requiring the Partnership to reduce the amount
outstanding under the revolving credit facility to $0 for 30 consecutive calendar days in each calendar year.

The
lending group under the Credit Agreement includes the following institutions: Bank of America, N.A.; Standard Chartered Bank; JPMorgan Chase Bank, N.A.; Societe Generale; RBS
Citizens, National Association; Sovereign Bank; Fortis Capital Corp.; Webster Bank National Association; KeyBank National Association; TD Bank, N.A. (f/k/a TD BankNorth, N.A.); Wells
Fargo Bank, N.A.; Wachovia Bank, National Association; and Calyon New York Branch.

Term NoteNote Payable

In 2001, the Partnership purchased the Fore River Terminal in South Portland, Maine. The purchase price was approximately
$3.4 million and included issuance by the Partnership of a promissory note for $3.0 million with a 7% interest rate. The note was secured by the property acquired. The note amortization
commenced in June 2001 and extended through May 2008. Monthly payments of principal and interest were approximately $34,800 through April 2008, with a final principal payment of $1.1 million
paid in May 2008.

Note 10.    Environmental Liabilities

The Partnership currently owns or leases properties where refined petroleum products are being or have been handled. These properties and the refined petroleum products handled thereon
may be subject to federal and state environmental laws and regulations. Under such laws and regulations, the Partnership could be required to remove or remediate containerized hazardous liquids or
associated generated wastes (including wastes disposed of or abandoned by prior owners or operators), to clean up contaminated property arising from the release of liquids or wastes to the
environment, including contaminated groundwater, or to implement best management practices to prevent future contamination.

F-26

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10.    Environmental Liabilities (continued)

The
Partnership maintains insurance of various types with varying levels of coverage that it considers adequate under the circumstances to cover its operations and properties. The
insurance policies are
subject to deductibles that the Partnership considers reasonable and not excessive. In addition, the Partnership has entered into indemnification agreements with various sellers in conjunction with
several of its acquisitions. Allocation of environmental liability is an issue negotiated in connection with each of the Partnership's acquisition transactions. In each case, the Partnership makes an
assessment of potential environmental liability exposure based on available information. Based on that assessment and relevant economic and risk factors, the Partnership determines whether to, and the
extent to which it will, assume liability for existing environmental conditions.

In
connection with the November 2007 acquisition of ExxonMobil's Glenwood Landing and Inwood, New York terminals, the Partnership assumed certain environmental liabilities, including the
remediation obligations under remedial action plans submitted by ExxonMobil to and approved by the New York Department of Environmental Conservation ("NYDEC") with respect to both terminals. As a
result, the Partnership recorded, on an undiscounted basis, total environmental liabilities of approximately $1.2 million, of which approximately $0.6 million was paid by the Partnership
for the year ended December 31, 2008. The remaining liability of $0.6 million was recorded as a current liability of $0.4 million and a long-term liability of
$0.2 million on the accompanying consolidated balance sheet at December 31, 2008. The remedial action plans submitted by ExxonMobil have been implemented by Global Companies LLC.
The Partnership does not believe that compliance with the terms thereof will result in material costs in excess of the environmental reserve or have a material impact on its operations.

In
connection with the May 2007 acquisition of ExxonMobil's Albany and Newburgh, New York and Burlington, Vermont terminals, the Partnership assumed certain environmental liabilities,
including the remediation obligations under a proposed remedial action plan submitted by ExxonMobil to NYDEC with respect to the Albany, New York terminal. As a result, the Partnership recorded, on an
undiscounted basis, total environmental liabilities of approximately $8.0 million, of which approximately $0.1 million was paid for the year ended December 31, 2008 for a balance
of $7.9 million. In June 2008, the Partnership submitted a remedial action work plan to NYEDC, implementing NYDEC's conditional approval of the remedial action plan submitted by ExxonMobil.
Although NYDEC has not yet officially approved the remedial action work plan submitted by the Partnership, the Partnership has responded to NYDEC's requests for additional information and conducted
pilot tests for the remediation outlined in the work plan. Based on the results of such pilot tests, the Partnership changed its estimate of the environmental liability by $2.8 million. The
remaining liability of $5.1 million was recorded as a current liability of $2.9 million and a long-term liability of $2.2 million on the accompanying consolidated
balance sheet at December 31, 2008. Subject to NYDEC's approval of the proposed remedial action work plan, the Partnership does not believe that compliance with the terms thereof will result in
material costs in excess of the environmental reserve or have a material impact on its operations.

In
connection with the 2006 acquisition of its Macungie, Pennsylvania terminal (the "Global Macungie Terminal"), the Partnership assumed certain existing environmental liabilities at the
terminal. The Partnership did not accrue for these contingencies as it believes that the aggregate amount of these liabilities cannot be reasonably estimated at this time. The Partnership also
executed an Administrative Order on Consent ("AOC") with the U.S. Environmental Protection Agency, Region III requiring certain investigatory activities at the Global Macungie Terminal. Although the
Partnership cannot

F-27

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10.    Environmental Liabilities (continued)

predict
the outcome of the investigation of the Global Macungie Terminal, based upon current information, the Partnership does not anticipate that the outcome will have a material adverse effect on
it. Furthermore, the Partnership does not believe that compliance with the terms of the AOC executed by it will result in material costs or have a material impact on the Partnership's operations.

As
previously disclosed, Global Companies LLC, in addition to several affiliates, has been named as one of over 50 defendants in two lawsuits alleging methyl tertiary-butyl ether
("MTBE") contamination of groundwater in Massachusetts. MTBE is an oxygenate that has been used extensively to reduce motor vehicle tailpipe emissions. In the cases of Town of Duxbury, et al. v.
Amerada Hess Corp., et al., filed December 31, 2003, and City of Lowell v. Amerada Hess Corp., et al., filed December 30, 2004, plaintiffs allege that manufacturers, refiners and others
involved in the distribution of gasoline containing MTBE are liable for the costs of investigating possible MTBE groundwater contamination, treating such contaminated groundwater where found, and
related relief including treble damages and injunctive relief. The plaintiffs in these cases generally claim to be public water providers or municipal or other government authorities. These cases have
been consolidated in multi-district litigation with over 60 other MTBE cases in federal court in the Southern District of New York. The Partnership entered into an agreement, in principle, to settle
these cases and, as a result, the Partnership recorded $0.9 million as a current environmental liability on the accompanying consolidated balance sheet at December 31, 2008. The
Partnership does not believe that settlement of these cases will have a material impact on its operations.

The
Partnership's estimates used in these reserves are based on all known facts at the time and its assessment of the ultimate remedial action outcomes. Among the many uncertainties that
impact the Partnership's estimates are the necessary regulatory approvals for, and potential modification of, its remediation plans, the amount of data available upon initial assessment of the impact
of soil or water contamination, changes in costs associated with environmental remediation services and equipment and the possibility of existing legal claims giving rise to additional claims.
Therefore, although the Partnership believes that the reserve is adequate, no assurances can be made that any costs incurred in excess of this reserve or outside of indemnifications or not otherwise
covered by insurance would not have a material adverse effect on the Partnership's financial condition, results of operations or cash flows.

