GILMORE & BELL, P.C.

Execution Copy

NATIONAL COOPERATIVE REFINERY ASSOCIATION
AS PURCHASER

AND

CITY OF MCPHERSON, KANSAS
AS ISSUER

BOND PURCHASE AGREEMENT

$325,000,000
TAXABLE INDUSTRIAL REVENUE BONDS
SERIES 2006
(NATIONAL COOPERATIVE REFINERY ASSOCIATION)

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BOND PURCHASE AGREEMENT

$325,000,000
CITY OF MCPHERSON, KANSAS
TAXABLE INDUSTRIAL REVENUE BONDS
SERIES 2006
(NATIONAL COOPERATIVE REFINERY ASSOCIATION)
Dated: December 18, 2006

On the basis of the representations, and the terms and conditions contained
herein, the undersigned, National Cooperative Refinery Association (the
“Purchaser”), hereby offers to purchase $325,000,000 aggregate principal amount
of Taxable Industrial Revenue Bonds, Series 2006 (National Cooperative Refinery
Association) (the “Bonds”) to be issued by the City of McPherson, Kansas (the
“Issuer”), an incorporated municipality duly organized and existing as a city of
the second class under the constitution and laws of the State of Kansas, under
and pursuant to Ordinance No. 2891 of the Issuer passed by the governing body of
the Issuer on September 11, 2006 (the “Ordinance”) and secured under the
provisions of a Trust Indenture dated as of the Issue Date of the Bonds (the
“Indenture”) between the Issuer and Security Bank of Kansas City, as Trustee
(the “Trustee”). The Bonds are to be issued by the Issuer pursuant to and in
accordance with provisions of Sections 12-1740 et seq., inclusive, of the Kansas
Statutes Annotated, as amended (collectively the “Act”), and the constitution of
the State of Kansas, for the purpose of paying the costs to finance
modifications and improvements to the existing crude oil refinery facility to be
leased to the Purchaser.

In connection with the issuance of the Bonds, the Purchaser and the Issuer
propose to enter into a Lease dated as of the Issue Date of the Bonds (the
“Lease”) with respect to the Leased Property (as defined below). Pursuant to the
Lease, the Issuer will lease the Leased Property to the Purchaser and the
Purchaser shall be required to pay as Basic Rent thereunder amounts sufficient
to pay the principal of, premium, if any, and interest on the Bonds and all
other Bonds Outstanding under the Indenture.

Section 1. Representations, Warranties, Covenants and Agreements of the Issuer.

By acceptance and execution hereof the Issuer hereby represents to, and agrees
with, the Purchaser that:

(a) The Issuer is a municipality incorporated as a city of the second class of
and within the State of Kansas, duly organized and existing under the
constitution and laws of the State of Kansas. The Issuer is authorized under the
provisions of the constitution and laws of the State of Kansas, including
particularly the Act, to issue, sell and deliver the Bonds for the purposes
specified above, to adopt and perform its obligations under the Ordinance, to
enter into and perform its obligations under this Bond Purchase Agreement (the
“Agreement”), the Indenture and the Lease and to pledge, pursuant to and in
accordance with provisions of the Ordinance, the Indenture and certain rentals
payable by the Purchaser to the Issuer pursuant to the provisions of the Lease,
to the payment of the principal of, premium, if any, and interest on the Bonds
in the manner provided therein.

(b) The Issuer has full power and authority to consummate all transactions
contemplated by this Agreement, the Bonds, the Ordinance, the Indenture and the
Lease (the “Bond Documents”) and any and all other agreements relating thereto,
to which the Issuer is a party.

(c) The Issuer will have duly authorized prior to the Closing Time (as
hereinafter defined) all necessary action to be taken by it or on its behalf
for: (i) the issuance and delivery of the Bonds upon the terms set forth in this
Bond Purchase Agreement; (ii) the passage, signature and publication of the
Ordinance; (iii) the execution and delivery by it of the Bond Documents to which
it is a party; (iv) the carrying out, giving effect to and consummation of the
transactions contemplated thereby and by this Agreement. Copies of this
Agreement, the Ordinance, the Indenture and the Lease, executed by the
appropriate officers or officials of the Issuer, shall be delivered to the
Purchaser by the Issuer at the Closing Time.

