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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED JANUARY 31, 2010

Commission File No. 000-1409171

TITAN MACHINERY INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) No. 45-0357838
(IRS Employer Identification No.)

4876 Rocking Horse Circle
Fargo, ND 58104-6049
(Address of Principal Executive Offices)

(701) 356-0130
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.00001 Par Value (Nasdaq Global Market)

Securities registered pursuant to Section 12(g) of the Act: None

        Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

        Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

Note: Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer ý Non-accelerated filer o
(Do not check if a smaller
reporting company) Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

        The aggregate market value of our common stock held by non-affiliates as of July 31, 2009 was approximately $148.3 million (based on the last sale price of $12.43 per share on such date as reported on the Nasdaq Global Market).

        The number of shares outstanding of the registrant's common stock as of April 1, 2010 was: Common Stock, $0.00001 par value, 17,784,550 shares.

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the proxy statement for the registrant's 2010 Annual Meeting of Stockholders are incorporated by reference into Items 10, 11, 12, 13 and 14 of Part III of this report.

Table of Contents

		Page No.
	PART I
Item 1.	Business		1
Item 1A.	Risk Factors		16
Item 1B.	Unresolved Staff Comments		23
Item 2.	Properties		23
Item 3.	Legal Proceedings		25
Item 4.	(Removed and Reserved)		25
	PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		26
Item 6.	Selected Financial Data		27
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		52
Item 8.	Financial Statements and Supplementary Data		53
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		89
Item 9A.	Controls and Procedures		89
Item 9B.	Other Information		90
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance		91
Item 11.	Executive Compensation		91
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		91
Item 13.	Certain Relationships and Related Transactions, and Director Independence		91
Item 14.	Principal Accounting Fees and Services		91
	PART IV
Item 15.	Exhibits, Financial Statement Schedules		91

We make available, free of charge, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act on our web site, http://www.titanmachinery.com, as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. We are not including the information on our web site as a part of, or incorporating it by reference into, our Form 10-K.

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ITEM 1.    BUSINESS

Our Company

Overview

        We own and operate a network of full service agricultural and construction equipment stores in the United States. Based upon information provided to us by CNH Global N.V. or its U.S. subsidiary CNH America LLC, collectively referred to in this Form 10-K as CNH, we are the world's largest retail dealer of Case IH Agriculture equipment and a major retail dealer of New Holland Agriculture, Case Construction and New Holland Construction equipment in the U.S. We have two primary business segments, Agriculture and Construction, within each of which we sell and rent new and used equipment, sell parts, and service the equipment in the areas surrounding our stores.

        The agricultural equipment we sell and service includes machinery and attachments for uses ranging from large-scale farming to home and garden use. The construction equipment we sell and service includes heavy construction and light industrial machinery for commercial and residential construction, road and highway construction and mining. Within each of our operating segments, we engage in four principal business activities:

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new and used equipment sales;

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parts sales;

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repair and maintenance services; and

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equipment rental and other activities.

        The new equipment and parts we sell are supplied primarily by CNH. CNH is a leading manufacturer and supplier of agricultural and construction equipment, primarily through the Case IH Agriculture, New Holland Agriculture, Case Construction and New Holland Construction brands. We acquire used equipment for resale through trade-ins from our customers and selective purchases. We also sell parts and provide in-store and on-site repair and maintenance services. We also rent equipment and provide other ancillary services such as equipment transportation, GPS signal subscriptions and finance and insurance products.

        We offer our customers a one-stop solution by providing equipment and parts sales, repair and maintenance services and rental functions in each store. Our full service approach provides us with multiple points of customer contact and substantial cross-selling opportunities. We believe our mix of equipment and recurring parts and service sales enables us to operate effectively throughout economic cycles. We also believe our significant scale, superior customer service, diverse and stable customer base, proven management reporting system and experienced management team provide us with a competitive advantage in many of our local markets.

        Throughout our 30-year operating history we have built an extensive, geographically contiguous network of 72 stores, including three outlet stores. Our agricultural equipment stores are located in highly productive farming regions, including the Red River valley in eastern North Dakota and northwestern Minnesota and western portions of the corn belt in Iowa, eastern South Dakota and southern Minnesota. Our construction equipment stores are located in North Dakota, South Dakota, Iowa, Montana, Wyoming, eastern Nebraska and western Minnesota.

        Our executives have extensive industry experience. David Meyer, our Chairman and Chief Executive Officer, founded our company in 1980. In 2002, we acquired two stores owned by C.I. Farm Power, Inc., a business owned by our President and Chief Financial Officer, Peter Christianson, which he co-founded in 1988. Based on our collective industry experience, we developed the Titan Operating Model, which combines management accountability and decision-making at the store level with centralized, back-office support. In addition, our executives work closely with our store managers to

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develop the managers' industry knowledge and ensure these managers achieve operational excellence in line with our management philosophy.

        We have a history of successful growth through acquisitions. Since January 1, 2003, we have completed 29 acquisitions consisting of 62 stores operating in seven states, including 14 acquisitions consisting of 31 stores completed since our initial public offering on December 11, 2007. We have a well-established track record of successfully integrating acquired stores through the Titan Operating Model, retaining acquired-store employees and maintaining acquired-store customer relationships. We expect that acquisitions will continue to be an important component of our consolidated and segment growth.

Industry Overview

Agricultural Equipment Industry

        Agricultural equipment is purchased primarily for the production of food, fiber, feed grain and renewable energy. It is also purchased for home and garden applications and maintenance of commercial, residential and government properties. Deere & Company, CNH and AGCO Corporation are the largest global manufacturers and supply a full line of equipment and parts that address the primary machinery requirements of farmers. For the most recent fiscal year-ends for which information is currently available, revenue from agriculture operations was $18.1 billion for Deere & Company, $10.7 billion for CNH and $6.6 billion for AGCO. In addition to the major manufacturers, several short-line manufacturers produce specialized equipment that addresses regional and niche requirements of farmers. Agricultural equipment manufacturers typically grant dealers in the U.S. authorized store locations, not exclusive territories, to distribute their products.

        We believe there are many factors that influence demand for agricultural equipment, parts and repair and maintenance services, including commodity prices, interest rates, general economic conditions and weather. Conditions can fluctuate drastically in a short time period, creating volatility in demand, especially for equipment, in a given year. Government subsidies also influence demand for agricultural equipment. Legislation, most notably the U.S. Farm Bill and the Farm Security and Rural Investment Act of 2002, attempts to stabilize the agriculture industry through USDA subsidies. USDA subsidies include (i) commodity programs consisting of direct, counter-cyclical and price support payments to farmers; (ii) conservation programs; and (iii) disaster relief programs. We believe USDA subsidies reduce financial volatility and help ensure that farmers operate their farms and equipment during economic down cycles, thus stabilizing demand for equipment, replacement parts and repair and maintenance services.

Construction Equipment Industry

        Construction equipment is purchased primarily for commercial, residential and infrastructure construction, as well as for demolition, maintenance, mining, energy production and forestry operations. The market for construction equipment is larger than the market for agricultural equipment and is segmented across multiple categories including earth moving, lifting, light industrial, asphalt and paving, and concrete and aggregate equipment. We believe Caterpillar, Inc., Komatsu Ltd., Deere & Company, CNH and Ingersoll-Rand Co. Ltd. are the largest global manufacturers of construction equipment. These companies generated revenue from their construction operations of $29.5 billion for Caterpillar, $20.4 billion for Komatsu, $2.6 billion for Deere & Company, and $2.1 billion for CNH for the most recent fiscal year-ends for which information is currently available. As in the agricultural equipment market, distribution of construction equipment in the U.S. is executed primarily by manufacturer authorized dealers; however, manufacturers' dealership agreements in the construction industry typically assign exclusive distribution territories.

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        Construction machinery is generally divided into heavy and light subgroups. Heavy machinery includes large wheel loaders, large tracked excavators, crawler dozers, motor graders and articulated haul trucks. Light machinery includes backhoe landscape tractors, forklifts, compact excavators and skid steers. Heavy machinery is generally purchased by construction companies, municipalities, local governments, rental fleet owners, quarrying and mining companies, waste management companies and forestry-related organizations. Typically, light machinery is purchased by contractors, rental fleet owners, landscapers, logistics companies, farmers and recreational users. Although demand for construction equipment is affected by weather and seasonal factors, it is usually less susceptible to seasonal changes than the agricultural equipment industry.

        CNH and industry reports show demand for construction equipment in our markets is driven by several factors, one of which is public infrastructure spending, including roads and highways, sewer and water, as well as by public and private expenditures for the energy and mining industries. Demand for construction equipment is also driven by demand for fossil fuels, as well as metals and other commodities. We expect to benefit from the need for equipment to establish the infrastructure necessary to extract these natural resources, particularly in North Dakota, as consumer and wholesale consumption accelerates.

Titan Operating Model

        We believe the Titan Operating Model is a key element to our continued success. Through the Titan Operating Model, we empower leadership and share best practices at the store level while realizing efficiencies at the corporate level. We believe exceptional customer service is most efficiently delivered through accountable store employees who are supported by centralized administrative, finance and marketing functions. By managing our business as a network of independent stores supported by a centralized, shared resources group, we ensure coordination of the entire enterprise while promoting local business relationships on a store-by-store basis. We have implemented the Titan Operating Model in each of our reporting segments.

Strong Stores

        Each of our stores is run by a store manager who is reviewed and compensated based on the store's achievement of revenue, profitability, market share and balance sheet objectives. Also, each store is typically staffed by a parts manager, a service manager and field marketers, all of whom report directly to the store manager. Under our operating model, decision-making for customer-related issues is decentralized, with each store manager responsible for matters such as the type of equipment to stock, equipment pricing, customer credit approvals, staffing levels and customer satisfaction. This operating model enables each trained and motivated store manager to concentrate on customers' equipment, parts and service needs, while our shared resources group manages the administrative functions of the store. We believe customers in our industry view store managers and sales and service personnel as important partners in operating their businesses. Therefore, we believe developing and supporting strong store managers enables us to grow same-store sales through fostering new relationships and further developing existing relationships with our customers. In addition, we believe that choosing to centralize customer-related decision making at the corporate level risks undermining the partnership many customers seek to build with their dealer.

Shared Resources

        Our shared resources group provides a range of services to support our stores, including warranty and service administration, information technology support, administration, marketing campaigns, human resources management, finance and insurance, central purchasing, accounting, data administration and cash management. We believe these functions can be run more efficiently when combined and provide more sophisticated tools to our store managers than an independent dealership

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could support alone. We maintain accountability through our management reporting systems, which provide data on certain key operational and financial metrics on a daily basis, as well as a comprehensive review of financial performance on a monthly basis. We believe the services provided by our shared resources group enables our stores to achieve a higher level of customer service by freeing them from certain general and administrative functions and a more competitive market presence at a lower cost than would be feasible if our stores operated independently. Furthermore, as we acquire new stores, we believe the shared services required to support these stores will grow at a lower rate than our overall growth in store count.

Management Development and Succession Planning

        Our executives work closely with our regional and store managers and mid-level corporate managers to ensure the managers benefit from our executives' industry knowledge and execute operational excellence in line with our management philosophy. We also conduct formal meetings on a monthly basis with our store managers and regional managers to assess operational and financial objectives, develop near-term strategies and share best practices across the organization. We believe the relationships between our executives, regional managers, store managers and mid-level corporate managers will sustain our financial success through continued implementation of our effective operating model, by providing a strong pool of capable successors to our current team of executives, regional managers and store managers. Further, we have deliberately structured our store personnel with entrepreneurial individuals trained, including through our programs, to move up the management ladder. In addition, we sponsor programs with several Technical Colleges and Community Colleges that offer scholarships to students who will ultimately work for us in various capacities empowered with the basic knowledge and tools to succeed.

Business Strengths

        In addition to the Titan Operating Model, we believe the following attributes of our business model and market position are important factors in our ability to compete effectively and achieve our long-term financial objectives:

Leading North American Equipment Provider with Significant Scale

        According to CNH, we are the world's largest retail dealer of Case IH Agriculture equipment and a major retail dealer of New Holland Agriculture, Case Construction and New Holland Construction equipment in the U.S. We believe our size and large, contiguous geographic market provide us with several competitive advantages including:

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our ability to efficiently manage inventory by empowering each individual store with inventory management responsibility and access to our centralized inventory management system, thus allowing inventory exchanges among the stores, which permits us to maintain only the inventory deemed needed by each store while providing significant breadth of parts and equipment to our customers;

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our ability to use expanded sales channels, including used equipment listings and periodic auctions hosted on our website, which enables us to offer our customers alternative purchasing options; and

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our ability to sell inventory to customers in a large geographic area covering North Dakota, South Dakota, Iowa, Minnesota, Nebraska, Wyoming and Montana, which enables us to capitalize on crop diversification and disparate weather throughout this area, as well as local trends in residential, infrastructure and commercial construction.

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Customer Focus at the Local Level

        As part of the Titan Operating Model, we centralize general and administrative functions and finance resources. This strategy enables our store employees to focus exclusively on customers and eliminates redundant operating expenses. We also centralize our marketing resources to offer our stores and field marketers professional marketing support that includes targeted direct mailings, advertising with targeted local media outlets, participation in and sponsorship of trade shows and industry events, our Titan Trader monthly magazine, and our hosting of open houses, service clinics, equipment demonstrations, product showcases and customer appreciation outings. We believe this operating structure, which focuses on serving our customers on a local level, will allow us to increase market share.

Superior Customer Service to Attract and Retain Customers

        We believe our ability to respond quickly to our customers' demands is a key to profitable growth. Our executives are committed to maintaining a customer-focused culture. We spend significant time and resources training our employees to effectively service our customers in each of our local markets, which we believe will increase our revenue. Our training program involves active participation in all manufacturer-sponsored training programs and the use of industry experts as consultants for customized training programs and a training team to assist in the integration of newly-acquired operations. We also partner with several technical colleges to sponsor students who we plan to ultimately employ. In particular, the following capabilities enable us to better service our customers:

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our ability to staff a large number of highly-trained service technicians across our network of stores, which makes it possible to schedule repair services on short notice without affecting our technician utilization rates;

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our ability to staff and leverage product and application specialists across our network of stores, which makes it possible to offer valuable pre-sale and aftermarket services, including equipment training, best practices education and precision farming technology support; and

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our ability to innovate and lead our industry through initiatives such as Rural Tower Network, our joint venture with certain local Caterpillar and John Deere dealerships to deploy a GPS guidance system in support of precision farming in our core geographic market, which provides our customers with the latest advances in technology and operating practices.

Unique Entrepreneurial Culture to Attract and Retain Superior Employees

        We created a unique entrepreneurial culture that empowers our employees to make decisions and act within the parameters of a proven operating process and system. We believe this culture and our size gives us a competitive advantage in attracting and retaining the best employees in our industry. We developed an operating system and process that provides our employees with defined objectives and frequent feedback of results within an entrepreneurial environment that allows them to work independently yet consistently throughout our company. Through this operating system and process we have established defined financial metrics on a balanced scorecard, which is used monthly with each store manager to assess performance. Each store manager is empowered to operate the individual store as appropriate within the guidelines set by the operating system and process. This balanced management philosophy enables our employees to understand clearly how they succeed in our organization and how to interact with customers who expect a level of autonomy from our employees. Our compensation system focuses on rewarding our employees for high performance, thus enabling us to retain most of those employees who perform at or above expectations. This system also enables us to attract talented individuals outside of our industry and train them to perform at a high level within a relatively short period of time.

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Diverse and Stable Customer Base to Avoid Market Volatility

        We believe our large and diverse customer base limits our exposure to risks associated with customer concentration and fluctuations in local market conditions. We have long and stable relationships with many of our customers. During fiscal 2010, we conducted business with approximately 58,000 customers, none of whom accounted for more than 1.0% of our total revenue and our top ten customers combined represented approximately 5.3% of our total revenue.

Proven Information Technology Systems

        Our management reporting systems provide the data and reports that facilitate our ability to make informed decisions. We use these systems to actively manage our business and enable each store to access the available inventory of our other stores before ordering additional parts or equipment from our suppliers. As a result, we minimize our investment in inventory while promptly satisfying our customers' parts and equipment needs. Our customer relationship management system provides sales and customer information and other organizational tools to assist our field marketers, parts managers and service managers. In addition, our management reporting systems facilitate training and foster development of management personnel.

Experienced Management Team to Implement our Growth Strategy

        Our executive team is led by David Meyer, our Chairman and Chief Executive Officer, and Peter Christianson, our President and Chief Financial Officer, who have approximately 35 and 31 years, respectively, of industry experience. Our regional managers, store managers and field marketers also have extensive knowledge and experience in our industry. In addition, we compensate, develop and review our regional managers and store managers based on an approach that aligns their incentives with the goals and objectives of our company, including achievement of revenue, profitability, market share and balance sheet objectives. We believe the strength of our management team will help our success in the marketplace.

Growth Strategy

        We believe our business strengths will enable us to grow our business as we continue to pursue the following growth strategies:

Increase Market Share and Same-Store Sales

        We focus on increasing our share of the equipment sold in our markets because our market share impacts current period revenue and compounds our revenue over the life of the equipment sold through recurring parts and service business. We seek to generate same-store growth and increase market share through:

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employing significant marketing and advertising programs, including targeted direct mailings, advertising with targeted local media outlets, participation in and sponsorship of trade shows and industry events, our Titan Trader monthly magazine, and by hosting open houses, service clinics, equipment demonstrations, product showcases and customer appreciation outings;

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supporting and providing customers with training for evolving technologies, such as precision farming, that are difficult for single-store operators to support;

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maintaining state-of-the-art service facilities, mobile service trucks and trained service technicians to maximize our customers' equipment uptime through preventative maintenance programs and seasonal 24/7 service support; and

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utilizing our inventory system to maximize parts and equipment availability for our customers.

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Make Selective Acquisitions

        The agricultural and construction equipment industries are fragmented and consist of many relatively small, independent businesses servicing discrete local markets. We believe a favorable climate for dealership consolidation exists due to several factors, including the competitiveness of our industry, growing dealer capitalization requirements and lack of succession alternatives. We intend to evaluate and pursue acquisitions with the objectives of entering new markets, consolidating distribution within our established network and strengthening our competitive position.

        We have a track record of completing and integrating acquisitions and have successfully used acquisitions to enter new markets. We look to add stores through acquisitions that offer attractive growth opportunities, high demand for the equipment we sell and services we offer, management strength, and contiguity with our existing geography. These factors have guided us to successful acquisition candidates. We believe our track record of successful acquisitions and expansion increases the probability that our future expansion will be profitable.

        We believe that we are effectively able to identify attractive acquisition candidates due to our leadership position in the industry, our track record of completing and integrating acquisitions, and our contacts in and knowledge of our industry and geographic region. We regularly assess the acquisition landscape, evaluating potential acquisition candidates in terms of their availability and desirability to our long-term growth strategy. In addition, we believe acquisition economics in our industry have been and will continue to be conducive to executing our long-term growth strategy. Typically, we acquire only the fixed assets, working capital and selected inventory we believe are necessary to run an efficient store according to the Titan Operating Model and assume only the liabilities related to financing the inventory and working capital acquired, although we sometimes acquire all the stock of a company. We, therefore, typically calculate our net purchase price of an acquisition as the value paid for the assets acquired less the amount of any liabilities assumed. Upon completion of an acquisition we seek to re-finance the inventory acquired according to the parts and floor plan financing parameters of the Titan Operating Model. We believe our management team's experience in evaluating potential acquisition candidates helps them determine whether a particular dealership can be successfully integrated into our existing operations and enables them to structure mutually beneficial purchase terms.

        The consent of CNH is required to acquire any CNH dealership, and the consent of Bremer Bank, N.A. ("Bremer Bank") and GE Commercial Distribution Finance ("GE") is required for the acquisition of dealerships meeting certain thresholds or other criteria defined in the financing agreements with the respective entities.

        The table below summarizes our acquisition of 29 dealers, totaling 62 stores, since January 1, 2003. Certain stores (designated with an *) are included in the Agriculture segment but also sell some construction equipment.

Agriculture Segment

Acquired Dealer		Location of Stores
Titan Machinery, LLC		Watertown, South Dakota
	January 2003	Wahpeton, North Dakota
		Casselton, North Dakota
		Fargo, North Dakota
Consolidated Ag Service, Inc.		Graceville, Minnesota
	February 2004	Marshall, Minnesota*
		Pipestone, Minnesota

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Acquired Dealer		Location of Stores
Smith International, Inc.		Waverly, Iowa
	March 2005
H.C. Clark Implement Co., Inc.		Aberdeen, South Dakota*
	May 2005
Vern Anderson, Inc.		Anthon, Iowa
	November 2005	Cherokee, Iowa
		Kingsley, Iowa
		Le Mars, Iowa
Walterman Implement, Inc.		Dike, Iowa
	November 2005
Farm Power, Inc. of Minnesota and related entities		Elbow Lake, Minnesota
	March 2006	Fergus Falls, Minnesota
Richland County Implement, Inc.		Wahpeton, North Dakota
	February 2007
Aberdeen Equipment Co., Huron Equipment Co. and Redfield Equipment Co.		Aberdeen, South Dakota*
	April 2007	Huron, South Dakota
		Redfield, South Dakota
Red Power International, Inc.		Ada, Minnesota
	August 2007	Crookston, Minnesota*
Twin City Implement, Inc.		Mandan, North Dakota*
	November 2007
Reiten & Young International, Inc.		Grand Forks, North Dakota*
	December 2007
Avoca Operations, Inc. and Greenfield Operations, Inc.		Avoca, Iowa
	January 2008	Greenfield, Iowa
Ceres Equipment Inc.		Roseau, Minnesota
	February 2008
Quad County Implement, Inc.		Blairstown, Iowa
	May 2008
Wolf's Farm Equipment, Inc.		Kintyre, North Dakota
	September 2008
Pioneer Garage, Inc.		Pierre, South Dakota
	October 2008	Highmore, South Dakota
		Miller, South Dakota
Anderson Power and Equipment, Inc.		Thief River Falls, Minnesota
	December 2008

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Acquired Dealer		Location of Stores
Winger Implement, Inc.		Winger, Minnesota
	May 2009
Arthur Mercantile Company		Arthur, North Dakota
	May 2009
Valley Equipment, Inc.		Mayville, North Dakota
	June 2009
Lickness Bros. Implement Co.		Britton, South Dakota
	August 2009
Oskaloosa Implement Co.		Pella, Iowa
	November 2009	Oskaloosa, Iowa
Valley Farm Equipment, Inc.		Milbank, South Dakota
	November 2009

Construction Segment

Acquired Dealer		Location of Stores
Krider Equipment Co., Inc.		Fargo, North Dakota
	January 2003	Bismarck, North Dakota
Fargo Tractor & Equipment, Inc.		West Fargo, North Dakota
	January 2003
Piorier Equipment Company, Inc. and related entities		Sioux City, Iowa
	June 2006	Marshall, Minnesota
		Rapid City, South Dakota
		Sioux Falls, South Dakota
Mid-Land Equipment Company, L.C.		Des Moines, Iowa
	May 2008	Davenport, Iowa
		Clear Lake, Iowa
		Cedar Rapids, Iowa
		Omaha, Nebraska
		Lincoln, Nebraska
Western Plains Machinery Co. and WP Rentals LLC		Billings, Montana (2 stores)
	December 2008	Belgrade, Montana
		Great Falls, Montana
		Missoula, Montana
		Columbia Falls, Montana
		Cheyenne, Wyoming
		Casper, Wyoming
		Gillette, Wyoming

Integrate New Dealers into the Titan Operating Model

        We have developed the Titan Operating Model to optimize the performance and profitability of each of our stores. Upon consummation of each acquisition, we integrate acquired stores into our

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operations by implementing the Titan Operating Model to enhance each acquired store's performance within its target market. We generally complete integration of a store within 18 months, although it may take several years before acquired stores fully realize the benefits of the Titan Operating Model. We believe the Titan Operating Model provides us with multiple points of customer contact, creates cross-selling opportunities, fosters strong customer relationships and supports a culture of individual accountability that increases our revenue and provides a strong platform for future growth.

Suppliers

CNH—Case IH Agriculture, Case Construction, New Holland Agriculture and New Holland Construction

        We have a longstanding relationship with CNH and, according to CNH, are the world's largest retail dealer of Case IH Agriculture equipment. We have been an authorized dealer of Case agricultural equipment since the inception of our company in 1980 and added the other CNH brands as Case grew, acquired other brands and merged with New Holland in 1999 to form CNH. CNH supplied, through CNH America LLC, CNH's U.S. manufacturing entity, approximately 81.9% of the new agricultural equipment and 64.1% of the new construction equipment we sold in fiscal 2010.

        CNH is a global leader in the agricultural and construction equipment industries based on the number of units sold. In 2009, CNH had $13.8 billion in worldwide revenue, with agricultural equipment accounting for approximately 77% and construction equipment accounting for approximately 15% of CNH's total revenue. In addition, CNH provides financing and insurance products and services to its end-user customers and authorized dealers through its CNH Capital business unit. CNH is a publicly-traded company and a majority-owned subsidiary of Fiat S.p.A.

        CNH is the world's second largest manufacturer of agricultural equipment. CNH owns and operates the Case IH Agriculture and New Holland Agriculture brands. Case IH Agriculture, recognized by the red color of its equipment, possesses over 160 years of farm equipment heritage. New Holland Agriculture, recognized by the blue color of its tractors and the yellow color of its harvesting and hay equipment, has over 100 years of farm equipment industry experience. CNH's agricultural equipment dealers are assigned authorized store locations but do not have exclusive territories.

        CNH is one of the world's largest manufacturers of construction equipment in terms of market share, owning and operating the Case Construction, New Holland Construction and Kobelco brands. CNH's construction equipment dealers are assigned a specific geographic area of responsibility, which typically includes an entire state, within which the dealers have the right to sell new Case Construction, New Holland Construction and/or Kobelco equipment.

        We have entered into separate dealership agreements with certain CNH entities to sell the Case IH Agriculture, New Holland Agriculture, Case Construction and New Holland Construction brands. These dealer agreements authorize us to sell CNH equipment and parts and entitle us to use CNH trademarks and trade names, with certain restrictions. The CNH entities have the right to terminate their dealer agreements with us immediately in certain circumstances, including if a person acquires 20% or more of our common stock without CNH's consent, and, in some cases, for any reason 90 days following written notice. The dealership agreements and industry practices generally provide that payment on equipment and parts purchased from CNH entities is due within 30 days and is typically subject to floor plan financing as discussed below. With respect to sales of equipment, payments from customers, which are typically financed by a third party, are due upon sale. Payments from customers for parts and services are due within 30 days. CNH makes available to us any floorplans, parts return programs, sales or incentive programs or similar plans or programs it offers to other dealers, and provides us with promotional items and marketing materials.

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        Based upon information provided to us by CNH, we are the world's largest retail dealer of Case IH Agriculture equipment and a major retail dealer of New Holland Agriculture, Case Construction and New Holland Construction equipment in the U.S. Thus, our relationship with CNH entities is more than a typical supply relationship; it is strategic for both our company and CNH. In that regard, it is in our mutual interests to maintain the strong longstanding relationship we share.

Other Suppliers

        In addition to products supplied by CNH, we sell a variety of new equipment, parts and attachments from other manufacturers. These products tend to address specialized niche markets and complement the CNH products we sell by filling gaps in the CNH line of products. We believe our offering of products for specialized niche markets supports our goal of being a one-stop solution for equipment needs at each of our stores. Approximately 20.0% of our total new equipment sales in fiscal 2010 resulted from sales of products manufactured by companies other than CNH with our single largest manufacturer other than CNH representing less than 3.4% of our total new equipment sales. The terms of our arrangements with these other suppliers vary, but most of the dealership agreements contain termination provisions allowing the supplier to terminate the agreement after a specified notice period, which is typically 30 days. Payment and financing practices with these other suppliers are similar to those practices described above with respect to CNH entities.

Operating Segments, Products and Services

        We operate our business in two reportable segments, Agriculture and Construction. Within each of our Agriculture and Construction segments, we have four principal sources of revenue: new and used equipment sales, parts sales, repair and maintenance service and equipment rental and other business activities. We recently realigned our operations into two reporting segments to reflect our changing business mix, highlight our growth potential, provide more insight into our operating results, and reflect our internal performance reporting and decision-making. See Note 16 to our consolidated financial statements included elsewhere in this annual report for additional information regarding our segments.

Equipment Sales

        We sell new agricultural and construction equipment manufactured under the CNH family of brands as well as equipment from a variety of other manufacturers. The used equipment we sell is from inventory acquired through trade-ins from our customers and selective purchases. The agricultural equipment we sell and service includes application equipment and sprayers, combines and attachments, hay and forage equipment, planting and seeding equipment, precision farming technology, tillage equipment, and tractors. The construction equipment we sell and service includes articulated trucks, compact track loaders, compaction equipment, cranes, crawler dozers, excavators, forklifts, loader/backhoes, loader/tool carriers, motor graders, skid steer loaders, telehandlers and wheel loaders. We sell new and used equipment through our professional, in-house retail sales force, which is organized by geography and operating segment. We also sell used equipment through our outlet stores. We believe this organizational structure improves the effectiveness of our sales force, better serves our customers and helps us negotiate advantageous trade-in purchase terms. Equipment sales generate cross-selling opportunities for us by populating our markets with equipment we repair and maintain and for which we sell parts. For the year ended January 31, 2010, equipment revenue was $643.2 million, representing 76.8% of total revenue for the period.

Parts Sales

        We sell a broad range of maintenance and replacement parts on equipment that we sell, as well as other types of equipment. We maintain an extensive in-house parts inventory to provide timely parts and repair and maintenance support to our customers. We generally are able to acquire out-of-stock

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parts directly from manufacturers within two business days. Our parts sales provide us with a relatively stable revenue stream that is less sensitive to economic cycles than our equipment sales and rental operations. For the year ended January 31, 2010, parts revenue was $119.5 million, representing 14.2% of total revenue for the period.

Repair and Maintenance Services

        We provide repair and maintenance services, including warranty repairs, for our customers' equipment. Each of our stores includes service bays staffed by trained service technicians. Our technicians are also available to make on-site repairs. In addition, we provide proactive and comprehensive customer service by maintaining service histories for each piece of equipment owned by our customers, maintaining 24/7 service hours in times of peak service usage, providing on-site repair services, scheduling off-season maintenance activities with customers, notifying customers of periodic service requirements and providing training programs to customers to educate them as to standard maintenance requirements. At the time equipment is purchased, we also offer customers the option of purchasing extended warranty protection. Our after-market services have historically provided us with a high-margin, relatively stable source of revenue through changing economic cycles. For the year ended January 31, 2010, service revenue was $59.0 million, representing 7.0% of total revenue for the period.

Equipment Rental and Other Business Activities

        We rent equipment to our customers on a short-term basis for periods ranging from a few days to a few months. We actively manage the size, quality, age and composition of our rental fleet and use our information technology systems to closely monitor and analyze customer demand and rate trends. We maintain the quality of our fleet through our on-site parts and services support and dispose of rental equipment through our retail sales force. Our rental business creates cross-selling opportunities for us in equipment sales. In addition, we provide ancillary equipment support activities such as equipment transportation, GPS signal subscriptions in connection with precision farming and reselling CNH Capital finance and insurance products. For the year ended January 31, 2010, other revenue was $17.1 million, representing 2.0% of total revenue for the period.

Customers

        We serve over 58,000 customers in the U.S., primarily in North Dakota, South Dakota, Minnesota, Iowa, Nebraska, Wyoming and Montana. Our customers include a wide range of farmers, construction contractors, public utilities, municipalities and maintenance contractors. They vary from small, single machine owners to large farming or contracting firms that operate under sophisticated capital equipment and maintenance budgets. Our stores enable us to closely service local and regional customers. We believe the Titan Operating Model enables us to satisfy customer requirements and increase revenue through cross-selling opportunities presented by the various products and services that we offer. In fiscal 2010, no single customer accounted for more than 1.0% of our revenue and our top ten customers combined accounted for approximately 5.3% of our total revenue. In addition to our U.S. customers, we sell equipment on a limited basis to international customers, primarily in Eastern Europe. Our U.S. customers primarily finance their equipment purchases through CNH Capital.

Floorplan Financing

        We attempt to maintain at each store, or have readily available at other stores in our network, sufficient inventory to satisfy customer needs. Inventory levels fluctuate throughout the year and tend to increase before the primary sales seasons for agricultural equipment. The cost of financing our inventory is an important factor affecting our financial results.

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CNH Capital

        CNH Capital offers floorplan financing to CNH dealers for extended periods to finance products from both CNH and other suppliers. CNH Capital provides this financing in part to enable dealers to carry representative inventories of equipment and encourage the purchase of goods by dealers in advance of seasonal retail demand. CNH Capital charges variable market rates of interest based on the prime rate on balances outstanding after any interest-free periods and retains a security interest in all of our assets, including inventories, which it inspects periodically. The interest-free periods, which CNH offers periodically in the form of additional incentives or special offers, typically average four months for new and used agriculture equipment and new construction equipment. CNH Capital also provides financing for used equipment accepted in trade, repossessed equipment and approved equipment from other suppliers, and receives a security interest in such equipment.

Other Financing Sources for Equipment

        In addition to the financing provided by CNH Capital, financing also may be available through floorplan financing programs provided by the suppliers, which may be financed by such suppliers themselves or through third party lenders.

Other Financing

        We have a revolving operating line of credit with Bremer Bank for up to $25.0 million. The revolving operating line of credit is to provide for our short term working capital requirements.

Sales and Marketing

        As part of the Titan Operating Model, we have centralized sales support and marketing management. All of our stores benefit from our centralized media buys, strategic planning, sales support and training, and we provide our store managers and their sales teams with flexibility to localize sales and marketing.

        We currently market our products and services through:

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field marketers, our direct sales representatives who operate out of our network of local stores and call on customers in the markets surrounding each store;

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parts counter and service managers, who provide our customers with comprehensive after-market support;

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local and national advertising efforts, including broadcast, cable, print and web-based media; and

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our remarketing division, which trades and sells used equipment through our outlet store and website.

Field Marketers

        We believe our sales force is one of the industry's most productive and highly trained. Our field marketers perform a variety of functions, such as servicing customers at our stores, calling on existing customers and soliciting new business at farming, construction and industrial sites. These field marketers target customers in specific areas, and we develop customized marketing programs for our sales force by analyzing each customer group for profitability, buying behavior and product selection. All members of our sales force are required to attend frequent in-house training sessions to develop product and application knowledge, sales techniques and financial acumen. Our sales force is supported by our corporate marketing department.

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Parts Counter and Service Managers

        Our parts counter and service managers are involved in our uptime service efforts, taking advantage of our seasonal marketing campaigns in parts and service sales. As a group, they have won multiple awards from our suppliers for their efforts benefiting both our customers and our key strategic partners. We believe they rank among the most well-trained and efficient parts and service groups in our industry.

Print, Broadcast and Web-Based Advertising Campaigns

        Each year we initiate several targeted direct mail, print and broadcast advertising and marketing campaigns. CNH and other suppliers periodically provide us with advertising funds, which we primarily use to promote new equipment, parts and financing programs. We will continue to explore and launch additional sales channels as appropriate, including, for example, new internet-based efforts.

Remarketing Division

        Our remarketing division capitalizes on sales opportunities for aged used agricultural and construction equipment transferred out of our retail stores. We have opened three outlet stores that sell used equipment. In addition, we are actively engaged in marketing equipment through our website.

Competition

        The agricultural and construction equipment sales and distribution industries are highly competitive and fragmented, with large numbers of companies operating on a regional or local scale. Our competitors range from multi-location, regional operators to single-location, local dealers and include dealers and distributors of competing equipment brands, including John Deere, Caterpillar and the AGCO family of brands, as well as other dealers and distributors of the CNH family of brands. Competition among equipment dealers, whether they offer agricultural or construction products or both, is primarily based on the price, value, reputation, quality and design of the products offered by the dealer, the customer service and repair and maintenance service provided by the dealer, the availability of equipment and parts and the accessibility of stores. While we believe we compete favorably on each of the identified competitive factors, our sales and margins may be impacted depending on (i) the extent of aggressive pricing competition through manufacturer discount programs or other competitive pricing tactics, (ii) our ability to obtain higher service gross margins based on our service quality and reputation and (iii) our ability to attract new and maintain existing customers based on the availability and quality of the products we offer and our local relationship and reputation.

        The number of agricultural and construction equipment dealers operating on a regional scale is limited and we are one of the principal regional-scale, agricultural and construction equipment dealers in the U.S. The primary regional-scale equipment dealers with whom we compete include RDO Equipment Co., Butler Machinery, Ziegler Inc. and Brandt Holdings Co. RDO Equipment Co. is a John Deere agricultural and construction equipment dealer with 56 locations in nine states including North Dakota, South Dakota, Minnesota and Montana. Butler Machinery is a Caterpillar construction and agriculture equipment dealer with 11 locations in North Dakota and South Dakota. Ziegler Inc. is a Caterpillar construction and agriculture equipment dealer with 20 locations in three states including Minnesota and Iowa. Brandt Holdings owns John Deere, Vermeer and Bobcat construction and agricultural equipment dealers with 32 locations in 11 states including Iowa, Minnesota, Nebraska, North Dakota, and South Dakota.

Information Technology Systems

        We currently use an integrated management reporting system developed and supported by Dealer Information Systems Corporation to manage our operating information. In fiscal 2010, we began

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implementing a new enterprise resource planning ("ERP") system that will replace our current management reporting system. Our information system enables us to closely monitor our performance and actively manage our business on a consolidated and segment basis and includes features that were enhanced to support the Titan Operating Model, including detailed store-based financial reporting, inventory management and customer relationship management.

        Through our information system we maintain a complete database on inventory of parts and equipment and a centralized inventory control system for each segment. Our system enables each store to access the available inventory of our other stores before ordering additional parts or equipment from our suppliers. We are also able to monitor inventory levels and mix at each store and make adjustments in accordance with our operating plan. Finally, our system is externally connected to CNH, enabling us to locate CNH equipment and parts inventories, and communicate with other CNH dealers.

        Our customer relationship management system provides sales and customer information and other organizational tools to assist our sales force. We maintain an extensive customer database that allows us to monitor the status and maintenance history of our customers' equipment and enables us to more effectively provide parts and services to meet their needs. In addition, our system includes, among other features, on-line contract generation, automated billing, local sales tax computation and automated rental purchase option calculation. We also use our relationship management information system and customer database to monitor sales information and customer demand.

        The data we store in our information system is backed-up on a daily basis and stored at an off-site location. Thus, if our system were to become inoperable, we would be able to continue operations through an off-site data center. Further, we own the software and hardware necessary to operate this system and have employees trained to manage and maintain the software without reliance on external support.

Corporate Information

        We were incorporated as a North Dakota corporation in 1980 and reincorporated in Delaware in December 2007 prior to our initial public offering. Our executive offices are located at 4876 Rocking Horse Circle, Fargo, ND 58104-6049. Our telephone number is (701) 356-0130. We maintain a web site at www.titanmachinery.com.

Intellectual Property

        We do not have any registered intellectual property. Case IH, Case and New Holland are registered trademarks of CNH, which we use in connection with advertisements and sales as authorized under our dealership agreements. We license trademarks and trade names of new equipment obtained from suppliers other than CNH from their respective owners. We operate each of our stores under either the Titan Machinery name or, if there was strong local name recognition and customer loyalty at a location we acquired, the name historically used by the dealership in that location for a transition period, the length of which can vary depending upon the location.

Product Warranties

        Product warranties for new equipment and parts are provided by our suppliers. The term and scope of these warranties vary greatly by supplier and by product. We also offer customers the option of purchasing extended warranty protection at the time equipment is purchased. Suppliers pay us for repairs we perform to equipment under warranty. We generally sell used equipment "as is" and without manufacturer's warranty, although manufacturers sometimes provide limited warranties if the supplier's original warranty is transferable and has not expired. Typically, we provide no additional warranties on used equipment.

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Seasonality

        Our quarterly operating results are subject to fluctuation due to varying weather patterns, which may impact the timing and amount of equipment purchases, rentals, and after-sales parts and service purchases by our Agriculture and Construction customers.

Employees

        As of April 1, 2010, we employed 1,240 full-time and 251 part-time employees. None of our employees is covered by a collective bargaining agreement. We believe our relations with our employees are good.

Governmental Regulation

        We are subject to numerous federal, state, and local rules and regulations, including regulations promulgated by the Environmental Protection Agency and similar state agencies, with respect to storing, shipping, disposing, discharging and manufacturing hazardous materials and hazardous and non-hazardous waste. These activities are associated with the repair and maintenance of equipment at our stores. Currently, none of our stores or operations exceeds small quantity generation status. Compliance with these rules and regulations has not had any material effect on our operations, nor do we expect it to in the future. Further, we have not made, and do not anticipate making, any material capital expenditures related to compliance with environmental regulations. However, there can be no assurance that these expectations are accurate, particularly if regulations change, unforeseen incidents occur or unknown past contamination or non-compliance is discovered, among other similar events.

ITEM 1A.    RISK FACTORS

We are substantially dependent upon our relationship with CNH.

        We are an authorized dealer of CNH agricultural and construction equipment and parts. In fiscal 2010, CNH supplied approximately 81.9% of the new agricultural equipment and 64.1% of the new construction equipment we sold and represented a significant portion of our parts revenue. Our acquisition strategy contemplates the acquisition of additional CNH geographic areas of responsibility and store locations in both the Agricultural and Construction equipment segments. We depend on CNH Capital America LLC, or CNH Capital, for floorplan financing to purchase a substantial portion of our inventory. In addition, CNH Capital provides a significant percentage of the financing used by our customers to purchase CNH equipment from us. CNH also provides incentive programs and discount programs from time to time that enable us to price our products more competitively. In addition, CNH conducts promotional and marketing activities on national, regional and local levels. Due to our substantial dependence on CNH, our success depends, in significant part, on (i) the overall reputation and success of CNH; (ii) the availability and terms of floorplan financing and customer financing from CNH Capital; (iii) the incentive and discount programs provided by CNH and its promotional and marketing efforts for its agricultural and construction products; (iv) the goodwill associated with CNH trademarks; (v) the introduction of new and innovative products by CNH; (vi) the manufacture and delivery of competitively-priced, high quality equipment and parts by CNH in quantities sufficient to meet our customers' requirements on a timely basis; (vii) the quality, consistency and management of the overall CNH dealership system; and (viii) the ability of CNH to manage its risks and costs, including those associated with being a multinational company. If CNH does not provide, maintain or improve any of the foregoing, or if CNH were sold or reduced or ceased operations, there could be a material adverse effect on our financial condition and results of operations.

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CNH may terminate its dealership agreements with us or change the terms of those agreements, which could adversely affect our business.

        Under our dealership agreements with CNH through CNH America LLC, CNH's U.S. manufacturing entity, CNH entities have the right to terminate these agreements immediately in certain circumstances, and, in some cases, for any reason 90 days following written notice. Furthermore, CNH entities may change the terms of their agreements with us, among other things, to change our sales and service areas and/or the product, pricing or delivery terms. CNH routinely conducts evaluations of dealership standards, customer satisfaction surveys and market share studies, the results of which can impact the relationships with its dealers. CNH uses the evaluation results to increase or decrease the monetary rewards to dealers, or limit or expand the availability of financing, warranty reimbursements or other marketing incentives. If CNH were to change the terms of any or all of these agreements in a manner that adversely affects us, our business may be harmed, and if CNH were to terminate all or any of its dealer agreements with us, our business would be severely harmed.

Restrictions in our CNH dealership agreements may significantly affect our operations and growth and prevent a change in control of our company.

        We operate our stores pursuant to CNH's customary dealership agreements. These agreements impose a number of restrictions and obligations on us with respect to our operations, including our obligations to actively promote the sale of CNH equipment within our designated geographic areas of responsibility, fulfill the warranty obligations of CNH, provide services to our customers, maintain sufficient parts inventory to service the needs of our customers, maintain inventory in proportion to the sales potential in each sales and service geographic area of responsibility, maintain adequate working capital and maintain stores only in authorized locations. Prior consent of CNH is required for the acquisition by another party of 20% or more of our outstanding stock and for our acquisition of other CNH dealerships; otherwise, CNH may terminate our dealership agreements. There can be no assurances that CNH will give its consent. The restrictions and obligations in our CNH dealership agreements limit our flexibility in operating our current stores and acquiring new stores, which could have an adverse effect on our operations and growth. Furthermore, the requirement that CNH consent to the acquisition by any party of 20% or more of our outstanding stock may have the effect of discouraging transactions involving a change in our control, including transactions that stockholders might deem to be in their best interests.

Our equipment dealer appointments are not exclusive to the geographic areas we serve, which could adversely affect our operations and financial condition.

        CNH could appoint other equipment dealers in close proximity to our existing stores. The sales and service geographic areas of responsibility assigned to our dealerships can be enlarged or reduced by CNH upon 30 days' prior written notice. CNH and other equipment dealers can also sell in our sales and service geographic areas of responsibility. To the extent CNH appoints other equipment dealers within our markets, enlarges or reduces the sales and service geographic areas of responsibility relating to our stores, amends the dealership agreements or imposes new or different terms or conditions under the dealer agreements, our operations and financial condition could be adversely affected.