Note 11.    Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following at December 31 (in thousands):

2008

2007Barging transportation, product storage and other ancillary costs

$
15,208

$
17,919Swaps and other derivatives


1,268


4,836Trustee taxes (taxes other than income tax)


32,578


39,495Employee compensation


1,681


5,608Other


3,319


1,904Total

$
54,054

$
69,762


F-28

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11.    Accrued Expenses and Other Current Liabilities (continued)

Trustee taxes consisted of various pass-through taxes collected from customers on behalf of taxing authorities. Employee compensation consisted of bonuses, vacation and other
salary accruals. Ancillary costs consisted of cost accruals related to product expediting and storage.

Note 12.    Employee Benefit Plans with Related Party

The General Partner has a qualified 401(k) Savings and Profit Sharing Plan that covers eligible employees. Contributions under the plan are determined annually, at the sole discretion of
the General Partner's board of directors. The General Partner's discretionary matching contributions to the 401(k) Savings and Profit Sharing Plan have been equal to 50% of each employee's
contribution, up to a maximum contribution of 3% of the employee's compensation. Matching contributions greater than this level are allowed under the plan. The General Partner's matching contributions
on behalf of higher-paid employees are subject to certain limitations under federal law. Employees may elect to contribute up to 60% of their compensation to the 401(k) Savings and Profit
Sharing Plan for each plan year. Employee contributions are subject to annual dollar limitations, which are periodically adjusted by the cost of living index. This plan had expenses of approximately
$500,000, $385,000 and $311,000 for the years ended December 31, 2008, 2007 and 2006, respectively, which are included in selling, general and administrative expenses in the accompanying
statements of income.

In
addition, the General Partner has a qualified pension plan (the "Plan") that covers all eligible employees. On December 31, 2006, the Partnership adopted SFAS No. 158,
"Employers' Accounting for Defined Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and 132(R)" ("SFAS No. 158") which amends
SFAS No. 87, "Employers' Accounting for Pensions" ("SFAS No. 87"). Under SFAS No. 158, the Partnership is required to recognize the overfunded or underfunded status of its defined
benefit pension plan as an asset or liability in its consolidated balance sheets and to recognize changes in that funded status through comprehensive income in the year in which such changes occur.
The funded status is measured as the difference between the fair value of plan assets and the Plan's benefit obligation, with the benefit obligation including all actuarial gains and losses, prior
service cost and any remaining transition amounts. SFAS No. 158 also requires the measurement date of the funded status to be the same as the entity's fiscal year end which, in the
Partnership's case, was December 31, 2008. SFAS No. 158 did not change the components of net periodic benefit cost. All items deferred when applying SFAS No. 87 were to be
recognized as a component of other comprehensive income, net of taxes, if any.

The
following presents reconciliations of the beginning and ending balances of the benefit obligation, fair value of plan assets, funded status and the accumulated benefit obligation at
December 31 (in thousands):

2008

2007Change in benefit obligation:Projected benefit obligation at beginning of year

$
13,486

$
11,010Service cost


1,061


814Interest cost


800


654Benefits paid


(496
)

(496
)Actuarial loss


551


1,504Projected benefit obligation at end of year


15,402


13,486


F-29

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12.    Employee Benefit Plans with Related Party (continued)

2008

2007Change in plan assets:Fair value of plan assets at beginning of year


8,250


7,840Actual return on plan assets


(1,818
)

326Employer contributions


613


580Benefits paid


(496
)

(496
)Fair value of plan assets at end of year


6,549


8,250Funded status at end of year

$
(8,853
)
$
(5,236
)Unrecognized net actuarial loss


4,417


1,388Net amount recognized

$
(4,436
)
$
(3,848
)Accumulated benefit obligation

$
10,852

$
10,318


The
following presents amounts recognized in the consolidated balance sheets at December 31 (in thousands):

2008

2007Accrued pension benefit cost

$
8,853

$
5,236Accumulated other comprehensive loss


(4,417
)

(1,388
)Net amount recognized

$
4,436

$
3,848


All
of the Partnership's prior service costs and transition amounts have been fully amortized at December 31, 2008, 2007 and 2006. The unrecognized net actuarial
losses of $4.4 million and $1.4 million and gain of $0.4 million are reflected in accumulated other comprehensive income as of December 31, 2008 and 2007 and 2006,
respectively, and in Note 2.

The
following presents the components of the net periodic benefit cost for the Plan (in thousands):

2008

2007

2006Service cost

$
1,061

$
814

$
765Interest cost


800


654


597Expected return on plan assets


(662
)

(632
)

(578
)Recognized net actuarial loss


3





Net periodic benefit cost

$
1,202

$
836

$
784


The
Partnership expects to recognize approximately $192,000 of the net actuarial loss as a component of net periodic benefit cost during 2009.

The
following presents the weighted-average actuarial assumptions used in determining the Plan's annual pension expense:

2008

2007

2006Discount rate


6.0
%

6.0
%

6.0
%Expected return on plan assets


8.0
%

8.0
%

8.0
%Rate of compensation increase


4.0
%

4.0
%

4.0
%


F-30

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12.    Employee Benefit Plans with Related Party (continued)

The
following presents the benefits as of December 31, 2008 expected to be paid in each of the next five fiscal years and in the aggregate for the next five fiscal years
thereafter (in thousands):

2009

$
3222010


3442011


3882012


5762013


7472014-2018


5,433Total

$
7,810


The
General Partner expects to contribute, and the Partnership expects to reimburse the General Partner for, approximately $1.2 million to the Plan for the fiscal year ending
December 31, 2008 and will make this contribution in 2009.

Investment Policy Summary

The fundamental investment objective of the Plan is to provide a rate of return sufficient to fund the retirement benefits under the
Plan at a reasonable cost to the General Partner, which is the Plan sponsor. At a minimum, the rate of return should equal or exceed the discount rate assumed by the Plan's actuaries in projecting the
funding cost of the Plan under applicable Employee Retirement Income Security Act, or ERISA, standards. To do so, the General Partner's Pension Committee (the "Committee") may appoint one or more
investment managers to invest all or portions of the assets of the Plan in accordance with specific investment guidelines, objectives, standards and benchmarks.

Because
the Committee expects the Plan's investment income, when combined with anticipated contributions by the General Partner, to exceed the sum of benefit payments and expenses over
the next several years, the Committee intends that the Plan be managed to achieve long-term returns, with only a small percentage of the Plan invested in cash.

