EMPLOYMENT
AGREEMENT





THIS
AGREEMENT made and entered into this 8thday of
July, 2010, to be effective as of July 8, 2010, by and between Red Trail Energy,
LLC of Richardton, North Dakota (hereinafter collectively referred to as "RTE
"), and Gerald Bachmeier residing at Morris, Minnesota (hereinafter referred to
as "Employee"):





WITNESSETH:





WHEREAS,
RTE desires to assure itself of the services of Employee; and





WHEREAS,
Employee desires to employed by RTE.





NOW,
THEREFORE, in consideration of the covenants and agreements herein contained,
the parties hereto agree as follows:





1.           Employment.RTE agrees to employ Employee and Employee agrees to accept such
employment upon the terms and conditions hereinafter set forth.





2.           Duties.Employee shall serve
as the chief executive officer of RTE, performing such services as the Operating
Agreement provides, and as the Board of Governors of RTE may, from time to time,
determine.





3.           Term.This Agreement shall be
for a five year and 6 month (5.5 year) term commencing on July 8, 2010, and
terminating December 31, 2015, subject, however, to prior termination as
provided at Section 8 herein.





4.           Base
Salary.In consideration for the Employee's services under this
Agreement, RTE agrees to pay the Employee an initial base salary at a rate of
One Hundred Thirty-Five Thousand Dollars ($135,000) from July 8, 2010 through
December 31, 2010 (the Base Salary). The Base Salary shall be subject to any
withholding required by law and shall be payable in bi-weekly installments. The
Base Salary is also subject to an increase starting January 1, 2011 of Ten
Thousand and no/100 ($10,000) per year for each year after the first six months
of employment. Thus for the year January 1, 2011 through December 31, 2011
Employee's base salary shall be $145,000; January 1, 2012 through December 31,
2012 the base salary shall be $155,000; January 1, 2013 through December 31,
2013 the base salary shall be $165,000; January 1, 2014 through December 31,
2014 the base salary shall be $175,000, and January 1, 2015 through December 31,
2015 the base salary shall be $185,000.





5.            Moving
Allowance.As additional compensation for this Agreement, RTE agrees to
pay Employee's moving expenses up to Ten Thousand Dollars ($10,000) as a moving
allowance to be paid when Employee relocates his residence from Morris,
Minnesota, to North Dakota.





6.            Year End
Bonus.Employee shall receive an annual year end bonus from RTE of one
half of one percent (.005%) of the annual net income of RTE, up to and amount
equaling fifty percent (50%) of Employee's annual salary for that year. In
addition to said one half of one percent (.005%) bonus, Employee shall be
eligible to receive an additional bonus which amount shall be determined by the
RTE Board of Governors annually.


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7.           Additional
Benefits and Working Facilities.





(a)
            RTE
      shall furnish Employee with the equipment, office space, secretarial
      support and such other items related to his employment that Employee
      reasonably determines are necessary, useful, and appropriate to him to
      conduct and carry out the duties required by his
    employment.





(b)
            RTE
      shall provide Employee with life, disability, health and dental insurance,
      and any other benefits included in its company sponsored benefit program
      applicable to other employees. In addition, Employee shall have the
      benefit of such other employee benefit plans that RTE, may, from time to
      time, establish and in which Employee would be entitled to participate
      pursuant to the terms thereof





(c)
            Employee
      shall be entitled to five (5) weeks of annual paid vacation during the
      term of this Agreement. One week of vacation may be carried over to the
      subsequent year if not taken by
Employee.





(d)
            RTE
      shall reimburse Employee for all reasonable expenses incurred by Employee
      in connection with RTE business, upon presentation of itemized statements
      therefore together with receipts for out of pocket
    expenses.





8.           Conflicts
of Interest.The Employee agrees that he will not, directly or
indirectly, transact business which conflicts with RTE's interests personally,
or as agent, owner, partner, or shareholder of any other entity; provided,
however, that any such transaction may be entered into if knowingly approved by
all of the disinterested members of RTE's Board of Governors prior to such
transaction.





Employee
further agrees he will give his "best efforts" to his employment with RTE and
will not engage in similar activities with other individuals, entities or
organizations involved in the ethanol industry other than with the express
written consent of the Board of Governors.