Our operating results may be adversely impacted by an under-supply or over-supply of equipment.

        If our suppliers cannot continue to provide us a reliable supply of new equipment, we may not be able to meet our customers' demand and our operating results could be negatively impacted. In times of heightened global demand for equipment, which is often driven by other factors (e.g., farm cash receipts often drive demand for agricultural equipment and infrastructure development often drives construction equipment demand), equipment suppliers may experience difficulty providing all

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dealerships a reliable supply of new agricultural equipment, which could adversely impact our results of operations. Further, an under-supply of equipment may cause prices for such equipment to increase. To the extent we cannot pass on any increased costs of equipment to our customers, our operating results may suffer. Conversely, an industry over-supply of equipment may also adversely affect our operations. Though manufacturers typically manage production of new equipment in response to demand, there may be short-term under-supplies or over-supplies of new equipment as manufacturers adjust to industry demand fluctuations. For used and rental equipment, short-term lease programs and commercial rental agencies for construction and agricultural equipment have expanded significantly in North America. Nationwide rental conglomerates have become sizeable purchasers of new equipment and can have a significant impact on industry sales and margins. When equipment comes off of lease or is replaced with newer equipment by rental agencies, there may be a significant increase in the availability of late-model used equipment. An over-supply of used equipment could adversely affect demand for, or the market prices of, new and used equipment. In addition, a decline in used equipment prices could have an adverse effect on residual values for leased equipment, which could adversely affect our financial performance.

If our acquisition plans are unsuccessful, we may not achieve our planned revenue growth.

        We believe a significant portion of our future growth will depend on our ability to acquire additional dealerships. Our ability to continue to grow through the acquisition of additional CNH geographic areas of responsibility and store locations or other businesses will be dependent upon the availability of suitable acquisition candidates at acceptable costs, our ability to compete effectively for available acquisition candidates and the availability of capital to complete the acquisitions. We may not successfully identify suitable targets, or if we do, we may not be able to close the transactions, or if we close the transactions, they may not be profitable. In addition, CNH's consent is required for the acquisition of any CNH dealership, and the consent of Bremer Bank and GE is required for the acquisition of dealerships meeting certain thresholds or other criteria defined in the financing agreements with the respective entities. CNH typically evaluates management, performance and capitalization of a prospective acquirer in determining whether to consent to the sale of a CNH dealership. There can be no assurance that CNH, Bremer Bank or GE will consent to any or all acquisitions of dealerships that we may propose.

Our potential inability to successfully integrate newly-acquired dealerships may adversely affect our financial results.

        Once an acquisition is completed, we face many other risks commonly encountered with growth through acquisitions. These risks include incurring significantly higher than anticipated capital expenditures and operating expenses; failing to assimilate the operations and personnel of the acquired dealerships; disrupting our ongoing business; dissipating our management resources; failing to maintain uniform standards, controls and policies; and impairing relationships with employees and customers as a result of changes in management. Fully integrating an acquired dealership into our operations and realization of the full benefit of our strategies, operating model and systems may take several years. There can be no assurance that we will be successful in overcoming these risks or any other problems encountered with such acquisitions. To the extent we do not successfully avoid or overcome the risks or problems related to acquisitions, our results of operations and financial condition could be adversely affected. Future acquisitions also will have a significant impact on our financial position and capital needs, and could cause substantial fluctuations in our quarterly and yearly results of operations. Acquisitions could include significant goodwill and intangible assets, which may result in future impairment charges that would reduce our stated earnings.

        We have grown significantly through acquisitions in recent years and expect to continue to grow through acquisitions. Management has expended, and expects to continue to expend, significant time

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and effort in evaluating, completing and integrating acquisitions and opening new stores. There can be no assurance that our systems, procedures and controls will be adequate to support our expanding operations. Any future growth will also impose significant added responsibilities on our executives, including the need to identify, recruit and integrate new senior level managers and executives. There can be no assurance we will be able to identify and retain such additional management. If we are unable to manage growth efficiently and effectively, or are unable to attract and retain additional qualified management, there could be a material adverse effect on our financial condition and results of operations.

We lease many of our dealership sites from related parties, and if we are unable to obtain commercially reasonable terms and conditions from these related parties or unrelated third parties in the future, our growth and financial condition may be adversely affected.

        We lease 36 of our 72 dealership sites from entities affiliated with David Meyer, our Chairman and Chief Executive Officer, Tony Christianson, one of our directors, Peter Christianson, our President and Chief Financial Officer, or James L. Williams, one of our directors. We expect that we may lease future dealership sites we acquire from parties related to our affiliates. There is no guarantee that related parties will offer us commercially reasonable terms and conditions or that unrelated third parties will provide alternate dealership sites on commercially reasonable terms and conditions. If we cannot obtain commercially reasonable terms and conditions on leases for our current or future dealership sites from entities related to Messrs. Meyer, Tony Christianson, Peter Christianson or Williams, or from unrelated third parties, our growth and financial condition may be adversely affected.

Substantial inventory financing is required for the equipment we sell but may not be available, which could adversely affect our growth and results of operations.

        The sale of agricultural and construction equipment requires substantial inventories of equipment and parts to be maintained at each store to facilitate sales to customers on a timely basis. We generally purchase our inventories of equipment with the assistance of floorplan financing programs through CNH Capital and other lenders. As we grow, whether internally or through acquisitions, our inventory requirements will increase and, as a result, our financing requirements also will increase. In the event that our available financing sources are not maintained or are insufficient to satisfy our future requirements, we would be required to obtain financing from other sources. There can be no assurance that additional or alternative financing could be obtained on commercially reasonable terms. To the extent additional financing cannot be obtained on commercially reasonable terms, our growth and results of operations could be adversely affected.

Failure to properly manage our equipment inventory, our largest asset, would have a significant adverse effect on our operations.

        Our equipment inventory has generally represented 50% or more of our total assets. Thus, our success is significantly dependent upon our ability to manage the supply and cost of new and used equipment. The pricing of equipment can be highly volatile and subject to negotiation, particularly in the used equipment market. Pricing for and sales of used equipment can be significantly affected by the limited market for such equipment. Further, liquidation prices of used agricultural and construction equipment can have significant fluctuations due to economic cycles, utilization trends and degree of specialization. We are dependent upon the ability of our management and buyers to negotiate acceptable purchase prices, to affect a proper balance of new and used equipment and to manage the amount of equipment in inventory to assure quick turnover. Our failure to manage our inventory and equipment costs could materially adversely affect our results of operations and financial condition.

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Adverse changes in governmental agricultural policies, including decreases in farm subsidies, may reduce demand for agricultural equipment and cause our revenue to decline.

        Changes in governmental agricultural policy could adversely affect sales of agricultural equipment. Government subsidies influence demand for agricultural equipment. Future farm bills and USDA budgets may reduce the amount of payments to individual farmers. We cannot predict the outcome of such governmental funding, and to the extent that future funding to individual farmers is reduced, these reductions in funding could reduce demand for agricultural equipment and we could experience a decline in revenue.

Economic events, particularly in the credit markets, may adversely affect our business and results of operations.

        The agricultural and construction equipment industries are affected by macroeconomic factors, including changes in international, national, regional, and local economic conditions. Current global economic conditions pose a risk to our business as customers may postpone spending in response to tighter credit, negative financial news, downturns in agricultural commodity prices and the housing market and/or declines in income or asset values, which could have a material negative effect on the demand for our products and services. Our business is also particularly dependent on our access to the capital and credit markets to finance acquisitions and manage inventory. Tight credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit, currency and equity markets have the potential to adversely affect our business. Such disruptions in the overall economy and financial markets and the related reduction in consumer confidence in the economy, slow activity in the capital markets, negatively affect access to credit on commercially acceptable terms, and may adversely impact the access of us or our customers to credit and the terms of any such credit. Further, any decreased collectability of accounts receivable or increase in customer insolvencies could negatively impact our results of operations. The nature of the agricultural and construction equipment industries is such that a downturn in demand can occur suddenly, due to tightening credit markets, decreasing commodity prices or demand, decreasing infrastructure and housing development, adverse weather conditions or other circumstances, resulting in excess inventory, un-utilized production capacity and reduced prices for equipment, which would harm our revenue and profitability. Uncertainty about current global economic conditions, agricultural commodity prices and demand and the housing market could also continue to increase the volatility of our stock price.

Adverse changes in the agricultural industries could result in decreases in purchases of agricultural equipment and harm our revenue and profitability.

        Our business depends to a great extent upon general activity levels in the agricultural industries. Changes in farm income and farmland value, the level of worldwide farm output and demand for farm products, commodity prices, animal diseases and crop pests, and limits on agricultural imports are all material factors that could adversely affect the agricultural industries and result in a decrease in the amount of agricultural equipment that our customers purchase. The nature of the agricultural equipment industries is such that a downturn in demand can occur suddenly, resulting in excess inventories, un-utilized production capacity and reduced prices for new and used equipment. These downturns may be prolonged and our revenue and profitability would be harmed.

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Adverse changes in the construction industry could result in decreased demand for construction equipment and harm our revenue.

        General economic conditions in markets in which we do business can impact the demand for our construction equipment. The construction industry in our geographical areas has experienced a prolonged economic down cycle as a result of the macroeconomic environment, which negatively impacts sales of light construction equipment. Decreased demand for our products can have a negative impact on our financial performance and cash flow. Our business and earnings are impacted by the changes in the construction industry. The ability of consumers to obtain mortgages for the purchase of newly constructed homes or commercial properties impacts the overall demand for new home construction. The uncertainties created by recent events in the sub-prime mortgage market and their impact on the overall mortgage market, including the tightening of credit standards, could adversely affect the ability of consumers to obtain financing, thus reducing demand for new construction and in turn reducing our customers' demand for our construction equipment. Reduced demand for our construction equipment can negatively affect our financial performance and cash flow.

Climate fluctuations may negatively impact the agricultural and construction equipment markets and harm our sales.

        Weather conditions, particularly severe floods and droughts, can have a significant impact on the success of regional agricultural and construction markets and, therefore, the economic conditions of the regions in which we operate stores. Accordingly, our financial condition and results of operations may be materially and adversely affected by any adverse cyclical trends or weather conditions. Our quarterly operating results are subject to fluctuation due to varying weather patterns, which may impact the timing and amount of equipment, parts and service purchases by our customers. A significant increase in the severity of weather cycles could increase the volatility of our results of operations and impact our financial condition. If we acquire businesses in geographic areas other than where we currently have operations, we may be affected more by the above-mentioned or other seasonal and equipment buying trends.

Our results of operations may fluctuate from period to period due to interest rate adjustments.

        The ability to finance affordable purchases, of which the interest rate charged is a significant component, is an important part of a customer's decision to purchase agricultural or construction equipment. Volatility in the credit markets may have a negative impact on our business by making it more difficult for certain of our customers to obtain financing to purchase agricultural or construction equipment. Interest rate increases may make equipment purchases less affordable for customers and, as a result, our revenue and profitability may decrease as we manage excess inventory and reduce prices for equipment. To the extent we cannot pass on our increased costs of inventory to our customers, our net income may decrease. Conversely, any decrease in interest rates may positively affect a customer's decision to purchase agricultural or construction equipment. Partially as a result of the foregoing, our results of operations have in the past and in the future are expected to continue to fluctuate from quarter to quarter and year to year. We are unable to anticipate the timing and impact of interest rate adjustments.

Aggressive pricing competition could adversely affect our results of operation and growth.

        The agricultural and construction equipment sales and distribution industries are highly competitive and fragmented, with large numbers of companies operating on a regional or local scale. Historically, our competitors have competed aggressively on the basis of pricing or inventory availability, resulting in decreased margins on our sales to the extent we choose to match our competitors' downward pricing. To the extent we choose not to match or remain within a reasonable competitive distance from our competitors' pricing, it could also have an adverse impact on our results

21

of operations, as we may lose sales volume. In addition, to the extent CNH's competitors provide their dealers with more innovative or higher quality products, better customer financing, or have more effective marketing efforts, our ability to compete and financial condition and results of operations could be adversely affected.

We are substantially dependent on our Chief Executive Officer and President/Chief Financial Officer, the loss of either of whom could have a material adverse effect on our business.

        We believe our success will depend to a significant extent upon the efforts and abilities of David Meyer, our Chairman and Chief Executive Officer, and Peter Christianson, our President and Chief Financial Officer. The employment relationships with both Mr. Meyer and Mr. Christianson are terminable by us or each of them at any time for any reason. The loss of the services of one or both of these persons and other key employees could have a material adverse effect on our operating results.

Selling agricultural and construction equipment and parts subjects us to product liability risks that could adversely affect our financial condition and reputation.

        Products sold or serviced by us may expose us to potential liabilities for personal injury or property damage claims relating to the use of such products. There can be no assurance that we will not be subject to or incur any liability for such claims in the future. There can be no assurance that our product liability insurance will be adequate to cover product liability claims. There also can be no assurance that such insurance will continue to be available on economically reasonable terms. An uninsured or partially insured claim for which indemnification is not provided could have a material adverse effect on our financial condition. Furthermore, if any significant claims are made against us or against CNH or any of our other suppliers, our business may be adversely affected by any resulting negative publicity.

Being a public company has substantially increased our legal and financial compliance costs, which could harm our business, financial condition and results of operations.

        Compliance with publicly-traded company regulations adversely impacts our resources. As a publicly-traded company, we are subject to rules and regulations that increase our legal and financial compliance costs, make some activities more time-consuming and costly, and divert our management's attention away from the operation of our business. These rules and regulations may make it more difficult and more expensive for us to maintain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, we may experience more difficulty attracting and retaining qualified individuals to serve on our board of directors or as executive officers. We cannot predict or estimate the amount of additional costs we may incur as a result of these requirements or the timing of these costs. Furthermore, our current management has limited experience in running a public company. The costs of being public and the diversion of management's time and attention may have a material adverse effect on our business, financial condition and results of operations.

Our internal control over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to its effectiveness, which could have a significant and adverse effect on our business and reputation.

        We are required to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and rules and regulations of the SEC thereunder. If we fail to maintain the adequacy of our internal control over financial reporting, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. We cannot be certain as to the timing of completion of our evaluation, testing and any remedial actions or their

22

impact on our operations. If we are not able to comply with the requirements of Section 404 our independent registered public accounting firm may not be able to certify as to the effectiveness of our internal control over financial reporting, we may be unable to report our financial results accurately or in a timely manner and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In fiscal 2010, we began implementing a new ERP system. Unforeseen problems with or any difficulties encountered integrating the new ERP system could result in internal control deficiencies.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        None.

ITEM 2.    PROPERTIES

Equipment Stores

        We currently operate 72 agricultural and construction equipment stores, including three outlet stores in the following locations. Certain stores (those designated with an *) are included in the Agriculture segment but also sell some construction equipment.

Agriculture Segment

North Dakota (14 stores)		Iowa (12 stores, including 1 outlet)
Arthur	Lidgerwood	Anthon	Grundy Center
Casselton	Lisbon	Avoca	Kingsley
Grand Forks*	Mandan*	Blairstown	Le Mars
Jamestown	Mayville	Cherokee	Oskaloosa
Kintyre	Wahpeton (2 stores)	Cherokee (outlet)	Pella
Kulm	Wishek	Greenfield	Waverly
Lamoure

Minnesota (13 stores, including 1 outlet)		South Dakota (10 stores)
Ada	Moorhead	Aberdeen (2 stores)*	Miller
Albert Lea	Moorhead (outlet)	Britton	Pierre
Crookston*	Pipestone	Highmore	Redfield
Elbow Lake	Roseau	Huron	Watertown
Fergus Falls	Thief River Falls	Milbank
Graceville	Winger
Marshall*

Construction Segment

North Dakota (4 stores)		Iowa (6 stores, including 1 outlet)
Bismarck	Minot	Cedar Rapids	Des Moines
Fargo (2 stores)		Clear Lake	Des Moines (outlet)
		Davenport	Sioux City

Nebraska (2 stores)		South Dakota (2 stores)
Lincoln	Omaha	Rapid City	Sioux Falls

23

Montana (6 stores)		Wyoming (3 stores)
Belgrade	Columbia Falls	Casper	Gillette
Billings (2 stores)	Missoula	Cheyenne
Great Falls

        Our stores are generally located in rural areas on property zoned for commercial use. The stores typically range from 5,000 square feet with three acres of land to 40,000 square feet with 14 acres of land. We fully utilize the leased space for each of our stores and believe the respective square footage and related acreage is adequate to meet our current and anticipated needs.

Store Lease Arrangements

        We lease real estate for 36 of our stores from entities affiliated with David Meyer, our Chairman and Chief Executive Officer, Tony Christianson, one of our directors, Peter Christianson, our President and Chief Financial Officer or James L. Williams, one of our directors. Of these 36 stores, we lease 34 dealership sites from Dealer Sites, LLC, an entity owned in part by Messrs. Meyer, Tony Christianson and Peter Christianson or their affiliates; one dealership site from C.I. Farm Power, Inc., an entity owned by Mr. Peter Christianson; and one dealership site from Arthur Mercantile Company, an entity owned in part by James L. Williams, one of the Company's directors. We lease 44 additional properties under operating lease agreements with unrelated parties. The leases for our dealership sites generally expire between 2010 and 2024, other than those leases which are currently automatically renewed on a year-to-year-basis until either we or the lessor terminate them. We do not intend to own significant amounts of real estate. Therefore, we anticipate that when we need real estate, including as part of acquiring dealerships, we will lease such real estate from third parties, which may include affiliates of our investors, directors or management. We intend for the terms of all of our leases to be commercially reasonable. We do not believe the terms of our leases with entities affiliated with Messrs. Meyer, Tony Christianson, Peter Christianson and James L. Williams are any less favorable to us than could be obtained in an arm's length transaction with an unrelated party.

        Our store lease agreements with entities affiliated with David Meyer, Peter Christianson, Tony Christianson and James L. Williams all contain substantially similar terms. The leases with Dealer Sites, LLC, C.I. Farm Power, Inc. and Arthur Mercantile Company provide for fixed lease periods ranging from three to ten years. All of the leases provide for fixed monthly rental payments and require us to pay the real estate taxes on the properties for the lease periods. The leases require that we maintain public liability and personal property insurance on each of the leased premises, and require us to indemnify the lessor in connection with any claims arising from the leased premises during our occupation of the property. The leases generally prohibit us from assigning the lease agreements or subletting the leased premises without the prior written consent of the lessor. The lease agreements with Dealer Sites, LLC provide that in the event Dealer Sites, LLC and Titan Machinery Inc. agree to sell the leased premises to a party other than us or our affiliates during the term of the lease, then we shall share in half of any surplus or deficit resulting to Dealer Sites, LLC from that sale.

        Our store lease agreements with unrelated parties contain terms comparable to the agreements with entities affiliated with our directors and officers described above. The lease periods range from automatically renewable month-to-month terms to twenty years in length. Many of the lease agreements either give us the option to renew or extend the lease for an additional period at the conclusion of the original lease term or automatically renew the lease term at the conclusion of the original lease period on a month-to-month or year-to-year basis. A majority of the leases provide for fixed monthly rental payments and require us to pay the real estate taxes on the properties for the lease periods. All of the leases require that we maintain public liability and personal property insurance on each of the leased premises, and a majority of the leases require us to indemnify the lessor in connection with any claims arising from the leased premises during our occupation of the property. Most of the leases prohibit us

24

from assigning the lease agreements or subletting the leased premises without the prior written consent of the lessor. We have been granted a right of first refusal to purchase the Watertown and one of the Aberdeen properties during the applicable lease terms. The lease agreements for the West Fargo, Kingsley, Le Mars, Watertown, Mayville and Redfield properties grant us the option to purchase the leased premises during or at the conclusion of the lease term. The lease agreements for the Milbank and Albert Lea properties grant Dealer Sites, LLC the option to purchase the leased premises during or at the conclusion of the lease term. The Kingsley, Le Mars and Redfield lease agreements grant the lessor the right to require Dealer Sites, LLC to purchase the leased premises during or at the conclusion of the lease term.

        As part of our due diligence review prior to a dealership acquisition, we evaluate the adequacy, suitability and condition of the related real estate. Our evaluation typically includes a Phase I environmental study, and if deemed necessary, a Phase II environmental study, of the real property to determine whether there are any environmental concerns. If any environmental concerns exist, we generally require that such concerns be addressed prior to acquisition of the dealership.

Headquarters

        We currently lease and occupy approximately 22,900 square feet in multiple locations in Fargo, North Dakota for our headquarters, which expire on various dates between May 1, 2010 and January 31, 2015. We will begin leasing a new building for our headquarters in May 2010, which will allow our Shared Resource group to be staffed out of one location. We continually review our location needs, including the adequacy of our headquarters space, to ensure our space is sufficient to support our operations. We believe there is ample opportunity for expansion in the Fargo area if necessary.

ITEM 3.    LEGAL PROCEEDINGS

        We are, from time to time, subject to claims and suits arising in the ordinary course of business. Such claims have, in the past, generally been covered by insurance. Management believes the resolution of other legal matters will not have a material effect on our financial condition or results of operation, although no assurance can be given with respect to the ultimate outcome of any such actions. Furthermore, there can be no assurance that our insurance will be adequate to cover all liabilities that may arise out of claims brought against us. We are not currently a party to any material litigation.

ITEM 4.    (REMOVED AND RESERVED)

EXECUTIVE OFFICERS OF THE REGISTRANT

        The names, ages and positions of our executive officers are as follows:

Name	Age	Position
David Meyer	56	Chairman and Chief Executive Officer
Peter Christianson	53	President, Chief Financial Officer and Director
Ted Christianson	51	Vice President, Finance and Treasurer

David Meyer is our Chairman and Chief Executive Officer. Mr. Meyer was a founder of our company in 1980 and has been a director of our company since its creation. From 1976 to 1980, Mr. Meyer was a partner in a Case and New Holland dealership with locations in Lisbon and Wahpeton, North Dakota.

Peter Christianson has been our President and a director since January 2003 and our Chief Financial Officer since August 2007. Prior to joining us and since 1988, he was a partner and owner of C.I. Farm Power, Inc., the operator of two of the dealership locations acquired by Titan Machinery LLC in 2002. Peter Christianson and Ted Christianson are brothers.

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Ted Christianson has been our Vice President, Finance and Treasurer since August 2007 and was previously our Chief Financial Officer from 2003 until August 2007. Mr. Christianson has spent over 15 years with startups and high growth companies in a variety of financial management roles, including as chief financial officer. Mr. Christianson was the full-time Managing Partner for Adam Smith Properties, a private real estate development company from 1997 to 2003. Mr. Christianson was formerly with US Bank (First Bank System).

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

        Our common stock began trading on December 6, 2007 on the Nasdaq Global Market under the symbol "TITN" in connection with our initial public offering. The following table sets forth, for the periods indicated, the high and low sale prices of our common stock as reported by the Nasdaq Global Market.

	High		Low
Fiscal 2010
First Quarter	$	12.96	$	7.50
Second Quarter	$	17.00	$	9.96
Third Quarter	$	14.49	$	10.38
Fourth Quarter	$	13.19	$	9.81
Fiscal 2009
First Quarter	$	24.50	$	14.66
Second Quarter	$	34.49	$	17.59
Third Quarter	$	28.17	$	9.53
Fourth Quarter	$	16.20	$	7.75

        As of April 1, 2010, there were approximately 74 record holders of our common stock, excluding holders whose stock is held either in nominee name and/or street name brokerage accounts.

DIVIDENDS

        We have not historically paid any dividends on our common stock and do not expect to pay cash dividends on our common stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, outstanding indebtedness and plans for expansion and restrictions imposed by lenders, if any. Upon the consummation of our initial public offering on December 11, 2007, we paid accrued cash dividends in the aggregate amount of $441,028 in connection with the conversion of all of our outstanding preferred stock.

UNREGISTERED SALES OF EQUITY SECURITIES

        We did not have any unregistered sales of equity securities during the fourth quarter of fiscal 2010.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

        For information on our equity compensation plans, refer to Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."

REPURCHASES

        We did not engage in any repurchases of our Common Stock during the fiscal year ended January 31, 2010.

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ITEM 6.    SELECTED FINANCIAL DATA

        The data given below as of and for each of the five years in the period ended January 31, 2010, has been derived from the Company's Audited Consolidated Financial Statements. In order to understand the effect of accounting policies and material uncertainties that could affect our presentation of financial information, such data should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto included under Item 8 to this Form 10-K and in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operation included under Item 7 to this Form 10-K.

		Year Ended January 31,
		2010			2009			2008			2007			2006
		(in thousands, except per share data)
Statement of Operations Data:
Revenue
	Equipment	$	643,186		$	540,307		$	338,382		$	220,958		$	175,549
	Parts		119,509			94,984			58,743			42,619			31,099
	Service		58,983			44,224			27,344			21,965			16,572
	Other		17,103			10,922			8,502			7,056			5,250
			838,781			690,437			432,971			292,598			228,470
Cost of revenue
	Equipment	$	578,411		$	478,324		$	302,320		$	200,558		$	160,814
	Parts		83,219			67,270			42,568			29,909			22,459
	Service		21,615			16,729			10,118			8,183			6,404
	Other		14,441			8,245			5,913			5,337			4,081
			697,686			570,568			360,919			243,987			193,758
Gross Profit			141,095			119,869			72,052			48,611			34,712
Operating expenses			108,998			86,940			53,190			37,399			26,978
Income from operations			32,097			32,929			18,862			11,212			7,734
Other income (expense)
	Interest and other income		1,843			1,545			577			349			87
	Interest expense		(6,948	)		(3,969	)		(6,292	)		(5,473	)		(3,368	)
	Debt retirement costs		—			—			(3,824	)		—			—
Income before income taxes			26,992			30,505			9,323			6,088			4,453
Provision for income taxes			(11,255	)		(12,430	)		(4,110	)		(2,450	)		(1,721	)
Income from continuing operations			15,737			18,075			5,213			3,638			2,732
Discontinued operations			—			—			—			—			—
Net income		$	15,737		$	18,075		$	5,213		$	3,638		$	2,732
Adjustment to income:
	Amortization of syndication fees—preferred stock		—			—			(51	)		(21	)		(21	)
	Unpaid accumulated preferred dividends		—			—			(88	)		(102	)		(102	)
Income available to common stockholders		$	15,737		$	18,075		$	5,074		$	3,515		$	2,609
Earnings per share
	Basic	$	0.89		$	1.11		$	0.90		$	0.81		$	0.60
	Diluted	$	0.88		$	1.08		$	0.67		$	0.57		$	0.47
Weighted average shares outstanding
	Basic		17,593			16,291			5,607			4,345			4,341
	Diluted		17,968			16,779			8,246			6,907			6,317

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	January 31,
	2010		2009		2008		2007		2006
	(in thousands)
Balance Sheet Data:
Cash	$	76,185	$	41,047	$	42,802	$	7,572	$	8,671
U.S. treasury bills		—		44,994		—		—		—
Receivables		22,254		19,626		22,061		10,921		5,794
Inventories		347,580		241,094		145,767		106,254		81,631
Prepaid expense		1,009		533		215		186		33
Income tax receivable		1,595		1,433		1,074		—		—
Deferred income taxes		2,266		1,426		1,027		462		423
Goodwill and intangibles, net		15,057		12,830		8,608		3,905		1,587
Property and equipment		46,604		45,269		16,023		8,175		5,327
Other assets		2,262		1,996		1,792		1,397		1,617
Total Assets	$	514,812	$	410,248	$	239,369	$	138,872	$	105,083
Accounts payable	$	12,352	$	18,652	$	9,244	$	4,228	$	5,488
Line of credit		—		—		—		—		—
Floorplan notes payable(1)		249,872		166,481		105,848		84,699		61,908
Current maturities of long-term debt		7,218		7,623		5,654		2,824		1,532
Customer deposits		12,974		15,158		19,310		4,608		4,015
Accrued expenses		9,870		8,308		6,137		2,287		1,942
Income taxes payable		—		—		—		378		350
Total current liabilities		292,286		216,222		146,193		99,024		75,235
Long-term liabilities		32,002		20,259		15,759		8,043		4,405
Subordinated debentures		—		—		1,300		16,747		14,194
Redeemable securities		—		—		—		1,680		1,556
Total stockholders' equity		190,524		173,767		76,117		13,378		9,693
	$	514,812	$	410,248	$	239,369	$	138,872	$	105,083

(1)

Approximately 51% of floorplan notes payable were interest bearing at January 31, 2010.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing under Item 8. Some of the information contained in this discussion and analysis or set forth elsewhere in this annual report, including information with respect to our plans and strategy for our business and expected financial results, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" under Item 1A for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

BUSINESS DESCRIPTION

        We own and operate a network of full service agricultural and construction equipment stores in the United States. Based upon information provided to us by CNH Global N.V. or its U.S. subsidiary CNH America LLC, collectively referred to in this annual report as CNH, we are the world's largest retail dealer of Case IH Agriculture equipment and a major retail dealer of New Holland Agriculture, Case Construction and New Holland Construction equipment in the U.S. We operate our business through two reportable segments, Agriculture and Construction. Within each segment, we have four principal sources of revenue, new and used equipment sales, parts sales, service, and other business activities including equipment rental.

        The agricultural equipment we sell and service includes machinery and attachments for uses ranging from large-scale farming to home and garden use. The construction equipment we sell and service includes heavy construction and light industrial machinery for commercial and residential construction, road and highway construction and mining applications. We offer our customers a one-stop solution for their equipment needs through:

•

new and used equipment sales;

•

parts sales;

•

repair and maintenance services; and

•

equipment rental and other activities.

        The new equipment and parts we sell are supplied primarily by CNH. According to public reports filed by CNH, CNH is a leading manufacturer and supplier of agricultural and construction equipment based on the number of units sold, primarily through the Case IH Agriculture, New Holland Agriculture, Case Construction and New Holland Construction brands. Sales of new CNH products accounted for approximately 80.0% of our new equipment revenue in fiscal 2010, with no other supplier accounting for more than 3.4%. We acquire used equipment for resale through trade-ins from our customers and selective purchases. We sell parts and provide in-store and on-site repair and maintenance services. We rent equipment and provide other ancillary services such as equipment transportation, GPS signal subscriptions and finance and insurance products.

        Throughout our 30-year operating history we have built an extensive, geographically contiguous network of 72 stores, including three outlet stores, located in North Dakota, South Dakota, Minnesota, Iowa, Nebraska, Montana and Wyoming. We have a successful history of growth through acquisitions, including 29 acquisitions consisting of 62 stores operating in seven states since January 1, 2003. We have a well-established track record of successfully integrating acquired stores, retaining acquired-store employees and maintaining acquired-store customer relationships. We expect that acquisitions will continue to be an important component of our growth.

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Certain External Factors Affecting our Business

        We are subject to a number of factors that affect our business as discussed in the sections entitled "Risk Factors" and "Information Regarding Forward- Looking Statements." Certain of the external factors include, but are not limited to, the following:

Industry Factors

        Our business is primarily driven by the demand for agricultural equipment for use in the production of food, fiber, feed grain and renewable energy; home and garden applications; and the maintenance of commercial, residential and government properties. Based on USDA data, we believe farmers have recently experienced historically strong economic fundamentals, driven by growing global demand for agricultural commodities in part due to growth in renewable energy and the economies of developing countries. This strong farm economy contributed significantly to our results of operations in fiscal 2010 and 2009. We believe our operating model, as discussed in "Business—Titan Operating Model," enables us to maximize opportunities and implement our conservative expenditure philosophy that emphasizes scalable costs. Further, our large and diverse customer base and seven-state geographic footprint limits our exposure to negative events that may occur in a particular area or crop. Additionally, we believe that the acquisition opportunities will continue to be strong.

        Additionally, our business is impacted by the demand for construction equipment for use in private and government commercial, residential and infrastructure construction; demolition; maintenance; mining and forestry operations. CNH and industry reports show that demand for construction equipment in our markets is driven by several factors, one of which is public infrastructure spending, including roads and highways, sewer and water. On February 17, 2009, Congress enacted the American Recovery and Reinvestment Act of 2009 (the "ARRA"), a bill intended to stimulate economic growth and create jobs in part through additional government spending on public infrastructure. Any growth in federal allocations to public infrastructure spending over the next few years should positively impact our future results of operations, though it is difficult to assess the impacts of the ARRA, which could impact our customers and the industries in which we operate in unforeseen ways. An offsetting factor may be the recent declines in residential and commercial real estate development to the extent such declines continue and the tightening of the credit markets that finance these real estate and infrastructure developments. To address the uncertainty of the construction industry, we expect to continue our focus on the agriculture industry and acquisition opportunities to establish additional locations in the markets where we believe the local construction industry will maintain its current level or grow.

Seasonality

        Our quarterly operating results are subject to fluctuation due to varying weather patterns, which may impact the timing and amount of equipment purchases, rentals, and after-sales parts and service purchases by our Agriculture and Construction customers.

Economic Cyclicality

        Sales of equipment, particularly new units, historically have fluctuated with general economic cycles. During economic downturns, equipment retailers tend to experience similar periods of decline and recession as the general economy. The impact of an economic downturn on retailers is generally less than the impact on manufacturers due to the sale of parts and service by retailers to maintain customer equipment.

30

Credit Market Changes

        Changes in credit markets can affect our customers' ability and willingness to make capital expenditures, including purchasing our equipment. Creditors have recently tightened their lending standards due to the collapse of the sub-prime mortgage market. These tightened lending standards may have a negative impact on our business if our customers are unable to obtain financing for equipment purchases. However, if retail interest rates remain low, our business may be positively affected by customers who find financing purchases of our equipment more attractive due to lower borrowing costs. Our business is also particularly dependent on our access to credit markets to finance acquisitions and manage inventory. Tightened lending standards may make it more difficult for us to obtain financing on commercially reasonable terms. We cannot predict what future changes will occur in credit markets or how these changes will impact our business.

Inflation

        Inflation has not had a material impact upon operating results and we do not expect it to have such an impact in the future. To date, in those instances in which we have experienced cost increases, we have been able to increase selling prices to offset such increases. There can be no assurance, however, that our business will not be affected by inflation or that we can continue to increase our selling prices to offset increased costs and remain competitive.

Acquisitions

        We have a successful history of growth through acquisitions. Since January 1, 2003, we have completed 29 acquisitions consisting of 62 stores operating in seven states. These acquisitions have been the most significant factor affecting our results of operations and liquidity over the last several years, as noted in the period-to-period comparisons below. We expect that acquisitions will continue to be an important component of our growth. Acquisitions are typically financed with floorplan debt, long-term debt and cash from operations. Although we cannot quantify the impact of any such potential acquisitions, we believe the nature of their impact on our financial statements to be similar to that experienced with our prior acquisitions as noted in our discussions of period comparisons.

        The following is a summary of acquisitions completed during the identified periods.

Fiscal 2010

•

On May 1, 2009, we acquired all of the outstanding stock of Winger Implement, Inc., resulting in the addition of one store in Winger, Minnesota. We subsequently merged Winger Implement, Inc. into our company.

•

On May 28, 2009, we acquired certain assets of Arthur Mercantile Company, resulting in the addition of one store in Arthur, North Dakota. James L. Williams, Arthur Mercantile Company's President and Treasurer, is a Titan Machinery director.

•

On June 30, 2009, we acquired certain assets of Valley Equipment, Inc., resulting in the addition of one store in Mayville, North Dakota. James L. Williams, Valley Equipment, Inc.'s President, is a Titan Machinery director.

•

On August 14, 2009, we acquired certain assets of Lickness Bros. Implement Co., resulting in the addition of one store in Britton, South Dakota.

•

On November 2, 2009, we acquired certain assets of Oskaloosa Implement Co., resulting in the addition of two stores located in Pella and Oskaloosa, Iowa.

31

•

On November 2, 2009, we acquired all of the outstanding stock of Valley Farm Equipment, Inc., resulting in the addition of one store in Milbank, South Dakota. We subsequently merged Valley Farm Equipment, Inc. into our company.

Fiscal 2009

•

On December 31, 2008, we acquired certain assets of WP Rentals LLC and all of the outstanding stock of Western Plains Machinery Co., resulting in the addition of three rental stores located in Billings and Belgrade, Montana and Cheyenne, Wyoming, and six construction equipment stores located in Billings, Great Falls, Missoula, and Columbia Falls, Montana and Casper and Gillette, Wyoming. We subsequently merged Western Plains Machinery Co. into our company.

•

On December 22, 2008, we acquired all of the outstanding stock of Anderson Power and Equipment, Inc., resulting in the addition of one store in Thief River Falls, Minnesota. We subsequently merged Anderson Power and Equipment, Inc. into our company.

•

On October 1 2008, we acquired certain assets of Pioneer Garage, Inc., resulting in the addition of three stores located in Pierre, Highmore, and Miller, South Dakota.

•

On September 12, 2008, we acquired certain assets of Wolf's Farm Equipment Inc., resulting in the addition of one store in Kintyre, North Dakota.

•

On May 28, 2008, we acquired certain assets of Mid-Land Equipment Company, resulting in the addition of six stores located in Des Moines, Davenport, Clear Lake and Cedar Rapids, Iowa and Omaha and Lincoln, Nebraska.

•

On May 1, 2008, we acquired all of the outstanding stock of Quad County Implement, Inc., resulting in the addition of one store in Blairstown, Iowa. We subsequently merged Quad County Implement, Inc. into our company.

•

On February 1, 2008, we acquired certain assets of Ceres Equipment Inc., resulting in the addition of one store in Roseau, Minnesota.

Fiscal 2008

•

On January 2, 2008, we acquired all of the outstanding stock of Avoca Operations, Inc. and Greenfield Operations, Inc., resulting in the addition of one store in Avoca, Iowa and one store in Greenfield, Iowa. We subsequently merged Avoca Operations, Inc. and Greenfield Operations, Inc. into our company.

•

On December 1, 2007, we acquired all of the outstanding stock of Reiten & Young International, Inc., resulting in the addition of one store in Grand Forks, North Dakota. We subsequently merged Reiten & Young International, Inc. into our company.

•

On November 13, 2007, we acquired certain assets of Twin City Implement, Inc., resulting in the addition of one store in Mandan, North Dakota.

•

On August 1, 2007, we acquired all of the outstanding stock of Red Power International, Inc., resulting in the addition of two stores located in Ada and Crookston, Minnesota. We subsequently merged Red Power International, Inc. into our company.

•

On April 13, 2007, we acquired certain assets of Aberdeen Equipment Co., Huron Equipment Co. and Redfield Equipment Co., three related dealerships, resulting in the addition of three stores located in Aberdeen, Huron and Redfield, South Dakota.

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•

On February 3, 2007, we acquired certain assets of Richland County Implement, Inc., resulting in the addition of one store located in Wahpeton, North Dakota.

Critical Accounting Policies and Estimates

        During the preparation of our financial statements, we are required to make estimates, assumptions and judgments that affect reported amounts. These estimates, assumptions and judgments include those related to bad debts and credit sales, inventories, goodwill and intangibles, income taxes and legal proceedings, revenue recognition, allowance for doubtful accounts, inventory reserves, incentive plan accruals, deferred taxes, stock-based compensation, and accounting for business combinations. We update these estimates, assumptions and judgments as appropriate, which in most cases is at least quarterly. We use our technical accounting knowledge, cumulative business experience, judgment and other factors in the selection and application of our accounting policies. While we believe our estimates, assumptions and judgments we use in preparing our financial statements are appropriate, they are subject to factors and uncertainties regarding their outcome and therefore, actual results may materially differ from these estimates. We believe the following are our primary critical accounting policies and estimates.

Revenue Recognition

        Revenue on equipment and parts sales is recognized upon delivery of product to customers. Rental and service revenue is recognized at the time the related services are provided. In addition to outright sales of new and used equipment, certain rental agreements may include rent-to-purchase options. Under these agreements, customers are given a period of time to exercise an option to purchase the related equipment, with a portion of the rental payments being applied to the purchase price. Any such equipment is included in inventory until the purchase option is exercised. Rental revenue is recognized during the rental period, with equipment sales revenue being recognized upon the exercise of the purchase option.

Inventories

        New and used machinery are stated at the lower of cost (specific identification) or market with adjustments for decreases in market value on inventory rented but available for sale being a percentage of the rental income received on such inventory. Parts inventories are valued at the lower of average cost or market, and an estimate of parts inventories not expected to be sold in the next year has been reported separately. Typically, there are no freight-in charges, except in cases of special orders where such freight-in charges are included in the cost of inventory. Work in process is valued at the billable rates of labor incurred and parts inventories used on service work in process at year end.

Intangible Assets and Goodwill

        Intangible assets include covenants not-to-compete that are being amortized using the straight-line method over the terms of the related agreements, which range from five to ten years.

        Goodwill represents the excess of costs over the fair value of the assets of businesses acquired not allocable to separately identifiable intangible assets. Goodwill acquired in business combinations is assigned to its related reporting unit, which consist of the Company's operating segments.

        Goodwill is not amortized, but is tested for impairment at the end of the Company's fiscal year, or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit's carrying amount of goodwill is greater than its fair value. The goodwill impairment test is performed by comparing the carrying value of the reporting unit to its fair value. Fair value is calculated by discounting the estimated future cash flows of the Company's reporting units. As of January 31, 2010, the carrying value of the Company's goodwill was not considered impaired.

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Income Taxes

        Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of receivables, inventory, property and equipment, intangible assets, stock-based compensation, and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Our policy is to recognize interest expense and penalties related to income tax matters within our provision for income taxes. We perform a comprehensive review of our portfolio of uncertain tax positions in accordance with the requirements and recognition standards established by Financial Accounting Standards Board (FASB) Accounting Standards Codification ("ASC" or "Codification") 740, Income Taxes. Pursuant to this guidance, an uncertain tax position represents our expected treatment of a tax position taken, or expected to be taken, in a tax return, that has not been reflected in measuring income tax expense for financial reporting purposes.

Stock-Based Compensation

        We account for stock-based compensation in accordance with the provisions of the ASC 718, Compensation—Stock Compensation. This guidance requires that stock-based compensation, which includes stock options and restricted stock, be accounted for at the fair value of the applicable equity instrument.

Business Combinations

        We account for business combinations in accordance with the provisions of ASC 805, Business Combinations. This guidance allows the acquirer to finalize the acquisition accounting during the measurement period, which may not exceed one year from the date of acquisition. During the measurement period the Company's accounting for the business combination transaction may be based on estimates due to various unknown factors present at the date of acquisition.

Key Financial Metrics

        In addition to tracking our sales and expenses to evaluate our operational performance, we also monitor certain key financial metrics, including absorption and same-store sales.

Absorption

        Absorption is an industry term that refers to the percentage of an equipment dealer's fixed operating expense covered by the gross margin of its combined parts and service businesses. Absorption in a given period is calculated by dividing our gross profit from parts and service sales in the period by the difference between (i) our operating expenses (including interest on floorplan notes) and (ii) our variable expense of sales commissions on equipment sales and incentive compensation in the same period. We believe that absorption is an important management metric because during economic down cycles our customers tend to postpone new and used equipment purchases while continuing to run, maintain and repair their existing equipment. Thus, operating at a high absorption rate enables us to operate profitably throughout economic down cycles. We measure and track absorption on a company-wide basis as well as on a per store basis. Our company-wide absorption rate was 75.4%, 75.7% and 72.6% for fiscal years 2010, 2009 and 2008, respectively.

Same-Store Sales

        Same-store sales for any period represent sales by stores that were part of our company for the entire comparable period in the preceding fiscal year. We do not distinguish relocated or

34

newly-expanded stores in this same-store analysis. Closed stores are excluded from the same-store analysis. We believe that tracking this metric is important to evaluating the success of the Titan Operating Model on a comparable basis.

Key Financial Statement Components

Revenue

        Equipment.    We derive equipment revenue from the sale of new and used agricultural and construction equipment.

        Parts.    We derive parts revenue from the sale of parts for equipment that we sell, as well as for other equipment makes. Our parts sales provide us with a relatively stable revenue stream that is less sensitive to the economic cycles that affect our equipment sales.

        Services.    We derive services revenue from maintenance and repair services to our customers' equipment. Our repair and maintenance services provide a high-margin, relatively stable source of revenue through changing economic cycles.

        Other.    We derive other revenue from equipment rentals and ancillary equipment support activities such as equipment transportation,  GPS signal subscriptions and reselling finance and insurance products.

Cost of Revenue

        Equipment.    Cost of equipment revenue is the lower of the acquired cost or the market value of the specific piece of equipment sold.

        Parts.    Cost of parts revenue is the lower of the acquired cost or the market value of the parts sold, based on average costing.

        Service.    Cost of service revenue represents costs attributable to services provided for the maintenance and repair of customer-owned equipment and equipment then on-rent by customers.

        Other.    Costs of other revenue represent costs associated with equipment rental, providing transportation, hauling, parts freight,  GPS subscriptions and damage waivers, including, among other items, drivers' wages, fuel costs, shipping costs and our costs related to damage waiver policies.