The
General Partner's Plan asset allocation, all of which is with unrelated parties, at December 31, was as follows:

2008

2007

2006Cash and cash equivalents





2.6
%

0.9
%Fixed income securities


52.8
%

42.4
%

40.1
%Equity securities


47.2
%

55.0
%

59.0
%100.0
%

100.0
%

100.0
%


Expected Long-term Rate of Return on Plan Assets

The expected long-term rate of return on assets assumption is based on historical experience and consultation with the
General Partner's actuarial consultants. The current 8.0% assumption compares to the historical weighted average compound return of 3.3% actually achieved by the Plan assets in the Companies' ten
years of existence. Because the Plan has only been in existence since December 1999, the time period over which the 3.3% return was calculated does not accurately reflect the long-term

F-31

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12.    Employee Benefit Plans with Related Party (continued)

investment
return which the Plan sponsor expects to be achieved. The Plan was created in December 1999 with a transfer of assets from the pension plan of Global Petroleum Corp. ("GPC"). Considering
the investment return of the Plan from 1995 through December 1998, the calculation of the average investment return would increase the 3.3% investment return to 8.5% over a 14-year period.

Non-qualified Pension and Deferred Compensation Plans

The Partnership has a non-qualified pension plan for a former employee, which commenced fixed payments in November of 2003.
The plan calls for payments over a fifteen-year period from the commencement date. Total remaining future fixed payments under this plan consist of $0.1 million per year for the
period from 2009 through 2013 for an aggregate amount of $0.8 million. The Partnership had a discounted obligation of approximately $0.9 million and $1.0 million recorded in long
term liabilities at December 31, 2008 and 2007, respectively.

The
General Partner also has two non-qualified deferred compensation arrangements. One arrangement is for an executive officer that calls for annual payments in the aggregate
amount of $70,000 for fifteen consecutive years from the commencement date. The other arrangement is for a former executive officer that calls for annual payments in the aggregate amount of $85,000
for fifteen consecutive years from the commencement date. The Partnership had a total discounted obligation of approximately $0.7 million and $0.5 million recorded in
long-term liabilities at December 31, 2008 and 2007, respectively. In accordance with the provisions of the Partnership's partnership agreement, the General Partner will be
reimbursed by the Partnership for payments to the executive officers under these non-qualified deferred compensation arrangements.

Long-Term Incentive Plan

Please see Note 13 for a discussion of the Long-Term Incentive Plan.

Note 13.    Long-Term Incentive Plan

In October 2005, the General Partner adopted a Long-Term Incentive Plan ("LTIP") whereby 564,242 common units were authorized for issuance. Any units delivered pursuant to an
award under the LTIP may be acquired in the open market or from any affiliate, be newly issued units or any combination of the foregoing. The LTIP provides for awards to employees, consultants and
directors of the General Partner and employees and consultants of affiliates of the Partnership who perform services for the Partnership. The LTIP allows for the award of unit options, unit
appreciation rights, restricted units, phantom units and distribution equivalent rights ("DERs").



On August 14, 2007, the Compensation Committee of the board of directors of the General Partner granted awards of phantom units
and associated DERs under the LTIP to certain employees and non-employee directors of the General Partner. The phantom units granted will cliff vest on December 31, 2009 and become
payable on a one-for-one basis in common units of the Partnership (or cash equivalent) upon the achievement of certain performance goals over the vesting period. The DERs that
were granted in tandem with the phantom units will vest and become payable in cash simultaneously with the vesting of the phantom units. Any phantom units and associated DERs that

F-32

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13.    Long-Term Incentive Plan (continued)

have
not vested as of the end of the cliff vesting period will be forfeited. The Partnership currently intends and reasonably expects to issue and deliver the common units upon vesting.

SFAS
No. 123(R), "Share-Based Payment," requires that a non-vested equity share unit awarded to an employee is to be measured at its fair value as if it were vested
and issued on the grant
date. The fair value of the Partnership's award at the August 14, 2007 grant date approximated the fair value of the Partnership's common unit at that date.

SFAS
No. 123(R) requires compensation cost for an award of share-based employee compensation classified as equity, as is the case of the Partnership's award, to be recognized over
the requisite service period. The requisite service period for the Partnership is from August 14, 2007, the grant date, through December 31, 2009 (the "Requisite Service Period"). The
Partnership will recognize as compensation expense the value of the portion of the award that is ultimately expected to vest over the Requisite Service Period on a straight-line basis. In
accordance with SFAS No. 123(R), the Partnership estimated forfeitures at the time of grant. Such estimates, which were based on the Partnership's service and performance history, are revised,
if necessary, in subsequent periods if actual forfeitures differ from estimates.

For
the years ended December 31, 2008 and 2007, the Partnership recorded compensation expenses of approximately $745,000 and $297,000, respectively, which are included in selling,
general and administrative expenses in the accompanying consolidated statements of income. The total compensation cost related to the non-vested awards not yet recognized at
December 31, 2008 is approximately $0.8 million and is expected to be recognized ratably over the remaining Requisite Service Period. The Partnership recorded no unit-based
compensation for the year ended December 31, 2006 as no other awards of any kind had been granted under the LTIP during that year.



On December 31, 2008, the Compensation Committee granted 99,700 phantom units, including a contingent right to receive an amount
in cash equal to the number of phantom units multiplied by the cash distribution per common unit made by the Partnership from time to time during the period the phantom units are outstanding. The
phantom units, which are subject to graded vesting, will vest in six equal installments on June 30 and December 31 of each year commencing June 30, 2009.

F-33

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13.    Long-Term Incentive Plan (continued)

Compensation expense related to these phantom units is recognized using the accelerated attribution method. For the year ended December 31, 2008, compensation expense related to
Mr. Slifka's phantom unit award was immaterial. The total compensation cost related to the non-vested awards not yet recognized at December 31, 2008 is approximately
$1.1 million and is expected to be recognized ratably over the remaining three-year service period.

The
following table presents a summary of the status of the non-vested units as of December 31:

Number of
Non-vested
Units

Weighted
Average
Grant Date
Fair ValueOutstanding non-vested units at December 31, 2006




$
Granted


64,951


29.00Vested





Forfeited





Outstanding non-vested units at December 31, 2007


64,951


29.00Granted


99,700


11.30Vested





Forfeited


(2,331
)

29.00Outstanding non-vested units at December 31, 2008


162,320

$
18.13


Additionally,
SFAS No. 123(R) requires that the income tax effects of share-based payments be recognized for financial reporting purposes if such awards would result in deductions
on the Partnership's income tax return. Global Montello is a taxable entity for federal and state income tax purposes. In the ordinary course of business, the Partnership charges a portion of its
selling, general and administrative expenses to Global Montello and, therefore, a portion of the compensation expense on the LTIP is allocated to Global Montello which results in a deduction for the
Partnership. The amount allocated to Global Montello for such LTIP related costs was immaterial for the years ended December 31, 2008 and 2007.

Note 14.    Commitments and Contingencies

The Partnership is subject to contingencies, including legal proceedings and claims arising out of the normal course of business that cover a wide range of matters, including, among
others, environmental matters and contract and employment claims.

Leases of Office Space and Computer Equipment

The Partnership has future commitments, principally for office space and computer equipment, under the terms of operating lease
arrangements. The following provides total future minimum

F-34

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 14.    Commitments and Contingencies (continued)

payments
under leases with non-cancelable terms of one year or more at December 31, 2008 (in thousands):

2009

$
1,3522010


1,2452011


1,0042012


8932013


911Thereafter


6,706Total

$
12,111


Total
expenses under the operating lease arrangements amounted to approximately $1.6 million, $1.7 million and $1.6 million for the years ended December 31,
2008, 2007 and 2006, respectively. The Partnership also has lease income from office space leased at one of its owned terminals for $0.2 million per year through April of 2009.

