Document:

exv10w12

 

Exhibit 10.12

LEASE AGREEMENT

     LEASE AGREEMENT made this 24th day of October, 2005, by and between WESTERN REFINING COMPANY,
L.P., a Delaware limited partnership, whose address is 6500 Trowbridge Drive, El Paso, Texas 79905
(hereinafter referred to as “Lessor”), and TRANSMOUNTAIN OIL COMPANY, L.C., a Texas limited
liability company, whose address is 6767 Gateway West, El Paso, Texas 79925 (hereinafter referred
to as “Lessee”).

W I T N E S S E T H:

     In consideration of the mutual covenants and agreements hereinafter set forth, Lessor and
Lessee agree and covenant as follows:

ARTICLE I. DEMISE OF PREMISES; QUIET ENJOYMENT

     Section 1.01 Premises.

     Subject to and upon the terms, conditions, covenants and undertakings hereinafter set forth,
Lessor does hereby demise and lease to Lessee, and Lessee does hereby lease from Lessor, 11,658.00
square feet of space, more or less, in the building located upon the real property described on
Exhibit “A” appended hereto; such space being outlined in red on Exhibit “B” appended hereto and
being referred to herein as the “Premises” or “Leased Premises”.

     Section 1.02 Condition of Premises.

     To the best of Lessor’s knowledge and belief, the Premises complies with the building codes
that were in effect at the time constructed and also with all applicable laws, covenants and
restrictions of record, regulations, and ordinances in effect on the date hereof, provided,
however, the same does not apply to the use to which Lessee will put the Premises or any
alterations or installations therein made or to be made by Lessee. By Lessee’s acceptance of
possession of the Premises, Lessee acknowledges that it has fully inspected the Premises and on the
basis of such inspection, Lessee accepts the Premises and the improvements situated thereon,
“AS-IS” and as suitable (in its present condition) for purposes for which the same are leased.
Lessee fully understands and agrees that there are no warranties, either express or implied, other
than the warranties, if any, which are set forth in writing in this Lease, and that neither Lessor
nor any agent of Lessor, has made any representation or warranty with respect to the Premises or
any portion thereof, or with respect to the suitability of the same for the conduct of Lessee’s
business. Lessee further acknowledges that Lessor has no obligation to perform any work or to
complete any improvements on or about the Premises. LESSEE HEREBY STIPULATES AND EXPRESSLY
UNDERSTANDS AND AGREES THAT THERE ARE NO IMPLIED WARRANTIES OF FITNESS, SUITABILITY, USE OR
MERCHANTABILITY WHICH ARE A PART OF THIS LEASE.

     Section 1.03 Quiet Enjoyment.

     Lessor covenants and agrees that upon Lessee paying rent and performing all of the covenants
and conditions herein set forth, Lessee shall and may peaceably and quietly have, hold and enjoy
the Premises hereby demised, for the term herein provided.

 

 

ARTICLE II. TERM/MEMORANDUM

     Section 2.01 Primary Term of Lease.

     Subject to the provisions set forth in Section 2.40 below, the Primary Term of this Lease
shall be for a period of ten (10) years, commencing December 1, 2005 and terminating November 30,
2015 (the “Primary Term”).

     Section 2.02 Renewal Terms.

     Provided Lessee is not in default at the end of the Primary Term of this Lease, Lessee shall
have and is hereby granted by Lessor the right and option to extend the term of this Lease for a
period of five (5) years from and after the expiration of the Primary Term of this Lease (the
“First Renewal Term”) upon the same terms, covenants and conditions as are contained in this Lease.
To exercise its right to extend the term of this Lease throughout the First Renewal Term, Lessee
shall give Lessor written notice of such election one hundred eighty (180) days prior to the
expiration of the Primary Term. Should Lessee exercise its option to extend the term of this Lease
throughout the First Renewal Term, provided Lessee is not in default at the end of the First
Renewal Term, Lessee shall have and is hereby granted the right and option to extend the term of
this Lease for an additional period of five (5) years from and after the expiration of the First
Renewal Term of this Lease (the “Second Renewal Term”) upon the same terms, covenants and
conditions as are contained in this Lease. Should Lessee elect to exercise its option to extend
the term of this Lease throughout the Second Renewal Term, Lessee shall give Lessor written notice
of such election one hundred eighty (180) days prior to the expiration of the First Renewal Term.

     Section 2.03 Memorandum.

     At the request of either Lessor or Lessee, the parties shall execute a Memorandum of Lease in
form and substance reasonably satisfactory to Lessor and Lessee.

     Section 2.04 Termination.

     Lessor reserves the right to terminate this Lease and the obligations of Lessor and Lessee
hereunder by issuing to Lessee a notice of termination terminating this Lease on a specified date,
which date will be no less than one (1) year from and after the date of the issuance of such
termination notice.

ARTICLE III. RENT AND SECURITY DEPOSIT

     Section 3.01 Monthly Base Rent During Primary Term.

     During the Primary Term of this Lease, and subject to adjustment as provided below, Lessee
shall pay to Lessor, without demand and without deduction, abatement or setoff, the sum of
$6,800.50 per month on or before the first day of each calendar month.

     Section 3.02 Adjustment of Monthly Base Rent.

     At the end of the first five (5) years of the Primary Term of this Lease, being November 30,
2010, and on the last day of the Primary Term and, should Lessee exercise its option to renew the
Primary Term of this Lease for the First Renewal Term and, if applicable, the Second Renewal

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Term, the Monthly Base Rent provided for in Section 3.01, as adjusted, shall be adjusted to reflect
any increase in the Consumer Price Index as hereinafter provided (the “CPI”). The adjusted Monthly
Base Rent for the second five (5) years of the Primary Term and, if applicable, the First Renewal
Term and the Second Renewal Term, shall be obtained by multiplying the Monthly Base Rent provided
for in Section 3.01, on an annualized basis, by a fraction, the numerator of which is the index
number for the first month of the second five (5) years of the Primary Term of this Lease and, if
applicable, the First Renewal Term and the Second Renewal Term, in the column for “All Items”
(unadjusted) in the table entitled “Consumer Price Index for all Urban Consumers”, “index base:
1982-1984 = 100)” “U.S. City Average” Published monthly by the Bureau of Labor Statistics of the
United States Department of Labor in the monthly Labor Review (said table being herein referred to
as the “CPI-U”), and the denominator of which is the CPI-U for the first full month of the first
year of the Primary Term of this Lease. The Adjusted Base Rent as so determined shall be the Base
Rent for the Premises during the second five (5) years of the Primary Term of this Lease and, if
applicable, the First Renewal Term and the Second Renewal Term, effective as of the first day of
the second five (5) years of the Primary Term and, if applicable, the First Renewal Term and the
Second Renewal Term. Notwithstanding the foregoing calculation, the Adjusted Base Rent shall in no
event be less than the Base Rent set forth in Section 3.01. Lessee shall continue payment of the
Monthly Base Rent in effect for the preceding five (5) years of the Primary Term and, if
applicable, the First Renewal Term and the Second Renewal Term, until notified by Lessor of any
increase in such Monthly Base Rent. Lessor shall provide such notification as soon as practical
after the commencement of the second five (5) years of the Primary Term and, if applicable, the
First Renewal Term and the Second Renewal Term. Such notification shall include a Memorandum
showing the calculations used by Lessor in determining the New Monthly Base Rent. On the first day
of the calendar month immediately following Lessee’s receipt of such notice, Lessee shall commence
payment of the New Monthly Base Rent specified in the notice, and shall also pay to Lessor, with
respect to the months of the second five (5) years of the Primary Term and, if applicable, the
First Renewal Term and the Second Renewal Term, which have already expired at the time of such
notice, the excess, if any, of the required Monthly Base Rent specified in the notice over the
monthly amounts actually paid by Lessee.

