<PAGE>
                                                                   Exhibit 10.30


                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

      This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of January 4,
2006 (this "Agreement"), between American Railcar Industries, Inc., a Missouri
corporation (the "Company") and Mr. James A. Cowan (the "Employee") amends and
restates that employment agreement, dated December 1, 2005, between ARI and the
Employee.

1.  Employment

(a) Upon the terms and conditions hereinafter set forth, the Company hereby
agrees to employ the Employee and the Employee hereby agrees to become so
employed. During the Term of Employment (as hereinafter defined), the Employee
shall be employed in the position of the Chief Operating Officer of the Company,
reporting to James J. Unger, Chief Executive Officer of the Company and the
Board of Directors of the Company (the "Board"), and as an officer of
subsidiaries of the Company as specified and directed by the Board from time to
time, and shall perform such duties, consistent with such status and position,
as are specified from time to time by, and shall serve in such capacities at the
pleasure of, the Company and the Board, subject to the terms hereof.

(b) During the Term of Employment (as hereinafter defined), the Employee shall
devote all of his professional attention, on a full time basis, to the business
and affairs of the Company and shall use his best efforts to advance the best
interest of the Company and shall comply with all of the policies of the
Company, including, without limitation, such policies with respect to legal
compliance, conflicts of interest, confidentiality and business ethics as are
from time to time in effect.

(c) During the Term of Employment, the Employee shall not directly or indirectly
render services to, or otherwise act in a business or professional capacity on
behalf of or for the benefit of, any other "Person" (as defined below) as an
employee, advisor, member of a board or similar governing body, independent
contractor, agent, consultant, representative or otherwise, whether or not
compensated. "Person" or "person", as used in this Agreement, means any
individual, partnership, limited partnership, corporation, limited liability
company, trust, estate, cooperative, association, organization, proprietorship,
firm, joint venture, joint stock company, syndicate, company, committee,
government or governmental subdivision or agency, or other entity.

2.  Term

The employment period of the Employee hereunder shall commence on or before
December 5, 2005, and shall continue through December 31, 2008 (December 31,
2008 being the "Expiration Date"), unless earlier terminated as set forth in
this Agreement.

3.  Compensation

For all services to be performed by the Employee under this Agreement, during
the Term of Employment, the Employee shall be compensated in the following
manner:


                                     Page 1
<PAGE>
      (a)   Base Compensation

The Company will pay the Employee a salary (the "Base Salary") at an annual rate
of $300,000 per full 365-day year. The Base Salary shall be payable in
accordance with the normal payroll practice of the Company. The Base Salary will
be reviewed periodically by the Board of Directors as is customary with other
officers. Following such review, the Board of Directors may, at its absolute and
sole discretion, increase (but shall not be required to increase) the Base
Salary or other benefits.

      (b)   Bonus Compensation

The Company will pay the Employee an annual bonus for each calendar year of
employment ending on or after December 31, 2006, calculated based on the
achievement of objective performance targets for the Company to be set by the
Board (or a committee thereof) not later than March 31 for each such calendar
year, of up to 50% of Base Salary, if such performance targets are met. The
compensation payable as contemplated in the preceding sentence of this section
3(b) is referred to herein as "Bonus Compensation". The Bonus Compensation in
respect of any calendar year shall be paid no later than March 15 of the
following calendar year or such later day as permissible under Section 409A of
the Internal Revenue Code of 1986, as amended from time to time, (the "Code")
and the guidance issued thereunder from time to time, but in any event no later
than promptly following completion of the audited financial statements of the
Company for the calendar year in question (such date, the "Bonus Payment Date").

      (c)   Stock Options

Pursuant to the Company's 2005 Equity Incentive Plan (the "Plan"), the Company
hereby agrees to grant to the Employee, on the date that the Company enters into
an underwriting agreement with underwriters (the "Pricing Date") relating to the
Company's initial public offering registered with the Securities and Exchange
Commission on Form S-1 (the "IPO"), stock options (the "Stock Options") in
respect of a notional amount equal to 1.25% of the shares of common stock of the
Company (the "Shares") to be outstanding immediately following the IPO (without
giving effect to any exercise of the over-allotment option) at an exercise price
equal to the fair market value of the Common Stock at the time of grant (the
"Exercise Price"); provided, however, if for any reason or no reason, the IPO is
not completed within five (5) business days of the Pricing Date at the price per
share of Common Stock as set forth on the cover of the final prospectus relating
to the IPO, the Stock Options shall immediately, and without further action,
terminate. Subject to this Section 3(c), the Stock Options shall be subject to
the terms and conditions of the Plan and the Notice of Stock Option Award, each
substantially in the form attached hereto as Exhibits A-1 and A-2, respectively;
provided, however, Section 7(f)(E) of the Plan shall not apply to the Employee's
Stock Options.

      (d)   Taxes

All amounts paid to the Employee under or pursuant to this Agreement, including,
without limitation, the Base Salary and any Bonus Compensation and Stock
Options, or any other compensation or benefits, whether in cash or in kind,
shall be subject to normal federal, state and, if applicable, local or foreign
tax withholding and deductions imposed by any one or


                                     Page 2

<PAGE>
more federal, state, local and or foreign governments, or pursuant to any
foreign or domestic applicable law, rule or regulation.

4.  Benefits.

During the Term of Employment, and in addition to any benefits and perquisites
to which the Employee is otherwise entitled pursuant to this Agreement, the
Employee shall be entitled to receive healthcare, group term life insurance,
group long-term disability insurance, 401(k) participation, twenty business days
paid vacation per year, and other similar employee benefits at least equal to
those currently or subsequently received by other senior employees of the
Company as such may be provided by the Company in its sole and absolute
discretion from time to time. In addition, during the Term of Employment, the
Employee shall be entitled to reimbursement for the reasonable use of an
automobile and for the payment of reasonable country club dues (but, not
including initiation fees) on terms consistent to those received by other senior
employees of the Company.

5.  Termination

This Agreement shall terminate (subject to Section 9(f) below) and the Term of
Employment and the employment of Employee hereunder shall end, on the first to
occur of any of the following (each a "Termination Event"):

      (a)   The Expiration Date;

      (b)   The: (i) death of the Employee or (ii) reasonable determination of
            the Board, which determination shall be reached in consultation with
            appropriate medical professionals, that the Employee has become
            physically or mentally incapacitated so as to be unable to perform
            the essential functions of Employee's duties to the Company for 60
            consecutive days, even with reasonable accommodation, (the
            "Disability);

      (c)   The discharge of the Employee by the Company with or without Cause;
            or

      (d)   The resignation of the Employee (and without limiting the effect of
            such resignation, the Employee agrees to provide the Company with
            not less than 30 days prior written notice of his resignation, in
            which event the Company may, at its option, declare such resignation
            to be effective at any day following receipt of such notice).

The Company may discharge the Employee at any time, for any reason or no reason,
with or without Cause. As used herein, "Cause" is defined as the Employee's: (i)
failure to perform substantially the duties of the Chief Operating Officer of
the Company (other than any such failure resulting from incapacity due to
Disability), (ii) charged with any crime other than traffic violations, (iii)
engagement in an act of fraud or of willful dishonesty towards the Company, (iv)
material breach of this Agreement, (v) willful misconduct or gross negligence in
the performance of Employee's duties hereunder, or (vi) violation of a federal
or state securities law or regulation. To the extent the Employee is discharged
or resigns, or is otherwise terminated or is deemed terminated, in each case as
provided herein, from his

                                     Page 3
<PAGE>
position with the Company, he shall be and be deemed to have ceased his
employment in the same manner with all of the subsidiaries of the Company.

6.  Effect of Termination

In the event of termination of the Employee's employment hereunder, all rights
of the Employee under this Agreement, including all rights to compensation,
shall end and the Employee shall only be entitled to be paid the amounts set
forth in this Section 6 below; provided, that, the obligations of the Company to
make any payment required pursuant to this Section 6 (other than (x) any amounts
of the Employee's Base Salary previously earned and accrued and (y) in
accordance with the Company's policy, unreimbursed business expenses of the
Employee, ((x) and (y) collectively, the "Accrued Obligations"), but with the
exception of the Accrued Obligations being payable under clause (c) below), is
conditioned upon (i) execution and delivery by the Employee to the Company of a
settlement and release agreement in favor of the Company, its affiliates and
their respective officers, directors, employees, agents and equity holders in
respect of the Employee's employment with the Company and the termination
thereof in form substantially as set forth in Exhibit B, attached hereto, and
(ii) such agreement, once executed by the Employee and delivered to the Company,
becomes irrevocable, enforceable and final under the applicable law.