The
Partnership also leases certain equipment under capital lease agreements, for which the net book value was approximately $0.9 million and $1.0 million at
December 31, 2008 and 2007, respectively. Depreciation expense for equipment under the capital leases was approximately $166,000 and $69,000 for the years ended December 31, 2008 and
2007, respectively. The Partnership did not have capital leases in 2006.

Terminal and Throughput Leases

The Partnership entered into terminal and throughput lease arrangements with various unrelated oil terminals. Certain arrangements have
minimum usage requirements. The following provides future minimum lease, sublease and throughput commitments under these arrangements with non-cancelable terms of one year or more at
December 31, 2008 (in thousands):

Lease and
Throughput
Commitments

Sublease
Commitments

Total2009

$
8,629

$
(866
)
$
7,7632010


6,412





6,4122011


6,211





6,2112012


1,945





1,9452013


252





252Thereafter


589





589Total

$
24,038

$
(866
)
$
23,172


Purchase Commitments

The minimum volume purchase requirements for 2009 under the Partnership's existing supply agreements are 344 million gallons.
All existing purchase commitments expire in 2010. The Partnership purchased approximately 0.9 billion, 1.7 billion and 1.2 billion gallons of product under the Partnership's
existing supply agreements for $2.2 billion, $3.3 billion and $2.0 billion in 2008, 2007 and

F-35

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 14.    Commitments and Contingencies (continued)

2006,
respectively, which included fulfillment of the minimum purchase obligation under these commitments.

Environmental Liabilities

Please see Note 10 for a discussion of the Partnership's environmental liabilities.

Legal Proceedings

Please see Note 20 for a discussion of the Partnership's legal proceedings.

Note 15.    Partners' Equity, Allocations and Cash Distributions

Issuance of Units

On October 4, 2005, the Partnership completed an initial public offering of 5,635,000 common units. Upon the closing of the
Partnership's IPO (and taking into account the underwriters' exercise of their over-allotment option), GPC and certain affiliates of the Slifka family received an aggregate of
5,642,424 subordinated units, which constituted 49% ownership of the Partnership at that time, a 2% general partner interest, and 7,424 common units.

Units Outstanding

Partners' equity at December 31, 2008 consisted of 7,428,139 common units outstanding (including 65,824 common units held by
affiliates of the General Partner, including directors and executive officers), 5,642,424 subordinated units held by affiliates of the Slifka family, collectively representing a 98.27% effective
ownership interest in the Partnership, and 230,303 general partner units representing a 1.73% general partner interest in the Partnership.

Units Authorized

The Partnership had 13,634,805 authorized units at December 31, 2008 which consisted of 7,428,139 common units, outstanding
(including 65,824 common units held by affiliates of the General Partner, including directors and executive officers), 5,642,424 subordinated units held by affiliates of the Slifka family, and 564,242
units remaining available for future issuance under the Partnership's equity compensation plans.

Common Units

During the subordination period, as defined in the Partnership's partnership agreement, the common units will have the right to receive
distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $0.4125 per quarter, plus any arrearages in the payment of the minimum quarterly
distribution on the common units from prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. The purpose of the subordinated units is
to increase the likelihood that during the subordination period there will be available cash to be distributed on the common units. The subordination period will extend until the first day of any
quarter beginning after September 30, 2010 that each of the following tests are met: (1) distributions of available cash from operating surplus on each of the outstanding common units
and subordinated units and general partner units equaled or exceeded the minimum

F-36

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Partners' Equity, Allocations and Cash Distributions (continued)

quarterly
distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date; (2) the "adjusted operating
surplus" (as defined in the Partnership's partnership agreement) generated during each of the three consecutive non-overlapping four-quarter periods immediately preceding that
date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted basis and the related
distribution on the 1.73% general partner units during those periods; and (3) there are no arrearages in payment of the minimum quarterly distribution on the common units. If the unitholders
remove the General Partner without cause, the subordination period may end before September 30, 2010.

The
common units have limited voting rights as set forth in the Partnership's partnership agreement.

Pursuant
to the Partnership's partnership agreement, if at any time the General Partner and its affiliates own more than 80% of the common units outstanding, the General Partner has the
right, but not the obligation, to "call" or acquire all, but not less than all, of the common units held by unaffiliated persons at a price not less than their then-current market value.
The General Partner may assign this call right to any of its affiliates or to the Partnership.

Subordinated Units

During the subordination period, the subordinated units have no right to receive distributions of available cash from operating surplus
until the common units receive distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $0.4125 per quarter, plus any arrearages in the
payment of the minimum quarterly distribution on the common units from prior quarters. No arrearages will be paid to subordinated units.

As
described above and in the Partnership's partnership agreement, the subordinated units may convert to common units on a one-for-one basis when certain
conditions are met. The Partnership's partnership agreement also sets forth the calculation to be used to determine the amount and priority of cash distributions that the common unitholders,
subordinated unitholders, holders of the incentive distribution rights and General Partner will receive.

The
subordinated units have limited voting rights as set forth in the Partnership's partnership agreement.

General Partner Units

The general partner units have the same rights to receive distributions of available cash from operating surplus as the common units
for each quarter until the Partnership distributes (a) for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter plus any arrearages in payment of
the minimum quarterly distribution on the common units for any prior quarters during the subordination period; and (b) for each outstanding subordinated unit an amount equal to the minimum
quarterly distribution for that quarter. The Partnership's partnership agreement sets forth the calculation to be used to determine the amount and priority of cash distributions that the common
unitholders, subordinated unitholders, holders of the incentive distribution rights and General Partner will receive.

F-37

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Partners' Equity, Allocations and Cash Distributions (continued)

The
general partner units have the management rights as set forth in the Partnership's partnership agreement.

Incentive Distribution Rights

Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from
operating surplus after the target distribution levels have been achieved, as defined in the Partnership's partnership agreement. The General Partner currently holds all of the incentive distribution
rights, but may transfer these rights separately from its general partner interest, subject to restrictions in the Partnership's partnership agreement.

Allocations of Net Income

Net income is allocated between the General Partner and the common and subordinated unitholders in accordance with the provisions of
the Partnership's partnership agreement. Net income is generally allocated first to the General Partner and the common and
subordinated unitholders in an amount equal to the net losses allocated to the General Partner and the common and subordinated unitholders in the current and prior tax years under the Partnership's
partnership agreement. The remaining net income is allocated to the General Partner and the common and subordinated unitholders in accordance with their respective percentage interests of the general
partner units, common units and subordinated units.

Cash Distributions

The Partnership intends to consider regular cash distributions to unitholders on a quarterly basis, although there is no assurance as
to the future cash distributions since they are dependent upon future cash flows, capital requirements, financial condition and other factors. The Credit Agreement prohibits the Partnership from
making cash distributions if any potential default or event of default, as defined in the Credit Agreement, occurs or would result from the cash distribution.