Operating Expenses

        Our operating expenses include sales and marketing expenses, sales commissions (which generally are based upon equipment gross profit margins), payroll and related benefit costs, insurance expenses, professional fees, property rental and related costs, property and other taxes, administrative overhead, and depreciation associated with property and equipment (other than rental equipment).

Floorplan Interest

        The cost of financing inventory is an important factor affecting our results of operations. Floorplan financing from CNH Capital represents the primary source of financing for equipment inventories, particularly for equipment supplied by CNH. CNH regularly offers interest-free periods as well as additional incentives and special offers. As of January 31, 2010, approximately 49% of our floorplan notes payable was non-interest bearing.

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Other Interest Expense

        Interest expense represents the interest on our outstanding debt instruments, other than floorplan financing facilities.

Results of Operations

        Comparative financial data for each of our four sources of revenue for fiscal 2010, 2009, and 2008 are expressed below. The results of these periods include the operating results of the acquisitions made during these periods. The period-to-period comparisons included below are not necessarily indicative of future results. Information regarding segment revenue and income (loss) before income taxes is presented for each period following our discussion of the consolidated results of operations. Additional information regarding our segments is included in Note 16 of our audited financial statements.

		Year Ended January 31,
		2010		2009		2008
		(dollars in thousands)
Equipment
	Revenue	$	643,186	$	540,307	$	338,382
	Cost of revenue		578,411		478,324		302,320
	Gross profit	$	64,775	$	61,983	$	36,062
Parts
	Revenue	$	119,509	$	94,984	$	58,743
	Cost of revenue		83,219		67,270		42,568
	Gross profit	$	36,290	$	27,714	$	16,175
Service
	Revenue	$	58,983	$	44,224	$	27,344
	Cost of revenue		21,615		16,729		10,118
	Gross profit	$	37,368	$	27,495	$	17,226
Other, including trucking and rental
	Revenue	$	17,103	$	10,922	$	8,502
	Cost of revenue		14,441		8,245		5,913
	Gross profit	$	2,662	$	2,677	$	2,589

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        The following table sets forth our statements of operations data expressed as a percentage of revenue for the periods indicated.

		Year Ended January 31,
		2010			2009			2008
Revenue
	Equipment		76.8	%		78.2	%		78.1	%
	Parts		14.2	%		13.8	%		13.6	%
	Service		7.0	%		6.4	%		6.3	%
	Other, including trucking and rental		2.0	%		1.6	%		2.0	%
Total revenue			100.0	%		100.0	%		100.0	%
Cost of revenue
	Equipment		69.0	%		69.3	%		69.8	%
	Parts		9.9	%		9.7	%		9.8	%
	Service		2.6	%		2.4	%		2.4	%
	Other, including trucking and rental		1.7	%		1.2	%		1.4	%
Total cost of revenue			83.2	%		82.6	%		83.4	%
Gross profit			16.8	%		17.4	%		16.6	%
Operating expenses			13.0	%		12.6	%		12.3	%
Income from operations			3.8	%		4.8	%		4.3	%

Fiscal Year Ended January 31, 2010 Compared to Fiscal Year Ended January 31, 2009

Consolidated Results

Revenue

		Fiscal Year Ended January 31, 2010		Fiscal Year Ended January 31, 2009		Increase		Percent Change
		(dollars in thousands)
Equipment		$	643,186	$	540,307	$	102,879		19.0	%
Parts			119,509		94,984		24,525		25.8	%
Service			58,983		44,224		14,759		33.4	%
Other, including trucking and rental			17,103		10,922		6,181		56.6	%
	Total Revenue	$	838,781	$	690,437	$	148,344		21.5	%

        The increase in revenue was primarily due to acquisitions contributing to fiscal 2010 revenue and same-store sales growth. The acquired stores contributed $117.0 million in additional total revenue, while the same-store sales growth contributed $31.3 million, an increase of 4.9% over the prior year. The same-store sales increase was driven by strong Agriculture segment sales offset by declines in our Construction segment. Revenue increases over the prior year in parts, service and other outpaced the increase in equipment revenue primarily due to a weak construction equipment market in fiscal 2010.

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Cost of Revenue

		Fiscal Year Ended January 31, 2010		Fiscal Year Ended January 31, 2009		Increase		Percent Change
		(dollars in thousands)
Equipment		$	578,411	$	478,324	$	100,087		20.9	%
Parts			83,219		67,270		15,949		23.7	%
Service			21,615		16,729		4,886		29.2	%
Other, including trucking and rental			14,441		8,245		6,196		75.1	%
	Total cost of revenue	$	697,686	$	570,568	$	127,118		22.3	%

        The increase in cost of revenue was primarily due to increased revenue. Acquisitions contributed $97.7 million of the increase in total cost of revenue, while same-store sales growth contributed $29.4 million. As a percentage of revenue, cost of revenue was 83.2% for fiscal 2010 compared to 82.6% for fiscal 2009.

Gross Profit

		Fiscal Year Ended January 31, 2010		Fiscal Year Ended January 31, 2009		Increase/ (Decrease)			Percent Change
		(dollars in thousands)
Equipment		$	64,775	$	61,983	$	2,792			4.5	%
Parts			36,290		27,714		8,576			30.9	%
Service			37,368		27,495		9,873			35.9	%
Other, including trucking and rental			2,662		2,677		(15	)		(0.6	)%
	Total Gross Profit	$	141,095	$	119,869	$	21,226			17.7	%

        The increase in gross profit was primarily due to increased revenue, somewhat offset by lower equipment margins. Acquisitions contributed $19.3 million of the increase in total gross profit, while same-store sale gross profits provided the remaining $1.9 million. Gross profit margins were 16.8% for fiscal 2010 compared to 17.4% for fiscal 2009. Fiscal 2009 Agriculture equipment margins were enhanced by a tight supply of equipment that did not recur in fiscal 2010. The return to more traditional supply conditions and inventory levels also resulted in increased equipment inventory valuation charges over the prior year. Fiscal 2010 also included a reduced manufacturer market share incentive payment as compared to the prior year. The decrease in "other" margins was primarily due to a lower utilization of rental fleet that resulted from a weak fiscal 2010 construction industry.

Operating Expenses

	Fiscal Year Ended January 31, 2010		Fiscal Year Ended January 31, 2009		Increase		Percent Change
	(dollars in thousands)
Operating Expenses	$	108,998	$	86,940	$	22,058		25.4	%

        The increase in operating expenses was primarily due to the additional costs associated with acquisitions such as compensation, rent, depreciation, travel and training. As a percentage of total revenue, operating expenses increased slightly to 13.0% in fiscal 2010 as compared to 12.6% in fiscal 2009. This increase from the prior year was due to the increased number of stores in our Construction segment, which have higher operating expenses as a percent of revenue, as well as lower revenues due to the challenging construction market, as compared to the same period of fiscal 2009.

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Other Income (Expense)

	Fiscal Year Ended January 31, 2010			Fiscal Year Ended January 31, 2009			Increase/ (Decrease)		Percent Change
	(dollars in thousands)
Interest and other income	$	1,843		$	1,545		$	298		19.3	%
Floorplan interest expense		(5,485	)		(3,240	)		2,245		69.3	%
Interest expense		(1,463	)		(729	)		734		100.7	%

        Interest and other income increased $0.3 million as we received a manufacturer financing incentive in the fourth quarter of fiscal 2010, offset by a decrease in interest income from investing our cash balances in highly secure investments in fiscal 2010 that carried lower interest rates than those earned in fiscal 2009. The increase in floorplan interest expense of $2.2 million was due to the increase in floorplan notes payable balances as compared to fiscal 2009, as well as increased interest rates. The increase in interest expense of $0.7 million resulted from higher long-term debt balances as compared to fiscal 2009.

Provision for Income Taxes

	Fiscal Year Ended January 31, 2010		Fiscal Year Ended January 31, 2009		Decrease			Percent Change
	(dollars in thousands)
Provision for income taxes	$	11,255	$	12,430	$	(1,175	)		(9.5	)%

        Our effective tax rate increased from 40.7% in fiscal 2009 to 41.7% in fiscal 2010. The increase in the effective tax rate from the prior year primarily reflects an increase in permanent differences between financial and income tax reporting, such as the increase in stock option expense over the prior year.

Segment Results

	Fiscal Year Ended January 31, 2010			Fiscal Year Ended January 31, 2009			Increase/ (Decrease)			Percent Change
	(dollars in thousands)
Revenues
Agriculture	$	751,258		$	624,035		$	127,223			20.4	%
Construction		116,361			88,032			28,329			32.2	%
Segment revenues		867,619			712,067			155,552			21.8	%
Eliminations		(28,838	)		(21,630	)		(7,208	)		33.3	%
Total	$	838,781		$	690,437		$	148,344			21.5	%
Income (Loss) Before Income Taxes
Agriculture	$	36,133		$	32,023		$	4,110			12.8	%
Construction		(6,837	)		604			(7,441	)		(1232.0	)%
Segment income (loss) before income taxes		29,296			32,627			(3,331	)		(10.2	)%
Shared Resources		(2,120	)		(1,678	)		(442	)		26.3	%
Eliminations		(184	)		(444	)		260			(58.6	)%
Income before income taxes	$	26,992		$	30,505		$	(3,513	)		(11.5	)%

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Agriculture

        Fiscal 2010 Agriculture revenues increased 20.4% compared to fiscal 2009. The revenue increase was due to acquisitions and an Agriculture same-store sales increase of 8.2% over fiscal 2009. Income before income tax increased 12.8% due to increased revenues, which generated additional gross profits and greater fixed operating expense utilization compared to the prior year. These increases were somewhat offset by lower Agriculture gross profit margins due to greater agriculture equipment supply and availability and a lower manufacturer market share incentive payment in the current year compared to fiscal 2009.

Construction

        Fiscal 2010 Construction revenues increased 32.2% compared to fiscal 2009. The revenue increase was due to acquisitions offset by a Construction same-store sales decrease of 26.8% as compared to fiscal 2009. Both acquisition and same-store revenue were negatively impacted by a weak fiscal 2010 construction market. The lower Construction revenue drove the $7.4 million decrease in income (loss) before income tax through lower gross profits and lower fixed operating expense utilization. Construction operating expense as a percent of sales was 23.7% in fiscal 2010 compared to 16.4% in fiscal 2009.

Shared Resources/Eliminations

        We incur centralized expenses/income at our general corporate level, which we refer to as "Shared Resources", and then allocate these net expenses to our segments. Since these allocations are set early in the year, unallocated balances may occur. The Shared Resource amount increased $0.4 in fiscal 2010 compared to the prior year.

        Eliminations remove any inter-company revenues or income before tax residing in our segment results.

Fiscal Year Ended January 31, 2009 Compared to Fiscal Year Ended January 31, 2008

Consolidated Results

Revenue

		Fiscal Year Ended January 31, 2009		Fiscal Year Ended January 31, 2008		Increase		Percent Change
		(dollars in thousands)
Equipment		$	540,307	$	338,382	$	201,925		59.7	%
Parts			94,984		58,743		36,241		61.7	%
Service			44,224		27,344		16,880		61.7	%
Other, including trucking and rental			10,922		8,502		2,420		28.5	%
	Total Revenue	$	690,437	$	432,971	$	257,466		59.5	%

        The increase in revenue was primarily due to acquisitions contributing to fiscal 2009 revenue and same-store sales growth. The acquired stores contributed $176.7 million in additional total revenue, or 68.6% of the increase, while the same-store sales growth contributed $80.8 million, or 31.4% of the increase. Same-store sales increased 21.5% over the prior year, which is indicative of the strong market for the products we sell. The calculation of same-store sales includes fiscal 2008 sales of $22.4 million from a special manufacturer leasing program available in our Agriculture segment. We did not conduct the same program in fiscal 2009 but do enter into various other manufacturer programs from time to time.

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Cost of Revenue

		Fiscal Year Ended January 31, 2009		Fiscal Year Ended January 31, 2008		Increase		Percent Change
		(dollars in thousands)
Equipment		$	478,324	$	302,320	$	176,004		58.2	%
Parts			67,270		42,568		24,702		58.0	%
Service			16,729		10,118		6,611		65.3	%
Other, including trucking and rental			8,245		5,913		2,332		39.4	%
	Total cost of revenue	$	570,568	$	360,919	$	209,649		58.1	%

        The increase in cost of revenue was primarily due to increased revenue. Acquisitions contributed $146.0 million in total cost of revenue, or 69.7% of the increase, while same-store sales growth contributed $63.6 million, or 30.3% of the increase. The calculation of same-store sales includes fiscal 2008 cost of revenue of $20.2 million from a special manufacturer leasing program available in our Agriculture segment. As a percentage of revenue, cost of revenue was 82.6% for fiscal 2009 compared to 83.4% for fiscal 2008.

Gross Profit

		Fiscal Year Ended January 31, 2009		Fiscal Year Ended January 31, 2008		Increase		Percent Change
		(dollars in thousands)
Equipment		$	61,983	$	36,062	$	25,921		71.9	%
Parts			27,714		16,175		11,539		71.3	%
Service			27,495		17,226		10,269		59.6	%
Other, including trucking and rental			2,677		2,589		88		3.4	%
	Total Gross Profit	$	119,869	$	72,052	$	47,817		66.4	%

        The increase in gross profit was primarily due to increased revenue. Acquisitions contributed $30.6 million in total gross profit, or 64.0% of the increase, while same-store sale gross profits provided the remaining $17.2 million, or 36.0% of the gross profit improvement. The calculation of same-store sales includes fiscal 2008 gross profit of $2.2 million from a special manufacturer leasing program available in our Agriculture segment. Gross profit margins were 17.4% for fiscal 2009 compared to 16.6% for fiscal 2008. The strong market for our products in fiscal year 2009, particularly agriculture equipment, has resulted in improved margins compared to the prior year. We recorded a similar manufacturer market share incentive bonus in the fourth quarters of fiscal 2009 and 2008 by achieving annual market share targets established by CNH for product lines within the regions in which we market our products. These incentives enhanced fourth quarter gross profits for both years.

Operating Expenses

	Fiscal Year Ended January 31, 2009		Fiscal Year Ended January 31, 2008		Increase		Percent Change
	(dollars in thousands)
Operating Expenses	$	86,940	$	53,190	$	33,750		63.5	%

        The increase in operating expenses was primarily due to the additional costs associated with acquisitions such as compensation, rent, depreciation, travel and training. Other costs contributing to higher operating expenses were increased sales commission expenses (resulting from increased gross profits), stock option expense and additional costs associated with being a public company, such as increased legal and accounting costs related to regulatory compliance, particularly Sarbanes-Oxley compliance. As a percentage of total revenue, operating expenses increased slightly from 12.3% in fiscal 2008 to 12.6% in fiscal 2009.

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Other Income (Expense)

	Fiscal Year Ended January 31, 2009			Fiscal Year Ended January 31, 2008			Increase/ (Decrease)			Percent Change
	(dollars in thousands)
Interest and other income	$	1,545		$	577		$	968			167.8	%
Floorplan interest expense		(3,240	)		(3,812	)		(572	)		(15.0	)%
Interest expense		(729	)		(2,480	)		(1,751	)		(70.6	)%
Debt retirement costs		—			(3,824	)		(3,824	)		(100.0	)%

        Interest and other income increased $1.0 million due to the higher level of cash, cash equivalents and U.S. treasury bills in fiscal 2009 compared to fiscal 2008. The decrease in floorplan interest expense of $0.6 million was due to lower borrowing rates in fiscal 2009 compared to fiscal 2008. The decrease in interest expense of $1.8 million was primarily due to lower debt levels for the first eleven months of fiscal 2009, resulting from the retirement of all subordinated debentures as well as the early extinguishment of a portion of our long-term debt.

        In conjunction with our December 2007 initial public offering, we exchanged or converted all $6.4 million in aggregate principal amount of our outstanding convertible subordinated debentures for 2,308,648 shares of our common stock and retired $9.4 million in subordinated debentures. As a result of these transactions, we recognized debt retirement costs of $3.8 million in the fourth quarter of fiscal 2008. There were no such transactions in fiscal 2009.

Provision for Income Taxes

	Fiscal Year Ended January 31, 2009		Fiscal Year Ended January 31, 2008		Decrease		Percent Change
	(dollars in thousands)
Provision for income taxes	$	12,430	$	4,110	$	8,320		202.4	%

        The effective tax rate as a percentage of income before taxes decreased from 44.1% in fiscal 2008 to 40.7% in fiscal 2009. The decrease resulted from an unrecognized tax benefit of $420,000 in the fourth quarter of fiscal 2008. We did not record any such uncertain tax positions in fiscal 2009.

Segment Results

	Fiscal Year Ended January 31, 2009			Fiscal Year Ended January 31, 2008			Increase/ (Decrease)			Percent Change
	(dollars in thousands)
Revenues
Agriculture	$	624,035		$	394,972		$	229,063			58.0	%
Construction		88,032			52,175			35,857			68.7	%
Segment revenues		712,067			447,147			264,920			59.2	%
Eliminations		(21,630	)		(14,176	)		(7,454	)		52.6	%
Total	$	690,437		$	432,971		$	257,466			59.5	%
Income Before Income Taxes
Agriculture	$	32,023		$	15,326		$	16,697			108.9	%
Construction		604			233			371			159.2	%
Segment income before income taxes		32,627			15,559			17,068			109.7	%
Shared Resources		(1,678	)		(6,049	)		4,371			(72.3	)%
Eliminations		(444	)		(187	)		(257	)		137.4	%
Income before income taxes	$	30,505		$	9,323		$	21,182			227.2	%

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Agriculture

        Fiscal 2009 Agriculture segment revenues increased 58.0% compared to fiscal 2008. The increase in revenue was primarily due to acquisitions and an Agriculture same-store sales increase of 21.7% over fiscal 2008. Income before income taxes increased 108.9% due to increased revenues as well as improved equipment margins that resulted from a reduced agricultural equipment supply in the overall market. The increased revenues and improved margins were attributable to the strong agricultural market experienced in fiscal 2009.

Construction

        Fiscal 2009 Construction segment revenues increased 68.7% compared to fiscal 2008. The increase in revenue was due to acquisitions and a Construction same-store sale increase of 20.2% over fiscal 2008. Income before income taxes increased 159.2%. The increase in income before income taxes was a result of the solid performance of our existing construction stores and was offset by the results of acquisition stores.

Shared Resources/Eliminations

        We incur centralized expenses/income at our general corporate level, which we refer to as "Shared Resources", and then allocate these net expenses to our segments. Since these allocations are set early in the year, unallocated balances may occur. The unallocated expenses in Shared Resources decreased to $1.7 million in fiscal 2009 from $6.0 million in fiscal 2008. The $6.0 million in fiscal 2008 includes debt retirement costs of $3.8 million that did not get allocated to the segments and did not recur in fiscal 2009.

        Eliminations remove any inter-company revenues or income before tax residing in our segment results.

Liquidity and Capital Resources

Cash Flow From Operating Activities

        During fiscal 2010, cash flow used for operating activities was $47.7 million. Our cash flows from operations were primarily the result of our reported net income of $15.7 million and non-cash adjustments to net income for depreciation and amortization of $8.0 million. These operating cash inflows were principally offset by an increase in inventories of $61.2 million, a net decrease in accounts payable, customer deposits, accrued expenses and other long-term liabilities of $6.6 million and a net decrease in floorplan notes payable of $3.7 million. The increase in inventories was primarily the result of our growth through acquisitions and inventory balances that reflect historical stocking levels.

        During fiscal 2009, cash flow provided by operating activities was $4.2 million. Our cash flows from operations were primarily the result of our reported net income of $18.1 million, non-cash adjustments to net income for depreciation and amortization of $4.6 million, a net decrease in receivables, prepaid expenses and other assets of $7.0 million, an increase in floorplan notes payable of $5.4 million and a net increase in accounts payable, customer deposits, accrued expenses and other long-term liabilities of $3.8. These operating cash inflows were principally offset by an increase in inventories of $34.8 million. The increase in inventories was primarily the result of our growth through acquisitions and purchasing to support our increased sales activity during fiscal 2009.

        During fiscal 2008, our operating activities provided net cash flow of $12.5 million. Our cash flows from operations were primarily the result of our reported net income of $5.2 million, non-cash adjustments to net income for depreciation and amortization of $2.5 million and for debt retirement costs of $2.4 million, and a net increase in accounts payable, customer deposits, accrued expenses and other long-term liabilities of $19.2 million. These operating cash inflows were principally offset by a net

43

increase in receivables, prepaid expenses and other assets of $8.5 million, an increase in inventories of $3.2 million and a decrease in floorplan payables of $4.4 million.

        We evaluate our cash flow from operating activities net of all floorplan activity and short-term advances related to customer contracts in transit. Taking these adjustments into account, our non-GAAP cash flow provided by operating activities was $4.6 million, $13.3 million and $11.8 million, for fiscal 2010, 2009 and 2008, respectively. For reconciliation of this non-GAAP financial measure, please see the Non-GAAP Cash Flow Reconciliation below.

Cash Flow From Investing Activities

        During fiscal 2010, cash provided by investing activities was $25.7 million. Our cash provided by investing activities primarily consisted of net sales of U.S. treasury bills of $45.0 million, offset by purchases of equipment dealerships (net of cash purchased) of $7.3 million and property and equipment purchases of $12.4 million.

        During fiscal 2009, cash used for investing activities was $87.3 million. Our cash used for investing activities primarily consisted of net purchases of U.S. treasury bills of $45.0 million following our follow-on common stock offering, purchases of equipment dealerships (net of cash purchased) of $35.5 million and property and equipment purchases of $7.2 million.

        During fiscal 2008, cash used for investing activities was $16.3 million. Our cash used for investing activities primarily consisted of purchases of equipment dealerships (net of cash purchased) of $10.1 million and property and equipment purchases of $6.3 million.

Cash Flow From Financing Activities

        During fiscal 2010, cash provided by financing activities was $57.1 million. Cash provided by financing activities was primarily the result of an increase in our non-manufacturer floorplan payable of $51.4 million and proceeds from long-term debt exceeding principal payments by $4.8 million. During fiscal 2010, we increased our floorplan financing with non-manufacturers in order to take advantage of the lower interest rates offered by these entities.

        During fiscal 2009, cash provided by financing activities was $81.3 million. Cash provided by financing activities was primarily the result of $78.8 million in net proceeds from our follow-on offering and increase in our non-manufacturer floorplan payable of $9.1 million. Partially offsetting these proceeds were principal payments on long-term debt exceeding proceeds from long-term debt by $6.7 million.

        During fiscal 2008, cash provided by financing activities was $39.1 million. Cash provided by financing activities was primarily the result of $41.8 million in net proceeds from our initial public offering. Partially offsetting these proceeds were principal payments on long-term debt exceeding proceeds from long-term debt by $2.3 million.

Non-GAAP Cash Flow Reconciliation

        Non-GAAP cash flow provided by (used for) operating activities is a non-GAAP financial measure which is adjusted for the following:

•

Non-manufacturer floorplan notes payable: We review our cash flow from operating activities to include all floorplan notes payable activity regardless of whether we obtain the financing from a manufacturer or a non-manufacturer. We consider inventory financing with both manufacturers and non-manufacturers to be part of the normal operations of our business and use the adjusted cash flow analysis in the evaluation of our inventory and inventory flooring needs. GAAP

44

categorizes non-manufacturer floorplan payable as financing activities in the Consolidated Statement of Cash Flows.

•

Short-term advances related to customer contracts in transit: We review our cash flow from operating activities to include short-term advances related to customer contracts in transit. These advances are directly related to our contracts in transit and are considered part of our working capital. GAAP categorizes short-term advances related to customer contracts in transit as financing activities in the Consolidated Statements of Cash Flows.

        The following table reconciles net cash flow provided by (used for) operating activities, a GAAP measure, to non-GAAP cash flow provided by operating activities and net cash provided by financing activities, a GAAP measure, to non-GAAP cash flow provided by financing activities (in thousands):

	As Reported			Adjustment(1)			Adjustment(2)			Non-GAAP Measures
Fiscal 2010:
Net cash provided by (used for) operating activities	$	(47,661	)	$	51,448		$	780		$	4,567
Net cash provided by financing activities		57,069			(51,448	)		(780	)		4,841
Fiscal 2009:
Net cash provided by operating activities	$	4,215		$	9,094		$	—		$	13,309
Net cash provided by financing activities		81,310			(9,094	)		—			72,216
Fiscal 2008:
Net cash provided by operating activities	$	12,460		$	(705	)	$	—		$	11,755
Net cash provided by financing activities		39,109			705			—			39,814

(1)—Net change in non-manufacturer floorplan notes payable

(2)—Net change in short-term advances related to customer contracts in transit

Debt Facilities

        Bremer Bank Credit Facility.    We currently have a credit facility with Bremer Bank that provides for a $25.0 million revolving operating line of credit ("Revolving Loan") and a $15.0 million term loan ("Term Loan"). The Revolving Loan carries a variable interest rate of a Bremer Bank reference rate minus 0.25%, subject to a minimum interest rate floor of 4.5%, and a non-usage fee of 0.5% on the average monthly unused amount. The Revolving Loan requires monthly payments of interest due and has a maturity date of July 14, 2010. As of January 31, 2010, we had no amount outstanding on the Revolving Loan. The Term Loan has a fixed interest rate of 5.9%, requires monthly payments of principal and interest and has a maturity date of July 1, 2014. As of January 31, 2010 we had $13.7 million outstanding on the Term Loan. The Bremer Bank credit facility is secured by substantially all of the Company's assets and contains various financial and other restrictive covenants that require prior consent of Bremer Bank if we desire to make any mergers, acquisitions, asset sales outside the ordinary course of business, or create a subsidiary.

        CNH Capital Credit Facility.    We currently have a credit facility with CNH Capital that provides for an aggregate principal balance of up to $300.0 million for floorplan financing, the availability of which is reduced by outstanding floorplan notes payable, rental fleet financing and other acquisition-related financing arrangements with CNH, as described below. Prior to September 1, 2009, the interest rate under the CNH Capital floorplan line of credit was equal to the prime rate plus 0.3% per annum for most purposes, subject to any interest-free periods offered by CNH. Effective September 1, 2009, interest rates range from the prime rate plus 4% to the prime rate plus 6% on new borrowings under the CNH Capital floorplan line of credit, subject to any interest-free periods offered by CNH. The

45

CNH Capital term loans and loans for certain purposes have an interest rates ranging from the prime rate plus 0.3% to the prime rate plus 5.9% per annum. Cumulative and unpaid balance of advances under the CNH Capital credit facility accrues interest each month and requires monthly payments. The CNH Capital credit facility automatically renews on August 31 of each year through August 31, 2012, unless earlier terminated by either party. The CNH Capital credit facility is secured by the related assets. As of January 31, 2010, we had approximately $202.9 million outstanding on the CNH Capital credit facility. The CNH Capital credit facility contains covenants that require the Company to maintain various financial ratio levels and to submit certain financial information. It also contains various restrictive covenants that require prior consent of CNH Capital if we desire to engage in any acquisition of, consolidation or merger with any other business entity in which we are not the surviving company; create subsidiaries; move any collateral outside of the U.S.; or sell, rent, lease or otherwise dispose or transfer any of the collateral, other than in the ordinary course of business. CNH's consent is also required for the acquisition of any CNH dealership. In addition, the CNH Capital credit facility restricts our ability to incur any liens upon any substantial part of our assets.

        Other Indebtedness with CNH Capital.    CNH Capital periodically provides loans for fixed asset financing in connection with acquisitions. Related to this acquisition financing, we have various term loans with CNH Capital. The aggregate principal amount of these terms loans was approximately $2.7 million at January 31, 2010. We also obtained variable rate notes at interest rates ranging from the prime rate plus 0.3% to the prime rate plus 5.9% per annum from CNH Capital, which are secured by our designated rental fleet. The amount of our rental fleet notes as of January 31, 2010, was $9.5 million.

        GE Credit Facility.    On March 12, 2010, we entered into a Second Amended and Restated Agreement for Wholesale Financing by and between the Company and GE Commercial Distribution Finance Corporation ("GE"), which provides for a discretionary revolving floorplan facility with an initial facility amount of up to $50 million. The agreement restates in its entirety our prior wholesale financing agreements with GE. Under the GE agreement, we have the ability to seek to increase the amount of the facility to $100 million. Advances under the facility are secured by substantially all of the inventory and other assets financed by GE and all proceeds of such inventory. The GE facility may be used to advance up to 85% of the value of new or used inventory purchased by us from vendors approved by GE, or to refinance new or used inventory. Advances made under the facility will generally have a variable interest rate equal to the three-month LIBOR Rate plus 5.5%. The agreement may be terminated by either party on 60 days notice. Under covenants of the GE credit facility, the Company has agreed, among other things, to maintain various financial ratio levels and to submit certain financial information. It also contains various restrictive covenants regarding related party transactions outside of the ordinary course of business and requires GE's prior consent if we desire to engage in any acquisition meeting certain financial thresholds; make any investments outside of the ordinary course of business; or have a change in control, as defined by the agreement.

Sources of Liquidity

        Our primary sources of liquidity are cash reserves, cash flow from operations, proceeds from the issuance of debt and borrowings under our credit facilities. We expect that ongoing requirements for debt service and capital expenditures will be funded from these sources.

Adequacy of Capital Resources

        Our primary uses of cash have been to fund our strategic acquisitions, finance the purchase of inventory, purchase U.S. Treasury Bills, meet debt service requirements and fund operating activities, working capital, payments due under building space operating leases and manufacturer floorplans payable. The primary factors affecting our ability to generate cash and to meet existing, known or reasonably likely cash requirements are the timing and extent of acquisitions and our operating

46

performance as impacted by (i) industry factors, (ii) competition, (iii) general economic conditions and (iv) other business factors as identified in Item 1A "Risk Factors."

        For fiscal 2010 and 2009, we spent $12.4 million and $7.2 million on property and equipment, respectively, exclusive of acquisitions, transfers between equipment inventory and our designated rental fleet, and property and equipment purchased with long-term debt. Our property and equipment purchases in fiscal 2010 were higher than the prior fiscal year primarily due to the increase in the number of stores and a licensing agreement for a new Enterprise Resource Planning ("ERP") software system. We expect our property and equipment expenditures, exclusive of acquisitions, for fiscal 2011 to be approximately $9.0 to $10.0 million. The actual amount of our fiscal 2011 equipment expenditures will depend upon factors such as general economic conditions, growth prospects for our industry and our acquisition activity. We currently expect to finance equipment purchases with borrowings under the existing credit facilities, with available cash or with cash flow from operations. We may need to incur additional debt if we pursue any future acquisitions.

        Our ability to service our debt will depend upon our ability to generate the necessary cash. This will depend on our future acquisitions activity, operating performance, general economic conditions, and financial, competitive, business and other factors, some of which are beyond our immediate control. Based on our current operational performance, we believe our cash flow from operations, available cash and available borrowings under the existing credit facilities will adequately provide our liquidity needs for, at a minimum, the next 12 months.

        We cannot assure you, however, that our business will generate sufficient cash flow from operations or that future borrowings will be available under the Bremer Bank, CNH Capital and GE credit facilities in amounts sufficient to allow us to service our indebtedness and to meet our other commitments. If we are unable to generate sufficient cash flow from operations or to obtain sufficient future borrowings, we may be required to seek one or more alternatives such as refinancing or restructuring our indebtedness, selling material assets or operations or seeking to raise additional debt or equity capital. We cannot assure you that we will be able to succeed with one of these alternatives on commercially reasonable terms, if at all. In addition, if we pursue strategic acquisitions, we may require additional equity or debt financing to consummate the transactions, and we cannot assure you that we will succeed in obtaining this financing on favorable terms or at all. If we incur additional indebtedness to finance any of these transactions, this may place increased demands on our cash flow from operations to service the resulting increased debt. Our existing debt agreements contain restrictive covenants that may restrict our ability to adopt any of these alternatives. Any non-compliance by us under the terms of our debt agreements could result in an event of default which, if not cured, could result in the acceleration of our debt.

Certain Information Concerning Off-Balance Sheet Arrangements

        As of January 31, 2010, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We are, therefore, not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships. In the normal course of our business activities, we lease rental equipment under operating leases.

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Contractual and Commercial Commitment Summary

        Our contractual obligations and commercial commitments as of January 31, 2010 are summarized below:

				Payments Due By Period
Contractual Obligations		Total		Less Than 1 Year		1 to 3 Years		3 to 5 Years		More Than 5 Years
		(in thousands)
Long-term debt obligations(1)		$	32,621	$	8,600	$	13,575	$	9,860	$	586
Operating lease(2)			61,507		7,798		14,577		12,856		26,276
Other long-term liabilities(3)			512		—		512		—		—
	Total	$	94,640	$	16,398	$	28,664	$	22,716	$	26,862

(1)

Includes obligations under notes payable issued in favor of our lenders and estimates of interest payable.

(2)

Includes minimum lease payment obligations under operating leases related to our stores. Amounts do not include insurance or tax, which we include in our operating expenses and which we estimate will be approximately $839,000 for the less than 1 year period, $1,651,000 for the 1-3 year period, $1,550,000 for the 3-5 year period, and $3,051,000 for the more than 5 years period for a total of approximately $7,091,000. See Note 9 to our audited financial statements for a description of our operating lease obligations.

(3)

Includes long-term portion of trade payables.

New Accounting Pronouncements

        In January 2010, the FASB issued authoritative guidance on fair value measurements, codified in ASC 820, Fair Value Measurements and Disclosures. This guidance required additional disclosure of significant transfers in and out of Level 1 and Level 2 fair value measurements and activity in Level 3 fair value measurements. It also clarified existing disclosure requirements regarding level of disaggregation and valuation inputs and techniques. The guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure of the Level 3 activity, which is effective for interim and fiscal years beginning after December 15, 2010. We adopted these provisions on February 1, 2010, except for the Level 3 activity disclosures, which will be effective for us on February 1, 2011. The provisions of this guidance have not, and are not expected to, have a material effect on our results of operations, financial position or cash flows.

        In June 2009, the FASB issued authoritative guidance on the FASB Accounting Standards Codification ("ASC" or "Codification") and the hierarchy of generally accepted accounting principles, codified in ASC 105, Generally Accepted Accounting Principles. This guidance established the Codification as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, excluding guidance from the SEC, was superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification became nonauthoritative. The Codification does not change GAAP, but instead introduced a new structure that combined all authoritative standards into a comprehensive, topically organized online database. The Codification was effective for interim or annual periods ending after September 15, 2009, and impacted our financial statement disclosures beginning with the quarter ending October 31, 2009 as all future references to authoritative accounting literature will be referenced in accordance with the Codification. There will be no changes to the content of our consolidated financial statements or disclosures as a result of implementing the Codification.

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        In October 2009, the Financial Accounting Standards Board ("FASB") issued authoritative guidance on revenue recognition, codified in ASC 605-25, Revenue Recognition. This guidance modifies the fair value requirements of revenue recognition on multiple element arrangements by allowing the use of the "best estimate of selling price" in addition to vendor specific objective evidence and third-party evidence for determining the selling price of a deliverable. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence, (b) third-party evidence, or (c) estimates. In addition, the guidance eliminates the residual method of allocation and significantly expands the disclosure requirements for such arrangements. This guidance is effective for fiscal years beginning on or after June 15, 2010, with early adoption permitted. We are in the process of determining the impact that this guidance will have on our consolidated financial statements.

        In June 2009, the FASB issued authoritative guidance on the consolidation of variable interest entities ("VIEs"), codified in ASC 810, Consolidation. This guidance eliminates the exemption for qualifying special-purpose entities, amends the approach companies use to identify the VIEs for which they are deemed to be the primary beneficiary and are required to consolidate, and requires additional disclosure of an entity's involvement with a VIE. The guidance requires companies to perform ongoing reassessments of whether it is the primary beneficiary of a VIE. This assessment no longer includes the quantitative-based assessment, and instead requires a qualitative assessment of whether a company has the power to direct the VIE's activities that most significantly impact the company's economic performance and whether the entity has the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. This guidance is effective for fiscal years beginning after November 15, 2009. We are in the process of determining the impact it will have on our consolidated financial statements.

        In May 2009, the FASB issued authoritative guidance on subsequent events, codified in ASC 855, Subsequent Events. This guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company adopted the guidance as of July 31, 2009. Its adoption did not have a material effect on the Company's consolidated financial statements. This guidance was amended in February 2010 to require SEC filers to disclose subsequent events through the date the financial statements are issued and exclude SEC filers from the requirement to disclose the date through which subsequent events were evaluated. This guidance became effective immediately and was used in determining the disclosure requirements in Note 18—Subsequent Events included in this Form 10-K. Its adoption did not have a material impact on our consolidated financial statements.

        In April 2009, the FASB issued authoritative guidance on the accounting and disclosure of assets acquired and liabilities assumed in a business combination that arise from contingencies, and subsequent accounting for these contingencies. This guidance was codified in ASC 805, Business Combinations. We adopted this guidance on February 1, 2010 and do not expect it to have a material effect on our consolidated financial statements based on the nature of the assets acquired and liabilities assumed in our business combinations.

        In April 2009, the FASB issued authoritative guidance that required disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies, in addition to inclusion in annual financial statements. This guidance was codified in ASC 820, Fair Value Measurements and Disclosures. We adopted this FSP as of July 31, 2009. Its adoption did not have a material effect on our consolidated financial statements.

        In February 2008, the FASB issued authoritative guidance on fair value measurements, codified in ASC 820, Fair Value Measurements and Disclosures. This guidance permitted a one year deferral of the application of fair value measurements for all non-financial assets and non-financial liabilities, except those recognized or disclosed at fair value in the financial statements on a recurring basis (at least

49

annually). We adopted fair value measurements for non-financial assets and non-financial liabilities on February 1, 2009. Its adoption did not have a material effect on our results of operations, financial position or cash flows.

        In December 2007, the FASB issued authoritative guidance on business combinations which provided additional guidance on improving the relevance, representational faithfulness, and comparability of the financial information that a reporting entity provides in its financial reports about a business combination and its effects. This guidance was codified in ASC 805, Business Combinations, and applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted SFAS 141R effective February 1, 2009. Its adoption did not have a material effect on our consolidated financial statements. Any acquisition made in fiscal 2010 and future periods are subject to this new accounting guidance.

        In December 2007, the FASB issued authoritative guidance on accounting and reporting for non-controlling interests in a subsidiary and for the deconsolidation of a subsidiary, codified in ASC 810, Consolidation. This guidance applied to all entities that prepare consolidated financial statements and have an outstanding noncontrolling interest in one or more subsidiaries. We adopted this guidance on February 1, 2009. Its adoption did not have a material effect on our consolidated financial statements.

Information Regarding Forward-Looking Statements

        The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Such "forward-looking" information is included in this Form 10-K, including this Item 7, as well as in other materials filed or to be filed by us with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company).

        This Form 10-K contains forward-looking statements that involve risks and uncertainties. In some cases, you can identify forward-looking statements by the following words: "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "should," "will," "would," or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve known and unknown risks, uncertainties and other factors that may cause our results or our industry's actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on our management's beliefs and assumptions, which in turn are based on currently available information. Our forward-looking statements in this Form 10-K generally relate to the following:

•

our beliefs and intentions with respect to our growth strategy, including growth through acquisitions, the types of acquisition targets we intend to pursue and our ability to identify such targets;

•

our beliefs with respect to our competitors and our competitive advantages;

•

our beliefs with respect to the impact of government subsidies on the agriculture economy;

•

our beliefs with respect to our business strengths, including the Titan Operating Model;

•

our plans and beliefs with respect to real property used in our business;

•

our beliefs with respect to our employee relations;

50

•

our assumptions, beliefs and expectations with respect to past and future market conditions, including interest rates, lending standards and public infrastructure spending and the impact these conditions will have on our operating results;

•

our beliefs with respect to the adequacy of our capital resources and the funding of debt service obligations and capital expenditures;

•

our plans for future capital expenditures;

•

our cash needs and the adequacy of our working capital; and

•

our expectations regarding the impact of inflation.

        Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on our management's beliefs and assumptions, which in turn are based on currently available information. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the expansion of product offerings geographically, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve known and unknown risks and uncertainties, which could cause actual results that differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Such factors include, but are not limited to, the following:

•

incorrect assumptions regarding our cash needs;

•

general economic conditions and construction activity in the markets where we operate;

•

our relationships with equipment suppliers;

•

our substantial leverage;

•

the risks associated with the expansion of our business;

•

our possible inability to integrate any businesses we acquire;

•

competitive pressures;

•

compliance with laws and regulations; and

•

other factors discussed under "Risk Factors" or elsewhere in this Form 10-K.

        These important factors include those that we discuss under Item 1A "Risk Factors." You should read these risk factors and the other cautionary statements made in this Form 10-K as being applicable to all related forward-looking statements wherever they appear in this Form 10-K. We cannot assure you that the forward-looking statements in this Form 10-K will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, if at all. Other than as required by law, we undertake no obligation to update these forward-looking statements, even though our situation may change in the future.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        We are exposed to market risk from changes in interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices such as interest rates. For fixed rate debt, interest rate changes affect the fair value of financial instruments but do not impact earnings or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact future earnings and cash flows, assuming other factors are held constant. We have both fixed and floating rate financing. Some of our floating rate credit facilities contain minimum rates of interest to be charged. Based upon balances and interest rates as of January 31, 2010, holding other variables constant, a one percentage point increase in interest rates for the next 12-month period would decrease pre-tax earnings and cash flow by approximately $1.4 million. Conversely, a one percentage point decrease in interest rates for the next 12-month period would result in an increase to pre-tax earnings and cash flow of approximately $1.4 million. At January 31, 2010, we had variable rate floorplan notes payable of $249.9 million, of which approximately $127.4 million was interest-bearing, variable notes payable and long-term debt of $11.0 million, and fixed rate notes payable and long-term debt of $18.1 million.

        Our policy is not to enter into derivatives or other financial instruments for trading or speculative purposes.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The Consolidated Balance Sheets of the Company as of January 31, 2010 and 2009, and the related Consolidated Statements of Operations, Stockholders' Equity, and Cash Flows for each of the three years in the period ended January 31, 2010, and the notes thereto have been audited by Eide Bailly LLP, independent registered public accounting firm.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Titan Machinery Inc.—Financial Statements
Audited Consolidated Financial Statements
	Report of Independent Registered Public Accounting Firm		54
	Report of Independent Registered Public Accounting Firm		55
	Consolidated Balance Sheets as of January 31, 2010 and 2009		56
	Consolidated Statements of Operations for the fiscal years ended January 31, 2010, 2009 and 2008		57
	Consolidated Statements of Stockholders' Equity for the fiscal years ended January 31, 2010, 2009 and 2008		58
	Consolidated Statements of Cash Flows for the fiscal years ended January 31, 2010, 2009 and 2008		59
	Notes to Consolidated Financial Statements		61

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Titan Machinery Inc.
Fargo, North Dakota

        We have audited the accompanying consolidated balance sheets of Titan Machinery Inc. as of January 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended January 31, 2010, and the financial statement schedule listed in the Index at Item 15. Titan Machinery Inc.'s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these 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 audits provide 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 Titan Machinery Inc. as of January 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the three-year period ended January 31, 2010, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the financial statement schedule referred to above, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Titan Machinery Inc.'s internal control over financial reporting as of January 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated April 15, 2010, expressed an unqualified opinion.

/s/ Eide Bailly LLP

Minneapolis, Minnesota
April 15, 2010

54

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Titan Machinery Inc.
Fargo, North Dakota

        We have audited Titan Machinery Inc.'s internal control over financial reporting as of January 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Titan Machinery Inc.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting 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 effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, Titan Machinery Inc. maintained, in all material respects, effective internal control over financial reporting as of January 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets and the related consolidated statements of operations, stockholders' equity, and cash flows of Titan Machinery Inc., and our report dated April 15, 2010, expressed an unqualified opinion.

/s/ Eide Bailly LLP

Minneapolis, Minnesota
April 15, 2010

55

TITAN MACHINERY INC.