      (a)   In the event that the Employee's employment is terminated for the
            reason set forth in Section 5(a) above (i.e., Expiration Date),
            then, in lieu of any other payments of any kind (including without
            limitation, any severance payments), the Employee shall be entitled
            to receive, within thirty (30) days following the date on which the
            Termination Event in question occurred (the "Clause (a) Termination
            Date") (or, in the case of any Bonus Compensation, as soon as
            practicable following the calculation thereof):

            (i)   the Employee's Accrued Obligations, due and unpaid to the
                  Employee from the Company as of the Clause (a) Termination
                  Date; and

            (ii)  any amounts of Bonus Compensation earned and due in respect of
                  a completed calendar year, which remains unpaid to the
                  Employee as of the Clause (a) Termination Date.

      (b)   In the event that the Employee's employment is terminated for the
            reason set forth in Section 5(b) above (i.e., death or Disability),
            then, in lieu of any other payments of any kind (including without
            limitation, any severance payments), the Employee shall be entitled
            to receive, within thirty (30) days following the date on which the
            Termination Event in question occurred (the "Clause (b) Termination
            Date") (or, in the case of any Bonus Compensation, as soon as
            practicable following the calculation thereof):

            (i)   the Employee's Accrued Obligations, due and unpaid to the
                  Employee from the Company as of the Clause (b) Termination
                  Date;

            (ii)  any amounts of Bonus Compensation earned and due with respect
                  to a completed calendar year, which remains unpaid to the
                  Employee as of the Clause (b) Termination Date; and


                                     Page 4
<PAGE>
            (iii) a pro-rated portion of the Bonus Compensation computed as set
                  forth below.


      (c)   In the event that the Employee's employment is terminated (A) for
            the reason set forth in Section 5(d) above (i.e., resignation) or
            (B) due to the discharge of the Employee by the Company for Cause,
            then, in lieu of any other payments of any kind (including without
            limitation, any severance payments), the Employee shall be entitled
            to receive, within thirty (30) days following the date on which the
            Termination Event in question occurred (the "Clause (c) Termination
            Date") the Employee's Accrued Obligations, due and unpaid to the
            Employee from the Company as of the Clause (c) Termination Date.

      (d)   In the event that the Employee's employment is terminated due to the
            discharge of the Employee by the Company without Cause (which the
            Company is free to do at any time in its sole and absolute
            discretion), then, in lieu of any other payments of any kind
            (including, without limitation, any severance payments), the
            Employee shall be entitled to receive, within thirty (30) days
            following the date on which the Termination Event in question
            occurred (the "Clause (d) Termination Date") (other than in the case
            of (iv), which shall be paid in accordance with normal payroll
            practice of the Company or, in the case of any Bonus Compensation,
            as soon as practicable following the calculation thereof):

            (i)   the Employee's Accrued Obligations, due and unpaid to the
                  Employee from the Company as of the Clause (d) Termination
                  Date;

            (ii)  any amounts of Bonus Compensation earned and due with respect
                  to a completed calendar year, which remains unpaid to the
                  Employee as of the Clause (d) Termination Date;

            (iii) a pro-rated portion of the Bonus Compensation computed as set
                  forth below; and

            (iv)  a continuation of the payment, in accordance with the normal
                  payroll practice of the Company, of amounts of Base Salary
                  that the Employee would have earned through the Expiration
                  Date had he continued to be employed by the Company through
                  the Expiration Date.

      (e)   In the event of any termination of the Employee's employment, the
            Employee shall be under no obligation to seek other employment, but
            in the event the Employee becomes employed following any such
            termination, the Company shall be entitled to an offset of the
            payments paid or to be paid under clause (iv) of Section 6(d) above,
            on account of any remuneration or other benefit attributable to any
            subsequent employment that the Employee may obtain. The Employee
            shall correctly disclose to the Company all such remuneration or
            other benefit, and if there is a written employment agreement in
            connection therewith, provide the Company with a copy thereof.


                                     Page 5

<PAGE>
      (f)   For the purpose of this Section 6, any Bonus Compensation shall be
            deemed to be earned and to become due and payable with respect to
            any calendar year only if the Term of Employment has continued
            through December 31, of such year and, with respect to the amounts,
            if any, of such Bonus Compensation for any year, shall be determined
            based upon the level of attainment of the applicable performance
            targets for such year. In the event that, pursuant to the terms of
            this Section 6, the Employee is entitled to receive any pro rated
            Bonus Compensation, such pro ration shall be determined following
            December 31 of the calendar year in which the Employee ceases to be
            employed hereunder, but shall be paid no later than the following
            Bonus Payment Date, and shall be calculated by multiplying the Bonus
            Compensation that would have been deemed earned and to become due
            and payable in accordance with the terms of this Agreement with
            respect to the calendar year in which the Employee ceases to be
            employed hereunder if the Term of Employment had continued through
            December 31 of such year as determined based upon the applicable
            performance targets for such year, by a fraction, the numerator of
            which is the number of days from (and including) January 1 of such
            year through (and including) the last day of employment hereunder,
            and the denominator of which is 365.

7.  Non-Disclosure

During the Term of Employment and at all times thereafter, the Employee shall
hold in a fiduciary capacity for the benefit of the Company and each of its
affiliates, all secret or confidential information, knowledge or data,
including, without limitation, trade secrets, sources of supplies and materials,
customer lists and their identity, designs, production and design techniques and
methods, identity of investments, identity of contemplated investments, business
opportunities, valuation models and methodologies, processes, technologies, and
any other intellectual property relating to the business of the Company or its
affiliates, and their respective businesses, (i) obtained by the Employee during
the Employee's employment by the Company and any of the subsidiaries of the
Company and (ii) not otherwise in the public domain, ("Confidential
Information"). The Employee also agrees to keep confidential and not disclose
any personal information regarding any controlling Person of the Company,
including Carl C. Icahn, or any of its or his affiliates and their employees,
and any member of the immediate family of any such Person (and all such personal
information shall be deemed "Confidential Information" for the purposes of this
Agreement). The Employee shall not, without the prior written consent of the
Company (acting at the direction of the Board): (i) except to the extent
compelled pursuant to the order of a court or other body having jurisdiction
over such matter or based upon the advice of counsel that such disclosure is
legally required, communicate or divulge any Confidential Information to anyone
other than the Company and those designated by the Company; or (ii) use any
Confidential Information for any purpose other than the performance of his
duties pursuant to this Agreement. The Employee will assist the Company or its
designee, at the Company's expense, in obtaining a protective order, other
appropriate remedy or other reliable assurance that confidential treatment will
be accorded any Confidential Information disclosed pursuant to the terms of this
Agreement.

All processes, know-how, technologies, trade-secrets information, intellectual
property and inventions (collectively, "Inventions") conceived, developed,
invented, made or found by the

                                     Page 6

<PAGE>
Employee, alone or with others, during the Term of Employment and out of the
performance of his duties and responsibilities hereunder, whether or not
patentable and whether or not on the Company's or any of its subsidiaries' time
or with the use of the Company's or any of its subsidiaries' facilities or
materials, shall be the property of the Company or its respective subsidiary, as
the case may be, and shall be promptly and fully disclosed by the Employee to
the Company. The Employee shall perform all necessary acts (including, without
limitations, executing and delivering any confirmatory assignments, power of
attorney, documents, or instruments requested by the Company or any of its
subsidiaries) to vest title to any such Invention in the Company or the
applicable subsidiary and to enable the Company or the applicable subsidiary, at
their expense, to secure and maintain domestic and/or foreign patents or any
other rights for such Inventions.

All right, title and interest in all copyrightable material that the Employee
shall conceive or originate individually or jointly or commonly with others, and
that arise during the term of his employment with the Company and out of the
performance of his duties and responsibilities under this Agreement, shall be
the property of the Company and are hereby assigned by the Employee to the
Company, along with ownership of any and all copyrights in the copyrightable
material. Upon request and without further compensation therefor, but at no
expense to the Employee, the Employee shall execute any and all papers and
perform all other acts necessary to assist the Company to obtain and register
copyrights on such materials in any and all countries. Where applicable, works
of authorship created by the Employee for the Company in performing his duties
and responsibilities hereunder shall be considered "works made for hire," as
defined in the U.S. Copyright Act.