     If the “CPI-U” is discontinued, the “Consumer Price Index for Urban Wage Earners and Clerical
Workers” (“CPI-W”) for “All Items”, unadjusted, (index base: 1982-84 = 100), the “U.S. City
Average”, published monthly in the Monthly Labor Review by the Bureau of Labor Statistics of the
United States Department of Labor shall be used for making the computation in this Section 3.02.
If the “CPI-W” is discontinued, comparable statistics on the purchasing power of the consumer
dollar published by the Bureau of Labor Statistics of the United States Department of Labor shall
be used for making the computation in this Section 3.02. If the Bureau of Labor Statistics shall
no longer maintain statistics on the purchasing power of the consumer dollar, comparable statistics
published by a responsible financial periodical or recognized authority selected by the Landlord
shall be used for making the computation in this Section 3.02. If the base year “(1981-84 = 100)”
or other base year used in computing the CPI-U (or CPI-W if applicable) is changed, the figures
used in making the adjustment in this Section 3.02 shall be changed accordingly, so that all
increases in the “CPI-U” (or CPI-W if applicable) are taken into account notwithstanding any such
change in the base year.

     Section 3.03 Security Deposit.

     Lessee has deposited the sum of $6,800.50 as a Security Deposit (the “Deposit”) with Lessor to
secure Lessee’s performance of its obligations hereunder. If Lessee defaults under any of the
terms of this Lease, Lessor may, after giving written notice to Lessee as provided in Section 12.03

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hereunder, and without prejudice to Lessor’s other remedies, apply part or all of the Deposit to
cure Lessee’s default. Should part or all of the Deposit be applied to cure a default by Lessee,
within ten (10) days after demand therefor, Lessee shall replenish the Deposit by paying the amount
of the Deposit applied to cure such default to Lessor. Any part of the Deposit not used by Lessor
as provided above shall be returned to Lessee within ten (10) days after the termination of the
Lease.

ARTICLE IV. TAXES, ASSESSMENTS AND UTILITIES

     Section 4.01 Taxes and Assessments.

     Lessee shall pay, as and when the same shall become due and payable, all taxes and other
assessments of whatsoever kind and nature which have been or may be levied against the personal
property owned by Lessee and located in or about the Premises.

     Section 4.02 Ad Valorem Taxes.

     Lessor shall pay all real estate taxes applicable to the real property described on Exhibit
“A”. As used herein, the term “Real Property Taxes” shall include any form of real estate tax or
assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental
tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate
taxes) imposed upon the real property described on Exhibit “A” by any authority having the direct
or indirect power to tax, including any city, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district thereof, levied
against any legal or equitable interest of Lessor in the real property described on Exhibit “A”.

     Section 4.03 Utilities/Security.

     Lessee shall pay and discharge, in addition to the rent herein reserved, all charges by any
public or private utility or others for gas, water, sewage, electric power or telephone or other
services furnished to or placed upon the Premises during the Primary Term and any Renewal Term
hereof, including any utility deposits which may be required and shall hold Lessor harmless
therefrom.

ARTICLE V. CASUALTY INSURANCE, LIABILITY INSURANCE,

POLICY REQUIREMENTS AND INDEMNIFICATION

     Section 5.01 Fire and Casualty Insurance.

     Lessee, at its sole cost and expense, shall throughout the Primary Term and any Renewal Term
of this Lease keep or cause to be kept all property of Lessee located in or upon the Premises
insured for Lessee’s benefit against loss or damage by fire and against loss or damage by other
risks embraced by “extended coverage” and against civil commotions, riots, vandalism, malicious
mischief in such an amount as Lessee may require.

     Lessor shall throughout the Primary Term and any Renewal Term of this Lease keep the Leased
Premises insured for the benefit of Lessor and any mortgagee of the Premise, as its interest may
appear, against loss or damage by fire, and against loss or damage by other risks embraced by
“extended coverage” and against civil commotions, riots, vandalism and malicious mischief in such
amounts and with such companies as Lessor, in its sole discretion may determine.

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     In connection therewith, Lessee agrees not to carry a stock of goods or do anything in or
about the Premises which increases the casualty insurance rates applicable to the Premises or the
building in which the Premises are located without the prior written consent of Lessor. Should
Lessor consent to any use of the Premises by Lessee which increases insurance rates upon the
Premises or the building in which the same are located, Lessee agrees to pay as additional rent any
increase in the premium(s) for insurance against loss by fire or extended coverage risk resulting
from such use of the Premises by Lessee.

     Section 5.02 Liability Insurance.

     Lessee, at its sole cost and expense, shall throughout the Primary Term and any Renewal Term
of this Lease provide and keep in force for the benefit of Lessor and Lessee, commercial liability
insurance in an amount not less than $l,000,000.00 for bodily injury arising out of any one
occurrence, $2,000,000.00 aggregate and $500,000.00 for property damage arising out of any one
occurrence.

     Section 5.03 Policy Requirements.

     All such policies of insurance shall be written by insurance companies authorized to do
business in the State of Texas and shall be written by companies approved by Lessor, such approval
not to be unreasonably withheld. Certificates of insurance shall be delivered to Lessor. Each
such certificate shall contain (i) a statement of the coverage provided by the policy; (ii) a
statement of the period during which the policy is in effect; (iii) a statement that the annual
premium or the annual deposit premium for such policy has been paid in advance; (iv) a statement
naming Lessor as an additional insured; and (v) an agreement by the insurance company issuing such
policy that the policy will not be canceled or reduced in any amount for any reason whatsoever
without at least fifteen (l5) days prior written notice to Lessor.

ARTICLE VI. REPAIRS AND ALTERATIONS

     Section 6.01 Lessor’s Obligation.

     Lessor shall, at Lessor’s sole cost and expense, keep and maintain in good condition and
repair the structural portion of the improvements constituting a part of the Premises, including
the roof, exterior walls (except glass or other breakable materials used in the structural portion
thereof), foundation and concrete floors; provided, however, Lessor shall be under no obligation to
make any repairs which become necessary or desirable by reason of the act or negligence of Lessee,
its agents, officers, employees or invitees, or until Lessor has received written notice from
Lessee of the necessity for such repairs. Except in the case of an emergency, Lessee shall notify
Lessor in writing upon the discovery by it of any condition with respect to which Lessor is
obligated to repair and Lessor agrees to make such repairs within fifteen (l5) days thereafter. In
the event of an emergency, Lessee shall notify Lessor in writing thereof and shall have the right
to proceed immediately to repair the condition and Lessor shall reimburse Lessee for the cost
reasonably incurred by Lessee for which Lessor is responsible.

     Section 6.02 Lessee’s Obligation.

     Lessee shall throughout the Primary Term and any Renewal Term of this Lease, at its own cost
and expense, keep, maintain and preserve or cause to be kept, maintained and preserved, the
Premises (including, but not limited to, the parking area utilized by Lessee, the interior of the

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improvements constituting the Premises, exterior entrances to the Premises, all glass and windows
of any type and all partitions, doors, fixtures, equipment and appurtenances of the Premises,
including electrical, heating, plumbing, air conditioning and sprinkler fixtures utilized by
Lessee) in good order, condition and repair, making replacements thereof as may be necessary. At
the end of the Primary Term or any Renewal Term of this Lease, Lessee shall return the Premises to
Lessor in good order, condition and repair, normal wear and tear excepted.