CONSOLIDATED BALANCE SHEETS

JANUARY 31, 2010 AND 2009

(in thousands, except per share data)

			January 31, 2010		January 31, 2009
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	76,185	$	41,047
	U.S. treasury bills			—		44,994
		Total cash, cash equivalents and U.S. treasury bills		76,185		86,041
	Receivables, net			22,254		19,627
	Inventories			347,580		241,094
	Prepaid expenses			1,009		532
	Income taxes receivable			1,595		1,433
	Deferred income taxes			2,266		1,426
		Total current assets		450,889		350,153
INTANGIBLES AND OTHER ASSETS
	Noncurrent parts inventories			1,642		1,509
	Goodwill			14,762		12,464
	Intangible assets, net of accumulated amortization			295		366
	Other			620		487
				17,319		14,826
PROPERTY AND EQUIPMENT, net of accumulated depreciation				46,604		45,269
			$	514,812	$	410,248
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable		$	12,352	$	18,652
	Floorplan notes payable			249,872		166,481
	Current maturities of long-term debt and short-term advances			7,218		7,623
	Customer deposits			12,974		15,158
	Accrued expenses			9,870		8,308
		Total current liabilities		292,286		216,222
LONG-TERM LIABILITIES
	Long-term debt, less current maturities			21,852		14,810
	Deferred income taxes			6,356		3,503
	Other long-term liabilities			3,794		1,946
				32,002		20,259
STOCKHOLDERS' EQUITY
	Common stock, par value $.00001 per share, authorized—25,000 shares; issued and outstanding—17,777 at January 31, 2010 and 17,657 at January 31, 2009			—		—
	Additional paid-in-capital			138,775		137,755
	Retained earnings			51,749		36,012
				190,524		173,767
			$	514,812	$	410,248

See Notes to Consolidated Financial Statements

56

TITAN MACHINERY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED JANUARY 31, 2010, 2009 AND 2008

(in thousands, except per share data)

		2010			2009			2008
REVENUE
	Equipment	$	643,186		$	540,307		$	338,382
	Parts		119,509			94,984			58,743
	Service		58,983			44,224			27,344
	Other, including trucking and rental		17,103			10,922			8,502
TOTAL REVENUE			838,781			690,437			432,971
COST OF REVENUE
	Equipment		578,411			478,324			302,320
	Parts		83,219			67,270			42,568
	Service		21,615			16,729			10,118
	Other, including trucking and rental		14,441			8,245			5,913
TOTAL COST OF REVENUE			697,686			570,568			360,919
GROSS PROFIT			141,095			119,869			72,052
OPERATING EXPENSES			108,998			86,940			53,190
INCOME FROM OPERATIONS			32,097			32,929			18,862
OTHER INCOME (EXPENSE)
	Interest and other income		1,843			1,545			577
	Floorplan interest expense		(5,485	)		(3,240	)		(3,812	)
	Debt retirement costs		—			—			(3,824	)
	Interest expense other		(1,463	)		(729	)		(2,480	)
INCOME BEFORE INCOME TAXES			26,992			30,505			9,323
PROVISION FOR INCOME TAXES			(11,255	)		(12,430	)		(4,110	)
NET INCOME		$	15,737		$	18,075		$	5,213
ADJUSTMENTS TO INCOME
	Amortization of syndication fees		—			—			(51	)
	Unpaid accumulated preferred dividends		—			—			(88	)
INCOME AVAILABLE TO COMMON STOCKHOLDERS		$	15,737		$	18,075		$	5,074
EARNINGS PER SHARE—NOTE 1
EARNINGS PER SHARE—BASIC		$	0.89		$	1.11		$	0.90
EARNINGS PER SHARE—DILUTED		$	0.88		$	1.08		$	0.67
WEIGHTED AVERAGE SHARES—BASIC			17,593			16,291			5,607
WEIGHTED AVERAGE SHARES—DILUTED			17,968			16,779			8,246

See Notes to Consolidated Financial Statements

57

TITAN MACHINERY INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED JANUARY 31, 2010, 2009 AND 2008

(in thousands)

		Common Stock
		Shares Outstanding		Amount		Additional Paid-In Capital		Retained Earnings			Total
BALANCE, JANUARY 31, 2007			4,345	$	—	$	515	$	12,863		$	13,378
	Common stock issued in initial public offering		5,442		—		41,794		—			41,794
	Issuance of shares for stock acquisition		235		—		2,000		—			2,000
	Issuance of shares for conversion of debt/conversion of redeemable securities/exercise of warrants		3,340		—		13,730		—			13,730
	Stock-based compensation expense		79		—		141		—			141
	Unpaid accumulated dividends		—		—		—		(88	)		(88	)
	Amortization of syndication fees		—		—		—		(51	)		(51	)
	Net income		—		—		—		5,213			5,213
BALANCE, JANUARY 31, 2008			13,441		—		58,180		17,937			76,117
	Common stock issued in follow-on offering		4,180		—		78,815		—			78,815
	Common stock issued on grant of restricted stock and exercise of stock options and warrants		36		—		68		—			68
	Stock-based compensation expense		—		—		692		—			692
	Net income		—		—		—		18,075			18,075
BALANCE, JANUARY 31, 2009			17,657		—		137,755		36,012			173,767
	Common stock issued on grant of restricted stock and exercise of stock options and warrants		120		—		58		—			58
	Stock-based compensation expense		—		—		962		—			962
	Net income		—		—		—		15,737			15,737
BALANCE, JANUARY 31, 2010			17,777	$	—	$	138,775	$	51,749		$	190,524

See Notes to Consolidated Financial Statements

58

TITAN MACHINERY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED JANUARY 31, 2010, 2009 AND 2008

(in thousands)

			2010			2009			2008
OPERATING ACTIVITIES
	Net income		$	15,737		$	18,075		$	5,213
	Adjustments to reconcile net income to net cash from operations
		Depreciation and amortization		7,950			4,583			2,515
		Debt retirement costs		—			—			2,407
		Deferred income taxes		1,850			968			(181	)
		Stock-based compensation expense		962			692			141
		Other		(15	)		(9	)		858
	Changes in assets and liabilities, net of purchase of equipment dealerships assets and assumption of liabilities
		Receivables, prepaid expenses and other assets		(2,481	)		6,993			(8,488	)
		Inventories		(61,244	)		(34,842	)		(3,165	)
		Floorplan notes payable		(3,660	)		5,380			(4,449	)
		Accounts payable, customer deposits, accrued expenses and other long-term liabilities		(6,649	)		3,833			19,237
		Income taxes		(111	)		(1,458	)		(1,628	)
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES				(47,661	)		4,215			12,460
INVESTING ACTIVITIES
	Net change in U.S. treasury bills			44,994			(44,994	)		—
	Property and equipment purchases			(12,394	)		(7,228	)		(6,288	)
	Net proceeds from sale of equipment			396			462			270
	Payment for intangible asset			—			—			(217	)
	Purchase of equipment dealerships, net of cash purchased			(7,266	)		(35,521	)		(10,103	)
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES				25,730			(87,281	)		(16,338	)
FINANCING ACTIVITIES
	Proceeds from initial public offering of common stock, net of underwriting discount of $3,238 and other direct costs of $1,228			—			—			41,794
	Proceeds from follow-on offering of common stock, net of underwriting discount of $4,389 and other direct costs of $396			—			78,815			—
	Net change in non-manufacturer floorplan notes payable			51,448			9,094			(705	)
	Short-term advances related to customer contracts in transit, net			780			—			—
	Proceeds from long-term debt borrowings			23,914			12,368			12,199
	Principal payments on long-term debt and subordinated debentures			(19,066	)		(19,034	)		(14,492	)
	Dividends paid on redeemable securities			—			—			(441	)
	Net change in subordinated debt interest accrual			—			—			(330	)
	Other			(7	)		67			1,084
NET CASH PROVIDED BY FINANCING ACTIVITIES				57,069			81,310			39,109
NET CHANGE IN CASH AND CASH EQUIVALENTS				35,138			(1,756	)		35,231
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD				41,047			42,803			7,572
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	76,185		$	41,047		$	42,803

59

TITAN MACHINERY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

YEARS ENDED JANUARY 31, 2010, 2009 AND 2008

(in thousands)

			2010			2009			2008
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
	Cash paid during the period
		Income taxes, net of refunds	$	10,287		$	12,894		$	5,349
		Interest	$	6,311		$	4,037		$	6,615
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
	Property and equipment purchased with long-term debt		$	2,312		$	979		$	1,328
	Net transfer of equipment from (to) fixed assets to (from) inventories		$	6,528		$	(3,631	)	$	—
	Net transfer of financing from long-term debt to floorplan notes payable		$	3,180		$	—		$	—
	Dividends on preferred redeemable stock charged to retained earnings		$	—		$	—		$	88
	Issuance of shares for conversion of debt and conversion of redeemable securities		$	—		$	—		$	8,114
	Acquisition of equipment dealership assets in exchange for cash and assumption of liabilities including purchase accounting adjustments on prior acquisitions
		Receivables	$	(558	)	$	(4,905	)	$	(2,638	)
		Inventories		(15,189	)		(42,594	)		(32,330	)
		Deferred income taxes, net		163			271			593
		Property and equipment		(1,462	)		(22,255	)		(2,936	)
		Intangible assets		—			(250	)		—
		Other assets					(89	)		(56	)
		Goodwill		(2,298	)		(4,193	)		(4,535	)
		Accounts payable		(149	)		3,367			3,987
		Floorplan notes payable		8,765			24,608			21,867
		Customer deposits		286			392			—
		Accrued expenses		205			290			343
		Income taxes payable		(51	)		1,100			176
		Long-term debt		1,877			8,084			1,000
		Non-cash consideration: other long-term liabilities		1,145			653			4,426
		Cash paid for dealerships, net of cash purchased and adjustments on prior acquisitions	$	(7,266	)	$	(35,521	)	$	(10,103	)

See Notes to Consolidated Financial Statements

60

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

        Titan Machinery Inc. (the "Company") is engaged in the retail sale, service and rental of agricultural and construction machinery through stores in North Dakota, South Dakota, Minnesota, Iowa, Nebraska, Montana and Wyoming.

Principles of Consolidation

        The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Transportation Solutions, LLC. All significant accounts, transactions and profits between the consolidated companies have been eliminated in consolidation.

Concentrations of Credit Risk

        The Company's sales are to agricultural and construction equipment customers principally in North Dakota, South Dakota, Minnesota, Iowa, eastern Nebraska, Montana and eastern Wyoming. The Company extends credit to its customers in the ordinary course of business and monitors its customers' financial condition to minimize its risks associated with trade receivables; however, the Company does not generally require collateral on trade receivables.

        A portion of the Company's cash balances are maintained in bank deposit accounts, which are in excess of federally insured limits.

Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations in Operations

        The Company currently purchases new and rental equipment and related parts from a limited number of manufacturers. Although no change in suppliers is anticipated, the occurrence of such a change could cause a possible loss of sales and adversely affect operating results. The Company is the holder of authorized dealerships granted by CNH Capital LLC, New Holland North America, Inc. and Kobelco Construction Machinery America LLC whereby it has the right to act as an authorized dealer for the entities' equipment. The dealership authorizations and floorplan facilities can be cancelled by the respective entity if the Company does not observe certain established guidelines and covenants.

Cash, Cash Equivalents and U.S. Treasury Bills

        The Company considers all highly liquid investments with original maturities of three months or less on their acquisition date to be cash equivalents. The Company accounts for investments with original maturities greater than three months, but less than one year, at the date of purchase as short-term marketable securities.

61

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1—BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

        As of January 31, 2009 short-term marketable securities consisted entirely of U.S. Treasury Bills. These investments were classified as held-to-maturity as the Company had both the positive intent and ability to hold to maturity. The investments were carried at amortized cost, which due to the short-term nature of the investments, approximated fair value.

Receivables and Credit Policy

        Trade receivables are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

        The carrying amount of trade receivables is reduced by a valuation allowance that reflects management's best estimate of the amounts that will not be collected. Management reviews aged receivable balances and estimates the portion, if any, of the balance that will not be collected.

        Finance receivables consist primarily of contracts in transit with manufacturers and finance companies, and credit card companies. These receivables do not generally have established payment terms and are collected in relatively short time periods.

Inventories

        New and used machinery are stated at the lower of cost (specific identification) or market with adjustments for decreases in market value on inventory rented but available for sale being a percentage of the rental income received on such inventory. All used inventory, including that which has been rented, is subject to periodic lower of cost or market evaluation. Parts inventories are valued at the lower of average cost or market, and an estimate of parts inventories not expected to be sold in the next year has been reported separately. Work in process is valued at the billable rates of labor incurred and parts inventories used on service work in process at year end.

Property and Equipment

        Property and equipment is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful life of each asset, as summarized below:

Buildings and leasehold improvements	Lesser of 10 - 40 years or lease term
Machinery and equipment	3 - 10 years
Furniture and fixtures	3 - 10 years
Vehicles	5 - 10 years
Rental fleet	5 years

        Depreciation for income tax reporting purposes is computed using accelerated methods.

        The Company completes an evaluation, at each balance sheet date, whether or not events or circumstances have taken place to indicate that the remaining net book value of the assets may be unrecoverable. If necessary, the estimated future undiscounted cash flows of any assets in question are compared to their carrying value to determine if an adjustment to the recorded value is necessary.

62

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1—BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Goodwill

        Goodwill represents the excess of costs over the fair value of the assets of businesses acquired not allocable to separately identifiable intangible assets. Goodwill acquired in business combinations is assigned to its related reporting unit, which consists of the Company's operating segments.

        Goodwill is not amortized, but is tested for impairment at the end of the Company's fiscal year, or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit's carrying amount of goodwill is greater than its fair value. The goodwill impairment test is performed by comparing the carrying value of the reporting unit to its fair value. Fair value is calculated by discounting the estimated future cash flows of the Company's reporting units. As of January 31, 2010, the carrying value of the Company's goodwill was not considered impaired.

Intangible Assets

        The covenants not to compete are being amortized using the straight-line method over the terms of the related agreements, which range from five to ten years.

Customer Deposits

        Customer deposits consist of advance payments from customers for revenue to be recognized in the following year.

Lease Accounting

        The Company periodically purchases equipment from its primary supplier that is subsequently sold to and leased back from a financing group. The Company records the sale of the equipment at the time units are sold to the financing group. Under the sale leaseback program, the lease period is four months or less and lease expense is recognized over the leasing period. The Company recognizes the entire sales transaction and gross profit on these units at the time of sale to the financing group due to the short leaseback period.

Income Taxes

        Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of receivables, inventory, property and equipment, intangible assets, stock-based compensation, and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. The Company's policy is to recognize interest expense and penalties related to income tax matters within its provision for income taxes. The Company performs a comprehensive review of its portfolio of uncertain tax positions in accordance with the requirements and recognition standards established by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC" or "Codification") 740, Income Taxes. Pursuant to this guidance, an uncertain tax position represents the Company's expected treatment of a tax position taken, or expected to be taken, in a tax return, that has not been reflected in measuring income tax expense for financial reporting purposes.

63

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1—BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Share

        Basic earnings per share were computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during the year. Accumulated preferred dividends and amortization of preferred stock syndication fees were subtracted from net income to arrive at income available to common stockholders.

        Diluted earnings per share were computed by dividing income available to common stockholders plus assumed conversions by the weighted-average shares of common stock outstanding after adjusting for potential dilution related to the conversion of all dilutive securities into common stock. All potentially dilutive securities were included in the computation of diluted earnings per share.

        The components of basic earnings per share are as follows:

Basic—Earnings Per Share	2010		2009		2008
(in thousands, except per share data)
Net income	$	15,737	$	18,075	$	5,213
Less: Amortization of syndication fees		—		—		(51	)
Less: Preferred stock dividends—unpaid		—		—		(88	)
Income available to common shareholders	$	15,737	$	18,075	$	5,074
Basic weighted-average shares outstanding		17,593		16,291		5,607
Basic—Earnings Per Share	$	0.89	$	1.11	$	0.90

        The components of diluted earnings per share are as follows:

Diluted—Earnings Per Share		2010		2009		2008
(in thousands, except per share data)
Income available to common shareholders		$	15,737	$	18,075	$	5,074
Plus: Income impact of assumed conversions
	Amortization of syndication fees		—		—		51
	Preferred stock dividends—unpaid		—		—		88
	Interest on convertible debentures, net of tax effect		—		—		278
Income available to common shareholders plus assumed conversions		$	15,737	$	18,075	$	5,491
Basic weighted-average shares outstanding			17,593		16,291		5,607
Plus: Incremental shares from assumed conversions
	Convertible debentures		—		—		1,864
	Convertible preferred shares		—		—		543
	Restricted stock		140		87		21
	Warrants		70		109		153
	Stock options		165		292		58
Diluted weighted-average shares outstanding			17,968		16,779		8,246
Diluted—EPS		$	0.88	$	1.08	$	0.67

64

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1—BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

        There were 139,000, 134,000 and 275,000 options outstanding as of January 31, 2010, 2009 and 2008, respectively, which were not included in the computation of diluted EPS because they were anti-dilutive.

Revenue Recognition

        Revenue on equipment is recognized upon receipt of a signed contract and delivery of product to customers. Revenue on parts sales is recognized upon delivery of product to customers. Rental and service revenue is recognized at the time the related services are provided. In addition to outright sales of new and used equipment, certain rental agreements may include rent-to-purchase options. Under these agreements, customers are given a period of time to exercise an option to purchase the related equipment, with a portion of the rental payments being applied to the purchase price. Any such equipment is included in inventory until the purchase option is exercised. Rental revenue is recognized during the rental period, with equipment sales revenue being recognized upon the exercise of the purchase option.

Sales Taxes

        The Company has customers in states and municipalities in which those governmental units impose a sales tax on certain sales. The Company collects those sales taxes from its customers and remits the entire amount to the various governmental units. The Company's accounting policy is to exclude the tax collected and remitted from revenue and cost of revenue.

Shipping and Handling Costs

        Shipping and handling costs are recorded as cost of revenue and amounts billed to customers for shipping and handling costs are recorded in revenue.

Manufacturer Incentives and Discounts

        The Company receives various manufacturer incentives and discounts, which are based on a variety of factors. The Company accounts for such programs in accordance with the provisions of the ASC 605-50, Customer's Accounting for Certain Consideration Received from a Vendor. Discounts and incentives related to the purchase of inventory are recognized as a reduction of inventory prices and recognized as a reduction of cost of revenue when the related inventory is sold. Sales-related discounts and incentives are recognized as a reduction of cost of revenue when the related inventory is sold. Financing-related incentives are recognized as other income when earned. Other incentives, reflecting reimbursement of qualifying expenses, are recognized as a reduction of the related expense when earned.

Advertising Costs

        Costs incurred for producing and distributing advertising are expensed as incurred. Advertising expense amounted to $2,553,000, $2,273,000 and $1,324,000, respectively, for the years ended January 31, 2010, 2009 and 2008.

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TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1—BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-Based Compensation

        The Company accounts for stock-based compensation in accordance with the provisions of the ASC 718, Compensation—Stock Compensation. This guidance requires that stock-based compensation, which includes stock options and restricted stock, be accounted for at the fair value of the applicable equity instrument.

Business Combinations

        The Company accounts for business combinations in accordance with the provisions of ASC 805, Business Combinations. This guidance allows the acquirer to finalize the acquisition accounting during the measurement period, which may not exceed one year from the date of acquisition. During the measurement period the Company's accounting for the business combination transaction may be based on estimates due to various unknown factors present at the date of acquisition.

Segment Reporting

        The Company operates its business in two operating segments, the Agriculture segment and Construction segment, in accordance with the provisions of ASC 280, Segment Reporting. Information regarding these segments is summarized in Note 16.

Recent Accounting Guidance

        In January 2010, the FASB updated authoritative guidance on fair value measurements, codified in ASC 820, Fair Value Measurements and Disclosures. This guidance required additional disclosure of significant transfers in and out of Level 1 and Level 2 fair value measurements and activity in Level 3 fair value measurements. It also clarified existing disclosure requirements regarding level of disaggregation and valuation inputs and techniques. The guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure of the Level 3 activity, which is effective for interim and fiscal years beginning after December 15, 2010. The Company adopted these provisions on February 1, 2010, except for the Level 3 activity disclosures, which will be effective for the Company on February 1, 2011. The provisions of this guidance have not, and are not expected to, have a material effect on the Company's results of

        In June 2009, the FASB issued authoritative guidance on the FASB ASC and the hierarchy of generally accepted accounting principles, codified in ASC 105, Generally Accepted Accounting Principles. This guidance established the Codification as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, excluding guidance from the SEC, was superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification became nonauthoritative. The Codification does not change GAAP, but instead introduced a new structure that combined all authoritative standards into a comprehensive, topically organized online database. The Codification was effective for interim or annual periods ending after September 15, 2009, and impacted the Company's financial statement disclosures beginning with the quarter ending October 31, 2009 as all future references to authoritative accounting literature will be referenced in accordance with the Codification. There will be no changes to the content of the Company's consolidated financial statements or disclosures as a result of implementing the Codification.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1—BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

        In October 2009, the FASB issued authoritative guidance on revenue recognition, codified in ASC 605-25, Revenue Recognition. This guidance modifies the fair value requirements of revenue recognition on multiple element arrangements by allowing the use of the "best estimate of selling price" in addition to vendor specific objective evidence and third-party evidence for determining the selling price of a deliverable. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence, (b) third-party evidence, or (c) estimates. In addition, the guidance eliminates the residual method of allocation and significantly expands the disclosure requirements for such arrangements. This guidance is effective for fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company is in the process of determining the impact that this guidance will have on the Company's consolidated financial statements.

        In June 2009, the FASB issued authoritative guidance on the consolidation of variable interest entities ("VIE"), codified in ASC 810, Consolidation. This guidance eliminates the exemption for qualifying special-purpose entities, amends the approach companies use to identify the VIEs for which they are deemed to be the primary beneficiary and are required to consolidate, and requires additional disclosure of an entity's involvement with a VIE. The guidance requires companies to perform ongoing reassessments of whether it is the primary beneficiary of a VIE. This assessment no longer includes the quantitative-based assessment, and instead requires a qualitative assessment of whether a company has the power to direct the VIE's activities that most significantly impact the company's economic performance and whether the entity has the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. This guidance is effective for fiscal years beginning after November 15, 2009. The Company is in the process of determining the impact that this guidance will have on the Company's consolidated financial statements.

        In May 2009, the FASB issued authoritative guidance on subsequent events, codified in ASC 855, Subsequent Events. This guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company adopted the guidance as of July 31, 2009. Its adoption did not have a material effect on the Company's consolidated financial statements. This guidance was amended in February 2010 to require SEC filers to disclose subsequent events through the date the financial statements are issued and exclude SEC filers from the requirement to disclose the date through which subsequent events were evaluated. This guidance became effective immediately and was used in determining the disclosure requirements in Note 18—Subsequent Events included in this Form 10-K. Its adoption did not have a material impact on the Company's consolidated financial statements.

        In April 2009, the FASB issued authoritative guidance on the accounting and disclosure of assets acquired and liabilities assumed in a business combination that arise from contingencies, and subsequent accounting for these contingencies. This guidance was codified in ASC 805, Business Combinations. The Company adopted this guidance on February 1, 2010 and does not expect it to have a material effect on its consolidated financial statements based on the nature of the assets acquired and liabilities assumed in the Company's business combinations.

        In April 2009, the FASB issued authoritative guidance that required disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies, in addition to inclusion in annual financial statements. This guidance was codified in ASC 820, Fair Value

67

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1—BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Measurements and Disclosures. The Company adopted this guidance as of July 31, 2009. Its adoption did not have a material effect on the Company's consolidated financial statements.

        In February 2008, the FASB issued authoritative guidance on fair value measurements, now codified in ASC 820, Fair Value Measurements and Disclosures. This guidance permitted a one year deferral of the application of fair value measurements for all non-financial assets and non-financial liabilities, except those recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company adopted fair value measurements for non-financial assets and non-financial liabilities on February 1, 2009. Its adoption did not have a material effect on the Company's results of operations, financial position or cash flows.

        In December 2007, the FASB issued authoritative guidance on business combinations which provided additional guidance on improving the relevance, representational faithfulness, and comparability of the financial information that a reporting entity provides in its financial reports about a business combination and its effects. This guidance was codified in ASC 805, Business Combinations, and applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted this guidance effective February 1, 2009. Its adoption did not have a material effect on the Company's consolidated financial statements. Any acquisition made in fiscal 2010 and future periods were subject to this new accounting guidance.

        In December 2007, the FASB issued authoritative guidance on accounting and reporting for non-controlling interests in a subsidiary and for the deconsolidation of a subsidiary, codified in ASC 810, Consolidation. This guidance applied to all entities that prepare consolidated financial statements and have an outstanding noncontrolling interest in one or more subsidiaries. The Company adopted this guidance on February 1, 2009. Its adoption did not have a material effect on the Company's consolidated financial statements.

NOTE 2—RECEIVABLES

	January 31, 2010			January 31, 2009
	(in thousands)
Trade accounts	$	8,488		$	7,666
Finance receivables		7,941			7,262
Volume discounts		4,011			2,250
Warranty claims		1,836			1,766
Other		311			897
	$	22,587		$	19,841
Less allowance for doubtful accounts		(333	)		(214	)
	$	22,254		$	19,627

68

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3—INVENTORIES

	January 31, 2010		January 31, 2009
	(in thousands)
New equipment	$	174,193	$	132,502
Used equipment		127,884		68,333
Parts and attachments		42,611		37,314
Work in process		2,892		2,945
	$	347,580	$	241,094

        In addition to the above amounts, the Company has estimated that a portion of its parts inventory will not be sold in the next operating cycle. Accordingly, these balances have been classified as noncurrent assets.

NOTE 4—PROPERTY AND EQUIPMENT

	January 31, 2010			January 31, 2009
	(in thousands)
Rental fleet equipment	$	15,231		$	22,474
Machinery and equipment		11,703			9,129
Vehicles		15,544			13,310
Furniture and fixtures		10,401			6,224
Land, buildings, and leasehold improvements		12,248			5,965
	$	65,127		$	57,102
Less accumulated depreciation		(18,523	)		(11,833	)
	$	46,604		$	45,269

        Depreciation expense amounted to $7,879,000, $4,361,000 and $2,388,000, respectively, for the years ended January 31, 2010, 2009 and 2008.

NOTE 5—INTANGIBLE ASSETS AND GOODWILL

        The following is a summary of non-goodwill intangibles as of January 31, 2010 and 2009:

	January 31, 2010			January 31, 2009
	(in thousands)
Covenants not to compete	$	575		$	635
Less accumulated amortization		(280	)		(269	)
	$	295		$	366

69

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5—INTANGIBLE ASSETS AND GOODWILL (Continued)

        Changes in the carrying amount of goodwill during the years ended January 31, 2010 and 2009 are summarized as follows:

		Agriculture		Construction			Total
		(in thousands)
Balance, January 31, 2008		$	8,271	$	—		$	8,271
	Arising in completed business combinations		1,813		2,340			4,153
	Adjustments to business combinations completed in prior year		40		—			40
	Impairment losses		—		—			—
Balance, January 31, 2009			10,124		2,340			12,464
	Arising in completed business combinations		1,464		—			1,464
	Adjustments to business combinations completed in prior year		1,113		(279	)		834
	Impairment losses		—		—			—
Balance, January 31, 2010		$	12,701	$	2,061		$	14,762

NOTE 6—LINES OF CREDIT/FLOORPLAN NOTES PAYABLE

Operating Line of Credit

        On July 15, 2009, the Company entered into a Loan Agreement (the "Loan Agreement") with Bremer Bank National Association ("Bremer Bank") which provides for a $25.0 million revolving operating line of credit ("Revolving Loan") and a $15.0 million term loan ("Term Loan"). The Revolving Loan may be used to fund short term working capital requirements of the Company, and replaces the Company's previous $25.0 million operating line of credit with Bremer Bank. The Revolving Loan has a variable interest rate of 0.25% per annum below a Bremer Bank reference rate (subject to a minimum interest rate floor of 4.5%) on outstanding balances, a 0.5% non-usage fee on the average monthly unused amount, requires monthly payments of accrued interest commencing August 1, 2009, and has a maturity date of July 14, 2010. Advances under the Loan Agreement are secured by substantially all of the Company's assets. See details of the Term Loan in the long-term debt schedule in Note 7.

        The Company had no amount outstanding on the Revolving Loan at January 31, 2010. The Loan Agreement contains certain financial covenants which impose minimum levels of current ratio, debt service coverage, and inventory turnover ratio and a maximum level of debt to tangible net worth ratio. As of January 31, 2010, the Company was in compliance with all of these financial covenants.

Floorplan Lines of Credit

        The Company has discretionary floorplan lines of credit for equipment purchases totaling approximately $365.0 million with various lending institutions, including a $300.0 million Wholesale Floorplan Credit Facility with CNH Capital America LLC ("CNH" or "CNH Capital") and $50.0 million with GE Commercial Distribution Finance ("GE"). The available borrowings under the CNH credit facility are reduced by outstanding floorplan notes payable, rental fleet financing and other acquisition-related financing arrangements with CNH. During fiscal 2010, interest rates for new

70

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6—LINES OF CREDIT/FLOORPLAN NOTES PAYABLE (Continued)

borrowings under the CNH Capital floorplan line of credit ranged from the prime rate plus 0.3% to the prime rate plus 6% per annum, subject to any interest-free periods offered by CNH. Beginning in February 2010, interest rates will be equal to the prime rate plus 4% on new borrowings, subject to any interest-free periods offered by CNH. The CNH Capital credit facility automatically renews on August 31 of each year through August 31, 2012, unless earlier terminated by either party. Under covenants of the CNH credit facility, the Company has agreed, among other things, to maintain various financial ratio levels and to submit certain financial information. It also contains various restrictive covenants that require prior consent of CNH Capital if the Company desires to engage in any acquisition of, consolidation or merger with any other business entity in which the Company is not the surviving company; create subsidiaries; move any collateral outside of the U.S.; or sell, rent, lease or otherwise dispose or transfer any of the collateral, other than in the ordinary course of business. CNH's consent is also required for the acquisition of any CNH dealership. In addition, the CNH Capital credit facility restricts the Company's ability to incur any liens upon any substantial part of its assets.

        The GE credit facility may be used to purchase new and used inventory from vendors approved by GE, or to finance or refinance new or used inventory. The interest rate on borrowings under the GE floorplan line of credit is equal to the three-month LIBOR rate plus 5.5%. The GE credit facility may be terminated by either party on 60 days notice. Under covenants of the GE credit facility, the Company has agreed, among other things, to maintain various financial ratio levels and to submit certain financial information. It also contains various restrictive covenants regarding related party transactions outside of the ordinary course of business and requires GE's prior consent if the Company desires to engage in any acquisition meeting certain financial thresholds; make any investments outside of the ordinary course of business; or have a change in control, as defined by the agreement.

        Floorplan notes payable relating to these credit facilities totaled approximately $245.3 million of the total floorplan notes payable balance of $249.9 million outstanding as of January 31, 2010 and $153.8 million of the total floorplan notes payable balance of $166.5 million outstanding as of January 31, 2009. As of January 31, 2010, the Company had approximately $106.9 million in available borrowings remaining under these lines of credit. These floorplan notes carried various interest rates primarily ranging from 3.25 to 9.25% as of January 31, 2010 and 2009, subject to interest-free periods offered by CNH, and are secured by the related inventory. Repayment terms vary by individual notes, but generally payments are made from sales proceeds or rental revenue from the related inventories. As of January 31, 2010, the Company was in compliance with all floorplan financial covenants.

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TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 7—LONG-TERM DEBT

        The following is a summary of long-term debt as of January 31, 2010 and 2009:

	January 31, 2010			January 31, 2009
	(in thousands)
Variable rate notes payable to CNH, variable rates at prime plus 0.3% to prime plus 6%, varying monthly installment payments maturing August 2012, secured by rental fleet equipment	$	9,591		$	15,048
Note payable to Bremer Bank, 5.9%, due in monthly installments of $289,300, matures July 2014, secured by all assets of the Company		13,663			—
Fixed rate notes payable to finance companies, interest rates primarily ranging from 5.5% to 8.7%, due in monthly installments including interest and various maturity dates through May 2016, secured by vehicles		2,870			1,494
Fixed rate notes to various finance companies and other parties, interest rates ranging from 4.9% to 10.0%, due in monthly installments including interest and various maturity dates through January 2018, secured by fixed assets		1,374			1,129
Variable rate notes payable to CNH, variable rates at prime to prime plus 4.0%, quarterly installment payments of $31,365 with a balloon payment due on November 3, 2010, secured by all assets of the Company		596			2,404
Note payable to AgCountry, due February 2010, variable interest at the LIBOR rate plus 4.0%, unsecured		780			—
Other, variable interest rates at 6.5%, various maturity dates through January 2015		196			426
Notes paid in full during the year ended January 31, 2010		—			1,932
		29,070			22,433
Less current maturities		(7,218	)		(7,623	)
	$	21,852		$	14,810

        Long-term debt maturities are as follows:

12 Months Ending January 31,	Amount
	(in thousands)
2011	$	7,218
2012		6,110
2013		5,789
2014		7,421
2015		2,018
Thereafter		514
	$	29,070

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TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 7—LONG-TERM DEBT (Continued)

        As of January 31, 2009, certain liabilities totaling $11,624,000 were included in long-term debt secured by rental fleet as the Company had the intent and ability to refinance the amounts due within the next twelve months on a long-term basis, in accordance with the applicable accounting guidance regarding the classification of short-term obligations expected to be refinanced in place at that date. Subsequent to January 31, 2009 the Company refinanced these amounts with CNH at a rate of prime plus 0.3% and payments over the next five years. Amounts due on or before January 31, 2009 were included in current maturities of long-term debt as of January 31, 2009.

NOTE 8—ACCRUED EXPENSES

	January 31, 2010		January 31, 2009
	(in thousands)
Interest	$	661	$	23
Compensation		6,983		6,844
Sales and payroll taxes		938		667
Health insurance claims liability		527		294
Other		761		480
	$	9,870	$	8,308

NOTE 9—OPERATING LEASES AND RELATED PARTY TRANSACTIONS

        As of January 31, 2010 the Company leases buildings pursuant to 34 different operating lease agreements with monthly rentals of $357,000 at January 31, 2010 from Dealer Sites, LLC ("Dealer Sites"), an entity in which a minority position is owned by David Meyer, the Company's Chairman and Chief Executive Officer, Tony Christianson, one of the Company's directors, Peter Christianson, the Company's President and Chief Financial Officer, and other Meyer and Christianson family members. Rent expense for leases with Dealer Sites totaled $3,890,000, $2,298,000 and $1,823,000 for the years ended January 31, 2010, 2009 and 2008, respectively. One lease expires in February 2010 and the other leases expire on various dates between May 2012 and April 2019. The leases provide that the lessee pay all property taxes, utilities, insurance and all expenses necessary for the general upkeep of the respective buildings.

        Rent expense for leases with related parties other than Dealer Sites totaled $122,000, $436,000, and $590,000 for the years ended January 31, 2010, 2009 and 2008, respectively. During fiscal year 2010, the Company leased two buildings pursuant to operating leases from C.I. Farm Power, Inc., a company affiliated with Peter Christianson, and Arthur Mercantile Company, a company for which James L. Williams, one of the Company's directors, is the President and Treasurer. The lease with C.I. Farm Power, Inc. expires in July 2013 and the lease with Arthur Mercantile Company will expire in May 2019. During fiscal years 2009 and 2008 the Company leased various buildings on operating leases from Meyer Family Limited Partnership, Padre Partnership, and Landco LLC, companies also affiliated with David Meyer and Peter Christianson.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9—OPERATING LEASES AND RELATED PARTY TRANSACTIONS (Continued)

        The Company also leases 44 additional buildings under operating lease agreements with unrelated parties and leases office equipment under various operating lease agreements. The leases expire at various dates through January 2024. Rent and lease expense under all operating leases totaled $7,835,000, $4,870,000 and $3,232,000 during the years ended January 31, 2010, 2009 and 2008, respectively. Certain leases have fluctuating minimum lease payments. The Company recognizes lease expense on a straight-line basis over the expected term of the lease.

        Approximate minimum future lease payments are as follows:

Years ending January 31,	Amount
	(in thousands)
2011	$	7,798
2012		7,619
2013		6,958
2014		6,471
2015		6,385
Thereafter		26,276
	$	61,507

        During the fiscal year ended January 31, 2008 the Company paid Cherry Tree Securities, LLC, an entity affiliated with Tony Christianson, a director, a fee of $125,000 related to successful completion of the initial public offering.

NOTE 10—INCOME TAXES

        Net deferred tax assets and liabilities consist of the following components as of January 31, 2010 and 2009:

		2010			2009
		(in thousands)
Current deferred tax assets:
	Inventory allowances	$	1,140		$	803
	Other liabilities		636			336
	Receivables		133			84
	Stock-based compensation		357			203
		$	2,266		$	1,426
Non-current deferred tax assets (liabilities):
	Property and equipment	$	(6,161	)	$	(3,546	)
	Intangibles		(355	)		(117	)
	Other liabilities		160			160
		$	(6,356	)	$	(3,503	)

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TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 10—INCOME TAXES (Continued)

        The provision for income taxes charged to income for the years ended January 31, 2010, 2009 and 2008 consists of the following:

		2010		2009		2008
		(in thousands)
Currently payable
	Federal	$	7,652	$	9,202	$	3,260
	State		1,753		2,260		760
Deferred			1,850		968		90
		$	11,255	$	12,430	$	4,110

        The reconciliation of the statutory federal income tax rate to the Company's effective rate is as follows:

	2010			2009			2008
U.S. Statutory Rate		35.0	%		35.0	%		35.0	%
State taxes on income net of federal tax benefit		5.1	%		5.2	%		5.3	%
Unrecognized tax benefits		—	%		0.1	%		4.5	%
All other, net		1.6	%		0.4	%		(0.7	)%
		41.7	%		40.7	%		44.1	%

Uncertain Tax Positions

        The Company identified an uncertain tax position and recorded an unrecognized tax benefit during the year ending January 31, 2008. This unrecognized tax benefit was included in other long term liabilities on the Company's Consolidated Balance Sheet. In August 2009, the Internal Revenue Service ("IRS") completed its audit of the Company, including the uncertain tax position taken during fiscal 2008. All amounts owed to state and federal taxing authorities were paid prior to January 31, 2010.

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TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 10—INCOME TAXES (Continued)

        A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:

		(in thousands)
Balance at January 31, 2008		$	420
Additions for tax positions related to current year			—
Additions/reductions for tax positions taken in prior years
	Accrued interest expense		26
Reductions for tax positions as a result of:
	Settlements		—
	Lapse of statute of limitations		—
Balance at January 31, 2009		$	446
Additions for tax positions related to current year			—
Additions/reductions for tax positions taken in prior years
	Accrued interest expense		9
	Reduction due to final IRS settlement		(14	)
Reductions for tax positions as a result of:
	Settlements		(441	)
	Lapse of statute of limitations		—
Balance at January 31, 2010		$	—

        The Company files income tax returns in the U.S. federal jurisdiction and various states and is no longer subject to U.S. federal and state income tax examinations by tax authorities for fiscal years ending on or prior to January 31, 2006.

NOTE 11—CAPITAL STRUCTURE

        The Company's certificate of incorporation provides the Company with the authority to issue 30,000,000 shares of $0.00001 par value stock, consisting of 25,000,000 shares of common stock and 5,000,000 shares classified as undesignated. In conjunction with its initial public offering, in December 2007 the Company exchanged or converted all outstanding convertible subordinated debentures of $6,350,000 into 2,308,648 shares of common stock and retired $9,442,000 in subordinated debentures. As a result of these transactions, the Company recognized debt retirement costs of $3,824,000. The debt retirement costs consisted of $2,407,000 of conversion costs, $1,065,000 of repayment penalties and $352,000 of unamortized debt issuance costs.

Series A and B Preferred Stock

        Prior to conversion into common stock in December 2007, holders of Series A and Series B Preferred shares were entitled to annual dividends at the rate of $0.21 and $0.245 per share, respectively. In December 2007 a dividend was declared and all accumulated dividends were paid on Series A and Series B Preferred stock.

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TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12—STOCK-BASED COMPENSATION AND STOCK WARRANTS

Stock Warrants

        The following table summarizes stock warrant activity for the year ended January 31, 2010:

(number of warrants and aggregate intrinsic value in thousands)

		Number of Warrants			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (Years)
Outstanding and exercisable at January 31, 2009			123		$	3.45
	Granted		—			—
	Exercised		(40	)		3.50
	Forfeited		—			—
Outstanding and exercisable at January 31, 2010			83		$	3.43	$	629		3.1

        The aggregate intrinsic value of stock warrants exercised was $336,000 and $95,000 for the years ended January 31, 2010 and 2009, respectively. There were no stock warrants exercised in the year ended January 31, 2008.

        Stock warrants were valued using the Black-Scholes option pricing model. Assumptions used to value the warrants were similar to those used in valuing the stock options as described below. Warrants issued in conjunction with a debt offering were valued and classified as Additional Paid-In Capital in accordance with applicable authoritative guidance in effect at the time of the transaction.

Stock Award Plans

        The Company implemented the 2005 Equity Incentive Plan, a stock-based compensation plan (the "Plan"), during the year ended January 31, 2006. In August 2007, the Plan was amended to increase the number of shares available under the Plan from 500,000 to 1,000,000 shares. The purpose of the Plan is to provide incentive compensation to participants for services that have been or will be performed for continuing as employees or members of the Board of Directors of the Company. Under the Plan, the Company may grant incentive stock options, non-qualified stock options and restricted stock for up to 1,000,000 shares of common stock under all forms of awards. The Company accounts for stock options and restricted stock using the fair value method under ASC 718, Compensation—Stock Compensation. Shares issued for stock-based awards may be either authorized but unissued shares, or shares of treasury stock acquired in the open market. The Company has 168,330 shares authorized and available for future equity awards under the Plan as of January 31, 2010.

        Compensation cost charged to operations under the Plan was $962,000, $692,000 and $141,000 for the years ended January 31, 2010, 2009 and 2008, respectively. The income tax benefit recognized from all stock-based compensation arrangements was $540,000, $265,000, and $51,000 for the years ended January 31, 2010, 2009 and 2008, respectively. The income tax benefit realized from all stock-based compensation arrangements was $55,000, $138,000 and $14,000 for the years ended January 31, 2010, 2009 and 2008, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12—STOCK-BASED COMPENSATION AND STOCK WARRANTS (Continued)

Stock Options

        The Company grants stock options as part of its long-term incentive compensation to employees and members of the Board of Directors of the Company. Stock options vest over a period of four to six years for employees and immediately for members of the Board of Directors and have contractual terms of five to ten years.

        The following table summarizes stock option activity for the year ended January 31, 2010:

(number of stock options and aggregate intrinsic value in thousands)

		Number of Options			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (Years)
Outstanding at January 31, 2009			646		$	10.91
	Granted		5			11.16
	Exercised		(10	)		5.86
	Forfeited		(10	)		16.40
Outstanding at January 31, 2010			631		$	10.90	$	1,603		7.0
Exercisable at January 31, 2010			243		$	8.75	$	806		6.5

        The aggregate intrinsic value of stock options exercised was $59,000 and $152,000 for the years ended January 31, 2010 and 2009, respectively. There were no options exercised during the years ended January 31, 2008. The weighted-average grant date fair value of stock options granted was $11.16, $8.41 and $2.94 for the years ended January 31, 2010, 2009, and 2008, respectively.

        The fair value of each stock option granted is estimated using the Black-Scholes pricing model. The following assumptions were made in estimating fair value for stock options granted during the following fiscal years:

Assumption	2010			2009
Dividend yield		0	%		0	%
Risk-free interest rate		3.1	%		2.1 - 3.6	%
Expected life of options		6.75 years			6.75 - 8 years
Expected volatility		39	%		34 - 42	%

        Prior to the Company's initial public offering the expected volatility was based upon management's best estimate of the value of the shares based upon the Company's internal market. Due to the limited historical stock price data available since its initial public offering, the Company currently estimates its volatility using a blended rate based on quoted market prices of its stock and other similar companies determined by Company management. The expected life of options is estimated consistent with the "simplified" method identified in Staff Accounting Bulletin ("SAB") No. 107, the use of which was extended by SAB 110. The simplified method calculates the expected term as the average of the vesting and contractual terms of the award. The risk-free interest rate assumption is based on observed interest rates appropriate for the term of the options. The Company uses historical data to estimate pre-vesting

78

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12—STOCK-BASED COMPENSATION AND STOCK WARRANTS (Continued)

option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. The Company recognizes the fair value of stock options as compensation expense ratably over the vesting period of the award.

        The following is a summary of information related to options outstanding and exercisable at January 31, 2010:

(number of options in thousands)

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$4.00 - 4.50		118		6.4	$	4.46		71		6.4	$	4.43
7.50 - 10.20		344		6.4		8.62		144		6.2		8.66
11.15 - 14.69		35		8.8		11.84		6		8.8		11.84
21.21 - 26.84		134		8.5		22.24		22		8.5		22.24
		631		7.0		10.90		243		6.5		8.75

        As of January 31, 2010 there was $1,575,000 of unrecognized compensation cost on non-vested stock options that is expected to be recognized over a weighted-average period of 3.4 years.

Restricted Stock

        The Company grants restricted stock awards in addition to stock options as part of its long-term incentive compensation to employees and members of the Board of Directors of the Company. The fair value of the restricted stock is determined based on the closing market price of the Company's stock on the date of grant. The restricted stock vests over a period of three to six years for employees and over one year for members of the Board of Directors. The Company recognizes compensation expense ratably over the vesting period of the restricted stock.