8.  Non-Compete and Non-Solicitation

      (a)   In addition to, and not in limitation of, all of the other terms and
            provisions of this Agreement, the Employee agrees that during the
            Term of Employment, the Employee will comply with the provisions of
            Section 1 above.

      (b)   Unless the Employee's employment is terminated by the Company
            without Cause, for the later of (i) a period of one (1) year
            following the last day of the Term of Employment or (ii) the period
            during which the Company continues to pay Base Salary to the
            Employee after termination of employment under Section 6(d)(iv), the
            Employee will not, either directly or indirectly, as principal,
            agent, owner, employee, director, partner, investor, shareholder
            (other than solely as a holder of not more than 1% of the issued and
            outstanding shares of any public corporation), consultant, advisor
            or otherwise howsoever own, operate, carry on or engage in the
            operation of or have any financial interest in or provide, directly
            or indirectly, financial assistance to or lend money to or guarantee
            the debts or obligations of any Person carrying on or engaged in any
            business that is similar to or competitive with the business
            conducted by the Company or any of its subsidiaries during or on the
            date of termination of Employee's employment. The business of
            manufacturing, selling and/or distributing railcars and railcar
            parts and other related products shall be and be deemed to be
            "competitive" with the business conducted by the Company for the
            purposes hereof.


                                     Page 7
<PAGE>
      (c)   The Employee covenants and agrees with the Company and its
            subsidiaries that, during the Term of Employment and for the later
            of (i) one (1) year following the last day of the Term of Employment
            or (ii) the period during which the Company continues to pay Base
            Salary to the Employee under Section 6(d)(iv) thereafter, the
            Employee shall not directly, or indirectly, for herself or for any
            other Person:

            (i)   solicit, interfere with or endeavor to entice away from the
                  Company or any of its subsidiaries or affiliates, any
                  customer, client or any Person in the habit of dealing with
                  any of the foregoing;

            (ii)  attempt to direct or solicit any customer or client away from
                  the Company or any of its subsidiaries or affiliates;

            (iii) interfere with, entice away or otherwise attempt to obtain the
                  withdrawal of any employee of the Company or any of its
                  subsidiaries or affiliates; or

            (iv)  advise any Person not to do business with the Company or any
                  of its subsidiaries or affiliates.

The Employee represents to and agrees with the Company that the enforcement of
the restrictions contained in Section 7 and Section 8 (the Non-Disclosure and
Non-Compete and Non-Solicitation sections respectively) would not be unduly
burdensome to the Employee and that such restrictions are reasonably necessary
to protect the legitimate interests of the Company. The Employee agrees that the
remedy of damages for any breach by the Employee of the provisions of either of
these sections may be inadequate and that the Company shall be entitled to
injunctive relief, without posting any bond. This section constitutes an
independent and separable covenant that shall be enforceable notwithstanding any
right or remedy that the Company may have under any other provision of this
Agreement or otherwise.

9.  Miscellaneous

      (a)   This Agreement constitutes the entire agreement between the parties
            with respect to the subject matter hereof and supersedes all
            previous written, and all previous or contemporaneous oral
            negotiations, understandings, arrangements, and agreements, and may
            be amended, modified or changed only by a written instrument
            executed by the Employee and the Company.

      (b)   This Agreement and all of the provisions hereof shall inure to the
            benefit of and be binding upon the legal representative, heirs,
            distributees, successors (whether by merger, operation of law or
            otherwise) and assigns of the parties hereto; provided, however,
            that the Employee may not delegate any of the Employee's duties
            hereunder, and may not assign any of the Employee's rights
            hereunder, and any such purported or attempted assignment or
            delegation shall be null and void and of no legal effect. In the
            event the Company assigns this Agreement and its successor assumes
            the Company's obligations hereunder in writing or by operation of
            law, (i) the Company shall be released from all of its obligations
            hereunder, and (ii) all of the references to the Company, and to the


                                     Page 8
<PAGE>
            Board, shall be deemed to be references to the Company's successor
            and to the governing body of such successor, respectively. The
            Company and all of its future or current subsidiaries shall be and
            be deemed to be third-party beneficiaries of this Agreement.

      (c)   This Agreement will be interpreted and the rights of the parties
            determined in accordance with the laws of the United States
            applicable thereto and the internal laws of the State of New York.

      (d)   The Employee covenants and represents that (i) he is not a party to
            any contract, commitment, restrictive covenant or agreement, nor is
            he subject to, or bound by, any order, judgment, decree, law,
            statute, ordinance, rule, regulation or other restriction of any
            kind or character, which would prevent or restrict his from entering
            into and performing his obligations under this Agreement, (ii) he is
            free to enter into the arrangements contemplated herein, (iii) he is
            not subject to any agreement or obligation that would limit his
            ability to act on behalf of the Company or any of its subsidiaries,
            and (iv) his termination of his existing employment, his entry into
            the employment contemplated herein and his performance of his duties
            in respect thereof, will not violate or conflict with any agreement
            or obligation to which he is subject. Employee has delivered to the
            Company true and complete copies of any currently effective
            employment agreement, non-competitive agreement or similar agreement
            to which Employee is subject.

      (e)   The Employee acknowledges that he has had the assistance of legal
            counsel in reviewing and negotiating this Agreement.

      (f)   This Agreement and all of its provisions (other than the provisions
            of Section 3(c)A(i), Section 5, Section 6, Section 7, Section 8, and
            Section 9 hereof, which shall survive termination) shall terminate
            upon the Employee ceasing to be an employee of the Company for any
            reason.

      (g)   All notices and other communications hereunder shall be in writing;
            shall be delivered by hand delivery to the other party or mailed by
            registered or certified mail, return receipt requested, postage
            prepaid or by a nationally recognized courier service such as
            Federal Express; shall be deemed delivered upon actual receipt; and
            shall be addressed as follows:

            If to the Company:

            American Railcar Industries, Inc.
            100 Clark Street
            St. Charles, Missouri 63301
            Facsimile:  (636) 940-6044
            Attention:  James J. Unger, President and Chief Executive Officer

            If to the Employee:


                                     Page 9


<PAGE>
            At the last known principal residence address reflected in the
            payroll records of the Company, or to such other address as either
            party shall have furnished to the other in writing in accordance
            herewith.


                            [Signature Page Follows]




                                    Page 10

<PAGE>
AMERICAN RAILCAR INDUSTRIES, INC.


By:  /s/ James J. Unger
    -----------------------------------------------
       Name:  James J. Unger
       Title: President and Chief Executive Officer

Date:  January 4, 2005
       --------------------------------------------


EMPLOYEE:


By:  /s/ James A. Cowan
    -----------------------------------------------
       James A. Cowan

Date:  January 4, 2005
       --------------------------------------------




                    [Signature page to Employment Agreement]





                                    Page 11

<PAGE>
                                                    [2005 EQUITY INCENTIVE PLAN]

                                                                     EXHIBIT A-1


                                     FORM OF
                             AMERICAN RAILCAR, INC.
                           2005 EQUITY INCENTIVE PLAN


1. Purpose and Eligibility. The purpose of this 2005 Equity Incentive Plan (the
"Plan") of American Railcar, Inc., a Delaware corporation (the "Company") is to
provide stock options, stock issuances, stock units and other equity interests
in the Company (each, an "Award") to (a) employees, officers, directors,
consultants and advisors of the Company and its Parents and Subsidiaries, and
(b) any other Person who is determined by the Board to have made (or is expected
to make) contributions to the Company. Any person to whom an Award has been
granted under the Plan is called a "Participant." Additional definitions are
contained in Section 10.

