<PAGE>   1
                                                                   EXHIBIT 10.12

                                OPTION AGREEMENT

                             HUNTWAY PARTNERS, L.P.

                                 March 13, 1996

Mr. Andre Danesh
c/o Alliance Financial Corp.
1583 Beacon Street
Brookline, MA 02146

Re:  Huntway Partners, L.P.
     Unit Option

Dear Mr. Danesh:

         The Company is pleased to advise you that General Partner has granted
to you a unit option, as provided below.

         1. Definitions. For the purposes of this Agreement, the following terms
shall have the meanings set forth below:

         "Agreement" means this Agreement dated March 13, 1996, between you and
the Company.

         "Common Unit" shall mean the Company's common limited partnership
units, or, in the event that the outstanding Common Unit is hereafter changed
into or exchanged for different stock or securities of the Company, such other
stock or securities.

         "Company" shall mean Huntway Partners, L.P., a Delaware limited
partnership.

         "General Partner" shall mean Huntway Managing General Partner, L.P.,
the Company's managing general partner.

         "Option Units" shall mean (i) all Common Units issued upon the exercise
of the Option and (ii) all Common units issued with respect to the Common Units
referred to in clause (i) above by way of unit dividend or unit split or in
connection with any conversion, merger, consolidation or recapitalization or
other reorganization fundamentally affecting the Common Units. Option Units
shall continue to be Option Units in the hands of any holder other than you
(except for the Company), and each such transferee thereof shall succeed to the
rights and obligations of a holder of Option Units hereunder.



<PAGE>   2
         "Securities Act" shall mean the Securities Act of 1933, as amended, and
any successor statute.

         2. Option.

         (a) Terms. Your Option is for the purchase of up to 546,059 Common
Units (the "Option") at a price per share of $0.50 (the "Exercise Price"),
payable upon exercise as set forth in paragraph 2(b) below. Your Option shall
expire at the close of business on March 2006 (the "Expiration Date") and in no
event shall any part of your Option be exercisable after the Expiration Date.

         (b) Payment of Option Price.. Your Option may be exercised in whole or
in part after the date hereof upon payment of an amount (the "Option Price")
equal to the product of (i) the Exercise Price multiplied by (if) the number of
Option Units to be acquired. Payment shall be made in full by delivery of a
cashier's check, certified check or wire transfer of immediately available funds
in the amount of the Option Price.

         3. Procedure for Exercise. At any time prior to the Expiration Date,
you may exercise all or a portion of your Option by delivering written notice to
the Company (to the attention of the Company's Secretary), together with (i) a
written acknowledgment that you have read and have been afforded an opportunity
to ask questions of management of the Company regarding all financial and other
information provided to you regarding the Company and (ii) payment in full by
delivery of a cashier's, certified check or wire transfer of immediately
available funds in the amount of the Option Price. As a condition to any
exercise of the Option, you will permit the Company to deliver to you all
financial and other information regarding the Company which the Company believes
necessary to enable you to make an informed investment decision.

         4. Securities Laws Restrictions and Other Restrictions on Transfer of
Option Units. You represent that when you exercise your option you will be
purchasing Option Units for your own account and not on behalf of others. You
understand and acknowledge that federal and state securities laws govern and
restrict your right to offer otherwise dispose of any of Option Units unless
your offer, sale or otherwise pose of a is registered under the Securities Act
and state securities laws, or in the opinion of the Company's counsel, such
offer, sale or other disposition is exempt from registration or qualification
thereunder. you agree that you will not offer, sell or otherwise dispose of any
Option Units in any manner which would Units in any manner which would: (i)
require the Company to file a registration statement with the Securities and
Exchange Commission (or any similar filing under state law) or



                                      -2-
<PAGE>   3
to amend or supplement any such filing or (i) violate or cause the Company to
violate the Securities Act, the rules and regulations promulgated thereunder or
any other state or federal law. You further understand that the certificates for
any Option Units you purchase will bear such legends as the Company deems
necessary or desirable in connection with the Securities Act or other rules,
regulations or laws.

         5. Adjustments. In the event of a reorganization, recapitalization,
unit dividend or unit split, or combination or other fundamental change in the
Common Units, the General Partner shall, in order to prevent the dilution or
enlargement of rights under your Option, make such adjustments in the number and
type of Units covered by your Option and the Exercise Price specified herein as
may be determined to be appropriate and equitable.

         6. Additional Restrictions on Transfer.

         (a) Restrictive Legend. The certificates representing the Option Units
will bear the following legend:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
     STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
     AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
     SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
     SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
     RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN A LETTER
     AGREEMENT DATED MARCH 13 1996 AND AN OPTION AGREEMENT DATED AS OF
     1996, EACH BETWEEN THE COMPANY AND ANDRE DANESH COPIES OF WHICH MAY
     BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
     BUSINESS WITHOUT CHARGE."


