American Railcar Industries, Inc./DE (Form: S-1/A, Received: 01/04/2006 17:28:46)

Common Law

Trademarks

Registration Number

Registration Date

Licensed Trademarks

“American Railcar”

“American Railcar”

Diamond shaped portion of Trademark

As filed with the Securities and Exchange Commission on January 4, 2006

Registration No. 333-130284

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

American Railcar Industries, Inc.

(Exact name of Registrant as specified in its charter)


Delaware	3743	43-1481791
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. employer identification number)

100 Clark Street

St. Charles, MO 63301

(636) 940-6000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

James J. Unger

President and Chief Executive Officer

American Railcar Industries, Inc.

100 Clark Street

St. Charles, MO 63301

(636) 940-6000

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

Copies To:


Philip J. Flink, Esquire Samuel P. Williams, Esquire BROWN RUDNICK BERLACK ISRAELS LLP One Financial Center Boston, MA 02111 (617) 856-8200		Lisa L. Jacobs, Esquire SHEARMAN & STERLING LLP 599 Lexington Avenue New York, NY 10022 (212) 848-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE




	Proposed maximum	Amount of
	aggregate offering	registration
Title of each class of securities to be registered	price(a)(b)	fee(c)

Common Stock, par value $0.01 per share	$175,950,000	$18,827



(a)		Includes shares of Common Stock to cover over-allotments, if any.



(b)		Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) promulgated under the Securities Act, as amended.



(c)		A registration fee in the amount of $17,655 was previously paid by American Railcar Industries, Inc., a Missouri corporation (“American Railcar Industries Missouri”) in connection with the filing of a Registration Statement on Form S-1 (Registration No. 333-128177) on September 8, 2005. The Registrant is a wholly owned subsidiary of American Railcar Industries Missouri. Pursuant to Rule 457(p) under the Securities Act, the filing fee of $17,655 previously paid by American Railcar Industries Missouri may be offset against the filing fee of $18,827 for this Registration Statement.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.


PRELIMINARY PROSPECTUS	Subject to Completion	January 4, 2006

8,500,000 Shares

American Railcar Industries, Inc.

Common Stock

This is our initial public offering of our common stock. No public market currently exists for our common stock. We are offering 8,500,000 shares of common stock by this prospectus. We expect the public offering price to be between $16.00 and $18.00 per share.

We expect to apply to have our common stock approved for quotation on the Nasdaq National Market under the trading symbol “ARII.”

Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in “Risk factors” beginning on page 14 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


	Per Share	Total

Public offering price	$	$

Underwriting discounts and commissions	$	$

Proceeds, before expenses, to us	$	$

The underwriters may also purchase up to an additional 1,275,000 shares of our common stock at the public offering price, less the underwriting discounts and commissions, to cover over-allotments, if any, within 30 days from the date of this prospectus.

The underwriters are offering the common stock as set forth under “Underwriting.” Delivery of the shares will be made on or about , 2006.


UBS Investment Bank	Bear, Stearns & Co. Inc.

BB&T Capital Markets


	CIBC World Markets


	Morgan Keegan & Company, Inc.

The date of this prospectus is , 2006.

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with additional information or information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock.

TABLE OF CONTENTS


Prospectus summary		1
Risk factors		14
Special note regarding forward-looking statements		37
Use of proceeds		39
Dividend policy and restrictions		41
Capitalization		42
Dilution		45
Selected consolidated financial data		47
Management’s discussion and analysis of financial condition and results of operations		50
Industry		80
Business		87
Management		107
Certain relationships and related party transactions		120
Principal stockholders		135
Description of capital stock		138
Shares eligible for future sale		143
Material U.S. income tax considerations for non-U.S. holders		145
Underwriting		149
Legal matters		153
Experts		153
Where you can find more information		153
Index to financial statements		F-1
Ex-1.1 Form of Underwriting Agreement
Ex-2.1 Form of Agreement and Plan of Merger
Ex-3.3 Form of Certificate of Ownership an Merger
EX-4.1 American Railcar Industries Stock Certificate
Ex-4.2 Form of Registration Rights Agreement
Ex-5.1 Opinion of Brown Rudnick Berlack Israels LLP
EX-9.1 Voting Agreement
Ex-10.18 Multi-Year Purchase and Sale Agreement, July 29, 2005
EX-10.19 2005 Equity Incentive Plan Agreement
Ex-10.24 Redemption Agreement, dated January 3, 2006
Ex-10.30 Amended and Restated Employment Agreement
Ex-10.31 Employee Benefit Plan Agreement dated as of December 1, 2005
Ex-10.32 Trademark License Agreement dated June 30, 2005
EX-10.33 Summary Plan Description of Executive Survivor Insurance Plan Program
EX-10.34 Summary Description of Supplemental Executive Retirement Plan
EX-10.35 Form of Amended and Restated Loan and Security Agreement
Ex-23.1 Consent of Grant Thornton LLP
Ex-23.2 Consent of Grant Thornton LLP
Ex-23.3 Consent of KPMG LLP

ARI ^® , Pressureaide ^® , Center Flow ^® and our railcar logo are our U.S. registered trademarks. Each trademark, trade name or service mark of any other company appearing in this prospectus belongs to its respective holder.

The market and industry data and forecasts included in this prospectus are based upon independent industry sources, including the Association of American Railroads, the Railway Supply Institute, Inc., Global Insight and the U.S. Department of Agriculture. Although we believe that these independent sources are reliable, we have not independently verified the accuracy and completeness of this information, nor have we independently verified the underlying economic assumptions relied upon in preparing any forecasts. See “Risk factors—Risks related to our business—The market and industry data contained in this prospectus, including estimates and forecasts relating to the growth of the railcar market, cannot be verified with certainty and may prove to be inaccurate.”

We have been advised by Global Insight that forecasts and projections included in this prospectus that have been attributed to Global Insight should not be construed as a guarantee that the forecasts and projections will, in fact, be achieved. These forecasts and projections have been prepared on the basis of certain assumptions, judgments and hypotheses and accordingly no representation or warranty of any kind is or can be made with respect to the accuracy or completeness of, and no representation or warranty shall be inferred from, the forecasts and projections. The forecasts and projections made by Global Insight herein are based on assumptions as to future events and, therefore, are subject to varying degrees of uncertainty.

Prospectus summary

This summary highlights information contained elsewhere in this prospectus. It is not complete and may not contain all the information that may be important to you. You should read the entire prospectus carefully before making an investment decision, especially the information presented under the heading “Risk factors” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

OUR COMPANY

We are a leading North American manufacturer of covered hopper and tank railcars. We also repair and refurbish railcars, provide fleet management services and design and manufacture certain railcar and industrial components used in the production of our railcars as well as railcars and non-railcar industrial products produced by others. We provide our railcar customers with integrated solutions through a comprehensive set of high quality products and related services.

Our primary customers include companies that purchase railcars for lease by third parties, or leasing companies, industrial companies that use railcars for freight transport, or shippers, and Class I railroads. In servicing this customer base, we believe our integrated railcar repair and refurbishment and fleet management services and our railcar components manufacturing business help us further penetrate the general railcar manufacturing market. These products and services provide us with significant cross-selling opportunities and insights into our customers’ railcar needs that we use to improve our products and services and enhance our reputation for high quality. Although we build, service and manage railcars through an integrated, complementary set of products and services, we have chosen not to offer railcar leasing services so that we do not compete with our leasing company customers, which represent a significant source of our revenues.

For the year ended December 31, 2004, we generated total revenues of $355.1 million and net earnings of $1.9 million. For the nine months ended September 30, 2005, we generated total revenues of $442.1 million and net earnings of $14.5 million. As of September 30, 2005, our total railcar backlog was 15,567 railcars, compared to a total backlog of 5,653 railcars as of September 30, 2004. The reported backlog as of September 30, 2005 includes 9,000 railcars relating to the CIT Group’s minimum purchase obligations under its agreement with us based upon an assumed product mix consistent with CIT’s orders for railcars. This agreement is described below under “Management’s discussion and analysis of financial conditions and results of operations — Backlog.”

OUR HISTORY

Since our formation in 1988, we have grown our business from being a small provider of railcar components and maintenance services to one of North America’s leading integrated providers of railcars, railcar components, railcar maintenance services and fleet management services. In October 1994, we acquired railcar components manufacturing and railcar maintenance assets from ACF Industries, Incorporated (now known as ACF Industries LLC), or ACF, a company controlled by Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors. Through this acquisition, we also hired members of ACF’s management, many of whom, including our president, remain a significant part of our current management team. These executives brought with them established relationships with important customers and suppliers and extensive industry knowledge, as ACF and its predecessor companies have roots in the railcar manufacturing industry that trace back to 1873. Led by this management team, we entered the railcar manufacturing business through the construction of new manufacturing facilities.

In October 1995, we produced our first railcar at our Paragould, Arkansas manufacturing facility. We primarily manufacture covered hopper railcars at our Paragould facility, but we have the ability to manufacture many other types of railcars at this facility. The Paragould facility initially had two railcar manufacturing lines. We added painting and lining capabilities to this facility in 1999 and a third

manufacturing line in December 2004. We are currently constructing additional painting and lining capabilities at our Paragould facility to increase efficiency, which we expect to open at the end of 2005. Our Paragould facility also features component manufacturing capabilities.

Since 1994, we have significantly expanded our components manufacturing and railcar services operations. Our operations now include three railcar assembly, sub-assembly and fabrication facilities, three railcar and industrial component manufacturing facilities, six railcar repair plants and four mobile repair units. Our services business has grown to include online access by customers, remote fleet management, expanded painting, lining and cleaning offerings, regulatory consulting and engineering support. Additionally, members of our management team helped found and develop, and continue to operate, a joint venture, Ohio Castings Company, LLC, which we refer to as Ohio Castings, in which we own a one-third interest and that manufactures and sells sideframes, bolsters, couplers and yokes for distribution to third parties and to us. We believe that our involvement in this joint venture helps us maintain our levels of production at competitive prices, despite industry-wide shortages of these potentially capacity constraining components.

OUR INDUSTRY

Overview. Demand for railcars reflects their importance to the North American economy in moving goods and raw materials. In periods of rising economic activity, fleet utilization typically increases, driving an increase in demand for new railcars, which also increases backlog for new railcars. Conversely, during economic slowdowns, fleet utilization typically declines, resulting in reduced demand, deliveries and backlog for new railcars. According to Global Insight’s Freight Car Outlook Third Quarter 2005, orders for new railcars are expected to be strong with deliveries projected to average 59,400 railcars per year from 2005 through 2010. This compares to deliveries of 17,714 railcars in 2002, 32,184 railcars in 2003 and 46,871 railcars in 2004, as reported by Railway Supply Institute, or RSI. RSI reported that at the end of 2004, the total backlog for the railcar manufacturing industry reached 58,677 railcars. This growth trend has continued through the first nine months of 2005, with 54,134 new railcars ordered and 50,682 railcars delivered, with total backlog increasing to 60,986 railcars.

We believe the main characteristics and trends affecting the North American railcar industry are:


4	the cyclical nature of the railcar market;

4	the replacement demand for the aging North American railcar fleet;

4	the shift in the customer base from railroads to leasing companies and shippers; and

4	the consolidation of railcar manufacturers.

Covered hopper railcars. North American demand for covered hopper railcars has shown renewed strength due to increased shipments of a variety of products including plastics, chemicals and food. We believe there will be strong demand for covered hopper railcars in the North American market over the next several years. Global Insight’s Freight Car Outlook Third Quarter 2005 forecasts a significant increase in deliveries of covered hopper railcars, from 3,801 in 2003 and 5,602 in 2004 to 14,927 in 2005 and 16,926 in 2006, with deliveries averaging approximately 15,800 railcars per year from 2007 through 2010. We believe the main characteristics and trends affecting the North American covered hopper railcar market are:


4	the health of the U.S. economy;

4	increases in production of a number of consumer and business durable goods;


4	increases in domestic and international demand for U.S. agricultural products;

4	increases in demand for corn used in ethanol production; and

4	the need to replace aging covered hopper railcars.

Tank railcars. Tank railcars are in higher demand in North America as manufacturing activity and the need for liquids and gases used in manufacturing increases. The manufacturing of tank railcars is highly regulated and their production requires a specially trained workforce and dedicated manufacturing facilities. As a result, the tank railcar market is difficult to enter and competition is concentrated. We believe the demand for tank railcars in the North American market will continue to be strong and stable over the next several years. Global Insight’s Freight Car Outlook Third-Quarter 2005 projects an increase in tank railcar deliveries, from 8,176 in 2003 and 8,939 in 2004, to 11,069 in 2005 and 11,075 in 2006, with deliveries averaging approximately 9,900 tank railcars per year from 2007 through 2010. We believe the main characteristics and trends affecting the North American tank railcar market are:


4	increases in manufacturing activity and the resulting demand for higher volumes of chemicals and gases;

4	increases in demand for petrochemicals, ethanol, edible and lubricating oils and liquid food products; and

4	the need to replace aging tank railcars.

These trends affecting the railcar industry and the covered hopper and tank railcar markets are discussed in the section entitled “Industry.”

OUR BUSINESS STRENGTHS AND COMPETITIVE ADVANTAGES

We believe that the following key business strengths and competitive advantages will contribute to our growth:


4	*Leading railcar manufacturer with focus on the covered hopper and tank railcar markets.* We are a leading North American manufacturer of covered hopper and tank railcars. Over the last three years, we believe we have produced an estimated 33% of the covered hopper railcars and an estimated 16% of the tank railcars delivered in North America. Based on a report by the Association of American Railroads, these represent the two largest segments of the North American railcar industry, with covered hopper railcars representing approximately 30% and tank railcars representing approximately 19% of the total North American railcar fleet, based on the number of railcars in service. We believe our railcars are differentiated by their superior quality, innovation and reliability.

4	*Modern non-union, low-cost railcar manufacturing facilities in strategic locations.* Unlike many of our competitors, we manufacture all of our railcars in modern facilities built in the last ten years. We designed these facilities to provide manufacturing flexibility and allow for the production of a variety of railcar sizes and types. We strategically located these facilities in close proximity to our main customers and suppliers. This reduces freight time and costs for the components we purchase and the time for delivery of completed railcars. Over the past several years, we increased our production capacity and efficiency and reduced our costs per railcar through a number of targeted operational and design improvements, which has also reduced the amount of raw materials necessary for production of railcars. Currently none of our over 1,100 employees at our Paragould and Marmaduke railcar manufacturing facilities are represented by a union. However, employees of three of our repair facilities and one of our component manufacturing facilities, representing 16% of our total workforce as of September 30, 2005, are represented by a union.


4	*Preferred access to components through in-house production, a joint venture and strategic sourcing arrangements.* We produce many of the components necessary to our railcar manufacturing business ourselves and we own a one-third interest in, and our management team operates, our Ohio Castings joint venture, from which we obtain certain other components. We believe our in-house production capabilities and our involvement in this joint venture help us maintain access to components at competitive prices, despite industry-wide shortages of these potentially capacity constraining components. We also have developed and actively maintain strategic sourcing arrangements and strong relationships with our suppliers. These arrangements and relationships help ensure our continued access to critical components and raw materials that we use to produce railcars, including steel, wheels, and heavy castings. We believe our attention to strengthening our supply chain helps us maintain operational continuity and high production levels.

4	*Integrated railcar repair and refurbishment and fleet management services complement railcar manufacturing.* We provide a wide array of complementary products and services to the railcar industry. Unlike some other railcar manufacturers, we also repair, maintain and provide fleet management services for existing railcars, including railcars built by others, and manufacture railcar components for third parties and us. We believe this diverse product and service offering provides us with a competitive advantage relative to other railcar manufacturers, primarily in the form of cross- selling opportunities. We also believe that our ability to address the needs of our customers throughout the lifecycle of a railcar enhances our customer relationships and provides us with additional growth opportunities and unique insights into industry trends.

4	*Strong relationships with a long-term customer base.* We believe that our customers value our products and services. Many of our major customers have been doing business with us for a number of years, including CIT, Dow Chemical Company, GE Capital Corporation and Solvay America, Inc. Many of our customers have demonstrated a willingness to purchase several different types of our products and services over time. We believe we deliver high quality products and services to our customers with low operating and maintenance costs, while maintaining what we believe are low levels of warranty claims.

4	*Strong management team with long-standing industry experience.* We have an experienced senior operations management team that has an average of over 25 years of experience in the railcar and related manufacturing industries. Our senior operations management team, including our president, James J. Unger, has been with us since we began manufacturing railcars. This team conceived and built our Paragould and Marmaduke railcar manufacturing facilities and has been responsible for growing our revenues from $80.9 million in 1994 to $355.1 million in 2004.

OUR STRATEGY

The key elements of our business strategy are as follows:


4	*Maintain and expand presence in covered hopper and tank railcar markets.* We intend to maintain and expand our presence in the covered hopper and tank railcar markets by continuing to deliver high quality and innovative products. We believe our excellent customer relationships have enabled us to identify market demands that we then target through our product development and marketing efforts. We intend to continue the close collaboration between our customers and our engineering, marketing, operations and management personnel to meet demand and, where appropriate, to selectively expand production capacity.

4	*Continue to improve operating efficiencies.* We intend to build on the success of our production initiatives at our Paragould and Marmaduke railcar manufacturing facilities and plan to continue to identify opportunities to enhance operating efficiencies across these and our other manufacturing facilities. These opportunities include our continued streamlining of our manufacturing processes and our quality control initiatives. We also intend to continue the efforts of our design cost reduction team, formed in 2003, which has already significantly reduced our


	railcar production costs through standardization of components used in our railcars, implemented design changes to reduce the amount of raw material required for our railcars, and improved manufacturing techniques that reduce our labor requirements. These efforts should allow us to reduce our costs and maintain competitive prices.

4	*Continue to grow railcar service and fleet management businesses and increase sales of railcar and industrial components.* As the existing North American railcar fleet continues to age, we anticipate increased demand for maintenance and repair services and railcar components used in the maintenance and repair of railcars. Additionally, we expect growing demand for our fleet management services as ownership of railcars continues to shift away from the railroads and toward the shippers and leasing companies, which often outsource their fleet management activities to third-party service providers such as us. We intend to capitalize on these trends and we believe we are well positioned to provide increased services through our strategically located network of railcar repair and service facilities.

4	*Leverage manufacturing expertise to selectively expand product portfolio.* We may seek to expand our product portfolio to other selected types of railcars. Our management designed and constructed our Paragould manufacturing facility to be able to produce most railcar types, and we believe our adaptive production lines and flexible employees are able to shift production among various railcar types with minimal interruption to our operations. In addition, as the existing fleet of North American railcars is aging, expansion of our product portfolio into new railcar types will allow us to grow our business by capturing a portion of the natural replacement demand for existing railcar types. Our ability to produce other types of railcars positions us to respond to customer requests for production outside of our traditional markets and provides us additional manufacturing flexibility in the event the covered hopper or tank railcar markets weaken.

4	*Selectively pursue strategic external growth opportunities.* By significantly reducing our debt through this offering and with the establishment of a public market for our common stock, we believe we will have increased financial flexibility to supplement internal growth with select acquisitions, alliances or joint ventures. We also believe our in-house fabrication of railcar components and our Ohio Castings joint venture provide us with competitive advantages and we intend to enhance these advantages by selectively acquiring or establishing strategic relationships with railcar component manufacturers and suppliers of critical raw materials. While we have in the past engaged in preliminary discussions with certain parties regarding potential strategic acquisitions, alliances or joint ventures, as of the date of this prospectus, we are not currently engaged in any such discussions and do not have any commitments to enter into any acquisition, alliance or joint venture. We may also seek to expand our railcar components business into international markets on an opportunistic basis.

THE TRANSACTIONS

We intend to use the proceeds of this offering to:



4	redeem all of the outstanding shares of our preferred stock, all of which are held by Carl C. Icahn and his affiliates;


4	repay the notes payable that we issued to ACF Industries Holding Corp. in connection with the acquisition of our joint venture interest in Ohio Castings, and that we issued to Arnos Corp., both of which are entities controlled by Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors;

4	redeem all of our industrial revenue bonds;


4	repay a portion of the outstanding borrowings under our existing revolving credit facility and amend and restate our revolving credit facility; and


4	pay fees and expenses related to this offering and the transactions identified above.

For more information, see “Use of proceeds.”

Our outstanding shares of preferred stock include our mandatorily redeemable preferred stock and our new preferred stock. We intend to redeem the one outstanding share of our mandatorily redeemable preferred stock, held by Mr. Icahn, immediately prior to the closing of this offering using available cash. See “Description of capital stock.” Concurrently with this offering, we expect to issue to our president and chief executive officer, James J. Unger, the number of shares of our common stock obtained by dividing $6.0 million by the public offering price set forth on the cover page of this prospectus. See “Management—Executive compensation—Employment agreements.” Concurrently with this offering, we also intend to amend and restate provisions of our existing revolving credit facility to increase its size to $75 million and extend its term to three years from the closing of this offering, pursuant to a commitment letter we have obtained from North Fork Business Capital Corporation and our other lenders. See “Management’s discussion and analysis of financial condition and results of operations— Liquidity and capital resources—Outstanding debt—Revolving credit facility” for a description of our existing revolving credit facility and the expected terms of our new revolving credit facility. Immediately prior to the closing of this offering, our parent company will merge with and into us pursuant to which all of the outstanding shares of our parent company’s capital stock will be exchanged for shares of our capital stock in the manner described below in “—Corporate Information.” We refer to this offering, the application of the proceeds of this offering as described above, the issuance of shares of our common stock to James J. Unger, the amendment and restatement of our revolving credit facility, the redemption of our mandatorily redeemable preferred stock and the merger described below collectively as the “Transactions.”

OUR RELATIONSHIP WITH CARL C. ICAHN AND ENTITIES AFFILIATED WITH CARL C. ICAHN

Overview. Carl C. Icahn is our principal beneficial stockholder and is the chairman of our board of directors. Since our formation, we have entered into agreements relating to the acquisition of assets from and disposition of assets to entities controlled by Mr. Icahn, the provision of goods and services to us by entities controlled by Mr. Icahn, the provision of goods and services by us to entities affiliated with Mr. Icahn and other matters involving entities controlled by Mr. Icahn. We receive substantial benefit from these agreements and we expect that in the future we will continue to conduct business with entities affiliated with or controlled by Mr. Icahn. In 2002, 2003, 2004 and the first nine months of 2005, our revenues from affiliates of Mr. Icahn accounted for 45%, 34%, 24% and 14% of our total revenues, respectively. In addition, we receive other benefits from our affiliation with Mr. Icahn and companies controlled by Mr. Icahn, such as financial and advisory support, sales support and our participation in buying groups and other arrangements with entities controlled by Mr. Icahn. Until recently, most of our capital needs have been provided by entities controlled by Mr. Icahn.

Application of the net proceeds of this offering. We intend to use the net proceeds of this offering to, among other things, repay $20.0 million of indebtedness that we owe to entities controlled by Mr. Icahn. We also intend to use $91.4 million of the net proceeds of this offering to redeem all of our new preferred stock, all of which is held by Mr. Icahn and his affiliates, including all accumulated and unpaid dividends due on our new preferred stock. Both of these amounts represent amounts outstanding as of September 30, 2005 and will be adjusted to reflect interest accrued and dividends accumulated through the closing of this offering. For more information, see “Use of proceeds.”

Mr. Icahn’s holdings of our common stock. We have been advised that in December 2005, Modal LLC, a company controlled by Mr. Icahn, entered into a stock purchase agreement with the Foundation for a Greater Opportunity, or the Foundation, our other significant beneficial stockholder, to acquire all of our common stock held by the Foundation. The consummation of this acquisition of our common stock requires the completion of this offering and the approval of applicable authorities of the State of New York. If the parties obtain this approval, we have been advised that the parties expect that the purchase would be completed in the first three months of 2006. Pending the closing of this purchase, and for so long as the stock purchase agreement has not been terminated, the Foundation has granted Modal LLC an irrevocable proxy to vote all of the shares of our common stock held by the Foundation. The stock purchase agreement may be terminated by either party if the

purchase does not occur by May 2006. As a result of these contemplated arrangements, we expect that Mr. Icahn will control approximately 56% of the voting power of our capital stock following the offering. As a result, Mr. Icahn is, and will be, able to exert substantial influence over us, elect our directors and control most matters requiring board or shareholder approval. If, following this offering, Mr. Icahn does not acquire all of the shares of our common stock held by the Foundation, following the termination of the irrevocable proxy granted to Modal LLC, Mr. Icahn will continue to beneficially own 34% of our common stock and will still be able to exert substantial influence over us. See “Principal stockholders— Icahn agreement to purchase Foundation shares.”

For information about the risks associated with our relationships with Carl C. Icahn and entities affiliated with Carl C. Icahn, see “Risk factors—Risks related to our business—After this offering, companies affiliated with Carl C. Icahn will continue to be important suppliers and customers,” “Risk factors—Risks related to our business—Services being provided to us by ARL, an entity controlled by Carl C. Icahn, may not be sufficient to meet our needs, which may require us to incur additional costs,” “Risk factors—Risks related to our business—After this offering, we may have reduced access to resources of, and benefits provided by, entities affiliated with Carl C. Icahn,” “Risk factors—Risks related to our business—We could be liable for liabilities associated with pension plans sponsored by companies controlled by Carl C. Icahn,” “Risk factors—Risks related to the purchase of our common stock in this offering—Our stock price may decline due to sales of shares by Carl C. Icahn and other stockholders,” “Risk factors—Risks related to the purchase of our common stock in this offering—Carl C. Icahn will continue to exert significant influence over us,” “Risk factors—Risks related to the purchase of our common stock in this offering—Mr. Icahn’s interests may conflict with the interest of our stockholders,” “Risk factors—Risks related to the purchase of our common stock in this offering—Upon the closing of this offering we may be a “controlled company” within the meaning of the Nasdaq National Market rules and you will not have the same protections afforded to shareholders of companies that are not “controlled companies” and, therefore, are subject to all of the Nasdaq National Market corporate governance requirements.” Also, see “Certain relationships and related party transactions—Transactions with Carl C. Icahn and entities affiliated with Carl C. Icahn” for more information about our affiliation with Mr. Icahn and entities affiliated with Mr. Icahn.

CORPORATE INFORMATION

American Railcar Industries, Inc., a Delaware corporation formed on November 16, 2005 (referred to as American Railcar Industries Delaware), will be the issuer of the common stock offered hereby. American Railcar Industries Delaware is a wholly owned subsidiary of American Railcar Industries, Inc., a Missouri corporation (referred to as American Railcar Industries Missouri). Immediately prior to the closing of this offering, American Railcar Industries Missouri intends to redeem its one share of mandatorily redeemable preferred stock, and then will merge with and into American Railcar Industries Delaware, with American Railcar Industries Delaware being the surviving corporation. As a part of this merger American Railcar Industries Missouri will exchange all of its shares of common stock for shares of American Railcar Industries Delaware’s common stock on a 9,328.083-for-one basis. In addition, American Railcar Industries Missouri will also exchange all of its new preferred stock for shares of American Railcar Industries Delaware’s new preferred stock on a one-for-one basis. We refer to the merger of American Railcar Industries Missouri with and into American Railcar Industries Delaware and these share exchanges collectively as the merger. The surviving corporation of the merger will be incorporated in Delaware and will be named American Railcar Industries, Inc. In this prospectus, references to “our company,” “we,” “us” and “our,” except where the context otherwise indicates, refer to American Railcar Industries Delaware and its consolidated subsidiaries and its predecessors, assuming the merger has occurred.

The address of our principal executive offices is 100 Clark Street, St. Charles, Missouri, 63301. Our telephone number is (636) 940-6000. Our website address is www.americanrailcar.com. Information contained in or connected to our website is not part of this prospectus.

The offering

Unless otherwise indicated, all of the information in this prospectus assumes the underwriters do not exercise their over-allotment option to purchase additional shares of our common stock. Please see “Description of capital stock” for a summary of the terms of our common stock.



Common stock offered by us		8,500,000 shares.



Common stock outstanding after this offering		20,000,000 shares.



		This amount includes 352,941 shares we estimate we will issue to James J. Unger, our president and chief executive officer, upon the closing of this offering pursuant to the terms of an agreement we entered into with Mr. Unger, assuming an initial public offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus. Under the terms of the agreement, the actual number of shares we will issue to Mr. Unger will be such number of shares of our common stock obtained by dividing $6.0 million by the initial public offering price per share of our common stock. If the initial public offering price is $16.00 per share, Mr. Unger will receive 375,000 shares of our common stock and we will have 20,022,059 shares of common stock outstanding after this offering. If the initial public offering price is $18.00 per share, Mr. Unger will receive 333,333 shares of our common stock and we will have 19,980,392 shares of common stock outstanding after this offering.



Common stock subject to the over-allotment option		1,275,000 shares.



Use of proceeds		We expect to receive net proceeds from the offering of approximately $130.0 million, after deducting underwriting discounts and commissions and estimated expenses of this offering payable by us, assuming an initial offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus.



		We intend to use the net proceeds from this offering to redeem all shares of our outstanding preferred stock, all of which are held by affiliates of Mr. Icahn, repay notes due to our affiliates, redeem all of our industrial revenue bonds, and, with the balance of our net proceeds from this offering, if any, repay a portion of the amounts outstanding under our existing revolving credit facility. See “Use of proceeds.”


Dividend policy		Although our board of directors has never declared or paid any cash dividends on our common stock, following this offering we intend to pay cash dividends on our common stock. Payment of dividends will be at the discretion of our board of directors and will depend upon our operating results, strategic plans, capital requirements, financial condition, provisions of our borrowing arrangements, applicable law and other factors our board of directors considers relevant. As of the date of this prospectus, our


		board of directors has not determined the amount of any specific dividend, if any. See “Risk factors—Risks related to the purchase of our common stock in this offering—Payments of cash dividends on our common stock may be made only at the discretion of our board of directors and Delaware law may restrict, and the agreements governing our revolving credit facility contain provisions that limit, our ability to pay dividends” and “Dividend policy and restrictions.”

Proposed Nasdaq symbol		ARII.

Risk factors		You should carefully read and consider the information set forth under the caption “Risk factors” beginning on page 14 and all other information set forth in this prospectus before investing in our common stock.

Unless otherwise indicated, all of the information in this prospectus relating to the number of shares of common stock to be outstanding after this offering:


Ø	gives effect to the merger immediately prior to the closing of this offering;


Ø	gives effect to the issuance of 352,941 shares of our common stock, obtained by dividing $6.0 million by $17.00, which represents the midpoint of the range on the cover of this prospectus, to our president and chief executive officer, James J. Unger, see “Management—Executive compensation—Employment agreements”; and


Ø	excludes shares of our common stock that will be available for future issuance under stock options granted under our 2005 Equity Incentive Plan, none of which will be exercisable upon the completion of this offering. See “Management—Executive compensation—Equity incentive plan.”

Summary consolidated financial data

The following table sets forth our summary consolidated financial data for the periods presented. The consolidated statements of operations and cash flow data for the years ended December 31, 2002, 2003 and 2004 and the consolidated balance sheet data as of December 31, 2003 and 2004 are derived from our audited consolidated financial statements and related notes included elsewhere in this prospectus. The consolidated statements of operations and cash flow data for the years ended December 31, 2000 and 2001 and the consolidated balance sheet data as of December 31, 2000, 2001 and 2002 are derived from our historical consolidated financial statements not included in this prospectus. The consolidated statements of operations and cash flow data for the nine months ended September 30, 2004 and 2005 and the consolidated balance sheet data as of September 30, 2005 have been derived from unaudited consolidated financial statements and related notes included elsewhere in this prospectus and reflect all adjustments (consisting only of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of our financial position, the results of operations and cash flows for the periods presented. Operating results for the nine months ended September 30, 2005 are not necessarily indicative of the results that may be expected for the year ended December 31, 2005 or any other future period.

You should read this information together with “Capitalization,” “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

Summary Consolidated Financial Data


																			Nine months ended
				Years ended December 31,															September 30,

				2000			2001			2002			2003			2004			2004			2005

																			(unaudited)
				(in thousands, except per share amounts and number of railcars)
Consolidated statement of operations data:
Revenues
	Manufacturing operations(1)			$	200,691		$	181,438		$	138,441		$	188,119		$	316,432		$	226,759		$	409,208
	Railcar services(2)				38,093			32,703			30,387			29,875			38,624			27,572			32,940

		Total revenues			238,784			214,141			168,828			217,994			355,056			254,331			442,148
Cost of goods sold
	Cost of manufacturing operations(3)				187,375			169,952			134,363			174,629			306,283			216,027			377,181
	Cost of railcar services(4)				37,111			33,255			29,533			29,762			34,473			24,585			27,538

			Total cost of goods sold		224,486			203,207			163,896			204,391			340,756			240,612			404,719

		Gross profit			14,298			10,934			4,932			13,603			14,300			13,719			37,429
Selling, administrative and other					8,693			9,219			9,505			10,340			10,334			8,543			11,417

	Operating earnings (loss)				5,605			1,715			(4,573	)		3,263			3,966			5,176			26,012
Interest income(5)					5,777			4,770			3,619			3,161			4,422			2,122			1,265
Interest expense(6)					(13,687	)		(9,525	)		(4,853	)		(3,616	)		(3,667	)		(2,216	)		(3,577	)
Income (loss) from joint venture					—			—			—			(604	)		(609	)		(351	)		443

Earnings (loss) before income tax (benefit) expense					(2,305	)		(3,040	)		(5,807	)		2,204			4,112			4,731			24,143
Income tax (benefit) expense					(713	)		(1,074	)		(1,894	)		1,139			2,191			1,858			9,611

	Net earnings (loss)			$	(1,592	)	$	(1,966	)	$	(3,913	)	$	1,065		$	1,921		$	2,873		$	14,532
		Less preferred dividends			—			(3,070	)		(7,139	)		(9,690	)		(13,241	)		(9,296	)		(11,171	)
	Net earnings (loss) available to common shareholders			$	(1,592	)	$	(5,036	)	$	(11,052	)	$	(8,625	)	$	(11,320	)	$	(6,423	)	$	3,361

Weighted average shares outstanding, basic and diluted(7)					9,328			9,328			9,328			9,328			10,140			9,804			11,147
Net earnings (loss) per common share, basic and diluted(7)				$	(0.17	)	$	(0.54	)	$	(1.18	)	$	(0.92	)	$	(1.12	)	$	(0.66	)	$	0.30

Consolidated balance sheet data (at period end):
Cash and cash equivalents				$	2,342		$	1,476		$	183		$	65		$	6,943		$	50,605		$	26,201
Net working capital					32,096			35,172			16,065			15,084			46,565			83,355			31,197
Net property, plant and equipment					84,897			81,090			75,746			71,230			76,951			73,706			88,555
Total assets					204,764			191,229			187,590			196,508			356,840			300,764			262,024
Total liabilities					170,158			113,596			98,463			190,704			221,817			95,332			154,489
Total shareholders’ equity				$	34,606		$	77,633		$	89,127		$	5,804		$	135,023		$	205,432		$	107,535
Consolidated other operating data:
EBITDA(8)				$	12,202		$	8,764		$	1,698		$	9,067		$	9,604		$	9,599		$	31,427
Items decreasing EBITDA(9)				$	8,619		$	1,848		$	193		$	1,256		$	7,922		$	4,945		$	1,530
Capital expenditures				$	8,662		$	2,617		$	1,816		$	2,301		$	11,441		$	6,750		$	16,356
New railcars delivered					2,423			2,312			1,766			2,557			4,384			3,260			4,980
New railcar orders					2,054			1,598			1,861			4,432			9,644			6,626			13,000
New railcar backlog					1,031			317			412			2,287			7,547			5,653			15,567
Estimated backlog value(10)				$	60,417		$	19,864		$	26,906		$	129,850		$	494,107		$	365,097		$	1,132,788
Consolidated cash flow data:
Net cash provided by (used in) operating activities				$	5,217		$	13,434		$	10,611		$	(1,639	)	$	(17,082	)	$	1,946		$	27,831
Net cash used in investing activities					(8,782	)		(2,189	)		(535	)		(2,251	)		(11,037	)		(6,750	)		(16,356	)
Net cash provided by (used in) financing activities				$	5,490		$	(12,111	)	$	(11,369	)	$	3,772		$	34,997		$	55,344		$	7,783


(1)	Includes revenues from transactions with affiliates of $52.8 million, $64.8 million, $63.6 million, $62.9 million and $64.4 million in 2000, 2001, 2002, 2003 and 2004, respectively and $44.6 million and $44.5 million for the nine months ended September 30, 2004 and 2005, respectively.

(2)	Includes revenues from transactions with affiliates of $16.1 million, $8.6 million, $12.8 million, $11.0 million and $19.4 million in 2000, 2001, 2002, 2003 and 2004, respectively and $12.7 million and $16.0 million for the nine months ended September 30, 2004 and 2005, respectively.

(3)	Including costs from transactions with affiliates of $46.6 million, $57.6 million, $55.7 million, $54.4 million and $59.1 million in 2000, 2001, 2002, 2003 and 2004, respectively and $40.2 million and $41.4 million for the nine months ended September 30, 2004 and 2005, respectively.

(4)	Includes costs from transactions with affiliates of $12.8 million, $7.2 million, $12.2 million, $10.1 million and $15.5 million in 2000, 2001, 2002, 2003 and 2004, respectively and $9.6 million and $12.7 million for the nine months ended September 30, 2004 and 2005, respectively.

(5)	Includes interest income from affiliates of $5.6 million, $4.3 million, $3.4 million, $3.0 million and $3.9 million in 2000, 2001, 2002, 2003 and 2004, respectively and $1.2 million and $0.8 million for the nine months ended September 30, 2004 and 2005, respectively.

(6)	Includes interest expense to affiliates of $0.2 million in 2001, and $1.5 million in 2004 and $0.2 million and $1.7 million for the nine months ended September 30, 2004 and 2005, respectively.


(7)	Share and per share data have been restated to give effect to the merger.


(8)	EBITDA represents net earnings (loss) before income tax expense (benefit), interest (income) expense, net and amortization and depreciation of property and equipment. We believe EBITDA is useful to investors in evaluating our operating performance compared to that of other companies in our industry. In addition, our management uses EBITDA to evaluate our operating performance. The calculation of EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall operating performance of a company’s business. EBITDA is not a financial measure presented in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider EBITDA in isolation or as a substitute for net earnings (loss), cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.

The following is a reconciliation of net earnings (loss) to EBITDA:


																Nine months ended
	Years ended December 31,															September 30,

	2000			2001			2002			2003			2004			2004			2005

	(in thousands)
Net earnings (loss)	$	(1,592	)	$	(1,966	)	$	(3,913	)	$	1,065		$	1,921		$	2,873		$	14,532
Income tax (benefit) expense		(713	)		(1,074	)		(1,894	)		1,139			2,191			1,858			9,611
Interest expense		13,687			9,525			4,853			3,616			3,667			2,216			3,577
Interest income		(5,777	)		(4,770	)		(3,619	)		(3,161	)		(4,422	)		(2,122	)		(1,265	)
Depreciation and amortization		6,597			7,049			6,271			6,408			6,247			4,774			4,972

EBITDA	$	12,202		$	8,764		$	1,698		$	9,067		$	9,604		$	9,599		$	31,427


	(9)	Our net earnings (loss) and EBITDA decreased in the periods specified below as a result of the following items:


	(a)	In 2000 and 2001, we incurred start-up expenses totaling $8.6 million and $1.8 million, respectively, in connection with our Marmaduke tank railcar manufacturing facility. The start-up expenses related to costs associated with introducing new tank railcar products, learning new manufacturing processes and commencing new operating procedures to reach normal productive capacity.


	(b)	In 2002 and 2003, we recorded an asset impairment charge of $0.2 million and $0.8 million respectively to reduce the carrying value of buildings and improvements, and equipment related to our Milton, Pennsylvania railcar repair plant. Inventory value was also reduced by $0.4 million in


		2003 to reflect the lower of cost or market value. Due to reduced demand for railcar repairs at this location, we elected to idle this facility until business conditions warrant its reopening.


	(c)	In 2004 and in the nine months ended September 30, 2004 and September 30, 2005, we incurred an estimated $7.9 million, $4.9 million and $1.5 million, respectively, in increased raw materials costs, consisting primarily of costs relating to steel and railcar components which we were unable to pass on to our customers under our then existing fixed-price customer contracts. Beginning in the first quarter of 2004, we started renegotiating our railcar manufacturing contracts to include provisions that adjust the selling prices of our railcars to reflect increases or decreases in the costs of certain raw materials and components. As a result of this change to our railcar manufacturing contracts, we were able to pass on to our customers approximately 32% of the increased raw material and component costs with respect to the railcars that we produced and delivered in 2004. All of our railcar manufacturing contracts covering railcars to be produced after September 30, 2005 allow for variable pricing to protect us against future changes in the cost of certain raw materials and components.

(10)

Estimated backlog reflects the total sales attributable to the backlog reported at the end of the particular period as if such backlog were converted to actual sales. Estimated backlog does not reflect potential price increases or decreases under our customer contracts that provide for variable pricing based on changes in the cost of certain raw materials and railcar components or the possibility that contracts may be canceled or railcar delivery dates delayed and does not reflect the effects of any cancellation or delay of railcar orders that may occur. See “Management’s discussion and analysis of financial condition and results of operations—Backlog.”

Risk factors

Investing in our common stock involves a high degree of risk. Before you invest in our common stock, you should understand and carefully consider the risks below, as well as all of the other information contained in this prospectus and our financial statements and the related notes included elsewhere in this prospectus. Any of these risks could materially adversely affect our business, financial condition, results of operations and the trading price of our common stock, and you may lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

Due in part to the highly cyclical nature of the railcar industry, we have incurred substantial operating losses in the past and may experience declines in revenue and substantial operating losses in the future.

Historically, the North American railcar market has been highly cyclical and we expect it to continue to be highly cyclical. During the most recent industry cycle, industry-wide railcar deliveries declined from a peak of 75,704 in 1998 to a low of 17,714 railcars in 2002. During this downturn, our revenues dropped from $238.8 million in 2000 to $168.8 million in 2002 and we incurred losses of $1.6 million, $2.0 million and $3.9 million in 2000, 2001 and 2002, respectively. We believe that downturns in the railcar manufacturing industry will occur in the future and will result in decreased demand for our products and services. The cycles in our industry result from many factors that are beyond our control, including economic conditions in the United States. Although railcar production has increased since 2002, industry professionals believe that demand for railcars may have reached a peak and may not persist if favorable economic and other conditions are not sustained. Even if a sustained economic recovery occurs in the United States, demand for our railcars may not match or exceed expected levels. An economic downturn may result in increased cancellations of railcar orders which could have a material adverse effect on our ability to convert our railcar backlog into revenues. If industry backlog for railcars declines below certain levels, CIT, one of our customers which accounts for 71% of our backlog as of September 30, 2005, will be permitted to cancel some or, in certain circumstances, all its orders with at least 180 days written notice, which could have a material adverse effect on our business, financial condition and results of operations. In addition, an economic downturn in the United States could result in lower sales volumes, lower prices for railcars and a loss of profits for us.

A substantial number of the end users of our railcars acquire railcars through leasing arrangements with our leasing company customers. Economic conditions that result in higher interest rates would increase the cost of new leasing arrangements, which could cause our leasing company customers to purchase fewer railcars. A reduction in the number of railcars purchased by our leasing company customers could have a material adverse effect on our business, financial condition and results of operations.

The cost of the raw materials that we use to manufacture railcars, particularly steel, are high and these costs are expected to increase. Any increase in these costs or delivery delays of these raw materials may materially adversely affect our business, financial condition and results of operations.

The production of railcars requires substantial amounts of steel. The cost of steel and all other materials, including scrap metal, used in the production of our railcars represents approximately 80% to 85% of our manufacturing costs. Although we have negotiated variable pricing provisions in all of our current railcar manufacturing contracts that pass certain increases or decreases in our steel costs

Risk factors

on to our customers, our business remains subject to risks related to price increases and periodic delays in the delivery of steel and other raw materials, all of which are beyond our control. The price for steel, the primary raw material component of our railcars, increased sharply in 2004 as a result of strong worldwide demand and supply limitations caused, in part, by steel industry consolidation and import trade barriers. Price levels for steel have increased again in 2005 and we expect worldwide demand for steel to increase, supplies to be more limited and prices to continue to increase in 2006. In addition, the price and availability of other railcar components that are made of steel have been adversely affected by the increased cost and limited availability of steel. Any fluctuations in the price or availability of steel, or any other material used in the production of our railcars, may have a material adverse effect on our business, financial condition and results of operations. In addition, if any of our raw material suppliers were unable to continue its business or were to seek bankruptcy relief, the availability or price of the materials we use could be adversely affected. Deliveries of our raw materials, and the components made from those raw materials, may also fluctuate depending on supply and demand for the raw material or governmental regulation relating to the raw material, including regulation relating to the importation of the raw material.

We have entered into contracts with all of our current railcar customers that allow for variable pricing to protect us against future increases in the cost of certain raw materials and components, including steel. However, in 2004 and in the nine months ended September 30, 2005, we were unable to pass on an estimated $7.9 million and $1.5 million, respectively, in increases in raw material and components costs. As prices for steel, other raw materials and components increase, we may not be able to pass on such price increases to our customers in the future, which could adversely affect our operating margins and cash flows. Even if we are able to increase prices, any such price increases may reduce demand for our railcars. In addition, our customers may not be willing to accept contractual terms that provide for variable pricing and our competitors, in an effort to gain market share or otherwise, have agreed in the past, and may in the future agree, to railcar supply arrangements that provide for fixed pricing. As a result, we may lose railcar orders or we may be required to agree to supply railcars with fixed pricing provisions or be subject to less favorable contract terms, any of which could have a material adverse effect on our business, financial condition and results of operations.

Fluctuations in the supply of components and raw materials we use in manufacturing railcars could cause production delays or reductions in the number of railcars we manufacture, which could materially adversely affect our business, financial condition and results of operations.

Our railcar manufacturing business depends on the adequate supply of numerous components, such as railcar wheels, brakes, tank railcar heads, sideframes, axles, bearings, yokes, bolsters and other heavy castings, and raw materials, such as normalized steel plate. Over the last few years many suppliers have been acquired or ceased operations, which has caused the number of alternative suppliers of components and raw materials to decline. The combination of industry consolidation and high demand has caused recent industry-wide shortages of many critical components as reliable suppliers are frequently at or near production capacity. For example, with respect to railcar wheels, there are only two significant suppliers that continue to produce the type of component we use in our products. We rely on one of these suppliers for most of our railcar wheels. Also, a small percentage of the railcar wheels we use are refurbished and are obtained from scrapped railcars. Supply of these refurbished railcar wheels is available in limited quantities and is unpredictable because the supply of refurbished railcar wheels depends on the level and type of railcars being scrapped in any given period. The supply of steel is similarly limited. While we receive regular steel from three suppliers, we have entered into agreements this year requiring us to buy the lesser of a fixed volume or 75% of our steel requirements from one supplier. In addition, there is currently only one North American supplier of the types and sizes of normalized steel plate we use in the production of many of our tank railcars.

Risk factors

Supply constraints are exacerbated in our industry because, although multiple suppliers may produce certain components, railcar manufacturing regulations and the physical capabilities of manufacturing facilities restrict the types and sizes of components and raw materials that manufacturers may use. In addition, we do not carry significant inventories of components and procure many of our components on a just-in -time basis. With the recent increased demand for railcars, our remaining suppliers are facing significant challenges in providing components and materials on a timely basis to all railcar manufacturers, including to us. In the event that our suppliers of railcar components and raw materials were to stop or reduce the production of railcar components and raw materials that we use, go out of business, refuse to continue their business relationships with us or become subject to work stoppages, our business would be disrupted. Our inability to obtain components and raw materials in required quantities or of acceptable quality could result in significant delays or reductions in railcar shipments. Any of these events would materially and adversely affect our operating results. Furthermore, our ability to increase our railcar production to expand our business depends on our ability to obtain an increased supply of these railcar components and raw materials.

While we believe that we may, in certain circumstances, secure alternative sources of these components and materials, we may incur substantial delays and significant expense in doing so, the quality and reliability of alternative sources may not be the same and our operating results may be materially adversely affected. Alternative suppliers might charge significantly higher prices for railcar components and materials than we currently pay. Even if alternative suppliers are available to us, these suppliers may be unacceptable to our customers because our customers often specify the components we may use in railcars manufactured for them. Under such circumstances, the disruption to our business could have a material adverse impact on our customer relationships, business, financial condition and results of operations.

We operate in a highly competitive industry and we may be unable to compete successfully, which would materially adversely affect our results of operations.

We face intense competition in all of our markets. In each of our covered hopper and tank railcar manufacturing businesses, we have two principal competitors. Both of our principal competitors in the tank railcar market, Trinity Industries, Inc. and the Union Tank Car Company, and one of our principal competitors in the covered hopper railcar market, Trinity Industries, Inc., have substantially greater resources and produce substantially more railcars than we do. For example, according to Trinity Industries, Inc.’s annual report for the year ended December 31, 2004 and its quarterly report for the nine months ended September 30, 2005, Trinity delivered a total of approximately 15,100 and 17,016 railcars, respectively, during those periods in North America. By comparison, for the year ended December 31, 2004 and for the nine months ended September 30, 2005, we delivered a total of approximately 4,384 and 4,980 railcars, respectively, during those periods in North America. In addition, some of these and other railcar manufacturers produce railcars primarily for use in their own railcar leasing operations, competing directly with leasing companies, some of which are our largest customers. Some of our competitors have greater financial and technological resources than we have. Our competitors may increase their participation in the railcar markets in which we compete and other railcar manufacturers that currently do not manufacture covered hopper or tank railcars may choose to compete directly with us. Railcar purchasers’ sensitivity to price and strong price competition within the industry have historically limited our ability to increase prices to obtain better margins on our railcars. Additionally, as we selectively seek to manufacture different types of railcars we will be competing against railcar manufacturers with significantly more experience than we have with regard to such railcar types. Our competition for the sale of railcar components includes our competitors in the railcar manufacturing market as well as a concentrated group of companies whose primary business focus is the production of one or more specialty components. We compete with numerous

Risk factors

companies in our railcar fleet management and railcar repair services business, ranging from companies with greater resources than we have to small, local companies.

In all our markets, in addition to price, competition is based on quality, reputation, reliability of delivery, product performance, customer service and other factors. In particular, technological innovation by any of our existing competitors, or new competitors entering any of the markets in which we do business, could put us at a competitive disadvantage. We may be unable to compete successfully or retain our market share in our established markets. Increased competition for the sales of our railcars, our fleet management and repair services and our railcar components could result in price reductions, reduced margins and loss of market share, which could materially adversely affect our prospects, business, financial condition and results of operations.

Equipment failures, delays in deliveries or extensive damage to our facilities, particularly our railcar manufacturing facilities in Paragould or Marmaduke, Arkansas, could lead to production or service curtailments or shutdowns.

We manufacture our railcars at manufacturing facilities in Paragould and Marmaduke, Arkansas. An interruption in manufacturing capabilities at either of these facilities, as a result of equipment failure or other reasons, could reduce or prevent the production of our railcars. A halt of production at either facility could severely delay scheduled railcar delivery dates to our customers and affect our production schedule, which would delay future production. Any significant delay in deliveries to our customers could result in the termination of orders, cause us to lose future sales and negatively affect our reputation among our customers and in the railcar industry, all of which would materially adversely affect our business and results of operations. Additionally, production delays or interruptions at our Jackson, St. Charles or Kennett, Missouri components manufacturing facilities or at our Ohio Castings joint venture, all of which provide key components to our Paragould and Marmaduke railcar manufacturing facilities, could contribute to delays of railcar deliveries and order cancellations. Interruptions at our repair, cleaning and maintenance facilities, including our mobile repair units, may also have a material adverse effect on our business. All of our manufacturing and service facilities are also subject to the risk of catastrophic loss due to unanticipated events, such as fires, earthquakes, explosions, floods or weather conditions. We may experience plant shutdowns or periods of reduced production as a result of equipment failures, loss of power, gray outs, delays in deliveries or extensive damage to any of our facilities, which could have a material adverse effect on our business, results of operations or financial condition.

We depend upon a small number of customers that represent a large percentage of our revenues. The loss of any single customer, or a reduction in sales to any such customer, could have a material adverse effect on our business, financial condition and results of operations.

Railcars are typically sold pursuant to large, periodic orders and, therefore, a limited number of customers typically represents a significant percentage of our railcar sales in any given year. Our top ten customers based on revenues represented, in the aggregate, approximately 77%, 79% and 79% in 2002, 2003 and 2004, respectively, of our total revenues. Moreover, our top three customers based on revenues represented, in the aggregate, approximately 65%, 70% and 59% in 2002, 2003 and 2004, respectively, of our total revenues. In 2004, sales to our top three customers accounted for approximately 23%, 20% and 16%, respectively, of our total revenues. In the nine months ended September 30, 2005, sales to our top three customers accounted for approximately 17%, 16% and 15%, respectively, of our total revenues. The loss of any significant portion of our sales to any major customer, the loss of a single major customer or a material adverse change in the financial condition of any one of our major customers could have a material adverse effect on our business, financial condition and financial results.

Risk factors

If we lose any of our executive officers or key employees, or Carl C. Icahn, the chairman of our board of directors, our operations and ability to manage the day-to -day aspects of our business may be materially adversely affected.

We believe our success depends to a significant degree upon the continued contributions of our executive officers and key employees, both individually and as a group. Our future performance will substantially depend on our ability to retain and motivate them. If we lose any of our executive officers or key employees or are unable to recruit qualified personnel, our ability to manage the day-to -day aspects of our business may be materially adversely affected. It would be difficult to replace any of our executive officers or key employees without materially adversely affecting our business operations because our executive officers and key employees have many years of experience with our company and within the railcar industry and other manufacturing industries and strong personal ties with many of our important customers and suppliers. Additionally, Mr. Icahn and his affiliated entities have been key resources for strategic and management advice, which we have obtained at no cost. We believe the availability and access to these resources has provided us with a competitive advantage. If Mr. Icahn were no longer the chairman of our board of directors we could lose access to these resources. Furthermore, if Mr. Icahn were no longer the chairman of our board of directors, certain other risks we face relating to our customer, supplier and service relationships with, and competition between us and Mr. Icahn and affiliates of Mr. Icahn, described below, may be exacerbated. The loss of the services of one or more of our executive officers or key employees or the chairman of our board of directors could have a material adverse effect on our business, financial condition and results of operations. We do not currently maintain “key person” life insurance.

If we face labor shortages or increased labor costs our growth and results of operations could be materially adversely affected.

Due to the cyclical nature of the demand for our products, we have had to reduce and then rebuild our workforce as our business has gone through downturns followed by upturns in business activity. Due to the competitive and rural nature of the labor markets in which we operate, this type of employment cycle increases our risk of not being able to retain and recruit the personnel we require in our railcar manufacturing and other businesses, particularly in periods of economic expansion. Our Paragould and Marmaduke facilities are located in sparsely populated communities and we have experienced a high turnover rate at these locations among newly-hired employees. The additional painting and lining capabilities that we are adding to our Paragould facility, which we expect will be completed by the end of 2005, will require additional employees to operate. Our inability to recruit, retain and train adequate numbers of qualified personnel on a timely basis could materially adversely affect our ability to operate our businesses, our financial condition and our results of operations.

The variable purchase patterns of our railcar customers and the timing of completion, delivery and acceptance of customer orders may cause our revenues and income from operations to vary substantially each quarter, which could result in significant fluctuations in our quarterly results.

Most of our individual railcar customers do not make railcar purchases every year because they do not need to replace or replenish their railcar fleets on a yearly basis. Many of our customers place orders for railcars on an as-needed basis, sometimes only once every few years. As a result, the order levels for railcars, the mix of railcar types ordered and the railcars ordered by any particular customer have varied significantly from quarterly period to quarterly period in the past and may continue to vary significantly in the future. Railcar sales comprised approximately 75% of our total revenue in 2004 and 81% of our total revenue in the nine months ended September 30, 2005, and our results of operations in any particular quarterly period may be significantly affected by the number and type of

Risk factors

railcars manufactured and delivered in any given quarterly period. For example, our net income increased 156% from the first quarter to the second quarter of this year while it decreased 207% from the third quarter to the fourth quarter of fiscal 2004. We record the sale of a railcar after completion of production of the railcar, the railcar is accepted by the customer following inspection, the risk for any damage or loss with respect to the railcar passes to the customer and title to the railcar transfers to the customer. This revenue recognition policy determines when we record the revenues associated with our railcar sales and, as a result, will cause fluctuations in our quarterly results. As a result of these fluctuations, we believe that comparisons of our sales and operating results between quarterly periods within the same fiscal year and between quarterly periods within different fiscal years may not be meaningful and, as such, these comparisons should not be relied upon as indicators of our future performance.

Our relationships with our partners in our Ohio Castings joint venture may not be successful, which could materially adversely affect our business.

Effective on January 1, 2005, we acquired from ACF Industries Holding Corp., an affiliate of Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors, its one-third ownership interest in Ohio Castings, our joint venture with affiliates of Amsted Industries Inc., a railcar components manufacturing company, and The Greenbrier Companies, a railcar manufacturer and leasing company. We acquired this joint venture interest in order to increase our supply alternatives for heavy castings, which are critical components for the manufacture of railcars and the supply of which is constrained. The companies that supply the railcar industry with heavy castings have been unable to meet the short-term or long-term demand of railcar manufacturers and, as such, the production capacity of many railcar manufacturers, including ours, is restricted by the limited availability of these components. Although the allocation of castings that we receive from Ohio Castings does not provide us with all of our castings requirements, the joint venture does provide us with a committed source for a critical portion of the castings that we require for the successful operation of our business. If Ohio Castings is unable to provide us with our allocation of castings on a timely basis or at all, our manufacturing costs could increase and we may have to delay or cancel the production of ordered railcars, all of which could materially adversely affect our business, financial condition and results of operations.

The level of our reported railcar backlog may not necessarily indicate what our future revenues will be and our actual revenues may fall short of the estimated revenue value attributed to our railcar backlog.

We define backlog as the number of railcars, and the revenue value in dollars attributed to these railcars, to which our customers have committed in writing to purchase from us that have not yet been recognized as revenues. Our competitors may not define railcar backlog in the same manner as we do, which could make comparisons of our railcar backlog with theirs misleading. In this prospectus, we have disclosed our railcar backlog for various periods and the estimated revenue value in dollars that would be attributed to this railcar backlog once the railcar backlog is converted to actual sales. We consider railcar backlog to be an indicator of future revenues. However, our reported railcar backlog may not be converted into revenues in any particular period, if at all, and the actual revenues from such sales may not equal our reported estimates of railcar backlog value. For example, if the price for raw materials, such as steel, and other components used in the production of our railcars decreases or increases and we have entered into applicable variable pricing contracts with a customer or we are otherwise able to pass on these price changes to a customer, our actual revenues will differ from the estimated revenue value attributed to our railcar backlog. In addition, our railcar manufacturing business relies on third-party suppliers for heavy castings, wheels and other components and raw materials and if these third parties were to stop or reduce their supply of components or raw

Risk factors

materials, our production would decline and our actual revenues would fall short of the estimated revenue value attributed to our railcar backlog. Customer orders may be subject to cancellation, inspection rights and other customary industry terms, all of which could affect our recognition of revenue currently reflected in our September 30, 2005 backlog. If industry backlog for railcars declines below certain levels, CIT, one of our customers which accounts for 71% of our September 30, 2005 backlog, will be permitted to cancel some or, in certain circumstances, all its orders after at least 180 days written notice, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, delivery dates may be subject to deferral, thereby delaying the date on which we will deliver the associated railcars and realize revenues attributable to such railcar backlog. Therefore, our current level of reported railcar backlog may not necessarily represent the level of revenues that we may generate in any future period. Furthermore, any contract included in our reported railcar backlog that actually generates revenues may not be profitable.

Our management and auditors have identified three significant deficiencies in our internal controls as of December 31, 2004, which, if not properly remediated could result in misstatements in our financial statements in future periods.

Our independent auditors, Grant Thornton LLP, issued a letter to our board of directors in which they identified three significant deficiencies in the design and operation of our internal controls as of December 31, 2004. A significant deficiency is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a misstatement of the financial statements that is more than inconsequential will not be prevented or detected. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. The letter specifically noted the following significant deficiencies:


4	*Inventory cut-off.* Our manufacturing facilities recorded inventory shipped by our vendors to us on the date we received the inventory in our facilities, rather than on the date of shipment.

4	*Construction in process.* We transferred assets from construction in process to fixed assets on a quarterly basis rather than at the time assets are actually placed into service. There was insufficient documentation authorizing the movement of assets from construction in process to fixed assets. Certain assets were still being classified as construction in process even though the asset was in service.

4	*Fixed asset recording and reconciliation.* Our fixed asset subsidiary ledgers were not updated in a timely manner. Supporting ledgers for depreciation schedules were tracked using Microsoft Excel. The schedules were not reconciled on a timely basis. The procedures surrounding the compilation of the data was manual and subject to error.

In light of the noted significant deficiencies, we have instituted control improvements that we believe will reduce the likelihood of similar errors. If the remedial policies and procedures we have implemented are insufficient to address the three significant deficiencies or if additional significant deficiencies or other conditions relating to our internal controls are discovered in the future, we may fail to meet our future reporting obligations, our financial statements may contain misstatements and our operating results may be adversely affected. Any such failure could also adversely affect the results of the periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our internal controls over financial reporting, which will be required when the SEC’s rules under Section 404 of the Sarbanes-Oxley Act of 2002 become applicable to us beginning with the filing of our Annual Report on Form 10-K for the year ended December 31, 2007. Although we believe we have addressed our significant deficiencies in internal controls with the remedial measures we have implemented, we cannot guarantee that the measures we have taken to date or any future

Risk factors

measures will remediate the significant deficiencies identified or that any additional significant deficiencies will not arise in the future due to a failure to implement and maintain adequate internal controls over financial reporting. Internal control deficiencies could cause investors to lose confidence in the reliability of our financial statements and other reported financial information, which in turn could harm our business and negatively impact the trading price of our common stock.

Once we become a public company, we will need to comply with the reporting obligations of the Exchange Act and Section 404 of the Sarbanes-Oxley Act. If we fail to comply with the reporting obligations of the Exchange Act and Section 404 of the Sarbanes-Oxley Act, or if we fail to achieve and maintain adequate internal controls over financial reporting, our business, results of operations and financial condition, and investors’ confidence in us, could be materially adversely affected.

As a public company, we will be required to comply with the periodic reporting obligations of the Exchange Act, including preparing annual reports, quarterly reports and current reports. Our failure to prepare and disclose this information in a timely manner could subject us to penalties under federal securities laws, expose us to lawsuits and restrict our ability to access financing. In addition, we will be required under applicable law and regulations to integrate our systems of internal controls over financial reporting. We plan to evaluate our existing internal controls with respect to the standards adopted by the Public Company Accounting Oversight Board. During the course of our evaluation, we may identify areas requiring improvement and may be required to design enhanced processes and controls to address issues identified through this review. This could result in significant delays and cost to us and require us to divert substantial resources, including management time, from other activities. For example, during the audit of our 2004 fiscal year, our independent registered public accounting firm issued a letter to our board of directors noting certain significant deficiencies, as described above.

We expect to dedicate significant management, financial and other resources in connection with our compliance with Section 404 of the Sarbanes-Oxley Act in the second half of 2005. We expect these efforts to include a review of our existing internal control structure. As a result of this review, we may either hire or outsource additional personnel to expand and strengthen our finance function. There have been no external costs associated with this effort through September 30, 2005, and we cannot be certain at this time that we will be able to comply with all of our reporting obligations and successfully complete the procedures, certification and attestation requirements of Section 404 of the Sarbanes-Oxley Act by the time that we are required to file our Annual Report on Form 10-K for the year ended December 31, 2007. If we fail to achieve and maintain the adequacy of our internal controls and do not address the deficiencies identified by our auditors, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with the Sarbanes-Oxley Act. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our failure to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act on a timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading price of our common stock.

Rapid growth is straining our operations and requiring us to incur costs to upgrade our infrastructure.

During the last five quarters, we have experienced rapid growth in our operations, number of our employees and our product offerings. Our growth places a significant strain on our management, operations and financial systems and also on our ability to retain employees. Our future operating results will depend in part on our ability to continue to implement and improve our operating and

Risk factors

financial controls and management information systems. If we fail to manage our growth effectively, our business, financial condition and results of operations could be materially adversely affected.

After this offering, companies affiliated with Carl C. Icahn will continue to be important suppliers and customers.

We manufacture railcars and railcar components and provide railcar services for companies affiliated with Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors. To the extent our relationships with affiliates of Mr. Icahn change due to the sale of his interest in us or otherwise, our business, results of operations and financial condition may be materially adversely affected.

Affiliates of Mr. Icahn have accounted for approximately 45%, 34%, 24% and 14% of our revenues in 2002, 2003, 2004 and the nine months ended September 30, 2005, respectively. This revenue is primarily attributable to our sale of railcars. American Railcar Leasing LLC, or ARL, a railcar leasing company owned by affiliates of Mr. Icahn, currently purchases all of its railcars from us. However, we have no long-term agreements with ARL or any other affiliates of Mr. Icahn to purchase our railcars, and we cannot assure you that ARL or other affiliates of Mr. Icahn will continue to do so. ARL could, in the future, purchase railcars from one of our competitors. In addition, we have a railcar servicing agreement with ARL, under which we provide fleet management services for the entire railcar fleet of ARL and its subsidiaries. These railcars represented approximately 39% of the railcars for which we provided fleet management services as of September 30, 2005. This agreement is terminable by either party at the end of any contract year upon six months prior notice and ARL is not restricted from using the services of our competitors for its existing fleet of railcars or any other railcars it may purchase. A significant change in the nature of the business relationship with ARL and other affiliates of Mr. Icahn could have a material adverse effect on our business, financial condition and results of operations.

We also purchase railcar and industrial components from ACF, another entity affiliated with Mr. Icahn. ACF has been the supplier of approximately $19.0 million, $31.3 million and $56.2 million of our inventory purchases in 2003, 2004 and the nine months ended September 30, 2005, respectively. Currently, ACF is our sole supplier of tank railcar heads and one of a limited number of suppliers for other important railcar components that we use in our manufacturing operations. These railcar components are manufactured and sold to us under a supply agreement that is terminable by ACF at the end of any contract year on six months prior notice. We cannot guarantee that we would be able to obtain alternative supplies of these railcar components on a timely basis and on comparable terms if we were no longer able to purchase these railcar components from ACF. A failure to obtain component supplies from ACF could materially adversely affect our business, financial condition and results of operations.

For more information on these arrangements, see “Certain relationships and related party transactions.”

Services being provided to us by ARL, an entity controlled by Carl C. Icahn, may not be sufficient to meet our needs, which may require us to incur additional costs.

We use certain outsourced information technology and administrative services from ARL, an entity controlled by Mr. Icahn. We also sublease our headquarters office space in St. Charles, Missouri from ARL. We cannot assure you that these services will be provided at the same level as they are currently being provided or that we will be able to maintain our sublease on the same terms as currently in effect. These arrangements may be terminated by ARL or by us upon six months notice and, if they were terminated, we would be required to find a third-party provider of these services or begin to provide them for ourselves and relocate our office headquarters. As these agreements were negotiated

Risk factors

with ARL, an entity affiliated with us, the prices and rates charged to us under these agreements may be lower than the prices and rates that may be charged by unaffiliated third parties for similar services and an office sublease or for us to provide these services on our own. We cannot assure you that, if these agreements are terminated, we will be able to replace these services and the sublease in a timely manner or on terms and conditions, including cost, as favorable as those we are currently receiving. Additional expenses incurred in replacing these services and relocation of our office facilities or the failure to replace these services could materially adversely affect our business, financial condition and results of operations.

After this offering, we may have reduced access to resources of, and benefits provided by, entities affiliated with Carl C. Icahn.

We have in the past obtained access to significant financial and other resources from entities affiliated with Carl C. Icahn. For example, until recently, most of our capital needs have been satisfied by entities affiliated with Mr. Icahn. In addition, we believe that our relationship with entities affiliated with Mr. Icahn have, in many cases, provided us with a competitive advantage in identifying opportunities for sales of our products and identifying and attracting partners for critical supply arrangements. For example, we participate in product and service purchasing arrangements with entities controlled by Mr. Icahn, which we believe may provide us with favorable pricing as a result of larger aggregate purchases by the Icahn-affiliated buying group. If we were unable to participate in these buying group arrangements our manufacturing costs would increase and our results of operations and financial condition may be materially adversely affected. Also, lease sales agents of ARL and ACF, in connection with their own leasing sales activities have, from time to time, referred their customers or contacts to us if the customer or contact prefers to purchase rather than lease railcars, which has, in some cases, led to us selling railcars to these customers or contacts. ACF and ARL have in the past accepted orders to purchase railcars for us on our behalf. ARL and ACF have discontinued accepting orders to sell railcars on our behalf. At this time there is no formal arrangement under which referral services are provided and we do not compensate ARL, ACF or any of their leasing sales agents for any railcar sales that we may make as a result of these referrals. To the extent that ARL or ACF discontinue referring potential customers to us, or require us to compensate them for these referrals, our business, results of operations and financial condition may be adversely affected.

Lack of acceptance of our new railcar offerings by our customers could materially adversely affect our business.

Our strategy depends in part on our continued development and sale of new railcar designs to expand or maintain our market share in the railcar markets in which we currently compete. The investment required by us in connection with the development of new railcar designs is considerable and we usually make decisions to develop and market new railcars and railcars with modified designs without firm indications of customer acceptance. New or modified railcar designs may require customers to alter their existing business methods or displace existing equipment in which these customers may have a substantial capital investment. Additionally, many railcar purchasers prefer to maintain a standardized fleet of railcars and railcar purchasers with established railcar fleets are generally resistant to railcar design changes. Therefore, any new or modified railcar designs that we develop may not gain widespread acceptance in the marketplace and any such products may not be able to compete successfully with existing railcar designs or new railcar designs that may be introduced by our competitors.

Risk factors

Our production of new railcar product lines may not be initially profitable and may result in financial losses.

Our strategy includes developing new railcars and selectively expanding beyond the covered hopper and tank railcar markets. When we begin production of a new railcar product line, we usually experience higher initial costs of production due to training and labor and operating inefficiencies associated with new manufacturing processes. Due to pricing pressures in our industry, the pricing for new railcars in customer contracts usually does not reflect the initial additional costs, and our costs of production may exceed the anticipated revenues until we are able to gain labor efficiencies. For example, in 2004 and 2005, we used a portion of the railcar production capacity at our Paragould facility, which we primarily use to manufacture covered hopper railcars, to manufacture centerbeam platform railcars. This was the first time we manufactured centerbeam platform railcars and primarily as a result of initial training and start-up costs, we incurred a loss on this product. To the extent that the total costs of production significantly exceed our anticipated costs of production, we may incur a loss on our sale of new railcar product lines.

We may pursue acquisitions or joint ventures that involve inherent risks, any of which may cause us not to realize anticipated benefits.

Our business strategy includes the potential acquisition of businesses and entering into joint ventures and other business combinations that we expect will complement and expand our business. We may not be able to successfully identify suitable acquisition or joint venture opportunities or complete any particular acquisition, combination, joint venture or other transaction on acceptable terms. Our identification of suitable acquisition candidates and joint venture opportunities involves risks inherent in assessing the values, strengths, weaknesses, risks and profitability of these opportunities including their effects on our business, diversion of our management’s attention and risks associated with unanticipated problems or unforeseen liabilities. If we are successful in pursuing future acquisitions or joint ventures, we may be required to expend significant funds, incur additional debt or issue additional securities, which may materially adversely affect our results of operations and be dilutive to our stockholders. If we spend significant funds or incur additional debt, our ability to obtain financing for working capital or other purposes could decline and we may be more vulnerable to economic downturns and competitive pressures. In addition, we cannot guarantee that we will be able to finance additional acquisitions or that we will realize any anticipated benefits from acquisitions or joint ventures that we complete. Should we successfully acquire another business, the process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of our existing business. Our failure to identify suitable acquisition or joint venture opportunities may restrict our ability to grow our business.

If we are unable to protect our intellectual property and prevent its improper use by third parties, our ability to compete in the market may be harmed.

We rely on patent protection and a combination of copyright, trade secret and trademark laws to protect our proprietary technology and prevent others from duplicating our products. However, these means afford only limited protection and may not prevent our competitors from duplicating our products or gaining access to our proprietary information and technology. These means also may not permit us to gain or maintain a competitive advantage.

Any of our patents may be challenged, invalidated, circumvented or rendered unenforceable. We cannot guarantee that we will be successful should one or more of our patents be challenged for any reason. If our patent claims are rendered invalid or unenforceable, or narrowed in scope, the patent coverage afforded our products could be impaired, which could significantly impede our ability to

Risk factors

market our products, negatively affect our competitive position and materially adversely affect our business and results of operations.

We cannot assure you that any pending or future patent applications held by us will result in an issued patent, or that if patents are issued to us, that such patents will provide meaningful protection against competitors or against competitive technologies. The issuance of a patent is not conclusive as to its validity or its enforceability. The United States federal courts may invalidate our patents or find them unenforceable. Competitors may also be able to design around our patents. Our patents and patent applications cover particular aspects of our products. Other parties may develop and obtain patent protection for more effective technologies, designs or methods. If these developments were to occur, it could have an adverse effect on our sales. If our intellectual property rights are not adequately protected, we may not be able to commercialize our technologies, products or services and our competitors could commercialize our technologies, which could result in a decrease in our sales and market share and could materially adversely affect our business, financial condition and results of operations.

Our products could infringe the intellectual property rights of others, which may lead to litigation that could itself be costly, could result in the payment of substantial damages or royalties, and could prevent us from using technology that is essential to our products.

We cannot guarantee you that our products, manufacturing processes or other methods do not infringe the patents or other intellectual property rights of third parties. Infringement and other intellectual property claims and proceedings brought against us, whether successful or not, could result in substantial costs and harm our reputation. Such claims and proceedings can also distract and divert management and key personnel from other tasks important to the success of our business. In addition, intellectual property litigation or claims could force us to do one or more of the following:


4	cease selling or using any of our products that incorporate the asserted intellectual property, which would adversely affect our revenue;

4	pay substantial damages for past use of the asserted intellectual property;

4	obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; and

4	redesign or rename, in the case of trademark claims, our products to avoid infringing the intellectual property rights of third parties, which may not be possible and could be costly and time-consuming if it is possible to do.

In the event of an adverse determination in an intellectual property suit or proceeding, or our failure to license essential technology, our sales could be harmed and our costs could increase, which could materially adversely affect our business, financial condition and results of operations.

We are subject to a variety of environmental laws and regulations and the cost of complying, or our failure to comply, with such requirements may have a material adverse effect on our business, financial condition and results of operations.

We are subject to a variety of federal, state and local environmental laws and regulations relating to the release or discharge of materials into the environment, the management, use, processing, handling, storage, transport or disposal of hazardous materials, or otherwise relating to the protection of human health and the environment. These laws and regulations expose us to liability for the environmental condition of our current or formerly owned or operated facilities, and also may expose us to liability for the conduct of others or for our actions that were in compliance with all applicable laws at the time these actions were taken. Despite our intention to be in compliance, we cannot guarantee that we

Risk factors

will at all times be in compliance with all such requirements. The cost of complying with environmental requirements may also increase substantially in future years. If we violate or fail to comply with these regulations, we could be fined or otherwise sanctioned by regulators. In addition, these requirements are complex, change frequently and may become more stringent over time, which could have a material adverse effect on our business. We are also required to maintain a variety of environmental permits. Our failure to maintain and comply with these permits could result in fines or penalties or other sanctions and have a material adverse effect on our operations or results. Future events, such as new environmental regulations or changes in or modified interpretations of existing laws and regulations or enforcement policies, or further investigation or evaluation of the potential health hazards of products or business activities, may give rise to additional compliance and other costs that could have a material adverse effect on our business, financial conditions and operations.

We are involved in investigation and remediation activities at properties that we now own or lease to address historic contamination and potential contamination by third parties. We are also involved with state agencies in the cleanup of two sites under these laws. These investigations are at a preliminary stage, and it is impossible to estimate, with any certainty, the timing and extent of remedial actions that may be required, and the costs that would be involved in such remediation. Substantially all of the issues identified relate to the use of the properties prior to their transfer to us in 1994 by ACF and for which ACF has retained liability and agreed to indemnify us. However, if ACF fails to honor its obligations to us, we would be responsible for the cost of such remediation. We have been advised that ACF estimates that, for the remainder of 2005, ACF will spend approximately $0.1 million on environmental investigation and, in 2006 and 2007, respectively, it will spend approximately $0.2 million on environmental investigation, relating to contamination that existed at properties prior to their transfer to us in 1994 and for which ACF has retained liability and agreed to indemnify us. We expense all costs associated with environmental investigation and remediation relating to our properties even if we receive indemnification from ACF. ACF’s indemnification is not treated as an offset to that expense, but rather as an additional capital contribution. The discovery of historic contamination or the release of substances into the environment at our current or formerly owned or operated facilities could require ACF or us in the future to incur investigative or remedial costs or other liabilities that could be material or that could interfere with the operation of our business. Any environmental liabilities that we may incur that are not covered by adequate insurance or indemnification from a party other than ACF will also increase our costs and have a negative impact on our profitability. See “Business— Environmental matters” for more information.

Failure of ACF to honor its indemnification obligations to us may have a material adverse effect on our business and financial condition.

In connection with our 1994 acquisition from ACF of assets and certain properties relating to ACF’s railcar components manufacturing and railcar manufacturing and railcar maintenance businesses, ACF agreed to retain and indemnify us for certain liabilities relating to its ownership of those assets and operation of its business prior to the transfer, including liabilities relating to employee benefit plans, worker’s compensation, environmental contamination and third-party litigation. The total of such accrued liabilities was $11.1 million as of December 31, 2004. Additional such liabilities may accrue in the future. If ACF fails to honor its indemnification obligations, whether as a result of a dispute related to the applicability of the indemnification, ACF having insufficient assets to pay liabilities or otherwise, our business and financial condition could be materially adversely affected.

Risk factors

Changes in assumptions or investment performance of pension and other postretirement benefit plans that we sponsor could materially adversely affect our financial condition and results of operations.

We sponsor two pension plans, including one plan that was frozen effective April 1, 2004, and in which our employees are therefore no longer accruing additional benefits. We will be responsible for making funding contributions to the plans, including the frozen pension plan, and may be liable for any unfunded liabilities that may exist at the time the plans are terminated. Our liability and resulting costs for these plans may increase or decrease based upon a number of factors, including actuarial assumptions used, the discount rate used in calculating the present value of future liabilities, and investment performance. An adverse change or result in one or more of these factors could have a material adverse effect on our financial condition and results of operations.

We also provide other postretirement benefits to certain of our employees. Our postretirement benefit obligations and related expense with respect to these postretirement benefits also increase or decrease based on several factors, including changes in health care cost trend rates, and could similarly be materially adversely affected by adverse changes in these factors.

We could be liable for liabilities associated with pension plans sponsored by companies controlled by Carl C. Icahn.

Mr. Icahn, our principal beneficial stockholder and the chairman of our board of directors, and his affiliates currently hold over 80% of our outstanding voting securities. Applicable pension and tax laws make each member of a plan sponsor’s controlled group, generally defined as entities in which there is at least an 80% common ownership interest, jointly and severally liable for pension plan obligations sponsored by other members of the controlled group. These pension obligations include liability for any unfunded liabilities that may exist at the time the plans are terminated. We and our subsidiaries are currently members of a controlled group that includes ACF, an entity in which Mr. Icahn has an indirect ownership interest of at least 80%. ACF is the sponsor of several pension plans that are underfunded, as of December 31, 2004, by a total of approximately $24.1 million on an ongoing actuarial basis and $172.4 million if those plans were terminated, as most recently reported by the plans’ actuaries. These liabilities could increase or decrease, depending on a number of factors, including future changes in promised benefits, investment returns and the assumptions used to calculate the liability. As members of the controlled group, we would be jointly and severally liable for any failure of ACF to pay the unfunded liabilities upon a termination of the ACF pension plans.

Upon completion of this offering, we believe that we should no longer be a member of the ACF controlled group. As a result, we should no longer be subject to ACF’s pension liabilities, unless it were determined that we were otherwise a member of the ACF controlled group or that a principal purpose of the offering or other transactions that resulted in our ceasing to be a member of the ACF controlled group was to evade pension liabilities and the termination date of the underfunded plan was within five years after the offering or other transactions. If such a determination were made and upheld by a court, we could remain jointly and severally liable for pension plan obligations of ACF, which could have a material adverse effect on our financial condition and results of operations.

In connection with Trans World Airlines, Inc.’s (or TWA) 1992 bankruptcy proceedings under Chapter 11 of the Bankruptcy Code, the Pension Benefit Guaranty Corporation (or the PBGC) asserted that ACF as well as the other entities in which Mr. Icahn had a controlling interest were obligated along with TWA to satisfy any underfunding of obligations under TWA’s defined benefit plan. Subsequently, and in response to a petition of another member of the Icahn control group, the PBGC terminated the TWA pension plan and obligated an affiliate of ours, Highcrest Investors Corp (or Highcrest), to make

Risk factors

eight annual termination payments of $30 million, totaling $240 million. We have been advised that as of December 31, 2004, Highcrest had made termination payments totaling $130 million and still owed $110 million of this obligation. The obligation to make termination payments is non-recourse except to the common stock of ACF Industries Holding Corp., which is also a member of the Icahn control group. The authority of the PBGC to enter into the settlement agreement is currently being contested. If such a contest were to succeed, we could be jointly and severally liable with the other members of the Icahn control group for the termination liability associated with the TWA pension plan, which may be in excess of the remaining termination payments.

Our manufacturer’s warranties expose us to potentially significant claims.

We warrant the workmanship and materials of many of our products under express limited warranties. Accordingly, we may be subject to significant warranty claims in the future such as multiple claims based on one defect repeated throughout our mass production process or claims for which the cost of repairing the defective component is highly disproportionate to the original cost of the part. These types of warranty claims could result in costly product recalls, significant repair costs and damage to our reputation, which could materially adversely affect our business, financial condition and results of operations. Unresolved warranty claims could result in users of our products bringing legal actions against us. For example, we have been named as the defendant in a lawsuit in which the plaintiff, OCI Chemical Company, claims we were responsible for the damage caused by allegedly defective railcars that were manufactured by us. OCI Chemical Company alleges that failures in certain components caused the contents transported by these railcars to spill out of the railcars causing property damage, clean-up costs, monitoring costs, testing costs and other costs and damages.

Increasing insurance claims and expenses could lower profitability and increase business risk.

The nature of our business subjects us to product liability, property damage and personal injury claims, especially in connection with our manufacture and repair of products that transport hazardous or volatile materials, such as pressure tank railcars. We maintain reserves and liability insurance coverage at levels based upon commercial norms in the industries in which we operate and our historical claims experience. Over the last several years, insurance carriers have raised premiums for many companies operating in our industry. Increased premiums may further increase our insurance expense as coverages expire or cause us to raise our self-insured retention. If the number or severity of claims within our self-insured retention increases, we could suffer costs in excess of our reserves. An unusually large liability claim or a series of claims based on a failure repeated throughout our mass production process may exceed our insurance coverage or result in direct damages if we were unable or elected not to insure against certain hazards because of high premiums or other reasons. In addition, the availability of, and our ability to collect on, insurance coverage is often subject to factors beyond our control. Moreover, any accident or incident involving us, even if we are fully insured or not held to be liable, could negatively affect our reputation among customers and the public, thereby making it more difficult for us to compete effectively, and could materially adversely affect the cost and availability of insurance in the future.

Covenants in our revolving credit facility currently restrict and, following amendments to our revolving credit facility that we expect to enter into concurrently with this offering, covenants in our amended and restated revolving credit facility will continue to restrict our discretion in operating our business and provide for certain minimum financial requirements.

We expect to amend and restate our revolving credit facility concurrently with this offering. Our amended and restated revolving credit facility will contain various covenants, similar to those in our

Risk factors

existing revolving credit facility, that, among other things, will require us to satisfy certain financial covenants and will limit our management’s discretion by restricting our ability to:


4	incur additional debt;

4	redeem our capital stock;

4	enter into certain transactions with affiliates;

4	pay dividends and make other distributions;

4	make investments and other restricted payments; and

4	create liens.

Our failure to comply with any covenants under the amended and restated revolving credit facility could lead to an event of default under the agreements governing our indebtedness that we may have outstanding at the time, permitting our lenders to accelerate our borrowings and to foreclose on any collateral.

Some of our railcar services and component manufacturing employees belong to labor unions and strikes or work stoppages by them or unions formed by some or all of our other employees in the future could adversely affect our operations.

We are a party to collective bargaining agreements with labor unions at our Longview, Texas, North Kansas City, Missouri and our Milton, Pennsylvania repair facilities and at our Longview, Texas steel foundry and components manufacturing facility. As of September 30, 2005, the covered employees at these sites collectively represent approximately 16% of our total workforce. Disputes with regard to the terms of these agreements or our potential inability to negotiate acceptable contracts with these unions in the future could result in, among other things, strikes, work stoppages or other slowdowns by the affected workers. We cannot guarantee that our relations with our railcar services workforce will remain positive. We cannot guarantee that union organizers will not be successful in future attempts to organize our railcar manufacturing employees or our other employees at some of our other facilities. If our workers were to engage in a strike, work stoppage or other slowdown, or other employees were to become unionized or the terms and conditions in future labor agreements were renegotiated, we could experience a significant disruption of our operations and higher ongoing labor costs. In addition, we could face higher labor costs in the future as a result of severance or other charges associated with layoffs, shutdowns or reductions in the size and scope of our operations.

The market and industry data contained in this prospectus, including estimates and forecasts relating to the growth of the railcar market, cannot be verified with certainty and may prove to be inaccurate.

This prospectus contains market and industry data obtained primarily from industry publications of the Association of American Railroads, the Railway Supply Institute, Global Insight and information from the U.S. Department of Agriculture. Industry publications typically indicate that they have derived the published data from sources believed to be reasonable, including other railcar manufacturers, but do not guarantee the accuracy or completeness of the data. While we believe these publications to be reliable, we have not independently verified the data or any of the assumptions on which the estimates and forecasts are based, and the data may prove to be inaccurate. This data includes estimates and forecasts regarding future growth in these industries, specifically data related to railcar production, railcar growth and the historical average age of active railcars in North America. Forecasts and estimates regarding future growth of the railcar industry included in these reports are based on assumptions of the growth and improvement of certain sectors of the U.S. economy. The

Risk factors

growth and improvement of these sectors of the U.S. economy during the period of these forecasts and estimates are not assured. The failure of these sectors of the U.S. economy to perform as assumed in these forecasts and estimates would cause the forecasted expansion of the railcar industry not to occur or to occur to a lesser extent than predicted. The failure of the rail industry or the railcar supply industry to continue to grow as forecasted by the market and industry data included in this prospectus may have a material adverse effect on our business and the market price of our common stock. See additional information on industry data on page (i).

Our failure to comply with regulations imposed by federal and foreign agencies could negatively affect our financial results.

Our railcar operations are subject to extensive regulation by governmental regulatory and industry authorities and by federal and foreign agencies. These organizations establish rules and regulations for the railcar industry, including construction specifications and standards for the design and manufacture of railcars; mechanical, maintenance and related standards; and railroad safety. New regulatory rulings and regulations from these federal or foreign agencies may impact our financial condition and results of operations. If we fail to comply with the requirements and regulations of these agencies, we may face sanctions and penalties that could materially adversely affect our results of operations.

Further consolidation of the railroad industry may materially adversely affect our business.

Over the past ten years, there has been a consolidation of railroad carriers operating in North America. Railroad carriers are large purchasers of railcars and represent a significant portion of our historical customer base. With fewer railroad carriers, each railroad carrier will have proportionately greater buying power and operating efficiency. This may intensify competition among railcar manufacturers to retain customer relationships with the consolidated railroad carriers and cause our prices to decline. Future consolidation of railroad carriers may materially adversely affect our sales and reduce our income from operations.

Reductions in the availability of energy supplies or an increase in energy costs may increase our operating costs.

We use electricity and natural gas at our manufacturing facilities and to operate our equipment. Over the past three years, prices for electricity and natural gas have fluctuated significantly. An outbreak or escalation of hostilities between the United States and any foreign power and, in particular, a prolonged armed conflict in the Middle East, or a natural disaster such as the recent hurricane and related flooding in the oil producing region of the Gulf Coast of the United States, could result in a real or perceived shortage of petroleum and/or natural gas, which could result in an increase in the cost of electricity or energy generally. Future limitations on the availability or consumption of petroleum products and/or an increase in energy costs, particularly electricity for plant operations, could have a materially adverse effect upon our business and results of operations.

We may be required to reduce our inventory carrying values, which could materially adversely affect our financial condition and results of operations.

We are required to record our inventories at the lower of cost or market. In assessing the ultimate realization of inventories, we are required to make judgments as to future demand requirements and compare them with the current or committed inventory levels. We have recorded reductions in inventory carrying values in recent periods due to the discontinuance of product lines and changes in market conditions due to changes in demand requirements. We may be required to reduce inventory carrying values in the future due to a decline in market conditions in the railcar business, which could have a material adverse effect on our financial condition and results of operations.

Risk factors

We may be required to reduce the value of our long-lived assets, which could materially adversely affect our financial condition and results of operations.

We periodically evaluate the carrying values of our long-lived assets for potential impairment. The carrying value of a long-lived asset is considered impaired when the carrying value is not recoverable through undiscounted future cash flows and the fair value of the asset is less than the carrying value reduced by the estimated cost to dispose of the asset. Any resulting impairment loss related to reductions in the value of our long-lived assets could materially adversely affect our financial condition and results of operations.

RISKS RELATED TO THE PURCHASE OF OUR COMMON STOCK IN THIS OFFERING

As a new investor, you will experience immediate and substantial dilution.

You will pay a price for each share of our common stock that exceeds the per share value attributed from our tangible assets less our total liabilities. Therefore, if we distributed our consolidated tangible assets after deducting our consolidated liabilities to our stockholders following this offering, our stockholders would receive less per share of common stock than you paid in this offering. After giving effect to the sale of our shares of common stock in this offering at the assumed initial public offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us and after giving effect to the Transactions, our net tangible book value would have been approximately $155.5 million, or $7.77 per share. Accordingly, if you purchase shares of our common stock in this offering you will suffer immediate dilution of $9.23 per share in net tangible book value. Net tangible book value per share represents the amount of our total consolidated tangible assets less our total consolidated liabilities, divided by the total number of shares of common stock outstanding adjusted for this offering and the expected use of the proceeds of this offering, based on an assumed initial offering price of $17.00 per share of common stock, which represents the midpoint of the range on the cover of this prospectus. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares of our capital stock. You may suffer additional dilution to the extent outstanding options to purchase shares of our common stock are exercised. To the extent the actual initial public offering price differs from the assumed initial public offering price or the actual number of shares we sell in this offering differs from the 8,500,000 shares we expect to sell in this offering, our net tangible book value and dilution per share will also change. For more information, see “Dilution.”

Our common stock may trade at prices below the initial public offering price and may be susceptible to declines based on securities analysts’ or industry research and reports.

Prior to this offering, you could not buy or sell our common stock publicly. We cannot predict the extent to which an active trading market for our common stock will develop or be sustained after this offering. The initial public offering price will be determined by negotiations between us and representatives of the underwriters based on factors that may not be indicative of future performance and may not bear any relationship to the price at which our common stock will trade upon completion of this offering. You may not be able to resell our common stock at or above the initial public offering price.

In addition, the trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of the analysts who cover us or our industry downgrade our stock or project a downturn in our industry, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Risk factors

The price of our common stock is subject to volatility and you could lose all or part of your investment.

Various factors, such as general economic changes in the financial markets, announcements or significant developments with respect to the railcar industry, actual or anticipated variations in our or our competitors’ quarterly or annual financial results, the introduction of new products or technologies by us or our competitors, changes in other conditions or trends in our industry or in the markets of any of our significant customers, changes in governmental regulation, our financial results failing to meet expectations of analysts or investors, or changes in securities analysts’ estimates of our future performance or of that of our competitors or our industry, could cause the market price of our common stock to fluctuate substantially. In addition, our customers’ practice of placing large, periodic orders for products on an as needed basis makes our quarterly sales and operating results difficult to predict and could cause our operating results in some quarters to vary from market expectations and also lead to volatility in our stock price.

Our stock price may decline due to sales of shares by Carl C. Icahn and other stockholders.

Sales of substantial amounts of our common stock, or the perception that these sales may occur, may adversely affect the price of our common stock and impede our ability to raise capital through the issuance of equity securities in the future. There will be 20,000,000 shares of our common stock outstanding immediately after this offering, subject to increase or decrease based on the actual number of shares we sell in this offering and the number of shares we issue to our chief executive officer. See “Description of capital stock— Authorized and outstanding capital stock” for more information. Of these shares, approximately 56% will be beneficially owned by our principal beneficial stockholder and the chairman of our board of directors, Carl C. Icahn. These include shares of our common stock, representing 22% of our shares of common stock outstanding immediately after this offering, held by the Foundation for Greater Opportunity, which an affiliate of Mr. Icahn has agreed to purchase pursuant to a stock purchase agreement entered into in December 2005. The consummation of this acquisition requires the completion of this offering and the approval of applicable authorities of the State of New York. If the parties obtain this approval, we have been advised that the parties expect that the acquisition would be completed in the first three months of 2006. Pending the closing of this acquisition, and for so long as the stock purchase agreement has not been terminated, the Foundation has granted the affiliate of Mr. Icahn purchasing the shares owned by the Foundation an irrevocable proxy to vote all of the shares of our common stock held by the Foundation. All shares sold in this offering will be freely transferable without restriction or further registration under the Securities Act of 1933. All of our other outstanding shares of common stock are subject to restrictions applicable to our “affiliates,” as that term is defined in Rule 144 of the Securities Act and subject to 180-day lock-up agreements. See “Shares eligible for future sale” and “Underwriting.”

We and our executive officers, directors and all our existing stockholders have entered, and certain individuals who purchase shares of our common stock in this offering through the directed share program may enter, into 180-day lock-up agreements with the underwriters. The lock-up agreements prohibit us and our executive officers, directors, existing stockholders and certain individuals who have purchased shares of our common stock through the directed share program from selling or otherwise disposing of shares of common stock, except in limited circumstances. The terms of the lock-up agreements can be waived, at any time, by UBS Securities LLC and Bear, Stearns & Co. Inc. in their sole discretion, without prior notice or announcement, to allow us or our officers, directors, existing stockholders and certain individuals who have purchased shares of our common stock through the directed share program to sell shares of our common stock. If the terms of the lock-up agreements are waived, shares of our common stock will be available for sale in the public market, which could

Risk factors

reduce the price of our common stock. See “Shares eligible for future sale— Lock-up agreements” and Underwriting — Directed share program.”

Following the expiration of the lock-up period, certain shareholders under our new registration rights agreement will be entitled, subject to certain exceptions, to exercise their demand registration rights to register their shares under the Securities Act. If this right is exercised, holders of any of our common stock subject to the registration rights agreement will be entitled to participate in such registration. In addition, in our letter agreement with James J. Unger, our president and chief executive officer, we have agreed to use commercially reasonable efforts to file a registration statement on Form S-8 with the SEC to cover the registration of 141,176 shares of our common stock (assuming an initial public offering price of $17.00 per share, which represents the midpoint of the range on the cover page of this prospectus). We have agreed to include the balance of Mr. Unger’s shares in any registration statement we file on behalf of Mr. Icahn with regard to the registration for sale of our shares held by Mr. Icahn, provided the contractual restrictions and applicable lock-up period of Mr. Unger’s shares have lapsed. By exercising their registration rights, and selling a large number of shares, these holders could cause the price of our common stock to decline. An estimated 11.5 million shares of common stock will be subject to our registration rights agreement and Mr. Unger’s letter agreement upon completion of this offering. See “Shares eligible for future sale,” “Certain relationships and related party transactions— Registration rights,” “Management— Executive compensation— Employment agreements” and “Description of capital stock— Registration rights.”

We may require additional capital in the future and sales of our equity securities to provide this capital may dilute your ownership in us.

We may need to raise additional funds through public or private equity financings to:


4	expand and grow our business;


4	develop new products and services;


4	respond to competitive pressures; or


4	acquire complementary businesses or technologies.

Any additional capital raised through the sale of our equity securities may dilute your percentage ownership interest in us.

Carl C. Icahn will continue to exert significant influence over us.

We have been advised that in December 2005 an affiliate of Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors, entered into a stock purchase agreement with the Foundation for a Greater Opportunity, or the Foundation, our other significant beneficial stockholder, to acquire all of our common stock held by the Foundation. The consummation of this acquisition requires the completion of this offering and the approval of applicable authorities of the State of New York. If the parties obtain this approval, we have been advised that the parties expect that the purchase would be completed in the first three months of 2006. Pending the closing of this purchase, and for so long as the stock purchase agreement has not been terminated, the Foundation has granted the affiliate of Mr. Icahn purchasing the shares owned by the Foundation an irrevocable proxy to vote all of the shares of our common stock held by the Foundation. The stock purchase agreement may be terminated by either party if the purchase does not occur by May 2006. As a result of these contemplated arrangements, we expect that Mr. Icahn will control approximately 56% of the voting power of our capital stock following the offering. If the common stock held by the Foundation is not acquired by affiliates of Mr. Icahn, and the irrevocable proxy expires, Mr. Icahn will control approximately 34% of the voting power of our common stock. Whether or not affiliates of Mr. Icahn acquire our common stock held by the Foundation, Mr. Icahn will be able to control or exert

Risk factors

substantial influence over us, including the election of our directors, and controlling most matters requiring board or shareholder approval, including:


4	any determination with respect to our business strategy and policies;

4	mergers or other business combinations involving us;

4	our acquisition or disposition of assets;

4	future issuances of common stock or other securities by us;

4	our incurrence of debt or obtaining other sources of financing; and

4	the payment of dividends on our common stock.

In addition, the existence of a controlling stockholder may have the effect of making it difficult for, or may discourage or delay, a third party from seeking to acquire, a majority of our outstanding common stock, which may adversely affect the market price of the stock.

Mr. Icahn’s interests may conflict with the interest of our stockholders.

Mr. Icahn owns and controls and has an interest in a wide array of companies, some of which such as ARL and ACF as described below, may compete directly or indirectly with us. As a result, his interests may not always be consistent with our interests or the interests of our other stockholders. For example, ARL, a railcar leasing company owned by Mr. Icahn, competes directly with our other customers that are in the railcar leasing business and ACF, which supplies us with critical components, also provides components to our competitors. ACF has also previously manufactured railcars and may do so in the future. Mr. Icahn and entities controlled by him may also pursue acquisitions or business opportunities that may be complementary to our business. Our certificate of incorporation will allow Mr. Icahn, entities controlled by him, and any director, officer, member, partner, stockholder or employee of Mr. Icahn or entities controlled by him, to take advantage of such corporate opportunities without first presenting such opportunities to us, unless such opportunities are expressly offered to any such party solely in, and as a direct result of, his or her capacity as our director, officer or employee. As a result, corporate opportunities that may benefit us may not be available to us in a timely manner, or at all. See “Description of Capital Stock— Corporate Opportunities.” To the extent that conflicts of interest may arise between us and Mr. Icahn and his affiliates, those conflicts may be resolved in a manner adverse to us or to you or other holders of our securities.

Upon the closing of this offering we may be a “controlled company” within the meaning of the Nasdaq National Market rules and you will not have the same protections afforded to shareholders of companies that are not “controlled companies” and, therefore, are subject to all of the Nasdaq National Market corporate governance requirements.

We have been advised that an affiliate of Carl C. Icahn has entered into an agreement to acquire all of our common stock held by the Foundation. The consummation of this acquisition of our common stock would require the completion of this offering and the approval of applicable authorities of the State of New York. If the parties obtain this approval, we have been advised that the parties expect that the purchase would be completed in the first three months of 2006. Pending the closing of this purchase, and for so long as the stock purchase agreement has not been terminated, the Foundation has granted the affiliate of Mr. Icahn purchasing the shares owned by the Foundation an irrevocable proxy to vote all of the shares of our common stock held by the Foundation. As a result of these contemplated arrangements, Mr. Icahn will control approximately 56% of the voting power of our capital stock following the offering. Consequently, after the offering, we will be a “controlled company” within the meaning of the corporate governance standards of the Nasdaq National Market. Under these rules, a “controlled company” may elect not to comply with certain Nasdaq National Market corporate governance requirements, including requirements that a majority of the board of directors consist of independent directors; compensation of officers be

Risk factors

determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee that is composed entirely of independent directors; and director nominees be selected or recommended for selection by a majority of the independent directors or by a nominating committee composed solely of independent directors. If we are a “controlled company” following this offering, we intend to use these exemptions. As a result, we expect that we would not have a majority of independent directors, we would not have a compensation committee and we would not have a nominating committee. Accordingly, if we are a “controlled company” following this offering, you will not have the same protections afforded to shareholders of other companies that are not “controlled companies” and, therefore, are subject to all of the Nasdaq National Market corporate governance requirements.

Payments of cash dividends on our common stock may be made only at the discretion of our board of directors and Delaware law may restrict, and the agreements governing our revolving credit facility contain provisions that limit, our ability to pay dividends.

Our board of directors has never declared or paid any cash dividends on our common stock. Our board of directors may, in its discretion, refuse to pay dividends and any payment of dividends will depend upon our operating results, strategic plans, capital requirements, financial condition, provisions of our borrowing arrangements and other factors our board of directors considers relevant. In addition, the agreements governing our existing revolving credit facility restrict our ability to declare and pay dividends on our capital stock and the amended and restated revolving credit facility that we expect to enter into concurrently with this offering will also restrict our ability to declare and pay dividends. Furthermore, Delaware law imposes restrictions on our ability to pay dividends. For example, our board of directors may declare dividends only to the extent of our “surplus” (which is defined as total assets at fair market value minus total liabilities, minus statutory capital), or if there is no surplus, out of our net profits for the then-current and/or immediately preceding fiscal years. Accordingly, we may not be able to pay dividends in any given amount in the future, or at all.

As a result of being a public company, we will incur increased costs that may place a strain on our resources and our management’s attention may be diverted from other business concerns.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, as well as new rules subsequently implemented by the Securities and Exchange Commission, or SEC, and the Nasdaq National Market, have required changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We currently do not have an internal audit group. We will require significant resources and management oversight to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting. This may divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, we will need to hire or outsource additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

We also expect these new rules and regulations to make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. We

Risk factors

are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of costs we may incur with respect to them or the timing of such costs.

This offering may cause us to undergo an “ownership change” for purposes of Section 382 of the Internal Revenue Code, which may limit our ability to use our net operating loss carryforwards and certain other tax attributes.

At December 31, 2004, the Company had net operating loss carryforwards of $26 million, which begin to expire in 2024. The tax effect of this federal net operating loss carryforwards were approximately $10.1 million. Under Section 382 of the Internal Revenue Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change of control net operating loss carryforward and other pre-change tax attributes against its post-change income may be limited. Although no definite determination can be made at this time, there is a possibility that this offering will cause us to undergo an ownership change under the Internal Revenue Code. These limitations may have the effect of reducing our after-tax cash flow. Even if this offering does not cause an ownership change to occur, we may undergo an ownership change after the offering due to subsequent changes in ownership of our common stock.

Special note regarding forward-looking statements

This prospectus contains some forward-looking statements including, in particular, statements about our industry, plans, strategies and prospects. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, financial position or performance to be materially different from any future results, financial position or performance expressed or implied by such forward-looking statements. We have used the words “may,” “will,” “expect,” “anticipate,” “believe,” “forecast,” “estimate,” “plan,” “projected,” “intend” and similar expressions in this prospectus to identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. Our actual results or those of our industry could differ materially from those projected in the forward-looking statements.

Our forward-looking statements are subject to risks and uncertainties, including:


4	the cyclical nature of our business;

4	adverse economic and market conditions;

4	fluctuating costs of raw materials, including steel and railcar components, and delays in the delivery of such raw materials and components;

4	our ability to maintain relationships with our suppliers of railcar components and raw materials;

4	fluctuations in the supply of components and raw materials we use in railcar manufacturing;

4	the highly competitive nature of our industry;

4	the risk of damage to our primary railcar manufacturing facilities or equipment in Paragould or Marmaduke, Arkansas;

4	our reliance upon a small number of customers that represent a large percentage of our revenues;

4	the variable purchase patterns of our railcar customers and the timing of completion, delivery and acceptance of customer orders;

4	our dependence on our key personnel;

4	the risks of a labor shortage in light of our recent growth;

4	risks associated with the conversion of our railcar backlog into revenues;

4	the risk of lack of acceptance of our new railcar offerings by our customers;

4	the cost of complying with environmental laws and regulations;

4	the costs associated with being a public company;

4	our relationship with Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors, and his affiliates as a purchaser of our products, supplier of components and services to us and as a provider of significant capital, financial and managerial support;

4	potential failure by ACF to honor its indemnification obligations to us;

4	potential risk of increased unionization of our workforce;

4	our ability to manage our pension costs;

4	potential significant warranty claims; and

4	covenants in our existing revolving credit facility and other agreements as they presently exist and similar covenants that we expect in our amended and restated revolving credit facility governing our indebtedness that limit our management’s discretion in the operation of our businesses.

Special note regarding forward-looking statements

Our actual results could be different from the results described in or anticipated by our forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections and may be better or worse than anticipated. Given these uncertainties, you should not rely on forward-looking statements. Forward-looking statements represent our estimates and assumptions only as of the date that they were made. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this prospectus, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed above under “Risk factors.” We caution you that these risks may not be exhaustive. We operate in a continually changing business environment and new risks emerge from time to time. You should carefully read this prospectus in its entirety as it contains information you should consider when making your investment decision.

Use of proceeds

We estimate that we will receive net proceeds from this offering of approximately $130.0 million (or $150.2 million, if the underwriters exercise their over-allotment option in full), after deducting underwriting discounts and other estimated fees and expenses related to this offering payable by us, assuming an initial offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus. An increase (or decrease) in the initial public offering price from the assumed initial public offering price of $17.00 per share by $1.00 would increase (or decrease) the net proceeds to us from this offering by approximately $7.9 million, after deducting the estimated underwriting discounts and commissions and estimated aggregate offering expenses payable by us and assuming no exercise of the underwriters’ over-allotment option and no other change to the number of shares offered by us as set forth on the cover page of this prospectus.

The table below shows the application of the net proceeds of this offering to give effect to the Transactions, as if the Transactions were completed as of September 30, 2005. Actual amounts will vary from the amounts shown below.


		Amount

		(in thousands)
*Uses of funds*
Redemption of all outstanding shares of preferred stock(1)		$	91,309
Repayment of notes due to affiliates(2)			20,000
Repayment of all industrial revenue bonds(3)			8,632
Repayment of a portion of the amounts outstanding under revolving credit facility(4)			10,059

	Total uses(5)	$	$130,000



(1)	We intend to redeem all of the outstanding shares of our new preferred stock and pay all accumulated and unpaid dividends on that stock immediately following the completion of this offering. There are 82,055 shares of our new preferred stock outstanding and, as of September 30, 2005, there were $9.3 million of accumulated and unpaid dividends on those shares. Immediately prior to the merger and the closing of this offering, we intend to redeem our one outstanding share of mandatorily redeemable preferred stock and pay all accumulated and unpaid dividends on that share with $1,770 of available cash. All of our outstanding preferred stock is held by Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors, and his affiliates. See “Certain relationships and related party transactions—Transactions with Carl C. Icahn and entities affiliated with Carl C. Icahn—Redemption of new preferred stock” and “Description of capital stock.”



(2)	Includes indebtedness owed to Arnos Corp. and ACF Industries Holding Corp., both of which are beneficially owned and controlled by Mr. Icahn. On December 17, 2004, we issued a note payable to Arnos Corp. in the amount of $7.0 million that bears interest at the U.S. prime rate plus 1.75% and is payable on demand. We refer to this note as the Arnos note. We used the proceeds of the Arnos note to provide additional working capital. As of September 30, 2005, the interest rate on the Arnos note was 8.0%. As of September 30, 2005, we had $7.0 million in principal amount and $0.4 million in accrued interest on the Arnos note outstanding. As of January 1, 2005, in connection with our purchase of Castings LLC, the entity through which we own our interest in the Ohio Castings joint venture, from ACF Industries Holding Corp., we issued a note payable to ACF Industries Holding Corp. in the principal amount of $12.0 million. We refer to this note as the Castings note. The Castings note bears interest at the U.S. prime rate plus 0.5% and is due on demand. As of September 30, 2005, the interest rate on the Castings note was 7.25%. As of September 30, 2005, we had $12.0 million in principal amount and $0.6 million in accrued interest on the Castings note outstanding. See “Certain relationships and related party transactions—Certain transactions with ACF Industries LLC and American Railcar Leasing LLC—Amounts due to affiliates.”


(3)	The industrial revenue bonds are due at varying dates through 2011 and as of September 30, 2005 bear interest at rates ranging from 7.75% to 8.5%, with a weighted average interest rate of 8.3% per year. See

Use of proceeds



	“Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Industrial revenue bonds.” The industrial revenue bonds are guaranteed by affiliates of Mr. Icahn, and these affiliates will be released from such guarantees upon repayment of the industrial revenue bonds. In addition, James J. Unger, our president and chief executive officer, and his wife own $0.4 million of the industrial revenue bonds issued by Paragould, Arkansas. See “Certain relationships and related party transactions—Guarantees of indebtedness by ACF and other related parties—Industrial revenue bonds” and “Certain relationships and related party transactions—Certain transactions involving James J. Unger—Industrial revenue bonds” for more details. Amounts include accrued and unpaid interest through the date of the repurchase of the industrial revenue bonds. As of September 30, 2005, we had $8.3 million in principal amount and $0.3 million in accrued interest outstanding on the industrial revenue bonds. At the closing of this offering, we will deliver the aggregate principal amount outstanding under the industrial revenue bonds and accrued and unpaid interest to the date of redemption to the trustee under the indenture governing the industrial revenue bonds and we will deliver to the trustee irrevocable instructions to notify the holders of the industrial revenue bonds of the redemption of all outstanding industrial revenue bonds. Pursuant to the terms of the indenture, the industrial revenue bonds will be redeemed upon the expiration of a 30-day to 60-day notice period from the date the trustee gives notice to the holders of the industrial revenue bonds. At the time we deposit the amounts due under the industrial revenue bonds with the trustee and give irrevocable instructions to the trustee the industrial revenue bonds will be deemed to be repaid.



(4)	As of September 30, 2005, we had $31.3 million in principal and interest outstanding under our existing revolving credit facility. We intend to use the remaining net proceeds from this offering, following the redemption of our new preferred stock and the repayment of our notes due to affiliates and our industrial revenue bonds described above, to repay amounts outstanding under our existing revolving credit facility upon the closing of this offering. To the extent the remaining net proceeds from this offering, following the redemption of our new preferred stock and the repayment of our notes due to affiliates and our industrial revenue bonds described above, are insufficient to repay our existing revolving credit facility in full, we intend to use a portion of our available cash and cash equivalents to repay additional amounts outstanding under our existing revolving credit facility upon the closing of this offering. Following such payments, any remaining amounts outstanding under our existing revolving credit facility will become outstanding borrowings under our amended and restated revolving credit facility, which we intend to enter into in conjunction with this offering pursuant to a commitment letter we have obtained from our lenders. See “Capitalization.” Borrowings under our existing revolving credit facility bear interest at various rates based on either the LIBOR or the U.S. prime rate. As of September 30, 2005, the interest rate on the borrowings under the revolving credit facility was 6.5%, based on the U.S. prime rate at that time. Our existing revolving credit facility matures in March 2006. See “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Revolving credit facility” for a description of the material terms of our existing revolving credit facility and the expected terms of our amended and restated revolving credit facility.



(5)	This excludes a one-time special cash bonus of $500,000 that William P. Benac, our chief financial officer, is entitled to receive on April 22, 2007 in the event we complete this offering and provided Mr. Benac remains employed with us until that date, subject to certain exceptions. See “Management — Employment Agreements.” We intend to pay Mr. Benac’s bonus with cash from operations.

If the remaining net proceeds from this offering, following the redemption of our new preferred stock and the repayment of our notes due to affiliates and our industrial revenue bonds described above, together with available cash and cash equivalents, are insufficient to repay our existing revolving credit facility in full, whether as a result of a reduction in our available cash and cash equivalents, a reduction in the number of shares of our common stock we sell in this offering, a reduction in the initial public offering price from the initial public offering price assumed above, or any combination of these factors, then any remaining amounts outstanding under this facility will become outstanding borrowings under our amended and restated revolving credit facility.

To the extent the remaining net proceeds from this offering available to repay our existing revolving credit facility exceed the aggregate amounts outstanding under our existing revolving credit facility, whether as a result of the exercise by the underwriters of their over-allotment option or an increase in the number of shares of our common stock we sell in this offering or a change in the public offering price, or any combination of these factors, we intend to use any excess net proceeds from this offering to repay additional amounts under our existing revolving credit facility and any remaining net proceeds will be used for working capital and general corporate purposes.

Dividend policy and restrictions

Our board of directors has never declared or paid any cash dividends on our common stock. Following this offering, we intend to pay cash dividends on our common stock.

As of the date of this prospectus, our board of directors has not determined the amount of any specific dividend. The declaration and payment of dividends will be at the discretion of our board of directors and will depend upon our operating results, strategic plans, capital requirements, financial condition, provisions of our borrowing arrangement and other factors our board of directors considers relevant.

Our existing revolving credit facility provides that the payment of dividends triggers a right in favor of the administrative agent and our lenders to accelerate all of our obligations under the existing revolving credit facility, a demand right, unless we satisfy certain financial covenants and provide our lenders under that facility with advance notice of the dividend. We expect to amend and restate our existing revolving credit facility pursuant to a commitment letter we have received from our lenders concurrently with the completion of this offering. The amended and restated revolving credit facility would continue to contain provisions that trigger a demand right if we pay dividends on our common stock unless the payment would not cause the adjusted fixed charge coverage ratio (fixed charges, pursuant to the amended and restated revolving credit facility, include any dividends paid or payable on our common stock) to be less than 1.2 to 1.0 or the adjusted ratio of indebtedness to earnings before interest, taxes, depreciation and amortization, after giving effect to any debt incurred to pay any such dividend, to be greater than 4.0 to 1.0, each on a quarterly and/or annual basis, as defined in the amended and restated revolving credit facility. In addition, Delaware law imposes restrictions on our ability to pay dividends. For example, our board of directors may declare dividends only to the extent of our “surplus” (which is defined as total assets at fair market value minus total liabilities, minus statutory capital), or if there is no surplus, out of our net profits for the then-current and/or immediately preceding fiscal years. Accordingly, we may not be able to pay dividends in any given amount in the future, or at all.

Capitalization

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2005, on an actual basis and on an adjusted basis to give effect to the Transactions, assuming an initial offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus and the issuance and sale of 8,500,000 shares by us in this offering, after deducting estimated underwriting discounts and commissions and estimated aggregate offering expenses payable by us and assuming no exercise of the underwriters’ over-allotment option and no other change to the number of shares offered by us as set forth on the cover page of this prospectus.