2. Administration.

      a. Administration by Board of Directors. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board, in its sole
discretion, shall have the authority to grant and amend Awards, to adopt, amend
and repeal rules relating to the Plan and to interpret and correct the
provisions of the Plan and any Award. The Board shall have authority, subject to
the express limitations of the Plan, (i) to construe and determine the
respective Stock Option Agreement, Awards and the Plan, (ii) to prescribe, amend
and rescind rules and regulations relating to the Plan and any Awards, (iii) to
determine the terms and provisions of the respective Stock Option Agreements and
Awards, which need not be identical, (iv) to initiate an Option Exchange
Program, and (v) to make all other determinations in the judgment of the Board
of Directors necessary or desirable for the administration and interpretation of
the Plan. The Board may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any Stock Option Agreement or Award in the
manner and to the extent it shall deem expedient to carry the Plan, any Stock
Option Agreement or Award into effect and it shall be the sole and final judge
of such expediency. All decisions by the Board shall be final and binding on all
interested persons. Neither the Company nor any member of the Board shall be
liable for any action or determination relating to the Plan.

      b. Appointment of Committee. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean such Committee or the Board.

      c. Delegation to Executive Officers. To the extent permitted by applicable
law, the Board may delegate to one or more executive officers of the Company the
power to grant Awards and exercise such other powers under the Plan as the Board
may determine, provided that the Board shall fix the maximum number of Awards to
be granted and the maximum number of shares issuable to any one Participant
pursuant to Awards granted by such executive officers.
<PAGE>
      d. Applicability of Section Rule 16b-3. Notwithstanding anything to the
contrary in the foregoing if, or at such time as, the Common Stock is or becomes
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any successor statute, the Plan shall be administered
in a manner consistent with Rule 16b-3 promulgated thereunder, as it may be
amended from time to time, or any successor rules ("Rule 16b-3"), such that all
subsequent grants of Awards hereunder to Reporting Persons, as hereinafter
defined, shall be exempt under such rule. Those provisions of the Plan which
make express reference to Rule 16b-3 or which are required in order for certain
option transactions to qualify for exemption under Rule 16b-3 shall apply only
to such persons as are required to file reports under Section 16 (a) of the
Exchange Act (a "Reporting Person").

      e. Applicability of Section 162 (m). Those provisions of the Plan which
are required by or make express reference to Section 162 (m) of the Code or any
regulations thereunder, or any successor section of the Code or regulations
thereunder ("Section 162 (m)") shall apply only upon the Company's becoming a
company that is subject to Section 162 (m). Notwithstanding any provisions in
this Plan to the contrary, whenever the Board is authorized to exercise its
discretion in the administration or amendment of this Plan or any Award
hereunder or otherwise, the Board may not exercise such discretion in a manner
that would cause any outstanding Award that would otherwise qualify as
performance-based compensation under Section 162 (m) to fail to so qualify under
Section 162 (m).

3     Stock Available for Awards.

      a. Number of Shares. Subject to adjustment under Section 3(c), the
aggregate number of shares of common stock of the Company (the "Common Stock")
that may be issued pursuant to the Plan is one million 1,000,000. If any Award
expires, or is terminated, surrendered or forfeited, in whole or in part, the
unissued Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan. If an Award granted under the Plan shall expire
or terminate for any reason without having been exercised in full, the
unpurchased shares subject to such Award shall again be available for subsequent
Awards under the Plan, and if shares of Common Stock issued pursuant to the Plan
are repurchased by, or are surrendered or forfeited to, the Company at no more
than the price paid for such shares, such shares of Common Stock shall again be
available for the grant of Awards under the Plan. Shares issued under the Plan
may consist in whole or in part of authorized but unissued shares or treasury
shares.

      b. Per-Participant Limit. Subject to adjustment under Section 3(c), no
Participant may be granted Awards during any one fiscal year to purchase more
than two hundred and fifty thousand 300,000 shares of Common Stock.

      c. Adjustment to Common Stock. Subject to Section 7, in the event of any
stock split, reverse stock split stock dividend, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off, split-up, or other similar change in
capitalization or similar event (other than any stock split effected in
connection with the merger of American Railcar Industries, Inc., a Missouri
Corporation with and into the
<PAGE>
Corporation), (i) the number and class of securities available for Awards under
the Plan and the per-Participant share limit, (ii) the number and class of
securities, vesting schedule and exercise price per share subject to each
outstanding Option, (iii) the repurchase price per security subject to
repurchase, and (iv) the terms of each other outstanding Award shall be adjusted
by the Company (or substituted Awards may be made if applicable) to the extent
the Board shall determine, in good faith, that such an adjustment (or
substitution) is appropriate.

4.    Stock Options.

      a. General. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option and the shares of Common
Stock issued upon the exercise of each Option, including, but not limited to,
vesting provisions, repurchase provisions and restrictions relating to
applicable federal or state securities laws. Each Option will be evidenced by a
Stock Option Agreement, consisting of a Notice of Stock Option Award and a Stock
Option Award Agreement (collectively, a "Stock Option Agreement").

      b. Incentive Stock Options. An Option that the Board intends to be an
incentive stock option (an "Incentive Stock Option") as defined in Section 422
of the Code, as amended, or any successor statute ("Section 422"), shall be
granted only to an employee of the Company and shall be subject to and shall be
construed consistently with the requirements of Section 422 and regulations
thereunder. The Board and the Company shall have no liability if an Option or
any part thereof that is intended to be an Incentive Stock Option does not
qualify as such. An Option or any part thereof that does not qualify as an
Incentive Stock Option is referred to herein as a "Nonstatutory Stock Option" or
"Nonqualified Stock Option."

      c. Dollar Limitation. For so long as the Code shall so provide, Options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to qualify as Incentive Stock Options
shall not qualify as Incentive Stock Options to the extent that such Options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate fair market value (determined as of
the respective date or dates of grant) of more than $100,000. The amount of
Incentive Stock Options which exceed such $100,000 limitation shall be deemed to
be Nonqualified Stock Options. For the purpose of this limitation, unless
otherwise required by the Code or regulations of the Internal Revenue Service or
determined by the Board, Options shall be taken into account in the order
granted, and the Board may designate that portion of any Incentive Stock Option
that shall be treated as Nonqualified Option in the event that the provisions of
this paragraph apply to a portion of any Option. The designation described in
the preceding sentence may be made at such time as the Committee considers
appropriate, including after the issuance of the Option or at the time of its
exercise.

      d. Exercise Price. The Board shall establish the exercise price (or
determine the method by which the exercise price shall be determined) at the
time each Option is granted and specify the
<PAGE>
exercise price in the applicable Stock Option Agreement, provided, however, in
no event may the per share exercise price be less than the fair market value of
the Common Stock at the time of the grant. In the case of an Incentive Stock
Option granted to a Participant who, at the time of grant of such Option, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any parent or subsidiary, then the exercise
price shall be no less than 110% of the fair market value of the Common Stock on
the date of grant. In the case of a grant of an Incentive Stock Option to any
other Participant, the exercise price shall be no less than 100% of the fair
market value of the Common Stock on the date of grant.

      e. Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
Stock Option Agreement; provided, that the term of any Incentive Stock Option
may not be more than ten (10) years from the date of grant. In the case of an
Incentive Stock Option granted to a Participant who, at the time of grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any parent or subsidiary, the
term of the Option shall be no longer than five (5) years from the date of
grant.

      f. Exercise of Option. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 4(g) and the Stock Option Agreement
for the number of shares for which the Option is exercised.

      g. Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option shall be paid for by one or any combination of the following forms of
payment as permitted by the Board in its sole and absolute discretion:

            i. by check payable to the order of the Company;

            ii. only if the Common Stock is then publicly traded, by delivery of
an irrevocable and unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price, or delivery
by the Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price;

            iii. to the extent explicitly provided in the applicable Stock
Option Agreement, by delivery of shares of Common Stock owned by the Participant
valued at fair market value (as determined by the Board or as determined
pursuant to the applicable Stock Option Agreement); and

            iv. payment of such other lawful consideration as the Board may
determine.

