EXCHANGE AND REDEMPTION AGREEMENT

This Exchange and Redemption Agreement (this "Agreement") as of June 30, 2005, among American Railcar Industries, Inc., a Missouri corporation ("ARI"), Hopper Investments, LLC, a Delaware limited liability company ("Hopper"), High crest Investors Corp., a Delaware corporation ("Highcrest"), Buffalo Investors Corp., a New York corporation ("Buffalo", and together with Hopper and High crest, the "Holders") and American Railcar Leasing, LLC, a Delaware corporation ("ARL"). All terms not otherwise defined herein shall have the meaning ascribed to such terms in the Operating Agreement (as defined below).

WITNESSETH

WHEREAS, the parties hereto desire to exchange the number of issued and outstanding shares of New Preferred Stock, of ARI, (the "Preferred Stock") set forth in Schedule A hereto across from each Holder's name respectively (the "Shares"), for the number of shares of A Units, of ARL (the "A-Units"), set forth in Schedule A hereto across from each Holder's names respectively (the "A-Units"), subject to the provisions contained herein;

WHEREAS, reference is made to that certain Second Amended and Restated Operating Agreement (the "Operating Agreement") of ARL, effective as of July 16, 2004, among ARL and the persons listed on Schedule A thereto;

WHEREAS, ARI is sole the record and beneficial owner of 151,669 shares of A-Units and currently serves as the Managing Member of ARL;

WHEREAS, ARI, as Managing Member of ARL, hereto desires to consent to the transfer of A-Units to each of the Holders and hereto desires to consent to the admission of Buffalo as Managing Member of ARL;

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. 
Exchange.

SECTION 1.1. Exchange. Subject to the terms and conditions of this Agreement, the Holders hereby transfer their respective Shares to ARI for cancellation and redemption, and ARI hereby accepts and acknowledges such transfer from the Holders, and in exchange therefor hereby transfers to the Holders the number of A-Units set forth across from such Holder's name on Schedule A hereto, and the Holders hereby accept and acknowledge such transfer.

ARTICLE 2.
Consent to Transfer; Operating Agreement.

SECTION 2.1. Consent to Transfer. Pursuant to and in compliance with Section 8.1 of the Operating Agreement, ARI, as Managing Member of ARL, hereby provides its written consent to the transfer by ARI to each Holder of the number of shares set forth across the name of such Holder on Schedule A hereto.

SECTION 2.2. Substitute Members. Pursuant to and in compliance with Section 8.3 of the Operating Agreement, ARI, as Managing Member of ARL, hereby provides its written consent to the admission of Hopper, Buffalo and High crest as Substitute Members. ARI, as Managing Member of ARL, acknowledges that Hopper, Buffalo and High crest, as Substitute Members, shall be entitled to exercise or receive any of the rights, powers or benefits of a Member, including the right to receive distributions and to share in any Profits and Losses. Each Holder hereby agrees to deliver to ARL a counterpart to the Operating Agreement, substantially in form of Exhibit A hereto, whereby such Holder accepts and agrees to the terms and conditions of the Operating Agreement.

SECTION 2.3. Managing Member. Buffalo hereby becomes the Managing Member of ARL.

SECTION 2.4. Effectiveness and Withdrawal. Pursuant to Section 8.4 of the Operating Agreement, effective June 30, 2005, Hopper, Buffalo and High crest shall be admitted to ARL as Members, and ARI shall automatically withdraw as a Member of ARL.

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