The adjusted information below is illustrative only and our capitalization following the completion of this offering is subject to adjustment based on the actual initial public offering price of our common stock and the actual number of shares of common stock we sell in this offering, both of which will be determined at pricing, and whether or not the underwriters exercise their over-allotment option. You should read this table together with “Prospectus summary— The transactions,” “Use of proceeds,” “Management’s discussion and analysis of financial condition and results of operations” and the consolidated financial statements and the related notes thereto included elsewhere in this prospectus.


				As of September 30, 2005

							As
				Actual			Adjusted(1)

				(in thousands, except share
				information)
Cash and cash equivalents(2)(3)				$	26,201		$	4,964

Short-term debt:
	Revolving credit facility(2)(3)(4)				31,294			—
	Notes payable to affiliates(5)				19,000			—

		Total short-term debt			50,294			—
Long-term debt:
	Industrial revenue bonds (including current portion)(6)				8,340			—
	Note payable for land				196			196
	Mandatorily redeemable preferred stock, $0.01 par value, 99,000 shares authorized, 1 share issued and outstanding, actual; no shares authorized, issued or outstanding, as adjusted(7)				1			—
Shareholders’ equity:
	New preferred stock, par value $0.01 per share, 500,000 shares authorized, 82,055 shares issued and outstanding, actual; no shares authorized, issued or outstanding, as adjusted(8)				82,055			—
	Preferred stock, $0.01 par value, no shares authorized, issued or outstanding, actual; 1,000,000 shares authorized and no shares issued or outstanding, as adjusted(9)				—			—
	Common stock, par value $0.01 per share, 50,000,000 shares authorized, 11,147,059 issued and outstanding, actual; 50,000,000 shares authorized, 20,000,000 shares issued and outstanding, as adjusted(9)(10)(11)				111			200
	Additional paid-in capital(10)(11)				40,014			175,925
	Accumulated deficit(12)(13)				(13,599	)		(19,599	)
	Accumulated other comprehensive loss				(1,046	)		(1,046	)
		Total shareholders’ equity			107,535			155,480

			Total capitalization	$	166,366		$	155,676



(1)	As adjusted, reflects application of the net proceeds from this offering to pay accrued and unpaid interest on our notes payable to affiliates and our industrial revenue bonds and accumulated and unpaid dividends on our new preferred stock, and also reflects the redemption of our mandatorily redeemable preferred stock prior to the merger.



(2)	Reflects application of available cash and cash equivalents to repay amounts outstanding under our existing revolving credit facility in excess of the amount of net proceeds from this offering available for such purpose. See “Use of proceeds.”



(3)	If the aggregate net proceeds of this offering available to repay our existing revolving credit facility, along with our available cash and cash equivalents, are insufficient to repay the outstanding amounts under our existing revolving credit facility in full, any remaining amounts outstanding under our existing revolving credit facility will become outstanding borrowings under our amended and restated revolving credit facility. To the extent the aggregate net proceeds from this offering available to repay our existing revolving credit facility exceed the aggregate amounts outstanding under our existing revolving credit facility, we intend to use any excess net proceeds from this offering to repay additional amounts under our existing revolving credit facility and any remaining net proceeds will increase our cash and cash equivalents.



(4)	We anticipate that our amended and restated revolving credit facility that we intend to enter into concurrently with the closing of this offering, pursuant to a commitment letter we have received from our lenders, will permit us to borrow $75 million and will mature three years after the closing of this offering. See “Management’s discussion and analysis of financial condition and results of operations— Liquidity and capital resources— Outstanding debt— Revolving credit facility,” for more information on the terms of our amended and restated revolving credit facility.



(5)	Does not include $1.0 million of accrued interest on these notes as of September 30, 2005. We intend to use the net proceeds from this offering to repay all of the principal and interest outstanding on these notes upon the closing of this offering.



(6)	Does not include $0.3 million of accrued interest on these bonds as of September 30, 2005. We intend to use the net proceeds from this offering to repay all of the principal and interest outstanding on these bonds upon the closing of this offering.



(7)	Does not include $770 of accumulated and unpaid dividends on our mandatorily redeemable preferred stock accrued as of September 30, 2005. We intend to redeem our one outstanding share of mandatorily redeemable preferred stock, and pay all accumulated and unpaid dividends on that share, with $1,770 of available cash immediately prior to the merger and the closing of this offering.



(8)	Does not include $9.3 million of accumulated and unpaid dividends on our new preferred stock accrued as of September 30, 2005. We intend to use the net proceeds from this offering to repay all of the accumulated and unpaid dividends on our new preferred stock upon the closing of this offering.



(9)	To be authorized immediately prior to the completion of the offering.



(10)	As adjusted, reflects 352,941 shares we estimate we will issue to James J. Unger, our president and chief executive officer, upon the closing of this offering pursuant to the terms of an agreement we entered into with Mr. Unger, assuming an initial public offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus. Under the terms of the agreement, the actual number of shares we will issue to Mr. Unger will be such number of shares of our common stock obtained by dividing $6.0 million by the initial public offering price per share of our common stock. If the initial public offering price is $16.00 per share, Mr. Unger will receive 375,000 shares of our common stock, and we will have 20,022,059 shares of common stock outstanding after this offering. If the initial public offering price is $18.00 per share, Mr. Unger will receive 333,333 shares of our common stock, and we will have 19,980,392 shares of common stock outstanding after this offering.



(11)	To the extent we change the number of shares of common stock we sell in this offering from the 8,500,000 shares we expect to sell or we change the initial public offering price from the $17.00 per share assumed initial public offering price, or any combination of these events occurs, our net proceeds from this offering and as adjusted additional paid-in capital may increase or decrease. An increase (or decrease) of $1.00 from the assumed initial public offering price, assuming no change in the number of shares of common stock to be sold, would increase (or decrease) our net proceeds from this offering and our as adjusted additional paid-in capital by $7.9 million and an increase (or decrease) of 1,000,000 shares from the expected number of shares to be sold in the offering, assuming no change in the assumed initial public

offering price, would increase (or decrease) our net proceeds from this offering and our as adjusted additional paid-in capital by approximately $15.8 million.

(12) As adjusted, reflects an estimated $6.0 million of expense associated with our issuance of common stock to Mr. Unger as described in Note 9 above. The amount we will record as an expense will equal the value of the shares issued to Mr. Unger as of the date of the closing of this offering, which may be different from the initial public offering price.

(13) As adjusted, reflects the write-off of deferred financing costs of $0.6 million relating to the redemption of the industrial revenue bonds.

Dilution

Purchasers of the common stock in the offering will suffer an immediate and substantial dilution in net tangible book value per share. Dilution is the amount by which the initial public offering price paid by purchasers of shares of our common stock exceeds the net tangible book value per share of our common stock immediately following the completion of the offering. Net tangible book value represents the amount of our total tangible assets reduced by our total liabilities. Tangible assets represents our total assets less intangible assets. Net tangible book value per share represents our net tangible book value divided by the number of shares of common stock outstanding. As of September 30, 2005, prior to giving effect to the Transactions, our net tangible book value was $107.5 million and our net tangible book value per share, after giving effect to the merger, was $9.65.

After giving effect to the Transactions at the assumed initial public offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus, our net tangible book value would have been approximately $155.5 million, or $7.77 per share. This represents an immediate decrease in net tangible book value of $1.88 per share to existing stockholders and an immediate dilution in net tangible book value of $9.23 per share to new investors purchasing shares of our common stock in this offering. Dilution per share represents the difference between the price per share paid by new investors for shares issued in this offering and the net tangible book value per share immediately after the completion of this offering. The following table illustrates this dilution:


Assumed initial public offering price per share				$	17.00
	Net tangible book value per share as of September 30, 2005	$	9.65
	Decrease in net tangible book value per share attributable to new investors		1.88

Adjusted net tangible book value per share after this offering					7.77

Dilution per share to new investors				$	9.23

An increase (or decrease) in the initial public offering price from the assumed initial public offering price of $17.00 per share by $1.00 would increase (or decrease) our net tangible book value after giving effect to the Transactions by approximately $7.9 million, our adjusted net tangible book value per share after giving effect to the Transactions by $0.40 per share and the dilution in net tangible book value per share to new investors in this offering by $0.60 per share, after deducting the estimated underwriting discounts and commissions and estimated aggregate offering expenses payable by us and assuming no exercise of the underwriters’ over-allotment option and no other change to the number of shares offered by us as set forth on the cover page of this prospectus. An increase of 1,000,000 shares from the expected number of shares to be sold in the offering, assuming no change in the initial public offering price from the price assumed above, would increase our net tangible book value after giving effect to the Transactions by approximately $15.8 million, increase our adjusted net tangible book value per share after giving effect to the Transactions by $0.39 per share, and decrease the dilution in net tangible book value per share to new investors in this offering by $0.39 per share, after deducting the estimated underwriting discounts and commissions and estimated aggregate offering expenses payable by us and assuming no exercise of the underwriters’ over-allotment option. A decrease of 1,000,000 shares from the expected number of shares to be sold in the offering, assuming no change in the initial public offering price from the price assumed above, would decrease our net tangible book value after giving effect to the Transactions by approximately $15.8 million, decrease our adjusted net tangible book value per share after giving effect to the Transactions by $0.42 per share, and increase the dilution in net tangible book value per share to new investors in this offering by $0.42 per share, after deducting the estimated underwriting discounts and commissions and estimated aggregate offering expenses payable by us and assuming no exercise of the underwriters’ over-allotment option. The pro forma information discussed above is illustrative only. Our net tangible book value following the

Dilution

completion of this offering is subject to adjustment based on the actual initial public offering price of our common stock and the actual number of shares of common stock we sell in this offering, both of which will be determined at pricing.

The following table presents, on an adjusted basis, after giving effect to the Transactions, as of September 30, 2005, the total number of shares of common stock purchased from us, the total consideration paid and the average price per share paid by the existing stockholders and by new investors purchasing shares of our common stock in this offering, assuming an initial public offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus. The information in the following table is illustrative only and the total consideration paid and the average price per share is subject to adjustment based on the actual initial offering price of our common stock and other terms of this offering determined at pricing.


		Shares purchased					Total consideration
												Average price
		Number		Percent			Amount		Percent			per share

Existing stockholders			11,147,059		55.7			40,125,000		21.0			3.60
Management bonus shares(1)			352,941		1.8			6,000,000		3.1			17.00
New investors			8,500,000		42.5			144,500,000		75.9			17.00

	Total		20,000,000		100	%		190,625,000		100	%

(1)

The total consideration set forth in the table above for the management bonus shares represents our estimate of the expense associated with our grant to James J. Unger, our president and chief executive officer, upon the closing of this offering pursuant to the terms of an agreement we entered into with Mr. Unger, of 352,941 shares, assuming an initial public offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus. The actual expense we will recognize in connection with this grant will equal the value of the shares granted to Mr. Unger as of the date of issuance, which we expect to be approximately $6.0 million. If the initial public offering price is $16.00 per share, Mr. Unger will receive 375,000 shares of our common stock. If the initial public offering price is $18.00 per share, Mr. Unger will receive 333,333 shares of our common stock.

An increase (or decrease) in the initial public offering price from the assumed initial public offering price of $17.00 per share by $1.00 would increase (or decrease) total consideration paid by new investors, total consideration paid by all shareholders and the average price per share paid by all shareholders by $7.9 million, $7.9 million and $0.93, respectively, assuming no change to the number of shares offered by us as set forth on the cover page of this prospectus and without deducting underwriting discounts and commissions and other expenses of the offering.

The above table excludes the estimated 541,176 shares that will be available for future issuance under stock options to be granted under our 2005 Equity Incentive Plan in connection with this offering and the estimated 458,824 remaining shares that will be available for future issuance under our 2005 Equity Incentive Plan. See “Management — Executive compensation — Equity incentive plan”. To the extent that any of the options issued under our 2005 Equity Incentive Plan are exercised, there will be further dilution to new investors.

If the underwriters exercise their over-allotment option in full, the number of shares of common stock held by our existing stockholders will further decrease to approximately 52.4% of the total number of shares of our common stock outstanding, and the number of shares of our common stock held by new investors will further increase to 9,775,000 shares, or approximately 45.9% of the total number of shares of our common stock outstanding.

Selected consolidated financial data

Selected consolidated financial data


																			Nine months ended
				Years ended December 31,															September 30,

				2000			2001			2002			2003			2004			2004			2005

																			(unaudited)
				(in thousands, except per share amounts)
Consolidated statement of operations data:
Revenues
	Manufacturing operations(1)			$	200,691		$	181,438		$	138,441		$	188,119		$	316,432		$	226,759		$	409,208
	Railcar services(2)				38,093			32,703			30,387			29,875			38,624			27,572			32,940

			Total revenues		238,784			214,141			168,828			217,994			355,056			254,331			442,148
Cost of goods sold
	Cost of manufacturing operations(3)				187,375			169,952			134,363			174,629			306,283			216,027			377,181
	Cost of railcar services(4)				37,111			33,255			29,533			29,762			34,473			24,585			27,538

			Total cost of goods sold		224,486			203,207			163,896			204,391			340,756			240,612			404,719

		Gross profit			14,298			10,934			4,932			13,603			14,300			13,719			37,429
Selling, administrative and other					8,693			9,219			9,505			10,340			10,334			8,543			11,417

	Operating earnings (loss)				5,605			1,715			(4,573	)		3,263			3,966			5,176			26,012
Interest income(5)					5,777			4,770			3,619			3,161			4,422			2,122			1,265
Interest expense(6)					(13,687	)		(9,525	)		(4,853	)		(3,616	)		(3,667	)		(2,216	)		(3,577	)
Income (loss) from joint venture					—			—			—			(604	)		(609	)		(351	)		443

Earnings (loss) before income tax (benefit) expense					(2,305	)		(3,040	)		(5,807	)		2,204			4,112			4,731			24,143
Income tax (benefit) expense					(713	)		(1,074	)		(1,894	)		1,139			2,191			1,858			9,611

Net earnings (loss)				$	(1,592	)	$	(1,966	)	$	(3,913	)	$	1,065		$	1,921		$	2,873		$	14,532
		Less preferred dividends			—			(3,070	)		(7,139	)		(9,690	)		(13,241	)		(9,296	)		(11,171	)

	Net earnings (loss) available to common shareholders			$	(1,592	)	$	(5,036	)	$	(11,052	)	$	(8,625	)	$	(11,320	)	$	(6,423	)	$	3,361

Weighted average shares outstanding basic and diluted(7)					9,328			9,328			9,328			9,328			10,140			9,804			11,147
Net earnings (loss) per common share basic and diluted(7)				$	(0.17	)	$	(0.54	)	$	(1.18	)	$	(0.92	)	$	(1.12	)	$	(0.66	)	$	0.30

Consolidated balance sheet data (at period end):
Cash and cash equivalents				$	2,342		$	1,476		$	183		$	65		$	6,943		$	50,605		$	26,201
Net working capital					32,096			35,172			16,065			15,084			46,565			83,355			31,197
Net property, plant and equipment					84,897			81,090			75,746			71,230			76,951			73,706			88,555
Total assets					204,764			191,229			187,590			196,508			356,840			300,764			262,024
Total liabilities					170,158			113,596			98,463			190,704			221,817			95,332			154,489
Total shareholders’ equity				$	34,606		$	77,633		$	89,127		$	5,804		$	135,023		$	205,432		$	107,535
Consolidated cash flow data:
Net cash provided by (used in) operating activities				$	5,217		$	13,434		$	10,611		$	(1,639	)	$	(17,082	)	$	1,946		$	27,831
Net cash used in investing activities					(8,782	)		(2,189	)		(535	)		(2,251	)		(11,037	)		(6,750	)		(16,356	)
Net cash provided by (used in) financing activities				$	5,490		$	(12,111	)	$	(11,369	)	$	3,772		$	34,997		$	55,344		$	7,783

Selected consolidated financial data


(1)	Includes revenues from transactions with affiliates of $52.8 million, $64.8 million, $63.6 million, $62.9 million and $64.4 million in 2000, 2001, 2002, 2003 and 2004, respectively and $44.6 million and $44.5 million for the nine months ended September 30, 2004 and 2005, respectively.

(2)	Includes revenues from transactions with affiliates of $16.1 million, $8.6 million, $12.8 million, $11.0 million and $19.4 million in 2000, 2001, 2002, 2003 and 2004, respectively and $12.7 million and $16.0 million for the nine months ended September 30, 2004 and 2005, respectively.

(3)	Including costs from transactions with affiliates of $46.6 million, $57.6 million, $55.7 million, $54.4 million and $59.1 million in 2000, 2001, 2002, 2003 and 2004, respectively and $40.2 million and $41.4 million for the nine months ended September 30, 2004 and 2005, respectively.

(4)	Includes costs from transactions with affiliates of $12.8 million, $7.2 million, $12.2 million, $10.1 million and $15.5 million in 2000, 2001, 2002, 2003 and 2004, respectively and $9.6 million and $12.7 million for the nine months ended September 30, 2004 and 2005, respectively.

(5)	Includes interest income from affiliates of $5.6 million, $4.3 million, $3.4 million, $3.0 million and $3.9 million in 2000, 2001, 2002, 2003 and 2004, respectively and $1.2 million and $0.8 million for the nine months ended September 30, 2004 and 2005, respectively.

(6)	Includes interest expense to affiliates of $0.2 million in 2001, and $1.5 million in 2004 and $0.2 million and $1.7 million for the nine months ended September 30, 2004 and 2005, respectively.


(7)	Share and per share data have been restated to give effect to the merger.

Management’s discussion and analysis of financial condition and results of operations

You should read the following discussion in conjunction with “Selected consolidated financial data” and our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements and as a result of the factors we describe under “Risk factors” and elsewhere in this prospectus. See “Special note regarding forward-looking statements” and “Risk factors.”

OVERVIEW

We operate in two segments: manufacturing operations and railcar services. Manufacturing operations consists of railcar manufacturing and railcar and industrial component manufacturing. Railcar services consists of railcar repair and refurbishment services and fleet management services.

We have experienced significant growth in the last three years with revenues growing to $355.1 million in 2004, from $218.0 million in 2003 and $168.8 million in 2002. Our revenues in the first nine months of 2005 were $442.1 million, compared to $254.3 million in the first nine months of 2004. Our revenues in 2004 included $316.5 million from manufacturing operations and $38.6 million from the sale of railcar services. Our revenues in the first nine months of 2005 included $409.2 million from manufacturing operations and $32.9 million from the sale of railcar services.

Manufacturing operations

We manufacture all of our railcars in modern facilities located in Paragould and Marmaduke, Arkansas, which were built in 1995 and 1999, respectively. We strategically located these facilities in close proximity to our main shipper and railroad customers, as well as our main suppliers of railcar components. As of the date of this prospectus, none of our over 1,100 employees at our Paragould and Marmaduke facilities are represented by a union. However, employees of three of our repair facilities and one of our component manufacturing facilities, representing 16% of our total workforce as of September 30, 2005, are represented by a union. We manufacture components in four other manufacturing facilities.

Our Paragould facility was designed primarily to produce covered hopper railcars, but is also capable of producing other railcar types. For example, in 2004 and the first nine months of 2005, we produced centerbeam platform railcars at our Paragould facility. This facility originally consisted of two production tracks with an initial production capacity of approximately six railcars per day. Changes in plant design and manufacturing processes since 1995, along with the addition of painting and lining capabilities in 1999, and a third production track in December 2004, increased our production capacity. Based on our current backlog, we plan to produce an average of approximately 24 covered hopper railcars per working day, dependent upon product mix and the availability of raw materials and components. The production lines at our Paragould facility are designed to provide maximum flexibility for efficient and rapid changeover in product mix between various types and sizes

Management’s discussion and analysis of financial condition and results of operations

of railcars. Currently, we are expanding our Paragould facility through the construction of additional painting and lining capabilities, which are scheduled to be completed by the end of 2005.

We delivered the following quantities and types of railcars in 2002, 2003 and 2004, and the first nine months of 2004 and 2005, manufactured at our Paragould facility:


							Nine Months
							Ended
	Year Ended December 31,						September 30,

	2002		2003		2004		2004		2005

Covered hoppers		1,053		1,343		1,507		1,081		2,759
Centerbeam platform		—		5		1,240		981		785

Total Paragould railcar deliveries		1,053		1,348		2,747		2,062		3,544

Our Marmaduke facility was built in 1999 to manufacture tank railcars. Based on our current backlog, we plan to produce an average of approximately 7.5 tank railcars per working day at this facility, dependent upon product mix of tank railcar types and the availability of raw materials and components. The facility is designed to produce both pressure and non-pressure tank railcars.

We delivered the following quantities and types of tank railcars in 2002, 2003 and 2004, and the first nine months of 2004 and 2005, manufactured at our Marmaduke facility:


							Nine Months
							Ended
	Year Ended December 31,						September 30,

	2002		2003		2004		2004		2005

Pressure tanks		76		277		322		203		223
Non-pressure tanks		637		932		1,315		995		1,213

Total Marmaduke railcar deliveries		713		1,209		1,637		1,198		1,436

We provide components for our railcar manufacturing operations as well as for other railcar manufacturers and other industries. Components manufactured by us include aluminum and steel fabricated and machined parts and carbon steel, aluminum, high alloy and stainless steel castings, primarily for the trucking and construction equipment and oil and gas exploration markets. Our revenues from the sales of components exclude the components we manufacture for use in our railcar manufacturing business. In 2004, our revenues from sales of components increased by 52% to $50.7 million from $33.4 million in 2003. In the first nine months of 2005, our revenues from sales of components increased to $51.7 million from $36.6 million in the first nine months of 2004. We attribute the increase in these revenues primarily to an overall increase in demand for commercial railcar components as well as the demand for steel castings and machine components in the non-railcar industrial sectors that we serve.

Railcar services

Our railcar services include railcar repair and refurbishment and fleet management and engineering services. Our railcar repair and refurbishment services are provided through our network of six full service maintenance and repair facilities and four mobile repair units. Our railcar service facilities are located in strategic areas near major customers. We have established long-term business relationships with a customer base that includes railcar leasing companies, shippers and railroads. In 2004, our railcar services revenues increased by 29% to $38.6 million, from $29.9 million in 2003. In 2002, our railcar services revenues were $30.4 million. In the first nine months of 2005, our railcar services revenues increased to $32.9 million from $27.6 million in the first nine months of 2004. We believe

Management’s discussion and analysis of financial condition and results of operations

the growth in these revenues reflects the overall trend in the United States toward increased railcar utilization, the increase in our customer base, the increase in our service offerings and the increase in the number of railcars under fleet management by us. Our fleet management business complements both our railcar repair and refurbishment and railcar manufacturing operations. As of September 30, 2005, we managed approximately 57,000 railcars for various customers, including approximately 22,000 railcars for ARL, an affiliate of Carl C. Icahn, the chairman of our board of directors and our principal controlling stockholder.

AMERICAN RAILCAR LEASING LLC FORMATION AND EXCHANGE

We formed ARL, a company that buys and leases railcars, as our wholly owned subsidiary in June 2004. As part of the formation of ARL and its further capitalization, ACF and certain of its subsidiaries transferred to us and ARL their railcars and related leases, as well as equity in certain of ACF’s subsidiaries that supported its leasing business, in exchange for shares of our new preferred stock and preferred interests of ARL. We, in turn, contributed the assets we received to ARL in return for common equity interests in ARL. ACF is a company beneficially owned and controlled by Mr. Icahn. On June 30, 2005, we transferred all of our interest in ARL to the holders of our new preferred stock, all of which are beneficially owned and controlled by Mr. Icahn, in exchange for the redemption of 116,116 shares of our new preferred stock held by them plus accumulated dividends. The description of our operations and the presentation of our financial information and consolidated financial statements has been prepared on a standalone basis, excluding ARL’s operations for all periods, and all transactions giving effect to ARL’s formation and subsequent transfer have been eliminated from the financial statements, with the exception of deferred tax assets retained by us. Any differences related to the amounts originally capitalized and the amount paid for ARL or our subsequent transfer of ARL have been recorded through adjustments to shareholder’s equity, including certain tax benefits that we received as a result of using ARL’s previously incurred tax losses.

For further information relating to the formation of ARL, the subsequent ARL transfer and our prior and continuing agreements with ARL and with other affiliates of Mr. Icahn, see “Certain relationships and related party transactions— Certain transactions involving American Railcar Leasing LLC.”

FACTORS AFFECTING OPERATING RESULTS

The following is a discussion of some of the key factors that have in the past and are likely in the future to affect our operating results. These factors include, but are not limited to, the cyclical nature of the North American railcar market, our reliance on a few customers for most of our revenues, our historical reliance on revenues from our affiliates for a significant portion of our revenue, our reliance on large orders, the variable purchasing patterns of our customers and fluctuation in supplies and prices of raw materials and components used in railcar manufacturing. See “Risk factors” for a more comprehensive list of factors that could affect our operating results.

Cyclicality of the railcar industry. Historically, the North American railcar market has been highly cyclical and we expect it to continue to be highly cyclical. During the most recent industry cycle, industry-wide railcar deliveries declined from a peak of 75,704 in 1998 to a low of 17,714 railcars in 2002. During this downturn, our revenues dropped from $238.8 million in 2000 to $168.8 million in 2002 and we incurred losses of $1.6 million, $2.0 million and $3.9 million in 2000, 2001 and 2002, respectively. We believe that downturns in the railcar manufacturing industry will occur in the future and will result in decreased demand for our products and services. The cycles in our industry result from many factors that are beyond our control, including economic conditions in the United States. Although railcar production has increased since 2002, industry professionals believe demand for railcars may have reached a peak and may not persist if favorable economic and other conditions are not sustained. Even if a sustained economic recovery occurs in the United States, demand for our

Management’s discussion and analysis of financial condition and results of operations

railcars may not match or exceed expected levels. An economic downturn may result in increased cancellations of railcar orders which could have a material adverse effect on our ability to convert our railcar backlog into revenues. If industry backlog for railcars declines below certain levels, CIT, one of our customers which accounts for 71% of our September 30, 2005 backlog, will be permitted to cancel some or, in certain circumstances, all its orders after 180 days written notice, which could have a material adverse effect on our business, financial condition and results of operations. In addition, an economic downturn in the United States could result in lower sales volumes, lower prices for railcars and a loss of profits for us. Furthermore, a substantial number of the end users of our railcars acquire railcars through leasing arrangements with our leasing company customers. Economic conditions that result in higher interest rates would increase the cost of new leasing arrangements, which could cause our leasing company customers to purchase fewer railcars.

Customer concentration. Railcars are typically sold pursuant to large, periodic orders, and a limited number of customers typically represent a significant percentage of our railcar sales in any given year. In 2004, sales to our top three customers accounted for approximately 23%, 20% and 16%, respectively, of our total revenues. In the nine months ended September 30, 2005, sales to our top three customers accounted for approximately 17%, 16% and 15%, respectively, of our total revenues. The loss of any significant portion of our sales to any major customer, the loss of a single major customer or a material adverse change in the financial condition of any one of our major customers could have a material adverse effect on our business and financial results. Most of our individual railcar customers do not make railcar purchases every year because they do not need to replace or replenish their railcar fleets on a yearly basis. Many of our customers place orders for railcars on an as-needed basis, sometimes only once every few years. As a result, the order levels for railcars, the mix of railcar types ordered and the railcars ordered by any particular customer have varied significantly from quarterly period to quarterly period in the past and may continue to vary significantly in the future. As railcar sales comprised 75% of our total revenue in 2004 and 81% of our total revenue in the nine months ended September 30, 2005, our results of operations in any particular quarterly period may be significantly affected by the number of railcars and the product mix of railcars we deliver in any given quarterly period. Additionally, because we record the sale of a railcar at the time we complete production, the railcar is accepted by the customer following inspection, the risk for any damage or loss with respect to the railcar passes to the customer and title to the railcar transfers to the customer, and not when the order is taken, the timing of completion, delivery and acceptance of significant customer orders will have a considerable effect on fluctuations in our quarterly results.

Revenues from affiliates. In 2002, 2003, 2004 and the first nine months of 2005, our revenues from affiliates accounted for 45%, 34%, 24% and 14% of our total revenues, respectively. These affiliates consisted of entities beneficially owned and controlled by Carl C. Icahn, the chairman of our board of directors and our principal controlling stockholder. The decline in our percentage of revenues from affiliates is primarily attributable to the growth in our revenues from third parties. We anticipate that our percentage of revenues from affiliates will continue to decline if we are successful in growing our business. Nevertheless we believe that revenues from affiliates will continue to constitute an important portion of our business. A significant reduction in sales to affiliates could have a material adverse effect on our business and financial results.

Raw material costs. The price for steel, the primary raw material used in the manufacture of our railcars, increased sharply in 2004 as a result of strong worldwide demand, limited availability of production inputs for steel, including scrap metal, industry consolidation and import trade barriers. These factors have caused a corresponding increase in the cost and decrease in the availability of castings and other railcar components constructed with steel. Costs for other railcar manufacturers have been similarly affected by the availability and pricing of steel and castings and other components. The costs for raw steel, based on a Semi Finished Steel Mill Product Index, have almost doubled during the period from October 2003 through December 2004. The availability of scrap metal has

Management’s discussion and analysis of financial condition and results of operations

been limited by exports of scrap metal to China and, as a result, steel producers have charged steel and scrap metal surcharges in excess of agreed-upon prices. Price levels for steel have increased again in 2005 and we expect worldwide demand for steel to increase, supplies to continue to be limited and prices to continue to increase in 2006.

In 2004, we were unable to pass on an estimated $7.9 million in increased raw material and component costs to our customers under existing customer contracts. In the first nine months of 2005, we estimate that we were unable to pass through to our customers an estimated $1.5 million of such increased costs. In response to the increasing cost of raw materials and railcar components, we began working with suppliers to reduce surcharges that they charge us and started entering into variable pricing contracts with our railcar customers that allow us to pass along changes in costs of certain raw materials and components to our customers to protect us against future changes in these costs. By September 30, 2005, we completed all of the deliveries of railcars under contracts that did not allow us to pass through these increased costs. All of our current deliveries and backlog for railcars include variable pricing to protect us against further volatility in the price of certain raw materials and railcar components.

Component supply constraints. Our business depends on the adequate supply of numerous specialty components, such as railcar wheels, brakes, sideframes, axles, bearings, yokes, bolsters and other heavy castings, and specialized raw materials, such as normalized steel plate used in the production of railcars. Over the last few years many suppliers have been acquired or have ceased operations, which has caused the number of alternative suppliers of specialty components and raw materials to decline. The combination of industry consolidation and high demand has caused recent railcar industry-wide shortages of many critical components as many reliable suppliers are frequently at or near production capacity. In certain cases, such as for railcar wheels, only two significant suppliers continue to produce the type of component we use in our railcars. With the recent increased demand for railcars, our remaining suppliers are facing significant challenges in providing components and materials on a timely basis to us and other railcar manufacturers. If our suppliers of railcar components and raw materials were to stop or reduce the production of railcar components and raw materials that we use, go out of business, refuse to continue their business relationships with us, reduce the amounts they are willing to sell to us or become subject to work stoppages, our business would be disrupted. Our inability to obtain components and raw materials in required quantities or of acceptable quality could result in significant delays or reductions in railcar shipments. This would materially and adversely affect our operating results. Furthermore, our ability to increase our railcar production to expand our business depends on our ability to obtain an adequate supply of these railcar components and raw materials.

Our participation in the Ohio Castings joint venture has facilitated our ability to meet some of our requirements for heavy castings such as bolsters and sideframes. In 2005, Ohio Castings expanded its castings production and added couplers and yokes to its products. We believe that this expanded production capability should help to reduce our risk of encountering supply shortages. In 2004, we purchased $24.8 million of railcar components produced by Ohio Castings.

Completion of our centerbeam platform railcar contract. In 2004 we entered into an agreement with The Greenbrier Companies to manufacture centerbeam platform railcars at our Paragould manufacturing facility. This was the first time we manufactured centerbeam platform railcars and, as a result of start-up and increased production costs, we did not realize a profit on this contract. We completed our deliveries of these centerbeam platform railcars in July 2005 and we do not anticipate significant sales to Greenbrier in the future. Our revenues from our sales of centerbeam platform railcars were $50.8 million in the first nine months of 2005 and $53.0 million in 2004. Upon completion of production of the centerbeam platform railcars for Greenbrier, we converted the manufacturing line at our Paragould facility that we used to manufacture those railcars to manufacture covered hopper railcars. This manufacturing line, along with our two other covered hopper railcar

Management’s discussion and analysis of financial condition and results of operations

manufacturing lines at our Paragould manufacturing facility have been operating at capacity since the conversion and, as a result of our significant backlog for covered hopper cars, we expect those lines to continue, subject to cancellations or adjustments in existing railcar orders in our backlog, to operate at or close to capacity through at least 2007. We have generally been able to achieve higher profit margins on our sale of covered hopper railcars than we were able to achieve on our sales of the centerbeam platform railcars to Greenbrier. Therefore, we do not believe that the completion of our centerbeam platform railcar contracts and the corresponding reduction of sales to Greenbrier will have a material adverse affect on our business or results of operations.

OUTLOOK

We believe that demand for railcars has reached a peak and should continue at or near current levels due to generally positive economic conditions, the current United States economic recovery, strong industry-wide backlog for railcars, increased rail traffic, the projected replacement of aging railcar fleets and an increasing demand for products that are hauled and stored in railcars. We believe that we are strategically positioned to capitalize on the current strong demand for railcars, and that we have growth opportunities across our broad array of product and service offerings.

BACKLOG

Our backlog consists of orders for railcars. We define backlog as the number and sales value of railcars that our customers have committed in writing to purchase from us that have not been recognized as revenues. Customer orders, however, may be subject to cancellation, customer requests for delays in railcar deliveries, inspection rights and other customary industry terms and conditions. Although we generally have one to three year contracts with most of our fleet management customers, neither orders for our railcar repair and refurbishment services business nor our fleet management business are included in our backlog because we generally deliver our services in the same period in which orders are received. Similarly, orders for our component manufacturing business are not included in our backlog because we generally deliver components to our customers in the same period in which orders for the components are received. Due to the large size of railcar orders and variations in the number and mix of railcars ordered in any given period, the size of our reported backlog at the end of any such period may fluctuate significantly. See “Risk factors— Risks related to our business— The variable purchase patterns of our customers and the timing of completion, delivery and acceptance of customer orders may cause our revenues and income from operations to vary substantially each quarter, which could result in significant fluctuations in our quarterly results.”

Our backlog has increased from 412 railcars at the end of 2002 to 15,567 railcars at September 30, 2005. We believe this increase is due to the current strength of the economy, the replacement of aging railcar fleets, increasing demand for consumer and industrial products, and an increasing demand for covered hopper and tank railcars.

Management’s discussion and analysis of financial condition and results of operations

the right, on 240 days prior written notice, to cancel pending purchase orders or reduce subsequent purchase obligations for the then current agreement year, in either case such that actual purchases by CIT would not fall below 50% of that agreement year’s original minimum purchase requirements. If the American Railway Car Institute’s reported quarterly backlog falls below 35,000 railcars, CIT has the right to cancel or suspend all, or any, pending purchase orders or remaining purchase obligations under the Agreement upon 180 days prior written notice. If CIT elects to cancel any pending purchase order under these provisions within 120 days of the delivery date of the order, we may require that CIT purchase from us, at our cost, all material which we had purchased and identified to such cancelled purchase order. CIT also has the right to reduce its railcar orders from us if market prices for the railcars subject to our agreement are reduced significantly below our quoted prices and we fail to meet such price reductions. Under the agreement, purchase prices for railcars are subject to steel surcharges and certain other material cost increases applicable at the time of production.

The following table shows our reported railcar backlog, in number of railcars and estimated future value attributable to such backlog, for the periods shown. This reported backlog includes 9,000 railcars relating to CIT’s minimum purchase obligations under its agreement with us based upon an assumed product mix consistent with CIT’s orders for railcars. Changes in product mix from that assumed would affect the dollar amount of our backlog from CIT.


										Nine months ended
	Year ended December 31,									September 30,

	2002			2003			2004			2004			2005

Railcar backlog at start of period		317			412			2,287			2,287			7,547
New railcars delivered		(1,766	)		(2,557	)		(4,384	)		(3,260	)		(4,980	)
New railcar orders		1,861			4,432			9,644			6,626			13,000

Railcar backlog at end of period		412			2,287			7,547			5,653			15,567

Estimated backlog value at end of period (in thousands of dollars)(1)	$	26,906		$	129,850		$	494,107		$	365,097		$	1,132,788

(1)

Estimated backlog value reflects the total revenues expected to be attributable to the backlog reported at the end of the particular period as if such backlog were converted to actual revenues. Estimated backlog does not reflect potential price increases and decreases under customer contracts that provide for variable pricing based on changes in the cost of certain raw materials and railcar components, or the cancellation or delay of railcar orders that may occur.

We anticipate that approximately 12% of our reported backlog as of September 30, 2005 will be converted to revenues by the end of 2005. Historically, we have experienced little variation between the number of railcars ordered and the number of railcars actually delivered. However, our backlog is not necessarily indicative of our future results of operations as orders may be canceled or delivery dates extended. We cannot assure that our reported backlog will convert to revenues in any particular period, if at all, that the actual revenues from these orders will equal our reported backlog estimates or that our future revenue collection efforts will be successful. See “Risk factors—Risks related to our business—The level of our reported railcar backlog may not necessarily indicate what our future revenues will be and our actual revenues may fall short of the estimated revenue value attributed to our railcar backlog.”

We rely on supplies from third-party providers and our Ohio Castings joint venture for steel, heavy castings, wheels and other components for our railcars. In the event that our suppliers were to stop or reduce their supply of steel, heavy castings, wheels or the other railcar components that we depend upon, our business would be disrupted and the actual sales from our customer contracts may fall significantly short of our reported backlog. See “Risk factors—Risks related to our business— Fluctuations in the supply of components and raw materials we use in manufacturing railcars could

Management’s discussion and analysis of financial condition and results of operations

cause production delays or reductions in the number of railcars we manufacture, which could adversely affect our business and operating results.”

CHARGES AND COSTS ASSOCIATED WITH OUR PUBLIC OFFERING

We expect to incur significant additional selling, administrative and other fees and expenses in connection with the preparation for this offering and becoming a public company. In addition we expect to incur a number of charges in connection with transactions contemplated in connection with this offering.

ACF employee benefit plans

In anticipation of our no longer being a part of ACF’s controlled group upon completion of this offering, we have entered into an agreement, effective December 1, 2005, with ACF for allocating the assets and liabilities of the pension benefit plans retained by ACF in the 1994 ACF asset transfer in which some of our employees were participants, and which has relieved us of our further employee benefit reimbursement obligations to ACF under the 1994 ACF asset transfer agreement. The principal employee benefit plans affected by this arrangement are two ACF sponsored pension plans, known as the ACF Employee Retirement Plan and the ACF Shippers Car Line Pension Plan, and certain ACF sponsored retiree medical and retiree life insurance plans. See “Certain relationships and related party transactions—Certain transactions with ACF Industries LLC—1994 ACF asset transfer.”

Under the arrangement, in exchange for our agreement to pay ACF approximately $9.2 million and to become the sponsoring employer under the ACF Shippers Car Line Pension Plan, including the assumption of all obligations for our and ACF’s employees under that plan, we have ceased to be a participating employer under the ACF Employee Retirement Plan and have been relieved of all further reimbursement obligations, including for our employees, under that plan. We estimate that as of December 1, 2005, the ACF Shippers Car Line Pension Plan had $4.0 million of unfunded liabilities on an accounting basis that were assumed by us in connection with this arrangement. The payment of approximately $9.2 million which was made by us to ACF represents our and ACF’s estimate of the payment required to be made by us to achieve an appropriate allocation of the assets and liabilities of the benefit plans accrued after the 1994 ACF asset transfer, with respect to each of our and ACF’s employees in connection with the two plans. This allocation was determined in accordance with actuarial calculations consistent with those that would be required to be used by us and ACF in allocating plan assets and liabilities at such time as we cease to be a member of ACF’s controlled group.

As part of this arrangement, we also assumed sponsorship of a retiree medical and retiree life insurance plan for active and identified former ARI employees that were covered by the ACF sponsored medical and retiree life insurance plans, and ACF was relieved of all further liability under those plans with respect to those employees. We estimate that as of December 1, 2005, the post-retirement liability related to this obligation was approximately $3.9 million. ACF paid ARI $2.9 million to assume the pre 1994 portion of this liability.

In connection with the foregoing, we recorded an expense of approximately $10.4 million in December 2005, including $6.3 million for the net cash payment to ACF, $4.0 million for the unfunded liability assumed under the Shippers Car Line pension plan and $3.9 million for the assumption and sponsorship of an unfunded post retirement medical and retiree life insurance plan for our employees. We have previously accrued an estimated liability related to this settlement of $3.8 million.

Management’s discussion and analysis of financial condition and results of operations

Equity incentive awards

We also expect to incur a non-cash operating expense in connection with the issuance at the close of this offering to James Unger, our chief executive officer, of the number of shares of our common stock obtained by dividing $6.0 million by the initial public offering price set forth on the cover page of this prospectus for no consideration. Assuming an initial public offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus, Mr. Unger will receive 352,941 shares of our common stock. If the initial public offering price is $16.00 per share, Mr. Unger will receive 375,000 shares of our common stock. If the initial public offering price is $18.00 per share, Mr. Unger will receive 333,333 shares of our common stock. The expense we will recognize in connection with this grant will equal the value of the shares granted to Mr. Unger as of the date of issuance, which we expect will be approximately $6.0 million. We expect to recognize $2.4 million of this expense in the quarter that we complete this offering, when 40% of these shares will vest. We expect to recognize the remaining $3.6 million of this expense in the quarter that is one year after we complete the offering, when the balance of these shares will vest. See “Management—Executive compensation—Employment agreements” and “Certain relationships and related party transactions—Certain transactions involving James J. Unger—Grant of common stock.”

We also intend to issue options to purchase up to an estimated 541,176 shares of common stock under our 2005 equity incentive plan upon the pricing of this offering. These options will be granted at an exercise price equal to the fair market value of the shares on the date of the grant, which we anticipate will be the initial public offering price. Subject to the completion of this offering, the options will have a term of five years and vest in equal annual installments over a three-year period. If this offering is not completed, these options will terminate. Under the terms of his employment agreement, James A. Cowan, our chief operating officer, is entitled to receive an option to purchase 1.25% of our shares of common stock to be outstanding immediately following the offering (excluding the shares that may be issued upon the exercise, if any, of the over-allotment option). As a result, the actual number of shares subject to the option granted to Mr. Cowan will be proportionately adjusted if the number of shares to be issued by us in this offering is increased or decreased. Based on the anticipated number of shares we will issue in this offering, Mr. Cowan would have an option to purchase 250,000 shares of our common stock. We have also agreed to issue options to other of our employees to purchase up to approximately $5.0 million of our shares, representing the balance of the options we intend to issue upon the pricing of this offering, under our 2005 equity incentive plan. The number of shares subject to those options will be determined by dividing the dollar value of the shares allocated to each recipient by the exercise price as so determined. Actual valuation of the options and shares described above will be based upon a number of factors that are not in our control, such as the fair market value of our common stock on the date of grant. We estimate that our stock option expense for all these options will total approximately $3.5 million over the next three years assuming a Black-Scholes calculation based on the following assumptions: stock volatility of 33.78%; 5-year term; interest rate of 4.46%; and dividend yield of 0%.

The 2005 Equity Incentive Plan will be administered by the Board of Directors who will be authorized to grant incentive stock options, nonqualified stock options, stock appreciation rights (SARs), performance shares, restricted stock, other forms of equity-based or equity-related awards, or other cash awards.

Other additional expenses

We have agreed to pay William Benac, our chief financial officer, a one-time special cash bonus of $500,000 on April 22, 2007 if, prior to that date, we issue common stock to the public in an offering registered with the SEC or Mr. Icahn sells his controlling interest in us to a third party in a private transaction. If at any time on or before April 22, 2007, we terminate Mr. Benac’s employment without cause, he resigns for good reason, or a change in control occurs, he will be entitled to receive the

Management’s discussion and analysis of financial condition and results of operations

special cash bonus of $500,000 upon the occurrence of such event. Mr. Benac’s right to the special cash bonus of $500,000 and any severance immediately terminates if his employment is terminated for cause or he resigns without good reason. As a result of this arrangement, we expect that we will accrue a $500,000 expense in the quarter that we complete this offering. See “Management—Executive compensation—Employment agreements.”

Other additional expenses that we expect to incur in connection with this offering includes the write-off of the remaining $0.6 million of deferred financing costs that we incurred in connection with our industrial revenue bond financings, which we plan to repay in full with a portion of the net proceeds of this offering. We had previously been amortizing these expenses over the remaining terms of the industrial revenue bonds.

RESULTS OF OPERATIONS

The following table summarizes our historical operations as a percentage of revenues for the periods shown. Our historical results are not necessarily indicative of operating results that may be expected in the future.


												Nine months ended
			Years ended December 31,									September 30,

			2002			2003			2004			2004			2005

Revenues
	Manufacturing Operations			82.0	%		86.3	%		89.1	%		89.2	%		92.6	%
	Railcar Services			18.0	%		13.7	%		10.9	%		10.8	%		7.4	%

		Total revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of goods sold
	Cost of manufacturing			79.6	%		80.1	%		86.3	%		84.9	%		85.3	%
	Cost of railcar services			17.5	%		13.7	%		9.7	%		9.7	%		6.2	%

Total cost of goods sold				97.1	%		93.8	%		96.0	%		94.6	%		91.5	%

Gross profit				2.9	%		6.2	%		4.0	%		5.4	%		8.5	%
Selling, administrative and other expenses				5.6	%		4.7	%		2.9	%		3.4	%		2.6	%

Earnings (loss) from operations				(2.7	)%		1.5	%		1.1	%		2.0	%		5.9	%
Interest income				2.1	%		1.5	%		1.2	%		0.8	%		0.3	%
Interest expense				(2.9	)%		(1.7	)%		(1.0	)%		(0.9	)%		(0.8	)%
Income (loss) from joint venture				0.0	%		(0.3	)%		(0.2	)%		(0.1	)%		0.1	%

Earnings (loss) before income tax expense (benefit)				(3.4	)%		1.0	%		1.1	%		1.8	%		5.5	%
Income tax expense (benefit)				(1.1	)%		0.5	%		0.6	%		0.7	%		2.2	%

		Net earnings (loss)		(2.3	)%		0.5	%		0.5	%		1.1	%		3.3	%

Comparison of the nine months ended September 30, 2005 to the nine months ended September 30, 2004

Our net earnings for the nine months ended September 30, 2005 were $14.5 million, compared to $2.9 million for the nine months ended September 30, 2004, representing an increase of $11.6 million. In the first nine months of 2005, we sold 4,980 railcars, which is 1,720 more than the 3,260 railcars we sold in the first nine months of 2004. Most of our revenues for the first nine months of 2005 included sales under contracts that allowed us to adjust our sale prices to pass on to our customers the impact of increases in the costs of certain raw materials, particularly steel, and components. This improvement was

Management’s discussion and analysis of financial condition and results of operations

partially offset by increased costs associated with outsourcing our railcar painting and lining for our new production line at our Paragould facility and the start-up costs for that new production line.

Revenues

Our revenues for the nine months ended September 30, 2005 increased 74% to $442.1 million from $254.3 million in the nine months ended September 30, 2004. This increase was primarily attributable to an increase in our revenues from sales of railcars.

Our manufacturing operations revenues increased 81% to $409.2 million in the first nine months of 2005 from $226.8 million in the first nine months of 2004. This increase was primarily attributable to the delivery of an additional 1,720 railcars in the first nine months of 2005, increased prices resulting from our ability to pass through a portion of our increased raw material and component costs and increases in the base unit price for some of our railcars. Our revenues from sales of railcars increased $166.8 million to $356.5 million in the first nine months of 2005 from $189.7 million in the first nine months of 2004. The additional deliveries of railcars in the first nine months of 2005 reflected increased sales of covered hopper and tank railcars and a continuation of deliveries of centerbeam platform railcars ordered in 2004. These increased sales reflected our increased capacity at our Paragould facility supported by the continued strong backlog of orders for our railcars. Our manufacturing operations revenues attributable to sales of railcar and industrial components increased by $15.1 million in the first nine months of 2005 to $51.7 million from $36.6 million in the first nine months of 2004. This increase was primarily attributable to increased unit sales reflecting increased railcar manufacturing and industrial activity. For the first nine months of 2005, our manufacturing operations revenues included $44.5 million, or 10.1% of our total revenues, from transactions with affiliates, compared to $44.6 million, or 17.5% of our total revenues, in the first nine months of 2004. These revenues were attributable to sales of railcars to companies controlled by Mr. Icahn.

Our railcar services revenues increased by $5.3 million to $32.9 million in the first nine months of 2005, from $27.6 million in the first nine months of 2004. This increase was primarily attributable to strong railcar repair demand and a $2.0 million increase in leasing and other fleet management service revenue from subsidiaries of our affiliate, ARL, a company controlled by Mr. Icahn. The increase in railcar services revenues from ARL was fully offset by $2.0 million of pass through costs paid to ACF, also a company controlled by Mr. Icahn, that was included in our cost of railcar services. Our management agreements with the ARL subsidiaries were terminated on June 30, 2005. However, we continue to provide repair, maintenance and fleet management services for those fleets. For the first nine months of 2005, our railcar services revenues included $16.0 million, or 3.6% of our total revenues, from transactions with affiliates, compared to $12.7 million, or 5.0% of our total revenues, in the first nine months of 2004.

Gross profit

Our gross profit increased to $37.4 million in the first nine months of 2005 from $13.7 million in the first nine months of 2004. Our gross profit margin increased to 8.5% in the first nine months of 2005 from 5.4% in the first nine months of 2004, primarily reflecting improved margins in our manufacturing operations.

Our gross profit margin for our manufacturing operations increased to 7.8% in the first nine months of 2005 from 4.7% in the first nine months of 2004. This increase was primarily attributable to the contribution from increased overhead absorption on plant work volume and our ability to pass through a greater portion of increased raw material and component costs through variable pricing contracts. In the first nine months of 2005, we were unable to pass through only approximately $1.5 million of $32.5 million of increased raw material and component costs. In the first nine months of 2004, we were unable to pass through approximately $5.0 million of $7.0 million of increased raw material and component costs. All of our railcar manufacturing contracts providing for deliveries after the first nine months of 2005 have variable cost provisions that adjust the delivery price for changes in certain raw

Management’s discussion and analysis of financial condition and results of operations

material and component costs. As a result, changes in steel prices and other raw material and component prices should have little impact on our gross profits for the remainder of the year. However, increases in raw material and component costs would have an adverse effect on our gross profit margin as a percentage of revenues, because we do not earn any additional net profit margin on our price adjustments.

Our improvement in gross profit margin in 2005 was partially offset by a contract to manufacture centerbeam platform railcars, a new product line for us in 2004. This was the first time we manufactured centerbeam platform railcars and, as a result of start-up and increased production costs, we did not realize a profit on this contract. Our centerbeam platform railcar contracts were completed at our Paragould facility in July 2005 and we have since converted the manufacturing line at that facility to manufacturing covered hopper railcars. In the first six months of 2005, we also incurred additional costs in connection with the completion of our new third production line at our Paragould facility, including costs associated with outsourcing our railcar painting and lining for the increased railcar production from that new production line and costs of the initial training and supplies for that production line. We are currently constructing additional painting and lining capabilities at our Paragould facility, which we expect to be completed by the end of 2005. This new painting and lining capacity should allow us to improve margins as we reduce or eliminate outsourcing of this function.

Our gross profit margin for our railcar services increased to 16.4% in the first nine months of 2005 from 10.8% in the first nine months of 2004. This increase was primarily attributable to our service facilities operating at a higher volume level, which resulted in efficiencies in labor and overhead.

Selling, administrative and other expenses

Our selling, administrative and other expenses increased by $2.9 million in the first nine months of 2005, to $11.4 million from $8.5 million in the first nine months of 2004. Selling, administrative and other expenses were 2.6% of total revenues in the first nine months of 2005 as compared to 3.4% of total revenues in the first nine months of 2004. Our increase in the amount of our selling, administrative and other expenses was primarily attributable to an increase in information technology costs, audit and outside professional service fees.

Interest expense and interest income

Our interest expense in the nine months ended September 30, 2005 was $3.6 million as compared to $2.2 million for the nine months ended September 30, 2004, representing an increase of $1.4 million. The increase in interest expense was primarily attributable to higher debt balances. Our interest income in the nine months ended September 30, 2005 was $1.3 million as compared to $2.1 million for the nine months ended September 30, 2004, representing a decrease of $0.8 million. The decrease in interest income was primarily attributable to a $57.2 million loan to an affiliate that was repaid in 2004 that was partially offset by interest income we earned on a $165.0 million secured loan we made to Mr. Icahn in October 2004. In January 2005, we transferred our entire interest in this loan to ARL in exchange for additional common interests in ARL and in satisfaction of our $130.0 million loan from ARL. See “Certain relationships and related party transactions— Certain transactions with Mr. Icahn and other related entities.”

Income tax expense

Our income tax expense for the nine months ended September 30, 2005 was $9.6 million, or 39.8% of our earnings before income taxes, as compared to $1.9 million for the nine months ended September 30, 2004, or 39.3% of our earnings before income taxes. Our effective tax rate is impacted by expenses included in pre-tax earnings for which we do not receive a deduction for tax purposes. These expenses result from the liabilities and obligations retained by ACF as part of its transfer of assets to us in 1994. See “Certain relationships and related party transactions—Certain transactions with ACF Industries LLC.” Although ACF is responsible for any costs associated with these liabilities, we are required to recognize

Management’s discussion and analysis of financial condition and results of operations

these costs as expenses in order to reflect the full cost of doing business. The entire amount of such permanently nondeductible expenses is treated as contribution of capital resulting in an increase to our effective tax rate. The expenses included in pre-tax income were $0.8 million and $0.8 million for the nine months ended September 30, 2004 and September 30, 2005, respectively.

Comparison of the year ended December 31, 2004 to the year ended December 31, 2003

Our net earnings for the year ended December 31, 2004 was $1.9 million as compared to $1.1 million for the year ended December 31, 2003, representing an increase of $0.8 million. In 2004, we sold 4,384 railcars, 1,827 more than the 2,557 railcars we sold in 2003. Despite the increase in railcar deliveries in 2004, our net earnings for 2004 was negatively affected by dramatic increases in raw materials, especially steel, and railcar component prices, particularly for components manufactured from steel. Our railcar manufacturing contracts precluded us from passing most of these increased costs on to our customers. Our gross margins in 2004 were also adversely affected by the losses we incurred from our introduction and sale of centerbeam platform railcars manufactured at our Paragould facility. Net earnings for 2003 reflected a $0.8 million write-down of the carrying value of buildings and improvements, and equipment at our Milton, Pennsylvania railcar repair facility, and a $0.4 million charge to adjust inventory to the lower of cost or market. We incurred no such write-downs in 2004.

Revenues

Our revenues in 2004 increased 63% to $355.1 million from $218.0 million in 2003. This increase was attributable to an increase in revenues from both manufacturing operations and railcar services.

Our manufacturing operations revenues increased 68% to $316.4 million in 2004 from $188.1 million in 2003. This increase was primarily attributable to our delivery of an additional 1,827 railcars in 2004 and, to a lesser extent, an increase in pricing based upon our ability to pass through some of our increased costs as well as an increase in the base price of our railcars. Our revenues from railcar sales increased $111.1 million to $265.8 million in 2004 from $154.7 million in 2003. The additional deliveries of railcars in 2004 reflected increased sales of covered hopper and tank railcars and sales of centerbeam platform railcars. We believe that the increases were primarily attributable to the continuing recovery of the railcar industry which resulted in a strong backlog of orders for delivery in 2004. In 2004, deliveries increased by 428 tank railcars and 164 covered hopper railcars from 2003, and our centerbeam platform railcar deliveries totaled 1,240. We delivered five centerbeam platform railcars in 2003. Our increase in manufacturing operations revenues also reflected a $17.3 million increase in our sales of railcar and industrial components. This increase was primarily attributable to an increase in demand for castings and components in the oil refinery and transportation markets. In 2004, our manufacturing operations revenues included $64.4 million, or 18.1% of our total revenues, from transactions with affiliates, compared to $62.9 million, or 28.8% of our total revenues, in 2003. These revenues were primarily attributable to sales of railcars to companies controlled by Mr. Icahn.

Our railcar services revenues increased 29% to $38.6 million in 2004 from $29.9 million in 2003. This increase was attributable to increased sales, primarily related to repair and maintenance services provided to affiliates, including ACF and ARL and their subsidiaries. In 2004, our railcar services revenues included $19.4 million, or 5.5% of our total revenues, from transactions with affiliates, as compared to $11.0 million, or 5.1%, in 2003.

Gross profit

Our gross profit increased to $14.3 million in 2004 from $13.6 million in 2003. Our gross profit margin decreased to 4.0% in 2004 from 6.2% in 2003. The decrease in our gross profit margin was primarily attributable to a decrease in our gross profit margin for our manufacturing operations that was partially offset by an increase in our gross profit margin for our railcar services.

Management’s discussion and analysis of financial condition and results of operations

Our gross profit margin for our manufacturing operations decreased to 3.2% in 2004 from 7.2% in 2003. This decrease was primarily attributable to an increase in the cost of raw materials and components, consisting primarily of steel and steel-based components, that we were not able to pass through to our customers due to fixed price contracts. Our cost of sales increased by approximately $11.3 million in 2004 based upon these increased raw material and component costs. We estimate that we were able to pass through $3.4 million of these costs to our customers. Our margins were also adversely affected by the losses we incurred resulting from our introduction and sale of centerbeam platform railcars in 2004. We completed deliveries under our centerbeam platform railcar contract by in July 2005 and have converted the manufacturing line we used to manufacture these railcars to manufacture covered hopper railcars.

Our gross profit margin for railcar services increased to 10.7% in 2004 from 0.4% in 2003. This increase was primarily attributable to increased sales that resulted in increased efficiencies of labor and overhead. Our gross profit margin for railcar services in 2003 was adversely affected by a $0.8 million write-down of the carrying value of buildings and improvements, and equipment at our Milton, Pennsylvania railcar maintenance facility, which we idled during 2003, and a $0.4 million charge to adjust inventory to the lower of cost or market.

Selling, administrative and other expenses

Our selling, administrative and other expenses did not increase in 2004 from the $10.3 million expense in 2003. Selling, administrative and other expenses were 2.9% of sales in 2004 as compared to 4.7% of sales in 2003. In 2004, we were able to use the infrastructure we put in place in 2003 to grow our revenues without increasing our selling, administrative and other expenses. Our expenses in 2004 reflected an increase in engineering and purchasing personnel, but these expenses were offset by reduced spending in insurance, retirement, legal fees and engineering consulting services.

Interest expense and interest income

Interest expense was $3.7 million and $3.6 million for years ended December 31, 2004 and 2003, respectively. Our interest income increased to $4.4 million in 2004 from $3.2 million in 2003. The increase in interest income and interest expense was primarily attributable to our $165.0 million secured loan to Mr. Icahn and our $130.0 million loan from ARL, respectively, both of which are no longer outstanding.

Income tax expense

Income tax expense for 2004 was $2.2 million, or 53.3% of our earnings before income taxes, as compared to $1.1 million for 2003, or 51.7% of our earnings before income taxes. Our income tax rates were higher than the statutory rates in both periods because of the effect of expenses included in pre-tax income for which we do not receive a deduction for tax purposes. These expenses primarily relate to the liabilities and obligations retained by ACF as part of its transfer of assets to us in 1994.

Comparison of the year ended December 31, 2003 to the year ended December 31, 2002

Our net earnings for the year ended December 31, 2003 was $1.1 million as compared to a $3.9 million net loss for the year ended December 31, 2002, representing an increase of $5.0 million. In 2003, we sold 2,557 railcars, 791 more than the 1,766 railcars we sold in 2002. The increase in our earnings was primarily attributable to increased gross profit from the delivery of these additional railcars, which was partially offset by an increase in selling, administrative and other expenses of $0.8 million, as increased engineering and purchasing support were added to support railcar manufacturing. Net earnings was reduced in 2003 because we wrote down the carrying value of buildings and improvements and equipment for one of our railcar maintenance facilities by $0.8 million, and an inventory value reduction of $0.4 million.

Management’s discussion and analysis of financial condition and results of operations

Revenues

Our revenues increased by 29.1% to $218.0 million in 2003 from $168.8 million in 2002. This increase was attributable to an increase in our manufacturing operations revenues that was partially offset by a decrease in railcar services revenues.

Our manufacturing operations revenues increased 36% to $188.1 million in 2003 from $138.4 million in 2002. This increase was primarily attributable to our delivery of an additional 791 railcars in 2003 and, to a lesser extent, an increase in the base unit price of our railcars. In 2003, we delivered 496 additional tank railcars and 290 additional covered hopper railcars as compared to 2002. We attribute these increased sales to the recovery of the railcar manufacturing industry. Our revenues from railcar and industrial components manufacturing increased $3.1 million to $33.4 million in 2003 from $30.3 million in 2002. This increase reflected increased demand for our railcar component products and an increase in demand for our steel castings products in the oil, gas and transportation markets. In 2003, our manufacturing operations revenues included $62.9 million, or 28.8% of our total revenues, from transactions with affiliates, compared to $63.6 million, or 37.6% of our total revenues, in 2002. These revenues were primarily attributable to sales of railcars to companies controlled by Mr. Icahn.

Our revenues from railcar services decreased by $0.5 million to $29.9 million in 2003 from $30.4 million in 2002. This decrease is primarily attributable to the idling of our Milton, Pennsylvania repair facility and a corresponding loss of repair and maintenance revenues that had historically been performed at that facility. In 2003, our railcar services revenues included $11.0 million, or 5.1% of our total revenues, from transactions with affiliates, as compared to $12.8 million, or 7.6% of our total revenues, in 2002.

Gross profit

Our gross profit increased by $8.7 million to $13.6 million in 2003 from $4.9 million in 2002. Our gross profit margin increased to 6.2% in 2003 from 2.9% in 2002. The improvement in our gross profit margin was attributable to an improved gross profit margin for our manufacturing operations that was partially offset by a decrease in our gross profit margin for our railcar services. Our gross profit margin for our manufacturing operations increased to 7.2% in 2003 from 2.9% in 2002. This increase was primarily attributable to the contribution from increased overhead absorption as plant work volume increased. Our gross profit margin for our railcar services was 0.4% in 2003 compared to 2.8% in 2002. This decrease in gross profit margin was primarily attributable to decreased revenues and the $1.2 million asset write-down in 2003 in connection with the idling of our Milton, Pennsylvania repair and maintenance facility. We incurred a $0.2 million write-down in connection with this facility in 2002.

Selling, administrative and other expenses

Our selling, administrative and other expenses increased 8.8% to $10.3 million in 2003 from $9.5 million in 2002. The increase in our selling, administrative and other expenses in 2003 was primarily attributable to increased information technology, infrastructure, engineering and purchasing services to support our growing operations. Selling, administrative and other expenses decreased to 4.7% of revenues in the year ended December 31, 2003 from 5.6% in the year ended December 31, 2002.

Interest expense and interest income

Our interest expense was $3.6 million and $4.9 million for the years ended December 31, 2003 and 2002, respectively. Our interest income was $3.2 million and $3.6 million for the years ended December 31, 2003 and 2002, respectively. The interest income was primarily from a $57.2 million loan to an affiliate that was repaid in 2004. The interest expense reduction was primarily due to reduction of the average outstanding borrowings under our existing revolving credit facility.

Management’s discussion and analysis of financial condition and results of operations

Income tax expense/benefit

Our income tax expense in the year ended December 31, 2003 was $1.1 million, or 51.7% of income before income taxes, as compared to a $1.9 million tax benefit in the year ended December 31, 2002, or 32.6% of loss before income taxes. Our income tax rate was higher than the statutory rates in 2003, because of the effect of expenses included in pre-tax income for which we do not receive a deduction for tax purposes. These expenses primarily relate to the liabilities and obligations retained by ACF as part of its transfer of assets to us in 1994.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity have historically been the cash generated from our operations, the sale of securities and funds generated from borrowings. Until recently, most of our capital needs have been satisfied by entities affiliated with Mr. Icahn. Upon completion of this offering, we intend to use the net proceeds from this offering to redeem all shares of our outstanding new preferred stock, repay notes due to our affiliates, redeem all of our industrial revenue bonds, all of which are held by affiliates of Mr. Icahn, and repay a portion of the amounts outstanding under our existing revolving credit facility. See “Use of proceeds” for more information. Following this offering we cannot guarantee that we will receive any further financial support from Mr. Icahn or his affiliates.

Outstanding debt

Revolving credit facility. On March 10, 2005, we entered into a revolving credit facility with North Fork Business Capital Corporation, as administrative agent for various lenders. As of September 30, 2005, we had $31.3 million in principal and interest outstanding under this facility. We intend to repay all or a substantial portion of this credit facility with the proceeds of this offering. We have entered into a commitment letter with our lenders to amend and restate our revolving credit facility in conjunction with the closing of this offering to, among other things, extend the term of the facility to three years from the completion of the offering, increase our maximum borrowing amount to $75 million with a $15 million subfacility and modify certain covenants, including to eliminate the covenant that requires Mr. Icahn to retain a majority interest in us.

Terms of our existing revolving credit facility are:


4	Maximum borrowing. The revolving credit facility provides for a maximum borrowing of the lesser of (a) $50.0 million or (b) 85% of the eligible receivables plus 65% of the eligible inventory, which inventory may include at the most $40.0 million, less any reserves established by the agent in accordance with the agreement. As of September 30, 2005, the maximum borrowing amount eligible under this facility was $48.4 million;

4	Term. The revolving credit facility expires March 10, 2006;

4	Interest rate and fees. Borrowings bear an interest rate of a base rate less 0.25%, where the base rate is the highest prime, base or equivalent rate of interest published by the administrative agent, or the published annualized rate for 90-day dealer commercial paper published in the Wall Street Journal, or a LIBOR rate plus 2.5%. We are required to pay an unused line fee of 0.375% per year on the difference, if positive, of $50.0 million minus the average daily aggregate outstanding amount of the loans. As of September 30, 2005, the interest rate under the revolving credit facility was 6.5%;

4	Collateral. Our receivables, inventory and a pledged deposit account serve as collateral under the existing revolving credit facility. In addition, we are required to maintain one or more blocked accounts to which all our collections are remitted, upon notice from the administrative agent, if the difference between the lesser of $50.0 million or the borrowing base and the outstanding amount of our loans is less than $5.0 million, or if an event of default is ongoing;


4	Financial covenants. Our existing revolving credit facility requires us to meet a fixed charge coverage ratio of not less than 1.2 to 1.0 for each of the following periods: January 1, 2005

Management’s discussion and analysis of financial condition and results of operations


	through June 30, 2005; January 1, 2005 through September 30, 2005; January 1, 2005 through December 31, 2005; and each 12 month period ending on the last day of each calendar quarter thereafter; and a leverage ratio calculated based on the outstanding amount of indebtedness to EBITDA of not greater than 4.0 to 1.0 for each of the above mentioned periods. As of September 30, 2005, we were in compliance with these financial covenants; and

4	Negative covenants. Our existing revolving credit facility includes certain limitations on, among other things, our ability to incur additional indebtedness, modify our current governing documents, sell or dispose of collateral, grant credit and declare or pay dividends or make distributions on common stock or other equity securities. In addition, our existing revolving credit facility provides that Mr. Icahn shall maintain a direct or indirect ownership of at least 50.1% of our voting equity interest.

Terms of the proposed amended and restated revolving credit facility are:


4	Maximum borrowing. Our amended and restated revolving credit facility would provide for a maximum borrowing of the lesser of (a) $75 million or (b) 85% of the eligible accounts receivables plus 65% of the eligible raw materials and finished goods inventory. Eligible receivables would include only accounts receivable to our customers in the United States or Canada arising from sales in the ordinary course of business with non-affiliates. In addition, the amended and restated revolving credit facility would include a $15.0 million capital expenditure sub-facility that would be based on 80% of the costs related to capital projects we may undertake;

4	Term. The amended and restated revolving credit facility would expire three years after the closing of this offering;

4	Interest rate and fees. Borrowings would bear an interest rate of a base rate less 0.5%, where the base rate is the higher of the highest prime, base or equivalent rate of interest published by the administrative agent, or the published annualized rate for 90-day dealer commercial paper published in the Wall Street Journal. In addition we would be granted a 1 month, 2 month or 3 month LIBOR rate plus 1.5%. We would be required to pay a closing fee of $0.2 million and an unused line fee of 0.375% per year on the unused portion of our amended and restated revolving credit facility;

4	Collateral. Our receivables, inventory and a pledged deposit account together with assets we purchase with the proceeds from the capital expenditure sub-facility would serve as collateral under the amended and restated revolving credit facility and the capital expenditure sub-facility. In addition, we would be required to maintain one or more blocked accounts to which all our collections would be remitted. Under the amended and restated revolving credit facility, the types of collections that would be subject to the blocked account consist of all collections including all cash, funds, checks, notes, instruments, any other form of remittance tendered by account debtors in respect of payment of our receivables and any other payments received by us with respect to any collateral. If the funds which we can draw under the amended and restated revolving credit facility would fall under $5 million, the proceeds in the blocked accounts would be transferred to the administrative agent and the administrative agent would be required to apply all such proceeds to our loan account with the administrative agent, conditional upon final collection, effecting a payment of any obligations that are outstanding at such time. The interest that the administrative agent would hold in such proceeds (until such time as they are applied to the obligations) would be in the nature of a collateral security interest. Upon termination of the administrative agent’s security interests in such proceeds in accordance with applicable laws generally governing the termination of security interests and bank deposits, the administrative agent would return to us any proceeds it holds after satisfaction of existing or contingent obligations owed to the administrative agent and the other lenders. We may borrow, repay, and reborrow revolving credit loans in accordance with the proposed terms of the revolving credit facility;

4	Financial covenants. Our amended and restated revolving credit facility would require us to meet an adjusted fixed charge coverage ratio of not less than 1.2 to 1.0 on a quarterly and/or annual

Management’s discussion and analysis of financial condition and results of operations


	basis and a leverage ratio calculated based on the outstanding amount of indebtedness to EBITDA of not greater than 4.0 to 1.0 on a quarterly and/or annual basis; and

4	Negative covenants. Our amended and restated revolving credit facility would include certain limitations on, among other things, our ability to incur additional indebtedness, modify our current governing documents, sell or dispose of collateral, grant credit and declare or pay dividends or make distributions on common stock or other equity securities. The limitation on certain of the actions addressed by the amended and restated revolving credit facility would be in the nature of a right in favor of the administrative agent and our lenders to accelerate all of our obligations under the credit facility, a demand right, that is triggered by certain actions, rather than in the nature of a negative covenant by which we contractually agree not to take such actions. Included among the actions that would trigger a demand right would be certain actions to modify governing documents, sell or dispose of collateral, grant credit, incur indebtedness, and make dividends and distributions. An incurrence of indebtedness would trigger a demand right if it would cause the adjusted ratio of our indebtedness to EBITDA, as defined in the amended and restated revolving credit facility, to be greater than 4.0 to 1.0. The direct or indirect payment of dividends or distributions, or purchase, redemption, or retirement of capital stock, equity interests, options or rights to purchase capital stock or equity interests, or payments to sinking or analogous funds, will trigger a demand right if it would cause the adjusted fixed charge coverage ratio to be less than 1.2 to 1.0 or the ratio of adjusted indebtedness to EBITDA to be greater than 4.0 to 1.0, each on a quarterly and/or annual basis, as defined in the amended and restated revolving credit facility. Our amended and restated revolving credit facility would eliminate the requirement that Mr. Icahn maintain a direct or indirect ownership of at least 50.1% of our voting equity interest.

Industrial revenue bonds. As of September 30, 2005, we had $8.3 million in principal amount and $0.3 million in accrued interest on the industrial revenue bonds outstanding. As of that date, these bonds had effective interest rates ranging from 7.75% to 8.5%, with principal amounts due through 2011. We intend to use a portion of the net proceeds of this offering to repay all amounts due under these bonds. The industrial revenue bonds are guaranteed by affiliates of Mr. Icahn, and these affiliates will be released from such guarantees upon repayment of the industrial revenue bonds. In addition, James J. Unger, our president and chief executive officer, and his wife own $0.4 million of the industrial revenue bonds issued by Paragould, Arkansas. Mr. Unger and his wife will receive approximately $0.4 million upon our repayment of the amounts due under the industrial revenue bonds.

Outstanding notes to affiliates. In December 2004, we borrowed $7.0 million from Arnos Corp., a company controlled by Mr. Icahn, to provide us with additional working capital. The loan bears interest at the prime rate plus 1.75% (8.0% at September 30, 2005) and is payable on demand. Additionally, in connection with our purchase of Castings LLC, effective January 1, 2005, from an affiliate of Mr. Icahn, we issued that affiliate a note payable in the principal amount of $12.0 million. The note bears interest at the prime rate plus 0.5% (6.75% at September 30, 2005) and is payable on demand. We intend to use a portion of the net proceeds of this offering to repay all amounts due under these obligations. As of September 30, 2005, $20.0 million was outstanding under these obligations.

Management’s discussion and analysis of financial condition and results of operations

Cash flows

The following table summarizes our net cash provided by or used in operating activities, investing activities and financing activities and our capital expenditures for the periods presented:


					Nine Months
		Year Ended			Ended
Cash flows		December 31, 2004			September 30, 2005

		(in thousands)
Net cash provided by (used in):
	Operating activities	$	(17,082	)	$	27,831
	Investing activities		(11,037	)		(16,356	)
	Financing activities		34,997			7,783
	Capital expenditures		(11,441	)		(16,356	)

Operating activities. Our net cash provided by or used in operating activities reflects net earnings or loss, adjusted for non-cash charges and changes in net working capital, including non-current assets and liabilities. Cash flows from operating activities are affected by several factors, including fluctuations in business volume, contract terms for billings and collections, the timing of collections on our accounts receivables, processing of payroll and associated taxes and payments to our suppliers. We do not typically experience business credit losses, although a payment may be delayed pending completion of closing documentation, and a typical order of railcars may not yield cash proceeds until after the end of a reporting period.

Our net cash provided by operating activities was $27.8 million for the nine months ended September 30, 2005, which included net earnings of $14.5 million, increased by depreciation and amortization of $5.0 million, a provision for deferred income taxes of $8.7 million, and $0.8 million of expenses that we incurred relating to pre-capitalization liabilities retained and payable by ACF. Payment of these expenses by ACF is reflected as additional paid in capital. These increases were partially offset by $0.4 million of earnings allocated to us as a result of our joint venture interest in Ohio Castings. Cash provided by operating activities attributable to changes in our current assets and liabilities included an increase in accounts payable of $33.4 million and an increase in accrued expenses and taxes of $5.8 million. These sources of cash were partially offset by an increase in inventories of $7.9 million, an increase in accounts receivable of $23.8 million and an increase in prepaid expenses of $8.3 million. The increase in inventories was primarily attributable to the build-up of inventory for our new third production line at our Paragould facility. The increase in accounts payable and accrued expenses was primarily due to this inventory buildup and a change in the processing and accounting of accounts payable that had previously been processed through affiliates. The increase in accounts receivable was primarily attributable to the increased volume of sales attributed to railcars manufactured at our Paragould facility. The increase in prepaid expenses was primarily attributable to payments for workers’ compensation and general insurance coverages that benefit future periods.

For the year ended December 31, 2004, cash used by operating activities was $17.1 million. Our sources of cash included net earnings of $1.9 million, increased by depreciation and amortization of $6.2 million, expenses relating to pre-capitalization liabilities retained by ACF of $1.4 million, a provision for deferred income taxes of $1.7 million and $0.6 million of non-cash loss allocated to us as a result of our joint venture interest in Ohio Castings. Cash used in operating activities attributable to changes in our current assets and liabilities included an increase in inventories of $28.7 million and an increase in accounts receivable of $12.0 million. These uses of cash were partially offset by an increase in accounts payable of $12.0 million. The increase in our inventories and accounts receivable were primarily attributable to our increased sales and the increased cost or raw materials and

Management’s discussion and analysis of financial condition and results of operations

components. The increase in accounts payable was primarily attributable to our build-up of inventory to support our increased sales.

Investing activities. Net cash used in investing activities for the nine months ended September 30, 2005 was $16.4 million, including $8.3 million for construction of additional painting and lining capabilities at our Paragould facility and $2.8 million for the purchase of manufacturing equipment and leasehold improvements that we had previously been leasing from ACF at our St. Charles, Missouri manufacturing facility. See “Certain relationships and related party transactions—Certain transactions with ACF Industries LLC—Corbitt Equipment Lease and Purchase.” Net cash used in investing activities for the year ended December 31, 2004 was $11.0 million, including $9.4 million to construct an additional production line at our Paragould facility.

Financing activities. Cash provided by financing activities was $7.8 million for the nine months ended September 30, 2005, and included $31.3 million borrowed under our existing revolving credit facility that we obtained in March 2005, offset by payments to affiliates of $22.2 million and debt repayments of $1.3 million. The decrease in amounts due affiliates was primarily attributable to the change in our financing arrangement with ACF, which was terminated on April 1, 2005. The accumulated amounts due to ACF under this intercompany arrangement were repaid by us from the proceeds of our revolving credit facility that we obtained in March 2005.

Net cash provided by financing activities was $35.0 million for the year ended December 31, 2004. During the year ended December 31, 2004, we received $110.0 million in additional capital contributions, of which $25.0 million was used for our contribution in the initial capitalization of ARL, $137.0 million from the proceeds of notes due to affiliates. The $137.0 million of proceeds from notes due to affiliates primarily related to our $130.0 million loan from ARL. The increase in amounts due to affiliates consisted of cash advances and affiliate transactions. These sources of cash were partially offset by a $165.0 million secured loan we made to Mr. Icahn in October 2004 and a $40.2 million repayment of our term loan in July 2004.

Capital expenditures. We continuously evaluate facility requirements based on our strategic plans, production requirements and market demand and may elect to make capital investments at higher or lower levels in the future. These investments are all based on an analysis of the potential for these additions to improve profitability and future rates of return. In response to the current demand for our railcars, we are pursuing opportunities to increase our production capacity and reduce our costs through continued vertical integration of our production capacity. From time to time, we may expand our business by acquiring other businesses or pursuing other strategic growth opportunities. We presently have not entered into any agreements related to any material acquisitions.

In December 2004, we began construction of additional painting and lining capabilities at our Paragould, Arkansas covered hopper manufacturing facility. This will complement our additional production line that was completed in November 2004. We expect our capital expenditures in connection with the new painting and lining capabilities, including the $8.3 million paid in the first nine months of 2005, to be approximately $13.2 million, with completion by November 2005.

We recently initiated a project that we estimate will cost approximately $7.0 million to construct a new fabrication shop at our Paragould facility to produce covered hopper railcar components that are currently supplied by an outside vendor. We have also recently initiated a project that we estimate will cost approximately $2.0 million for additional steel storage at our Marmaduke facility, which should result in production efficiencies and contribute to a higher tank railcar output at our Marmaduke facility.

As of January 1, 2005 we acquired from ACF Industries Holding Corp., a company beneficially-owned and controlled by Mr. Icahn, its interest in Castings LLC for total consideration of $12.0 million, represented by a promissory note bearing an interest rate equal to the prime rate plus 0.5%, payable

Management’s discussion and analysis of financial condition and results of operations

on demand. Castings LLC owns a one-third interest in Ohio Castings, which operates two foundries that produce heavy castings. In connection with this transfer, we agreed to assume certain, and indemnify all liabilities related to and arising from ACF Industries Holding Corp.’s investment in Castings LLC, including the guarantee of Castings LLC’s obligations to Ohio Castings, the guarantee of bonds in the amount of $10.0 million issued by the State of Ohio to one of Ohio Castings’ subsidiaries, of which $8.0 million was outstanding as of September 30, 2005, and the guarantee of a $2.0 million state loan that provides for purchases of capital equipment, of which $0.8 million was outstanding as of September 30, 2005. The two other partners of Ohio Castings have made similar guarantees of these obligations. See “Certain relationships and related party transactions—Certain transactions involving Ohio Castings.”

We have an equipment lease expiring on January 30, 2006, the terms of which include an option to either renew the lease or purchase the equipment at a specified amount. Our intent is to purchase the equipment upon expiration of the lease. The buyout amount is estimated at $6.7 million. We expect to fund these capital expenditures through cash provided by operating activities and our revolving credit facility.

We anticipate that any future expansion of the business will be financed through cash flow from operations, our amended and restated revolving credit facility or term debt associated directly with that expansion. Moreover, we believe that following the completion of this offering, these sources of funds will provide sufficient liquidity to meet our expected operating requirements over the next twelve months.

Our long-term liquidity is contingent upon future operating performance and our ability to continue to meet financial covenants under our proposed amended and restated revolving credit facility and any other indebtedness. We may also require additional capital in the future to fund capital expenditures, acquisitions or incur from time to time other investments and these capital requirements could be substantial. Our operating performance may also be affected by matters discussed under “Risk factors,” and trends and uncertainties discussed in this discussion and analysis, including those factors discussed under “Factors affecting operating results,” as well as elsewhere in this prospectus. These risks, trends and uncertainties may also adversely affect our long-term liquidity.

Dividends. Our board of directors has never declared or paid any cash dividends on our common stock. Following this offering, we intend to pay cash dividends on our common stock. However, as of the date of this prospectus our board of directors has not determined the amount of any specific dividend. Our existing revolving credit facility provides that the payment of dividends triggers a right in favor of the administrative agent and our leaders to accelerate all of our obligations under the credit facility, a demand right, unless we satisfy certain financial covenants and provide our lenders under that facility with advance notice of the dividend. Our revolving credit facility requires us to meet a fixed charge coverage ratio, after giving effect to the payment of the dividend, of not less than 1.2 to 1.0 for each 12 month period ending on the last day of each calendar quarter. We expect to amend and restate our revolving credit facility concurrently with the completion of this offering pursuant to a commitment letter we have obtained from our lenders. The amended and restated revolving credit facility would continue to contain provisions that trigger a demand right if we pay dividends on our common stock unless the payment would not cause the adjusted fixed charge coverage ratio (fixed charges, pursuant to the amended and restated revolving credit facility, include any dividends paid or payable on our common stock) to be less than 1.2 to 1.0 or the adjusted ratio of our indebtedness to earnings before interest, taxes, depreciation and amortization, after giving effect to any debt incurred to pay any such dividend to be greater than 4.0 to 1.0, each on a quarterly and/or annual basis. In addition, under Delaware law, our board of directors may declare dividends only to the extent of our “surplus” (which is defined as total assets at fair market value minus total liabilities, minus statutory capital), or if there is no surplus, out of our net profits for the then-current and/or immediately

Management’s discussion and analysis of financial condition and results of operations

preceding fiscal years. Moreover, our declaration and payment of dividends will be at the discretion of our board of directors and will depend upon our operating results, strategic plans, capital requirements, financial condition, covenants under our borrowing arrangement and other factors our board of directors considers relevant. Accordingly, we may not pay dividends in any given amount in the future, or at all.

Contractual obligations

The following table summarizes our contractual obligations as of December 31, 2004, and the effect that these obligations and commitments would be expected to have on our liquidity and cash flow in future periods, assuming that our existing debt remains outstanding during such periods:


		Payments Due By Period

						2-3		4-5		After
Contractual Obligations		Total		1 Year		Years		Years		5 Years

		(in thousands)
Long-term debt obligations		$	9,851	$	1,334	$	3,014	$	3,353	$	2,150
Notes payable to affiliates			149,000		149,000		—		—		—
Operating lease obligations			9,077		5,355		3,352		303		66
Purchase obligations			67,629		—		43,159		24,470		—
Pension funding(1)			1,623		—		—		494		1,129

	Total	$	237,180	$	155,689	$	49,525	$	28,620	$	3,345


(1)	Includes obligations under the pension plan relating to our employees at our Bude, Mississippi repair plant and our supplemental executive retirement plan.

The operating lease commitment above includes the future minimum rental payments required under non-cancelable operating leases for property and equipment leased by us.

In anticipation of the offering, after which we anticipate that we will no longer be a part of ACF’s control group, we have entered into an agreement, effective December 1, 2005, with ACF for allocating the assets and liabilities of the pension benefit plans and retiree group health and life insurance plans retained by ACF in the 1994 ACF asset transfer, in which some of our employees were participants, and which has relieved us of further employee benefit reimbursement obligations to ACF under the 1994 ACF asset transfer agreement. In connection with the allocation of assets and liabilities of the affected plans, we paid ACF $6.3 million. In addition, in connection with that arrangement, we assumed unfunded post retirement benefit liabilities totaling $7.9 million. We have previously accrued an estimated liability related to this settlement of $3.8 million. For a further description of the proposed arrangement, see “—Charges and costs associated with our public offering—ACF employee benefit plans” and Note 13 to our Condensed Consolidated Financial Statements.

Contractual obligations for the Bude pension plan are the estimated minimum required contributions to be made to the Bude pension plan at the due date of those payments. The first of these payments is due on January 15, 2008. The amount included for the supplemental executive retirement plan reflects accrued benefits to be paid to James J. Unger, our chief executive officer. These payments are included in the amounts due after five years. See “Management—Retirement plans” for more information.

As of November 1, 2005, we had $135.6 million of purchase orders outstanding, all of which is scheduled to be delivered within one year. These purchase orders include purchase orders relating to the commitments described below.

Management’s discussion and analysis of financial condition and results of operations

We entered into two vendor supply contracts with minimum volume commitments in October 2005 with suppliers of materials used at our railcar production facilities. The agreements have terms of two and three years respectively. We have agreed to purchase a combined total of $67.6 from these two suppliers over the next three years. In 2006, 2007 and 2008 we expect to purchase $16.0 million, $27.1 million and $24.5 million respectively under these agreements.

We entered into two supply agreements, in January 2005 and June 2005, with a steel supplier for the purchase of regular and normalized steel plate. The agreements each have terms of five years and may be terminated by either party at any time after two years, upon twelve months prior notice. Each agreement requires us to purchase the lesser of a fixed volume or 75% of our requirements for the steel covered by that agreement at prices that fluctuate with the market. We have no commitment under these arrangements to buy a minimum amount of steel, other than the minimum percentages, if our overall steel purchases decline.

We have entered into supply agreements with an affiliate of Amsted Industries, Inc., an affiliate of one of our Ohio Castings joint venture partners, to purchase up to 25% and 33% of the car sets, consisting of sideframes and bolsters, produced at each of two foundries, respectively, being operated by subsidiaries of Ohio Castings. Our purchase commitments under these supply agreements are dependent upon the number of car sets manufactured by these foundries, which are jointly controlled by us and the other two members of Ohio Castings.

The following table summarizes our contractual obligations as of December 31, 2004, and the effect that these obligations and commitments are expected to have on our liquidity and cash flow in future periods, after giving effect to this offering and the application of the net proceeds of this offering as described in “Use of proceeds”:


		Payments Due By Period

						2-3		4-5		After
Contractual Obligations		Total		1 Year		Years		Years		5 Years

		(in thousands)
Long-term debt obligations(1)		$	—	$	—	$	—	$	—	$	—
Notes payable to affiliates			—		—		—		—		—
Operating lease obligations			9,077		5,355		3,352		303		66
Purchase obligations			67,629		—		43,159		24,470		—
Pension funding			1,623		0		0		494		1,129

	Total	$	78,329	$	5,355	$	46,511	$	25,267	$	1,195

(1)

We anticipate that our amended and restated revolving credit facility that we intend to enter into concurrently with this offering, will permit us to borrow $75.0 million and that our amended and restated revolving credit facility will mature three years following the closing of the offering. If the aggregate net proceeds of this offering, along with available cash and cash equivalents, are insufficient to repay the outstanding amounts under our existing revolving credit facility in full, any remaining amounts outstanding under our existing revolving credit facility will become outstanding borrowings under our amended and restated revolving credit facility. See “Use of proceeds.”

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Upon completion of this offering, we intend to repay and replace our existing revolving credit facility, under which there is presently $31.3 million outstanding, with an amended and restated revolving credit facility. We will be exposed to interest rate risk on the borrowings under our revolving credit facility. However, we do not plan to enter into swaps or other hedging arrangements to manage this risk because we do not believe the risk is significant. On an annual basis, a 1% change in the interest

Management’s discussion and analysis of financial condition and results of operations

rate in our revolving credit facility will increase or decrease our interest expense by $10,000 for every $1.0 million of outstanding borrowings.

We are exposed to price risks associated with the purchase of raw materials, especially steel and heavy castings. The cost of steel, heavy castings and all other materials used in the production of our railcars represent approximately 80-85% of our direct manufacturing costs. Given the significant increases in the price of raw materials since November 2003, this exposure can affect our costs of production. We believe that the risk to our margins and profitability has been greatly reduced by the variable pricing contracts we now have in place. We have negotiated all of our current railcar manufacturing contracts with our customers to adjust the purchase prices of our railcars to reflect increases or decreases in the cost of certain raw materials and components and, as a result, we are able to pass on to our customers substantially all of the increased raw material and component costs with respect to the railcars that we will produce and deliver after the first nine months of 2005. We believe that we currently have excellent supplier relationships and do not anticipate that material constraints will limit our production capacity. Such constraints may exist if railcar production were to increase beyond current levels, or other economic changes occur that affect the availability of our raw materials.

We are not exposed to any significant foreign currency exchange risks.

CRITICAL ACCOUNTING POLICIES

We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. Our significant accounting policies are described in the notes to our consolidated financial statements included elsewhere in this prospectus. Some of these policies involve a high degree of judgment in their application. The critical accounting policies, in management’s judgment, are those described below. If different assumptions or conditions prevail, or if our estimates and assumptions prove to be incorrect, actual results could be materially different from those reported.

Revenue recognition

Revenues from railcar sales are recognized following completion of manufacturing, inspection, customer acceptance and shipment, which is when title and risk for any damage or loss with respect to the railcars passes to the customer. In some cases, painting and lining work may be outsourced to an independent contractor and, as a result, the sale will not be recorded until the railcars are shipped from the independent contractor’s facilities to our customer. Revenues from railcar and industrial components are recorded at the time of product shipment, in accordance with our contractual terms. Revenue for railcar maintenance services are recognized upon completion and shipment of railcars from our plants. Revenue for fleet management services are recognized as performed.

We record amounts billed to customers for shipping and handling as part of sales in accordance with Emerging Issues Task Force (EITF) 00-10, Accounting for Shipping and Handling Fees and Costs , and we record related costs in our cost of sales.

Accounts receivable

We carry our accounts receivable at cost, less an allowance for doubtful accounts. On a quarterly basis, we evaluate our accounts receivable and establish an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. Accounts are placed for collection on a limited basis once all other methods of collection have been exhausted. Once it has been determined that the customer is no longer in business and/or refuses to pay, the accounts are

Management’s discussion and analysis of financial condition and results of operations

written off. Our bad debt experience has been minimal. Write-offs could be materially different than reserves if economic conditions change or actual results deviate from historical trends.

Product warranties

We record a liability for an estimate of costs that we expect to incur under our basic limited warranty when manufacturing revenue is recognized. Warranty terms are based on the negotiated railcar sales contracts and typically are for periods of up to five years. Factors affecting our warranty liability include the number of units sold and historical and anticipated rates of claims and costs per claim. We assess quarterly the adequacy of our warranty liability based on changes in these factors. We have generally experienced low warranty claims. Our warranty claims were $0.5 million in 2003 and $0.1 million in 2004. Actual results differing from estimates could have a material effect on results from operations in the event that unforeseen warranty issues were to occur.

Inventory

Inventories are stated at the lower of average cost or market, and include the cost of materials, direct labor and manufacturing overhead. We evaluate our ability to realize the value of our inventory based on a combination of factors including historical usage rates, forecasted sales or usage, product end of life dates, estimated current and future market values and new product introductions. Assumptions used in determining our estimates of future product demand may prove to be incorrect, in which case the provision required for excess and obsolete inventory would have to be adjusted in the future. If inventory is determined to be overvalued, we would be required to recognize such costs as cost of goods sold at the time of such determination. Any significant unanticipated changes in demand could have a significant negative impact on the value of our inventory and our reported operating results. Additionally, purchasing requirements and alternative usage avenues are explored within these processes to mitigate inventory exposure. When recorded, our reserves are intended to reduce the carrying value of our inventory to its net realizable value.

Long-lived assets

We evaluate long-lived assets, including property, plant and equipment, under the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets , which addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. The criteria for determining impairment or such long-lived assets to be held and used is determined by comparing the carrying value of these long-lived assets to be held and used to management’s best estimate of future undiscounted cash flows expected to result from the use of the assets. If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The estimated fair value of the assets is measured by estimating the present value of the future discounted cash flows to be generated. We incurred impairment losses in the years ended December 31, 2002 and 2003, and reduced the carrying value of buildings and improvements and equipment by $0.2 million and $0.8 million, respectively, at one of our railcar maintenance facilities. Any future determination requiring write-off of a significant portion of long-lived assets recorded on our balance sheet could have an adverse effect on our financial condition and results of operations.

Income taxes

For financial reporting purposes, income tax expense is estimated based on planned tax return filings. The amounts anticipated to be reported in those filings may change between the time the financial

Management’s discussion and analysis of financial condition and results of operations

statements are prepared and the time the tax returns are filed. Further, because tax filings are subject to review by taxing authorities, there is also the risk that a position on a tax return may be challenged by a taxing authority. If the taxing authority is successful in asserting a position different than that taken by us, differences in a tax expense or between current and deferred tax items may arise in future periods. Any such differences which could have a material impact on our financial statements would be reflected in the financial statements when management considers them probable of occurring and the amount reasonably estimable.

Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized. Management’s estimates of the realization of deferred tax assets is based on the information available at the time the financial statements are prepared and may include estimates of future income and other assumptions that are inherently uncertain. No valuation allowance is currently recorded, as we expect to realize our deferred tax assets.

Accounting for expenses paid by affiliate

In October 1994, we acquired railcar components manufacturing, railcar maintenance and certain other assets from ACF, a company beneficially owned and controlled by Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors. In connection with that transaction, ACF retained, and agreed to indemnify and hold us harmless for, certain liabilities and obligations relating to the conduct of business and ownership of the assets prior to the transfer, including liabilities relating to employee benefit plans subject to certain exceptions for transferred employees, workers’ compensation, environmental contamination and third-party litigation. See “Certain relationships and related party transactions—Certain transactions with ACF Industries LLC.” At December 31, 2004, the total liability retained by ACF was $11.1 million, which is related primarily to pension benefit obligations. Although ACF is responsible for any costs associated with the retained liabilities, we have continued to reflect the costs associated with those retained liabilities in our financial statements as an expense in order to reflect the full cost of doing business, and the payment by ACF of these expenses is reflected as additional paid-in capital, as required by Staff Accounting Bulletin Topic 5T.

Fair value of financial instruments

The carrying amounts of cash and cash equivalents, accounts receivable, amounts due to/from affiliates and accounts payable approximate fair values because of the short-term maturity of these instruments. The fair value of long-term debt is calculated by discounting cash flows through maturity using our current rate of borrowing for similar liabilities. The fair value of the note receivable from ACF, which was carried at face amount plus accrued interest, could not reasonably be estimated due to the lack of market for similar instruments. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.

Contingencies and litigation

We periodically record the estimated impacts of various uncertain outcomes. These events are called contingencies and our accounting for these events is prescribed by SFAS No. 5, Accounting for Contingencies . SFAS No. 5 defines a contingency as “an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur.” Contingent losses must be accrued if:


4	available information indicates it is probable that the loss has been or will be incurred, given the likelihood of the uncertain future events; and

4	the amount of the loss can be reasonably estimated.

Management’s discussion and analysis of financial condition and results of operations

The accrual of a contingency involves considerable judgment on the part of management. Legal proceedings have elements of uncertainty, and in order to determine the amount of any reserves required, we assess the likelihood of any adverse judgments or outcomes to pending and threatened legal matters, as well as potential ranges of probable losses.

We are subject to comprehensive federal, state, local and international environmental laws and regulations relating to the release or discharge of materials into the environment, the management, use, processing, handling, storage, transport or disposal of hazardous materials and wastes, or otherwise relating to the protection of human health and the environment. These laws and regulations not only expose us to liability for the environmental condition of our current or formerly owned or operated facilities, and our own negligent acts, but also may expose us to liability for the conduct of others or for our actions that were in compliance with all applicable laws at the time these actions were taken. In addition, these laws may require significant expenditures to achieve compliance, and are frequently modified or revised to impose new obligations. Civil and criminal fines and penalties and other sanctions may be imposed for non-compliance with these environmental laws and regulations. Our operations that involve hazardous materials also raise potential risks of liability under common law. We are involved in investigation and remediation activities at properties that we now own or lease to address historical contamination and potential contamination by third parties. We are also involved with state agencies in the cleanup of two sites under these laws. These investigations are at a preliminary stage, and it is impossible to estimate, with any certainty, the timing and extent of remedial actions that may be required, and the costs that would be involved in such remediation. Substantially all of the issues identified relate to the use of the properties prior to their transfer to us in 1994 by ACF and for which ACF has retained liability for environmental contamination that may have existed at the time of transfer to us. ACF has also agreed to indemnify us for any cost that might be incurred with those existing issues. However, if ACF fails to honor its obligations to us, we would be responsible for the cost of such remediation. We have been advised that, for the remainder of 2005, ACF estimates that it will spend approximately $0.1 million on environmental investigation and, in each of 2006 and 2007, it will spend approximately $0.2 million on environmental investigation, relating to contamination that existed at properties prior to their transfer to us and for which ACF has retained liability and agreed to indemnify us. We believe that our operations and facilities are in substantial compliance with applicable laws and regulations and that any noncompliance is not likely to have a material adverse effect on our operations or financial condition.

Future events, such as new environmental regulations or changes in or modified interpretations of existing laws and regulations or enforcement policies, or further investigation or evaluation of the potential health hazards of products or business activities, may give rise to additional compliance and other costs that could have a material adverse effect on our financial conditions and operations. In addition, ACF has in the past conducted investigation and remediation activities at properties that we now own to address historic contamination. Although we believe that ACF has satisfactorily addressed all known material contamination, there can be no assurance that ACF has addressed all historical contamination. The discovery of historical contamination or the release of hazardous substances into the environment at our current or formerly owned or operated facilities could require ACF or us in the future to incur investigative or remedial costs or other liabilities that could be material or that could interfere with the operation of our business.

We are currently a member of a controlled group that includes ACF, an entity in which Mr. Icahn has an indirect ownership of at least 80%. ACF is the sponsor of several pension plans that are underfunded, as of December 31, 2004, by a total of approximately $24.1 million on an ongoing actuarial basis and $172.4 million if those plans were terminated, as most recently reported by the plans’ actuaries. The liabilities could increase or decrease, depending on a number of factors, including future changes in promised benefits, investment returns and the assumptions used to calculate the

Management’s discussion and analysis of financial condition and results of operations

liability. As members of the controlled group, we would be jointly and severally liable for any failure of ACF to pay the unfunded liabilities upon a termination of the ACF pension plans. Upon completion of this offering, we believe that we should no longer be a member of the ACF controlled group. As a result, we should no longer be subject to ACF’s pension liabilities, unless it were determined that we were otherwise a member of the ACF controlled group or that a principal purpose of the offering or other transactions that resulted in our ceasing to be a member of the ACF controlled group was to evade pension liabilities and the termination date of the underfunded plan was within five years after the offering or other transactions. If such a determination were made and upheld by a court, we could remain jointly and severally liable for pension plan obligations of ACF, which could have a material adverse effect on our financial condition and results of operations.

In connection with Trans World Airlines, Inc.’s (or TWA) 1992 bankruptcy proceedings under Chapter 11 of the Bankruptcy Code, the Pension Benefit Guarantee Corporation (or the PBGC) asserted that ACF as well as the other entities in which Mr. Icahn had a controlling interest were obligated along with TWA to satisfy any underfunding of obligations under TWA’s defined benefit plan. Subsequently, and in response to a petition of another member of the Icahn control group, the PBGC terminated the TWA pension plan and obligated an affiliate of ARI, Highcrest Investors Corp (or Highcrest) to make eight annual termination payments of $30 million, totaling $240 million. We have been advised that as of December 31, 2004, Highcrest had made termination payments totaling $130 million and still owed $110 million on this obligation. The obligation to make termination payments is non-recourse except to the common stock of ACF Industries Holding Corp., which is also a member of the Icahn control group. The authority of the PBGC to enter into the settlement agreement is currently being contested. Although ARI is a controlled entity of Mr. Icahn, management believes this obligation will have no adverse effect on the future liquidity, results of operations, or financial position of ARI. See “Risk Factors—Risks related to our business—We could be liable for liabilities associated with pension plans sponsored by companies controlled by Carl C. Icahn.”

We have been named a party to a suit in which the plaintiff alleges we were responsible for the malfunction of a valve which we manufactured, and that was negligently remanufactured in 2004 by a third party. We believe we have no responsibility for this malfunction and have meritorious defenses against any liability. It is not possible to estimate the expected settlement, if any, at this time as the case is in its early stages.

We have been named the defendant in a law suit in which the plaintiff, OCI Chemical Company, claims we were responsible for the damage caused by allegedly defective railcars that were manufactured by us. The lawsuit was filed on September 19, 2005 in the United States District Court, Eastern District of Missouri. The plaintiff seeks unspecified damages in excess of $75,000. The plaintiffs allege that the failures in certain components caused the contents transported by these railcars to spill out of the railcars causing property damage, clean-up costs, monitoring costs, testing costs and other costs and damages. We believe that we are not responsible for the damage and have meritorious defenses against liability.

REPORT ON INTERNAL CONTROLS

Management’s discussion and analysis of financial condition and results of operations

statements that is more than inconsequential will not be prevented or detected. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. Specifically, the significant deficiencies noted were:


4	*Inventory cut-off.* Our manufacturing locations recorded inventory shipped by our vendors to us on the date we received the inventory in our facility, rather than on the date of shipment.

4	*Construction in process.* We transferred assets from construction in process to fixed assets on a quarterly basis rather than at the time assets are actually placed into service. There was insufficient documentation authorizing the movement of assets from construction in process to fixed assets. Certain assets were still being classified as construction in process even though the asset was in service.

4	*Fixed asset recording and reconciliation.* Our fixed asset subsidiary ledgers were not updated in a timely manner. Supporting ledgers for depreciation schedules were tracked using Microsoft Excel. The schedules were not reconciled on a timely basis. The procedures surrounding the compilation of the data was manual and subject to error.

In light of the noted significant deficiencies, we have instituted control improvements that we believe will reduce the likelihood of similar errors to less than remote or to an inconsequential amount in the specific areas that are judged to be most vulnerable. See “Risk factors—Risks related to our business—Our management and auditors have identified three significant deficiencies in our internal controls as of December 31, 2004, which, if not properly remediated could result in misstatements in our financial statements in future periods.” These control improvements include:


4	*Inventory cut-off.* Effective March 31, 2005, we implemented procedures to track the inventory in transit and record the receipt of such inventory properly in our general ledger. We now follow this procedure monthly.

4	*Construction in process.* We are developing a process for plant and corporate management approval to authorize assets to be placed in service. This procedure will entail a threshold dollar amount requiring corporate controller approval that will include a review of the asset clarification and depreciation rate. Under this plan, assets will be moved from construction in process in the month the asset is placed in service.

4	*Fixed asset recording and reconciliation.* We expect to implement a new fixed asset tracking system before the end of 2005.

We do not expect to incur material incremental staffing costs associated with these corrective actions. However, in connection with becoming a public company, we expect to incur significant additional staffing and infrastructure costs.

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities , which was later amended on December 24, 2003 (FIN 46R). FIN 46R explains how to identify variable interest entities and how an enterprise assesses its interest in a variable interest entity to decide whether to consolidate that entity. FIN 46R requires unconsolidated variable interest entities to be consolidated by their primary beneficiaries if their entities do not effectively disperse the risks and rewards of ownership among their owners and other parties involved. The provisions of FIN 46R are generally effective for periods after December 31, 2003. The adoption of this pronouncement has not had a material effect on us.

Management’s discussion and analysis of financial condition and results of operations

In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS 150), which establishes standards for how companies classify and measure certain financial instruments with characteristics of both liabilities and equity. It requires companies to classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). We classified our mandatorily redeemable payment-in -kind preferred stock as a liability in accordance with SFAS 150 in 2003.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs-An Amendment of ARB No. 43 , Chapter 4 , which requires the recognition of costs of idle facilities, excessive spoilage, double freight, and rehandling costs as a component of current-period expenses. The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Since we produce railcars based upon specific customer orders, management does not expect the provisions of SFAS No. 151 to have a material impact on our financial statements.

In December 2004, the FASB issued SFAS 123R, Share-Based Payments. SFAS 123R is a revision of SFAS 123, Accounting for Stock Based Compensation , and supersedes APB 25. Among other items, SFAS 123R eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The effective date of SFAS 123R is currently the beginning of the next fiscal year that begins after June 15, 2005, which is the first quarter of our year ending December 31, 2006.

In March 2005, the FASB issued FIN 47 as an interpretation of FASB Statement 143, Accounting for Asset Retirement Obligations (FASB 143). This interpretation clarifies that the term conditional asset retirement obligation as used in FASB 143 and refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. This interpretation also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. We believe that the adoption of FIN 47 will not result in a material change in our financial statements.

On June 1, 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3 (SFAS 154) . The Statement applies to all voluntary changes in accounting principle, and changes the requirements for accounting for and reporting of a change in accounting principle. We will adopt SFAS 154 at December 31, 2005 and do not anticipate any material change to our operating results as a result of this adoption.

Industry

OVERVIEW OF NORTH AMERICAN RAILCAR MANUFACTURING INDUSTRY

Many diverse industries depend on the railroad system to transport items such as plastic pellets, chemicals and related products, non-metallic minerals, grains and other farm products, food products, metals and ores, coal, lumber and other building products, petroleum products, oils, ethanol related products, paper products, vehicles, equipment and associated parts. Demand for railcars reflects their importance for the North American economy in moving goods and raw materials. In periods of rising economic activity, fleet utilization typically increases, driving an increase in demand for new railcars, which also increases backlog for new railcars. Conversely, during economic slowdowns, fleet utilization typically declines, resulting in reduced demand, deliveries and backlog for new railcars. According to Global Insight’s Freight Car Outlook Third Quarter 2005, orders for new railcars are expected to be strong with deliveries projected to average 59,400 railcars per year from 2005 through 2010. This compares to deliveries of 17,714 railcars in 2002, 32,184 railcars in 2003 and 46,871 railcars in 2004, as reported by the Railway Supply Institute, or RSI. RSI reported that at the end of 2004, the total backlog for the railcar manufacturing industry reached 58,677 railcars. This growth trend has continued through the first nine months of 2005, with 54,134 new railcars ordered and 50,682 railcars delivered, with total backlog increasing to 60,986 railcars.

The primary purchasers of railcars in North America are leasing companies, shippers and railroads. Leasing companies are financial institutions that buy railcars from manufacturers like us and lease these railcars to end users that include railroads and shippers. Shippers include a variety of industrial companies that purchase railcars for freight transport. Railroads purchase railcars to transport goods for industrial companies and others on their lines. The primary source of railcar orders has shifted over time as leasing companies and shippers replace railroads as the largest purchasers of new railcars. From 1990 to 2003, leasing companies and shippers have increased their collective share of the total North American railcar fleet from 37% to 53%, respectively.

The major railcar types and primary uses of these railcars in North America are summarized below.


Railcar Type		Primary Use

Covered Hopper Railcar		Transport of cargo in the plastics, chemical, oil and food industries
Tank Railcar		Transport of liquids and gaseous materials, including chemicals, petroleum products and fertilizers
Intermodal Flat Railcar		Transport of cargo in containers and trailers that may also be used by trucks or ships
Gondola Railcar		Transport of coal and other commodities including steel products and scrap metals
Open-Top Hopper Railcar		Transport of coal
Box Railcar		Transport of auto parts, food products, wood products and paper products
Flat Railcar		Transport of bulky items including machinery, automobiles and forest products

Although a railcar can be used for up to 50 years under existing regulations in North America, we believe that the average life of a railcar is approximately 30 to 35 years. After that point, most railcars must either be refurbished or replaced. Railcar designs change over time, incorporating technical and quality improvements while adapting to the functions required by customers. As the industry advances,

Industry

we generally expect that railcars will become more efficient and capable of carrying larger loads with better ride quality and lower repair and operating costs. We believe that as customers replace aging fleets and expand the number of railcars in use to meet higher shipping demand, they make new railcar purchasing decisions based not only on price and delivery time, but also on key performance characteristics.

The following chart identifies the composition, by percentage, of the U.S. railcar fleet in 2003, and indicates that among all the different railcar types, covered hopper railcars and tank railcars represented the two largest categories of the U.S. railcar fleet.

Composition of 2003 U.S. Railcar Fleet


Source:	Association of American Railroads

NORTH AMERICAN RAILCAR COMPONENTS AND SERVICES INDUSTRIES

Manufacturers of railcar components are primarily comprised of railcar manufacturers, some of which produce components solely for internal use, while others produce railcar components for sale to outside customers, as well as non-railcar manufacturers.

Railcar support services are an important part of the railcar industry. Railcar services include maintenance and repair, cleaning, painting and lining, engineering services and the management of customers’ railcar fleets. Maintenance and repair facilities may be fixed locations near railroad lines or operate as mobile units designed to service railcars at customer locations.

NORTH AMERICAN RAILCAR INDUSTRY DYNAMICS AND TRENDS

The 1980 Staggers Rail Act ended more than 100 years of government rail industry regulation and dramatically transformed the railcar industry in North America. The deregulation enabled railroads to regain market share lost to the trucking industry over the years and resulted in a wave of industry consolidation. The number of Class I railroads, the grouping of the largest railroads based on operating revenue, dropped from 22 in 1980 to seven today while the volume of goods transported on the U.S. rail system increased from 1.5 billion tons in 1980 to 1.8 billion tons in 2003, according to the Association of American Railroads.

Industry

Railroad industry deregulation also prompted a series of consolidations among railcar manufacturers and more efficient fleet management, which resulted in a reduction of the total U.S. railcar fleet size from 1.7 million railcars in 1980 to 1.2 million railcars in 1995.

The following chart reflects the size of the railcar fleet in the United States, which represents the majority of the North American railcar fleet, from 1994 to 2003.

Historical U.S. Railcar Fleet


Source:	Association of American Railroads—Railroad Facts 2004

Cyclical nature of the North American railcar market and outlook for North American railcar demand

The North American railcar market is highly cyclical and trends in the railcar manufacturing industry are directly affected by the level of activity in the North American economy. When the economy is in a period of sustained growth, railcar users generally tend to increase the size of their fleets and replace older railcars with newer railcars or railcars with greater capacity and durability. Conversely, when the economy slows down, these companies generally delay investment in new railcars and increase the utilization rates of railcars already in use, keeping them in service for longer periods. The North American railcar market is also affected by the level of international trade activity, as railroads are also used to transport imported and exported goods to and from ports. In addition, supplies of materials, such as steel, as well as key railcar components, such as heavy castings and wheels, are constrained from time to time, which limits the production capacity of companies in the railcar manufacturing industry and results in further cyclical fluctuations.

As illustrated by the chart below, railcar demand was at a high in the late 1970s due, in particular, to the preferential tax treatment attributed to railcars under then-existing tax laws. The Tax Reform Act of 1981, which eliminated the preferential tax treatment of railcars beginning in 1983, as well as the economic recession in the early 1980s, led to low levels of railcar production through most of the 1980s. However, during most of the 1990s, increased general economic activity and higher import levels led to an increase in railcar deliveries. In addition, after a period of consolidation in the railroad industry, railroads suffered from integration difficulties, poor railcar utilization and aging fleets. We believe that railroads responded by ordering additional railcars, which led to a significant increase in railcar deliveries in 1998 and 1999. This period of peaking orders ended in 2000 and 2001 as slowing

Industry

economic growth, a recovery in railroad operating efficiency and transportation disruption related to the September 11 ^th terrorist attacks pushed 2002 deliveries of new railcars down to 17,714 railcars, according to the Railway Supply Institute.

In 2003, the industry began to recover from the downturn and demand for new railcars started to increase. A total of 46,871 railcars were delivered in 2004 and industry backlog stood at 58,677 railcars at December 31, 2004. A total of 50,682 railcars have been delivered during the first nine months of 2005 and industry backlog stands at 60,986 railcars as of September 30, 2005. The following chart illustrates annual North American deliveries of railcars since 1978 and projected annual North American railcar deliveries through 2010, according to the Railway Supply Institute and Global Insight’s Freight Car Outlook Third-Quarter, 2005, respectively.

Railcar Annual Deliveries


Source:	Railway Supply Institute and Global Insight’s Freight Car Outlook Third-Quarter 2005

Strong near term demand for railcars

Following a period of economic weakness from 2001 to 2003, we believe leasing companies, shippers and railroads that have deferred new railcar purchases and equipment maintenance are poised to expand and service their fleets in response to growing demand for railroad shipping. Global Insight’s Freight Car Outlook Third-Quarter, 2005 anticipates delivery of 66,043 new railcars in 2005 and average annual deliveries of 59,400 railcars per year from 2005 through 2010.

Industry

The following chart sets forth the historical backlog for the North American railcar industry:

Historical North American Railcar Backlog by Quarter


Source:	Railway Supply Institute

Positive long term demand fundamentals

Over the long term, we expect increased U.S. economic activity to drive growth in railroad shipment and new railcar purchases. Global Insight’s Freight Car Outlook Third-Quarter 2005 forecasts continued gains in rail freight usage, with 1.6% growth in railcar loads during 2005, 1.7% growth in railcar loads in 2006 and 1.7% to 0.8% annual growth in railcar loads from 2007 to 2010. Under normal circumstances, railcars generally need to be refurbished or replaced after 30 to 35 years of use. We believe that, historically, the useful life of tank railcars has been shorter, ranging from 25 to 30 years of use. Railcars used at a higher than average rate may require replacement in a shorter period of time. In some cases, advances in technology and efficiency or new regulations may require railcars with remaining useful life to be replaced. We believe demand for replacement railcars will be strong over the long term as approximately 50% of all railcars in use are over 20 years old.

Trends impacting covered hopper railcars

Covered hopper railcars constitute the largest of all railcar segments in terms of numbers of railcars in use. Covered hopper railcars are used primarily to transport cargo such as cement, plastic pellets, grain and dry fertilizer. Demand for covered hopper railcars has shown renewed strength due to increased shipments of a variety of products including plastics, chemicals and foods. According to the Railway Supply Institute, 5,602 covered hopper railcars were delivered in 2004. We believe manufacturing activity across a variety of sectors will continue to drive demand for covered hopper railcars through 2005 and 2006. In addition, we believe increasing ethanol production will continue to drive the volume of corn shipments transported in covered hopper railcars. The U.S. Department of Agriculture’s Baseline Projections to 2014 dated February 2005 forecasts a 9% increase in corn production from 2005 to 2010, largely attributable to demand for corn in ethanol production.