Within
45 days after the end of each quarter, the Partnership will distribute all of its available cash (as defined in its partnership agreement) to unitholders of record on the
applicable record date. The amount of available cash is all cash on hand at the end of the quarter; plus all cash on hand on the date of determination of available cash for the quarter resulting from
working capital borrowings made after the end of the quarter; less the amount of cash reserves established by the General Partner to provide for the proper conduct of the Partnership's business, to
comply with applicable law, any of the Partnership's debt instruments, or other agreements or to provide funds for distributions to unitholders and to the General Partner for any one or more of the
next four quarters. Working capital borrowings are generally borrowings that are made under the Credit Agreement and in all cases are used solely for working capital purposes or to pay distributions
to partners.

The
Partnership will make distributions of available cash from operating surplus for any quarter during the subordination period as defined in its partnership agreement in the following
manner: firstly, 98.27% to the common unitholders, pro rata, and 1.73% to the General Partner, until the Partnership distributes for each outstanding common unit an amount equal to the minimum
quarterly distribution for that quarter; secondly, 98.27% to the common unitholders, pro rata, and 1.73% to the General Partner, until the Partnership distributes for each outstanding common unit an
amount equal to any arrearages in payment of the minimum quarterly distribution on the common units for any prior

F-38

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Partners' Equity, Allocations and Cash Distributions (continued)

quarters
during the subordination period; thirdly, 98.27% to the subordinated unitholders, pro rata, and 1.73% to the General Partner, until the Partnership distributes for each subordinated unit an
amount equal to the minimum quarterly distribution for that quarter; and thereafter, cash in excess of the minimum quarterly distributions is distributed to the unitholders and the General Partner, as
the holder of the incentive distribution rights, based on the percentages as provided below.

As
the holder of the incentive distribution rights, the General Partner is entitled to incentive distributions if the amount that the Partnership distributes with respect to any quarter
exceeds specified target levels shown below:

Total Quarterly Distribution

Marginal Percentage Interest in DistributionsTarget Amount

Unitholders

General PartnerMinimum Quarterly Distribution

$0.4125


98.27
%

1.73
%First Target Distribution

Up to $0.4625


98.27
%

1.73
%Second Target Distribution

above $0.4625 up to $0.5375


85.27
%

14.73
%Third Target Distribution

above $0.5375 up to $0.6625


75.27
%

24.73
%Thereafter

above $0.6625


50.27
%

49.73
%


The
Partnership paid the following cash distributions during 2008, 2007 and 2006 (in thousands, except per unit data):

Cash Distribution Payment Date

Per Unit Cash Distribution

Common Units

Subordinated Units

General Partner

General Partner Incentive Distribution

Total Cash Distribution200602/14/06(1)

$
0.4111

$
2,319

$
2,319

$
95

$


$
4,73305/15/06(1)


0.4250


2,398


2,398


98





4,89408/14/06(1)


0.4375


2,469


2,469


100





5,03811/14/06(1)


0.4450


2,511


2,511


102





5,124200702/14/07(1)

$
0.4550

$
2,567

$
2,567

$
105

$


$
5,23905/15/07(1)(2)


0.4650


2,624


2,624


107


4


5,35908/14/07(3)


0.4725


3,510


2,666


109


20


6,30511/14/07(4)


0.4800


3,566


2,708


110


35


6,419200802/14/08(5)

$
0.4875

$
3,621

$
2,751

$
112

$
50

$
6,53405/14/08(5)


0.4875


3,621


2,751


112


50


6,53408/14/08(5)


0.4875


3,621


2,751


112


50


6,53411/14/08(5)


0.4875


3,621


2,751


112


50


6,534


---

F-39

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Partners' Equity, Allocations and Cash Distributions (continued)

On
January 21, 2009, the board of directors of the General Partner declared a quarterly cash distribution of $0.4875 per unit for the period from October 1, 2008 through
December 31, 2008 ($1.95 per unit on an annualized basis) to the Partnership's common and subordinated unitholders of record as of the close of business February 4, 2009. On
February 13, 2009, the Partnership paid the total cash distribution of approximately $6.5 million.

Note 16.    Unitholders' Equity



On March 13, 2007, the Partnership entered into a Class B Unit Purchase Agreement (the "Unit Purchase Agreement") with
Kayne Anderson MLP Investment Company and funds managed by Tortoise Capital Advisors, LLC and Fiduciary Asset Management, LLC (the "Purchasers") to sell $50.0 million of
Class B units representing limited partner interests of the Partnership in a private placement (the "Private Placement"). The Partnership issued and sold 1,785,715 Class B units to the
Purchasers pursuant to the Unit Purchase Agreement on May 9, 2007. The Class B units were convertible into common units on a one-for-one basis.

In
connection with the issuance of the Class B units, the Partnership agreed to a discount in the purchase price of approximately $0.8 million, which is the approximate
amount of the product of (i) the
1,785,715 Class B units, and (ii) $0.4650, the amount of the Partnership's first quarter 2007 per unit distribution that was paid to the common and subordinated unitholders on
May 15, 2007. Such discount was paid by the Partnership to the Purchasers of the Class B units substantially contemporaneously with the payment of the Partnership's first quarter 2007
distribution. After giving effect to such reduction, the purchase price for the Class B units was approximately $49.2 million, or $27.53 per unit. The net purchase price of the
Class B units, after the reduction and related fees, was $49.1 million. The net proceeds of the Class B units were used to partially finance the acquisition of three refined
petroleum products terminals in Albany and Newburgh, New York and Burlington, Vermont from ExxonMobil in May of 2007 (see Note 5). On May 22, 2007, the Class B units converted
into common units on a one-for-one basis.

F-40

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 16.    Unitholders' Equity (continued)



On May 9, 2007, the Partnership issued and sold to the Purchasers 1,785,715 Class B units representing limited partner
interests of the Partnership in a private placement for $50.0 million. After giving effect to a price reduction as discussed above, the purchase price for the
Class B units was approximately $49.2 million, or $27.53 per unit. On May 22, 2007, the Class B units converted into common units on a one-for-one
basis.

In
connection with the private placement, the Partnership was required to take into account the effect of EITF 98-05. As a result, a non-cash reduction in
net income available to limited partners was recorded for the year ended December 31, 2007. This non-cash reduction was required to be recorded pursuant to
EITF 98-05 because the fair value of the Partnership's common units on May 9, 2007 (the date on which the Class B units were issued) was greater than the purchase
price of the Class B units, which was established at the time of the execution of the Unit Purchase Agreement on March 14, 2007. The non-cash reduction was approximately
$16.4 million computed as the product of (i) the 1,785,715 Class B units, and (ii) the difference between the fair value of a common unit on the date of issuance ($36.71)
and the conversion rate after the price reduction ($27.53). The non-cash reduction resulted in the Partnership recognizing a $16.4 million decrease in common unit equity and a
corresponding increase in Class B unit equity. Additionally, the Partnership recorded accretion of $16.4 million as a non-cash distribution to common unitholders for the year
ended December 31, 2007.