     Section 6.03 Alterations.

     Lessee shall not make any alterations, changes, replacements, improvements and additions in
and to the Premises, without the written consent of Lessor being first had and obtained. Any such
alterations, additions or replacements, except with respect to furniture, furnishings, equipment,
fixtures and other personal property, shall at once become a part of the Premises and accordingly
be the property of Lessor.

     Section 6.04 Right of Entry and Inspection.

     Lessee shall permit Lessor or Lessor’s duly authorized agent, employee or representative to
enter upon the Premises at all reasonable times for the purpose of inspecting the same or making
such repairs therein as may be required for the safety and preservation thereof, which right to
make repairs shall, however, be subject to each and every provision contained in this Lease
applicable to repairs, and Lessor agrees that except for emergencies, Lessor will give Lessee ten
(10) days notice before making any repairs to the Premises.

ARTICLE VII. PROHIBITED USE/HAZARDOUS MATERIALS

     Section 7.01 Prohibition on Uses; Compliance.

     Lessee may not occupy or use, or permit any portion of the Premises to be occupied or used for
any business or purpose which is unlawful or deemed to be extra-hazardous on account of fire, or
permit anything to be done which would in any way increase Lessor’s risk of owning the Premises or
insuring the building (exclusive of additions and alterations made by Lessee) against fire or other
casualty. Lessee further agrees to (i) comply with all laws, statutes, ordinances, rules, orders,
restrictions, guidelines and regulations (state, federal, municipal and other agencies or bodies
having any jurisdiction thereof) relating to the use, condition or occupancy of the Premises; (ii)
conduct its business and control its agents, employees, invitees, and visitors in such manner as
not to create any nuisance, or interfere with, annoy or disturb any adjacent owners or occupants;
and (iii) comply with and observe all laws, rules and regulations of governmental authorities
exercising jurisdiction relating to the use, operation or development of the Premises.

     Should Lessor lease any other space in the building located upon the real property described
on Exhibit “A” to a third party tenant, Lessor agrees to cause any such third party tenant to agree
to: (i) comply with all laws, statutes, ordinances, rules, orders, restrictions, guidelines and
regulations (state, federal, municipal and other agencies or bodies having jurisdiction thereof)
relating to the use, condition or occupancy of the premises; (ii) conduct its business and control
its agents, employees, invitees and visitors in such a manner as not to create any nuisance, or
interfere with, annoy or disturb any adjacent owners or occupants; and (iii) comply with and
observe all laws, rules and regulations of governmental authorities exercising jurisdiction
relating to the use, operation or development of the Premises.

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     Section 7.02 Hazardous Materials.

     Except for lawful, ordinary and general office supplies and chemicals typically used in the
ordinary course of business of Lessee and other uses within commercial properties, such as copies
toner, liquid paper, glue, ink and common household cleaning materials (some or all of which may
constitute “Hazardous Materials” as defined below), Lessee agrees not to cause or permit any
Hazardous Materials to be brought upon, stored, used, handled, generated, released, disposed of on,
in, under or about the Premises by Lessee, its agents, employees, subtenants, assignees,
contractors, or invitees (collectively, “Lessee’s Parties”), without the prior written consent of
Lessor, which consent shall not be unreasonably withheld or delayed provided Lessee complies with
all laws regarding the use, storage and disposition of any such Hazardous Materials. Upon the
expiration or sooner termination of this Lease, Lessee agrees to remove from the Premises, at its
sole cost and expense, any and all Hazardous Materials, including any equipment or systems
containing Hazardous Materials which are installed, brought upon, stored, used, generated or
released upon, in or under the Premises or any portion thereof by Lessee or any of Lessee’s
Parties. To the fullest extent permitted by law, Lessee agrees to promptly indemnify, protect,
defend and hold harmless Lessor and Lessor’s partners, officers, directors, employees, agents,
successors and assigns (collectively, “Lessor’s Indemnified Parties”) from and against any and all
claims that Lessor may be liable for, suffer, incur, or pay arising out of any Hazardous Materials
brought upon, stored, used, handled, generated, released, disposed of on, in, under or about the
Premises by the Lessee parties. Lessee must comply with all clean-up, removal, repair,
detoxification or the remediation requirements of the Texas Commission on Environmental Quality and
the Environmental Protection Agency, and each of its successor agencies and authorities, or any
other state agency, or federal agency of competent jurisdiction, in rendering the Premises safe
from injury or death and caused by any Hazardous Materials being brought upon, stored, used,
handled, generated, released, disposed of on, in, under or about the Premises by Lessee Parties.
For purposes of this Section 7.02 “Hazardous Materials” includes and means (a) any “hazardous
waste” as defined by the Resource Conservation and Recovery Act of 1976, as amended from time to
time, and regulations promulgated thereunder; (b) any “hazardous substances” as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time
to time, and regulations promulgated thereunder; (c) any oil, petroleum products, and its
by-products; and (d) any substance that is or becomes regulated by any federal, state or local
governmental authority having jurisdiction or regulatory power over environmental matters
pertaining to the Land or the improvements located thereon or the use and occupancy thereof.
Lessee’s covenants contained in this Section 7.02 will survive the expiration or earlier
termination of this Lease.

ARTICLE VIII. LIENS

     Section 8.01 Liens.

     With respect to any alterations in or upon the Premises made by Lessee, Lessee shall pay or
cause to be paid the total cost and expense thereof and shall not suffer or permit to be enforced
against the Premises or any part of it any mechanic’s, materialman’s, contractor’s or
subcontractor’s lien arising from any such work, however it may arise. However, Lessee may in good
faith and at its expense contest the validity of any such asserted lien, claim or demand. In such
an event, Lessee shall defend and indemnify the Lessor against any liability and loss of any type
arising out of any alterations, improvements or changes to the improvements on the Premises by
Lessee together with reasonable attorneys’ fees and all costs and expenses incurred by Lessor in
negotiating, settling, defending or otherwise protecting against such claims.

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     Section 8.02 Right to Discharge Lien.

     If Lessee does not protect the Premises against any such liens and a final judgment is
rendered against Lessee by a court of competent jurisdiction for the foreclosure of a mechanic’s,
materialman’s, contractor’s or subcontractor’s lien claim, and if Lessee fails to stay the
execution of judgment by lawful means or to pay the judgment, Lessor shall have the right, but not
the obligation, to pay or otherwise discharge, stay or prevent the execution of any such judgment
or lien or both. Lessee shall reimburse Lessor for all sums paid by Lessor and attributable to
work ordered by Lessee under this paragraph, together with Lessor’s reasonable attorneys’ fees and
costs, plus interest on those sums, fees and costs, at the rate of twelve percent (12%) per annum
from the date of payment until the date of reimbursement.

ARTICLE IX. DESTRUCTION OF IMPROVEMENTS

BY FIRE OR OTHER CASUALTY

     Section 9.01 Damage or Destruction.

     During the Primary Term and any Renewal Term hereof, should the improvements constituting a
part of the Premises be damaged or destroyed, in whole or in part, by fire or other casualty,
Lessee shall give prompt notice thereof to Lessor, and Lessor, at its own cost and expense, shall
promptly repair, replace and rebuild the same, at least to the extent of the value and as nearly as
practical to the character of the buildings or improvements existing immediately prior to such
time.

     Section 9.02 Abatement of Rent.

     Should the improvements upon the Premises be damaged or destroyed, in whole or in part, by
fire or other casualty, the rent due hereunder pursuant to Article III shall equitably abate.

     Section 9.03 Right of Termination.