Over the long term, Global Insight’s Freight Car Outlook Third-Quarter 2005 forecasts strong demand for covered hopper railcars driven by continued growth of the U.S. economy, higher production for a number of consumer and business durable goods, increasing domestic and international demand for

Industry

U.S. agricultural products, increasing ethanol production and replacement of aging railcars. As shown by the chart below, Global Insight’s Freight Car Outlook Third-Quarter 2005 forecasts deliveries of covered hopper railcars will reach 14,927 in 2005 and 16,926 in 2006, and will average more than 15,800 deliveries per year from 2007 through 2010. These forecasts illustrate a significant projected increase from the 5,602 covered hopper railcars delivered in 2004 and the 3,801 covered hopper railcars delivered in 2003.

Historical and Projected Covered Hopper Railcar Deliveries


Source:	Railway Supply Institute and Global Insight Freight Car Outlook Third-Quarter 2005

Trends impacting tank railcars

Orders of tank railcars are being driven in part by the advanced age of the current North American tank railcar fleet. In 2004, 8,939 tank railcars were delivered, according to Global Insight’s Freight Car Outlook Third-Quarter 2005. Tank railcars primarily are used to transport liquid and gaseous products, such as chemicals, liquid fertilizers and petroleum products. Tank railcars, like covered hopper railcars, are also in higher demand in North America as manufacturing activity, and the need for liquids and gases used in manufacturing, increases. We believe expansion of the ethanol sector as well as strong consumer demand for petrochemicals, edible oils, lubricating oils, liquid propane and liquid food products also positively impact tank railcar shipments.

Based on Global Insight’s Freight Car Outlook Third-Quarter 2005 projections, tank railcar deliveries are expected to increase to 11,069 railcars in 2005 and 11,075 railcars in 2006 and will average approximately 9,900 deliveries per year from 2007 through 2010. In comparison, the number of tank railcars delivered in North America was 8,939 in 2004 and 8,176 in 2003.

The tank railcar market is a more difficult market to enter compared to other railcar types. The manufacturing of tank railcars is highly regulated and their production requires a specially trained workforce and dedicated manufacturing facilities. As a result, competition in the tank railcar market is concentrated. Production of tank railcars is also very labor intensive compared to production of other railcars. Due to domestic supply constraints, tank railcar manufacturers have experienced difficulties in obtaining normalized steel plate, which is an essential specialty material used in the production of many types of tank railcars.

Industry

The following chart shows historical tank railcar deliveries in 2003 and 2004 and projected tank railcar deliveries through 2010.

Historical and Projected Tank Railcar Deliveries


Source:	Railway Supply Institute and Global Insight Freight Car Outlook Third-Quarter 2005

Business

OVERVIEW

Our primary customers include companies that purchase railcars for lease by third parties, or leasing companies, industrial companies that use railcars for freight transport, or shippers, and Class I railroads. Over the past five years, our largest leasing company customers included ACF Industries LLC, ARL, CIT, GATX Rail Corporation, GE Capital Corporation, The Greenbrier Companies and Union Tank Car Company and our largest shipper customers included Dow Chemical Company, Engelhard Corporation, Exxon Mobil Corporation, Lyondell Chemical Company and Solvay America, Inc. Our major railroad customers over the past five years included TTX and Union Pacific. In servicing this customer base, we believe our integrated railcar repair and refurbishment and fleet management services and our railcar components manufacturing business help us further penetrate the general railcar manufacturing market. These products and services provide us with significant cross-selling opportunities and insights into our customers’ railcar needs that we use to improve our products and services and enhance our reputation for high quality. Although we build, service and manage railcars through an integrated, complementary set of products and services, we have chosen not to offer railcar leasing services so that we do not compete with our leasing company customers, which represent a significant portion of our revenues.

For the years ended December 31, 2003 and 2004, we generated total revenues of $218.0 million and $355.1 million and net earnings of $1.1 million and $1.9 million, respectively. For the nine months ended September 30, 2004 and 2005, we generated revenues of $254.3 million and $442.1 million and net earnings of $2.9 million and $14.5 million, respectively. As of September 30, 2005, our total railcar backlog was 15,567 railcars, compared to a total railcar backlog of 5,653 railcars as of September 30, 2004. On July 29, 2005, we entered into an agreement with CIT, under which CIT has agreed to purchase from us, during the 2006 to 2008 period, 9,000 to 12,000 railcars, subject to negotiated terms and conditions. See “—Backlog.”

OUR HISTORY

Since our formation in 1988, we have grown our business from being a small provider of railcar components and maintenance services to one of North America’s leading integrated providers of railcars, railcar components, railcar maintenance services and fleet management services. In October 1994, we acquired railcar components manufacturing and railcar maintenance assets from ACF Industries, Incorporated (now known as ACF Industries, LLC), or ACF, a company controlled by Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors. Through this acquisition, we also hired members of ACF’s management, many of whom, including our president, remain a significant part of our current management team. These executives brought with them established relationships with important customers and suppliers and extensive industry knowledge, as ACF and its predecessor companies have roots in the railcar manufacturing industry that trace back to 1873. Led by this management team, we entered the railcar manufacturing business through the construction of new manufacturing facilities.

Business

manufacture many other types of railcars at this facility. The Paragould facility initially had two railcar manufacturing lines. We added painting and lining capabilities to this facility in 1999 and a third manufacturing line in December 2004. We are currently constructing additional painting and lining capabilities at our Paragould facility to increase efficiency, which we expect to open at the end of 2005. Our Paragould facility also features component manufacturing capabilities. We manufactured 20,455 railcars at our Paragould facility, mostly covered hopper railcars, through September 30, 2005. We can manufacture up to 30 railcars a working day at this facility.

In January 2000, we produced our first railcar at our Marmaduke, Arkansas manufacturing facility. We manufacture tank railcars at this facility. The design of this facility enables us to manufacture many different types of tank railcars at the same time. We manufactured 6,373 tank railcars at our Marmaduke facility through September 30, 2005. We can manufacture up to 10 railcars a working day at this facility.

OUR BUSINESS STRENGTHS AND COMPETITIVE ADVANTAGES

We believe that the following key business strengths and competitive advantages will contribute to our growth:

Leading railcar manufacturer with focus on the covered hopper and tank railcar markets

We are a leading North American manufacturer of covered hopper and tank railcars. Over the last three years, we believe we have produced an estimated 33% of the covered hopper railcars and an estimated 16% of the tank railcars delivered in North America. Based on the Association of American Railroads Railroad Facts 2004 Report, these represent the two largest segments of the North American railcar industry, with covered hopper railcars representing approximately 30% and tank railcars representing approximately 19% of the total North American railcar fleet, based on the number of railcars in service. We believe our railcars are differentiated by their superior quality, innovation and reliability.

Modern non-union, low cost railcar manufacturing facilities in strategic locations

Unlike many of our competitors, we manufacture all of our railcars in modern facilities built in the last ten years. We believe our Paragould and Marmaduke, Arkansas railcar production facilities to be the newest covered hopper and tank railcar production plants in North America. We designed these facilities to provide manufacturing flexibility and allow for the production of a variety of railcar sizes and types. We strategically located these facilities in close proximity to our main customers and suppliers. This reduces freight time and costs for the components we purchase and the time for delivery of completed railcars. Over the past several years, we have increased our production capacity

Business

and efficiency and reduced our costs per railcar through a number of targeted operational improvements, which has also reduced the amount of raw materials necessary for production of railcars. We emphasize flexibility in our employees’ training and, consequently, our employees frequently move both between locations on manufacturing lines and among our different manufacturing facilities. Currently, none of our over 1,100 employees at our Paragould and Marmaduke facilities are represented by a union. However, employees of three of our repair facilities and one of our component manufacturing facilities, representing 16% of our total workforce as of September 30, 2005, are represented by a union.

Preferred access to components through in-house production, a joint venture and strategic sourcing arrangements

We produce many of the components necessary to our railcar manufacturing business ourselves and we own a one-third interest in, and our management team operates, our Ohio Castings joint venture from which we obtain certain other components. We believe our in-house production capabilities and our involvement in this joint venture help us maintain access to components at competitive prices, despite industry-wide shortages of these potentially capacity constraining components. We also have developed and actively maintain strategic sourcing arrangements and strong relationships with our suppliers. These arrangements and relationships help ensure our continued access to critical components and raw materials we use to produce railcars, including steel, wheels and heavy castings. We also have recently entered into an agreement to diversify our supply of steel. We believe our attention to strengthening our supply chain helps us maintain operational continuity and high production levels.

Integrated railcar repair and refurbishment and fleet management services complement railcar manufacturing

We provide a wide array of complementary products and services to the railcar industry. Unlike some other railcar manufacturers, we also repair, maintain and provide fleet management services for existing railcars, including railcars built by others, and manufacture railcar components for third parties and us. We believe this diverse product and service offering provides us with a competitive advantage relative to other railcar manufacturers, primarily in the form of cross-selling opportunities with respect to our repair and fleet management services. For example, customers of our repair business that have experienced problems with our competitors’ railcars have transferred railcar orders to us after our repair workers were able to identify the benefits of our railcars compared to our competitors’. We also believe that our ability to address the needs of our customers throughout the lifecycle of a railcar enhances our customer relationships and provides us with additional growth opportunities and unique insights into industry trends. As of September 30, 2005, we have approximately 57,000 railcars under management.

Strong relationships with a long-term customer base

We believe that our customers value our products and services. Many of our major customers have been doing business with us for a number of years, including CIT, Dow Chemical Company, GE Capital Corporation and Solvay America, Inc. Many of our customers have demonstrated a willingness to purchase several different types of our products and services over time. For example, GE Capital Corporation purchases pressure and non-pressure tank railcars, covered hopper railcars and fleet management services from us and The CIT Group, Inc. purchases our tank railcars as well as cement, grain, sugar and plastic pellet covered hopper railcars. We believe we deliver high quality products and services to our customers with low operating and maintenance costs, while maintaining what we believe are low levels of warranty claims.

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Strong management team with long-standing industry experience

We have an experienced senior operations management team that has an average of over 25 years of experience in the railcar and related manufacturing industries. Our senior operations management team, including our president, James J. Unger, has been with us since we began manufacturing railcars. This team conceived and built our Paragould and Marmaduke railcar manufacturing facilities and has been responsible for growing our revenues from $80.9 million in 1994 to $355.1 million in 2004. We believe our management successfully managed our business during the most recent cyclical downturn in the railcar manufacturing industry while positioning us to capitalize on the current upturn in our industry. Members of our management, in particular our president, Mr. Unger, have risen to leadership roles on a number of prominent industry committees and associations, which provide us with insight into the railcar industry, trends and customer needs. We believe our active participation in industry committees and associations strengthens our relationships with our customers and suppliers and increases our profile and reputation in the North American railcar market.

OUR STRATEGY

The key elements of our business strategy are as follows:

Maintain and expand presence in covered hopper and tank railcar markets

We intend to maintain and expand our presence in the covered hopper and tank railcar markets by continuing to deliver high quality and innovative products. We believe our excellent customer relationships have enabled us to identify market demands that we then target through our product development and marketing efforts. We intend to continue the close collaboration between our customers and our engineering, marketing, operations and management personnel to meet demand and, where appropriate, to selectively expand production capacity.

Continue to improve operating efficiencies

We intend to build on the success of our production initiatives at our Paragould and Marmaduke railcar manufacturing facilities and plan to continue to identify opportunities to enhance operating efficiencies across these and our other manufacturing facilities. These opportunities include our continued streamlining of our manufacturing processes and our quality control initiatives. For example, we believe the additional painting and lining capabilities we are currently constructing at our Paragould facility will reduce costs and further increase our manufacturing efficiency and will speed delivery of our products to our customers. We also intend to continue the efforts of our design cost reduction team, formed in 2003, which has already significantly reduced our railcar production costs through standardization of components used in our railcars, implemented design changes to reduce the amount of raw material required for our railcars, and improved manufacturing techniques that reduce our labor requirements. These efforts should allow us to reduce our costs and maintain competitive prices.

Continue to grow railcar service and fleet management businesses and increase sales of railcar and industrial components

As the existing North American railcar fleet continues to age, we anticipate increased demand for maintenance and repair services and railcar components used in the maintenance and repair of railcars. Additionally, we expect growing demand for our fleet management services as ownership of railcars continues to shift away from the railroads and toward the shippers and leasing companies, which often outsource their fleet management activities to third-party service providers such as us. We intend to

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capitalize on these trends and we believe we are well positioned to provide increased services through our strategically located network of railcar repair and service facilities.

Leverage manufacturing expertise to selectively expand product portfolio

We may seek to expand our product portfolio to other selected types of railcars. Our management designed and constructed our Paragould manufacturing facility to be able to produce most railcar types, and we believe our adaptive production lines and flexible employees are able to shift production among various railcar types with minimal interruption to our operations. For example, we have in the past produced centerbeam platform railcars and may in the future produce other types of railcars, including various intermodal railcars, such as the innovative platform railcar. In addition, as the existing fleet of North American railcars is aging, expansion of our product portfolio into new railcar types will allow us to grow our business by capturing a portion of the natural replacement demand for existing railcar types. Our ability to produce other types of railcars positions us to respond to customer requests for production outside of our traditional markets and provides us additional manufacturing flexibility in the event the covered hopper or tank railcar markets weaken.

Selectively pursue strategic external growth opportunities

By significantly reducing our debt through this offering and with the establishment of a public market for our common stock, we believe we will have increased financial flexibility to supplement internal growth with select acquisitions, alliances or joint ventures. We also believe our in-house fabrication of railcar components and our Ohio Castings joint venture provide us with competitive advantages and we intend to enhance these advantages by selectively acquiring or establishing strategic relationships with railcar components manufacturers and suppliers of critical raw materials. Successful acquisitions of or collaborations with these manufacturers and suppliers should help mitigate the risk of supply shortages of key components and raw materials we need for our business. While we have in the past engaged in preliminary discussions with certain parties regarding potential strategic acquisitions, alliances or joint ventures, as of the date of this prospectus, we are not currently engaged in any such discussions and do not have any commitments to enter into any acquisition, alliance or joint venture. We may also seek to expand our railcar components business into international markets on an opportunistic basis.

OUR PRODUCTS AND SERVICES

We design and manufacture special, customized and general purpose railcars and a wide range of components primarily for the North American railcar and industrial markets. We also support the railcar industry through a variety of integrated railcar services, including repair, maintenance, consulting, engineering and fleet management services.

Manufacturing

We manufacture two primary types of railcars, covered hopper railcars and tank railcars. Our revenues attributable to our railcar manufacturing operations were approximately $108.2 million, $154.7 million and $265.8 million in 2002, 2003 and 2004, respectively, and were approximately $357.2 million for the nine months ended September 30, 2005. These revenues represented 64%, 71% and 75% of our total revenues in 2002, 2003 and 2004, respectively, and represented 81% of our total revenues for the nine months ended September 30, 2005.

Covered hopper railcars. We believe we are a leading manufacturer of covered hopper railcars in North America. We manufacture both general service and specialty covered hopper railcars. Our general service covered hopper railcars have capacities ranging from 3,200 to 6,500 cubic feet and

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primarily carry plastic pellets, cement, grain and other food products, soda ash and other dry granular products. Our specialty covered hopper railcars, which include our Pressureaide covered hopper railcar, have capacities ranging from 3,300 to 5,750 cubic feet and use air pressure to assist unloading. Our specialty covered hopper railcars primarily carry flour, clays, food and industrial grade corn starches. Revenues attributable to sales of our covered hopper railcars were approximately $61.9 million, $82.2 million and $84.8 million in 2002, 2003 and 2004, respectively, and were approximately $190.8 million for the nine months ended September 30, 2005. These revenues represented 37%, 38% and 24% of our total revenues in 2002, 2003 and 2004, respectively, and represented 43% of our total revenues for the nine months ended September 30, 2005. We sold 1,053, 1,343 and 1,507 covered hopper railcars in 2002, 2003 and 2004, respectively, and 2,759 covered hopper railcars in the nine months ended September 30, 2005.

All of our covered hopper railcars may be equipped with varying combinations of hatches, discharge outlets and protective coatings to provide our customers with a railcar designed to perform in precise operating environments. The flexible nature of our covered hopper railcar design allows it to be quickly modified to suit changing customer needs. This flexibility can continue to provide value after the initial purchase because our railcars may be converted for reassignment to other services or customers. We provide a range of coatings to protect the railcar and the shipper’s product against corrosion and product contamination. We build carbon steel and stainless steel covered hopper railcars.

Our covered hopper railcars are specifically designed for shipping a variety of dry bulk products, from light density products, such as plastic pellets, to high density products, such as cement. Some of our covered hopper railcars have a three curve cross section. Depending upon the equipment on the railcars, they can operate in either a gravity or vacuum pneumatic unloading environment. Since its introduction, we have improved our Center Flow line of covered hopper railcars to provide protection for a wide range of dry bulk products and to enhance the associated loading, unloading and cleaning processes. Examples of these improvements include new and better design of the shape of the railcars, joint designs, outlet mounting frames and loading hatches and discharge outlets, which enhance the cargo loading and unloading processes.

We have several versions of our covered hopper railcar that target specific customers and specific loads, including:


4	Plastic Pellet Railcars. These railcars are designed to transport, load and unload plastic pellets under precise specifications to preserve the purity of the load. Slight imperfections in the railcars transporting such goods or in the components that load and unload them can ruin an entire load. If plastic pellets within a load become tainted, the imperfection will likely persist during the conversion of the plastic pellets into end-products. An example of such cargo would be food grade plastic pellets used in the production of milk bottles and other food containers.

4	Cement Railcars. Cement loads are heavier than many other loads of comparable volume, and therefore cement railcars are smaller in size to compensate for the weight. As a consequence, we can build more cement covered hopper railcars per day than we can any other railcar we manufacture. Our cement railcars typically have capacities of 3,250 cubic feet and are built with two lading compartments, compared to, for example, our plastic pellet railcars, which typically have capacities of up to 6,224 cubic feet and are built with four compartments.

4	Pressureaide Railcars. Our Pressureaide railcar is targeted towards the bulk powder markets. Pressureaide railcars typically handle products such as clays, industrial and food grade starches and flours. We build our Pressureaide railcars in capacities ranging from 3,300 cubic feet to as large as 5,750 cubic feet. They operate with internal pressures up to 14.5 pounds per square inch, which expedites unloading, and are equipped with several safety devices, such as pressure relief valves, a rupture disc and a vacuum relief valve.

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Tank railcars. We manufacture non-pressure and high pressure tank railcars. Our non-pressure tank railcars have capacities ranging from 14,000 to 30,000 gallons and are flexibly designed to enable the handling of a variety of commodities including petroleum products, ethanol, asphalt, vegetable oil, corn syrup and other food products. Our high pressure tank railcars have capacities ranging from 13,500 to 33,600 gallons and transport products that require a pressurized state due to their liquid, semi-gaseous or gaseous nature, including chlorine, anhydrous ammonia, liquid propane and butane. Most of our pressure tank railcars feature a thicker pressure retaining inner shell that is separated from a jacketed outer shell by layers of insulation, thermal protection or both. Our pressure tank railcars are made from specific grades of normalized steel that are selected for toughness and ease of welding. Most of our tank railcars feature a sloped bottom tank that improves the flow rate of the shipped product and provides improved drainage. Many of our tank railcars feature coils that are steam-heated to decrease cargo viscosity, which improves the transported product’s flow rate and speeds unloading. We can alter the design of our tank railcars to address specific customer requirements. Revenues attributable to sales of our tank railcars were approximately $46.2 million, $72.2 million and $111.3 million in 2002, 2003 and 2004, respectively, and were $113.8 million for the nine months ended September 30, 2005. These revenues represented 27%, 33% and 31% of our total revenues in 2002, 2003 and 2004, respectively, and represented 26% of our total revenues for the nine months ended September 30, 2005. We sold 713, 1,209 and 1,637 tank railcars in 2002, 2003 and 2004, respectively, and 1,436 tank railcars in the nine months ended September 30, 2005.

Component manufacturing. We believe we are an industry leader in the design and manufacture of custom and standard railcar components. We manufacture over 300 different components for the North American railcar industry. Our products include hitches for the intermodal market, tank railcar components and valves, discharge outlets for covered hopper railcars, manway covers and valve body castings, and outlet components and running boards for industrial and railroad customers. We manufacture a variety of outlet types for our covered hopper railcars that we also sell to other railcar manufacturers. We use these components in our own railcar manufacturing and also sell them to third parties, including our competitors. Sales of our railcar components to third parties were approximately $9.2 million, $9.8 million and $15.0 million in 2002, 2003 and 2004, respectively, and were approximately $21.3 million for the nine months ended September 30, 2005. Revenues attributable to these sales represented 5%, 4% and 4% of our total revenues in 2002, 2003 and 2004, respectively, and represented 5% of our total revenues for the nine months ended September 30, 2005.

We also manufacture aluminum and special alloy steel castings that we sell primarily to industrial customers. These products include castings for the trucking, construction, mining and oil and gas exploration markets, as well as finished, machined aluminum castings, other custom machined products and commercial mixing bowls. Sales of our industrial components were approximately $21.1 million, $23.7 million and $35.6 million in 2002, 2003 and 2004, respectively and were approximately $30.4 million for the nine months ended September 30, 2005. Revenues attributable to these sales represented 13%, 11% and 10% of our total revenues in 2002, 2003 and 2004, respectively, and represented 7% of our total revenues for the nine months ended September 30, 2005.

Railcar services

Our primary railcar services are railcar repair and refurbishment and railcar fleet management services. Our primary customers for these services are leasing companies and shippers. We can service the entire railcar fleets of our customers, including railcars manufactured by other companies. Some of our customers use both our railcar repair and refurbishment business and our fleet management services. We often provide these preferred customers with expedited repair services to strengthen our overall customer relationships. Our railcar services provide us insights into our customers’ railcar needs that we can use to improve our products. These services create new customer relationships and enhance

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relationships with our existing customers. Our revenues from our railcar services operations were approximately $30.4 million, $29.9 million and $38.6 million in 2002, 2003 and 2004, respectively, and were approximately $32.9 million for the nine months ended September 30, 2005. These revenues represented 18%, 14% and 11% of our total revenues in 2002, 2003 and 2004, respectively, and represented 7% of our total revenues for the nine months ended September 30, 2005.

Railcar repair and refurbishment. Our railcar repair and refurbishment services include light and heavy railcar repairs, exterior painting, interior lining application and cleaning, tank and safety valve testing, railcar inspections, wheel replacement and conversion or reassignment of railcars from one purpose to another. We support our railcar repair and refurbishment services customers through a combination of full service repair shops, mobile repair units and mini-shop locations. Our repair shops, like our manufacturing facilities, are strategically located near major rail lines used by our customers and suppliers and close to some of the major industries we serve. Revenues attributable to our railcar repair and refurbishment service operations were approximately $28.0 million, $26.6 million and $33.6 million in 2002, 2003 and 2004, respectively, and were approximately $27.6 million for the nine months ended September 30, 2005. These revenues represented 17%, 12% and 10% of our total revenues in 2002, 2003 and 2004, respectively, and represented 6% of our total revenues for the nine months ended September 30, 2005.

Railcar fleet management. As of September 30, 2005, we manage approximately 57,000 railcars for various customers, including approximately 22,000 for ARL, a leasing company controlled by affiliates of Carl C. Icahn. Revenues attributable to our fleet management services were approximately $2.4 million, $3.3 million and $5.0 million in 2002, 2003 and 2004, respectively, and were approximately $5.3 million for the nine months ended September 30, 2005. These revenues represented 1%, 2% and 1% of our total revenues in each of 2002, 2003 and 2004, respectively, and represented 1% of our total revenues for the nine months ended September 30, 2005. Some of the principal features of our railcar fleet management services business include:


4	Mileage accounting. Some customers elect to receive mileage payments to offset freight charges. Mileage is paid for loaded miles moved and calculated based on published rates. We collect and audit the railroads’ mileage calculations to ensure our customers receive the funds they are due.

4	Rolling stock taxes. States and localities impose taxes on railcars calculated based upon mileage reporting. We file the required tax forms with the state and local taxing authorities. We audit the tax invoices received to determine whether the assessments are accurate.

4	Regulatory compliance. Our regulatory compliance support services help customers maintain their railcar fleets in compliance with applicable regulations. As regulations change, we help our customers manage the associated requirements and costs. We analyze new fleets for which we provide fleet management services to identify areas of noncompliance with applicable U.S. rail regulations and determine corrective actions.

4	Engineering services. Our engineering support services help customers manage their regulatory compliance and documentation. We provide procedures and consultation for railcar repairs to address integrity and compliance.

4	Field engineering services. We provide on-site evaluation and implementation of significant engineering design changes for our customers.

4	Online service access. Our web-based systems allow our customers to view information on their railcar fleet online. The data we maintain includes mechanical and regulatory information, historical costs and repair detail and the status of repairs.

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4	Maintenance planning. We forecast our customers’ railcar maintenance needs and suggest schedules for repair service and refurbishment. This helps to ensure better fleet utilization and more effective maintenance cycles.

MANUFACTURING

Our principal railcar manufacturing facilities are located in Paragould and Marmaduke, Arkansas. We built these facilities in 1995 and 1999, respectively, on previously undeveloped sites. These facilities employ non-unionized work forces and are strategically located in close proximity to our major customers and suppliers, which decreases our freight costs and railcar delivery times. These facilities provide us the flexibility to produce a variety of railcars and enable us to quickly shift production from one railcar type to another railcar type. Through September 30, 2005, we have manufactured 20,455 railcars at our Paragould facility and 6,373 railcars at our Marmaduke facility.

We manufacture all of our covered hopper railcars at our Paragould facility. We successfully launched a third manufacturing line at Paragould in December 2004. Based on our current backlog, we plan to produce an average of approximately 24 railcars a working day at this facility. We manufacture all of our tank railcars at our Marmaduke, Arkansas facility. Based on our current backlog, we plan to produce an average of approximately 7.5 railcars a working day at this facility. Our actual daily production at both of these facilities will depend on the mix of railcar types being manufactured and the availability of raw materials and components. In 2004, we manufactured 2,747 railcars at our Paragould facility and 1,637 railcars at our Marmaduke facility. We also have the manufacturing ability to produce other types of railcars. For example, in the past we have manufactured centerbeam platform railcars used to transport building products.

We believe that we sustain product quality throughout each railcar manufacturing facility by employing uniform, quality tools and equipment. Our production lines are able to produce a variety of railcars to satisfy changing customer preferences and our tooling and plant layouts were constructed to enable quick changeover. We currently can manufacture up to three different types of railcars simultaneously at our Paragould facilities and many different types of tank railcars simultaneously at our Marmaduke facility. We believe our quality products and modern manufacturing processes contribute to our low incidence of warranty claims. Our warranty claims for railcars produced at our Paragould and Marmaduke facilities were approximately $0.3 million, $0.4 million and $0.1 million in 2002, 2003 and 2004, respectively, and were approximately $0.5 million for the nine months ended September 30, 2005.

We designed our Paragould and Marmaduke facilities to provide manufacturing flexibility and allow for the production of a variety of railcar sizes and types. Examples of our production flexibility include:


4	our ability to manufacture several types of railcars at our Paragould facility; for example, the Paragould facility recently finished an order of centerbeam platform railcars, and quickly converted to covered hopper railcar production upon completion of that order;

4	our two parallel, vertically-tiered manufacturing tracks at Paragould allow workers on these two tracks to share tools and equipment and allow multiple components of the same railcar to be produced simultaneously;

4	our welding machines, which are purposefully smaller than many other industrial welding machines, allow our welders greater freedom of movement, which, in turn, we believe increases production speed;

4	our automated painting lance helps ensure proper interior coating in a single application and we believe is faster and produces greater consistency than manual coating;

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4	our grit-blasting is conducted by automated, oscillating machinery, which we believe is superior to and more efficient than alternative techniques, including static manual blasting;

4	our ability to rotate railcars 360 degrees eases and speeds specific steps in the production line, such as complicated welding steps that would otherwise need to be performed from difficult and possibly dangerous angles;

4	our horizontal manufacturing lines at our Marmaduke facility allow individual tank railcars to be taken in and out of the production line for additional attention, without the need to stop the plant’s entire production process;

4	our proprietary outer-jacket coiling process allows us to insulate our tank railcars at our facility;

4	our force curing technique helps eliminate impurities, smell and residue remaining in railcars following the painting and lining steps, which we use primarily for railcars designed to transport food products;

4	our tracked loading and unloading points decrease the indirect labor required to move raw materials and components into our facilities and finished products out of our facilities; and

4	our integrated painting, railcar truck assembly and fabrication shops eliminate downtime in our production process.

In addition, we believe our management and operation of these facilities help reduce our operating costs, some examples of which include:


4	our decentralized management, including a salaried-to -hourly employee ratio of one to 14;

4	our proactive safety program, which features weekly meetings of safety sub-committees on which our hourly and salaried employees participate and voluntarily establish safety rules that frequently exceed regulatory and industry minimum requirements; our safety program has helped contribute to low incidences of accidents requiring lost production time at our facilities; and

4	our flexible workforce allows our employees to frequently move both between locations on production lines, such as welding and small components fabricating positions, and among our different manufacturing facilities.

CUSTOMERS

We have strong long-term relationships with many large purchasers of railcars. Long-term customers are particularly important in the railcar industry, given the limited number of buyers and sellers of railcars, and railcar manufacturers’ desire constantly to maintain adequate backlog and manufacture at full capacity.

Our railcar customer base consists mostly of U.S. shippers, leasing companies and railroads. Over the past five years, our largest leasing company customers included ACF Industries LLC, The CIT Group, Inc., GATX Rail Corporation, GE Capital Corporation, The Greenbrier Companies and Union Tank Car Company and our largest shipper customers included Solvay America, Inc., Dow Chemical Company, Engelhard Corporation, Exxon Mobil Corporation and Lyondell Chemical Company. Our major railroad customers over the past five years included TTX and Union Pacific. Over the last five years, our largest customers of railcar repair and refurbishment services included ACF and ARL, affiliates of Carl C. Icahn, The CIT Group, Inc., Lyondell Chemical Company and PPG Industries, Inc. Over the last five years, our largest fleet management services customers included ACF, ARL and PLM Transportation. Over the last five years, our largest customers for railcar components included ACF, GE Capital Railcar, Olin Corporation, Trinity Industries, Inc. and TTX Company. Over the last

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five years, our largest customers for industrial parts included ABB Vetco Gray, Dresser Industries, Inc., KF Industries, Inc., McKissick Products and Stream Flo Industries, Ltd.

In 2004, The CIT Group, Inc. accounted for approximately 16% of our revenues, The Greenbrier Companies accounted for approximately 20% of our revenues, and ACF and ARL collectively accounted for approximately 23% of our revenues. In 2004, sales to our top ten customers accounted for approximately 79% of our revenues. Sales to The Greenbrier Companies, another railcar manufacturer, were under a contract for centerbeam platform railcars that is now complete. We do not anticipate significant sales to The Greenbrier Companies in the future. ARL and ACF are affiliates of Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors.

While we maintain strong relationships with our customers, many customers do not purchase railcars from us every year because railcar fleets are not necessarily replenished or augmented every year. The size and frequency of railcar orders often results in a small number of customers representing a significant portion of our sales in a given year. See “Risk factors—Risks related to our business—We depend upon a small number of customers that represent a large percentage of our revenues. The loss of any single customer, or a reduction in sales to any such customer, could have a material adverse effect on our business, financial condition and results of operations.”

SALES AND MARKETING

We sell and market our products in North America through our sales and marketing staff, including sales representatives who sell directly to customers, catalogs through which our customers have access to our railcar components, and our web site, through which customers can order specialty components. We have seven employees devoted to sales and marketing efforts for our railcar manufacturing, components manufacturing and fleet management services who operate from our corporate headquarters in St. Charles, Missouri and, for our railcar repair business, from a service office located in Houston, Texas. In addition, ARL and ACF, affiliates of Carl C. Icahn, in connection with their own leasing sales activities have, from time to time, referred their customers and contacts to us that prefer to purchase, rather than lease, railcars. At this time, there is no formal arrangement with, or compensation of, ARL and ACF for any referrals that result in sales of railcars.

The sales process for our products and services is often multi-level, involving a team comprised of individuals from sales, marketing, engineering, operations and senior management. Each significant customer is assigned a team that engages the customer at different organizational levels to provide planning and product customization and to assure open communications and support. Our marketing activities also include participation in trade shows, publication of articles in trade journals, participation in industry forums and distribution of sales literature.

There is significant overlap between our railcar manufacturing, railcar components and fleet services customers. Our presence in each market increases our opportunities to gain market share in each of the other markets. Our access to competitors’ railcars through our components and railcar repair and maintenance businesses further increases our opportunities to identify and address customer needs.

PRODUCT DEVELOPMENT

Our engineering, marketing, operations and management personnel have developed collaborative relationships with many of their customer counterparts and have used these relationships to identify market demands and target our product development to meet those demands. Our product development costs are reflected in our general, selling and administrative expenses. From time to time, we hire additional engineers or contract projects to outside firms to work on specific product development projects. Our current product development efforts focus on the development of railcars equipped with outlets specifically designed to target certain industries, including a through sill general

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service covered hopper railcar designed for the sugar industry and the grain and cement markets. We also have developed a bulkheadless covered hopper railcar to address the needs of customers that are more focused on loading, rather than unloading, efficiency. We have built prototypes of some of these railcars, which are currently being field tested by target customers. With input from our customers, we continually monitor product performance following delivery. Observation of our products and our competitors’ products at various stages of a railcar’s lifecycle and feedback from our repair shops, has led to product innovations, including proprietary bulkhead reinforcements and changes to our basic design platform. We cannot guarantee that we will be able to develop new products effectively, to enhance our existing products, or to respond effectively to technological changes or new industry standards or developments on a timely basis if at all.

BACKLOG

Our total backlog as of September 30, 2004 was $365.1 million and as of September 30, 2005 was $1,133 million. We estimate that approximately 12% of our September 30, 2005 backlog will be converted to revenues in the year ended December 31, 2005. Although we believe these orders to be firm, customer orders may be subject to cancellation, customer requests for delays in railcar delivery, inspection rights and other customary industry terms and conditions.

On July 29, 2005, we entered into a multi-year purchase and sale agreement with CIT to manufacture and sell to CIT covered hopper and tank railcars. Under this agreement, CIT has agreed to buy a minimum of 3,000 railcars from us in each of 2006, 2007 and 2008 and we have agreed to offer to sell to CIT up to 1,000 additional railcars in each of those years. CIT may choose to satisfy its purchase obligations from among a variety of covered hopper and tank railcars described in the agreement. CIT may reduce its future purchase obligations or cancel pending purchase orders, upon prior written notice to us, under certain conditions, including a reduction of the then current American Railway Car Institute’s most recently reported quarterly backlog below specified levels. As of September 30, 2005, the American Railway Car Institute reported a quarterly backlog of in excess of 60,900 railcars. If during the term of the agreement, the levels of quarterly backlog reported by American Railway Car Institute fall below 45,000 railcars but remains above 35,000 railcars, CIT has the right, on 240 days prior written notice, to cancel pending purchase orders or reduce subsequent purchase obligations for the then current agreement year, in either case such that actual purchases by CIT would not fall below 50% of that agreement year’s original minimum purchase requirements. If the American Railway Car Institute’s reported quarterly backlog falls below 35,000 railcars, CIT has the right to cancel or suspend all, or any, pending purchase orders or remaining purchase obligations under the Agreement upon at least 180 days prior written notice. If CIT elects to cancel any pending purchase order under these provisions within at least 120 days of the delivery date of the order, we may require that CIT purchase from us, at our cost, all material which we had purchased and identified to such cancelled purchase order. CIT also has the right to reduce its railcar orders from us if market prices for the railcars subject to our agreement are reduced significantly below our quoted prices and we fail to meet such price reductions. Under the agreement, purchase prices for railcars are subject to steel surcharges and certain other material cost increases applicable at the time of production.

Our backlog consists of orders for railcars. We define backlog as the number and sales value of railcars that our customers have committed in writing to purchase from us that have not been recognized as revenues. Although we generally have one to three year contracts with most of our fleet management customers, neither orders for our railcar repair and refurbishment services business nor our fleet management business are included in our backlog because we generally deliver our services in the same period in which orders are received. Similarly, orders for our component manufacturing

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business are not included in our backlog because we generally deliver components to our customers in the same period in which orders for the components are received.

Due to the large size of railcar orders and variations in the number and mix of railcars ordered in any given period, the size of our reported backlog at the end of any such period may fluctuate significantly. See “Risk factors—Risks related to our business—The variable purchase patterns of our railcar customers and the timing of completion, delivery and acceptance of customer orders may cause our revenues and income from operations to vary substantially each quarter, which could result in significant fluctuations in our quarterly results.”

The following table shows our reported railcar backlog, and estimated future revenue value attributable to such backlog, at the end of the periods shown. This reported backlog includes 9,000 railcars relating to CIT’s minimum purchase obligations under its agreement with us based upon an assumed product mix consistent with CIT’s orders for railcars. Changes in product mix from that assumed would affect the dollar amount of our backlog from CIT.


										Nine months ended
	Year ended December 31,									September 30,

	2002			2003			2004			2004			2005

Railcar backlog at start of period		317			412			2,287			2,287			7,547
New railcars delivered		(1,766	)		(2,557	)		(4,384	)		(3,260	)		(4,980	)
New railcar orders		1,861			4,432			9,644			6,626			13,000

Railcar backlog at end of period		412			2,287			7,547			5,653			15,567
Estimated railcar backlog value at end of period (in thousands)(1)	$	26,906		$	129,850		$	494,107		$	365,097		$	1,132,798

(1)

Estimated backlog value reflects the total revenues expected to be attributable to the backlog reported at the end of the particular period as if such backlog were converted to actual revenues. Estimated backlog does not reflect potential price increases and decreases under customer contracts that provide for variable pricing based on changes in the cost of certain raw materials and railcar components or the cancellation or delay of railcar orders that may occur.

Historically, we have experienced little variation between the number of railcars ordered and the number of railcars actually delivered, however, our backlog is not necessarily indicative of our future results of operations. As orders may be canceled or delivery dates extended, we cannot guarantee that our reported railcar backlog will convert to revenue in any particular period, if at all, nor can we guarantee that the actual revenue from these orders will equal our reported backlog estimates or that our future revenue efforts will be successful. See “Risk factors—Risks related to our business—The level of our reported railcar backlog may not necessarily indicate what our future revenues will be and our actual revenues may fall short of the estimated revenue value attributed to our railcar backlog.”

SUPPLIERS AND MATERIALS

We employ a just-in -time supply strategy for our manufacturing. We believe this strategy improves working capital efficiency, reduces operating costs and improves our flexibility to adjust rapidly to production capacity. Our business depends on the adequate supply of numerous railcar components, such as railcar wheels, brakes, sideframes, axles, bearings, yokes, tank railcar heads, bolsters and other heavy castings, and raw materials, such as steel and normalized steel plate, used in the production of railcars. Over the last few years, many components and raw materials suppliers have been acquired or ceased operations, which has caused the number of alternative suppliers of railcar components and raw materials to decline. The combination of industry consolidation and high demand has caused recent industry-wide shortages of many critical components and raw materials as reliable suppliers are

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frequently at or near production capacity. In some cases, such as those described below, as few as one significant supplier produces the type of component or raw material we use in our railcars. See “Risk factors—Risks related to our business—Fluctuations in the supply of components and raw materials we use in manufacturing railcars could cause production delays or reductions in the number of railcars we manufacture, which could materially adversely affect our business and results of operations.”

The cost of raw materials and railcar components represents approximately 80% to 85% of the direct manufacturing costs of most of our railcar product lines. Prices for steel, the primary component in railcars and railcar components, rose sharply in 2004 as a result of strong demand, limited availability of scrap metal for steel processing, reduced capacity and import trade barriers. As of September 30, 2005, all of our railcar manufacturing contracts contain price variability provisions that track fluctuations in the prices of certain raw materials and railcar components, including steel, so that increases in our manufacturing costs caused by increases in the prices of these raw materials and components are passed directly on to our customers. Conversely, if the price of those materials or components decreases, a discount is applied to reflect the decrease in cost. In our component manufacturing business, we add a surcharge to every product to account for increases in steel costs. Though we do not have similar contractual protections in connection with the aluminum we use in our manufacturing processes, we believe the risks are much less significant primarily due to the overall lower amounts of aluminum we use in our manufacturing, the relative price of aluminum to steel and the historical range of aluminum prices.

Our customers often specify particular railcar components and the suppliers of such components. We continually monitor inventory levels to ensure adequate support of production. We periodically make advance purchases to avoid possible shortages of material due to capacity limitations of railcar component suppliers and possible price increases. We do not typically enter into binding long-term contracts with suppliers because we rely on established relationships with major suppliers to ensure the availability of raw materials and specialty items.

In 2004, no single supplier accounted for more than 12% of our total purchases and our top ten suppliers accounted for 63% of our total purchases. See “Risk factors—Risks related to our business—The cost of the raw materials that we use to manufacture railcars, particularly steel, are high and these costs are expected to increase. Any increase in these costs or delivery delays of these raw materials may materially adversely affect our business, financial condition and results of operations.”

In October 2005, we entered into two vendor supply contracts with minimum volume commitments with suppliers of materials used at our railcar manufacturing facilities. These agreements relate to railcar components, and have terms of two and three years, respectively. We have agreed to purchase a combined total of $67.6 million from these two suppliers over the next three years. In 2006, 2007 and 2008 we expect to purchase $16.0 million, $27.1 million and $24.5 million respectively under these agreements.

Steel. We use both regular and normalized steel plate to manufacture railcars. Currently, there is only one domestic supplier of the form and size of normalized steel plate that we need for our manufacturing operations, and that supplier is our only source of this product. We believe we can acquire regular steel from other suppliers. Normalized steel plate is a special form of heat treated steel that is stronger and can withstand puncture better than regular steel. Normalized steel plate is required by Federal regulations to be used in tank railcars carrying certain types of hazardous cargo, including liquefied petroleum gas. We use normalized steel plate in the production of many of our tank railcars.

In June 2005, we entered into an agreement with another supplier that is constructing a facility to manufacture normalized steel plate, including normalized steel plate of the form and size we need for our manufacturing operations to supply us with a portion of our normalized steel plate requirements. We believe construction of this normalized steel production facility is scheduled for completion by

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early 2006. Although our arrangements with this supplier will not satisfy all of our normalized steel requirements, we expect this facility will provide us an alternative source of normalized steel plate and decrease our reliance on the current sole supplier of this critical raw material.

We also have entered into a supply agreement with this supplier for the purchase of regular steel plate. Both agreements have a term of five years and may be terminated by either party at any time after two years, upon twelve months prior notice. Each agreement requires us to purchase the lesser of a fixed volume or 75% of our requirements for the steel plate covered by that agreement at prices that fluctuate with the market.

Tank heads and floor sheet reinforcements. ACF supplies us with tank railcar heads, head blocks, head pads, floor sheet reinforcements, wheel sets, mounting frames and sheared panels. ACF is our sole supplier of tank railcar heads and floor sheet reinforcements. See “Risk Factors—Risks related to our business—After this offering, companies affiliated with Carl C. Icahn will continue to be important suppliers and customers.”

Castings. Heavy castings we use in our railcar manufacturing primarily include bolsters, sideframes, couplers and yokes. These castings form part of the truck assemblies upon which railcars must be placed. The companies that supply the railcar industry with heavy castings are unable to meet current demands of all the railcar manufacturers and, as such, the production capacity of many railcar manufacturers is limited by the restricted availability of these components. In 2003, our management team helped found and develop, and continues to operate Ohio Castings, a joint venture, in which we own a one-third interest. The joint venture leased a foundry in Cicero, Illinois and acquired a foundry in Alliance, Ohio and produces sideframes, bolsters, couplers and yokes. We also have entered into supply agreements with an affiliate of one of our Ohio Castings joint venture partners to purchase up to 25% and 33%, respectively, of the car sets, consisting of sideframes and bolsters, produced at each of these foundries. Our purchase commitments under these supply agreements are dependent upon the number of car sets manufactured by these foundries, which are jointly controlled by us and the other two members of Ohio Castings. We believe that our involvement in this joint venture helps us maintain our levels of production at competitive prices, despite industry-wide shortages of these potentially capacity constraining components. See “Risk factors—Risks related to our business—Our relationships with our partners in our Ohio Castings joint venture may not be successful, which could materially adversely affect our business,” and “—Certain relationships and related party transactions.”

Wheels and brakes. There also have been supply constraints and shortages of wheels and brakes used in railcars. Currently, there are only two domestic suppliers of each of these components. For both wheels and brakes, we primarily rely on one supplier. We also obtain limited quantities of refurbished wheels from scrapped railcars. If necessary, we believe we can also obtain railcar wheels from a Chinese supplier at a significantly higher cost.

COMPETITION

The railcar manufacturing business is extremely competitive. We compete primarily with Trinity Industries, Inc. and National Steel Car Limited in the covered hopper railcar market and with Trinity Industries and, to a lesser degree, Union Tank Car Company in the tank railcar market. Both Trinity Industries, and Union Tank Car Company have substantially greater resources and produce substantially more tank railcars than us. However, Union Tank primarily produces tank railcars for its own leased fleet. Trinity Industries produces substantially more covered hopper railcars than we do. For example, according to Trinity Industries, Inc.’s annual report for the year ended December 31, 2004 and its quarterly report for the nine months ended September 30, 2005, Trinity delivered a total of approximately 15,100 and 17,016 railcars, respectively, during those periods in North America. By

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comparison, for the year ended December 31, 2004 and for the nine months ended September 30, 2005, we delivered a total of approximately 4,384 and 4,980 railcars, respectively, during those periods in North America.

Some of our competitors have greater financial and technological resources than we do. They may increase their participation in the railcar markets in which we compete and other railcar manufacturers that currently do not manufacture covered hopper railcars or tank railcars may choose to compete directly with us. Railcar purchasers’ sensitivity to price and strong price competition within the industry have historically limited our ability to increase prices to obtain better margins on our railcars.

We face intense competition in our other markets as well. Our competition for the sale of railcar components includes our competitors in the railcar manufacturing market as well as a concentrated group of companies whose primary business focus is the production of one or more specialty components. In addition, new competitors, or alliances among existing competitors, may emerge and rapidly gain market share. We compete with numerous companies in our railcar services and fleet management businesses, ranging from companies with greater resources than we have to small, local companies. Our principal competitors in these businesses include Rescar and Millennium Rail.

In addition to price, competition in all our markets is based on quality, reputation, reliability of delivery, customer service and other factors. Any of these factors as well as technological innovation by any of our existing competitors, or new competitors entering any of the markets in which we do business, could put us at a competitive disadvantage. We may be unable to compete successfully or retain our market share in our established markets. Increased competition for the sales of our railcar products and services could result in price reductions, reduced margins and loss of market share, which could negatively affect our prospects, business, financial condition and results of operations.

INTELLECTUAL PROPERTY

We rely on a combination of investments, copyrights and patents to protect our intellectual property. Due to the change that has historically characterized the railcar manufacturing industry, we believe that the improvement of existing technology and the development of new products may be more important than patent protection in establishing and maintaining a competitive advantage. Nevertheless, we have obtained patents and will continue to make efforts to obtain patents, when available, in connection with product developments and designs. We cannot guarantee that any patent obtained will provide protection or be of commercial benefit to us, or that its validity will not be challenged.

We have ten U.S. and two non-U.S. patents, two pending non-U.S. patent applications, seven registered trademarks, and numerous unregistered copyrights and trade names. Our patents expire at various times from 2005 to 2021.

EMPLOYEES

As of September 30, 2005, we had 2,336 full-time employees in various locations throughout the United States and Canada, including 2,217 engaged in our manufacturing, railcar repair and railcar fleet management operations and 119 in various corporate support functions. At our Longview, Texas and North Kansas City, Missouri repair facilities, and at our Longview, Texas steel foundry and components manufacturing facility, 50, 45 and 289 employees, respectively, are covered by collective bargaining agreements. These agreements expire in January 2008, September 2007 and April 2008, respectively. We are also party to a collective bargaining agreement at our Milton, Pennsylvania repair facility, which is currently idle. Employees at our other locations are not covered by collective bargaining agreements. We believe that our relations with our employees are generally good.

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REGULATION

The Federal Railroad Administration, or FRA, administers and enforces U.S. federal laws and regulations relating to railroad safety. These regulations govern equipment and safety compliance standards for railcars and other rail equipment used in interstate commerce. The Association of American Railroads, or AAR, promulgates a wide variety of rules and regulations governing safety and design of equipment, relationships among railroads with respect to railcars in interchange and other matters. The AAR also certifies railcar manufacturers and component manufacturers that provide equipment for use on railroads in the United States. New products must generally undergo AAR testing and approval processes. As a result of these regulations, we must maintain certifications with the AAR as a railcar manufacturer, and products that we sell must meet AAR and FRA standards. We must comply with the rules of the U.S. Department of Transportation, or DOT, and we are also subject to oversight by Transport Canada. To the extent that we expand our business internationally, we will increasingly be subject to the regulations of other non-U.S. jurisdictions.

Due to the health and safety risks posed by several types of hazardous cargo transported by pressure tank railcars, including liquefied petroleum gas, chlorine and anhydrous ammonia, pressure tank railcars are subject to regulations to which many other types of railcars are not subject. For example, in response to general safety and homeland security concerns, there are currently proposals pending by governmental and non-governmental railcar authorities that address, among other things, the impact resistance of the steel used in the manufacture of pressure tank railcars. These proposals may result in additional regulation concerning the required use of normalized steel, and the testing of its impact resistance, in pressure tank railcars. Prior to 1989, normalized steel was not typically used in the manufacture of pressure tank railcars and, according to AAR and DOT data, approximately 28,000 pressure tank railcars currently in the U.S. railcar fleet were not manufactured with normalized steel. Because normalized steel is used to form railcars’ shells, it is generally not feasible to retrofit railcars with normalized steel. We believe we are well positioned to take advantage of any increased demand for new pressure tank railcars that could result from regulations requiring the increased use of normalized steel in pressure tank railcars or the removal of any pre-1989 pressure tank railcars from the U.S. railcar fleet.

ENVIRONMENTAL MATTERS

Environmental operating permits are, or may be, required for our operations under these laws and regulations. These operating permits are subject to modification, renewal and revocation. We regularly monitor and review our operations, procedures and policies for compliance with permits, laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of our businesses, as it is with other companies engaged in similar businesses. Many of our properties were transferred to us by ACF in 1994. We are involved in investigation and remediation activities at properties that we now own or lease to address historic contamination and potential contamination by

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third parties. We are also involved with state agencies in the cleanup of two sites under these laws. These investigations are at a preliminary stage, and it is impossible to estimate, with any certainty, the timing and extent of remedial actions that may be required, and the costs that would be involved in such remediation. Substantially all of the issues identified relate to the use of the properties prior to their transfer to us in 1994 by ACF and for which ACF has retained liability for environmental problems that may have existed at the time of their transfer to us and ACF has also agreed to indemnify us for any cost that might be incurred with those existing problems. However, if ACF fails to honor its obligations to us, we would be responsible for the cost of such remediation.

In connection with its ongoing obligations, ACF, in consultation with us, is investigating and, as appropriate, remediating those sites that it transferred to us. We have been advised that, for the remainder of 2005, ACF estimates that it will spend approximately $0.1 million on environmental investigation and, in each of 2006 and 2007, it will spend approximately $0.2 million on environmental investigation, relating to contamination that existed at properties prior to their transfer to us and for which ACF has retained liability and agreed to indemnify us. We believe that our operations and facilities are in substantial compliance with applicable laws and regulations and that any noncompliance is not likely to have a material adverse effect on our operations or financial condition.

Future events, such as new environmental regulations or changes in or modified interpretations of existing laws and regulations or enforcement policies, or further investigation or evaluation of the potential health hazards of products or business activities, may give rise to additional compliance and other costs that could have a material adverse effect on our financial conditions and operations. In addition, we have in the past conducted investigation and remediation activities at properties that we own to address historic contamination. To date such costs have not been material. Although we believe we have satisfactorily addressed all known material contamination through our remediation activities, there can be no assurance that these activities have addressed all historic contamination. The discovery of historic contamination or the release of hazardous substances into the environment at our current or formerly owned or operated facilities could require us in the future to incur investigative or remedial costs or other liabilities that could be material or that could interfere with the operation of our business.

In addition to environmental laws, the transportation of commodities by railcar raises potential risks in the event of a derailment or other accident. Generally, liability under existing law in the United States for a derailment or other accident depends on the negligence of the party, such as the railroad, the shipper or the manufacturer of the railcar or its components. However, for certain hazardous commodities being shipped, strict liability concepts may apply.

PROPERTY

Our headquarters are located in St. Charles, Missouri. ARL, an affiliate of Carl C. Icahn, leases this facility and permits us to occupy it for a fee pursuant to a service agreement. Either party may terminate this agreement on six months notice.

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The following table presents information about our railcar manufacturing and components manufacturing facilities as of September 30, 2005:


			Leased or	Lease
Location	Use	Size	Owned	Expiration Date

Paragould, Arkansas	Covered hopper railcar manufacturing	546,680 square feet on 82 acres	Owned(1)	—
Marmaduke, Arkansas	Tank railcar manufacturing	441,075 square feet on 55 acres	Owned	—
St. Charles, Missouri	Aluminum foundry and machining	128,626 square feet on 3 acres	Leased	February 28, 2006
Jackson, Missouri	Railcar components manufacturing	110,240 square feet on 8 acres	Owned(1)	—
Kennett, Missouri	Covered hopper and tank railcar subassembly and small components manufacturing	78,375 square feet on 9 acres	Owned(1)	—
Longview, Texas	Steel foundry and machining	155,030 square feet on 31 acres	Owned	—

(1)

Our manufacturing facility located in Paragould, Arkansas is subject to a mortgage that secures the $9,500,000 industrial revenue bonds issued on April 27, 1995 by Paragould, Arkansas. As of September 30, 2005, approximately $4.5 million of these bonds remain outstanding. Our manufacturing facility located in Jackson, Missouri is subject to a mortgage that secures the approximately $2.5 million industrial development revenue bonds issued on July 1, 1996 by Jackson, Missouri. As of September 30, 2005, approximately $1.5 million of these bonds remain outstanding. Our manufacturing facility located in Kennett, Missouri is subject to a mortgage that secures the approximately $5.5 million industrial development revenue bonds issued on June 22, 1995 by Kennett, Missouri. As of September 30, 2005, approximately $2.6 million of these bonds remain outstanding. We occupy the real property at these facilities through lease-back arrangements. We intend to repay all of these bonds in full with the proceeds of this offering. Each of these properties will be re-conveyed to us when the bonds secured by the properties are paid in full. The industrial revenue bonds are guaranteed by affiliates of Mr. Icahn, and these affiliates will be released from such guarantees upon repayment of the industrial revenue bonds. In addition, James J. Unger, our president and chief executive officer, and his wife own $0.4 million of the industrial revenue bonds issued by Paragould, Arkansas. Mr. Unger and his wife will receive approximately $0.4 million upon our repayment in full of the amounts due under the industrial revenue bonds. See “Use of proceeds,” “Certain relationships and related party transactions—Guarantees of indebtedness by ACF and other related parties—Industrial revenue bonds” and “Certain relationships and related party transactions—Certain transactions involving James J. Unger—Industrial revenue bonds” for more details.

We also provide railcar repair, cleaning, maintenance and other services at facilities we own in Longview and Goodrich, Texas; North Kansas City, Missouri; and Tennille, Georgia; and at facilities we lease in Gonzales, Louisiana; Green River, Wyoming; Deer Park, Texas; Bude, Mississippi; and Sarnia, Ontario. We also own a repair facility in Milton, Pennsylvania that has been idle since 2003. Our facility located in Tennille, Georgia is secured by a $0.6 million mortgage due February 10, 2008. As of September 30, 2005, approximately $0.2 million remained outstanding on this mortgage.

INSURANCE

We maintain insurance on terms typical of our industry. Our policies cover standard industry risks, including general and products liability, workers compensation, automobile liability and other casualty and property risks.

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LEGAL PROCEEDINGS

We are from time to time party to various other legal proceedings arising out of our business. Such proceedings, even if not meritorious, could result in the expenditure of significant financial and managerial resources. We believe that there are no proceedings pending against us which, if determined adversely, would have a material adverse effect on our business, financial condition and results of operations.

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DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is information concerning our current directors and executive officers, including their ages as of September 30, 2005.


Name	Age		Position

Carl C. Icahn		69	Chairman of the Board
James J. Unger		57	President, Chief Executive Officer and Director
James A. Cowan		48	Executive Vice President and Chief Operating Officer
William P. Benac		59	Senior Vice President, Chief Financial Officer and Treasurer
Alan C. Lullman		50	Senior Vice President Sales, Marketing and Services
Vincent J. Intrieri		49	Director
Jon F. Weber		46	Director
Keith Meister		32	Director
James C. Pontious*		67	Director
James M. Laisure*		53	Director


*	Mr. Pontious and Mr. Laisure have each consented to serve as a director at such time as our common stock is listed on the Nasdaq National Market.

Carl C. Icahn, chairman of the board

Mr. Icahn has been our principal beneficial stockholder and has served as our chairman of the board and as a director since 1994. Mr. Icahn has served as chairman of the board and a director of Starfire Holding Corporation, or Starfire, (formerly Icahn Holding Corporation), a privately-held holding company, and chairman of the board and a director of various subsidiaries of Starfire, since 1984. Mr. Icahn has also been chairman of the board and president of Icahn & Co., Inc., a registered broker-dealer and a member of the National Association of Securities Dealers, since 1968. Since November 1990, Mr. Icahn has been chairman of the board of American Property Investors, Inc., the general partner of American Real Estate Partners, L.P., a public limited partnership that invests in real estate and holds various other interests, including the interests in its subsidiaries that are engaged, among other things, in the oil and gas business and casino entertainment business. Mr. Icahn has been a director of Cadus Pharmaceutical Corporation, a firm that holds various biotechnology patents, since 1993. From August 1998 to August 2002, Mr. Icahn served as chairman of the board of Maupintour Holding LLC (f/k/a/ Lowestfare.com, LLC), an Internet travel reservations company. From October 1998 through May 2004, Mr. Icahn was the president and a director of Stratosphere Corporation, which operates the Stratosphere Hotel and Casino. Since September 29, 2000, Mr. Icahn has served as the chairman of the board of GB Holdings, Inc., which owns all of the outstanding stock of Atlantic Coast Entertainment Holdings, Inc., which owns an interest in The Sands Hotel and Casino in Atlantic City, New Jersey. In January 2003, Mr. Icahn became chairman of the board and a director of XO Communications, Inc., a telecommunications company. In May 2005, Mr. Icahn became a director of Blockbuster Inc., a provider of in-home movie rental and game entertainment. Mr. Icahn received his B.A. from Princeton University.

James J. Unger, president, chief executive officer and director

Mr. Unger has served as our president and chief executive officer since March 1995. Prior to joining us, he served ACF as its president from 1988 to 1995, as its senior vice president and chief financial

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officer from 1984 to 1988 and on its board of directors from August 1993 to March 2005. After he joined us in 1995, Mr. Unger simultaneously continued to serve as the vice chairman of ACF until March 2005. ACF is controlled by Mr. Icahn. Mr. Unger has served as president of Ohio Castings, the joint venture in which we have a one-third interest, since June 2003. Mr. Unger has been on the board of directors of Aspen Resources Group, an oil and gas exploration company since May 2002. Mr. Unger participates in several industry organizations, including as an executive committee member and board member for the Railway Supply Institute, Inc., or “RSI”. He also is a board member of the American Railway Car Institute, a member of the project review committee for the RSI-AAR Railroad Tank Car Safety Research Test Project, a steering committee member of the RSI Committee on Tank Railcars, and a member of the National Freight and Transportation Association. Mr. Unger served as a member of the board of directors of Ranken Technical College from 1990 to 2002. Mr. Unger received a B.S. in accounting from the University of Missouri, Columbia and is a certified public accountant.

James A. Cowan, executive vice president and chief operating officer

Mr. Cowan has served as our executive vice president and chief operating officer since December 2005. Prior to joining us, he spent the last 26 years in various positions involving the engineering, construction and manufacturing of multiple steel and tubular products. From March 2003 to August 2005, Mr. Cowan served as president and chief operating officer of Maverick Tube Corporation, a North American manufacturer of welded tubular steel products used in the energy industry. Prior to this position, from June 2002 to March 2003, Mr. Cowan served as president and chief operating officer of Vallourec & Mannesmann Star, a French, German and Japanese joint venture and seamless manufacturer of tubular steel products. From January 1992 to June 2002, he served as general manager responsible for all sales and operations of three different steel manufacturing facilities for North Star Steel, a business previously owned by Cargill. Mr. Cowan was responsible for the complete greenfield development, construction and start-up of one of these facilities. From July 1979 to January 1992, he served in differing operational capacities for Cargill’s steel group, North Star Steel. For two years, during 2000 and 2001, Mr. Cowan served as the Chairman of the Governor of Ohio’s Steel Council. Mr. Cowan received his B.S. in Metallurgical Engineering from Michigan Technological University.

William P. Benac, senior vice president, chief financial officer and treasurer

Mr. Benac has served as our senior vice president and chief financial officer since January 2005 and has served as our treasurer since December 2005. Prior to joining us, he spent the last 32 years in various corporate finance, turnaround and value creation positions. Mr. Benac co-founded bpmx, a financial services and consulting restructuring company, where he served as senior managing director and chief financial officer from December 2003 to January 2005. From August 2002 to February 2003, Mr. Benac served Kinko’s Inc., a print services company, as senior vice president and chief financial officer. From November 2000 to November 2001, Mr. Benac was the executive vice president and chief financial officer of Grass Valley Group, a manufacturer of digital broadcast technology. Mr. Benac served simultaneously as an executive vice president and chief financial officer of UICI, a diversified financial services company, and as chief executive officer of United Credit National Bank, a subsidiary of UICI and a credit card bank, from May 1999 to November 2000. Mr. Benac has held a variety of other financial management positions, including serving Electronic Data Systems Corporation from February 1992 to October 1997 as global vice president and treasurer, and numerous positions with Verizon Corporation and its predecessor companies from 1973 to 1990, including as president of GTE Finance Corp. from 1986 to 1990. Mr. Benac is a certified public accountant and a certified management accountant. He has served on the National Advisory Council of the Marriott School of Management—Brigham Young University since 1997. Mr. Benac received his B.A. and his M.B.A. from Brigham Young University and his J.D. from Pace University School of Law.

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Alan C. Lullman, senior vice president sales, marketing and services

Mr. Lullman has served as our senior vice president sales, marketing and services since October 2004. From August 1998 to September 2004, he served as our vice president sales and marketing. Prior to joining us, he served as a regional sales manager at the Houston office of ACF from March 1989 to July 1998, where he was responsible for sales across 22 states. From August 1987 to February 1989, Mr. Lullman was a district sales manager at ACF. He held numerous other sales positions at ACF sales offices in the Southwest, Midwest and Northeast from October 1978 to July 1987. Mr. Lullman is a member of the Transportation and Logistics Committee of the American Plastics Council. He received a B.A. from Westminster College. He also served in the U.S. Marine Corps Reserve from 1973 to 1976, when he received an honorable discharge.

Vincent J. Intrieri, director

Mr. Intrieri served as our senior vice president, treasurer and secretary from March 2005 to December 2005 and has served on our board of directors since August 2005. Mr. Intrieri is a senior managing director of Icahn Partners LP and Icahn Partners Master Fund LP, private investment funds controlled by Mr. Icahn. Since January 1, 2005, Mr. Intrieri has been senior managing director of Icahn Associates Corp. and High River Limited Partnership, which is primarily engaged in the business of holding and investing in securities. From March 2003 to December 2004, Mr. Intrieri served as a managing director and from 1998 to March 2003, he served as a portfolio manager of Icahn Associates Corp. and High River. Each of Icahn Associates Corp. and High River are under the control of Mr. Icahn. From 1995 to 1998, Mr. Intrieri served as portfolio manager for distressed investments with Elliott Associates L.P., a New York investment fund. Prior to 1995, Mr. Intrieri was a partner at the Arthur Andersen accounting firm. Mr. Intrieri is a certified public accountant. Mr. Intrieri is chairman of the board of directors and a director of Viskase Companies, Inc., a publicly owned producer of cellulose and plastic casings used in preparing and packaging meat products, in which Mr. Icahn has an interest through the ownership of securities. In addition, Mr. Intrieri has served on the board of directors of XO Communications, Inc., a telecommunications services company controlled by Mr. Icahn, since January 2003. Mr. Intrieri received a B.S. in Accounting from The Pennsylvania State University.

Jon F. Weber, director

Mr. Weber has served on our board of directors since August 2005. Since April 2005, Mr. Weber has served as the president of American Property Investors, Inc., which is the general partner of American Real Estate Partners, L.P., a public limited partnership controlled by Mr. Icahn that invests in real estate and holds various other interests, including the interests in its subsidiaries that are engaged, among other things, in the oil and gas business and casino entertainment business. Mr. Weber has, since April 2003, been head of portfolio company operations and chief financial officer at Icahn Associates Corp., an entity controlled by Mr. Icahn. Since May 2003, Mr. Weber has been a director of Viskase Companies, Inc. and was the chief executive officer of Viskase Companies, Inc. from May 2003 to October 2004. Since March 2003, he has served as chief executive officer and a director of Philip Services Corporation, a metal recycling and industrial services company affiliated with Mr. Icahn. He served as chief financial officer of venture-backed companies QuantumShift Inc. and Alchemedia Ltd. from October 2001 to July 2002 and November 2000 to October 2001, respectively. From May 1998 to November 2000, Mr. Weber served as managing director—investment banking for JP Morgan Chase and its predecessor, Chase Manhattan Bank, in São Paulo, Brazil. He has served as a director of XO Communications, Inc., since May, 2005. Previously, Mr. Weber was an investment banker at Morgan Stanley and Salomon Brothers.

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Keith Meister, director

Mr. Meister has served on our board of directors since August 2005. Since June 2002, Mr. Meister has been a senior investment analyst of High River, a company owned and controlled by Mr. Icahn that is primarily engaged in the business of holding and investing in securities. Mr. Meister is also a senior investment analyst of Icahn Partners LP and Icahn Partners Master Fund LP. He is also a director of Icahn Fund Ltd., which is the feeder fund of Icahn Partners Master Fund LP. Icahn Partners LP and Icahn Partners Master Fund L.P. are private investment funds controlled by Mr. Icahn. Since August 2003, Mr. Meister has served as the chief executive officer of American Property Investors, Inc., or API, which is the general partner of American Real Estate Partners, L.P., a public limited partnership controlled by Mr. Icahn that invests in real estate and holds various other interests, including the interests in its subsidiaries that are engaged, among other things, in the oil and gas business and casino entertainment business. Mr. Meister served API as its president from August 2003 to April 2005. From March 2000 through the end of 2001, Mr. Meister co-founded and served as co-president of J Net Ventures, a venture capital fund focused on investments in information technology and enterprise software businesses. From 1997 through 1999, Mr. Meister served as an investment professional at Northstar Capital Partners, an opportunistic real estate investment partnership. Prior to his work at Northstar, Mr. Meister served as an investment analyst in the investment banking group at Lazard Freres. Mr. Meister is a director of XO Communications, Inc., a telecommunications services company controlled by Mr. Icahn. Mr. Meister also is a director of American Entertainment Properties Corp. and American Casino & Entertainment Properties Finance Corp., which are gaming companies, and Scientia Corporation, a private health care venture company, all of which are companies controlled by American Real Estate Partners, L.P. In August 2005, Mr. Meister also became a director of ADVENTRX Pharmaceuticals, Inc., a biopharmaceutical company. Mr. Meister received his A.B. in Government cum laude from Harvard College.

James C. Pontious, director

Mr. Pontious has agreed to serve on our board of directors at such time as our common stock is listed on the Nasdaq National Market. Since May 2005, Mr. Pontious has been a consultant in the areas of business development and acquisitions to Wabtec Corporation, a public company that supplies air brakes and other equipment for locomotives, freight cars and passenger transit vehicles. In 2005, Mr. Pontious helped Wabtec found Intermodal Trailer Express Corp, an intermodal operating company established to focus on hauling highway trailers over the nation’s railroads. Mr. Pontious is a principal of this newly founded company. Mr. Pontious served Wabtec as vice president of special projects from January 2003 through April 2005 and as vice president of sales and marketing from April 1990 to January 2003. Mr. Pontious also served as vice president of sales and marketing at New York Air Brake Company, a unit of General Signal Corporation, from 1977 to 1990. Prior to this, Mr. Pontious served the Pullman-Standard division of Pullman, Inc., a freight and passenger railcar manufacturer, from 1961 to 1977 in various management positions in the areas of sales, marketing and operations. Mr. Pontious currently serves as a director of the Intermodal Transportation Institute at the University of Denver. Mr. Pontious holds a B.B.A. from the University of Minnesota.

James M. Laisure, director

Mr. Laisure has agreed to serve on our board of directors at such time as our common stock is listed on the Nasdaq National Market. Since May 2005, Mr. Laisure has been consulting as an independent contractor for the automotive and industrial manufacturing space. Prior to this, he spent 32 years in various corporate accounting, sales, engineering and operational positions with Dana Corporation, a publicly held corporation that designs, manufactures and supplies vehicle components and technology, and its predecessors. Mr. Laisure served as president of Dana’s Automotive Systems Group from

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March 2004 to May 2005. From December 2001 to February 2004, Mr. Laisure served as president of Dana’s engine and fluid management group and, from December 1999 to November 2001, he served as president of Dana’s fluid management group. In addition, he served on the board of directors of various Dana Corporation joint ventures, including joint ventures in Germany, Indonesia, Mexico and Turkey. Mr. Laisure served as director of finance of P.T. Spicer Indonesia, a manufacturer of axles and driveshafts, from 1982 to 1984. Also, he served as accountant, internal auditor and controller at Perfect Circle, a manufacturer of automotive engine components, from 1973 to 1981. Mr. Laisure received a B.A. degree in Accounting from Ball State University and an M.B.A. from Miami (Ohio) University, and has completed the Harvard Advanced Management Program.

KEY EMPLOYEES

Set forth below is information concerning our key employees, including their ages as of September 30, 2005.

Jackie R. Pipkin, 56, director of railcar manufacturing

Mr. Pipkin has served as our director of railcar manufacturing since July 1996, after serving as plant manager of our Paragould and Kennett manufacturing facilities. Prior to joining us, Mr. Pipkin served Thrall Car Manufacturing, a railcar manufacturer, as manufacturing manager from January 1992 to March 1994 and as general superintendent from December 1989 to December 1992. He served ACF in various roles from February 1969 to December 1989. Mr. Pipkin has supervised or helped supervise the launch of several new railcar manufacturing facilities during his employment with ACF and with us, including the original construction of our Paragould and Marmaduke facilities and the addition of the third manufacturing line at our Paragould facility.

Michael R. Williams, 44, vice president engineering and manufacturing

Mr. Williams has served as our vice president engineering and manufacturing since October 2004 and in various product and account management roles since April 1997. Prior to joining us, Mr. Williams served ACF as a strength analyst of covered hopper and tank railcars from January 1991 to March 1997. Mr. Williams served as an airframe designer and analyst at McDonnell Douglas Corporation from May 1983 to December 1990. Mr. Williams received his B.S. in mechanical engineering from the University of Illinois and a M.S. in Mechanical Engineering and a M.B.A. from Washington University.

BOARD OF DIRECTORS

Our board of directors presently consists of five members. Upon the listing of our common stock on the Nasdaq National Market we will expand the size of our board of directors to seven members with the addition of Mr. Pontious and Mr. Laisure as independent directors. Our directors are expected to serve until the next annual meeting of our stockholders and until their respective successors have been duly elected and qualified. We believe that, within the one-year transition period available to us following the completion of this offering, we will comply with all applicable requirements of the SEC and the Nasdaq National Market relating to director independence and the composition of the committees of our board of directors, including the designation of an “audit committee financial expert.”

We have been advised that in December 2005 an affiliate of Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors, entered into a stock purchase agreement with our other principal stockholder, the Foundation for a Greater Opportunity, or the Foundation, to acquire all of our common stock held by the Foundation. The consummation of this acquisition requires the completion of this offering and the approval of applicable authorities of the State of New

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York. If the parties obtain this approval, we have been advised that the parties expect that the purchase would be completed in the first three months of 2006. Pending the closing of this purchase, and for so long as the stock purchase agreement has not been terminated, the Foundation has granted the affiliate of Mr. Icahn purchasing the shares owned by the Foundation an irrevocable proxy to vote all of the shares of our common stock held by the Foundation. The stock purchase agreement may be terminated by either party if the purchase does not occur by May 2006. As a result of these contemplated arrangements, we expect that Mr. Icahn will control approximately 56% of the voting power of our outstanding common stock following the offering. Consequently, we would be a “controlled company” within the meaning of the listing standards governing companies with stock quoted on the Nasdaq National Market. Under these rules, a “controlled company” may elect not to comply with certain Nasdaq National Market corporate governance requirements, including requirements that (1) a majority of the board of directors consist of independent directors, (2) compensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee that is composed entirely of independent directors and (3) director nominees be selected or recommended for selection by a majority of the independent directors or by a nominating committee composed solely of independent directors. If, at the time of this offering, we are a “controlled company” under the listing standards of the Nasdaq National Market, we intend to avail ourselves of those exemptions and will not have a majority of independent directors on our board. See “Risk factors—Risks related to the purchase of our common stock in this offering—Upon the closing of this offering we may be a “controlled company” within the meaning of the Nasdaq National Market rules and you will not have the same protections afforded to shareholders of companies that are not “controlled companies” and, therefore, are subject to all of the Nasdaq National Market corporate governance requirements.”

COMMITTEES OF OUR BOARD OF DIRECTORS

If we are a “controlled company” following this offering, we intend to use exemptions available to us under the corporate governance listing standards of the Nasdaq National Market. In that circumstance, we expect that we would not have a compensation committee and we would not have a nominating committee. If we are not a “controlled company” following this offering, we intend to comply with all applicable corporate governance requirements of the Nasdaq National Market within the transition periods allowed companies following their initial public offering of common stock. Accordingly, if we are not a “controlled company” at the time this offering is completed, the standing committees of our board of directors will consist of an audit committee, a compensation committee and a nominating committee. See “Risk factors—Risks related to the purchase of our common stock in this offering—Upon the closing of this offering we may be a “controlled company” within the meaning of the Nasdaq National Market rules and you will not have the same protections afforded to shareholders of companies that are not “controlled companies” and, therefore, are subject to all of the Nasdaq National Market corporate governance requirements.”

In any event, we may establish special committees under the direction of the board of directors when necessary to address specific issues.

Audit committee

Our Audit Committee will be responsible for oversight of the qualifications, independence, appointment, retention, compensation and performance of the Company’s independent registered public accounting firm and for assisting the board of directors in monitoring the Company’s financial reporting process, accounting functions and internal controls. It also will be responsible for oversight of “whistle-blowing” procedures and certain other compliance matters.

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The composition of the Audit Committee following the completion of this offering will comply with applicable SEC and Nasdaq National Market requirements, including the requirement that at least one member of the Audit Committee qualify as a “financial expert” under SEC rules and the stricter definition of independence for audit committee members under the rules of the Nasdaq National Market. Our board of directors will adopt a written charter for our Audit Committee. That charter will conform to recently adopted rules and regulations of the SEC and the Nasdaq National Market.

Corporate governance

We believe that shortly after completion of this offering, we will comply with all applicable Nasdaq National Market corporate governance and listing requirements. In the interim, we will rely on transition periods available to companies following their initial public offering of common stock. See “Risk factors—Risks related to the purchase of our common stock in this offering—Upon the closing of this offering we may be a “controlled company” within the meaning of the Nasdaq National Market rules and you will not have the same protections afforded to shareholders of companies that are not “controlled companies” and, therefore, are subject to all of the Nasdaq National Market corporate governance requirements,” “Management—Board of directors” and “Management—Committees of our board of directors.”

Codes of conduct and ethics

Upon completion of this offering, we will have adopted written codes of conduct and ethics applicable to all of our directors, executive officers and employees including, without limitation, all of our senior financial officers, that will be designed to deter wrongdoing and to promote:


4	honest and ethical conduct;

4	full, fair, accurate, timely and understandable disclosure in reports and documents that we file with the SEC and in our other public communications;

4	compliance with applicable laws, rules and regulations, including insider trading compliance; and

4	accountability for adherence to the code and prompt internal report of violations of the code, including illegal or unethical behavior regarding accounting or auditing practices.

Our codes of conduct and ethics will also comply with applicable requirements of the Nasdaq National Market. The Audit Committee of our board of directors will review our codes of conduct and ethics on a regular basis and will propose or adopt additions or amendments as it considers required or appropriate.

Director compensation

Each director is entitled to reimbursement for out-of -pocket expenses incurred for each meeting of the full board or a committee of the board attended. The annual compensation for our independent directors is $30,000. In addition, each independent director is entitled to receive $1,000 for each board or committee meeting attended and an annual stipend of $5,000 if he is a chairperson of a committee.

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EXECUTIVE COMPENSATION

The following table sets forth the compensation of our chief executive officer and each of our other most highly compensated executive officers during the years ended December 31, 2004 and December 31, 2005. We refer to these officers as the named executive officers. No options were granted to or exercised by any of our named executive officers during the years ended December 31, 2004 and December 31, 2005.


				Annual Compensation

									Other Annual		All Other
									Compensation		Compensation
Name and principal position		Fiscal Year		Salary		Bonus			(6)		(7)

James J. Unger
	President and Chief Executive Officer		2005	$	350,000		(1	)	$	32,828	$	13,578
			2004	$	350,000		—		$	48,532	$	13,918
James A. Cowan(2)
	Executive Vice President and Chief Operating Officer		2005	$	22,727		—			—		—
			2004		—		—			—		—
William P. Benac(3)
	Senior Vice President and Chief Financial Officer		2005	$	229,167		(4	)		—	$	1,935
			2004		—		—			—		—
Alan C. Lullman
	Senior Vice President Sales, Marketing and Services		2005	$	158,333		(5	)	$	21,572	$	4,315
			2004	$	140,000	$	45,000		$	9,431	$	574



(1)	Under the terms of his employment agreement, Mr. Unger is eligible to receive an annual bonus as determined by our board of directors. Mr. Unger’s bonus for our fiscal year ended December 31, 2005 has not yet been determined. For more information, see “—Employment agreements.”



(2)	Mr. Cowan started his employment with us on December 5, 2005.



(3)	Mr. Benac started his employment with us on January 31, 2005.



(4)	Under the terms of his employment agreement, Mr. Benac is entitled to a non-prorated cash bonus of at least $150,000 for our fiscal year ended December 31, 2005. The amount of Mr. Benac’s bonus has not yet been determined. For more information, see “—Employment agreements.”



(5)	Mr. Lullman participates in our 2005 executive incentive plan. Awards under that plan for our fiscal year ended December 31, 2005 have not yet been determined. See “—Executive incentive plan.”



(6)	Includes the following payments we made on behalf of Messrs. Unger and Lullman:


			Car		Country
	Fiscal Year		Allowances		Club Dues

Mr. Unger		2005	$	24,053	$	8,775
		2004		39,651		8,881
Mr. Lullman		2005		21,572		—
		2004		8,820		611

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(7)	Includes the following payments we made on behalf of Messrs. Unger, Benac and Lullman:


			Life Insurance		401(k) Matching
	Fiscal Year		Premiums*		Contributions**

Mr. Unger		2005	$	7,278	$	6,300
		2004		7,768		6,150
Mr. Benac		2005		1,935		—
		2004		—		—
Mr. Lullman		2005		1,075		3,240
		2004		574		—


*	These amounts represent the taxable income related to payment of premiums for group term life insurance and executive survivor insurance for the benefit of the employee.

**	These amounts represent matching contributions to each employee’s 401(k) plan equal to 50% of the employee’s deferrals up to a maximum of 6% of each employee’s compensation.

Employment agreements

James J. Unger. In November 2005, we entered into a new employment agreement with Mr. Unger. Upon the closing of this offering, this new employment agreement will supersede our original agreement with Mr. Unger which we entered into in 1994. The original agreement with Mr. Unger, provided that Mr. Unger shall be granted an option to purchase 2.0% of our outstanding common shares at a price equal to 2.0% of the common equity contribution by Carl C. Icahn at our formation. The agreement provided that this option shall be exercisable at the time of our initial public offering, and should we be sold to parties other than in a public offering, Mr. Unger shall receive 2.0% of the sales price, net of the preferred interest established at our formation, and net of the contribution for common stock. The original agreement further provided that the above options and or rights shall remain in effect as long as Mr. Unger is employed by us, and that should we go public with an offering and Mr. Unger exercise his stock option, Mr. Unger will agree, if we or our board of directors so desires, to a three-year employment contract providing no reductions in salary or fringe benefits.

Mr. Unger’s term as our president and chief executive officer under the new employment agreement is effective for one year following the completion of this offering and may be extended for two additional one-year terms at the sole option of our board of directors.

Under the terms of the new employment agreement, Mr. Unger receives a base salary of $350,000. In addition, Mr. Unger is eligible to receive an annual bonus, as determined by our board of directors from year to year. The new employment agreement also provides that Mr. Unger is entitled to receive healthcare, vacation, 401(k) participation, transportation and other similar benefits we offer our senior employees.

Under the terms of the new employment agreement, if Mr. Unger is terminated without cause (as defined in the new employment agreement) or resigns for good reason (as defined in the new employment agreement), then we shall pay him, in addition to any unpaid and earned base salary and bonus, the base salary Mr. Unger would have earned through the end of his term, as extended, if applicable, by our board of directors.

Mr. Unger’s new employment agreement contains non-competition, non-solicitation and confidentiality provisions. The non-competition and non-solicitation provisions prohibit Mr. Unger from directly or indirectly competing with us, or soliciting our employees as long as he is our employee and generally for a one-year period thereafter.

In connection with the new employment agreement, we also entered into a letter agreement with Mr. Unger that replaces any option grants to Mr. Unger under the original agreement. Upon the closing of this offering, we are required to issue Mr. Unger such number of shares of our common

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stock obtained by dividing $6.0 million by the initial public offering price per share as set forth on the cover page of this prospectus. Assuming an initial public offering price of $17.00, which represents the midpoint of the range on the cover page of this prospectus, Mr. Unger will receive 352,941 shares of our common stock. If the initial public offering price is $16.00 per share, Mr. Unger will receive 375,000 shares of our common stock. If the initial public offering price is $18.00 per share, Mr. Unger will receive 333,333 shares of our common stock. Of these shares, 40% will be transferable without contractual restrictions by Mr. Unger after 180 days from the closing of this offering, 30% will be transferable without contractual restrictions by Mr. Unger one year after the closing of this offering and the remaining 30% will be freely transferable 540 days after the closing of this offering. If Mr. Unger is terminated for cause (as defined in the letter agreement), or resigns without good reason (as defined in the letter agreement) within one year from the closing date of this offering, Mr. Unger shall return to us 60% of the shares of our common stock we granted to him. We have agreed to use commercially reasonable efforts to file a registration statement on Form S-8 with the SEC to cover the registration of 40% of these shares. We have agreed to include the balance of these shares in any registration statement we file on behalf of Mr. Icahn with regard to the registration for sale of our shares held by Mr. Icahn, provided the contractual restrictions and applicable lock-up period of these shares have lapsed.

William P. Benac. In July 2005, we entered into an employment agreement with William P. Benac to serve as our chief financial officer for a period of one year. The agreement is effective as of April 22, 2005, and automatically renews for successive one-year terms unless terminated by either party at least 180 days before the expiration of the then applicable term.

Under the terms of the agreement, Mr. Benac will receive a minimum annual base salary of $250,000. Mr. Benac is also entitled to a non-prorated cash bonus of at least $150,000 for the 2005 fiscal year. Criteria for cash bonuses that may be awarded for each year the agreement is extended are subject to negotiation and will be determined during the first quarter of each calendar year the agreement is renewed. It is expected that the target bonus amounts during such years will not be less than $150,000.

In addition to the salary and bonus compensation described above, Mr. Benac will receive a one-time special cash bonus of $500,000 on April 22, 2007 if, prior to that date, we issue common stock to the public in an offering registered with the SEC or Mr. Icahn sells his controlling interest in us to a third party in a private transaction. If at any time on or before April 22, 2007, we terminate Mr. Benac’s employment without cause, he resigns for good reason, or a change in control occurs, he will be entitled to receive the special cash bonus of $500,000 upon the occurrence of such event. In addition, if we terminate Mr. Benac’s employment other than for cause, death or disability, or if he terminates his employment for good reason, he is entitled to receive a lump sum severance payment of $200,000. Mr. Benac’s right to the special cash bonus of $500,000 and any severance immediately terminates if his employment is terminated for cause or he resigns without good reason.

Mr. Benac will be reimbursed for reasonable and necessary business related expenses, including those expenses associated with commuting from Dallas to our headquarters in St. Charles, Missouri, such as air and car travel and reasonable living expenses. He is eligible to participate in all health, medical, retirement and other employee benefit plans we generally provide to our senior executives. Mr. Benac’s employment agreement also contains provisions requiring him to protect our confidential information during his employment and at all times thereafter.

Mr. Benac may terminate his employment for good reason upon at least 30 days prior written notice to us, or without good reason upon at least 60 days prior written notice to us. We may terminate Mr. Benac’s employment without cause upon 30 days written notice or immediately for cause or upon his death or disability.

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James A. Cowan. In December 2005, we entered into an employment agreement with Mr. Cowan to serve as our chief operating officer through December 31, 2008, unless earlier terminated pursuant to the agreement.

Under the terms of the agreement, Mr. Cowan receives a base salary at an annual rate of $300,000 per year. Mr. Cowan is also entitled to an annual bonus for each calendar year of employment ending on or after December 31, 2006 of up to 50% of his then applicable base salary, provided certain performance targets established by our board of directors are achieved.

In addition to the compensation described above, we have agreed to grant to Mr. Cowan, on the pricing of our initial public offering of common stock registered with the SEC, an option to purchase 1.25% of our shares of common stock to be outstanding immediately following the closing of this offering, assuming the over-allotment option is not exercised. The exercise price of the option will be equal to the fair market value of the common stock at the time of grant.

Mr. Cowan is eligible to participate in all health, medical, retirement and other employee benefit plans we generally provide to our senior executives. In addition, he will be reimbursed for the reasonable use of an automobile and for the payment of reasonable country club dues (excluding initiation fees) on terms consistent with our other senior executives.

Mr. Cowan may terminate the agreement upon 30 days written notice. We may terminate Mr. Cowan’s employment at any time, with or without cause. If Mr. Cowan’s employment is terminated due to death or disability, he is entitled to receive earned and accrued base salary and unreimbursed business expenses due and unpaid as of the date of his termination, bonus compensation earned and due with respect to a completed calendar year but not paid as of the date of termination, and a pro-rated portion of his bonus compensation payable for any incomplete calendar year. If Mr. Cowan is terminated without cause, he is entitled to receive earned and accrued base salary and unreimbursed business expenses due and unpaid as of the date of his termination, bonus compensation earned and due with respect to a completed calendar year but not paid as of the date of termination, a pro-rated portion of his bonus compensation payable for any incomplete calendar year and, in addition, a continuation of the payment of the base salary he would have earned through December 31, 2008 had he continued to be employed by us through such date. If Mr. Cowan resigns or if we terminate Mr. Cowan for cause, he is entitled to receive earned and accrued base salary and unreimbursed business expenses due and unpaid as of the date of his termination.

Mr. Cowan’s employment agreement contains non-competition and non-solicitation provisions that prohibit Mr. Cowan from directly or indirectly competing with us during the term of his employment and generally for a one-year period thereafter. Mr. Cowan’s employment agreement also contains provisions requiring him to protect confidential information during his employment and at all times thereafter.

Equity incentive plan

2005 Equity Incentive Plan. We expect to adopt prior to the completion of this offering, our 2005 equity incentive plan to provide long-term incentives and rewards to our employees, officers, directors, consultants and advisors. The 2005 plan permits us to issue stock and grant stock options, restricted stock, stock units and other equity interests to purchase or acquire up to 1.0 million shares of our common stock. Awards covering no more than 300,000 shares may be granted to any person during any fiscal year. If any award expires, or is terminated, surrendered or forfeited, then shares of common stock covered by the award will again be available for grant under the 2005 plan. The 2005 plan is administered by our board of directors or a committee of the board. The board or committee has broad discretion to determine the terms of an award granted under the 2005 plan, including, to the extent applicable, the vesting schedule, purchase or grant price, option exercise price, or the term of the option or other award; provided that the exercise price of any options granted under the 2005

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plan may not be less than the fair market value of the common stock on the date of grant. The board or committee also has discretion to implement an option exchange program, whereby outstanding stock options are exchanged for stock options with a lower exercise price, substitute another award of the same or different type for an outstanding award, and accelerate the vesting of, including, as applicable, lapse of restrictions with respect to, stock options and other awards at any time. The terms and conditions of stock options or other awards granted under the 2005 plan will be set forth in a separate agreement between us and the recipient of the award.

Concurrently with the pricing of this offering, we intend to grant a total of approximately 541,176 options to purchase shares of our common stock under our 2005 equity incentive plan, including the following estimated number of shares to our executive officers and key employees:


	Estimated
	Number of
Executive Officer/Key Employee	Shares

James A. Cowan		250,000
Jackie R. Pipkin		52,941
Alan C. Lullman		52,941
Michael R. Williams		52,941

Under the terms of his employment agreement, James A. Cowan is entitled to receive an option to purchase 1.25% of our shares of common stock to be outstanding immediately following the closing of this offering (excluding the shares that may be issued upon the exercise, if any, of the over-allotment option). As a result, the actual number of shares subject to the option granted to Mr. Cowan will be proportionately adjusted if the number of shares to be issued by us in this offering is increased or decreased. The actual number of shares to be subject to the options granted to Mssrs. Pipkin, Lullman and Williams will be determined by dividing the dollar value of the shares allocated to each of them by the exercise price. For the purpose of estimating the number of shares to be subject to these options, the table above assumes an exercise price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus. All of the options will be issued at an exercise price equal to the fair market value of the shares on the date of the grant, which we anticipate will be the initial public offering price. Subject to the completion of this offering, the options will have a term of five years and vest in equal annual installments over a three year period. If this offering is not completed, these options will terminate.

Retirement plans

Supplemental Executive Retirement Plan. Mr. Unger is entitled to benefits from a supplemental executive retirement plan, or SERP. The SERP benefit is generally equal to the benefit that would be provided under the Employees’ Retirement Plan of ACF Industries LLC, if certain Internal Revenue Code limits and exclusions from compensation under the retirement plan did not apply, less the actual benefit payable under the ACF retirement plan. ACF is responsible for payment of that portion of Mr. Unger’s SERP benefit related to service with ACF prior to the 1994 ACF asset transfer and we are responsible for payment of that portion of the benefit related to service with us after that transfer. The SERP benefits were frozen effective as of March 31, 2004. As a result, no further benefits are accruing under the SERP. These benefits are generally paid at the same time and in the same form as the participant’s benefit under the retirement plan. No funds have been set aside for the benefits payable under the SERP. The estimated annual SERP benefit for Mr. Unger is $117,799, of which $106,769 is payable by us and $11,030 is payable by ACF.

Pension Plan. We provide pension benefits to certain of our salaried employees, including Mr. Unger, Mr. Finn and Mr. Lullman, under the Employees’ Retirement Plan of ACF Industries, LLC. Each executive’s benefit under the retirement plan is based on 2.25% of average annual compensation for each year of service after April 30, 1981; plus the highest of the executive’s annual compensation for five consecutive years of employment prior to May 1, 1981 that results in the highest such average

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multiplied by number of years of service completed prior to May 1, 1981; plus a fixed dollar amount. This fixed dollar amount is $12,800 for Mr. Unger, $15,600 for Mr. Finn and $6,108 for Mr. Lullman. For purposes of this plan, years of service include years of service with both ACF and us. This total is then reduced by an amount equal to 0.5% of the executive’s final average compensation multiplied by the number of years of service up to 35. The benefits under this plan were frozen effective as of March 31, 2004. As a result, no additional benefits are accruing under this plan.

The benefits under the ACF retirement plan are generally paid monthly for the life of the executive, following retirement in the form of a joint and survivor annuity. As most recently determined by the actuaries for the retirement plan, based on current years of service with us and ACF, the estimated annual pension commencing at age 65 for each of the named executives is as follows: Mr. Unger: $99,633; Mr. Finn: $72,966; and Mr. Lullman: $49,752. These named executives are fully vested in their retirement plan benefits.

Postretirement Obligations. We also provide postretirement health and life insurance benefits for certain of our salaried employees under plans sponsored by ACF. Our named executive officers may become eligible for these benefits if they retire after attaining specified age and service requirements. In anticipation of this offering, we have assumed sponsorship of these benefits for our employees.

Executive Survivor Insurance Plan. We provide an executive survivor insurance plan for certain of our salaried employees, including the named executive officers. This plan provides life insurance benefits to the qualified spouse of a named executive officer upon his death during his employment or following retirement at or after age 55. We have purchased a group term life insurance policy to off-set the cost of providing this benefit. Benefits payable under this plan are separate from any benefit payable under our retirement plans. If the named executive officer retires and dies after attaining age 55, then his qualified spouse is entitled to a monthly benefit equal to what would have been payable under our retirement plan if the named executive officer had retired with a 50% joint and survivor benefit. If the named executive officer dies while actively employed and before attaining age 55, then his qualified spouse is entitled to a monthly benefit equal to 20% of the named executive officer’s salary, reduced by any amount payable under the survivor provisions of our retirement plan. If the named executive officer dies while actively employed and on or after attaining age 55, then his qualified spouse is entitled to a benefit equal to the greater of (a) the benefit described in the preceding sentence (for death while employed and not yet 55) and (b) the amount determined as if the named executive officer had retired on the first day of the month coincident with or next following the date of death. In no event may the amounts paid under this plan exceed $6,500 per month. We have reserved the right to amend, modify or terminate this plan.

Executive incentive plan

2005 Executive Incentive Plan. We established our 2005 executive incentive plan to provide additional compensation to eligible participants for their contribution to the achievement of our objectives, to encourage and stimulate superior performance, and to assist in attracting and retaining highly qualified key employees. Our key managers, other than James J. Unger, James A. Cowan and William P. Benac, are eligible to participate in the 2005 executive incentive plan. The plan permits us to make cash awards to participants based upon a percentage of each participant’s base salary, as measured against each participant’s personal performance and our financial performance. Personal performance goals are established by each participant and his or her supervisor at the beginning of each fiscal year. Our financial performance goals are based on certain EBITDA targets relating to our performance at each of our facilities, Ohio Castings and us as a whole, as established by our board of directors based on our annual business plan. Participants are entitled to payment of a partial award if, during a fiscal year, a participant, among other things, dies, retires or becomes permanently disabled, provided that the participant was an active employee for a minimum of 30 consecutive calendar days during such fiscal year. The plan is subject to the control and supervision of our chief executive officer and our board of directors.

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Certain relationships and related party transactions

Other than the transactions described below, for the last three full fiscal years there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we are or will be a party:


4	in which the amount involved exceeded or will exceed $60,000; and

4	in which any director, executive officer, holder of more than 5% of our common stock on an as-converted basis or any member of their immediate family has or will have a direct or indirect material interest.

We believe that each of the transactions described below that is to remain in effect following the completion of this offering is on terms no less favorable to us than could have been obtained from unaffiliated third parties. Although we do not have a separate conflicts policy, we intend to comply with Delaware law with respect to transactions involving potential conflicts. Delaware law requires that all transactions between us and any director or executive officer are subject to full disclosure and approval of the majority of the disinterested members of our board of directors, approval of the majority of our stockholders or the determination that the contract or transaction is intrinsically fair to us.

TRANSACTIONS WITH CARL C. ICAHN AND ENTITIES AFFILIATED WITH CARL C. ICAHN

Overview

Our company was formed in 1988 as a company beneficially owned by Carl C. Icahn. Mr. Icahn is our principal beneficial stockholder and is the chairman of our board of directors. We grew our company through the transfer of certain assets to us from ACF, a company also beneficially owned by Mr. Icahn. Since our formation, we have entered into agreements relating to the acquisition of assets from and disposition of assets to entities controlled by Mr. Icahn, the provision of goods and services to us by entities controlled by Mr. Icahn, the provision of goods and services by us to entities affiliated with Mr. Icahn and other matters involving entities controlled by Mr. Icahn. We receive substantial benefit from these agreements and we expect that in the future, we will continue to conduct business with entities affiliated with or controlled by Mr. Icahn. In addition, we receive other benefits from our affiliation with Mr. Icahn and companies controlled by Mr. Icahn, such as financial and advisory support, sales support and our participation in buying groups and other arrangements with entities controlled by Mr. Icahn. Until recently, most of our capital needs have been provided by entities controlled by Mr. Icahn. Lease sales agents of ARL, a company beneficially owned by Mr. Icahn, and ACF, in connection with their own leasing sales activities, have, from time to time, referred their customers or contacts to us that prefer to purchase rather than lease railcars, which has, in some cases, led to us selling railcars to these customers or contacts. At this time there is no formal arrangement under which these referrals are provided and we do not compensate ARL, ACF or any of their leasing sales agents for any railcar sales that we make as a result of these referrals. As an accommodation to some of their customers and contacts that they referred to us, ARL and ACF from time to time accepted orders to purchase our railcars and then assigned those orders to us. ARL and ACF have discontinued accepting orders to sell railcars on our behalf. See “Risk factors—Risks related to our business—After this offering, companies affiliated with Carl C. Icahn will continue to be important suppliers and customers,” “Risk factors—Risks related to our business—Services being provided to us by ARL, an entity controlled by Carl C. Icahn, may not be sufficient to meet our needs, which may require us to incur additional costs,” “Risk factors—Risks related to our business—After this offering, we may have reduced access to resources of, and benefits provided by, entities affiliated with Carl C. Icahn” and “Risk factors—Risks related to our business—We could be liable for liabilities associated

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with pension plans sponsored by companies controlled by Carl C. Icahn” for a description of certain risks associated with our affiliation with Mr. Icahn and entities affiliated with Mr. Icahn.

We describe below the material arrangements and other relationships that we are, or have been, a party to with Mr. Icahn and entities affiliated with Mr. Icahn since January 1, 2002. As noted below, some of these arrangements and relationships have been terminated or otherwise will no longer be in effect following the completion, and the application of the net proceeds of, this offering.

Application of the net proceeds of this offering

We intend to use the net proceeds of this offering to, among other things, repay certain indebtedness that we owe to entities controlled by Mr. Icahn and to redeem all of the outstanding shares of our preferred stock, all of which are held by Mr. Icahn and his affiliates. As of September 30, 2005, the total amount of this indebtedness outstanding was approximately $60.1 million, including accrued interest of $1.3 million. As a result, entities controlled by Mr. Icahn will receive approximately $20.0 million of the net proceeds of this offering. We also intend to use the net proceeds of this offering to repay in full amounts due under our industrial revenue bonds. As of September 30, 2005, the total amount of this indebtedness outstanding was approximately $8.3 million in principal amount and $0.3 million in accrued interest. The industrial revenue bonds are guaranteed by affiliates of Mr. Icahn and these affiliates will be released from such guarantees upon the repayment of the bonds. In addition James J. Unger, our president and chief executive officer, and his wife own $0.4 million of the industrial revenue bonds. See “Use of proceeds,” “—Guarantees of indebtedness by ACF and other related parties—Industrial revenue bonds” and “Certain transactions involving James J. Unger—Industrial revenue bonds” and the transactions described below for more information.

Redemption of new preferred stock

Concurrently with the closing of this offering, we intend to use approximately $91.3 million of the net proceeds of this offering to redeem our new preferred stock, including all accumulated and unpaid dividends due on our new preferred stock. See “—Certain transactions involving American Railcar Leasing LLC—The ARL exchange” for more information. We will redeem each outstanding share of new preferred stock for an amount equal to the liquidation preference of each share of new preferred stock, which is $1,000 per share, plus all accumulated and unpaid dividends on each share of new preferred stock through the date of the redemption. Assuming the redemption occurred on September 30, 2005, the aggregate amount required to redeem all of the outstanding shares of our new preferred stock, including accumulated and unpaid dividends, would have been $91.3 million. All of our new preferred stock is held by entities beneficially owned and controlled by Mr. Icahn.

Redemption of mandatorily redeemable preferred stock

On or before the closing of this offering, and prior to the merger, we intend to redeem our one outstanding share of mandatorily redeemable preferred stock, which is held by Mr. Icahn. As of September 30, 2005, there was $770 of accumulated and unpaid dividends on that stock. This share became mandatorily redeemable for $1,000 on February 1, 2005.

CERTAIN TRANSACTIONS WITH ACF INDUSTRIES LLC AND AMERICAN RAILCAR LEASING LLC

Overview

We have entered into a variety of agreements and transactions with ACF Industries LLC (which we refer to, along with its predecessor ACF Industries, Inc., as ACF), American Railcar Leasing LLC (which we refer to as ARL) and certain other parties related to these companies. These transactions and agreements are described in further detail below. During the periods discussed, ACF and ARL

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were beneficially owned and controlled by Mr. Icahn, and they continue to be so owned and controlled.

On October 1, 1994, under an asset transfer agreement with ACF, we acquired from ACF, properties and assets used in its railcar components manufacturing business and its railcar servicing business at specified locations, and certain intellectual property rights associated with the transferred assets and businesses, as well as specified assets used in the manufacture and sale of industrial size mixing bowls. We refer to this transaction as the 1994 ACF asset transfer.

In 2004, ACF and its subsidiaries, through a series of transactions, transferred some of the railcar fleets that they then owned and held primarily for lease to third parties, to ARL and its subsidiaries. At the time, we owned all the common interests of ARL. As of June 30, 2005, we transferred our entire interest in ARL in exchange for the redemption of shares of our new preferred stock, in a transaction we refer to as the ARL exchange. All of our shares of new preferred stock were and continue to be owned by entities beneficially owned and controlled by Mr. Icahn.

Manufacturing operations

Prior to the transfer of ACF’s and its subsidiaries’ railcar fleets to ARL and its subsidiaries in 2004, we sold railcars and railcar components to ACF and its subsidiaries for use in their railcar fleets. Since the transfer of these fleets to ARL, we sell railcars to ARL. We believe that since ARL’s formation in 2004, we have been the only supplier of railcars to ARL, although ARL is not precluded from purchasing railcars from others. In 2002, 2003 and 2004, our revenues from manufacturing operations included $63.6 million, $62.9 million and $64.4 million, respectively, from transactions with affiliates. In the nine months ended September 30, 2005, our revenues from manufacturing operations included $44.5 million from transactions with affiliates. Most of these revenues were attributable to railcars and railcar components that we sold to ACF, ARL and their respective subsidiaries. As of September 30, 2005, our backlog included $44.1 million for railcar orders by ARL. These orders are on substantially the same terms as we provide to our other customers.

ACF has also been a significant supplier of components for our business. Components supplied to us by ACF include tank railcar heads, wheel sets and various structural components. In 2002, 2003 and 2004, we purchased inventory of $15.7 million, $19.0 million, and $31.3 million, respectively, of components from ACF. In the nine months ended September 30, 2005, we purchased inventory of $56.2 million from ACF. As of September 30, 2005, we had outstanding purchase orders for $8.7 million of inventory from ACF.

During 2003 and 2004, Castings LLC, a joint venture partner in Ohio Castings, was a wholly owned subsidiary of ACF Industries Holding Corp., an indirect parent of ACF that is beneficially owned and controlled by Mr. Icahn. Effective January 1, 2005, we acquired Castings LLC from ACF Industries Holding Corp. as described under “—Certain transactions involving Ohio Castings.” Our cost of railcar manufacturing for the years ended December 31, 2003 and 2004, and the nine months ended September 30, 2005 included $3.0 million, $19.9 million and $14.0 million, respectively, in railcar components produced by Ohio Castings. Expenses of $0.4 million and $3.2 million paid to Castings LLC under a supply agreement are also included in the cost of railcar manufacturing for the years ended December 31, 2003 and 2004, respectively. We also have been charged $0.2 million in the year ended December 31, 2003 relating to certain costs incurred by Castings LLC in the establishment of Ohio Castings. In the first nine months of 2005, we purchased $15.0 million in railcar components produced by Ohio Castings. Inventory at December 31, 2003, 2004 and September 30, 2005 includes approximately $0.3 million, $5.3 million and $2.3 million, respectively, of purchases from Ohio Castings. In September 2003, Castings LLC loaned Ohio Castings $3.0 million under a promissory note which was due in January 2004. The note was renegotiated for $2.2 million and bears interest at

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4.0%. Payments are made in quarterly installments with the last payment due in November 2008. As of September 30, 2005, $2.2 million was outstanding under this note.

Railcar services

We have provided railcar repair and maintenance services and fleet management services to ACF and ARL and we continue to provide these services to ARL. As of September 30, 2005, we managed approximately 22,000 railcars for ARL, and we also provide repair and maintenance services for these railcars. In 2002, 2003 and 2004, our revenues from railcar repair and refurbishment and fleet management services included $12.8 million, $11.0 million and $18.2 million, respectively, from transactions with affiliates. In the nine months ended September 30, 2005, our revenues from railcar repair and refurbishment and fleet management services included $16.0 million from transactions with affiliates. Almost all of these revenues were attributable to services we provided to ACF, ARL and their subsidiaries.

Cost of railcar services

Through September 30, 2005, ACF and ARL have provided certain leasing and other fleet management services that we were required to provide to subsidiaries of ARL, under management agreements we entered into with those companies in July and October 2004. Through March 31, 2005, we paid to ACF and, from March 31, 2005 through September 30, 2005, we paid to ARL, the leasing and management fees we received under those management agreements. In 2004 and the nine months ended September 30, 2005, we incurred $1.2 million and $2.0 million, respectively, of cost of railcar services in connection with these arrangements. These arrangements were terminated on June 30, 2005, when we assigned our management agreements to ARL.

Administrative and other support expenses

During the current and last three fiscal years, ACF and ARL have provided us outsourced services related to our information technology needs as well as other administrative and support services. We incurred $0.3 million of expenses in each of 2002, 2003 and 2004 in connection with these arrangements, and in the first nine months of 2005, we incurred $1.1 million of such expenses. The increased expenses in 2005 reflect additional information technology services not provided in previous years. Until October 2004, ACF received the majority of our cash receipts and disbursed our cash on our behalf. We maintained a receivable/payable from affiliates bearing interest at ACF’s internal cost of funds in accordance with an administration agreement between ACF and us, which is described below. Under this arrangement, ACF provided financing to us based on our cash flow needs. We have also subleased our headquarters facility which is located in St. Charles, Missouri, from affiliates. The St. Charles property is owned by an affiliate of James Unger, our chief executive officer. In each of 2002, 2003 and 2004, our expenses included $0.1 million of rent and $0.4 million of related facility expense payments required to be made to affiliates associated with our lease of the St. Charles headquarters facility. In the nine months ended September 30, 2005, our expenses included $0.1 million of rent and $0.2 million of related expense for these facilities.

Amounts due to affiliates

As of September 30, 2005, net amounts due to affiliates were $22.1 million relating to the above referenced transactions and included:


4	an amount payable to ACF of $2.1 million;

4	an amount payable of $7.4 million to Arnos Corp., a company beneficially owned and controlled by Mr. Icahn, representing the principal and interest due under a demand note in the principal amount of $7.0 million that we issued in connection with a working capital loan from Arnos Corp.; and

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4	an amount payable of $12.6 million to ACF Industries Holding Corp., a company beneficially owned and controlled by Mr. Icahn, representing the principal and interest due under a demand note in the principal amount of $12.0 million that we issued in connection with our purchase of Castings LLC from ACF Industries Holding Corp.

We intend to use a portion of the net proceeds of this offering to repay in full the notes to Arnos Corp. and ACF Industries Holding Corp.

CERTAIN TRANSACTIONS WITH ACF INDUSTRIES LLC

1994 ACF asset transfer

On October 1, 1994, under an asset transfer agreement with ACF, we acquired properties and assets used in ACF’s railcar components manufacturing business and its railcar servicing business at specified locations, and certain intellectual property rights associated with the transferred assets and businesses, as well as specified assets used in the manufacture and sale of industrial size mixing bowls. We refer to this transaction as the 1994 ACF asset transfer. The properties covered by this agreement included the following:


		Component manufacturing
Repair plants		plant and warehouse	Mobile units

Bude, Mississippi		Jackson, Missouri	Addis, Louisiana
Milton, Pennsylvania			Convent, Louisiana
Tennille, Georgia			Ingleside, Texas
North Kansas City,			Deer Park, Texas
	Missouri		Taft, Louisiana
Longview, Texas

Pursuant to the 1994 ACF asset transfer, ACF retained and agreed to indemnify us for certain liabilities and obligations relating to ACF’s conduct of business and ownership of the assets at these locations prior to their transfer to us, including liabilities relating to employee benefit plans, subject to exceptions for transferred employees described below, workers compensation, environmental contamination and third-party litigation. As part of the 1994 ACF asset transfer, we agreed that the ACF employees transferred to us would continue to be permitted to participate in ACF’s employee benefit plans for so long as we remained a part of ACF’s controlled group, and we further agreed to assume the ongoing expense for such employees’ continued participation in those plans. In the event that we cease to be a member of ACF’s controlled group, ACF is required to terminate the further accrual of benefits by our transferred employees under its benefit plans, and we and ACF are required to cooperate to achieve an allocation of the assets and liabilities of the benefits plans accrued after the 1994 ACF asset transfer with respect to each of our and ACF’s employees as we and ACF deem appropriate. Upon completion of the offering, we will no longer be a part of ACF’s controlled group. As of December 31, 2004, we estimate that the total retained liabilities of ACF under the asset transfer agreement were $11.1 million, primarily relating to pension and postretirement liabilities. In 2002, 2003 and 2004, ACF paid $0.7 million, $0.6 million and $1.4 million, respectively, relating to the retained liabilities. In the nine months ended September 30, 2005, ACF paid $0.8 million relating to the retained liabilities.

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the ACF Employee Retirement Plan and the ACF Shippers Car Line Pension Plan, and certain ACF sponsored retiree medical and retiree life insurance plans.

Under the arrangement, in exchange for our agreement to pay ACF approximately $9.2 million and to become the sponsoring employer under the ACF Shippers Car Line Pension Plan, including the assumption of all obligations for our and ACF’s employees under that plan, we have ceased to be a participating employer under the ACF Employee Retirement Plan and have been relieved of all further reimbursement obligations, including for our employees, under that plan. We estimate that as of December 1, 2005, the ACF Shippers Car Line Pension Plan had $4.0 million of unfunded liabilities on an accounting basis, that were assumed by us in connection with this arrangement. The payment of approximately $9.2 million which was made by us to ACF represents our and ACF’s estimate of the payment required to be made by us to achieve an appropriate allocation of the assets and liabilities of the benefit plans accrued after the 1994 ACF asset transfer, with respect to each of our and ACF’s employees in connection with the two plans. This allocation was determined in accordance with the actuarial calculations that would be required to used by us and ACF in allocating plan assets and liabilities at such time as we cease to be a member of ACF’s controlled group.

As part of this arrangement, we also assumed sponsorship of a retiree medical and retiree life insurance plan for active and identified former ARI employees that were covered by the ACF sponsored medical and retiree life insurance plans, and ACF was relieved of all further liability under those plans with respect to those employees. We estimate that as of December 1, 2005, the post-retirement liability related to this obligation was approximately $3.9 million. ACF paid us $2.9 million to assume the pre-1994 portion of this liability.

In connection with the foregoing, we recorded an expense of approximately $10.4 million in December 2005 including $6.3 million for the net cash payment to ACF, $4.0 million for the unfunded liability assumed under the Shippers Car Line pension plan and $3.9 million for the assumption and sponsorship of an unfunded post retirement medical and retiree life insurance plan for our employees. We have previously accrued an estimated liability related to this settlement of $3.8 million.

In connection with the 1994 ACF asset transfer, certain of our employees, including Mr. Unger, our president, continued to participate in the ACF supplemental executive retirement plan, or SERP. The SERP benefit is generally equal to the benefit that would be provided under the Employees’ Retirement Plan of ACF Industries LLC, if certain Internal Revenue Code limits and exclusions from compensation under the retirement plan did not apply, less the actual benefit payable under the ACF retirement plan. ACF remained responsible for payment of that portion of those employees’ SERP benefit related to service with ACF prior to the 1994 ACF asset transfer and we are responsible for payment of that portion of the benefit related to service with us after that transfer. The SERP benefits were frozen effective as of March 31, 2004. As a result, no further benefits are accruing under the SERP. In anticipation of our no longer being a part of ACF’s control group upon completion of this offering, we are adopting a separate SERP to cover our allocable portion of the SERP obligations to those of our employees who participated in ACF’s SERP. ACF will remain obligated to pay that portion of any liability associated with the SERP related to service of those employees performed prior to the 1994 ACF asset transfer. See “Management—Retirement plans.”

Also in connection with the 1994 ACF asset transfer, we entered into the following administrative and operating agreements with ACF, effective as of October 1, 1994:


4	manufacturing services agreement;

4	license agreement from ACF;

4	license agreement to ACF;

4	administration agreement;

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4	railcar servicing agreement; and

4	supply agreement.

Only the manufacturing services agreement and the two license agreements remain in effect. The other agreements were all terminated as of April 1, 2005.

Manufacturing Services Agreement. Under the manufacturing services agreement, ACF has agreed to manufacture and, upon our instruction, to distribute various railcar components and industrial size mixing bowls, using assets that we acquired pursuant to the 1994 ACF asset transfer, but were retained by ACF at its Milton, Pennsylvania and Huntington, West Virginia manufacturing facilities. This equipment included presses and related equipment that were impracticable to move to our premises. ACF transferred its Milton, Pennsylvania repair facility, but not its Milton, Pennsylvania manufacturing facility, to us under the 1994 asset transfer. Under our manufacturing services agreement, ACF is required to maintain and insure the equipment during the term of the manufacturing services agreement and is permitted to use the equipment for its own purposes in the ordinary course of business, provided that it does not interfere with ACF’s timely performance of the manufacturing services under this agreement. Upon termination of the agreement, ACF is required, at our expense, to remove and deliver the equipment to any site designated by us in the continental U.S. As payment for these services, we agreed to pay ACF its direct costs, including the cost of all raw materials not supplied by us, and a reasonable allocation of overhead expenses attributable to the services, including the cost of maintaining employees to provide the services. We believe that payments to ACF under this arrangement are comparable to the cost we would have paid to an independent third party to manufacture such components. This agreement remains in effect and automatically renews on an annual basis unless we provide six months prior written notice of termination. There is no right of termination for ACF under this agreement.

License Agreement from ACF. Under a license agreement with ACF, ACF granted us a non-exclusive, perpetual, royalty-free license to the patents and other intellectual property owned by it, which could be used by us in the conduct of our business, but did not exclusively relate to our business, including the 12 patents and one patent application, now issued as a patent, listed in that agreement. Of these patents, ten patents have expired and the remaining three patents have expiration dates ranging from 2012 to 2013. These remaining patents primarily relate to pneumatic outlets and railcar hopper gaskets. Under this agreement, we could not use the licensed patents for the production of railcar components for third parties without the consent of ACF. In 1997, ACF transferred the patents covered by this license to us. This license is not assignable by either party, without the prior consent of the other, except in connection with the sale of substantially all of either party’s business. This agreement remains in effect.