Although
EITF 98-05 affected net income available to limited partners for the year ended December 31, 2007, it did not affect net income, nor did it affect
total partners' equity.

Note 17.    Related-Party Transactions

The Partnership is a party to a Second Amended and Restated Terminal Storage Rental and Throughput Agreement with GPC, an affiliate of the Partnership, which extends through
December 2013 with annual renewal options. The agreement is accounted for as an operating lease.

The
following provides future minimum payments at December 31, 2008, including the expected exercise of renewal options, which have an annual consumer price index adjustment (in
thousands):

2009

$
7,2622010


7,2622011


7,2622012


7,2622013


7,262Thereafter


Total

$
36,310


The
expenses under this agreement totaled $8.6 million, $8.3 million and $8.1 million for the years ended December 31, 2008, 2007 and 2006, respectively.
These expenses include annual consumer price index adjustments of approximately $1.2 million, $0.9 million and $0.8 million for the years ended December 31, 2008, 2007 and
2006, respectively. Deferred rent expense was approximately $121,000 for each of the years ended December 31, 2008, 2007 and 2006 as calculated under SFAS No. 13, "Accounting for
Leases."

F-41

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17.    Related-Party Transactions (continued)

Pursuant
to an Amended and Restated Services Agreement with GPC, GPC provides certain terminal operating management services to the Partnership and uses certain
administrative, accounting and information processing services of the Partnership. The expenses from these services totaled approximately $86,000, $74,000 and $78,000 for the years ended
December 31, 2008, 2007 and 2006, respectively. These charges were recorded in selling, general and administrative expenses in the accompanying consolidated statements of income. The agreement
is for an indefinite term, and either party may terminate its receipt of some or all of the services thereunder upon 180 days' notice at any time after January 1, 2009.

Pursuant
to the Partnership's Amended and Restated Services Agreement with Alliance Energy LLC (formerly known as Alliance Energy Corp.) ("Alliance"), the Partnership also
provides certain administrative, accounting and information processing services, and the use of certain facilities, to Alliance, an affiliate of the Partnership that is wholly owned by AE Holdings
Corp., which is approximately 95% owned by members of the Slifka family. The income from these services was approximately $866,000, $626,000 and $757,000 for the years ended December 31, 2008,
2007 and 2006, respectively. These fees were recorded as an offset to selling, general and administrative expenses in the accompanying consolidated statements of income. The agreement extends through
January 1, 2010.

The
Partnership sells refined petroleum products to Alliance at prevailing market prices at the time of delivery. Sales to Alliance were approximately $29.1 million,
$42.2 million and $18.9 million for the years ended December 31, 2008, 2007 and 2006, respectively.

The
General Partner employs substantially all of the Partnership's employees and charges the Partnership for their services. The expenses for the years ended December 31, 2008,
2007 and 2006, including payroll, payroll taxes and bonus accruals, were $27.2 million, $29.0 million and $24.4 million, respectively. The Partnership also reimburses the General
Partner for its contributions under the General Partner's 401(k) Savings and Profit Sharing Plan and the General Partner's qualified and non-qualified pension plans. See Note 12,
Employee Benefit Plans with Related Party.

The
table below presents trade receivables with Alliance, receivables incurred in connection with the services agreements between Alliance and the Partnership and GPC and the
Partnership, as the case may be, and receivables from the General Partner at December 31 (in thousands):

2008

2007Receivables from Alliance

$
383

$
3,926Receivables from GPC


325


64Receivables from the General Partner(1)


1,810


318Total

$
2,518

$
4,308


---

Note 18.    Segment Reporting

The Partnership is a wholesale and commercial distributor of gasoline, distillates, and residual oil whose business is organized within two operating segments, Wholesale and Commercial,
based on the way the chief operating decision maker (CEO) manages the business and on the similarity of customers

F-42

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 18.    Segment Reporting (continued)

and
expected long-term financial performance of each segment. The accounting policies of the segments are the same as those described in Note 2, "Summary of Significant Accounting
Policies."

In
the Wholesale segment, the Partnership sells gasoline, home heating oil, diesel, kerosene and residual oil to unbranded retail gasoline stations and other resellers of transportation
fuels, home heating oil retailers and wholesale distributors. Generally, customers use their own vehicles or contract carriers to take delivery of the product at bulk terminals and inland storage
facilities that the Partnership owns or controls or with which it has throughput arrangements.

The
Commercial segment includes (1) sales and deliveries of unbranded gasoline, home heating oil, diesel, kerosene, residual oil and small amounts of natural gas to customers in
the public sector and to large commercial and industrial customers, either through a competitive bidding process or through contracts of various terms, and (2) sales of custom blended
distillates and residual oil delivered by barges or from a terminal dock. Commercial segment customers include federal and state agencies, municipalities, large industrial companies, many autonomous
authorities such as transportation authorities and water resource authorities, colleges and universities and a limited group of small utilities. Unlike the Wholesale segment, in the Commercial
segment, the Partnership generally arranges the delivery of the product to the customer's designated location, typically hiring third-party common carriers to deliver the product.

The
Partnership evaluates segment performance based on net product margins before allocations of corporate and indirect operating costs, depreciation, amortization (including
non-cash charges) and interest. Based on the way the CEO manages the business, it is not reasonably possible for the Partnership to allocate the components of operating costs and expenses
between the reportable segments. Additionally, due to the commingled nature and uses of the Partnership's assets, it is not reasonably possible for the Partnership to allocate assets between the two
segments. There were no intersegment sales for any of the years presented below.

F-43

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 18.    Segment Reporting (continued)

Summarized
financial information for the Partnership's reportable segments for the years ended December 31 is presented in the table below (in thousands):

2008

2007

2006Wholesale Segment:Sales

$
8,589,180

$
6,376,749

$
4,071,608Net product margin(1)Distillates

$
70,045

$
86,358

$
58,285Gasoline


36,451


11,463


22,812Residual oil


11,671


23,667


20,896Total

$
118,167

$
121,488

$
101,993Commercial Segment:Sales

$
429,943

$
381,085

$
400,810Net product margin(1)

$
11,835

$
11,485

$
13,151Combined sales and net product margin:Sales

$
9,019,123

$
6,757,834

$
4,472,418Net product margin(1)

$
130,002

$
132,973

$
115,144Depreciation allocated to cost of sales


10,211


5,989


1,918Combined gross profit

$
119,791

$
126,984

$
113,226


---

In
the Wholesale segment, the Partnership had one customer whose revenues were approximately $1.8 billion, or 20% of the Partnership's total revenues and 21% of the Partnership's
revenues from the Wholesale segment for the year ended December 31, 2008 and $966.4 million, or 14% of the Partnership's total revenues and 15% of the Partnership's revenues from the
Wholesale segment for the year ended December 31, 2007. No single customer accounted for 10% or more of the Partnership's sales for the year ended December 31, 2006.