(d) There is no action, suit, proceeding, inquiry or investigation at law or in
equity or before or by any court, public board or body pending or, to the
knowledge of the Issuer, threatened against or affecting it (or, to its
knowledge, any basis therefor) wherein an unfavorable decision, ruling or
finding would adversely affect the transactions contemplated by this Agreement
or would adversely affect the validity of the Bond Documents or any agreement or
instrument to which the Issuer is a party and which is used or contemplated for
use in the consummation of the transactions contemplated hereby.

(e) Any certificate signed by any authorized officer or official of the Issuer
and delivered to the Purchaser in connection with the transactions contemplated
by this Agreement shall be deemed a representation by the Issuer to the
Purchaser as to the statements made therein.

(f) When delivered to and paid for by the Purchaser in accordance with the
provisions of this Agreement and authenticated in accordance with the provisions
of the Indenture, the Bonds will have been duly authorized, executed, issued and
delivered; the Bonds will constitute valid and binding limited obligations of
the Issuer payable solely and only from the revenues specified in the Indenture
and in conformity with, and entitled to the benefits and security of, the
Indenture and all action taken by the Issuer in connection therewith shall be in
conformity with the Act.

(g) The execution and delivery of this Agreement, the Bonds and the other
documents to be executed by the Issuer in compliance with the provisions hereof
and thereof will not conflict with or constitute a breach of or default under
any agreement or other instrument to which the Issuer is a party or any existing
law, administrative regulation, court order or consent decree to which the
Issuer is subject.

(h) The Issuer will cause the cash proceeds, if any, from the sale of the Bonds
to be deposited as required by the Indenture and used for the purposes set forth
in the Indenture.

(i) No additional or further approval, consent or authorization of any
governmental or public agency or authority not already obtained by the Issuer is
required in connection with the issuance and sale of the Bonds or entering into
and performing the obligations of the Issuer under this Agreement, the Bonds or
the other documents to be executed by the Issuer.

Section 2. Representations of the Purchaser.

The Purchaser makes the following representations as of the Closing:

(a) The statements and information relating to the Bonds, the Purchaser, the
anticipated sources and use of funds to be applied in connection with the
issuance of the Bonds, and the Leased Property are true and correct in all
material respects and do not omit any material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.

(b) The Purchaser is a duly formed nonprofit cooperative marketing association
existing and in good standing under the laws of the State of Kansas.

(c) The Purchaser has full power and authority to enter into, execute and
deliver the Lease and this Agreement, and to perform its obligations thereunder
and hereunder, all of which have been duly authorized by all proper and
necessary corporate action, and no consent or approval of parties not
signatories to this Agreement or of any public authority other than the Issuer
is necessary to carry out the same.

(d) The execution, delivery and performance by the Purchaser of the documents
and agreements required to be executed by the Purchaser will not conflict with
or constitute a material violation or breach of or a default under its articles
of incorporation and bylaws, or any mortgage, indenture, deed of trust,
contract, instrument or agreement binding on it or affecting its property, or
any provision of law or order, rule, regulation, ordinance or decree of any
court, government or governmental body having jurisdiction over the Purchaser or
any of its property.

(e) To the actual knowledge of the officer of the Purchaser signing this
Agreement, there is no litigation, proceeding or investigation by or before any
court, public board or body, pending, or threatened, against or affecting the
Purchaser, its officers or property, challenging the validity of the Lease, the
Indenture or this Agreement, or seeking to enjoin any of the transactions
contemplated by such instruments or the performance by the Purchaser of its
obligations thereunder or hereunder, or challenging the acquisition or operation
of the Leased Property.

Section 3. Other Representations, Warranties, Covenants and Agreements of the
Purchaser.