License Agreement to ACF. Under a license agreement with ACF, we granted ACF a non-exclusive, perpetual, royalty-free license to the intellectual property exclusively relating to our business that was transferred to us in the 1994 asset transfer. There are no restrictions on ACF’s use of the information licensed under this agreement. This license is not assignable by either party, without the prior consent of the other, except in connection with the sale of substantially all of either party’s business. This agreement remains in effect.

Administration Agreement. Under an administration agreement with ACF, ACF agreed to provide us information technology services and other administrative services. We agreed to pay ACF its direct costs, including a reasonable allocation of overhead expenses attributable to providing the services, including the cost of maintaining employees to provide the services. Until October 2004, under this agreement, ACF received the majority of our cash receipts and disbursed our cash on our behalf. We maintained a receivable/payable from affiliates bearing interest at ACF’s internal cost of funds. Under this arrangement, ACF provided financing to us based upon our cash flow needs. We also subleased

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our headquarters facility in St. Charles Missouri from ACF under this agreement. This agreement was terminated on April 1, 2005.

Railcar Servicing Agreement. Under a railcar servicing agreement with ACF, we agreed to provide railcar repair and maintenance services for railcars owned or managed by ACF and leased or held for lease by ACF, to provide ACF with fleet management services, and to provide ACF with consulting services on safety and environmental matters. For maintenance services, ACF paid us for components at our actual costs plus 15% and for our labor at a fixed rate that has been adjusted from time to time to reflect market conditions. Painting, lining and cleaning services were billed at current market rates, and fleet management services were billed at a monthly fee per railcar serviced. Other services were billed at our direct costs plus 5.0%. Our direct costs included a reasonable allocation of overhead expenses attributable to providing the services, including the cost of maintaining employees to provide the services. This agreement was terminated on April 1, 2005.

Supply Agreement. Under a supply agreement with ACF, we agreed to manufacture and sell to ACF specified components. In addition, under this agreement, we agreed to sell ACF other components manufactured by us on terms not less favorable than the terms on which we sell those products to third parties. We sold specified components under the agreement for a price equal to the then current market price or our cost plus a gross profit percentage. This gross profit percentage has been revised annually and has ranged from 5.0% to 25.0%, depending upon the component and which one of our facilities manufactured the product. This agreement was terminated on April 1, 2005.

2005 consulting agreements

On April 1, 2005, we entered into two business consultation agreements with ACF, whereby each of us has agreed to provide services to the other. ACF has agreed to assist us in labor litigation, labor relations support and consultation, and labor contract interpretation and negotiation. In 2005, we anticipate that we will require the services of at least one ACF employee for no more than 20 hours a week under this agreement. We pay $150 per hour for these services. We have agreed to provide ACF with engineering consultation and advice. In 2005, we anticipate that ACF will require the services of at least one of our employees for no more than 20 hours a week under this agreement. ACF is required to pay $150 per hour for these services. We do not believe that either party will be required to pay more than $60,000 per year under either of these agreements. These agreements remain in effect through March 2015, subject to the right of either party to terminate the agreement on 30 days notice.

1998 loan to ACF

In October 1998, we loaned $57.2 million to ACF. This loan accrued interest at a variable rate, adjusted quarterly, equal to LIBOR plus 3.0% or the base rate of the Industrial Bank of Japan plus 1.5%, as elected by ACF. This loan was repaid in full in 2004 in connection with the formation and capitalization of ARL. See “Certain transactions involving American Railcar Leasing LLC—Formation of ARL and related contributions.” In 2002, 2003 and 2004, we recorded interest income relating to this loan of $2.8 million, $2.5 million and $1.8 million, respectively.

Guarantees of indebtedness by ACF and other related parties

Industrial Revenue Bonds. ACF and ACF Industries Holding Corp., an indirect parent of ACF, have guaranteed our obligations under our industrial revenue bonds. As of September 30, 2005, $8.3 million was outstanding under these bonds. These bonds are payable through 2011 and, as of September 30, 2005, bear interest at rates ranging from 7.75% to 8.5%. We intend to use a portion of the net proceeds of this offering to repay these bonds in full. ACF and ACF Industries Holding Corp. will be released from their guarantees upon the repayment of the bonds.

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Senior Secured Credit Facility. In 1998, we obtained a senior secured credit facility from the Industrial Bank of Japan, as administrative agent, with a total availability of $150 million. This facility was guaranteed by ACF, ACF Industries Holding Corp., an indirect parent of ACF, and NMI Holding Corp., a wholly owned subsidiary of ACF Industries Holding Corp. This facility was repaid in full in July 2004.

Subordinated Note. In 1998, we obtained a $10.0 million loan from Boeing Financial under a promissory note. This note was guaranteed by ACF and ACF Industries Holding Corp. and was repaid in full in July 2004.

CIT Equipment Lease. In 1999, we entered into a master equipment lease agreement with CIT that was guaranteed by ACF. This lease relates to equipment that we use to manufacture railcars and railcar components at our Paragould, Marmaduke, Jackson and Kennett facilities. The interest rate on the lease is LIBOR plus 2.75% (6.1% at September 30, 2005). As of September 30, 2005, a balance of $7.4 million was outstanding under this lease, including amounts subject to our purchase option at the expiration of the lease term. The lease expires in November 2005. While we are not committed to do so, we currently intend to exercise our purchase option under this lease.

Interest rate swap contract

In 2001, we entered into a derivative instrument in the form of an interest rate swap contract with an underlying notional amount of $49.0 million. We assigned this contract to ACF, effective as of the date of its execution, and all rights and obligations of this contract were passed through to ACF. This contract expired on February 28, 2005.

Raw material and other product purchase agreements

We, together with ACF, have entered into agreements for the purchase of products by each of us, including steel and gas. Under these agreements, we and ACF are entitled to favorable pricing based upon the aggregate amount of our purchases. We allocate the benefits under these purchase agreements proportionally based upon the amount of products that each of us purchases during the applicable period.

Corbitt equipment lease and purchase

We leased from ACF, leasehold improvements and equipment that we placed in service at our Corbitt manufacturing facility in St. Charles, Missouri from July 1, 2001 through June 1, 2003. During 2002, 2003 and 2004, we paid ACF $0.3 million, $0.3 million and $0.4 million, respectively, for the use of these leasehold improvements and equipment. We did not pay any rent for these assets in 2005. Rather, on March 31, 2005, we purchased these assets from ACF for $2.8 million.

CERTAIN TRANSACTIONS INVOLVING AMERICAN RAILCAR LEASING LLC

Formation of ARL and related contributions

We formed ARL as our wholly owned subsidiary in June 2004. As part of the formation of ARL and its further capitalization, ACF and certain of its subsidiaries transferred to us and ARL railcars and related leases, as well as equity in certain of ACF’s subsidiaries that supported ACF’s leasing business, in exchange for shares of our new preferred stock and preferred interests of ARL. We, in turn, contributed the assets we so received to ARL and made a cash investment in ARL of $25.0 million.

In connection with these transactions, all of which occurred in 2004:


4	we were issued all of the common interests in ARL;

4	ACF and its subsidiaries were issued all of ARL’s B-1 preferred interests;

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4	Vegas Financial Subsidiary Corp., a company beneficially owned and controlled by Mr. Icahn, was issued all of ARL’s B-2 preferred interests in exchange for an investment of $40 million;

4	we issued 34,500 shares of our new preferred stock to ACF and its subsidiaries; and

4	our $57.2 million loan to ACF was repaid in full.

The B-1 and B-2 preferred interests of ARL were convertible into shares of our new preferred stock. On June 30, 2005, the terms of these interests were modified, among other things, to eliminate this conversion feature.

The ARL exchange

On June 30, 2005, we transferred all our interest in ARL, consisting of all its outstanding common A units, pro rata, to the holders of our new preferred stock in exchange for the redemption of 116,116 shares of our new preferred stock held by them, including all dividends accumulated on those shares. The value of the total liquidation preference and accumulated dividends on the shares of new preferred stock redeemed in this transaction was $125.0 million. All of the shares of our new preferred stock are held by companies beneficially owned and controlled by Mr. Icahn. We refer to this transaction as the ARL exchange.

Agreements relating to ARL and its subsidiaries

In 2004 and 2005, we entered into the following agreements relating to ARL and its subsidiaries:


4	railcar management agreements with ARI First LLC and ARI Third LLC;

4	ACF administration agreement;

4	ARL railcar services agreement;

4	ARL railcar servicing agreement;


4	ARL services agreement;



4	guarantee of ARI Second LLC loan agreement; and



4	ARL trademark license agreement.

The ARL railcar servicing agreement and the ARL services agreement remain in effect. All other agreements were terminated or assigned to ARL at various times during 2005, as described below.

Railcar Management Agreements with ARI First LLC and ARI Third LLC. On July 20, 2004, we entered into a railcar management agreement with ARI First LLC and on October 7, 2004, we entered into a railcar management agreement with ARI Third LLC. ARI First LLC and ARI Third LLC are wholly owned subsidiaries of ARL that hold railcars forming a portion of the railcar lease fleet owned by ARL and its subsidiaries. Under these railcar management agreements, we provided ARI First and ARI Third with marketing, leasing, administration, maintenance, recordkeeping and insurance services for the railcars owned by ARI First and ARI Third. ARI First and ARI Third paid us a monthly management fee, based upon the number of railcars covered, and reimbursed us for all costs incurred in performing these services. We assigned this agreement to ARL effective June 30, 2005.

ACF Administration Agreement. On July 20, 2004, we entered into an ACF administration agreement with ACF and ARL. Under this agreement, ACF agreed to provide us with railcar management services which we were required to provide under the management agreements with ARI First LLC and ARI Third LLC described above (except maintenance, insurance and risk management services). In addition, ACF provided us with lease administration services for the railcars owned by

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ARI First LLC and ARI Third LLC, respectively. Under this agreement, we were required to pay ACF a per railcar monthly fee equal to the per railcar fee that we were receiving under our railcar management agreements with ARI First LLC and ARI Third LLC. This Agreement terminated on March 31, 2005.

ARL Railcar Services Agreement. On April 1, 2005, we entered into a railcar services agreement with ARL. Under this agreement, ARL provided us with railcar services which we were required to provide to ARI First LLC and ARI Third LLC under our railcar management agreements with ARI First LLC and ARI Third LLC. Under this agreement, we were required to pay ARL all compensation that we received from ARI First LLC and ARI Third LLC under our railcar management agreements with them. This agreement was terminated July 1, 2005 when we assigned our railcar management agreements with ARI First LLC and ARI Third LLC to ARL.

ARL Railcar Servicing Agreement. On April 1, 2005, we entered into a railcar servicing agreement with ARL. Under this agreement, we provide ARL with substantially the same services that we had previously provided to ACF under our 1994 railcar servicing agreement with ACF described above under “Certain transactions with ACF Industries, LLC—1994 ACF asset transfer—Railcar servicing agreement,” for railcars that ARL or its affiliates own or manage. Under the agreement with ARL, ARL is required to pay us a monthly fee, based upon the number of railcars covered, plus a charge for labor, components and materials. For materials and components we manufacture, ARL pays us our current market price, and for materials and components we purchase, ARL pays us our purchasing costs plus 15%. For painting, lining and cleaning services, ARL pays the then current market rate. For other labor costs, ARL pays us a fixed hourly fee. We have further agreed that the charges for our services will be on at least as favorable terms as our terms with any other party for similar purposes. The per railcar fees paid to us through September 30, 2005 under the railcar management agreements for ARI First LLC and ARI Third LLC are credited against the amounts due us under the ARL railcar servicing agreement. This agreement extends through June 30, 2006, and is automatically renewable for additional one year periods unless either party gives at least six months prior notice of termination. If we elect to terminate this agreement, we must pay a termination fee of $0.5 million.

ARL Services Agreement. On April 1, 2005, we entered into a services agreement with ARL. Under this agreement, ARL has agreed to provide us certain information technology services, rent and building services and limited administrative services. The rent and building services includes our use of our headquarters space which is leased by ARL from an affiliate of James J. Unger, our President and Chief Executive Officer. See “Certain transactions involving James J. Unger.” Also under this agreement, we have agreed to provide purchasing and engineering services to ARL. Each party is required to pay the other a fixed annual fee for each of the listed services under this agreement. The total annual fees that we are required to pay ARL for all services that ARL is providing us, under this agreement is $2.2 million, and the total annual fees that ARL is required to pay us for all services that we are providing ARL under this agreement is $0.2 million. The annual fees under our services agreements with ARI and ARL were determined in the following manner: first, we allocated for the cost of each department of ARL providing services to us; second, we calculated these costs based on the number of employees providing these services and the attendant cost associated with them; third, we applied the same formula to value the services we provided to ARL; and finally, we calculated the fee allocations relating to rent and building services using an agreed upon percentage of space utilized and headcount between the two companies. Either party may terminate any of these services, and the associated costs for those services, on at least six months prior notice at any time prior to the termination of the agreement on December 31, 2007.

Guarantee of ARI Second LLC Loan Agreement. On July 20, 2004, ARI Second LLC, a subsidiary of ARL, entered into a loan agreement with HSH Nordbank AG, under which ARI Second borrowed

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$64.3 million. We guaranteed ARI Second LLC’s obligations under this loan agreement. This loan was repaid in full in October 2004.

ARL Trademark License Agreement. Effective June 30, 2005, we entered into a trademark license agreement with ARL. Under this agreement, for an annual fee of $1,000, we have granted a nonexclusive, perpetual, worldwide license to ARL to use our common law trademarks “American Railcar” and the “diamond shape” of our ARI logo. ARL may only use the licensed trademarks in connection with the railcar leasing business.

Health and welfare benefit plans

Employees of ARL participate in our 401(k) plan and certain of our health and welfare benefit plans. ARL is responsible for the costs and benefits for its employees under these plans. As part of the ARL Exchange, ARL is in the process of establishing its own 401(k) and health and welfare benefit plans.

CERTAIN TRANSACTIONS INVOLVING OHIO CASTINGS

In February 2003, Castings LLC, a wholly owned subsidiary of ACF Industries Holding Corp., a company beneficially owned and controlled by Mr. Icahn, acquired a one-third ownership interest in Ohio Castings Company, LLC, a joint venture with affiliates of two established railcar industry companies, Amsted Industries, Inc. and The Greenbrier Companies, Inc. Ohio Castings operates two foundries that produce heavy castings. Effective as of January 1, 2005, ACF Industries Holding Corp. transferred its interest in Castings LLC to us for total consideration of $12.0 million, represented by a promissory note bearing an interest rate equal to the prime rate plus 0.5%, payable on demand. In connection with this transfer, we agreed to assume certain, and indemnify all liabilities related to and arising from ACF Industries Holding Corp.’s investment in Castings LLC, including the guarantee of Castings LLC’s obligations to Ohio Castings, the guarantee of bonds in the amount of $10.0 million issued by the State of Ohio to one of Ohio Castings’ subsidiaries, of which $8.0 million was outstanding as of September 30, 2005, and the guarantee of a $2.0 million state loan that provides for purchases of capital equipment, of which $0.8 million was outstanding as of September 30, 2005. The two other partners of Ohio Castings have made similar guarantees of these obligations.

We have entered into supply agreements with an affiliate of Amsted Industries, Inc., an affiliate of one of our Ohio Castings joint venture partners, to purchase up to 25% and 33%, respectively, of the products produced at each of two foundries being operated by Ohio Castings. We pay Castings LLC a fee in connection with those purchases. Our purchases and payments relating to these purchases and fees are set forth above under “—Certain transactions with ACF Industries LLC and American Railcar Leasing LLC—Manufacturing operations.”

CERTAIN TRANSACTIONS WITH MR. ICAHN AND OTHER RELATED ENTITIES

Carl C. Icahn and ARL loans

In October 2004, we advanced Mr. Icahn $165.0 million under a secured promissory note due in 2007 and bearing interest at the prime rate plus 1.75%. At the same time, we borrowed $130.0 million from ARL represented by a promissory note due in 2007 and bearing interest at the prime rate plus 1.5%. In January 2005, we transferred our entire interest in the Icahn note to ARL in exchange for additional common interests in ARL and in satisfaction of our obligations under the ARL note. In 2004 and the nine months ended September 30, 2005, we recorded interest income of $2.0 million and $0.8 million, respectively, and interest expense of $1.5 million and $0.6 million, respectively, relating to these notes.

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Arnos Corp. note payable

In December 2004, we borrowed $7.0 million from Arnos Corp., a company beneficially owned and controlled by Mr. Icahn, under a promissory note. The note bears interest at the prime rate plus 1.75% (8.0% at September 30, 2005) and is payable on demand. We intend to use a portion of the net proceeds of this offering to repay this loan in full.

Transactions with Vegas Financial Corp.

Purchase of Mandatorily Redeemable Payment-in -Kind Preferred Stock. We issued to Vegas Financial Corp., a company beneficially owned and controlled by Mr. Icahn, 15,000 shares of our mandatorily redeemable payment-in -kind preferred stock, known as PIK preferred stock, for $15.0 million in June 2002, and 10,000 shares of PIK preferred stock for $10.0 million in June 2003.

Conversion into and Purchase of New Preferred Stock. In July 2004, Vegas Financial Corp. converted all of its PIK preferred stock, consisting of 95,517.04 shares of PIK preferred stock, representing all of the shares of PIK preferred stock outstanding, into 96,171 shares of our new preferred stock. In addition, Vegas Financial Corp. simultaneously purchased an additional 67,500 shares of new preferred stock for $67.5 million. We intend to use the net proceeds of this offering to, among other things, redeem all of the outstanding shares and pay all accumulated dividends on our new preferred stock, including those held by Vegas Financial Corp. As a result, Vegas Financial Corp, will receive $89.2 million of the net proceeds of this offering. See “— Transactions with Carl C. Icahn and entities affiliated with Carl C. Icahn — Redemption of new preferred stock.”

Transactions with Hopper Investments LLC

In 2004, Hopper Investments LLC, a company beneficially owned and controlled by Mr. Icahn, paid $42.5 million for 1,818,976 shares of our common stock.

Transactions with Philip Environmental Services Corp.

We engaged Philip Environmental Services Corp., an environmental consulting company beneficially owned and controlled by Mr. Icahn, to provide environmental consulting services to us. In the nine months ended September 30, 2005 we incurred $0.2 million of expenses associated with that engagement. We have continued to use Philip Environmental Services Corp. to assist us in our environmental compliance.

CERTAIN TRANSACTIONS INVOLVING JAMES J. UNGER

Facilities leasing arrangements

Our headquarters facilities and our Corbitt manufacturing facilities in St. Charles, Missouri are owned by St. Charles Properties, an entity controlled by James J. Unger, our President and Chief Executive Officer. Under two leases dated May 1, 1995 and March 1, 2001, St. Charles Properties leased these facilities to ACF. We reimbursed ACF for our proportionate share of the cost of renting these facilities through April 1, 2005. On that date, ACF assigned the March 1, 2001 lease, covering our Corbitt manufacturing facilities, to us and the May 1, 1995 lease, covering our and ARL’s headquarters facility, to ARL. We continue to maintain our headquarters in the space that has been leased to ARL. Under our services agreement with ARL, we pay ARL $0.5 million per year, which represents the estimate of our proportionate share of ARL’s costs for the space that we use under the lease, including rent and building services. The terms of the underlying leases are as follows.

Under the terms of the lease agreement assigned to ARL, ARL has leased approximately 78,000 square feet of office space. The lease expires on December 31, 2010. Rent is payable monthly in the amount

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of $25,000. Under the terms of the lease, ARL pays one-tenth of the property tax and insurance expenses levied upon the property. In addition, ARL must pay 17% and 54% of any increase in taxes and property insurances costs, respectively. ARL is also required to repair and maintain the facility at its costs and expense. We use approximately 46% of the office space leased by ARL under this agreement.

Under the terms of the lease agreement assigned to us, we occupy approximately 128,000 square feet of space which we use for our Corbitt manufacturing facility. The lease expires on February 28, 2011 with an option to renew the lease for one successive five-year term. Rent is payable monthly in the amount of $29,763. The maximum monthly rent for the renewal period is $32,442 per month. We are required to pay 27% of all tax increases assessed or levied upon the property and the cost of the utilities we use, as well as repair and maintain the facility at our expense.

In 2002, 2003 and 2004, we incurred $0.8 million of costs to affiliates in each of 2002, 2003 and 2004, under these two leasing arrangements, and in the nine months ended September 30, 2005, we incurred $0.6 million of such costs.

Grant of common stock

Upon completion of this offering, we will issue Mr. Unger that number of shares of our common stock obtained by dividing $6.0 million by the initial public offering price set forth on the cover page of this prospectus. Assuming an initial public offering price of $17.00, which represents the midpoint of the range on the cover page of this prospectus, Mr. Unger will receive 352,941 shares of our common stock. If the initial public offering price is $16.00 per share, Mr. Unger will receive 375,000 shares of our common stock. If the initial public offering price is $18.00 per share, Mr. Unger will receive 333,333 shares of our common stock. See “Management—Executive compensation—Employment agreements” for more information.

Industrial revenue bonds

Mr. Unger and his wife own $0.4 million of the industrial revenue bonds issued by Paragould, Arkansas. Mr. Unger and his wife purchased these bonds at the time of their original issuance on the same terms that all non-affiliated entities purchased the bonds. We intend to use the net proceeds of this offering to repay in full the amounts due under all of our industrial revenue bonds. Mr. Unger and his wife will receive approximately $0.4 million upon our repayment of the amounts due under the industrial revenue bonds.

REGISTRATION RIGHTS

We intend to enter into a new registration rights agreement, which will become effective upon the completion of this offering, with certain of our existing stockholders as of immediately prior to the completion of this offering. The stockholders that are party to the new registration rights agreement will have the right to require us, subject to certain terms and conditions, to register their shares of our common stock under the Securities Act of 1933, as amended, at any time following expiration of the lock-up period as described under the caption “Shares eligible for future sale—Lock-up Agreements”. These stockholders collectively will have an aggregate of five demand registration rights, three of which relate solely to registration on a short-form registration statement, such as a Form S-3. In addition, if we propose to register any additional shares of our capital stock under the Securities Act, these stockholders will be entitled to customary “piggyback” registration rights, which will entitle them to include their shares of common stock in a registration of our securities for sale by us or by other security holders. In addition, in our letter agreement with James Unger, we have agreed to use commercially reasonable efforts to file a registration statement on Form S-8 with the SEC to cover the registration of 141,176 shares of our common stock (assuming an initial public offering price of

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$17.00, which represents the midpoint of the range on the cover page of this prospectus). We have agreed to include the balance of Mr. Unger’s shares in any registration statement we file on behalf of Mr. Icahn with regard to the registration for sale of our shares held by Mr. Icahn, provided the contractual restrictions and applicable lock-up period of Mr. Unger’s shares have lapsed. The registration rights granted under the new registration rights agreement and Mr. Unger’s letter agreement will be subject to customary exceptions and qualifications and compliance with certain registration procedures. Following completion of this offering, 11.5 million shares of common stock, representing 57.5% of our outstanding shares of common stock following completion of this offering, will be entitled to the benefits of these registration rights.

SHARES PURCHASED BY CERTAIN RELATED PARTIES IN THIS OFFERING

The underwriters have reserved a portion of the shares of our common stock for sale in this offering for purchase by certain related parties through a directed share program. In connection with the directed share program, any of our directors, officers, nominees for election as director or an immediate family member of any of these individuals may purchase shares of our common stock with a value in excess of $60,000. See “Underwriting—Directed Share Program” for more information on the directed share program.

FUTURE TRANSACTIONS

All future transactions, if any, between us and any of our officers, directors and principal stockholders and their affiliates, as well as any transactions between us and any entity with which our officers, directors or principal stockholders are affiliated, will be approved in accordance with the then-current SEC rules and regulations, Nasdaq stock market rules and applicable law governing the approval of the transactions.

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Principal stockholders

The following table sets forth information known to us regarding the beneficial ownership of our common stock calculated as of September 30, 2005, and as adjusted to reflect the Transactions and the sale of the common stock offered hereby, by:


4	each stockholder who is known by us to own beneficially more than 5% of our common stock;

4	our chief executive officer and our other most highly compensated executive officers;

4	each of our directors and director nominees; and

4	all of our executive officers and directors as a group.

The number of shares beneficially owned by each stockholder, director or officer is determined according to the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. The number of shares and the percentage ownership of each stockholder prior to this offering is calculated based on 11,147,059 shares of our common stock outstanding immediately after the merger. The percentage ownership of each stockholder after the offering is calculated based on 20,000,000 shares of our common stock outstanding, which is derived from the 11,147,059 shares of our common stock outstanding after the merger and prior to this offering, plus the 8,500,000 shares of our common stock that we intend to issue in this offering and the estimated 352,941 shares of our common stock that we expect to issue to James J. Unger, our president and chief executive officer, but without giving effect to the underwriters’ exercise of the over-allotment option. The number of shares of common stock we will issue to Mr. Unger is based on an assumed initial public offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus. To the extent the initial public offering price changes from this assumed price, the actual number of shares we issue to Mr. Unger will change and, as a result, the number of shares we have outstanding and the ownership percentages after this offering will also change. See Note 5 to the following table for more information. See “Management—Executive compensation—Employment agreements” for more information on the calculation of the number of shares we will issue to Mr. Unger. To the extent that the over-allotment is exercised, we will sell up to an aggregate of 1,275,000 additional shares of our common stock.

The underwriters have reserved a portion of the shares of our common stock for sale in this offering for purchase by certain related parties through a directed share program. In connection with the directed share program, any of our directors, officers, nominees for election as director or an immediate family member of any of these individuals may purchase shares of our common stock with a value in excess of $60,000. See “Certain relationships and related party transactions—Shares purchased by certain related parties in this offering” and “Underwriting—Directed Share Program” for more information on the directed share program. The following table does not reflect any potential purchases under the directed share program.

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									Shares of Common
									Stock Beneficially Owned
	Shares of Common				Shares of Common				After this Offering
	Stock Beneficially				Stock Beneficially				Assuming Full Exercise
	Owned Prior to this				Owned After this				of the Over-Allotment
	Offering				Offering(1)				Option(1)

Name of beneficial owner	Number		Percent		Number		Percent		Number		Percent

Carl C. Icahn ^(2)(3)(4)		11,147,059		100.0%		11,147,059		55.7%		11,147,059		52.4%
Foundation for a Greater Opportunity ⁽²⁾⁽⁴⁾		4,290,918		38.5%		—		—		—		—
James J. Unger ⁽⁵⁾⁽⁶⁾		—		—		352,941		1.8%		352,941		1.7%
James A. Cowan ⁽⁶⁾		—		—		—		—		—		—
William P. Benac ⁽⁶⁾		—		—		—		—		—		—
Alan C. Lullman ⁽⁶⁾		—		—		—		—		—		—
Vincent J. Intrieri ⁽²⁾		—		—		—		—		—		—
Jon F. Weber ⁽²⁾		—		—		—		—		—		—
Keith Meister ⁽²⁾		—		—		—		—		—		—
James C. Pontious ⁽⁶⁾⁽⁷⁾		—		—		—		—		—		—
James M. Laisure ⁽⁶⁾⁽⁷⁾		—		—		—		—		—		—
All directors, director nominees and executive officers as a group ⁽⁸⁾ (10 persons)		11,147,059		100.0%		11,500,000		57.5%		11,500,000		54.1%



(1)	Assumes no other change to the number of shares offered by us as set forth on the cover page of this prospectus. If the number of shares offered by us changes, the ownership percentages after this offering will also change.



(2)	The address of such person is c/o Icahn Associates Corp. and Affiliated Companies, 767 Fifth Avenue, 47th Floor, New York, New York 10153.



(3)	Mr. Icahn beneficially owns 5,037,165 of these shares directly and an additional 1,818,976 of these shares are owned by Hopper Investments, LLC, which is a Delaware limited liability company that is wholly owned by Barberry Corp., which is a Delaware corporation that is wholly owned by Mr. Icahn. The remaining 4,290,918 shares are owned by the Foundation for a Greater Opportunity, or the Foundation, subject to certain agreements with an affiliate of Mr. Icahn, as described in Note 4 below.



(4)	In December 2005 Modal LLC, a Delaware limited liability company that is wholly owned by Mr. Icahn, entered into a stock purchase agreement with the Foundation to acquire all of our common stock held by the Foundation. Pending the closing of this acquisition, the Foundation has granted Modal LLC an irrevocable proxy to vote these shares. The table above assumes that this acquisition will be consummated upon the closing of this offering. These agreements are described under “—Icahn agreement to purchase Foundation shares” set forth below. See also “Risk Factors—Risks related to the purchase of our common stock in the offering—Upon the closing of this offering we may be a “controlled company” within the meaning of the Nasdaq National Market rules and you will not have the same protections afforded to shareholders of other companies that are subject to all of the Nasdaq National Market corporate governance requirements.” If the acquisition of the Foundation’s shares of our common stock does not occur and the irrevocable proxy is terminated, after completion of this offering Mr. Icahn would beneficially own 6,856,141 shares of our common stock, representing approximately 34% of our outstanding common stock, and the Foundation

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Principal stockholders



	would beneficially own 4,290,918 shares of our common stock, representing approximately 22% of our outstanding common stock.



(5)	Represents 352,941 shares we estimate we will issue to Mr. Unger upon the closing of this offering pursuant to the terms of an agreement we entered into with Mr. Unger, assuming an initial offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus. Under the terms of the agreement, the actual number of shares we will issue to Mr. Unger will be such number of shares of our common stock obtained by dividing $6.0 million by the initial public offering price per share of our common stock. If the initial public offering price is $16.00 per share, Mr. Unger will receive 375,000 shares of our common stock, and we will have 20,022,059 shares of common stock outstanding after this offering. If the initial public offering price is $18.00 per share, Mr. Unger will receive 333,333 shares of our common stock, and we will have 19,980,392 shares of common stock outstanding after this offering.



(6)	The address of such person is c/o American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301.



(7)	Mr. Pontious and Mr. Laisure have each consented to serve as a director at such time as our common stock is listed on the Nasdaq National Market.



(8)	Includes Mr. Pontious and Mr. Laisure, each of whom has consented to serve as a director at such time as our common stock is listed on the Nasdaq National Market.

Icahn agreement to purchase Foundation shares

We have been advised that in December 2005 Modal LLC, an affiliate of Mr. Icahn, entered into a stock purchase agreement with the Foundation to acquire the 4,290,918 shares of our common stock held by the Foundation for a purchase price equal to the greater of $100 million or the fair market value of the shares on the date of purchase. If the purchase takes place on the date of, or within five days of the closing of this offering, the fair market value will be the initial public offering price. If the purchase takes place after this five day period, the fair market value will be equal to the average of the closing price of our common stock on the Nasdaq National Market for the five days immediately preceding the acquisition. The purchase price will be payable $10.0 million in cash and the balance in a five year interest-only promissory note with monthly payments of interest at the prime rate. The note may be prepaid without penalty and will be secured by a pledge of all of the shares sold in the transaction. The note also will be secured by the guarantee of High Coast Limited Partnership, which is also an affiliate of Mr. Icahn. The Foundation will be able to accelerate repayment of the principal due under the note based on its cash needs under terms outlined in the note.

The consummation of this acquisition requires the completion of this offering and the approval of applicable authorities of the State of New York. If the parties obtain this approval, we have been advised that the parties expect that the acquisition would be completed in the first three months of 2006. Pending the closing of this acquisition, and for so long as the stock purchase agreement has not been terminated, the Foundation has granted Modal LLC an irrevocable proxy to vote all of the shares of our common stock held by the Foundation. The stock purchase agreement may be terminated by either party if the acquisition does not occur by May 2006.

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Description of capital stock

The following description of our capital stock is only a summary. You should refer to our certificate of incorporation and bylaws as in effect upon the closing of this offering, which are included as exhibits to the registration statement of which this prospectus is a part. See “Where you can find more information.”

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

Our authorized capital stock as of September 30, 2005, without giving effect to the merger, consisted of 12,000 shares of common stock, with a par value of $0.01 per share, 99,000 shares of preferred stock, with a par value of $0.01 per share, which we refer to as our mandatorily redeemable preferred stock, 150,000 shares of payment-in -kind preferred stock, with a par value of $0.01 per share, which we refer to as our PIK preferred stock, and 500,000 shares of new preferred stock, with a par value of $0.01 per share. As of September 30, 2005, without giving effect to the merger, there were 1,195 shares of our common stock outstanding, one share of our mandatorily redeemable preferred stock outstanding, no shares of our PIK preferred stock outstanding and 82,055 shares of our new preferred stock outstanding. As of September 30, 2005, our shares of common stock were held of record by a total of three stockholders.

Prior to the closing of this offering, we will reincorporate in Delaware through a merger with and into our wholly owned Delaware subsidiary. Upon completion of that merger our certificate of incorporation will authorize us to issue up to 50,000,000 shares of common stock, with a par value of $0.01 per share, and up to 1,000,000 shares of preferred stock, with a par value of $0.01 per share.

In connection with this merger, we will exchange all of our shares of common stock for shares of common stock on a 9,328.083-for-one basis. Following this merger, and prior to our issuance of shares of common stock in this offering, 11,147,059 shares of our common stock will be outstanding.

After giving effect to our issuance of 8,500,000 shares of common stock in this offering and our issuance of 352,941 shares we estimate we will issue to James J. Unger, our president and chief executive officer, upon the closing of this offering pursuant to the terms of an agreement we entered into with Mr. Unger (assuming an initial offering price of $17.00 per share, which represents the midpoint of the range on the cover of this prospectus), we will have 20,000,000 shares of common stock outstanding and 21,275,000 shares of common stock outstanding if the underwriters exercise their over-allotment option in full. Under the terms of our agreement with Mr. Unger, the actual number of shares we will issue to Mr. Unger will be such number of shares of our common stock obtained by dividing $6.0 million by the initial public offering price per share of our common stock. If the initial public offering price is $16.00 per share, Mr. Unger will receive 375,000 shares of our common stock, and we will have 20,022,059 shares of common stock outstanding after this offering and 21,297,059 shares of common stock outstanding if the underwriters exercise their over-allotment option in full. If the initial public offering price is $18.00 per share, Mr. Unger will receive 333,333 shares of our common stock, and we will have 19,980,392 shares of common stock outstanding after this offering and 21,255,392 shares of common stock outstanding if the underwriters exercise their over-allotment option in full.

In connection with the merger, we will exchange one share of new preferred stock, with substantially the same terms of our existing new preferred stock, for each of the 82,055 shares of new preferred stock then outstanding. We intend to use a portion of the net proceeds of this offering to redeem all of the outstanding shares of our new preferred stock. Immediately prior to the merger, we will also redeem our one share of mandatorily redeemable preferred stock. Following the closing of this offering, we will be authorized to issue 1,000,000 shares of preferred stock, with a par value of $0.01 per share, and there will be no shares of any series of preferred stock designated or outstanding.

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Description of capital stock

Common stock

The holders of our common stock are entitled to one vote for each share held of record on the applicable record date on all matters voted on by our shareholders. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock exclusively possess all voting power. All holders of our common stock have the same voting rights and vote together as a single class. Our certificate of incorporation does not provide for cumulative voting in the election of directors or any preemptive rights to purchase or subscribe for any stock or other securities, and there are no conversion rights or sinking fund or redemption provisions with respect to our common stock. Consequently, holders of more than 50% of the shares of our common stock are able to elect all directors eligible for election each year. Holders of our common stock are entitled to dividends and other distributions out of assets legally available if and when declared by our board of directors. Upon our liquidation, dissolution or winding up, the holders of our common stock are entitled to share pro rata in the distribution of all of our assets remaining available for distribution after satisfaction of all liabilities, including any prior rights of any preferred stock which may be outstanding.

Preferred stock

Upon completion of this offering, our board of directors, subject to limitations prescribed by law, will be permitted to establish one or more series of preferred stock and to determine, with respect to any series of preferred stock, the terms and rights of that series, including:


4	the designation of the series;

4	the number of shares of the series, which our board may, except where otherwise provided in the preferred stock designation, increase and decrease, but not below the number of shares then outstanding;

4	whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;

4	the dividend rate, if any, and the dates at which dividends, if any, will be payable;

4	the redemption rights and price or prices, if any, for shares of the series;

4	the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;

4	the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of our company;

4	whether the shares of the series will be convertible into shares of any other class or series, or any other security, of our company or any other corporation, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;

4	restrictions on the issuance of shares of the same series or of any other class or series;

4	the voting rights, if any, of the holders of the series;

4	the limitations, if any, on payment of dividends or making contributions on and on purchase and redemption of, common stock or shares ranking junior to such series; and

4	restrictions, if any, on the creation of indebtedness.

The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisition and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or discourage a third party from acquiring, a majority of our outstanding voting stock. Our board of directors may issue preferred stock with voting and conversion rights that could

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adversely affect the voting power of the holders of our common stock. There are no current agreements or understandings for the issuance of preferred stock, and our board of directors has no present intention to issue any shares of preferred stock.

CORPORATE OPPORTUNITIES

Our certificate of incorporation provides that none of Mr. Icahn or entities controlled by him (referred to as the Founding Stockholders), or any director, officer, member, partner, stockholder or employee of a Founding Stockholder (each referred to as a Specified Party), will have any duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as we do. In the event that any Founding Stockholder or Specified Party acquires knowledge of a potential transaction or matter that may be a corporate opportunity for any Founding Stockholder or Specified Party, as applicable, and us, none of the Founding Stockholders or Specified Parties has any duty to communicate or offer such corporate opportunity to us, and any Founding Stockholder or Specified Party is entitled to pursue or acquire such corporate opportunity for itself or to direct such corporate opportunity to another person or entity and we have no right in or to such corporate opportunity or to any income or proceeds derived therefrom.

In the event that one of our directors, officers or employees who is also a Founding Stockholder or a Specified Party acquires knowledge of a potential transaction or matter which may be a corporate opportunity or otherwise is then exploiting any corporate opportunity, subject to the following paragraph, we will have no interest in such corporate opportunity and no expectation that such corporate opportunity be offered to us, so that such Specified Party will have no duty to communicate or present such corporate opportunity to us, will have the right to hold such corporate opportunity for its own account or to recommend, sell, assign or transfer such corporate opportunity to persons other than us and will not breach any fiduciary duty to us by reason of the fact that such Specified Party pursues or acquires such corporate opportunity for itself, directs, sells, assigns or transfers such corporate opportunity to another person or does not communicate information regarding such corporate opportunity to us.

Notwithstanding the foregoing, our certificate of incorporation will provide that we do not renounce any interest or expectation we may have in any corporate opportunity that is offered to any Founding Stockholder or Specified Party, if such opportunity is expressly offered to such Founding Stockholder or Specified Party solely in, and as a direct result of, his or her capacity as our director, officer or employee.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

Our bylaws will require us to indemnify each of our directors and officers to the fullest extent permitted by law. Our bylaws will also provide that an amendment to the indemnification provisions of our bylaws will not affect the liability of any director or officer for any act or omission occurring prior to the effective time of such amendment.

OTHER PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS

Board of directors

Our certificate of incorporation will provide that the number of directors shall be determined in the manner specified by our bylaws, and may be increased or decreased from time to time in the manner prescribed by our bylaws. Our certificate of incorporation will further provide that we may not adopt or approve the classification of our directors for staggered terms other than by an amendment to the certificate of incorporation duly adopted by our stockholders. Currently, our board of directors consists of five directors.

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Description of capital stock

Prohibition against certain anti-takover defenses.

Our certificate of incorporation will provide that we shall not, other than by an amendment to our certificate of incorporation duly adopted by our stockholders, adopt or approve any so called rights plan, poison pill or other similar plan, agreement or device designed to prevent or make more difficult a hostile takeover of us by increasing the cost to a potential acquirer of such a takeover either through the issuance of new rights, shares of common stock or preferred stock or any other security or device that may be issued to our stockholders, other than all our stockholders, that carry severe redemption provisions, favorable purchase provisions or otherwise.

Amendment of bylaws

Our Board of Directors and stockholders will be authorized and empowered to adopt, amend and repeal our bylaws.

Inapplicability of Delaware’s antitakeover statute

Our certificate of incorporation will make the anti-takeover protection of Section 203 of The Delaware General Corporation Law, which we refer to as the DGCL, inapplicable to us. Generally, Section 203 of the DGCL provides that any person who acquires direct or indirect beneficial ownership of 15% or more of the outstanding voting stock of a Delaware corporation becomes an “interested shareholder.” Section 203 prohibits a corporation from engaging in any “business combination” with an interested shareholder for a period of three years following the date that such interested shareholder becomes an interested shareholder, unless certain conditions are satisfied. Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder.

The listing requirements of the Nasdaq National Market, which will apply to us while our common stock is listed on the Nasdaq National Market, require stockholder approval of certain issuances equal to or in excess of 20% of the voting power or the number of shares of common stock. These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.

One of the effects of the existence of unissued and unreserved common stock or preferred stock may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.

REGISTRATION RIGHTS

We intend to enter into a new registration rights agreement, which will become effective upon the completion of this offering, with certain of our existing stockholders as of immediately prior to the completion of this offering. The stockholders that are party to the new registration rights agreement will have the right to require us, subject to certain terms and conditions, to register their shares of our common stock under the Securities Act of 1933, as amended, at any time following expiration of the lock-up period as described under the caption “Shares eligible for future sale—Lock-up Agreements.”. These stockholders collectively will have an aggregate of five demand registration rights, three of which relate solely to registration on a short-form registration statement, such as a Form S-3. In addition, if we propose to register any of our capital stock under the Securities Act, our stockholders will be entitled to customary “piggyback” registration rights which will entitle our stockholders to include their shares of common stock in a registration of our securities for sale by us or by other security holders. In addition, in our letter agreement with James Unger, we have agreed to use commercially reasonable efforts to file a registration statement on Form S-8 with the SEC to cover the

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Description of capital stock

registration of 141,176 shares of our common stock (assuming an initial public offering price of $17.00, which represents the midpoint of the range on the cover page of this prospectus). We have agreed to include the balance of Mr. Unger’s shares in any registration statement we file on behalf of Mr. Icahn with regard to the registration for sale of our shares held by Mr. Icahn, provided the contractual restrictions and applicable lock-up period of Mr. Unger’s shares have lapsed. The registration rights granted under the new registration rights agreement and Mr. Unger’s letter agreement are subject to customary exceptions and qualifications and compliance with certain registration procedures. Following the completion of this offering, 11.5 million shares of common stock, representing 57.5% of our outstanding shares of common stock following completion of this offering, will be entitled to the benefits of these registration rights.

QUOTATION OF OUR COMMON STOCK

We expect to have our common stock approved for quotation on the Nasdaq National Market under the trading symbol “ARII.”

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company.

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Shares eligible for future sale

Prior to this offering, there has not been a public market for our common stock. Future sales of substantial amounts of our common stock in the public market, or the possibility of these sales, could adversely affect the trading price of the common stock and could impair our future ability to raise capital through the sale of our equity at a time and price we deem appropriate.

Upon completion of this offering and the merger, we will have outstanding 20,000,000 shares of common stock, subject to increase or decrease based on the actual number of shares we sell in this offering and the number of shares we issue to our chief executive officer. See “Description of capital stock—Authorized and outstanding capital stock” for more information. Of these shares, the 8,500,000 shares sold in this offering, or 9,775,000 shares if the underwriters’ over-allotment option is exercised in full, will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by our “affiliates,” as defined in Rule 144 under the Securities Act, which would be subject to the limitations and restrictions described below.

The remaining 11,500,000 shares of common stock outstanding upon completion of this offering, subject to increase or decrease based on the actual number of shares we issue to our chief executive officer, will be “restricted securities” as defined in Rule 144. Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration such as the exemption provided by Rule 144.

Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144 and 144(k) promulgated under the Securities Act, which rules are summarized below. Subject to the lock-up agreements described below and the provisions of Rules 144 and 144(k), additional shares will be available for sale in the public market as follows:


Number of Shares		Date

0		After the date of this prospectus.
11,147,059		After 180 days from the date of this prospectus.

All of these restricted securities will be eligible for sale in the public market, subject in all cases to the volume limitations and other restrictions of Rule 144, beginning upon expiration of the lock-up agreements described below.

RULE 144

In general, under Rule 144 as currently in effect, beginning 90 days after this offering, a person (or persons whose shares are required to be aggregated), including an affiliate, who has beneficially owned shares of our common stock for at least one year is entitled to sell in any three-month period a number of shares that does not exceed the greater of:



4	1% of then-outstanding shares of our common stock, which is approximately 200,000 shares of our common stock immediately after the completion of this offering; or


4	the average weekly reported trading volume of our common stock on the Nasdaq National Market during the four calendar weeks preceding the filing of a Form 144 with respect to the sale, subject to certain restrictions.

Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

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Shares eligible for future sale

RULE 144(K)

In addition, a person who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years, would be entitled to sell those shares under Rule 144(k) without regard to the manner of sale, public information, volume limitation or notice requirements of Rule 144.

LOCK-UP AGREEMENTS

We have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the SEC a registration statement under the Securities Act relating to any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of UBS Securities LLC and Bear, Stearns & Co. Inc. for a period of 180 days after the date of this prospectus. Our officers, directors, all of our existing stockholders have also agreed, and certain individuals who purchase shares of our common stock through the directed share program may agree, that they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock (other than shares they may sell in this offering) or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of UBS Securities LLC and Bear, Stearns & Co. Inc. until 180 days after the date of this prospectus. UBS Securities LLC and Bear, Stearns & Co. Inc. may, in their sole discretion at any time without notice, release all or any portion of the shares of our common stock held by our officers, directors, existing stockholders and certain individuals who have purchased shares of our common stock in the directed share program, subject to these lock-up agreements.

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Material U.S. income tax considerations for non-U.S. holders

The following summary describes material United States federal income tax consequences of the ownership and disposition of common stock by a Non-U.S. Holder (as defined below) as of the date of this prospectus. This discussion does not address all aspects of United States federal income taxation and does not deal with estate, gift, foreign, state and local tax consequences that may be relevant to such Non-U.S. Holders in light of their personal circumstances. Special U.S. tax rules may apply to certain Non-U.S. Holders, such as “controlled foreign corporations,” “passive foreign investment companies,” corporations that accumulate earnings to avoid U.S. federal income tax, investors in partnerships or other pass-through entities for U.S. federal income tax purposes, dealers in securities, holders of securities held as part of a “straddle,” “hedge,” “conversion transaction” or other risk reduction transaction, and certain former citizens or long-term residents of the United States that are subject to special treatment under the Internal Revenue Code of 1986, as amended (which we also refer to as the Code). Such entities and persons should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them. Furthermore, the discussion below is based upon the provisions of the Code, and regulations, administrative pronouncements of the Internal Revenue Service (which we also refer to as the IRS) and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified with or without retroactive effect so as to result in United States federal income tax consequences different from those discussed below.

If a partnership (or an entity treated as a partnership for U.S. federal income tax purposes) holds the common stock, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Persons who are partners in partnerships holding the common stock should consult their tax advisors.

The authorities on which this summary is based are subject to various interpretations, and any views expressed within this summary are not binding on the IRS or the courts. No assurance can be given that the IRS or the courts will agree with the tax consequences described in this prospectus.

As used herein, a “Non-U.S. Holder” means a beneficial owner of our common stock that is not any of the following for U.S. federal income tax purposes:


4	a citizen or resident of the United States,

4	a corporation, or other entity treated as a corporation for United States federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia,

4	an estate the income of which is subject to United States federal income taxation regardless of its source, or

4	a trust (i) which is subject to primary supervision by a court situated within the United States and as to which one or more United States persons have the authority to control all substantial decisions of the trust, or (ii) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.

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Material U.S. income tax considerations for non-U.S. holders

Prospective purchasers are urged to consult their own tax advisors regarding the U.S. federal income tax consequences, as well as other U.S. federal, state, and local income and estate tax consequences, and non-U.S. tax consequences, to them of acquiring, owning, and disposing of our common stock.

DIVIDENDS

If we make distributions on our common stock, such distributions paid to a Non-U.S. Holder will generally constitute dividends for U.S. federal income tax purposes to the extent such distributions are paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a tax-free return of the Non-U.S. Holder’s investment to the extent of the Non-U.S. Holder’s adjusted tax basis in our common stock. Any remaining excess will be treated as capital gain.

Dividends paid to a Non-U.S. Holder generally will be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. A Non-U.S. Holder of common stock who wishes to claim the benefit of an applicable treaty rate for dividends will be required to (a) properly complete IRS Form W-8BEN (or appropriate substitute form) and certify, under penalties of perjury, that such holder is not a U.S. person and is eligible for the benefits with respect to dividends allowed by such treaty or (b) hold common stock through certain foreign intermediaries and satisfy the certification requirements for treaty benefits of applicable Treasury regulations. A Non-U.S. Holder eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

This United States withholding tax generally will not apply to dividends that are effectively connected with the conduct of a trade or business by the Non-U.S. Holder within the United States, and, if a treaty applies, attributable to a United States permanent establishment or fixed base of the Non-U.S. Holder. Dividends effectively connected with the conduct of a trade or business, as well as those attributable to a United States permanent establishment or fixed base of the Non-U.S. Holder under an applicable treaty, are subject to United States federal income tax generally in the same manner as if the Non-U.S. Holder were a U.S. person, as defined under the Code. Certain IRS certification and disclosure requirements must be complied with in order for effectively connected income to be exempt from withholding. Any such effectively connected dividends received by a Non-U.S. Holder that is a foreign corporation may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

GAIN ON DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to United States federal income tax (or any withholding thereof) with respect to gain recognized on a sale or other disposition of common stock unless:


4	The Non-U.S. Holder is an individual who is present in the United States for 183 or more days in the taxable year of the disposition and certain other conditions are met,

4	the gain is effectively connected with a trade or business of the Non-U.S. Holder in the United States and, where a tax treaty applies, is attributable to a United States permanent establishment or fixed base of the Non-U.S. Holder, or

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Material U.S. income tax considerations for non-U.S. holders


4	we are or have been a “U.S. real property holding corporation” within the meaning of Section 897(c)(2) of the Code, also referred to as a USRPHC, for United States federal income tax purposes at any time within the five-year period preceding the disposition (or, if shorter, the Non-U.S. Holder’s holding period for the common stock).

Gain recognized on the sale or other disposition of common stock and effectively connected with a United States trade or business, or attributable to a United States permanent establishment or fixed base of the Non-U.S. Holder under an applicable treaty, is subject to United States federal income tax on a net income basis generally in the same manner as if the Non-U.S. Holder were a U.S. person, as defined under the Code. Any such effectively connected gain from the sale or disposition of common stock received by a Non-U.S. Holder that is a foreign corporation may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

In general, a corporation is a USRPHC if the fair market value of its “U.S. real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide (domestic and foreign) real property interests and its other assets used or held for use in a trade or business. For this purpose, real property interests include land, improvements, and associated personal property. We believe that we currently are not a USRPHC. In addition, based on these financial statements and current expectations regarding the value and nature of our assets and other relevant data, we do not anticipate becoming a USRPHC.

If we become a USRPHC, a Non-U.S. Holder nevertheless will not be subject to United States federal income tax if our common stock is regularly traded on an established securities market, within the meaning of applicable Treasury regulations, and the Non-U.S. Holder holds no more than five percent of our outstanding common stock, directly or indirectly, during the five-year testing period identified in the third bullet point immediately above. We expect that our common stock will be quoted on the Nasdaq National Market and may be regularly traded on an established securities market in the United States so long as it is so quoted.

INFORMATION REPORTING AND BACKUP WITHHOLDING

We must report annually to the IRS and to each Non-U.S. Holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the Non-U.S. Holder resides under the provisions of an applicable income tax treaty.

The United States imposes a backup withholding tax on dividends and certain other types of payments to United States persons (currently at a rate of 28%) of the gross amount. Dividends paid to a Non-U.S. Holder will not be subject to backup withholding if proper certification of foreign status (usually on an IRS Form W-8BEN) is provided, and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person, or the holder is a corporation or one of several types of entities and organizations that qualify for exemption, also referred to as an exempt recipient.

Information reporting and backup withholding generally are not required with respect to the amount of any proceeds from the sale or other disposition of shares of common stock by a Non-U.S. Holder outside the United States through a foreign office of a foreign broker that does not have certain specified connections to the United States. However, if a Non-U.S. Holder sells or otherwise disposes of shares of common stock through the U.S. office of a United States or foreign broker, the broker will be required to report the amount of proceeds paid to such holder to the IRS and to apply the backup

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Material U.S. income tax considerations for non-U.S. holders

withholding tax (currently at a rate of 28%) to the amount of such proceeds unless appropriate certification (usually on an IRS Form W-8BEN) is provided to the broker of the holder’s status as either an exempt recipient or a non-U.S. person, and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person. Information reporting also applies if a Non-U.S. Holder sells or otherwise disposes of its shares of common stock through the foreign office of a broker deriving more than a specified percentage of its income from United States sources or having certain other connections to the United States and the foreign broker does not have certain documentary evidence in its files of the Non-U.S. Holder’s foreign status.

Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against such holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.

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Underwriting

We are offering the shares of our common stock described in this prospectus through the underwriters named below. UBS Securities LLC and Bear, Stearns & Co. Inc. are the representatives of the underwriters and joint book-running managers of this offering. We have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, each of the underwriters has severally agreed to purchase the number of shares of common stock from us listed next to its name in the following table:


		Number of
Underwriters		shares

UBS Securities LLC
Bear, Stearns & Co. Inc.
BB&T Capital Markets, a division of Scott & Stringfellow, Inc.
CIBC World Markets Corp.
Morgan Keegan & Company, Inc.

	Total		8,500,000

The underwriting agreement provides that the underwriters must buy all of the shares if they buy any of them. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below.

Our common stock is offered subject to a number of conditions, including:


4	receipt and acceptance of our common stock by the underwriters; and

4	the underwriters’ right to reject orders in whole or in part.

We have been advised by the representatives that the underwriters intend to make a market in our common stock but that they are not obligated to do so and may discontinue making a market at any time without notice.

In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses electronically.

OVER-ALLOTMENT OPTION

We have granted the underwriters an option to buy up to an aggregate of 1,275,000 additional shares of our common stock. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this offering. The underwriters have 30 days from the date of this prospectus to exercise this option. If the underwriters exercise this option, they will each purchase additional shares on a pro rata basis in approximately the same proportion to the amounts specified in the table above.

Directed Share Program

At our request, the underwriters have reserved up to 5% of the shares of common stock for sale at the public offering price set forth on the cover page of this prospectus to persons who are directors, officers, employees, and certain vendors, suppliers, customers and business associates, or who are otherwise associated with us through a directed share program. The number of shares of common stock available for sale to the general public will be reduced by the number of directed shares purchased by participants in the directed share program. Any directed shares not purchased will be

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Underwriting

offered by the underwriters to the general public on the same basis as all other shares of common stock offered. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with the sales of the directed shares. We have been advised by UBS Securities LLC that any participants in the directed share program who purchase more than $100,000 of our common stock will be required to sign a lock-up agreement, the form of which will be the same as that of the lock-up agreements to be entered into by all of our directors, officers and existing stockholders. See “Shares eligible for future sale— Lock-up agreements” for a description of the material terms of these agreements.

COMMISSIONS AND DISCOUNTS

Shares sold by the underwriters to the public will initially be offered at the initial offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $ per share from the initial public offering price. Any of these securities dealers may resell any shares purchased from the underwriters to other brokers or dealers at a discount of up to $ per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms. Sales of shares made outside of the United States may be made by affiliates of the underwriters. Upon execution of the underwriting agreement, the underwriters will be obligated to purchase the shares at the prices and upon the terms stated in the underwriting agreement and, as a result, will thereafter bear any risk associated with changing the offering price to the public or other selling terms.

The following table shows the per share and total underwriting discounts and commissions we will pay to the underwriters assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional shares.


		No exercise	Full exercise

Per share		$	$
	Total	$	$

We estimate that the total expenses of this offering payable by us, not including the underwriting discounts and commissions, will be approximately $3.6 million.

NO SALES OF SIMILAR SECURITIES

We, our executive officers and directors and all of our existing stockholders have entered, and certain individuals who purchase shares of our common stock in this offering through the directed share program may enter, into lock-up agreements with the underwriters. Under these agreements, subject to certain exceptions, we and each of these persons may not, without the prior written approval of UBS Securities LLC and Bear, Stearns & Co. Inc., offer, sell, contract to sell or otherwise dispose of, directly or indirectly, or hedge our common stock or securities convertible into or exchangeable for our common stock. These restrictions will be in effect for a period of 180 days after the date of this prospectus. At any time and without public notice, UBS Securities LLC and Bear, Stearns & Co. Inc. may, in their sole discretion, release all or some of the securities from these lock-up agreements. Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day lock-up period we issue an earnings release or material news or a material event relating to us occurs or (2) prior to the expiration of the 180-day lock-up period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day lock-up period, then the restrictions described above will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

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Underwriting

INDEMNIFICATION

We have agreed to indemnify the underwriters against certain liabilities, including certain liabilities under the Securities Act. If we are unable to provide this indemnification, we have agreed to contribute to payments the underwriters may be required to make in respect of those liabilities.

LISTING

We expect to apply to have our common stock approved for quotation on the Nasdaq National Market under the trading symbol “ARII.”

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company.

PRICE STABILIZATION, SHORT POSITIONS

In connection with this offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our common stock, including:


4	stabilizing transactions;

4	short sales;

4	purchases to cover positions created by short sales;

4	imposition of penalty bids; and

4	syndicate covering transactions.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common stock while this offering is in progress. These transactions may also include making short sales of our common stock, which involve the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering and purchasing shares of common stock in the open market to cover positions created by short sales. Short sales may be “covered short sales,” which are short positions in an amount not greater than the underwriters’ over-allotment option referred to above, or may be “naked short sales,” which are short positions in excess of that amount.

The underwriters may close out any covered short position by either exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.

Naked short sales are sales made in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchased in this offering.

The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have

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repurchased shares sold by or for the account of that underwriter in stabilizing or short covering transactions.

As a result of these activities, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the underwriters at any time. The underwriters may carry out these transactions on the Nasdaq National Market, in the over-the -counter market or otherwise.

DETERMINATION OF OFFERING PRICE

Prior to this offering, there has been no public market for our common stock. The initial public offering price was determined by negotiation by us and the representatives of the underwriters. The principal factors considered in determining the initial public offering price include:


4	the information set forth in this prospectus and otherwise available to representatives;

4	our history and prospects and the history and prospects for the industry in which we compete;

4	our past and present financial performance and an assessment of our management;

4	our prospects for future earnings and the present state of our development;

4	the general condition of the securities markets at the time of this offering;

4	the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

4	other factors deemed relevant by the underwriters and us.

AFFILIATIONS

Certain of the underwriters and their affiliates have provided in the past and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us for which they will be entitled to receive customary fees.

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Legal matters

An opinion regarding the legality of the shares of common stock being offered in this offering is being provided by Brown Rudnick Berlack Israels LLP, New York, New York. The underwriters have been represented by Shearman & Sterling LLP, New York, New York.

Experts

Our consolidated financial statements as of and for the year ended December 31, 2004 included in this prospectus were audited by Grant Thornton LLP (Grant Thornton), our independent registered public accounting firm, as stated in their report appearing therein. Our consolidated financial statements as of December 31, 2003 and for each of the years in the two year period ended December 31, 2003 have been included in this prospectus in reliance upon the report of KPMG LLP (KPMG), our former independent registered public accounting firm, appearing elsewhere herein and upon the authority of said firm as experts in accounting and auditing. KPMG’s reports on our consolidated financial statements as of December 31, 2003 and for each of the years in the two year period ended December 31, 2003 contained no adverse opinion or disclaimer of opinion and were not otherwise qualified or modified as to uncertainty, audit scope or accounting principles. On August 11, 2004, we terminated KPMG. In connection with its audits of our financial statements as of and for the years ended December 31, 2002 and 2003, and through August 11, 2004, there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference thereto in its report on such statements for such periods.

Following KPMG’s termination, we engaged Grant Thornton as our independent certified public accountants effective August 12, 2004. The decision to hire Grant Thornton was unanimously approved by our board of directors. We did not consult with Grant Thornton with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, or a disagreement with KPMG and there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K promulgated under the Exchange Act during this time frame. Grant Thornton has been given access to prior years work papers by KPMG without limitation in accordance with Statement on Auditing Standard No. 84, Communications Between Predecessor and Successor Auditors.

Where you can find more information

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares to be sold in this offering. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits, schedules and amendments to the registration statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information about us and the shares to be sold in this offering, please refer to the registration statement.

Statements contained in this prospectus as to the contents of any contract, agreement or other document that we make reference to, are not necessarily complete, and in each instance, where applicable, please refer to the copy of the contract, agreement or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by this reference.

153

Where you can find more information

Upon completion of this offering, we will become subject to the reporting and information requirements of the Exchange Act and, as a result, we will file periodic and current reports, proxy statements and other information with the SEC.

You may read and copy all or any portion of the registration statement or any reports, statements or other information we file with the SEC following the completion of this offering at the public reference room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on the public reference rooms. Copies of such material are also available by mail from the SEC at prescribed rates. You can also find our SEC filings at the SEC’s website at www.sec.gov.

We intend to provide our stockholders with annual reports containing consolidated financial statements that have been examined and reported on, with an opinion expressed by, an independent registered public accounting firm.

154

Index to financial statements


	Page

Audited Consolidated Financial Statements of American Railcar Industries, Inc.
Report of Grant Thornton LLP Independent Registered Public Accounting Firm		F-2
Report of KPMG LLP Independent Registered Public Accounting Firm		F-3
Consolidated Balance Sheets as of December 31, 2003 and 2004		F-4
Consolidated Statements of Operations for the years ended December 31, 2002, 2003 and 2004		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2003 and 2004		F-6
Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss) for the years ended December 31, 2002, 2003 and 2004		F-7
Notes to Consolidated Financial Statements		F-8

Unaudited Condensed Consolidated Financial Statements of American Railcar Industries, Inc.
Condensed Consolidated Balance Sheets as of December 31, 2004 and September 30, 2005 (unaudited)		F-33
Condensed Consolidated Statements of Earnings for the nine months ended September 30, 2004 and 2005 (unaudited)		F-34
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2005 (unaudited)		F-35
Notes to Condensed Consolidated Financial Statements		F-36

Audited Consolidated Financial Statements of Ohio Castings Company, LLC
Report of Grant Thornton LLP Independent Registered Public Accounting Firm		F-53
Consolidated Balance Sheets as of August 31, 2003, 2004 and 2005		F-54
Consolidated Statements of Operations for the period from June 20, 2003 to August 31, 2003 and for the years ended August 31, 2004 and 2005		F-55
Consolidated Statements of Cash Flows for the period from June 20, 2003 to August 31, 2003 and for the years ended August 31, 2004 and 2005		F-56
Consolidated Statements of Members’ Equity for the period from June 20, 2003 to August 31, 2003 and for the years ended August 31, 2004 and 2005		F-57
Notes to Consolidated Financial Statements		F-58

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

American Railcar Industries, Inc.

We have audited the accompanying consolidated balance sheet of the manufacturing and railcar services operations of American Railcar Industries, Inc. and subsidiaries (the “Company”) as of December 31, 2004, and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss), and cash flows for the period then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the manufacturing and railcar services operations of American Railcar Industries, Inc. and subsidiaries as of December 31, 2004, and the consolidated results of its operations and cash flows for the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Chicago, Illinois

September 30, 2005, except note 18,

as to which the date is December 23, 2005

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors

American Railcar Industries, Inc.:

We have audited the accompanying consolidated balance sheet of American Railcar Industries, Inc. and subsidiaries as of December 31, 2003, and the consolidated statements of operations, shareholders’ equity and comprehensive income (loss), and cash flows for each of the years in the two-year period ended December 31, 2003. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Railcar Industries, Inc. and subsidiaries as of December 31, 2003, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2003, in conformity with U.S. generally accepted accounting principles.


	/s/ KPMG LLP


	St. Louis, Missouri

	April 23, 2004

F-3

American Railcar Industries, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share amounts)


			Year Ended
			December 31,

			2003			2004

Assets
Current assets:
	Cash and cash equivalents		$	65		$	6,943
	Accounts receivable, net			13,409			25,183
	Inventories, net			45,207			73,925
	Amounts due from affiliates— current			404			—
	Prepaid expenses			62			244
	Deferred tax asset			1,423			2,065

		Total current assets		60,570			108,360
Property, plant and equipment:
	Land			1,977			1,977
	Buildings			66,199			66,350
	Machinery and equipment			56,152			58,816
	Construction in process			—			8,686

				124,328			135,829
	Less accumulated depreciation			53,098			58,878

		Net property, plant and equipment		71,230			76,951
Notes receivable from affiliates and interest thereon				57,170			165,000
Deferred tax asset				—			663
Debt issuance costs and other assets				905			615
Investment in joint venture				6,633			5,251

		Total assets	$	196,508		$	356,840

Liabilities and Shareholders’ Equity
Current liabilities:
	Current portion of long-term debt		$	14,738		$	1,334
	Accounts payable			10,752			22,800
	Accrued expenses and taxes			7,997			13,524
	Note payable to affiliate— current			12,000			19,000
	Other amounts due to affiliates— current			—			5,137

		Total current liabilities		45,487			61,795
Long-term debt, net of current portion				35,335			8,517
Note payable to affiliate— noncurrent				—			130,000
Other amounts due to affiliates— noncurrent				4,028			17,109
Deferred tax liability				9,583			—
Mandatorily redeemable payment-in-kind preferred stock, $.01 par value, 150,000 shares authorized, 89,899 shares issued and outstanding at December 31, 2003, $1,000 liquidation price per share				89,899			—
Mandatorily redeemable preferred stock, stated value $1,000, 99,000 shares authorized, 1 share issued and outstanding at December 31, 2003 and 2004, respectively				1			1
Other liabilities				6,371			4,395

		Total liabilities		190,704			221,817
Commitments and contingencies				—			—
Shareholders’ equity:
New Preferred Stock, $.01 par value per share, stated value $1,000 per share, 500,000 shares authorized, 111,685 shares issued and outstanding at December 31, 2004				—			111,685
Common stock, $.01 par value, 50,000,000 shares authorized, 9,328,083 and 11,147,059 shares issued and outstanding at December 31, 2003 and 2004, respectively				93			111
Additional paid-in capital				11,484			41,249
Accumulated deficit				(4,889	)		(16,959	)
Accumulated other comprehensive loss				(884	)		(1,063	)

		Total shareholders’ equity		5,804			135,023

		Total liabilities and shareholders’ equity	$	196,508		$	356,840

See notes to the consolidated financial statements.

F-4

American Railcar Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)


				Years Ended December 31,

				2002			2003			2004

Revenues:
	Manufacturing operations (including revenues from affiliates of $63,561, $62,882 and $64,372 in 2002, 2003 and 2004, respectively)			$	138,441		$	188,119		$	316,432
	Railcar services (including revenues from affiliates of $12,838, $11,012 and $19,429 in 2002, 2003 and 2004, respectively)				30,387			29,875			38,624

			Total revenues		168,828			217,994			355,056
Costs of goods sold:
	Cost of manufacturing operations (including costs related to affiliates of $55,679, $54,394 and $59,052 in 2002, 2003 and 2004, respectively)				134,363			174,629			306,283
	Cost of railcar services (including costs related to sales to affiliates of $12,152, $10,136 and $15,539 in 2002, 2003 and 2004, respectively)				29,533			29,762			34,473

			Total costs of goods sold		163,896			204,391			340,756
		Gross profit			4,932			13,603			14,300
Selling, administrative and other					9,505			10,340			10,334

		Earnings (loss) from operations			(4,573	)		3,263			3,966
Interest income (includes interest income from affiliates of $3,379, $2,998 and $3,885 in 2002, 2003 and 2004, respectively)					3,619			3,161			4,422
Interest expense including interest expense to affiliates of $1,524 in 2004					4,853			3,616			3,667
Loss from joint venture					—			(604	)		(609	)

		Earnings (loss) before income tax expense (benefit)			(5,807	)		2,204			4,112
Income tax expense (benefit)					(1,894	)		1,139			2,191

	Net earnings (loss)			$	(3,913	)	$	1,065		$	1,921

	Less preferred dividends				(7,139	)		(9,690	)		(13,241	)

	Loss available to common shareholders				(11,052	)		(8,625	)		(11,320	)
Weighted average common shares outstanding — basic and diluted					9,328			9,328			10,140

Net loss per common share — basic and diluted				$	(1.18	)	$	(0.92	)	$	(1.12	)

See notes to the consolidated financial statements.

F-5

American Railcar Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


			Years ended December 31,

			2002			2003			2004

Operating activities:
	Net earnings (loss)		$	(3,913	)	$	1,065		$	1,921
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
	Depreciation and amortization			6,271			6,408			6,247
	Change in joint venture investment as a result of loss			—			604			609
	Expenses relating to pre-recapitalization liabilities			668			583			1,431
	Curtailment gain			—			—			(59	)
	Provision for deferred income taxes (benefits)			(2,349	)		963			1,740
	Provision for losses on accounts receivable			159			254			209
	Long-lived asset impairment and other charges			193			801			—
	(Gain) loss on the disposition of property, plant and equipment			(19	)		73			—
	Changes in operating assets and liabilities:
		Accounts receivable		4,489			(4,509	)		(11,983	)
		Inventories		(469	)		(11,835	)		(28,718	)
		Prepaid expenses		2,257			88			(365	)
		Accounts payable		(417	)		3,999			12,048
		Accrued expenses and taxes		808			1,183			1,966
		Other		2,933			(1,316	)		(2,128	)

Net cash provided by (used in) operating activities				10,611			(1,639	)		(17,082	)
Investing activities:
	Purchases of property, plant and equipment			(1,816	)		(2,301	)		(11,441	)
	Proceeds from the disposition of property, plant and equipment			822			—			—
	Change in note and interest receivable from ACF			50			50			404
	Refund of sales tax on property, plant and equipment			409			—			—

Net cash used in investing activities				(535	)		(2,251	)		(11,037	)
Financing activities:
	Issuance of common stock			—			—			42,500
	Issuance of preferred stock			15,000			10,000			67,500
	Effect of ARL spin off			—			—			(25,000	)
	Advance to affiliate under notes receivable			—			—			(165,000	)
	Proceeds from issuance of notes payable from affiliates			—			—			137,000
	(Increase) decrease in amount due from affiliate			(8,634	)		8,634			—
	Increase (decrease) in amount due to affiliate			(893	)		4,028			18,219
	Repayment of debt			(16,842	)		(18,890	)		(40,222	)

Net cash provided by (used in) financing activities				(11,369	)		3,772			34,997

Increase (decrease) in cash and cash equivalents				(1,293	)		(118	)		6,878
Cash and cash equivalents at beginning of year				1,476			183			65

Cash and cash equivalents at end of year			$	183		$	65		$	6,943

See notes to the consolidated financial statements.

F-6

American Railcar Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)

(in thousands)


				Retained			New													Accumulated
	Comprehensive			earnings			Preferred			New			Common				Additional			other			Total
	income			(accumulated			Stock-			preferred			Stock-		Common		paid-in			comprehensive			shareholders’
	(loss)			deficit)			Shares			stock			Shares		stock		capital			loss			equity

Balance December 31, 2001				$	19,662			—		$	—			9,328	$	93	$	10,233		$	(427	)	$	29,561
Net loss	$	(3,913	)		(3,913	)																		(3,913	)
Currency translation adjustment		—																			—			—
Minimum pension liability adjustment, net of tax effect of $163		(260	)																		(260	)		(260	)

Comprehensive loss	$	(4,173	)

Capital contribution for expenses relating to pre- recapitalization liabilities retained by ACF																		668						668
Dividends on mandatorily redeemable payment-in-kind preferred stock					(7,139	)																		(7,139	)

Balance December 31, 2002					8,610			—			—			9,328		93		10,901			(687	)		18,917
Net earnings	$	1,065			1,065																			1,065
Currency translation adjustment		11																			11			11
Minimum pension liability adjustment, net of tax effect of $128		(208	)																		(208	)		(208	)

Comprehensive income	$	868

Capital contribution for expenses relating to pre- recapitalization liabilities retained by ACF																		583						583
Excess of purchase price over book value related to transfer of Castings from ACF					(4,874	)																		(4,874	)
Dividends on mandatorily redeemable payment-in-kind preferred stock					(9,690	)																		(9,690	)

Balance December 31, 2003					(4,889	)		—			—			9,328		93		11,484			(884	)		5,804
Net earnings	$	1,921			1,921																			1,921
Currency translation adjustment		14																			14			14
Minimum pension liability adjustment, net of taxes of $109		(193	)																		(193	)		(193	)

Comprehensive income	$	1,742

Dividends on preferred stock					(13,241	)																		(13,241	)
Transfer mandatorily redeemable PIK preferred to New Preferred Stock								95,517			95,517													95,517
Conversion of PIK Preferred Dividends								654			654													654
Capital contributions								102,000			102,000			1,819		18		42,482						144,500
Net adjustments relating to spin off of ARL (Note 1)								(86,486	)		(86,486	)						(14,148	)					(100,634	)
Deemed distribution related to decrease in Castings book value					(750	)																		(750	)
Capital contribution for expenses relating to pre- capitalization liabilities retained by ACF																		1,431						1,431

Balance December 31, 2004				$	(16,959	)		111,685		$	111,685			11,147	$	111	$	41,249		$	(1,063	)	$	135,023

See notes to the consolidated financial statements.

F-7

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2002, 2003 and 2004

Note 1—Description of the Business

The accompanying consolidated financial statements include the manufacturing and railcar services operations of American Railcar Industries, Inc. and its wholly owned subsidiaries (collectively the “Company” or “ARI”). As further described below, the Company purchased Castings, LLC (or “Castings”) on January 1, 2005. In accordance with accounting principles generally accepted in the United States of America, assets and liabilities transferred between entities under common control are accounted for at historical cost in a manner similar to a pooling of interests, and the financial statements of previously separate companies for periods prior to the acquisition are restated as if the transfer occurred at the beginning of the year. The consolidated income statement and statement of cash flows also include the activity of Castings for all periods after its formation in June of 2003, as if it were owned for these periods. All significant intercompany balances and transactions have been eliminated.

ARI manufactures railcars, custom designed railcar parts for industrial companies, railroads, and other industrial products, primarily aluminum and special alloy steel castings, for non-rail customers. ARI also provides railcar maintenance services for railcar fleets, including that of its affiliate, American Railcar Leasing, LLC (“ARL”). In addition, ARI provides fleet management and maintenance services for railcars owned by selected customers. Such services include inspecting and supervising the maintenance and repair of such railcars. The Company’s operations are located in the United States and Canada. The Company operates a small railcar repair facility in Sarnia Ontario Canada. Canadian revenues were 0.7%, 0.5% and 0.5% of total company revenues for 2002, 2003 and 2004, respectively. Canadian assets were 0.5%, 0.5% and 0.3% of total company assets for 2002, 2003 and 2004, respectively.

ARI was recapitalized on October 1, 1994 when ACF Industries LLC (“ACF”), the former holder of ARI’s common stock, transferred to ARI the old common stock of ARI along with the assets and liabilities of ACF’s railcar maintenance and railcar parts manufacturing businesses. In exchange, ACF received 57,306 shares of ARI’s newly issued mandatorily redeemable preferred stock. New shares of ARI’s common stock were issued to Carl C. Icahn, Chairman of the Board of ACF, in exchange for cash of $6.4 million. In October 1998, ARI redeemed 57,305 shares of the preferred stock and the remaining share of preferred stock was transferred to Mr. Icahn.

In 2003, ACF Industries Holding Corp. (“ACF Holding”), an affiliate of ARI, formed a wholly-owned subsidiary, Castings. Castings has a one-third ownership interest in Ohio Castings Company, LLC (“Ohio Castings”), a limited liability company formed to run two foundries which cast railcar sideframes and bolsters for use or sale by the ownership group. Starting in the third quarter of 2003, ARI has purchased bolsters and sideframes produced by Ohio Castings. In June 2005, ARI completed the purchase of its one-third ownership interest in Castings from ACF Holding. The transaction was consummated on January 1, 2005. The cost of the acquisition was $12.0 million represented by a demand note that the Company expects to pay in 2005. However, as Castings was owned by an entity with ownership common to ARI, the investment in subsidiary is recorded at the date of Castings’ inception, June, 2003 at book value. The purchase price is recorded at full value as a payable to the affiliate and the excess of fair value over cost, totalling $4.9 million, is presented as a distribution from equity. Interest is accrued on the note payable to the affiliate as of January 1, 2005 as that is the date the purchase was agreed to.

F-8

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

On July 20, 2004, ARI formed ARL, a wholly owned subsidiary. ARL’s primary business is the leasing of railcars. The subsidiary was capitalized through the issuance of common and preferred stock. ARI’s investment in ARL was $116.7 million and $151.7 million at December 31, 2004 and June 30, 2005, respectively. Preferred stock of ARL was issued to affiliated companies in exchange for contributions of cash or railcars totaling $102.7 million. In January 2005, ARI obtained an additional $35 million of ARL common stock resulting in a carrying value of $151.7 million.

On June 30, 2005, in anticipation of its public offering, ARI sold its common interest in ARL for $125.0 million to affiliated companies in return for the preferred stock investment, valued at $116.1 million, plus accrued dividends of $8.9 million that those affiliates held in ARI. At December 31, 2004, ARI’s investment in ARL was $116.7 million. This investment was eliminated as of December 31, 2004 in order to present ARI on a stand alone basis. New preferred stock of $86.5 million plus accrued dividends of $3.5 million were eliminated from ARI’s equity and a charge of $26.7 million was recorded to additional paid in capital to reflect the difference between the final transfer price of $125 million and the ultimate carrying value of ARI’s investment in ARL of $151.7 million. The 2005 financial statements will reflect a reduction of New Preferred Stock of $29.6 million plus accrued dividends of $5.4 million to eliminate the additional investment of $35 million made in that period. ARI retained no liabilities or other interests in ARL as a result of this sale. The presentation of ARI’s operations has been prepared on a standalone basis excluding ARL’s operations for all periods, and all transactions giving effect to ARL’s formation have been eliminated from the financial statements. Any differences related to the amounts originally capitalized and the amount paid for ARL in the sale have been recorded through adjustments to shareholders’ equity, including certain tax benefits that ARI received as a result of utilizing ARL’s previously incurred tax losses. ARI recorded a related deferred tax asset of $12.5 million for those net operating loss carry forwards, as ARI has the legal right to utilize them for tax purposes.

The following table discloses the preferred stock transactions and the effect on additional paid in capital for the year ended December 31, 2004 required to eliminate ARI’s investment in ARL at that time.


	New preferred			Additional
	stock			paid in capital

	(in thousands)
January 1, 2004	$	—		$	11,484
New preferred stock issued in exchange for mandatorily redeemable preferred stock		95,517			—
Capital contribution		102,654			42,482
Exchange of common interest in ARL for new preferred stock		(86,486	)		(26,670	)
ARL deferred tax assets		—			12,522
Other		—			1,431

December 31, 2004	$	111,685		$	41,249

F-9

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

Note 2—Summary of Significant Accounting Policies

Significant accounting policies are described below.

Revenue recognition

Revenues from railcar sales are recognized following completion of manufacturing, inspection, customer acceptance and shipment, which is when title and risk for any damage or loss with respect to the railcars passes to the customer. In some cases, paint and lining work may be outsourced and, as a result, the sale will not be recorded until the railcars are shipped from the independent contractor and accepted by the customer. Revenues from railcar and industrial parts and components are recorded at the time of product shipment, in accordance with our contractual terms. Revenue for railcar maintenance services are recognized upon completion and shipment of railcars from our plants. The Company does not bundle railcar service contracts with new railcar sales. Revenue for fleet management services are recognized as performed.

The Company records amounts billed to customers for shipping and handling as part of sales in accordance with EITF 00-10, Accounting for Shipping and Handling Fees and Costs, and records related costs in cost of sales.

Debt issuance costs

Debt issuance costs are incurred in connection with ARI’s issuance of long-term debt as described in Note 6, and are amortized over the term of the related debt, utilizing the effective interest method.

Inventories

Inventories are stated at the lower of average cost or market on a first-in, first-out basis, and include the cost of materials, direct labor and manufacturing overhead.

Accounts receivable

Property, plant and equipment

Land, buildings, machinery and equipment are carried at cost, including interest on funds borrowed to finance construction. Maintenance and repair costs are charged directly to earnings. Tooling is generally capitalized and amortized over a period of two to five years.

Buildings are depreciated over estimated useful lives that range from 14 to 50 years. The estimated useful lives of other depreciable assets, including equipment, vary from 3 to 25 years. Depreciation is calculated on the straight-line method for financial reporting purposes and on accelerated methods for tax purposes.

F-10

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

Ohio Castings joint venture

The Company uses the equity method to account for its investment in Ohio Castings, owned by its subsidiary, Castings. Under the equity method, the Company recognizes its share of the earnings and losses of the joint venture as they accrue instead of when they are realized. Advances and distributions are charged and credited directly to the investment account. Ohio Castings produces railcar parts that are sold to one of the joint venture partners. The joint venture partner sells these parts to outside third parties at current market prices and to the Company and the other joint venture partner in Ohio Castings at cost plus a licensing fee. The risk of loss to Castings and the Company is limited to its investment in Ohio Castings and its one third share of its guarantee of Ohio Castings debt which was approximately $3.3 million at December 31, 2004. The fair market value of the guarantee was approximately $0.1 million at December 31, 2004.

The cost of railcar manufacturing for the years ended December 31, 2003 and 2004 included $3.0 million and $19.9 million, respectively, in products produced by Ohio Castings.

The carrying amount of the investment in Ohio Castings by Castings was $6.6 million and $5.3 million at December 31, 2003 and 2004, respectively. Summary combined financial information for Ohio Castings, the investee company, as of and for the 6 months ended December 31, 2003 and as of for the year ended December 31, 2004 are as follows:


			2003			2004

			(in thousands)
Financial position
	Current assets		$	18,009		$	19,111
	Property, plant, and equipment, net			12,144			14,407
	Other assets			41			—

		Total assets		30,194			33,518

Current liabilities				13,806			19,674
Long-term debt				8,903			8,184

		Total liabilities		22,709			27,858

Member’s equity				7,485			5,660

Results of Operations
	Sales			14,419			76,789

		Operating loss		(1,793	)		(1,770	)

		Net loss	$	(1,812	)	$	(1,827	)

Impairment of long-lived assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. The criteria for determining impairment for such long-lived assets to be held and used is determined by comparing the carrying value of these long-lived assets to be held and used to management’s best estimate of future undiscounted cash flows expected to result from the use of the assets. If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. The estimated fair value of the assets is measured by estimating the present value of the future discounted cash flows to be generated. An impairment loss in the years

F-11

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

ended December 31, 2002 and 2003 is discussed in Note 5. No impairment losses have been recorded in the year ended December 31, 2004.

Pension plans and other postretirement benefits

Certain ARI employees participate in noncontributory, defined benefit pension plans and a supplemental executive retirement plan. Benefits for the salaried employees are based on salary and years of service, while those for hourly employees are based on negotiated rates and years of service.

ARI also participates in defined contribution retirement plans, health care and life insurance plans sponsored by a related party covering certain employees. Benefit costs are accrued during the years the employees render service.

Income taxes

ARI accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial reporting basis and the tax basis of ARI’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are recovered or settled. ARI files a tax return separate from other members of the controlled group.

Statement of cash flows

For the purpose of the consolidated statement of cash flows, ARI considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Until October 2004, ACF received the majority of ARI’s cash receipts and disbursed ARI’s cash on behalf of ARI, and maintained an intercompany receivable/payable which bore interest at ACF’s internal cost of funds in accordance with an administration agreement between ARI and ACF, which is described in Note 10. Since October 2004, ARI maintains its own cash balances.

Fair value of financial instruments

The carrying amounts of cash and cash equivalents, accounts receivable, amounts due to/from affiliates and accounts payable approximate fair values because of the short-term maturity of these instruments. The fair value of long-term debt is discussed in Note 6. The fair value of the note receivable from ACF, which is carried at face amount plus accrued interest, could not reasonably be estimated due to the lack of market for similar instruments. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.

Foreign currency translation

Balance sheet amounts from our Canadian operation are translated at the exchange rates in effect at year-end, and operations statement amounts are translated at the average rates of exchange prevailing during the year. Currency translation adjustments are included in Shareholders’ Equity.

F-12

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

Comprehensive income (loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) consists of net earnings (loss), foreign currency translation adjustment and the Company’s minimum pension liability adjustment, which is shown net of tax.

Retained earnings

As ARI and ACF are entities under common control, accounting principles generally accepted in the United States of America require that ARI’s initial carrying value of assets transferred to it from ACF and the purchase of Castings be equal to ACF’s historical net book value at the time of transfer. The excess of the fair value paid over the net book value of assets and liabilities transferred to ARI is reflected as a distribution of retained earnings and has the effect of reducing shareholders’ equity by $24.1 million as of December 31, 2003 and 2004. Of that amount, $19.2 million was recorded at the formation of ARI, and $4.9 million was recorded in 2003 from the acquisition of Castings.

Basic earnings (loss) per share are calculated as net earnings (loss) attributable to common shareholders divided by the weighted-average number of common shares outstanding during the respective period. Diluted earnings (loss) per share are calculated by dividing net earnings (loss) attributable to common shareholders by the weighted-average number of shares outstanding plus dilutive potential common shares outstanding during the year.

As of the years ended December 31, 2002 and 2003, 1,000 common shares were issued and outstanding. As indicated in Note 13, an additional 195 common shares were issued in 2004 in connection with the capital contribution received from Hopper Investments.

Use of estimates

Management of ARI has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Significant items subject to estimates and assumptions include deferred taxes, workers compensation accrual, valuation allowances for accounts receivable and inventory obsolescence, valuation of property, plant and equipment, and the reserve for warranty claims. Actual results could differ from those estimates.

Recent accounting pronouncements

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. (“FIN”) 46, Consolidation of Variable Interest Entities , which was later amended on December 24, 2003 (“FIN 46R”). FIN 46R explains how to identify variable interest entities and how an enterprise assesses its interest in a variable interest entity to decide whether to consolidate that entity. FIN 46R requires unconsolidated variable interest entities to be consolidated by their primary beneficiaries. The provisions of FIN 46R are generally effective for periods after December 31, 2003. The adoption of this pronouncement has not had a material effect on the Company.

In May 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity , (“SFAS 150”), which establishes standards for how companies classify and measure certain financial

F-13

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

instruments with characteristics of both liabilities and equity. It requires companies to classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). ARI re-classified the mandatorily redeemable payment-in -kind preferred stock (see Note 12) as a liability in accordance with SFAS 150 in 2003.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs—An Amendment of ARB No. 43 , Chapter 4 , which requires the recognition of costs of idle facilities, excessive spoilage, double freight, and rehandling costs as a component of current-period expenses. The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Since the Company produces railcars based upon specific customer orders, management does not expect the provisions of SFAS No. 151 to have a material impact on the Company’s financial statements.

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payments. SFAS No. 123R is a revision of SFAS No. 123, Accounting for Stock Based Compensation, and supersedes APB 25. Among other items, SFAS 123R eliminates the use of Accounting Principles Board (“APB”) 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the consolidated financial statements. The effective date of SFAS 123R is the first quarter of the Company’s year ending December 31, 2006.

In March 2005, the FASB issued FIN 47 as an interpretation of FASB Statement 143, Accounting for Asset Retirement Obligations (“FASB 143”). This interpretation clarifies that the term conditional asset retirement obligation as used in FASB 143 and refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. This interpretation also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The Company believes that the adoption of FIN 47 will not have a material effect on the Company.

On June 1, 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3 SFAS 154. The Statement applies to all voluntary changes in accounting principle, and changes the requirements for accounting for and reporting of a change in accounting principle. The Company will adopt SFAS 154 at December 31, 2005 and does not anticipate any material change to its operating results as a result of this adoption.

F-14

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

Note 3—Accounts Receivable

The allowance for doubtful accounts consists of the following:


		Years Ended December 31,

		2002			2003			2004

		(in thousands)
Beginning balance		$	482		$	522		$	572
	Bad debt expense		159			254			209
	Accounts written off		(167	)		(279	)		(271	)
	Recoveries		48			75			—

Ending balance		$	522		$	572		$	510

Note 4—Inventories

Inventories consist of the following:


			December 31,

			2003		2004

			(in thousands)
Raw materials			$	18,341	$	39,655
Work-in-process				20,710		25,515
Finished products				8,466		11,434

	Total inventories		$	47,517	$	76,604
Less reserves				2,310		2,679

		Total inventories, net	$	45,207	$	73,925

Inventory reserves consist of the following:


		December 31,

		2002			2003			2004

		(in thousands)
Beginning balance		$	948		$	1,670		$	2,310
	Provision		990			762			559
	Write off		(268	)		(122	)		(190	)

Ending balance		$	1,670		$	2,310		$	2,679

Note 5—Long-Lived Asset Impairment and Other Charges

The Company reduced the carrying value of building improvements and equipment by $0.2 million and $0.8 million in 2002 and 2003, for one of its car repair plants which is reflected in the consolidated statement of operations in the costs of railcar services. The scope of work performed at this facility was reduced due the economic slow-down. As a result, an impairment charge was recorded for equipment that was no longer in use. The facility was idled in 2003.

F-15

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

Note 6—Long-Term Debt

Long-term debt at December 31, 2003 and 2004 consists of:


		December 31,

		2003		2004

		(in thousands)
Senior secured credit facilities, secured by all the assets of ARI, and guaranteed by ACF, ACF’s parent, NMI Holding Corp., and ACF Holding, bearing interest at variable rates based on LIBOR(1), payable in installments through the year 2005		$	28,984	$	—
Industrial revenue bonds secured by certain buildings and manufacturing equipment and guaranteed by ACF and ACF Holding, with effective interest rates ranging from 6.75% to 8.5%, principal amounts due through the year 2011			10,770		9,600
Subordinated note secured by all the assets of ARI and guaranteed by ACF and ACF Holding, bearing interest at variable rates based on LIBOR(1), payable in 2006			10,000		—
Other			319		251

Total long-term debt, including current portion			50,073		9,851
Less current portion of debt			14,738		1,334

	Total long-term debt, net of current portion	$	35,335	$	8,517


(1)	LIBOR was 1.1% at December 31, 2003, and 2.3% at December 31, 2004.

Aggregate maturities of long-term debt over the next five years, as of December 31, 2004, are as follows (in thousands):


2005	$	1,334
2006		1,441
2007		1,573
2008		1,613
2009 and thereafter		3,890

The senior secured credit facilities were issued for $120.0 million in 1998. Prior to termination of the revolver in June 2002, the credit facilities provided for an additional $30.0 million revolving credit facility. There were no amounts drawn on the revolving credit facility prior to its termination in June 2002. Debt covenants require ARI to maintain certain debt-to-earnings and coverage ratios with which ARI was in compliance at December 31, 2003 and 2004. The Company repaid $15.8 million, $17.7 million and $29.0 million of the senior secured credit facilities in 2002, 2003 and 2004, respectively. On July 20, 2004, ARI repaid in full a $10.0 million subordinated note. In addition, the company repaid industrial revenue bonds of $1.0 million, $1.2 million and $1.2 million in 2002, 2003 and 2004, respectively.

The fair value of long-term debt was approximately $50.1 million and $9.9 million at December 31, 2003 and 2004, respectively, as calculated by discounting cash flows through maturity using ARI’s current rate of borrowing for similar liabilities.

F-16

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

Note 7—Income Taxes

Income tax expense (benefit) consists of:


			Years Ended December 31,

			2002			2003			2004

			(in thousands)
Current:
	Federal		$	388		$	172		$	332
	State and local			61			27			46
	Foreign			6			(23	)		71

		Total current		455			176			449
Deferred
	Federal			(2,092	)		833			1,504
	State and local			(332	)		136			239
	Foreign			75			(6	)		(1	)

		Total deferred		(2,349	)		963			1,742

	Total income tax expense (benefit)		$	(1,894	)	$	1,139		$	2,191

Income tax expense (benefit) attributable to earnings (loss) from operations differed from the amounts computed by applying the U.S. Federal income tax rate of 35% to earnings (loss) from operations by the following amounts:


		Years Ended December 31,

		2002			2003			2004

		(in thousands)
Computed income tax expense (benefit)		$	(2,032	)	$	771		$	1,439
State and local taxes, net of federal tax benefit			(176	)		106			185
Non-deductible expenses			297			267			566
Other			17			(5	)		1

	Total income tax expense (benefit)	$	(1,894	)	$	1,139		$	2,191


	Years Ended December 31,

	2002			2003			2004

Computed income tax expense (benefit)		(35.0	)%		35.0	%		35.0	%
State and local taxes, net of federal tax benefit		(3.0	)		4.8			4.5
Non-deductible expenses		5.1			12.1			13.8
Other		0.3			(0.2	)		—

Effective income tax rate		(32.6	)%		51.7	%		53.3	%

F-17

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

The tax effects of temporary differences that have given rise to deferred tax assets and liabilities are presented below:


			December 31,

			2003			2004

			(in thousands)
Current deferred taxes
	Deferred tax assets
		Provisions not currently deductible		1,423		$	2,065
Non-current deferred taxes
	Deferred tax assets
		Provisions not currently deductible		786			627
		Net operating loss carryforwards		—			10,144
		Pensions and post retirement		1,953			1,440

				2,739			12,211
	Deferred tax liabilities
		Property, plant and equipment		12,322			11,548

	Total non-current deferred tax (liability) asset-net			(9,583	)		663

Total deferred tax (liability) asset			$	(8,160	)	$	2,728

The net deferred tax liability is classified in the balance sheet as follows:


	December 31,

	2003			2004

	(in thousands)
Deferred tax current asset	$	1,423		$	2,065
Deferred tax non-current (liability) asset	$	(9,583	)	$	663

Net deferred tax (liability) asset	$	(8,160	)	$	2,728

In the consolidated balance sheets, these deferred tax assets and liabilities are classified as either current or non-current based on the classification of the related liability or asset for financial reporting. A deferred tax asset or liability that is not related to an asset or liability for financial reporting, including deferred taxes related to carryforwards, is classified according to the expected reversal date of the temporary differences as of the end of the year. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. No valuation allowances have been recorded at December 31, 2003 and 2004 as management believes that it is more likely than not that all deferred tax assets will be fully realized based on the expectation of taxable income in future years. At December 31, 2004, the Company had net operating loss carry-forwards of $26 million which begin to expire in 2024.

Note 8—Warranties

The Company records a liability for an estimate of costs that it expects to incur under its basic limited warranty when manufacturing revenue is recognized. Factors affecting the Company’s warranty liability include the number of units sold and historical and anticipated rates of claims and costs per claim. The Company periodically assesses the adequacy of its warranty liability based on changes in these factors.

F-18

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

Changes in the Company’s warranty reserve, which is reflected on the balance sheet in accrued expenses, are as follows:


		December 31,

		2002			2003			2004

		(in thousands)
Liability, beginning of year		$	434		$	1,048		$	1,436
	Expense for new warranties issued		924			893			114
	Warranty claims		(310	)		(505	)		(142	)

Liability, end of year		$	1,048		$	1,436		$	1,408

Note 9—Stock Options

In 1994, the Company entered into an agreement with Mr. Unger, currently its chief executive officer, which provided that Mr. Unger shall be granted an option to purchase 2.0% of the outstanding common shares of ARI at a price equal to 2.0% of the common equity contribution by Carl C. Icahn (ARI’s chairman of the board and a principal stockholder) at the formation of ARI. The agreement provided that this option shall be exercisable at the time of ARI’s initial public offering, and should ARI be sold to parties other than in a public offering, Mr. Unger shall receive 2.0% of the sales price, net of the preferred interest established at the formation of ARI, and net of the contribution for common stock. The agreement further provided that the above options and or rights shall remain in effect as long as Mr. Unger is employed by ARI. Compensation expense under this arrangement would be recognized when the contingency is met at the effective date of a public offering or the completion of a sale.

Note 10—Related Party Transactions

As part of the 1994 recapitalization described in Note 1, ACF has retained certain liabilities existing as of the recapitalization date, including employee benefits, workers compensation, litigation, environmental and others. If ACF were unable to honor or meet these obligations, ARI would be responsible for such liabilities. In the opinion of management, ACF has the present ability to meet these obligations. This liability totaled approximately $10.0 million and $11.1 million at December 31, 2003 and 2004 respectively, consisting primarily of pension and postretirement liabilities.

In connection with the 1994 ACF asset transfer, the Company entered into the following administrative and operating agreements with ACF, effective as of October 1, 1994:

Manufacturing services agreement

Under the manufacturing services agreement, ACF agreed to manufacture and distribute, at the Company’s instruction, various products using certain assets that the Company acquired pursuant to the 1994 ACF asset transfer agreement. In consideration for these services, the Company agreed to pay ACF based on agreed upon rates. Components supplied to ARI by ACF include tank railcar heads, wheel sets and various structural components. In the years ended December 31, 2002, 2003 and 2004, ARI purchased inventory of $15.7 million, $19.0 million and $31.3 million, respectively, of components from ACF. The agreement automatically renews unless written notice is provided by the Company.

F-19

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

Administration Agreement

Under this agreement, ACF agreed to provide the Company with office facilities and administrative services, primarily information technology services. In exchange for the facilities and services, the Company agreed to pay ACF based on agreed upon rates. Management believes that these allocation methods are reasonable for the relevant costs. Total amounts incurred under this agreement totaled $0.8 million, $0.8 million and $0.8 million at December 31, 2002, 2003, and 2004, respectively.

Until October 2004, ACF received the majority of ARI’s cash receipts and disbursed cash on its behalf. ARI maintained a receivable/payable from affiliates bearing interest at ACF’s internal cost of funds in accordance with this agreement.

At the time of ARI’s formation in 1994, when this Administrative Agreement was entered into, ARI and ACF contemplated that ARI would generally need funds to build its facilities, acquire assets and provide for working capital needs. ACF has provided financing to ARI and ARI has repaid these amounts through an affiliate account based on ARI’s cash flow needs from month to month. ARI has classified its relations with ACF through its affiliate account as financing activities on the accompanying statements of cash flows. From time to time this account has had a due from balance but ARI does not believe that this changes the basic nature of the financing relationship.

Included in amounts due to affiliates was a payable to ACF of $4.0 million as of December 31, 2003. As of December 31, 2004, amounts due to affiliates included $22.2 million in payables to ACF and ARL.

Railcar Servicing Agreement

Under this agreement, the Company agreed to provide ACF with railcar repair and maintenance services, fleet management services and consulting services on safety and environmental matters for railcars owned or managed by ACF. ACF agreed to compensate the Company based on agreed upon rates. Revenue recorded under this arrangement totaled $12.8 million, $11.0 million and $18.2 million at December 31, 2002, 2003, and 2004, respectively and is included under revenue from affiliates on the statement of operations.

Supply Agreement

Under this agreement, we agreed to manufacture and sell to ACF specified components at cost plus mark-up or on terms not less favorable than the terms on which the Company sold the same products to third parties. Revenue recorded under this arrangement totaled $1.4 million, $0.9 million and $0.7 million at December 31, 2002, 2003, and 2004, respectively and is included under revenue from affiliates on the statement of operations.

In 2004, the Company entered into the following agreements with ARL and its subsidiaries:


	Railcar Management Agreements with ARI First LLC and ARI Third LLC
	Under this agreement, the Company provided ARI First and ARI Third with marketing, leasing, administration, maintenance, record keeping and insurance services for railcars owned by ARI First and ARI Third. In exchange for these services ARI First and ARI Third paid the Company a management fee which totaled $1.2 million for the year ended December 31, 2004 which is included under revenue from affiliates on the statement of operations.

F-20

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004


	ACF Administration Agreement
	The ACF Administration agreement was entered into with ACF and ARL. Under the agreement, ACF agreed to provide certain management services which were required under the railcar management agreement wit ARI First and ARI Third described above. Fees paid to ACF under this agreement were equal to the fees the Company charged to ARI First and Third under the railcar management agreement and totaled $1.2 million for the year ended December 31, 2004 which is included under revenue from affiliates on the statement of operations.

These two arrangements were terminated on June 30, 2005, when ARI assigned its management agreements for ARI First LLC and ARI Third LLC to ARL.

Cost of railcar manufacturing for the years ended December 31, 2003 and 2004 includes $3.0 million and $19.9 million, respectively, in railcar products produced by Ohio Castings, which is partially owned by Castings, as described in Note 1. Expenses of $0.4 million and $3.2 million paid to Castings under a supply agreement is included in the cost of railcar manufacturing for the years ended December 31, 2003 and 2004, respectively. ARI also has been charged $0.2 million in the year ending December 31, 2003 relating to certain costs incurred by Castings in the establishment of Ohio Castings. Inventory at December 31, 2003 and 2004 includes approximately $0.3 million and $5.3 million, respectively, of purchases from Ohio Castings.

In September 2003, Castings loaned Ohio Castings $3.0 million under a promissory note which was due January 2004. The note was renegotiated for $2.2 million and bears interest at 4.0% with payments made in quarterly installments with the last payment due in November 2008.

ARI’s employees participate in ACF’s noncontributory, defined benefit pension plans and other postretirement health care and life insurance plans. As part of ARI’s recapitalization, ACF retained the liabilities for unfunded pension and other postretirement liabilities and workers compensation liabilities as of October 1, 1994 for employees who transferred from ACF to ARI at that date and for environmental liabilities as of that date. Although ACF is responsible for any costs associated with the liabilities at the recapitalization date, related expenses which have accrued since the recapitalization have been reflected in ARI’s financial statements in order to reflect the full cost of doing business. Expenses that ACF pays relating to pre-recapitalization liabilities are recorded as capital contributions and appear as additional paid-in capital on ARI’s balance sheet. ARI recorded total expenses relating to benefits and environmental liabilities of $2.8 million, $2.8 million and $4.0 million in the years ended December 31, 2002, 2003 and 2004, respectively. Included in these total expenses were $0.7 million, $0.6 million and $1.4 million in 2002, 2003 and 2004, respectively, which related to pre-recapitalization liabilities retained by ACF and are reflected as additional paid-in capital.

In October 1998, ARI advanced $57.2 million to ACF under a promissory note secured by the stock of an affiliate. $14.9 million of the note was assigned to an affiliate, with the remaining $42.3 million of the note repaid in October 2004. The Company recorded interest income on this note of $2.8 million, $2.5 million and $1.8 million in the years ended December 31, 2002, 2003 and 2004, respectively. Accrued interest was $0.4 million as of December 31, 2003.

In 2001, ARI entered into a derivative instrument in the form of an interest rate swap contract with an underlying initial notional amount of $49.0 million, terminating in February 2005. Concurrent with the execution of this swap agreement, ARI assigned its rights and obligations under this contract to ACF. ARI includes the fair value of the contract as a liability on its balance sheet, with an equal amount included in amounts due from ACF to reflect the assignment of the contract. The fair value of the contract was $2.7 million, $1.5 million and $0.1 million at December 31, 2002, 2003 and 2004,

F-21

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

respectively. Interest expense is not reflected in ARI’s results of operations due to ACF’s assumption of the contract.

ACF and ACF Holding have guaranteed the Company’s obligations under the industrial revenue bonds as described in Note 6. In addition, ACF and ACF Holding provided guarantee’s under the senior secured credit facility and the subordinated note, also described in Note 6. The senior secured credit facility and the subordinated note were both repaid in July 2004.

During 2004, ARI advanced $165.0 million to Mr. Icahn under a secured note due in 2007 and bearing interest at prime plus 1 ³ / 4 %. Accrued interest was paid in full as of December 31, 2004. Interest income on the note was $2.0 million for the year ended December 31, 2004. As further discussed in Note 17, ARI transferred its interest in the note receivable to an affiliate on January 26, 2005.

During 2004, ARL advanced $130.0 million to ARI under a note due in 2007 and bearing interest at prime plus 1 ¹ / 2 %. Accrued interest was paid in full as of December 31, 2004. Interest expense on the note was $1.5 million for the year ended December 31, 2004. As further discussed in Note 17, this note was fully satisfied on January 26, 2005.

On December 17, 2004, ARI borrowed $7.0 million under a note payable to Arnos Corp., an affiliate. The note bears interest at prime plus 1 ³ / 4 % and is payable on demand.

We have been advised that affiliates of Mr. Icahn are currently negotiating with the Foundation for a Greater Opportunity, or the Foundation, our other significant beneficial stockholder, to enter into an agreement to acquire all of our common stock held by the Foundation. The consummation of this acquisition of our common stock would require the approval of applicable authorities of the State of New York. If the parties obtain this approval, we have been advised that the parties expect that the purchase would be completed in the first three months of 2006. As a result of these contemplated arrangements, we expect that Mr. Icahn will continue to control a majority of the voting power of our capital stock following the offering. As a result, Mr. Icahn is, and will be, able to exert substantial influence over us, elect our directors and control most matters requiring board or shareholder approval.

Note 11—Pension Plans

ARI is the sponsor of two defined benefit plans that cover certain executives and employees at certain of its manufacturing facilities. ARI uses a measurement date of October 1 for all of its employee benefit plans. The plan’s assets are held by independent trustees and consist primarily of equity and fixed income securities.

Costs of benefits relating to current service for those employees to whom the Company is responsible to provide benefits are expensed currently. Pension expense for the year ended December 31, 2004 includes a $0.1 million curtailment gain caused by the elimination of future benefit accruals for service credit for salaried employees as of April 1, 2004 and a reduction in service hours for hourly employees at one plant location. The changes in benefit obligation, change in plan assets, funded status and

F-22

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

weighted average assumptions as of December 31, 2003 and 2004, and components of net periodic benefit cost for the years ended December 31, 2002, 2003 and 2004 is as follows:


	Years Ended
	December 31,

	2003			2004

	(in thousands)
Change in benefit obligation
Benefit obligation, beginning of year	$	2,678		$	3,148
Service cost		127			34
Interest cost		173			188
Plan Amendments		—			(7	)
Actuarial loss		180			29
Benefits paid		(10	)		(14	)

Benefit obligation, end of year	$	3,148		$	3,378


Change in plan assets
Fair value of plan assets, beginning of year	$	1,377		$	1,574
Actual return on plan assets		59			(92	)
Employer contributions		148			308
Benefits paid		(10	)		(14	)

Fair value of plan assets, end of year	$	1,574		$	1,776


Funded status
Benefit obligation in excess of plan assets	$	(1,574	)	$	(1,602	)
Unrecognized prior service cost		(59	)		(7	)
Unrecognized net loss		1,584			1,783

Net amount recognized	$	(49	)	$	174


	December 31,

	2003			2004

	(in thousands)
Amounts recognized in the balance sheets
Accrued benefit liability	$	(2,145	)	$	(2,450	)
Prepaid pension		622			848
Other comprehensive income		909			1,102

Net amount recognized	$	(614	)	$	(500	)

The accumulated benefit obligation for all defined benefit pension plans was $3.1 million and $3.4 million at December 31, 2003 and 2004, respectively.

F-23

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004


	Years Ended December 31,

	2002			2003			2004

	(in thousands)
Components of net periodic benefit cost
Service cost	$	114		$	126		$	34
Interest cost		157			173			188
Expected return on plan assets		64			(58	)		92
Deferred asset gain		(182	)		(90	)		(236	)
Amortization of unrecognized prior service cost from plan amendments		(9	)		(9	)		—
Curtailment gain		—			—			(59	)
Amortization of net loss		28			49			65

Net periodic benefit cost	$	172		$	191		$	84

Additional information


	Years Ended
	December 31,

	2003		2004

	(in thousands)
Increase in minimum liability (pre-tax)	$	336	$	302

Weighted-average assumptions used to determine benefit obligations at December 31


	Years Ended
	December 31,

	2003			2004

Discount rate		6.50	%		6.00	%
Rate of compensation increase		5.00	%		N/A

Weighted-average assumptions used to determine net periodic benefit cost for years ended

December 31


	Years Ended December 31,

	2002			2003			2004

Discount rate		6.50	%		6.00	%		6.00	%
Expected long-term return on plan assets		9.00	%		9.00	%		8.50	%
Rate of compensation increase		5.00	%		5.00	%		N/A

F-24

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

The Company’s pension plan weighted-average asset allocations by asset category at

December 31 are as follows:


	Years Ended
	December 31,

	2003			2004

Asset Category
Equity securities		51	%		68	%
Debt securities		49	%		32	%

		100	%		100	%

The objective of the pension plan investment policy is to grow assets in relation to liabilities, while prudently managing the risk of a decrease in the pension plan’s assets. The pension plan management committee has established a target investment mix with upper and lower limits for investments in equities, fixed-income and other appropriate investments. Assets will be re-allocated among asset classes from time-to-time to maintain the target investment mix. The committee has established a target investment mix of 65% equities and 35% fixed-income for the plan.

The expected return on plan assets is based on our asset allocation mix and our historical return, taking into account current and expected market conditions.

The Company’s policy with respect to funding the qualified plans is to fund at least the minimum required by the Employee Retirement Income Security Act of 1974, as amended, and not more than the maximum amount deductible for tax purposes. ARI does not currently have minimum funding requirements, as set forth in employee benefit and tax laws. All contributions made to the funded pension plans for 2003 and 2004 were voluntary and were made with cash generated from operations.

The Company also maintains qualified defined contribution plans which provide benefits to their employees based on employee contributions, years of service, and employee earnings with discretionary contributions allowed. Expenses related to these plans were $0.5 million, $0.5 million, and $0.7 million for the years ended December 31, 2002, 2003, and 2004, respectively. Selected ARI salaried employees participated in the ACF Industries, Inc. Savings and Investment Plan, and the expense is included above.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


	As of 12/31/04

	(in thousands)
2005	$	20
2006		23
2007		23
2008		106
2009		139
2010-2014		791

ARI is currently a member of a controlled group that includes ACF, an entity in which Mr. Icahn has an indirect ownership of at least 80%. ACF is the sponsor of several pension plans that are underfunded, as of December 31, 2004, by a total of approximately $24.1 million on an ongoing actuarial basis and $172.4 million if those plans were terminated, as most recently reported by the plans’ actuaries. The liabilities could increase or decrease, depending on a number of factors, including future changes in promised benefits, investment returns and the assumptions used to calculate the

F-25

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

liability. As members of the controlled group, ARI would be jointly and severally liable for any failure of ACF to pay the unfunded liabilities upon a termination of the ACF pension plans. Upon completion of this offering, ARI believes that it should no longer be a member of the ACF controlled group. As a result, ARI should no longer be subject to ACF’s pension liabilities, unless it were determined that ARI was otherwise a member of the ACF controlled group or that a principal purpose of the offering or other transactions that resulted in ARI’s ceasing to be a member of the ACF controlled group was to evade pension liabilities and the termination date of the underfunded plan was within five years after the offering or other transactions. If such a determination were made and upheld by a court, ARI could remain jointly and severally liable for pension plan obligations of ACF, which could have a material adverse effect on ARI’s financial condition and results of operations.

ARI employees are participants in the ACF Retirement Plan and the ACF Shippers Hourly Plan, both of which are sponsored by ACF. At October 1, 2003 and 2004, these plans had actuarial liabilities in excess of assets. Presented below are the assets and liabilities of those plans, and the liabilities attributed to ARI participants.


	2003

	ACF			Shipper’s
	Retirement Plan			Hourly Plan

	(in millions)
Projected benefit obligation(a)	$	110.4		$	11.2
Assets at fair value		61.4			7.5

Underfunded status	$	(49.0	)	$	(3.7	)

(a) — Amount attributed to ARI participants	$	9.1		$	1.9
— Percentage of total liabilities		8	%		17	%


	2004

	ACF			Shipper’s
	Retirement Plan			Hourly Plan

	(in millions)
Projected benefit obligation(a)	$	107.4		$	11.5
Assets at fair value		62.7			8.0

Underfunded status	$	(44.7	)	$	(3.5	)

(a) — Amount attributed to ARI participants	$	8.8		$	2.0
— Percentage of total liabilities		8	%		18	%

Note 12—Commitments and Contingencies

As of December 31, 2004, future minimum rental payments required under noncancellable operating leases for property and equipment leased by the Company with lease terms longer than one year are as follows:


	(in
	thousands)
2005	$	5,355
2006		1,696
2007		1,656
2008		168
2009		135
2010 and after		66

F-26

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

The Company leases certain facilities from an entity owned by its Chief Executive Officer, certain affiliates of ARI and third parties. Total rent expense on leases were approximately $5.4 million, $5.8 million and $6.6 million for the years ended December 31, 2002, 2003 and 2004, respectively. Expenses to related parties included in the amounts above were $0.8 million, annually for the years ended December 31, 2002, 2003 and 2004.

In connection with Trans World Airlines, Inc.’s (TWA) 1992 bankruptcy proceedings under Chapter 11 of the Bankruptcy Code, the Pension Benefit Guarantee Corporation (“PBGC”) asserted that ACF as well as the other entities in which Mr. Icahn had a controlling interest were obligated along with TWA to satisfy any underfunding of TWA’s defined benefit plan. Subsequently, and in response to a petition of another member of the Icahn control group, the PBGC terminated the TWA pension plan and obligated an affiliate of ARI, Highcrest Investors Corp (Highcrest) to make eight annual payments of $30 million each commencing on July 1, 2002 and totaling $240 million (termination payments). As of December 31, 2004, Highcrest had made termination payments totaling $130 million and still owed $110 million on this obligation. The obligation to make termination payments is non-recourse except to the common stock of ACF Holding (another member of the control group). While ARI is a controlled entity of Mr. Icahn, management believes this obligation will have no adverse effect on the future liquidity, results of operations, or financial position of ARI.

The Company is subject to comprehensive federal, state, local and international environmental laws and regulations relating to the release or discharge of materials into the environment, the management, use, processing, handling, storage, transport or disposal of hazardous materials and wastes, or otherwise relating to the protection of human health and the environment. These laws and regulations not only expose ARI to liability for the environmental condition of its current or formerly owned or operated facilities, and its own negligent acts, but also may expose ARI to liability for the conduct of others or for ARI’s actions that were in compliance with all applicable laws at the time these actions were taken. In addition, these laws may require significant expenditures to achieve compliance, and are frequently modified or revised to impose new obligations. Civil and criminal fines and penalties and other sanctions may be imposed for non-compliance with these environmental laws and regulations. ARI’s operations that involve hazardous materials also raise potential risks of liability under common law. ARI is involved in investigation and remediation activities at properties that it now owns or leases to address historical contamination and potential contamination by third parties. The Company is also involved with state agencies in the cleanup of two sites under these laws. These investigations are at a preliminary stage, and it is impossible to estimate, with any certainty, the timing and extent of remedial actions that may be required, and the costs that would be involved in such remediation. Substantially all of the issues identified relate to the use of the properties prior to their transfer to ARI in 1994 by ACF and for which ACF has retained liability for environmental contamination that may have existed at the time of transfer to ARI. ACF has also agreed to indemnify ARI for any cost that might be incurred with those existing issues. However, if ACF fails to honor its obligations to ARI, ARI would be responsible for the cost of such remediation. The Company believes that its operations and facilities are in substantial compliance with applicable laws and regulations and that any noncompliance is not likely to have a material adverse effect on its operations or financial condition.