     Should the improvements constituting a part of the Premises be damaged or destroyed, in whole
or in part, by fire or other casualty during the Primary Term or any Renewal Term of this Lease,
either Lessor or Lessee shall have the right to cancel this Lease by giving the other written
notice of such election within thirty (30) days after the date of any such damage or destruction.
In such an event, this Lease shall terminate as of the date of such destruction and the insurance
proceeds received or receivable under any policy of insurance shall be paid to and retained by
Lessor. All rents and other charges payable under this Lease shall be prorated and paid to the
date of such termination.

ARTICLE X. CONDEMNATION

     Section 10.01 Termination Upon Condemnation.

     Upon condemnation of part or all of the Premises, Lessee’s obligation to pay rent and other
charges hereunder shall terminate on the date of taking, but Lessee’s interest in the leasehold
shall continue until the taking is completed by deed, contract or final order of condemnation.

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     Section 10.02 Distribution of Award for Condemnation.

     Upon condemnation of part or all of the Premises, all sums, including damages and interest,
awarded for the fee, leasehold or both shall be distributed and disbursed to Lessor.

ARTICLE XI. SUBORDINATION AND ATTORNMENT

     Section 11.01 Subordination.

     All of the rights of Lessee hereunder are and shall be subject and subordinate to the lien of
any mortgage or mortgages now or hereafter placed upon the Premises or any part thereof, except
Lessee’s property or trade fixtures, and to any and all renewals, modifications, consolidations,
replacements and extensions or substitutions of any such mortgage or mortgages. In confirmation of
such subordination, Lessee agrees to promptly execute and deliver any instrument that the holder of
any such mortgage may request to evidence such subordination.

     Section 11.02 Attornment.

     If the interest of Lessor under this Lease shall be transferred by reason of foreclosure or
other proceeding for the enforcement of a mortgage, Lessee shall be bound to the purchaser under
all the terms, covenants and conditions of this Lease for the balance of the Primary Term or any
Renewal Term hereof, with the same force and effect as if the purchaser were Lessor under this
Lease, and Lessee does hereby attorn to the purchaser, including any mortgagee if it be the
purchaser, as its Lessor, said attornment to be effective and self-operative without the execution
of any further instrument upon purchaser’s succeeding to the interest of Lessor under this Lease.
The respective rights and obligations of Lessee and purchaser upon such attornment, to the extent
of the then remaining balance of the Primary Term or any Renewal Term of this Lease, shall be and
are the same as now set forth herein.

ARTICLE XII. DEFAULT

     Section 12.01 Events of Default.

     Each of the following events shall be a default by Lessee and a breach of this Lease:

     (a) Abandonment or surrender of the Premises or of the leasehold estate, or
failure or refusal to pay when due any installment of rent or any other sum
required by this Lease to be paid by Lessee, or to perform as required or
conditioned by any other covenant or condition of this Lease;

     (b) The subjection of any right or interest of Lessee in the Premises to
attachment, execution or other levy, or seizure under legal process;

     (c) The appointment of a receiver to take possession of the Premises or
improvements or of Lessee’s interest in the leasehold estate or of Lessee’s
operation on the Premises for any reason;

     (d) An assignment by Lessee for the benefit of creditors;

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     (e) The adjudication that Lessee is a bankrupt by a court of competent
jurisdiction; and

     (f) The commencement of any proceeding by Lessee for the purpose of hindering
or delaying any of its creditors under or pursuant to the bankruptcy laws of the
United States.

     Section 12.02 Noncurable Defaults.

     Upon the occurrence of those defaults described in Subsections 12.01(d), 12.01(e) or 12.01(f)
above, this Lease shall forthwith and without notice terminate and all rights of Lessee hereunder
shall cease subject to the provisions of Section 12.04 hereof.

     Section 12.03 Curable Defaults; Notice.

     In the event Lessor shall determine that Lessee is in breach or violation hereof in any manner
except noncurable defaults described in the preceding section, before invoking any remedy
hereunder, Lessor shall give written notice thereof to Lessee and Lessee shall have ten (10) days
after receipt of such notice within which to correct or cure such breach or default if the same
pertains to the payment of rent, taxes or other payment of money, and (30) days after receipt of
notice within which to correct or cure such breach or default if it pertains to acts or omissions
other than the payment of money plus such additional period that is reasonably required for the
curing of such default provided Lessee has promptly commenced the curing of the same and diligently
pursues the same.

     Section 12.04 Lessor’s Remedy.

     In the event of a default by Lessee hereunder which shall remain uncured after the required
notices have been given pursuant to this Lease and for such time as provided herein, Lessor may at
once thereafter or any times subsequent during the existence of such breach or default (a) exercise
its rights to the Deposit as provided in Section 3.03 above or (b) enter into and upon the Premises
or any part thereof and repossess the same, expelling therefrom Lessee and all personal property of
Lessee (which property may be removed and stored at the cost of and for the account of Lessee),
using such force as may be necessary, and (c) either (i) terminate this Lease by notice, or (ii)
without terminating this Lease, relet the Premises or any part thereof upon such terms and
conditions as shall appear advisable to Lessor. If Lessor shall proceed in accordance with the
last mentioned alternative (ii) and the amounts received from reletting of the Premises during any
month or part thereof be less than the rent due and owing from Lessee during such month or part
thereof under the terms of this Lease, Lessee shall pay such deficiency to Lessor immediately upon
calculation thereof.

     Section 12.05 Lessor’s Right to Cure Default.

     If Lessee shall be in default hereunder, Lessor shall have the right with or without prior
notice to Lessee to make any payment or perform any act required of Lessee under any provision of
this Lease and, in exercising such right, to incur necessary or incidental costs and expenses,
including reasonable attorney’s fees. All payments made and all costs and expenses incurred by
Lessor in connection with any exercise of such right, together with interest thereon at the rate of
twelve 12%) per annum from the respective dates of making such payments or the incurring of such
costs and expenses, shall be reimbursed by Lessee immediately upon demand. Notwithstanding the

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foregoing, nothing herein shall imply any obligation on the part of Lessor to make any payment or
perform any act required of Lessee.

     Section 12.06 Default by Lessor.

     If Lessor defaults in the observance or performance of any term, covenant or condition
required to be performed by it under this Lease, Lessee may, after not less than (10) days notice
to Lessor, except in the case of any emergency, remedy such default by any necessary action, and in
connection with such remedy may pay all expenses; all sums expended or obligations incurred by
Lessee in connection therewith shall be paid by Lessor to Lessee within ten (10) days after demand
therefor.

     Section 12.07 Unavoidable Default or Delay.

     Any prevention, delay, nonperformance or stoppage due to any of the following causes shall
excuse nonperformance for a period equal to any such prevention, delay, nonperformance or stoppage,
except the obligations imposed by this Lease for the payment of rent, taxes, insurance or
obligations to pay money that are treated as rent. The causes referred to above are strikes,
lockouts, labor disputes, failure of power, acts of God, acts of public enemies of this State or of
the United States, riots, insurrections, civil commotions, inability to obtain labor or materials
or reasonable substitutes for either, governmental restrictions or regulations or control,
casualties not contemplated by insurance provisions of this Lease, or other causes beyond the
reasonable control of the party obligated to perform.

     Section 12.08 Waiver.

     No waiver of any default shall constitute a waiver of any other breach or default, whether of
the same or any other covenant or condition. No waiver, benefit, privilege or service voluntarily
given or performed by either party shall give the other any contractual right by custom, estoppel
or otherwise. The subsequent acceptance of rent pursuant to this Lease shall not constitute a
waiver of any preceding default by Lessee other than default in the payment of the particular
rental payment so accepted, regardless of Lessor’s knowledge of the preceding breach at the time of
accepting the rent, nor shall acceptance of rent or other payment after termination constitute a
reinstatement, extension or renewal of the Lease or revocation of any notice or other act by
Lessor.