        The following table summarizes restricted stock activity for the year ended January 31, 2010:

(number of restricted shares in thousands)

		Shares			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term
Nonvested at January 31, 2009			92		$	10.18		2.1
	Granted		88			12.89
	Forfeited		(6	)		11.06
	Vested		(11	)		12.75
Nonvested at January 31, 2010			163		$	11.45		2.5

79

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12—STOCK-BASED COMPENSATION AND STOCK WARRANTS (Continued)

        The weighted-average grant date fair value of restricted stock granted was $12.89, $17.45 and $8.48 during the years ended January 31, 2010, 2009 and 2008, respectively. The total fair value of restricted stock vested was $139,000, $26,000, and $7,000 during the years ended January 31, 2010, 2009 and 2008, respectively. As of January 31, 2010, there was $583,000 of unrecognized compensation cost on non-vested restricted stock that is expected to be recognized over a weighted-average period of 2.5 years.

NOTE 13—EMPLOYEE BENEFIT PLANS

        The Company has a 401(k) profit-sharing plan for full-time employees at least 19 years of age. The Company makes matching contributions of 50% of qualifying employee elective contributions to the plan. The Company's matching contributions to the plan of $1,528,000, $1,154,000 and $699,000 were charged to expense for the years ended January 31, 2010, 2009 and 2008, respectively. In addition, the Company may make a discretionary contribution to the plan as determined by the Board of Directors, with a maximum amount equal to the amount allowed under the Internal Revenue Service regulations. The Company did not make any discretionary contributions to the plan for the years ended January 31, 2010, 2009 and 2008.

NOTE 14—BUSINESS COMBINATIONS

        The Company continued to implement its strategy of consolidating dealerships in desired market areas. Below is a summary of the acquisitions completed for the years ended January 31, 2010, 2009 and 2008. In certain of the business combination transactions the Company recognized goodwill. Factors contributing to the recognition of goodwill include an evaluation of enterprise value, historical financial performance, estimated industry potential within the market and the market territory relationship to other existing and future planned Company locations. Pro forma results are not presented as the acquisitions are not considered material, individually or in aggregate, to the Company. The results of operations have been included in the Company's consolidated results of operations since the date of each respective business combination.

Fiscal 2010

Winger Implement, Inc.

        On May 1, 2009, the Company acquired 100% of the outstanding stock of Winger Implement, Inc. and subsequently merged the acquired entity into the Company. The acquired entity consisted of one agricultural equipment store located in Winger, Minnesota and expands the Company's presence in the Red River Valley. The acquisition-date fair value of the total consideration transferred for the dealership was $1,450,000. The accounting for this business combination is based on certain provisional estimates as of January 31, 2010. The Company will finalize the purchase accounting within the measurement period, which will not exceed one year from the date of acquisition.

Arthur Mercantile Company

        On May 28, 2009, the Company acquired certain assets of Arthur Mercantile Company. The acquired entity consisted of one agricultural equipment store located in Arthur, North Dakota and expands the Company's presence in the Red River Valley. The acquisition-date fair value of the total consideration transferred for the dealership was $832,000. James L. Williams, Arthur Mercantile

80

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14—BUSINESS COMBINATIONS (Continued)

Company's President and Treasurer, is a Titan Machinery director. The accounting for this business combination is based on certain provisional estimates as of January 31, 2010. The Company will finalize the purchase accounting within the measurement period, which will not exceed one year from the date of acquisition.

Valley Equipment, Inc.

        On June 30, 2009, the Company acquired certain assets of Valley Equipment, Inc. in Mayville, North Dakota. The acquired entity consisted of one agricultural equipment store and expands the Company's presence in the Red River Valley. The acquisition-date fair value of the total consideration transferred for the dealership was $753,000. James L. Williams, Valley Equipment, Inc.'s President, is a Titan Machinery director. The accounting for this business combination is based on certain provisional estimates as of January 31, 2010. The Company will finalize the purchase accounting within the measurement period, which will not exceed one year from the date of acquisition.

Lickness Bros. Implement Co.

        On August 14, 2009, the Company acquired certain assets of Lickness Bros. Implement Co. The acquired entity consisted of one agricultural equipment store located in Britton, South Dakota and is contiguous to existing markets in Northeast South Dakota and Southeast North Dakota. The acquisition-date fair value of the total consideration transferred for the dealership was $210,000. The accounting for this business combination is based on certain provisional estimates as of January 31, 2010. The Company will finalize the purchase accounting within the measurement period, which will not exceed one year from the date of acquisition.

Oskaloosa Implement Co.

        On November 2, 2009, the Company acquired certain assets of Oskaloosa Implement Co. The acquired entity consisted of two agricultural equipment stores located in Pella and Oskaloosa, Iowa and expands the Company's presence in Iowa. The acquisition-date fair value of the total consideration transferred for the dealership was $2,559,000. The accounting for this business combination is based on certain provisional estimates as of January 31, 2010. The Company will finalize the purchase accounting within the measurement period, which will not exceed one year from the date of acquisition.

Valley Farm Equipment, Inc.

        On November 2, 2009, the Company acquired 100% of the outstanding stock of Valley Farm Equipment, Inc. and subsequently merged the acquired entity into the Company. The acquired entity consisted of one agricultural equipment store located in Milbank, South Dakota and is strategically located in the Whetstone Valley in Eastern South Dakota, between Titan Machinery's existing dealerships in Graceville, Minnesota, Watertown, South Dakota, and Aberdeen, South Dakota. The acquisition-date fair value of the total consideration transferred for the dealership was $1,860,000. The accounting for this business combination is based on certain provisional estimates as of January 31, 2010. The Company will finalize the purchase accounting within the measurement period, which will not exceed one year from the date of acquisition.

        During the year ended January 31, 2010 adjustments were recorded to finalize the purchase price allocations of prior acquisitions and for additional consideration of $1,063,000 earned and paid under

81

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14—BUSINESS COMBINATIONS (Continued)

agreements disclosed below. These adjustments and additional consideration resulted in a net increase in goodwill of $834,000.

Fiscal 2009

Western Plains Machinery Co. and WP Rentals LLC

        On December 31, 2008, the Company acquired certain assets of WP Rentals LLC and 100% of the outstanding stock of Western Plains Machinery Co., and subsequently merged the acquired entity into the Company. WP Rentals LLC consisted of three construction equipment rental stores located in Billings and Belgrade, Montana and Cheyenne, Wyoming. Western Plains Machinery Co. consisted of six construction equipment stores in Billings, Great Falls, Missoula, and Columbia Falls, Montana and Casper and Gillette, Wyoming. These nine locations expand the number of Titan Machinery locations that offer construction equipment and are contiguous to existing markets in western South Dakota and North Dakota. The total consideration for the dealerships included cash payments of $7,653,000.

Anderson Power and Equipment, Inc.

        On December 22, 2008, the Company acquired 100% of the outstanding stock of Anderson Power and Equipment, Inc. and subsequently merged the acquired entity into the Company. The acquired entity consisted of an agricultural equipment store located in Thief River Falls, Minnesota and is contiguous to existing markets in Western Minnesota and Eastern North Dakota. The total cash purchase price for the dealership was $2,179,000.

Pioneer Garage, Inc.

        On October 1, 2008, the Company acquired certain assets of Pioneer Garage, Inc. The acquired entity consisted of three agricultural equipment stores located in Pierre, Highmore, and Miller, South Dakota. These stores are contiguous to existing markets in South Dakota. The total cash purchase price for the dealership was $5,481,000.

Wolf's Farm Equipment, Inc.

        On September 12, 2008, the Company acquired certain assets of Wolf's Farm Equipment, Inc. The dealership is located in Kintyre, North Dakota and is contiguous to existing markets. The total cash purchase price for the dealership was $586,000.

Mid-Land Equipment Company, L.C.

        On May 28, 2008, the Company acquired certain assets of Mid-Land Equipment Company, L.C. The acquired entity consisted of six construction equipment stores located in Des Moines, Davenport, Clear Lake and Cedar Rapids, Iowa, and Omaha and Lincoln, Nebraska. These stores are contiguous to existing markets in South Dakota and overlay the existing agricultural locations in Iowa. The total cash purchase price for the dealership was $14,389,000.

Quad County Implement, Inc.

        On May 1, 2008, the Company acquired 100% of the outstanding stock of Quad County Implement, Inc. and subsequently merged the acquired entity into the Company. The dealership is

82

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14—BUSINESS COMBINATIONS (Continued)

located in Blairstown, Iowa and is contiguous to existing markets. The acquisition increases the Company's market share in central Iowa. The total cash purchase price for the dealership was $2,000,000.

Ceres Equipment, Inc.

        On February 1, 2008, the Company acquired certain assets of Ceres Equipment, Inc. The dealership is located in Roseau, Minnesota and is contiguous to existing markets. The acquisition increases the Company's market share in the northwest area of Minnesota. The total cash purchase price for the dealership was $3,940,000.

Fiscal 2008

Avoca Operations, Inc. and Greenfield Operations, Inc.

        On January 2, 2008, the Company acquired 100% of the outstanding stock of Avoca Operations, Inc. and Greenfield Operations, Inc. in a related transaction and subsequently merged the acquired entities into the Company.. The dealerships are located in Avoca and Greenfield, Iowa, and are contiguous to existing markets. The total cash purchase price was $3,784,000.

Reiten and Young International, Inc.

        On December 1, 2007, the Company acquired 100% of the outstanding stock of Reiten and Young International, Inc. and subsequently merged the acquired entity into the Company. The dealership is located in Grand Forks, North Dakota, and is contiguous to existing markets. The purchase price of the dealership was $2,000,000 in Company common stock.

Twin City Implement, Inc.

        On November 13, 2007, the Company acquired the assets of Twin City Implement, Inc. The dealership is located in Mandan, North Dakota and is contiguous to existing markets. The acquisition increases the Company's market share in the west/central part of North Dakota. The total cash purchase price was $1,891,000.

Red Power International, Inc.

        On August 1, 2007, the Company acquired Red Power International, Inc.. The dealerships are located in Ada and Crookston, Minnesota and contiguous to existing markets. The acquisition expands the Company's market share in the state. The Company acquired all of the common stock of Red Power International, Inc. in exchange for 323,533 shares of Series D convertible preferred stock issued by the Company and valued at $2,426,000 and subsequently merged the acquired entity into the Company.. The Company's Series D convertible preferred stock was automatically converted into common stock of the Company in connection with the Company's initial public offering.

83

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14—BUSINESS COMBINATIONS (Continued)

Aberdeen Equipment Co., Huron Equipment Co. and Redfield Equipment Co.

        On April 13, 2007, the Company acquired the assets of the related entities of Aberdeen Equipment Co., Huron Equipment Co. and Redfield Equipment Co. The dealerships are located in South Dakota and contiguous to existing markets. The acquisition expands the Company's market share in the state. The total cash purchase price was $4,096,000. Under the purchase agreement additional goodwill could be earned by the acquiree if certain profit goals are met for fiscal years through 2012. Additional consideration of $1,063,000 was earned and paid under this agreement during the year ended January 31, 2010.

Richland County Implement, Inc.

        The Company acquired the assets of Richland County Implement, Inc. in February 2007. The total cash purchase price was $1,031,000. Through the acquisition, the Company increased its market share in existing markets in the Wahpeton, North Dakota area and gained control of the New Holland dealership.

        The allocations of the purchase prices in the above business combinations are presented in the following table:

	January 31, 2010			January 31, 2009		January 31, 2008
	(in thousands)
Cash	$	315		$	54	$	699
Receivables		558			4,905		2,638
Inventories		15,189			42,594		32,330
Deferred income taxes		93			63		—
Property and equipment		1,462			22,255		2,936
Intangible assets		—			250		—
Other assets		—			89		56
Goodwill		2,298			4,193		4,535
	$	19,915		$	74,403	$	43,194
Accounts payable	$	(149	)	$	3,367	$	3,987
Floorplan notes payable		8,765			24,608		21,867
Customer deposits		286			392		—
Accrued expenses		205			290		343
Income taxes payable		(51	)		1,100		176
Long-term debt		1,877			8,084		1,000
Deferred income taxes		256			334		593
	$	11,189		$	38,175	$	27,966
Cash consideration		7,581			35,575		10,802
Non-cash consideration: other long-term liabilities		1,145			653		4,426
Total consideration	$	8,726		$	36,228	$	15,228
Goodwill related to the Agriculture operating segment	$	2,577			1,853		4,535
Goodwill related to the Construction operating segment	$	(279	)		2,340		—

84

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14—BUSINESS COMBINATIONS (Continued)

        Goodwill of $2,011,000, $3,730,000 and $3,100,000 recorded in the acquisition transactions during the years ended January 31, 2010, 2009 and 2008, respectively, is expected to be deductible for tax purposes.

NOTE 15—FAIR VALUE OF FINANCIAL INSTRUMENTS

        The fair value of a financial instrument is generally defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation sale. Quoted market prices are generally not available for the Company's financial instruments. Accordingly, fair values are based on judgments regarding anticipated cash flows, future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates involve uncertainties and matters of judgment, and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. As explained in Note 1, actual results could differ from the estimates.

        The carrying amount of cash, receivables, payables, short-term debt and other current liabilities approximates fair value because of the short maturity and/or frequent repricing of those instruments. Based upon current borrowing rates with similar maturities, the carrying value of the long-term debt approximates the fair value as of January 31, 2010 and 2009.

NOTE 16—SEGMENT INFORMATION AND OPERATING RESULTS

        The Company owns and operates a network of full service agricultural and construction equipment stores in the United States. The Company recently re-evaluated its segment reporting in accordance with ASC 280, Segment Reporting and realigned its reporting segments to better reflect its changing business mix, growth strategies and its internal performance reporting to the Company's chief operating decision maker in light of the significance of the Company's construction equipment operations. As a result of this change, the Company is now reporting results in two segments, Agriculture and Construction, rather than a single reporting segment. The Company's two reportable segments each offer different products and the operating results for each segment are reported separately to the Company's senior management to make decisions regarding the allocation of resources, to assess the Company's operating performance and to make strategic decisions.

        The Company's Agriculture segment sells, services, and rents machinery, and related parts and attachments, for uses ranging from large-scale farming to home and garden use. This segment also includes ancillary sales and services related to agricultural activities and products such as equipment transportation, Global Positioning System ("GPS") signal subscriptions, hardware merchandise and finance and insurance products.

        The Company's Construction segment sells, services, and rents machinery, and related parts and attachments, for uses ranging from heavy construction to light industrial machinery use. This segment also includes ancillary sales and services related to construction activities such as equipment transportation, GPS signal subscriptions and finance and insurance products.

        Certain financial information for each of the Company's business segments is set forth below. Revenues, income before income tax and total assets at the segment level are reported before eliminations. The Company retains various unallocated income/(expense) items and assets at the general corporate level, which the Company refers to as "Shared Resources" in the table below. Shared

85

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 16—SEGMENT INFORMATION AND OPERATING RESULTS (Continued)

Resource assets primarily consist of cash and property and equipment. Intersegment revenues are immaterial. For information regarding goodwill by segment, see Note 5.

	Fiscal 2010			Fiscal 2009			Fiscal 2008
	(in thousands)
Revenues
Agriculture	$	751,258		$	624,035		$	394,972
Construction		116,361			88,032			52,175
Segment revenues		867,619			712,067			447,147
Eliminations		(28,838	)		(21,630	)		(14,176	)
Total	$	838,781		$	690,437		$	432,971
Income (Loss) Before Income Taxes
Agriculture	$	36,133		$	32,023		$	15,326
Construction		(6,837	)		604			233
Segment income (loss) before income taxes		29,296			32,627			15,559
Shared Resources		(2,120	)		(1,678	)		(6,049	)
Eliminations		(184	)		(444	)		(187	)
Income before income taxes	$	26,992		$	30,505		$	9,323
Interest Income
Agriculture	$	94		$	49		$	77
Construction		74			11			22
Segment interest income		168			60			99
Shared Resources		169			1,038			318
Total	$	337		$	1,098		$	417
Interest Expense
Agriculture	$	4,471		$	5,018		$	4,609
Construction		2,488			1,669			1,584
Segment interest expense		6,959			6,687			6,193
Shared Resources		(11	)		(2,718	)		99
Total	$	6,948		$	3,969		$	6,292
Depreciation and Amortization
Agriculture	$	3,416		$	2,494		$	1,801
Construction		3,793			1,510			572
Segment depreciation and amortization		7,209			4,004			2,373
Shared Resources		741			579			142
Total	$	7,950		$	4,583		$	2,515

86

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 16—SEGMENT INFORMATION AND OPERATING RESULTS (Continued)

	Fiscal 2010			Fiscal 2009			Fiscal 2008
	(in thousands)
Capital Expenditures
Agriculture	$	6,567		$	4,659		$	5,330
Construction		2,917			770			475
Segment capital expenditures		9,484			5,429			5,805
Shared Resources		2,910			1,799			483
Total	$	12,394		$	7,228		$	6,288
Total Assets
Agriculture	$	350,086		$	252,599		$	158,404
Construction		87,910			87,317			31,208
Segment assets		437,996			339,916			189,612
Shared Resources		77,631			70,963			49,944
Eliminations		(815	)		(631	)		(187	)
Total	$	514,812		$	410,248		$	239,369

NOTE 17—SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

        The following reflects selected quarterly financial information for fiscal years 2010 and 2009.

(in thousands, except per share data)

	Revenue		Gross Profit		Net Income		Earnings per Share-Basic		Earnings per Share-Diluted
2010
First quarter	$	166,301	$	28,516	$	1,790	$	0.10	$	0.10
Second quarter		193,192		36,008		4,851		0.28		0.27
Third quarter		227,018		39,583		5,733		0.33		0.32
Fourth quarter		252,270		36,988		3,363		0.19		0.19
2009
First quarter	$	152,582	$	24,599	$	3,387	$	0.25	$	0.24
Second quarter		134,905		25,429		3,333		0.20		0.19
Third quarter		213,960		37,346		8,185		0.47		0.45
Fourth quarter		188,990		32,495		3,170		0.18		0.18

87

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 18—SUBSEQUENT EVENTS

        On April 14, 2010, the Company entered into a Purchase Agreement to acquire certain assets of Hubbard Implement, Inc. This entity consists of one agricultural dealership in Iowa Falls, Iowa and is contiguous to existing markets. We expect the closing date to be on or around June 1, 2010.

        As part of the Company's Construction Profit Improvement Plan, in April 2010, the Company decided to close its Construction store in Columbia Falls, Montana. The Company plans to transfer the majority of the assets and related floorplan notes payable and long-term debt to other stores, and will account for all exit costs related to this closure in accordance with ASC 420, Exit or Disposal Cost Obligations. We expect the primary costs to relate to terminating our lease agreement, which has monthly minimum lease payments of $10,980 and expires on February 1, 2015. The Company will record a liability for the net present value of any remaining lease obligations, net of estimated sublease income, at the date we cease using the property, in accordance with ASC 420.

88

Schedule II—Valuation and Qualifying Accounts and Reserves

Titan Machinery Inc.

Classification	Beginning Balance		Additions Charged to Expenses		Deductions for Write-offs			Ending Balance
	(in thousands)
Valuation reserve deduction from receivables:
Year ended January 31, 2010	$	214	$	458	$	(339	)	$	333
Year ended January 31, 2009		189		273		(248	)		214
Year ended January 31, 2008		36		367		(214	)		189

Classification	Beginning Balance		Additions Charged to Cost of Revenue			Deductions for Write-offs		Ending Balance
	(in thousands)
Valuation reserve deduction from parts inventory:
Year ended January 31, 2010	$	614	$	46		$	—	$	660
Year ended January 31, 2009		627		(13	)		—		614
Year ended January 31, 2008		143		484			—		627

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        None.

ITEM 9A.    CONTROLS AND PROCEDURES

        Evaluation of Disclosure Controls and Procedures.    After evaluating the effectiveness of the Company's disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 the ("Exchange Act") as of the end of the period covered by this annual report, our Chief Executive Officer and Chief Financial Officer, with the participation of the Company's management, have concluded that the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) are effective to ensure that information that is required to be disclosed by the Company in reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. Our Chief Executive Officer and Chief Financial Officer, with the participation of the Company's management, have also concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

        Management's Report on Internal Control Over Financial Reporting    Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this evaluation management has concluded that our internal control over financial reporting was effective as of January 31, 2010.

        Eide Bailly LLP, the independent registered public accounting firm that audited the consolidated financial statements included in this Annual Report on Form 10-K, has also audited our internal

89

control over financial reporting as of January 31, 2010, as stated in their attestation report included in Part II, Item 8 of this Annual Report on Form 10-K.

        Changes in Internal Control over Financial Reporting.    The Company is in the process of converting to a new enterprise resource planning (ERP) system, which is scheduled to be implemented in phases. During the fiscal quarter ended October 31, 2009, the Company went live on its initial phase of the new ERP system implementation, which included the financial reporting and shared resource center functions. The Company believes that the new ERP system and related changes to internal controls will enhance the Company's internal controls over financial reporting. The Company has taken the necessary steps to monitor and maintain appropriate internal control over financial reporting during this period of change and will continue to evaluate the operating effectiveness of related key controls during subsequent periods.

        Other than the implementation of the new ERP system discussed above, there has not been any change in the Company's internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during its most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

        On November 25, 2009 and February 19, 2010, we entered into letter agreements with CNH Capital America, LLC to amend our Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement to provide that the interest rate applicable to all outstanding amounts under the facility is the prime rate plus 4%. The November 25, 2009 letter agreement was filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the three months ended October 31, 2009. The February 19, 2010 letter agreement is filed as Exhibit 10.43 to this Annual Report on Form 10-K.

        On December 16, 2009, the Company entered into an Amended and Restated Agreement for Wholesale Financing with GE Commercial Distribution Finance Corporation ("GE") (the "Agreement"), which provides for a discretionary revolving floorplan facility with an initial facility amount of up to $50 million. The Company may seek to increase the amount of the facility up to $100 million subject to obtaining the consent of GE for any increase. The Agreement was amended and restated on March 12, 2010 to allow for GE to sell participation interest to other lenders that might wish to participate in the facility. The Agreement, as amended and restated, restates in its entirety the prior Agreement for Wholesale Financing dated June 29, 2004 with GE, as amended. The facility may be used to advance up to 85% of the value of new or used inventory purchased by the Company from vendors approved by GE, or to refinance new or used inventory. Advances made under the facility will generally have a variable interest rate equal to the Three-Month LIBOR Rate plus 5.5%. The Agreement may be terminated by GE upon 60 days written notice to the Company.

        Advances under the facility are secured by inventory financed by GE and all proceeds of such inventory. The Agreement requires the Company to comply with customary affirmative, negative and financial covenants. Various negative covenants require the prior consent of GE for, among other things, making certain acquisitions, granting certain liens, creating subsidiaries, or engaging in a change in control transaction. Financial covenants include an EBITDA to interest expense ratio, a total funded debt to tangible net worth ratio, and inventory turn ratios. Finally, for quarters ended through July 31, 2010, the Company's equipment inventory may not exceed a specified amount based on existing inventory plus acquired assets.

        The Agreement contains customary events of default, including nonpayment of principal or interest when due; nonpayment of other amounts owed to GE when due; cross-default to other indebtedness or other agreements; and a change in control (as defined in the Agreement). Upon an event of default, GE may terminate all existing and future loan commitments and declare all of the Company's

90

outstanding loan obligations immediately due and payable. The Agreement, as amended and restated on March 12, 2010, is filed as Exhibit 10.42 to this Annual Report on Form 10-K.

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

        Other than the information included in Part I of this Form 10-K under the heading "Executive Officers of the Registrant," the information required by Item 10 is incorporated by reference to the sections labeled "Election of Directors," "Corporate Governance" and "Section 16(a) Beneficial Ownership Reporting Compliance," all of which appear in our definitive proxy statement for our 2010 Annual Meeting.

ITEM 11.    EXECUTIVE COMPENSATION

        The information required by Item 11 is incorporated herein by reference to the sections entitled "Executive Compensation," "Non-Employee Director Compensation," "Compensation Committee," "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report," all of which appear in our definitive proxy statement for our 2010 Annual Meeting.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        The information required by Item 12 is incorporated herein by reference to the sections entitled "Principal Stockholders and Management Stockholdings" and "Equity Compensation Plan Information," which appear in our definitive proxy statement for our 2010 Annual Meeting.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

        The information required by Item 13 is incorporated herein by reference to the sections entitled "Corporate Governance—Independence" and "Certain Relationships and Related Party Transactions," which appear in our definitive proxy statement for our 2010 Annual Meeting.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

        The information required by Item 14 is incorporated herein by reference to the section entitled "Fees of the Independent Registered Public Accounting Firm," which appears in our definitive proxy statement for our 2010 Annual Meeting.

PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)

Documents filed as part of this report.

(1)

Financial Statements. The following financial statements are included in Part II, Item 8 of this Annual Report on Form 10-K:

Report of Eide Bailly LLP on Consolidated Financial Statements and Financial Statement Schedule as of January 31, 2010 and 2009 and for each of the three years in the period ended January 31, 2010

Report of Eide Bailly LLP on Internal Control Over Financial Reporting as of January 31, 2010

Consolidated Balance Sheets as of January 31, 2010 and 2009

91

Consolidated Statements of Operations for each of the three years in the period ended January 31, 2010

Consolidated Statements of Stockholders' Equity for each of the three years in the period ended January 31, 2010

Consolidated Statements of Cash Flows for each of the three years in the period ended January 31, 2010

Notes to Consolidated Financial Statements

(2)

Financial Statement Schedules. The following consolidated financial statement schedule is included in Item 8:


Schedule II—Valuation and Qualifying Accounts and Reserves

All other financial statement schedules have been omitted, because they are not applicable, are not required, or the information is included in the Financial Statements or Notes thereto

(3)

Exhibits. See the Exhibit Index to our Form 10-K immediately following the signature page of this Annual Report on Form 10-K

92

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: April 15, 2010

TITAN MACHINERY INC.

By /s/ DAVID J. MEYER
David J. Meyer,
Chairman and Chief Executive Officer By /s/ PETER J. CHRISTIANSON
Peter J. Christianson,
President and Chief Financial Officer

POWER OF ATTORNEY

        Each person whose signature appears below constitutes DAVID J. MEYER and PETER J. CHRISTIANSON his true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ DAVID J. MEYER David Meyer	Chairman and Chief Executive Officer (principal executive officer)	April 15, 2010
/s/ PETER J. CHRISTIANSON Peter J. Christianson	President and Chief Financial Officer, Director (principal financial and accounting officer)	April 15, 2010
/s/ GORDON PAUL ANDERSON Gordon Paul Anderson	Director	April 15, 2010
/s/ TONY CHRISTIANSON Tony Christianson	Director	April 15, 2010

93

Signatures	Title	Date
/s/ JAMES WILLIAMS James Williams	Director	April 15, 2010
/s/ JAMES IRWIN James Irwin	Director	April 15, 2010
/s/ JOHN BODE John Bode	Director	April 15, 2010
/s/ THEODORE WRIGHT Theodore Wright	Director	April 15, 2010

94

EXHIBIT INDEX
TITAN MACHINERY INC.
FORM 10-K

No.		Description
	3.1	Certificate of Incorporation of the registrant(b)
	3.2	Bylaws of the registrant, as amended(e)
	4.1	Specimen Certificate representing shares of common stock of Titan Machinery Inc.(c)
	4.2	Common Stock Purchase Warrant, dated April 7, 2003, in favor of Cherry Tree Securities, LLC(b)
	4.3	Common Stock Purchase Warrant, dated August 1, 2004, in favor of Cherry Tree Securities, LLC(b)
	4.4	Form of Director Warrant.**(f)
	10.1	2005 Equity Incentive Plan**(a)
	10.2	Employment Agreement, dated November 16, 2007, between David Meyer and the registrant**(b)
	10.3	Employment Agreement, dated November 16, 2007, between Peter Christianson and the registrant**(b)
	10.4	Non-employee Director Compensation Policy**(c)
	10.5	Agricultural Equipment Sales & Service Agreement, dated December 31, 2002, between Case, LLC and the registrant(a)
	10.6	Construction Equipment Sales & Service Agreement, dated effective April 8, 2003, between Case, LLC and the registrant(a)
	10.7	Dealer Agreement, dated April 14, 2003, between New Holland North America, Inc. and the registrant, as amended December 27, 2005 and December 9, 2006(a)
	10.8	Construction Equipment Sales & Service Agreement, dated effective June 15, 2006, between CNH America, LLC and the registrant(a)
	10.9	Dealer Agreement, effective February 20, 2007, between CNH America LLC and the registrant(a)
	10.10	Dealer Agreement, dated effective June 22, 2006, between CNH America LLC and the registrant(a)
	10.11	Dealer Agreements, dated effective April 1, 2006, between CNH America and the registrant(a)
	10.12	Dealer Agreement, dated April 1, 2005, between CNH America LLC and the registrant(a)
	10.13	Dealer Agreement, dated effective January 1, 2000 between New Holland North America, Inc. and the registrant(a)
	10.14	Dealer Security Agreements between New Holland North America, Inc. and the registrant(a)
	10.15	Dealer Security Agreements between CNH America LLC and the registrant(a)
	10.16	Lease by and between Rocking Horse Farm, LLC and the registrant, dated August 2, 2004, and Addendum No. 1 thereto dated September 13, 2005(a)

95

No.		Description
	10.17	Wholesale Floor Plan Credit Facility and Security Agreement, dated as of February 21, 2006, between CNH Capital America LLC and the registrant(a)
	10.18	Agreement for Wholesale Financing, dated June 29, 2004, between GE Commercial Distribution Finance Corporation and the registrant (and amendments dated January 24, 2007, November 7, 2005, June 29, 2004)(a)
	10.19	Loan Agreement, dated August 7, 2007, between Bremer Bank, N.A. and the registrant(a)
	10.20	Shareholder Rights Agreement, dated April 7, 2003, by and between the registrant and the individuals listed on Schedule A(a)
	10.21	Amendment No. 1 to Shareholder Rights Agreement, dated January 31, 2006, by and between the registrant and the individuals listed on Schedule A(a)
	10.22	Form of Incentive Stock Option Agreement under the 2005 Equity Incentive Plan**(a)
	10.23	Form of Non-Qualified Stock Option Agreement under the 2005 Equity Incentive Plan**(a)
	10.24	Form of Restricted Stock Agreement under the 2005 Equity Incentive Plan**(a)
	10.25	Amended and Restated Wholesale Floorplan Credit Facility and Security Agreement, dated November 13, 2007, between CNH Capital America LLC and the registrant(b)
	10.26	Consent and Agreement, dated November 13, 2007, between CNH Capital America LLC and the registrant(b)
	10.27	Amendment to Case IH Agricultural Equipment Sales and Service Agreement, dated November 14, 2007, between CNH America LLC and Red Power International, Inc.(b)
	10.28	Amendment to Case IH Agricultural Equipment Sales and Service Agreements, dated November 14, 2007, between CNH America LLC and the registrant(b)
	10.29	Amendment to Case Construction Equipment Sales and Service Agreements, dated November 14, 2007, between CNH America LLC and the registrant(b)
	10.30	Amendment to Kobelco Construction Machinery America LLC Dealer Agreement, dated November 14, 2007, between Kobelco Construction Machinery America LLC and the registrant(b)
	10.31	Amendment to CNH America LLC Dealer Agreement for New Holland Construction Products, dated November 14, 2007, between CNH America LLC and the registrant(b)
	10.32	Amendment to CNH America LLC Dealer Agreement for New Holland Agricultural Equipment, dated November 14, 2007, between CNH America LLC and the registrant(b)
	10.33	Recapitalization Agreement, dated effective August 16, 2007, among the registrant, David J. Meyer, C.I. Farm Power, Inc., Peter Christianson, Adam Smith Growth Partners, L.P., Adam Smith Companies,  LLC, Tony J. Christianson, Adam Smith Activist Fund, LLC, David Christianson and Earl Christianson(b)
	10.34	Form of Director and Officer Indemnification Agreement(b)
	10.35	Agreement, dated July 17, 2007, between Cherry Tree Securities, LLC and the registrant(b)
	10.36	Amendment to Loan Documents dated December 4, 2007 between the registrant and Bremer Bank, N.A.(d)

96

No.			Description
	10.37		Titan Machinery Inc. Fiscal 2009 Non-Employee Director Compensation Plan (incorporated by reference to Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2007).**
	10.38		Titan Machinery Inc. Executive Bonus Plan (incorporated by reference to Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2007).**
	10.39	*	Compensation Arrangements for Executive Officers**
	10.40		Loan Agreement, dated July 15, 2009, between Bremer Bank, N.A. and the registrant(g)
	10.41		Letter Agreement with CNH Capital America, LLC dated November 25, 2009(h)
	10.42	*	Second Amended and Restated Agreement for Wholesale Financing, dated March 12, 2010, between GE Commercial Distribution Finance Corporation and the registrant
	10.43	*	Letter Agreement with CNH Capital America, LLC dated February 19, 2010
	21		Subsidiaries of the Registrant: Transportation Solutions, LLC, a North Dakota limited liability company
	23.1	*	Consent of Eide Bailly, LLP
	24.1		Power of Attorney (Included on Signature Page)
	31.1	*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2	*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*

Filed herewith

**

Indicates management contract or compensatory plan or arrangement.

(a)

Incorporated herein by reference to the cited exhibit in Amendment No. 2 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on October 10, 2007.

(b)

Incorporated herein by reference to the cited exhibit in Amendment No. 5 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on November 27, 2007.

(c)

Incorporated herein by reference to the cited exhibit in Amendment No. 6 to Registration Statement Form S-1, Reg. No. 333-145526, filed with the Commission on December 3, 2007.

(d)

Incorporated herein by reference to the cited exhibit in Amendment N0. 7 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on December 5, 2007.

(e)

Incorporated herein by reference to the cited exhibit in the registrant's Annual Report on Form 10-K filed with the Commission on April 16, 2009.

(f)

Incorporated herein by reference to Exhibit 10.1 in the registrant's Quarterly Report on Form 10-Q filed with the Commission on June 9, 2009.

97

(g)

Incorporated herein by reference to Exhibit 10.1 in the registrant's Quarterly Report on Form 10-Q filed with the Commission on September 9, 2009.

(h)

Incorporated herein by reference to Exhibit 10.1 in the registrant's Quarterly Report on Form 10-Q filed with the Commission on December 10, 2009.

98

EX-10.39

EXHIBIT 10.39

TITAN MACHINERY INC.
COMPENSATION ARRANGEMENTS FOR EXECUTIVE OFFICERS
FOR FISCAL YEAR 2011

The Titan Machinery Inc. Board of Directors approved the 2011 fiscal year base salaries for the executive officers as set forth below.

	2011 Annual
Executive Officer and Title	Base Salary
David J. Meyer	$	275,000
Chairman and Chief Executive Officer
Peter Christianson	$	275,000
President and Chief Financial Officer
Ted Christianson	$	170,000
Vice President, Finance and Treasurer

EX-10.42

Exhibit 10.42

SECOND AMENDED AND RESTATED

AGREEMENT FOR WHOLESALE FINANCING

between

GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION

as Lender

and

TITAN MACHINERY INC.

as Borrower

March 12, 2010

TABLE OF CONTENTS

				Page
1.	Effective Date			1
2.	Amendment and Restatement; Reaffirmation			1
3.	Assignment			2
4.	Definitions; Rules of Construction; Borrowing Agent; Patriot Act			2
	4.1.	Listed Definitions		2
	4.2.	Other Definitions		2
	4.3.	References to Borrower		2
	4.4.	References to Covered Person		2
	4.5.	Accounting Terms		2
	4.6.	Meaning of Satisfactory		2
	4.7.	Computation of Time Periods		2
	4.8.	General		3
	4.9.	Patriot Act Notification		3
5.	Lender’s Credit Facilities			3
	5.1.	Floorplan Loan Facility		3
		5.1.1.	Floorplan Loan Facility Generally	3
		5.1.2.	Operation of Floorplan Loan Facility	4
		5.1.3.	Floorplan Loan Approvals	4
		5.1.4.	Inventory not Available for Floorplan Loans	4
		5.1.5.	New Inventory	4
		5.1.6.	Used Inventory	5
		5.1.7.	Requirements for Every Advance Request.	5
		5.1.8.	Termination of Floorplan Loan Facility	5
		5.1.9.	Repurchase Agreements	6
		5.1.10.	Existing Transaction Statements and Approvals	6
		5.1.11.	LKE Inventory	6
	5.2.	Increase in Floorplan Loan Facility		6
	5.3.	Termination		7
6.	Interest; Yield Protection			7
	6.1.	Interest on the Floorplan Loan		7
	6.2.	Interest on Floorplan Loans		9
	6.3.	Adjusted LIBOR Rate		9
	6.4.	Time of Accrual		9
	6.5.	Computation		9
	6.6.	Rate After Maturity and Rate After An Event of Default		9
	6.7.	Taxes		9
	6.8.	Compensation for Increased Costs and Reduced Returns; Capital Adequacy		10
	6.9.	Usury		11
7.	Payments			11
	7.1.	Scheduled Payments on Loans; Applications to Loans		11
		7.1.1.	Interest	11
		7.1.2.	Principal	11
		7.1.3.	Maturity	11
	7.2.	Prepayments		12
		7.2.1.	Voluntary Prepayments	12

i

		7.2.2	Mandatory Prepayments		12
		7.2.3	Other Mandatory Prepayments		12
			7.2.3.1	Insurance Proceeds	12
	7.3.	Manner of Payments and Timing of Application of Payments			12
		7.3.1	Payment Requirement		12
		7.3.2	Application of Payments and Proceeds		12
		7.3.3	Interest Calculation		13
	7.4.	Returned Instruments			13
	7.5.	Compelled Return of Payments or Proceeds			13
	7.6.	Due Dates Not on Business Days			13
8.	Procedure for Obtaining Advances				13
	8.1.	Initial Advances			13
	8.2.	Subsequent Floorplan Loan Advances			13
		8.2.1	Lender’s Right to Make Other Certain Advances		14
			8.2.1.1	Payment of Loan Obligations	14
			8.2.1.2	Payments to Other Creditors	14
	8.3.	Disbursement			14
	8.4.	Restrictions on Advances			14
	8.5.	Each Advance Request a Certification			14
	8.6.	Requirements for Every Advance Request			14
	8.7.	Exoneration of Lender			14
9.	Security Interest in Personal Property Collateral; Security				15
	9.1.	Grant of Security Interest; Landlord Consents			15
10.	Power of Attorney				15
11.	Conditions of Lending				16
	11.1.	Conditions to Initial Advance			16
		11.1.1	Listed Documents and Other Items		16
		11.1.2	Financial Condition		16
		11.1.3	Default		16
		11.1.4	Perfection of Security Interests		16
		11.1.5	Representations and Warranties		16
		11.1.6	Material Adverse Change		16
		11.1.7	Pending Material Proceedings		16
		11.1.8	Payment of Fees		17
		11.1.9	Other Items		17
	11.2.	Conditions to Subsequent Advances			17
		11.2.1	General Conditions		17
		11.2.2	Representations and Warranties		17
		11.2.3	Approvals		17
		11.2.4	Default		17
		11.2.5	Releases or Intercreditor Agreements		17
12.	Representations and Warranties				17
	12.1.	Organization and Existence			17
	12.2.	Authorization			18
	12.3.	Due Execution			18
	12.4.	Enforceability of Obligations			18
	12.5.	Burdensome Obligations			18
	12.6.	Legal Restraints			18
	12.7.	Labor Contracts and Disputes			18
	12.8.	No Material Proceedings			18
	12.9.	Material Licenses			18

ii

	12.10.	Compliance with Material Laws		18
		12.10.1	General Compliance with Environmental Laws	19
		12.10.2	Proceedings	19
		12.10.3	Investigations Regarding Hazardous Materials	19
		12.10.4	Notices and Reports Regarding Hazardous Materials	19
		12.10.5	Hazardous Materials on Real Property	19
		12.10.6	Environmental Property Transfer Acts	19
	12.11.	Other Names		19
	12.12.	Prior Transactions		20
	12.13.	Capitalization		20
	12.14.	Solvency		20
	12.15.	Projections		20
	12.16.	Financial Statements		20
	12.17.	No Change in Condition		20
	12.18.	No Defaults		20
	12.19.	Investments		20
	12.20.	Indebtedness		20
	12.21.	Indirect Obligations		20
	12.22.	[Intentionally omitted]		20
	12.23.	Capital Leases		20
	12.24.	Tax Liabilities; Governmental Charges		21
	12.25.	Pension Benefit Plans		21
	12.26.	Welfare Benefit Plans		21
	12.27.	Retiree Benefits		21
	12.28.	Real Property		21
	12.29.	State of Collateral and other Property		21
		12.29.1	Inventory	22
		12.29.2	Equipment	22
		12.29.3	Documents, Instruments and Chattel Paper	22
	12.30.	Chief Place of Business; Locations of Collateral		22
	12.31.	Warranties and Representations-Inventory		23
	12.32.	No Negative Pledges		23
	12.33.	Security Documents		23
		12.33.1	Security Agreements	23
	12.34.	[Intentionally omitted]		23
	12.35.	Subsidiaries		23
	12.36.	[Intentionally omitted]		24
	12.37.	Margin Stock		24
	12.38.	Securities Matters		24
	12.39.	Investment Company Act, Etc.		24
	12.40.	No Material Misstatements or Omissions		24
	12.41.	Filings		24
	12.42.	Broker’s Fees		24
	12.43.	Transportation Solutions Assets		24
13.	Modification and Survival of Representations			24
14.	Affirmative Covenants			25
	14.1.	Use of Proceeds		25
	14.2.	Corporate Existence		25
	14.3.	Maintenance of Property and Leases		25
	14.4.	Inventory		25
	14.5.	Insurance		26

iii

	14.6.	Payment of Taxes and Other Obligations		26
	14.7.	Compliance With Laws		26
		14.7.1.	Environmental Laws	26
		14.7.2.	Pension Benefit Plans	27
	14.8.	Discovery and Clean-Up of Hazardous Material		27
		14.8.1.	In General	27
	14.9.	Termination of Pension Benefit Plan		27
	14.10.	Notice to Lender of Material Events		27
	14.11.	Maintenance of Security Interests of Security Documents		30
		14.11.1.	Preservation and Perfection of Security Interests	30
		14.11.2.	Collateral Held by Warehouseman, Bailee, etc.	30
		14.11.3.	Compliance With Terms of Security Documents	30
	14.12.	Accounting System		31
		14.12.1.	Account Records	31
		14.12.2.	Inventory Records	31
		14.12.3.	Tracing of Proceeds	31
	14.13.	Financial Statements		31
		14.13.1.	Annual Financial Statements	31
		14.13.2.	Quarterly Financial Statements	31
	14.14.	Other Financial Information		32
		14.14.1.	Reports or Information Concerning Inventory	32
		14.14.2.	Stockholder and SEC Reports	32
	14.15.	Inventory		32
	14.16.	Annual Projections; Operating Plan		32
	14.17.	Rental Agreements and System Reports		33
	14.18.	Other Information		33
	14.19.	Examinations and Site Visits by Lender		33
	14.20.	Verification of Accounts and Notices to Account Debtors		33
	14.21.	Appraisals of Collateral		33
	14.22.	Access to Officers and Auditors		33
	14.23.	Movement of Inventory		34
	14.24.	Titled Assets		34
	14.25.	Claims Act		34
	14.26.	Further Assurances		34
15.	Negative Covenants			34
	15.1.	Investments		34
	15.2.	Indebtedness		35
	15.3.	Prepayments		35
	15.4.	Indirect Obligations		35
	15.5.	Security Interests		35
	15.6.	Acquisitions		36
	15.7.	Leases; Bailments; Consignments; Warehousing		36
	15.8.	Disposal of Property		36
	15.9.	Change of Control		36
	15.10.	Capital Structure; Capital Securities		37
	15.11.	Change of State of Formation; Change of Name		37
	15.12.	Change of Business		37
	15.13.	Transactions With Affiliates		37
	15.14.	Conflicting Agreements		37
	15.15.	Investment Banking and Finder’s Fees		37
	15.16.	Sale and Leaseback Transactions		37

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	15.17.	New Subsidiaries		37
	15.18.	Fiscal Year		38
	15.19.	[Intentionally omitted]		38
	15.20.	Depreciation Methodology		38
	15.21.	Tax Consolidation		38
	15.22.	Transactions Having a Material Adverse Effect		38
	15.23.	Storage		38
	15.24.	Transportation Solutions Assets		38
	15.25.	Other Indebtedness		38
	15.26.	Rental Contracts		38
16.	Financial Covenants			39
	16.1.	Special Definitions		39
	16.2.	Debt Service Coverage		40
	16.3.	Maximum Total Funded Indebtedness to Tangible Net Worth		40
	16.4.	Minimum Inventory Turn		41
	16.5.	Maximum Total Whole Goods Inventory		41
17.	Default			41
	17.1.	Events of Default		41
		17.1.1.	Failure to Pay Principal or Interest	41
		17.1.2.	Failure to Pay Certain Other Amounts Owed to Lender	41
		17.1.3.	Failure to Pay Examination and Appraisal Costs	41
		17.1.4.	Failure to Pay Amounts Owed to Other Persons	42
		17.1.5.	Representations or Warranties	42
		17.1.6.	Certain Covenants with Cure Periods	42
		17.1.7.	Certain Covenants Without Cure Periods	42
		17.1.8.	Other Covenants	42
		17.1.9.	Acceleration of Other Indebtedness	42
		17.1.10.	Default Under Other Agreements	42
		17.1.11.	Bankruptcy; Insolvency; Etc.	43
		17.1.12.	Judgments; Attachment; Settlement; Etc.	43
		17.1.13.	Pension Benefit Plan Termination, Etc.	43
		17.1.14.	Liquidation or Dissolution	43
		17.1.15.	Seizure of Assets	44
		17.1.16.	Racketeering Proceeding	44
		17.1.17.	Loan Documents; Security Interests	44
		17.1.18.	Loss to Collateral	44
		17.1.19.	Change of Control	44
		17.1.20.	Material Adverse Change	44
	17.2.	Cross-Default		44
	17.3.	Rights and Remedies		45
		17.3.1.	Termination of Floorplan Loan Facility	45
		17.3.2.	Acceleration; Funding	45
		17.3.3.	Right of Set-off	45
		17.3.4.	Notice to Account Debtors	45
		17.3.5.	Entry Upon Premises and Access to Information	46
		17.3.6.	Completion of Uncompleted Inventory Items	46
		17.3.7.	Borrower’s Obligations	46
		17.3.8.	Secured Party Rights	46
		17.3.9.	Joint and Several	47
		17.3.10.	Miscellaneous	48
	17.4.	Application of Funds		48

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	17.5.	Limitation of Liability; Waiver		48
	17.6.	Notice		49
	17.7.	No Liability		49
18.	Intentionally Omitted			49
19.	General			49
	19.1.	Lender’s Right to Cure		49
	19.2.	Rights Not Exclusive		49
	19.3.	Survival of Agreements		49
	19.4.	Assignments; Participations		49
		19.4.1.	Assignments	49
		19.4.2.	Sale of Participations	50
		19.4.3.	Information	50
	19.5.	Payment of Expenses		50
	19.6.	General Indemnity		51
	19.7.	Changes in Accounting Principles		52
	19.8.	Loan Records		52
	19.9.	Other Security and Guaranties		53
	19.10.	Loan Obligations Payable in Dollars		53
	19.11.	Disclosure		53
	19.12.	Tax Treatment Waiver		54
20.	Binding Arbitration			54
	20.1.	Arbitrable Claims		54
	20.2.	Administrative Body		55
	20.3.	Hearings		55
	20.4.	Discovery		55
	20.5.	Exemplary or Punitive Damages		56
	20.6.	Confidentiality of Awards		56
	20.7.	Prejudgment and Provisional Remedies		56
	20.8.	Attorneys’ Fees		56
	20.9.	Limitations		56
	20.10.	Survival After Termination		57
	20.11.	Invalidity/Unenforceability of Binding Arbitration; Jury Trial Waiver; Service of Process; Forum		57
		20.11.1.	Jury Trial Waiver	57
		20.11.2.	Choice of Forum	57
		20.11.3.	Service of Process	57
21.	Miscellaneous			58
	21.1.	Notices		58
	21.2.	Amendments and Modifications; Waivers and Consents		58
	21.3.	Course of Dealing		58
	21.4.	Rights Cumulative		58
	21.5.	Successors and Assigns		58
	21.6.	Severability		59
	21.7.	Counterparts		59
	21.8.	Governing Law; No Third Party Rights		59
	21.9.	Counterpart Facsimile Execution		59
	21.10.	No Other Agreements		59
	21.11.	Negotiated Transaction		59
	21.12.	Waiver of Punitive and Exemplary Damages		59
	21.13.	Incorporation By Reference		60
	21.14.	Statutory Notice-Insurance		60

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21.15. Statutory Notice—Oral Commitments 60

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SECOND AMENDED AND RESTATED AGREEMENT FOR WHOLESALE FINANCING

In consideration of the mutual agreements herein and other sufficient consideration, the receipt of which is hereby acknowledged, TITAN MACHINERY INC., a Delaware corporation (referred to as “Borrower” or “the Borrower” or “Parent”), and GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION (“Lender”) (and its successors and assigns), agree as follows:

1.Effective Date.  This Agreement is effective March 12, 2010.