When it is possible to make a reasonable estimate of the liability with respect to such a matter, a provision will be made as appropriate. Actual cost to be incurred in future periods may vary from these estimates. Based on facts presently known, ARI does not believe that the outcome of these proceedings will have a material adverse effect on its future liquidity, results of operations or financial position.

F-27

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

Certain claims, suits and complaints arising in the ordinary course of business have been filed or are pending against ARI. Management believes that all such claims, suits, and complaints arising in the ordinary course of business have been properly reported and reflected in Company’s financial statements. The Company believes that the settlement of these claims would not have a significant effect on the future liquidity, results of operations or financial position of ARI.

ARI is a party to collective bargaining agreements with labor unions at its Longview, Texas and North Kansas City, Missouri repair facilities and at its Longview, Texas steel foundry and components manufacturing facility. These agreements expire in January 2008, September 2007, and April 2008, respectively. ARI is also party to a collective bargaining agreement at our Milton, Pennsylvania repair facility, which expired on June 19, 2005. At the present time, there are no workers at Milton, as the site is idled.

Note 13—Mandatorily Redeemable Payment-in -Kind Preferred Stock, New Preferred Stock and Shareholders’ Equity

In January 2001, ARI issued to ACF 15,000 shares of a new class of mandatorily redeemable payment-in -kind preferred stock (“PIK Preferred Stock”) in exchange for $15.0 million in cash. In November 2001, ACF sold these 15,000 shares to an affiliated entity, Vegas Financial Corp. (“Vegas”) for $15.0 million plus accrued dividends of $1.6 million. The PIK Preferred Stock is redeemable within 30 days after the full repayment of amounts outstanding under the senior secured credit facilities, but no earlier than February 1, 2006. The PIK Preferred Stock provides for cumulative dividends at 12.5% per year on the liquidation price of $1,000 per share, payable in the form of additional shares of PIK Preferred Stock.

In 2001, 2002 and 2003, ARI issued additional shares of PIK Preferred Stock to Vegas in exchange for cash. In August 2001, ARI issued to Vegas 30,000 shares of PIK Preferred Stock in exchange for cash of $30.0 million. In the second quarter of 2002, ARI issued 15,000 shares of PIK Preferred Stock in exchange for cash of $15.0 million. In the year ended December 31, 2003, ARI issued 10,000 shares of PIK Preferred Stock in exchange for cash of $10.0 million.

On July 20, 2004, ARI’s PIK Preferred Stock was converted into a new issue of preferred stock (“New Preferred Stock”). As a result of this conversion, 95,517 shares of PIK Preferred Stock held by Vegas, an entity owned by Mr. Icahn were converted into New Preferred Stock. Additionally, ARI issued Vegas 654 shares of New Preferred Stock in consideration for accrued PIK Preferred dividends at the date of conversion. Vegas invested an additional $67.5 million in New Preferred Stock in exchange for cash on July 20, 2004.

On July 20, 2004, ACF transferred its ownership in ACF Lease Administrators, Inc. to ARI in exchange for 2,000 shares of New Preferred Stock. On the same date, ARI contributed its ownership in ACF Lease Administrators, Inc. to ARL in exchange for 2,000 A Units of ARL.

On December 22, 2004, Shippers Second transferred its ownership in Shippers Third to ARI in exchange for 32,500 shares of ARI New Preferred Stock. On the same date, ARI contributed its ownership in Shippers Third to ARL in exchange for 32,500 A Units of ARL.

The New Preferred Stock is entitled to cumulative dividends at the rate of 9.25% per annum, payable solely in cash on a semi annual basis. Holders of the New Preferred Stock are entitled to vote on matters submitted to the holders of shares of common stock based on a percentage of the combined number of shares of common stock and New Preferred Stock.

F-28

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

ARI issued 1,818,976 shares of common stock to Hopper Investments LLC, an entity controlled by Mr. Icahn, in exchange for cash of $42.5 million.

Note 14—Operating Segment and Sales/ Credit Concentrations

ARI operates in two reportable segments; manufacturing and railcar services. The accounting policies of the segments are the same as those described in Note 2. Performance is evaluated based on revenue and operating profit. Intersegment sales and transfers are accounted for as if sales or transfers were to third parties.

The information in the following table is derived from the segments’ internal financial reports used for corporate management purposes.


As of and for the		Manufacturing		Railcar			Corporate
year ended December 31, 2002		operations		services			& all other			Eliminations			Totals

		(in thousands)
Revenues from external customers		$	138,441	$	30,387		$	—		$	—		$	168,828
Intersegment revenues			129		409			—			(538	)		—
Cost of goods sold—external customers			134,363		29,533			—			—			163,896
Cost of intersegment sales			110		328			—			(438	)		—

	Gross profit		4,097		935			—			(100	)		4,932
Selling, administration and other			1,476		1,715			6,314			—			9,505

Earnings (loss) from operations		$	2,621	$	(780	)	$	(6,314	)	$	(100	)	$	(4,573	)

Total assets		$	96,468	$	32,010		$	59,112		$	—		$	187,590
Capital expenditures			995		804			17			—			1,816
Depreciation and amortization			3,685		2,061			525			—			6,271


As of and for the		Manufacturing		Railcar			Corporate
year ended December 31, 2003		operations		services			& all other			Eliminations			Totals

		(in thousands)
Revenues from external customers		$	188,119	$	29,875		$	—		$	—		$	217,994
Intersegment revenues			1,152		548			—			(1,700	)		—
Cost of goods sold—external customers			174,629		29,762			—			—			204,391
Cost of intersegment sales			1,074		539			—			(1,613	)		—

	Gross profit		13,568		122			—			(87	)		13,603
Selling, administration and other			3,370		1,555			5,415			—			10,340

Earnings (loss) from operations		$	10,198	$	(1,433	)	$	(5,415	)	$	(87	)	$	3,263

Total assets		$	105,542	$	32,594		$	58,372		$	—		$	196,508
Capital expenditures			1,733		568			—			—			2,301
Depreciation and amortization			3,932		2,112			364			—			6,408

F-29

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004


As of and for the		Manufacturing		Railcar		Corporate
year ended December 31, 2004		operations		services		& all other			Eliminations			Totals

		(in thousands)
Revenues from external customers		$	316,432	$	38,624	$			$	—		$	355,056
Intersegment revenues			2,574		3,003		—			(5,577	)		—
Cost of goods sold—external customers			306,283		34,473		—			—			340,756
Cost of intersegment sales			2,307		2,527		—			(4,834	)		—

	Gross profit		10,416		4,627		—			(743	)		14,300
Selling, administration and other			4,210		2,225		3,899			—			10,334

Earnings (loss) from operations		$	6,206	$	2,402	$	(3,899	)	$	(743	)	$	3,966

Total assets		$	34,606	$	33,034	$	289,200		$	—		$	356,840
Capital expenditures			11,062		379		—			—			11,441
Depreciation and amortization			3,955		1,959		333			—			6,247

Manufacturing operations

Revenues from affiliates were 38%, 29% and 18% of total revenues for the years ended December 31, 2002, 2003 and 2004, respectively. Revenues from one significant customer totaled 13%, 32% and 20% of total revenues for the years ended December 31, 2002, 2003 and 2004, respectively. Revenues from two significant customers were 17%, 35% and 36% for the years ended December 31, 2002, 2003 and 2004, respectively. Receivables from one significant customer were 2% and 7% of total accounts receivable at December 31, 2003 and 2004, respectively. Receivables from two significant customers were 2% and 10% at December 31, 2003 and 2004, respectively.

Railcar services

Revenues from affiliates were 8%, 5% and 5% of total revenues for the years ended December 31, 2002, 2003 and 2004, respectively. Revenues from one significant customer totaled 3%, 1% and 1% of total revenues for the years ended December 31, 2002, 2003 and 2004, respectively. Revenues from two significant customers were 4%, 1% and 1% for the years ended December 31, 2002, 2003 and 2004, respectively. Receivables from one significant customer were 8% and 1% of total accounts receivable at December 31, 2003 and 2004, respectively. Receivables from two significant customers were 10% and 1% at December 31, 2003 and 2004, respectively.

Note 15—Selected Quarterly Financial Data (unaudited)


		First			Second			Third			Fourth
		quarter			quarter			quarter			quarter

		(in thousands)
2003
	Sales	$	50,374		$	54,549		$	57,239		$	55,832
	Gross profit		3,906			3,925			4,911			861
	Net earnings (loss) available to common shareholders		170			433			953			(491	)
	Net loss attributable to common shareholders, basic and diluted	$	(2,024	)	$	(1,775	)	$	(1,691	)	$	(3,135	)

F-30

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004


		First			Second			Third			Fourth
		quarter			quarter			quarter			quarter

		(in thousands)
2004
	Sales	$	79,084		$	79,910		$	95,337		$	100,725
	Gross profit		6,099			4,783			2,838			580
	Net earnings (loss) available to common shareholders		1,016			969			889			(953	)
	Net loss attributable to common shareholders, basic and diluted	$	(1,793	)	$	(1,841	)	$	(2,789	)	$	(4,897	)

Note 16—Supplemental Cash Flow Information

ARI received interest income of $3.4 million, $3.0 million and $4.4 million for the years ended 2002, 2003 and 2004, respectively.

ARI paid interest expense of $4.4 million, $3.2 million and $1.8 million for the years ended December 31, 2002, 2003 and 2004, respectively.

ARI was refunded taxes of $1.7 million for the year ended December 31, 2002 and paid taxes of $0.2 million for each year ended December 31, 2003 and 2004.

During the year ended December 31, 2004, ARI recorded a non-cash charge to additional paid-in -capital of $26.7 million, representing the excess of the book value of its investment in ARL over fair market value on the date of the transfer of the investment in ARL to its affiliates. In addition, $12.5 million representing certain tax benefits that ARI received as a result of utilizing ARL’s previously incurred tax losses is also being recorded through additional paid-in -capital as ARI will receive the benefit of these tax losses in the future. The net non-cash effect of these transactions was a charge to additional paid-in -capital of $14.1 million (see Note 1).

Note 17—Subsequent Events

On January 26, 2005, the ARL operating agreement was amended and an assignment and assumption agreement was executed whereby ARI transferred its interest in a $165.0 million secured note receivable from Mr. Icahn dated October 28, 2004 to ARL in exchange for 35,000 A Units of ARL and in satisfaction of its $130.0 million note issued to ARL.

ARI entered into two supply agreements on January 28, 2005 and on June 8, 2005 with a supplier for two types of steel plates. The agreement is for five years and is cancelable by either party, with proper notice after two years. The agreement commits ARI to buy the lesser of a fixed volume of steel or 75% of its production needs from this supplier at prices that fluctuate with market.

In March 2005, ARI entered into a $50.0 million revolving credit facility secured by receivables and inventory. The notes bear interest at various rates based on LIBOR and prime. The term of the credit facility is one year. Debt covenants require ARI to maintain certain debt-to -earnings and coverage ratios with which ARI was in compliance. In addition, the revolving credit facility provides that the payment of dividends triggers a demand right in favor of ARI’s lenders unless ARI meets certain financial covenants and provides advance notice of the dividend to its lenders. Through April 26, 2005, ARI had drawn $30.3 million on the revolving credit facility.

In March 2005, ARI acquired certain assets of ACF for $2.8 million. The assets were transferred between entities under common control and, hence, have been accounted for at historical cost.

F-31

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Years Ended December 31, 2002, 2003 and 2004

In April 2005, construction began on a new paint shop at the Paragould facility. The project is expected to be completed by November 2005 at an estimated cost of $13.2 million.

In August 2005, the company entered into an employment agreement with its Chief Financial Officer (CFO). The agreement provides for a bonus that will be earned upon the successful completion of an Initial Public Offering. Under the terms of the agreement, the CFO will receive a minimum annual base salary of $0.25 million and a non-prorated cash bonus of at least $0.15 million for the 2005 fiscal year. In addition to the salary and bonus compensation, the CFO will receive a one-time special cash bonus of $0.5 million on April 22, 2007 if, prior to that date, the Company issues common stock to the public in an offering registered with the Securities and Exchange Commission (“SEC”) or if the Company is sold to a third party in a private transaction.

The Company is negotiating the terms of an employment contract with its Chief Executive Officer (CEO) and expects to execute this agreement in the fourth quarter of 2005. Significant terms of this agreement are still being finalized.

In August 2005, the company was named a party to a suit in which the plaintiff alleges the company was responsible for the malfunction of a valve which was remanufactured in 2004 by a third party. The company believes it has no responsibility for this malfunction and has a meritorious defense against any liability in this case. In any event, it is not possible to estimate the expected settlement, if any, that any party might be held accountable for at this time as the case is in its early stages.

The Company has been named as the defendant in a lawsuit in which the plaintiff claims that the Company is responsible for the damage caused by allegedly defective railcars that were manufactured by the Company. The plaintiffs allege that failures in certain components caused the contents transported by these railcars to spill out of the railcars causing property damage, clean-up costs, monitoring costs, testing costs and other costs and damages. The Company was recently served with the complaint for this lawsuit, but Management believes that the Company is not responsible for the spills and has meritorious defenses against liability.

Note 18 — Stock Split

On December 23, 2005, ARI’s board of directors approved the reincorporation of ARI from Missouri to Delaware in connection with its anticipated initial public offering. To accomplish this reincorporation, the board approved a merger of ARI, immediately prior to the closing of the offering, with and into ARI’s wholly owned subsidiary, American Railcar Industries, Inc., a Delaware corporation incorporated on November 16, 2005 by ARI for this purpose. As a part of this merger ARI will exchange all of its shares of common stock for shares of the subsidiary’s common stock on a 9,328.083-for-1 basis. In addition, ARI will also exchange all of its new preferred stock for shares of the subsidiary’s new preferred stock on a 1-for-1 basis. The subsidiary will survive the merger and will be named American Railcar Industries, Inc. All references to common stock amounts, shares and per share data included in the financial statements and related notes have been adjusted to give retroactive effect to the stock split.

F-32

American Railcar Industries, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


									(a)
									Proforma
			December 31,			September 30,			September 30,
			2004			2005			2005

Assets
Current assets:
	Cash and cash equivalents		$	6,943		$	26,201		$	26,201
	Accounts receivable, net			25,183			39,060			39,060
	Receivables from affiliates			—			9,867			9,867
	Inventories, net			73,925			81,864			81,864
	Prepaid expenses			244			5,364			5,364
	Deferred tax asset			2,065			1,837			1,837

		Total current assets		108,360			164,193			164,193
Property, plant and equipment:
	Land			1,977			1,977			1,977
	Buildings			66,350			75,541			75,541
	Machinery and equipment			58,816			61,178			61,178
	Construction in process			8,686			13,549			13,549

				135,829			152,245			152,245
	Less accumulated depreciation			58,878			63,690			63,690

		Net property, plant and equipment		76,951			88,555			88,555
Notes receivable from affiliates and interest thereon				165,000			—			—
Deferred tax asset				663			—			—
Debt issuance costs and other assets				615			3,643			3,643
Investment in joint venture				5,251			5,633			5,633

		Total assets	$	356,840		$	262,024		$	262,024

Liabilities and Shareholders’ Equity
Current liabilities:
	Current portion of long-term debt		$	1,334		$	32,733		$	32,733
	Accounts payable, including $3,073 due from affiliates in 2005			22,800			56,154			56,154
	Accrued expenses and taxes			13,524			25,109			107,164
	Notes payable to affiliate—current			19,000			19,000			19,000
	Other amounts due to affiliates—current			5,137			—			—

		Total current liabilities		61,795			132,996			215,051
Long-term debt, net of current portion				8,517			7,097			7,097
Note payable to affiliate—noncurrent				130,000			—			—
Other amounts due to affiliates—noncurrent				17,109			—			—
Deferred tax liability				—			9,853			9,853
Mandatorily redeemable preferred stock, stated value $1,000, 99,000 shares authorized, 1 share issued and outstanding at December 31, 2004 and September 30, 2005				1			1			1
Other liabilities				4,395			4,542			4,542

		Total liabilities		221,817			154,489			236,544
Commitments and contingencies				—			—			—
Shareholders’ equity:
	New Preferred Stock, $.01 par value per share, stated value $1,000 per share, 500,000 shares authorized, 111,685 and 82,055 shares issued and outstanding at December 31, 2004 and September 30, 2005, respectively			111,685			82,055			—
	Common stock, $.01 par value, 50,000,000 shares authorized, 11,147,059 shares issued and outstanding at December 31, 2004 and September 30, 2005, respectively			111			111			111
	Additional paid-in capital			41,249			40,014			40,014
	Accumulated deficit			(16,959	)		(13,599	)		(13,599	)
	Accumulated other comprehensive loss			(1,063	)		(1,046	)		(1,046	)

		Total shareholders’ equity		135,023			107,535			25,480

		Total liabilities and shareholders’ equity	$	356,840		$	262,024		$	262,024


(a)	Proforma adjustment includes the reduction of preferred stock of $82,055, which will be paid with IPO proceeds. A corresponding increase of $82,055 has been included in accrued expenses and taxes.

See notes to the condensed consolidated financial statements.

F-33

American Railcar Industries, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS—UNAUDITED

(in thousands, except per share amounts)


				Nine months ended
				September 30,

				2004			2005

Revenues:
	Manufacturing operations (including revenues from transactions with affiliates of $44,590 and $44,493 in 2004 and 2005, respectively)			$	226,759		$	409,208
	Railcar services (including revenues from affiliates of $12,698 and $16,036 in 2004 and 2005, respectively)				27,572			32,940

			Total revenues		254,331			442,148
Costs of goods sold:
	Cost of manufacturing operations (including costs from transactions with affiliates of $40,178 and $41,384 in 2004 and 2005, respectively)				216,027			377,181
	Cost of railcar services (including costs from transactions with affiliates of $9,593 and $12,728 in 2004 and 2005, respectively)				24,585			27,538

			Total costs of goods sold		240,612			404,719
		Gross profit			13,719			37,429
	Selling, administrative and other				8,543			11,417

		Earnings from operations			5,176			26,012
	Interest income (includes interest income from affiliates of $1,201 and $823 in 2004 and 2005, respectively)				2,122			1,265
	Interest expense (including interest expense to affiliates of $174 and $1,683 in 2004 and 2005, respectively)				2,216			3,577
		Earnings(loss) income from joint venture			(351	)		443

		Earnings before income tax expense			4,731			24,143
	Income tax expense				1,858			9,611

	Net earnings			$	2,873		$	14,532

	Less preferred dividends				(9,296	)		(11,171	)

	Net earnings (loss) available to common shareholders				(6,423	)		3,361
Weighted average shares outstanding — basic and diluted					9,804			11,147

Net earnings (loss) per common share — basic and diluted				$	(0.66	)	$	0.30

See notes to condensed consolidated financial statements

F-34

American Railcar Industries, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED

(in thousands)


			Nine Months Ended
			September 30,

			2004			2005

Operating activities:
Net earnings			$	2,873		$	14,532
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
	Depreciation and amortization			4,774			4,972
	Change in joint venture investment as a result of (earnings) loss			351			(443	)
	Expenses relating to pre-capitalization liabilities retained by ACF			800			794
	Provision for deferred income taxes			1,485			8,721
	Provision for losses on accounts receivable			86			50
	Curtailment gain			(59	)		—
	Changes in operating assets and liabilities:
		Accounts receivable		(13,353	)		(23,794	)
		Inventories		(14,204	)		(7,939	)
		Prepaid expenses and other assets		(156	)		(8,309	)
		Accounts payable		14,952			33,354
		Accrued expenses and taxes		5,041			5,784
		Other		(644	)		109

Net cash provided by operating activities				1,946			27,831
Investing activities:
	Purchases of property, plant and equipment			(6,750	)		(16,356	)

Net cash used in investing activities				(6,750	)		(16,356	)
Financing activities:
	Issuance of common stock			42,500			—
	Issuance of preferred stock			67,500			—
	Effect of ARL spin off			(25,000	)		—
	Increase (decrease) in amounts due to affiliates			10,548			(22,246	)
	Repayment of note receivable from affiliate			—			50
	Proceeds from debt issuance			—			31,294
	Repayment of debt			(40,204	)		(1,315	)

Net cash provided by financing activities				55,344			7,783

Increase in cash and cash equivalents				50,540			19,258
Cash and cash equivalents at beginning of year				65			6,943

Cash and cash equivalents at end of period			$	50,605		$	26,201

See notes to condensed consolidated financial statements.

F-35

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2004 and 2005

The condensed consolidated financial statements included herein have been prepared by American Railcar Industries, Inc. and subsidiary (collectively the “Company” or “ARI”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The Condensed Balance Sheet as of December 31, 2004 has been derived from the audited consolidated balance sheets as of that date. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s latest annual report attached on Form S-1 for the year ended December 31, 2004. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. Due to the seasonality of the Company’s business, the results of operations of any interim period are not necessarily indicative of the results that may be expected for a fiscal year.

Note 1—Description of the Business

The condensed consolidated financial statements of the Company include the accounts of American Railcar Industries, Inc. and its wholly owned subsidiaries. Through its subsidiary Castings, LLC (“Castings”), the Company has a one-third ownership interest in Ohio Castings Company, LLC (“Ohio Castings”), a limited liability company formed to run two foundries which cast railcar sideframes and bolsters for use or sale by the ownership group. All significant intercompany transactions and balances have been eliminated.

ARI manufactures railcars, custom designed railcar parts for industrial companies, railroads, and other industrial products, primarily aluminum and special alloy steel castings, for non-rail customers. ARI also provides railcar maintenance services for railcar fleets, including that of its affiliate, American Railcar Leasing, LLC (“ARL”). In addition, ARI provides fleet management and maintenance services for railcars owned by selected customers. Such services include inspecting and supervising the maintenance and repair of such railcars. The Company’s operations are located in the United States and Canada. The Company operates a small railcar repair facility in Sarnia Ontario Canada. Canadian revenues were 0.5% and 0.4% of total company revenues for the nine months ended September 30, 2004 and 2005, respectively. Canadian assets were 0.4% and 0.3% of total company assets for the nine months ended September 30, 2004 and 2005, respectively.

ARI was recapitalized on October 1, 1994 when ACF Industries LLC (“ACF”), the former holder of ARI’s common stock, transferred to ARI the old common stock of ARI along with the assets and liabilities of ACF’s railcar maintenance and railcar parts manufacturing businesses. In exchange, ACF received 57,306 shares of ARI’s newly issued mandatorily redeemable preferred stock. New shares of ARI’s common stock were issued to Carl C. Icahn (“Mr. Icahn”), Chairman of the Board of ACF, in exchange for cash of $6.4 million. In October 1998, ARI redeemed 57,305 shares of the preferred stock and the remaining share of preferred stock was transferred to Mr. Icahn.

In 2003, ACF Industries Holding Corp. (“ACF Holding”), an affiliate of ARI, formed a wholly-owned subsidiary, Castings. In June 2005, ARI completed the purchase of Castings from ACF Holdings. The transaction was effective January 1, 2005. The cost of the acquisition totaled $12.0 million, which represents the fair value of Castings equity interest in Ohio Castings. The purchase price will be paid in 2005. However as Castings was owned by an entity with ownership common to ARI, the investment in subsidiary is recorded at the date of Castings inception, June, 2003 at book value. The

F-36

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

purchase price is recorded at full value as a payable to the affiliate and the excess of fair value over cost is presented as a distribution from equity. Interest is accrued on the note payable to the affiliate as of January 1, 2005 as that is the date the purchase was agreed to.

On July 20, 2004, ARI formed ARL, a wholly owned subsidiary. ARL’s primary business is the leasing of railcars. The subsidiary was capitalized through the issuance of common and preferred stock. ARI’s investment in ARL was $116.7 and $151.7 million at December 31, 2004 and just prior to June 30, 2005, respectively. Preferred stock of ARL was issued to affiliated companies in exchange for contributions of cash or railcars totaling $102.7 million. In January 2005, ARI obtained an additional $35 million of ARL common stock resulting in a carrying value of $151.7 million.

On June 30, 2005, in anticipation of its public offering, ARI sold its common interest in ARL for $125.0 million to affiliated companies in return for the preferred stock investment valued at $116.1 million plus accrued dividends of $8.9 million that those affiliates held ARI. At December 31, 2004, ARI’s investment in ARL was $116.7 million. This investment was eliminated as of December 31, 2004 in order to present ARI on a stand alone basis. New preferred stock of $86.5 million plus accrued dividends of $3.5 million were eliminated from ARI’s equity and a charge of $26.7 million was recorded to additional paid in capital to reflect the difference between the final transfer price of $125 million and the ultimate carrying value of ARI’s investment in ARL of $151.7 million. The 2005 financial statements reflect a reduction of New Preferred Stock of $29.6 million plus accrued dividends of $5.4 million to eliminate the additional investment of $35 million made in that period. ARI retained no liabilities or other interests in ARL as a result of this sale. The presentation of ARI’s operations has been prepared on a standalone basis excluding ARL’s operations for all periods, and all transactions giving effect to ARL’s formation have been eliminated from the financial statements. Any differences related to the amounts originally capitalized and the amount paid for ARL in the sale have been recorded through adjustments to shareholder’s equity, including certain tax benefits that ARI received as a result of utilizing ARL’s previously incurred tax losses. ARI recorded a related deferred tax asset of $12.5 million for those net operating loss carry forwards as ARI has the legal right to utilize them for tax purposes.

F-37

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

The following table discloses the preferred stock transactions and the effect on additional paid in capital for the year ended December 31, 2004 and nine months ended September 30, 2005 to include all of the transactions including the effect of the spin off of ARL.


				Additional
	New preferred			paid in
	stock			capital

	(in thousands
January 1, 2004	$	—		$	11,484
New preferred issued for mandatorily redeemable preferred stock		95,517			—
Capital contribution		102,654			42,482
Exchange of common interest in ARL for new preferred stock		(86,486	)		(26,670	)
ARL deferred tax assets		—			12,522
Other		—			1,431

December 31, 2004		111,685			41,249
Exchange of common interest in ARL for new preferred stock		(29,630	)		—
ARL tax benefit		—			(2,023	)
Other		—			788

September 30, 2005	$	82,055		$	40,014

Note 2—Summary of Significant Accounting Policies

Significant accounting policies are described below.

Revenue recognition

Revenues from railcar sales are recognized following completion of manufacturing, inspection, customer acceptance and shipment, which is when title and risk for any damage or loss with respect to the railcars passes to the customer. In some cases, paint and lining work may be outsourced and, as a result, the sale will not be recorded until the railcars are shipped from the independent contractor. Revenues from railcar and industrial parts and components are recorded at the time of product shipment, in accordance with our contractual terms. Revenue for railcar maintenance services are recognized upon completion and shipment of railcars from our plants. The Company does not bundle railcar service contracts with new car sales. Revenue for fleet management services are recognized as performed.

The Company records amounts billed to customers for shipping and handling as part of sales in accordance with EITF 00-10, Accounting for Shipping and Handling Fees and Costs , and records related costs in cost of sales.

Debt issuance costs

Debt issuance costs were incurred in connection with ARI’s issuance of long-term debt, and are amortized over the term of the related debt, utilizing the effective interest method.

Inventories

Inventories are stated at the lower of average cost or market on a first in, first out basis, and include the cost of materials, direct labor and manufacturing overhead.

F-38

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

Accounts receivable

The Company carries its accounts receivable at cost less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its account receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. Accounts are placed for collection on a limited basis once all other methods of collection have been exhausted. Once it has been determined that the customer is no longer in business and/or refuses to pay, the accounts are written off.

Property, plant and equipment

Ohio Castings joint venture

The Company uses the equity method to account for its investment in Ohio Castings owned by its subsidiary, Castings, LLC. Under the equity method, the Company recognizes its share of the earnings and losses of the joint venture as they accrue instead of when they are realized. Advances and distributions are charged and credited directly to the investment account. Ohio Castings produces railcar parts that are sold to one of the joint venture partners. The joint venture partner sells these parts to outside 3rd parties at current market prices and to the Company and the other joint venture partner in Ohio Castings at cost plus a licensing fee. The risk of loss to Castings, LLC and the Company is limited to its investment in Ohio Castings and its one third share of its guarantee of Ohio Castings debt which was approximately $0.1 million at September 30, 2005.

The cost of railcar manufacturing for the nine months ended September 30, 2004 and 2005 included $14.3 million and $19.0 million, respectively, in products produced by Ohio Castings.

The carrying amount of the investment in Ohio Castings by Castings LLC was $5.3 million and $6.2 million at December 31, 2004 and September 30, 2005, respectively.

F-39

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

Summary combined unaudited financial information for Ohio Castings as of and for the years ended December 31, 2004 and nine months ended September 30, 2005 follows:


			December 31,		September 30,
			2004		2005

			(in thousands)
Financial Position
	Current Assets		$	19,111	$	18,000
	Property, plant, and equipment, net			14,407		15,436

		Total assets		33,518		33,436

Current liabilities				19,674		14,679
Long-term debt				8,184		11,770

		Total liabilities		27,858		26,449

Member’s equity			$	5,660	$	6,987

Summary consolidated results of operations for the nine months ended September 30, 2004 and 2005.


		September 30,			September 30,
		2004			2005

		(in thousands)
Sales		$	53,488		$	88,324

	Earnings (loss) from operations		(991	)		1,115

	Net earnings (loss)	$	(1,053	)	$	1,327

Impairment of long-lived assets

Pension plans and other postretirement benefits

Certain ARI employees participate in noncontributory, defined benefit pension plans sponsored by a related party. Benefits for the salaried employees are based on salary and years of service, while those for hourly employees are based on negotiated rates and years of service.

F-40

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

Income taxes

Statements of cash flows

For the purpose of the consolidated statements of cash flows, ARI considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Until October 2004, ACF received the majority of ARI’s cash receipts and disbursed ARI’s cash on behalf of ARI, and maintained an intercompany receivable/payable which bore interest at ACF’s internal cost of funds in accordance with an administration agreement between ARI and ACF, which is described in Note 9. Since October 2004, ARI maintains its own cash balances.

Earnings per share

Basic earnings per share are calculated as net earnings attributable to common shareholders divided by the weighted-average number of common shares outstanding during the respective period. Diluted earnings per share are calculated by dividing net earnings attributable to common shareholders by the weighted-average number of shares outstanding plus dilutive potential common shares outstanding during the year.

Fair value of financial instruments

The carrying amounts of cash and cash equivalents, accounts receivable, amounts due to/from affiliates and accounts payable approximate fair values because of the short-term maturity of these instruments. The fair value of long-term debt is discussed in Note 5. The fair value of the note receivable from Ohio Castings and Mr. Icahn, which is carried at face amount plus accrued interest, could not reasonably be estimated due to the lack of market for similar instruments. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.

Foreign currency translation

Balance sheet amounts from our Canadian operation are translated at the exchange rates in effect at the end of the period, and operations statement amounts are translated at the average rates of exchange prevailing during the year. Currency translation adjustments are included in Shareholders’ Equity.

Comprehensive income (loss)

F-41

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

Use of estimates

Management of ARI has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Significant items subject to estimates and assumptions include, deferred taxes, pension obligations, workers compensation, valuation allowances for accounts receivable and inventory obsolescence and the reserve for warranty claims. Actual results could differ from those estimates.

Retained earnings

As ARI and ACF are entities under common control, accounting principles generally accepted in the United States of America require that ARI’s initial carrying value of assets transferred to it from ACF and the sale of Castings be equal to ACF’s historical net book value at the time of transfer. The excess of the fair value paid over the net book value of assets and liabilities transferred to ARI is reflected as a distribution of retained earnings due to common control and has the effect of reducing shareholders’ equity by $24.1 million at December 31, 2004 and September 30, 2005. Of that amount, $19.2 million was recorded at the formation of ARI, and $4.9 million was recorded in 2003 from the acquisition of Castings.

Recent accounting pronouncements

In December 2004, the FASB revised SFAS No. 123, Share-Based Payment, which establishes the accounting for transactions in which an entity exchanges its equity instruments or certain liabilities based upon the entity’s equity instruments for goods or services. The revision to SFAS No. 123 generally requires that publicly traded companies measure the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award on the grant date. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award, which is usually the vesting period. Management expects that the revised provisions of SFAS No. 123 will be effective for the Company after the Initial Public Offering. Management has not yet evaluated the impact of the revisions to SFAS No. 123 on the Company’s financial statements. After the offering, the Company will comply with 123R and expense stock options.

F-42

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

reporting of a change in accounting principle. We will adopt SFAS 154 at December 31, 2005 and do not anticipate any material change to our operating results as a result of this adoption.

Note 3—Accounts Receivable

The allowance for doubtful accounts consists of the following:


		September 30,			September 30,
		2004			2005

		(in thousands)
Beginning balance		$	572		$	510
	Bad debt expense		86			35
	Accounts written off		(81	)		(23	)
	Recoveries		21			38

Ending balance		$	598		$	560

Note 4—Inventories

Inventories consist of the following:


			December 31,		September 30,
			2004		2005

			(in thousands)
Raw materials			$	39,655	$	37,072
Work-in-process				25,515		34,253
Finished products				11,434		13,072

	Total inventories		$	76,604	$	84,397
Less reserves				2,679		2,533

		Total inventories, net	$	73,925	$	81,864

Inventory reserves consist of the following:


		December 31,			September 30,
		2004			2005

		(in thousands)
Beginning Balance		$	2,310		$	2,679
	Provision		559			309
	Write-off		(190	)		(455	)

Ending balance		$	2,679		$	2,533

F-43

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

Note 5—Long-Term Debt

Long-term debt consists of the following:


		December 31,		September 30,
		2004		2005

		(in thousands)
Revolving line of credit		$	—		31,294
Industrial revenue bonds guaranteed by ACF and ACF Holding, with effective interest rates ranging from 6.75% to 8.5%, principal amounts due through the year 2011			9,600		8,340
Other			251		196

			9,851		39,830
Less current portion of debt			1,334		32,733

	Total long-term debt, net of current portion	$	8,517	$	7,097

On March 10, 2005, ARI entered into a $50.0 million revolving credit facility secured by receivables and inventory. The note bears interest at various rates based on LIBOR or prime. As of September 30, 2005, the interest rate on the borrowings under the revolving credit facility was 6.5% and was based on the U.S. prime rate at that time. The term of the credit facility is one year. Debt covenants require ARI to maintain certain debt-to -earnings and coverage ratios with which ARI was in compliance at September 30, 2005. In addition, the revolving credit facility provides that the payment of dividends triggers a demand right in favor of ARI’s lenders unless ARI meets certain financial covenants and provides advance notice of the dividend to its lenders.

The fair value of long-term debt was approximately $9.9 million and $39.8 million at December 31, 2004 and September 30, 2005, respectively, as calculated by discounting cash flows through maturity using ARI’s current rate of borrowing for similar liabilities.

Note 6—Warranties

Changes in the Company’s warranty reserve are as follows:


		Nine Months Ended
		September 30,

		2004			2005

		(in thousands)
Liability, beginning of period		$	1,436		$	1,630
	Expense for new warranties issued		159			278
	Warranty claims		(67	)		(471	)

Liability, end of period		$	1,528		$	1,437

F-44

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

Note 7—Stock options

In 1994, the company entered into an agreement with Mr. Unger, currently its chief executive officer, which provided that Mr. Unger shall be granted an option to purchase 2.0% of the outstanding common shares of ARI at a price equal to 2.0% of the common equity contribution by Carl C. Icahn (ARI’s chairman of the board and a principal stockholder) at the formation of ARI. The agreement provided that this option shall be exercisable at the time of ARI’s initial public offering, and should ARI be sold to parties other than in a public offering, Mr. Unger shall receive 2.0% of the sales price net of the preferred interest established at the formation of ARI and net of the contribution for common stock. The agreement further provided that the above options and or rights shall remain in effect as long as Mr. Unger is employed by ARI. Compensation expense under this arrangement would be recognized when the contingency is met at the effective date of a public offering or the completion of a sale.

In November 2005, ARI entered into a new agreement with Mr. Unger. Upon the closing of an initial public offering of ARI common stock, this new agreement will supersede the 1994 agreement and the 1994 agreement will terminate. The new agreement provides for the issuance of $6 million of common shares to be issued at the IPO price on the IPO date. These shares will vest 40% upon issuance, with the remaining 60% to vest one year after issuance.

Note 8—Related Party Transactions

In connection with the 1994 ACF asset transfer, the Company entered into the following administrative and operating agreements with ACF, effective as of October 1, 1994:

Manufacturing services agreement

Under the manufacturing services agreement, ACF agreed to manufacture and distribute, at the Company’s instruction, various products using certain assets that the Company acquired pursuant to the 1994 ACF asset transfer agreement. In consideration for these services, the Company agreed to pay ACF for the direct costs they incurred which totaled $20.0 million and $56.2 million for the nine month period ended September 30, 2004 and 2005, respectively. The agreement automatically renews unless written notice is provided by the Company.

Administration Agreement

Under this agreement, ACF agreed to provide the Company with office facilities and administrative services, primarily information technology services. In exchange for the facilities services, the Company agreed to pay ACF based on agreed upon cost allocations. Charges for these services represent a portion of actual direct and overhead expenses incurred by ACF, with direct expenses being charged based on relative time commitments of managerial personnel and overhead based on relative numbers of employees. Management believes that these allocation methods are reasonable for the relevant costs. Amounts incurred under this agreement totaled $0.6 million and $0.4 million for the nine month period ended September 30, 2004 and 2005, respectively. The facility lease amounts, included in the amounts incurred, have been included in the total lease expense discussion within this footnote. The Agreement was terminated on April 1, 2005.

F-45

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

Railcar Servicing Agreement

Under this agreement, the Company agreed to provide ACF with railcar repair and maintenance services, fleet management services and consulting services on safety and environmental matters for railcars owned or managed by ACF and leased or held for lease by ACF. ACF agreed to compensate the Company based on agreed upon rates. Revenue recorded under this arrangement totaled $12.7 million for the nine month period ended September 30, 2004 and is included under revenue from affiliates on the statement of earnings. No amounts were recorded during the nine month period ended September 30, 2005. The Agreement was terminated on April 1, 2005.

Supply Agreement

Under this agreement, we agreed to manufacture and sell to ACF specified components at cost plus mark-up or on terms not less favorable than the terms on which the Company sold the same products to third parties. Revenue recorded under this arrangement totaled $0.1 million and $0.3 million for the nine month period ended September 30, 2005 and 2004 and is included under revenue from affiliates on the statement of earnings. The Agreement was terminated on April 1, 2005.

ACF and ACF Holding have guaranteed the Company’s obligations under the industrial revenue bonds as described in note 5.

As of December 31, 2004, amounts due to affiliates included $22.2 million to ACF and ARL.

As of September 30, 2005, amounts due from affiliates included $1.8 million from ACF, $7.1 million from ARL, $0.8 million from Mr. Icahn, and $0.2 million from Ohio Castings. As of September 30, 2005, amounts due to affiliates included $2.1 million to ACF, $0.6 million to ACF Holding for interest on the Castings note described below, and $0.4 million for interest on the Arnos note described below.

During 2004, ARI advanced $165.0 million to Mr. Icahn under a secured note due in 2007 and bearing interest at prime plus 1.75%. During 2004, ARL advanced $130.0 million to ARI under a note due in 2007 and bearing interest at prime plus 1 ¹ / 2 %. On January 26, 2005, an assignment and assumption agreement was executed whereby ARI transferred its interest in a $165.0 million note receivable from Mr. Icahn dated October 28, 2004 to ARL in exchange for 35,000 Units of common ownership and in satisfaction of a $130.0 million note issued to ARL.

The Company leases certain facilities and equipment from an entity owned by an officer of the Company, certain affiliates of ARI and third parties. Total rent expense on these leases were approximately $4.8 million and $5.3 million for the nine month period ended September 30, 2004 and 2005, respectively. Expenses to related parties included in the amounts above were $0.6 million and $0.3 million for the nine month period ended September 30, 2004 and 2005, respectively.

F-46

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

Castings has a note receivable of $2.2 million from Ohio Castings due November, 2008. The note bears interest at 4%. Principle and interest is payable quarterly starting November 30, 2005.

ARI entered into a note payable with ACF Holding, an affiliate, for $12.0 million effective January 1, 2005 in connection with the purchase of Castings (Note 1). The note bears interest at prime (6.75% at September 30, 2005) plus 0.5% and is due on demand.

ARI entered into a note payable with Arnos Corp., an affiliate, for $7.0 million in December 2004.

In 2005, the Company entered into the following agreements with ARL and its subsidiaries:

ARL Railcar Services Agreement

Under this agreement, ARL provided the Company with railcar services which the Company was Required to provide to ARI First and ARI Third under the railcar management agreement. The Company paid ARL an amount equal to the amounts paid to the Company by ARI First and ARI Third under the railcar management agreement which totaled $2.0 million for the nine month period ended September 30, 2005 and it is included under cost to affiliates on the statement of earnings. This agreement was terminated on July 1, 2005.

ARL Railcar Servicing Agreement

Under this agreement, the Company agreed to provide ARL with railcar repair and maintenance services, fleet management services and consulting services on safety and environmental matters for railcars owned or managed by ARL and leased or held for lease by ARL. ARL agreed to compensate the Company based on agreed upon rates. Revenue of $16.0 million for the nine month period ended September 30, 2005 was recorded under this arrangement which is included under revenue from affiliates on the statement of earnings. The agreement extends through June 30, 2006 and is automatically renewable unless either party provides at least six months prior notice of termination. Termination by the Company would result in a termination fee of $0.5 million.

ARL Services Agreement

Under this agreement, ARL agreed to provide the Company certain information technology services, rent and building services and limited administrative services. The rent and building services includes the use of certain facilities owned by Mr. Unger which is further described in note 12. Under the agreement, the Company agreed to provide purchasing and engineering services to ARL. Consideration exchanged between the Company’s is based on agreed upon fixed annual fee’s. Total fees paid to ARL were $1.1 million for the nine month period ended September 30, 2005. Amounts billed to ARL totaled $0.1 million for the nine month period ended September 30, 2005. These balances are included in revenues and costs from affiliates on the statement of earnings. Either party may terminate any of these services, and the associated costs for these services, on at least six months prior notice at any time prior to the termination of the agreement on December 31, 2007.

In April 2005, the Company entered into a consulting agreement with ACF in which both parties agreed to provide labor litigation, labor relations support and consultation, and labor contract interpretation and negation services to one another. In addition, the Company has agreed to provide ACF with engineering and consultation advice. Fees paid to one another are based on agreed upon rates. No services were rendered and no amounts were paid during the nine month period ended September 30, 2005.

ARI has been advised that in December 2005 an affiliate of Mr. Icahn entered into an agreement with the Foundation for a Greater Opportunity, or the Foundation, ARI’s other significant beneficial

F-47

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

stockholder, to acquire all of ARI’s common stock held by the Foundation. The consummation of this acquisition would require the approval of applicable authorities of the State of New York. If the parties obtain this approval, ARI has been advised that the parties expect that the purchase would be completed in the first three months of 2006. Pending the completion of this purchase, and for so long as the purchase agreement has not been terminated, the Foundation has granted the purchaser an irrevocable proxy to vote all the shares of ARI common stock held by the Foundation. As a result of these contemplated arrangements, ARI expects that Mr. Icahn will continue to control a majority of the voting power of ARI’s capital stock following the offering. As a result, Mr. Icahn is, and will be, able to exert substantial influence over ARI, elect ARI’s directors and control most matters requiring board or shareholder approval.

Note 9—Commitments and contingencies

The Company is currently a member of a controlled group that includes ACF, an entity in which Mr. Icahn has an indirect ownership of at least 80%. ACF is the sponsor of several pension plans that are underfunded, as of December 31, 2004, by a total of approximately $24.1 million on an ongoing actuarial basis and $172.4 million if those plans were terminated, as most recently reported by the plans’ actuaries. The liabilities could increase or decrease, depending on a number of factors, including future changes in promised benefits, investment returns and the assumptions used to calculate the liability. As a member of the controlled group, ARI would be jointly and severally liable for any failure of ACF to pay the unfunded liabilities upon a termination of the ACF pension plans. Upon completion of this offering, ARI believes that it should no longer be a member of the ACF controlled group. As a result, ARI should no longer be subject to ACF’s pension liabilities, unless it were determined that ARI was otherwise a member of the ACF controlled group or that a principal purpose of the offering or other transactions that resulted in ARI’s ceasing to be a member of the ACF controlled group was to evade pension liabilities and the termination date of the underfunded plan was within five years after the offering or other transactions. If such a determination were made and upheld by a court, ARI could remain jointly and severally liable for pension plan obligations of ACF, which could have a material adverse effect on ARI’s financial condition and results of operations.

In connection with Trans World Airlines, Inc.’s (TWA) 1992 bankruptcy proceedings under Chapter 11 of the Bankruptcy Code, the Pension Benefit Guarantee Corporation (“PBGC”) asserted that ACF as well as the other entities in which Mr. Icahn had a controlling interest were obligated along with TWA to satisfy any underfunding of TWA’s defined benefit plan. Subsequently, and in response to a petition of another member of the Icahn control group, PBGC terminated the TWA pension plan and obligated an affiliate of ARI, Highcrest Investors Corp. (Highcrest) to make eight annual payments of $30 million each commencing on July 1, 2002 and totaling $240 million (termination payments). As of December 31, 2004, Highcrest had made termination payments totaling $130 million and still owed $110 million on this obligation. The obligation to make termination payments is non-recourse except to the common stock of ACF Holding (another member of the control group). While ARI is a controlled entity of Mr. Icahn, management believes this obligation will have no adverse effect to the future liquidity, results of operations, or financial position of ARI.

F-48

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

others or for ARI’s actions that were in compliance with all applicable laws at the time these actions were taken. In addition, these laws may require significant expenditures to achieve compliance, and are frequently modified or revised to impose new obligations. Civil and criminal fines and penalties and other sanctions may be imposed for non-compliance with these environmental laws and regulations. ARI’s operations that involve hazardous materials also raise potential risks of liability under common law. ARI is involved in investigation and remediation activities at properties that it now owns or leases to address historical contamination and potential contamination by third parties. The Company is also involved with state agencies in the cleanup of two sites under these laws. These investigations are at a preliminary stage, and it is impossible to estimate, with any certainty, the timing and extent of remedial actions that may be required, and the costs that would be involved in such remediation. Substantially all of the issues identified relate to the use of the properties prior to their transfer to ARI in 1994 by ACF and for which ACF has retained liability for environmental contamination that may have existed at the time of transfer to ARI. ACF has also agreed to indemnify ARI for any cost that might be incurred with those existing issues. However, if ACF fails to honor its obligations to ARI, ARI would be responsible for the cost of such remediation. The Company believes that its operations and facilities are in substantial compliance with applicable laws and regulations and that any noncompliance is not likely to have a material adverse effect on its operations or financial condition.

Certain claims, suits and complaints arising in the ordinary course of business have been filed or are pending against ARI. In the opinion of management, all such claims, suits, and complaints arising in the ordinary course of business are without merit or would not have a significant effect on the future liquidity, results of operations or financial position of ARI if disposed of unfavorably.

ARI is a party to collective bargaining agreements with labor unions at its Longview, Texas and North Kansas City, Missouri repair facilities and at its Longview, Texas steel foundry and components manufacturing facility. These agreements expire in January 2008, September 2007, and April 2008, respectively. We are also party to a collective bargaining agreement at our Milton, Pennsylvania repair facility, which expired on June 19, 2005. At the present time, there are no workers at Milton, as the site is idled.

The Company was named a party to a suit in which the plaintiff alleges the Company was responsible for the malfunction of a valve which was remanufactured in 2004 by a third party. The Company believes it has no responsibility for this malfunction and has a meritorious defense against any liability in this case. In any event, it is not possible to estimate the expected settlement, if any, that any party might be held accountable for at this time as the case is in its early stages.

ARI entered two supply agreements on January 28, 2005 and on June 8, 2005 with a supplier for two types of steel plates. The agreement is for five years and is cancelable by either party, with proper notice after two years. The agreement commits ARI to buy 75% of its production needs from this supplier at prices that fluctuate with market.

In August 2005, the company entered into employment agreement with its Chief Financial Officer (CFO). The agreement provides for a bonus that will be earned upon the successful completion of an Initial Public Offering. Under the terms of the agreement, the CFO will receive a minimum annual base salary of $0.25 million and a non-prorated cash bonus of at least $0.15 million for the 2005 fiscal year.

F-49

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

In addition to the salary and bonus compensation, the CFO will receive a one-time special cash bonus of $0.5 million on April 22, 2007 if, prior to that date, the Company issues common stock to the public in an offering registered with the SEC or if the Company is sold to a third party in a private transaction.

Note 10—New Preferred Stock

Note 11—Operating Segment and Sales/ Credit Concentrations

ARI operates in two reportable segments; manufacturing and railcar services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2. Performance is evaluated based on revenue and operating profit. Intersegment sales and transfers are accounted for as if sales or transfers were to third parties.

The information in the following table is derived from the segments’ internal financial reports used for corporate management purposes.


As of and for the		Manufacturing		Railcar		Corporate
nine months ended September 30, 2004		Operations		Services		& All Other			Eliminations			Totals

		(in thousands)
Revenues from external customers		$	226,759	$	27,572	$	—		$	—		$	254,331
Intersegment revenues			2,357		2,505		—			(4,862	)		—
Cost of goods sold — external customers			216,027		24,585		—			—			240,612
Cost of intersegment sales			2,103		2,135		—			(4,238	)		—

	Gross profit		10,986		3,357		—			(624	)		13,719
Selling, administration and other			3,983		1,319		3,241			—			8,543

Earnings (loss) from operations		$	7,003	$	2,038	$	(3,241	)	$	(624	)	$	5,176

Total assets		$	133,003	$	32,101	$	135,660		$	—		$	300,764
Capital expenditures			6,733		135		—			—			6,868
Depreciation & amortization			2,929		1,518		327			—			4,774

F-50

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005


As of and for the		Manufacturing		Railcar		Corporate
nine months ended September 30, 2005		Operations		Services		& All Other			Eliminations			Totals

		(in thousands)
Revenues from external customers		$	409,208	$	32,940	$	—		$	—		$	442,148
Intersegment revenues			666		1,911		—			(2,577	)		—
Cost of goods sold — external customers			377,181		27,538		—			—			404,719
Cost of intersegment sales			595		1,474		—			(2,069	)		—

	Gross profit		32,098		5,839		—			(508	)		37,429
Selling, administration and other			4,077		1,442		5,898			—			11,417

Earnings (loss) from operations		$	28,021	$	4,397	$	(5,898	)	$	(508	)	$	26,012

Total assets		$	175,669	$	31,888	$	54,467		$	—		$	262,024
Capital expenditures			15,595		568		193			—			16,356
Depreciation & amortization			3,372		1,453		147			—			4,972

Manufacturing operations

Revenues from affiliates were 20% and 11% of total manufacturing revenues for the nine months ended September 30, 2004 and 2005, respectively. Revenues from five significant customers totaled 18%, 17%, 15%, 11% and 11% of total manufacturing revenues for the nine months ended September 30, 2005. Revenues from three significant customers totaled 23%, 21% and 19% of total manufacturing revenues for the nine months ended September 30, 2004. Receivables from these customers totaled 26% and 40% of total receivables at September 30, 2004 and 2005, respectively.

Railcar services

Revenues from affiliates were 46% and 49% of total railcar services revenues for the nine months ended September 30, 2004 and 2005, respectively. No customer accounted for more than 5% of railcar services revenue.

Note 12—Supplemental Cash Flow Information

The Company received interest income of approximately $2.1 million and $1.3 million for the nine months ended September 30, 2004 and 2005, respectively.

ARI paid interest expense of $2.2 million and $3.6 million for the nine months ended September 30, 2004 and 2005, respectively.

ARI paid taxes of $1.5 million and $0.3 million for the nine months ended September 30, 2004 and 2005, respectively.

In January 2005, ARI exchanged the $165.0 million secured note with Mr. Icahn to ARL in satisfaction of the $130.0 million note owed to ARL plus $35.0 million of common interest in ARL.

Note 13—Subsequent Events

We entered into two vendor supply contracts with minimum volume commitments in October 2005, with suppliers of materials used at our railcar production facilities. The agreements have terms of two and three years respectively. We have agreed to purchase a combined total of $67.6 million from these two suppliers over the next three years. In 2006, 2007 and 2008 we expect to purchase $16.0 million, $27.1 million and $24.5 million respectively under these agreements.

Effective December 1, 2005, ARI entered into an agreement with ACF which released ARI from all employee benefit reimbursement obligations under the 1994 Asset Transfer Agreement. The settlement was based on the actuarial valuation of liabilities at December 1, 2005, and the market value of assets at that time.

F-51

American Railcar Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended September 30, 2004 and 2005

Under this agreement, ACF has released ARI from all employee benefit reimbursement obligations under the 1994 Asset Transfer Agreement in exchange for ARI assuming sponsorship and all obligations of the Shipper’s Car Line Pension Plan, including obligations related to ACF participants in the Plan, and a cash payment to ACF of approximately $9.2 million to settle all of its obligations related to ARI employees included in the ACF Retirement Plan. The Shipper’s Car Line Pension Plan has an unfunded liability of $4.0 million, which has become the obligation of ARI. ACF will continue to be responsible for the ACF Retirement Plan and is responsible for all obligations of that plan including obligations related to ARI employees who are in the Plan. The ACF Retirement Plan was curtailed in April 2004.

The assets, liabilities and unfunded liability of the Shipper’s Car Line Plan based on 2004 actuarial valuations are as follows:


Projected benefit obligation	$	12.4 million
Assets at fair value		8.4 million
Underfunded status		4.0 million

The Shipper’s Car Line Plan assets consist mainly of equity and debt securities.

In addition to the agreement related to pension plans, ARI has assumed sponsorship of a Retiree Medical and Retiree Life Insurance plan for retirees of ARI and for active ARI employees that will receive this benefit in the future. The post retirement liability related to this obligation is estimated to be $3.9 million based on the 2005 APBO valuation. ACF has paid ARI approximately $2.9 million in exchange for assuming the portion of this liability that relates to years prior to 1994. The 2006 projected expense and cash spending estimates related to these benefits were $0.2 million and $0.3 million, respectively.

The total amount of the obligations assumed by ARI is estimated to be $14.2 million. ARI has previously accrued an estimated liability related to this settlement of $3.8 million. In December 2005 ARI recorded an increase in the estimated liability of $10.4 million and a loss on the settlement of the same amount. The net cash payment to ACF related to this transaction, and included in the numbers above, was approximately $6.3 million ($9.2 million less $2.9 million).

In December 2005, ARI entered into a trademark license agreement with ARL. Under this agreement, which is effective as of June 30, 2005, ARI granted a nonexclusive, perpetual, worldwide license to ARL to use ARI’s common law trademarks “American Railcar” and the “diamond shape” of ARI’s logo. ARL may only use the licensed trademarks in connection with the railcar leasing business. ARI receives annual fees of $1,000 in exchange for this license.


Note 14—	Stock Split

On December 23, 2005, ARI’s board of directors approved the reincorporation of ARI from Missouri to Delaware in connection with its anticipated initial public offering. To accomplish this reincorporation, the board approved a merger of ARI, immediately prior to the closing of the offering, with and into ARI’s wholly owned subsidiary, American Railcar Industries, Inc., a Delaware corporation incorporated on November 16, 2005 by ARI for this purpose. As a part of this merger ARI will exchange all of its shares of common stock for shares of the subsidiary’s common stock on a 9,328.083 -for-1 basis. In addition, ARI will also exchange all of its new preferred stock for shares of the subsidiary’s new preferred stock on a 1-for-1 basis. The subsidiary will survive the merger and will be named American Railcar Industries, Inc. All references to common stock amounts, shares and per share data included in the financial statements and related notes have been adjusted to give retroactive effect to the stock split.

F-52

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Ohio Castings Company, LLC

We have audited the accompanying consolidated balance sheets of Ohio Castings Company, LLC and Subsidiaries (the “Company”) as of August 31, 2005, 2004 and 2003, and the related consolidated statements of operations, members’ equity and cash flows for the year ended August 31, 2005 and 2004, and the period from inception (June 20, 2003) to August 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America as established by the Auditing Standards Board of the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Ohio Castings Company, LLC and Subsidiaries as of August 31, 2005, 2004 and 2003, and the consolidated results of their operations and their cash flows for the year ended August 31, 2005, 2004 and the period from inception (June 20, 2003) to August 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Chicago, Illinois
December 9, 2005

F-53

Ohio Castings Company, LLC and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


			August 31,

			2003		2004		2005

Assets
Current assets:
	Cash		$	811	$	1,922	$	2,026
	Accounts receivable, net			4,808		10,802		8,522
	Inventories			2,242		5,275		5,827
	Other Assets			393		112		759

		Total current assets		8,254		18,111		17,134
Restricted cash				—		935		800
Property, plant and equipment:
	Buildings			—		2,178		2,192
	Machinery and equipment			79		12,052		14,866

				79		14,230		17,058
	Less accumulated depreciation and amortization			3		854		1,846

				76		13,376		15,212
	Land			—		270		270

		Net property, plant and equipment		76		13,646		15,482
Debt issuance costs, net				—		254		214

		Total assets	$	8,330	$	32,946	$	33,630

Liabilities and Members’ Equity
Current liabilities:
	Current portion of long-term debt, net of debt discount of $14 in 2005		$	—	$	2,370	$	3,700
	Current portion of capital leases			20		20		16
	Accounts payable			1,369		7,850		7,246
	Accrued expenses			570		3,046		3,969

		Total current liabilities		1,959		13,286		14,931
Long-term liabilities:
	Long-term debt, net of current portion, net of debt discount of $51 in 2005			—		14,725		11,838
	Long-term portion of capital leases, net of current portion			38		16		—

		Total long-term liabilities		38		14,741		11,838
		Total liabilities		1,997		28,027		26,769
Members’ equity				6,333		4,919		6,861

		Total liabilities and members’ equity	$	8,330	$	32,946	$	33,630

See accompanying notes to the consolidated financial statements.

F-54

Ohio Castings Company, LLC and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)


			Period From
			Inception
			(June 20,
			2003) to		Years Ended August 31,
			August 31,
			2003		2004			2005

Revenues			$	5,039	$	55,722		$	109,801
Costs and expenses:
	Cost of sales			4,860		54,974			101,518
	Selling, administrative and other			144		4,666			5,698
	Interest expense			—		496			643

		Total costs and expenses		5,004		60,136			107,859

		Net earnings (loss)	$	35	$	(4,414	)	$	1,942

See accompanying notes to the consolidated financial statements.

F-55

Ohio Castings Company, LLC and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)


		Period From
		Inception
		(June 20,
		2003) to			Years Ended August 31
		August 31,
		2003			2004			2005

Operating activities:
	Net earnings (loss)	$	35		$	(4,414	)	$	1,942
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
	Depreciation and amortization		3			878			1,032
Changes in operating assets and liabilities, net of effects of acquisitions:
	Accounts receivable		(4,808	)		(5,994	)		2,280
	Inventories		(408	)		(3,033	)		(552	)
	Other assets		(393	)		281			(647	)
	Accounts payable		1,369			6,481			(604	)
	Accrued expenses		400			2,476			858

Net cash provided by (used in) operating activities			(3,802	)		(3,325	)		4,309
Investing activities:
	Acquisitions		(1,664	)		(12,000	)		—
	Purchases of property, plant and equipment		(17	)		(2,424	)		(2,828	)

Net cash used in investing activities			(1,681	)		(14,424	)		(2,828	)
Financing activities:
	Proceeds from notes payable		—			17,750			—
	Payments of debt		—			(655	)		(1,492	)
	Payments of capital lease obligations		(4	)		(22	)		(20	)
	Debt issuance costs		—			(278	)		—
	Net change in restricted cash		—			(935	)		135
	Investment from members		6,298			3,000			—

Net cash (used in) provided by financing activities			6,294			18,860			(1,377	)

Increase in cash and cash equivalents			811			1,111			104
Cash at beginning of year			—			811			1,922

Cash at end of year		$	811		$	1,922		$	2,026

See accompanying notes to the consolidated financial statements.

F-56

Ohio Castings Company, LLC and Subsidiaries

CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY

Period from Inception (June 20, 2003) to August 31, 2003 and the

Years Ended August 31, 2004 and 2005

(Dollars in thousands)


Balance at inception (June 20, 2003)	$	—
Capital contributions		6,298
Net loss		35

Balance, August 31, 2003		6,333
Net loss		(4,414	)
Capital contributions		3,000

Balance, August 31, 2004		4,919
Net earnings		1,942

Balance, August 31, 2005	$	6,861

See accompanying notes to consolidated financial statements.

F-57

Ohio Castings Company, LLC and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Period from Inception (June 20, 2003) to August 31, 2003 and the

Years Ended August 31, 2004 and 2005

Note 1—Basis of Presentation

The accompanying consolidated financial statements of Ohio Castings Company, LLC and Subsidiaries (“Ohio Castings” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America, applied on a consistent basis throughout the periods covered.

The consolidated financial statements include the accounts of Ohio Castings and its subsidiaries, Alliance Castings Company, LLC (“Alliance Castings”) and Chicago Castings Company, LLC (“Chicago Castings”). All significant intercompany accounts and transactions have been eliminated. Amounts presented in thousands unless otherwise noted.

Note 2—Description of the Business

Ohio Castings was formed on June 20, 2003 to acquire and operate two steel foundries. The members of Ohio Castings, each with a one-third ownership, are Gunderson Specialty Products, LLC (“Gunderson”), an Oregon company and wholly-owned subsidiary of Gunderson, Inc., an Oregon corporation; Castings, LLC (“Castings”), a Delaware company and wholly-owned subsidiary of American Railcar Industries, Inc. (“ARI”), a Missouri corporation and ASF-Keystone, Inc. (“ASF”), a Delaware corporation and wholly-owned subsidiary of Amsted Industries, a Delaware corporation (collectively, the “members”). ARI acquired its ownership interest from ACF Industries Holding Corporation (“ACF”), an affiliate of ARI, in 2005. The members share equally in the profits and losses of Ohio Castings. The steel foundries are operated for the purpose of casting railcar sideframes and bolsters for use or sale by the Ohio Castings members.

Formation and Capital Contributions

Chicago Castings was formed in June, 2003 and capitalized through contributions of $6,298 by the members. Alliance Castings was formed in September, 2003 and capitalized through contributions of $3,000 by the members.

Acquisitions

On June 20, 2003, Chicago Castings purchased certain assets from the Meridian Rail Products Corporation (“Meridian”) foundry business located in Cicero, Illinois. The effects of the transaction on the consolidated balance sheet as of June 20, 2003, were as follows:


Inventory	$	1,834
Accrued liabilities		(170	)

On September 30, 2003, Alliance Castings purchased real and personal property from Amsted Industries, Inc. and ASF for use in the operation of a foundry in Alliance, Ohio. Total consideration paid was $12,000; no liabilities were assumed in the transaction. The effects of the acquisition on the consolidated balance sheet as of September 30, 2003, were as follows:


Land	$	270
Buildings		2,178
Equipment		9,552

F-58

Ohio Castings Company, LLC and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Period from Inception (June 20, 2003) to August 31, 2003 and the

Years Ended August 31, 2004 and 2005

Both transactions were accounted for using the purchase method of accounting and the purchase price was allocated to the assets acquired based upon relative fair values.

Note 3—Summary of Significant Accounting Policies

Significant accounting policies are described below.

Revenue Recognition

Sales are recorded when the product is shipped to the customer and title is transferred. All shipments are made FOB shipping point.

Debt Issuance Costs

Debt issuance costs are incurred in connection with Ohio Castings issuance of long-term debt as described in Note 5, and are amortized over the term of the related debt, utilizing the straight-line method. Amortization expense of $24 and $40 was recognized for the year ended August 31, 2004, and 2005, respectively. Accumulated amortization totaled $24 and $64 at August 31, 2004 and 2005, respectively. There was no amortization expense or accumulated amortization as of and for the period from inception (June 20, 2003) to August 31, 2003.

Inventories

Inventories are recorded using the first-in first-out (“FIFO”) method and are stated at the lower of cost or market. Inventory includes the cost of materials, direct labor and manufacturing overhead.

Accounts Receivable

The Company carries its accounts receivable at cost, less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its account receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs, collections and current credit conditions. Accounts are placed for collection on a limited basis once all other methods of collection have been exhausted. Once it has been determined that the customer is no longer in business and/or refuses to pay, the accounts are written off. At August 31, 2005, an allowance of $85 is recorded against receivables. No allowance was recorded at August 31, 2003 and 2004. No amounts were written off during the period from inception (June 20, 2003) to August 31, 2003 and the years ended August 31, 2004 and 2005, respectively.

Property, Plant and Equipment

Land, buildings, machinery and equipment are carried at cost. Maintenance and repair costs are charged directly to earnings.

Buildings are depreciated over estimated useful lives that range from 14 to 50 years. The estimated useful lives of machinery and equipment, vary from 3 to 25 years. Depreciation is calculated on the straight-line method for financial reporting purposes and on accelerated methods for tax purposes. Depreciation expense of $3, $854 and $992 was recognized for the period from inception (June 20, 2003) to August 31, 2003 and for the years ended August 31, 2004 and 2005, respectively.

F-59

Ohio Castings Company, LLC and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Period from Inception (June 20, 2003) to August 31, 2003 and the

Years Ended August 31, 2004 and 2005

Impairment of Long-Lived Assets

In the event that facts and circumstances indicate the carrying amount of assets held for use may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount. If the carrying amount of an asset is greater than the future undiscounted cash flows expected to be generated by the asset, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. No impairment of long-lived assets was determined for the period from inception (June 20, 2003) to August 31, 2003 and for the years ended August 31, 2004 and 2005, respectively.

Income Taxes

Ohio Castings is organized as a limited liability company and is not subject to Federal income taxes. The Company’s taxable income is reported in the tax returns of the members. Accordingly, no liability or provision for Federal income taxes is included in the accompanying consolidated financial statements as of and for the periods ending August 31, 2003, 2004 and 2005.

Fair Value of Financial Instruments

The carrying amounts of cash, accounts receivable and accounts payable approximate fair values because of the short-term maturity of these instruments. The fair value of long-term debt is discussed in Note 5. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.

Restricted Cash

Alliance Castings is required to maintain a cash balance in an escrow account equal to 10% of the outstanding principal on the enterprise bond described in Note 5. Alliance Castings is entitled to interest earned on the escrow balance which totaled $4 and $17 for the years ended August 31, 2004 and 2005, respectively. There were no restricted cash balances or interest recorded as of and for the period ended August 31, 2003.

Use of Estimates

Management of Ohio Castings has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Significant items subject to estimates and assumptions include property, plant and equipment, inventory reserves and workers’ compensation. Actual results could differ from those estimates.

F-60

Ohio Castings Company, LLC and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Period from Inception (June 20, 2003) to August 31, 2003 and the

Years Ended August 31, 2004 and 2005

Note 4—Inventories

Inventories consist of the following at August 31 (in thousands):


		2003			2004			2005

Raw materials		$	515			953		$	433
Work in process			1,440			3,097			4,781
Finished products			677			1,520			1,459
Less reserves			(390	)		(295	)		(846	)

	Total inventories	$	2,242		$	5,275		$	5,827

Note 5—Long-Term Debt

Long-term debt consists of the following at August 31 (in thousands):


	2003		2004		2005

Enterprise bonds to the Director of Development of the State of Ohio due on December 1, 2010, at 3.90% interest payable in quarterly installments to a trustee pursuant to a payment schedule. The bonds are guaranteed by the members	$	—	$	9,345	$	8,000
Term note payable to the State of Ohio, to be comprised of two separate disbursements of $1,000 at 1% interest (modified from 3% in January 2005), with interest-only payments until disbursement of the second installment and monthly payments of principal and interest thereafter, reported net of debt discount of $65 in 2005		—		1,000		935
Notes payable to the members, payable in quarterly principal and interest payments at 4% interest due November 2008		—		6,750		6,603

		—		17,095		15,538
Less current portion of debt		—		2,370		3,700

Total long-term debt, net of current portion	$	—	$	14,725	$	11,838

Aggregate maturities of long-term debt over the next five years, as of August 31, 2005, are as follows (in thousands):


2006	$	3,700
2007		3,591
2008		3,653
2009		2,233
2010		1,801
Thereafter		560

In association with the Enterprise bonds, the Company paid $15 and $20 in administration and trustee fees for the years ended August 31, 2004 and 2005. The fees vary with costs incurred by the trustee and changes in the outstanding principle of the bonds. The administration fee equaled .10% and .125% at August 31, 2004 and 2005, respectively. The trustee fee equaled .01% and .16% at

F-61

Ohio Castings Company, LLC and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Period from Inception (June 20, 2003) to August 31, 2003 and the

Years Ended August 31, 2004 and 2005

August 31, 2004 and 2005, respectively. The bonds are secured by substantially all of the assets of the Company and subject to mandatory redemption by the state at any time. A number of non-financial covenants under the agreement have been met for the periods ended August 31, 2004 and 2005.

In connection with the term note, the Company shall receive two disbursements of $1,000 from the State of Ohio. The first installment was received in May 2004. The second installment is expected to be received in December 2005, following the completion of qualified capital expenditures.

The Company had no outstanding debt as of and for the period ended August 31, 2003. Accordingly, no interest expense or fees associated with the aforementioned debt were recorded in the financial statements for the period ended August 31, 2003.

Note 6—Capital Leases

The Company leases certain machinery and equipment for use in the businesses. These leases have been accounted for as capital leases and mature in 2006. Scheduled future minimum lease payments required under the capital leases are $16 at August 31, 2005, which are due in 2006. Machinery and equipment include assets under capitalized leases of $58, $39 and $18 at August 31, 2003, 2004 and 2005, respectively.

Note 7—Related-Party Transactions

The majority of the Company’s products are sold to one of the members through supply agreements. The supply agreements have an original term of 5 years and expire in 2008. The other members have supply agreements in place with this member to purchase a defined percentage of the products produced by Ohio Castings. These agreements also have a term of 5 years and expire in 2008. A balance of $4,614, $8,688 and $10,534 is due from this member as of August 31, 2003, 2004 and 2005, respectively, which has been classified as accounts receivables.

Alliance Castings purchases a majority of its scrap steel used in production from an affiliate of one of the members of Ohio Castings. A balance of $1,203 and $662 is due to this affiliate as of August 31, 2004 and 2005, respectively. No amounts were due at August 31, 2003. The balance is included in accounts payable.

Note 8—Commitments and Contingencies

As of August 31, 2005, future minimum rental payments required under non-cancelable operating leases for property and equipment leased by Ohio Castings, with lease terms longer than one year are as follows (in thousands):


2006	$	241
2007		67
2008		55
2009		46
2010		44

Rent expense on the related leases was $62, $394, and $445 for the period from inception (June 20, 2003) to August 31, 2003 and the years ended August 31, 2004 and 2005, respectively.

F-62

Ohio Castings Company, LLC and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Period from Inception (June 20, 2003) to August 31, 2003 and the

Years Ended August 31, 2004 and 2005

A monthly rental agreement was negotiated between Chicago Castings and Meridian for the rental of the real property at the Cicero foundry. Rent expense under this agreement was $25, $600, and $600 for the period from inception (June 20, 2003) to August 31, 2003 and the years ending August 31, 2004 and 2005, respectively.

Chicago Castings currently purchases general utilities and waste removal under negotiated service contracts from unrelated third parties. The contracts are generally under a twelve-month period, with a right to renewal. Under the terms of the contracts, the cost is based on market price, and charged based on consumption.

The Company is involved in certain matters of litigation, substantially all of which have arisen in the ordinary course of business. It is the opinion of management that these matters are either adequately covered by insurance or that the resulting liability, if any, from these actions and other pending claims will not materially affect the Company’s financial position.

Note 9—Business and Credit Concentrations

The Company has an exclusive supply arrangement with one of the members whereby 100% of the castings produced by the Company are sold to the member, as described in Note 7.

Note 10—Employee Benefit Plan

The Company maintains defined contribution plans which cover all employees. Participants under 50 years old may elect to defer up to $13 of eligible compensation. Participants 50 years or older may elect to defer up to $15 of eligible compensation. Participants are fully vested in all contributions made to the plan. Employer contributions are made to the plan based on number of hours worked for employees covered by a collective bargaining agreement and as a percentage of annual salary for all other employees. Contributions of $121 and $350 were made for the years ending August 31, 2004 and 2005, respectively. No amounts were contributed for the period from inception (June 20, 2003) to August 31, 2003.

Note 11—Supplemental Cash Flow Data

The Company incurred interest expense of $496 and $630 for the years ended August 31, 2004 and 2005, respectively.

In 2003, the Company entered into $62 in capital lease agreements to finance the purchase of equipment.

The Company amortized $13 of the debt discount relating to the term loan in 2005.

F-63

Until , 2006 (the 25th day after the date of this prospectus), all dealers that effect transactions in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Part II

INFORMATION NOT REQUIRED IN PROSPECTUS


Item 13.	Other expenses of issuance and distribution.

The following are the estimated expenses to be incurred in connection with the issuance and distribution of the securities registered under this Registration Statement, other than underwriting discounts and commissions. All amounts shown are estimates except the Securities and Exchange Commission registration fee, the National Association of Securities Dealers, Inc. filing fee and the Nasdaq National Market listing fee. The following expenses will be borne solely by the registrant.


SEC Registration Fee		$	18,827
NASD Filing Fee		$	31,000
Nasdaq Listing Fee		$	105,000
Transfer Agent Fees and Expenses		$	3,500
Costs of Printing and Engraving		$	150,000
Legal Fees and Expenses		$	1,750,000
Accounting Fees and Expenses		$	2,000,000
Director and Officer Liability Insurance Premium		$	99,000
Blue Sky Fees and Expenses		$	7,500
Miscellaneous		$	220,173

	Total	$	4,385,000


Item 14.	Indemnification of directors and officers.

Sections 145(a) and (b) of The Delaware General Corporation Law, or the DGCL, provide that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case of an action or suit by or in the right of the corporation, the corporation may not indemnify such persons against judgments and fines and no person shall be indemnified as to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court in which the action or suit was brought determines upon application that, despite the adjudication of liability and in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the court deems proper.

Section 145(c) of the DGCL provides that, our certificate of incorporation, to the extent a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 145(a) and (b) of the DGCL, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses, including attorney’s fees, actually and reasonably incurred by him in connection with the action, suit or proceeding.

II-1

Part II

Our bylaws will generally provide that the corporation shall indemnify each person (other than a party plaintiff suing on his or her own behalf or in the right of the corporation) who at any time is serving or has served as a director or officer of the corporation against any claim, liability or expense incurred as a result of such service (or as a result of any other service on behalf of or at the request of the corporation) to the maximum extent permitted by law. This indemnification includes, but is not limited to, indemnification of any such person (other than a party plaintiff suing on his or her behalf or in the right of the corporation), who was or is a party or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding (including, but not limited to, an action by or in the right of the corporation) by reason of such service against expenses (including, without limitation, costs of investigation and attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding.

Our bylaws will further generally provide that the corporation may indemnify any person (other than a party plaintiff suing on his or her own behalf or in the right of the corporation) who at any time is serving or has served as an employee or agent of the corporation against any claim, liability or expense incurred as a result of such service (or as a result of any other service on behalf of or at the request of the corporation) to the maximum extent permitted by law or to such lesser extent as the corporation, in its discretion, may deem appropriate. Without limiting the generality of the foregoing, the corporation may indemnify any such person (other than a party plaintiff suing on his or her own behalf or in the right of the corporation), who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding (including, but not limited to, an action by or in the right of the corporation) by reason of such service, against expenses (including, without limitation, costs of investigation and attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding.

Our bylaws will also provide that the corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against liability under the indemnification provisions of the corporation’s bylaws. The corporation has obtained director and officer liability insurance.

The foregoing represents a summary of the general effect of the indemnification and insurance provisions of the DGCL, the certificate of incorporation, the bylaws and such agreements. Additional information regarding indemnification of directors and officers can be found in Section 145 of the DGCL, the certificate of incorporation and the bylaws.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.


Item 15.	Recent sales of unregistered securities.

The following information is furnished with regard to all securities issued by us since July 15, 2002 that were not registered under the Securities Act.

Prior to the closing of this offering and in connection with our merger, we plan to effect a 9,328.083 -for-one split of our common stock. All references to numbers of shares and prices of capital stock give effect to the stock split. All of the securities issued in the following transactions were sold in reliance

II-2

Part II

upon the exemptions from registration set forth in Sections 3(a)(9) and 4(2) of the Securities Act relating to sales by an issuer not involving any public offering. There were no underwriters employed in connection with any of the transactions set forth in this Item 15.


	(1)	In June 2003 Vegas Financial Corp., a company beneficially owned and controlled by Carl C. Icahn, our principal beneficial stockholder and the chairman of our board of directors, invested $10.0 million for 10,000 shares of our payment-in -kind preferred stock, which we refer to as our PIK preferred stock.

	(2)	During the period July 15, 2002 through December 2003, we issued to Vegas Financial Corp., the sole owner of our PIK preferred stock, 8,531.65 shares of PIK preferred stock as a dividend on the PIK preferred stock.

	(3)	In July 2004, Vegas Financial Corp. converted all of its PIK preferred stock, consisting of 95,517.04 shares of PIK preferred stock and representing all of the shares of PIK preferred stock then outstanding and dividend accrued thereon, into 96,171 shares of our new preferred stock. The PIK preferred stock was valued at the liquidation preference of 95.6 million plus accrued and unpaid dividends of 0.7 million on such PIK preferred stock converted. At that time Vegas Financial Corp. also invested $67.5 million for an additional 67,500 shares of our new preferred stock.


	(4)	In July 2004, Hopper Investments LLC, a company beneficially owned and controlled by Mr. Icahn, invested $42.5 million for 1,818,976 shares of our common stock.


	(5)	In July 2004, we issued ACF Industries, Incorporated 2,000 shares of our new preferred stock in exchange for ACF Industries, Incorporated transferring certain assets to us. The assets were valued at $2 million equaling the liquidation preference for the new preferred stock issued. The assets so transferred to us were subsequently transferred to American Railcar Leasing, LLC.

	(6)	In December 2004, we issued 32,500 shares of our new preferred stock to Shippers Second LLC, a subsidiary of ACF Industries, Incorporated, in exchange for Shippers Second transferring certain assets to us. The assets were valued at $32.5 million equalling the liquidation preference for the new preferred stock issued. The assets so transferred to us were subsequently transferred to American Railcar Leasing LLC.

	(7)	In July 2004, American Railcar Leasing LLC issued 40,000 B-units of American Railcar Leasing LLC to ACF Industries, Incorporated and its subsidiaries in consideration of the transfer of assets to American Railcar Leasing LLC. The B-units of American Railcar Leasing LLC were convertible into shares of our new preferred stock. On June 30, 2005, the terms of the B-Units were modified, among other things, to eliminate this conversion feature. We did not issue any shares of our capital stock in connection with these transactions.


Item 16.	Exhibits and financial statement schedules.


(a)	Exhibits

See Exhibit Index at the end of this registration statement.


(b)	Financial Statement Schedules

No financial statement schedules of the registrant are included in Part II of the Registration Statement.

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, are inapplicable or not material, or the information called for thereby is otherwise included in the financial statements and therefore has been omitted.

II-3

Part II


Item 17.	Undertakings.

(a) The undersigned registrant hereby undertakes to provide to the Underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification by the registrant for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 14 of this Registration Statement or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.


	(1)	For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

	(2)	For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof.

II-4

Signatures

Pursuant to the requirements of the Securities Act of 1933 (as amended, the “Securities Act”), American Railcar Industries, Inc. has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Charles, State of Missouri, on January 4, 2006.


	American Railcar Industries, Inc.


	By:	/s/ James J. Unger



	Name: James J. Unger
	Title: President and Chief Executive Officer

Pursuant to the requirements of the Securities Act, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.


	Title	Date
Signature


/s/ James J. Unger Name: James J. Unger	President and Chief Executive Officer (principal executive officer) and Director	January 4, 2006

/s/ William P. Benac Name: William P. Benac	Chief Financial Officer (principal financial officer)	January 4, 2006

/s/ Michael E. Vaughn Name: Michael E. Vaughn	Controller (principal accounting officer)	January 4, 2006

/s/ Vincent J. Intrieri Name: Vincent J. Intrieri	Director	January 4, 2006

/s/ Jon F. Weber Name: Jon F. Weber	Director	January 4, 2006

/s/ Keith Meister Name: Keith Meister	Director	January 4, 2006

II-5

Exhibit index


Exhibit
No.			Description of Exhibit

	1	.1	Form of Underwriting Agreement by and among UBS Securities LLC, Bear, Stearns & Co. Inc. and American Railcar Industries, Inc.**
	2	.1	Form of Agreement and Plan of Merger between American Railcar Industries, Inc. (Missouri) and American Railcar Industries, Inc. (Delaware)**
	3	.1	Certificate of Incorporation of American Railcar Industries, Inc. (Delaware)*
	3	.2	Bylaws of American Railcar Industries, Inc. (Delaware)*
	3	.3	Form of Certificate of Ownership and Merger of American Railcar Industries, Inc. (Missouri) and American Railcar Industries, Inc. (Delaware)**
	4	.1	Specimen Common Stock Certificate of American Railcar Industries, Inc. (Delaware)**
	4	.2	Form of Registration Rights Agreement**
	5	.1	Opinion of Brown Rudnick Berlack Israels LLP**
	9	.1	Voting Agreement dated as of December 8, 2005 by and between MODAL LLC and the Foundation for a Greater Opportunity**
	10	.1	Asset Transfer Agreement dated as of October 1, 1994 by and among ACF Industries, Incorporated, American Railcar Industries, Inc. and Carl C. Icahn*
	10	.2	License Agreement dated as of October 1, 1994 by and between ACF Industries, Incorporated and American Railcar Industries, Inc. as Licensee*
	10	.3	License Agreement dated as of October 1, 1994 by and between American Railcar Industries, Inc. and ACF Industries, Incorporated as Licensee*
	10	.4	Manufacturing Services Agreement dated as of October 1, 1994 between ACF Industries, Incorporated and American Railcar Industries, Inc., as ratified and amended on June 30, 2005*
	10	.5	Amended and Restated Railcar Servicing Agreement dated as of June 30, 2005 between American Railcar Industries, Inc. and American Railcar Leasing LLC*
	10	.6	Business Consultation Agreement for Human Resources Consultation between ACF Industries LLC and American Railcar Industries, Inc. dated April 1, 2005*
	10	.7	Business Consultation Agreement for Engineering Services between ACF Industries LLC and American Railcar Industries, Inc. dated April 1, 2005*
	10	.8	Guaranty of the Master Lease Agreement dated September 30, 1999 between The CIT Group, Inc./ Equipment Financing, Inc. and American Railcar Industries, Inc., as amended by ACF Industries, Incorporated for the benefit of American Railcar Industries, Inc.*
	10	.9	Loan Agreement dated as of July 1, 1996 between The Industrial Development Authority of the City of Jackson, Missouri and American Railcar Industries, Inc.*
	10	.9.A	Bond Guaranty Agreement dated as of July 1, 1996 by and among American Railcar Industries, Inc., ACF Industries, Incorporated and Fleet National Bank, as Trustee*
	10	.9.B	Deed of Trust and Security Agreement dated as of July 1, 1996 from American Railcar Industries, Inc. to E. Sid Douglas, III, as Mortgage Trustee and The Industrial Development Authority of The City of Jackson, Missouri as Issuer and Secured Party*
	10	.10	Loan Agreement dated as of June 1, 1995 between The Industrial Development Authority of The City of Kennett, Missouri and American Railcar Industries, Inc.*
	10	.10.A	Bond Guaranty Agreement dated as of June 1, 1995 by and among American Railcar Industries, Inc., ACF Industries, Incorporated and Fleet National Bank, as Trustee*
	10	.10.B	Deed of Trust and Security Agreement dated as of June 1, 1995 from American Railcar Industries, Inc. to E. Sid Douglas, III as Mortgage Trustee and The Industrial Development Authority of the City of Kennett, Missouri as Issuer and Secured Party*

II-6

Exhibit index


Exhibit
No.			Description of Exhibit

	10	.11	Lease Agreement dated as of April 1, 1995 between the City of Paragould, Arkansas as Lessor and American Railcar Industries, Inc. as Lessee*
	10	.11.A	Bond Guaranty Agreement by and among American Railcar Industries, Inc. and ACF Industries, Incorporated and Fleet National Bank, as Trustee*
	10	.12	Amended and Restated Services Agreement dated as of June 30, 2005 between American Railcar Leasing LLC and American Railcar Industries, Inc.*
	10	.13	Indenture of Lease between St. Charles Properties and ACF Industries, Incorporated for the property located at Clark and Second Streets, St. Charles, MO, dated March 1, 2001 together with the Assignment and Assumption of Lease dated April 1, 2005 among ACF Industries LLC (as successor to ACF Industries, Incorporated), American Railcar Industries, Inc. and St. Charles Properties*
	10	.14	Promissory Note by American Railcar Industries, Inc. in favor of Arnos Corp. dated as of December 17, 2004*
	10	.15	Exchange and Redemption Agreement dated as of June 30, 2005 among American Railcar Industries, Inc., Hopper Investments, LLC, Highcrest Investors Corp., Buffalo Investors Corp. and American Railcar Leasing, LLC*
	10	.16	Loan and Security Agreement dated as of March 10, 2005 among American Railcar Industries, Inc. as Borrower, the lenders from time to time party thereto, and North Fork Business Capital Corporation, as Agent*
	10	.17	Corbitt Equipment Acquisition Agreement*
	10	.18	Multi-Year Purchase and Sale Agreement dated as of July 29, 2005 between American Railcar Industries, Inc. and The CIT Group/ Equipment Financing, Inc.**†
	10	.19	American Railcar Industries, Inc. 2005 Equity Incentive Plan**
	10	.20	Employment Agreement dated as of July 20, 2005 between American Railcar Industries, Inc. and William P. Benac*
	10	.21	Promissory Note by American Railcar Industries, Inc. in favor of ACF Industries Holding Corp. dated as of January 1, 2005*
	10	.22	Assignment and Assumption, Novation and Release dated as of June 30, 2005 by and between ACF Industries Holding, Inc., American Railcar Industries, Inc., Gunderson Specialty Products, Inc., Gunderson, Inc., Castings, LLC, ASF-Keystone, Inc., Amsted Industries Incorporation and Ohio Castings Company, LLC*
	10	.23	Interest Transfer Agreement dated as of June 30, 2005 by and between ACF Industries Holding, Inc. and American Railcar Industries, Inc.*
	10	.24	Redemption Agreement between American Railcar Industries, Inc. and Vegas Financial Corp. dated as of January 3, 2006 **
	10	.25	Ohio Castings Company, LLC Amended and Restated Limited Liability Company Agreement, dated as of June 20, 2003*
	10	.26	Employment Agreement between American Railcar Industries, Inc. and James J. Unger, dated as of November 18, 2005*
	10	.27	Letter Agreement between American Railcar Industries, Inc. and James J. Unger, dated as of November 18, 2005*
	10	.28	Form of Option Agreement*
	10	.29	American Railcar Industries, Inc. 2005 Executive Incentive Plan*
	10	.30	Amended and Restated Employment Agreement dated as of January 4, 2006 between American Railcar Industries, Inc. and James A. Cowan**
	10	.31	Employee Benefit Plan Agreement dated as of December 1, 2005 between American Railcar Industries, Inc. and ACF Industries LLC.**
	10	.32	Trademark License Agreement dated as of June 30, 2005 by and between American Railcar Industries, Inc. and American Railcar Leasing LLC.**

II-7

Exhibit index


Exhibit
No.			Description of Exhibit

	10	.33	Summary Plan Description of Executive Survivor Insurance Plan Program of Insurance Benefits for Salaried Employees of American Railcar Industries, Inc.**
	10	.34	Summary Description of Supplemental Executive Retirement Plan of American Railcar Industries, Inc.**
	10	.35	Form of Amended and Restated Loan and Security Agreement among American Railcar Industries, Inc., certain Lenders and North Fork Business Capital Corporation, as agent.**
	21	.1	Subsidiaries of American Railcar Industries, Inc.*
	23	.1	Consent of Grant Thornton LLP**
	23	.2	Consent of Grant Thornton LLP**
	23	.3	Consent of KPMG LLP**
	23	.4	Consent of Global Insight*
	23	.5	Consent of Brown Rudnick Berlack Israels LLP (included in Exhibit 5.1)**
	24	.1	Powers of Attorney*
	99	.1	Consent of James M. Laisure*
	99	.2	Consent of James C. Pontious*


*	Previously filed.


**	Filed herewith.


†	Confidential treatment has been requested for the redacted portions of this agreement. A complete copy of this agreement, including the redacted portions, has been filed separately with the Securities and Exchange Commission.

II-8

EXHIBIT 1.1

AMERICAN RAILCAR INDUSTRIES, INC.

[__] Shares

of
Common Stock
($0.01 Par Value)

UNDERWRITING AGREEMENT

[__], 2006

UBS Securities LLC
Bear, Stearns & Co. Inc.
BB&T Capital Markets,
a division of Scott & Stringfellow, Inc. CIBC World Markets Corp.
Morgan Keegan & Company, Inc.
as Underwriters
c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171

Ladies and Gentlemen:

American Railcar Industries, Inc., a Delaware corporation (the "New ARI"), proposes to issue and sell (the "Offering") to the underwriters named in Schedule A annexed hereto (the "Underwriters") an aggregate of [__] (the "Firm Shares") of common stock, $0.01 par value per share, of New ARI (the "Common Stock"). In addition, solely for the purpose of covering over-allotments, New ARI proposes to grant to the Underwriters the option to purchase from New ARI up to an additional [__] shares of Common Stock (the "Additional Shares"). The Firm Shares and the Additional Shares are hereinafter collectively sometimes referred to as the "Shares." The Shares are as described in the Prospectus (as defined below).

New ARI hereby acknowledges that in connection with the proposed offering of the Shares, it has requested UBS Financial Services Inc. ("UBS-FinSvc") to administer a directed share program (the "Directed Share Program") under which up to [__] Firm Shares, or 5% of the Firm Shares to be purchased by the Underwriters (the "Reserved Shares"), shall be reserved for sale by UBS-FinSvc at the initial public offering price to New ARI's officers, directors, employees and consultants and other persons having a relationship with New ARI designated by New ARI (the "Directed Share Participants") as part of the distribution of the Shares by the Underwriters, subject to the terms of this Agreement, the applicable rules, regulations and interpretations of the National Association of Securities Dealers, Inc. (the "NASD") and all other applicable laws, rules and regulations. The number of Shares available for sale to the general public will be reduced to the extent that Directed Share Participants purchase Reserved Shares. The Underwriters may offer any Reserved Shares not purchased by Directed Share Participants to the general public on the same basis as the other Shares being issued and sold hereunder. New ARI has supplied UBS-FinSvc with names, addresses and telephone numbers of the individuals or other entities that New ARI has designated to be participants in the Directed Share Program. It is understood that any number of those designated to participate in the Directed Share Program may decline to do so.

As described in the Registration Statement (as defined below), American Railcar Industries, Inc., a Missouri corporation and sole stockholder of New ARI ("Old ARI"), will on or prior to the Time of Purchase (as defined below), pursuant to a Certificate of Ownership and Merger, to be filed by Old ARI, with the Secretary of State of the State of Delaware on or prior to the Time of Purchase in the form filed with the Securities and Exchange Commission (the "Commission") as an exhibit to the Registration Statement (the "Certificate of Merger"), merge with and into New ARI, with New ARI being the surviving corporation. Pursuant to this merger (i) the [__] shares of Old ARI's common stock, $0.01 par value per share will be exchanged for [__] shares of a single class of New ARI's common stock, par value $0.01 per share and (ii) [__] shares of Old ARI's new preferred stock will be exchanged for [__]

shares of New ARI's new preferred stock (the merger of Old ARI with and into New ARI and the share exchanges are collectively referred to as the "Merger").

Prior to or concurrently with and as a condition to the consummation of the Offering contemplated hereby, New ARI will (i) repay all revolving loans under the revolving credit facility pursuant to the credit agreement dated March 10, 2005 among Old ARI, North Fork Business Capital Corporation (as administrative agent) and the other lenders party thereto (the "Credit Facility"), (ii) amend and restate the Credit Facility as described in the Registration Statement and the Preliminary Prospectus (the "New Credit Facility"), (iii) deposit an amount equal to the aggregate principal amount and all accrued and unpaid interest outstanding under the industrial revenue bonds due 2011 (the "Industrial Revenue Bonds") issued by the Company with [__] as trustee (the "Trustee") thereunder and deliver irrevocable instructions to the Trustee notifying the holders thereunder of the full repayment and redemption of such Industrial Revenue Bonds by no later than [__], (iv) repay all principal and accrued interest outstanding under that certain promissory note issued to Arnos Corp. dated December 17, 2004 (the "Arnos Note"), (v) repay all principal and outstanding interest outstanding under that certain promissory note issued to ACF Industries Holding Corp. dated January 1, 2005 (together with the Arnos Note, the "Affiliate Notes"), (vi) complete the Merger, (vii) issue to James J. Unger [__] shares of common stock pursuant an agreement between the Company and James J. Unger dated November 18, 2005 (the "Unger Stock Grant"), (viii) redeem
[82,055] shares of the Old ARI's new preferred stock, $0.01 par value per share (the "Preferred Stock Redemption"); the forgoing clauses are each referred to as a "Concurrent Transaction" and collectively referred to as the "Concurrent Transactions."

Old ARI and New ARI have prepared and filed, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the "Act"), with the Commission registration statements on Form S-1 (File Nos. 333-130284 and No. 333-128177), including a prospectus, relating to the registration of the Shares under the Act.

Old ARI and New ARI have furnished to you, for use by the Underwriters and by dealers, copies of one or more preliminary prospectuses relating to the Shares. Except where the context otherwise requires, "Preliminary Prospectus," as used herein, means each such preliminary prospectus, in the form so furnished.

Except where the context otherwise requires, "Registration Statement," as used herein, means the registration statement, as amended at the time of such registration statement's effectiveness for purposes of Section 11 of the Act, as such section applies to the respective Underwriters (the "Effective Time"), including (i) all documents filed as a part thereof or incorporated or deemed to be incorporated by reference therein, (ii) any information contained or incorporated by reference in a prospectus filed with the Commission pursuant to Rule 424(b) under the Act and deemed, pursuant to Rule 430A under the Act, to be part of the registration statement at the Effective Time, and (iii) any registration statement filed to register the offer and sale of Shares pursuant to Rule 462(b) under the Act.

Except where the context otherwise requires, "Prospectus," as used herein, means the prospectus, in the form filed by New ARI with the Commission pursuant to Rule 424(b) under the Act on or before the second business day after the date hereof (or such earlier time as may be required under the Act) or, if no such filing is required, the form of final prospectus included in the Registration Statement at the time it became effective under the Act, in each case in the form furnished by New ARI to you for use by the Underwriters and by dealers in connection with the offering of the Shares.

"Permitted Free Writing Prospectuses," as used herein, means the documents listed on Schedule B attached hereto "and each "road show" (as defined in Rule 433 under the Act), if any, related

to the offering of the Shares contemplated hereby that is a "written communication" (as defined in Rule 405 under the Act) (each such road show, a "Road Show")".

"Disclosure Package," as used herein, means any Preliminary Prospectus together with any combination of one or more of the Permitted Free Writing Prospectuses, if any.

For purposes of this Agreement, all references to the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). As used herein, "business day" shall mean a day on which The Nasdaq National Market ("Nasdaq") is open for trading.

New ARI has prepared and filed, in accordance with Section 12 of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the "Exchange Act"), a registration statement (as may be amended prior to the time of execution of this Agreement, the "Exchange Act Registration Statement") on Form 8-A (File No. [____]) under the Exchange Act to register, under Section 12(g) of the Exchange Act, the class of securities consisting of the Common Stock.

New ARI and the Underwriters agree as follows:

1. Sale and Purchase. Upon the basis of the representations and warranties and subject to the terms and conditions herein set forth, New ARI agrees to issue and sell to the respective Underwriters and each of the Underwriters, severally and not jointly, agrees to purchase from New ARI the respective number of Firm Shares (subject to such adjustments you may determine to avoid fractional shares) which bears the same proportion to the number of Firm Shares to be sold by New ARI as such number of Firm Shares set forth opposite the name of such Underwriter in Schedule A attached hereto, subject to adjustment in accordance with Section 8 hereof, in each case at a purchase price of $[o] per Share.

New ARI is advised by you that the Underwriters intend (i) to make a public offering of their respective portions of the Firm Shares as soon after the effective date of the Registration Statement as in your judgment is advisable and (ii) initially to offer the Firm Shares upon the terms set forth in the Prospectus. You may from time to time increase or decrease the public offering price after the initial public offering to such extent as you may determine.

In addition, New ARI hereby grants to the several Underwriters the option to purchase, and upon the basis of the representations and warranties and subject to the terms and conditions herein set forth, the Underwriters shall have the right to purchase all or a portion of the Additional Shares as may be necessary to cover over-allotments made in connection with the offering of the Firm Shares, at the same purchase price per share to be paid by the Underwriters to New ARI for the Firm Shares. This option may be exercised by UBS Securities LLC ("UBS") on behalf of the several Underwriters at any time and from time to time on or before the thirtieth day following the date hereof, upon notice to New ARI. Such notice shall set forth the aggregate number of Additional Shares as to which the option is being exercised, and the date and time when the Additional Shares are to be delivered (such date and time being herein referred to as the "Additional Time of Purchase"); provided, however, that the Additional Time of Purchase shall not be earlier than the Time of Purchase (as defined below), but it may be on the same day as the Time of Purchase, nor earlier than the second business day after the date on which the option shall have been exercised nor later than the tenth business day after the date on which the option shall have been exercised. The number of Additional Shares to be sold by New ARI to each Underwriter shall be the number which bears the same proportion to the aggregate number of Additional Shares being purchased from New ARI at the Additional Time of Purchase as the number of Additional Shares set

forth opposite the name of such Underwriter on Schedule A hereto bears to the total number of Additional Shares (subject, in each case, to such adjustment as you may determine to eliminate fractional shares), subject to adjustment in accordance with Section 8 hereof.

2. Payment and Delivery. Payment of the purchase price for the Firm Shares shall be made to, or as directed in writing by, New ARI by Federal Funds wire transfer, against delivery of the certificates for the Firm Shares to you through the facilities of The Depository Trust Company (DTC) for the respective accounts of the Underwriters. Such payment and delivery shall be made at 10:00
a.m., New York City time, on [o], 2006 (unless another time shall be agreed to by you and New ARI or unless postponed in accordance with the provisions of
Section 8 hereof). The time at which such payment and delivery are to be made is hereinafter sometimes called the "Time of Purchase." Electronic transfer of the Firm Shares shall be made to you at the Time of Purchase in such names and in such denominations as you shall specify.

Payment of the purchase price for the Additional Shares shall be made at the Additional Time of Purchase to New ARI in the same manner and at the same office as the payment for the Firm Shares. Transfer of the Additional Shares shall be made to you at the Additional Time of Purchase in such names and in such denominations as you shall specify and in the same manner as the Firm Shares.

Deliveries of the documents described in Section 6 hereof with respect to the purchase of the Shares shall be made at the offices of Shearman & Sterling LLP at 599 Lexington Avenue, New York, New York, at 9:00 A.M., New York City time, on the date of the closing of the purchase of the Firm Shares or the Additional Shares, as the case may be.

3. Representations and Warranties of New ARI and Old ARI. New ARI and Old ARI represent and warrant to and agree with each of the Underwriters that:

(a) the Registration Statement, including any registration statement filed with the Commission pursuant to Rule 462(b) under the Act and any post-effective amendment thereto, has been declared effective under the Act; and no stop order of the Commission preventing or suspending the use of any Preliminary Prospectus or Permitted Free Writing Prospectus or the effectiveness of the Registration Statement is in effect and no proceedings for such purpose have been instituted or, to New ARI's or Old ARI's knowledge, are threatened or contemplated by the Commission and any request on the part of the Commission for additional information has been complied with; the Exchange Act Registration Statement has become effective as provided in Section 12 of the Exchange Act; each Preliminary Prospectus (except for the preliminary prospectus included in the Registration Statement filed with the Commission on October 5, 2005) complied, at the time it was filed with the Commission, and complies as of the date hereof, in all material respects with the requirements of the Act; at no time during the period that begins on the earlier of the date of such Preliminary Prospectus and the date such Preliminary Prospectus was filed with the Commission and ends at the Time of Purchase and any Additional Time of Purchase did or will any Preliminary Prospectus, as then amended or supplemented, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and at no time during such period did or will any Preliminary Prospectus, as then amended or supplemented, together with any combination of one or more of the then issued Permitted Free Writing Prospectuses, if any, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; the Registration Statement, including any registration statement filed with the Commission pursuant to Rule 462(b) under the Act and any post-effective amendment thereto, complied when it became effective, complies as of the date

hereof and, as amended or supplemented, if applicable, will comply, at the Time of Purchase and any Additional Time of Purchase and at all times during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Shares, will comply, in all material respects, with the requirements of the Act and any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement have been and will be so described or filed; the conditions to the use of Form S-1 have been satisfied; the Registration Statement (other than with respect to matters of fact relating to parties other than Old ARI, New ARI or the Subsidiaries contained in or referred to in the agreements filed as exhibits thereto) did not, as of the Effective Time, and will not, at the Time of Purchase and any Additional Time of Purchase, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus will comply as of its date, the date that it is filed with the Commission, and at the Time of Purchase and any Additional Time of Purchase and at all times during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Shares, in all material respects, with the requirements of the Act (including, without limitation, Section 10(a) of the Act); at no time during the period that begins on the earlier of the date of the Prospectus and the date the Prospectus is filed with the Commission and ends at the later of the Time of Purchase, the latest Additional Time of Purchase, if any, and the end of the period during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Shares did or will the Prospectus, as then amended or supplemented, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; at no time during the period that begins on the date of such Permitted Free Writing Prospectus and ends at the Time of Purchase and any Additional Time of Purchase did or will any Permitted Free Writing Prospectus include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that New ARI or Old ARI makes no warranty or representation with respect to any statement contained in any Preliminary Prospectus, the Registration Statement or the Prospectus or any Permitted Free Writing Prospectus in reliance upon and in conformity with information concerning an Underwriter and furnished in writing by or on behalf of such Underwriter through you to Old ARI or New ARI expressly for use in such Preliminary Prospectus, the Registration Statement, the Prospectus or such Permitted Free Writing Prospectus;

(b) prior to the execution of this Agreement, New ARI and Old ARI have not, directly or indirectly, offered or sold any Shares by means of any "prospectus" (within the meaning of the Act) or used any "prospectus" (within the meaning of the Act) in connection with the offer or sale of the Shares, in each case other than the Preliminary Prospectuses and the Permitted Free Writing Prospectuses, if any; New ARI and Old ARI have not, directly or indirectly, prepared, used or referred to any Permitted Free Writing Prospectus except in material compliance with Rules 164 and 433 under the Act; assuming that such Permitted Free Writing Prospectus is accompanied or preceded by the most recent Preliminary Prospectus that contains a price range or the Prospectus, as the case may be, and that such Permitted Free Writing Prospectus is so sent or given after the Registration Statement was filed with the Commission (and after such Permitted Free Writing Prospectus was, if required pursuant to Rule 433(d) under the Act, filed with the Commission), the sending or giving, by any Underwriter, of any Permitted Free Writing Prospectus will satisfy the provisions of Rule 164 or Rule 433 (without reliance on subsections (b),
(c) and (d) of Rule 164); the Preliminary Prospectus dated [o] is a prospectus

that, other than by reason of Rule 433 or Rule 431 under the Act, satisfies the requirements of Section 10 of the Act, including a price range where required by rule; neither New ARI nor the Underwriters are disqualified, by reason of subsection (f) or (g) of Rule 164 under the Act, from using, in connection with the offer and sale of the Shares, "free writing prospectuses" (as defined in Rule 405 under the Act) pursuant to Rules 164 and 433 under the Act; New ARI is not an "ineligible issuer" (as defined in Rule 405 under the Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the Act with respect to the offering of the Shares contemplated by the Registration Statement; the parties hereto agree and understand that the content of any and all "road shows" developed with the consent of Old ARI and New ARI (as defined in Rule 433 under the Act) related to the offering of the Shares contemplated hereby is solely the property of New ARI and Old ARI; New ARI and Old ARI have caused there to be made available at least one version of a "bona fide electronic road show" (as defined in Rule 433 under the Act) in a manner that, pursuant to Rule 433(d)(8)(ii) under the Act, causes New ARI not to be required, pursuant to Rule 433(d) under the Act, to file, with the Commission, any such Road Show;

(c) Old ARI has an authorized, issued and outstanding capitalization as set forth under the heading "Actual" in the section of the Registration Statement, the Preliminary Prospectus and the Prospectus entitled "Capitalization" (and any similar sections or information, if any, contained in any Permitted Free Writing Prospectus) and, as of the Time of Purchase and the Additional Time of Purchase, as the case may be after giving effect to the Offering and the Concurrent Transactions, New ARI shall have an authorized and outstanding capitalization as set forth under the heading "As Adjusted" in the section of the Registration Statement, the Preliminary Prospectus and the Prospectus (and any similar sections or information, if any, contained in any Permitted Free Writing Prospectus) entitled "Capitalization" (subject, in each case, to the issuance of shares of Common Stock upon exercise of stock options disclosed as outstanding in the Registration Statement, the Preliminary Prospectus and the Prospectus and excluding the shares of Common Stock available for future issuance under the equity compensation plan described in the Registration Statement, the Preliminary Prospectus and the Prospectus), all of the issued and outstanding capital stock of New ARI is owned by Old ARI; Old ARI has redeemed the single share of its mandatorily redeemable preferred stock, $0.01 par value per share prior to the consummation of the Merger; all of the issued and outstanding shares of capital stock of New ARI have been duly authorized and validly issued and are fully paid and non-assessable, have been issued in compliance with all federal and state securities laws and were not issued in violation of any preemptive right, resale right, right of first refusal or similar right; and the Shares are duly listed, and admitted and authorized for trading subject to official notice of issuance and evidence of satisfactory distribution, on Nasdaq; and on or prior to the Time of Purchase, New ARI has consummated the Merger in the manner set forth in the Registration Statement, the Preliminary Prospectus and the Prospectus; and the Certificate of Merger of New ARI and the bylaws of New ARI, each in the form filed as an exhibit to the Registration Statement, have been heretofore duly authorized and approved in accordance with the Delaware General Corporation Law and shall become effective and in full force and effect on or before the Time of Purchase;

(d) New ARI and Old ARI have been duly incorporated and are validly existing as a corporation in good standing under the laws of the State of Delaware, with full corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, the Preliminary

Prospectus, the Prospectus and any Permitted Free Writing Prospectus to execute and deliver this Agreement and to issue, sell and deliver the Shares as contemplated herein and to perform its other obligations under this Agreement and to consummate the transactions contemplated in the Registration Statement, the Preliminary Prospectus, the Prospectus and any Permitted Free Writing Prospectus (including without limitation, the Concurrent Transactions);

(e) New ARI and Old ARI are duly qualified to do business as a foreign corporation and are in good standing in each jurisdiction where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a material adverse effect on the business, properties, condition (financial, or otherwise), or results of operations or prospects of New ARI, Old ARI and the Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse Effect");

(f) As of the date hereof, New ARI has no subsidiaries, and Old ARI has no subsidiaries either direct or indirect, other than the subsidiaries listed in Schedule C (each a "Subsidiary" and collectively, the "Subsidiaries"); other than the capital stock of the Subsidiaries, Old ARI does not, and following the Merger New ARI will not, own, directly or indirectly, any shares of stock or any other equity or long-term debt securities of any corporation or have any equity interest in any firm, partnership, joint venture, association or other entity; complete and correct copies of the certificates of incorporation and the by-laws of each of Old ARI and New ARI and the Subsidiaries and all amendments thereto have been made available to you, and except as set forth in the exhibits to the Registration Statement no changes therein will be made subsequent to the date hereof and prior to the Time of Purchase or, if later, the Additional Time of Purchase; each Subsidiary that is a "significant subsidiary," as that term is defined in Rule 1-02(w) of Regulation S-X under the Act (each such Subsidiary, a "Material Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the Preliminary Prospectus, the Prospectus and any Permitted Free Writing Prospectus; each Material Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect; each Subsidiary is in compliance in all respects with the laws, orders, rules, regulations and directives issued or administered by such jurisdictions, except where the failure to be in compliance would not, individually or in the aggregate, have a Material Adverse Effect; all of the outstanding shares of capital stock of each of the Subsidiaries including New ARI, have been duly authorized and validly issued, are fully paid and non-assessable, have been issued in compliance with all applicable securities laws, were not issued in violation of any preemptive right, resale right, right of first refusal or similar right and are owned prior to the Merger by Old ARI and following the Merger by New ARI and are not subject to any security interest, other encumbrance or adverse claims that would not, individually or in the aggregate, have a Material Adverse Effect; and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligation into shares of capital stock or ownership interests in the Subsidiaries are outstanding;

(g) the Shares have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and non-assessable and free of statutory and contractual preemptive rights, resale rights, rights of first refusal and similar rights and the issuance of the Shares is not subject to preemptive or other similar rights;

(h) the capital stock of New ARI, including the Shares, and of Old ARI conforms in all material respects to the description thereof contained in the Registration Statement, the Preliminary Prospectus, the Prospectus and any Permitted Free Writing Prospectus as described in the section "Description of Capital Stock" and the form of specimen certificate for the Shares complies with applicable law and the holders of the Shares will not be subject to personal liability by reason of being such holders;

(i) this Agreement has been duly authorized, executed and delivered by New ARI and Old ARI;

(j) none of New ARI, Old ARI or any of the Subsidiaries is in breach or violation of or in default under (nor has any event occurred which with notice, lapse of time or both would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder's behalf) the right to require the repurchase, redemption (other than the redemption of one share of mandatory redeemable preferred stock, $0.01 par value, of Old ARI held by Carl C. Icahn) or repayment of all or a part of such indebtedness under)
(i) its respective charter or by-laws, or (ii) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which New ARI, Old ARI or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected, or (iii) any federal, state, local or foreign law, regulation or rule applicable to Old ARI, New ARI or the Subsidiaries, or (iv) any rule or regulation of Nasdaq applicable to New ARI, Old ARI or the Subsidiaries, or (v) any decree, judgment or order applicable to New ARI, Old ARI or any of the Subsidiaries or any of their respective properties, except in the case of the foregoing clauses (ii), (iii), (iv) and (v), for any breach, violation or default, as applicable, that would not, individually or in the aggregate have a Material Adverse Effect; and the execution, delivery and performance of this Agreement, the issuance and sale of the Shares and the consummation of the transactions contemplated hereby and contemplated in the Registration Statement, the Preliminary Prospectus, the Prospectus and any Permitted Free Writing Prospectus (including, without limitation, the Concurrent Transactions) will not conflict with, result in any breach or violation of or constitute a default under (nor constitute any event which with notice, lapse of time or both would result in any breach or violation of or constitute a default under or give the holder of any indebtedness (or a person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (or result in the creation or imposition of a lien, charge or encumbrance on any property or assets of the Company or any Subsidiary pursuant to) (1) the charter or by-laws of New ARI, Old ARI or any of the Subsidiaries, or (2) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness any license, lease, contract or other agreement or instrument to which New ARI, Old ARI or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound or affected, or (3) any federal, state, local or foreign law, regulation or rule applicable to New ARI, Old ARI or the Subsidiaries, or
(4) any decree, judgment or order applicable to New ARI, Old ARI or any of the Subsidiaries, or (5) any rule or regulation of Nasdaq, except in the case of the foregoing clauses (2), (4) and (5), for any breach, violation or default, as applicable, that would not, individually or in the aggregate have a Material Adverse Effect;

(k) no approval, authorization, consent, qualification, decree or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency is required in connection with the issuance and sale of the Shares by New ARI or the consummation by New ARI or Old ARI of the Concurrent Transactions contemplated hereby and as contemplated in the Registration Statement, the Preliminary Prospectus, the

Prospectus and any Permitted Free Writing Prospectus (including, without limitation, the Concurrent Transactions) except for (i) registration of the Shares under the Act, which has been or will be effected, (ii) any necessary qualification under the securities or blue sky laws of the various jurisdictions in which the Shares are being offered by the Underwriters or under the rules and regulations of the NASD, (iii) any necessary notice to the Pension Benefit Guarantee Corporation as described in the Prospectus and (iv) and the filing by Old ARI of financing statements under the Uniform Commercial Code as in effect in the State of New York (the "UCC") in connection with the discharge of any liens pursuant to the repayment of the Credit Facility;

(l) except as set forth in the Registration Statement, the Preliminary Prospectus, the Prospectus and any Permitted Free Writing Prospectus, (i) no person has the right, contractual or otherwise, to cause New ARI or Old ARI to issue or sell to it any shares of Common Stock or shares of any other capital stock or other equity interests of New ARI or Old ARI, as the case may be, (ii) no person has any preemptive rights, resale rights, rights of first refusal or other rights to purchase (A) from New ARI or Old ARI any shares of Common Stock or shares of any other capital stock or other equity interests of New ARI or Old ARI and (B) to the knowledge of New ARI or Old ARI any shares of Common Stock or shares of any other capital stock or other equity interests of New ARI or Old ARI, and (iii) no person has the right to act as an underwriter or as a financial advisor to New ARI or Old ARI in connection with the offer and sale of the Shares, and (iv) no person has the right, contractual or otherwise, to cause New ARI or Old ARI to register under the Act any shares of Common Stock or shares of any other capital stock or other equity interests of New ARI or Old ARI, or to include any such shares or interests in the Registration Statement or the offering contemplated thereby, in the case of each of the foregoing clauses (i), (ii), (iii) and
(iv) whether as a result of the filing or effectiveness of the Registration Statement or the sale of the Shares as contemplated thereby or otherwise;

(m) each of New ARI, Old ARI and the Subsidiaries has all necessary licenses, authorizations, consents and approvals and has made all necessary filings required under any federal, state, local or foreign law, regulation or rule, and has obtained all necessary authorizations, consents and approvals from other persons, in order to conduct its respective business except where such failure to possess any such license, authorization, consent or approval or make any such filings would not, individually or in the aggregate have a Material Adverse Effect; none of New ARI, Old ARI or any of the Subsidiaries is in violation of, or in default under, or has received notice of any proceedings relating to revocation or modification of, any such license, authorization, consent or approval or any federal, state, local or foreign law, regulation or rule or any decree, order or judgment applicable to New ARI, Old ARI or any of the Subsidiaries, except where such violation, default, revocation or modification would not, individually or in the aggregate, have a Material Adverse Effect;

(n) there are no actions, suits, claims, investigations or proceedings pending or to the knowledge of New ARI and Old ARI threatened or contemplated, to which New ARI, Old ARI or any of the Subsidiaries or, to the knowledge of New ARI and Old ARI, any of their respective directors or officers in their capacities as such directors and officers, is or would be a party or of which any of their respective properties is or would be subject at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, court authority or agency, except any such action, suit, claim, investigation or proceeding which would not result in a judgment, decree or order having, individually or in the aggregate, a Material Adverse Effect or preventing consummation of the transactions contemplated hereby (including without limitation, the Concurrent Transactions) or as otherwise disclosed in the Registration Statement the Preliminary Prospectus and the Prospectus;

(o) each of Grant Thornton LLP and KPMG LLP, whose reports on the consolidated financial statements of Old ARI and the Subsidiaries are filed with the Commission as part of the Registration Statement, the Preliminary Prospectus and the Prospectus, is an independent registered public accounting firm as required by the Act and by the rules of the Public Company Accounting Oversight Board;

(p) the consolidated financial statements included in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus, together with the related notes and schedules, present fairly in all material respects the consolidated financial position of Old ARI and the Subsidiaries as of the dates indicated and the consolidated results of operations and cash flows of Old ARI and the Subsidiaries for the periods specified and have been prepared in compliance with the requirements of the Act in all material respects and in conformity with generally accepted accounting principles applied on a consistent basis during the periods involved subject to, in the case of the financial statements for the nine months ended September 30, 2004 and 2005, only normal, recurring adjustments; the other financial data set forth in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus is fairly presented and prepared in all material respects on a basis consistent with the financial statements of Old ARI included in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus; there are no financial statements (historical or pro forma) that are required to be included in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus that are not included as required, including financial statements of New ARI;

(q) subsequent to the time of execution of this Agreement or, if earlier, the respective dates as of which information is given in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus, there has not been (i) any material adverse change, or any development involving a prospective material adverse change, in the business, properties, management, financial condition or results of operations of New ARI, Old ARI and the Subsidiaries taken as a whole, (ii) any obligation, direct or contingent (including any off-balance sheet obligations), incurred by New ARI, Old ARI or the Subsidiaries, which is material to New ARI, Old ARI and the Subsidiaries taken as a whole except as contemplated in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus, (iii) any change in the capital stock or material changes in outstanding indebtedness of New ARI, Old ARI or the Subsidiaries except as contemplated in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus or (iv) any dividend or distribution of any kind declared, paid or made on the capital stock of New ARI, Old ARI except as contemplated in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus;

(r) New ARI and Old ARI have obtained for the benefit of the Underwriters the agreement (a "Lock-Up Agreement"), substantially in the form set forth as Exhibit A hereto, of each entity or individual listed in Schedule D;

(s) none of New ARI, Old ARI, or any Subsidiary is an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"); and, after giving effect to the offering and sale of the Shares and at no time during which a prospectus is required by the Act to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) in connection with any sale of Shares, none of New ARI, Old ARI, or any Subsidiary will be an investment company or an entity controlled by an investment company; and upon the application of the proceeds from the sale of the Shares in the manner contemplated by

the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus as described in the section "Use of Proceeds," none of New ARI, Old ARI, or any Subsidiary will be an investment company or an entity controlled by an investment company;

(t) except as disclosed in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus, New ARI, Old ARI and each of the Subsidiaries has good and marketable title to all property (real and personal) described in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus as being owned by each of them, free and clear of all liens, claims, security interests or other encumbrances, except where the failure to possess good and marketable title would not, individually or in the aggregate have a Material Adverse Effect; all the property described in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus as being held under lease by New ARI, Old ARI or a Subsidiary is held thereby under valid, subsisting and enforceable leases, assuming the due and valid execution by the lessors thereto, except where the failure to have valid, subsisting and enforceable leases would not, individually or in the aggregate have a Material Adverse Effect;

(u) Old ARI and the Subsidiaries own and following the Merger New ARI and the Subsidiaries will own or have obtained valid and enforceable licenses for, or other rights to use, the inventions, patent applications, patents, trademarks (both registered and unregistered), tradenames, service names, copyrights, trade secrets and other proprietary information described in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus (collectively, "Intellectual Property") as being owned or licensed by them or which are necessary for the conduct of their respective businesses, except where the failure to own, license or have such rights would not, individually or in the aggregate, have a Material Adverse Effect; (i) to the knowledge of New ARI and Old ARI, there are no third parties who have, or will be able to establish, rights to any Intellectual Property, except for the ownership rights of the owners of the Intellectual Property which is licensed to New ARI; (ii) to New ARI's knowledge, there is no infringement by third parties of any Intellectual Property; (iii) there is no pending or, to New ARI's knowledge, threatened action, suit, proceeding or claim by others challenging New ARI's rights in or to any Intellectual Property; (iv) there is no pending or, to New ARI's knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property, and to New ARI's knowledge, there are no facts which could form a reasonable basis for any such claim; and (v) there is no pending or, to New ARI's knowledge, threatened action, suit, proceeding or claim by others that New ARI infringes or otherwise violates any patent, trademark, copyright, trade name, service name, trade secret or other proprietary rights of others, and to New ARI's knowledge there are no facts which could form a reasonable basis for any such action, suit proceeding or claim;

(v) except for matters which would not, individually or in the aggregate, have a Material Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or, to the knowledge of New ARI and Old ARI, threatened against New ARI, Old ARI or any of the Subsidiaries before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under collective bargaining agreements is pending or, to the knowledge of New ARI and Old ARI, threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to the knowledge of New ARI or Old ARI, threatened against New ARI, Old ARI or any of the Subsidiaries and (C) no union representation dispute currently existing concerning the employees of New ARI, Old ARI or any of the Subsidiaries, and (ii) to the knowledge of New ARI and Old ARI, (A) no union organizing activities are currently taking place concerning the employees of the New ARI, Old ARI or any of the Subsidiaries and (B) there has been no violation of any federal, state, local or foreign law relating to discrimination

in the hiring, promotion or pay of employees, any applicable wage or hour laws or any provision of the Employee Retirement Income Security Act of 1974 ("ERISA") or the rules and regulations promulgated thereunder concerning the employees of the New ARI, Old ARI or any of the Subsidiaries, except where such violation would not, individually or in the aggregate, have a Material Adverse Effect;

(w) New ARI, Old ARI and the Subsidiaries and their properties, assets and operations are in compliance with, and hold all permits, authorizations and approvals required under, Environmental Laws (as defined below), except to the extent that failure to so comply or to hold such permits, authorizations or approvals would not, individually or in the aggregate, have a Material Adverse Effect; except as would not, individually or in the aggregate, have a Material Adverse Effect, there are no past, present or, to the knowledge of New ARI and Old ARI, reasonably anticipated future events, conditions, circumstances, activities, practices, actions, omissions or plans that could reasonably be expected to give rise to any costs or liabilities to New ARI, Old ARI or the Subsidiaries under, or to interfere with or prevent compliance by New ARI or the Subsidiaries with, Environmental Laws; except as would not, individually or in the aggregate, have a Material Adverse Effect, none of New ARI, Old ARI or any of the Subsidiaries (i) to the knowledge of New ARI and Old ARI, is the subject of any investigation, (ii) has received any written notice or claim, (iii) is a party to or affected by any pending, or to the knowledge of New ARI and Old ARI, threatened action, suit or proceeding, (iv) is bound by any judgment, decree or order or (v) has entered into any agreement, in each case relating to any alleged material violation of any Environmental Law or any actual or alleged release or threatened material release or cleanup at any location of any Hazardous Materials (as defined below) (as used herein, "Environmental Law" means any federal, state, local or foreign law, statute, ordinance, rule, regulation, order, decree, judgment, injunction, permit, license, authorization or other binding requirement, or common law, relating to health, safety or the protection, cleanup or restoration of the environment or natural resources, including those relating to the distribution, processing, generation, treatment, storage, disposal, transportation, other handling or release or threatened release of Hazardous Materials, and "Hazardous Materials" means any material (including, without limitation, pollutants, contaminants, hazardous or toxic substances or wastes) that is regulated by or may give rise to liability under any Environmental Law);

(x) all material tax returns required to be filed by New ARI, Old ARI and each of the Subsidiaries have been filed; all taxes and other assessments of a similar nature (whether imposed directly or through withholding) including any interest, additions to tax or penalties applicable thereto due or claimed to be due from New ARI, Old ARI and each of the Subsidiaries have been paid, other than those that are immaterial in amount or those being contested in good faith and for which adequate reserves have been provided;

(y) New ARI, Old ARI and each of the Subsidiaries maintains insurance covering its properties, operations, personnel and businesses as New ARI and Old ARI deems adequate to protect New ARI, Old ARI and the Subsidiaries and their businesses; all such insurance is fully in force on the date hereof except where the failure to maintain such insurance would not individually or the aggregate have a Material Adverse Effect;

(z) none of New ARI, Old ARI or any of the Subsidiaries has sustained since the date of the last audited financial statements included in the Registration Statement, the Preliminary Prospectus and the Prospectus any loss or interference with its respective business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any

labor dispute or court or governmental action, order or decree, except for any loss or interference which would not, individually or in the aggregate, have a Material Adverse Effect;

(aa) none of New ARI, Old ARI or any Subsidiary has sent or received any communication regarding termination of, or intent not to renew, any of the contracts or agreements referred to or described in any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus, or referred to or described in, or filed as an exhibit to, the Registration Statement except where such termination or nonrenewal would not individually or in the aggregate have a Material Adverse Effect, and no such termination or non-renewal has been threatened by the Company or, to the Company's knowledge, by any other party to any such contract or agreement except where such termination or nonrenewal would not individually or in the aggregate have a Material Adverse Effect; as a result of the Merger, neither New ARI, Old ARI nor any Subsidiary expect to receive any such communication relating to the termination or non-renewal of such contracts except where such termination or nonrenewal would not individually or in the aggregate have a Material Adverse Effect;

(bb) New ARI, Old ARI and each of the Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences;

(cc) to the extent that it is required to do so as of the date of this Agreement and as of the Time of Purchase, New ARI and Old ARI have established and maintain disclosure controls and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act) and "internal control over financial reporting" (as such terms is defined in Rule 13a-15 and 15d-15 under the Exchange Act; such disclosure controls and procedures are designed to ensure that material information relating to New ARI and Old ARI, including its consolidated subsidiaries, is made known to New ARI's and Old ARI's Chief Executive Officer and its Chief Financial Officer by others within those entities, and such disclosure controls and procedures are effective to perform the functions for which they were established; Old ARI's auditors and the Board of Directors have been advised by Old ARI and New ARI of: (i) any significant deficiencies in the design or operation of internal controls which could adversely affect New ARI's or Old ARI's ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a role in New ARI's or Old ARI's internal controls; any material weaknesses in internal controls have been identified for Old ARI's auditors;

(dd) since July 30, 2002, New ARI and Old ARI have not, directly or indirectly, including through any Subsidiary: (i) extended credit, arranged to extend credit, or renewed any extension of credit, in the form of a personal loan, to or for any director or executive officer of New ARI and Old ARI, or to or for any family member or affiliate of any director or executive officer of New ARI and Old ARI; or (ii) made any material modification, including any renewal thereof, to any term of any personal loan to any director or executive officer of New ARI and Old ARI, or any family member or affiliate of any director or executive officer, which loan was outstanding on July 30, 2002;

(ee) any statistical and market-related data included in the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus are based on or derived from sources that New ARI and Old ARI reasonably believe to be reliable and accurate;

(ff) none of New ARI, Old ARI or any of the Subsidiaries or to the knowledge of New ARI and Old ARI any of their respective directors, officers, affiliates or controlling persons has taken, directly or indirectly, any action designed, or which has constituted, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any security of New ARI to facilitate the sale or resale of the Shares;

(gg) to the knowledge of New ARI and Old ARI, there are no affiliations or associations between any member of the NASD and any of New ARI's or Old ARI's executive officers, directors or 5% or greater securityholders, except as set forth in the Registration Statement, the Preliminary Prospectus, the Prospectus, any Permitted Free Writing Prospectus and Schedule E to this Agreement;

(hh) New ARI and Old ARI and their respective officers and directors (in their capacities as such) are in compliance in all material respects with all applicable effective provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Commission and Nasdaq promulgated thereunder;

(ii) the agreements, contracts or instruments filed with the Commission as exhibits to the Registration Statement and listed in the Exhibit Index contained in the Registration Statement (the "Material Agreements") are the only material agreements, contracts or instruments that are binding upon Old ARI, New ARI and the Subsidiaries that are material to the operation of the business of Old ARI, New ARI and the Subsidiaries, taken as a whole and required to be disclosed under Regulation S-K promulgated under the Act;

(jj) as of the date hereof, to the knowledge of New ARI and Old ARI, there is no fact or circumstance that will prevent New ARI or Old ARI from consummating each of the Concurrent Transactions, including the Merger;

(kk) the Registration Statement, the Preliminary Prospectus, the Prospectus and any Permitted Free Writing Prospectus comply, in all material respects, and any further amendments or supplements thereto will comply, in all material respects, with any applicable laws or regulations of any Canadian jurisdiction in which the Prospectus, any Preliminary Prospectus or any Permitted Free Writing Prospectus is distributed in connection with the Directed Share Program; and no approval, authorization, consent or order of or filing with any governmental or regulatory commission, board, body, authority or agency, other than those obtained, is required in connection with the offering of the Reserved Shares in any jurisdiction where the Reserved Shares are being offered;

(ll) New ARI and Old ARI have not offered, or caused the Underwriters to offer, Reserved Shares to any person pursuant to the Directed Share Program with the intent to influence unlawfully (i) a customer or supplier of New ARI, Old ARI or any of the Subsidiaries to alter the customer's or supplier's level or type of business with New ARI or any of the Subsidiaries, or (ii) a trade journalist or publication to write or publish favorable information about New ARI or any of the Subsidiaries or any of their respective products or services.