ARTICLE XIII. ASSIGNMENT; SUBLETTING

     Section 13.01 No Right of Assignment.

     Lessee, without the prior written approval of Lessor, shall not have the right to assign or
otherwise transfer Lessee’s interest in this Lease and the estate created by this Lease or any part
thereof.

     Section 13.02 No Right to Sublet.

     Lessee shall not have the right to sublease, assign, mortgage or encumber this Lease without
first obtaining Lessor’s prior written approval. Should Lessee desire to assign its interest under
this Lease or sublet the Premises, Lessee shall bear all costs and expenses incurred by Lessor in
reviewing and approving or disapproving the proposed assignment or sublease. Should Lessor approve
a proposed sublease, if the total rent or other consideration payable to Lessee in connection

11

 

with such sublease exceeds the rent payable to Lessor pursuant to this Lease for the Premises or
the portion thereof covered by the proposed sublease, then Lessee shall pay to Lessor as additional
rent fifty percent (50%) of such excess as the same becomes due and payable to Lessee. In
connection therewith, Lessee, from time to time upon request by Lessor, shall provide Lessor an
accounting with respect to the amounts payable by the subtenant under any such sublease and, in
conjunction therewith, Lessor or Lessor’s duly authorized agent, shall have access to Lessee’s
books and records with respect to such subletting during normal business hours.

     In the event Lessor consents to an assignment or sublease by Lessee of this Lease, or any part
thereof, such assignment or subletting shall in no event or manner be deemed a release of the
liability of Lessee hereunder, as Lessee shall remain fully liable and responsible pursuant to all
of the terms hereof regardless of such assignment or sublease.

ARTICLE XIV. RIGHT OF FIRST REFUSAL — OPTION TO LEASE

     Section 14.01 Right of First Refusal.

     During the Primary Term and any Renewal Term of this Lease, Lessee shall have the right of
first refusal to lease the adjacent 1,153 and 1,906 square feet of space within the building which
are crosshatched on Exhibit “B” attached hereto (the “Additional Spaces”). If, during the Primary
Term or any Renewal Term of this Lease, Lessor receives an offer to lease all or any part of the
Additional Spaces (the “Offer”) and desires to accept the Offer, Lessor shall notify Lessee in
writing of the receipt of the Offer therein enclosing a copy of the Offer and Lessee shall have ten
(10) days after the receipt of such notice to either: (i) elect to lease the Additional Spaces or
so much thereof as is covered by the Offer on the same terms and conditions conveyed in the Offer;
or (ii) waive such right of first refusal by written notice or relinquish such right of first
refusal by failing to respond to Lessor within said ten (10) day period. In the event that Lessee
elects to lease the Additional Spaces or so much thereof as is covered by the Offer, Lessee shall
deliver a written notice of such election to Lessor within the ten (10) day period and shall
thereafter take possession of the Additional Spaces as contemplated in the Offer. If Lessee elects
to lease the Additional Spaces or so much thereof as contemplated in the Offer, Lessee’s notice of
such election shall be accompanied by one (1) month’s rent in advance. Upon receipt, Lessor will
cause a Lease Agreement to be prepared for execution by both Lessor and Lessee embodying the terms
of the Offer.

     Section 14.02 Option to Lease.

     During the Primary Term and any Renewal Term of this Lease and provided Lessor shall not have
leased the Additional Spaces, Lessee shall have the option to lease the Additional Spaces. To
exercise such option, Lessee shall give Lessor written notice of the exercise of its option to
lease the Additional Spaces or a portion thereof. Should Lessee lease the Additional Space or a
portion thereof, the Additional Spaces shall be leased upon the same terms and conditions as are
contained in this Lease. Upon receipt of such written notice exercising Lessee’s option to lease
the Additional Spaces or a portion thereof, Lessor shall cause a Lease covering the Additional
Spaces or a portion thereof to be prepared for execution by Lessor and Lessee.

12

 

ARTICLE XV. EXPIRATION OF THE TERM

     Section 15.01 Peaceful Surrender.

     Upon the expiration of the Primary Term or any Renewal Term of this Lease, Lessee shall
peacefully surrender and vacate the Premises and leave the same in broom-clean condition, and
Lessor may reenter and take possession of such Premises and all remaining improvements and eject
all parties in possession or eject some and not others or eject none.

     Section 15.02 Holding Over.

     Following the expiration of the Primary Term or any Renewal Term of this Lease, should Lessee
have failed to have surrendered and vacated the Premises, such shall give rise to a month-to-month
tenancy upon the same terms and conditions as are provided herein, except the Monthly Base Rent
shall be equal to two hundred percent (200%) of the Monthly Base Rent payable pursuant to Section
3.01.

ARTICLE XVI. MISCELLANEOUS

     Section 16.01 Time of the Essence.

     Time is and shall be deemed of the essence in respect of the performance of each provision of
this Lease.

     Section 16.02 Binding Effect; Successors or Assigns.

     All of the terms, provisions, covenants and conditions of this Lease shall inure to the
benefit of and be binding upon the undersigned parties, their successors, assigns, legal
representatives, heirs, executors and administrators.

     Section 16.03 Notices.

     All notices provided to be given under this Lease shall be given by certified or registered
mail, return receipt requested, postage fully prepaid, addressed Lessor and Lessee at the addresses
above referenced.

     The address of either party hereinabove set forth may be changed from time to time by giving
written notice to that effect.

     Any notice deposited as above provided shall be conclusively deemed to have been received by
the party to whom the same is addressed within forty-eight (48) hours if deposited in the same
state as the addressee and within ninety-six (96) hours if deposited in a state other than the
addressee.

     Section 16.04 Law Governing.

     The laws of the State of Texas shall govern the validity, performance and enforcement of this
Lease.

13

 

     Section 16.05 Gender and Number.

     Words of any gender used in this Lease shall be held and construed to include any other
gender, and words in the singular number shall be held to include the plural, and vice versa,
unless the context otherwise requires.

     Section 16.06 Entire Agreement.

     This Lease contains all of the agreements and conditions made between the parties hereto and
may not be modified orally or in any manner other than by agreement in writing signed by the
parties hereto or their respective successors in interest.

     Section 16.07 Captions.

     The captions of the various articles and the sections of this Lease are for convenience and
ease of reference only and do not define, limit, augment or describe the scope, context or intent
of this Lease or any part or parts of this Lease.

     Section 16.08 Severability.

     The invalidity or illegality of any provision shall not affect the remainder of this Lease.

     Section 16.09 Attorneys’ Fees.

     If either party brings any action or proceeding to enforce, protect or establish any right or
remedy, the prevailing party shall be entitled to recover reasonable attorneys’ fees.

     EXECUTED the day and year first above written.

	 	 	 	 	 	 	 
	 	 	WESTERN REFINING COMPANY, L.P., a Delaware

limited partnership
	 
	 	 	 	 	 	 
	 	 	BY:	 	REFINERY COMPANY, L.C., its General
Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott Weaver
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Scott Weaver
	 

	 	 	 	Title:
	 	Chief Administrative Officer

LESSOR

14

 

	 	 	 	 	 
	 	 	TRANSMOUNTAIN OIL COMPANY, L.C., a Texas

limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Terrance D. Calhoun
	 

	 	 	 	 
	 

	 	Name:
	 	Terrance D. Calhoun
	 

	 	Title:
	 	VP

LESSEE

15exv10w13

 

Exhibit 10.13

RHC HOLDINGS, L.P.