2.Amendment and Restatement; Reaffirmation.  This Agreement is an amendment and restatement of that certain Agreement for Wholesale Financing, dated June 29, 2004, by and between Borrower and GE Commercial Distribution Finance Corporation (the “Initial AWF”) which was amended and restated in its entirety by that certain Amended and Restated Amendment to Agreement for Wholesale Financing dated December 16, 2009 by and among Borrower, and GE Commercial Distribution Finance Corporation as administrative agent and as sole lender (together with all subsequent amendments and modifications, the “Prior AWF”), which Prior AWF is hereby amended and restated in its entirety and replaced with this Agreement in its entirety.  This Agreement is not a novation of the Prior AWF.

This Agreement does not extinguish the obligations for the payment of money outstanding under the Initial AWF, the Prior AWF, or the Existing Loan Documents, or discharge or release the Loan Obligations under, and as defined in, the Prior AWF or the Security Interests or priority of Lender’s Security Interests in the Collateral (as defined in the Prior AWF), including any Existing Loan Document.  Nothing herein contained shall be construed as a substitution or novation of the Loan Obligations outstanding under, and as defined in, the Prior AWF or instruments securing the same, which shall remain in full force and effect, except as modified hereby or by instruments executed concurrently herewith.  Nothing expressed or implied in this Agreement shall be construed as a release or other discharge of any Covered Person under the Initial AWF, the Prior AWF, any Existing Loan Document or any other Loan Document.  Each Existing Loan Document, including to the extent amended hereby, to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects.

The Borrower hereby unconditionally reaffirms, covenants, represents, warrants, acknowledges and confirms that (i) the Borrower has no defenses to its obligations under the Initial AWF, the Prior AWF, the Existing Loan Documents, this Agreement and the other Loan Documents arising out of or relating to any facts or circumstances existing on or before the date hereof, known or unknown, to the Borrower or any Covered Person, (ii) as of the date hereof, the Borrower has no claim against Administrative Agent (as defined in the Prior AWF), CDF (as defined in the Prior AWF), or Lender arising from or in connection with the Prior AWF, the Existing Loan Documents, this Agreement or the other Loan Documents and any AND ALL SUCH CLAIMS ARE WAIVED, RELEASED AND DISCHARGED FOREVER (the foregoing is not intended to waive any manifest errors in the Administrative Agent’s or any Lender’s records with respect to the Loan Obligations), (iii) each of Existing Loan Documents and each of the Loan Documents is hereby reaffirmed without qualification and is and remains in full force and effect except that on and after the Effective Date all references in any such Loan Document to “the Loan Agreement,” “the Credit Agreement”, “thereto,” “thereof,” “thereunder” or words of like import referring to the Prior AWF shall mean the Prior AWF as amended and restated by and into this Agreement and therefore this Agreement, and constitutes the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms, except to the extent that the enforceability thereof against the Borrower may be limited by bankruptcy, insolvency or other laws affecting the enforceability of creditors rights generally or by equity

principles of general application, and (iv) the Security Interests granted by the Borrower in favor of the Administrative Agent (as defined in the Prior AWF), CDF (as defined in the Prior AWF) or Lender under the Initial AWF, the Prior AWF and the Existing Loan Documents secure all the Loan Obligations hereunder, are perfected, continue in full force and effect, and have the same priority as before this Agreement.

3.Assignment.  Simultaneously with the effectiveness hereof, Administrative Agent (as such term is defined in the Prior AWF) hereby assigns and transfers to Lender, and Lender hereby accepts, all of Administrative Agent’s rights in and to the Collateral (as defined in the Prior AWF), and under and with respect to any landlord consents, control agreements, pledge agreements and security agreements.

4.Definitions; Rules of Construction; Borrowing Agent; Patriot Act.

4.1.Listed Definitions.  Capitalized words defined in the Glossary and Index of Defined Terms attached hereto as Exhibit 4.1 shall have such defined meanings wherever used in this Agreement and the other Loan Documents.

4.2.Other Definitions.  If a capitalized word in this Agreement is not defined in the Glossary and Index of Defined Terms, it shall have such meaning as defined elsewhere herein, or if not defined elsewhere herein, the meaning defined in the UCC.

4.3.References to Borrower.  In the event that there is more than one Person who is a Borrower hereunder, then the words “a Borrower”, “any Borrower”, “each Borrower” and “every Borrower” refer to such Borrower, both separately and collectively, as though each such entity were actually listed, and its Obligations and liabilities (including, without limitation, the Loan Obligations) under the Loan Documents are joint and several in all respects.

4.4.References to Covered Person.  The words “Covered Person”, “a Covered Person”, “any Covered Person”, “each Covered Person” and “every Covered Person” refer to Borrower and each of their currently existing or later acquired, created or organized Subsidiaries separately.  The words “Covered Persons” refers to Borrower and their currently existing or later acquired, created or organized Subsidiaries collectively.

4.5.Accounting Terms.  Unless the context otherwise requires, accounting terms herein that are not defined herein shall be determined under GAAP.  All financial measurements contemplated hereunder respecting Borrower shall be made and calculated for Borrower and all of their now existing or later acquired, created or organized Subsidiaries, if any, on a consolidated basis in accordance with GAAP unless expressly provided otherwise herein.

4.6.Meaning of Satisfactory.  Whenever herein a document or matter is required to be satisfactory to Lender, unless expressly stated otherwise such document must be reasonably satisfactory to Lender in both form and substance, and unless expressly stated otherwise Lender shall have the commercially reasonable discretion to determine whether the document or matter is satisfactory.

4.7.Computation of Time Periods.  In computing or defining periods of time from a specified date to a later specified date, and in computing the accrual of interest or fees, the word “from” shall mean “from and including” and the words “to” and “until” shall each mean “to but excluding”.  Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed, and references in this Agreement to months and years are to calendar months and calendar years unless otherwise specified.

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4.8.General.  Unless the context of this Agreement clearly requires otherwise: (i) references to the plural include the singular and vice versa; (ii) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement;  (iii) references to one gender include all genders; (iv) “including” is not limiting;  (v) “or” has the inclusive meaning represented by the phrase “and/or;” (vi) the words “hereof,” “herein,” “hereby,” “hereunder” and similar terms in this Agreement refer to this Agreement as a whole, including its Exhibits, and not to any particular provision of this Agreement;  (vii) the word “Section” or “section” and “Page” or “page” refer to a section or page, respectively, of, and the word Exhibit refers to an Exhibit to, this Agreement unless it expressly refers to something else; (viii) reference to any agreement, document, or instrument (including this Agreement and any other Loan Document or other agreement, document or instrument defined herein), means such agreement, document, or instrument as amended, modified, restated and/or replaced and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof, and includes all attachments thereto and documents incorporated therein, if any; (ix) general and specific references to any Law means such Law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time; and (x) unless otherwise expressly modified, the word “anniversary” shall refer to the annual observance of such an event on that date in following years.  Section captions and the Table of Contents are for convenience only and shall not affect the interpretation or construction of this Agreement or the other Loan Documents.

4.9.Patriot Act Notification.  Lender hereby notifies the Borrowers and each other Covered Person that, pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (as amended from time to time (including any successor statute) and together with all rules promulgated thereunder, collectively, the “Act”), it is required to obtain, verify and record information that identifies the Borrowers and each other Covered Person, which information includes the name and address of the Borrowers and each other Covered Person and other information that will allow Lender to identify the Borrowers and each other Covered Person in accordance with the Act.

5.Lender’s Credit Facilities.  Subject to the terms and conditions hereof, and in reliance upon the Representations and Warranties:

5.1.Floorplan Loan Facility.

5.1.1.Floorplan Loan Facility Generally.  Lender shall, subject to the terms and limitations in this Section 5.1, and elsewhere herein, make available to Borrower a “Floorplan Loan Facility” that is initially Fifty Million Dollars ($50,000,000) but which may increase from time to time as provided herein.  No Floorplan Loan Advance will be made which would result in the sum of the Floorplan Loan and all unfunded Approvals, exceeding the Floorplan Loan Facility. Subject to the terms of this Agreement, payments and prepayments that are applied to reduce the Floorplan Loan may be reborrowed through subsequent Floorplan Loan Advances, subject to the terms and conditions of this Agreement and the Loan Documents.  The Floorplan Loan Facility is not a commitment to lend or advance funds but is a discretionary facility.  From and after the date on which Lender has actual knowledge of an Event of Default under Section 17.1.1 or under Section 17.1.11 (whether or not any time periods referenced therein have expired), in Lender’s sole and absolute discretion, no further Approvals will be issued, and except, in Lender’s sole and absolute discretion, with respect to existing unfunded Approvals, no further Floorplan Loan Advances shall be made.  From and after the date on which Lender has actual knowledge of any other Event of Default, no further Approvals will be

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issued if Lender so chooses in its sole and absolute discretion to no longer issue Approvals.

5.1.2.Operation of Floorplan Loan Facility.  Subject to the terms of this Agreement, the Floorplan Loan Facility will be used by Borrower from time to time to purchase new and used Inventory from vendors approved by Lender in its sole and absolute discretion (“Vendors”) or to refinance such Vendors original purchase financing with Borrower, to finance or refinance new Inventory owned by Borrower, or to finance or refinance used Inventory, in each case as approved by Lender in its sole and absolute discretion.

5.1.3.Floorplan Loan Approvals.  A request from a Vendor (with respect to a Borrower) to Lender to fund Floorplan Inventory will be deemed to be a request from the Borrower for a Floorplan Loan Advance.

5.1.4.Inventory not Available for Floorplan Loans.  Only Vendors approved by Lender will be eligible to receive proceeds of the Floorplan Loan Facility.  Lender may, at any time and without notice to Borrower, elect not to finance any Inventory sold by particular Vendors, including any Vendors who are in default of their obligations to Lender, or with respect to which Lender deems itself insecure, or any Inventory or Proceeds thereof in which another Person has a Security Interest other than a Permitted Security Interest.  Except with respect to Approvals issued by Lender on or before the Floorplan Loan Maturity Date or before termination as set forth in Section 5.1.8 which such Approvals may be funded in Lender’s sole and absolute discretion, Lender shall not be obligated to fund any Floorplan Loan Advances after the Floorplan Loan Maturity Date or after the Floorplan Loan Facility has been terminated.

5.1.5.New Inventory.  If Borrower provides to Lender a written request to finance (“Advance Request”) an item or items of new Inventory (which is or was equipment acquired from the original equipment manufacturer or its distributor, and which has not been sold before), then Lender may approve some or all such new Inventory for financing under the Floorplan Loan Facility, subject to the following conditions or requirements:  (i) Lender may, in its discretion, advance up to 85% of Borrower’s purchase price for such equipment if the Advance is made within twelve months of the original invoice date for such equipment and such equipment has been used less than 100 hours; (ii) Lender may, in its discretion, for new equipment not satisfying the conditions in (i) above, advance up to the lesser of 85% of (A) the Borrower’s purchase price of any such new equipment Inventory, or (B) the price for such equipment listed in Green Guide Quick Sale, Farm Equipment Guide Quick Sale or other similar guides as Lender may select in its sole discretion, as necessary, with respect to such new equipment Inventory; and (iii) such other conditions or requirements as Lender may impose in its sole discretion.  Lender shall notify Borrower if it approves or disapproves of financing any new Inventory under the Floorplan Loan Facility.  Any new Inventory financed under the Floorplan Loan Facility shall be amortized by Borrower over 48 months for light equipment Inventory (for example, attachments, compact equipment, trailers and lift equipment Inventory) or over 54 months for heavy equipment Inventory (for example, dozers, excavators, loaders, combines, and tractors); provided, however that the 48/54 month principal amortization payments shall commence, in each case, six months following the Advance with respect to such equipment (unless such Inventory shall be leased by Borrower to another Person in which case the amortization payments shall begin immediately) and shall be level monthly principal payments.

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5.1.6.Used Inventory.  If Borrower provides to Lender an Advance Request with respect to an item or items of used Inventory (which is equipment not acquired from the original equipment manufacturer or its distributor, and which has been sold before) together with a written report acceptable to Lender and in such detail as requested by Lender describing the condition of each item of such used Inventory, then Lender may approve some or all such used Inventory for financing under the Floorplan Loan Facility, subject to the following conditions or requirements:  (i) Lender may, in its discretion, advance up to the lesser of 85% of (A) the Borrower’s purchase price of any such used Inventory or (B) the price for such used equipment listed in Green Guide Quick Sale, Farm Equipment Guide Quick Sale or other similar guides as Lender may select in its sole discretion, with respect to any such used Inventory, (ii) Lender or its designee shall have had the opportunity to physically inspect each such item of used Inventory and approved each such item of used Inventory for financing under the Floorplan Loan Facility, and (iii) such other conditions or requirements as Lender may impose in its sole discretion.  Lender shall notify Borrower if it approves or disapproves of financing any used Inventory under the Floorplan Loan Facility.  Any used Inventory financed under the Floorplan Loan Facility shall be amortized by Borrower over 36 months for light equipment Inventory (see Section 5.1.5 above) or over 48 months for heavy equipment Inventory (see Section 5.1.5 above), provided, however, the age of the used Inventory plus the amortization of such used Inventory cannot exceed (i) eight years for light equipment Inventory; (ii) ten years for heavy equipment Inventory; and (iii) three years for any equipment Inventory considered forestry equipment Inventory.

5.1.7.Requirements for Every Advance Request.  Subject to the terms of Section 11 and the other provisions of this Agreement, with regards to Floorplan Loans requested by Borrower under Section 5.1.5 and Section 5.1.6, only an Advance Request (which shall be in writing in the form specified by Lender from time to time and mailed, sent via email from a Borrowing Officer with such email containing a signed PDF copy of such duly signed request, personally delivered or telecopied as provided herein) from a Borrowing Officer to Lender that specifies the amount of the Advance to be made, the Advance Date, the new or used Inventory to be financed, the Vendor, and such other information as Lender shall request from time to time, shall be treated as a request for an Advance.  No Advance Date for any requested Advance may be other than a Business Day and a request for an Advance must be given prior to 11:00 a.m., Local Time, two Business Days prior to the Advance Date for such Advance.  Subject to the terms of Section 11 and the other provisions of this Agreement, Floorplan Loan Advances will be funded in accordance with Lender’s procedures.

5.1.8.Termination of Floorplan Loan Facility.  The Floorplan Loan Facility is a discretionary facility and may be terminated by Lender with respect to any future Floorplan Loans which have not been funded (whether or not an Approval has been issued) at any time by Lender upon written notice to the Borrower in accordance with this Section 5.1.8.  In addition to any other rights and remedies that Lender may have in this Agreement, including, without limitation, if there is an Existing Default and all rights and remedies set forth in Section 17.3 and in this Section, Lender may, at any time, whether or not there is an Existing Default, elect to terminate the Floorplan Loan Facility, and Borrower agrees that if there is no Existing Default, sixty (60) days prior notice of termination is reasonable and sufficient (although this provision shall not be construed to mean that shorter periods may not, in particular circumstances, also be reasonable and sufficient) and Lender will continue to fund Advances for Approvals issued on or before the expiration of such sixty (60) day period and repayment shall be in immediately

5

available funds in accordance with the applicable Transaction Statement and billing statement.  Borrower will not be relieved from any obligation to Lender arising out of Floorplan Loans made before the effective termination date of the Floorplan Loan Facility or made after the effective termination date of the Floorplan Loan Facility in connection with Approvals issued on or before such effective termination date.  Notwithstanding a termination of the Floorplan Loan Facility, Lender will retain all of its rights, interests and remedies hereunder and in all Collateral until Borrower has made Payment in Full.  The effective date of the termination of the Floorplan Loan Facility in accordance with this Section 5.1.8 shall be deemed the “Floorplan Termination Date”.

5.1.9.Repurchase Agreements.  Lender may enter into agreements with the Vendors who will be receiving proceeds of the Floorplan Loan Facility (each being a “Vendor Agreement” and collectively, the “Vendor Agreements”).  Lender makes no representation or warranty regarding the Vendor Agreements, including, without limitation regarding the enforceability thereof, whether any particular item of Inventory purchased by Borrower is subject to repurchase rights, or any repurchase rights that may be set forth therein.  Borrower acknowledges and agrees that Lender may take or refrain from taking any actions under or in connection with the Vendor Agreements in Lender’s commercially reasonable judgment.

5.1.10.Existing Transaction Statements and Approvals.  Pursuant to each of the Prior AWF’s, Transaction Statements and Approvals may have been issued by CDF (as such term is defined thereunder) or Administrative Agent (as such term is defined thereunder)  in favor of Borrower which remain outstanding.  Simultaneously with the execution and delivery by Borrower of this Agreement, all outstanding Transaction Statements and Approvals under the Prior AWF’s shall be deemed to have been ratified by and re-issued under this Agreement.  To the extent a Transaction Statement represents an outstanding advance under the Prior AWF’s, the same shall be deemed the initial Floorplan Loan Advance under the Floorplan Loan Facility, without further action on the part of Borrower, Lender or any Vendor.

5.1.11.LKE Inventory.  No Inventory financed by a Floorplan Loan shall be subject to a like-kind exchange, unless such Inventory is paid for in full prior to being subject to any like-kind exchange.

5.2.Increase in Floorplan Loan Facility.

5.2.1.The Borrower may, at its option at any time and from time to time before the Floorplan Loan Maturity Date, on no more than two occasions (or more occasions at Lender’s discretion) at anytime on or before the Termination Date, seek to increase the Floorplan Loan Facility by up to an aggregate amount not exceeding One Hundred Million Dollars ($100,000,000.00) upon written notice to Lender (which notice shall specify the amount of any such incremental increase), and any such notice shall be delivered at a time when no Event of Default has occurred and is continuing.  Lender may sell participations to such financial institutions as Lender may choose in its sole discretion to fund any such incremental increase. There is no commitment by Lender to provide any such incremental increase.

5.2.2.No increase in the Floorplan Loan Facility shall become effective until: (1) Lender has, in its sole discretion agreed to such increase stating the amount of the Floorplan Loan Facility increase and has obtained credit approval for such increase, (2) the Borrower accepts in writing such increased facility amount in writing, as the case

6

may be; (3) Borrower shall have delivered to Lender such amendments, certificates and other agreement as Lender may request in its sole discretion, (4) Borrower shall have delivered to Lender an opinion of Borrower’s outside counsel in form and substance satisfactory to Lender in its sole discretion, (5) if Lender chooses to sell participations, Lender shall have entered into participations agreements with third party financial institutions acceptable to it in its sole discretion, and (6) Borrower has agreed in writing to pay any fee required by Lender in connection with such increase.  Any such amendments to the Loan Documents and any such fees payable by Borrower shall be agreed to in writing by Borrower.

5.3.Termination.

5.3.1.At any time an Event of Default has occurred and is continuing, Lender may, without notice or demand to Borrowers or any other Covered Person, terminate the Floorplan Loan Facility, accelerate the Loan Obligations or take such other actions as they may have hereunder (including Section 17.3), the other Loan Documents or at law or at equity.

5.3.2.Borrower may at any time terminate Floorplan Loan Facility by giving written notice to Lender if and only if Borrower repays in full and in cash all of the Loan Obligations within 60 days of Lender’s receipt of such notice, including Floorplan Loan Advances that may be made with respect to any Approval issued during such 60 day period, and such termination shall be effective on or before the end of such 60 day period.  Notwithstanding a termination, Lender will retain all of its rights, interests and remedies hereunder and in all Collateral until Payment in Full.

5.3.3.Subject to the terms hereof, within five business days of Borrower’s request (which Borrower may request at any time), Lender shall provide a written payoff letter in form and content acceptable to Lender setting forth the amount required to be paid (or cash collateralized in the case of Approvals) for Payment in Full (subject to per diem amounts, additional Advances made or Approvals given or payments received after the date thereof, together with all fees, costs and expenses owing to Lender hereunder and the other Loan Documents), which letter shall provide that Lender agrees to release the Security Interest granted hereunder upon Payment in Full in same day funds of such amount.

6.Interest; Yield Protection.

6.1.Interest on the Floorplan Loan.

6.1.1.The term “Three Month LIBOR” with respect to any Transaction Statement, shall have the following meaning, regardless of any other definition that may appear in a Transaction Statement from time to time: the term “Three Month LIBOR” in such Transaction Statement shall mean, for any calendar month the Three Month LIBOR Rate published in the “Money Rates” column of the Wall Street Journal on the first Business Day of such month. After Maturity or upon the occurrence and during the continuance of an Event of Default, and if Lender so determines in its absolute discretion, Indebtedness under each Transaction Statement shall bear interest at the default or post-maturity rate described therein (but not greater than at the rate which would otherwise apply under such Transaction Statement plus 2.0%).  In the event no default or post-maturity rate is specified in any Transaction Statement, then after Maturity or upon the occurrence and during the continuance of an Event of Default, and if Lender so determines in its absolute

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discretion, the Indebtedness under such Transaction Statement shall bear interest at the rate which would otherwise apply under such Transaction Statement plus 2.0%.

6.1.2.Borrower and Lender agrees that certain financial terms of any Floorplan Loan Advance made under this Agreement, whether regarding finance charges, other fees, maturities, curtailments or other financial terms, are not set forth herein because such terms depend, in part, upon the availability of Vendor discounts, payment terms or other incentives, prevailing economic conditions, Lender’s floorplanning volume with Borrower and with Borrower’s Vendors, and other economic factors which may vary over time.  Borrower, and Lender further agree that it is therefore in their mutual best interest to set forth in this Agreement only the general terms of the Floorplan Loan Facility.  Upon agreeing to finance a particular item of Inventory for Borrower, Lender will send Borrower a transaction statement identifying such Inventory and the applicable financial terms (each being a “Transaction Statement”).  Lender may change any aspect or portion of any Transaction Statement.  Unless Borrower notifies Lender in writing of any objection within thirty (30) days after the earlier to occur of the date a Transaction Statement is made available to Borrower or the date a Transaction Statement is sent to Borrower:  (a) the amount shown on such Transaction Statement will be an account stated; (b) Borrower will have agreed to all rates, charges and other terms shown on such Transaction Statement; (c) Borrower will have agreed that Lender is financing the items of Inventory referenced in such Transaction Statement at Borrower’s request; and (d) such Transaction Statement will be incorporated herein by reference, will be made a part hereof as if originally set forth herein, and will constitute an addendum hereto.  If Borrower objects to the terms of any Transaction Statement, Borrower agrees to pay Lender for such Inventory in accordance with the most recent terms for similar Inventory to which Borrower has not objected (or, if there are no prior terms, at the lesser of the then agreed upon rate between Lender and Borrower as set forth in any Interest Rate and Fee Letter and 16.00% per annum or at the maximum lawful contract rate of interest permitted under applicable law).

6.1.3.Borrower will pay the interest, fees, and finance charges to Lender on the outstanding principal amount of the Floorplan Loans, respectively, at the rate(s) and in the amount(s) shown on the applicable Transaction Statement, unless Borrower objects thereto as provided in Section 6.1.2.  All such amounts (whether interest, fees or late charges, but excluding principal) due and owing as set forth in each Transaction Statements shall be retained by Lender.  The finance charges attributable to the rate shown on each Transaction Statement will:  (a) be computed based on a 360 day year; (b) be calculated by multiplying the Daily Charge (as defined below) by the actual number of days in the applicable billing period; and (c) accrue at the applicable interest rate set forth in the applicable Transaction Statement (which such rate may be zero percent for a period of time) from the invoice date of the Collateral identified on such Transaction Statement until Lender receives full payment as provided in this Agreement for each item of such Collateral.  The “Daily Charge” is the product of the Daily Rate (as defined below) multiplied by the Average Daily Balance (as defined below).  The “Daily Rate” is the quotient of the annual rate shown on each Transaction Statement divided by 360, or the monthly rate shown on each Transaction Statement divided by 30.  The “Average Daily Balance” is the quotient of (i) the sum of the outstanding principal under the Floor Plan Facility on each day of a billing period for each item of Collateral identified on a Transaction Statement, divided by (ii) the actual number of days in such billing period.  With respect to the Floorplan Loans, the annual percentage rate of the finance charges relating to any item of Collateral financed thereby will be calculated from the invoice

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date of such Collateral (which rate may be zero percent for a period of time), regardless of any period during which any finance charge subsidy shall be paid or payable by any third party.

6.1.4.Lender will send Borrower a monthly billing statement identifying all charges, including any late fees assessed, due to Lender.  The charges specified on each billing statement will be (1) due and payable in full immediately on receipt, and (2) an account stated, unless Lender receives Borrower’s written objection thereto within fifteen (15) days after it is transmitted or otherwise sent to Borrower. If Lender does not receive, by the 25th day of any given month, payment of all charges accrued to Borrower’s account with Lender during the immediately preceding month, Borrower will (to the extent allowed by law) pay Lender a late fee equal to the greater of $5 or 5% of the amount of such charges (payment of such fee does not waive the default caused by the late payment). Lender may adjust the billing statement at any time to conform to applicable law and this Agreement.

6.2.Interest on Floorplan Loans.  Borrower and Lender acknowledges and agrees that the rate of return paid on any Floorplan Loan is dependent on numerous factors, including discounts and subsidies offered by the Vendors.

6.3.Adjusted LIBOR Rate.  The “Adjusted LIBOR Rate” for any LIBOR Loan is the Three-Month LIBOR Rate plus the LIBOR Increment.  The “LIBOR Increment” shall be the amount set forth in the Interest Rate and Fee Letter and defined therein as the “LIBOR Increment.”  The interest rate paid by Borrower on the Floorplan Loan is the interest rate described in each Transaction Statement, as provided in Section 6.1.

6.4.Time of Accrual.  Interest shall accrue on all principal amounts outstanding from the date when first outstanding to the date when no longer outstanding.  Amounts shall be deemed outstanding until payments are applied thereto as provided herein.

6.5.Computation.  Interest shall be computed for the actual days elapsed over a year deemed to consist of 360 days for all LIBOR Loans.  The Three-Month LIBOR Rate will be determined by Lender before the initial Advance on the Effective Date and with respect to LIBOR Loans, and on the first Business Day of each calendar month thereafter.  Interest rates that are based on the Three-Month LIBOR Rate shall be effective for the entire calendar month for which such rate is determined.

6.6.Rate After Maturity and Rate After An Event of Default.  The default rate on the Floorplan Loans is described in Section 6.1.1.

6.7.Taxes.

6.7.1.Any and all payments by the Borrower to or for the account of Lender hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future Taxes, excluding, in the case of Lender, Taxes imposed on its income, and franchise Taxes imposed on it, by the jurisdiction (or any political subdivision thereof) under the laws of which Lender (or its Applicable Lending Office) is organized or any political subdivision thereof.  If the Borrower shall be required by Law to deduct any Taxes from or in respect of any sum payable under this Agreement or any other Loan Document to Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) Lender receives an amount equal to the

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sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Law, and (iv) the Borrower shall furnish to Lender , at its address referred to herein, the original or a certified copy of a receipt evidencing payment thereof or other evidence satisfactory to Lender .

6.7.2.In addition, the Borrower agrees to pay any and all present or future stamp or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under this Agreement or any other Loan Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as “Impositions”), except income Taxes and franchise Taxes imposed by any jurisdiction referred to in Section 6.7.1.

6.7.3.The Borrower agrees to indemnify Lender for the full amount of Taxes and Impositions (including, without limitation, any Taxes or Impositions imposed or asserted by any jurisdiction on amounts payable under this Section) that are required to be paid by the Borrower hereunder but are paid by Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; provided, however, that Lender shall not have any obligation to pay any such Taxes, Impositions or other liability.

6.7.4.Within thirty (30) days after the date of any payment of Taxes described in this Section 6.7, the Borrower shall furnish to Lender the original or a certified copy of a receipt evidencing such payment or other evidence of payment satisfactory to v.

6.7.5.Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section shall survive the termination of the Floorplan Loan Facility and the payment in full in cash of the Loan Obligations.

6.8.Compensation for Increased Costs and Reduced Returns; Capital Adequacy.

6.8.1.If, after the date hereof, Lender shall have reasonably determined that the adoption of any applicable Law regarding capital adequacy or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank, or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank, or comparable agency, has or would have the effect of reducing the rate of return on the capital of Lender or any corporation controlling Lender as a consequence of Lender’s obligations hereunder to a level below that which Lender or such corporation could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy), then from time to time upon demand the Borrower shall pay to Lender such additional amount or amounts as will reasonably compensate Lender for such reduction.

6.8.2.Lender shall promptly notify the Borrower of any event of which it has knowledge, occurring after the date hereof, which will entitle Lender to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of Lender, be otherwise disadvantageous to it.  If Lender is claiming compensation under this Section it shall furnish to the Borrower a statement setting forth the additional amount or amounts to be paid to it hereunder which shall be conclusive in

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the absence of manifest error.  In determining such amount, Lender may use any reasonable averaging and attribution methods.  Lender agrees, with respect to the provisions of this Section, to treat Borrower in a manner substantially similar to that of its other similarly situated customers.

6.9.Usury.  Notwithstanding any provisions to the contrary in Section 6 or elsewhere in any of the Loan Documents, Borrower shall not be obligated to pay interest at a rate which exceeds the maximum rate permitted by Law.  If, but for this Section 6.9, Borrower would be deemed obligated to pay interest at a rate which exceeds the maximum rate permitted by Law, or if any of the Loan Obligations is paid or becomes payable before its originally scheduled Maturity and as a result Borrower has paid or would be obligated to pay interest at such an excessive rate, then (i) Borrower shall not be obligated to pay interest to the extent it exceeds the interest that would be payable at the maximum rate permitted by Law; (ii) if the outstanding Loan Obligations have not been accelerated as provided in Section 17.3.2, any such excess interest that has been paid by Borrower shall be refunded; (iii) if the outstanding Loan Obligations have been accelerated as provided in Section 17.3.2, any such excess that has been paid by Borrower shall be applied to the Loan Obligations as provided in Section 17.4; and (iv) the effective rate of interest shall be deemed automatically reduced to the maximum rate permitted by Law.

7.Payments.

7.1.Scheduled Payments on Loans; Applications to Loans.

7.1.1.Interest.  Borrower shall pay to Lender , all interest, fees and charges accrued on the Floorplan Loan in accordance with the Transaction Statements.

7.1.2.Principal.  Borrower will immediately pay Lender the principal indebtedness owed Lender on each item of Collateral financed by Lender (as shown on the Transaction Statement identifying such Collateral) under the Floorplan Loan Facility on the earliest occurrence of any of the following events:  (a) when such Collateral is (i) lost, (ii) stolen, or (iii) damaged and no longer merchantable; (b)  in strict accordance with any curtailment schedule for such Collateral (as shown on the Transaction Statement identifying such Collateral); (c) for Collateral financed under Scheduled Payment Program (“SPP”) terms (as shown on the Transaction Statement identifying such Collateral), or in accordance with Sections 5.1.5 or 5.1.6, in strict accordance with the installment payment schedule; and (d) when otherwise required under the terms of any financing program agreed to in writing by the Borrower Lender.  Any third party discount, rebate, subsidy, bonus or credit granted to Borrower for any Collateral will not reduce the Loan Obligations until Lender has received payment as provided in this Agreement.  The Floorplan Shortfall, if any, will remain in effect, until the next determination of the Floorplan Shortfall by Lender.  Lender may determine the Floorplan Shortfall as often as it chooses in its sole discretion.  Borrower shall pay all amounts owing to Lender under the Floorplan Loan Facility as set forth herein and in the Transaction Statement.

7.1.3.Maturity.  Borrower shall repay the entire amount of the Floorplan Loan on the Floorplan Termination Date or as specified elsewhere in this Agreement (such date being, the “Floorplan Loan Maturity Date”), plus cash collateral equal to 100% of any unfunded Approvals, in which case such Approvals shall be otherwise paid in accordance with the applicable Transaction Statements.

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7.2.Prepayments.

7.2.1.Voluntary Prepayments.  Subject to the limitations in the following sentences, except for mandatory prepayments and funds received by Lender as contemplated by Section 7.1, Borrower may wholly prepay any Floorplan Loan at any time and may make a partial prepayment thereon from time to time, without penalty or premium if Borrower pays any amount that is due as a consequence of the prepayment of any LIBOR Loan and as otherwise provided for in this Agreement.  All such prepayments, unless otherwise expressly stated in writing by Borrower to Lender prior to the making of such prepayment, will be deemed made on the Floorplan Loan until it is reduced to zero (with, in each case, the payment of any and all penalties and premiums due hereunder in connection therewith), and will be applied by Lender to reduce the Floorplan Loans.

7.2.2.Mandatory Prepayments.  On any date that the sum of the Floorplan Loans plus unfunded Approvals exceeds the Floorplan Loan Facility, then the Borrower shall, on such date, pay such excess to Lender and failure to pay such excess on such date shall be an immediate Event of Default.  In addition, on any date that the sum of the Floorplan Loans, the unfunded Approvals, and the Floorplan Shortfall exceeds the Floorplan Inventory Value, then the Borrower shall immediately make a payment of the amount of such excess to Lender and failure to pay such excess on such date shall be an immediate Event of Default.

7.2.3.Other Mandatory Prepayments.

7.2.3.1.Insurance Proceeds.  All Insurance Proceeds relative to the Personal Property Collateral shall be deposited with Lender and shall be applied by Lender to the Loan Obligations.  Lender is hereby authorized to participate in any proceeding for the condemnation or other taking of any of Borrower’s Personal Property Collateral and Borrower from time to time will deliver to Lender all instruments reasonably requested by Lender to permit such participation.

Every prepayment under this Section  shall be applied to reduce the Floorplan Loans to zero.

7.3.Manner of Payments and Timing of Application of Payments.

7.3.1.Payment Requirement.  Unless expressly provided to the contrary elsewhere herein, Borrower shall make each payment on the Loan Obligations to Lender as required under the Loan Documents at the Applicable Lending Office of Lender on the date when due, without deduction, set-off or counterclaim (provided, however, the making of such payment shall not constitute a waiver by Borrower of counterclaims arising from the willful misconduct or gross negligence of Lender).  All such payments will be applied to the Loan Obligations as provided herein.

7.3.2.Application of Payments and Proceeds.  All immediately available funds collected at or before 12:00 noon (Local Time) on a Business Day, will be applied to the Loan Obligations as provided herein.  Such funds received on a day that is not a Business Day, or if on a Business Day, after 12:00 noon (Local Time), will be deemed received on the immediately following Business Day, and applied to the Loan Obligations as provided herein.  The amount so received Lender will be applied by Lender to the relevant Loan Obligation on the Business Day when received.  Borrower will also pay to

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Lender , such fees as Lender generally charges its customers for each check returned unpaid for insufficient funds (an “NSF check”) (such payment repays Lender’s estimated administrative costs; it does not waive any Default or Event of Default caused by the NSF check).

7.3.3.Interest Calculation.  Interest shall begin accruing, and be owing and payable on an Advance on the day such Advance is made by Lender (provided, however, that interest on the Floorplan Loan shall begin accruing on the date of the applicable invoice, as provided in the applicable Transaction Statement at the applicable rate set forth therein (which rate may be zero percent for a period of time)).  Section 7.3.2 notwithstanding, for purposes of interest calculation only, (i) a payment by check, draft or other instrument received on a Business Day shall be deemed to have been applied to the relevant Loan Obligation on the third following Business Day, (ii) a payment received by ACH (Automatic Clearing House) received on a Business Day shall be deemed to have been applied to the relevant Loan Obligation on the same Business Day, and (iii) a payment received by wire transfer received on a Business Day shall be deemed to have been applied to the relevant Loan Obligation on the Business Day when it is received.  Borrower acknowledges that payments in cash on the Loan Obligations will not be accepted by Lender.

7.4.Returned Instruments.  If a payment is made by check, draft or other instrument and the check, draft or other instrument is returned unpaid, any application of the payment to the Loan Obligations will be reversed and will be treated as never having been made.

7.5.Compelled Return of Payments or Proceeds.  If Lender is for any reason compelled to surrender any payment or any proceeds of the Collateral because such payment or the application of such proceeds is for any reason invalidated, declared fraudulent, set aside, or determined to be void or voidable as a preference, an impermissible set-off, or a diversion of trust funds, then this Agreement and the Loan Obligations to which such payment or proceeds was applied or intended to be applied shall be revived as if such application was never made; and Borrower shall be liable to pay to Lender, and shall indemnify Lender for and hold Lender harmless from any loss with respect to, the amount of such payment or proceeds surrendered.  This Section shall be effective notwithstanding any contrary action that Lender may take in reliance upon its receipt of any such payment or proceeds.  Any such contrary action so taken by Lender shall be without prejudice to Lender’s rights under this Agreement and shall be deemed to have been conditioned upon the application of such payment or proceeds having become final and indefeasible.  The provisions of this Section shall survive termination of the Floorplan Loan Facility and the indefeasible payment and satisfaction of all of the Loan Obligations.

7.6.Due Dates Not on Business Days.  If any payment required hereunder becomes due on a date that is not a Business Day, then such due date shall be deemed automatically due on the preceding Business Day.

8.Procedure for Obtaining Advances.

8.1.Initial Advances.   The manner of disbursement shall be subject to Lender’s approval.  Lender will fund the initial Floorplan Loan in accordance with its policies and procedures.

8.2.Subsequent Floorplan Loan Advances.  Lender will fund subsequent Floorplan Loan in accordance with its policies and procedures and subject to the terms and conditions of this Agreement.  No requested Floorplan Loan Advance shall violate any provision of this Agreement, including, without limitation, 7.2.2.

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8.2.1.Lender’s Right to Make Other Certain Advances.

8.2.1.1.Payment of Loan Obligations.  Lender shall have the right to make Advances at any time and from time to time to cause timely payment of any of the Loan Obligations, including without limitation, to pay any fees, interest or principal on the Floorplan Loan, and to pay any other fees owing to Lender; provided, however, with respect to third party fees, if there is no Existing Default, Lender shall use its reasonable efforts to give prior notice to the Borrower of the payment of any such fees from an Advance (but shall have no liability for its failure to notify Borrower, and any such failure shall not give rise to a claim or cause of action by Borrower against Lender).  If there is no Existing Default, Lender shall use reasonable efforts to notify Borrower (but shall have no liability for its failure to notify Borrower and such failure shall not give rise to a claim or cause of action by Borrower Lender) on the day it makes an Advance to pay any interest owing hereunder.  Lender may select the Advance Date for any such Advance, but such Advance Date may only be a Business Day.  Lender will give notice to Borrower after any such Advance is made.

8.2.1.2.Payments to Other Creditors.  If Lender becomes obligated to reimburse or pay to any creditor of Borrower any amount in order to (i) obtain a release of such creditor’s Security Interest in any of the Collateral, other than Permitted Security Interests, or (ii) otherwise satisfy an Obligation of Borrower to such creditor to the extent not indefeasibly satisfied by the initial Advances, then Lender shall have the right (but shall have no obligation) to make Advances for that purpose.  Lender may select the Advance Date for any such Advance, but such Advance Date may only be a Business Day.  Lender will give notice to Borrower after any such Advance is made.

8.3.Disbursement.  Provided that all conditions precedent herein to a requested Advance have been satisfied, Lender will make the amount of such requested Advance available to the appropriate Vendor or to Borrower, on the applicable Advance Date in immediately available funds in Dollars at the Applicable Lending Office.

8.4.Restrictions on Advances.  Advances will only be made for the purposes permitted in Section 14.1.

8.5.Each Advance Request a Certification.  Each submittal of a request for an Advance by a Borrowing Officer shall constitute a certification by Borrower that (i) there is no Existing Default, (ii) all conditions precedent hereunder to the making of the requested Advance have been satisfied, and (iii) the Representations and Warranties are then true, with such exceptions as have been disclosed to Lender in writing by the Covered Person making such Representations and Warranties from time to time and are satisfactory to Lender, and will be true on the Advance Date, as applicable, as if then made with such exceptions.

8.6.Requirements for Every Advance Request.  Subject to the terms of Section 11 and the other provisions of this Agreement, Floorplan Loan Advances will be funded in accordance with Lender’s procedures.

8.7.Exoneration of Lender.  Lender shall not incur any liability to Borrower for treating a request that meets the express requirements of Sections 8.6, as a request for an Advance Lender believes in good faith that the Person making the request is a Borrowing Officer of Borrowing

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Agent.  Lender shall not incur any liability to Borrower for failing to treat any such request as a request for an Advance Lender believes in good faith that the Person making the request is not a Borrowing Officer of Borrowing Agent.

9.Security Interest in Personal Property Collateral; Security.

9.1.Grant of Security Interest; Landlord Consents.

As security for the payment and performance of the Loan Obligations, Borrower hereby grants to Lender, a first priority security interest in all of the Personal Property Collateral.  Borrower shall on the Execution Date and from time to time thereafter execute and deliver, or cause to be executed and delivered, to Lender such additional security agreements and other security documents as they relate to the Collateral as reasonably requested by Lender from time to time, including, without limitation, the following documents, each in form and substance satisfactory to Lender: with respect to any real property leased (whether pursuant to a lease, bailment or otherwise) by Borrower or any other Covered Person on which Collateral valued in excess of $50,000 is located, whether on, prior to or after the Effective Date, Borrower shall cause to be delivered to Lender such landlord consents and/or warehousemen’s letters as Lender shall reasonably request.