Except as otherwise expressly set forth in a Stock Option Agreement, the Board
shall have no obligation to accept consideration other than cash and in
particular, unless the Board so expressly provides, in no event will the Company
accept the delivery of shares of Common Stock that have not been owned by the
Participant at least six months prior to the exercise. The fair market value of
any
<PAGE>
shares of the Company's Common Stock or other non-cash consideration which may
be delivered upon exercise of an Option shall be determined in such manner as
may be prescribed by the Board.

      h. Acceleration, Extension, Etc. The Board may, in its sole discretion,
and in all instances subject to any relevant tax and accounting considerations
which may adversely impact or impair the Company, (i) accelerate the date or
dates on which all or any particular Options or Awards granted under the Plan
may be exercised, or (ii) extend the dates during which all or any particular
Options or Awards granted under the Plan may be exercised or vest.

      i. Determination of Fair Market Value. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded under the
Exchange Act, "fair market value" shall mean (i) if the Common Stock is listed
on any established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq Small Cap Market of The
Nasdaq Stock Market, its fair market value shall be the last reported sales
price for such stock (on that date) or the closing bid, if no sales were
reported as quoted on such exchange or system as reported in The Wall Street
Journal or such other source as the Board deems reliable; or (ii) the average of
the closing bid and asked prices last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on a national market system. In the absence of an established market
for the Common Stock, the fair market value thereof shall be determined in good
faith by the Board after taking into consideration all factors which it deems
appropriate.

5.    Restricted Stock.

      a. Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to (i) delivery to the Company by the
Participant of a check in an amount at least equal to the par value of the
shares purchased, and (ii) the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula price from the
Participant in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each, a
"Restricted Stock Award").

      b. Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award. Any stock certificates issued in
respect of a Restricted Stock Award shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). After the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or, if the Participant has died, to the
beneficiary designated by a Participant, in a manner determined by the Board, to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
<PAGE>
6. Other Stock-Based Awards. The Board shall have the right to grant other
Awards based upon the Common Stock having such terms and conditions as the Board
may determine, including, without limitation, the grant of shares based upon
certain conditions, the grant of securities convertible into Common Stock and
the grant of stock appreciation rights, phantom stock awards or stock units.

7.    General Provisions Applicable to Awards.

      a. Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant; provided, however, except as the Board may otherwise
determine or provide in an Award, that Nonstatutory Options and Restricted Stock
Awards may be transferred pursuant to a qualified domestic relations order (as
defined in the Employee Retirement Income Security Act of 1974, as amended) or
to a grantor-retained annuity trust or a similar estate-planning vehicle in
which the trust is bound by all provisions of the Stock Option Agreement and
Restricted Stock Award, which are applicable to the Participant. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.

      b. Documentation. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine or as executed by
an officer of the Company pursuant to authority delegated by the Board. Each
Award may contain terms and conditions in addition to those set forth in the
Plan, provided that such terms and conditions do not contravene the provisions
of the Plan or applicable law.

      c. Board Discretion. The terms of each type of Award need not be
identical, and the Board need not treat Participants uniformly.

      d. Additional Award Provisions. The Board may, in its sole discretion,
include additional provisions in any Stock Option Agreement, Restricted Stock
Award or other Award granted under the Plan, including without limitation
restrictions on transfer, repurchase rights, commitments to pay cash bonuses, to
make, arrange for or guaranty loans or to transfer other property to
Participants upon exercise of Awards, or transfer other property to Participants
upon exercise of Awards, or such other provisions as shall be determined by the
Board; provided that such additional provisions shall not be inconsistent with
any other term or condition of the Plan or applicable law.

      e. Termination of Status. The Board shall determine the effect on an Award
of the disability (as defined in Section 22(e)(3) of the Code), death,
retirement, authorized leave of absence or other change in the employment or
other status of a Participant and the extent to which, and the period during
which, the Participant, or the Participant's legal representative, conservator,
guardian or Designated Beneficiary, may exercise rights under the Award, subject
to applicable law and the provisions of the Code related to Incentive Stock
Options.
<PAGE>
      f. Change in Control. Unless otherwise expressly provided in the
applicable Stock Option Agreement or Restricted Stock Award or other Award, in
connection with the occurrence of a Change in Control (as defined below), the
Board shall, in its sole discretion as to any outstanding Awards including any
portions thereof (on the same basis or on different bases, as the Board shall
specify), take one or any combination of the following actions:

                  A. make appropriate provision for the continuation of such
Awards by the Company or the assumption of such Awards by the surviving or
acquiring entity and by substituting on an equitable basis for the shares then
subject to such Awards either (x) the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Change in Control, (y)
shares of stock of the surviving or acquiring corporation or (z) such other
securities as the Board deems appropriate, the fair market value of which (as
determined by the Board in its sole discretion) shall not materially differ from
the fair market value of the shares of Common Stock subject to such Awards
immediately preceding the Change in Control;

                  B. accelerate the date of exercise or vesting of such Awards;

                  C. permit the exchange of such Award for the right to
participate in any stock option or other employee benefit plan of any successor
corporation;

                  D. provide for the repurchase of the Award for an amount equal
to the difference of (i) the consideration received per share for the securities
underlying the Award in the Change in Control minus (ii) the per share exercise
price, if any, of such securities. Such amount shall be payable in cash for the
property payable with respect to such securities in connection with the Change
in Control. The value of any such property shall be determined by the Board in
its sole discretion; or

                  E. provide for the termination of any such Awards immediately
prior to a Change in Control; provided that no such termination will be
effective if the Change in Control is not consummated.

      g. Change in Control Defined. For purposes of this Agreement, "Change in
Control" means the consummation of any transaction (including, without
limitation, any sale of stock, merger, consolidation or spin-off), the result of
which is that any Person, other than Carl Icahn or the Related Parties, becomes
the Beneficial Owner, directly or indirectly, of more than 50% of the Voting
Stock of the Company. For purposes of the definition of Change in Control, the
capitalized terms shall have the following meaning: "Beneficial Owner" has the
meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, except that in calculating the beneficial ownership of any particular
"person" (as that term is used in Section 13(d)(3) of the Exchange Act), such
"person" shall be deemed to have beneficial ownership of all securities that
such "person" has the right to acquire by conversion or exercise of other
securities, whether such right is currently exercisable or is exercisable only
after the passage of time. The terms "Beneficially Owns" and "Beneficially
Owned" have a corresponding meaning. "Exchange Act" means the Securities
Exchange Act of
<PAGE>
1934, as amended, and any successor thereto. "Related Parties" means: (1) Carl
Icahn, any spouse and any child, stepchild, sibling or descendant of Carl Icahn;
(2) any estate of Carl Icahn or of any person under clause (1); (3) any person
who receives a beneficial interest in any estate under clause (2) to the extent
of such interest; (4) any executor, personal administrator or trustee who holds
such beneficial interest in the Company for the benefit of, or as fiduciary for,
any person under clauses (1), (2) or (3) to the extent of such interest; and (5)
any Person, directly or indirectly owned or controlled by Carl Icahn or any
other person or persons identified in clauses (1), (2), (3) or (4), and (6) any
not-for-profit entity not subject to taxation pursuant to Section 501(c)(3) of
the Code or any successor provision to which Carl Icahn or any person identified
in clauses (1), (2), or (3) above is a member of the Board of Directors or an
equivalent governing body of, and is a senior officer or trustee, as the case
may be, of any such entity. "Voting Stock" means any class or series of capital
stock, or of an equity interest in an entity other than a corporation, that is
(A) ordinarily entitled to vote in the election of directors thereof at a
meeting of stockholders called for such purpose, without the occurrence of any
additional event or contingency or (B) in the case of an entity other than a
corporation, ordinarily entitled to elect or appoint the governing body of such
entity, without the occurrence of any additional event or contingency.

      h. Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Board shall notify each Participant as soon as
practicable prior to the effective date of such proposed transaction. The Board
in its sole discretion may provide for a Participant to have the right to
exercise his or her Award until fifteen (15) days prior to such transaction as
to all of the shares of Common Stock covered by the Option or Award, including
shares as to which the Option or Award would not otherwise be exercisable, which
exercise may in the sole discretion of the Board, be made subject to and
conditioned upon the consummation of such proposed transaction. In addition, the
Board may provide that any Company repurchase option applicable to any shares of
Common Stock purchased upon exercise of an Option or Award shall lapse as to all
such shares of Common Stock, provided the proposed dissolution and liquidation
takes place at the time and in the manner contemplated.

      i. Assumption of Options Upon Certain Events. In connection with a merger
or consolidation of an entity with the Company or the acquisition by the Company
of property or stock of an entity, the Board may grant Awards under the Plan in
substitution for stock and stock-based awards issued by such entity or an
affiliate thereof. The substitute Awards shall be granted on such terms and
conditions as the Board considers appropriate in the circumstances.

      j. Parachute Payments and Parachute Awards. Notwithstanding the provisions
of Section 7(f) and in the sole discretion of the Company, if, in connection
with a Change in Control described therein, if a tax under Section 4999 of the
Code would be imposed on the Participant (after taking into account the
exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code, if
applicable), then the number of Awards which shall become exercisable,
realizable or vested as provided in such Section shall be reduced (or delayed),
to the minimum extent necessary, so that no such tax would be imposed on the
Participant (the Awards not becoming so accelerated, realizable or vested, the
"Parachute Awards"). All determinations required to be made under this Section
7(j) shall be made by the Company.
<PAGE>
      k. Amendment of Awards. The Board may amend, modify or terminate any
outstanding Award including, but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant and such
action is expressly permitted herein, including, without limitation, Section
7(m).

      l. Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

      m. Acceleration. The Board may, without the Participant's consent, at any
time provide that any Options shall become immediately exercisable in full or in
part, that any Restricted Stock Awards shall be free of some or all
restrictions, or that any other stock-based Awards may become exercisable in
full or in part or free of some or all restrictions or conditions, or otherwise
realizable in full or in part, as the case may be, despite the fact that the
foregoing actions may (i) cause the application of Sections 280G and 4999 of the
Code if a change in control of the Company occurs, or (ii) disqualify all or
part of the Option as an Incentive Stock Option.