By the execution hereof Purchaser hereby represents, warrants and agrees with
the Issuer that:

(a) Purchaser is knowledgeable and experienced in financial and business matters
and is capable of evaluating investment merit and risks associated with its
purchase of the Bonds. Purchaser has been furnished and has reviewed the
provisions of the Ordinance, the Indenture and the Lease relating to the
authorization of and security for payment of the Bonds. Prior to the execution
hereof Purchaser also obtained such information and conducted such
investigations as it has deemed necessary in order to enable itself to fully
evaluate the terms and provisions of the Bonds, of the Ordinance, and of the
Indenture and the Lease authorizing their issuance and providing for the payment
thereof and the financial and investment merits and risks associated with the
purchase of the Bonds. On the basis of such information materials and
Purchaser’s investigation, Purchaser has made the decision to purchase the Bonds
and has not relied upon any representations of the Issuer or any of its officers
or employees with respect to the Bonds or security for payment of the Bonds.

(b) Purchaser is purchasing the Bonds as an investment for its own account and
not with a view to the sale, redistribution or other disposition thereof in the
ordinary course of business in a transaction not amounting to a public offering
as contemplated by Section 4(2) of the Securities Act of 1933, as amended.
Purchaser acknowledges that (1) the Bonds will not be registered under the
Securities Act of 1933, as amended or any applicable state securities law,
(2) the Bonds may not be transferred unless, in the opinion of Klenda, Mitchell,
Austerman & Zuercher, L.L.C., Wichita, Kansas, or other counsel reasonably
acceptable to the Trustee, such transfer will not cause a violation of the
Securities Act of 1933, as amended, or any applicable state securities law or
unless there should be a registration statement in effect under the Securities
Act of 1933, as amended, and under any applicable state securities laws
requiring a state-level registration statement with respect to such transfer,
and that (3) language consistent with the foregoing restrictions will appear in
the registration and transfer provisions of the Indenture.

Section 4. Purchase, Sale and Delivery of the Bonds.

On the basis of, and reliance upon, the representations and agreements of the
Issuer contained herein, and in the other documents and agreements referred to
herein and subject to the terms and conditions herein set forth, at the Closing
Time the Purchaser agrees to purchase from the Issuer and the Issuer agrees to
sell to the Purchaser the Bonds at 100% of the par principal amount thereof. The
purchase price of the Bonds shall be payable by transfer to the Issuer of
absolute ownership of the real and/or personal property listed in Exhibit A
attached (the “Leased Property”), free and clear of all encumbrances other than
the terms of the Lease, by Deed and/or Bill of Sale warranting title thereto,
and all provisions of the Bond Documents concerning the receipt, transfer,
deposit, use, payment, expenditure or any similar action that would apply if the
purchase price were paid in cash shall be construed accordingly. Notwithstanding
the transfer of the Leased Property to the Issuer, the Issuer and the Purchaser
intend that the Purchaser shall continue to be the owner of the Leased Property
for federal and state income tax purposes.

The Bonds shall be issued under and secured as provided in the Ordinance and the
Indenture and the Bonds shall be in the amount and shall mature and bear
interest at the rate and be subject to the redemption as set forth in the
Indenture. Proceeds of the Bonds shall be expended to pay, or reimburse the
Purchaser for payment of, costs of the Leased Property as provided in the
Indenture and the Lease.

Payment for the Bonds shall be made by delivering the Deed and/or Bill of Sale
heretofore referred to the Trustee for the account of the Issuer, at its
corporate trust office in Kansas City, Kansas, by 10:00 a.m., Central Time on
December 18, 2006, or at such other place or on such other date and at such hour
on such other date as the Issuer and the Purchaser shall mutually agree. The
date of such delivery and payment is herein called the “Closing Date,” and the
time and date of such delivery and payment is herein called the “Closing Time”.
The Bonds shall be available for examination by the Purchaser at least 24 hours
prior to the Closing Time.

Section 5. Conditions to the Purchaser’s Obligations.

The Purchaser’s obligations hereunder shall be subject to the due performance by
the Issuer of its obligations and agreements to be performed hereunder at or
prior to the Closing Time and to the accuracy of and compliance with the
representations and warranties of the Issuer contained herein, as of the date
hereof and as of the Closing Time, and are also subject to the following
conditions:

(a)  The Ordinance shall have been duly passed, signed and published and the
Bonds, this Agreement, the Indenture and the Lease shall have been duly
authorized, executed and delivered substantially in the forms heretofore
approved by the Purchaser and Issuer with only such changes therein as the
Purchaser and the Issuer shall mutually agree.