10.Power of Attorney.  Each Borrower hereby authorizes (and shall cause each other Covered Person to do the same) Lender and irrevocably appoints Lender (acting by any of its officers) as such Borrower’s agent and attorney-in-fact (which appointment is coupled with an interest and is therefore irrevocable) to do any of the following until Payment in Full:

10.1.At any time while there is an Existing Default, (i) demand payment of any Account that is Collateral; (ii) enforce payment of any such Account by legal proceedings or otherwise; (iii) exercise all of such Borrower’s rights and remedies in proceedings brought to collect any such Account; (iv) sell or assign any such Account upon such terms, for such amount and at such time or times as Lender deems advisable; (v) settle, adjust, compromise, extend or renew any such Account; (vi) discharge and release any such Account; (vii) prepare, file and sign such Borrower’s name on any proof of claim in bankruptcy or other similar documents against an Account Debtor with respect to such an Account; (viii) notify the postal authorities of any change of the address for delivery of such Borrower’s mail to any address designated by Lender and open and process all mail addressed to such Borrower; (ix) endorse such Borrower’s name on any verification of such Accounts and notices thereof to Account Debtors; (x) make one or more Floorplan Loan Advances to pay the costs and expenses of any of the foregoing; and (xi) do anything that Lender deems necessary in its reasonable discretion to assure that the Loan Obligations are fully and indefeasibly paid and satisfied in cash and that Borrower complies with each covenant and agreement contained herein and in the other Loan Documents.

10.2.At any time while there is an Existing Default, (i) take control in any manner of any item of payment or proceeds of any Account that is Collateral; (ii) have access to any lockbox or postal box into which such Borrower’s mail is deposited; (iii) endorse such Borrower’s name upon any items of payment with respect to such Accounts and deposit the same in the Cash Collateral Account and apply the proceeds thereof to the Loan Obligations as provided herein; (iv) endorse such Borrower’s name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Account that is Collateral or other item of the Collateral; and (v) execute in such Borrower’s name and on such Borrower’s behalf any financing statement or amendments thereto, or such mortgages, deeds of trust or other security documents deemed necessary or appropriate by Lender to assure the perfection or continued perfection of Lender’s Security Interests in the Collateral.  If Lender by exercising its rights in this Section

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receives mail not containing Collateral, Lender will use its reasonable efforts to return such mail to the Parent within three (3) Business Days of its receipt thereof, provided however, Lender shall have no liability for the failure to so return such mail unless such failure was willful.

The foregoing power of attorney and authorization shall be deemed irrevocable, but shall be automatically revoked only upon Payment in Full.

11.Conditions of Lending.

11.1.Conditions to Initial Advance.  Lender will have no obligation to fund the initial Floorplan Loan Advance or any subsequent Floorplan Loan Advance unless the following conditions are satisfied or waived by Lender:

11.1.1.Listed Documents and Other Items.  Lender shall have received on or before the Effective Date all of the documents and other items listed or described in Exhibit 11.1.1 hereto, with each being satisfactory to Lender and (as applicable) duly executed and (also as applicable) sealed, attested, acknowledged, certified, or authenticated.

11.1.2.Financial Condition.  Lender shall have determined to its satisfaction that the Financial Statements of Borrower for the period ended April 30, 2009 (the “Initial Financial Statements”), and the projections of Borrower’s financial condition, results of operations, and cash flow statements of Borrower for the period ending as of January 31, 2010 (the “Proforma Financial Statements”, as furnished to Lender and other information furnished to Lender by Borrower (i) for the periods ended on or before the Effective Date, fairly and accurately reflect the business and financial condition of Borrower, its cash flows and the results of its operations for such periods in accordance with GAAP, and (ii) for the periods that will end after the Effective Date, fairly forecast on a reasonable basis and in Borrower’s good faith the business and financial condition of Borrower, its cash flows, and the results of its operations for such periods in accordance with GAAP.

11.1.3.Default.  There shall be no Existing Default and no Default or Event of Default will occur as a result of such Advance being requested or made or the application of the proceeds thereof.

11.1.4.Perfection of Security Interests.  Every Security Interest required to be granted by Borrower to Lender under Section 9 shall have been perfected and shall be, except for Permitted Security Interests, as otherwise satisfactory to Lender, a first priority Security Interest.

11.1.5.Representations and Warranties.  The Representations and Warranties shall be true and correct, with such exceptions as are set forth in the Disclosure Schedule.

11.1.6.Material Adverse Change.  Since the date of the last audited Financial Statements delivered to Lender for the period ending January 31, 2009, there shall not have been any change which has had or is reasonably likely to have a Material Adverse Effect.

11.1.7.Pending Material Proceedings.  There shall be no pending Material Proceedings.

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11.1.8.Payment of Fees.  Borrower shall have paid and reimbursed to Lender all fees, costs and expenses that are payable or reimbursable to Lender hereunder on or before the Effective Date.

11.1.9.Other Items.  Lender shall have received such other consents, approvals, opinions, certificates, documents or information as it reasonably deems necessary to issue an Approval as necessary, including releases or intercreditor agreements acceptable to Lender from any Person holding or purporting to hold a Security Interest in any of the Collateral.

11.2.Conditions to Subsequent Advances.  Lender will have no obligation to fund any Advance and after the initial Floorplan Loan Advance, unless the following conditions are satisfied or waived by Lender:

11.2.1.General Conditions.  All of the conditions to the initial Advances in Section 11.1 (except the condition in Section 11.1.5) shall have been and shall remain satisfied.

11.2.2.Representations and Warranties.  The Representations and Warranties are then true, with such exceptions as have been disclosed to Lender in writing by Borrower or each Guarantor from time to time and are satisfactory to Lender, and will be true as of the time of such Advance, as if then made with such exceptions.

11.2.3.Approvals.  With regards to a Floorplan Loan Advance, an Approval has been issued by Lender.

11.2.4.Default.  There shall be no Existing Default and no Default or Event of Default will occur as a result of such Advance being requested or made or the application of the proceeds thereof.

11.2.5.Releases or Intercreditor Agreements.  Releases or intercreditor agreements acceptable to Lender from any Person holding or purporting to hold a Security Interest in any of the Collateral.

12.Representations and Warranties.  Except as otherwise described in the Disclosure Schedule attached hereto as Exhibit 12 as updated from time to time pursuant to the provisions hereof, Borrower represents and warrants to Lender, as follows:

12.1.Organization and Existence.  Each Covered Person is duly organized and existing in good standing under the Laws of the state of its organization and is duly qualified to do business and is in good standing in every state where the nature or extent of its business or properties require it to be qualified to do business, except where the failure to so qualify will not have a Material Adverse Effect.  Each Covered Person has the power and authority to own its properties and carry on its business as now being conducted.  Section 12.1 of the Disclosure Schedule, as updated from time to time as permitted herein, set forth (a) the Borrower’s and each other Covered Person’s jurisdiction of organization, (b) the location of the Borrower’s and each other Covered Person’s chief executive office, (c) the Borrower’s and each other Covered Person’s exact legal name as it appears on its organizational documents, (d) all prior legal names and trade names of each Borrower and each other Covered Person since January 1, 2001, (e) the Borrower’s and each other Covered Person’s organizational identification number (to the extent the Borrower’s and each other Loan Party’s is organized in a jurisdiction which assigns such

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numbers), and (f) the Borrower’s and each other Covered Person’s federal employer identification number.

12.2.Authorization.  Each Covered Person is duly authorized to execute and perform every Loan Document to which such Covered Person is a party, and Borrower is duly authorized to borrow hereunder, and this Agreement and the other Loan Documents have been duly authorized by all requisite corporate action (or in the case of Covered Persons which are not corporations, other organizational action) of each Covered Person.  No consent, approval or authorization of, or declaration or filing with, any Governmental Authority, and no consent of any other Person, is required in connection with any Covered Person’s execution, delivery or performance of this Agreement and the other Loan Documents to which it is a party, except for those already duly obtained.

12.3.Due Execution.  Every Loan Document to which a Covered Person is a party has been executed on behalf of such Covered Person by a Person duly authorized to do so.

12.4.Enforceability of Obligations.  Each of the Loan Documents to which a Covered Person is a party constitutes the legal, valid and binding obligation of such Covered Person, enforceable against such Covered Person in accordance with its terms, except to the extent that the enforceability thereof against such Covered Person may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally or by equitable principles of general application.

12.5.Burdensome Obligations.  No Covered Person is a party to or bound by any Contract or is subject to any provision in the Charter Documents of such Covered Person which, if performed by such Covered Person, could reasonably be likely to result in a Default or Event of Default.

12.6.Legal Restraints.  The execution and performance of any Loan Document by a Covered Person does not and will not violate or constitute a default under the Charter Documents of such Covered Person, any Material Agreement of such Covered Person, or any Material Law applicable to such Covered Person, and does not and will not, except as expressly contemplated or permitted in this Agreement, result in any Security Interest being imposed on any of such Covered Person’s property.

12.7.Labor Contracts and Disputes.  There is no collective bargaining agreement or other labor contract covering employees of a Covered Person.  To Borrower’s Knowledge, no union or other labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of employees of a Covered Person.  There is no pending or, to Borrower’s knowledge, threatened, strike, work stoppage or other material labor dispute against or affecting any Covered Person or its employees, which has had or could reasonably be likely to have a Material Adverse Effect.

12.8.No Material Proceedings.  There are no Material Proceedings pending or, to the Borrower’s Knowledge, threatened.

12.9.Material Licenses.  All Material Licenses have been obtained or exist for each Covered Person.

12.10.Compliance with Material Laws.  Each Covered Person is in compliance with all Material Laws.  Without limiting the generality of the foregoing:

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12.10.1.General Compliance with Environmental Laws.  The operations of every Covered Person comply with all applicable Environmental Laws except where the failure to be in compliance would not reasonably be likely to have a Material Adverse Effect.

12.10.2.Proceedings.  None of the operations of any Covered Person are the subject of any written judicial or administrative complaint, order or proceeding alleging the violation of any applicable Environmental Laws which could reasonably be likely to have a Material Adverse Effect.

12.10.3.Investigations Regarding Hazardous Materials.  To Borrower’s Knowledge, none of the operations of any Covered Person are the subject of investigation by any Governmental Authority regarding the improper transportation, storage, disposal, generation or release into the environment of any Hazardous Material, the results of which have or could reasonably be likely to have a Material Adverse Effect or reduce materially the value of the Collateral.

12.10.4.Notices and Reports Regarding Hazardous Materials.  No written notice or report under any Environmental Law indicating a past or present spill or release into the environment of any Hazardous Material has been filed within the four years ending on the Execution Date, or is required to be filed, by any Covered Person with any Governmental Authority.

12.10.5.Hazardous Materials on Real Property.  No Covered Person has at any time, and to Borrower’s Knowledge, no other Person has at any time during any Covered Person’s occupancy of such real property, transported, stored, disposed of, generated or released any Hazardous Material on the surface, below the surface, or within the boundaries of any real property owned or operated by such Covered Person or any improvements thereon in violation of applicable Law except where such violation is not reasonably likely to have a Material Adverse Effect.  No property of any Covered Person is subject to a Security Interest in favor of any Governmental Authority for any liability under any Environmental Law or damages arising from or costs incurred by such Governmental Authority in response to a spill or release of Hazardous Material into the environment.

12.10.6.Environmental Property Transfer Acts.  No environmental property transfer acts are applicable to the transactions contemplated by this Agreement and each Covered Person has provided all notices and obtained all necessary environmental permit transfers and consents, if any, required in order to consummate the transactions contemplated by this Agreement, to perfect Lender’s Security Interests and to operate such Covered Person’s business as presently or proposed to be operated, except in any case where the failure to provide such notices, obtain such permits or consents could not reasonably be likely to have a Material Adverse Effect.

12.11.Other Names.  Except as disclosed in the Disclosure Schedules or in writing to Lender from time to time with no less than thirty (30) days prior written notice to Lender (unless Lender agrees in writing to a shorter period) (i) no Covered Person has used any name other than the full name which identifies such Covered Person in this Agreement, and (ii) the only trade name or style under which a Covered Person sells Inventory or creates Accounts, or to which instruments in payment of Accounts are made payable, is the name which identifies such Covered Person in this Agreement.

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12.12.Prior Transactions.  Except as described in section 12.12 of the Disclosure Schedule except for Permitted Acquisitions (including, transactions contemplated by the last proviso in Section 15.17), since the Effective Date, no Covered Person has been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property outside of the ordinary course of business.

12.13.Capitalization.  Other than with respect to Parent, each Covered Person’s authorized capital stock, partnership interests and membership interests and issued and outstanding capital stock, partnership interests and membership interests is as described in section 12.13 of the Disclosure Schedule; provided, however, Borrower shall update the Disclosure Schedule with respect to any newly-created Subsidiary (in each case, with obtaining the prior written consent of Lender, and Borrower shall comply with the terms of Section 15.17 hereof); and all issued and outstanding shares, partnership interests and membership interests of each Covered Person are validly issued and outstanding, fully paid and non-assessable, and are owned beneficially and of record by the Persons listed.

12.14.Solvency.  Each Borrower is Solvent prior to and after giving effect to, the making of each Advance and after giving effect to the contribution provisions of Section 17.3.9.

12.15.Projections.  The projections of Borrower’s financial condition, results of operations, and cash flow for the period through January 31, 2010, a copy of which have been delivered to Lender, represent Borrower’s good faith estimate of Borrower’s future financial performance for the periods set forth therein.  Such projections have been prepared on the basis of the assumptions set forth therein reasonably believed by Borrower in good faith to be fair and reasonable.

12.16.Financial Statements.  The Financial Statements are complete and correct in all material respects, have been prepared in accordance with GAAP, and fairly reflect the financial condition, results of operations and cash flows of the Persons covered thereby as of the dates and for the periods stated therein.

12.17.No Change in Condition.  Since the date of the initial Financial Statements and the Financial Statements delivered to Lender as required herein, there has been no change which has had or could reasonably be likely to have a Material Adverse Effect.

12.18.No Defaults.  No Covered Person is in breach or violation under any Material Agreement or any Material Obligation of such Covered Person.  No Default has occurred which is continuing and no Event of Default has occurred and is continuing.

12.19.Investments.  No Covered Person has any Investments in other Persons except Permitted Investments.

12.20.Indebtedness.  No Covered Person has any Indebtedness except Permitted Indebtedness.

12.21.Indirect Obligations.  No Covered Person has any Indirect Obligations except existing Permitted Indirect Obligations.

12.22.[Intentionally omitted].

12.23.Capital Leases.  No Covered Person has an interest as a lessee under any Capital Leases other than Capital Leases that are Permitted Indebtedness.

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12.24.Tax Liabilities; Governmental Charges.  Each Covered Person has filed or caused to be filed all tax reports and returns required to be filed by it with any Governmental Authority, except where extensions have been properly obtained.  Each Covered Person has paid or made adequate provision for payment of all Taxes of such Covered Person, except Taxes which are being diligently contested in good faith by appropriate proceedings and as to which such Covered Person has established adequate reserves in conformity with GAAP.  No Security Interest for any such Taxes has been filed and no claims are being asserted in writing with respect to any such Taxes which, if adversely determined, have or could reasonably be likely to have a Material Adverse Effect.  There are no material unresolved issues concerning any liability of a Covered Person for any Taxes which, if adversely determined, has or could reasonably be likely to have a Material Adverse Effect.

12.25.Pension Benefit Plans.  All Pension Benefit Plans that Borrower or any ERISA Affiliate has maintained, sponsored, or contributed to in the past 5 years comply with all Material Laws applicable thereto and will continue to so comply.

12.26.Welfare Benefit Plans.  No Covered Person or ERISA Affiliate of any Covered Person maintains a Welfare Benefit Plan that has a liability which, if enforced or collected, has had or could reasonably be likely to have a Material Adverse Effect.  Each Covered Person and each ERISA Affiliate of any Covered Person has complied in all respects with the applicable requirements of Section 4980B of the Code pertaining to continuation coverage as mandated by COBRA, except any failure that does not have or could be reasonably likely not to have a Material Adverse Effect.

12.27.Retiree Benefits.  No Covered Person or ERISA Affiliate of such Covered Person has an obligation to provide any Person with any medical, life insurance, or similar benefit following such Person’s retirement or termination of employment (or to such Person’s beneficiary subsequent to such Person’s death) which, if enforced or collected, has had or could reasonably be likely to have a Material Adverse Effect, other than (i) such benefits provided to Persons at such Person’s sole expense and (ii) obligations under COBRA.

12.28.Real Property.  Section 12.28 of the Disclosure Schedule contains a correct and complete list of (i) the street addresses of all real property owned by each Covered Person, and (ii) a list of all leases, subleases, and licenses of real property by each Covered Person, with such Covered Person identified for each as the lessee, sublessee, licensee, lessor, sublessor, or licensor, as is the case, together with the street addresses of the real property involved and the names and addresses of the other parties to such leases, subleases, and licenses.  Each of such leases, subleases, and licenses is valid and enforceable against the Covered Person party thereto and to Borrower’s Knowledge, each other party thereto, in accordance with its terms and is in full force and effect, and no default by such Covered Person, or to Borrower’s Knowledge, any other party to any such lease, sublease, or license exists which could reasonably be likely to have a Material Adverse Effect.

12.29.State of Collateral and other Property.  Each Covered Person has good and marketable or merchantable title to all real and personal property purported to be owned by it or reflected in the Financial Statements, except for personal property sold or leased in the ordinary course of business after the date of the Initial Financial Statements as permitted by and in accordance with the terms of the Loan Documents and subject to Permitted Security Interests.  There are no Security Interests on any of the property purported to be owned by any Covered Person, including the Collateral, except Permitted Security Interests.  All of the Inventory purported to be owned or leased by a Covered Person is in good operating condition and repair taken as a whole and is,

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taken as a whole, suitable for the use to which it is customarily put by its owner, ordinary wear and tear and damage by acts of God excepted.  Without limiting the generality of the foregoing:

12.29.1.Inventory.  With respect to Inventory of each Borrower:  (i) such Inventory (except for Inventory in transit or in the possession of such Covered Person’s customers) that is Collateral is located at one or another of the premises listed in section 12.29.1 of the Disclosure Schedule as being a location of such Borrower’s Inventory; (ii) the applicable Covered Person has good and merchantable title to such Inventory or a good and valid leasehold interest as lessee to such Inventory, subject to no Security Interest whatsoever except for the perfected Security Interest granted to Lender and except for Permitted Security Interests; (iii) such is of good and merchantable quality, free from any material defects; (iv) such Inventory that is Collateral is not subject to any licensing, patent, royalty, trademark, trade name or copyright agreements with any third parties; and (v) the completion of manufacture and sale, lease, or other disposition of such Inventory that is Collateral by Lender following an Event of Default shall not require the consent of any Person and shall not constitute a breach or default under any contract or agreement to which any Covered Person is a party or to which the Inventory is subject.

12.29.2.Equipment.  With respect to each Covered Person’s equipment: (i) such Covered Person has good and marketable title thereto subject to Permitted Security Interests; (ii) none of such equipment is subject to any Security Interests except for the perfected Security Interest granted to Lender pursuant hereto and except for Permitted Security Interests; (iii) such equipment that is Collateral (except for equipment in transit) is located at one or another of the premises listed in section 12.29.1 of the Disclosure Schedule as a location of such Covered Person’s equipment; and (iv) such equipment is of good and merchantable quality, free from any material defects, ordinary wear and tear and damage by acts of God excepted.

12.29.3.Documents, Instruments and Chattel Paper.  All documents, instruments and chattel paper describing, evidencing or constituting Collateral, and all signatures and endorsements thereon by a Covered Person are complete, valid, and genuine as to Borrower and, to Borrower’s Knowledge, as to third parties, and all goods evidenced by such documents, instruments and chattel paper are owned by a Covered Person free and clear of all Security Interests other than Permitted Security Interests.

12.30.Chief Place of Business; Locations of Collateral.  As of the Execution Date,

12.30.1.the chief executive office and principal place of business of each Covered Person is identified in section 12.30.1 of the Disclosure Schedule and the location of the books and records of each Covered Person, and all of such Covered Person’s chattel paper and all records of Accounts, are located only at the places listed and so identified in section 12.30.1 of the Disclosure Schedule;

12.30.2.the States in which any Covered Person is qualified to conduct its business and other foreign jurisdictions if any in which any Covered Person conducts its business are listed and so identified in section 12.30.2 of the Disclosure Schedule; and

12.30.3.all of the Collateral is located within one or more of the locations listed in section 12.29.1 of the Disclosure Schedule or is in transit to, or located at, one of the Borrower’s customers, provided, however, if any Collateral will remain outside of any location listed on section 12.29.1 of the Disclosure schedule for longer than

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30 consecutive days, Borrower shall, prior to the expiration of such 30-day period, give written notice to Lender of such event as required under Section 14.23.

12.31.Warranties and Representations-Inventory.  For each item of Inventory, Borrower represents and warrants to Lender that at all times:  (a) all such Inventory that is Collateral, except as otherwise provided in Section 12.30.3, will be kept only at the locations indicated on section 12.29.1 of the Disclosure Schedule; (b) Borrower now keeps and will keep correct and accurate records itemizing and describing the kind, type, quality and quantity of such Inventory, Borrower’s cost therefor and the selling price thereof and/or the rental/lease rate thereof, the daily withdrawals therefrom and the additions thereto; (c) Inventory that is Collateral not on rent is not and will not be stored with a bailee, repairman, warehouseman or similar party without Lender’s prior written consent, and if Lender consents, Borrower will, concurrently with delivery to such party, cause any such party to issue and deliver to Lender, in form acceptable to Lender, warehouse receipts, in Lender’s name evidencing the storage of such Inventory, and waivers of warehouseman’s liens in favor of Lender, if required by this Agreement; (d) Borrower will timely pay or cause to be timely paid all taxes, rents, business taxes, and other charges relating to the premises where such Inventory is located which Borrower is contractually or legally obligated to pay; and (e) a landlord consent of the type described in Section 9.1, satisfactory to Lender, has been obtained for each location in which Borrower keeps Inventory that is Collateral with a value in excess of $50,000 or any of its material books and records.

12.32.No Negative Pledges.  No Covered Person is a party to or bound by any Contract which prohibits the creation or existence of any Security Interest upon or assignment or conveyance of any of the Collateral (regardless of type or nature) of any Covered Person, except as expressly set forth on Section 12.32 of the Disclosure Schedule.

12.33.Security Documents.

12.33.1.Security Agreements.  Section 9 of this Agreement is effective to grant to Lender for itself and for the benefit of its participants (and each of their respective successors and assigns) an enforceable Security Interest in the Personal Property Collateral described therein.  Upon appropriate filing (as to all Personal Property Collateral in which a  Security Interest may be perfected under the applicable state’s UCC by filing a financing statement or statements) or Lender’s taking possession (as to items of the Personal Property Collateral of which a secured party must take possession in order to perfect a Security Interest under the applicable state’s UCC), Lender for itself and for the benefit of its participants (and each of their respective successors and assigns) a fully perfected Security Interest in the Personal Property Collateral described, subject only to Permitted Security Interests affecting such Personal Property Collateral.

12.34.[Intentionally omitted].

12.35.Subsidiaries.  Borrower has no Subsidiaries except those Persons listed in section 12.35 of the Disclosure Schedule; provided, however, Borrower shall update the Disclosure Schedule with respect to a new Subsidiary created any newly-created Subsidiary (in each case, with obtaining the prior written consent of Lender) and Borrower shall comply with the terms of Section 15.17 hereof; provided, however, if Borrower acquires a Subsidiary in connection with a Permitted Acquisition, no prior consent of Lender shall be required and the foregoing shall be inapplicable to any such acquired Subsidiary if such acquired Subsidiary is merged into a Borrower within ten (10) days following its acquisition.  As of the Execution Date, except as set forth in section 12.35 of the Disclosure Schedule and except for employee or director stock option programs, employee stock purchase plans, benefit plans, and restricted stock programs, there are

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no pre-emptive or other outstanding rights, options, warrants, conversion rights or other similar agreements or understandings for the purchase or acquisition of any Capital Securities of any Borrower other than Parent or other Covered Person other than Parent to which a Borrower or other Covered Person is a party.

12.36.[Intentionally omitted].

12.37.Margin Stock.  No Covered Person is engaged or will engage, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U), and no part of the proceeds of any Advance will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation U.  None of the transactions contemplated by any of the Loan Documents will violate Regulations T, U or X of the FRB.

12.38.Securities Matters.  No proceeds of any Advance will be used to acquire any security in any transaction which is subject to Sections 13 and 14 of the Securities Exchange Act of 1934.

12.39.Investment Company Act, Etc.  No Covered Person is an investment company  registered or required to be registered under the Investment Company Act of 1940, or a company controlled (within the meaning of such Investment Company Act) by such 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.  No Covered Person is subject to regulation under the Public Utility Holding Company Act of 2005, the Federal Power Act, the Interstate Commerce Act or any other Law limiting or regulating its ability to incur Indebtedness for money borrowed.

12.40.No Material Misstatements or Omissions.  Neither the Loan Documents, any of the Financial Statements nor any statement, list, certificate or other information furnished or to be furnished by Borrower or any other Covered Person to Lender in connection with the Loan Documents or any of the transactions contemplated thereby contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements therein, in light of the circumstances in which it was made, not misleading.  To Borrower’s knowledge, Borrower has disclosed to Lender everything regarding the business, operations, property, financial condition, or business prospects of itself and every Covered Person that has or is reasonably likely to have a Material Adverse Effect on any Covered Person.

12.41.Filings.  Since December 11, 2007, all registration statements, reports and proxy statements, if any, required to be filed by Borrower with the Securities and Exchange Commission pursuant to the Securities Act of 1933, and the Securities Exchange Act of 1934, have been filed, and such filings are complete and accurate in all material respects and contain no untrue statements of material fact or omit to state any material facts required to be stated therein or necessary in order to make the statements therein not misleading.

12.42.Broker’s Fees.  No broker or finder is entitled to compensation for services rendered with respect to the transactions contemplated by this Agreement.

12.43.Transportation Solutions Assets.   The sole asset of Borrower’s Subsidiary, Transportation Solutions, LLC, is its interest in aircraft.

13.Modification and Survival of Representations.  Borrower may at any time after the initial Advances are made propose to Lender in writing to modify the Representations and Warranties in

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Section 12, and any other representation or warranty made in any certificate, report, opinion or other document delivered by Borrower pursuant to the Loan Documents.  If the proposed modifications are satisfactory to Lender as evidenced by its written assent thereto, then such representations and warranties shall be deemed and treated as so modified, but only as of the date of Borrower’s written modification proposal.  If such proposed modifications are not satisfactory to Lender, then such proposed modifications shall not be deemed or treated as modifying such Representations and Warranties.  All such representations and warranties, as made or deemed made as of a particular time, shall survive execution of each of the Loan Documents and the making of every Advance, and may be relied upon by Lender as being true and correct as of the date when made or deemed made until Payment in Full.

14.Affirmative Covenants.  Each Borrower covenants and agrees that, while the Floorplan Loan Facility remains in effect and until Payment in Full, each Borrower shall do, and each Borrower shall cause each other Borrower and each other Covered Person to do, the following:

14.1.Use of Proceeds.  The proceeds of and the initial and subsequent Floorplan Loan Advances, shall be used for purposes permitted by Section 5.1.2.

14.2.Corporate Existence.  Each Covered Person shall maintain its existence in good standing and shall maintain in good standing under its jurisdiction of incorporation/formation/organization and its right to transact business in those states in which it is now or hereafter doing business, except where the failure to so qualify will not have and will not be reasonably likely to have a Material Adverse Effect on any Covered Person (provided, however, notwithstanding anything contained herein to the contrary, Borrower may, in its discretion, eliminate any Subsidiary by merging such Subsidiary with and into Borrower with Borrower as the surviving entity).  Each Covered Person shall obtain and maintain all Material Licenses for such Covered Person.

14.3.Maintenance of Property and Leases.  Each Covered Person shall maintain in good condition and working order (ordinary wear and tear and damage by acts of God excepted and taken as a whole), and repair and replace as required, all buildings, equipment, machinery, fixtures, Inventory, and other real and personal property owned or leased by such Covered Person whose useful economic life has not elapsed and which is necessary for the ordinary conduct of the business of such Covered Person, except where failure to do so does not have or reasonably will likely not have a Material Adverse Effect.  Each Covered Person shall maintain in good standing and free of defaults all of its leases of buildings, equipment, machinery, fixtures, Inventory, and other real and personal property, taken as a whole, whose useful economic life has not elapsed and which is necessary for the ordinary conduct of the business of such Covered Person, except where the failure to be in good standing or free of default would not reasonably be likely to give rise to a Material Adverse Effect.  No Covered Person shall permit any of its equipment, Inventory, or other property that is Collateral to become a fixture to real property or an accession to other personal property unless Lender has a valid, perfected and first priority Security Interest in such Collateral.  No Covered Person shall, without Lender’s prior written consent, alter or remove any identifying symbol or number on its equipment or any Inventory that is Collateral.

14.4.Inventory.  Each Covered Person shall keep its Inventory and Equipment, taken as a whole, in good and merchantable condition (subject to ordinary wear and tear) at its own expense and shall hold such Inventory and Equipment for lease, or to be furnished in connection with the rendition of services, in the ordinary course of such Covered Person’s business, on terms which do not include consignment or similar terms with respect to any Inventory and Equipment that is Collateral.

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14.5.Insurance.  Each Covered Person shall at all times keep insured or cause to be kept insured, in insurance companies having a rating of at least “A-” by Best’s Rating Service, all property owned by it of a character usually insured by others carrying on businesses similar to that of such Covered Person in such manner and to such extent and covering such risks as such properties are usually insured.  At all times, all Inventory that is Collateral shall be insured for full replacement value.  Each Covered Person shall timely pay all premiums for such insurance.  Each Covered Person shall at all times carry insurance, in insurance companies having a rating of at least “A-” by Best’s Rating Service, against liability on account of damage to persons or property (including product liability insurance and insurance required under all Laws pertaining to workers’ compensation) and covering all other liabilities common to such Covered Person’s business, in such manner and to such extent as such coverage is usually carried by others conducting businesses similar to that of such Covered Person.  At all times, Borrower shall maintain replacement value insurance for all Collateral on any ocean, waterway, interstate, highway, or other public way.  All policies of liability insurance maintained hereunder shall name Lender as named as an additional insured; all policies of property insurance maintained hereunder with respect to the Collateral shall reflect Lender’s interest therein as a loss payee on a form reasonably acceptable to Lender.  Lender is authorized, but not obligated, as the attorney-in-fact for Borrower, and every other Covered Person and, (i) prior to the occurrence of an Event of Default, with Borrower’s consent (which consent shall not be unreasonably withheld), and upon the occurrence of an Event of Default, without Borrower’s or any other Covered Person’s consent, to adjust and compromise proceeds payable under such policies of insurance, (ii) to collect, receive and give receipts for such proceeds in the name of Borrower or any other Covered Person and Lender, and (iii) to endorse Borrower or any other Covered Person’s name upon any instrument in payment thereof.  Such power granted to Lender shall be deemed coupled with an interest and shall be irrevocable (until Payment in Full) as set forth in Section 10.  All policies of insurance maintained hereunder shall contain a clause providing that such policies under which Lender is the loss payee or additional insured may not be canceled, reduced in coverage or otherwise modified without 30 days’ prior written notice to Lender.  Borrower shall or shall cause any other Covered Person upon the reasonable request of Lender at any time to furnish to Lender updated evidence of insurance (in the form required as a condition to Lender’s lending hereunder) for such insurance.

14.6.Payment of Taxes and Other Obligations.  Each Covered Person shall promptly pay and discharge or cause to be paid and discharged, as and when due, any and all income taxes, federal or otherwise, lawfully assessed and imposed upon it, and any and all lawful taxes, rates, levies, and assessments whatsoever upon its properties and every part thereof, or upon the income or profits therefrom and all claims of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons for labor, materials, supplies, storage or other items or services which if unpaid might be or become a Security Interest or charge upon any of its property; provided, however, that a Covered Person may diligently contest in good faith by appropriate proceedings the validity of any such taxes, rates, levies, or assessments and claims, provided such Covered Person has established adequate reserves therefor in conformity with GAAP on the books of such Covered Person, and no Security Interest, other than a Permitted Security Interest, results from such non-payment.

14.7.Compliance With Laws.  Each Covered Person shall comply with all Material Laws.  Without limiting the generality of the foregoing:

14.7.1.Environmental Laws.  Each Covered Person shall comply and shall use commercially reasonable efforts to ensure compliance by all of its tenants, subtenants and other occupants, if any, with all Environmental Laws, any of which if not so complied

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with will or could be reasonably likely to have a Material Adverse Effect on any Covered Person.

14.7.2.Pension Benefit Plans.  Each Covered Person and each ERISA Affiliate of such Covered Person shall at all times make prompt payments or contributions to meet the minimum funding standards under ERISA and the Code with respect to any Pension Benefit Plan maintained by such Covered Person or such ERISA Affiliate, and shall comply with all reporting and disclosure requirements and all provisions of the Code and ERISA applicable to any Pension Benefit Plan maintained by such Covered Person or such ERISA Affiliate except to the extent that any such failure could not reasonably be expected to have a Material Adverse Effect.

14.8.Discovery and Clean-Up of Hazardous Material.

14.8.1.In General.  Upon any Covered Person receiving written notice of any violation of Environmental Laws or any similar notice described in Section 14.10.4, or upon any Covered Person otherwise discovering Hazardous Material on any property owned or leased by such Covered Person which is in violation of, or which would result in liability under, any Environmental Law, the violation of which or which liability will or is reasonably likely to have a Material Adverse Effect.  Borrower shall: (i) promptly take such acts as Borrower determines may be necessary to prevent material danger or material harm to the property or any Person therein as a result of such Hazardous Material; (ii) at the request of Lender during the continuance of an Event of Default, and at Borrower’s sole cost and expense, obtain and deliver to Lender promptly, but in no event later than 90 days after such request, a then currently dated environmental assessment of the property certified to Lender and any future holder of the Loan Obligations, a proposed plan for responding to any environmental problems described in such assessment, and an estimate of the costs thereof; and (iii) take all necessary steps that Borrower determines may be appropriate to comply with its obligations under Environmental Laws in connection therewith, and keep Lender informed of such actions and the results thereof as it may reasonably request.

14.9.Termination of Pension Benefit Plan.  No Covered Person or ERISA Affiliate of such Covered Person shall terminate or amend any Pension Benefit Plan maintained by such Covered Person or such ERISA Affiliate if such termination or amendment would result in any liability to such Covered Person or such ERISA Affiliate under ERISA or any increase in current liability for the plan year for which such Covered Person or such ERISA Affiliate is required to provide security to such Pension Benefit Plan under the Code except to the extent any such termination or amendment could not reasonably be expected to have a Material Adverse Effect.

14.10.Notice to Lender of Material Events.  Borrower shall, promptly upon any Responsible Officer of Borrower obtaining Knowledge or notice thereof, give notice to Lender of (i) any breach of any of the covenants in Sections 14, 15, or 16; (ii) any Default or Event of Default; (iii) the commencement of any Material Proceeding; and (iv) any loss of or damage to any assets of a Covered Person or the commencement of any proceeding for the condemnation or other taking of any of the assets of a Covered Person, if such loss, damage or proceeding has or is reasonably likely to have a Material Adverse Effect on such Covered Person, whether or not Insurance Proceeds are likely to be payable as a consequence of such loss, damage or proceeding.  In addition,

14.10.1.Borrower shall furnish to Lender from time to time all information which Lender reasonably requests with respect to the status of any Material Proceeding, which

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Borrower is not prohibited to provide to Lender under any applicable Law or without loss of attorney-client privilege.

14.10.2.Borrower shall furnish to Lender from time to time all information which Lender reasonably requests with respect to any Pension Benefit Plan established by a Covered Person or an ERISA Affiliate of any Covered Person.

14.10.3.Borrower shall deliver to Lender a copy of any notice from any Governmental Authority that any violation of applicable Material Law may have occurred with respect to any Pension Benefit Plan by a Covered Person or an ERISA Affiliate of such Covered Person.

14.10.4.Borrower shall promptly inform Lender of its receipt of, and deliver to Lender a copy of, any (i) notice that any violation of any Environmental Law or Employment Law may have been committed or is about to be committed by any Covered Person that has had or which could reasonably be likely to have a Material Adverse Effect, (ii) notice that any administrative or judicial complaint or order has been filed or is about to be filed against any Covered Person alleging violations of any Environmental Law or Employment Law or requiring such Covered Person to take any action in connection with the release of any Hazardous Material into the environment, which has had or could reasonably be likely to have a Material Adverse Effect, (iii) notice from a Governmental Authority or private party alleging that a Covered Person may be liable or responsible for costs associated with a response to or cleanup of a release of Hazardous Material into the environment or any damages caused thereby, which has had or could reasonably be likely to have a Material Adverse Effect, (iv) notice that a Covered Person is subject to federal, state or local investigation regarding the improper transportation, storage, disposal, generation or release into the environment of any Hazardous Material which has had or could reasonably be expected to have a Material Adverse Effect, or (v) notice that any properties or assets of a Covered Person are subject to a Security Interest in favor of any Governmental Authority for any liability under any Environmental Law or damages arising from or costs incurred by such Governmental Authority in response to a release of Hazardous Material into the environment.

14.10.5.Borrower shall deliver to Lender notice of each of the following events promptly after they occur:  (i) the failure of any Covered Person or ERISA Affiliate of such Covered Person to make any required installment or any other required payment to any Pension Benefit Plan in sufficient amount to comply with ERISA and the Code on or before the due date for such installment or payment and any applicable grace period; (ii) the occurrence of any Reportable Event, or a prohibited transaction or accumulated funding deficiency (as those terms are defined in ERISA), with respect to any Pension Benefit Plan maintained or contributed to by a Covered Person or an ERISA Affiliate of such Covered Person; (iii) receipt by a Covered Person or ERISA Affiliate of such Covered Person of any notice from a Multi-employer Plan regarding the imposition of withdrawal liability; and (iv) receipt by a Covered Person or ERISA Affiliate of such Covered Person of any notice of the institution, or a Covered Person’s expectancy of the institution, of any proceeding or receipt by such Covered Person or such ERISA Affiliate of any notice of the taking, or such Covered Person’s or such ERISA Affiliate’s expectancy of the taking, of any other action which may be reasonably expected to result in the termination of any Pension Benefit Plan maintained or contributed to by such Covered Person or such ERISA Affiliate, or the withdrawal or partial withdrawal by a Covered Person or ERISA Affiliate of such Covered Person from any Pension Benefit

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Plan, and the filing or receipt by a Covered Person or ERISA Affiliate of such Covered Person of any such notice and filing or receipt of all subsequent reports or notices under ERISA with or from the IRS, the PBGC, or the DOL relating to the same; and, in addition to such notice, deliver to Lender a certificate of a Responsible Officer of Borrower, setting forth details as to such events and the action that the affected Covered Person or ERISA Affiliate of such Covered Person proposes to take with respect thereto.   For purposes of this Section, each Covered Person and any ERISA Affiliate of such Covered Person shall be deemed to know all facts known by the administrator of any Plan of which such Covered Person or such ERISA Affiliate is the plan sponsor.

14.10.6.Borrower shall promptly deliver to Lender notice of any default or event of default, or the occurrence of any event which would with the passage of time, giving of notice or otherwise, constitute a default or event of default with respect to any of the Permitted Indebtedness in excess of $250,000.

14.10.7.To the extent not filed by the Borrower with the SEC, Borrower shall promptly deliver notice to Lender of the assertion by the holder of any Capital Securities in a Covered Person or any other Indebtedness of a Covered Person in the outstanding principal amount in the aggregate in excess of $250,000 that a default exists with respect thereto or that such Covered Person is not in compliance with the terms thereof, or of the threat or commencement by such holder of any enforcement action because of such asserted default or noncompliance.

14.10.8.Borrower shall, promptly upon Borrower’s Knowledge thereof, deliver notice to Lender of any pending or threatened strike, work stoppage, or other material labor dispute affecting a Covered Person which could reasonably be likely to have a Material Adverse Effect.

14.10.9.Borrower shall promptly deliver notice to Lender of any change in the name, state of incorporation or organization or form of any Covered Person, or the trade names or styles under which a Covered Person will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, at least 30 days prior to such change unless Lender agrees in writing to a shorter period.

14.10.10.Borrower shall, promptly after Borrower having Knowledge thereof, deliver notice to Lender of any event that has or is reasonably likely to have a Material Adverse Effect on any Covered Person.

14.10.11.Borrower shall, promptly after Borrower having Knowledge thereof, deliver notice to Lender of an actual, alleged, or potential violation of any Material Law applicable to a Covered Person or the property of a Covered Person.

14.10.12.Borrower shall notify Lender promptly in writing of any fact or condition of which Borrower is aware which adversely affects the value of the Collateral taken as a whole, including disclosing the amount of such loss or depreciation and disclosing any adverse fact or condition or the occurrence of any event which causes loss or depreciation in the value of the Collateral, of more than $250,000 taken as a whole.  Borrower shall provide such additional information to Lender regarding the amount of any loss or depreciation in value of the Collateral as Lender may request from time to time.

14.10.13.Borrower shall keep on file with Lender at all times an appropriate instrument naming each Borrowing Officer.

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14.11.Maintenance of Security Interests of Security Documents.

14.11.1.Preservation and Perfection of Security Interests.  Borrower shall promptly, upon the reasonable request of Lender and at Borrower’s expense, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter file or record in the appropriate governmental office, any document or instrument supplementing or confirming the Security Documents or otherwise reasonably deemed necessary by Lender to create, preserve or perfect any Security Interest purported to be created by the Security Documents in the Collateral or to fully consummate the transactions contemplated by the Loan Documents.  The foregoing actions by Borrower shall include, without limitation, (i) filing financing or continuation statements, and amendments thereof, and executing such assignments or security agreements, in form and substance satisfactory to Lender; (ii) delivering to Lender the original certificates of title for motor vehicles, or applications therefor duly executed, with Lender’s Security Interest properly shown thereon; (iii) delivering to Lender the originals of all instruments, documents and chattel paper, and all other Collateral of which Lender determines it should have physical possession in order to perfect and protect Lender s Security Interest, duly endorsed or assigned to Lender without restriction; (iv) delivering to Lender warehouse receipts covering any portion of the Collateral located in warehouses and for which warehouse receipts are issued; (v) during an Event of Default, transferring Inventory that is Collateral to warehouses designated by Lender; (vi) during an Event of Default, delivering to Lender all letters of credit on which Borrower is named beneficiary if it is Collateral or relates to Collateral; (vii) placing a durable notice of the existence of Lender’s Security Interest, acceptable to Lender, upon such items of the Collateral as are designated by Lender; and (viii) placing a notice of the existence of Lender’s Security Interest, acceptable to Lender, upon those writings evidencing the Collateral and the books and records of Borrower pertaining to the Collateral, as designated by Lender.

14.11.2.Collateral Held by Warehouseman, Bailee, etc.  If any Collateral with a value greater than $50,000 or if any of its material books and records are at any time in the possession or control of a warehouseman, bailee or any of Borrower’s agents or processors (not including any lessee or other person to whom Inventory is leased or rented in the ordinary course of such Covered Person’s business), or with respect to any national or regional headquarters location, then Borrower shall notify Lender thereof and shall notify such Person of Lender’s Security Interest in such Collateral and, upon Lender’s request during an Event of Default, instruct such Person to hold all such Collateral for Lender’s account subject to Lender’s instructions.  If at any time any Collateral with a value greater than $50,000 or any of its material books and records are located on any premises that are not owned by Borrower (not including any lessee or other person to whom Inventory is leased or rented in the ordinary course of such Covered Person’s business, or other locations where Borrower is not obligated to pay rent for up to 30 consecutive days or in transit thereto), or with respect to any national or regional headquarters location, then Borrower shall obtain or cause to be obtained written waivers or consents, in form and substance satisfactory to Lender, of all present and future Security Interests to which the owner or lessor or any mortgagee of such premises may be entitled to assert against the Collateral.

14.11.3.Compliance With Terms of Security Documents.  Each Covered Person shall comply with all of the terms, conditions and covenants in the Security Documents to which such Covered Person is a party.

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14.12.Accounting System.  Each Covered Person shall maintain a system of accounting established and administered in accordance with GAAP.  Without limiting the generality of the foregoing:

14.12.1.Account Records.  Each Covered Person shall maintain a record of Accounts at its principal place of business that itemizes each Account of such Covered Person and describe the names and addresses of the Account Debtors on such Accounts, all relevant invoice numbers, invoice dates, and shipping dates, and the due dates, collection histories, and aging of such Accounts.