9. Events of
Termination.This Agreement shall be terminated as
follows:





(a)
            On
      the expiration of the term set forth at Section 3
  above;




(b)
            By
      mutual written agreement of the
parties;




(c)
            Upon
      Employee's death;





(d)
            Without
      notice, by RTE, for cause. "Cause" for purposes hereof shall mean a
      determination by RTE's Board of Governors that Employee has: (i) committed
      an illegal act that reflects upon his fitness to act as an officer and
      employee of RTE; or (ii) refused, or is unable, to perform his duties
      hereunder, other than as a result of illness or disability, for a period
      of one hundred twenty (120) consecutive days in a twelve (12) month
      period; or




(e)
            If
      Employee is terminated without cause by RTE, Employee shall qualify for
      severance
      benefits as follows:


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It is
expressly recognized that Employee's position with RTE and agreement to be bound
by the terms of this Agreement represents a commitment in terms of Employee's
personal and professional career which cannot be reduced to monetary terms, and
thus, necessarily constitutes a forbearance of options available now and in the
future to Employee and in the ethanol industry. Accordingly, in the event RTE
elects to terminate this Agreement without cause. Employee shall receive six (6)
months of Base Salary on a semi-monthly basis regardless of Employee's
relocation and re-employment elsewhere. RTE shall have the option of a lump sum
cash settlement in lieu of the six (6) month severance compensation referenced
above. If RTE elect this option it shall be paid within thirty (30) days of the
beginning of Employee's six (6) month severance.





10.         Additional
Documents.The parties shall each, without further consideration, execute
such additional documents as may be reasonably required in order to carry out
the purpose and intent of this Agreement and to fulfill the obligation of the
respective parties hereunder.





11.         Waiver.Any waiver of any term
or condition of this Agreement shall not operate as a waiver of any other breach
of such term or condition, or of any other term or condition, nor shall any
failure to enforce a provision hereof operate as a waiver of such provision or
of any other provision hereof.





12.         Notices.All communications with respect to this Agreement shall be considered given if
delivered personally or sent as follows:





(a)           If
to Employee, by first class certified mail, postage prepaid, return receipt requested,
addressed as follows:





Gerald
Bachmeier


20897
467th
Avenue


Morris,
MN 56267





(b)  If to
RTE, by first class mail, postage prepaid, return receipt requested, addressed
as follows:





Red Trail
Energy, LLC


Attn:
Chairman of the Board


P. O. Box
11


Richardton,
ND 58652





or mailed
to such other address as the parties hereto may designate by notice given in
like manner. Notice shall be effective three (3) days after mailing or upon
personal delivery.





13.         Entire
Agreement.This Agreement, together with all exhibits and writings
required or contemplated hereby, constitutes the entire Agreement between the
parties hereto with respect to the transaction contemplated hereby and no party
shall be liable or bound to another in any manner by and warranties,
representations, or guarantees, except as specifically set forth
herein.





14.         Modification,
Amendments, and Waivers.The parties hereto at any time may, by written
Agreement: (i) extend the time for the performance of any of the obligations or
other acts of the parties hereto; (ii) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any exhibit,
schedule, letter, certificate, or other instrument delivered pursuant hereto;
(iii) waive compliance with any of the covenants or agreements contained in this
Agreement; or (iv) make any other modifications of this Agreement. This
Agreement shall not be altered or otherwise amended except pursuant to an
instrument in writing executed by both parties hereto.


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15.         Severability.No finding or adjudication that any provision of this Agreement is
invalid or unenforceable shall affect the validity or enforceability of the
remaining provision herein, and this Agreement shall be construed as though such
invalid or unenforceable provisions were omitted.





16.         Arbitration.All controversies or claims of any nature arising out of the transaction
which is the subject matter of this agreement shall be resolved by arbitration
under the commercial rules of the American Arbitration Association. The
Arbitrator(s) shall have the discretion to determine which party shall be liable
for the costs of arbitration (including, but not limited to, the Arbitrator(s)
charges). Each party shall bear their own costs and attorney fees incurred in
arbitration.





17.
              Miscellaneous.(a)
              The
      terms and conditions of this Agreement shall inure to the benefit of and
      be binding upon the parties hereto and the respective legal
      representatives, successors, and assigned of both of the parties
      hereto.





(b)
              This
      Agreement is made pursuant to and shall be construed under the laws of the
      State of North Dakota.(c)
              This
      Agreement shall be executed in two (2) counterparts, but each of these
      counterparts shall, for all purposes, be deemed to be an original, but
      both counterparts shall together constitute one and the same
      instrument.





IN WITNESS WHEREOF,the
parties have executed this Agreement effective the date set forth
above.





EMPLOYEE:
              
              EMPLOYER:RED
      TRAIL ENERGY, LLC/s/ Gerald Bachmeier
              
              By:
              /s/ Mike Appert
              (signature)Gerald Bachmeier, Employee
              
              
              Mike Appert
              (printed)Its:
              Chairman
              (title)


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