(b)  At the Closing Time, the Purchaser shall receive:

(i) The opinions dated as of the Closing Date and addressed to the Purchaser of
(1) Gilmore & Bell, P.C., Bond Counsel and (2) the City Attorney (or other
counsel) for the Issuer, all in forms reasonably acceptable to counsel for the
Purchaser.

(ii) A certificate, in form and substance satisfactory to the Purchaser, of the
Mayor of the Issuer or any duly authorized officer or official of the Issuer
satisfactory to the Purchaser, dated as of the Closing Date, to the effect that:
(1) each of the Issuer’s representations contained herein is true and correct as
of the Closing Time; (2) the Issuer has authorized, by all necessary action, the
adoption and due performance of the Ordinance; (3) the Issuer has authorized, by
all necessary action, the execution, delivery and due performance of the Bond
Documents to which it is a party; (4) no litigation is pending, or to his or her
knowledge threatened, to restrain or enjoin the issuance or sale of the Bonds or
in any way affecting any authority for or the validity of the Bond Documents or
the existence or powers of the Issuer or its right to lease the Leased Property
to the Purchaser; and (5) the Bond Documents, executed by the Issuer, are in the
forms, or in substantially the forms, approved for such execution by appropriate
proceedings of the governing body of the Issuer and (6) the Issuer is not in
default under any of the Bond Documents.

(iii) Such additional certificates and other documents as the Purchaser may
reasonably request to evidence performance of or compliance with the provisions
of this Agreement and the transactions contemplated hereby, all such
certificates and other documents to be satisfactory in form and substance to the
Purchaser.

(c) At the Closing Time, the Purchaser shall continue in possession of the
Leased Property under the terms of the Lease.

Section 6. The Purchaser’s Right to Cancel.

The Purchaser shall have the right to cancel its obligation to purchase the
Bonds hereunder by notifying the Issuer in writing or by telefax of its election
so to do between the date hereof and the Closing Time.

Section 7. Conditions of City’s Obligations.

The obligations of the Issuer hereunder are subject to the Purchaser’s
performance of its obligations hereunder, and the further condition that at the
Closing Time each of the conditions to the Purchaser’s obligations hereunder set
forth in Section 5 hereof shall have been satisfied.

Section 8. Representations and Agreements to Survive Delivery.

All representations and agreements of the Issuer shall remain in full force and
effect, regardless of any investigations made by or on the Purchaser’s behalf,
and shall survive delivery of the Bonds to the Purchaser.

Section 9. Payment of Expenses.

All customary, reasonable and necessary expenses and costs to effect the
authorization, preparation, issuance, delivery and sale of the Bonds (including,
without limitation, the fees and disbursements of bond counsel as set forth in
separate letter agreement) and the expenses and costs for the preparation,
photocopying, execution and delivery of the Bond Documents and all other
agreements and documents contemplated hereby shall be paid by the Purchaser.

Section 10. Notices.

Any notice or other communication to be given to the Issuer under this Agreement
may be given by mailing or delivering the same in writing to the City of
McPherson, Kansas, Attn: City Clerk, 400 E. Kansas Avenue, McPherson, Kansas
67460; any notice or other communication to be given to the Purchaser under this
Agreement may be given by delivering the same in writing to National Cooperative
Refinery Association, P.O. Box 1404, McPherson, Kansas 67460, Attn: Vice
President - Finance.

Section 11. Applicable Law; Nonassignability.

This Agreement shall be governed by the laws of the State of Kansas. This
Agreement shall not be assigned by the Issuer. All covenants and agreements in
this Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties hereto.

Section 12. Execution of Counterparts.

This Agreement may be executed in several counterparts, each of which shall be
regarded as an original and all of which shall constitute one and the same
document.

Section 13. Amendment.

This Agreement may not be changed orally but only by an agreement in writing
signed by each of the parties hereto.

EXECUTED, effective as of the date first above written.

CITY OF MCPHERSON, KANSAS

[SEAL] By:     

Mayor

Attest:

     

City Clerk

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NATIONAL COOPERATIVE REFINERY

ASSOCIATION

          By:_________________________________
   
Name: John G. Buehrle
Title:
 
Vice President — Finance  

 
       
 
      “Purchaser”
 
       

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