8. Withholding. The Company shall have the right to deduct from payments of any
kind otherwise due to the optionee or recipient of an Award any federal, state
or local taxes of any kind required by law to be withheld with respect to any
shares issued upon exercise of Options under the Plan or the purchase of shares
subject to the Award. Subject to the prior approval of the Company, which may be
withheld by the Company in its sole discretion, the optionee or recipient of an
Award may elect to satisfy such obligation, in whole or in part, (a) by causing
the Company to withhold shares of Common Stock otherwise issuable pursuant to
the exercise of an Option or the purchase of shares subject to an Award or (b)
by delivering to the Company shares of Common Stock already owned by the
optionee or Award recipient of an Award. The shares so delivered or withheld
shall have a fair market value of the shares used to satisfy such withholding
obligation as shall be determined by the Company as of the date that the amount
of tax to be withheld is to be determined. An optionee or recipient of an Award
who has made an election pursuant to this Section may only satisfy his or her
withholding obligation with shares of Common Stock which are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.

9. No Exercise of Option if Engagement or Employment Terminated for Cause. If
the employment or engagement of any Participant is terminated "for Cause," the
Award may terminate,
<PAGE>
upon a determination of the Board, on the date of such termination and the
Option shall thereupon not be exercisable to any extent whatsoever and the
Company shall have the right to repurchase any shares of Common Stock, subject
to a Restricted Stock Award whether or not such shares have vested, at the
Participant's initial purchase price. For purposes of this Section 9, "for
Cause" shall be defined as follows: (i) if the Participant has executed an
employment agreement, then the definition of "cause" contained therein, if any,
shall govern, or (ii) conduct, as determined by the Board of Directors,
involving any one of the following: (a) misconduct or inadequate performance by
the Participant which is injurious to the Company; (b) the commission of an act
of embezzlement, fraud or theft, which results in economic loss, damage or
injury to the Company; (c) the unauthorized disclosure of any trade secret or
confidential information of the Company (or any client, customer, supplier or
other third party who has a business relationship with the Company) or the
violation of any noncompetition or nonsolicitation covenant or assignment of
inventions obligation with the Company; (d) the commission of an act which
constitutes unfair competition with the Company or which induces any customer or
prospective customer of the Company to breach a contract with the Company or to
decline to do business with the Company; (e) the indictment of the Participant
for a felony or serious misdemeanor offense, either in connection with the
performance of his or her obligations to the Company or which shall adversely
affect the Participant's ability to perform such obligations; (f) the commission
of an act of fraud or breach of fiduciary duty which results in loss, damage or
injury to the Company; or (g) the failure of the Participant to perform in a
material respect his or her employment, consulting or advisory obligations
without proper cause. The Board may in its discretion waive or modify the
provisions of this Section at a meeting of the Board with respect to any
individual Participant with regard to the facts and circumstances of any
particular situation involving a determination under this Section.

10. Miscellaneous.

      a. Definitions.

            i. "Company," for purposes of eligibility under the Plan, shall
include any present or future subsidiary corporations of American Railcar, Inc.,
as defined in Section 424(f) of the Code (a "Subsidiary"), and any present or
future parent corporation of American Railcar, Inc., as defined in Section
424(e) of the Code. For purposes of Awards other than Incentive Stock Options,
the term "Company" shall include any other business venture in which the Company
has a direct or indirect significant interest, as determined by the Board in its
sole discretion.

            ii. "Code" means the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.

            iii. "Employee" for purposes of eligibility under the Plan shall
include a person to whom an offer of employment has been extended by the
Company.

            iv "Option Exchange Program" means a program whereby outstanding
options are exchanged for options with a lower exercise price.
<PAGE>
      b. No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan.

      c. No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder thereof.

      d. Effective Date and Term of Plan. The Plan shall become effective on the
date on which it is adopted by the Board. No Awards shall be granted under the
Plan after the completion of ten years from the date on which the Plan was
adopted by the Board, but Awards previously granted may extend beyond that date.

      e. Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time.

      f. Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the state of
Delaware, without regard to any applicable conflicts of law.
<PAGE>
                                                  [NOTICE OF STOCK OPTION AWARD]

                                                                     EXHIBIT A-2


                                     FORM OF
                        AMERICAN RAILCAR INDUSTRIES, INC.
                           2005 EQUITY INCENTIVE PLAN
                          NOTICE OF STOCK OPTION AWARD


      Unless otherwise defined herein, the terms defined in the 2005 Equity
Incentive Plan shall have the same defined meanings in this Notice of Stock
Option Award and the attached Stock Option Award Terms, which is incorporated
herein by reference (together, the "Award Agreement").

PARTICIPANT (the "PARTICIPANT")
<<Name>>
<<Address>>

GRANT

The undersigned Participant has been granted an Option to purchase Common Stock
of American Railcar Industries, Inc. (the "Company"), subject to the terms and
conditions of the Plan and this Award Agreement, as follows:

<TABLE>
<S>                     <C>                  <C>              <C>
      DATE OF GRANT     <<Grant_Date>>       TOTAL EXERCISE   $<<Total_Exercise_Price>>
                                             PRICE

      TYPE OF OPTION    [ ] Incentive Stock  TOTAL NUMBER OF  <<Shares_Granted>>
                        Option               SHARES GRANTED

                        [ ] Nonstatutory
                        Stock Option

      EXERCISE PRICE    $<<Exercise_Price>>  TERM/EXPIRATION  <<Five years from
      PER SHARE                              DATE             Grant Date>>
</TABLE>

Vesting Schedule:

This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:

<TABLE>
<CAPTION>
        NUMBER OF MONTHS (OR YEARS) OF       % OF GRANT (OR # OF SHARES) VESTED
                    SERVICE
      --------------------------------------------------------------------------
<S>                                          <C>
      One year anniversary of Grant Date     33% of Grant
</TABLE>
<PAGE>
<TABLE>
<S>                                          <C>
      Two year anniversary of Grant Date     66% of Grant

      Three year anniversary of Grant Date   100% of Grant
</TABLE>


Vesting of this Option shall cease upon termination of Employment (the
"RELATIONSHIP") of the Participant with the Company.

Termination:

If, within five (5) business days of the date of this Notice of Stock Option
Award, the Company's initial public offering is not completed at the price per
share of Common Stock as set forth on the cover of the Company's final
prospectus, dated the date hereof, this Option shall, without any further
action, immediately terminate.

PARTICIPANT                               AMERICAN RAILCAR INDUSTRIES, INC.


------------------------------------      ------------------------------------
Signature                                 By


------------------------------------      ------------------------------------
Print Name                                Title

------------------------------------

------------------------------------
Residence Address
<PAGE>
                        AMERICAN RAILCAR INDUSTRIES, INC.
                                  STOCK OPTION
                                   AWARD TERMS

      1.    Grant of Option. The Committee hereby grants to the Participant
            named in the Notice of Stock Option Grant an option (the "Option")
            to purchase the number of Shares set forth in the Notice of Stock
            Option Award, at the exercise price per Share set forth in the
            Notice of Stock Option Grant (the "Exercise Price"), and subject to
            the terms and conditions of the 2005 Equity Incentive Plan (the
            "Plan"), which is incorporated herein by reference. In the event of
            a conflict between the terms and conditions of the Plan and this
            Stock Option Award Agreement, the terms and conditions of the Plan
            shall prevail.