(mm) the Certificate of Merger to be filed on or prior to the Time of Purchase is in the form attached hereto as Exhibit D has been duly authorized and executed pursuant to this

Certificate of Merger, upon filing with the Secretary of State of Delaware and Missouri, all of the property, rights, privileges and powers of Old ARI will vest in New ARI, and all debts, liabilities, obligations, restrictions, disabilities and duties of Old ARI, including its obligations under this Agreement, will become the debts, liabilities, obligations, restrictions, disabilities and duties of New ARI; and

(nn) Prior to the time of the Merger New ARI had no subsidiaries and, other than relating solely to matters related to the filing of the Registration Statement, had no operations and conducted no business.

In addition, any certificate signed by any officer of New ARI, Old ARI or any of the Subsidiaries and delivered to the Underwriters or counsel for the Underwriters in connection with the offering of the Shares shall be deemed to be a representation and warranty by New ARI, Old ARI or such Subsidiary, as the case may be, as to matters covered thereby, to each Underwriter.

4. Certain Covenants of New ARI and Old ARI. New ARI and Old ARI hereby agrees:

(a) to furnish such information as may be required and otherwise to cooperate in qualifying the Shares for offering and sale under the securities or blue sky laws of such states [or other jurisdictions] as you may reasonably designate and to maintain such qualifications in effect so long as you may reasonably request for the distribution of the Shares, provided that New ARI shall not be required to qualify as a foreign corporation, subject itself to taxation in any foreign jurisdiction or to consent to the service of process under the laws of any such jurisdiction (except service of process with respect to the offering and sale of the Shares); and to promptly advise you of the receipt by New ARI of any notification with respect to the suspension of the qualification of the Shares for offer or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

(b) to make available to the Underwriters in New York City, as soon as practicable after the Registration Statement becomes effective, and thereafter from time to time to furnish to the Underwriters, as many copies of the Prospectus (or of the Prospectus as amended or supplemented if New ARI shall have made any amendments or supplements thereto after the effective date of the Registration Statement) as the Underwriters may reasonably request in writing for the purposes of complying with the Act; in case any Underwriter is required to deliver (whether physically or through compliance with Rule 172 under the Act or any similar rule) a prospectus after the nine-month period referred to in Section 10(a)(3) of the Act in connection with the sale of the Shares, New ARI will prepare, at its expense, as promptly as practicable, upon request such amendment or amendments to the Registration Statement and the Prospectus as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act;

(c) if, at the time this Agreement is executed and delivered, it is necessary for the Registration Statement or any post-effective amendment thereto to be declared effective before the offering of the Shares may commence, New ARI and Old ARI will endeavor to cause the Registration Statement or such post-effective amendment to become effective as soon as reasonably possible, and New ARI and Old ARI will advise you of its intention to file or prepare any amendment to the Registration Statement or any amendment or supplement to the Prospectus, and New ARI and Old ARI will advise you promptly and, if requested by you, will confirm such advice in writing, (i) when the Registration Statement and any such post-effective amendment thereto has become effective, and (ii) if Rule 430A under the Act is used, when the Prospectus is

filed with the Commission pursuant to Rule 424(b) under the Act (which New ARI and Old ARI agrees to file in accordance with such Rule);

(d) to advise you as promptly as practicable, confirming such advice in writing, of any request by the Commission for amendments or supplements to the Registration Statement, Exchange Act Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus or for additional information with respect thereto, or of notice of institution of proceedings for, or the entry of a stop order, suspending the effectiveness of the Registration Statement and, if the Commission should enter a stop order suspending the effectiveness of the Registration Statement, to use its reasonable efforts to obtain the lifting or removal of such order as soon as practicably possible; to advise you as promptly as practicable of any proposal to amend or supplement the Registration Statement, the Exchange Act Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus and to provide you and Underwriters' counsel copies of any such documents for review and comment a reasonable amount of time prior to any proposed filing and to file no such amendment or supplement to which you shall reasonably object in writing;

(e) subject to Section 4(d) hereof, to file as promptly as practicable all reports and any definitive proxy or information statement required to be filed by New ARI with the Commission in order to comply with the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery (whether physically or through compliance with Rule 172 under the Act or any similar rule) of a prospectus is required in connection with the offering or sale of the Shares and to provide you with a copy of such reports and statements and other documents to be filed by New ARI pursuant to Section 13, 14 or 15(d) of the Exchange Act during such prospectus delivery period a reasonable amount of time prior to any proposed filing, and to promptly notify you of such filing;

(f) if necessary or appropriate, to file a registration statement pursuant to Rule 462(b) under the Act and pay the applicable fees in accordance with the Act;

(g) to advise the Underwriters as promptly as practicable of the happening of any event actually known by New ARI or Old ARI within the time during which a prospectus relating to the Shares is required to be delivered (whether physically or through compliance with Rule 172 under the Act or any similar rule) under the Act which could require the making of any change in the Prospectus then being used so that the Prospectus would not include an untrue statement of material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, and, during such time, subject to Section 4(d) hereof, to prepare and furnish, at New ARI's expense, to the Underwriters promptly such amendments or supplements to such Prospectus as may be necessary to reflect any such change;

(h) to make generally available to its security holders, an earnings statement of New ARI (which will satisfy the provisions of Section 11(a) of the Act) covering a period of twelve months beginning after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act) as soon as is reasonably practicable after the termination of such twelve-month period but not later than fifteen months after the effective date of the Registration Statement;

(i) to furnish to its stockholders in accordance with the requirements of the Exchange Act after the end of each fiscal year an annual report (including a consolidated balance sheet and statements of income, stockholders' equity and cash flow of New ARI and the Subsidiaries for such fiscal year, accompanied by a copy of the certificate or report thereon of

nationally recognized independent certified public accountants duly registered with Public Company Accounting Oversight Board (the "PCAOB");

(j) to the extent not otherwise available on EDGAR and upon request in writing, to furnish promptly to you and to each of the other Underwriters for a period of five years from the date of this Agreement
(i) copies of any reports or other communications which New ARI and Old ARI shall send to its stockholders or shall from time to time publish or publicly disseminate, and (ii) copies of all annual, transition, quarterly and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by the Commission;

(k) to furnish to you, upon request, prior to the Time of Purchase and any Additional Time of Purchase, as the case may be, but not later than two business days prior thereto, a copy of the latest available unaudited interim and monthly consolidated financial statements, if any, of New ARI, Old ARI and the Subsidiaries which have been read by the independent certified public accountants, as stated in their letter to be furnished pursuant to Section 6(b) hereof;

(l) to apply the net proceeds from the sale of the Shares by New ARI in the manner set forth under the caption "Use of proceeds" in the Prospectus and to file such reports with the Commission with respect to the sale of the Shares and the application of the proceeds therefrom as may be required by Rule 463 under the Act;

(m) New ARI agrees to pay all costs, expenses and fees in connection with (i) the preparation and filing of the Registration Statement, each Preliminary Prospectus, the Prospectus, each Permitted Free Writing Prospectus and any amendments or supplements thereto, and the printing and furnishing of copies of each thereof to the Underwriters and to dealers (including costs of mailing and shipment), (ii) the registration, issue, sale and delivery of the Shares including any stock or transfer taxes and stamp or similar duties payable upon the sale, issuance or delivery of the Shares to the Underwriters, (iii) the qualification of the Shares for offering and sale under state or foreign laws and the determination of their eligibility for investment under state law as aforesaid (including the reasonable and documented legal fees and filing fees and other disbursements of counsel for the Underwriters incurred in connection with such qualifications and determinations which shall not exceed $7,500) and the furnishing of any blue sky surveys or legal investment surveys to the Underwriters and to dealers, (iv) any listing of the Shares on any securities exchange or qualification of the Shares for quotation on Nasdaq and any registration thereof under the Exchange Act, (v) any filing for review of the public offering of the Shares by the NASD, including the reasonable and documented legal fees and filing fees and other disbursements of counsel to the Underwriters, which shall not exceed $25,000, incurred in connection with such filing, (vi) the fees and disbursements of any transfer agent or registrar for the Shares, (vii) the costs and expenses of New ARI and Old ARI relating to presentations or meetings undertaken in connection with the marketing of the offering and sale of the Shares to prospective investors and the Underwriters' sales forces, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel, lodging and other expenses incurred by the officers of New ARI and Old ARI and any such consultants, and one half of the the cost of any aircraft chartered in connection with the road show; provided, that, the costs for any consultants engaged or aircraft chartered in connection with the road show shall be incurred with New ARI's consent, (viii) the offer and sale of the Reserved Shares, including all costs and expenses of UBS-FinSvc and the Underwriters, including the reasonable and documented fees and disbursements of counsel for the Underwriters in an amount not to exceed $8,000, (ix) the costs and expenses of qualifying the Shares for inclusion in the book-entry

settlement system of the DTC, (x) the preparation and filing of the Exchange Act Registration Statement, including any amendments thereto and
(xi) the performance of New ARI's other obligations hereunder;

(n) for a period of 180 days after the date hereof (the "Lock-Up Period"), without the prior written consent of UBS and Bear, Stearns & Co. Inc. ("Bear Stearns"), not to (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, with respect to, any Common Stock or securities convertible into or exchangeable or exercisable for Common Stock or warrants or other rights to purchase Common Stock or any other securities of New ARI or Old ARI that are substantially similar to Common Stock, (ii) file or cause to be declared effective a registration statement under the Act relating to the offer and sale of any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock or warrants or other rights to purchase Common Stock or any other securities of New ARI or Old ARI that are substantially similar to Common Stock, (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or warrants or other rights to purchase Common Stock or any such securities, whether any such transaction is to be settled by delivery of Common Stock or such other securities, in cash or otherwise or (iv) publicly announce an intention to effect any transaction specified in clause (i), (ii) or (iii), except, in each case, for (A) the registration of the Shares and the sales to the Underwriters pursuant to this Agreement, (B) issuances of Common Stock upon the exercise of options or warrants disclosed as outstanding in the Registration Statement and the Prospectus, (C) the filing of a registration statement relating to the issuance of restricted shares or of employee stock options not exercisable during the Lock-Up Period pursuant to stock option plans described in the Registration Statement and the Prospectus, (D) the issuance to James J. Unger of [__] shares of Common Stock pursuant to the Unger Stock Grant as described in the Prospectus, (E) issuances or exchanges of Common Stock or preferred stock pursuant to the Merger and (F) the issuance by New ARI of shares of Common Stock in connection with acquisitions of other companies up to an aggregate amount equal to 5% of New ARI's fully-diluted Common Stock (measured as of the Time of Purchase and calculated in the manner that New ARI will calculate its fully-diluted common stock in connection with the preparation of its consolidated financial statements to be filed with the SEC), provided that each recipient of such shares of Common Stock agrees in writing to be subject to the restrictions as set forth in Exhibit A; provided, however, that if (a) during the period that begins on the date that is fifteen (15) calendar days plus three (3) business days before the last day of the Lock-Up Period and ends on the last day of the Lock-Up Period, New ARI issues an earnings release or material news or a material event relating to New ARI occurs; or (b) prior to the expiration of the Lock-Up Period, New ARI announces that it will release earnings results during the sixteen (16) day period beginning on the last day of the Lock-Up Period, then the restrictions imposed by this Section 4(n) shall continue to apply until the expiration of the date that is fifteen
(15) calendar days plus three (3) business days after the date on which the issuance of the earnings release or the material news or material event occurs;

(o) to use its reasonable efforts to cause the Common Stock to be listed for quotation on the Nasdaq;

(p) prior to the Time of Purchase or the Additional Time of Purchase, as the case may be, to issue no press release or other similar communications directly or indirectly and hold

no press conference with respect to New ARI, Old ARI or any Subsidiary, the financial condition, results of operations, business, properties, assets or liabilities of New ARI, Old ARI or any Subsidiary, or the offering of the Shares, without your prior consent which shall not be unreasonably withheld or delayed;

(q) to not take, directly or indirectly, any action designed to or that would cause or result, under the Exchange Act or otherwise, in the stabilization or manipulation of the price of any security of New ARI or Old ARI to facilitate the sale or resale of the Shares;

(r) to maintain a transfer agent and, if necessary under the jurisdiction of incorporation of New ARI, a registrar for the Common Stock;

(s) to cause each Directed Share Participant that purchases over $100,000 of Reserved Shares to execute a Lock-Up Agreement and otherwise to cause the Reserved Shares to be restricted from sale, transfer, assignment, pledge or hypothecation to such extent as may be required by the NASD and its rules, and to direct the transfer agent to place stop transfer restrictions upon such Reserved Shares during the Lock-Up Period or any such longer period of time as may be required by the NASD and its rules; and to comply with all applicable securities and other applicable laws, rules and regulations in each jurisdiction in which the Reserved Shares are offered in connection with the Directed Share Program;

(t) not, at any time at or after the execution of this Agreement, to offer or sell any Shares by means of any "prospectus" (within the meaning of the Act), or use any "prospectus" (within the meaning of the Act) in connection with the offer or sale of the Shares, in each case other than the Prospectus;

(u) to comply with Rule 433(g) of the Act; and

(v) prior to the consummation of the Merger, the Certificate of Merger (as attached as Exhibit D hereto) will not be amended without the prior written consent of UBS and Bear Stearns.

5. Reimbursement of Underwriters' Expenses. If the Shares are not delivered for any reason other than (a) the termination of this Agreement pursuant to the fifth paragraph of Section 8 hereof, (b) the default by one or more of the Underwriters in its or their respective obligations hereunder or (c) the occurrence of the conditions specified in Section 7(y)(i), (iii), (iv) and
(v), New ARI shall, in addition to paying the amounts described in Section 4(m) hereof, reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of their counsel.

6. Conditions of Underwriters' Obligations. The several obligations of the Underwriters hereunder are subject to the accuracy of the representations and warranties on the part of New ARI and Old ARI on the date hereof, at the Time of Purchase and, if applicable, at the Additional Time of Purchase, the performance by New ARI and Old ARI of its obligations hereunder and to the following additional conditions precedent:

(a) New ARI shall furnish to you at the Time of Purchase and, if applicable, at the Additional Time of Purchase, an opinion of (i) Brown Rudnick Berlack Israels LLP, counsel for New ARI, addressed to the Underwriters, and dated the Time of Purchase or the Additional Time of Purchase, as the case may be, with reproduced copies for each of the other Underwriters, reasonably satisfactory to Shearman & Sterling LLP, counsel for the Underwriters and substantially in the form attached as Exhibit C-1 and (ii) Armstrong Teasdale LLP, Missouri

counsel for Old ARI, addressed to the Underwriters, and dated the Time of Purchase or the Additional Time of Purchase, as the case may be, with reproduced copies for each of the other Underwriters, reasonably satisfactory to Shearman & Sterling LLP, counsel for the Underwriters and substantially in the form attached as Exhibit C-2.

(b) You shall have received from each of Grant Thornton LLP and KPMG LLP letters each dated, respectively, the date of this Agreement, and with respect to Grant Thornton LLP, the Time of Purchase and, if applicable, the Additional Time of Purchase, and addressed to the Underwriters (with reproduced copies for each of the Underwriters) in substantially the forms heretofore approved by representatives of the Underwriters.

(c) You shall have received at the Time of Purchase and, if applicable, at the Additional Time of Purchase, the favorable opinion of Shearman & Sterling LLP, counsel for the Underwriters, dated the Time of Purchase or the Additional Time of Purchase, as the case may be, in a form reasonably satisfactory to UBS and Bear Stearns.

(d) No Prospectus or amendment or supplement to the Registration Statement or the Prospectus shall have been filed after the date hereof to which you reasonably object in writing.

(e) The Registration Statement and the Exchange Act Registration Statement shall become effective not later than 5:30 p.m. New York City time on the date of this Agreement and if Rule 430A under the Act is used, the Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act at or before 5:30 p.m., New York City time, on the second full business day after the date of this Agreement and any registration statement pursuant to Rule 462(b) under the Act required in connection with the offering and sale of the Shares shall have been filed and become effective no later than 10:00 P.M., New York City time, on the date of this Agreement.

(f) Prior to the Time of Purchase, and, if applicable, the Additional Time of Purchase, (i) no stop order with respect to the effectiveness of the Registration Statement shall have been issued under the Act or proceedings initiated under Section 8(d) or 8(e) of the Act;
(ii) the Registration Statement shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (iii) the Preliminary Prospectus or the Prospectus and all amendments or supplements thereto shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading; (iv) no Disclosure Package, and no amendment or supplement thereto, shall include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; and (v) none of the Permitted Free Writing Prospectuses, if any, shall include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.

(g) Between the time of execution of this Agreement and the Time of Purchase or the Additional Time of Purchase, as the case may be, no material adverse change or any development involving a prospective material adverse change in the business, properties, management, financial condition or results of operations of New ARI and the Subsidiaries taken as a whole shall occur or become known.

(h) New ARI will, at the Time of Purchase and, if applicable, at the Additional Time of Purchase, deliver to you a certificate of its Chief Executive Officer and its Chief Financial Officer to in substantially the form attached as Exhibit B hereto.

(i) You shall have received the signed Lock-Up Agreements referred to in Section 3(q) hereof.

(j) New ARI and Old ARI shall have furnished to you such other documents and certificates of officers of New ARI and Old ARI as to the accuracy and completeness of any statement in the Registration Statement, Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus as of the Time of Purchase and, if applicable, the Additional Time of Purchase, as you may reasonably request.

(k) The Shares shall have been approved for quotation on Nasdaq, subject only to notice of issuance at or prior to the Time of Purchase or the Additional Time of Purchase, as the case may be.

(l) The NASD shall not have raised any objection with respect to the fairness or reasonableness of the underwriting, or other arrangements of the transactions, contemplated hereby.

(m) At the Time of Purchase, New ARI shall have (i) repaid or caused to be repaid all outstanding amounts under the Credit Facility, the Industrial Revenue Bonds and the Affiliate Notes, (ii) delivered or caused to be delivered irrevocable instructions to the Trustee notifying the holders thereunder of the full repayment and redemption of such Industrial Revenue Bonds by no later than [__], (iii) entered into the New Credit Facility and (iv) issued [__] shares of Common Stock to James J. Unger pursuant to the Unger Stock Grant, as each is described in the Prospectus and (iv) effected the Preferred Stock Redemption.

(n) The Merger shall have been consummated pursuant to the terms of the Certificate of Merger and all of the property, rights, privileges and powers of Old ARI have vested in New ARI, and all debts, liabilities, obligations, restrictions, disabilities and duties of Old ARI, including its obligations under this Agreement, shall have become the debts, liabilities, obligations, restrictions, disabilities and duties of New ARI.

7. Effective Date of Agreement; Termination. This Agreement shall become effective (i) if Rule 430A under the Act is not used, when you shall have received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed and delivered this Agreement.

The obligations of the several Underwriters hereunder shall be subject to termination in the absolute discretion of UBS and Bear Stearns or any group of Underwriters (which may include UBS and Bear Stearns) which has agreed to purchase in the aggregate at least 50% of the Firm Shares, if (x) since the time of execution of this Agreement or the earlier respective dates as of which information is given in the Registration Statement, the Preliminary Prospectus, the Prospectus and any Permitted Free Writing Prospectus, there has been any material adverse change or any development involving a prospective material adverse change in the business, properties, management, financial condition or results of operations of New ARI, Old ARI and the Subsidiaries taken as a whole, which would, in UBS' and Bear Stearns' judgment or in the judgment of such group of Underwriters, make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares on the terms and in the manner contemplated in the Registration Statement, the Preliminary Prospectus, the Prospectus and any

Permitted Free Writing Prospectus, or (y) since the time of execution of this Agreement there shall have occurred: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange, the American Stock Exchange or the Nasdaq; (ii) a suspension or material limitation in trading in New ARI's securities on Nasdaq; (iii) a general moratorium on commercial banking activities declared by either federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) an outbreak or escalation of hostilities or acts of terrorism involving the United States or a declaration by the United States of a national emergency or war; or (v) any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in UBS' and Bear Stearns' judgment or in the judgment of such group of Underwriters makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares on the terms and in the manner contemplated in the Registration Statement, the Preliminary Prospectus, the Prospectus and any Permitted Free Writing Prospectus.

If UBS and Bear Stearns or any group of Underwriters elects to terminate this Agreement as provided in this Section 7, New ARI and each other Underwriter shall be notified promptly in writing.

If the sale to the Underwriters of the Shares, as contemplated by this Agreement, is not carried out by the Underwriters for any reason permitted under this Agreement or if such sale is not carried out because New ARI or Old ARI shall be unable to comply with any of the terms of this Agreement, New ARI or Old ARI shall not be under any obligation or liability under this Agreement (except to the extent provided in Sections 4(m), 5 and 9 hereof), and the Underwriters shall be under no obligation or liability to New ARI and Old ARI under this Agreement (except to the extent provided in Section 9 hereof) or to one another hereunder.

8. Increase in Underwriters' Commitments. Subject to Sections 6 and 7 hereof, if any Underwriter shall default in its obligation to take up and pay for the Firm Shares to be purchased by it hereunder (otherwise than for a failure of a condition set forth in Section 6 hereof or a reason sufficient to justify the termination of this Agreement under the provisions of Section 7 hereof) and if the number of Firm Shares which all Underwriters so defaulting shall have agreed but failed to take up and pay for does not exceed 10% of the total number of Firm Shares, the non-defaulting Underwriters shall take up and pay for (in addition to the aggregate number of Firm Shares they are obligated to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be purchased by all such defaulting Underwriters, as hereinafter provided. Such Shares shall be taken up and paid for by such non-defaulting Underwriters in such amount or amounts as you may designate with the consent of each Underwriter so designated or, in the event no such designation is made, such Shares shall be taken up and paid for by all non-defaulting Underwriters pro rata in proportion to the aggregate number of Firm Shares set opposite the names of such non-defaulting Underwriters in Schedule A.

Without relieving any defaulting Underwriter from its obligations hereunder, New ARI agrees with the non-defaulting Underwriters that it will not sell any Firm Shares hereunder unless all of the Firm Shares are purchased by the Underwriters (or by substituted Underwriters selected by you with the approval of New ARI or selected by New ARI with your approval).

If a new Underwriter or Underwriters are substituted by the Underwriters or by New ARI for a defaulting Underwriter or Underwriters in accordance with the foregoing provision, New ARI or you shall have the right to postpone the Time of Purchase for a period not exceeding five business days in order that any necessary changes in the Registration Statement and the Prospectus and other documents may be effected.

The term "Underwriter" as used in this Agreement shall refer to and include any Underwriter substituted under this Section 8 with like effect as if such substituted Underwriter had originally been named in Schedule A.

If the aggregate number of Firm Shares which the defaulting Underwriter or Underwriters agreed to purchase exceeds 10% of the total number of Firm Shares which all Underwriters agreed to purchase hereunder, and if neither the non-defaulting Underwriters nor New ARI shall make arrangements within the five business day period stated above for the purchase of all the Firm Shares which the defaulting Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall terminate without further act or deed and without any liability on the part of New ARI to any non-defaulting Underwriter (except to the extent provided in Section 8 hereof) and without any liability on the part of any non-defaulting Underwriter to New ARI (except to the extent provided in Section 8 hereof). Nothing in this paragraph, and no action taken hereunder, shall relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

9. Indemnity and Contribution. (a) New ARI and Old ARI agree to indemnify, defend and hold harmless each Underwriter, its partners, directors and officers, and any person who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable and documented cost of investigation) which, jointly or severally, any such Underwriter or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by New ARI) or arises out of or is based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to New ARI expressly for use in, the Registration Statement or arises out of or is based upon any omission or alleged omission to state a material fact in the Registration Statement in connection with such information, which material fact was not contained in such information and which material fact was required to be stated in such Registration Statement or was necessary to make such information not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact included in any Prospectus (the term Prospectus for the purpose of this Section 9 being deemed to include any Preliminary Prospectus, the Prospectus and any amendments or supplements to the foregoing), in any Permitted Free Writing Prospectus, in any "issuer information" (as defined in Rule 433 under the Act) of New ARI or in any Prospectus together with any combination of one or more of the Permitted Free Writing Prospectuses, if any, or arises out of or is based upon any omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except, with respect to such Prospectus or Permitted Free Writing Prospectus, insofar as any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to New ARI expressly for use in, such Prospectus or Permitted Free Writing Prospectus or arises out of or is based upon any omission or alleged omission to state a material fact in such Prospectus or Permitted Free Writing Prospectus in connection with such information, which material fact was not contained in such information and which material fact was necessary in order to make the statements in such information, in the light of the circumstances under which they were made, not misleading or (iii) the Directed Share Program, except, with respect to this clause (iii), insofar as such loss, damage,

expense, liability or claim is finally judicially determined to have resulted from the gross negligence or willful misconduct of the Underwriters in conducting the Directed Share Program.

If any action, suit or proceeding (each, a "Proceeding") is brought against an Underwriter or any such person in respect of which indemnity may be sought against New ARI or Old ARI pursuant to the foregoing paragraph, such Underwriter or such person shall promptly notify New ARI or Old ARI in writing of the institution of such Proceeding and New ARI or Old ARI shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses; provided, however, that the omission to so notify New ARI or Old ARI shall not relieve New ARI or Old ARI from any liability which New ARI or Old ARI may have to any Underwriter, or any such person or otherwise except to the extent New ARI or Old ARI is not otherwise aware of such Proceeding and is materially prejudiced by such omission or New ARI or Old ARI forfeits substantial rights or defenses as a result of such omission. Such Underwriter or such person shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Underwriter or of such person unless the employment of such counsel shall have been authorized in writing by New ARI or Old ARI in connection with the defense of such Proceeding or New ARI or Old ARI shall not have, within a reasonable period of time in light of the circumstances, employed counsel to have charge of the defense of such Proceeding or such indemnified party or parties shall have reasonably concluded after consultation with counsel that there may be defenses available to it or them which are different from, additional to or in conflict with those available to New ARI or Old ARI (in which case New ARI or Old ARI shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties, but New ARI or Old ARI may employ counsel and may participate in the defense thereof), in any of which events such reasonable fees and expenses shall be borne by New ARI or Old ARI and paid as incurred (it being understood, however, that New ARI or Old ARI shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding). New ARI or Old ARI shall not be liable for any settlement of any Proceeding effected without its written consent but if settled with the written consent of New ARI or Old ARI, New ARI or Old ARI agrees to indemnify and hold harmless any Underwriter and any such person from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, then the indemnifying party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have fully reimbursed the indemnified party in accordance with such request prior to the date of such settlement, unless there is a bona fide dispute between such indemnifying party and indemnified party regarding such reimbursement of such fees and expenses and (iii) such indemnified party shall have given the indemnifying party at least 30 days' prior notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such indemnified party.

New ARI and Old ARI agree to indemnify, defend and hold harmless UBS-FinSvc and its partners, directors and officers, and any person who controls UBS-FinSvc within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, UBS-FinSvc or any such person may incur

under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim (i) arises out of or is based upon (a) any of the matters referred to in clauses (i) through (iii) of the first paragraph of this Section 9(a), or (b) any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of New ARI or Old ARI for distribution to Directed Share Participants in connection with the Directed Share Program or caused by any omission or alleged omission to state therein a material fact required to be state therein or necessary to make the statements therein not misleading; (ii) is caused by the failure of any Directed Share Participant to pay for and accept delivery of Reserved Shares that the Directed Share Participant has agreed to purchase; or
(iii) otherwise arises out of or is based upon the Directed Share Program, provided that New ARI shall not be responsible under this clause (iii) for any loss, damage, expense, liability or claim that is finally judicially determined to have resulted from the gross negligence or willful misconduct of UBS-FinSvc in conducting the Directed Share Program. The third paragraph of this Section 9(a) shall apply equally to any Proceeding brought against UBS-FinSvc or any such person in respect of which indemnity may be sought against New ARI or Old ARI pursuant to the foregoing sentence; except that New ARI or Old ARI shall be liable for the expenses of one separate counsel (in addition to any local counsel) for UBS-FinSvc and any such person, separate and in addition to counsel for the Underwriters, in any such Proceeding.

(b) Each Underwriter severally agrees to indemnify, defend and hold harmless New ARI, Old ARI, their respective directors and officers, and any person who controls New ARI or Old ARI within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, New ARI, Old ARI or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to New ARI expressly for use in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by New ARI), or arises out of or is based upon any omission or alleged omission to state a material fact in such Registration Statement in connection with such information, which material fact was not contained in such information and which material fact was required to be stated in such Registration Statement or was necessary to make such information not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in, and in conformity with information concerning such Underwriter furnished in writing by or on behalf of such Underwriter through you to New ARI expressly for use in, a Prospectus or a Permitted Free Writing Prospectus, or arises out of or is based upon any omission or alleged omission to state a material fact in such Prospectus or Permitted Free Writing Prospectus in connection with such information, which material fact was not contained in such information and which material fact was necessary in order to make the statements in such information, in the light of the circumstances under which they were made, not misleading.

If any Proceeding is brought against New ARI, Old ARI or any such person in respect of which indemnity may be sought against any Underwriter pursuant to the foregoing paragraph, New ARI, Old ARI or such person shall promptly notify such Underwriter in writing of the institution of such Proceeding and such Underwriter shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses; provided, however, that the omission to so notify such Underwriter shall not relieve such Underwriter from any liability which such Underwriter may have to New ARI, Old ARI or any such person or otherwise. New ARI, Old ARI or such person shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of New ARI, Old ARI or such person unless the employment of such counsel shall have been authorized in writing by such Underwriter in connection with the defense of such Proceeding or such Underwriter shall not have, within a reasonable

period of time in light of the circumstances, employed counsel to defend such Proceeding or such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to or in conflict with those available to such Underwriter (in which case such Underwriter shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties, but such Underwriter may employ counsel and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such Underwriter), in any of which events such fees and expenses shall be borne by such Underwriter and paid as incurred (it being understood, however, that such Underwriter shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding). No Underwriter shall be liable for any settlement of any such Proceeding effected without the written consent of such Underwriter but if settled with the written consent of such Underwriter, such Underwriter agrees to indemnify and hold harmless New ARI, Old ARI and any such person from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, then the indemnifying party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement, unless there is a bona fide dispute between such indemnifying party and indemnified party regarding such reimbursement of such fees and expenses and
(iii) such indemnified party shall have given the indemnifying party at least 30 days' prior notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such indemnified party.

(c) If the indemnification provided for in this Section 9 is unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 or insufficient to hold an indemnified party harmless in respect of any losses, damages, expenses, liabilities or claims referred to therein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, damages, expenses, liabilities or claims (i) in such proportion as is appropriate to reflect the relative benefits received by New ARI and Old ARI on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of New ARI and Old ARI on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, damages, expenses, liabilities or claims, as well as any other relevant equitable considerations. The relative benefits received by New ARI and Old ARI on the one hand and the Underwriters on the other shall be deemed to be in the same respective proportions as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by New ARI and Old ARI and the total underwriting discounts and commissions received by the Underwriters bear to the aggregate public offering price of the Shares. The relative fault of New ARI and Old ARI on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission relates to information supplied by New ARI and/or Old ARI or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, damages, expenses, liabilities and claims referred to in this subsection shall be deemed to include any legal or other

fees or expenses reasonably incurred and documented by such party in connection with investigating, preparing to defend or defending any Proceeding.

(d) New ARI, Old ARI and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in subsection (d) above. Notwithstanding the provisions of this Section 9, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by such Underwriter and distributed to the public were offered to the public exceeds the amount of any damage which such Underwriter has otherwise been required to pay by reason of such untrue statement or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 9 are several in proportion to their respective underwriting commitments and not joint.

(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of New ARI and Old ARI contained in this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of any Underwriter, its partners, directors or officers or any person (including each partner, officer or director of such person) who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of New ARI or Old ARI, their respective directors or officers or any person who controls New ARI or Old ARI within the meaning of Section 15 of the Act or Section 20 of the Exchange Act and shall survive any termination of this Agreement or the issuance and delivery of the Shares. New ARI, Old ARI and each Underwriter agree promptly to notify each other of the commencement of any Proceeding against it and, in the case of New ARI or Old ARI against any of New ARI's or Old ARI's officers or directors, as the case may be, in connection with the issuance and sale of the Shares, or in connection with the Registration Statement, the Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus.

10. Information Furnished by the Underwriters. The statements set forth in the last paragraph on the cover page of the Prospectus and the statements set forth in the second and third sentence of the paragraph entitled "Commissions and Discounts" under the caption "Underwriting" in the Prospectus and the paragraphs under the heading "Price Stabilization, Short Positions" in the Prospectus, in each case only insofar as such statements relate to the amount of selling concession and reallowance or to over-allotment and stabilization activities that may be undertaken by the Underwriters, constitute the only information furnished by or on behalf of the Underwriters as such information is referred to in Sections 3 and 9 hereof.

11. Notices. Except as otherwise herein provided, all statements, requests, notices and agreements shall be in writing or by telegram and, if to the Underwriters, shall be sufficient in all respects if delivered or sent to UBS Securities LLC, 299 Park Avenue, New York, New York 10171-0026, Attention:
Syndicate Department; if to New ARI or Old ARI, shall be sufficient in all respects if delivered or sent to the offices of New ARI at [o], Attention: [o];

12. Free Writing Prospectus. Each Underwriter severally covenants with the Old ARI and New ARI not to take any action without the written consent of the New ARI, not to be unreasonably withheld, that would result in Old ARI or New ARI being required to file with the Commission under Rule 433(d) under the Act a free writing prospectus prepared by or on behalf of such Underwriter that otherwise would not be required to be filed by the Old ARI or New ARI thereunder, but for the action of the Underwriter. Old ARI and New ARI agree with the Underwriters not to take any

action without your consent, not to be unreasonably withheld, that would result in Old ARI or New ARI being required to file with the Commission under Rule 433(d) under the Act a free writing prospectus prepared by or on behalf of Old ARI or New ARI that otherwise would not be required to be filed by the Old ARI or New ARI thereunder

13. Governing Law; Construction. This Agreement and any claim, counterclaim or dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement ("Claim"), directly or indirectly, shall be governed by, and construed in accordance with, the laws of the State of New York. The Section headings in this Agreement have been inserted as a matter of convenience of reference and are not a part of this Agreement.

14. Submission to Jurisdiction. Except as set forth below, no Claim may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Underwriters, New ARI and Old ARI consent to the jurisdiction of such courts and personal service with respect thereto. Each of the Underwriters, New ARI and Old ARI(on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) waive all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement. New ARI, Old ARI and the Underwriters agree that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon New ARI, Old ARI and the Underwriters and may be enforced in any other courts to the jurisdiction of which New ARI, Old ARI and the Underwriters are or may be subject, by suit upon such judgment.

15. Parties at Interest. The Agreement herein set forth has been and is made solely for the benefit of the Underwriters, Old ARI and New ARI and to the extent provided in Section 9 hereof the controlling persons, directors and officers referred to in such section, and their respective successors, assigns, heirs, personal representatives and executors and administrators. No other person, partnership, association or corporation (including a purchaser, as such purchaser, from any of the Underwriters) shall acquire or have any right under or by virtue of this Agreement.

16. Counterparts. This Agreement may be signed by the parties in one or more counterparts which together shall constitute one and the same agreement among the parties.

17. Successors and Assigns. This Agreement shall be binding upon the Underwriters, New ARI, Old ARI and their successors and assigns and any successor or assign of any substantial portion of Old ARI's, New ARI's and any of the Underwriters' respective businesses and/or assets.

18. Miscellaneous. UBS, an indirect, wholly owned subsidiary of UBS AG, is not a bank and is separate from any affiliated bank, including any U.S. branch or agency of UBS AG. Because UBS is a separately incorporated entity, it is solely responsible for its own contractual obligations and commitments, including obligations with respect to sales and purchases of securities. Securities sold, offered or recommended by UBS are not deposits, are not insured by the Federal Deposit Insurance Corporation, are not guaranteed by a branch or agency, and are not otherwise an obligation or responsibility of a branch or agency.

19. No Fiduciary Duty. New ARI and Old ARI hereby acknowledge that the Underwriters are acting solely as underwriters in connection with the purchase and sale of New ARI's securities. New ARI and Old ARI further acknowledge that the Underwriters are acting pursuant to a

contractual relationship created solely by this Agreement entered into on an arm's-length basis and in no event do the parties intend that the Underwriters act or be responsible as a fiduciary to New ARI, Old ARI, their respective management, stockholders, creditors or any other person in connection with any activity that the Underwriters may undertake or has undertaken in furtherance of the purchase and sale of New ARI's securities, either before or after the date hereof. The Underwriters hereby expressly disclaim any fiduciary or similar obligations to New ARI and Old ARI either in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions, and New ARI and Old ARI hereby confirm their understanding and agreement to that effect. New ARI, Old ARI and the Underwriters agree that they are each responsible for making their own independent judgments with respect to any such transactions, and that any opinions or views expressed by the Underwriters to New ARI or Old ARI regarding such transactions, including but not limited to any opinions or views with respect to the price or market for New ARI's securities, do not constitute advice or recommendations to New ARI or Old ARI. New ARI and Old ARI hereby waive and release, to the fullest extent permitted by law, any claims that New ARI and Old ARI may have against the Underwriters with respect to any breach or alleged breach of any fiduciary or similar duty to New ARI or Old ARI in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

If the foregoing correctly sets forth the understanding among New ARI, Old ARI and the Underwriters, please so indicate in the space provided below for the purpose, whereupon this Agreement and your acceptance shall constitute a binding agreement among New ARI, Old ARI and the Underwriters, severally.

Very truly yours,

AMERICAN RAILCAR INDUSTRIES, INC.,
a Delaware corporation

By:

Name:

Title:

AMERICAN RAILCAR INDUSTRIES, INC.,
a Missouri corporation

By:

Name:

Title:

Accepted and agreed to as of the
date first above written

UBS SECURITIES LLC
BEAR, STEARNS & CO. INC.

BB&T CAPITAL MARKETS,
A DIVISION OF SCOTT & STRINGFELLOW, INC.
CIBC WORLD MARKETS CORP.
MORGAN KEEGAN & COMPANY, INC.
By: UBS SECURITIES LLC

By:
Name:
Title:

SCHEDULE A

                                                     Number of         Number of
Underwriter                                         Firm Shares    Additional Shares
-----------                                         -----------    -----------------
UBS Securities LLC
Bear, Stearns & Co. Inc.
BB&T Capital Markets, a division of
Scott & Stringfellow CIBC World Markets Corp.
                                                    -----------    -----------------
Morgan Keegan & Company, Inc.
                                                    -----------    -----------------
                                        Total
                                                    ===========    =================

SCHEDULE B

Permitted Free Writing Prospectuses

SCHEDULE C

List of Subsidiaries

SUBSIDIARY                                     JURISDICTION OF INCORPORATION
----------                                     -----------------------------
Castings LLC                                   Delaware
American Railcar                               Arkansas
Paragould I LLC
American Railcar                               Arkansas
Paragould II LLC
American Railcar                               Arkansas
Marmaduke I LLC
American Railcar                               Arkansas
Marmaduke II LLC
Southwest Steel I, LLC                         Texas
Southwest Steel II, LLC                        Texas
Southwest Steel III, LLC                       Texas
ARI Fleet Services of                          Ontario, Canada
Canada, Inc.

SCHEDULE D

List of Entities and Individuals Entering into a Lock-Up Agreement

[Carl C. Icahn
Hopper Investments LLC
James J. Unger
James A. Cowan
William P. Benac

Foundation for a Greater Opportunity
Modal LLC
Alan C. Lullman
Vincent J. Intrieri
Jon F. Weber
Keith Meister
James C. Pontious
James A. Laisure
Jackie R. Pipkin
Michael R. Williams]

SCHEDULE E

NASD Affiliations or Associations

Icahn & Co., Inc.

EXHIBIT A

FORM OF LOCK-UP LETTER

American Railcar Industries, Inc.

Common Stock

($0.01 Par Value)

_________, 2006

UBS Securities LLC
Bear, Stearns & Co., Inc.
BB&T Capital Markets,
a division of Scott & Stringfellow, Inc. CIBC World Markets Corp.
Morgan Keegan & Company, Inc.

As Underwriters

c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171

Ladies and Gentlemen:

This Lock-Up Letter Agreement is being delivered to you in connection with the proposed Underwriting Agreement (the "Underwriting Agreement") to be entered into by American Railcar Industries, Inc., a Delaware Corporation ("New ARI"), American Railcar Industries, Inc., a Missouri Corporation ("Old ARI") and you, as Underwriters, with respect to the public offering (the "Offering") of Common Stock, par value $0.01 per share, of the Company (the "Common Stock"). In this Lock-Up Letter Agreement, references to the "Company" refer to each of Old ARI and New ARI prior to the Merger (as defined in the Underwriting Agreement), and New ARI following the Merger

In order to induce you to enter into the Underwriting Agreement, the undersigned agrees that for a period of 180 days after the date of the final prospectus relating to the Offering (the "Public Offering Date"), the undersigned will not, without the prior written consent of UBS Securities LLC ("UBS") and Bear, Stearns & Co. Inc. ("Bear Stearns"), (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or file (or participate in the filing of) a registration statement with the Securities and Exchange Commission (the "Commission") in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder with respect to, any Common Stock of the Company or any securities convertible into or exercisable or exchangeable for Common Stock, or warrants or other rights to purchase Common Stock or any such Securities, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or any such Securities, or warrants or

other rights to purchase Common Stock, whether any such transaction is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, or (iii) publicly announce an intention to effect any transaction specified in clause (i) or (ii) of this paragraph. The foregoing sentence shall not apply to (a) the registration of or sale to the Underwriters (as defined in the Underwriting Agreement) of any Common Stock pursuant to the Offering and the Underwriting Agreement, (b) bona fide gifts, provided the recipient thereof agrees in writing with the Underwriters to be bound by the terms of this Lock-Up Letter Agreement and confirms that he, she or it has been in compliance with the terms of this Lock-Up Letter Agreement since the date hereof or (c) dispositions to any trust or other entity for the direct or indirect benefit of the undersigned and/or the immediate family of the undersigned, provided that such trust or other such entity agrees in writing with the Underwriters to be bound by the terms of this Lock-Up Letter Agreement and confirms that it has been in compliance with the terms of this Lock-Up Letter Agreement since the date hereof. For purposes of this paragraph, "immediate family" shall mean the undersigned and the spouse, any lineal descendent, father, mother, brother or sister of the undersigned.

In addition, the undersigned hereby waives any rights the undersigned may have to require registration of Common Stock in connection with the filing of a registration statement relating to the Offering. The undersigned further agrees that, during the Lock-Up Period, the undersigned will not, without the prior written consent of UBS and Bear Stearns, make any demand for, or exercise any right with respect to, the registration of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or warrants or other rights to purchase Common Stock.

Notwithstanding the above,

(1) during the period that begins on the date that is 15 calendar days plus 3 business days before the last day of the Lock-Up Period ends on the last day of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or

(2) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period,

the restrictions imposed by this Lock-Up Letter Agreement shall continue to apply until the expiration on of the date that is 15 calendar days plus 3 business days after the date on which the issuance of the earnings release or the material news or material event occurs.

In addition, the undersigned hereby waives any and all preemptive rights, participation rights, resale rights, rights of first refusal and similar rights that the undersigned may have in connection with the Offering or with any issuance or sale by the Company of any equity or other securities before the Offering, except for any such rights as have been heretofore duly exercised.

The undersigned hereby confirms that the undersigned has not, directly or indirectly, taken, and hereby covenants that the undersigned will not, directly or indirectly, take, any action designed, or which has constituted or will constitute or might reasonably be expected to cause or result in, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of shares of Common Stock.

If (i) the Company notifies you in writing that it does not intend to proceed with the Offering, (ii) the registration statement filed with the Commission with respect to the Offering is withdrawn, or (iii) for any reason the Underwriting Agreement is terminated prior to the Time of Purchase (as defined in the Underwriting Agreement), this Lock-Up Letter Agreement shall be terminated and the undersigned shall be released from his or its obligations hereunder.

Yours very truly,

Name:

EXHIBIT B

OFFICERS' CERTIFICATE

1. I have reviewed the Registration Statement and the Prospectus.

2. The representations and warranties of the Company as set forth in this Agreement are true and correct as of the Time of Purchase and, if applicable, the Additional Time of Purchase.

3. The Company has performed all of its obligations under this Agreement as are to be performed at or before the Time of Purchase and at or before the Additional Time of Purchase, as the case may be.

4. The conditions set forth in paragraphs (e) and (f) of Section 6 of this Agreement have been met.

5. The financial statements and other financial information included in the Registration Statement and the Prospectus fairly present in all material respects the financial condition, results of operations, and cash flows of the Company as of, and for, the periods presented in the Registration Statement.

6. There has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company since the respective dates as of which information is given in the Prospectus.

7. No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending, or, to my knowledge, are contemplated by the Commission.

8. The Merger has been consummated pursuant to the terms of the Certificate of Merger and all of the property, rights, privileges and powers of Old ARI have vested in New ARI, and all debts, liabilities, obligations, restrictions, disabilities and duties of Old ARI have become the debts, liabilities, obligations, restrictions, disabilities and duties of New ARI.

EXHIBIT C-1

FORM OF OPINION OF BROWN RUDNICK BERLACK ISRAELS LLP
AS COUNSEL TO OLD ARI AND NEW ARI

[Separately Provided]

EXHIBIT C-2

FORM OF OPINION OF ARMSTRONG TEASDALE LLP
AS MISSOURI COUNSEL TO OLD ARI AND NEW ARI

[Separately Provided]

EXHIBIT D

CERTIFICATE OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER ("AGREEMENT") entered into this ______ day of January, 2006 between American Railcar Industries, Inc., a Missouri corporation ("PARENT"), and American Railcar Industries, Inc., a Delaware corporation ("SUBSIDIARY" and together with Parent, "CONSTITUENT CORPORATIONS").

RECITALS:

WHEREAS, the authorized capital stock of Parent consists of: (i) 12,000 shares of Common Stock, $.01 par value per share ("PARENT COMMON STOCK"), 1,195 shares of which are issued and outstanding as of the date hereof; (ii) 99,000 shares of Preferred Stock, par value $.01 per share ("PARENT OLD PREFERRED STOCK"), one share of which is issued and outstanding as of the date hereof;
(iii) 150,000 shares of Payment-In-Kind Preferred Stock, par value $.01 per share, none of which are issued and outstanding as of the date hereof; and (iv) 500,000 shares of New Preferred Stock, $.01 par value per share ("PARENT NEW PREFERRED STOCK"), 82,055 shares of which are issued and outstanding on the date hereof.

WHEREAS, the authorized capital stock of Subsidiary consists of: (i) 50,000,000 shares of Common Stock, $.01 par value per share ("SUBSIDIARY COMMON STOCK"), 100 shares of which are issued and outstanding and held by Parent as of the date hereof; and (ii) 1,000,000 shares of Preferred Stock, $.01 par value per share, none of which are issued and outstanding on the date hereof ("SUBSIDIARY PREFERRED STOCK").

WHEREAS, the parties deem it advisable and in the best interests of the Constituent Corporations and their stockholders that Parent be merged with and into Subsidiary (the "MERGER") in accordance with the provisions of the Missouri General and Business Corporation Law ("MGBCL") and the Delaware General Corporation Law ("DGCL") and desire to state herein the mode of carrying the same into effect and certain other details and provisions of the Merger;

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

1. Constituent Corporations and Merger. On the Effective Time, as defined in Section 3 below, Parent shall be merged into Subsidiary and Subsidiary shall be the surviving corporation (the "SURVIVING CORPORATION").

2. Surviving Corporation.

(a) The name by which the Surviving Corporation shall be known is:
American Railcar Industries, Inc.

(b) The corporate purposes of the Surviving Corporation shall be the purposes set forth in the Certificate of Incorporation of Subsidiary.

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(c) The Certificate of Incorporation of the Surviving Corporation shall be the Certificate of Incorporation, as supplemented by the Certificate of Designations adopted by the Board of Directors of the Subsidiary and attached hereto as Exhibit A (the "SURVIVING CORPORATION CERTIFICATE OF DESIGNATIONS").

(d) The By-Laws of the Surviving Corporation shall be the By-Laws of the Subsidiary;

(e) The officers and directors of the Surviving Corporation shall be those of the Parent immediately prior to the Effective Time.

3. Effective Time. Simultaneously with or immediately prior to the closing of an initial public offering of shares of Subsidiary Common Stock pursuant to an effective registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or such earlier time as the Boards of Directors of the Parent and Subsidiary shall approve, (i) a Certificate of Ownership and Merger and/or an executed counterpart of this Agreement, together with the Surviving Corporation Certificate of Designations, shall be filed with the Secretary of State of the State of Delaware pursuant to the applicable provisions of the DGCL; and (ii) Articles of Merger shall be filed with the Secretary of State of the State of Missouri pursuant to the applicable provisions of the MGBCL. The Merger shall become effective when the Certificate of Ownership and Merger and/or an executed counterpart of this Agreement and the Articles of Merger are filed in the Offices of the Secretary of State of the State of Delaware and the Secretary of State of the State of Missouri, respectively (the "EFFECTIVE TIME").

4. Effect of Merger. From and after the Effective Time, the effect of the Merger shall be as provided in Sections 351.447, 351.450 and 351.458 of the MGBCL and Sections 253 and 259 of the DGCL, including the following: (i) the separate corporate existence of Parent shall cease and all of its assets, property, rights and powers as well as all debts due it and all choses in action belonging to it shall be transferred to and vested in the Subsidiary as the Surviving Corporation without further act or deed; (ii) the Subsidiary as the Surviving Corporation shall continue in existence and retain all of its assets, property, leasehold interests, rights and powers as well as all debts due to it and all choses in action belonging to it without impairment; and further, the title to any real estate, or any interest therein, under the laws of the State of Missouri vested in the Subsidiary Corporation shall not revert or be in any way impaired by reason of the Merger; and further, the rights of creditors of Parent, lessors of property leased by Parent and parties contracting with Parent shall not in any manner be impaired by the Merger, and Subsidiary as the Surviving Corporation shall remain liable for all of its liabilities and obligations existing prior to the Effective Time and shall be deemed to have assumed the obligations of Parent existing prior to the Effective Time to the same extent as if Subsidiary had itself incurred such obligations; and further the aggregate amount of the net assets of the parties which was available for the payment of dividends immediately prior to the Merger shall continue to be available for the payment of dividends by the Surviving Corporation.

5. Further Assurance. If at any time Parent shall consider or be advised that any acknowledgments or further assurances or assignments in law or other similar actions are

-2-

necessary or desirable to acknowledge, confirm, vest or perfect in and to the Surviving Corporation any rights, title or interests of Parent, or otherwise to carry out the provisions hereof, Parent and its respective officers and directors shall and will execute and deliver any and all such acknowledgements, assurances or assignments in law, and do all things necessary or proper to acknowledge, confirm, vest or perfect such rights, title or interests in the Surviving Corporation, and to otherwise carry out the provisions of this Agreement.

6. Statutory Agent. From and after the Effective Time, until thereafter changed as permitted by law, the Secretary of State of the State of Missouri shall serve as the statutory agent of the Surviving Corporation upon whom any process, notice or demand against either Parent or the Surviving Corporation may be served for any prior obligations for so long as any liability remains outstanding against Parent or the Surviving Corporation in the State of Missouri.

7. Conversion of Shares.

(a) At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, (i) each share of Parent Common Stock issued and outstanding shall be converted into and be deemed to become 9,328.083 shares of Subsidiary Common Stock, provided that any fractional shares to be issued to each Stockholder of the Corporation pursuant to such conversion shall be rounded to the nearest whole number of shares and (ii) each share of Parent New Preferred Stock issued and outstanding shall be converted into and be deemed to become one share of Subsidiary New Preferred Stock (as defined in the Surviving Corporation Certificate of Designations). At such time prior to the Effective Time as shall be determined by the Board of Directors of Parent, each share of Parent Old Preferred Stock issued and outstanding shall be redeemed pursuant to the terms thereof and the Articles of Incorporation of the Parent.

(b) From and after the Effective Time, (i) each certificate theretofore representing shares of issued and outstanding Parent Common Stock shall, upon surrender to Subsidiary, entitle the holder to receive in exchange therefor a certificate or certificates representing the number of shares of Subsidiary Common Stock into which the stock theretofore represented by the certificate so surrendered shall have been converted in accordance with the paragraph above, and (ii) each certificate theretofore representing shares of issued and outstanding Parent New Preferred Stock shall, upon surrender to Subsidiary, entitle the holder to receive in exchange therefor a certificate or certificates representing the number of shares of Subsidiary New Preferred Stock into which the stock theretofore represented by the certificate so surrendered shall have been converted in accordance with the paragraph above.

(c) Each share, if any, of capital stock held in Parent's treasury at the Effective Time shall automatically be canceled.

(d) At the Effective Time, and pursuant to Section 351.447 of the MGBCL and Section 253 of the DGCL, all of the presently issued and outstanding shares of Subsidiary Common Stock shall cease to exist as the Parent Corporation holds 100% of such shares.

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8. Dissenter's Rights. Any holder of record of shares of Parent's capital stock who shall, at or before the taking of the vote of Parent stockholders to adopt this Agreement and the Merger contemplated hereby, have filed with Subsidiary written objection thereto and not have voted for the Merger and who shall have, after the taking of such vote, properly demanded payment for such shares in accordance with Section 351.875 of the MGBCL, shall not thereafter have any rights as a stockholder except as provided in Section 351.900 et seq. of the MGBCL.

9. Abandonment. This Agreement may be terminated and the Merger abandoned by the mutual consent of the Boards of Directors of Parent and Subsidiary at any time prior to the filing date with the Delaware Secretary of State and the Missouri Secretary of State, whether or not at the time of such termination and abandonment this Agreement has been adopted by the stockholders of Parent.

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute this Agreement of Merger effective as of the date first above written.

AMERICAN RAILCAR INDUSTRIES, INC., a Missouri
Corporation

By:

James J. Unger, President and Chief Executive Officer

A T T E S T:

Secretary

AMERICAN RAILCAR INDUSTRIES, INC., a Delaware
Corporation

By:

James J. Unger, President and Chief Executive Officer
A T T E S T:

Secretary

-4-

Exhibit 3.3

CERTIFICATE OF OWNERSHIP AND MERGER
MERGING

AMERICAN RAILCAR INDUSTRIES, INC., A MISSOURI CORPORATION

INTO

AMERICAN RAILCAR INDUSTRIES, INC., A DELAWARE CORPORATION

American Railcar Industries, Inc., a corporation organized and existing under the laws of the State of Missouri ("Parent")

DOES HEREBY CERTIFY:

FIRST: That Parent was organized pursuant to the provisions of the General Business and Corporation Law of the State of Missouri, on the 23rd day of May, 1988.

SECOND: That Parent owns 100% of the outstanding shares of the capital stock of American Railcar Industries, Inc. ("American Railcar Delaware"), a corporation organized pursuant to the provisions of the General Corporation Law of the State of Delaware on the 16th day of November, 2005.

THIRD: That the Board of Directors of Parent at a meeting held on the ___ day of January 2006, determined to merge the corporation into said American Railcar Delaware and did adopt the following resolutions:

RESOLVED, that Parent merge itself with and into American Railcar Delaware such that American Railcar Delaware shall be the surviving corporation and assume all of the obligations of Parent.

FURTHER RESOLVED, that the terms and conditions of the merger are as follows:
(i) each share of Parent Common Stock, $.01 par value, issued and outstanding shall be converted into and be deemed to become 9,328.083 shares of American Railcar Delaware Common Stock, $.01 par value, provided that any fractional shares to be issued to each stockholder of the Corporation pursuant to such conversion shall be rounded to the nearest whole number of shares; (ii) each share of Parent New Preferred Stock, $.01 par value, issued and outstanding shall be converted into and be deemed to become one share of American Railcar Delaware New Preferred Stock, $.01 par value; (iii) all of the shares of American Railcar Delaware Common Stock held by Parent shall be surrendered and canceled; and (iv) the holders of shares of Common Stock and New Preferred Stock of Parent shall have no further claims of any kind or nature.

FURTHER RESOLVED, that the foregoing resolution to merge be submitted to the stockholders of this corporation for approval, and in the event that the holders of at least

two thirds of the stock of this corporation vote in favor of the resolution, in accordance with Missouri General and Business Corporation Law, that the merger shall be deemed approved.

FOURTH: That this merger has been approved by the holders of all of the outstanding shares of stock of Parent by written consent in lieu of a meeting.

IN WITNESS WHEREOF, said Parent has caused this Certificate to be signed by an authorized officer this _____________ day of January 2006.

By:__________________________
Authorized Officer
Name: James J. Unger
Title: President and Chief Executive Officer

Exhibit 4.1

product. ink. PROOF final printing the on and ANOTHER appear dyes SEND will the 931-490-1720 INC. it AND ARI 2005 TERESA as between 29, color CHANGES DEROSSETT: FACE the of TODD INDUSTRIES, 2 difference MAKE CUSIP 02916P 10 3 the INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE REV. to SEE REVERSE FOR CERTAIN DEFINITIONS DECEMBER 21925 green. OF RAILCAR TSB dark representation due THIS CERTIFIES that COORDINATOR: PROOF SC-3 good proof in the CHANGES a AMERICAN OPERATOR: is prints It from WITH PRODUCTION Intaglio printer. different OK black. laser slightly IS color AS By and appear OK FACE 288 quality, 2 Countersigned X PMS may 21925 in is the owner of AMERICAN and / graphics PROOF: COMPANY 38401 prints a product LANE on THIS FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF THE PAR VALUE OF $.01 PER SHARE OF STOCK Registered: 212-269-0339 image, printed AMERICAN RAILCAR INDUSTRIES, INC. transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate (New NOTE AMERICAN FOR properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Certificate of Incorporation of the Corporation 388-3003 / artwork final A or and any amendments thereto, to all of which the holder, by acceptance hereof, assents. York, TENNESSEE / vector the This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar. TRANSFER BANK (931) a file N.Y.) ARMSTRONG is WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. & NAPOLITANO: JOBS digital and SELECTION 711 J. Logo LIVE a Dated: TRUST COLUMBIA, / AMERICAN SALES: 7 PRINTING: from rendition, Authorized and Transfe r ETHER printed color APPROPRIATE COMPANY / Of FOR was exact THE Secretary President and Chief Executive Officer ficer Registrar Agent an proof not INITIAL is SELECTED This it PLEASE COLORS COLOR: However,

AMERICAN RAILCAR INDUSTRIES, INC. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM as tenants in commn UNIF GIFT MIN ACT Custodian TEN ENT as tenants by the entireties (Cust) (Minor) JT TEN as joint tenants with right of survivorship and not as tenants in common under unifrom gifts to minors Act (State) Additional abbreviations may also be used though not in the above list. For value received hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE) Shares of the capital stock represented by the within Certificate and do hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. Signature(s) Guaranteed: THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDITUNIONS WITH MEM- BERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE CORPORATION MAY
REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE. AMERICAN BANK NOTE COMPANY 711 ARMSTRONG LANE COLUMBIA, TENNESSEE 38401 (931) 388-3003 SALES: J. NAPOLITANO: 212-269-0339 X 2 / ETHER 7 / LIVE JOBS / A / AMERICAN / 21925 BACK
PRODUCTION COORDINATOR: TODD DEROSSETT: 931-490-1720 PROOF OF NOVEMBER 30, 2005 AMERICAN RAILCAR INDUSTRIES, INC. TSB 21925 BACK_PATCH OPERATOR: TERESA REV. 1 PLEASE INITIAL THE APPROPRIATE SELECTION FOR THIS PROOF: OK AS IS OK WITH CHANGES MAKE CHANGES AND SEND ANOTHER PROOF

Exhibit 4.2

AMERICAN RAILCAR INDUSTRIES, INC.

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT, dated as of January __, 2006, among the parties listed on Schedule I hereto (the "Holders") and American Railcar Industries, Inc., a Delaware corporation (the "Company").

R E C I T A L S

WHEREAS, the Company has filed a registration statement on Form S-1 (file number 333-130284, as it may be amended from time to time, the "Initial Registration Statement") with the Commission (as defined below) to effect a proposed public offering of the Company's common stock;

WHEREAS, in order to enable the Company to proceed with the public offering, the Holders have been required to consent to certain actions and to make certain other accommodations;

WHEREAS, as an inducement to the Holders to permit the public offering, the Company has agreed to grant the Holders certain registration rights;

WHEREAS, the Company and the Holders desire to define the registration rights of the Holders on the terms and subject to the conditions herein set forth.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows:

SECTION 1. DEFINITIONS

As used in this Agreement, the following terms have the respective meaning set forth below:

Affiliate: shall have the meaning set forth in Rule 144 promulgated under the Securities Act (as currently in effect);

Commission: shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act;

Common Stock: shall mean the common stock of the Company, par value $0.01 per share;

Effective Date: shall mean the date of the first closing for the offering contemplated by the Initial Registration Statement;

Exchange Act: shall mean the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder;

Foundation: shall mean the Foundation for a Greater Opportunity;

Foundation Stock Purchase Agreement: shall mean that certain Stock Purchase Agreement executed as of December 8, 2005, as it may be amended from time to time, entered into between Modal and the Foundation, pursuant to which the Foundation has agreed to sell all of its shares of Common Stock to Modal, subject to the terms and conditions set forth therein;

Holder: shall mean any holder of Registrable Securities;

Initial Holder: shall mean any of the persons initially listed on Schedule 1 to this Agreement;

Initial Registration Statement: shall have the meaning set forth in the recitals;

Initial Underwriting Agreement: shall mean the underwriting agreement entered into by the Company for the sale of shares pursuant to the offering contemplated by the Initial Registration Statement;

Initiating Holder: shall mean any Holder or Holders who in the aggregate are Holders of more than 50% of the then outstanding Registrable Securities;

Modal: shall mean Modal LLC, a Delaware limited liability company;

Person: shall mean an individual, partnership, limited liability company, joint-stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof;

Register, Registered and Registration: shall mean to a registration effected by preparing and filing a registration statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such registration statement;

Registrable Securities: shall mean the Common Stock (together with any securities issued or issuable in respect thereof by way of a dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise) owned by the Initial Holders on the Effective Date, including without limitation the Common Stock to be purchased by Modal from the Foundation as contemplated by the Foundation Stock Purchase Agreement; provided, however, that any shares of Common Stock (or securities which would otherwise be Registrable Securities), that are transferred in a transaction pursuant to which the registration rights set forth herein are not assigned or permitted to be assigned as set forth in Section 2(a) below, shall cease to be Registrable Securities.

Registration Expenses: shall mean all expenses incurred by the Company in compliance with Section 2(a), (b) and (c) hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, reasonable fees and expenses of one counsel for all the Holders, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company); provided, however, that Registration Expenses shall exclude Selling Expenses;

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Security, Securities: shall have the meaning set forth in Section 2(1) of the Securities Act;

Securities Act: shall mean the Securities Act of 1933, as amended and the rules and regulations promulgated thereunder; and

Selling Expenses: shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities and all fees and disbursements of counsel for each of the Holders other than the fees and expenses of one counsel for all the Holders referenced in the definition of Registration Expenses above.

SECTION 2. REGISTRATION RIGHTS

(a) Requested Registration.

(i) Request for Registration. If the Company shall receive from an Initiating Holder, at any time after the Effective Date, subject to Section
(2)(j), if applicable, a written request that the Company effect any registration with respect to more than 30% of the Registrable Securities, the Company will:

(1) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and

(2) as soon as practicable, but in no event prior to the time permitted under the Initial Underwriting Agreement, use its diligent best efforts to effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within 10 business days after written notice from the Company is given under Section 2(a)(i)(1) above; provided that the Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 2(a):

(A) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder;

(B) After the Company has effected two (2) such registrations pursuant to this Section 2(a) and such registrations have been declared or ordered effective and the sales of such Registrable Securities shall have closed;

(C) If the Registrable Securities requested by all Holders to be registered pursuant to such request do not have an anticipated aggregate public

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offering price (before any underwriting discounts and commissions) of not less than $5,000,000;

(D) During the period starting with the date forty-five (45) days prior to the Company's good faith estimate of the date of filing of, and ending on the date ninety (90) days (or in the case of the offering contemplated by the Initial Public Offering, such period of time as provided in the Initial Underwriting Agreement) immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction, or a registration on any registration form (including Form S-4) which does not permit secondary sales, with respect to an employee benefit plan or with respect to the Company's first registered public offering of its stock); provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

(E) If the Company shall furnish to the Initiating Holders a certificate signed by an officer of the Company stating that in the good faith judgment of the Board of Directors it would be significantly detrimental to the Company or its stockholders for a registration statement to be filed or securities to be offered, in which case the Company's obligation to use its best efforts to comply with this Section 2 shall be deferred for a period not to exceed sixty (60) days from the date of receipt of written request from the Initiating Holders; provided, however, that the Company shall not exercise such right more than once in any twelve (12) month period.

The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of Section 2(a)(ii) below, include other securities of the Company which are held by Persons who, by virtue of agreements with the Company, are entitled to include their securities in any such registration ("Other Stockholders"). In the event any Holder requests a registration pursuant to this Section 2(a) in connection with a distribution of Registrable Securities to its stockholders, partners, members or holders of other beneficial or equity interests, the registration shall provide for the resale by such Persons, if requested by such Holder.

The registration rights set forth in this Section 2 may be assigned, in whole or in part, by an Initial Holder or any of its Affiliates to any transferee of Registrable Securities (who shall agree to be bound by all obligations of this Agreement), but may not be assigned, without the written consent of the Company in its sole discretion, by any person who is not an Initial Holder or any Affiliate of an Initial Holder, provided, however, it being understood that, by executing this Agreement, Modal shall be deemed to be an Initial Holder without any further action on the part of Modal or the Company, and that upon Modal's purchase of the Common Stock held by the Foundation as contemplated by the Foundation Stock Purchase Agreement, all rights and obligations of the Foundation under this Agreement shall be assigned to and assumed by Modal, without any further action on the part of the Foundation, Modal, the Company or any other Initial Holder or Holder, and the Foundation shall have no further rights or obligations hereunder.

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(ii) Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to
Section 2(a).

If Other Stockholders request such inclusion, the Holders shall offer to include the securities of such Other Stockholders in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Section 2. The Holders whose shares are to be included in such registration and the Company shall (together with all Other Stockholders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting by the Initiating Holders and reasonably acceptable to the Company. Notwithstanding any other provision of this Section 2(a), if the representative advises the Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, the securities of the Company held by Other Stockholders shall be excluded from such registration to the extent so required by such limitation. If, after the exclusion of such shares, further reductions are still required, the number of shares included in the registration by each Holder shall be reduced on a pro rata basis (based on the number of shares held by such Holder), by such minimum number of shares as is necessary to comply with such request. No Registrable Securities or any other securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any Other Stockholder who has requested inclusion in such registration as provided above disapproves of the terms of the underwriting, such Person may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating Holders. The securities so withdrawn shall also be withdrawn from registration. If the underwriter has not limited the number of Registrable Securities or other securities to be underwritten, the Company and officers and directors of the Company may include its or their securities for its or their own account in such registration if the representative so agrees and if the number of Registrable Securities and other securities which would otherwise have been included in such registration and underwriting will not thereby be limited. If the Company includes shares to be sold by it in any Registration Statement requested pursuant to this Section
2(a), such Registration Statement shall be deemed to have been a registration under Section 2(b), unless the Holders of Registrable Securities are able to include in such Registration Statement all of the Registrable Securities initially requested for inclusion in such Registration Statement.

(b) Company Registration.

(i) If the Company shall determine to register any of its equity securities either for its own account or for the account of Other Stockholders, other than a registration relating solely to employee benefit plans, or a registration relating solely to a Commission Rule 145 transaction, or a registration on any registration form (including Form S-4) which does not permit secondary sales, the Company will:

(1) promptly give to each of the Holders a written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and

(2) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the

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Registrable Securities specified in a written request or requests, made by the Holders within fifteen (15) days after receipt of the written notice from the Company described in clause (i) above, except as set forth in Section 2(b)(ii) below. Such written request may specify all or a part of the Holders' Registrable Securities. In the event any Holder requests inclusion in a registration pursuant to this Section 2(b) in connection with a distribution of Registrable Securities to its stockholders, partners, members or holders of other beneficial or equity interests the registration shall provide for the resale by such Persons, if requested by such Holder.

(ii) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise each of the Holders as a part of the written notice given pursuant to Section 2(b)(i)(1). In such event, the right of each of the Holders to registration pursuant to this Section 2(b) shall be conditioned upon such Holders' participation in such underwriting and the inclusion of such Holders' Registrable Securities in the underwriting to the extent provided herein. The Holders whose shares are to be included in such registration shall (together with the Company and the Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for underwriting by the Company. Notwithstanding any other provision of this
Section 2(b), if the representative determines that marketing factors require a limitation on the number of shares to be underwritten, and the representative may (subject to the allocation priority set forth below) limit the number of Registrable Securities to be included in the registration and underwriting to not less than twenty five percent (25%) of the shares included therein (based on the number of shares). The Company shall so advise all holders of securities requesting registration, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated in the following manner: The securities of the Company held by officers, directors and Other Stockholders of the Company (other than Registrable Securities and other than securities held by holders who by contractual right demanded such registration ("Demanding Holders")) shall be excluded from such registration and underwriting to the extent required by such limitation, and, if a limitation on the number of shares is still required, the number of shares that may be included in the registration and underwriting by each of the Holders and Demanding Holders shall be reduced, on a pro rata basis (based on the number of shares held by such Holder), by such minimum number of shares as is necessary to comply with such limitation. If any of the Holders or any officer, director or Other Stockholder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

(c) Form S-3. The Company shall use its best efforts to qualify for registration on Form S-3 for secondary sales. After the Company has qualified for the use of Form S-3, the Initiating Holders shall have the right to request three (3) registrations on Form S-3 (such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended method of disposition of shares by such holders), provided that the Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 2(c):

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(i) Unless the Holder or Holders requesting registration propose to dispose of shares of Registrable Securities having an aggregate price to the public (before deduction of Selling Expenses) of more than $5,000,000;

(ii) Within ninety (90) days of the effective date of the most recent registration pursuant to this Section 2(c) in which securities held by the requesting Holder could have been included for sale or distribution;

(iii)In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder;

(iv) During the period starting with the date forty-five (45) days prior to the Company's good faith estimate of the date of filing of, and ending on the date ninety (90) days immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction, a registration on any registration form (including Form S-4) which does not permit secondary sales or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; provided, however, that the Company may only delay an offering pursuant to this Section 2(c)(iv) for a period of not more than sixty (60) days, if a filing of any other registration statement is not made within that period and the Company may only exercise this right once in any twelve (12) month period; or

(v) If the Company shall furnish to the Holders a certificate signed by an officer of the Company stating that in the good faith judgment of the Board of Directors it would be significantly detrimental to the Company or its stockholders for a registration statement to be filed in the near future, in which case the Company's obligation to use its best efforts to comply with this
Section 2(c) shall be deferred for a period not to exceed sixty (60) days from the date of receipt of written request from the Holders; provided, however, that the Company shall not exercise such right more than once in any twelve (12) month period.

The Company shall give written notice to all Holders of the receipt of a request for registration pursuant to this Section 2(c) and shall provide a reasonable opportunity for other Holders to participate in the registration, provided that if the registration is for an underwritten offering, the terms of
Section 2(a)(ii) shall apply to all participants in such offering. Subject to the foregoing, the Company will use its best efforts to effect promptly the registration of all shares of Registrable Securities on Form S-3 to the extent requested by the Holder or Holders thereof for purposes of disposition. In the event any Holder requests a registration pursuant to this Section 2(c) in connection with a distribution of Registrable Securities to its stockholders, partners, members or holders of other beneficial or equity interests, the registration shall provide for the resale by such Persons, if requested by such Holder.

(d) Expenses of Registration. Subject to Section 2(e), all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to this Section

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2 shall be borne by the Company, and all Selling Expenses shall be borne by the Holders of the securities so registered pro rata on the basis of the number of their shares so registered

(e) Withdrawal of Registration Statement. At any time before the registration statement requested under Section 2(a) or Section 2(c) covering Registrable Shares becomes effective, the Holders of a majority of such shares may request the Company to withdraw or not to file the registration statement. In that event, unless such request of withdrawal was caused by, or made in response to, (i) a material adverse effect or a similar event related to the business, properties, condition, or operations of the Company not known (without imputing the knowledge of any other Person to such holders) by the holders initiating such request at the time their request was made, or other material facts not known to such Holders at the time their request was made, or (ii) a material adverse change in the financial markets, the Holders shall be deemed to have used one of their registration rights under Section 2(a) or Section 2(c), as applicable; provided, however, that such withdrawn registration shall not count as requested registration pursuant to Section 2(a) or Section 2(c) above if the Company shall have been reimbursed (pro rata by the Holders holding a majority of the Registrable Shares requested to be registered or in such other proportion as the requesting Holders may agree) for all out-of-pocket expenses incurred by the Company in connection with such withdrawn registration.

(f) Registration Procedures. In the case of each registration effected by the Company pursuant to this Section 2, the Company will keep the Holders, as applicable, advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Company will:

(i) keep such registration effective for a period of one hundred twenty (120) days or until the Holders (or in the case of a distribution to the stockholders, partners, members or holders of other beneficial or equity interests of such Holder, such Persons, as applicable, have completed the distribution described in the registration statement relating thereto, whichever first occurs; provided, however, that (A) such 120-day period shall be extended for a period of time equal to the period during which the Holders (or stockholders, partners, members or holders of other beneficial or equity interests of a Holder) as applicable, refrain from selling any securities included in such registration in accordance with provisions in Section 2(j) hereof; and (B) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended until all such Registrable Securities are sold, provided that Rule 415, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Securities Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (y) includes any prospectus required by Section 10(a) of the Securities Act or (z) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (y) and (z) above to be contained in periodic reports filed pursuant to Section 12 or 15(d) of the Exchange Act in the registration statement;

(ii) furnish such number of prospectuses and other documents incident thereto as each of the Holders, as applicable, from time to time may reasonably request;

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(iii) notify each Holder of Registrable Securities covered by such registration at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; and

(iv) if such securities are being sold through underwriters, furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, (1) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders participating in such registration, addressed to the underwriters, if any, and to the Holders participating in such registration and (2) a letter, dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders participating in such registration, addressed to the underwriters, if any, and if permitted by applicable accounting standards, to the Holders participating in such registration.

(v) Otherwise use its diligent best efforts to comply with all applicable rules and regulations of the SEC, and make available to the Holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first month after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

(g) Indemnification.

(i) The Company will indemnify each of the Holders, as applicable, each of its officers, directors, members and partners, and each Person controlling each of the Holders, with respect to each registration which has been effected pursuant to this Section 2, and each underwriter, if any, and each person who controls any underwriter, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or the Exchange Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each of the Holders, each of its officers, directors, members and partners, and each Person controlling each of the Holders, each such underwriter and each Person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, provided

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that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by the Holders or underwriter and stated to be specifically for use therein.

(ii) Each of the Holders will, if Registrable Securities held by it are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers and each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter, each Other Stockholder and each of their officers, directors, members and partners, and each person controlling such Other Stockholder against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document made by such Holder, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements by such Holder therein not misleading, and will reimburse the Company and such Other Stockholders, directors, officers, members, partners, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein; provided, however, that the obligations of each of the Holders hereunder shall be limited to an amount equal to the net proceeds to such Holder of securities sold as contemplated herein.

(iii) Each party entitled to indemnification under this Section 2(g) (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld) and the Indemnified Party may participate in such defense at such party's expense (unless the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in such action, in which case the fees and expenses of counsel shall be at the expense of the Indemnifying Party), and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2 unless the Indemnifying Party is materially prejudiced thereby. No Indemnifying Party shall be liable for any settlement of any action or proceeding effected without its written consent. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party

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shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.

(iv) If the indemnification provided for in this Section 2(g) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(v) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with any underwritten public offering contemplated by this Agreement are in conflict with the foregoing provisions, the provisions in such underwriting agreement shall be controlling.

(h) Information by the Holders.

(i) Each of the Holders holding securities included in any registration shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Section 2.

(ii) In the event that, either immediately prior to or subsequent to the effectiveness of any registration statement, any Holder shall distribute Registrable Securities to its stockholders, partners, members or holders of other beneficial or equity interests, such Holder shall so advise the Company and provide such information as shall be necessary to permit an amendment to such registration statement to provide information with respect to such Persons, as selling securityholders. Promptly following receipt of such information, the Company shall file an appropriate amendment to such registration statement reflecting the information so provided.

(i) Rule 144 Reporting.

With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of restricted securities to the public without registration, the Company agrees to:

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(i) make and keep public information available as those terms are understood and defined in Rule 144 under the Securities Act ("Rule 144"), at all times from and after ninety (90) days following the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;

(ii) use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements; and

(iii) so long as the Holder owns any Registrable Securities, furnish to the Holder upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration.

(j) "Market Stand-off" Agreement. Each of the Holders agrees, if requested by the Company or an underwriter of equity securities of the Company, not to sell or otherwise transfer or dispose of any Registrable Securities held by such Holder during the ninety (90) day period following the effective date of a registration statement of the Company filed under the Securities Act, provided that all officers and directors of the Company enter into similar agreements.

If requested by the underwriters, the Holders shall execute a separate agreement to the foregoing effect. The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of said ninety (90) day period. The provisions of this
Section 2(j) shall be binding upon any transferee who acquires Registrable Securities. The parties understand and agree that the Holders have entered into separate agreements with the Initial Underwriters in respect of the offering contemplated by the Initial Registration Statement, which agreements, in respect of such offering, shall be deemed to have satisfied and be in lieu of the agreements set forth in or contemplated by this Section 2(j).

SECTION 3. MISCELLANEOUS

(a) Directly or Indirectly. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

(b) Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State. The parties further agree that any action or proceeding to enforce any right arising out of this Agreement shall be commenced in any New York State court or United Sates District Court sitting in New York, and the parties hereto consent to such jurisdiction, agree that venue will be proper in such courts and in any such matter, agree that the State of New York is the most convenient forum for litigation in any suit, action or legal proceeding in any such court shall be properly served an shall confer personal jurisdiction if

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served by registered or certified mail, or as otherwise provided by the laws of the State of New York or the United States.

(c) Section Headings. The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof.

(d) Notices.

(i) All communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier or by registered or certified mail, postage prepaid:

(1) if to the Company, to American Railcar Industries, Inc., 100 Clark Street, St. Charles, MO 63301, Attention: Chief Financial Officer (facsimile: (636) 940-6044, or at such other address as it may have furnished in writing to the Holders.

(2) if to the Holders, at the address or facsimile number listed on Schedule I hereto, or at such other address or facsimile number as may have been furnished the Company in writing.

(ii) Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery; if mailed by overnight courier, on the first business day following the date of such mailing; and if mailed by registered or certified mail, on the third business day after the date of such mailing.

(e) Reproduction of Documents. This Agreement and all documents relating thereto, including, without limitation, any consents, waivers and modifications which may hereafter be executed may be reproduced by the Holders by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and the Holders may destroy any original document so reproduced. The parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Holders in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

(f) Successors and Assigns. Subject to the restrictions set forth herein, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties.

(g) Entire Agreement; Amendment and Waiver. This Agreement constitutes the entire understanding of the parties hereto and supersedes all prior understanding among such parties. This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of the Company and the Holders holding a majority of the then outstanding Registrable Securities.

(h) Severability. In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such

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determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect.

(i) No Third Party Beneficiaries. The parties hereto acknowledge and agree that there are no intended third party beneficiaries to this Agreement and no third parties have any rights under or relating to this Agreement.

(j) Lock-Up Restrictions. Notwithstanding anything in this Agreement to the contrary, the Company shall not file any registration statement for any Registrable Securities prior to the expiration of the Lock-Up Period (as defined in the Initial Underwriting Agreement) or as otherwise permitted under the Initial Underwriting Agreement.

(k) Counterparts. This Agreement may be executed in two or more counterparts (including by facsimile), each of which shall be deemed an original and all of which together shall be considered one and the same agreement.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

AMERICAN RAILCAR INDUSTRIES, INC.

By:

Name: James J. Unger Title: President and Chief Executive Officer

Carl C. Icahn

FOUNDATION FOR A GREATER OPPORTUNITY

By:
Name: Edward J. Shanahan
Title: President

HOPPER INVESTMENTS LLC
By: Barberry Corp.

By:
     ------------------------------
     Name:  Edward E. Mattner
     Title:   Authorized Signatory


MODAL LLC

By:
     ------------------------------
     Name:  Edward E. Mattner
     Title:   Vice President

Schedule I

Initial Holders

INVESTOR NAME AND ADDRESS

Carl C. Icahn
c/o Icahn Associates Corp.
767 Fifth Avenue
Suite 4700
New York, NY 10153

Foundation for a Greater Opportunity
Attn: Edward J. Shanahan and Julie Clark Goodyear c/o Icahn Associates Corp. and Affiliated Company 767 Fifth Avenue, 47th Floor
New York, NY 10153

Hopper Investments LLC
c/o Icahn Associates Corp. and Affiliated Companies 767 Fifth Avenue, 47th Floor
New York, New York 10153

MODAL LLC
c/o Icahn Associates Corp. and Affiliated Companies 767 Fifth Avenue
Suite 4700
New York, NY 10153

EXHIBIT 5.1

January 4, 2006

American Railcar Industries, Inc.
100 Clark Street
St. Charles, MO 63301

RE: American Railcar Industries, Inc. Registration Statement on Form S-1 Registration No. 333-130284

Ladies and Gentlemen:

We have acted as counsel to American Railcar Industries, Inc., a Delaware corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission of a Registration Statement on Form S-1 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the Registration Statement and an underwriting agreement (the "Underwriting Agreement") by and among the Company, UBS Securities LLC and Bear, Stearns and Co. Inc., as representatives of the several underwriters (the "Underwriters") in substantially the form filed as Exhibit 1.1 to the Registration Statement, the Company proposes to sell to the Underwriters up to 9,775,000 shares (the "Shares") of Common Stock, $0.01 par value per share (the "Common Stock"), including 1,275,000 shares of Common Stock that may be sold by the Company to cover over-allotments pursuant to the Registration Statement. As described in the Registration Statement and contemplated by the Underwriting Agreement, immediately prior to the closing of the Offering, the Company's Predecessor company, American Railcar Industries, Inc., a Missouri corporation (the "Predecessor"), will merge (the "Merger") with and into the Company, whereby each of the Predecessor's issued and outstanding shares of common stock, $0.01 par value, will be exchanged for 9,328.083 shares of Common Stock of the Company. This opinion is being rendered in connection with the filing of the Registration Statement.

In rendering the opinion set forth below, we have examined and relied upon such certificates, corporate records, agreements, instruments and other documents that we considered necessary or appropriate as a basis for the opinion, including (i) the Registration Statement, (ii) the corporate minute books of the Company, (iii) a specimen certificate for the Common Stock filed as Exhibit 4.1 to the Registration Statement; (iv) the Certificate of Incorporation of the Company, (v) the By-laws of the Company (vi) the form of Agreement and Plan of Merger filed as Exhibit 2.1 to the Registration Statement, (vii) the form of Certificate of Ownership and Merger filed as Exhibit 3.3 to the Registration Statement and (viii) the form of Underwriting Agreement. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. As to any facts material to this opinion that we did not independently establish or verify, we have relied upon oral or written statements and representations of officers and other representatives of the Predecessor, the Company and others.

American Railcar Industries, Inc.
January 4, 2005

Page 2

Our opinions contained herein are limited to the laws of The Commonwealth of Massachusetts, the General Corporation Law of the State of Delaware, including the statutory provisions, all applicable provisions of the Delaware Constitution, and reported judicial decisions interpreting these laws, and the federal law of the United States of America.

Based upon the foregoing and subject to the assumptions, qualifications and limitations set forth herein, we are of the opinion that the Shares to be sold by the Company following the completion of the Merger and under the other circumstances contemplated in the Registration Statement are duly authorized and, when delivered pursuant to the Underwriting Agreement, will be validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to our firm under the caption "Legal matters" in the Prospectus included in the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations promulgated thereunder.

Very truly yours,

BROWN, RUDNICK, BERLACK ISRAELS LLP

/s/ Brown, Rudnick, Berlack Israels LLP
---------------------------------------

EXHIBIT 9.1

VOTING AGREEMENT

THIS AGREEMENT is made between the made by and between MODAL LLC, a Delaware limited liability company, with its principal business address at c/o Icahn Associates Corp. and Affiliated Companies, 767 Fifth Avenue, New York, New York 10153 ("Purchaser") and the Foundation for a Greater Opportunity, a Delaware not-for-profit corporation with its principal offices at 767 Fifth Avenue, New York, New York ("Foundation").

WHEREAS, the Foundation owns 460 shares (the "Shares") of the common stock of American Railcar Industries, Inc. ("ARI"); and

WHEREAS, ARI is a private company that is in the process of registering an initial public offering of its common stock under the Securities Act of 1933 ("Securities Act") with the U.S. Securities Exchange Commission, pursuant to which it expects to raise in excess of $100 million of new capital (the "IPO); and

WHEREAS, ARI and the Purchaser are "affiliated companies," as they are both controlled by Carl C. Icahn; and

WHEREAS, the Purchaser desires to acquire all of the Shares, and consequently the Purchaser has offered to acquire all of the Shares on the terms set forth in a certain Stock Purchase Agreement between the Purchaser and the Foundation of even date herewith (the "Stock Purchase Agreement"), and the Foundation is willing to sell the Shares to the Purchaser for the consideration and upon the terms and conditions set forth in the Stock Purchase Agreement; and

WHEREAS, as a condition to executing the Stock Purchase Agreement, the Purchaser desires to obtain the voting power with respect to all such Shares pending the closing of the purchase of the Shares from the Foundation under the terms of the Stock Purchase Agreement, and the Foundation is willing to grant this right to the Purchaser;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration the receipt of which is acknowledged, the parties hereto hereby agree as follows:

1) In consideration for Purchaser's execution of the Stock Purchase Agreement, the Foundation agrees to execute an Irrevocable Proxy, in the form attached hereto, naming the Purchaser or its nominee as agent with respect to the voting of all of the Shares during the term of this Agreement.

2) This Agreement will terminate on the closing of Purchaser's purchase of the Shares under the Stock Purchase Agreement, or upon the termination of the Stock Purchase Agreement, whichever first occurs.

3) This Agreement will be governed by and interpreted in accordance with the laws of the State of New York, excluding its conflicts of law principles. In the event that any legal proceedings are commenced with respect to any matter arising under this Agreement, the parties specifically consent and agree that the courts of the State of New York and/or the Federal Courts located in the State of New York will have exclusive jurisdiction over each of the parties and over the subject matter of any such proceedings. Additionally, the party that loses any such proceeding will pay all costs and expenses incurred by the other party(s) in connection therewith, including all attorneys' and other professional fees and expenses.

IN WITNESS WHEREOF, the parties agree to the terms of this Agreement and further certify that their respective signatories are duly authorized to execute this Agreement. This Agreement is effective as of the date on which it has been signed by both parties, as indicated below.

FOUNDATION FOR                             MODAL LLC:
A GREATER OPPORTUNITY

By:  /s/ Edward J. Shanahan                By:  /s/ Edward E. Mattner
     ------------------------------             -----------------------------
Print Name: EDWARD J. SHANAHAN             Print Name: Edward E. Mattner
            -----------------------                   -----------------------
Title: PRESIDENT                           Title:  Vice President
       ----------------------------               ---------------------------
Date: DEC. 7, 2005                         Date:   Dec. 8, 2005
      -----------------------------              ----------------------------

/s/ Christine M. Blois
CHRISTINE M. BLOIS
NOTARY PUBLIC
MY COMMISSION EXPIRES JULY 31, 2006

PROXY

The undersigned stockholder of AMERICAN RAILCAR INDUSTRIES, INC., a Missouri corporation (the "Corporation"), does hereby irrevocably constitute and appoint MODAL LLC ("Purchaser") as its proxy with full power of substitution, for and on its behalf to attend all meetings of stockholders of the Corporation and to act, vote and execute consents with respect to all of its shares of Common Stock of the Corporation identified in Annex 1 hereto (the "Shares"), as fully and to the same extent as the undersigned stockholder might do itself. This proxy is irrevocable and is coupled with an interest, having been executed pursuant to a certain Voting Agreement dated as of DEC 7, 2005 to which the Purchaser and the undersigned are parties (the "Voting Agreement"). This proxy shall continue in full force and effect for the term set forth in the Voting Agreement.

Executed as of DEC 7, 2005.

FOUNDATION FOR A GREATER OPPORTUNITY

By:    /s/ Edward J. Shanahan
    ---------------------------------------
Print Name:  EDWARD J. SHANAHAN
            -------------------------------
Title: PRESIDENT
       ------------------------------------

Annex 1

The following shares are subject to this Voting Agreement and Irrevocable Proxy:

1. 460 shares of AMERICAN RAILCAR INDUSTRIES, INC. currently held by the Foundation as of the date of the Voting Agreement; and

2. all voting securities of AMERICAN RAILCAR INDUSTRIES, INC. that may hereafter be issued to the Foundation as a result of any stock split, stock dividend, or distribution or dividend with respect to the number of shares of common stock of AMERICAN RAILCAR INDUSTRIES, INC. set forth in paragraph 1 above.

Exhibit 10.18

MULTI-YEAR PURCHASE AND SALE AGREEMENT

This Multi Year Purchase and Sale Agreement (this “ Agreement ”) is made as of this 29 ^th day of July, 2005, by and between The CIT Group/Equipment Financing, Inc. (“ Buyer ”) , a corporation organized under the laws of the State of Delaware, and American Railcar Industries, Inc. (“ Seller ”), a corporation organized under the laws of the State of Missouri. Seller is a manufacturer of railroad rolling stock that Buyer desires to purchase and Seller desires to sell.

For and in consideration of the premises and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree as follows:

1. Sale of Railcars; Scope of Work .

(a) Subject to the provisions hereof, Seller agrees to manufacture and sell to Buyer railcars of the types described in Exhibit A attached hereto (individually, a “ Car ,” and collectively, the “ Cars ”), and Buyer agrees to purchase Cars from any such types. Except as otherwise provided in this Agreement, Seller shall furnish all labor, materials and equipment required to manufacture the Cars at its manufacturing facility or facilities listed on Exhibit A hereto (hereinafter referred to as “ Seller’s Plant ”).

(b) In each of calendar 2006, 2007 and 2008 (each, an “ Agreement Year ”), Seller hereby offers to sell to Buyer up to four thousand (4,000) Cars (the “ Offered Quantity ”) consisting of any combination and number of types identified on Exhibit A hereto (“ Offered Car Types ”). Buyer agrees to order from Seller in each Agreement Year pursuant to the terms of one or more schedules (each, a “ Schedule ”) and one or more purchase orders (each, a “ Purchase Order ”) of not less than three thousand (3,000) Cars (“ Railcar Quantity Obligations ”) from among the Offered Car Types for delivery in each Agreement Year. The obligation of Seller to offer and the obligation of Buyer to purchase Cars in any Agreement Year are subject to the provisions of this Agreement. Buyer shall not be obligated to order any percentage or number of Cars from any particular Offered Car Types provided that Buyer orders Cars which conform to one or more Offered Car Types. The parties shall execute a separate Schedule with respect to specific Car purchases under this Agreement. Each Schedule shall incorporate the provisions of this Agreement and the numbers and particulars of the Cars to be ordered, delivery dates, any special terms and pricing. If pricing is not agreed or cannot then be determined, the pricing terms may be deferred to resolution under the provisions of this Agreement.

(c) The purchase and sale obligations set forth in paragraph (b) of this Section 1 in any Agreement Year shall depend on the then current American Railway Car Institute’s (“ARCI”) most recent reported quarterly backlog during the term of this Agreement. (For purposes of reference, the ARCI 4th quarter backlog for 2004 was in excess of 58,000 railcars.) If the most recent ARCI reported quarterly backlog for any quarter during the term of this Agreement falls below 45,000 railcars but remains above 35,000 railcars, Buyer shall have the right, on two hundred forty (240) days’ prior notice, to cancel any pending Purchase Orders or reduce subsequent Railcar Quantity Obligations in the then current Agreement Year, in either

Confidential Treatment has been requested for portions
of this document marked with asterisks.

case such that actual purchases by Buyer would not fall below 50% of that Agreement Year’s original Railcar Quantity Obligations. If the ARCI quarterly backlog in any calendar quarter last reported falls below 35,000 railcars, Buyer shall have the right to cancel or suspend all, or any, pending Purchase Orders or remaining Railcar Quantity Obligations under this Agreement upon one hundred eighty (180) days’ written notice to Seller (or lesser notice as agreed to by both Parties in any case). If, during the term of this Agreement, the ARCI quarterly backlog again reaches 35,000 railcars, Buyer may elect, on ninety (90) days’ prior notice, to activate suspended Purchase Orders or to place new Purchase Orders up to the Offered Quantity in each Agreement Year or pro rata for any remaining partial Agreement Year. Buyer’s right to reactivate and Seller’s obligation to honor such reactivation shall depend on Seller ^‘ s available production capacity as at the date of Seller’s receipt of Buyer’s notice of reactivation. * * * In the event Buyer elects to cancel any pending Purchase Order under this paragraph within one hundred twenty (120) days of the delivery date thereunder, Seller may require, by written notice to Buyer, that Buyer purchase from Seller, at * * *, all material which Seller had theretofore purchased and identified to such cancelled Purchase Orders. In the event Buyer purchases such material following a cancellation, Buyer may elect to store such material at Seller’s facility for up to * * * at * * *. Buyer may at any time have such material removed from Seller’s facility or resell such material to Seller at cost for use in manufacture of Cars subsequently ordered by Buyer pursuant to a Purchase Order under this Agreement.

2. Purchase Price .

(a) The actual purchase price (“ Purchase Price ”) shall be * * *. The base purchase price of the Cars (the “ Base Purchase Price ”) as of July 2005 for each Offered Car Type shall be as set forth in Exhibit A hereto. The Base Purchase Price is firm and subject to escalation or other adjustment after the date of this Agreement only as provided in this Agreement. The Base Purchase Price shall be * * *. The Base Purchase Price, as increased or decreased pursuant to the provisions of this Agreement, is referred to as the “ Adjusted Purchase Price .” Neither the Adjusted Purchase Price nor any Market Price includes any state or local sales, use or other similar taxes, and any such sales, use or similar tax arising out of this transaction, if any, shall be paid by Buyer together with the Base Purchase Price. Seller shall sell Cars to Buyer at the lesser of the Adjusted Purchase Price or the best current market price (“ Market Price ”) determined on a “most favored nations” basis.

(b) At the time of execution of each Schedule and Purchase Order, Seller shall provide Buyer the Market Price for the delivery period quoted. “Most favored nations” pricing, for the purpose of this Agreement, is defined as the lowest price of an Offered Car Type offered by Seller to the marketplace in general.

(c) Seller shall also inform Buyer in connection with the execution of each Schedule, of Seller’s estimated adjustments to the relevant Base Purchase Price. Seller shall inform Buyer promptly of its final determination of the Adjusted Purchase Price and, in any event, prior to rendering any Seller’s invoice with respect to such Schedule. * * *. No adjustments shall be made in any Price for changes in any of the following * * *.

(d) * * *

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of this document marked with asterisks.

3. Specifications* * * . The _. Cars shall be constructed in a good and workmanlike manner in accordance with the specifications described on Exhibit C hereto, as the same may be hereafter amended or supplemented from time to time (the “ Specifications ”). The Cars will be built in accordance with all then current Federal Railroad Administration, American Association of Railroads and United States Department of Transportation design, testing and approval requirements for new Cars.

Seller shall construct and equip each Car with components and appurtenances identified on * * * attached hereto as Exhibit D. * * *

4. Buyer’s Option to Modify Order . Within ten (10) days of the placement of each Purchase Order, Seller shall give Buyer written notice of the date on which Seller will commence manufacture of each type of Car (“ Manufacture Start Date ”). Buyer will have the option to change either the quantity or type of Car to be purchased subject to the following conditions:

(a) The option must be exercised no later than * * * prior to any Manufacture Start Date by Buyer notifying Seller in writing of the change.

(b) * * *

(iii) Seller may reasonably modify the delivery schedule in the event that Seller requires additional time to manufacture the Cars with respect to which the order has been changed.

(iv) Seller may reasonably modify the delivery schedule in the event that it requires additional time to manufacture the Cars with respect to which the order has been changed.

5. Delivery and Terms of Payment

(a) Seller shall (i) dedicate, for Buyer’s benefit, sufficient production capacity toward the production and delivery of * * *

(b) If, with respect to Offered Car Types covered under this Agreement, Seller is unable to meet engineering specifications required by Buyer, the quantity of Cars that Seller is unable to provide will be deducted from the Railcar Quantity Obligations. From time to time in any Agreement Year of the term of this Agreement, Seller * * * .

(c) Unless otherwise agreed in writing, delivery of the Cars shall be F.O.B. Seller’s Plant not later than * * * following the date of the Purchase Order therefor. After a Certificate of Acceptance (as hereinafter defined) has been executed with respect to a Car, such Car will be shipped from Seller’s Plant to the railroad interchange designated in Exhibit A hereto (the “ Interchange Point ”), and Seller shall invoice Buyer for payment of the Purchase Price. Unless otherwise agreed, Seller shall, at its expense, deliver the Cars to the Interchange Point and all subsequent switching and transportation charges shall be for Buyer’s account. Payment by Buyer of Seller’s invoice shall be due * * * after Buyer’s receipt thereof Title to a Car shall pass

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to Buyer upon payment in full for such Car. Following receipt of payment for a Car, Seller shall deliver to Buyer a bill for sale for such Car substantially in the form of Exhibit E hereto.

6. Force Majeure . In the event that Seller is unable to deliver a Car to Buyer within * * * after the date of a Purchase Order therefor as a result of a Force Majeure Event, Buyer shall have the option to notify Seller that it will not purchase such Car(s) as to which delivery has been delayed, and the Railcar Quantity Obligations in that Agreement Year shall be reduced by the number of Cars that Seller is unable to deliver, the Purchase Price will be reduced accordingly for each Car that Buyer has elected not to purchase, and such omitted Car will not be deemed a “Car” under this Agreement. As used herein, a “Force Majeure Event” shall mean and include any delays in the delivery of any Car caused by strikes, lockouts (other than lockouts by Seller) or other labor disturbances; shortages or late delivery of material (due to no fault of Seller); unavailability, interruptions or inadequacy of fuel supplies; acts of God; war, preparation for war or other acts or interventions the military or other governmental agencies; governmental regulations; priorities given to defense orders; riot, embargoes, sabotage, act of terrorism, vandalism, malicious mischief, landslides, floods, hurricanes, earthquakes, collisions or fires; delays of subcontractors or of carriers by land, sea or air (due to no fault of Seller); quarantine restrictions, shortages of labor or components and any other circumstances or cause beyond Seller’s reasonable control.

7. Inspection and Acceptance; Failure to Deliver . Seller shall give Buyer, and/or its designated agent, reasonable opportunity to inspect the Cars during construction at Seller’s Plant during normal operating hours or at such other time as may be mutually agreed. Prior to shipment of a Car, Buyer and Seller shall mutually agree on a date for Buyer’s inspection of such completed Car and the execution of a certificate of acceptance (“ Certificate of Acceptance ”) in the form of Exhibit F hereto. If Buyer determines that a Car appears to have been manufactured according to the applicable specifications and is in acceptable condition for delivery (hereinafter, a “ Conforming Car ”), Buyer shall execute a Certificate of Acceptance. In the event Buyer does not attend such inspection, or Buyer and Seller cannot mutually agree on an inspection date to occur within three (3) days of the date of shipment of the Car, Seller is authorized and empowered to inspect the Car and execute a Certificate of Acceptance on Buyer’s behalf if it determines that the Car is a Conforming Car. If Buyer notifies Seller that a Car does not conform to the specifications applicable to that Car (hereinafter a “ Non-Conforming Car ”), it shall be Seller’s obligation to make the Car a Conforming Car. The execution of a Certificate of Acceptance shall not preclude Buyer from asserting a claim for a breach of Seller’s Car warranty contained in Section 9 herein within the applicable warranty period or that a Car was not manufactured in accordance with the applicable Specifications.

If Seller is unable to provide a Conforming Car within * * * of the scheduled delivery date for any reason whatsoever other than a Force Majeure Event or as a result of a delay caused by Buyer,* * *.

8. No Liens or Claims of Third Parties . Seller hereby represents and warrants to Buyer that: (a) Seller is the sole owner of the Cars and has good and marketable title to all of the Cars, free and clear of all liens, claims, demands, charges, security interests, privileges, pledges or other encumbrances (“ Liens ”) other then the Liens created by Buyer and that Seller will convey to Buyer good and marketable title to the Cars being sold free and clear of all Liens of

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of this document marked with asterisks.

every nature and kind whatsoever other than Liens created by Buyer; and (b) neither Seller’s rights in the Cars, nor the Cars, are subject to any contract, agreement, or understanding, whether written or oral, which provides for any remarketing, residual sharing or similar arrangement or which would be binding upon or enforceable against Buyer, the Cars, or the proceeds of any sale, lease or any disposition of any thereof.

9. Seller’s Car Warranty; Car Cleaning . Seller warrants that each Car will be free from defects in material and workmanship under normal use and service for a period of * * * from the Closing Date and will be manufactured in accordance with the applicable Specifications. With respect to parts and materials manufactured by others and incorporated by Seller in the Cars, such parts and material shall be covered only by the warranty, if any, of the manufacturer thereof, and Seller shall assign to Buyer any such warranty, to the extent assignable by Seller* * * . Seller’s obligations with respect to any Car for breach of this warranty is limited at its option, to either a credit or refund of the price of any non-conforming or defective component (or Car) or replacement or repair of such non-conforming or defective component (or Car) at Seller’s Plant or at such other location as Seller shall designate in order to minimize Purchaser’s transportation expenses. Seller’s agreement set forth above to refund, repair or replace defective parts and materials (other than with respect to parts and materials manufactured by others and incorporated by Seller in the Cars, the remedy for which is provided for above in this Section 9) shall be Buyer’s sole and exclusive warranty liability with respect to the Cars that are defective in any respect or that fail to conform to any express or implied warranty, and Seller will not in any event be liable for the cost of any labor or transportation charges expended on or in connection with the repair, replacement or return of any component (or Car) or, except as provided herein, for any special, indirect, incidental, or consequential damages.

THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. BUYER ACKNOWLEDGES THAT ITS SOLE REMEDY FOR BREACH OF THIS WARRANTY BY SELLER IS AS PROVIDED ABOVE AND, EXCEPT AS PROVIDED HEREIN, SELLER SHALL NOT BE LIABLE FOR ANY SPECIAL, INDIRECT OR OTHER INCIDENTAL OR CONSEQUENTIAL INJURY OR DAMAGE; PROVIDED, HOWEVER, NOTHING CONTAINED HEREIN SHALL LIMIT SELLER’S LIABILITY TO BUYER FOR CLAIMS OF CONTRIBUTION, IN TORT, PRODUCTS LIABILITY, OR ARE BASED ON ACTS OR OMISSIONS OF SELLER WITHOUT ANY NEGLIGENCE ON THE PART OF BUYER.

THIS WARRANTY IS CONDITIONED UPON COMPLIANCE BY BUYER AND ALL OTHER USERS OF THE CARS WITH OPERATION, LOADING, USE, HANDLING, MAINTENANCE AND STORAGE IN ACCORDANCE WITH GOOD COMMERCIAL PRACTICES OF THE RAILROAD INDUSTRY. SELLER SHALL NOT BE RESPONSIBLE FOR FAILURES CAUSED BY MISLOADING, OVERLOADING, OVERHEATING, IMPROPER CLEANING, PHYSICAL ABUSE, ACCIDENT, DERAILMENT OR FOR OTHER DAMAGE CAUSED BY FIRE, FLOOD OR OTHER EXTERNAL CONDITIONS UNRELATED TO THE MANUFACTURE OF THE CAR, OR FOR NORMAL WEAR AND TEAR.

In general, Cars shall be delivered clean and free from debris or other matter. Certain of

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the Cars may require that particular cleaning procedures be followed. Any such procedures and the Cars to which such procedures apply shall be described in Exhibit G hereto. Notwithstanding the fact that a Certificate of Acceptance has been executed with respect to a Car, if a Car is not clean prior to first load by Buyer’s customer so as to make it suitable for loading the commodities described on Exhibit G hereto, then Buyer and Seller may jointly inspect the Car or Cars in question. Seller will either pay, or reimburse Buyer, for the expenses to clean any such Car, up to a maximum of * * *per car, provided, however, Seller’s payment or reimbursement obligation will not apply if the Car is not clean because foreign matter was introduced while in transit or through loading operations or other actions of third parties.

10. Sales Tax . Buyer shall pay, and shall indemnify and hold Seller harmless on an after-tax basis against, all sales, use, transfer or similar taxes (and any fines, penalties, additions to tax or interest relating thereto), if any, imposed or assessed on or with respect to the sale and the transfer of the Cars as contemplated herein.

11. No Finder . Each party represents and warrants to the other that neither it not any party acting on its behalf has paid, or become obligated to pay, or committed any other party to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement.

12. Patents . In lieu of any other warranty by Seller against patent infringement, statutory or otherwise, Seller agrees to defend, hold harmless and indemnify Buyer against all claims, demands, losses, suits, damages, liabilities and expenses (including reasonable attorneys’ fees) arising out of any suit, claim, or action for actual or alleged direct or contributory infringement of, or inducement to infringe, any patent, trademark, copyright or other intellectual property right by reason of the manufacture, use or sale of the Cars unless such actual or alleged infringement arises out of the compliance with designs, instructions or specifications furnished by Buyer. In case the Cars or any part thereof are held to constitute such infringement or the use thereof is enjoined, Seller shall, at its option, take one of the following three corrective actions (each, a “ Corrective Action ”): (a) procure for Buyer the right to continue using the Cars or part thereof, (b) replace the Cars or part thereof with a non infringing Car or part thereof, or (c) take such measures as may be required to make the Cars or part thereof non infringing, in which event Buyer shall deliver the Cars to Seller for that purpose. In the event that Seller fails to effect a Corrective Action within * * * after Buyer’s written request, Seller shall * * *. The foregoing states Seller’s entire liability with respect to any patent infringement by the Cars or part thereof.

13. Expenses . Whether or not the transactions contemplated hereby are consummated, each party hereto shall pay its own expenses in connection with this Agreement and the transactions contemplated hereby, including, without limitation, the fees and disbursements of its counsel.

14. Entire Agreement . This Agreement and the Exhibits hereto contain the entire agreement and understanding between the parties hereto with respect to the subject matter contained herein and therein and supersede all prior agreements, understandings and representations; oral or written. No modification, limitation or release of any terms and conditions contained herein or in the Exhibits hereto shall be made except by mutual agreement to that effect in writing and signed by the parties hereto.

Confidential Treatment has been requested for portions
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15. Governing Law . THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK, SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THE RIGHTS AND LIABILITIES OF THEPARTIES HEREUNDER SHALL BE GOVERNED BY, THE LAWS OF SUCH STATE, WITHOUT REGARD TO ITS CONFLICTS OF LAW DOCTRINE, AND THIS AGREEMENT SHALL BE DEEMED IN ALL RESPECTS TO BE A CONTRACT OF SUCH STATE. BOTH PARTIES CONSENT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK, NEW YORK, FOR ANY ACTION THAT MAY BE BROUGHT UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

16. Notice . All communications under this Agreement shall be in writing or by a telecommunications device capable of creating a written record, and any such notice shall become effective (a) upon personal delivery thereof, including, without limitation, by overnight mail and courier service, (b) five (5) days after the date on which it shall have been mailed by United States mail (by certified mail, postage prepaid, return receipt requested), or (c) in the case of notice by such a telecommunications device, when properly transmitted, addressed to each party at the following addresses:


		If to Seller:


		American Railcar Industries, Inc. 100 Clark Street St. Charles, MO 63301 Attention: Alan C. Lullman, Senior Vice President Facsimile No.: (636) 940-600


		If to Buyer:


		The CIT Group/Equipment Financing, Inc. 10 LaSalle Street Chicago, IL 60603 Attn: Kenneth Hofacker, Vice President Mechanical Operations Facsimile No.: (312) 223-9980

or to any other address as may be given by any party to the other by notice pursuant to the provisions of this Section 16.

17. Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies . This Agreement may be amended, superseded, modified, supplemented or terminated, and the terms hereof may be waived, only by written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof. No waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity.

Confidential Treatment has been requested for portions
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18. Binding Effect; Assignment . This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No assignment of this Agreement or of any rights hereunder shall relieve the assigning party of any of its obligations or liabilities hereunder. This Agreement, and the certificates, schedules, annexes and other documents executed and delivered at the closing in connection herewith are the complete agreement of the parties regarding the subject matter hereof and thereof and supersede all prior understandings (written or oral), communications and agreements.

19. Counterparts . This Agreement may be executed by the parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

20. Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be effective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision and the remaining provisions of this Agreement, and the remainder of such provision and the remaining provisions of this Agreement shall be interpreted, to the maximum extent possible, so as to conform to the original intent of this Agreement.

21. Indemnification . Each party agrees that it shall indemnify and hold harmless the other party from and against any loss, claim, damage or expense (including attorneys’ fees and costs) attributable to a breach by such party of any of its obligations, representations or warranties contained herein.

22. Non-Disclosure . Seller agrees that the information contained in this Agreement as well as other information provided to Seller by Buyer in connection with Buyer’s purchase of the Cars (including but not limited to the price, type and number of railcars to be purchased, particular configurations, designs or modifications, delivery locations and identity of Buyer’s customers and parties to whom the Cars are to be delivered) is confidential and, except as provided in this Agreement or required by Seller in order to fulfill the terms and conditions of Buyer’s purchase, Seller shall not disclose any thereof to any third party. Seller shall similarly treat any information provided to Seller by Buyer in connection with the purchase of the Cars prior to or subsequent to the date of this Agreement as confidential in accordance with the terms hereof. All of the foregoing is hereinafter referred to as the “Confidential Information.” In particular, Seller agrees that it will not disclose any of the Confidential Information to any affiliate of Seller engaged in the leasing of railcars or in the management of railcars or to the employees, officers or directors of any such affiliate.

Neither party, without the prior written consent of the other, shall issue any press release or make any other public announcement or statement relating to Buyer’s purchase of the Cars or containing any Confidential Information.

Notwithstanding the foregoing, Confidential information shall not include: (a) such information as is required to be made to UMLER and the Association of American Railroads, (b) such information as is required to be disclosed by law, court or governmental agency or authority, (c) such information as is required by either party’s accountants, auditors, insurance

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carriers or other legal or financial advisors, and (d) information that becomes known to a party on a non-confidential basis from a source as to which the party has no actual knowledge that such source was bound by a confidentiality agreement with respect to such information.

Seller shall take reasonable security precautions, at least as great as the precautions it takes to protect its own confidential information, to keep confidential the Confidential Information, and will not otherwise use such Confidential Information for the benefit of any affiliate engaged in the leasing or management of railcars or other third party.

Seller shall notify Buyer immediately upon discovery of any unauthorized use or disclosure of Confidential Information, and will cooperate with Buyer in every reasonable way to help Buyer regain possession and control of the Confidential Information, and prevent its further unauthorized use. Seller acknowledges that monetary damages may be inadequate to protect Buyer against actual or threatened breach of this Agreement with respect to the Confidential Information. Accordingly, Seller agrees that Buyer shall be entitled to seek injunctive relief for any such breach of Seller’s obligations or representations under this Agreement with respect to the Confidential Information. BUYER STIPULATES ACKNOWLEDGES AND AGREES THAT SELLER SHALL NOT BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES FOR ANY BREACH OF THIS AGREEMENT WITH RESPECT TO THE CONFIDENTIAL INFORMATION BY SELLER OR BREACH OF SELLER’S REPRESENTATIONS HEREIN .

23. Drawings . Seller agrees that all drawings and technical material, including specifications, descriptions and tolerances relating to the Cars of any components thereof supplied by Seller to Buyer (the “ Drawings ”), are the exclusive properly of Seller and contain confidential and proprietary information. By accepting the Drawings from Seller, Buyer agrees to limit its use of the Drawings solely to matters relating to Buyer’s use of the Cars, including the repair and maintenance of the Cars. Buyer further agrees not to disclose the Drawings, or to disclose any information contained in or derived from the Drawings to any person, including, but not limited to, any other manufacturer of Cars or components; provided , however , in the event Buyer sells any of the Cars, Buyer may deliver any Drawings relating to such Cars to the purchaser. Seller agrees on Buyer’s written request, to provide Drawings to any car repair shop reasonably satisfactory to Seller or other party reasonably satisfactory to Seller (other than another manufacturer of Cars or components) provided that such car repair shop or other party agrees in advance, in writing, to be bound by confidentiality provisions similar to those contained herein and reasonably satisfactory to Seller.

24. Termination . Without prejudice to any other right or remedy:

(a) Either party may terminate this Agreement by written notice to the other party in the event that:

(i) the other party should breach this Agreement and such breach shall not be remedied within * * * of the giving of notice of the breach; or

(ii) a petition or complaint in bankruptcy or for reorganization is filed by or against the other party or the other party becomes insolvent.

Confidential Treatment has been requested for portions
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25. Paragraph Headings . The paragraph headings contained in this Agreement are for convenience of reference only and shall not effect in any way the meaning or interpretation of this Agreement.

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IN WITNESS WHEREOF , Seller and Buyer have executed this Agreement as of the day and year first hereinabove set forth.


		SELLER:

		AMERICAN RAILCAR INDUSTRIES, INC.


		By: /s/ James J. Unger Title: President CEO

		BUYER:

		THE CIT GROUP/EQUIPMENT FINANCING, INC.


		By: [ILLEGIBLE] Title: 07-29-05

EXHIBIT A TO
MULTI-YEAR PURCHASE AND SALE AGREEMENT

OFFERED CAR TYPES

JULY 2005 BASE PURCHASE PRICES

DESCRIPTION

Covered Hoppers:

3,256 cu. ft suitable for cement service - **** each
5,200 cu ft suitable for grain - **** each.
5,400 cu ft suitable for grain - **** each
6,224 cu ft suitable for plastic pellets - **** each
5,750 cu ft pressure differential covered hopper - **** each

Tanks:

25,500 gallons general purpose - **** each
30,000 gallons general purpose - **** each
33,600 gallons pressure - **** each

If Buyer successfully executes lease arrangements with customers for specialty tanks (those outside the above three tank Offered Car Types) and Buyer elects to utilize Seller as the builder, those tanks may count toward the Railcar Quantity Obligations.

The above prices include current estimate of surcharges and lining for the covered hoppers for plastic pellets and for the pressure differential covered hoppers. These selling prices are subject to steel surcharges, specialty surcharges and material cost increases applicable at time of production.

If Buyer documents that Seller’s lowest Purchase Price is * * *, Buyer may exit from its Railcar Quantity Obligations by that amount unless Seller chooses to match the lower price.

MANUFACTURING LOCATION :

Seller’s Plant, Paragould, Arkansas, or

Marmaduke, Arkansas

INTERCHANGE POINT :

To be included in each Purchase Order as applicable

EXHIBIT A
Page 12

EXHIBIT B TO
MULTI-YEAR PURCHASE AND SALE AGREEMENT

APPROVED AUDITORS LIST

Stephen J. Petracek of Garibaldi Consulting Group

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[Multi-Year Purchase and Sale Agreement]

EXHIBIT D TO
MULTI-YEAR PURCHASE AND SALE AGREEMENT

* * *

* * *

EXHIBIT D
Page 1

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[Multi-Year Purchase and Sale Agreement]

EXHIBIT E TO
MULTI-YEAR PURCHASE AND SALE AGREEMENT

WARRANTY BILL OF SALE

American Railcar Industries, Inc., a Missouri corporation (the “ Seller ”), in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, from THE CIT GROUP/EQUIPMENT FINANCING, INC., a Delaware corporation (“ Buyer ”), hereby grants, sells, assigns, conveys, transfers, delivers and sets over unto Buyer, all of Seller’s right, title and interest in and to the equipment identified in Schedule 1 attached hereto and made a part hereof, together with all parts, appurtenances or other property attached or installed on such items of equipment (collectively with and including such parts, appurtenances and other property, the “ Equipment ”).

To have and to hold to Buyer and its successors and assigns forever.

This Warranty Bill of Sale is being delivered in connection with the Multi-Year Purchase and Sale Agreement between Seller and Buyer, dated as of July 29, 2005. Seller hereby warrants to Buyer and its successors and assigns on the date hereof that Seller is the lawful owner of good and marketable legal and beneficial title to the Equipment, that Seller has the right to sell the same, that good and marketable title to the Equipment is conveyed to Buyer free and clear of all claims, liens, security interests, encumbrances and rights of others of any nature whatsoever arising prior to the delivery of the Equipment hereunder, except any claims, liens, security interests and other encumbrances arising from, through or under Buyer, and Seller covenants that it shall warrant and defend such title to the Equipment against all such claims and demands whatsoever.

IN WITNESS WHEREOF , Seller has caused this Warranty Bill of Sale to be duly executed by its officer thereunto duly authorized on this day of , 2000 .


		AMERICAN RAILCAR INDUSTRIES, INC.


		By: Name: Title:


STATE OF COUNTY OF		) ) )

On this day of , 200_, before me personally appeared , to me personally known, who, being by me duly sworn, says that he is a of American Railcar Industries, Inc., and that the foregoing Warranty Bill of Sale was signed on

EXHIBIT E
Page 1

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[Multi-Year Purchase and Sale Agreement]

behalf of said corporation by authority of its Board of Directors. Further, he acknowledged that the execution of the foregoing Warranty Bill of Sale was the free act and deed of said corporation.


		Notary Public

[Notarial Seal]

My commission expires:

EXHIBIT E
Page 2

SCHEDULE 1 TO
WARRANTY BILL OF SALE

EQUIPMENT

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[Multi-Year Purchase and Sale Agreement]

EXHIBIT F TO
MULTI-YEAR PURCHASE AND SALE AGREEMENT

CERTIFICATE OF ACCEPTANCE


Contract/Order No.:		Certificate No.

Place Accepted:
Date Accepted:

I, the duly authorized representative of The CIT Group/Equipment Financing, Inc. (“ Buyer ”), under the Multi-Year Purchase and Sale Agreement, dated July 29, 2005 (the “ Agreement ”), for the purpose of accepting and inspecting the following Cars, hereby certifies that the Cars have been inspected, approved, delivered, received and accepted on behalf of Buyer or its assigns and found to be in apparent good order and running condition and in apparent conformance with applicable specifications and drawings. The execution of this Certificate of Acceptance shall not relieve American Railcar Industries, Inc. (“ Seller ”), of its duty or decrease its responsibility to produce and deliver the Cars in accordance with the terms, including warranties, contained in the Agreement.

Description of Cars

Quantity

Light Weight

Reporting Marks

Capitalized terms used herein and not otherwise defined shall have the meaning given to them in the Agreement.

Authorized Representative of The CIT
Group/Equipment Financing, Inc.

EXHIBIT F
Page 1

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[Multi-Year Purchase and Sale Agreement]

EXHIBIT G TO
MULTI-YEAR PURCHASE AND SALE AGREEMENT

Special Cleaning Procedures: To be included in each Purchase Order as applicable.

Commodities to be Loaded: To be included in each Purchase Order as applicable.

Exhibit 10.19

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.

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 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 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 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.

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.

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 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.

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, 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.

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.

EXHIBIT 10.24

REDEMPTION AGREEMENT

This Redemption Agreement (this "AGREEMENT") is entered into as of January 3, 2006, among American Railcar Industries, Inc., a Missouri corporation ("ARI MISSOURI"), American Railcar Industries, Inc., a Delaware corporation and wholly-owned subsidiary of ARI Missouri ("ARI DELAWARE"; collectively with ARI Missouri, "ARI") and Vegas Financial Corp., a Nevada corporation ("STOCKHOLDER").

W I T N E S S E T H

WHEREAS, 82,055 shares of New Preferred Stock, par value $.01 per share, of ARI Missouri are issued and outstanding as of the date hereof (including shares of New Preferred Stock of ARI Delaware into which such shares may be converted as described in further detail below, the "SHARES");

WHEREAS, Stockholder currently holds of record and beneficially all of the Shares;

WHEREAS, ARI is contemplating a public offering of its shares of common stock of ARI ("PUBLIC OFFERING");

WHEREAS, in connection with the Public Offering, ARI Missouri plans to reincorporate in Delaware ("REINCORPORATION") pursuant to a merger with and into ARI Delaware, whereby ARI Delaware shall be the surviving corporation, and each Share shall be converted into one share of New Preferred Stock of ARI Delaware with substantially identical terms and conditions, including dividend and liquidation rights and preferences;

WHEREAS, ARI desires to purchase from Stockholder, and Stockholder desires to sell to ARI, the Shares upon the closing of the Public Offering upon the terms and subject to the conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and intending to be legally bound by the terms and conditions of this Agreement, the parties hereto hereby agree as follows:

ARTICLE 1. REDEMPTION OF SHARES.

Section 1.1 Repurchase and Redemption; Redemption Price. Based upon the representations and warranties of Stockholder set forth in Section 2 hereof, ARI agrees to repurchase and redeem from the Stockholder and, based upon the representations and warranties of ARI set forth in Section 3 hereof, Stockholder agrees to tender to ARI for repurchase and redemption, at the Closing (as defined in Section 1.3 below), all of the Shares for an aggregate price equal to the price to be paid for the Shares ("REDEMPTION PRICE")

pursuant to ARI's Articles or Certificate of Incorporation, as applicable ("CHARTER"), in connection with the liquidation, dissolution or winding up of ARI as if such liquidation, dissolution or winding up had taken place at the time of the Closing. For the avoidance of doubt, it is set forth that such Redemption Price per Share shall equal: (i) $1,000 ("NP BASE AMOUNT" as defined in the Charter), plus (ii) cumulative dividends accumulated and unpaid on such Share as of December 31, 2005, equaling $138.14 per share plus (iii) cumulative dividends which shall accrue on such Share from December 31, 2005 until the Closing at a rate of $0.2884 per day.

Section 1.2. Payment of Redemption Price. At the Closing, ARI shall pay the Redemption Price or shall cause the Redemption Price to be paid, to the stockholder by federal funds wire transfer of immediately available funds, against delivery of those documents and instruments listed and described in Section 1.4 hereof.

Section 1.3 Time and Place of Closing. The transfers and deliveries contemplated hereby (the "CLOSING") shall take place at the time and place of the closing of the Public Offering. The date of the Closing is referred to herein as the "CLOSING DATE."

Section 1.4 Deliveries at Closing. At the Closing, the Stockholder shall authorize, execute and deliver to ARI, against payment of the Redemption Price one or more stock certificates representing the Shares, duly endorsed in blank, or accompanied by a duly executed stock power.

ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. In connection with the transactions contemplated by this Agreement, Stockholder hereby represents and warrants to ARI as follows:

Section 2.1. Title. Stockholder is the sole record and beneficial owner of, and has good legal title to the Shares, and has the full legal right, power and authority to assign and transfer complete ownership in the Shares to ARI. The Shares are, and upon the effectiveness of the assignment and transfer will be, free and clear of all liens, claims, restrictions, encumbrances, charges, options or rights of third parties with respect thereto.

Section 2.2 Organization; Authority. (i) Stockholder is a corporation duly formed and validly existing under the laws of the State of Nevada and has full power and authority to own its property, including the Shares, and to enter into and perform the transactions contemplated hereby.

Section 2.3. Non-Contravention. The execution and delivery by Stockholder of this Agreement and the consummation of the transactions contemplated hereby will not (a) violate or conflict with any provision of the organizational documents of Stockholder, each as amended to date, (b) constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon

any property of Stockholder pursuant to (i) any agreement or instrument to which Stockholder is a party or by which Stockholder or any of its properties are bound or subject, or (ii) any statute, judgment, decree, order, regulation or rule of any court or governmental authority to which Stockholder is subject.

Section 2.4. Approval; Binding Effect. Stockholder has obtained all corporate and other approvals necessary for the execution and delivery of this Agreement and for the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Stockholder and constitutes the legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, except to the extent such enforceability is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other law affecting or relating to creditors' rights generally and general principles of equity.

Section 2.5. Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon any arrangement made by or on behalf of Stockholder.

Section 2.6. Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by Stockholder of this Agreement or the consummation of the transactions contemplated hereby.

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF ARI. In connection with the transactions contemplated by this Agreement, each of ARI Missouri and ARI Delaware jointly and severally represent and warrant as follows:

Section 3.1 Organization; Authority. Each of ARI Missouri and ARI Delaware is duly organized and existing in good standing in its jurisdiction of incorporation. Each of ARI Missouri and ARI Delaware has the corporate power to own its properties and to carry on its business as now conducted and to enter into and perform the transactions contemplated hereby.

Section 3.2 Non-Contravention. The execution, delivery and performance by ARI of this Agreement and the consummation of the transactions contemplated hereby, (i) are within ARI's corporate power and authority, (ii) have been duly authorized by all necessary corporate proceedings, (iii) do not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which ARI is a party or by which ARI is bound or to which any of the properties or assets of ARI is subject and has been, nor will such actions result in any violation of the provisions of the organizational documents of ARI or any statue or any order, rule, regulation or writ of any court or governmental agency or body having proper jurisdiction over ARI or any of its properties or

assets (except for such statutes, orders, rules, regulations or writs the violation of which would not have a material adverse effect on the business, properties, financial positions or results of operations of ARI and except to the extent consent to or waiver of such conflict, violation or breach has been obtained from the third party prior to Closing), and (iv) will not result in the creation or imposition of any lien upon any property of ARI pursuant to the terms of any agreement or instrument to which ARI is bound or to which any of the properties or assets of ARI is subject.

Section 3.3 Enforceability. The execution and delivery by ARI of this Agreement will result in legally binding obligations of ARI, enforceable against it in accordance with the terms and provisions hereof, except as such enforceability may be limited by bankruptcy, insolvency, reorganization and other similar laws affecting creditors' rights generally, and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).

Section 3.4 Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by ARI of this Agreement or the consummation of the transactions contemplated hereby.

ARTICLE 4. INDEMNITY.

Section 4.1. ARI shall defend, indemnify, save and hold harmless Stockholder from and against all liabilities, losses, claims, demands, suits, costs, expenses and damages of every kind and character, including, without limitation, attorneys' fees, court costs, and costs of investigation, which arise from or in connection with in any way a breach by ARI of its representations and warranties contained in this Agreement or other breach of this Agreement by ARI.

Section 4.2. Stockholder shall defend, indemnify, save and hold harmless ARI from and against all liabilities, losses, claims, demands, suits, costs, expenses and damages of every kind and character, including, without limitation, attorneys' fees, court costs, and costs of investigation, which arise from or in connection with in any way a breach by Stockholder of its respective representations and warranties contained in this Agreement or other breach of this Agreement by Stockholder.

ARTICLE 5. MISCELLANEOUS.

Section 5.1. This Agreement shall, without any further action required by either party, be immediately terminated in its entirety and be of no further force or effect if the Public Offering does not close on or before March 31, 2006.

Section 5.2. Assignment; Successors and Assigns. The provisions of this Agreement shall be binding upon, and inure to the benefit of, the respective successors, assigns, heirs, executors and administrators of the parties hereto.

Section 5.3. Survival of Representations and Warranties. All indemnities, covenants, representations and warranties contained herein shall survive the execution and delivery of this Agreement and the closing of the transactions contemplated hereby.

Section 5.4. Expenses. Each party to this Agreement shall bear its own costs and expenses, including, but not limited to, attorneys' fees and expenses, in connection with the closing of the transactions contemplated hereby.

Section 5.5. Entire Agreement. This Agreement, together with the instruments and other documents contemplated to be executed and delivered in connection herewith, contains the entire agreement and understanding of the parties hereto, and supersedes any prior agreements or understandings between or among them, with respect to the subject matter hereof.

Section 5.6. Amendments and Waivers. This Agreement may not be amended or waived (either generally or in a particular instance and either retroactively or prospectively) except by a written instrument signed by the party against whom enforcement of such amendment, modification or waiver is sought. No waivers of or exceptions to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

Section 5.7. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 5.8. Captions. The captions of the sections, subsections and paragraphs of this Agreement have been added for convenience only and shall not be deemed to be a part of this Agreement.

Section 5.9. Governing Law. This Agreement shall be governed by and interpreted and construed in accordance with the laws of the State of New York without regard to the conflict of law principles thereof.

Section 5.9. Further Assurances. The parties hereto hereby agree to take such further action and execute and deliver such further documents and instruments as may be necessary or appropriate to effect the transactions, assignments, transfers and conveyances contemplated in this Agreement.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement effective as of the date and time first above written.

AMERICAN RAILCAR INDUSTRIES, INC.
(a Missouri corporation)

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

AMERICAN RAILCAR INDUSTRIES, INC.
(a Delaware corporation)

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

VEGAS FINANCIAL CORP.

By: /s/ Edward E. Mattner
   ------------------------------------------------
    Name: Edward E. Mattner
    Title: Vice President

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:

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(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").

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

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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);

(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

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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

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(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.

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(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

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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.

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(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

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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:

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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]

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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]

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[2005 EQUITY INCENTIVE PLAN]

EXHIBIT A-1

FORM OF
AMERICAN RAILCAR, INC.
2005 EQUITY INCENTIVE PLAN

2. Administration.

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").

3 Stock Available for Awards.

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.

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

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.

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

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

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.

5. Restricted Stock.

7. General Provisions Applicable to Awards.

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

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;

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.

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.

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,

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.

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.

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.

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

[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:

      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>>

Vesting Schedule:

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

  NUMBER OF MONTHS (OR YEARS) OF       % OF GRANT (OR # OF SHARES) VESTED
              SERVICE
--------------------------------------------------------------------------
One year anniversary of Grant Date     33% of Grant

Two year anniversary of Grant Date     66% of Grant

Three year anniversary of Grant Date   100% of Grant

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

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.

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

(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

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.

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.]

Submitted by:                             Accepted by:

PARTICIPANT                               AMERICAN RAILCAR INDUSTRIES, INC.


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Signature                                 By


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Print Name                                Title

Address:                                  Address:

                                          100 Clark St.
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                                          St. Charles, MO 63301
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                                          Attention: President
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                                          Date Received

[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

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.

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]

PLEASE READ THIS GENERAL RELEASE CAREFULLY. IT CONTAINS A RELEASE OF ALL

KNOWN AND UNKNOWN CLAIMS.

EMPLOYEE:

James A. Cowan

Date: ______________, 20__

Exhibit 10.31

EMPLOYEE BENEFIT PLAN AGREEMENT

This Employee Benefit Plan Agreement (this “Agreement”) is dated as of December 1, 2005 (the “Effective Date”) between AMERICAN RAILCAR INDUSTRIES, INC., a Missouri corporation (“ARI”), and ACF INDUSTRIES LLC, a Delaware limited liability company and successor to ACF Industries, Incorporated, a New Jersey corporation (“ACF”).

WITNESSETH:

WHEREAS, ARI and ACF entered into that certain Asset Transfer Agreement, dated as of October 1, 1994 (the “Asset Transfer Agreement”), whereby ACF transferred to ARI certain assets incident to the railcar business, and certain employees of ACF (“Transferred Employees”) transferred employment from ACF to ARI, all effective as of October 1, 1994 (the “Asset Transfer Date”);

WHEREAS, the Asset Transfer Agreement provided, among other things, that Transferred Employees shall continue to participate in certain employee benefit plans sponsored by ACF and identified in Schedule 9.4(b) of the Asset Transfer Agreement as “Benefit Plans,” and ARI agreed to reimburse ACF for the costs of providing benefits to the Transferred Employees under each of the Benefit Plans after the Asset Transfer Date;

WHEREAS, the Asset Transfer Agreement further provided that ACF would retain all obligations relating to the Transferred Employees participation in the Benefit Plans prior to the Asset Transfer Date;

WHEREAS, after the Asset Transfer Date, employees have been hired by ARI, including certain former employees of ACF, and such employees have participated or continued to participate in certain of the Benefit Plans (collectively, the “Other ARI Employees”);

WHEREAS, ACF is the Plan Sponsor of the Employees’ Retirement Plan of ACF Industries LLC and the Shippers Carline Division of American Railcar Industries, Inc., Employees’ Pension Plan, and ARI has been a participating employer in these plans since the Asset Transfer Date;

WHEREAS, pursuant to an Administration Agreement, dated as of the Asset Transfer Date, between ACF and ARI (the “Administration Agreement”), ACF and ARI allocated the costs associated with administering the ACF Benefit Plans (as defined below) in accordance with the Asset Transfer Agreement;

WHEREAS, the Administration Agreement was terminated effective April 1, 2005, and following such termination ACF and ARI have continued to allocate the respective costs associated with the ACF Benefit Plans consistent with the allocations under the Administration Agreement and the Asset Transfer Agreement;

WHEREAS, the Asset Transfer Agreement provides that at the time that ARI shall cease to be a member of ACF’s “controlled group” (as such term is defined in the Employee Retirement Income Security Act of 1974, as amended, “ERISA”) that the Transferred Employees shall cease to participate in the Benefit Plans and that the parties shall cooperate to achieve such allocation of the assets and liabilities of the Benefit Plans accrued after the Asset Transfer Date in a manner that the parties shall deem appropriate;

WHEREAS, ARI is contemplating one or more transactions pursuant to which it will cease to be a member of ACF’s controlled group; and

WHEREAS, ARI and ACF now desire to allocate the assets, liabilities and obligations of the Benefit Plans in the manner set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the parties hereto agree as follows:

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

(a) “ACF Retirement Plan” means, the Employees’ Retirement Plan of ACF Industries LLC.

(b) “Shippers Plan” means the Shippers Carline Division of American Railcar Industries, Inc. Employees’ Pension Plan.

(c) “Executive Survivor Insurance Plan” means the Executive Survivor Insurance Plan, as part of the Program of Insurance Benefits for Salaried Employees of ACF Industries, Incorporated.

(d) “Retiree Insurance Plans” means the post-retirement group health and life insurance plans of ACF.

(e) “SERP” or “Supplemental Retirement Plan” means the Supplemental Retirement Plan of ACF Industries, Incorporated.

(f) “ACF Benefit Plans” means collectively, the ACF Retirement Plan, Shippers Plan, the Executive Survivor Insurance Plan, the Retiree Insurance Plans and the SERP.

(g) “ARI Participating Employees” means collectively the Transferred Employees and the Other ARI Employees.

2. Prior Treatment . Except as otherwise provided herein, each party agrees that any amounts due by ARI to ACF in respect of the ACF Benefit Plans from the Asset Transfer Date through the Effective Date have been paid in full, and that neither party has any obligations to the other party with respect thereto.

3. Pension Plans . Effective as of the Effective Date (i) ARI shall and hereby does assume sponsorship of the Shippers Plan and ACF shall and hereby does cease to be a participating employer in the Shippers Plan and shall cease to have any further liability or obligation with respect to such plan; and (ii) ACF shall remain the plan sponsor of the ACF Retirement Plan and ARI shall cease to be a participating employer in the ACF Retirement Plan and shall cease to have any further liability or obligation with respect to such plan, including, without limitation, any funding obligations for the plan.

4. Executive Survivor Insurance Plan . Effective as of the Effective Date, ARI shall and hereby does assume all liabilities and obligations to provide benefits under the Executive Survivor Insurance Plan with respect to ARI Participating Employees covered by the Executive

Survivor Insurance Plan, a list of which is attached as Schedule 1 hereto. In connection therewith, ARI has obtained a group term life insurance policy on the life of each such ARI Participating Employee and is and shall continue to be responsible for payment of premiums and all other obligations with respect to such policy in accordance with the terms thereof. ACF shall retain all liabilities and obligations to provide the benefits under the Executive Survivor Insurance Plan with respect to any and all persons under the Executive Survivor Insurance Plan, other than ARI Participating Employees, entitled to benefits thereunder.

5. Retiree Insurance Plans . Effective as of the Effective Date, ARI shall and hereby does assume all liabilities and obligations to provide benefits under the Retiree Insurance Plans for ARI Participating Employees, including any such benefits attributable to any employment of such employees prior to the Asset Transfer Date. A list of such employees who are currently retired and receiving such benefits is set forth on Schedule 2 hereto. ACF agrees that it has retained all obligations to provide benefits under the Retiree Insurance Plans in respect of any and all persons, other than ARI Participating Employees, participating in the Retiree Insurance Plans.

6. SERP . Effective as of the Effective Date, ARI shall and hereby does assume all liabilities and all obligations to provide benefits, attributable solely to employment service with ARI after the Asset Transfer Date, under the SERP for ARI Participating Employees. A list of such employees and, in the case of employees with any benefits attributable to employment prior to the Asset Transfer Date, the amount of such employees’ estimated annual benefit attributable to employment service with ARI after the Asset Transfer Date, is set forth on Schedule 3 hereto. ACF shall retain all liabilities and obligations to provide benefits under the SERP in respect of any and all persons, other than the ARI Participating Employees (except as otherwise provided in Schedule 3), entitled to benefits thereunder.

7. Net Payment for Assumed Liabilities . In consideration of the foregoing, including the assumption of pension plan and Retiree Insurance Plan liabilities by the respective parties pursuant to Sections 3 and 5 hereof, ARI shall make a net payment in cash to ACF in the amount of $6,310,000 within 30 days following the Effective Date, which amount represents the difference between (i) the $9,238,000 in additional unfunded liabilities assumed by ACF in respect of the ARI Participating Employees under the ACF Retirement Plan for periods following the Asset Transfer Date, net of the additional unfunded liabilities assumed by ARI in respect of ARI Participating Employees in the Shippers Plan for periods prior to the Asset Transfer Date and in respect of participants in the Shippers Plan who are not ARI Participating Employees; and (ii) the $2,928,000 in additional unfunded liabilities assumed by ARI with respect to the pre-Asset Transfer Date liabilities of the ARI Participating Employees under the Retiree Insurance Plans, in each case as determined by the actuaries for the respective plans as of December 1, 2005, using actuarial assumptions appropriate for reporting liabilities under Financial Accounting Standards Nos. 132 and 106, as applicable, and, in the case of the ACF Retirement Plan and the Shippers Plan, allocating the assets of the respective plans under the principles of Section 4044 of ERISA.

8. Indemnification .

(a) ACF covenants and agrees with ARI that ACF shall indemnify ARI and its directors and officers, and each of their successors and assigns (individually an “ARI Indemnified Party”) and hold them harmless from and against in respect of any and all costs, losses, claims, liabilities, fines, penalties, damages and expenses (including court costs and reasonable fees and disbursements of counsel) resulting from or arising from any of the liabilities or obligations retained

by or otherwise allocated to ACF under this Agreement.

(b) ARI covenants and agrees with ACF that ARI shall indemnify ACF and its directors and officers and each of their successors and assigns (individually an “ACF Indemnified Party”) and hold them harmless from, against and in respect of any and all costs, losses, claims, liabilities, fines, penalties, damages and expenses (including court costs and reasonable fees and disbursements of counsel) resulting from or arising out of any of the liabilities or obligations assumed by or otherwise allocated to ARI under this Agreement.

9. Asset Transfer Agreement . Except as otherwise modified hereby, the terms and conditions of the Asset Transfer Agreement as they relate to ACF Benefit Plans is hereby ratified and confirmed.

10. Entire Agreement; Modification and Waiver . This Agreement (including the recitals herein and any schedules or exhibits hereto, each of which is an integral part of this Agreement) sets forth the entire agreement and understanding between ARI and ACF with respect to the subject matter hereof. This Agreement may not be waived, changed, altered, modified or amended in any respect without a writing to that effect, signed by each of the parties hereto. Failure of a party to enforce one or more of the provisions of this Agreement or to exercise any option or other rights hereunder or to require at any time performance of any of the obligations hereof shall not in any manner be construed (a) to be a waiver of such provisions by such party, (b) to affect the validity of this Agreement or such party’s right thereafter to enforce each and every provision of this Agreement, or (c) to preclude such party from taking any other action at any time that it would be legally entitled to take.

11. Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.

12. Severability . Any provision of this Agreement that may be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof so long as the economic or legal substance of the transactions contemplated thereby is not affected in any manner adverse to any party. Any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by law, the parties hereby waive any provision of law that renders any provision of this Agreement prohibited or unenforceable in any respect. In addition, in the event of any such prohibition or unenforceability, the parties agree that it is their intention and agreement that any such provision that is held or determined to be prohibited or unenforceable, as written, in any jurisdiction shall nonetheless be in force and binding to the fullest extent permitted by the law of such jurisdiction as though such provision had been written in such a manner and to such an extent as to be enforceable therein under the circumstances.

13. Successors and Assigns . The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties hereto.

14. Third Party Beneficiaries . The terms and provisions of this Agreement are intended for the benefit of each party hereto and their respective successors or permitted assigns, and

it is not the intention of the parties to confer third-party beneficiary rights upon any other Person. Without limiting the foregoing, nothing herein shall limit the right of ARI or ACF to amend or terminate in their sole discretion any employee benefit plan, program or benefit in accordance with the terms therein.

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

16. CONSENT TO JURISDICTION . ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ARI OR ACF ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY TRANSACTION CONTEMPLATED HEREBY, MAY BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, STATE OF NEW YORK AND ARI AND ACF EACH WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING AND, SOLELY FOR THE PURPOSES OF ENFORCING. THIS AGREEMENT, ARI AND ACF EACH IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

17. WAIVER OF JURY TRIAL . EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, AS AGAINST THE OTHER PARTY HERETO, ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL ACTION OR PROCEEDING (WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE), INCLUDING ANY COUNTERCLAIM, ARISING UNDER OR RELATING TO THIS AGREEMENT, INCLUDING IN RESPECT OF THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT HEREOF OR THEREOF.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.


AMERICAN RAILCAR INDUSTRIES, INC.
By:	/s/ James J. Unger
	Name:	James J. Unger
	Title:	President


ACF INDUSTRIES LLC
By:	/s/ Mark A. Crinnion
	Name:	Mark A. Crinnion
	Title:	General Counsel, Treasurer, Vice President and Secretary

Exhibit 10.32

TRADEMARK LICENSE AGREEMENT

THIS TRADEMARK LICENSE AGREEMENT (hereinafter the “Agreement”) is made effective the 30th day of June, 2005 by and between American Railcar Industries, Inc., a Missouri corporation, having a place of business at 100 Clark Street, St. Charles, Missouri 63301 (hereinafter “Licensor”), and American Railcar Leasing LLC, a Delaware limited liability company, having a place of business at 620 North Second, St. Charles, Missouri 63301 (hereinafter “Licensee”).

WHEREAS, Licensor is in the railcar manufacturing, maintenance and fleet management services business and Licensee is in the railcar leasing and sales business;

WHEREAS, Licensor and Licensee are independent going concerns that from time to time transact business with each other;

WHEREAS, Licensor currently provides railcar repair and maintenance services and fleet management services to Licensee;

WHEREAS, Licensor is the owner of the trademarks, as depicted on Exhibit A , attached hereto, including any and all trade names and tradedress associated therewith, and of the goodwill represented thereby, as well as various U.S. and international trademark registrations for certain variations of the trademarks (hereinafter the “Trademarks”); and

WHEREAS, it is the desire and intention of the parties that Licensee be permitted to use certain variations of the Trademarks (hereinafter the “Licensed Trademarks”) pursuant to the terms of this Agreement.

NOW, THEREFORE, in consideration of the promises and covenants contained herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows:

1. LICENSE .

(a) Subject to the terms of this Agreement, Licensor grants Licensee a perpetual, worldwide, nonexclusive right to use the Licensed Trademarks, under the conditions set forth in this Agreement, for the following goods and services: “the operation of and products associated with operating a railcar leasing business” (hereinafter the “Goods and Services”).

(b) Upon the terms and subject to the conditions set forth in this Agreement, the license grant herein includes Licensee’s right to sublicense wholly-owned subsidiaries of Licensee engaged exclusively in the business of railcar leasing and only in connection with the Goods and Services.

2. QUALITY OF GOODS AND SERVICES . Licensee shall use the Licensed Trademarks only with the quality and standards as approved by Licensor, from time to time, with the Goods and Services.

3. PAYMENTS . In consideration for the license granted herein, Licensee agrees to pay Licensor an annual fee of $1000.00 for use of the Licensed Trademarks in connection with the Goods and Services.

4. INSPECTION . Upon prior written notice, Licensee will permit duly authorized representatives of Licensor to inspect on the premises of Licensee at all reasonable times the Goods and Services in connection with which Licensee uses or intends to use the Licensed Trademarks, and Licensee shall upon reasonable request of Licensor submit to the Licensor, or to its duly authorized representatives, representative samples of the Goods and Services which it sells or intends to sell under the Licensed Trademarks for the purpose of ascertaining or determining compliance with paragraphs 1 and 2 hereof.

5. OWNERSHIP OF LICENSED TRADEMARKS . Licensee acknowledges that Licensor is the owner or has the rights to all the Licensed Trademarks, and Licensee agrees not to contest or object to the ownership or validity of such Licensed Trademarks at anytime. Licensee further acknowledges that the Licensed Trademarks are good and valid, that Licensee has no rights therein except those set forth herein, that Licensee will not contest the ownership or validity of any rights of Licensor in the Licensed Trademarks or registrations thereof, and that Licensee will not do or cause to be done anything that might impair Licensor’s rights in and to the Licensed Trademarks. Licensee undertakes to comply substantially with all laws pertaining to trademarks in force at any time in any jurisdiction, including but not limited to marking requirements under federal, state or foreign law. Licensee agrees to comply with any reasonable requirements established by Licensor concerning the style, design, display and use of the Licensed Trademarks, and, as appropriate, to use correctly the trademark symbol TM or registration symbol ^® .

6. EXTENT OF LICENSE . This Agreement, and in particular the right granted under paragraph 1, shall not be transferable or assignable without Licensor’s prior written consent, which shall not be unreasonably withheld. Licensor shall have the right to use the Licensed Trademarks and to license its uses to any third party for any purpose including maintaining and protecting its trademark rights; provided, however, Licensor shall not license the Licensed Trademarks to any other third party in the railcar leasing business.

7. POLICING OF LICENSED TRADEMARKS. Licensee agrees to inform Licensor of the use of any other trademarks similar to the Licensed Trademarks and any potential infringements of the Licensed Trademarks which come to its attention during the term of this Agreement.

8. MAINTENANCE OF LICENSED TRADEMARKS . Licensor will use its best efforts to register and maintain, or cause to be registered and maintained, the Licensed Trademarks in the particular jurisdictions to enable the Goods and Services to be distributed and sold under the Licensed Trademarks as provided herein.




Trademark License Execution Copy		Page 2

9. INDEMNITY . Licensor in its capacity as licensor of the Licensed Trademarks assumes no liability to Licensee or third parties with respect to the performance characteristics or other qualities or conditions of the Goods and Services distributed or sold by Licensee under the Licensed Trademarks, and Licensee will indemnify Licensor against losses incurred through claims of third persons against Licensor involving the production, distribution, or sale of Licensee’s Goods and Services.

10. LITIGATION . In the event Licensee is named as defendant in any action based on its use of the Licensed Trademarks, Licensee agrees to immediately notify Licensor, and Licensor shall have the right, but not the obligation, to intervene in any such action and to control and direct the defense thereof, including the right to select defense counsel and the obligation to pay defense counsel fees.

11. TERM AND TERMINATION . This Agreement shall remain in full force and effect, unless Licensee fails to comply with any provision of this Agreement, whereupon Licensor may terminate the Agreement upon not less than ninety (90) days written notice to Licensee, but if Licensee corrects such default during the notice period, the notice shall be of no further force or effect.

Upon termination of this Agreement in any manner, Licensee shall within six (6) months thereof cease all use of the Licensed Trademarks, including but not limited to removing the Licensed Trademarks from any Goods and Services still in its possession; changing its corporate or trade name to exclude the Licensed Trademarks or any similar trademark, if it is included; delivering up to Licensor or its duly authorized representatives all material and papers upon which the Licensed Trademarks appears; and not thereafter adopting or using any trademark which is similar to or likely to be confusing with the Licensed Trademarks.

12. INTEGRATION AND MODIFICATION . This Agreement represents the entire understanding of the parties with respect to its subject matter and supersedes any prior or contemporaneous written or oral communications. No amendment to this Agreement will be effective unless in writing and signed by both parties.

13. RELATIONSHIP OF LICENSOR AND LICENSEE . Nothing contained herein shall be construed to place Licensor or Licensee in any agency, partnership, or joint venture relationship. Nothing in this Agreement shall authorize Licensor or Licensee to make any contract, agreement, warranty or representation on behalf of the other or to incur any debt or other obligation in the other’s name. Neither Licensor nor Licensee shall assume liability for, or be deemed liable hereunder as a result of, any such action, or by reason of any act or omission of any of such others, or any claim or judgment arising therefrom.




Trademark License Execution Copy		Page 3

14. ENFORCEMENT AND GOVERNING LAW . This Agreement shall be governed by the laws of the State of New York and any applicable federal laws of the United States of America, without regard to principles of conflicts of law or choice of law. Licensee acknowledges that irreparable injury might result to the business and property of Licensor in the event of a breach of this Agreement, and, therefore, agrees that the Agreement may be enforced by injunction, specific performance, or other appropriate legal or equitable remedies. If any provision of this Agreement is deemed unenforceable, the enforceability of the rest of this Agreement will not be affected; and any provision deemed unenforceable as written may be modified by judicial decree so that such provision is enforceable.

15. WAIVER . The waiver by either party of a breach of a provision of this Agreement shall not operate or be construed to invalidate the balance of the provisions contained in this Agreement, which shall continue to remain in effect.

Remainder of Page Left Intentionally Blank




Trademark License Execution Copy		Page 4

IN WITNESS WHEREOF, Licensor has caused this Trademark License Agreement to be executed as a sealed instrument as of the date first stated above by its officer thereunto duly authorized.


		AMERICAN RAILCAR INDUSTRIES, INC.

		By:		/s/ William Benac


		Name: William Benac Title: CFO Date: December 21, 2005

STATE OF MISSOURI
COUNTY OF: ST. CHARLES

In said County and State, before me this 21st day of December 2005, personally appeared William Benac of American Railcar Industries, Inc., known to me to be the person whose name is subscribed to the foregoing assignment and he acknowledged that he executed the same as an officer of American Railcar Industries, Inc. as a free act and deed for the purposes therein contained.

/s/ Donna Garza

Donna Garza
Notary Public
My commission expires: 5/20/06




Trademark License Execution Copy		Page 5

IN WITNESS WHEREOF, Licensee has caused this Trademark License Agreement to be executed as a sealed instrument as of the date first stated above by its authorized signatory thereunto duly authorized.


		AMERICAN RAILCAR LEASING LLC

		By:		/s/ James J. Unger


		Name: James J. Unger, authorized signatory Date: December 20, 2005

STATE OF MISSOURI
COUNTY OF: ST. CHARLES

In said County and State, before me this 20th day of December 2005, personally appeared James J. Unger, as authorized signatory of American Railcar Leasing LLC, known to me to be the person whose name is subscribed to the foregoing assignment and he acknowledged that he executed the same as a free act and deed for the purposes therein contained.

/s/ Donna Garza

Donna Garza
Notary Public
My commission expires: 5/20/06




Trademark License Execution Copy		Page 6

EXHIBIT A

TRADEMARKS


	Registration No.
Federal Trademarks	Country	Registration Date	Licensed Trademarks
	2,614,206 United States	September 3, 2002	Diamond shaped portion of Trademark

ARI Diamond Logo	TMA 559,830 Canada	April 3, 2002	Diamond shaped portion of Trademark

ARI Diamond Logo	701276 Mexico	May 31, 2001	Diamond shaped portion of Trademark




Trademark License Execution Copy		Page 7

Exhibit 10.33

SUMMARY PLAN DESCRIPTION
EXECUTIVE SURVIVOR INSURANCE PLAN
PROGRAM OF INSURANCE BENEFITS FOR SALARIED EMPLOYEES
OF AMERICAN RAILCAR INDUSTRIES, INC.

FORWARD

The purpose of the Executive Survivor Insurance Plan is to provide additional protection for your spouse while you are an active employee and to continue that protection during your retirement years. This valuable protection is an integral part of the total benefit program provided to you by ARI. Please report any changes in your marital status to the Employee Benefits Department.

IMPORTANT FACTS ABOUT THE PLAN

PLAN NAME:                         Executive Survivor Insurance Plan, as part
                                   of the Program of Insurance Benefits for
                                   Salaried Employees of American Railcar
                                   Industries, Inc.

PLAN SPONSOR:                      American Railcar Industries, Inc.
                                   100 Clark Street
                                   St. Charles, Missouri 63301

PLAN ADMINISTRATOR:                Employee Benefits Administration Committee
                                   American Railcar Industries, Inc.
                                   100 Clark Street
                                   St. Charles, Missouri 63301
                                   (636)940-5000

AGENT FOR SERVICE                  Secretary or Plan Administrator
OF LEGAL PROCESS:                  American Railcar Industries, Inc.
                                   100 Clark Street
                                   St. Charles, Missouri 63301

EMPLOYER ID NO.:                   43-1481791

PLAN NUMBER:                       501

PLAN YEAR:                         June 1 to May 31

SOURCE OF CONTRIBUTIONS:           Employer

BENEFITS PROVIDED BY:              Prudential Insurance Company of America
                                   Prudential Plaza
                                   Newark, New Jersey  07101

TYPE OF PLAN:                      Welfare

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ELIGIBILITY

The following are classifications by which an employee with a qualified spouse may become eligible to participate in the Plan:

- Any employee with one year of continuous service whose job classification is grade C-5 and above;

- Any employee with one year of continuous service whose job classification is grade C-3 and above and who is a Director of a function, or a President of a subsidiary company; or

- Any employee with one year of continuous service who is a full Officer of the Company regardless of pay grade.

Plan participation is subject to approval of the Employee Benefits Administration Committee.

Once an employee has been determined eligible to participate, a change in job classification will not cause termination of coverage under the Plan.

BENEFITS

The Plan provides lifetime benefits to the qualified surviving spouse of a participant who dies either while in active employment with the Company or following retirement at or after age 55. Benefits payable under the Executive Survivor Insurance Plan are apart from any benefits from the Company retirement plans. Benefits are only payable to the qualified surviving spouse who has not ceased to be the participant's spouse by reason of divorce or annulment.

The benefits provided to the qualified surviving spouse are described below:

For death of a retired participant at or after age 55:

A monthly benefit equal to that which would have been payable under the Company retirement plan if the participant had retired with a 50% Joint and Survivor benefit regardless of the type of retirement benefit elected.

For death of an active participant:

I. Before participant's attainment of age 55 - An annual benefit, paid in monthly installments, equal to 20% of the participant's annual salary less any amount payable under the survivor provisions of the Company's retirement plans.

II. On or after the participant's attainment of age 55 - The greater of (a) the benefit payable under (I) above and (b) an amount determined as if the participant had retired on the first day of the month coincident with or next following the date of death less any applicable reductions, actuarial or otherwise.

In no event shall the monthly benefit payable to the surviving spouse of a retired or active

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participant exceed $6,500.

As benefits under this program are funded through term life insurance, participation in the Plan may result in imputed income for Federal Income Tax purposes. Any imputed income will be reflected annually on Form W-2 or Form 1099.

CLAIM REVIEW PROCEDURE

If a claim for benefits is denied, the Plan Administrator must give written notice of such denial by mail within 90 days after the claim is filed with it or its representatives (or 180 days if special circumstances exist). Such notice must set forth:

- the specific reason or reasons for the denial;

- the specific plan provisions on which the denial is based; and

- any additional material or information necessary in order to perfect the claim and an explanation of why such material or information is necessary.

Following receipt of such denial, the right exists to appeal the decision. Specific information regarding the claim review procedure can be obtained from the Human Resources Department.

PLAN AMENDMENT, TERMINATION AND LOSS OF BENEFIT

The Company intends to continue this Plan indefinitely but does reserve the right, in its sole discretion, to amend or modify the Plan or, if conditions warrant, discontinue all or part of the Plan. If this event should happen, any benefits to which a surviving spouse is entitled will be payable and no action on the part of the Company can cause that benefit to be reduced or eliminated.

Termination of employment, other than by retirement at or after age 55 will cause coverage to cease under this program. Benefits are payable only to the qualified surviving spouse of the participant. No other person is eligible to be a beneficiary under the Executive Survivor Insurance Plan.

In the case of any inconsistency between this description and the provisions of the Plan, the actual provisions of the insurance contract shall apply.

YOUR RIGHTS UNDER ERISA

As a participant in the Executive Survivor Insurance Plan, you are entitled to certain rights and protection under the Employee's Retirement Income Security Act of 1974 (ERISA)

ERISA provides that all plan participants shall be entitled to:

- Examine, without charge, at the Plan Administrator's office and at other specified locations, such as subsidiary locations, all documents governing the Plan, including

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insurance contracts, and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Security Benefits Administration.

- Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated summary plan description. The Plan Administrator may charge a reasonable amount for the copies.

- Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to provide each participant a copy of the summary annual report.

In addition to giving rights to plan participants, ERISA places certain duties upon those who are responsible for operating the plan. The Employee Benefits Administration Committee manages and administers the plan, and has the responsibility to act in the interest of plan participants and must carry out its duties in accordance with the fiduciary standards of ERISA.

No one, including your employer, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or from exercising your rights under ERISA. If a claim for benefits is denied, in whole or in part, a written explanation of the reason for the denial must be given. The right to have the claim reviewed and reconsidered is also available.

Under ERISA, there are steps to take to enforce your rights as outlined above.

For instance, if you request material from the Plan Administrator and do not receive it within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the material and pay you up to $100 a day until you receive the material unless the material was not sent because of reasons beyond the control of the Administrator.

If a claim for benefits which is denied or ignored, in whole or in part, suit may be filed in a state or federal court.

If it should happen that plan fiduciaries misuse the plan's money or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the plan you have sued to pay these costs and fees. If you lose, the court may order you to pay costs and fees if, for example, it finds your claim frivolous.

If it should ever become necessary for you or your beneficiary to take legal action against the Plan Sponsor, over the terms of the plan or your rights under ERISA, legal process should be served on the Secretary, American Railcar Industries, Inc., 100 Clark Street, Charles, Missouri, 63301. Legal process may also be served on the Plan Administrator.

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If you have any questions about the plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area Office of the Employee Benefits Security Administration, Department of Labor.

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EXHIBIT 10.34

Exhibit Description

Supplemental Executive Retirement Plan. American Railcar Industries, Inc. sponsors a supplementary executive retirement plan (or "SERP"). This SERP provides benefits to a select group of our current employees, our chief executive officer, Mr. Unger, and two former employees. The SERP benefit is generally equal to the benefit that would be provided under the Employees' Retirement Plan of ACF Industries, LLC ("ACF"), if certain Internal Revenue Code limits and exclusions from compensation under that plan do not apply, less the actual benefit payable under the ACF Retirement Plan. We are solely responsible for the payment of the SERP benefits attributable to employment service with us after October 1, 1994, the date that ACF transferred certain assets to us. The SERP benefits were frozen effective as of March 31, 2004. As a result, no further benefits are accruing under the SERP. The SERP benefits are generally paid at the same time and in the same form as the participant's benefits under the retirement plan. No funds have been set aside for the benefits payable under the SERP. The estimated annual SERP benefit for Mr. Unger is $117,799, of which $106,769 is payable by us and $11,030 is payable by ACF.

EXHIBIT 10.35

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of January __, 2006, among AMERICAN RAILCAR INDUSTRIES, INC., a Delaware corporation, as successor-by-merger to American Railcar Industries, Inc., a Missouri corporation (the "Borrower"), each of the financial institutions identified as a Lender on Schedule 1 (together with each of their respective direct and indirect successors and assigns, each, a "Lender," and collectively, the "Lenders"), and NORTH FORK BUSINESS CAPITAL CORPORATION, a New York corporation ("NFBC"), as agent for the Lenders (the "Agent").

W I T N E S S E T H :

WHEREAS, the Borrower, the Agent and certain of the Lenders are parties to a Loan and Security Agreement, dated as of March 10, 2005 (as amended, the "Original Loan Agreement");

WHEREAS, the Borrower wishes to amend and restate the Original Loan Agreement to increase the amount of the revolving credit facility available to it and to create a subfacility for the borrowing of loans for capital expenditures; and

WHEREAS, upon the terms and subject to the conditions set forth herein, the Lenders are willing to make revolving loans and term loans to the Borrower in an aggregate amount not to exceed $75,000,000, of which no more than $15,000,000 may be term loans;

NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as follows:

ARTICLE I.
DEFINITIONS

SECTION 1.1 General Definitions. As used herein, the following terms shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined):

"Advance" means a Base Rate Advance or a LIBOR Rate Advance.

"Affiliate" means, as to any Person, any other Person who directly or indirectly controls, is under common control with, is controlled by or is a director, officer, manager or general partner of such Person. As used in this definition, "control" (including its correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of voting securities or partnership or other ownership interests, by contract or otherwise), provided that any public company that does not conduct business in any material respect in or with the railcar industry shall not be an Affiliate hereunder except for purposes of

Section 6.1(cc). For the avoidance of doubt, a Subsidiary of the Borrower shall be deemed to be an Affiliate of the Borrower.

"Agent" has the meaning specified in the introductory paragraph.

"Agent Loan" has the meaning specified in Section 2.3(h).

"Agent's Payment Account" means the account of the Agent at North Fork Bank in Melville, New York, account number 3124059415, or such other account of the Agent or any of its Affiliates in the United States as the Agent may from time to time designate in writing to the Borrower and the Lenders.

"Agreement" means this Loan and Security Agreement, as amended, supplemented or otherwise modified from time to time.

"Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and its assignee, and accepted by the Agent, and substantially in the form of Exhibit C.

"Auditors" means Grant Thornton LLP or another nationally recognized firm of independent public accountants selected by the Borrower and reasonably satisfactory to the Agent.

"Availability Event" means that the difference between (i) the lesser of (A) the Borrowing Base and (B) the Maximum Amount of the Facility less the aggregate outstanding principal amount of the CapEx Loans and (ii) the aggregate outstanding amount of the Revolving Loans and the Agent Loans, is less than $5,000,000.

"Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as that title may be amended from time to time, or any successor statute.

"Base Rate" means the higher of (i) the highest prime, base or equivalent rate of interest publicly announced from time to time by Citibank, N.A., Bank of America, N.A. and North Fork Bank, or any successor thereto (which may not be the lowest rate of interest charged by any such bank) and (ii) the published annualized rate for ninety-day dealer commercial paper that appears in the "Money Rates" section of The Wall Street Journal.

"Base Rate Advance" means an Advance that bears interest as provided in Section 4.1(a).

"Blocked Account" has the meaning specified in Section 2.7.

"Blocked Account Agreement" has the meaning specified in Section 2.7.

"Blocked Account Bank" means Citibank, N.A., Bank of America, N.A. or U.S. Bank National Association or any successor or any other bank acceptable to the Agent to act as such.

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"Borrower" has the meaning specified in the introductory paragraph.

"Borrower's Account" means the account maintained by the Borrower at North Fork Bank in Melville, New York or such other account as the Borrower may from time to time designate in writing to the Agent.

"Borrowing" has the meaning specified in Section 2.3(a).

"Borrowing Base" has the meaning specified in Section 2.1(a).

"Borrowing Base Certificate" has the meaning specified in Section 7.1(k)(iv).

"Borrowing Date" means the date on which a Borrowing is obtained.

"Business Day" means any day other than a Saturday, a Sunday or any other day on which commercial banks in New York, New York are required or permitted by law to close. When used in connection with any LIBOR Rate Advance, a Business Day shall also exclude any day on which commercial banks are not open for dealings in Dollar deposits in the London interbank market.

"Business Plan" means a business plan of the Borrower and its Subsidiaries, consisting of consolidated and consolidating projected balance sheets, related cash flow statements and related profit and loss statements, and availability forecasts, together with appropriate supporting details and a statement of the underlying assumptions, which covers a one-year period and which is prepared on a monthly basis in a manner consistent with GAAP and with the Financial Statements.

"CapEx Loans" has the meaning specified in Section 2.2(a).

"CapEx Note" has the meaning specified in Section 2.2(b).

"Capital Expenditures" means expenditures for any fixed assets or improvements, replacements, substitutions or additions thereto or therefor which have a useful life of more than one year, and shall include all commitments, payments in respect of Capitalized Lease Obligations and leasehold improvements.

"Capitalized Lease Obligations" means any rental obligation which, under GAAP, is or will be required to be capitalized on the books of the lessee, taken at the amount thereof accounted for as Indebtedness (net of Interest Expense) in accordance with GAAP.

"Cash Equivalents" means (i) securities issued, guaranteed or insured by the United States or any of its agencies with maturities of not more than one year from the date acquired; (ii) securities issued, guaranteed or insured by any state of the United States or any public instrumentality thereof with maturities of not more than one year from the date acquired and, at the time of acquisition, having one of the three highest ratings obtainable from either Standard & Poor's Ratings Services or Moody's Investors Service, Inc.;
(iii) time deposits, term deposits and certificates of deposit with maturities of not more than one year from the date acquired, issued by (A) the Agent or any Lender or any of their respective Affiliates, (B) any

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U.S. federal or state chartered commercial bank of recognized standing which has capital and unimpaired surplus in excess of $500,000,000 or (C) any bank or its holding company that has a short-term commercial paper rating of at least A-1 or the equivalent by Standard & Poor's Ratings Services or at least P-1 or the equivalent by Moody's Investors Service, Inc.; (iv) repurchase agreements and reverse repurchase agreements with terms of not more than thirty days from the date acquired, for securities of the type described in clause (i) or (ii) above and entered into only with commercial banks having the qualifications described in clause (iii) above or such other financial institutions with a short-term commercial paper rating of at least A-1 or the equivalent by Standard & Poor's Ratings Services or at least P-1 or the equivalent by Moody's Investors Service, Inc.; (v) commercial paper issued by any Person incorporated under the laws of the United States or any state thereof and rated at least A-1 or the equivalent thereof by Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof by Moody's Investors Service, Inc., in each case with maturities of not more than one year from the date acquired; and (vi) investments in money market funds registered under the Investment Company Act of 1940, which have net assets of at least $500,000,000 and at least eighty-five percent (85%) of whose assets consist of securities and other obligations of the type described in clauses (i) through (v) above.

"Closing Date" means the date of execution and delivery of this Agreement.

"Code" has the meaning specified in Section 1.3.

"Collateral" means all Receivables of the Borrower (other than Excluded Receivables), all Inventory of the Borrower, the Pledged Deposit Accounts of the Borrower and all Equipment purchased with the proceeds of CapEx Loans.

"Collateral Access Agreements" means a landlord waiver, mortgagee waiver, bailee letter or similar acknowledgment of any lessor, warehouseman or processor in possession of any Collateral or on whose property any Collateral is located, substantially in the form of Exhibit J.

"Collections" means all cash, funds, checks, notes, instruments, any other form of remittance tendered by account debtors in respect of payment of Receivables of the Borrower and any other payments received by the Borrower with respect to any Collateral.

"Commitment" means, with respect to any Lender, its commitment to make Loans up to the amount set forth opposite its name on Schedule 1.

"Compliance Certificate" has the meaning specified in Section 7.1(k)(iii).

"Contingent Obligation" means any direct, indirect, contingent or non-contingent guaranty or obligation for the Indebtedness of another Person, except endorsements in the ordinary course of business.

"Continuation" has the meaning specified in Section 2.3(b).

"Convert," "Conversion" and "Converted" each refers to conversion of Advances of one Type into Advances of another Type pursuant to Section 2.3(c).

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"Default" means any of the events specified in Section 9.1, whether or not any of the requirements for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

"Defaulting Lender" has the meaning specified in Section 2.10(a).

"Dollars" and the sign "$" means freely transferable lawful currency of the United States.

"EBITDA" means, for any period, with respect to the Borrower (i) net income (as that term is determined in accordance with GAAP) for such period, plus (ii) the amount of depreciation and amortization of fixed and intangible assets deducted in determining such net income for such period, plus (iii) all Interest Expense and all fees for the use of money or the availability of money, including commitment, facility and like fees and charges upon Indebtedness (including Indebtedness to the Lenders) paid or payable during such period, plus
(iv) all tax liabilities paid or accrued during such period, less (v) the amount of all extraordinary gains (or plus the amount of all extraordinary losses) realized during such period including, without limitation, gains (or losses) realized upon the sale or other disposition of property or assets that are sold or otherwise disposed of outside the ordinary course of business, plus (vi) the amount of any non-cash compensation accrued during such period including, without limitation, in connection with (A) stock options or other equity awards and incentives granted under the 2005 Equity Incentive Plan described in the Registration Statement and (B) the award of common stock to be granted to James Unger in connection with the IPO as described in the Registration Statement, plus (vii) any expenses accrued by the Borrower in connection with the allocation of the assets and liabilities of the pension and other post-retirement employee benefit plans sponsored by ACF Industries LLC between the Borrower and ACF Industries LLC in accordance with the Employee Benefit Agreement, effective as of December 1, 2005, between the Borrower and ACF Industries LLC including, without limitation, any liabilities assumed or payments made by the Borrower in connection therewith, less (viii) any non-cash compensation that subsequently becomes payable in cash during such period, in each case, to the extent that the amount specified in clause (ii), (iii), (iv),
(v), (vi), (vii) or (viii) hereof is included in the calculation of net income for such period.

"Eligible Assignee" means (i) a Lender or any Affiliate thereof;
(ii) a commercial bank organized or licensed under the laws of the United States or a state thereof having total assets in excess of $500,000,000; (iii) a finance company, insurance company or other financial institution or fund, which is regularly engaged in making, purchasing or investing in loans and having total assets in excess of $500,000,000; or (iv) a savings and loan association or savings bank organized under the laws of the United States or a state thereof which has a net worth, determined in accordance with GAAP, in excess of $500,000,000; provided, however, that (A) each Eligible Assignee under clauses
(ii) through (iv) hereof shall be reasonably acceptable to the Agent and, so long as no Event of Default is continuing, the Borrower and (B) nothing herein shall restrict or require the consent of any Person to the pledge by any Lender of all or any portion of its rights and interests under this Agreement, its Notes or any other Loan Document to any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System or U.S. Treasury Regulation 31 CFR 203.14, and such Federal Reserve Bank may enforce such pledge in any manner permitted by applicable law.

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"Eligible Inventory" means only such Inventory of the Borrower located in the United States consisting of raw materials or finished goods, which is free from any claim of title or Lien in favor of any Person (other than Liens in favor of the Agent) and with respect to which no event has occurred and no condition exists which could reasonably be expected to impair substantially the Borrower's ability to use or sell such Inventory in the ordinary course of its business. No Inventory of the Borrower shall be Eligible Inventory unless the Agent has a perfected first priority Lien thereon. The value of Eligible Inventory shall be computed at the lower of cost (computed on a "first in, first out" basis) or market. Any Inventory of the Borrower that is not in the control or possession of the Borrower and is covered by a warehouse receipt, a bill of lading or other document of title shall in no event be Eligible Inventory unless such warehouse receipt, bill of lading or document of title is in the name of or held by the Agent. No Inventory of the Borrower shall be Eligible Inventory unless (i) it is located on property owned by the Borrower; or (ii) it is located on property leased by the Borrower or in a contract warehouse (A) which is subject to a Collateral Access Agreement executed by the mortgagee, lessor or contract warehouseman, as the case may be, or (B) with respect to which the Agent has established a reserve from the Borrowing Base in an amount equal to the rent or fees payable to the applicable lessor or warehouseman for a three-month period and, in either case such Inventory is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises. No Inventory of the Borrower shall be Eligible Inventory if it is in transit or it is consigned to or from the Borrower. In addition, and without limitation of the foregoing, the Agent may treat any Inventory as ineligible if:

(a) it is not owned solely by the Borrower or the Borrower does not have sole and good, valid and marketable title thereto; or

(b) it is packing or shipping materials or maintenance supplies; or

(d) it (i) is excess (as so reserved by the Borrower from time to time), (ii) is obsolete, defective, damaged, unmerchantable or consists of an amount of Inventory in excess of a two-year supply, (iii) is samples or inventory on hand which is used for promotional and other sales activities, or
(iv) does not otherwise conform to the representations and warranties contained in the Loan Documents; or

(e) it is repossessed, attached, seized, made subject to a writ or distress warrant, levied upon or brought within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors; or

(f) it is Inventory acquired by the Borrower in or as part of (i) a "bulk" transfer or sale of assets and such acquisition is not consummated in the ordinary course of business unless the Borrower has complied with all applicable bulk sales or bulk transfer laws in connection with such acquisition or (ii) any acquisition of assets from another Person other than in the ordinary course of business and such Inventory is not satisfactory to the Agent or has not been inspected by the Agent in a collateral audit examination.

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"Eligible Receivables" means and includes only those unpaid Receivables of the Borrower, without duplication, which (i) arise out of a bona fide sale of goods or rendition of services of the kind ordinarily sold or rendered by the Borrower in the ordinary course of its business, (ii) are owed by a Person competent to contract for such goods or services that is not an Affiliate or an employee of the Borrower and is not controlled by an Affiliate of the Borrower, (iii) are not subject to renegotiation or redating, (iv) are free and clear of any Lien in favor of any Person other than Liens in favor of the Agent and (v) mature as stated in the invoice or other supporting data covering such sale or services. No Receivable of the Borrower shall be an Eligible Receivable (i) unless the Agent has a perfected first priority Lien thereon, (ii) if it is more than ninety days past the date of the original invoice therefor or more than sixty days past its due date or (iii) unless the delivery of the goods or the rendition of the services giving rise to such Receivable has been completed. The Agent may treat any Receivable as ineligible if:

(a) any warranty contained in this Agreement or in any other Loan Document with respect to such Receivable or in any assignment or statement of warranties or representations relating to such Receivable delivered by the Borrower to the Agent has been breached or is untrue in any material respect or the Borrower is not in compliance with all applicable laws with respect to such Receivable; or

(b) the account debtor has disputed liability, has asserted a right of setoff or has made any claim with respect to any other Receivable due from such account debtor to the Borrower, to the extent of the amount of such dispute or claim, or the amount of such actual or asserted right of setoff, as the case may be; or

(c) the account debtor or any of its assets is the subject of an Insolvency Event or is reasonably likely to become the subject of an Insolvency Event; or

(d) the account debtor has called a meeting of its creditors to obtain any general financial accommodation; or

(e) the account debtor is also a supplier to the Borrower, to the extent of the aggregate amount owed by the Borrower to the account debtor; or

(f) the sale or rendition of services is to an account debtor outside the United States of America or Canada, unless it is on letter of credit, acceptance or other terms reasonably acceptable to the Required Lenders; or

(g) twenty-five percent (25%) or more of the accounts of any account debtor to the Borrower are unpaid more than ninety days past the date of the original invoices therefor; or

(h) except for Receivables due from American Railcar Leasing, LLC (if it is not an Affiliate of the Borrower at such time), General Electric Capital Corp., CIT Group, Inc., Union Pacific Corporation, Greenbrier Equity Group, LLC and Union Tank Car Company and any of their respective Affiliates, and except as determined by the Agent in its sole discretion, the amount owed by the account debtor under such Receivable and under all other Receivables owed by such account debtor exceeds twenty percent (20%) of all Eligible Receivables, but only to the extent of such excess; or

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(i) the account debtor is the United States of America or any department, agency or instrumentality thereof, unless the Borrower assigns its right to payment under such Receivable to the Agent as collateral hereunder in full compliance with (including, without limitation, the filing of a written notice of the assignment and a copy of the assignment with, and receipt of acknowledgment thereof by, the appropriate contracting and disbursing offices pursuant to) the Assignment of Claims Act of 1940, as amended (U.S.C. Section 3727; 41 U.S.C. Section 15); or

(j) it was acquired by the Borrower in or as part of an acquisition of assets from another Person and such Receivable is not satisfactory to the Agent or has not been reviewed by the Agent in a collateral examination audit.

"Environmental Laws" means all federal, state and local statutes, laws (including common or case law), regulations or orders applicable to the business or property of a Person relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any Hazardous Materials.

"Equipment" means all machinery, equipment, furniture, fixtures, leasehold improvements, conveyors, tools, materials, storage and handling equipment, hydraulic presses, cutting equipment, computer equipment and hardware, including central processing units, terminals, drives, memory units, embedded computer programs and supporting information, printers, keyboards, screens, peripherals and input or output devices, molds, dies, stamps, and other equipment of every kind and nature and wherever situated now or hereafter owned by a Person or in which a Person may have any interest as lessee or otherwise (to the extent of such interest), together with all additions and accessions thereto, all replacements and all accessories and parts therefor, all manuals, blueprints, know-how, warranties and records in connection therewith and all rights against suppliers, warrantors, manufacturers, and sellers or others in connection therewith, together with all substitutes for any of the foregoing.

"ERISA" means the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sections 1000 et seq., amendments thereto, successor statutes, and regulations or guidelines promulgated thereunder.

"ERISA Affiliate" means any entity required to be aggregated with the Borrower under Section 414(b), (c), (m) or (o) of the Internal Revenue Code.

"Event of Default" means the occurrence of any of the events specified in Section 9.1.

"Excluded Receivables" means Receivables (i) with respect to which the account debtors are Affiliates of the Borrower and (ii) that do not arise from the sale of Inventory.

"Expiration Date" means the earlier of (i) January __, 2009 and (ii) the date of termination of the Commitments.

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"Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal, for each day during such period, to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal Funds brokers of recognized standing selected by it.

"Federal Reserve Board" means the Board of Governors of the Federal Reserve System or any Person succeeding to the functions thereof.

"Fee Letter" means the letter agreement as to the payment by the Borrower of certain fees to the Agent, both for its own account and for the ratable benefit of the Lenders.

"Financial Covenants" means the covenants set forth in Article VIII.

"Financial Statements" means, with respect to the Borrower and its Subsidiaries, the balance sheets, profit and loss statements, statements of cash flow, and statements of changes in intercompany accounts, if any, for the period specified, prepared in accordance with GAAP and consistent with prior practices applied to the Borrower's financial statements.

"Fixed Charge Coverage Ratio" means (without duplication), for any period, with respect to the Borrower, as of the date of determination thereof, the ratio of (X) (i) EBITDA for such period, less (ii) all Capital Expenditures (other than (A) Capital Expenditures financed by Persons other than the Lenders or by Loans and (B) Capital Expenditures, not to exceed $10,000,000 in the aggregate for the Borrower's 2005 fiscal year, relating to the construction of a "paint line" at the Borrower's facility in Paragould, Arkansas and for which the Borrower shall thereafter seek financing from Persons other than the Lenders) paid or payable during such period (other than from proceeds of Loans), less
(iii) all tax liabilities paid during such period to (Y) (i) all scheduled principal amounts of Indebtedness paid or scheduled to be paid during such period, plus (ii) all Interest Expense and all fees for the use of money or the availability of money, including commitment, facility and like fees and charges upon Indebtedness (including Indebtedness to the Lenders) paid or payable during such period, plus (iii) without limitation of Section 7.2(d) or 9.2, all loans and Investments to any Person (including, without limitation, any Affiliate of the Borrower) made during such period plus (iv) without limitation of Section 9.2, all dividends, stock repurchases or other distributions paid or payable in cash on account of the Borrower's capital stock or other equity interests during such period less (v) any proceeds of the IPO used to repay any Indebtedness or redeem preferred stock of the Borrower or to fund or pay any of the items specified in clauses (Y)(ii), (iii) or (iv) during such period.

"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable to the circumstances as of the date of determination.

"Governing Documents" means, with respect to any Person, the certificate of incorporation and bylaws or similar organizational documents of such Person.

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"Governmental Authority" means any nation or government, any state or other political subdivision thereof or any entity exercising executive, legislative, judicial, regulatory or administrative functions thereof or pertaining thereto.

"Hazardous Materials" means any and all pollutants, contaminants and toxic, caustic, radioactive and hazardous materials, substances and wastes including, without limitation, petroleum or petroleum distillates, asbestos or urea formaldehyde foam insulation or asbestos-containing materials, whether or not friable, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature, that are regulated under any Environmental Laws.

"Hedging Agreement" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging agreement.

"Indebtedness" means, with respect to the Borrower or any other Person, as of the date of determination thereof (without duplication), (i) all obligations of such Person for borrowed money of any kind or nature, including funded and unfunded debt, and any Hedging Agreements or arrangements therefor, regardless of whether the same is evidenced by any note, debenture, bond or other instrument, (ii) all obligations of such Person to pay the deferred purchase price of property or services (other than current trade accounts payable under normal trade terms and which arise in the ordinary course of business), (iii) all obligations of such Person to acquire or for the acquisition or use of any fixed asset, including Capitalized Lease Obligations (other than, in any such case, any portion thereof representing interest or deemed interest or payments in respect of taxes, insurance, maintenance or service), or improvements which are payable over a period longer than one year, regardless of the term thereof or the Person or Persons to whom the same are payable, (iv) the then outstanding amount of withdrawal or termination liability incurred by or imposed on the Borrower or its Subsidiaries under ERISA, (v) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right to be secured) a Lien on any asset of such Person whether or not the Indebtedness is assumed by such Person, provided that, for the purpose of determining the amount of Indebtedness of the type described in this clause (v), if recourse with respect to such Indebtedness is limited to the assets of such Person, then the amount of Indebtedness shall be limited to the fair market value of such assets, (vi) all Indebtedness of others to the extent guaranteed by such Person and (vii) all obligations of such Person in respect of letters of credit, bankers acceptances or similar instruments issued or accepted by banks or other financial institutions for the account of such Person. For the avoidance of doubt, (A) Indebtedness as defined herein shall include all Indebtedness of a Person owing to an Affiliate of such Person and (B) obligations of a Person under an Operating Lease shall not constitute Indebtedness.

"Insolvency Event" means, with respect to any Person, the occurrence of any of the following: (i) such Person shall be adjudicated insolvent or bankrupt or institutes proceedings to be adjudicated insolvent or bankrupt, or shall generally fail to pay or admit in writing its inability to pay its debts as they become due, (ii) such Person shall seek dissolution or reorganization or the appointment of a receiver, trustee, custodian or liquidator for it or a substantial portion of its property, assets or business or to effect a plan or other arrangement with its creditors, (iii) such Person shall make a general assignment for the benefit of its creditors, or

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consent to or acquiesce in the appointment of a receiver, trustee, custodian or liquidator for a substantial portion of its property, assets or business, (iv) such Person shall file a voluntary petition under any bankruptcy, insolvency or similar law, (v) such Person shall take any corporate or similar act in furtherance of any of the foregoing, or (vi) such Person, or a substantial portion of its property, assets or business, shall become the subject of an involuntary proceeding or petition for (A) its dissolution or reorganization or
(B) the appointment of a receiver, trustee, custodian or liquidator, and (I)
such proceeding shall not be dismissed or stayed within ninety days or (II) such receiver, trustee, custodian or liquidator shall be appointed; provided, however, that the Lender shall have no obligation to make any Advance during the pendency of any ninety-day period described in clauses (A) and (B).

"Interest Expense" means, for any period, all interest with respect to Indebtedness (including, without limitation, the interest component of Capitalized Lease Obligations) accrued or capitalized during such period (whether or not actually paid during such period) determined in accordance with GAAP.

"Interest Period" means the period commencing on the date of a LIBOR Rate Advance and ending one, two or three months thereafter; provided, however, that (i) the Borrower may not select any Interest Period that ends after the Expiration Date; (ii) whenever the last day of an Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, except that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, then the last day of such Interest Period shall occur on the next preceding Business Day; and (iii) if there is no corresponding date of the month that is one, two or three months, as the case may be, after the first day of an Interest Period, such Interest Period shall end on the last Business Day of such first, second or third month, as the case may be.

"Internal Revenue Code" means the Internal Revenue Code of 1986, any amendments thereto, any successor statute and any regulations and guidelines promulgated thereunder.

"Internal Revenue Service" or "IRS" means the United States Internal Revenue Service and any successor agency.

"Inventory" means all present and future goods intended for sale, lease or other disposition including, without limitation, all raw materials, work in process, finished goods and other retail inventory, goods in the possession of outside processors or other third parties, consigned goods (to the extent of the consignee's interest therein), materials and supplies of any kind, nature or description which are or might be used in connection with the manufacture, packing, shipping, advertising, selling or finishing of any such goods, all documents of title or documents representing the same and all records, files and writings with respect thereto.

"Investment" in any Person means, as of the date of determination thereof, (i) any payment or contribution, or commitment to make a payment or contribution, by a Person including, without limitation, property contributed or committed to be contributed by such Person for or in connection with its acquisition of any stock, bonds, notes, debentures, partnership or other ownership interest or any other security of the Person in whom such

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Investment is made or (ii) any loan, advance or other extension of credit or guaranty of or other surety obligation for any Indebtedness of such Person in whom the Investment is made. In determining the aggregate amount of Investments outstanding at any particular time, (i) a guaranty (or other surety obligation) shall be valued at not less than the principal outstanding amount of the primary obligation; (ii) returns of capital (but only by repurchase, redemption, retirement, repayment, liquidating dividend or liquidating distribution) shall be deducted; (iii) earnings, whether as dividends, interest or otherwise, shall not be deducted; and (iv) decreases in the market value shall not be deducted unless such decreases are computed in accordance with GAAP.

"IPO" means the initial public offering of the Borrower's common stock, which offering was consummated on January __, 2006.

"Lender" or "Lenders" has the meaning specified in the introductory paragraph and shall include the Agent with respect to any Agent Loan.

"Leverage Ratio" means the ratio specified in Section 8.2.

"Liabilities" of a Person as of the date of determination thereof means the liabilities of such Person on such date as determined in accordance with GAAP. Liabilities to Affiliates of such Person shall be treated in accordance with GAAP or as otherwise provided herein.

"LIBOR Rate" means, with respect to each Interest Period, the reserve adjusted rate per annum equal to the one, two or three-month London Interbank Offered Rate, as applicable, that appears in the "Money Rates" section of The Wall Street Journal on the first day of such Interest Period; provided, however, that if The Wall Street Journal no longer publishes such one, two or three-month London Interbank Offered Rate, reference shall be made to the Dow Jones Market Service (formerly Telerate) page 3750 for such London Interbank Offered Rate.

"LIBOR Rate Advance" means an Advance that bears interest as provided in Section 4.1(b).

"Lien" means any lien, claim, charge, pledge, security interest, assignment, hypothecation, deed of trust, mortgage, lease, conditional sale, retention of title or other preferential arrangement having substantially the same economic effect as any of the foregoing, whether voluntary or imposed by law.

"Loan Account" has the meaning specified in Section 2.6.

"Loan Documents" means this Agreement and all documents and instruments executed and delivered by the Borrower under or in connection with this Agreement, as each of the same may be amended, supplemented or otherwise modified from time to time, including, without limitation, the Notes and the Blocked Account Agreements.

"Loans" means the Revolving Credit Loans, the Agent Loans and the CapEx Loans.

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"Material Adverse Effect" means (i) a material adverse effect on the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of the Borrower, (ii) the impairment of (A) the Borrower's ability to perform in any material respect its obligations under the Loan Documents to which it is a party or (B) the ability of the Agent or the Lenders to enforce the Obligations or realize upon the Collateral or (iii) a material adverse effect on the value of the Collateral or the amount that the Agent or the Lenders would be likely to receive (after giving consideration to delays in payment and costs of enforcement) in the liquidation of the Collateral; provided, however, that (A) a material adverse change in (I) the global, United States or regional economy generally, (II) railcar manufacturing or leasing conditions generally or (III) global or United States securities markets, (B) a change in laws, rules or regulations applicable to the Borrower or its business or (C) a change caused by any announcement of the transactions contemplated by this Agreement shall not, in and of itself, be deemed to have a Material Adverse Effect.

"Material Indebtedness" means Indebtedness (other than the Loans), or obligations in respect of one or more Hedging Agreements, of the Borrower in an aggregate principal amount exceeding $20,000,000. For purposes of this definition, the "principal amount" of the obligations of the Borrower in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower would be required to pay if such Hedging Agreement were terminated at such time.

"Maximum Amount of the Facility" means Seventy Five Million Dollars ($75,000,000) as such amount may be decreased from time to time in accordance with Section 2.10(d) of this Agreement.

"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate has contributed within the past six years.

"Net Cash Proceeds" means, the aggregate cash proceeds received by the Borrower in respect of any sale or other disposition of Equipment purchased with the proceeds of CapEx Loans, net of (without duplication) (i) the reasonable out-of-pocket expenses incurred in effecting such sale or other disposition and (ii) any taxes reasonably attributable to such asset sale and reasonably estimated by the Borrower to be actually payable.

"NFBC" has the meaning specified in the introductory paragraph.

"Notes" means the CapEx Notes and the Revolving Credit Notes.

"Obligations" means and includes all loans (including the Loans), advances (including the Advances), debts, liabilities, obligations, covenants and duties owing by the Borrower to the Agent or the Lenders of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, which may arise under, out of, or in connection with, this Agreement, the Notes, the other Loan Documents or any other agreement executed in connection herewith or therewith, whether or not for the payment of money, whether arising by reason of an extension of credit, opening, guaranteeing or confirming of a letter of credit, loan, guaranty, indemnification or in any other manner, whether direct or indirect

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(including those acquired by assignment, purchase, discount or otherwise), whether absolute or contingent, due or to become due, and however acquired. The term includes, without limitation, all Loans made in excess of the limitations specified in Section 2.5(a) and all interest (including interest accruing on or after an Insolvency Event, whether or not such interest constitutes an allowed claim), charges, expenses, commitment, facility, closing and collateral management fees, attorneys' fees, and any other sum properly chargeable to the Borrower under this Agreement, the Notes, the other Loan Documents or any other agreement executed in connection herewith or therewith.

"Operating Lease" means a lease treated as an operating lease in accordance with GAAP.

"Original Loan Agreement" has the meaning given in the first Recital.

"PBGC" means the Pension Benefit Guaranty Corporation and any Person succeeding to the functions thereof.

"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA (other than a Multiemployer Plan) which the Borrower or any ERISA Affiliate sponsors or maintains, or to which it makes, is making, or is obligated to make contributions, or, in the case of a multiple employer plan (as described in Section 4064(a) of ERISA), has made contributions at any time during the immediately preceding five plan years.

"Permitted Liens" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced and be continuing (unless such enforcement, collection, levy or foreclosure relates to liabilities not exceeding $1,000,000 in the aggregate and is being contested by the Borrower in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained in accordance with GAAP): (i) Liens for taxes, assessments and other governmental charges or levies or the claims or demands of landlords, carriers, warehousemen, mechanics, laborers, materialmen and other like Persons arising by operation of law in the ordinary course of business for sums which are not yet due and payable, (ii) deposits or pledges (other than Liens on Collateral) to secure the payment of worker's compensation, unemployment insurance or other social security benefits or obligations, public or statutory obligations, surety or appeal bonds, bid or performance bonds, or other obligations of a like nature incurred in the ordinary course of business, (iii) zoning restrictions, easements, encroachments, licenses, restrictions or covenants on the use of any Property which do not materially impair either the use of such Property in the operation of the business of the Borrower or the value of such Property, (iv) inchoate Liens arising under ERISA to secure current service pension liabilities as they are incurred under the provisions of employee benefit plans from time to time in effect, and (v) rights of general application reserved to or vested in any Governmental Authority to control or regulate any Property, or to use any Property in a manner which does not materially impair the use of such Property for the purposes for which it is held by the Borrower, provided that the foregoing Liens under clauses (i) through (v) hereof do not secure liabilities in excess of $5,000,000 in the aggregate at any time, and provided further that Permitted Liens shall not include any Lien securing Indebtedness.

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"Person" means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, joint stock company, association, corporation, institution, entity, party or government (including any division, agency or department thereof) or any other legal entity, whether acting in an individual, fiduciary or other capacity, and, as applicable, the successors, heirs and assigns of each. For the avoidance of doubt, a Subsidiary or other Affiliate of the Borrower shall constitute a separate Person.

"Plan" means any employee benefit plan, as defined in Section 3(3) of ERISA, maintained or contributed to by the Borrower or any Subsidiary (other than a Multiemployer Plan) or with respect to which any of them may incur liability even if such plan is not covered by ERISA pursuant to Section 4(b)(4) thereof.

"Pledged Deposit Accounts" means the deposit accounts specified in Schedule 2, any other Blocked Accounts and any other deposit account of the Borrower in which any proceeds of any Collateral are on deposit from time to time.

"Prohibited Transaction" means a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code for which a statutory or class exemption is not available or a private exemption has not previously been obtained from the Department of Labor.

"Property" means any real property owned, leased or controlled by the Borrower.

"Pro Rata Share" of any amount means, with respect to any Lender, a fraction (expressed as a percentage) (i) at any time before the Expiration Date, the numerator of which is the Commitment of such Lender and the denominator of which is the aggregate amount of the Commitments of all the Lenders, and (ii) at any time on and after the Expiration Date, the numerator of which is the aggregate unpaid principal amount of the Loans made by such Lender and the denominator of which is the aggregate unpaid principal amount of all Loans, at such time.

"Qualification" or "Qualified" means, with respect to any report of independent public accountants covering Financial Statements, a material qualification to such report (i) resulting from a limitation on the scope of examination of such Financial Statements or the underlying data, (ii) as to the capability of the Borrower to continue operations as a going concern or (iii) which could be eliminated by changes in Financial Statements or notes thereto covered by such report (such as by the creation of or increase in a reserve or a decrease in the carrying value of assets) and which if so eliminated by the making of any such change and after giving effect thereto would result in a Default or an Event of Default.

"Receivables" means all present and future accounts, leases, instruments and chattel paper and all claims against third parties, drafts, acceptances, letters of credit, rights to receive payments under letters of credit, book accounts, credits, reserves, computer tapes, programs, discs, software, books, ledgers, files and records relating to such accounts, leases, instruments and chattel paper, together with all supporting obligations and all right, title, security and guaranties with respect to any of the foregoing, including any right of stoppage in transit.

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"Registration Statement" means the Registration Statement on Form S-1A (File No. 333-128177) of American Railcar Industries, Inc., a Missouri corporation, filed with the Securities and Exchange Commission on October 5, 2005, as amended, and the Borrower's Registration Statement on Form S-1 (File No. 333-130284), filed with the Securities and Exchange Commission on December 13, 2005, as amended.(1)

"Replacement Lender" means a financial institution proposed by the Borrower in accordance with Section 2.10(d) that is reasonably satisfactory to the Agent and which has agreed to acquire and assume all or a part of a Defaulting Lender's Loans and Commitments under Section 2.10(d).

"Reportable Event" means any of the events described in Section 4043 of ERISA and the regulations thereunder, other than a reportable event for which the thirty-day notice requirement to the PBGC has been waived.

"Required Lenders" means (i) before the Expiration Date, the Lenders holding more than fifty percent of the aggregate Commitments at such time and
(ii) on and after the Expiration Date, the Lenders holding more than fifty percent of the aggregate unpaid principal amount of the Loans at such time or, if NFBC holds more than fifty percent of the Commitments at such time and there are at least three Lenders, "Required Lenders" means NFBC and one other Lender.

"Requirement of Law" means (i) the Governing Documents, (ii) any law, treaty, rule, regulation, order or determination of an arbitrator, court or other Governmental Authority or (iii) any franchise, license, lease, permit, certificate, authorization, qualification, easement, right of way, or other right or approval binding on the Borrower or any of its property.

"Responsible Officer" means the Chairman of the Board, the President, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Controller, the Assistant Controller, the Treasurer or the Assistant Treasurer of the Borrower, as each such term is defined or otherwise used in the bylaws of the Borrower or in any resolution of the Borrower's board of directors, or any other individual designated in writing by the Chairman of the Board, the President, the Chief Executive Officer or the Chief Financial Officer of the Borrower as a "Responsible Officer" for purposes hereof.

"Revolving Credit Loans" has the meaning specified in Section 2.1(a).

"Revolving Credit Note" has the meaning specified in Section 2.1(c).

"Settlement" has the meaning specified in Section 2.3(i).

"Settlement Date" has the meaning specified in Section 2.3(i).

"Solvent" means, when used with respect to any Person, that as of the date as to which such Person's solvency is to be measured:

(1) Subject to revision.

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(i) the fair saleable value of its assets is in excess of (A) the total amount of its liabilities (including contingent, subordinated, absolute, fixed, matured, unmatured, liquidated and unliquidated liabilities) and (B) the amount that will be required to pay the probable liability of such Person on its debts as such debts become absolute and matured;

(ii) it has sufficient capital to conduct its business; and

(iii) it is able to meet its debts as they mature.

"Subsidiary" means a corporation or other entity in which the Borrower directly or indirectly owns or controls the shares of stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other governing body, or to appoint the majority of the managers of, such corporation or other entity.

"Termination Event" means (i) a Reportable Event with respect to any Pension Plan; (ii) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" (as defined in Section 4001(a)(2) of ERISA); (iii) the providing of notice of intent to terminate a Pension Plan in a distress termination (as described in Section 4041(c) of ERISA); (iv) the institution by the PBGC of proceedings to terminate or appoint a trustee to administer a Pension Plan; (v) the receipt by the Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvent under Section 4241 or 4245 of ERISA or that intends to terminate or has terminated under Section 4041A of ERISA; or (vi) the partial or complete withdrawal, within the meaning of Sections 4203 and 4205 of ERISA, of the Borrower or any ERISA Affiliate from a Multiemployer Plan.

"Type" means a Base Rate Advance or a LIBOR Rate Advance.

SECTION 1.2 Accounting Terms and Determinations. Unless otherwise defined or specified herein, all accounting terms used in this Agreement shall be construed in accordance with GAAP, applied on a basis consistent in all material respects with the Financial Statements delivered to the Agent on or before the Closing Date. All accounting determinations for purposes of determining compliance with Article VIII shall be made in accordance with GAAP as in effect on the Closing Date and applied on a basis consistent in all material respects with the audited Financial Statements delivered to the Agent on or before the Closing Date. The Financial Statements required to be delivered hereunder from and after the Closing Date, and all financial records, shall be maintained in accordance with GAAP. If GAAP shall change from the basis used in preparing the audited Financial Statements delivered to the Agent on or before the Closing Date, the Compliance Certificates required to be delivered pursuant to Section 7.1 shall include calculations setting forth the adjustments necessary to demonstrate how the Borrower is in compliance with the Financial Covenants based upon GAAP as in effect on the Closing Date.

SECTION 1.3 Other Terms; Headings. Unless otherwise defined herein, terms used herein that are defined in the Uniform Commercial Code, from time to time in effect in the State of New York (the "Code"), shall have the meanings given in the Code. An Event of

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Default shall "continue" or be "continuing" unless and until such Event of Default has been waived or cured within any grace period specified therefor under Section 9.1. The headings and the Table of Contents are for convenience only and shall not affect the meaning or construction of any provision of this Agreement. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein or in any other Loan Document shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iii) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (v) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

ARTICLE II.
THE CREDIT FACILITIES

SECTION 2.1 The Revolving Credit Loans.

(a) Each Lender severally agrees, subject to Section 2.5(a) and the other terms and conditions of this Agreement, to make revolving credit loans (the "Revolving Credit Loans") to the Borrower, from time to time from the Closing Date to but excluding the Expiration Date, at the Borrower's request to the Agent, in an aggregate principal amount which, after giving effect thereto, would not cause the aggregate principal amount of all outstanding Loans made by such Lender to exceed such Lender's Commitment reduced by such Lender's Pro Rata Share of the amount, if any, by which the Maximum Amount of the Facility exceeds
(i) 85% of Eligible Receivables plus (ii) 65% of Eligible Inventory (not to exceed $40,000,000) less (iii) any reserves established by the Agent in accordance with the terms of this Agreement (the "Borrowing Base"); provided, however, that in no event shall the aggregate amount of the Revolving Credit Loans of all the Lenders outstanding at any time exceed the Maximum Amount of the Facility less the aggregate outstanding principal amount of the CapEx Loans.

(b) The Agent, at any time in the exercise of its commercially reasonable discretion, may (i) establish and increase (or decrease) reserves against Eligible Receivables and Eligible Inventory for variances in collateral reporting based on tests conducted during examinations of the Collateral and
(ii) impose additional restrictions (or eliminate the same) to the standards of eligibility set forth in the definitions of "Eligible Receivables" and "Eligible Inventory" based on information obtained by the Agent from its examination of the Collateral, the books and records of the Borrower, public information and information furnished to the Agent by the Borrower or its Affiliates.

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(c) The Revolving Credit Loans made by each Lender shall be evidenced by a promissory note payable to the order of such Lender, substantially in the form of Exhibit A (as amended, supplemented or otherwise modified from time to time, a "Revolving Credit Note"), executed by the Borrower and delivered to the Agent on the Closing Date. The Revolving Credit Note payable to the order of a Lender shall be in a stated maximum principal amount equal to such Lender's Pro Rata Share of the Maximum Amount of the Facility.

(d) The Revolving Credit Loans shall be payable in full, with all interest accrued thereon, on the Expiration Date. The Borrower may borrow, repay and reborrow Revolving Credit Loans, in whole or in part, in accordance with the terms hereof.

SECTION 2.2 CapEx Loans. (a) The Lenders agree, subject to Section 2.5 and the other terms and conditions of this Agreement, to make loans to the Borrower to finance the purchase by the Borrower of Equipment (the "CapEx Loans"), from time to time from the Closing Date to but excluding the date that is six months before the Expiration Date, at the Borrower's request to the Agent, the aggregate principal amount at any time outstanding which shall not exceed the lesser of (i) $15,000,000 and (ii) 80% of the cost of such Equipment (excluding the cost of any software, warranties or other intangible assets related thereto).

(b) Each CapEx Loan shall be in a minimum principal amount of $3,000,000, and no more than five CapEx Loans may be outstanding at any time.

(c) The CapEx Loans shall be evidenced by a promissory note payable to the order of each Lender, substantially in the form of Exhibit B (as amended, supplemented or otherwise modified from time to time, the "CapEx Notes"), executed by the Borrower and delivered to each Lender on the Closing Date. The CapEx Note payable to the order of a Lender shall be in a stated maximum principal amount equal to such Lender's Pro Rata Share of $15,000,000.

(d) The principal amount of each CapEx Loan shall be payable in equal and consecutive monthly installments each in an amount equal to 1.67% of the amount of such CapEx Loan on the first Business Day of each month commencing on the first Business Day following the first anniversary of the Closing Date or, if such CapEx Loan is made after the first anniversary of the Closing Date, on the first Business Day of the month following the month in which such CapEx Loan is made, provided that the entire unpaid principal balance of each CapEx Loan shall be payable in full, with all interest accrued thereon, on the Expiration Date. Amounts repaid on account of a CapEx Loan may not be reborrowed as a CapEx Loan, provided that, (i) to the extent a repayment or prepayment, in whole or in part, of a CapEx Loan creates availability to borrow Revolving Credit Loans, such amounts may be reborrowed as Revolving Credit Loans; and (ii) to the extent any CapEx Loan is repaid or prepaid in full (and not in part), such amounts may be reborrowed as CapEx Loans to finance a different item of Equipment.

SECTION 2.3 Procedure for Borrowing; Notices of Borrowing; Notices of Continuation; Notices of Conversion; Settlement.

(a) Each borrowing of Revolving Credit Loans or CapEx Loans (each, a "Borrowing") shall be made on notice, given not later than 12:00 Noon (New York time) on the

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third Business Day prior to the date of the proposed Borrowing in the case of a LIBOR Rate Advance, and not later than 12:00 Noon (New York time) on the date of the proposed Borrowing in the case of a Base Rate Advance, by the Borrower to the Agent. Each such notice of a Borrowing shall be by telecopier, substantially in the form of Exhibit E (a "Notice of Borrowing"), specifying therein the requested (i) date of such Borrowing, (ii) Type of Advance comprising such Borrowing, (iii) aggregate principal amount of such Borrowing, (iv) Interest Period, in the case of a LIBOR Rate Advance and (v) whether such requested Borrowing is of a Revolving Credit Loan or a CapEx Loan. In the case of a proposed Borrowing of a CapEx Loan, the Borrower shall deliver with the Notice of Borrowing a copy of the invoice, purchase order, sales agreement or similar document applicable to the Equipment to be financed with the proceeds thereof, which machinery or equipment shall be used or useful in the manufacture or servicing of railcars or reasonably satisfactory to the Agent.

(b) With respect to any Borrowing consisting of a LIBOR Rate Advance, the Borrower may, subject to the provisions of Section 2.3(d) and so long as all the conditions set forth in Article V have been fulfilled, elect to maintain such Borrowing or any portion thereof as a LIBOR Rate Advance by selecting a new Interest Period for such Borrowing, which new Interest Period shall commence on the last day of the Interest Period then ending. Each selection of a new Interest Period (a "Continuation") shall be made by notice given not later than 12:00 Noon (New York time) on the third Business Day prior to the date of any such Continuation by the Borrower to the Agent. Each such notice of a Continuation shall be by telecopier, substantially in the form of Exhibit F (a "Notice of Continuation"), specifying whether the Advance subject to the requested Continuation comprises part (or all) of the Revolving Credit Loans or the CapEx Loans and the requested (i) date of such Continuation, (ii) Interest Period and (iii) aggregate amount of the Advance subject to such Continuation, which shall comply with all limitations on Loans hereunder. Upon the Agent's receipt of a Notice of Continuation, the Agent shall promptly notify each Lender thereof. Unless, on or before 12:00 Noon (New York time) of the third Business Day prior to the expiration of an Interest Period, the Agent shall have received a Notice of Continuation from the Borrower for the entire Borrowing consisting of the LIBOR Rate Advance outstanding during such Interest Period, any amount of such Advance comprising such Borrowing remaining outstanding at the end of such Interest Period (or any unpaid portion of such Advance not covered by a timely Notice of Continuation) shall, upon the expiration of such Interest Period, be Converted to a Base Rate Advance.

(c) The Borrower may on any Business Day upon notice (each such notice, a "Notice of Conversion") given by the Borrower to the Agent, and subject to the provisions of Section 2.3(d), Convert the entire amount of or a portion of an Advance of one Type into an Advance of another Type; provided, however, that any Conversion of a LIBOR Rate Advance into a Base Rate Advance shall be made on, and only on, the last day of an Interest Period for such LIBOR Rate Advance. Each such Notice of Conversion shall be given not later than 12:00 Noon (New York time) on the Business Day prior to the date of any proposed Conversion into a Base Rate Advance and on the third Business Day prior to the date of any proposed Conversion into a LIBOR Rate Advance. Subject to the restrictions specified above, each Notice of Conversion shall be by telecopier, substantially in the form of Exhibit G, specifying (i) the requested date of such Conversion, (ii) the Type of Advance to be Converted, (iii) the requested Interest Period, in the case of a Conversion into a LIBOR Rate Advance, and (iv) the amount of such Advance to be Converted and whether such amount comprises part (or all) of the Revolving

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Credit Loans or the CapEx Loans. Upon the Agent's receipt of a Notice of Conversion, the Agent shall promptly notify each Lender thereof. Each Conversion shall be in an aggregate amount not less than $1,000,000 or an integral multiple of $500,000 in excess thereof.

(d) Anything in subsection (b) or (c) above to the contrary notwithstanding,

(i) if, at least one Business Day before the date of any requested LIBOR Rate Advance, the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other Governmental Authority asserts that it is unlawful, for any Lender to perform its obligations hereunder to make a LIBOR Rate Advance or to fund or maintain a LIBOR Rate Advance hereunder (including in the case of a Continuation or a Conversion), such Lender shall promptly deliver written notice of such circumstance to the Agent, and the Agent shall promptly deliver such notice to the Borrower, and the right of the Borrower to select a LIBOR Rate Advance for such Borrowing or any subsequent Borrowing (including a Continuation or a Conversion) shall be suspended until the circumstances causing such suspension no longer exist, and any Advance comprising such requested Borrowing shall be a Base Rate Advance;

(ii) if, at least one Business Day before the first day of any Interest Period, the Agent is unable to determine the LIBOR Rate for LIBOR Rate Advances comprising any requested Borrowing, Continuation or Conversion, the Agent shall promptly give written notice of such circumstance to the Borrower, and the right of the Borrower to select or maintain LIBOR Rate Advances for such Borrowing or any subsequent Borrowing shall be suspended until the Agent shall notify the Borrower that the circumstances causing such suspension no longer exist, and any Advance comprising such Borrowing shall be a Base Rate Advance;

(iii) if any Lender shall, at least one Business Day before the date of any requested Borrowing or Continuation of, or Conversion into, a LIBOR Rate Advance, notify the Agent, which notice the Agent shall promptly deliver to the Borrower, that the LIBOR Rate for Advances comprising such Borrowing, Continuation or Conversion will not adequately reflect the cost to such Lender of making or funding Advances for such Borrowing, the right of the Borrower to select LIBOR Rate Advances shall be suspended until such Lender shall notify the Borrower that the circumstances causing such suspension no longer exist, and any Advance comprising such Borrowing shall be a Base Rate Advance;

(iv) there shall not be outstanding at any time more than three Borrowings which consist of LIBOR Rate Advances;

(v) each Borrowing which consists of LIBOR Rate Advances shall be in an amount equal to $1,000,000 or a whole multiple of $500,000 in excess thereof; and

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(vi) if a Default has occurred and is continuing, no LIBOR Rate Advances may be borrowed or continued as such and no Base Rate Advance may be Converted into a LIBOR Rate Advance.

(e) Each Notice of Borrowing, Notice of Continuation and Notice of Conversion shall be irrevocable and binding on the Borrower. The Borrower agrees to pay to the Agent for the account of the Lenders $300 for each and any (i) default by the Borrower in making a Borrowing of, Conversion into or Continuation of a LIBOR Rate Advance after the Borrower has given notice requesting the same, (ii) default by the Borrower in payment when due of the principal amount of or interest on any LIBOR Rate Advance or (iii) making of a payment or prepayment of a LIBOR Rate Advance on a day which is not the last day of an Interest Period with respect thereto.

(f) Promptly after its receipt of a Notice of Borrowing under
Section 2.3(a), the Agent shall elect, in its sole and absolute discretion, (i) to have the terms of Section 2.3(g) apply to the requested Borrowing or (ii) in the case of a request for Revolving Credit Loans, to make a Loan under Section 2.3(h) to the Borrower in the amount of the requested Borrowing.

(g) (i) If the Agent shall elect to have the terms of this Section 2.3(g) apply to a requested Borrowing as described in Section 2.3(f)(i), then, promptly after its receipt of a Notice of Borrowing under Section 2.3(a), the Agent shall notify the Lenders in writing (by telecopier or otherwise as permitted hereunder) of the requested Borrowing. Each Lender shall make the amount of such Lender's Pro Rata Share of the requested Borrowing available to the Agent in same day funds, for the account of the Borrower, at the Agent's Payment Account prior to 2:00 P.M. (New York time), on the Borrowing Date requested by the Borrower. The proceeds of such Borrowing will then be made available to the Borrower by the Agent wire transferring to the Borrower's Account the aggregate of the amounts made available to the Agent by the Lenders, and in like funds as received by the Agent by 2:00 P.M. (New York time), on the requested Borrowing Date.

(ii) Unless the Agent receives contrary written notice prior to the date of any proposed Borrowing, the Agent is entitled to assume that each Lender will make available its Pro Rata Share of such Borrowing and, in reliance upon that assumption, but without any obligation to do so, may advance such Pro Rata Share on behalf of such Lender. If and to the extent that such Lender shall not have made such amount available to the Agent, but the Agent has made such amount available to the Borrower, such Lender and the Borrower jointly and severally agree to pay and repay the Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is transferred by the Agent to the Borrower's Account until the date such amount is paid or repaid to the Agent, at (A) in the case of the Borrower, the interest rate applicable at such time to such Loan and (B) in the case of each Lender, for the period from the date such amount was wire transferred to the Borrower's Account to (and including) three days after demand therefor by the Agent to such Lender, at the Federal Funds Rate and, following such third day, at the interest rate applicable at such time to such Loan together with all costs and expenses incurred by the Agent in connection therewith. If a Lender shall pay to the Agent any or all of such amount, such amount so paid shall constitute a Revolving Credit Loan or a CapEx Loan, as applicable, by such Lender to the Borrower for purposes of this Agreement.

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(h) If the Agent shall elect, in its sole and absolute discretion, to have the terms of this Section 2.3(h) apply to a requested Borrowing of Revolving Credit Loans (as described in Section 2.3(f)(ii)), the Agent shall make a Loan in the amount of such requested Borrowing (any such Loan made solely by NFBC under this Section 2.3(h) being referred to as an "Agent Loan") available to the Borrower in same day funds by wire transferring such amount to the Borrower's Account by 2:00 P.M. (New York time) on the requested Borrowing Date. Each Agent Loan shall be subject to all the terms and conditions applicable hereunder to the Revolving Credit Loans except that all payments thereon shall be payable to the Agent solely for its own account (and for the account of the holder of any participation interest with respect to such Agent Loan). The Agent shall not make any Agent Loan if (i) any one or more of the conditions precedent specified in Section 5.2 will not be satisfied on the requested Borrowing Date for the applicable Borrowing unless the Agent, in its reasonable business judgment, deems the making of such Loan necessary or desirable (A) to preserve or protect the Collateral or any portion thereof, (B) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and the other Obligations, or (C) to pay any other amount chargeable to the Borrower under this Agreement or any other Loan Document including, without limitation, costs, fees and expenses as described in Section 11.4 or (ii) the requested Borrowing would cause the aggregate outstanding amount of Revolving Credit Loans and Agent Loans to exceed the Maximum Amount of the Facility (less the aggregate outstanding principal amount of CapEx Loans) or the Borrowing Base on such Borrowing Date, except that the Agent may, in its discretion and without the consent of any of the Lenders, voluntarily permit, for periods of up to thirty consecutive Business Days, the aggregate outstanding amount of the Revolving Credit Loans and the Agent Loans at any time and from time to time to exceed the Borrowing Base by an amount up to the lesser of (A) ten percent (10%) of the Borrowing Base and (B) $2,500,000. For purposes of the preceding sentence, the discretion granted to the Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Borrowing Base was unintentionally exceeded for any reason, including, without limitation, Collateral previously deemed to be either "Eligible Receivables" or "Eligible Inventory," as applicable, becomes ineligible, Collections of Receivables applied to reduce outstanding Loans are thereafter returned for insufficient funds or overadvances are made to protect or preserve the Collateral, all of which involuntary overadvances shall be repaid by the Borrower on demand. The Agent Loans shall be secured by the Collateral, shall constitute Loans and Obligations hereunder and shall bear interest at the rate in effect from time to time applicable to the Revolving Credit Loans comprised of Base Rate Advances, including any increase in such rate that is applicable under Section 4.2. The Agent shall notify each Lender in writing of each Agent Loan as soon as reasonably practicable.

(i) Each Lender's funded portion of any Loan is intended to be equal at all times to such Lender's Pro Rata Share of all outstanding Loans. Notwithstanding such agreement, the Agent and the other Lenders agree (which agreement shall not be for the benefit of or enforceable by the Borrower) that, to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Loans and the Agent Loans shall take place on a periodic basis in accordance with the following provisions:

(i) The Agent shall request settlement ("Settlement") with the Lenders on a weekly basis, or on a more frequent basis if so determined by the Agent, with respect to (A) each outstanding Agent Loan and (B) all payments made by the

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Borrower on account of the Loans, in each case by notifying the Lenders of such requested Settlement by telephone, confirmed immediately in writing (by telecopier or otherwise as permitted hereunder), prior to 12:00 Noon (New York time) on the date of such requested Settlement (any such date being a "Settlement Date").

(ii) Each Lender shall make the amount of such Lender's Pro Rata Share of the outstanding principal amount of the Agent Loan with respect to which Settlement is requested available to the Agent in same day funds, for itself or for the account of NFBC, to the Agent's Payment Account prior to 2:00 P.M. (New York time), on the Settlement Date applicable thereto, regardless of whether the conditions precedent specified in Section 5.2 have then been satisfied. Such amounts made available to the Agent shall be applied against the amounts of the applicable Agent Loan and, together with the portion of such Agent Loan representing NFBC's Pro Rata Share thereof, shall constitute Revolving Credit Loans of such Lenders. If any such amount is not made available to the Agent by any Lender on the Settlement Date applicable thereto, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three days from and after such Settlement Date and thereafter at the interest rate then applicable to Base Rate Loans.

(iii) Notwithstanding the foregoing, not more than one Business Day after demand is made by the Agent (whether before or after the occurrence of a Default or an Event of Default), each Lender (other than NFBC) shall irrevocably and unconditionally purchase and receive from the Agent, without recourse or warranty, an undivided interest and participation in such Agent Loan to the extent of such Lender's Pro Rata Share thereof, by paying to the Agent, in same day funds, an amount equal to such Lender's Pro Rata Share of such Agent Loan, regardless of whether the conditions precedent specified in Section 5.2 have then been satisfied. If such amount is not made available to the Agent by any Lender, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three days from and after such demand and thereafter at the interest rate then applicable to the Revolving Credit Loans for Base Rate Advances, including any increase in such rate that is applicable under Section 4.2.

(iv) From and after the date, if any, on which any Lender purchases an undivided interest and participation in an Agent Loan under clause (iii) above, the Agent shall promptly distribute to such Lender such Lender's Pro Rata Share of all payments of principal and interest received by the Agent in respect of such Agent Loan.