LONG-TERM UNIT EQUITY APPRECIATION RIGHTS PLAN

ARTICLE I

PURPOSE

     The purpose of the Plan is to (a) attract and retain management; (b) motivate Participants to
achieve long-range goals of the Company and its Affiliates; (c) provide compensation competitive
with similar businesses; and (d) to promote the long-term growth in value of the Company.

ARTICLE II

PARTICIPATION

     Each participant (the “Participant”) selected by the Committee shall be a key management
employee of the Company or its Affiliates.

ARTICLE III

RIGHTS

     Section 3.01 Right. A Rights Award under this Plan shall be in the form of an equity
appreciation right (“Right”) entitling the Participant to receive, with respect to his or her
Vested Rights, cash or Notes, at the Company’s option, in an amount equal to the excess of (a) the
Fair Market Value of each Right at the date of exercise over (b) the Issue Price of such Right.

     Section 3.02 Issue Price. The “Issue Price” of a Right under the Plan shall be
established by the Committee or shall be determined by a method established by the Committee at the
time of the grant of the Rights Award to the Participant.

     Section 3.03 Exercise. Subject to the terms and conditions herein, if the exercise of
any Rights occurs outside the Exercise Period, for any reason other than death or Disability, the
effective date of such exercise shall be deemed to be the first day of the next Exercise Period.
However, if the exercise of any Rights occurs because of the Participant’s death or Disability,
subject to the terms and conditions herein, the effective date of such exercise shall be the date
of exercise. Exercise of a Right shall not be effective until the Committee receives written
notice of exercise.

     Section 3.04 Settlement of Rights. A Right shall be subject to such conditions,
restrictions and contingencies as the Committee may establish in the applicable Rights Award.
Settlement of a Rights Award will be made in cash or Notes, at the Company’s option.

     Section 3.05 Vesting. Each Right of a Participant shall become fully vested upon the
Participant’s Separation due to Disability or death. In the event a Participant’s Separation is
for any reason other than Disability or death, such Participant shall be entitled to payment only
for his or her Rights that vested prior to the Participant’s Separation. The Committee shall
prescribe the vesting schedule governing the vesting of Rights under each Participant’s Rights
Award.

     Section 3.06 Forfeiture. Notwithstanding any other Plan provision to the contrary,
all of a Participant’s Rights shall be immediately forfeited and terminated upon Separation for
Cause.

 

 

     Section 3.07 Term. The term of each Right shall be ten (10) years, unless terminated
earlier. At the end of its term, an unexercised Right shall automatically terminate and cease to
be exercisable. The Committee shall have the right to extend the term of each Right.

ARTICLE IV

ADMINISTRATION

     Section 4.01 Effective Date. The Plan shall be effective as of January 1, 2003 (the
“Effective Date”).

     Section 4.02 Rights Subject to Plan. Rights granted under the Plan shall be subject
to the following:

          (a) The maximum number of Rights granted under the Plan shall be determined from time to time
by the Committee.

          (b) To the extent Rights are forfeited, canceled, expire without exercise, or payment in
respect thereof is not required to be made by, or is returned to, the Company, such Rights shall
not be counted toward the maximum number of Rights granted under the Plan.

          (c) In the event of a partnership transaction involving the Company or its Affiliates
(including, without limitation, any recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or exchange of ownership interests in the Company), the Committee
may, in its discretion, adjust any Rights theretofore granted to preserve the benefits or potential
benefits of the granting of such Rights. Action by the Committee may include: (i) adjustment of
the number and kind of Rights awarded under the Plan; (ii) adjustment of the Issue Price of
outstanding Rights Awards; and (iii) any other adjustments that the Committee determines to be
equitable.

     Section 4.03 Tax Withholding. All distributions of cash under the Plan are subject to
withholding and the Company shall withhold all applicable taxes with respect to distributions under
the Plan.

     Section 4.04 Transferability. Except as provided by the Plan and the Committee,
Rights granted under the Plan are nontransferable.

     Section 4.05 Forms and Elections. Unless otherwise specified herein, each election
required or permitted to be made by any Participant or other person entitled to benefits under the
Plan, and any permitted modification, or revocation thereof, shall be in writing filed with the
Committee at such times, in such form, and subject to such restrictions and limitations, consistent
with the terms of the Plan, as the Committee shall require.

     Section 4.06 Agreement with Company. A Right granted under the Plan shall be subject
to such terms and conditions, consistent with the Plan, as the Committee shall, in its sole
discretion, prescribe. The terms and conditions of a Right awarded to any Participant shall be
reflected in such form of written document as is determined by the Committee which shall
specifically reference the Plan. A copy of such document shall be provided to the Participant, and
the Committee may, but need not require that the Participant sign such document. Such document is
referred to in the Plan as a “Rights Award”.

EQUITY APPRECIATION RIGHTS PLAN — Page 2 of 10

 

 

     Section 4.07 Action by Company. Any action required or permitted to be taken by
the Company shall be by resolution of its partners (as applicable), or by action of the general
partner who is authorized to act for the partners or by a duly authorized officer thereof.

     Section 4.08 Limitation of Implied Rights.

          (a) Neither a Participant nor any other person shall, by reason of participation in the Plan,
acquire any right in or title to any assets, funds or property of the Company or its Affiliates
whatsoever, including, without limitation, any specific funds, assets, or other property which the
Company or its Affiliates, in their sole discretion, may set aside in anticipation of a liability
under the Plan. A Participant shall have only a contractual right to amounts, if any, payable
under the Plan, unsecured by any assets of the Company or its Affiliates, in accordance with the
Plan and the related Rights Award, and nothing contained in the Plan shall constitute a guarantee
that the assets of the Company shall be sufficient to pay any benefits to any person. A Rights
Award shall not entitle a Participant to any voting rights or any other partnership rights with
respect to such Rights. Nothing in this Plan is intended to confer any partnership rights upon any
Participant.

          (b) The Plan does not constitute a contract of employment or engagement as an employee or
independent contractor, and selection as a Participant will not give any participating employee,
consultant or other party the right to be retained in the employ of the Company or its Affiliates
or to be a consultant or contractor of the Company or its Affiliates or create any other commitment
or obligation of the Company or its Affiliates, nor any right or claim to any benefit under the
Plan or any Rights Award, unless such right or claim has specifically accrued under the terms of
the Plan and the related Rights Award. No Rights under the Plan shall confer upon the holder
thereof any rights as a partner of the Company or any of its Affiliates.

     Section 4.09 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on it considers
pertinent and reliable, and signed, made or presented by the proper party or parties.

ARTICLE V

TERMINATION AND PAYMENT

     Section 5.01 Termination of Right. If a Participant’s Separation from employment is
for any reason other than death or Disability, the Participant shall have the right for sixty (60)
days after the date of such Participant’s Separation to exercise any Rights awarded to such
Participant under the Plan. If a Participant’s Separation from employment is due to Disability,
the Participant (or his or her personal representative) shall have the right for ninety (90) days
from the date of his Separation to exercise any Rights awarded to such Participant. If a
Participant’s Separation from employment is due to death, the Participant’s beneficiary shall have
the right for ninety (90) days after the date of Participant’s death to exercise any Rights awarded
to the deceased Participant under the Plan. At the expiration of such applicable period, any
Rights awarded to the Participant under the Plan shall terminate, expire, and otherwise cease to be
exercisable.