            If designated in the Notice of Stock Option Grant as an Incentive
            Stock Option ("ISO"), this Option is intended to qualify as an
            Incentive Stock Option as defined in Section 422 of the Code.
            Nevertheless, to the extent that it exceeds the $100,000 limitation
            rule of Code Section 422(d), this Option shall be treated as a
            Nonstatutory Stock Option ("NSO").

      2.    Exercise of Option.

            i.    Right to Exercise. This Option may be exercised during its
                  term in accordance with the Vesting Schedule set out in the
                  Notice of Stock Option Award and with the applicable
                  provisions of the Plan and this Award Agreement, including,
                  without limitation, if the Participant is terminated for Cause
                  as described more fully in Section 9 of the Plan, the Option
                  shall immediately terminate.

            ii.   Method of Exercise. This Option shall be exercisable by
                  delivery of an exercise notice in the form attached as Exhibit
                  A (the "Exercise Notice") which shall state the election to
                  exercise the Option, the number of Shares with respect to
                  which the Option is being exercised (the "Exercised Shares"),
                  and such other representations and agreements as may be
                  required by the Company. The Exercise Notice shall be
                  accompanied by payment of the aggregate Exercise Price as to
                  all Exercised Shares. This Option shall be deemed to be
                  exercised upon receipt by the Company of such fully executed
                  Exercise Notice accompanied by payment of the aggregate
                  Exercise Price.

            No Shares shall be issued pursuant to the exercise of an Option
            unless such issuance and such exercise complies with applicable
            laws. Assuming such compliance, for income tax purposes the Shares
            shall be considered transferred to the Participant on the date on
            which the Option is exercised with respect to such Shares.
<PAGE>
      3.    Termination. This Option shall be exercisable for three months after
            Participant ceases to be an employee; provided, however, if the
            Relationship is terminated by the Company for cause, the Option
            shall terminate immediately. Upon Participant's death or Disability,
            this Option may be exercised for twelve months after the
            Relationship ceases. In no event may Participant exercise this
            Option after the Term/Expiration Date as provided above. Section
            7(f)(E) of the Plan shall not apply to this Option.

      4.    Participant's Representations. In the event the Shares have not been
            registered under the Securities Act of 1933, as amended, (the
            "Securities Act") at the time this Option is exercised and as a
            condition of such exercise, the Participant shall, if required by
            the Company, concurrently with the exercise of all or any portion of
            this Option, deliver to the Company his or her investment
            representations as requested by the Company.

      5.    Lock-Up Period. Participant hereby agrees that, if so requested by
            the Company or any representative of the underwriters (the "Managing
            Underwriter") in connection with any registration of the offering of
            any securities of the Company under the Securities Act, Participant
            shall not sell or otherwise transfer any Shares or other securities
            of the Company during the 180-day period (or such other period as
            may be requested in writing by the Managing Underwriter and agreed
            to in writing by the Company) (the "Market Standoff Period")
            following the effective date of a registration statement of the
            Company filed under the Securities Act. The Company may impose
            stop-transfer instructions with respect to securities subject to the
            foregoing restrictions until the end of such Market Standoff Period.

      6.    Restrictions on Exercise. This Option may not be exercised until
            such time as the Plan has been approved by the stockholders of the
            Company, or if the issuance of such Shares upon such exercise or the
            method of payment of consideration for such shares would constitute
            a violation of any applicable law.

      7.    Non-Transferability of Option. This Option may not be transferred in
            any manner otherwise than by will or by the laws of descent or
            distribution and may be exercised during the lifetime of Participant
            only by Participant. The terms of the Plan and this Award Agreement
            shall be binding upon the executors, Committees, heirs, successors
            and assigns of the Participant.

      8.    Term of Option. This Option may be exercised only within the Term
            set out in the Notice of Stock Option Award which Term may not
            exceed five (5) years from the Date of Grant, and may be exercised
            during such Term only in accordance with the Plan and the terms of
            this Award Agreement.

      9.    Notice of Disqualifying Disposition of Incentive Stock Option
            Shares. If this Option is an Incentive Stock Option, and if the
            Participant sells or otherwise disposes of any of the Shares
            acquired pursuant to the Incentive Stock Option on or before the
            later of
<PAGE>
            (1) the date two years after the Date of Grant, or (2) the date one
            year after the date of exercise, the Participant shall immediately
            notify the Company in writing of such disposition. The Participant
            agrees that the Participant may be subject to income tax withholding
            by the Company on the compensation income recognized by the
            Participant.

      10.   Withholding. Pursuant to applicable federal, state, local or foreign
            laws, the Company may be required to collect income or other taxes
            on the grant of this Option, the exercise of this Option, the lapse
            of a restriction placed on this Option or the Shares issued upon
            exercise of this Option, or at other times. The Company may require,
            at such time as it considers appropriate, that the Participant pay
            the Company the amount of any taxes which the Company may determine
            is required to be withheld or collected, and the Participant shall
            comply with the requirement or demand of the Company. In its
            discretion, the Company may withhold Shares to be received upon
            exercise of this Option or offset against any amount owed by the
            Company to the Participant, including compensation amounts, if in
            its sole discretion it deems this to be an appropriate method for
            withholding or collecting taxes.

      11.   Entire Agreement; Governing Law. The Plan is incorporated herein by
            reference. The Plan and this Award Agreement constitute the entire
            agreement of the parties with respect to the subject matter hereof
            and supersede in their entirety all prior undertakings and
            agreements of the Company and Participant with respect to the
            subject matter hereof, and may not be modified (except as provided
            herein and in the Plan) adversely to the Participant's interest
            except by means of a writing signed by the Company and Participant.
            This agreement is governed by the internal substantive laws but not
            the choice of law rules of the State of Delaware.

      12.   No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND
            AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE
            HEREOF IS EARNED ONLY BY CONTINUING IN THE RELATIONSHIP AT THE WILL
            OF THE COMPANY (NOT THROUGH THE ACT OF BEING ENGAGED, BEING GRANTED
            THIS OPTION OR ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER
            ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
            CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
            NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED EMPLOYMENT
            FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
            INTERFERE IN ANY WAY WITH PARTICIPANT'S RIGHT OR THE COMPANY'S RIGHT
            TO TERMINATE THE RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

      Participant acknowledges receipt of a copy of the Plan and represents that
      he or she is familiar with the terms and provisions thereof, and hereby
      accepts this Option subject to all
<PAGE>
      of the terms and provisions thereof. Participant has reviewed the Plan and
      this Option in their entirety, has had an opportunity to obtain the advice
      of counsel prior to executing this Option and fully understands all
      provisions of the Option. Participant hereby agrees to accept as binding,
      conclusive and final all decisions or interpretations of the Committee
      upon any questions arising under the Plan or this Option. Participant
      further agrees to notify the Company upon any change in the residence
      address indicated below.
<PAGE>
                                    EXHIBIT A

                           2005 EQUITY INCENTIVE PLAN
                                 EXERCISE NOTICE


American Railcar Industries, Inc.
100 Clark St.
St. Charles, MO 63301
Attention:  President

      1.    Exercise of Option. Effective as of today, ______________, 200__,
            the undersigned ("Participant") hereby elects to exercise
            Participant's option to purchase _________ shares of the Common
            Stock (the "Shares") of American Railcar Industries, Inc. (the
            "Company") under and pursuant to the 2005 Equity Incentive Plan (the
            "Plan") and the Stock Option Award Agreement dated ____________,
            200__ (the "Award Agreement").

      2.    Delivery of Payment. Purchaser herewith delivers to the Company the
            full purchase price of the Shares, as set forth in the Award
            Agreement.

      3.    Representations of Participant. Participant acknowledges that
            Participant has received, read and understood the Plan and the Award
            Agreement and agrees to abide by and be bound by their terms and
            conditions.