SECTION 2.4 Application of Proceeds. The proceeds of the Revolving Credit Loans shall be used by the Borrower for its general working capital purposes, to fund loans to and investments in Affiliates of the Borrower to the extent permitted under Section 7.2(d), to pay dividends to the extent permitted under Section 9.2(c)(H), to finance capital expenditures, to

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repay the Borrower's Indebtedness under the Original Loan Agreement and to pay expenses incurred by the Borrower in connection herewith. The proceeds of the CapEx Loans shall be used by the Borrower to finance the purchase of Equipment.

SECTION 2.5 Maximum Amount of the Facility; Mandatory Prepayments; Optional Prepayments.

(a) In no event shall the sum of (i) the aggregate outstanding principal balances of the Revolving Credit Loans and the Agent Loans exceed the lesser of (A) the Borrowing Base and (B) the Maximum Amount of the Facility less the aggregate outstanding principal amount of the CapEx Loans, (ii) the aggregate outstanding principal balance of the CapEx Loans exceed the lesser of (A) 80% of the costs of the Equipment financed with the proceeds of the CapEx Loans (excluding the cost of any software, warranties or other intangible assets related thereto) and (B) $15,000,000 or (iii) the aggregate outstanding principal balances of the Loans exceed the Maximum Amount of the Facility.

(b) In addition to any prepayment required as a result of an Event of Default hereunder, the Loans shall be subject to mandatory prepayment as follows:

(i) immediately upon discovery by or notice to the Borrower that any of the lending limits set forth in Sections 2.1(a), 2.2(a) or 2.5(a) has been exceeded, an amount sufficient to reduce the outstanding balances of the Loans to the applicable maximum allowed amount shall become due and payable by the Borrower without the necessity of a demand by the Agent or any Lender;

(ii) the outstanding principal amount of the CapEx Loans shall be immediately prepaid by an amount equal to 100% of all Net Cash Proceeds, which shall be applied to the outstanding installments under the CapEx Loans in inverse order of maturity; and

(iii) the entire outstanding principal amount of the Loans, together with all accrued and unpaid interest thereon and all fees, costs and expenses payable by the Borrower hereunder, shall become due and payable on the Expiration Date.

(c) The Borrower may prepay any or all of the Loans, without penalty or premium, subject to Section 2.3(e)(iii). Amounts prepaid on account of a CapEx Loan (i) shall be applied to the installments under such CapEx Loan in inverse order of maturity and (ii) may not be reborrowed as a CapEx Loan, provided that, (A) to the extent a repayment or prepayment, in whole or in part, of a CapEx Loan creates availability to borrow Revolving Credit Loans, such amounts may be reborrowed as Revolving Credit Loans; and (B) to the extent any CapEx Loan is repaid or prepaid in full (and not in part), such amounts may be reborrowed as CapEx Loans to finance a different item of Equipment.

SECTION 2.6 Maintenance of Loan Account; Statements of Account. The Agent shall maintain an account on its books in the name of the Borrower (the "Loan Account") in which the Borrower will be charged with all Loans and Advances made by each Lender to the Borrower or for the Borrower's account, including the Revolving Credit Loans, the Agent Loans, the CapEx Loans, interest, fees, expenses and any other Obligations. The Loan Account will be

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credited with all amounts received by the Agent from the Borrower or for the Borrower's account, including, as set forth below, all amounts received from the Blocked Account Banks. The Agent shall send the Borrower a monthly statement reflecting the activity in the Loan Account. Each such statement shall be an account stated and shall be final, conclusive and binding on the Borrower, absent manifest error.

SECTION 2.7 Collection of Receivables. The Borrower currently maintains and continue to maintain one or more blocked accounts (each, a "Blocked Account") at all times. Upon notice given by the Agent to the Borrower at any time after the occurrence of an Availability Event or, in the Agent's discretion, during the continuation of an Event of Default (a "Blocked Account Notice"), unless and until the Agent revokes such Blocked Account Notice in writing, the Borrower shall promptly remit to a Blocked Account all Collections including all checks, drafts and other documents and instruments evidencing remittances in payment (collectively, "Items of Payment"). The Borrower, the Agent and a Blocked Account Bank shall enter into an agreement, in form and substance satisfactory to the Agent, the Borrower and such Blocked Account Bank (as amended, supplemented or otherwise modified from time to time, a "Blocked Account Agreement"), which, among other things, shall provide for the opening of a Blocked Account for the deposit of Collections at such Blocked Account Bank. At all times after the delivery of a Blocked Account Notice (unless and until the Agent revokes such Blocked Account Notice in writing), all Collections and other amounts received by the Borrower from any account debtor, in addition to all other cash proceeds of the Collateral, shall upon receipt be deposited into a Blocked Account. The Agent will credit all such payments to the Loan Account, conditional upon final collection; credit will be given only for cleared funds received prior to 2:00 P.M. (New York time) by the Agent at its account at North Fork Bank, Melville, New York (Account #3124059415), or such other bank as the Agent may designate; provided, however, that for purposes of calculating interest due to the Lenders, credit will be given to collections one Business Day after receipt of cleared funds. In all cases, the Loan Account will be credited only with the net amounts actually received in payment of their Receivables. The Borrower will not commingle any Items of Payment with any of its other funds or property, but will segregate them from its other assets and will hold them in trust and for the account and as the property of the Agent. At any time (i) after the delivery of a Blocked Account Notice (unless and until the Agent revokes such Blocked Account Notice in writing) or (ii) during the continuation of an Event of Default, the Borrower shall endorse any Items of Payment upon the request of the Agent. Items of Payment will be processed in accordance with the Blocked Account Agreements.

SECTION 2.8 Term. The term of this Agreement shall be for a period from the Closing Date to but not including the Expiration Date unless sooner terminated in accordance with the terms of this Agreement. Notwithstanding the foregoing, the Borrower shall have no right to terminate this Agreement at any time that any principal of or interest on any of the Loans is outstanding, except upon prepayment of all Obligations.

SECTION 2.9 Payment Procedures.

(a) The Borrower hereby authorizes the Agent to charge the Loan Account with the amount of all principal, interest, fees, expenses and other payments to be made

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hereunder and under the other Loan Documents. The Agent may, but shall not be obligated to, discharge the Borrower's payment obligations hereunder by so charging the Loan Account.

(b) Each payment by the Borrower on account of principal, interest, fees or expenses hereunder shall be made to the Agent for the benefit of the Agent and the Lenders according to the their respective rights thereto. All payments to be made by the Borrower hereunder and under the Notes, whether on account of principal, interest, fees or otherwise, shall be made without setoff, deduction or counterclaim and shall be made prior to 2:00 P.M. (New York time) on the due date thereof to the Agent, for the account of the Lenders according to their Pro Rata Shares (except as expressly otherwise provided), at the Agent's Payment Account in immediately available funds. Except for payments which are expressly provided to be made (i) for the account of the Agent only or
(ii) under the settlement provisions of Section 2.3(i), the Agent shall distribute all payments to the Lenders on the Business Day following receipt in like funds as received. Notwithstanding anything to the contrary contained in this Agreement, if a Lender exercises its right of setoff under Section 11.3 or otherwise, any amounts so recovered shall promptly be shared by such Lender with the other Lenders according to their respective Pro Rata Shares.

(c) The Agent shall apply all amounts received by it on account of the Obligations from the Borrower, from the Blocked Account Banks or from any other source first, to fees, costs and expenses, second, to interest and third, to the principal amount of the Obligations, except that, during the continuance of an Event of Default, the Agent may, with the consent of the Required Lenders, apply such amounts to such of the Obligations and in such order as it may elect in its sole and absolute discretion.

(d) Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the payment may be made on the next succeeding Business Day (except as specified in clause (ii) of the definition of Interest Period) and such extension of time shall be included in the computation of the amount of interest due hereunder.

SECTION 2.10 Defaulting Lenders.

(a) A Lender that (i) fails to pay the Agent its Pro Rata Share of any Loans made available by the Agent on such Lender's behalf or (ii) fails to pay any other amount owing by it to the Agent hereunder, is a defaulting lender (a "Defaulting Lender"). The Agent may recover all such amounts owing by a Defaulting Lender on demand.

(b) The failure of any Lender to fund its Pro Rata Share of any Borrowing shall not relieve any other Lender of its obligation to fund its Pro Rata Share of such Borrowing. Conversely, no Lender shall be responsible for the failure of another Lender to fund such other Lender's Pro Rata Share of a Borrowing.

(c) The Agent shall not be obligated to transfer to a Defaulting Lender any payments made by the Borrower to the Agent for the Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or retained by the Agent. The Agent may hold and, in its discretion, re-lend to the Borrower the amount of all such payments received or retained by it

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for the account of such Defaulting Lender. For purposes of voting or consenting to matters with respect to the Loan Documents and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a Lender and such Lender's Commitment or Loans made by it, as applicable, for such purposes shall be deemed to be zero. This Section shall remain effective with respect to such Lender until (i) the Defaulting Lender has paid all amounts required to be paid to the Agent hereunder or (ii) the Required Lenders, the Agent and the Borrower shall have waived such Lender's default in writing. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender or to relieve or excuse the performance by any of the Borrower of its duties and obligations hereunder.

(d) The Borrower may, by notice (a "Replacement Notice") in writing to the Agent and a Defaulting Lender, (i) request such Defaulting Lender to cooperate with the Borrower in obtaining a Replacement Lender for such Defaulting Lender; (ii) request the non-Defaulting Lenders to acquire and assume all or a portion of such Defaulting Lender's Loans and Commitment, but none of such Lenders shall be obligated to do so; or (iii) propose a Replacement Lender. If a Replacement Lender shall be accepted by the Agent or one or more of the non-Defaulting Lenders shall agree to acquire and assume all or part of a Defaulting Lender's Loans and Commitment, then such Defaulting Lender shall assign, in accordance with Section 11.7, all or part, as the case may be, of its Loans, Commitment, Notes and other rights and obligations under this Agreement and all other Loan Documents to such Replacement Lender or non-Defaulting Lenders, as the case may be, in exchange for payment of the principal amount of the Loans so assigned and all interest and fees accrued on such amount so assigned; provided, however, that (i) such assignment shall be on the terms and conditions set forth in Section 11.7, and (ii) prior to any such assignment, the Borrower shall have (A) paid to such Defaulting Lender all amounts properly demanded and theretofore unpaid by the Borrower under the second sentence of
Section 2.3(e) (less costs and expenses incurred by the Borrower directly as a result of the actions of the Defaulting Lender in violation of this Agreement) and (B) paid to the Agent all amounts properly demanded and theretofore unpaid by the Borrower under Article IV. If the Replacement Lender and the non-Defaulting Lenders shall only be willing to acquire less than all of a Defaulting Lender's outstanding Loans and Commitment, the Commitment of such Defaulting Lender shall not terminate, but shall be reduced proportionately, and such Defaulting Lender shall continue to be a "Lender" hereunder with a reduced Commitment and Pro Rata Share. Upon the effective date of such assignment, the Borrower shall issue replacement Notes to such Replacement Lender, non-Defaulting Lenders and Defaulting Lender, as the case may be, in exchange for the Notes of such Defaulting Lender theretofore outstanding, and such Replacement Lender shall, if not already a Lender, become a "Lender" for all purposes under this Agreement and the other Loan Documents.

SECTION 2.11 Sharing of Payments, Etc. If any Lender shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of Obligations payable to such Lender hereunder at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations to (ii) the aggregate amount of the Obligations payable to all Lenders hereunder at such time), such Lender shall forthwith purchase from the other Lenders such participations in the Obligations payable to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that, if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each other Lender shall

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be rescinded and such other Lender shall repay to the purchasing Lender the purchase price to the extent of such other Lender's ratable share (according to the proportion of (i) the purchase price paid to such Lender to (ii) the aggregate purchase price paid to all Lenders) of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such other Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.11 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

SECTION 2.12 Publicity. The Agent or any Lender may, with the consent of the Borrower (which shall not be unreasonably withheld or delayed), publish a tombstone or similar advertising material relating to the financing transactions contemplated by this Agreement. The Agent or such Lender shall provide a draft of any such tombstone or similar advertising material to the Borrower for review and comment before the publication thereof. The Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

ARTICLE III.
SECURITY

SECTION 3.1 General. To secure the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of all of the Obligations, the Borrower hereby grants to the Agent for the ratable benefit of the Lenders a lien on and security interest in all of its right, title and interest in and to the Collateral, wherever located, whether now owned or hereafter acquired, and all additions and accessions thereto and substitutions and replacements therefor and improvements thereon, and all proceeds (whether in the form of cash or other property) and products thereof including, without limitation, all proceeds of insurance covering the same and all tort claims in connection therewith. As further security for the Obligations, and to provide other assurances to the Agent and the Lenders, the Agent and the Lenders shall receive, among other things, the Blocked Account Agreements and any agreements or documentation the Agent determines, in its sole discretion, that are necessary or desirable to perfect the Agent's lien on the Collateral including, without limitation, any Equipment financed with proceeds of any CapEx Loans. This Agreement shall constitute a security agreement for purposes of the Code.

SECTION 3.2 Recourse to Security. Recourse to security shall not be required for any Obligation hereunder and the Borrower hereby waives any requirement that the Agent or the Lenders exhaust any right or take any action against any of the Collateral before proceeding to enforce the Obligations against the Borrower.

SECTION 3.3 Special Provisions Relating to Inventory.

(a) All Inventory. The security interest in the Inventory granted to the Agent hereunder shall continue through all steps of manufacture and sale and attach without further act

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to raw materials, work in process, finished goods, returned goods, documents of title and warehouse receipts, and to proceeds resulting from the sale or other disposition of such Inventory. Until all of the Obligations have been satisfied and the Commitments have been terminated, the Agent's security interest in such Inventory and in all proceeds thereof shall continue in full force and effect and, if an Event of Default is continuing, the Agent shall have the right to take physical possession of such Inventory and to maintain it on the premises of the Borrower, in a public warehouse, or at such other place as the Agent may deem appropriate. If the Agent exercises such right to take possession of such Inventory, the Borrower will, upon demand, and at the Borrower's cost and expense, assemble such Inventory and make it available to the Agent at a place or places convenient to the Agent.

(b) No Liens. All Inventory of the Borrower shall be maintained at the locations therefor shown on Schedule 6.1(b), except for Inventory moved from such locations solely for the purpose of sale in the ordinary course of the Borrower's business and Inventory in transit in the ordinary course of the Borrower's business.

(c) Further Assurances. The Borrower will, upon the Agent's request, perform any and all steps that are necessary to perfect the Agent's security interests in the Borrower's Inventory including, without limitation, placing and maintaining signs, executing and filing financing or continuation statements in form and substance satisfactory to the Agent, maintaining stock records and conducting lien searches. In each case, the Borrower shall take such action as promptly as possible after requested by the Agent but in any event within five Business Days after any such request is made except that the Borrower shall take such action immediately upon the Agent's request following the occurrence of an Event of Default. If the Borrower's Inventory is in the possession or control of any Person other than a purchaser in the ordinary course of business or a public warehouseman where the warehouse receipt is in the name of or held by the Agent, the Borrower shall notify such Person of the Agent's security interest therein and, upon request, instruct such Person to acknowledge in writing its agreement to hold all such Inventory for the benefit of the Agent and subject to the Agent's instructions. If so requested by the Agent, the Borrower (as promptly as possible after requested by the Agent but in any event within five Business Days after any such request is made) will deliver (i) to the Agent warehouse receipts covering any of the Borrower's Inventory located in warehouses showing the Agent as the beneficiary thereof and (ii) to the warehouseman such agreements relating to the release of warehouse Inventory as the Agent may request. If so requested by the Agent, the Borrower shall execute and deliver to the Agent a confirmatory written instrument, in form and substance satisfactory to the Agent, listing all its Inventory, but any failure to execute or deliver the same shall not limit or otherwise affect the Agent's security interest in and to such Inventory.

(d) Inventory Records. The Borrower shall maintain full, accurate and complete records of its Inventory describing the kind, type and quantity of such Inventory and the Borrower's cost therefor, withdrawals therefrom and additions thereto, including a perpetual inventory for raw materials, work in process and finished goods.

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SECTION 3.4 Special Provisions Relating to Receivables.

(a) Invoices, Etc. If an Event of Default or Availability Event is continuing, on the Agent's request therefor, the Borrower shall furnish to the Agent (i) the originals of all promissory notes and other instruments in favor of the Borrower, (ii) copies of invoices to customers and shipping and delivery receipts or warehouse receipts thereof, (iii) the originals of all letters of credit in its favor, (iv) such endorsements or assignments related to such letters of credit, notes, and instruments as the Agent may reasonably request and (v) the written consent of the issuer of any letter of credit to the assignment of the proceeds of such letter of credit by the Borrower to the Agent.

(b) Records, Collections, Etc. The Borrower shall promptly report all customer credits to the Agent. The Borrower shall notify the Agent of all returns and of all claims asserted with respect to merchandise, in each case with a value in excess of $5,000,000. The Borrower shall promptly report to the Agent each such return, providing the Agent with a description of the returned item. The Borrower shall not, without the Agent's prior written consent, settle or adjust any dispute or claim, or grant any discount (except ordinary trade discounts), credit or allowance or accept any return of merchandise, except in the ordinary course of its business. During the continuance of an Event of Default, the Agent may (i) settle or adjust disputes or claims directly with account debtors for amounts and upon terms which it considers advisable and (ii) notify account debtors on the Borrower's Receivables that such Receivables have been assigned to the Agent, and that payments in respect thereof shall be made directly to the Agent. Where the Borrower receives collateral of any kind or nature by reason of transactions between itself and its customers or account debtors, the Borrower will hold the same on the Agent's behalf, subject to the Agent's instructions, and as property forming part of the Borrower's Receivables. Where the Borrower sells goods or services to a customer which also sells goods or services to it or which may have other claims against it, the Borrower will so advise the Agent immediately to permit the Agent to establish a reserve therefor. The Borrower shall maintain a record of its electronic chattel paper that identifies the Agent as the assignee thereof and otherwise in a manner such that the Agent has control over such chattel paper for purposes of the Code.

SECTION 3.5 Special Provisions Relating to Equipment.

(a) Location. Each item of Equipment of the Borrower financed with the proceeds of CapEx Loans will be kept at the location therefor shown on Schedule 6.1(b) and may not be moved without the prior written consent of the Agent except to another location of the Borrower specified for it on Schedule
6.1(b). The Borrower shall at all times hereafter keep correct and accurate records itemizing and describing the location, kind, type, age and condition of its Equipment financed with the proceeds of CapEx Loans, the Borrower's cost therefor and accumulated depreciation thereof, and retirements, sales, or other dispositions thereof, all of which records shall be available during the Borrower's usual business hours on demand to any of the officers, employees or agents of the Agent.

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(b) Repair. The Borrower shall keep all of its Equipment that was purchased with the proceeds of CapEx Loans in a state of repair and operating condition in accordance with industry standards, in each case with ordinary wear and tear excepted and will not waste or destroy it or any part thereof. The Borrower will use or cause its Equipment to be used in accordance with law and the manufacturer's instructions. The Borrower shall keep its Equipment separate from, and will not annex or affix any of its Equipment to, any part of any Property or any other realty if in so doing the Equipment would become so much a part of real estate that the security interest therein would become unperfected without the filing of a fixture filing, in which case the Borrower shall, at least ten days before so annexing or affixing such Equipment, notify the Agent and cooperate with the preparation and filing of such a fixture filing in favor of the Agent before so annexing or affixing such Equipment.

(c) Disposal. Where the Borrower is permitted to dispose of any of its Equipment under this Agreement or by any consent thereto hereafter given by the Agent, the Borrower shall do so at arm's length and in good faith.

SECTION 3.6 Continuation of Liens, Etc. The Borrower shall defend the Collateral against all claims and demands of all Persons at any time claiming any interest therein, other than claims relating to Liens permitted by the Loan Documents. The Borrower agrees to comply with the requirements of all state and federal laws to grant to the Agent valid and perfected first priority security interests in the Collateral, subject only to Permitted Liens. The Agent is hereby authorized by the Borrower, during the continuance of an Event of Default, to sign the Borrower's name on any document or instrument as may be necessary or desirable to establish and maintain the Liens covering the Collateral and the priority and continued perfection thereof or file any financing or continuation statements or similar documents or instruments covering the Collateral whether or not the Borrower's signature appears thereon. The Borrower agrees, from time to time, at the Agent's request, to file notices of Liens, financing statements, similar documents or instruments, and amendments, renewals and continuations thereof, and cooperate with the Agent's representatives, in connection with the continued perfection (and the priority status thereof) and protection of the Collateral and the Agent's Liens thereon. The Borrower agrees that the Agent may file a carbon, photographic or other reproduction of this Agreement (or any financing statement related hereto) as a financing statement.

SECTION 3.7 Power of Attorney. In addition to all of the powers granted to the Agent in this Article III, the Borrower hereby appoints and constitutes the Agent as the Borrower's attorney-in-fact to sign the Borrower's name on any of the documents, instruments and other items described in Section 3.6, to make any filings under the Uniform Commercial Code covering any of the Collateral, and to request at any time from customers indebted on its Receivables verification of information concerning such Receivables and the amount owing thereon (provided that any verification prior to an Event of Default shall not contain the Agent's name), and, during the continuance of an Event of Default, (i) to convey any item of Collateral to any purchaser thereof and (ii) to make any payment or take any act necessary or desirable to protect or preserve any Collateral. The Agent's authority hereunder shall include, without limitation, the authority to execute and give receipt for any certificate of ownership or any document, to transfer title to any item of Collateral and to take any other actions arising from or incident to the powers granted to the Agent under this Agreement. This power of attorney is

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coupled with an interest and is irrevocable, provided that it shall terminate upon the payment and satisfaction of all Obligations in full and the termination of the Commitments.

ARTICLE IV.
INTEREST, FEES AND EXPENSES

SECTION 4.1 Interest. The Borrower shall pay to the Agent for the ratable benefit of the Lenders, interest on the Advances, payable monthly in arrears on the first day of each month, commencing with the month immediately following the Closing Date, and on the Expiration Date, at the following rates per annum:

(a) Base Rate Advances. If such Advance is a Base Rate Advance, at a fluctuating rate which is equal to (i) the Base Rate then in effect less (ii) (A) 0.50% in the case of a Revolving Credit Loan or (B) 0.25% in the case of a CapEx Loan, each change in such fluctuating rate to take effect simultaneously with the corresponding change in the Base Rate.

(b) LIBOR Rate Advances. If such Advance is a LIBOR Rate Advance, at a rate which is equal at all times during the Interest Period for such LIBOR Rate Advance to (i) the LIBOR Rate plus (ii) (A) 1.50% in the case of a Revolving Credit Loan or (B) 1.75% in the case of a CapEx Loan.

SECTION 4.2 Interest After Event of Default. From the date of occurrence of any Event of Default until the earlier of the date upon which (i) all Obligations shall have been paid and satisfied in full or (ii) such Event of Default shall have been cured or waived, interest on the Loans shall be payable on demand at a rate per annum equal to the rate that would be otherwise applicable thereto under Section 4.1 plus up to an additional two percent (2%).

SECTION 4.3 Agent's and Closing Fees. On the Closing Date, the Borrower shall pay to the Agent, for its own account and for the ratable benefit of the Lenders, the non-refundable fees specified in the Fee Letter.

SECTION 4.4 Unused Line Fee. The Borrower shall pay to the Agent for the ratable benefit of the Lenders on the first day of each month, commencing with the month immediately following the Closing Date, and on the Expiration Date, in arrears, an unused line fee equal to three-eighths of one percent (.375%) per annum of the difference, if positive, between (i) the Maximum Amount of the Facility and (ii) the average daily aggregate outstanding amount of the Loans.

SECTION 4.5 Calculations. All calculations of interest and fees hereunder shall be made by the Agent on the basis of a year of 360 days for the actual number of days elapsed in the period for which such interest or fees are payable. Each determination by the Agent of an interest rate, fee or other payment hereunder shall be conclusive and binding for all purposes, absent manifest error.

SECTION 4.6 Indemnification in Certain Events. If, after the Closing Date, (i) any change in or in the interpretation of any law or regulation is introduced including, without limitation, with respect to reserve requirements, applicable to any Lender or any other banking or financial institution from which any Lender borrows funds or obtains credit, (ii) any Lender

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complies with any future guideline or request from any central bank or other Governmental Authority or (iii) any Lender determines that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof has or would have the effect described below, or any Lender complies with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, and in the case of any event set forth in this clause
(iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on such Lender's capital as a consequence of its obligations hereunder to a level below that which such Lender could have achieved but for such adoption, change or compliance (taking into consideration such Lender's policies as the case may be with respect to capital adequacy) by an amount deemed by such Lender to be material, and any of the foregoing events described in clauses (i), (ii) and (iii) increases the cost to such Lender of funding or maintaining the Loans, or reduces the amount receivable in respect thereof by such Lender, then the Borrower shall, upon demand by the Agent, pay to the Agent for the benefit of such Lender additional amounts sufficient to indemnify such Lender against such increase in cost or reduction in amount receivable. Each Lender agrees that, if it becomes aware of the occurrence of any such event or condition that would cause it to incur any material increased cost to fund or maintain the Loans or that would reduce the amount receivable in respect thereof in any material respect, it will notify the Agent (and the Agent will notify the Borrower) as promptly as practicable of such event or condition and will use its reasonable efforts to make, fund or maintain the affected Loans of such Lender in a manner such that the additional amounts which would otherwise be required to be paid hereunder would be materially reduced, in each case so long as, in such Lender's reasonable discretion, the making, funding or maintaining of such Loans in such other manner would not otherwise materially adversely affect such Loans or such Lender. If the Borrower shall receive notice from the Agent that amounts are due to a Lender hereunder, the Borrower may, upon at least five Business Days' prior written notice to such Lender and the Agent, but not more than sixty days after receipt of notice from the Agent, identify to the Agent an Eligible Assignee acceptable to the Borrower and the Agent, which will purchase from such Lender the Commitment, the amount of outstanding Loans, and the Notes held by such Lender and such Lender shall thereupon assign its Commitment, any Loans owing to such Lender, and the Notes held by such Lender to such Eligible Assignee in accordance with Section 2.10.

SECTION 4.7 Taxes.

(a) Subject to Section 4.7(e), any and all payments by the Borrower hereunder or under the Notes shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings and penalties, interest and all other liabilities with respect thereto ("Taxes"), excluding any taxes imposed on the net income of the recipient of such payment (including, without limitation, any taxes imposed on branch profits) and franchise taxes imposed on such recipient by any applicable jurisdiction. If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Loan to or for the benefit of the Agent or any Lender, (A) the sum payable shall be increased as may be necessary so that after making all required deductions of Taxes (including deductions of Taxes applicable to additional sums payable under this
Section 4.7) the Agent or such Lender receives an amount equal to the sum it would have received had

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no such deductions been made, (B) the Borrower shall make such deductions and
(C) the Borrower shall pay the full amount so deducted to the relevant taxation authority or other authority in accordance with applicable law.

(b) In addition, the Borrower agrees to pay any present or future stamp, documentary, excise, privilege, intangible or similar taxes or levies that arise at any time or from time to time (i) from any payment made under any and all Loan Documents, or (ii) from the execution or delivery by the Borrower of, or from the filing or recording or maintenance of, or otherwise with respect to the exercise by the Agent of its rights under, any and all Loan Documents (hereinafter referred to as "Other Taxes").

(c) Within thirty days after the date of any payment of Taxes or Other Taxes, the Borrower will, upon request, furnish to the Agent the original or a certified copy of a receipt evidencing payment thereof.

(d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 4.7 shall survive the indefeasible payment in full of the Obligations.

(e) Each Person which acquires (including as a result of the entering into of this Agreement or the making of a Loan) an interest in this Agreement or any Loan, on or prior to the effective date of such acquisition, will deliver to the Borrower and the Agent two valid, duly completed copies of such documentation (including, without limitation, IRS Form W-9, W-8BEN or W-8EC1 or any applicable successor form), as is required to establish that such Person is entitled to receive payments under this Agreement and the Notes payable to it without deduction or withholding of United States federal income tax and to establish an exemption from United States backup withholding tax. Each Person that delivers to the Borrower and the Agent a Form W-9, W-8BEN or W-8EC1, or any other required form, pursuant to the preceding sentence, further undertakes to deliver two further copies of such Form, or applicable successor forms, or other manner of required certification, as the case may be, on or before the date that any such form expires or becomes obsolete or otherwise is required to be resubmitted as a condition to obtaining an exemption from a required withholding of United States federal income tax or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower and the Agent, and such extensions or renewals thereof as may reasonably be requested by the Borrower and the Agent, certifying (A) in the case of a Form W-8BEN or W-8EC1, that such Tax Transferee is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless any change in treaty, law or regulation or official interpretation thereof has occurred after the effective date of such acquisition or change and prior to the date on which any such delivery would otherwise be required that renders all such forms inapplicable or that would prevent such Person from duly completing and delivering any such form with respect to it, and such Person advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax or (B) in the case of a Form W-9, establishing an exemption from United States backup withholding tax. If the Agent, a Lender or any other Person fails to comply with this Section 4.7(e), such Person shall not be entitled to the benefits of Section 4.7(a).

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ARTICLE V.
CONDITIONS OF LENDING

SECTION 5.1 Conditions to Initial Loan. The obligation of the Lenders to make the initial Loan is subject to the satisfaction of the following conditions prior to or concurrent with such initial Loan:

(a) the Agent shall have received the following, each dated the date of the initial Loan or as of an earlier date acceptable to the Agent, in form and substance satisfactory to the Agent and its counsel:

(i) the Notes, each duly executed by the Borrower;

(ii) each Blocked Account Agreement, duly executed by the Borrower and the Blocked Account Bank party thereto;

(iii) acknowledgment copies of Uniform Commercial Code financing statements (naming the Agent as secured party and the Borrower as debtor) and duly authorized release or termination statements, duly filed in all jurisdictions that the Agent deems necessary or desirable to perfect and protect the Liens created hereunder;

(iv) completed requests for information, dated on or before the date of the initial Loan, listing all effective financing statements filed in the jurisdictions referred to in clause (iii) above and in all other jurisdictions that the Agent deems necessary or desirable to confirm the priority of the Liens created hereunder, that name the Borrower as debtor, together with copies of such financing statements;

(v) a completed perfection certificate, substantially in the form of Exhibit I, signed by a Responsible Officer of the Borrower;

(vi) an initial Borrowing Base Certificate, duly executed by a Responsible Officer;

(vii) (A) unaudited Financial Statements of the Borrower for the nine-month period ended September 30, 2005, certified by a Responsible Officer, and (B) a certificate executed by a Responsible Officer certifying that, from September 30, 2005 until the Closing Date, no change, event, occurrence or development or event involving a prospective change in the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of the Borrower has occurred which has had or could reasonably be expected to have a Material Adverse Effect, and that all information provided by or on behalf of the Borrower to the Agent hereunder or in connection herewith is true and correct in all material respects;

(viii) an opinion of counsel for the Borrower covering such matters incident to the transactions contemplated by this Agreement as the Agent may

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reasonably require, which such counsel is hereby requested by the Borrower to provide;

(ix) certified copies of all policies of insurance required by this Agreement and the other Loan Documents, together with loss payee endorsements for all such policies naming the Agent as lender loss payee and an additional insured;

(x) copies of the Governing Documents of the Borrower and a copy of the resolutions of the Board of Directors (or similar evidence of authorization) of the Borrower authorizing the execution, delivery and performance of this Agreement, the other Loan Documents to which the Borrower is or is to be a party, and the transactions contemplated hereby and thereby, attached to which is a certificate of the Secretary or an Assistant Secretary of the Borrower certifying (A) that such copies of the Governing Documents and resolutions (or similar evidence of authorization) relating to the Borrower are true, complete and accurate copies thereof, have not been amended or modified since the date of such certificate and are in full force and effect and (B) the incumbency, names and true signatures of the officers of the Borrower authorized to sign the Loan Documents to which it is a party;

(xi) a certified copy of a certificate of the Secretary of State of the state of incorporation of the Borrower, dated within fifteen days of the Closing Date, listing the certificate of incorporation of the Borrower and each amendment thereto on file in such official's office and certifying that (A) such amendments are the only amendments to such certificate of incorporation on file in that office, (B) the Borrower has paid all franchise taxes to the date of such certificate and (C) the Borrower is in good standing in that jurisdiction;

(xii) a good standing certificate from the Secretary of State of each state in which the Borrower is qualified as a foreign corporation, each dated within fifteen days of the Closing Date;

(xiii) a Collateral Access Agreement for each parcel of Property specified in Schedule 6.1(b) and with respect to any Collateral in the possession of any Person other than the Borrower (in each case other than with respect to which the Agent has established a reserve as provided in the definition of "Eligible Inventory"), duly executed by each Person in possession of such Collateral or with a Lien on or other interest in such parcel of Property;

(xiv) the Fee Letter, duly executed by the Borrower;

(xv) the repayment in full of all loans and other obligations outstanding under the Original Loan Agreement, which repayment may be from the proceeds of the initial Revolving Credit Loans made hereunder or the IPO;

(xvi) the Business Plan;

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(xvii) evidence satisfactory to the Agent that the IPO has been consummated substantially in accordance with the Registration Statement and that the net proceeds of the IPO have been used in a manner described in the Registration Statement, to repay the Borrower's obligations under the Original Loan Agreement and the internal revenue bonds issued by the Borrower and to redeem the Borrower's preferred stock (and the Agent and the Lenders agree that, notwithstanding any covenants herein, the use of such net proceeds of the IPO in accordance with the Registration Statement shall not constitute a violation hereof or Event of Default hereunder); and

(xviii) such other agreements, instruments, documents and evidence as the Agent deems necessary in its reasonable discretion in connection with the transactions contemplated hereby.

(b) There shall be no pending or, to the knowledge of the Borrower, threatened litigation, proceeding, inquiry or other action (i) seeking an injunction or other restraining order, damages or other relief with respect to the transactions contemplated by this Agreement or the other Loan Documents or
(ii) which affects or could affect the business, operations, assets, liabilities or condition (financial or otherwise) of the Borrower, except, in the case of clause (ii), where such litigation, proceeding, inquiry or other action could not reasonably be expected to have a Material Adverse Effect.

(c) The Borrower shall have paid (i) all reasonable legal, audit and background investigation fees of the Agent in connection with the negotiation, preparation, execution and delivery of the Loan Documents and (ii) the fees payable under the Fee Letter and all other fees referred to in this Agreement that are required to be paid on the Closing Date.

(d) Except for the filing of the financing and termination statements under the Code specified in Section 5.1(a)(iii), no consent or authorization of, filing with or other act by or in respect of any Governmental Authority or any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, the Notes or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby or the continuing operations of the Borrower following the consummation of such transactions.

(e) The Agent and its counsel shall have performed (i) a review reasonably satisfactory to the Agent of all of the material contracts and other assets (including, without limitation, leases of operating facilities) of the Borrower, the financial condition of the Borrower, including all of its tax, litigation, environmental and other potential contingent liabilities, the corporate and capital structure of the Borrower and the cash management and management information systems of the Borrower, (ii) a pre-closing audit and collateral review and (iii) reviews and investigations of such other matters as the Agent and its counsel reasonably deem appropriate, in each case with results satisfactory to the Agent.

(f) The Borrower shall be in compliance with all Requirements of Law and its material contracts, other than such noncompliance that could not reasonably be expected to have a Material Adverse Effect.

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(g) The Liens in favor of the Agent shall have been duly perfected and shall constitute first priority Liens, and the Collateral shall be free and clear of all Liens other than Liens in favor of the Agent and Permitted Liens.

(h) After giving effect to all Revolving Credit Loans and CapEx Loans to be made on the Closing Date, the difference between (i) the lesser of (A) (I) the Borrowing Base plus (II) 80% of the cost of the Equipment financed with the proceeds of CapEx Loans made on the Closing Date (excluding the cost of any software, warranties or other intangible assets related thereto) and (B) the Maximum Amount of the Facility and (ii) the aggregate outstanding amount of such Loans shall exceed $10,000,000.

SECTION 5.2 Conditions Precedent to Each Loan. The obligation of the Lenders to make any Loan is subject to the satisfaction of the following conditions precedent:

(a) all representations and warranties contained in this Agreement (other than under Section 6.1(g) and any representations and warranties that relate solely to another date, in which case such representations and warranties shall have been true and correct in all material respects as of such other date) and the other Loan Documents shall be true and correct in all material respects on and as of the date of such Loan as if then made;

(b) no Default or Event of Default shall have occurred and be continuing or would result from the making of the requested Loan as of the date of such request; and

ARTICLE VI.
REPRESENTATIONS AND WARRANTIES

SECTION 6.1 Representations and Warranties of the Borrower; Reliance by the Lenders. The Borrower represents and warrants as of the date hereof (or as of any date hereafter as contemplated in Section 5.2(a) or subsection (j) hereof) as follows:

(a) Organization, Good Standing and Qualification. The Borrower (i) is a corporation duly organized, validly existing and in good standing under the laws of the state of its organization, (ii) has the corporate power and authority to own its properties and assets and to transact the businesses in which it presently is engaged and (iii) is duly qualified, authorized to do business and in good standing in each jurisdiction where it presently is engaged in business, except to the extent that the failure to so qualify or be in good standing could not reasonably be expected to have a Material Adverse Effect. Schedule 6.1(a) specifies the jurisdiction in which the Borrower is organized and all jurisdictions in which the Borrower is qualified to do business as a foreign corporation as of the Closing Date and sets forth the exact correct legal name of the Borrower as specified in the public record of the State of Delaware.

(b) Locations of Offices, Records and Collateral. The address of the principal place of business and chief executive office of the Borrower is, and the books and records of the Borrower and all of its chattel paper and records of Receivables are maintained exclusively in the possession of the Borrower at, the address of the Borrower specified in Schedule 6.1(b). There is

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no location at which the Borrower maintains any Collateral other than the locations specified for it in Schedule 6.1(b). Schedule 6.1(b) specifies all Property of the Borrower, and indicates whether each location specified therein is leased or owned by the Borrower.

(c) Authority. It has the requisite corporate power and authority to execute, deliver and perform its obligations under each of the Loan Documents to which it is a party. All corporate action necessary for the execution, delivery and performance by it of the Loan Documents to which it is a party (including the consent of shareholders where required) has been taken.

(d) Enforceability. This Agreement is and, when executed and delivered, each other Loan Document to which it is a party, will be, the legal, valid and binding obligation of the Borrower enforceable in accordance with its terms, except as enforceability may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) general principles of equity.

(e) No Conflict. The execution, delivery and performance by it of each Loan Document to which it is a party do not and will not contravene (i) any of the Governing Documents of the Borrower, (ii) any Requirement of Law or (iii) any contract of the Borrower listed as an exhibit to the Registration Statement and will not result in the imposition of any Liens upon any of its properties except in favor of the Agent.

(f) Consents and Filings. No consent, authorization or approval of, or filing with or other act by, any shareholders of the Borrower, any Governmental Authority or any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby or thereby or the continuing operations of the Borrower following such consummation, except for the filing of financing and termination statements under the Code.

(g) Subsidiaries. The capital stock of the Borrower's Subsidiaries is owned by the Persons and in the amounts specified in Schedule 6.1(g).

(h) Solvency. It is Solvent and will be Solvent upon the completion of all transactions contemplated to occur on or before the Closing Date (including, without limitation, the Loans to be made on the Closing Date).

(i) Financial Data. It has provided to the Agent complete and accurate copies of its annual audited Financial Statements for the fiscal year ended December 31, 2004, and unaudited Financial Statements for the nine-month period ended September 30, 2005. Such Financial Statements have been prepared in accordance with GAAP consistently applied throughout the periods involved and fairly present the financial position, results of operations and cash flows of the Borrower for each of the periods covered. It has no Contingent Obligation or liability for taxes, unrealized losses, unusual forward or long-term commitments or long-term leases, which is not reflected in such Financial Statements or the footnotes thereto. During the period from September 30, 2005 to and including the date hereof, there has been no sale, transfer or other disposition by the Borrower of any material part of its business or property and no

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purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the financial condition of the Borrower at September 30, 2005. Since September 30, 2005, (i) there has been no change, occurrence, development or event which has had or could reasonably be expected to have a Material Adverse Effect and (ii) none of the capital stock of the Borrower has been redeemed, retired, purchased or otherwise acquired for value by the Borrower except as specified in the Registration Statement.

(j) Accuracy and Completeness of Information. All data, reports and information (other than preliminary or draft data, reports or information) heretofore, contemporaneously or hereafter furnished by or on behalf of the Borrower in writing to the Agent or the Auditors for purposes of or in connection with this Agreement or any other Loan Document, or any transaction contemplated hereby or thereby, are or will be true and accurate in all material respects on the date as of which such data, reports and information are dated or certified and not incomplete by omitting to state any material fact necessary to make such data, reports and information not misleading at such time. There are no facts now known to any Responsible Officer of the Borrower which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect and which have not been specified herein, in the Financial Statements, or in any certificate, opinion or other written statement previously furnished by the Borrower to the Agent.

(k) No Joint Ventures or Partnerships. It is not engaged in any joint venture or partnership with any other Person except that Ohio Casting LLC is engaged in the joint venture specified in Schedule 6.1(g).

(l) Corporate and Trade Name. During the past five years, the Borrower has not been known by or used any other corporate trade or fictitious name except for its name as set forth in the introductory paragraph and on the signature page of this Agreement, which is the exact correct legal name of the Borrower.

(m) No Actual or Pending Material Modification of Business. Except as specified in the Registration Statement, there exists no actual or, to the best of the Borrower's knowledge after due inquiry, threatened termination, cancellation or limitation of, or any modification or change in, the business relationship of the Borrower with any customer or group of customers which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

(n) Investment Company. It is not an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of any Loans or the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated by this Agreement or the other Loan Documents, will violate any provision of such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder.

(o) Margin Stock. It does not own any "margin stock" as that term is defined in Regulation U of the Federal Reserve Board.

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(p) Taxes and Tax Returns. Except as specified in Schedule 6.1(p),

(i) it has properly completed and timely filed all income tax returns it is required to file. The information filed is complete and accurate in all material respects. All deductions taken in such income tax returns are appropriate and in accordance with applicable laws and regulations, except deductions that may have been disallowed but are being challenged in good faith and for which adequate reserves have been established in accordance with GAAP;

(ii) all taxes, assessments, fees and other governmental charges for periods beginning prior to the date hereof, which involve an amount in excess of $1,000,000 in the aggregate, have been timely paid (or, if not yet due, adequate reserves therefor have been established) by it and the Borrower has no liability for taxes in excess of the amounts so paid or reserves so established;

(iii) no deficiencies for taxes have been claimed, proposed or assessed by any taxing or other Governmental Authority against the Borrower and no tax Liens have been filed with respect thereto that involve an amount in excess of $1,000,000 in the aggregate. There are no pending or threatened audits, investigations or claims for or relating to any liability of the Borrower for taxes and there are no matters under discussion with any Governmental Authority which could result in an additional liability for taxes, which involve taxes in excess of $1,000,000 in the aggregate. The federal income tax returns of the Borrower have never been audited by the Internal Revenue Service. No extension of a statute of limitations relating to taxes, assessments, fees or other governmental charges is in effect with respect to the Borrower; and

(iv) it is not a party to, and has no obligations under, any written tax sharing agreement or agreement regarding payments in lieu of taxes.

(q) No Judgments or Litigation. No judgments, orders, writs or decrees are outstanding against it, nor is there now pending or, to its knowledge, threatened litigation, contested claim, investigation, arbitration, or governmental proceeding by or against the Borrower that (i) individually or in the aggregate could reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Agreement, the Notes, any other Loan Document or the consummation of the transactions contemplated hereby or thereby.

(r) Title to Property. It has (i) good and marketable fee simple title to or valid leasehold interests in all of its Property and (ii) good and marketable title to all of its other property, in each case free and clear of Liens other than (A) Liens in favor of the Agent, (B) Permitted Liens and (C) Liens securing Indebtedness reflected in the Financial Statements delivered under Section 5.1(a)(vii).

(s) No Other Indebtedness. On the Closing Date and after giving effect to the transactions contemplated hereby, it has no Indebtedness other than Indebtedness reflected in the

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Financial Statements delivered under Section 5.1(a)(vii) to the extent required by GAAP to be included therein or in footnotes thereto.

(t) Compliance with Laws. On the Closing Date, after giving effect to the transactions contemplated hereby, it is not in default under any term of any Requirement of Law other than any default which, when taken together with all other similar defaults, could not reasonably be expected to have a Material Adverse Effect.

(u) Rights in Collateral; Priority of Liens. All of the Collateral of the Borrower is owned or leased by it free and clear of any and all Liens in favor of third parties, other than Liens in favor of the Agent and Permitted Liens. Upon the proper filing of the financing and termination statements specified in Section 5.1(a)(iii), the Liens granted by the Borrower under this Agreement constitute valid, enforceable and perfected first priority Liens on the Collateral.

(v) ERISA.

(i) Each of the Borrower and its ERISA Affiliates has fulfilled its respective contribution obligations under the minimum funding standards of Section 302 of ERISA and Section 412 of the Internal Revenue Code with respect to each Pension Plan, and no application for a waiver of such minimum funding standards is currently outstanding with respect to any Pension Plan.

(ii) No Termination Event has occurred which could reasonably be expected to have a Material Adverse Effect. Neither it nor any ERISA Affiliate has incurred any liability to the PBGC or any Pension Plan or Multiemployer Plan, except for ordinary funding obligations and the payment of PBGC premiums which are not past due, and except for any such liability which could not reasonably be expected to have a Material Adverse Effect.

(iii) Neither it nor any ERISA Affiliate is required to or reasonably expects to be required to provide security to any Pension Plan under Section 307 of ERISA or Section 401(a)(29) of the Internal Revenue Code.

(iv) Each of the Borrower and its Subsidiaries is in compliance in all respects with all applicable provisions of ERISA and the Internal Revenue Code with respect to the Plans, and no Person has engaged in a Prohibited Transaction with respect to any Plan, except for any such noncompliance or Prohibited Transaction which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(w) Labor Matters. There are no existing or, to the Borrower's knowledge, threatened strikes, lockouts or other disputes relating to any collective bargaining or similar agreement to which the Borrower is a party which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(x) Compliance with Environmental Laws. (i) It is not the subject of any judicial or administrative proceeding or investigation relating to the violation of any

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Environmental Law or asserting potential liability arising from the release or disposal by any Person of any Hazardous Materials, (ii) it has not received from any Governmental Authority or other Person any notice, order, stipulation or directive under any Environmental Law, nor is it aware of any pending discussions within any Governmental Authority, concerning the treatment, storage, disposal, spill or release or threatened release of any Hazardous Materials at, on, beneath or adjacent to Property owned or leased by it, or the release or threatened release at any other location of any Hazardous Material generated, used, stored, treated, transported or released by or on behalf of the Borrower, (iii) during the period that Affiliates of Carl C. Icahn have controlled the Borrower, it has disposed of all its waste in accordance with all applicable laws and it has not improperly stored or disposed of any waste at, on, beneath or adjacent to any of its Property, (iv) it has no knowledge of any actual or potential liability for any release of any Hazardous Materials, and there has been no spill or release of any Hazardous Materials at any of its Property in violation of Environmental Laws, (v) all of its Property (including, without limitation, its Equipment) is free, and has at all times been free, of Hazardous Materials, except as such materials may be part of such Equipment, and underground storage tanks and (vi) to the knowledge of the Borrower, none of its Property has ever been used as a waste disposal site, whether registered or unregistered, where any of the foregoing could reasonably be expected to have a Material Adverse Effect.

(y) Licenses and Permits. It has obtained and holds in full force and effect all franchises, licenses, leases, permits, certificates, authorizations, qualifications, easements, rights of way and other rights and approvals which are necessary or advisable for the operation of its business as presently conducted and as proposed to be conducted, except where the failure to possess any of the foregoing (individually or in the aggregate) could not reasonably be expected to have a Material Adverse Effect.

(z) Government Regulation. It is not subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or any other Requirement of Law that limits its ability to incur Indebtedness or to consummate the transactions contemplated by this Agreement and the other Loan Documents.

(aa) Business and Properties. No business of the Borrower is affected by any fire, explosion, accident, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that could reasonably be expected to have a Material Adverse Effect.

(bb) Business Plan. The Business Plan delivered to the Agent on the Closing Date and in accordance with Section 7.1(k)(ii) were prepared in good faith on the basis of assumptions which were fair in the context of the conditions existing at the time of delivery thereof, and represented, at the time of delivery, the Borrower's best estimate of its future financial performance.

(cc) Affiliate Transactions. The Borrower is not a party to or bound by any agreement or arrangement (whether oral or written) relating to any of the Collateral to which any Affiliate of the Borrower is a party except (i) in the ordinary course of and pursuant to the reasonable requirements of the business of the Borrower and (ii) upon fair and reasonable terms

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no less favorable to the Borrower than it could obtain in a comparable arm's-length transaction with an unaffiliated Person except as specified in the Registration Statement.

(dd) Compliance with Anti-Terrorism Laws. The Borrower is and will remain in full compliance with all laws and regulations applicable to it including, without limitation, (i) ensuring that no Person who owns a controlling interest in or otherwise controls the Borrower is or shall be (A) listed on the Specially Designated Nationals and Blocked Person List maintained by the Office of Foreign Assets Control ("OFAC"), Department of the Treasury, or any other similar list maintained by the OFAC under any authorizing statute, Executive Order or regulation or (B) a Person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any similar Executive Order and (ii) compliance with all applicable Bank Secrecy Act ("BSA") laws, regulations and government guidance on BSA compliance and on the prevention and detection of money laundering violations. The Borrower acknowledges that each of the Agent and the Lenders have notified the Borrower that the Agent and the Lenders are required, under the USA Patriot Act, 31 U.S.C. Section 5318 (the "Patriot Act"), to obtain, verify and record information that identifies the Borrower including, without limitation, the name and address of the Borrower and such other information that will allow the Agent and the Lenders to identify the Borrower in accordance with the Patriot Act.

All representations and warranties made by the Borrower in this Agreement and in each other Loan Document to which it is a party shall survive the execution and delivery hereof and thereof and the closing of the transactions contemplated hereby and thereby. The Borrower acknowledges and confirms that the Lenders are relying on such representations and warranties without independent inquiry in entering into this Agreement.

ARTICLE VII.
COVENANTS OF THE BORROWER

SECTION 7.1 Affirmative Covenants. Until termination of the Commitments and payment and satisfaction of all Obligations in full:

(a) Corporate Existence. The Borrower shall (i) maintain its corporate existence, (ii) maintain in full force and effect all material licenses, bonds, franchises, leases, trademarks, qualifications and authorizations to do business, and all material patents, contracts and other rights necessary or advisable to the profitable conduct of its businesses, and
(iii) continue in the same lines of business as presently conducted by it.

(b) Maintenance of Property. The Borrower shall keep all property useful and necessary to its business in good working order and condition (ordinary wear and tear excepted) in accordance with its past operating practices except to the extent that the failure to do so would not cause a Material Adverse Effect.

(c) Environmental Matters. The Borrower shall, and shall cause each of its Subsidiaries to, conduct its business so as to comply in all material respects with all applicable Environmental Laws including, without limitation, compliance in all material respects with the terms and conditions of all permits and governmental authorizations, provided that the Borrower

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shall not be deemed in violation hereof if the Borrower's or any such Subsidiary's failure to comply with any of the foregoing could not reasonably be expected to have a Material Adverse Effect.

(d) Taxes. The Borrower shall pay, when due, (i) all tax assessments, and other governmental charges and levies imposed against it or any of its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that, unless such tax assessment, charge, levy or claim has become a Lien on any of the property of the Borrower in excess of $1,000,000 in the aggregate for all such assessments, charges, levies and claims, it need not be paid if it is being contested in good faith, by appropriate proceedings diligently conducted and an adequate reserve or other appropriate provision shall have been established therefor as required in accordance with GAAP.

(e) Requirements of Law. The Borrower shall comply with all Requirements of Law applicable to it, including, without limitation, all applicable federal, state, local or foreign laws and regulations, including, without limitation, those relating to environmental and employee matters (including the collection, payment and deposit of employees' income, unemployment, Social Security and Medicare hospital insurance taxes) and with respect to pension liabilities, provided that the Borrower shall not be deemed in violation hereof if the Borrower's failure to comply with any of the foregoing could not reasonably be expected to have a Material Adverse Effect.

(f) Insurance. The Borrower shall maintain public liability insurance, business interruption insurance, third party property damage insurance and replacement value insurance on its assets (including the Collateral) under such policies of insurance, with such insurance companies, in such amounts and covering such risks as are in effect (and copies of which have been provided to the Agent) immediately before the Closing Date or as subsequently take effect which contain terms customary in the industry and are issued by insurance companies reasonably satisfactory to the Agent, all of which policies covering the Collateral shall name the Agent as an additional insured and the lender loss payee in case of loss, and contain other provisions as the Agent may require to protect fully the Agent's interest in the Collateral and any payments to be made under such policies.

(g) Books and Records; Inspections. The Borrower shall (i) maintain books and records (including computer records and programs) of account pertaining to the assets, liabilities and financial transactions of the Borrower in such detail, form and scope as is consistent with good business practice and
(ii) provide the Agent and its agents and one representative of each of the Lenders access to the premises of the Borrower at any time and from time to time, during normal business hours and upon reasonable notice under the circumstances, and at any time after the occurrence and during the continuance of a Default or Event of Default, for the purposes of (A) inspecting and verifying the Collateral, (B) inspecting and copying (at the Borrower's expense) any and all records pertaining thereto, and (C) discussing the affairs, finances and business of the Borrower with any officer, employee or director thereof or with the Auditors, all of whom are hereby authorized to disclose to the Agent and the Lenders all financial statements, work papers, and other information relating to such affairs, finances or business. The Borrower shall reimburse the Agent for the reasonable travel and related expenses of the Agent's employees (unless the Agent has employed outside

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accountants for the purposes specified in this sentence) or, at the Agent's option, of such outside accountants retained by the Agent to verify or inspect Collateral and the records or documents related thereto (I) up to three times in any twelve-month period (and more frequently in the Agent's discretion at any time that an Event of Default has occurred and is continuing) or (II) in connection with the inspection of any Inventory acquired from another Person other than in the ordinary course of business if the value thereof is greater than $5,000,000. If the Agent's own employees are used, the Borrower shall also pay a per diem allowance of $750 plus the Agent's related costs and expenses, or, if outside accountants are used, the Borrower shall also pay the Agent such sum as may be required to reimburse the Agent for the expense thereof. All such Obligations may be charged to the Loan Account or any other account of the Borrower with the Agent or any of its Affiliates. The Borrower hereby authorizes the Agent to communicate directly with the Auditors to disclose to the Agent any and all financial information regarding the Borrower including, without limitation, matters relating to any audit and copies of any letters, memoranda or other correspondence related to the business, financial condition or other affairs of the Borrower.

(h) Notification Requirements. The Borrower shall timely give the Agent the following notices and other documents:

(i) Notice of Defaults. Promptly, and in any event within two Business Days after becoming aware of the occurrence of a Default or Event of Default, a certificate of a Responsible Officer specifying the nature thereof and the Borrower's proposed response thereto, each in reasonable detail.

(ii) Proceedings or Changes. Promptly, and in any event within ten Business Days after the Borrower becomes aware of (A) any proceeding including, without limitation, any proceeding the subject of which is based in whole or in part on a commercial tort claim being instituted or threatened to be instituted by or against the Borrower in any federal, state, local or foreign court or before any commission or other regulatory body (federal, state, local or foreign) involving a sum, together with the sum involved in all other similar proceedings, in a stated amount in excess of $1,000,000 in the aggregate, (B) any order, judgment or decree involving a sum, together with the sum of all other orders, judgments or decrees, in excess of $1,000,000 in the aggregate being entered against the Borrower or any of its property or assets, (C) any written notice or correspondence issued to the Borrower by a Governmental Authority warning, threatening or advising of the commencement of any investigation involving the Borrower or any of its property or assets, (D) any actual or prospective change, development or event which has had or could reasonably be expected to have a Material Adverse Effect, (E) a change in the location of any Collateral from the locations specified in Schedule 6.1(b) or (F) a proposed or actual change of the name, identity, mailing address, chief executive office, principal place of business, corporate structure (such as the formation of Subsidiaries or changes in the ownership thereof) or jurisdiction of organization of the Borrower, a written statement describing such proceeding, order, judgment, decree, change, development or event and any action being taken by the Borrower with respect thereto.

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(iii) ERISA Notices.

(A) Promptly, and in any event within ten Business Days after the occurrence thereof, notice of any of the following events which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, including with such notice a written statement of a Responsible Officer describing the event and any action that is being taken with respect thereto by the Borrower or ERISA Affiliate, and any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC;

(1) a Termination Event;

(2) the failure to satisfy the minimum funding standards of Section 302 of ERISA or Section 412 of the Internal Revenue Code with respect to any Pension Plan or the filing or a waiver request with the Internal Revenue Service with respect to such minimum funding standards for any Pension Plan;

(3) the occurrence of a Prohibited Transaction with respect to a Plan;

(4) a failure by the Borrower or ERISA Affiliate to make a payment to a Pension Plan required to avoid imposition of a Lien under Section 302(f) of ERISA or
Section 412(n) of the Internal Revenue Code;

(5) the adoption of an amendment to a Pension Plan requiring the provision of security to such Pension Plan pursuant to Section 307 of ERISA or Section 401(a)(29) of the Internal Revenue Code;

(6) receipt by the Borrower or any Subsidiary of notice from the Department of Labor of any penalty with respect to a Plan;

(7) receipt by the Borrower or any Subsidiary of notice from the Internal Revenue Service or the Treasury Department of any income tax deficiency or delinquency or excise tax penalty with respect to a Plan; and

(8) receipt by the Borrower or any Subsidiary of notice of the entry of a judgment, award or settlement agreement with respect to a Plan; and

(B) Promptly upon the request of the Agent, each annual report (IRS Form 5500 series) and all accompanying schedules, the most recent

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actuarial reports, the most recent financial information concerning the financial status of each Pension Plan.

(iv) Environmental Matters. Promptly, and in any event within ten days after receipt by the Borrower thereof, copies of each (A) written notice that any violation of any Environmental Law may have been committed or is about to be committed by the Borrower which violation could reasonably be expected to result in liability or involve remediation costs, which liability or remediation costs could reasonably be expected to have a Material Adverse Effect, (B) written notice that any administrative or judicial complaint or order has been filed or is about to be filed against the Borrower alleging violations of any Environmental Law or requiring the Borrower to take any action in connection with the release of toxic or Hazardous Materials into the environment which violation or action could reasonably be expected to result in liability or involve remediation costs, which liability or remediation costs could reasonably be expected to have a Material Adverse Effect, (C) written notice from a Governmental Authority or other Person alleging that the Borrower may be liable or responsible for costs associated with a response to or cleanup of a release of a Hazardous Material into the environment or any damages caused thereby which costs or damages could reasonably be expected to have a Material Adverse Effect, or (D) Environmental Law adopted, enacted or issued after the date hereof of which the Borrower becomes aware which could reasonably be expected to have a Material Adverse Effect.

(i) Casualty Loss. The Borrower shall (i) provide written notice to the Agent, within ten Business Days, of any material damage to, the destruction of or any other material loss to any of the Borrower's Inventory or any other asset or property owned or used by the Borrower to manufacture, repair or store any item of Collateral other than any such asset or property with a net book value (individually or in the aggregate) less than $5,000,000 or any condemnation, confiscation or other taking, in whole or in part, or any event that otherwise diminishes so as to render impracticable or unreasonable the use of such asset or property owned or used by the Borrower together with a statement of the amount of the damage, destruction, loss or diminution in value (a "Casualty Loss") and (ii) diligently file and prosecute its claim for any award or payment in connection with a Casualty Loss.

(j) Qualify to Transact Business. The Borrower shall, and shall cause each of its Subsidiaries to, qualify to transact business as a foreign corporation, limited partnership or limited liability company, as the case may be, in each jurisdiction where the nature or extent of its business or the ownership of its property requires it to be so qualified or authorized and where failure to qualify or be authorized could reasonably be expected to have a Material Adverse Effect.

(k) Financial Reporting. The Borrower shall deliver to the Agent the following:

(i) Annual Financial Statements. As soon as available, but not later than ninety days after the end of each fiscal year, beginning with the fiscal year ended December 31, 2005, (A) the Borrower' annual audited and certified

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consolidated and consolidating Financial Statements; (B) a comparison in reasonable detail to the prior year's audited Financial Statements; and (C) if available, the Auditors' opinion without Qualification, a "Management Letter" and a statement indicating that the Auditors have not obtained knowledge of the existence of any Default or Event of Default during their audit.

(ii) Projections. Not later than sixty days after the end of each fiscal year of the Borrower, the Business Plan of the Borrower certified by the Chief Financial Officer of the Borrower for the one-year period commencing with the following fiscal year.

(iii) Quarterly Financial Statements and Compliance Certificate. As soon as available, but not later than forty-five days after the end of each fiscal quarter, beginning with the fiscal quarter ending December 31, 2005, (A) the Borrower's interim consolidated and consolidating Financial Statements as of the end of such quarter and for the fiscal year to date and (B) a compliance certificate, substantially in the form of Exhibit D (a "Compliance Certificate"), signed by the Borrower's Chief Financial Officer, with an attached schedule of calculations demonstrating compliance with the Financial Covenants as of the end of such quarter.

(iv) Borrowing Base Certificate. Monthly, not later than the fifth Business Day of each month, a borrowing base certificate, substantially in the form of Exhibit H, detailing the Eligible Receivables and the Eligible Inventory, containing a calculation of availability and reflecting all sales, collections, and debit and credit adjustments, as of the last day of (or for) the preceding month, which shall be prepared by or under the supervision of the Chief Financial Officer of the Borrower and certified by such officer (a "Borrowing Base Certificate"), provided that, after the occurrence and during the continuance of an Availability Event, the Agent may require Borrowing Base Certificates to be delivered as frequently as it determines is necessary or desirable in its sole discretion.

(v) Agings. Monthly, not later than the fifth Business Day of each month, agings of the Borrower' Receivables and accounts payable, in scope and detail satisfactory to the Agent, as of the last day of the preceding month.

(vi) Inventory Reports. (A) Monthly, not later than the fifth Business Day of each month, a report of the Borrower's Inventory, based upon a perpetual inventory, describing such Inventory by category, item (in reasonable detail), location and current appraised value (at the lower of cost or market).

(B) Within 120 days after the end of each fiscal year, a report of the annual physical Inventory of the Borrower as observed and tested by its public accountants in accordance with GAAP.

(vii) Shareholder and SEC Reports. As soon as available, but not later than five days after the same are sent or filed, as the case may be, copies of all

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financial statements and reports that the Borrower sends to the shareholders of the Borrower or files publicly with the Securities and Exchange Commission.

(viii) Other Financial Information. Promptly after the request by the Agent therefor, such additional financial statements and other related data and information as to the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of the Borrower as the Agent may from time to time reasonably request. Any Lender may request that the Agent reasonably request any such additional information from the Borrower on behalf of such Lender, and the Agent agrees to make any such request as soon as reasonably practicable.

(l) Payment of Liabilities. The Borrower shall pay and discharge, in the ordinary course of business, all obligations and liabilities (including, without limitation, tax liabilities and other governmental charges), except where the same may be contested in good faith by appropriate proceedings and for which adequate reserves with respect thereto have been established in accordance with GAAP.

SECTION 7.2 Negative Covenants. Until termination of the Commitments and payment and satisfaction of all Obligations in full:

(a) Deposit Accounts. The Borrower will not establish or maintain any deposit account in which proceeds of Collateral are on deposit unless the Agent shall have received a Blocked Account Agreement, duly executed by the Borrower and the applicable depository bank, covering such deposit account other than deposit accounts in which the Borrower maintains a balance of no more than $50,000 at any time.

(b) Use of Proceeds. The Borrower will not (i) use any portion of the proceeds of any Loan in violation of Section 2.4 or for the purpose of purchasing or carrying any "margin stock" (as defined in Regulation U of the Federal Reserve Board) in any manner which violates the provisions of Regulation T, U or X of the Federal Reserve Board or for any other purpose in violation of any applicable statute or regulation, or of the terms and conditions of this Agreement, or (ii) take, or permit any Person acting on its behalf to take, any action which could reasonably be expected to cause this Agreement or any other Loan Document to violate any regulation of the Federal Reserve Board.

(c) Cancellation of Debt. The Borrower will not cancel any liability or debt owed to it in respect of any item of Collateral other than for consideration in the ordinary course of business and liabilities or debts involving an outstanding amount less than or equal to $50,000.

(d) Investments. Other than as governed by Section 9.2(c)(I), the Borrower will not, directly or indirectly, at any time use any funds included in the Collateral to make or hold any Investment in any Person (whether in cash, securities or other property of any kind) other than (i) Investments in Cash Equivalents, (ii) so long as no Blocked Account Notice is in effect and no Event of Default is continuing, Investments in Affiliates of the Borrower and (iii) other Investments in an amount less than or equal to $50,000.

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(e) Fiscal Year. The Borrower will not change its fiscal year from a year ending December 31.

(f) Accounting Changes. The Borrower will not at any time make or permit any change in accounting policies or reporting practices, except as required or allowed by GAAP.

ARTICLE VIII.
FINANCIAL COVENANTS

Until termination of the Commitments and the payment and satisfaction of all Obligations in full:

SECTION 8.1 Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio for the period beginning January 1, 2005 and ending December 31, 2005 and each twelve-month period ending on the last day of each calendar quarter thereafter shall not be less than 1.2 to 1.0.

SECTION 8.2 Leverage Ratio. The ratio of (a) the outstanding amount of all the Borrower's Indebtedness to (b) EBITDA, determined for the period beginning January 1, 2005 and ending December 31, 2005 and each twelve-month period ending on the last day of each calendar quarter thereafter, shall not be greater than 4.0 to 1.0.

SECTION 8.3 Business Plan. The Agent and the Borrower acknowledge that the foregoing financial covenants were established by the Agent and the Borrower on the basis of, among other things, the Business Plan, after leaving a margin in favor of the Borrower which the Agent and the Borrower have agreed was fair as of the date hereof and is fair on the date thereof. Accordingly, the Agent and the Borrower have agreed that any failure by the Borrower to comply with the terms of any Financial Covenant shall be deemed material for purposes of this Agreement.

ARTICLE IX.
EVENTS OF DEFAULT

SECTION 9.1 Events of Default. The occurrence of any of the following events shall constitute an "Event of Default":

(a) the Borrower shall fail to pay (i) any principal, interest, or unused line fees when payable, whether at stated maturity, by acceleration, or otherwise, or (ii) any other Obligations within fifteen Business Days of demand therefor; or

(b) the Borrower shall (i) default in the performance or observance of any agreement, covenant, condition, provision or term contained in Section 2.4, 2.5, 2.7, 7.1(a)(i), 7.1(f), 7.1(g)(ii), 7.1(h), 7.1(k), 7.2, 8.1, 8.2, 11.4 or 11.7(a) hereof; or (ii) default in the performance or observance of any agreement, covenant, condition, provision or term contained in this Agreement or any other Loan Document (other than those referred to in Sections 9.1(a) and
(b)(i)) and such failure continues for a period of thirty days from the earlier of the date on which (A) the Borrower has received notice of such failure in accordance with Section 11.1 and

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(B) a Responsible Officer of the Borrower has knowledge of such failure or, if such default is capable of being cured and the Borrower has undertaken to cure such default within such thirty-day period and is diligently prosecuting and pursuing such cure thereafter, such failure continues for a period of sixty days from such date of initial notice or knowledge; or

(d) the Borrower shall become the subject of an Insolvency Event; or

(e) (i) the Borrower shall fail to make any payment (whether of principal, interest or otherwise and regardless of amount) in respect of any Material Indebtedness when due (whether at scheduled maturity or by required prepayment, acceleration, demand or otherwise), or (ii) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits the holder or holders (or a trustee or agent on behalf of such holder or holders) to declare any Material Indebtedness to be due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; or

(f) any representation or warranty made by the Borrower under or in connection with any Loan Document or amendment or waiver thereof, or in any Financial Statement, report or certificate delivered in connection therewith, shall prove to have been incorrect in any material respect when made or deemed made; or

(g) any judgment or order for the payment of money which, when taken together with all other judgments and orders rendered against the Borrower, exceeds $1,000,000 in the aggregate shall be rendered against the Borrower and shall not be stayed, vacated, bonded or discharged within thirty days; or

(h) any of the events specified in clauses (1) through (8) of
Section 7.1(h)(iii)(A) shall occur and such event, together with any other of such events, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; or

(i) any covenant, agreement or obligation of the Borrower contained in or evidenced by any of the Loan Documents shall cease to be enforceable in any material respect, or shall be determined to be unenforceable in any material respect, in accordance with its terms; the Borrower shall deny or disaffirm its obligations under any of the Loan Documents or any Liens granted in connection therewith or shall otherwise challenge any of its obligations under any of the Loan Documents; or any Liens granted on any of the Collateral shall be determined to be void, voidable or invalid, are subordinated or are not given the priority contemplated by this Agreement or any other Loan Document; or

(j) this Agreement shall for any reason cease to create a valid and perfected first priority Lien on the Collateral purported to be covered thereby; or

(k) the independent public accountants for the Borrower shall deliver a Qualified opinion on any Financial Statement; or

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(l) the occurrence of any event or condition that has a Material Adverse Effect.

SECTION 9.2 Acceleration, Termination and Demand Rights. During the continuance of an Event of Default, the Agent may, or upon the request of the Required Lenders, the Agent shall take any or all of the following actions, without prejudice to the rights of the Agent to enforce its claims against the Borrower:

(a) Acceleration. To declare all Obligations immediately due and payable (except with respect to any Event of Default with respect to the Borrower specified in Section 9.1(d), in which case all Obligations shall automatically become immediately due and payable) without presentment, demand, protest or any other action or obligation of the agent or any Lender.

(b) Termination of Commitments. To declare the Commitments immediately terminated (except with respect to any Event of Default with respect to the Borrower set forth in Section 9.1(d), in which case the Commitments shall automatically terminate) and, at all times thereafter, any Loan made by a Lender or the Agent shall be in such Lender's or the Agent's sole and absolute discretion and none of the other Lenders shall have any obligation with respect thereto. Notwithstanding any such termination, until all Obligations shall have been fully and indefeasibly paid and satisfied, the Agent shall retain all security in existing and future Receivables included in the Collateral and existing and future Inventory of the Borrower and all other Collateral held by it hereunder.

(c) Demand Rights. Notwithstanding anything herein to the contrary, the Borrower shall, immediately upon the Borrower's decision to take any of the following actions (and, in any event, not less than ten days before the taking of any such action), deliver to the Agent written notice of such proposed action (together with, in the case of any action specified in clause (A), (F), (H) or
(I) hereof, such financial information as is necessary to determine the Borrower's compliance, on a pro forma basis giving effect to such action, with
Section 8.1 or 8.2, as the case may be), and, upon the giving of such notice (or, if such notice is not given for any reason, the occurrence of any such action), the Agent may, or upon the request of the Required Lenders, the Agent shall (i) declare all Obligations immediately due and payable without presentment, demand, protest or any other action or obligation of the Agent or any Lender or (ii) declare the Commitments immediately terminated and, notwithstanding any such termination, until all the Obligations shall have been fully and indefeasibly paid and satisfied, the Agent shall retain all security in existing and future Collateral:

(A) Indebtedness. The Borrower shall, directly or indirectly, at any time create, incur, assume or permit to exist any Indebtedness that causes the ratio of (1) the aggregate outstanding amount of the Borrower's Indebtedness to
(2) EBITDA, determined on a year-to-date basis (or, if after December 31, 2005, the twelve-month period) ending on the last day of the quarter preceding the quarter in which such Indebtedness is created, incurred, assumed or permitted to exist (which determination shall be made, if before December 31, 2005, by annualizing EBITDA in a manner

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consistent with the second sentence of Section 8.2), to be greater than 4.0 to 1.0.

(B) Contingent Obligations. Except as relates to the Indebtedness reflected in the Financial Statements delivered under Section 5.1(a)(vii), the Borrower shall, directly or indirectly, incur, assume, or suffer to exist any Contingent Obligation, excluding (1) indemnities given in connection with
(x) the Indebtedness reflected in the Financial Statements delivered under Section 5.1(a)(vii) and (y) this Agreement or the other Loan Documents in favor of the Agent and the Lenders, (2) liabilities associated with the Borrower's assumption, pursuant to an Interest Transfer Agreement and an Assignment and Assumption, Novation and Release, each dated as of June 30, 2005, and related documents, of certain liabilities, obligations and guaranties of ACF Industries Holding Corp. related to Ohio Castings Company, LLC, (3) contingent liabilities, if any, of the Borrower associated with or arising out of any ACF Industries LLC employment benefit plan and (4) any obligations of the Borrower to its current and future retired employees that are accrued or incurred after the date hereof, provided that the indemnities and obligations specified in clauses (2), (3) and (4) above shall not represent an aggregate Liability to the Borrower in excess of $20,000,000 at any time.

(C) Corporate Changes, Etc. The Borrower shall, directly or indirectly, merge or consolidate with any Person or amend, alter or modify its Governing Documents in a manner materially adverse to the Agent or the Lenders, or liquidate or dissolve itself (or suffer any liquidation or dissolution).

(D) Change in Nature of Business. The Borrower shall make any material adverse change in the nature of its business as carried on at the date hereof or enter into any new line of business that is materially adverse to the Agent and the Lenders.

(E) Sales, Etc. of Assets. The Borrower shall, directly or indirectly, in any fiscal year, sell, transfer or otherwise dispose of, or grant any option or other right to purchase or otherwise acquire, (1) any of the Collateral (other than sales of (I) Inventory in the ordinary course of business and (II) Equipment financed with the proceeds of CapEx Loans unless the related Net Cash Proceeds are applied in accordance with the terms hereof) or (2) all or substantially all of its assets.

(F) Loans to Other Persons. The Borrower shall make any loan or advance any credit to any Affiliate or other Person that causes the Fixed Charge Coverage Ratio or the Leverage Ratio, each as determined on a year-to-date basis (or, if after December 31, 2005, the twelve-month period) ended on the last day of the quarter preceding the quarter in which

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such loan is made or such credit is advanced, to be less than 1.2 to 1.0 or greater than 4.0 to 1.0, respectively.

(G) Liens, Etc. The Borrower shall incur, assume or suffer to exist any Lien on or with respect to any of the Collateral, other than:

(1) Liens created hereunder;

(2) Permitted Liens; and

(3) Liens not described in clauses (1) or (2) above if the incurrence, assumption or suffering of any such Lien would have a Material Adverse Effect, result in a default under Section 8.1 or 8.2 on a pro forma basis or otherwise result in a Default or an Event of Default.

(H) Dividends, Stock Redemptions, Distributions, Etc. Except as described in the Registration Statement with respect to the redemption of preferred stock of the Borrower and American Railcar Industries, Inc., a Missouri corporation, the Borrower shall directly or indirectly, pay any dividends or distributions on, purchase, redeem or retire any shares of any class of its capital stock or other equity interests or any warrants, options or rights to purchase any such capital stock or other equity interests, whether now or hereafter outstanding ("Stock"), or make any payment on account of or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of its Stock, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower, in each case that causes the Fixed Charge Coverage Ratio or the Leverage Ratio, each as determined on a year-to-date basis
(or, if after December 31, 2005, the twelve-month period)
ending on the last day of the quarter preceding the quarter in which such payment, purchase, redemption, defeasance, retirement, acquisition or distribution is made, to be less than 1.2 to 1.0 or greater than 4.0 to 1.0, respectively.

(I) Acquisition of Stock or Assets. The Borrower shall acquire or commit or agree to acquire any stock, securities or assets of any other Person other than acquisitions which, after giving effect thereto, would not have a Material Adverse Effect, result in a default under Section 8.1 or 8.2 on a pro forma basis or otherwise result in a Default or an Event of Default.

The Borrower's failure to repay all the Obligations upon a demand hereunder shall constitute an Event of Default. Any failure of the Agent to declare the Obligations immediately due and payable following the delivery of a notice by the Borrower under clause (A), (F), (H) or (I) hereof shall not be deemed to waive any Default or Event of Default arising under Section 8.1 or 8.2 as a result of the action specified in such notice.

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SECTION 9.3 Other Remedies.

(a) During the continuance of an Event of Default, the Agent shall have all rights and remedies with respect to the Obligations and the Collateral under applicable law and the Loan Documents, and the Agent may do any or all of the following:

(i) remove for copying all documents, instruments, files and records (including the copying of any computer records) relating to the Borrower's Receivables or use (at the expense of the Borrower) such supplies or space of the Borrower at the Borrower's places of business necessary to administer, enforce and collect such Receivables including, without limitation, any supporting obligations;

(ii) accelerate or extend the time of payment, compromise, issue credits, or bring suit on a Borrower's Receivables (in the name of the Borrower or the Agent) and otherwise administer and collect such Receivables;

(iii) sell, assign and deliver the Borrower's Receivables with or without advertisement, at public or private sale, for cash, on credit or otherwise, subject to applicable law; and

(iv) foreclose the security interests created pursuant to the Loan Documents by any available procedure, or take possession of any or all of the Collateral, without judicial process and enter any premises where any Collateral may be located for the purpose of taking possession of or removing the same.

This subsection (a) shall govern only those Receivables of the Borrower included in the Collateral.

(b) The Agent may bid or become a purchaser at any sale, free from any right of redemption, which right is expressly waived by the Borrower. If notice of intended disposition of any Collateral is required by law, it is agreed that ten days' notice shall constitute reasonable notification. The Borrower will assemble the Collateral in its possession and make it available at such locations as the Agent may specify, whether at the premises of the Borrower or elsewhere, and will make available to the Agent the premises and facilities of the Borrower for the purpose of the Agent's taking possession of or removing the Collateral or putting the Collateral in saleable form. The Agent may sell the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Agent may deem commercially reasonable. The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Borrower hereby grants the Agent a license, during the continuation of an Event of Default, to enter and occupy any of the Borrower's leased or owned premises and facilities, without charge, to exercise any of the Agent's rights or remedies.

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SECTION 9.4 License for Use of Software and Other Intellectual Property. The Borrower hereby grants to the Agent a license or other right to use, during the continuation of an Event of Default, without charge, all computer software programs, data bases, processes, trademarks, tradenames, copyrights, labels, trade secrets, service marks, advertising materials and other rights, assets and materials used by the Borrower in connection with its businesses or in connection with the Collateral.

SECTION 9.5 No Marshalling; Deficiencies; Remedies Cumulative. The Agent shall have no obligation to marshal any Collateral or to seek recourse against or satisfaction of any of the Obligations from one source of Collateral or from the Borrower before seeking recourse against or satisfaction from another source of Collateral or from the Borrower. The net cash proceeds resulting from the Agent's exercise of any of the foregoing rights to liquidate all or substantially all of the Collateral, including any and all Collections (after deducting all of the Agent's expenses related thereto), shall be applied by the Agent to such of the Obligations and in such order as the Agent shall elect in its sole and absolute discretion, whether due or to become due. The Borrower shall remain liable to the Agent and the Lenders for any deficiencies, and the Agent and the Lenders in turn agree to remit to the Borrower or its successor or assign any surplus resulting therefrom. All of the Agent's and the Lenders' remedies under the Loan Documents shall be cumulative, may be exercised simultaneously against any Collateral and the Borrower or in such order and with respect to such Collateral or the Borrower as the Agent may deem desirable, and are not intended to be exhaustive.

SECTION 9.6 Waivers. Except as may be otherwise specifically provided herein or in any other Loan Document, the Borrower hereby waives any right to a judicial or other hearing with respect to any action or prejudgment remedy or proceeding by the Agent to take possession, exercise control over, or dispose of any item of Collateral in any instance (regardless of where the same may be located) where such action is permitted under the terms of this Agreement or any other Loan Document or by applicable law or of the time, place or terms of sale in connection with the exercise of the Agent's rights hereunder and also waives any bonds, security or sureties required by any statute, rule or other law as an incident to any taking of possession by the Agent of any Collateral. The Borrower also waives any damages (direct, consequential or otherwise) occasioned by the enforcement of the Agent's rights under this Agreement or any other Loan Document including the taking of possession of any Collateral or the giving of notice to any account debtor or the collection of any Receivable of the Borrower. The Borrower also consents that the Agent may, during the continuation of an Event of Default, enter upon any premises owned by or leased to it without obligations to pay rent or for use and occupancy, through self-help, without judicial process and without having first obtained an order of any court. These waivers and all other waivers provided for in this Agreement and the other Loan Documents have been negotiated by the parties, and the Borrower acknowledges that it has been represented by counsel of its own choice, has consulted such counsel with respect to its rights hereunder and has freely and voluntarily entered into this Agreement and the other Loan Documents as the result of arm's-length negotiations.

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SECTION 9.7 Further Rights of the Agent.

(a) Further Assurances. The Borrower shall do all things and shall execute and deliver all documents and instruments reasonably requested by the Agent to protect or perfect any Lien (and the priority thereof other than with respect to Permitted Liens) of the Agent on the Collateral.

(b) Insurance; Etc. If the Borrower shall fail to purchase or maintain insurance (where applicable), or to pay any tax, assessment, governmental charge or levy, except as the same may be otherwise permitted hereunder or which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, or if any Lien prohibited hereby shall not be paid in full and discharged or if the Borrower shall fail to perform or comply with any other covenant, promise or obligation to the Agent or the Lenders hereunder or under any other Loan Document, the Agent may (but shall not be required to), if the Borrower has not done so within ten days of the Agent's written request, perform, pay, satisfy, discharge or bond the same for the account of the Borrower, and all amounts so paid by the Agent or the Lenders shall be treated as an Agent Loan or a Revolving Credit Loan, as the case may be, comprised of Base Rate Advances hereunder and shall constitute part of the Obligations.

SECTION 9.8 Interest After Event of Default. The Borrower agrees and acknowledges that the additional interest and fees that may be charged under
Section 4.2 (a) are an inducement to the Agent and the Lenders to make Advances and that the Agent and the Lenders would not consummate the transactions contemplated by this Agreement without the inclusion of such provisions, (b) are fair and reasonable estimates of the Agent's and the Lenders' costs of administering the credit facility upon an Event of Default, and (c) are intended to estimate the Agent's and the Lenders' increased risks upon an Event of Default.

ARTICLE X.
THE AGENT

SECTION 10.1 Appointment of Agent.

(a) Each Lender hereby designates NFBC as its agent and irrevocably authorizes it to take action on such Lender's behalf under the Loan Documents and to exercise the powers and to perform the duties described therein and to exercise such other powers as are reasonably incidental thereto. The Agent may perform any of its duties by or through its agents or employees.

(b) The provisions of this Article are solely for the benefit of the Agent and the Lenders, and the Borrower shall not have any rights as third party beneficiaries of any of the provisions hereof. The Agent shall act solely as agent of the Lenders and assume no obligation toward or relationship of agency or trust with or for the Borrower.

SECTION 10.2 Nature of Duties of Agent. The Agent shall have no duties or responsibilities except those expressly set forth in the Loan Documents. Neither the Agent nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted by it or them as such hereunder or in connection herewith, unless caused by its or their gross

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negligence or willful misconduct. The duties of the Agent shall be mechanical and administrative in nature. The Agent does not have a fiduciary relationship with or any implied duties to any Lender or any participant of any Lender.

SECTION 10.3 Lack of Reliance on Agent.

(a) Independently and without reliance upon the Agent, each Lender, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial or other condition and affairs of the Borrower in connection with taking or not taking any action related hereto and
(ii) its own appraisal of the creditworthiness of the Borrower, and, except as expressly provided in this Agreement, the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the initial Loans or at any time or times thereafter.

(b) The Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, collectibility, priority or sufficiency of this Agreement or the Notes or the financial or other condition of the Borrower. The Agent shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Loan Document, the financial condition of the Borrower, or the existence or possible existence of any Default or Event of Default.

SECTION 10.4 Certain Rights of the Agent. The Agent may request instructions from the Required Lenders at any time. If the Agent requests instructions from the Required Lenders with respect to any action or inaction, it shall be entitled to await instructions from the Required Lenders. No Lender shall have any right of action based upon the Agent's action or inaction in response to instructions from the Required Lenders.

SECTION 10.5 Reliance by Agent. The Agent may rely upon any written or telephonic communication it believes to be genuine and to have been signed, sent or made by the proper Person. The Agent may obtain the advice of legal counsel (including counsel for the Borrower with respect to matters concerning the Borrower), independent public accountants and other experts selected by it and shall have no liability for any action or inaction taken or omitted to be taken by it in good faith based upon such advice.

SECTION 10.6 Indemnification of Agent. To the extent the Agent is not reimbursed and indemnified by the Borrower, each Lender will reimburse and indemnify the Agent to the extent of such Lender's Pro Rata Share (determined as of the time that such indemnity payment is sought) for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder or otherwise relating to the Loan Documents unless resulting from the Agent's gross negligence or willful misconduct. The agreements contained in this Section shall survive any termination of this Agreement and the other Loan Documents and the payment in full of the Obligations.

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SECTION 10.7 The Agent in Its Individual Capacity. In its individual capacity, the Agent shall have the same rights and powers hereunder as any other Lender or holder of a Note or participation interest and may exercise the same as though it was not performing the duties specified herein. The terms "Lenders," "Required Lenders," "holders of Notes," or any similar terms shall, unless the context clearly otherwise indicates, include NFBC in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory or other business with the Borrower or any Affiliate of the Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from the Borrower for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.

SECTION 10.8 Holders of Notes. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor.

SECTION 10.9 Successor Agent.

(a) The Agent may, upon twenty Business Days' notice to the Lenders and the Borrower, resign by giving written notice thereof to the Lenders and the Borrower. Any such resignation shall be effective upon the appointment of a successor Agent.

(b) Upon receipt of notice of resignation by the Agent, the Required Lenders may appoint a successor agent which shall also be a Lender. If a successor agent has not accepted its appointment within fifteen Business Days, then the retiring agent may, on behalf of the Lenders, appoint a successor agent which shall be subject to the written approval of the Borrower, which approval shall not be unreasonably withheld and shall be delivered to the Required Lenders within ten Business Days after the Borrower's receipt of notice of a proposed successor agent.

(c) Upon its acceptance of the agency hereunder, such successor agent shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring agent, and the retiring agent shall be discharged from its duties and obligations under this Agreement. The retiring agent shall continue to have the benefit of the provisions of this Article for any action or inaction while it was agent.

SECTION 10.10 Collateral Matters.

(a) Except as otherwise set forth herein, any action or exercise of powers by the Agent provided under the Loan Documents, together with such other powers as are reasonably incidental thereto, shall be deemed authorized by and binding upon all of the Lenders. At any time and without notice to or consent from any Lender, the Agent may take any action necessary or advisable to perfect and maintain the perfection of the Liens upon the Collateral.

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(b) The Agent is authorized to release any Lien granted to or held by it upon any Collateral (i) upon termination of the Commitments and payment and satisfaction of all of the Obligations, (ii) required to be delivered from permitted sales of Collateral hereunder, if any, upon receipt of the proceeds by the Agent (or, if permitted hereunder, the Borrower) or (iii) if the release can be and is approved by the Required Lenders (or all the Lenders, if so required under Section 11.5). The Agent may request and the Lenders will provide confirmation of the Agent's authority to release particular types or items of Collateral.

(c) Upon any sale or transfer of Collateral which is expressly permitted pursuant to the terms of this Agreement, or consented to in writing by the Required Lenders or all of the Lenders, as applicable, and upon at least five Business Days' prior written request by the Borrower, the Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Agent for the benefit of the Lenders herein or pursuant hereto upon the Collateral that was sold or transferred, provided that (i) the Agent shall not be required to execute any such document on terms which, in the Agent's reasonable opinion, would expose the Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of the Borrower in respect of) all interests retained by the Borrower, including (without limitation) the proceeds of the sale, all of which shall continue to constitute part of the Collateral. In the event of any sale or transfer of Collateral, or any foreclosure with respect to any of the Collateral, the Agent shall be authorized to deduct all of the expenses reasonably incurred by the Agent from the proceeds of any such sale, transfer or foreclosure.

(d) The Agent shall not have any obligation to assure that the Collateral exists or is owned by the Borrower, that the Collateral is cared for, protected or insured, or that the Liens on the Collateral have been created or perfected or have any particular priority. With respect to the Collateral, the Agent may act in any manner it may deem appropriate, in its sole discretion, given NFBC's own interest in the Collateral as one of the Lenders, and it shall have no duty or liability whatsoever to the Lenders with respect thereto, except for its gross negligence or willful misconduct.

SECTION 10.11 Actions with Respect to Defaults. In addition to the Agent's right to take actions on its own accord as permitted under this Agreement, the Agent shall take such action with respect to an Event of Default as shall be directed by the Required Lenders. Until the Agent shall have received such directions, the Agent may act or not act as it deems advisable and in the best interests of the Lenders.

SECTION 10.12 Delivery of Information. The Agent shall not be required to deliver to any Lender originals or copies of any documents, instruments, notices, communications or other information received by the Agent from the Borrower, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Loan Document except (i) for the Financial Statements, Business Plans, certificates and reports received by the Agent from the Borrower under Section 7.1(k)(i), (ii), (iii), (iv), (v) or
(viii); (ii) for any notice received by the Agent from the Borrower under
Section 7.1(h); (iii) as otherwise specifically provided in this Agreement or any other Loan Document; and (iv) as

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specifically requested from time to time in writing by any Lender with respect to a specific document, instrument, notice or other written communication received by and in the possession of the Agent at the time of receipt of such request and then only in accordance with such specific request.

ARTICLE XI.
GENERAL PROVISIONS

SECTION 11.1 Notices. Except as otherwise provided herein, all notices and other communications hereunder shall be in writing and sent by certified or registered mail, return receipt requested, by overnight delivery service, with all charges prepaid, by hand delivery, or by telecopier followed by a hard copy sent by regular mail, if to the Agent, then to North Fork Business Capital Corporation, 1415 West 22nd Street, Suite 750E, Oak Brook, Illinois 60523, Telecopy: (630) 684-0228, Attn.: Regional Manager, with a copy to North Fork Business Capital Corporation, 275 Broadhollow Road, P.O. Box 8914, Melville, New York 11747, Telecopy: (631) 501-5524, Attn.: General Counsel, if to any Lender, then to its address specified in Schedule 1 or in the Assignment and Acceptance under which it became a party hereto, and if to the Borrower, then to 100 Clark Street, St. Charles, Missouri 63301, Telecopy: (636) 940-5109, Attn.: Mr. Umesh Choksi, with a copy to Icahn Associates Corp., 767 Fifth Avenue, 47th Floor, New York, New York 10153, Telecopy: (212) 668-1158, Attn.: Jesse A. Lynn, Esq., or, in each case, to such other address as the Borrower, a Lender or the Agent may specify to the other parties in the manner required hereunder. All such notices and correspondence shall be deemed given (i) if sent by certified or registered mail, three Business Days after being postmarked, (ii) if sent by overnight delivery service or by hand delivery, when received at the above stated addresses or when delivery is refused and (iii) if sent by telecopier transmission, when such transmission is confirmed.

SECTION 11.2 Delays; Partial Exercise of Remedies. No delay or omission of the Agent or any Lender to exercise any right or remedy hereunder shall impair any such right or operate as a waiver thereof. No single or partial exercise by the Agent or any Lender of any right or remedy shall preclude any other or further exercise thereof, or preclude any other right or remedy.

SECTION 11.3 Right of Setoff. In addition to and not in limitation of all rights of offset that the Agent, any Lender or any of their respective Affiliates may have under applicable law, while an Event of Default is continuing, the Agent, the Lenders and their respective Affiliates shall have the right to set off and apply any and all deposits (general or special, time or demand, provisional or final, or any other type) at any time held and any other Indebtedness at any time owing by the Agent, the Lenders or any of their respective Affiliates to or for the credit or the account of the Borrower or the Borrower's Subsidiaries against any and all of the Obligations. In the event that the Agent or any Lender exercises any of its rights under this Section 11.3, the Agent or such Lender shall provide notice to the Borrower of such exercise, provided that, without prejudice to the Borrower's right to assert a claim for any damages it may incur as a result of any failure by the Agent or such Lender to give such notice, the failure to give such notice shall not affect the validity of the exercise of such rights.

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SECTION 11.4 Indemnification; Reimbursement of Expenses of Collection.

(a) The Borrower hereby agrees that, whether or not any of the transactions contemplated by this Agreement or the other Loan Documents are consummated, the Borrower will indemnify, defend and hold harmless (on an after-tax basis) the Agent, the Lenders and their respective successors, assigns, directors, officers, agents, employees, advisors, shareholders and attorneys (each, an "Indemnified Party") from and against any and all losses, claims, damages, liabilities, deficiencies, obligations, fines, penalties, actions (whether threatened or existing), judgments, suits (whether threatened or existing) or expenses (including, without limitation, reasonable fees and disbursements of counsel, experts, consultants and other professionals) incurred by any of them (collectively, "Claims") (except, in the case of each Indemnified Party, to the extent that any Claim is determined in a final and non-appealable judgment by a court of competent jurisdiction to have directly resulted from such Indemnified Party's gross negligence or willful misconduct) arising out of or by reason of
(i) any litigation, investigation, claim or proceeding related to (A) this Agreement, any other Loan Document or the transactions contemplated hereby or thereby, (B) any actual or proposed use by the Borrower of the proceeds of the Loans or (C) the Agent's or any Lender's entering into this Agreement, the other Loan Documents or any other agreements and documents relating hereto (other than consequential damages and loss of anticipated profits or earnings), including, without limitation, amounts paid in settlement (provided that any such settlement has been approved by the Borrower), court costs and the fees and disbursements of counsel incurred in connection with any such litigation, investigation, claim or proceeding, (ii) any remedial or other action taken or required to be taken by the Borrower in connection with compliance by the Borrower, or any of its properties, with any federal, state or local Environmental Laws and (iii) any pending, threatened or actual action, claim, proceeding or suit by any shareholder or director of the Borrower or any actual or purported violation of the Borrower's Governing Documents or any other agreement or instrument to which the Borrower is a party or by which any of its properties is bound. In addition, the Borrower shall, upon demand, pay to the Agent all costs and expenses incurred by the Agent (including the reasonable fees and disbursements of counsel and other professionals) in connection with the preparation, execution, delivery, administration, modification and amendment of the Loan Documents, and pay to the Agent and each Lender all costs and expenses (including the reasonable fees and disbursements of counsel and other professionals) paid or incurred by the Agent or such Lender in (A) enforcing or defending its rights under or in respect of this Agreement, the other Loan Documents or any other document or instrument now or hereafter executed and delivered in connection herewith, (B) collecting the Obligations or otherwise administering this Agreement and (C) foreclosing or otherwise realizing upon the Collateral or any part thereof. If and to the extent that the obligations of the Borrower hereunder are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations that is permissible under applicable law.

(b) The Borrower' obligations under Sections 4.6 and 4.7 and this Section 11.4 shall survive any termination of this Agreement and the other Loan Documents, the termination and the payment in full of the Obligations, and are in addition to, and not in substitution of, any of the other Obligations.

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SECTION 11.5 Amendments, Waivers and Consents. No amendment or waiver of any provision of this Agreement or any other Loan Document, or consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower and the Required Lenders (or by the Agent on their behalf) without taking into account the Commitments or Loans held by Defaulting Lenders or the Borrower or any of its Affiliates (determined without giving effect to the proviso to the definition of "Affiliates"), and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by the Borrower and all the Lenders (other than any Defaulting Lender or the Borrower or any of its Affiliates (determined without giving effect to the proviso to the definition of "Affiliates")), do any of the following at any time: (a) change the number of Lenders that shall be required for the Lenders or any of them to take any action hereunder; (b) amend the definition of "Required Lenders"; (c) amend this Section 11.5; (d) reduce the amount of principal of, or interest on, or the interest rate applicable to, the Loans or any fees or other amounts payable hereunder; (e) postpone any date on which any payment of principal of, or interest on, the Loans or any fees or other amounts payable hereunder is required to be made; (f) release all or substantially all the Collateral; or (g) amend the definition of "Borrowing Base" or modify Section 2.2(a)(ii)if the effect thereof would be to increase the amount of Revolving Credit Loans or CapEx Loans, respectively, available to the Borrower; provided, further that no amendment, waiver or consent shall, unless in writing and signed by (i) a Lender, change the Pro Rata Share or increase the Commitment of such Lender, and (ii) the Agent, in addition to the Lenders required above, to take any such action that affects the rights or duties of the Agent under this Agreement or any other Loan Document.

SECTION 11.6 Nonliability of Agent and Lenders. The relationship among the Borrower and each Lender shall be solely that of borrower and lender. Neither the Agent nor any Lender shall have any fiduciary responsibilities to the Borrower. Neither the Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower' business or operations.

SECTION 11.7 Assignments and Participations.

(a) Borrower Assignment. The Borrower shall not assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the Agent and each of the Lenders.

(b) Lender Assignments. Each Lender may, with the consent of the Agent (not to be unreasonably withheld), assign to one or more Eligible Assignees (or, if an Event of Default has occurred and is continuing, to one or more other Persons) all or a portion of its rights and obligations under this Agreement, the Notes and the other Loan Documents upon execution and delivery to the Agent, for its acceptance and recording in the Register, of an Assignment and Acceptance, together with surrender of any Note or Notes subject to such assignment and a processing and recordation fee payable to the Agent for its account of $3,500. No such assignment shall be for less than $5,000,000 of the Commitments or Loans unless it is to another Lender, and each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations in respect of the Commitments and the Revolving Credit Loans. Upon the execution and delivery to the Agent of an Assignment and Acceptance and the payment of the

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recordation fee to the Agent, from and after the date specified as the effective date in the Assignment and Acceptance (the "Acceptance Date"), (i) the assignee thereunder shall be a party hereto, and, to the extent that rights and obligations hereunder have been assigned to it under such Assignment and Acceptance, such assignee shall have the rights and obligations of a Lender hereunder and (ii) the assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it under such Assignment and Acceptance, relinquish its rights (other than any rights it may have under Sections 4.6, 4.7 and 11.4, which shall survive such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(c) Agreements of Assignee. By executing and delivering an Assignment and Acceptance, the assignee thereunder confirms and agrees as follows: (i) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the Notes or any other Loan Documents,
(ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other Loan Document, (iii) such assignee confirms that it is an Eligible Assignee and has received a copy of this Agreement, together with copies of the Financial Statements referred to in Section 6.1(i), the Financial Statements delivered pursuant to Section 7.1(k), if any, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto, and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d) Agent's Register. The Agent shall maintain a register of the names and addresses of the Lenders, their Commitments and the principal amount of their Loans (the "Register"). The Agent shall also maintain a copy of each Assignment and Acceptance delivered to and accepted by it and modify the Register to give effect to each Assignment and Acceptance. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register and copies of each Assignment and Acceptance shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. Upon its receipt of each Assignment and Acceptance and surrender of the affected Note or Notes subject to such assignment, the Agent will give prompt notice thereof to the Borrower. Within five Business Days after its receipt of such notice, the Borrower shall execute and deliver to the Agent a new Note to the order of the assignee in the amount of the applicable Commitment or

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Loans assumed by it and to the assignor in the amount of the applicable Commitment or Loans retained by it, if any. Such new Note or Notes shall re-evidence the indebtedness outstanding under the surrendered Note or Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes and shall be dated as of the Acceptance Date. The Agent shall be entitled to rely upon the Register exclusively for purposes of identifying the Lenders hereunder.

(e) Lender Participations. Each Lender may sell participations to one or more parties (each, a "Participant") in or to all or a portion of its rights and obligations under this Agreement, the Notes and the other Loan Documents. Notwithstanding a Lender's sale of a participation interest, such Lender's obligations hereunder shall remain unchanged. The Borrower, the Agent, and the other Lenders shall continue to deal solely and directly with such Lender. No Lender shall grant any Participant the right to approve any amendment or waiver of this Agreement except to the extent such amendment or waiver would (i) increase the Commitment of the Lender from which the Participant purchased its participation interest; (ii) reduce the principal of, or rate or amount of interest on, the Loans subject to such participation interest; or (iii) postpone any date fixed for any payment of principal of, or interest on, the Loans subject to such participation interest. To the extent permitted by applicable law, each Participant shall also be entitled to the benefits of Section 11.3 as if it were a Lender, provided that such Participant agrees to be subject to the last sentence of Section 2.9(b) as if it were a Lender.

(f) Securities Laws. Each Lender agrees that it will not make any assignment hereunder in any manner or under any circumstances that would require registration or qualification of, or filings in respect of, any Loan, Note or other Obligation under the securities laws of the United States or of any other jurisdiction.

(g) Information. In connection with their efforts to assign their rights or obligations or sell participations pursuant to Sections 11.7(b) and (e), the Agent and the Lenders may disclose any information they have, now or in the future, with respect to the business of the Borrower to prospective assignees or purchasers, provided that such disclosure is subject to written confidentiality arrangements customary for assignment or participation transactions of such type.

(h) Pledge to Federal Reserve Bank. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 11.8 Counterparts; Telecopied Signatures. This Agreement and any waiver or amendment hereto may be executed in counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. This Agreement and each of the other Loan Documents may be executed and delivered by telecopier or other facsimile

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transmission all with the same force and effect as if the same was a fully executed and delivered original manual counterpart.

SECTION 11.9 Severability. In case any provision in or obligation under this Agreement, any Note or any other Loan Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

SECTION 11.10 Maximum Rate. Notwithstanding anything to the contrary contained elsewhere in this Agreement or in any other Loan Document, the parties hereto hereby agree that all agreements between them under this Agreement and the other Loan Documents, whether now existing or hereafter arising and whether written or oral, are expressly limited so that in no contingency or event whatsoever shall the amount paid, or agreed to be paid, to the Agent or any Lender for the use, forbearance, or detention of the money loaned to the Borrower and evidenced hereby or thereby or for the performance or payment of any covenant or obligation contained herein or therein, exceed the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Obligations, under the laws of the State of New York (or the laws of any other jurisdiction whose laws may be mandatorily applicable notwithstanding other provisions of this Agreement and the other Loan Documents), or under applicable federal laws which may presently or hereafter be in effect and which allow a higher maximum non-usurious interest rate than under the laws of the State of New York (or such other jurisdiction), in any case after taking into account, to the extent permitted by applicable law, any and all relevant payments or charges under this Agreement and the other Loan Documents executed in connection herewith, and any available exemptions, exceptions and exclusions (the "Highest Lawful Rate"). If due to any circumstance whatsoever, fulfillment of any provision of this Agreement or any of the other Loan Documents at the time performance of such provision shall be due shall exceed the Highest Lawful Rate, then, automatically, the obligation to be fulfilled shall be modified or reduced to the extent necessary to limit such interest to the Highest Lawful Rate, and if from any such circumstance any Lender should ever receive anything of value deemed interest by applicable law which would exceed the Highest Lawful Rate, such excessive interest shall be applied to the reduction of the principal amount then outstanding hereunder or on account of any other then outstanding Obligations and not to the payment of interest, or if such excessive interest exceeds the principal unpaid balance then outstanding hereunder and such other then outstanding Obligations, such excess shall be refunded to the Borrower. All sums paid or agreed to be paid to the Lenders for the use, forbearance, or detention of the Obligations and other Indebtedness of the Borrower to the Lenders shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such Indebtedness, until payment in full thereof, so that the actual rate of interest on account of all such Indebtedness does not exceed the Highest Lawful Rate throughout the entire term of such Indebtedness. The terms and provisions of this Section shall control every other provision of this Agreement, the other Loan Documents and all other agreements among the parties hereto.

SECTION 11.11 Entire Agreement; Successors and Assigns; Interpretation. This Agreement and the other Loan Documents constitute the entire agreement among the parties, supersede any prior written and verbal agreements among them, and shall bind and

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benefit the parties and their respective successors and permitted assigns. This Agreement shall be deemed to have been jointly drafted, and no provision of it shall be interpreted or construed for or against a party because such party purportedly prepared or requested such provision, any other provision, or this Agreement as a whole.

SECTION 11.12 LIMITATION OF LIABILITY. NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY TO THE BORROWER (WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE) FOR LOSSES SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR SUCH LENDER THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT OR SUCH LENDER. THE BORROWER HEREBY WAIVES ALL FUTURE CLAIMS AGAINST THE AGENT AND EACH LENDER FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.

SECTION 11.13 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS OF THE STATE OF NEW YORK.

SECTION 11.14 SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN OR AMONG THE BORROWER, THE AGENT OR ANY LENDER BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO (I) THIS AGREEMENT; (II) ANY OTHER LOAN DOCUMENT OR OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN OR AMONG THE BORROWER, THE AGENT AND A LENDER; OR (III) ANY CONDUCT, ACT OR OMISSION OF THE BORROWER, THE AGENT, A LENDER OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR OTHER AFFILIATES, IN EACH CASE WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT SHALL HAVE THE RIGHT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN (A) ANY COURTS OF COMPETENT JURISDICTION AND VENUE AND (B) ANY LOCATION SELECTED BY THE AGENT TO ENABLE THE AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE AGENT. THE

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BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.

SECTION 11.15 SERVICE OF PROCESS. THE BORROWER HEREBY IRREVOCABLY DESIGNATES CORPORATION SERVICE COMPANY, 1133 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10036 OR ITS SUCCESSOR AS THE DESIGNEE AND AGENT OF THE BORROWER TO RECEIVE, FOR AND ON BEHALF OF THE BORROWER, SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL TO THE BORROWER, BUT THE FAILURE OF THE BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

SECTION 11.16 JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO (I) THIS AGREEMENT; (II) ANY OTHER LOAN DOCUMENT OR OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN OR AMONG THE BORROWER, THE AGENT AND A LENDER; OR (III) ANY CONDUCT, ACT OR OMISSION OF THE BORROWER, THE AGENT, A LENDER OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR OTHER AFFILIATES, IN EACH CASE WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY OR OTHERWISE.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their proper and duly authorized officers as of the date first set forth above.

BORROWER

AMERICAN RAILCAR INDUSTRIES, INC.

By:

William Benac Chief Financial Officer

LENDERS

NORTH FORK BUSINESS CAPITAL CORPORATION

By:

Robert L. Heinz Senior Vice President

THE CIT GROUP/BUSINESS CREDIT, INC.

By:

Barry O'Neall Vice President

ASSOCIATED BANK, NATIONAL ASSOCIATION

By:

Steven R. Powell Vice President

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AGENT

NORTH FORK BUSINESS CAPITAL
CORPORATION

By:

Robert L. Heinz Senior Vice President

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[FORM OF]

AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

among

AMERICAN RAILCAR INDUSTRIES, INC.

as Borrower,

the Lenders from time to time party thereto,

and

NORTH FORK BUSINESS CAPITAL CORPORATION,

as Agent

Dated as of January __, 2006

TABLE OF CONTENTS

                                                                                                               Page
                                                                                                               ----
ARTICLE I. DEFINITIONS............................................................................................1

     SECTION 1.1            General Definitions...................................................................1
     SECTION 1.2            Accounting Terms and Determinations..................................................17
     SECTION 1.3            Other Terms; Headings................................................................17

ARTICLE II. THE CREDIT FACILITIES................................................................................18

     SECTION 2.1            The Revolving Credit Loans...........................................................18
     SECTION 2.2            CapEx Loans..........................................................................19
     SECTION 2.3            Procedure for Borrowing; Notices of Borrowing; Notices of Continuation; Notices
                            of Conversion; Settlement............................................................20
     SECTION 2.4            Application of Proceeds..............................................................25
     SECTION 2.5            Maximum Amount of the Facility; Mandatory Prepayments;
                            Optional Prepayments.................................................................25
     SECTION 2.6            Maintenance of Loan Account; Statements of Account...................................26
     SECTION 2.7            Collection of Receivables............................................................26
     SECTION 2.8            Term.................................................................................27
     SECTION 2.9            Payment Procedures...................................................................27
     SECTION 2.10           Defaulting Lenders...................................................................28
     SECTION 2.11           Sharing of Payments, Etc.............................................................29
     SECTION 2.12           Publicity............................................................................29

ARTICLE III. SECURITY............................................................................................29

     SECTION 3.1            General..............................................................................29
     SECTION 3.2            Recourse to Security.................................................................30
     SECTION 3.3            Special Provisions Relating to Inventory.............................................30
     SECTION 3.4            Special Provisions Relating to Receivables...........................................31
     SECTION 3.5            Special Provisions Relating to Equipment.............................................32
     SECTION 3.6            Continuation of Liens, Etc...........................................................32
     SECTION 3.7            Power of Attorney....................................................................33

ARTICLE IV. INTEREST, FEES AND EXPENSES..........................................................................33

     SECTION 4.1            Interest.............................................................................33
     SECTION 4.2            Interest After Event of Default......................................................34
     SECTION 4.3            Agent's and Closing Fees.............................................................34
     SECTION 4.4            Unused Line Fee......................................................................34
     SECTION 4.5            Calculations.........................................................................34
     SECTION 4.6            Indemnification in Certain Events....................................................34
     SECTION 4.7            Taxes................................................................................35

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ARTICLE V. CONDITIONS OF LENDING.................................................................................36

     SECTION 5.1            Conditions to Initial Loan...........................................................36
     SECTION 5.2            Conditions Precedent to Each Loan....................................................40

ARTICLE VI. REPRESENTATIONS AND WARRANTIES.......................................................................40

     SECTION 6.1            Representations and Warranties of the Borrower; Reliance
                            by the Lenders.......................................................................40

ARTICLE VII. COVENANTS OF THE BORROWER...........................................................................46

     SECTION 7.1            Affirmative Covenants................................................................46
     SECTION 7.2            Negative Covenants...................................................................52

ARTICLE VIII. FINANCIAL COVENANTS................................................................................53

     SECTION 8.1            Fixed Charge Coverage Ratio..........................................................53
     SECTION 8.2            Leverage Ratio.......................................................................53
     SECTION 8.3            Business Plan........................................................................53

ARTICLE IX. EVENTS OF DEFAULT....................................................................................53

     SECTION 9.1            Events of Default....................................................................53
     SECTION 9.2            Acceleration, Termination and Demand Rights..........................................55
     SECTION 9.3            Other Remedies.......................................................................58
     SECTION 9.4            License for Use of Software and Other Intellectual Property..........................59
     SECTION 9.5            No Marshalling; Deficiencies; Remedies Cumulative....................................59
     SECTION 9.6            Waivers..............................................................................59
     SECTION 9.7            Further Rights of the Agent..........................................................60
     SECTION 9.8            Interest After Event of Default......................................................60

ARTICLE X. THE AGENT.............................................................................................60

     SECTION 10.1           Appointment of Agent.................................................................60
     SECTION 10.2           Nature of Duties of Agent............................................................61
     SECTION 10.3           Lack of Reliance on Agent............................................................61
     SECTION 10.4           Certain Rights of the Agent..........................................................61
     SECTION 10.5           Reliance by Agent....................................................................61
     SECTION 10.6           Indemnification of Agent.............................................................62
     SECTION 10.7           The Agent in Its Individual Capacity.................................................62
     SECTION 10.8           Holders of Notes.....................................................................62
     SECTION 10.9           Successor Agent......................................................................62
     SECTION 10.10          Collateral Matters...................................................................63
     SECTION 10.11          Actions with Respect to Defaults.....................................................64
     SECTION 10.12          Delivery of Information..............................................................64

-ii-

ARTICLE XI. GENERAL PROVISIONS...................................................................................64

     SECTION 11.1           Notices..............................................................................64
     SECTION 11.2           Delays; Partial Exercise of Remedies.................................................65
     SECTION 11.3           Right of Setoff......................................................................65
     SECTION 11.4           Indemnification; Reimbursement of Expenses of Collection.............................65
     SECTION 11.5           Amendments, Waivers and Consents.....................................................66
     SECTION 11.6           Nonliability of Agent and Lenders....................................................67
     SECTION 11.7           Assignments and Participations.......................................................67
     SECTION 11.8           Counterparts; Telecopied Signatures..................................................69
     SECTION 11.9           Severability.........................................................................69
     SECTION 11.10          Maximum Rate.........................................................................69
     SECTION 11.11          Entire Agreement; Successors and Assigns; Interpretation.............................70
     SECTION 11.12          LIMITATION OF LIABILITY..............................................................70
     SECTION 11.13          GOVERNING LAW........................................................................71
     SECTION 11.14          SUBMISSION TO JURISDICTION...........................................................71
     SECTION 11.15          SERVICE OF PROCESS...................................................................72
     SECTION 11.16          JURY TRIAL...........................................................................72

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Schedules

Schedule 1                      Commitments of Lenders
Schedule 2                      Pledged Deposit Accounts
Schedule 6.1(a)                 Foreign Jurisdictions
Schedule 6.1(b)                 Locations of Collateral
Schedule 6.1(g)                 Subsidiaries
Schedule 6.1(p)                 Taxes


Exhibits

Exhibit A               -       Revolving Credit Note
Exhibit B               -       CapEx Note
Exhibit C               -       Assignment and Acceptance
Exhibit D               -       Compliance Certificate
Exhibit E               -       Notice of Borrowing
Exhibit F               -       Notice of Continuation
Exhibit G               -       Notice of Conversion
Exhibit H               -       Borrowing Base Certificate
Exhibit I               -       Perfection Certificate
Exhibit J               -       Collateral Access Agreement

-iv-

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated September 30, 2005, except for note 18, as to which the date is December 23, 2005, accompanying the consolidated balance sheet of the manufacturing and railcar services operation of American Railcar Industries, Inc. and subsidiaries as of December 31, 2004, and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss), and cash flows for the year ended December 31, 2004, contained in Amendment No. 1 of the Registration Statement on Form S-1 and Prospectus of American Railcar Industries, Inc. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption "Experts."

/s/ GRANT THORNTON LLP

Chicago, Illinois

January 4, 2006

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated December 9, 2005 accompanying the consolidated balance sheet of Ohio Castings Company, LLC and subsidiaries as of December 31, 2004, and the related consolidated statements of operations, members’ equity, and cash flows for the year ended December 31, 2004, contained in Amendment No. 1 of the Registration Statement on Form S-1 and Prospectus of American Railcar Industries, Inc. We consent to the use of the aforementioned report in the Registration Statement and Prospectus.

/s/ Grant Thornton LLP

Chicago, Illinois
January 4, 2006

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
American Railcar Industries, Inc.:

We consent to the use of our report dated April 23, 2004, with respect to the consolidated balance sheet of American Railcar Industries, Inc. and subsidiaries as of December 31, 2003, and the related consolidated statements of operations, shareholders’s equity and comprehensive income (loss), and cash flows for each of the years in the two year period ended December 31, 2003, included herein and to the reference to our firm under the heading "Experts" in the prospectus.

/s/ KPMG LLP
St. Louis, Missouri
January 4, 2006



	offering price, would increase (or decrease) our net proceeds from this offering and our as adjusted additional paid-in capital by approximately $15.8 million.



(12)	As adjusted, reflects an estimated $6.0 million of expense associated with our issuance of common stock to Mr. Unger as described in Note 9 above. The amount we will record as an expense will equal the value of the shares issued to Mr. Unger as of the date of the closing of this offering, which may be different from the initial public offering price.



(13)	As adjusted, reflects the write-off of deferred financing costs of $0.6 million relating to the redemption of the industrial revenue bonds.