     Section 5.02 Payments. A Vested Right may be settled through cash payments or Note at
the Company’s option. The Note shall not be for more than a ten (10) year term, bearing

     EQUITY APPRECIATION RIGHTS PLAN — Page 3 of 10

 

 

interest
at the prime rate as reported in the Wall Street Journal from time to time, with principal and
interest being payable in quarterly installments. The date of payment or issuance of the Note
shall be the later of fifteen (15) business days following the issuance of audited financial
statements covering the last period for which the valuation is calculated or 15 business days
following the date of exercise. A Rights settlement, including payment deferrals, may be subject to
such conditions, restrictions and contingencies as the Committee shall determine. The Committee
may permit or require the deferral of any Rights payment, subject to such rules and procedures as
it may establish, which may include provisions for the payment or crediting of interest.
Notwithstanding the foregoing, if a payment under the Plan or a Note will cause the Company or any
of its Affiliates to violate any provisions of applicable law, their respective organizational
documents, or any agreement to which they are a party, such payment shall be delayed until such
time as the payment can be made. The amount of any payment that is so delayed shall earn interest
as provided above until such time as the payment is made. Such payment shall be made as soon as
practicable after the restriction is removed or otherwise eliminated.

     Section 5.03 Change in Control. Notwithstanding the preceding provisions of this
Plan, in the event of a Change in Control, all Rights shall be deemed vested as of the date
immediately prior to the Change in Control, and all Rights shall be payable at the same time and
manner, to the extent possible, as the selling partners receive consideration for the sale of their
interests in the Company.

     Section 5.04 Release. If the exercise of Vested Rights occurs in connection with a
Separation other than death or Disability, any payment with respect to such Rights to any person
shall be in full satisfaction of all claims hereunder against the Plan, and, in addition, the
Company may require such person, as a condition precedent to receiving payment as provided herein,
to execute a receipt and release therefore in such form as determined by the Committee, in its sole
discretion.

ARTICLE VI

SOURCE OF PAYMENT

     Payments with respect to any Rights granted under this Plan shall be made only from the
general assets of the Company. No special or separate fund or segregation of assets shall be made
to assure such payment in such a way as to make this Plan a “funded” plan for purposes of ERISA or
the Code. The Company may, in its sole discretion, establish a bookkeeping reserve to meet its
obligations under the Plan. For purposes of the Code, the Company intends this Plan to be an
unfunded, unsecured promise on the part of the Company to pay in the future.

     Nothing contained in the Plan shall create or be construed to create a trust of any kind, and
nothing contained in the Plan, nor any action taken pursuant to the provisions of the Plan, shall
create or be construed to create a fiduciary relationship between the Company, on the one hand, and
a Participant, beneficiary, employee or other person, on the other. To the extent that any person
acquires a right to receive payment from the Company under the Plan, such right shall be no greater
than the right of any unsecured general creditor of the Company.

EQUITY APPRECIATION RIGHTS PLAN — Page 4 of 10

 

 

ARTICLE VII

COMMITTEE

     Section 7.01 Administration. The Company shall designate from time to time, a
committee (the “Committee”) to administer the Plan. No member of the Committee, while serving as a
Committee member, shall be eligible to receive a Rights Award under the Plan. Subject to the
provisions of the Plan, the Committee shall have exclusive power and authority to determine: (a)
the employees to be awarded Rights under the Plan; (b) the terms of the Rights to be granted to
selected employees; (c) the time or times when Rights will be awarded; (d) whether Participants
shall receive single or different classes of Rights; (e) the time or times, and the conditions,
subject to which any amounts may become payable with respect to Rights awarded; (f) the payment of
Rights in cash, notes, or a combination thereof; and (g) to prescribe the form of the instrument
evidencing any Rights awarded under the Plan. Rights awarded under the Plan may be based upon such
considerations as the Committee may deem appropriate including, but not limited to, the results of
operations of the Company, its Affiliates and one or more of its groups, divisions or business
divisions thereof, length of participation and may be different for different Participants.
Decisions and determinations by the Committee shall be final and binding upon all parties,
including partners, Participants and other employees. The Committee shall have the authority to
interpret the Plan, and to make any other determinations that it believes necessary or advisable
for the administration of the Plan.

     Section 7.02 Information to Be Furnished to Committee. The Company shall furnish the
Committee with such data and information as it determines may be required for it to discharge its
duties. The records of the Company as to an employee’s or Participant’s employment (or other
provision of services), termination of employment (or cessation of the provision services), leave
of absence, reemployment and compensation shall be conclusive on all persons. Participants and
other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or
information as the Committee considers desirable to carry out the terms of the Plan.

ARTICLE VIII

AMENDMENT AND TERMINATION

     The Company may, at any time, amend or terminate the Plan; provided that no amendment or
termination may, in the absence of written consent to the change by the affected Participant (or,
if not living, his or her beneficiary), adversely affect the Rights of any Participant under the
Plan prior to the date such amendment is adopted; provided that adjustments pursuant to subject to
Section 4.02(c) shall not be subject to the foregoing limitations of this Article VIII.

ARTICLE IX

DEFINED TERMS

     In addition to the other definitions contained herein, the following definitions shall apply:

          (a) “Affiliate”. “Affiliate” means any firm, corporation, limited liability company,
partnership, joint venture, trust or other entity during any period in which at least a fifty
percent (50%) ownership interest is owned, directly or indirectly, by the Company, by any entity
that is a successor to the Company.

EQUITY APPRECIATION RIGHTS PLAN — Page 5 of 10

 

 

          (b) “Cash”. “Cash” means any cash or cash equivalents as reported in the audited financial
statements of Western.

          (c) “Cause”. “Cause” means (1) the Participant’s (A) violation of any agreement with the
Company or its Affiliates (including without limitation the Rights Award, or any non-competition or
confidentiality agreement), (B) failure or refusal to perform his or her duties (except when
prevented by illness or disability); (C) misconduct, negligence, fraudulent or illegal action, (D)
violation of the rules of behavior of the Company or its Affiliates, (E) fraud or material
misrepresentation that materially and adversely affects the Company or its Affiliates; or (2)
conviction of the Participant of any crime involving moral turpitude, all as determined by
Committee in their discretion.

          (d) “Change in Control”. “Change in Control” means a change in the beneficial ownership of
the Company’s ownership or a change in the general partner of the Company which occurs as follows:

          (i) Any “person” (as such term is used in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934 (the “1934 Act”), other than Company, the general partner of Company,
the partners, owners of the general partner of the Company, or their Affiliates, is or
becomes a beneficial owner, directly or indirectly, of ownership interests in the Company
representing fifty percent (50%) or more of the total ownership interests in the Company.

          (ii) For the purposes of this definition, the members of the Immediate Family of
partners of the Company on the date of adoption of the Plan shall be considered a single
person and no transaction among them, entities owned by them, or trusts or similar entities
that hold ownership interest in Company for their benefit shall constitute a Change in
Control.

          (e) “Code”. The term “Code” means the Internal Revenue Code of 1986, as amended. A
reference to any provision of the Code shall include reference to any successor provision of the
Code and any applicable Regulations thereunder.

          (f) “Company”. “Company” means RHC HOLDINGS, L.P., a Delaware limited partnership.

          (g) “Debt”. “Debt” means Western’s bona fide indebtedness to third-party financial
institutions as reported in its audited financial statements.

          (h) “Disability”. Except as otherwise provided by the Committee, the Participant shall be
considered to have a “Disability” during the period in which the Participant is unable, by reason
of a medically determinable physical or mental impairment, to engage in any substantial gainful
activity, which condition, in the opinion of a physician selected by the Committee, is to have a
duration of more than one hundred eighty (180) days.