         (b) Opinion of Counsel. You may not sell, transfer or dispose of any
Option Unit (except pursuant to an effective registration statement under the
Securities Act) without first delivering to the Company an of counsel reasonably
acceptable in form and substance to the Company) (which counsel shall be
reasonably acceptable to the Company) that registration under the Securities
Act or any applicable state securities law is not required in connection with
such transfer.


         7. Remedies. The parties hereto shall be entitled to enforce their
rights under this Agreement specifically, to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The


                                      -3-
<PAGE>   4
parties hereto acknowledge and agree that money damages would not be an adequate
remedy for any breach of the provisions of this Agreement and that any party
hereto and any Investor as a third party beneficiary may, in its sole
discretion, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief (without posting bond or other
security) in order to enforce or prevent any violation of the provisions of this
Agreement.

         8. Amendment. Except as otherwise provided herein, any provision of
this Agreement may be amended or waived only with the prior written consent of
you and the Company.

         9. Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and permitted assigns of the parties hereto whether so
expressed or not.

         10. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.

         11. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall constitute an original, but all of
which taken together shall constitute one and the same Agreement.

         12. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.

         13. Governing Law. All ISSUES CONCERNING THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.

         14. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally or
mailed by certified or registered mail, return receipt requested and postage


                                      -4-
<PAGE>   5

prepaid, to the recipient. Such notices, demands and other communications shall
be sent to you and to the Company and the Investors at the addresses indicated
below:

         (a) If to the Optionee:

             Andre Danesh
             c/o Allied Financial Corp.
             1583 Beacon Street
             Brookline, MA 02146
             Telecopy: (617) 734-7779

         (b) If to the Company:

             Huntway Partners, L.P.
             25129 The Old Road, Suite 322
             Newhall, CA 91381
             Attn: Chief Financial Officer
             Telecopy: (805) 286-1588

             With a copy to:

             Kirkland & Ellis
             200 East Randolph
             Chicago, Illinois 60601
             Attention: William S. Kirsch
             Telecopy: (312) 861-2200

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

         15. Entire Agreement. This Agreement constitutes the entire
understanding between you and the Company, and supersedes all other agreements,
whether written or oral, with respect to the acquisition by you of Common Stock
of the Company, except for that certain Stock Purchase Agreement dated as of
June 27, 1994, among the Company, you and certain other persons party thereto.



                                      -5-
<PAGE>   6
         Please execute the extra copy of this Agreement in the space below and
return it to the Company's Secretary at its executive offices to confirm your
understanding and acceptance of the agreements contained in this Agreement.


                                   Very truly yours,

                                   HUNTWAY PARTNERS, L.P.

                                   By:  Huntway Managing Partner, L.P.,
                                        its Managing General Partner


                                        By: The Huntway Division of
                                            Reprise Holdings, Inc.,
                                            its sole General Partner

                                            By: /s/ WARREN J. NELSON
                                               ---------------------------------
                                               Name: Warren J. Nelson
                                               Title: Executive Vice
                                                      President & CFO


     The undersigned hereby acknowledges having read this Agreement and hereby
agrees to be bound by all provisions set forth herein.


Dated as of                                 OPTIONEE

                , 1996                      /s/ ANDRE DANESH
------------ --                             ------------------------------------
                                            Andre Danesh
<PAGE>   7
                              [HUNTWAY LETTERHEAD]


                                 March 19, 2001

Andre Danesh 1997 IRRV Trust
c/o Andre Danesh
Allied Financial Corporation
1330 Beacon Street
Brookline, MA 02146

Dear Trust:

You hereby confirm that you hold, free and clear, options to acquire an
aggregate of 1,146,059 shares of common stock of Huntway Refining Company
("Huntway") at an exercise price of $0.50 per share pursuant to two option
agreements with Huntway, one dated March 13, 1996 and the other December 30,
1996.

You hereby acknowledge and agree that in the event of a merger or other similar
transaction involving Huntway which is effected in such a way that the common
stock of Huntway is converted into the right to receive cash and/or other
securities, your options shall thereupon be exercisable only for the cash and/or
other securities to be paid in such merger or other transaction with respect to
an equivalent number of shares; and you and Huntway hereby agree that your
option agreements are accordingly amended.

As consideration for your entering into this agreement, Huntway shall deliver to
you within 5 business days of the date hereof a check in the amount of $200,000.


                                             Huntway Refining Company



                                             By: /s/ WARREN J. NELSON
                                                --------------------------------
                                                WARREN J. NELSON
                                                PRESIDENT &
                                                CHIEF EXECUTIVE OFFICER


<PAGE>   8




Confirmed, Acknowledged and Agreed:

Andre Danesh 1997 IRRV Trust

By: /s/ ANDRE DANESH
   -----------------------------------

Its: Sole Trustee

Address:
188 Mason Terrace
Brookline, MA 02446

Also Confirmed, Acknowledged and Agreed:



Signature /s/ ANDRE DANESH
         -----------------------------
Print name: Andre Danesh