      4.    Rights as Stockholder. Until the issuance of the Shares (as
            evidenced by the appropriate entry on the books of the Company or of
            a duly authorized transfer agent of the Company), no right to vote
            or receive dividends or any other rights as a stockholder shall
            exist with respect to the Optioned Stock, notwithstanding the
            exercise of the Option. The Shares shall be issued to the
            Participant as soon as practicable after the Option is exercised. No
            adjustment shall be made for a dividend or other right for which the
            record date is prior to the date of issuance except as provided in
            Section 3(c) of the Plan.

      5.    Tax Consultation. Participant understands that Participant may
            suffer adverse tax consequences as a result of Participant's
            purchase or disposition of the Shares. Participant represents that
            Participant has consulted with any tax consultants Participant deems
            advisable in connection with the purchase or disposition of the
            Shares and that Participant is not relying on the Company for any
            tax advice.

                        [SIGNATURES APPEAR ON NEXT PAGE.]
<PAGE>
Submitted by:                             Accepted by:

PARTICIPANT                               AMERICAN RAILCAR INDUSTRIES, INC.


------------------------------------      ------------------------------------
Signature                                 By


------------------------------------      ------------------------------------
Print Name                                Title

Address:                                  Address:

                                          100 Clark St.
------------------
                                          St. Charles, MO 63301
------------------
                                          Attention: President
------------------


                                          ------------------------------------
                                          Date Received
<PAGE>
                                [FORM OF RELEASE]
                                    EXHIBIT B



                          GENERAL RELEASE OF ALL CLAIMS

      This General Release of All Claims is made in consideration of severance
payments and other benefits provided to the undersigned employee under the
Employment Agreement with American Railcar Industries, Inc., a Missouri
corporation (the "Company"), dated as of December 30, 2005 ("Employment
Agreement"). Unless otherwise defined herein, the terms defined in the
Employment Agreement shall have the same defined meaning in this General
Release.

      1. For valuable consideration to be paid to Employee, upon expiration of
the seven day revocation period provided in Section 10 herein, in lump sum or as
salary continuation as provided for in Section 6 of the Employment Agreement and
to which he is not contractually entitled to absent the execution of this
General Release, the adequacy of which is hereby acknowledged, the undersigned
("Employee"), for himself, his spouse, heirs, administrators, children,
representatives, executors, successors, assigns, and all other persons claiming
through Employee, if any (collectively, "Releasers"), does hereby release,
waive, and forever discharge the Company and the Company's subsidiaries,
parents, affiliates, related organizations, employees, officers, directors,
shareholders, attorneys, successors, and assigns as well as all Related Parties
(collectively, the "Releasees") from, and does fully waive any obligations of
Releasees to Releasers for, any and all liability, actions, charges, causes of
action, demands, damages, or claims for relief, remuneration, sums of money,
accounts or expenses (including, without limitation, attorneys' fees and costs)
of any kind whatsoever (collectively, the "Released Claims"), whether known or
unknown or contingent or absolute, which heretofore has been or which hereafter
may be suffered or sustained, directly or indirectly, by Releasers in
consequence of, arising out of, or in any way relating to Employee's employment
with the Company or any of its affiliates and the termination of Employee's
employment including the payment of Employee's Accrued Obligations under Section
6 of the Employment Agreement. The foregoing release and discharge, waiver and
covenant not to sue includes, but is not limited to, all claims, and any
obligations or causes of action arising from such claims, under common law
including any state or federal discrimination, fair employment practices or any
other employment-related statute or regulation (as they may have been amended
through the date of this agreement) prohibiting discrimination or harassment
based upon any protected status including, without limitation, race, color,
religion, national origin, age, gender, marital status, disability, handicap,
veteran status or sexual orientation. Without limitation, specifically included
in this paragraph are any claims arising under the Federal Rehabilitation Act of
1973, Age Discrimination in Employment Act of 1967, as amended ("ADEA"), the
Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964,
as amended by the Civil Rights Act of 1991, the Equal Pay Act, the Americans
With Disabilities Act, the National Labor Relations Act, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, the Family
Medical Leave Act of 1993, the Consolidated Omnibus Budget Reconciliation Act of
1985, and any similar state statutes. The foregoing release and discharge also
expressly includes any Released Claims under any state or federal common law
theory, including, without limitation wrongful or retaliatory discharge, breach
of express or implied contract, promissory estoppel, unjust enrichment, breach
of covenant of good faith and fair dealing, violation of public policy,
defamation, interference with contractual relations, intentional or negligent
<PAGE>
infliction of emotional distress, invasion of privacy, misrepresentation,
deceit, fraud or negligence. This also includes a release by Employee of any
Released Claims for alleged physical or personal injury, emotional distress
relating to or arising out of Employee's employment with the Company or the
termination of that employment; and any Released Claims under the WARN Act or
any similar law, which requires, among other things, that advance notice be
given of certain work force reductions. This release and waiver applies to any
Released Claims or rights that may arise after the date Employee signs this
General Release.

      2. Excluded from this General Release are any claims which cannot be
waived by law, including but not limited to the right to participate in an
investigation conducted by certain government agencies. Employee does, however,
waive Employee's right to any monetary recovery should any agency (such as the
Equal Employment Opportunity Commission) pursue any claims on Employee's behalf.
Employee represents and warrants that Employee has not filed any complaint,
charge, or lawsuit against the Releasees with any government agency or any
court. Also excluded from this General Release are any amounts due and payable
under Section 6 other than Employee's Accrued Obligations.

      3. Employee agrees never to sue Releasees in any forum for any Released
Claims covered by the above waiver and release language, except that Employee
may bring a claim under the ADEA to challenge this General Release. If Employee
violates this General Release by suing Releasees, other than under the ADEA or
as otherwise set forth in Section 1 hereof, Employee shall be liable to the
Company for its attorneys' fees and other litigation costs incurred in defending
against such a suit. Nothing in this General Release is intended to reflect any
party's belief that Employee's waiver of claims under ADEA is invalid or
unenforceable, it being the interest of the parties that such claims are waived.

      4. Employee acknowledges and recites that:

      (a) Employee has executed this General Release knowingly and voluntarily;

      (b) Employee has read and understands this General Release in its
entirety;

      (c) Employee has been advised and directed orally and in writing (and this
subparagraph (c) constitutes such written direction) to seek legal counsel and
any other advice he wishes with respect to the terms of this General Release
before executing it;

      (d) Employee's execution of this General Release has not been forced by
any employee or agent of the Company, and Employee has had an opportunity to
negotiate the terms of this General Release and that the agreements and
obligations herein are made voluntarily, knowingly and without duress, and that
neither the Company nor its agents have made any representation inconsistent
with the General Release; and

      (e) Employee has been offered 21 calendar days after receipt of this
General Release to consider its terms before executing it.

      6. This General Release shall be governed by the internal laws (and not
the choice of laws) of the State of New York, except for the application of
pre-emptive Federal law.
<PAGE>
      7. Employee represents that he has returned all property belonging to the
Company including, without limitation, keys, access cards, computer software and
any other equipment or property. Employee further represents that he has
delivered to the Company all documents or materials of any nature belonging to
it, whether an original or copies of any kind, including any trade secrets or
proprietary information.

      8. Employee agrees to keep confidential the existence of this General
Release, as well as all of its terms and conditions and not to disclose to any
person or entity the existence, terms and conditions of this General Release
except to his attorney, financial advisors and/or members of his immediate
family provided they agree to keep confidential the existence, terms and
conditions of this General Release. In the event that Employee believes that he
is compelled by law to divulge the existence, terms or conditions of this
General Release in a manner prohibited by the preceding sentence, he agrees to
notify Company (by notifying counsel to the Company) of the basis for the belief
before actually divulging such information. Employee hereby confirms that as of
the date of signing this General Release, he has not disclosed the existence,
terms or conditions of this General Release, except as provided for herein.

      9. Employee represents that he has been provided notice of his right to
elect continuation of medical benefits under COBRA and that he is not entitled
to any other benefits under the Company's employee benefit plans except as
provided for therein or under Section 6 of the Employment Agreement.

      10. Employee shall have 7 days from the date hereof to revoke this General
Release by providing written notice of the revocation to the Company, as
provided in Section 9 of the Employment Agreement, in which event this General
Release shall be unenforceable and null and void.



                            [Signature Page Follows]
<PAGE>
      PLEASE READ THIS GENERAL RELEASE CAREFULLY. IT CONTAINS A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.


                                          EMPLOYEE:


                                          ____________________________________
                                          James A. Cowan


Date:  ______________, 20__