F-44

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 18.    Segment Reporting (continued)

A
reconciliation of the totals reported for the reportable segments to the applicable line items in the consolidated financial statements for the years ended December 31 is as
follows (in thousands):

2008

2007

2006Combined gross profit

$
119,791

$
126,984

$
113,226Operating costs and expenses not allocated to reportable segments:Selling, general and administrative expenses


42,060


45,537


43,027Operating expenses


31,788


27,703


22,158Amortization expense


2,937


2,250


1,528Total operating costs and expenses


76,785


75,490


66,713Operating income


43,006


51,494


46,513Interest expense


(20,799
)

(17,408
)

(11,901
)Other income








515Gain on sale of investment





14,118


Income tax expense


(1,152
)

(1,191
)

(1,666
)Net income

$
21,055

$
47,013

$
33,461


There
were no foreign sales for the years ended December 31, 2008, 2007 and 2006. The Partnership has no foreign assets.

Note 19.    Fair Value Measurements

On January 1, 2008, the Partnership partially adopted SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157") for its financial assets and financial liabilities.
The adoption of SFAS No. 157 did not have a material impact on the Partnership's fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

SFAS
No. 157 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following three levels:

Level 1 

Observable inputs such as quoted prices in active markets for identical assets or liabilities.Level 2 

Inputs other than the quoted prices in active markets that are observable for assets or liabilities, either directly or indirectly. These include quoted prices for similar assets or liabilities in
active markets and quoted prices for identical or similar assets or liabilities in inactive markets.Level 3 

Unobservable inputs based on the entity's own assumptions.


F-45

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 19.    Fair Value Measurements (continued)

The
following table presents those financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2008 (in thousands):

Fair Value Measurements UsingFair Value
December 31,
2008Level 1

Level 2

Level 3Assets:Hedged inventories

$
184,307

$


$
184,307

$
Fair value of forward fixed price contracts


161,787





161,787


Swap agreements and options


5,069


830


4,239


Total assets

$
351,163

$
830

$
350,333

$
Liabilities:Obligations on forward fixed price contracts

$
(7,954
)
$


$
(7,954
)
$
Swap agreements


(231
)




(231
)

Interest rate collars


(10,847
)




(10,847
)

Total liabilities

$
(19,032
)
$


$
(19,032
)
$



Note 20.    Legal Proceedings



Although the Partnership may, from time to time, be involved in litigation and claims arising out of its operations in the normal
course of business, the Partnership does not believe that it is a party to any litigation that will have a material adverse impact on its financial condition or results of operations. Except as
described below and in Note 10, the Partnership is not aware of any significant legal or governmental proceedings against it, or contemplated to be brought against it. The Partnership maintains
insurance policies with insurers in amounts and with coverage and deductibles as its general partner believes are reasonable and prudent. However, the Partnership can provide no assurance that this
insurance will be adequate to protect it from all material expenses related to potential future claims or that these levels of insurance will be available in the future at economically acceptable
prices.

On
September 17, 2008, the Office of the Attorney General of the State of Connecticut issued Interrogatories and Subpoena Duces Tecum (the "Subpoena") in connection with an
investigation of gasoline wholesalers in Connecticut in the wake of Hurricane Ike. The Partnership responded to the Subpoena on behalf of Global Companies LLC. According to the press release
issued by the Attorney General's office, similar subpoenas were also issued to other gasoline wholesalers in Connecticut. The Partnership has taken steps to comply with the demand. While the
Partnership cannot predict the
outcome of the investigation, it does not expect that the outcome will have a material adverse effect on its operations.

F-46

---



GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Quarterly Financial Data (Unaudited)

Unaudited quarterly financial data is as follows (in thousands, except per unit amounts):

First

Second

Third

Fourth

TotalYear ended December 31, 2008Sales

$
2,720,992

$
2,297,709

$
2,272,079

$
1,728,343

$
9,019,123Gross profit

$
35,616

$
22,673

$
25,928

$
35,574

$
119,791Net income (loss)

$
8,619

$
(1,254
)
$
1,007

$
12,683

$
21,055Limited partners' interest in net income (loss)

$
8,470

$
(1,232
)
$
990

$
12,463

$
20,691Net income (loss) per limited partner unitbasic and
diluted(1)

$
0.63

$
(0.09
)
$
0.08

$
0.78

$
1.40Cash distributions per limited partner unit(2)

$
0.4875

$
0.4875

$
0.4875

$
0.4875

$
1.9500First

Second

Third

Fourth

TotalYear ended December 31, 2007Sales

$
1,573,176

$
1,384,090

$
1,598,461

$
2,202,107

$
6,757,834Gross profit

$
42,252

$
21,622

$
23,947

$
39,163

$
126,984Net income(3)

$
32,875

$
610

$
2,530

$
10,998

$
47,013Limited partners' interest in net income

$
32,218

$
599

$
2,486

$
10,807

$
46,110Net income (loss) per limited partner unitbasic and
diluted(1)

$
1.75

$
(1.28
)
$
0.19

$
0.72

$
1.38Cash distributions per limited partner unit(2)

$
0.4550

$
0.4650

$
0.4725

$
0.4800

$
1.8725


---

Note 22.    Subsequent Events

On January 20, 2009, the Compensation Committee of the board of directors of the general partner approved grants of phantom units under the LTIP in an aggregate amount of 216,051
phantom units.

On
February 13, 2009, the Partnership paid a cash distribution of approximately $6.5 million to its common and subordinated unitholders of record as of the close of
business on February 4, 2009.

F-47

---





Table of Contents

Item 15(a)

SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS        GLOBAL PARTNERS LP        FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 and 2006  (In thousands)

Description

Balance at
Beginning
of Period

Charged to
Costs and
Expenses

Recoveries

Write Offs

Balance
at End
of PeriodYear ended December 31, 2008Allowance for doubtful accountsaccounts receivable

$
2,650

$
660

$
1

$
(337
)
$
2,974Year ended December 31, 2007Allowance for doubtful accountsaccounts receivable

$
2,756

$
330

$
8

$
(444
)
$
2,650Year ended December 31, 2006Allowance for doubtful accountsaccounts receivable

$
2,084

$
690

$
42

$
(60
)
$
2,756


F-48

---





INDEX TO EXHIBITS

Exhibit Number



Description3.1




Second Amended and Restated Agreement of Limited Partnership of Global Partners LP dated as of May 9, 2007 (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on
May 10, 2007).3.2




Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership of Global Partners LP dated April 14, 2008 (incorporated herein by reference to Exhibit 3.1 to the Current Report
on Form 8-K filed on April 17, 2008).4.1




Registration Rights Agreement, dated May 9, 2007, by and between Global Partners LP and the purchasers named therein (incorporated herein by reference to Exhibit 4.1 to the Current Report on
Form 8-K filed on May 10, 2007).4.2




Class B Unit Purchase Agreement, dated March 17, 2007, by and among Global Partners LP and the purchasers named therein (incorporated herein by reference to Exhibit 4.1 to the Registration
Statement on Form S-3 filed on August 6, 2007).10.1