          (i) “Eligible Individual”. The term “Eligible Individual” shall mean any employee of the
Company or its Affiliates and any consultant or other person providing services to the Company or
its Affiliates who is identified and recommended by the Committee, in its sole discretion, to
participate in the Plan. A Rights Award may be granted to an Eligible

     EQUITY APPRECIATION RIGHTS PLAN — Page 6 of 10

 

 

Individual, in connection with hiring, engagement, retention or otherwise, prior to the date
the Eligible Individual first performs services for the Company or its Affiliates; provided that
such Rights Awards shall not become vested prior to the date the first Eligible Individual first
performs such services.

          (j) “ERISA”. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

          (k) “Exercise Period”. “Exercise Period” means the second quarter of the Company’s fiscal
year.

          (l) “Fair Market Value”. The “Fair Market Value” of a Right as of any date shall be
determined as follows:

          (i) The Fair Market Value of a Right shall be Value multiplied by .001% on the
applicable date. “Value” means four times the average annual EBITDA of Western Refining
Company, LP (“Western”) for the prior thirty-six (36) months ended the end of its fiscal
year immediately preceding the date for which the calculation is made plus its Cash minus
its Debt at the end of such fiscal year.

          (ii) “EBITDA” shall mean, for any period, the sum of Western’s net income (excluding
nonrecurring income or gain), interest expense, taxes on income, depreciation and
amortization (to the extent deducted in the determination of net income and without
duplication).

          (m) “Immediate Family”. The term “Immediate Family” of any person means such person’s spouse,
parents, children, stepchildren, adoptive relationships, sisters, brothers and grandchildren, (and,
such person).

          (n) “Participant”. A “Participant” is a person who receives a Rights Award.

          (o) “Plan”. “Plan” means the Company’s Long-Term Equity Appreciation Rights Plan.

          (p) “Right”. “Right” means the right to receive cash or Notes under this Plan.

          (q) “Rights Award”. “Rights Award” means any award of Rights granted under the Plan.

          (r) “Separation”. “Separation” means a person’s ceasing to be an employee of the Company or
its Affiliates by reason of a termination of employment for any reason.

          (s) “Vested”. “Vested” means the nonforfeitable Rights of a Participant under the Plan.

EQUITY APPRECIATION RIGHTS PLAN — Page 7 of 10

 

 

ARTICLE X

GENERAL PROVISIONS

     Section 10.01 No Assignment. During the Participant’s lifetime, payments with respect
to any Rights awarded under the Plan may be paid only to the Participant or his legal
representative. No assignment or transfer of Rights awarded under the Plan, whether voluntary or
involuntary, by operation of law or otherwise, except a transfer by will or the laws of descent or
distribution, or as the Committee may, in its sole discretion, deem proper, shall be effective to
transfer any interest or right whatsoever in such Rights to the assignee or transferee.

     Section 10.02 Incapacity. If the Committee finds that any Participant or beneficiary
is unable to care for his affairs because of illness or accident, any payment due shall be made to
the Participant’s duly appointed guardian or other legal representative. Any such payment shall be
a complete discharge of the liabilities of the Company under the Plan.

     Section 10.03 Information Required. Each Participant shall file with the Committee
such pertinent information concerning the Participant and his or her beneficiary as the Committee
may specify, and no Participant or beneficiary or other person shall have any rights or be entitled
to any benefits under the Plan unless such information has been filed by the Participant.

     Section 10.04 Participant Communications. All designations, requests, notices,
instructions and other communications from a Participant, beneficiary or other person to the
Committee required or permitted under the Plan shall be in such form as is prescribed from time to
time by the Committee, shall be mailed by first-class mail or delivered to such location as shall
be specified by the Committee, and shall be deemed to have been given and delivered only upon
actual receipt by the Committee at such location.

     Section 10.05 Notices by Committee. All notices, statements, reports and other
communications from the Committee to any employee, Eligible Individual, Participant, beneficiary or
other person required or permitted under the Plan shall be deemed to have been duly given when
delivered to, or when mailed first-class mail, postage prepaid and addressed to, such employee,
Eligible Individual, Participant, beneficiary or other person at the address last appearing on the
records of the Company.

     Section 10.06 No Liability for Good Faith Determinations. Neither the partners of the
Company nor the Committee (nor their respective delegates) shall be liable for any act, omission,
or determination taken or made with respect to the Plan which is not judicially determined to be
due to willful misconduct, and partners of the Company and the Committee (and their delegates)
shall be entitled to indemnification and reimbursement by the Company in respect of any claim,
loss, damage, or expense (including attorneys’ fees, the costs of settling any suit, provided such
settlement is approved by independent legal counsel selected by the Company and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of willful misconduct) arising
therefrom to the full extent permitted by law and under any partners’ and officers’ liability, or
similar insurance coverage, that may from time to time be in effect.

EQUITY APPRECIATION RIGHTS PLAN — Page 8 of 10

 

 

     Section 10.07 Severability. In case any one or more of the provisions contained in
this Plan shall be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions in this Plan shall not in any way be affected or
impaired.

     Section 10.08 Captions and Gender. The captions preceding the Articles and Sections
of this Plan have been inserted solely as a matter of convenience and in no way define or limit the
scope or intent of any provisions of this Plan. When the context admits or requires, words used in
the masculine gender shall be construed to include the feminine, the plural shall include the
singular, and the singular shall include the plural.

     Section 10.09 Arbitration. Any legal or equitable claims or disputes, arising out of
or in connection with the Plan or any Rights Award Agreement entered into under this Plan, shall be
resolved by binding arbitration; provided, however, that action by the Company or its Affiliates to
enforce any non-competition agreement shall be excluded from the mandatory arbitration provisions
of this Section. The arbitration proceedings shall be conducted in Texas in accordance with the
Employment Dispute Resolution Rules (“EDR Rules”) of the American Arbitration Association (“AAA”)
in effect at the time a demand for arbitration is made. A Participant is entitled to
representation by an attorney throughout the proceedings at his own expense; however, the Company
agrees not to use an attorney in the arbitration hearing if the Participant agrees to the same.

     One arbitrator shall be used and chosen by mutual agreement of the parties. If, within thirty
(30) days, no arbitrator has been chosen, an arbitrator shall be chosen from a list or lists of
proposed arbitrators submitted by the AAA pursuant to its EDR Rules, except that: (a) the number of
peremptory strikes shall not be limited; and (b) if the parties fail to select an arbitrator from
one or more lists within sixty (60) days after the Participant notifies the Company of an
arbitrable dispute, AAA shall have the power to appoint the arbitrator. The arbitrator shall
coordinate, and limit as appropriate, all pre-arbitral discovery, which shall include document
production, information requests, and depositions. The arbitrator shall issue a written decision
and award stating the reasons therefore. The decision and award shall be final and binding on the
parties, their heirs, executors, Committees, successors, and assigns. The costs and expenses of
the arbitration shall be borne evenly by the parties.

     Section 10.10 Choice of Law. The Plan and all rights under this Plan shall be
governed by and construed in accordance with Delaware law and venue for any action regarding the
Plan shall lie in Texas.

EQUITY APPRECIATION RIGHTS PLAN — Page 9 of 10

 

 

     IN WITNESS WHEREOF, the Company has executed this Plan as of this 25th day of August, 2003.

	 	 	 	 	 	 	 
	 	 	RHC HOLDINGS, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	WRC Refining Company, its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	     By:
	 	/s/ Paul Foster
 

Name: Paul Foster

Title: President
	 	 

EQUITY APPRECIATION RIGHTS PLAN — Page 10 of 10

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