Omnibus Agreement, dated October 4, 2005, by and among Global Petroleum Corp., Montello Oil Corporation, Global Revco Dock, L.L.C., Global Revco Terminal, L.L.C., Global South Terminal, L.L.C., Sandwich Terminal,
L.L.C., Chelsea Terminal Limited Partnership, Global GP LLC, Global Partners LP, Global Operating LLC, Alfred A. Slifka, Richard Slifka and Eric Slifka (incorporated herein by reference to Exhibit 10.1 to the Current Report
on Form 8-K filed on October 11, 2005).10.2^




Global Partners GP Long-Term Incentive Plan effective as of October 4, 2005 (incorporated herein by reference to Exhibit 10.4 to Amendment No. 1 to Form S-1 (File No. 333-124755) filed on
July 1, 2005).10.3




Amended and Restated Services Agreement, dated October 4, 2005, by and among Global Petroleum Corp., Global Companies LLC, Global Montello Group LLC, and Chelsea Sandwich LLC (incorporated herein
by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on October 11, 2005).10.4




Amended and Restated Services Agreement, dated October 4, 2005, by and between Alliance Energy Corp. and Global Companies LLC (incorporated herein by reference to Exhibit 10.4 to the Current Report on
Form 8-K filed on October 11, 2005).10.5




Second Amended and Restated Terminal Storage and Throughput Agreement, dated October 4, 2005 by and among Global Petroleum Corp., Global Companies LLC and Global Montello Group LLC (incorporated herein
by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on October 11, 2005).10.6




Credit Agreement, dated October 4, 2005, among Global Operating LLC, Global Companies LLC, Global Montello Group LLC, Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers, Global
Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto and Bank of America, N.A., as administrative agent and L/C issuer (incorporated herein by reference to Exhibit 10.8 to the Current Report on
Form 8-K filed on October 11, 2005).10.7




First Amendment to Credit Agreement, dated as of November 10, 2005, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as
borrowers, Global Partners LP, Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C issuer (incorporated herein by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed on November 14, 2005).


---



Exhibit Number



Description10.8^




Employment Agreement dated April 19, 2006, by and between Global GP LLC and Thomas J. Hollister (incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8-K filed on
May 11, 2006).10.9




Second Amendment to Credit Agreement, dated as of August 2, 2006, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as
borrowers, Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed on August 3, 2006).10.10^




Employment Agreement dated February 1, 2007, by and between Global GP LLC and Edward J. Faneuil (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on
February 6, 2007).10.11




Third Amendment to Credit Agreement, dated as of April 24, 2007, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
 Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on April 26, 2007).10.12




Terminals Sale and Purchase Agreement, dated March 16, 2007 by and between Global Partners LP and ExxonMobil Oil Corporation (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on
Form 10-Q filed on August 9, 2007).10.13




Forms of LTIP Grant Agreements dated August 14, 2007 (Named Executive Officers who are party to an employment agreement with Global GP LLC) (incorporated herein by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed on August 20, 2007).10.14




Form of LTIP Grant Agreement (Directors) (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on August 20, 2007).10.15




Form of LTIP Grant Agreement (General) (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on August 20, 2007).10.16




Fourth Amendment to Credit Agreement, dated as of August 21, 2007, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as
borrowers, Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed on August 24, 2007).10.17




Fifth Amendment to Credit Agreement, dated as of October 23, 2007, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as
borrowers, Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed on October 24, 2007).


---



Exhibit Number



Description10.18




Sixth Amendment to Credit Agreement, dated as of November 29, 2007, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on December 3, 2007).10.19




Terminals Sale and Purchase Agreement, dated July 9, 2007 by and between Global Partners LP and ExxonMobil Oil Corporation (incorporated herein by reference to Exhibit 10.21 to the Annual Report on
Form 10-K filed on March 14, 2008).10.20




Waiver Letter and Seventh Amendment to Credit Agreement, dated as of March 13, 2008, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea
Sandwich LLC, as borrowers, Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on August 8, 2008).10.21




Eighth Amendment to Credit Agreement, dated as of June 13, 2008, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
 Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on June 17, 2008).10.22




Ninth Amendment to Credit Agreement, dated as of July 18, 2008, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea Sandwich LLC, as borrowers,
Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed on July 21, 2008).10.23




Tenth Amendment to Credit Agreement and Limited Waiver, dated as of September 26, 2008, among Global Operating LLC, Global Companies LLC, Global Montello Group Corp., Glen Hes Corp. and Chelsea
Sandwich LLC, as borrowers, Global Partners LP and Global GP LLC, as guarantors, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated herein by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed on October 1, 2008).10.24^




Employment Agreement dated December 31, 2008, by and between Global GP LLC and Eric S. Slifka (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on
January 7, 2009).10.25^




Amendment No. 1 to Employment Agreement dated December 31, 2008, by and between Global GP LLC and Thomas Hollister (incorporated herein by reference to Exhibit 10.2 to the Current Report on
Form 8-K filed on January 7, 2009).10.26^




Amendment No. 1 to Employment Agreement dated December 31, 2008, by and between Global GP LLC and Edward J. Faneuil (incorporated herein by reference to Exhibit 10.3 to the Current Report on
Form 8-K filed on January 7, 2009).


---



Exhibit Number



Description10.27^




Amended and Restated Deferred Compensation Agreement dated December 31, 2008, by and between Global GP LLC and Edward J. Faneuil (incorporated herein by reference to Exhibit 10.4 to the Current Report
on Form 8-K filed on January 7, 2009).10.28^




First Amendment to LTIP Grant Agreement dated December 31, 2008 for Eric Slifka (incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on January 7,
2009).10.29^




First Amendment to LTIP Grant Agreement (Named Executive Officers who are party to an employment agreement with Global GP LLC (except Mr. Slifka)), LTIP Grant Agreement (Directors) and LTIP Grant
Agreement (General) dated December 31, 2008 (incorporated herein by reference to Exhibit 10.6 to the Current Report on Form 8-K filed on January 7, 2009).10.30*^




Amendment No. 1 to Employment Agreement dated February 4, 2009, by and between Global GP LLC and Eric S. Slifka.10.31*^




Amendment No. 2 to Employment Agreement dated February 4, 2009, by and between Global GP LLC and Thomas Hollister.10.32*^




Amendment No. 2 to Employment Agreement dated February 4, 2009, by and between Global GP LLC and Edward J. Faneuil.10.33*^




Amendment No. 3 to Employment Agreement dated March 11, 2009, by and between Global GP LLC and Edward J. Faneuil.21.1*




List of Subsidiaries of Global Partners LP.23.1*


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Consent of Ernst & Young LLP.31.1*


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Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of Global GP LLC, general partner of Global Partners LP.31.2*


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Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of Global GP LLC, general partner of Global Partners LP.32.1


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Section 1350 Certification of Chief Executive Officer of Global GP LLC, general partner of Global Partners LP.32.2


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Section 1350 Certification of Chief Financial Officer of Global GP LLC, general partner of Global Partners LP.


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