14.12.2.Inventory Records.  Each Covered Person shall maintain an Inventory system satisfactory to Lender.

14.12.3.Tracing of Proceeds.  Each Borrower shall maintain detailed and accurate accounting and records of proceeds of the Loans and transfers of proceeds of the Loans (i) received by it from Lender, (ii) transferred from it to any other Covered Person, and (iii) received by it from another Borrower.  Each Borrower acknowledges that its ability to obtain the Loans hereunder is made possible by the fact that the Borrowers are co-borrowers under this Agreement and the other Loan Documents, and are engaged in a common enterprise.  Each Borrower agrees that (i) the business operations of each Borrower and each other Covered Person are interrelated and complement one another, and such entities have a common business purpose and common management, and (ii) the proceeds of Advances hereunder will benefit each Borrower, severally and jointly, regardless of which Borrower requests or receives part or all of any Advance.  Not in any way in limitation of any other provisions set forth herein, such books and records may be reviewed and copied by Lender at Borrower’s expense at reasonable intervals and upon reasonable notice given by Lender to Borrower.

14.13.Financial Statements.  Borrower shall deliver to Lender:

14.13.1.Annual Financial Statements.  Within 120 days after the close of each fiscal year of Borrower, year-end audited consolidated Financial Statements of each Borrower and its Subsidiaries, containing a balance sheet, income statement, statement of cash flows and a report by a regionally or nationally recognized independent certified public accounting firm selected by Borrower certified by such public accounting firm without qualification, including without adverse reference to going concern value and without reference to material weakness (as defined by Regulation S-X) in any respect of the Borrower’s or any other Covered Person’s internal controls, together with all related income tax returns and filings (except for income tax returns for which the required filing date has been extended, in which case Borrower shall deliver such tax returns to Lender simultaneously with the filing thereof in accordance with such extension) and accompanied by a Compliance Certificate of Borrower.  The independent certified public account firm of Borrower on the Effective Date is acceptable.

14.13.2.Quarterly Financial Statements.  Within 45 days after the end of each fiscal quarter of Borrower management-prepared unaudited Financial Statements of each Borrower and every Subsidiary of a Borrower for the fiscal quarters not covered by the latest year-end Financial Statements, in each case containing a balance sheet, income statement, statement of cash flows, and unaudited consolidated Financial Statements of Borrower and its Subsidiaries, in each case accompanied by (i) for the third month of each fiscal quarter, a statement comparing such Financial Statements with budgeted projections for such fiscal quarter and for the elapsed portion of the fiscal year of

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Borrower as contained in the annual budget prepared for such fiscal year, and (ii) a Compliance Certificate.

Each Compliance Certificate shall be in the form of Exhibit 14.13, shall contain detailed calculations of the financial measurements referred to in Section 16 for the relevant periods, and shall contain statements by the signing authorized officer on behalf of Borrower (either the chief executive officer, president, any vice president, the chief financial officer or other mutually agreed to representative) to the effect that, except as explained in reasonable detail in such Compliance Certificate, (i) the attached Financial Statements are complete and correct in all material respects (subject, in the case of Financial Statements other than annual, to normal year-end audit adjustments and with respect to Financial Statements other than annual, without footnote disclosures) and have been prepared in accordance with GAAP applied consistently throughout the periods covered thereby and with prior periods (except as disclosed therein), (ii) all of the Representations and Warranties are true and correct as of the date such certification is given as if made on such date (with such exceptions as have been disclosed to Lender in writing by Borrower or any Guarantor and are satisfactory to Lender), and (iii) there is no Existing Default.  If any Compliance Certificate delivered to Lender discloses that a representation or warranty is not true and correct, or that there is an Existing Default that has not been waived in writing by Lender, such Compliance Certificate shall state what action Borrower has taken or proposes to take with respect thereto.

14.14.Other Financial Information.  Borrower shall also deliver the following to Lender each in a form satisfactory to Lender:

14.14.1.Reports or Information Concerning Inventory.  Such other reports and information, in form and detail reasonably satisfactory to Lender, and documents as Lender may reasonably request from time to time concerning Inventory that constitutes Collateral including, to the extent requested by Lender, copies of all invoices, leases, rental agreements, bills of lading, shipping receipts, purchase orders, and warehouse receipts.

14.14.2.Stockholder and SEC Reports.  Contemporaneously with their filing by or on behalf of Borrower or any other Covered Person, copies of the following to the extent that they are not otherwise publicly available:  (i) proxy statements, financial statements and reports which Borrower makes available to its stockholders, and (ii) reports, registration statements and prospectuses with any securities exchange or the Securities and Exchange Commission or any Governmental Authority succeeding to any of its functions.

14.15.Inventory.  Borrower shall, at least once per fiscal year, conduct a physical count of the Inventory that constitutes Collateral at each location and promptly following the completion of such count provide Lender with a report thereof in form and detail satisfactory to Lender, including the value of such Inventory in accordance with GAAP, provided, however, during an Existing Default, Lender may request a physical count at any time.

14.16.Annual Projections; Operating Plan.  No more than 60 days after the first day of each fiscal year of all Borrowers, projected balance sheets, statements of income and expense, and statements of cash flows for such fiscal year and the fiscal year immediately thereafter, on a consolidated basis, and with such other detail as Lender may require, together with management’s operating plan, and, if the board of directors of Parent approves such operating plan, projections and/or budget, promptly after such approval, provide such approved operating plan, projections and budget, if modified, to Lender.

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14.17.Rental Agreements and System Reports.  At all times, Borrower shall cause its Account Debtors on Accounts that are Collateral to sign separate rental agreements relating to the Collateral from the rental agreements relating to assets securing Indebtedness to other Persons.  At all times, Borrower shall cause the reports delivered to Lender to show separately the Collateral from its and each other Covered Person’s assets securing the Indebtedness to other Persons.

14.18.Other Information.  Upon the request of Lender, Borrower shall promptly deliver to Lender such other information about the business, operations, revenues, financial condition, property, or business prospects of Borrower and every other Covered Person as Lender may, from time to time, reasonably request.

14.19.Examinations and Site Visits by Lender.  Lender or Persons authorized by and acting on behalf of Lender may at any time (upon reasonable prior notice, except if there is an Existing Default, no prior notice shall be required) during normal business hours examine the books, records, and assets of, and inspect any of the property, locations or operations of, each Covered Person from time to time, and in the course thereof may make copies or abstracts of such books and records and discuss the affairs, finances and books and records of such Covered Person with its accountants, officers and employees, and make such inspections as it deems necessary.  Lender may undertake examinations up to twelve (12) times in each calendar year.  Each Covered Person shall cooperate with Lender and such Persons in the conduct of such exams, site visits and inspections and shall deliver to Lender any instrument necessary for Lender to obtain records from any service bureau maintaining records for such Covered Person.  Lender may, while there is an Existing Default, perform as many as examinations as it may choose.  Borrower is required to reimburse Lender for all reasonable fees, costs and expenses incurred in connection with any such examinations, provided however, if any such examination is performed while there is no Existing Default, then the Borrower shall not be obligated to reimburse Lender for an amount in excess of $5,500 per such examination or $11,000 per year in total.

14.20.Verification of Accounts and Notices to Account Debtors.  Lender shall have the right at any time and from time to time, to verify the validity and amount of any Account that is Collateral and any other matter relating to an Account that is Collateral, by communicating in writing or orally directly with the Account Debtor or any Person who represents or Lender reasonably believes represents the Account Debtor.

14.21.Appraisals of Collateral.  Lender or Persons authorized by and acting on behalf of Lender may, as often as Lender deems desirable, perform or have performed on its behalf an appraisal of Borrower’s Collateral by an appraiser reasonably acceptable to Lender and prepared on a basis reasonably satisfactory to Lender.  Each Covered Person shall cooperate with Lender and such Persons in the conduct of such appraisals and shall deliver to Lender or such Persons any documents or instruments necessary for Lender or such Person’s to perform such appraisals.  If there is an Existing Default at the time of any such appraisal, then Borrower shall reimburse Lender for all reasonable costs and expenses actually incurred by it in conducting or having conducted such appraisal plus Lender’s other actual out-of-pocket costs and expenses, and if there is no Existing Default at the time of any such appraisal, Borrower shall not be obligated to reimburse Lender for its costs and expenses actually incurred by it in conducting or having conducted such appraisal including Lender’s other actual out-of-pocket costs and expenses.

14.22.Access to Officers and Auditors.  Each Covered Person shall permit Lender and Persons authorized by Lender to discuss the business, operations, revenues, financial condition, property, or business prospects of such Covered Person with its officers, employees, accountants and

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independent auditors as often as Lender may request in its reasonable discretion, and such Covered Person shall direct such officers and employees, and shall request such accountants and independent auditors to cooperate with Lender.

14.23.Movement of Inventory.  Borrower shall notify Lender in writing if Borrower has Knowledge that any Inventory that constitutes Collateral will be located for more than thirty (30) consecutive days outside any of the locations listed in section 12.29.1 of the Disclosure Schedule (except for Inventory in transit or at Borrower’s customers).

14.24.Titled Assets.  While an Event of Default has occurred and is continuing, upon Lender’s request, Borrower shall promptly cause the respective titles of all Collateral which are titled in the name of any Covered Person to reflect thereon that Lender, as the first and only lienholder thereon, and shall deliver, at Lender’s request, originals of all such titles to Lender.

14.25.Claims Act.  At any time, Borrower shall, at Lender’s request, promptly make such filings and obtain such acknowledgements in accordance with the Claims Act and take any other steps necessary to perfect Lender’s Security Interest to Lender’s satisfaction in any Account that is Collateral with respect to which the Account Debtor is the United States of America, any state, or any department, agency, public corporation or other instrumentality thereof.

14.26.Further Assurances.  Borrower shall execute and deliver, or cause to be executed and delivered, to Lender such documents and agreements, and shall take or cause to be taken such actions, as Lender may from time to time reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents.  Borrower further covenants to promptly execute and deliver at its expense (including, without limitation, the reasonable fees and expenses of counsel for Lender) an amendment to this Agreement in form and substance satisfactory to Lender evidencing the amendment of this Agreement to include Additional and Amended Financial Covenants as provided in Section 15.25, provided, however, that the execution and delivery of such amendment shall not be a precondition to the effectiveness of such amendment as provided for in Section 15.25, but shall merely be for the convenience of the parties hereto, and provided further, however, with respect to any Indebtedness in existence on the date hereof, the provisions of this sentence shall apply only to amendments after the date hereof.  Borrower shall provide Lender prior written notice of any proposed Additional and Amended Financial Covenants promptly upon Borrower becoming aware of any such proposed Additional and Amended Financial Covenants.

15.Negative Covenants.  Borrower covenants and agrees that, while the Floorplan Loan Facility remains in effect and until Payment in Full, Borrower shall not, directly or indirectly, do any of the following, or permit any other Borrower or any other Covered Person to do any of the following, without the prior written consent of Lender:

15.1.Investments.  Make any Investments in any other Person except the following:

15.1.1.Investments arising in the ordinary course of business and consistent with past practice, or otherwise incurred in the ordinary course of business and substantially related to the Parent’s business as of the Effective Date, including Permitted Acquisitions, cash and cash equivalents, marketable securities and short-term Investments, Investments in Subsidiaries to the extent permitted hereunder, travel and other expense advances to employees, deposit accounts, and currency or interest rate hedging arrangements, or any other Investment approved by Lender in writing prior to its incurrence.

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15.2.Indebtedness.  Create, incur, assume, or allow to exist any Indebtedness of any kind or description, except the following:

15.2.1.Indebtedness (including, without limitation, Capital Lease and purchase money Indebtedness) incurred in the ordinary course of business which is not reasonably anticipated to cause a Default hereunder.

15.2.2.The Loan Obligations.

15.2.3.Any Indebtedness that would not result in a violation of the financial covenant set forth in Section 16.

15.3.Prepayments.  During any Existing Default prepay, whether voluntarily or otherwise, any Indebtedness, other than (a) the Loan Obligations in accordance with the terms of the Loan Documents, (b) Obligations to other lenders constituting Permitted Indebtedness, and (c) trade payables in the ordinary course of business consistent with past practices.

15.4.Indirect Obligations.  Create, incur, assume or allow to exist any Indirect Obligations except (i) Indirect Obligations existing on the Execution Date and disclosed on section 12.21 of the Disclosure Schedule, and (ii) Indirect Obligations with respect to Permitted Indebtedness, or in connection with the Obligations of another Covered Person incurred in such Covered Person’s ordinary course of business consistent with past practices.

15.5.Security Interests.  Create, incur, assume or allow to exist any Security Interest upon all or any part of its property, real or personal (including, without limitation, intangible property), now owned, leased or hereafter acquired or leased, except the following:

15.5.1.Security Interests for taxes, assessments or governmental charges not delinquent or being diligently contested in good faith and by appropriate proceedings and for which adequate book reserves in accordance with GAAP are maintained.

15.5.2.Security Interests arising out of deposits in connection with workers’ compensation insurance, unemployment insurance, old age pensions, or other social security or retirement benefits legislation.

15.5.3.Deposits to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, and appeal bonds, and other obligations of like nature arising in the ordinary course of business.

15.5.4.Security Interests imposed by any Law, such as mechanics’, workmen’s, materialmen’s, landlords’, carriers’, or other like Security Interests arising in the ordinary course of business which secure payment of obligations which are not past due or which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on such Covered Person’s books.

15.5.5.Subject to the limitations in Section 15.2, Security Interests in favor of the holders of any asset leased under a Capital Lease to Borrower.

15.5.6.Subject to the limitations in Section 15.2, Purchase money Security Interests securing payment of the purchase price of equipment acquired by Borrower after the Execution Date if such Security Interests attach within 20 days of the Borrower’s receipt

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of such equipment and if the holder of such Security Interest holds or purports to hold a Security Interest in any of the Collateral then such Security Interest must be subject to an intercreditor agreement acceptable to Lender.

15.5.7.Security Interests securing the Loan Obligations in favor of Lender.

15.5.8.Without duplication of any other Security Interests permitted by this Section 15.5, Security Interests existing on the Execution Date that are disclosed in section 12.29 of the Disclosure Schedule

15.5.9.Security Interests in assets that are not Collateral.

15.5.10.Security Interests in Collateral that are subordinated to the Security Interest granted hereunder pursuant to an intercreditor agreement acceptable to Lender.

15.6.Acquisitions.  Acquire any Capital Securities in a Person, or acquire all or substantially all of the assets of a Person (including without limitation assets comprising all or substantially all of an unincorporated business unit or division of any Person) for consideration in excess of ten percent (10%) of the Parent’s Total Assets in any single Acquisition or series of related Acquisitions and twenty percent (20%) of the Parent’s Total Assets for all acquisitions in a fiscal year, except if approved by Lender (any such approved acquisition or acquisitions, being a “Permitted Acquisition”).

15.7.Leases; Bailments; Consignments; Warehousing.  Store any Inventory that is Collateral with a value in excess of $50,000 for each location or any of its material books and records that is at any time (i) in the possession or control of a warehouseman, bailee, consignee including pursuant to an express or implied agreement establishing a bailment or consignment, or similar arrangement, (ii) at any of Borrower’s agents or processors (not including any Person to whom Inventory is leased or rented in the ordinary course of such Covered Person’s business), or (iii) at any location or premises that are not owned by Borrower, unless, at its customer’s locations, in transit or in each case, Lender has received written waivers or consents, in form and substance reasonably satisfactory to Lender, which such written waivers or consents shall include, without limitation, a waiver of all present and future Security Interests to which the owner, bailor, or lessor of such premises may be entitled to assert against the Collateral.  Occupy any national or regional headquarters location, unless, in each case, Lender has received written waivers or consents, in form and substance satisfactory to Lender, which such written waivers or consents shall include, without limitation, a waiver of all present and future Security Interests to which the owner, bailor, or lessor of such premises may be entitled to assert.

15.8.Disposal of Property.  Sell, transfer, exchange, or otherwise dispose of the Personal Property Collateral.  Notwithstanding the foregoing unless an Event of Default then exists (in which case any of the following shall be prohibited if directed by Lender), Borrower may sell, transfer or otherwise dispose of Personal Property Collateral in the ordinary course of business consistent with past practice, provided that all proceeds of such sales, transfers or other dispositions shall be paid to Lender for application to the Loan Obligations.

15.9.Change of Control.  Unless consented to in writing by Lender, authorize or approve, or consent to, a Change in Control.

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15.10.Capital Structure; Capital Securities.

15.10.1.(i) Except as permitted by clause (iii) of this Section 15.10 hereof, make any change in the capital structure of any Covered Person which is reasonably likely to cause a Default or Event of Default or which is reasonably likely to have a Material Adverse Effect; or (ii) change any Charter Documents of any Covered Person which is reasonably likely to have a Material Adverse Effect or which will or is reasonably likely to cause a Default or Event of Default.

15.10.2.Be a party to any merger or consolidation, except as permitted by Section 14.2 or Section 15.6.

15.11.Change of State of Formation; Change of Name.  Make any change in the state of incorporation or formation of organization of any Covered Person, change its type of legal entity, or change its legal name as it appears on any certificates or articles of organization or formation.  Make any change in the trade names or styles under which a Covered Person will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, except in accordance with the terms of Section 14.10.9 with at least 30 days prior written notice to Lender of such change (unless Lender agrees in writing to a shorter period).

15.12.Change of Business.  Engage in any business other than substantially as conducted by the Parent on the Effective Date.

15.13.Transactions With Affiliates.  Enter into or be a party to any transaction or arrangement, including the purchase, sale or exchange of property of any kind or the rendering of any service, with any Affiliate, or make any loans or advances to any Affiliate, except each Covered Person may engage in such transactions with an Affiliate in the ordinary course of business or, if not in the ordinary course of business  but not material, and in each case pursuant to the reasonable requirements of its business and on fair and reasonable terms substantially as favorable to it as those which it could obtain in a comparable arm’s-length transaction with a non-Affiliate.  Pay any management or similar fees to any Affiliate or other Person other than another Borrower except each Covered Person may pay management fees to an Affiliate or any other Person in the ordinary course of business or, if not in the ordinary course of business but not material, and in each case pursuant to the reasonable requirements of its business and on fair and reasonable terms substantially as favorable to it as those which it could obtain in a comparable arm’s-length transaction with a non-Affiliate.

15.14.Conflicting Agreements.  Enter into any agreement that would, if fully complied with by it, result in a Default or Event of Default.

15.15.Investment Banking and Finder’s Fees.  Pay or agree to pay, or reimburse any other party with respect to, any investment banking or similar or related fee, underwriter’s fee, finder’s fee, or broker’s fee to any Person in connection with this Agreement.

15.16.Sale and Leaseback Transactions.  Enter into any agreement or arrangement with any Person providing for any Covered Person to lease or rent property that Borrower has or will sell or otherwise transfer to such Person.

15.17.New Subsidiaries.  Organize, create or acquire any Subsidiary unless Borrower has obtained the prior written consent of Lender thereto (which consent shall not be unreasonably withheld) and within five Business Days (unless Lender consents, in its sole discretion to a longer period of time up to but not exceeding thirty days) following the organization, creation or acquisition of such Subsidiary, the applicable Covered Person and such Subsidiary executes and delivers to Lender the following additional documents: all Charter Documents of such new

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Subsidiary, an unlimited Guaranty of the Loan Obligations by such Subsidiary or a joinder agreement to this Agreement and the Loan Documents, and other Security Documents requested by Lender so as to grant Lender, a perfected, first priority security interest in the Collateral of such Subsidiary; provided, however, if Borrower acquires a Subsidiary in connection with a Permitted Acquisition, no prior consent of Lender shall be required and the foregoing shall be inapplicable to any such acquired Subsidiary if such acquired Subsidiary is merged into a Borrower within ten (10) days following its acquisition.

15.18.Fiscal Year.  Change its fiscal year from a fiscal year ending on January 31 of each calendar year.

15.19.[Intentionally omitted].

15.20.Depreciation Methodology.  Change the depreciation schedule or depreciation methodology for any Inventory that is Collateral except as required by GAAP or applicable tax laws or upon 30 days prior written notice to Lender.

15.21.Tax Consolidation.  File or consent to the filing of any consolidated income tax return with any Person other than another Borrower or Subsidiary.

15.22.Transactions Having a Material Adverse Effect.  Enter into any transaction which has or is reasonably likely to have a Material Adverse Effect; or enter into any transaction, or take or contemplate taking any other action, or omit or contemplate omitting to take any action, which any Responsible Officer has Knowledge that it is reasonably likely to cause a Default or Event of Default hereunder.

15.23.Storage.  Store any Inventory that is Collateral at any location other than as set forth on section 12.29.1 of the Disclosure Schedule; maintain its chief executive office at any location other than as set forth on section 12.30.1 of the Disclosure Schedule.

15.24.Transportation Solutions Assets.  Borrower’s Subsidiary, Transportation Solutions, LLC, shall not own any material asset other than interests in aircraft.

15.25.Other Indebtedness.  Enter into, assume or otherwise be bound or obligated under any agreement creating or evidencing Indebtedness containing one or more Additional and Amended Financial Covenants, without providing prior written notice to Lender, provided, however, in the event the Borrower or any other Covered Person shall enter into, assume or otherwise become bound by or obligated under any such agreement, whether or not prior written notice is given to Lender, the terms of this Agreement shall, without any further action on the part of the Borrower and each other Covered Person or Lender, be deemed to be amended automatically to include each Additional and Amended Financial Covenant contained in such agreement, and provided further, however, with respect to any Indebtedness in existence on the date hereof, the provisions of this sentence shall apply only to amendments after the date hereof.

15.26.Rental Contracts.  Borrower may rent the Inventory financed by Lender or against which Lender has advanced funds and is Collateral pursuant to the terms of Borrower’s rental contracts (“Rental Contracts”).  Financing for such Inventory will thereafter be subject to the rates and terms of Lender’s financing program in effect for rented goods, as reflected in the applicable Transaction Statement for such Inventory.  All of Borrower’s Rental Contracts, agreements and rental transactions will be in a form satisfactory to Lender and conform with all applicable laws.  Borrower will indemnify Lender against any loss or damage Lender suffer, whether direct or indirect, resulting in any way from the Rental Contracts, agreements or rental

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transactions that fail to so comply with such laws.  All Rental Contracts will be transferable to Lender.  Borrower will indemnify Lender against any claims by its customers regarding Borrower’s obligations under the Rental Contacts.  Borrower will immediately, upon Lender’s oral or written request, deliver to Lender all Rental Contracts and all related documents.  This assignment is a transfer for security only and, until Lender has foreclosed its interest in the Rental Contracts, will not be deemed to delegate any of Borrower’s duties under the Rental Contracts to Lender; nor is it intended to alter or impair performance by either party to the Rental Contracts.  Lender may, from time to time, verify the accuracy of the Rental Contracts.  Borrower will immediately, upon Lender’s written request, provide Lender with the following information regarding Rental Contracts which are in effect on the date of such request:  (a) the name, address and telephone number of each customer who has executed a Rental Contract; (b) the location of the Inventory; (c) the date of each Rental Contract; (d) the date when the Inventory is to be returned under each Rental Contract; and, (e) any other information which Lender may reasonably request.  Other than to Lender and other than Permitted Security Interests, Borrower will not assign, sell, pledge, convey or by any other means transfer any Rental Contracts or chattel paper covering inventory financed by Lender that are for a term of thirty-two (32) days or more, without Lender’s prior written consent.  Borrower will not enter into any Rental Contracts for Inventory financed by Lender or against which Lender has advanced funds pursuant to which:  (i) the original term of the Rental Contract is greater than ninety (90) days; (ii) the original term of the Rental Contract is equal to or greater than the remaining economic life of such Inventory; (iii) the customer is bound to renew the Rental Contract for the economic life of such Inventory or is bound to become the owner of such Inventory; or, (iv) the customer has an option to renew the Rental Contract for the remaining economic life of such Inventory, or to become the owner of such Inventory, for nominal consideration, or for consideration which is less than the unpaid balance owed to Lender for such inventory.  If any such Rental Contracts are issued, Borrower will take any action which Lender may reasonably require to perfect and/or protect Lender’s security interest in such Rental Contracts and/or the inventory subject thereto.

16.Financial Covenants.

16.1.Special Definitions.  As used in this Section 16 and elsewhere herein, the following capitalized terms have the following meanings:

“Capital Expenditure” means an expenditure for an asset that must be depreciated or amortized under GAAP, or for any asset that under GAAP must be treated as a capital asset.  An expenditure for purposes of this definition includes any deferred or seller financed portion of the purchase price of an asset and includes the Capital Expenditure Equivalent of a Capital Lease.  Capital Expenditures do not include any expenditure made with insurance proceeds to the extent used to replace or repair damaged fixed assets and plant equipment.

“EBITDA” means, for any period of calculation, an amount equal to (A) the sum of (i) Net Income, (ii) Interest Expense, (iii) income tax expense, (iv) depreciation expense, (v) amortization expense, and (vi) non-cash charges relating to any share-based compensation awards, to the extent such non-cash charges were expensed during such period in accordance with SFAS 123R or are required to be shown as an expense in any Financial Statements for periods prior to the effective date of SFAS 123R, plus (B), the sum of (i) all nonrecurring losses under GAAP, and (ii) all extraordinary losses not otherwise related to the continuing operations of the Borrower in such period, minus (C) the sum of (i) all nonrecurring gains under GAAP, and (ii) all extraordinary gains and income not otherwise related to the continuing operations of the Borrower in such period.

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“Intangibles” means and includes, at any date, general intangibles; software (purchased or developed in-house); accounts receivable and advances due from officers, directors, employees, stockholders, members, owners and Affiliates; leasehold improvements net of depreciation; licenses; good will; prepaid expenses; escrow deposits; covenants not to compete; the excess of cost over book value of acquired assets; franchise fees; organizational costs; finance reserves held for recourse obligations; capitalized research and development costs; the capitalized cost of patents, trademarks, service marks and copyrights net of amortization; and such other similar items as Lender may from time to time determine in Lender’s sole discretion.

“Interest Expense” means for any period of calculation, all interest, whether paid in cash or accrued as a liability, but without duplication, on Total Funded Indebtedness during such period.

“Net Income” means, for any period of calculation, “net income” as determined in accordance with GAAP.

“Tangible Net Worth” means, at any date, (a) Total Assets minus (b) the sum of (i) Intangibles plus (ii) Total Liabilities.

“Total Assets” means the sum of all assets as presented in the balance sheet in Borrower’s most recent consolidated Financial Statements delivered to Lender as required hereunder.

“Total Funded Indebtedness” means the sum of the following, without duplication (i) the aggregate outstanding principal balance of all other Indebtedness for borrowed money, (ii) the principal outstanding under the Floorplan Loan Facility and  unfunded Approvals, and (iii) the maximum amount payable under any guaranty executed by a Borrower.

“Total Liabilities” means the sum of all liabilities as presented in the balance sheet in Borrower’s most recent consolidated Financial Statements delivered to Lender as required hereunder (including as liabilities, all reserves required under GAAP for contingencies and other potential liabilities) plus all Indebtedness of Borrower not otherwise reported thereon.

“Total Whole Goods Inventory” means the aggregate acquisition cost of all whole good items of Inventory owned by the Borrower and its Subsidiaries, whether or not such Inventory is subject to a Security Interest or subject to any Indebtedness (interest bearing or otherwise).

All other capitalized terms used in this Section 16 shall have their meanings and shall be determined under GAAP.  All calculations shall be for the Borrowers and their respective Subsidiaries on a consolidated basis.  For the purposes of calculating the amount of Total Funded Indebtedness in this Section 16, each scheduled payment of interest and principal on any of the Loans made on the first of a month shall be deemed to have been made on the immediately preceding day.

16.2.Debt Service Coverage.  Borrower covenants that it will maintain, as of the last day of each fiscal quarter ending on or after January 31, 2010, a ratio of EBITDA to Interest Expense, for the four preceding quarters then ended, of not less than 1.20 to 1.00.

16.3.Maximum Total Funded Indebtedness to Tangible Net Worth.  Borrower covenants that it will maintain, as of the last day of each fiscal quarter ending on or after January 31, 2010, a ratio of Total Funded Indebtedness to Tangible Net Worth not in excess of 3.00 to 1.00,

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calculated as of the last day of each fiscal quarter ending for the preceding four (4) fiscal quarters then ended.

16.4.Minimum Inventory Turn.  Borrower covenants that it will maintain as of the last day of each fiscal quarter ending on or after January 31, 2010, a ratio of:

(I) Borrower’s cost of goods sold with respect to new Inventory, to (b) average new Inventory, for the four (4) fiscal quarters then ended, of not less than (y) for the fiscal quarters ending January 31, 2010, April 30, 2010 and July 31, 2010, 1.80 to 1.00 and (z) for the fiscal quarter ending October 31, 2010 and each January 31, April 30, July 31 and October 31 thereafter, 2.00 to 1.00;

(II) (a) Borrower’s cost of goods sold with respect to used inventory, to (b) average used Inventory for the (4) fiscal quarters then ended, of not less than (y) for the fiscal quarters ending January 31, 2010, April 30, 2010 and July 31, 2010, 1.80 to 1.00 and (z) for the fiscal quarter ending October 31, 2010 and each January 31, April 30, July 31 and October 31 thereafter, 2.00 to 1.00; and

(III) (a) Borrower’s cost of goods sold with respect to parts inventory, to (b) average parts inventory, for the four (4) fiscal quarters then ended, of not less than 1.50 to 1.00.

16.5.Maximum Total Whole Goods Inventory.  Borrower covenants that as of October 31, 2009, January 31, 2010, April 30, 2010 and July 31, 2010, Borrower’s Total Inventory shall not exceed $380,000,000 plus an amount equal to fifty percent (50%) of the Dollar amount of all assets purchased by Borrower in connection with any Permitted Acquisition after the Effective Date.  For clarity, this covenant shall not be applicable after July 31, 2010.

17.Default.

17.1.Events of Default.  Any one or more of the following shall constitute an event of default (an “Event of Default”) under this Agreement:

17.1.1.Failure to Pay Principal or Interest.  Failure of Borrower to pay (i) any interest accrued on any of the Loans within three (3) Business Days after the date when due, or (ii) any principal of the Loans when due; provided, however, it shall not be an Event of Default with respect to the payment of any principal or interest on any Floorplan Loan until the occurrence of a Floorplan Payment Default.  “Floorplan Payment Default” means any failure by Borrower to make any payment, under a Transaction Statement by the last day of the “no interest” period set forth in a Transaction Statement.  “Floorplan Payment Default” shall not mean or include, and shall exclude, any deductions, offsets or other disputes made or asserted by Borrower which are accepted by or under good faith negotiation with Lender.

17.1.2.Failure to Pay Certain Other Amounts Owed to Lender.  Failure of Borrower to pay any of the Loan Obligations (other than principal of the Loans or interest accrued thereon and other than Lender’s costs and expenses Borrower is required to pay pursuant to the terms of Section 14.19 and Section 14.21) within 10 days after the date when due.

17.1.3.Failure to Pay Examination and Appraisal Costs.  Failure of Borrower to pay any of Lender’s reasonable costs and expenses required to be paid by Borrower pursuant to the terms of Section 14.19 and Section 14.21 within 10 days after the date when due.

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17.1.4.Failure to Pay Amounts Owed to Other Persons.  Failure of any Covered Person to make any payment due on Indebtedness of such Covered Person which such Indebtedness is over $250,000 in the aggregate to Persons (other than Indebtedness owed to Lender under the Loan Documents and other than Indebtedness owed to any Covered Person’s trade creditors in connection with the purchase of such Covered Person’s Inventory from such trade creditors) and which failure continues unwaived beyond any applicable grace period specified in the documents evidencing such Indebtedness.

17.1.5.Representations or Warranties.  Any of the Representations and Warranties is discovered to have been false in any material respect when made and is not cured within ten (10) days of the date such Representation and Warranty was made (provided such breach can be cured within such period and provided that Borrower works diligently and in good faith to cure any such breach during such period), provided, however, with respect to Representations and Warranties regarding Accounts, any such breach or falsity could reasonably be likely to have a Material Adverse Effect.

17.1.6.Certain Covenants with Cure Periods.  Failure of any Covered Person to comply with any covenant in Section 14 (other than the covenants set forth in Section 14.13, Section 14.14, Section 14.16, Section 14.19, Section 14.20, Section 14.21, Section 14.22, and Section 14.23) which is not cured within 20 days after the initial occurrence of such failure, provided noncompliance with such covenant can be cured within such 20 day period and provided that Borrower works diligently and in good faith to cure any such noncompliance during such period.

17.1.7.Certain Covenants Without Cure Periods.  Failure of any Covered Person to comply with the covenants in Section 14 (unless specified in Section 17.1.6 above ), Section 15, or Section 16.

17.1.8.Other Covenants.  Failure of any Covered Person to comply with of any of the terms or provisions of any of the Loan Documents applicable to it (other than a failure which constitutes an Event of Default under any of Sections 17.1.1 through 17.1.7).

17.1.9.Acceleration of Other Indebtedness.  Any Obligation (other than a Loan Obligation) of a Covered Person for the repayment of $250,000 in the aggregate or more of borrowed money is accelerated, or becomes or is declared to be due and payable or required to be prepaid (other than by an originally scheduled or required (not by acceleration) prepayment) prior to the original maturity thereof.

17.1.10.Default Under Other Agreements.  The occurrence of any default or event of default under any agreement to which a Covered Person is a party (other than the Loan Documents), which default or event of default continues unwaived beyond any applicable grace period provided therein and has had or could reasonably likely to have a Material Adverse Effect.  Lender or any Covered Person receives notice of a breach that is not cured within any applicable grace period from any landlord under a landlord consent/waiver concerning a leased regional or national headquarters or a leased location at which $500,000 or more of Inventory that is Collateral is located or any of its material books and records are located stating that Borrower is in default of its obligations under such lease.  Borrower loses any franchise, permission, license or right to sell or deal in any Collateral which Lender or Lender finance which has had or could reasonably be likely to have a Material Adverse Effect.

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17.1.11.Bankruptcy; Insolvency; Etc.  A Covered Person (i) fails to pay, or admits in writing its inability to pay, its debts generally as they become due, or otherwise becomes insolvent (however evidenced); (ii) makes an assignment for the benefit of creditors; (iii) files a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for any receiver or any trustee of such Covered Person or any substantial part of its property; (iv) commences any proceeding relating to such Covered Person under any reorganization, arrangement, readjustment of debt, dissolution or liquidation Law of any jurisdiction, whether now or hereafter in effect; (v) has commenced against it any such proceeding which remains undismissed for a period of 60 days, or by any act indicates its consent to, approval of, or acquiescence in any such proceeding or the appointment of any receiver of or any trustee for it or of any substantial part of its property, or allows any such receivership or trusteeship to continue undischarged for a period of 60 days; or (vi) takes any action to authorize any of the foregoing.

17.1.12.Judgments; Attachment; Settlement; Etc.  Any one or more judgments or orders is entered against a Covered Person or any attachment or other levy is made against the property of a Covered Person with respect to a claim or claims involving in the aggregate liabilities (not paid or fully covered by insurance, less the amount of reasonable deductibles in effect on the Execution Date) in an aggregate amount in excess of $250,000, and such judgment becomes final and non-appealable or if timely appealed is not fully bonded and collection thereof stayed pending the appeal; or any Covered Person agrees to a settlement obligating any Covered Person to make a payment with respect to a claim or claims involving in the aggregate liabilities (not paid or fully covered by insurance, less the amount of reasonable deductibles in effect on the Execution Date) in an aggregate amount in excess of $250,000.

17.1.13.Pension Benefit Plan Termination, Etc.  Any Pension Benefit Plan termination by the PBGC or the appointment by the appropriate United States District Court of a trustee to administer any Pension Benefit Plan or to liquidate any Pension Benefit Plan, which has had or reasonably could be likely to have a Material Adverse Effect; or any event which constitutes grounds either for the voluntary termination of any Pension Benefit Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer or liquidate any Pension Benefit Plan shall have occurred and be continuing for thirty (30) days after Borrower has notice of any such event, which has had or reasonably could be likely to have a Material Adverse Effect; or any voluntary termination of any Pension Benefit Plan which is a defined benefit pension plan as defined in Section 3(35) of ERISA while such defined benefit pension plan has an accumulated funding deficiency in an amount exceeding $500,000 in the aggregate unless Lender has been notified of such intent to voluntarily terminate such plan and Lender has given its consent and agreed that such event shall not constitute an Event of Default; or the plan administrator of any Pension Benefit Plan applies under Section 412(d) of the Code for a waiver of the minimum funding standards of Section 412(1) of the Code and Lender determines that the substantial business hardship upon which the application for such waiver is based could subject any Covered Person or ERISA Affiliate of any Covered Person to a liability in excess of $500,000 in the aggregate.

17.1.14.Liquidation or Dissolution.  A Covered Person files a certificate of dissolution under applicable state Law or is liquidated or dissolved or suspends or terminates the operation of its business, or has commenced against it any action or

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proceeding for its liquidation or dissolution or the winding up of its business, or takes any action in furtherance thereof, except in connection with the consolidation of such a Covered Person and its assets with another Covered Person and its assets except as permitted by this Agreement.

17.1.15.Seizure of Assets.  All or any material part of the property of all Covered Persons is nationalized, expropriated, seized or otherwise appropriated, or custody or control of such property or of all Covered Persons is assumed by any Governmental Authority or any court of competent jurisdiction at the instance of any Governmental Authority, unless the same is being contested in good faith by proper proceedings diligently pursued and a stay of enforcement is in effect.

17.1.16.Racketeering Proceeding.  There is filed against any Covered Person any civil or criminal action, suit or proceeding under any federal or state racketeering statute (including, without limitation, the Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit or proceeding is not dismissed within 120 days and could result in the confiscation or forfeiture of any of the Collateral.

17.1.17.Loan Documents; Security Interests.  For any reason other than the failure of Lender to take any action available to it to maintain perfection of the Security Interests created in favor of Lender pursuant to the Loan Documents, any Loan Document ceases to be in full force and effect or any Security Interest with respect to any portion of the Collateral intended to be secured thereby ceases to be, or is not, valid, perfected and prior to all other Security Interests (other than the Permitted Security Interests, and other than sales of Collateral expressly permitted hereunder made in the ordinary course of business, to a bona fide purchaser, for fair market value, if all of the proceeds thereof are delivered to Lender as set forth herein) or is terminated, revoked or declared void or invalid, or Borrower or any Covered Person contests or denies that it has any liability or obligation under any agreement, term, or condition contained in any Loan Document to which Borrower or such Covered Person is a party.

17.1.18.Loss to Collateral.  Any abandonment, loss, theft, damage or destruction of any item or items of Collateral occurs which is not covered by insurance as required herein and has or is reasonably likely to have a Material Adverse Effect.

17.1.19.Change of Control.  Unless consented to in writing by Lender, a Change of Control shall occur, or the Borrowers shall take any action in support of a Change in Control, or any Person states, publicly, privately, or otherwise, its intention to take any action, or fail to take any action, that may reasonably be likely, as determined by Lender, to result in a Change of Control.

17.1.20.Material Adverse Change.  There occurs any action or event or there is a nonoccurrence of any action or event, which has or reasonably could be likely to have a Material Adverse Effect.

17.2.Cross-Default.  An Event of Default under this Agreement will automatically and immediately constitute a default under every other Loan Document without regard to any requirement therein for the giving of notice or the passing of time.

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17.3.Rights and Remedies.

17.3.1.Termination of Floorplan Loan Facility.  Upon an Event of Default described in Section 17.1.11 (regardless of whether any time periods specified therein have expired), the Floorplan Loan Facility shall be deemed canceled without any action or notice by Lender shall have no obligation to make any further or subsequent Advances and no further advances or Approvals shall be made without the consent of Lender.  Upon the occurrence and during the continuance of any other Event of Default, Lender in its sole and absolute discretion may cancel the Floorplan Loan Facility.  Such cancellation may be, in any case, without presentment, demand or notice of any kind, which Borrower expressly waives.  Borrower hereby waives any requirement for notice of acceleration.

17.3.2.Acceleration; Funding.  Upon an Event of Default described in Section 17.1.11 (regardless of whether any time periods specified therein have expired), all of the outstanding Loan Obligations shall automatically become immediately due and payable.  From and after the date Lender has knowledge of an Event of Default under Section 17.1.1, no further Advances shall be made or issued Lender approves in writing any further Advances or unless Lender waives in writing such Event of Default.  Upon the occurrence and during the continuance of any other Event of Default, and at any time thereafter, (i) Lender may cease making Advances, and (ii) Lender in its sole and absolute discretion may declare all of the outstanding Loan Obligations immediately due and payable.  Any such acceleration may be, in either case, without presentment, demand or notice of any kind, which Borrower expressly waives.

17.3.3.Right of Set-off.  During an Existing Default, Lender and each participant of Lender in the Loan Obligations is hereby authorized, without notice to Borrower (any such notice being expressly waived by Borrower), to the fullest extent permitted by law, to set off and apply against the Loan Obligations any and all deposits (general or special, time or demand, provisional or final) or any other assets at any time held by or at Lender or such participant or under the control of or otherwise pledged to Lender or such participant, or any other Indebtedness at any time owing by Lender (or its Affiliate) or such participant (or its Affiliate) to or for the credit or the account of Borrower, irrespective of whether or not Lender shall have made any demand under this Agreement or the notes or any guaranty and although such Loan Obligations may be unmatured.  The rights of Lender or such participant under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which Lender or such participant may otherwise have.  Any such amounts shall be applied by Lender to the Loan Obligations as set forth in this Agreement.  During an Existing Default, Lender or such participant is hereby authorized, without notice to Borrower (any such notice being expressly waived by Borrower), to set off and apply against the Loan Obligations any and all deposits (general or special, time or demand, provisional or final) or other assets at any time held by or at Lender or such participant, or under the control of or otherwise pledged to Lender or such participant, or any other Indebtedness at any time owing by Lender (or its Affiliates) or such participant (or its Affiliates) to or for the credit or the account of Borrower, irrespective of whether or not Lender (or its Affiliates) thereof or such participant (or its Affiliates) shall have made any demand under this Agreement or the Loan Obligations and although such Loan Obligations may be unmatured.

17.3.4.Notice to Account Debtors.  Upon the occurrence and during the continuance of an Event of Default, Lender may, without prior notice to Borrower, notify any or all Account Debtors that the Accounts have been assigned to Lender and that Lender has a Security Interest therein, and Lender may direct, or Borrower, at Lender’s request, shall

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direct, any or all Account Debtors to make all payments upon the Accounts directly to Lender.

17.3.5.Entry Upon Premises and Access to Information.  Upon the occurrence and during the continuance of an Event of Default, Lender may (i) enter upon the premises leased or owned by Borrower where Collateral is located (or is believed to be located) without any obligation to pay rent to Borrower, or any other place or places where Collateral is believed to be located, (ii) render Collateral usable or saleable, (iii) remove Collateral therefrom to the premises of Lender or any agent of Lender for such time as Lender may desire in order effectively to collect or liquidate Collateral; (iv) take possession of, and make copies and abstracts of, Borrower’s original books and records, obtain access to Borrower’s data processing equipment, computer hardware and software relating to any of the Collateral and use all of the foregoing and the information contained therein in any manner deems appropriate in connection with the exercise of Lender’s rights; and (v) notify postal authorities to change the address for delivery of Borrower’s mail to an address designated by Lender and to receive, open and process all mail addressed to Borrower.

17.3.6.Completion of Uncompleted Inventory Items.  Upon the occurrence and during the continuance of an Event of Default, Lender may request that Borrower, and Borrower shall upon such request, use Borrower’s best efforts to obtain the consent of its and any other Covered Person’s customers to the completion (before or after foreclosure by Lender of its security interest therein) of the manufacture of all uncompleted Inventory items that Borrower or any other Covered Person was manufacturing for such customers pursuant to contracts or accepted purchase orders, and the commitment by such customers to purchase such items upon their completion as provided in the relevant contracts or accepted purchase orders.  Borrower shall, as an uncompensated agent for Lender, complete or cause to be completed the manufacture and shipment of all such items as provided in the relevant contracts or accepted purchase orders if Lender so directs.

17.3.7.Borrower’s Obligations.  Upon the occurrence and during the continuance of an Event of Default, Borrower shall, if Lender so requests, assemble all the movable tangible Collateral and make it available to Lender at a place or places to be designated by Lender in its discretion.

17.3.8.Secured Party Rights.  Upon the occurrence and during the continuance of an Event of Default:

17.3.8.1.Lender may exercise any or all of its rights under the Security Documents as a secured party under the UCC and any other applicable Law; and

17.3.8.2.Lender may sell or otherwise dispose of any or all of the Collateral at public or private sale in a commercially reasonable manner, which sale Lender may postpone from time to time by announcement at the time and place of sale stated in the notice of sale or by announcement at any adjourned sale without being required to give a new notice of sale, all as Lender deems advisable, for cash or credit.  Lender may become the purchaser at any such sale if permissible under applicable Law, and Borrower agrees that Lender has no obligation to preserve rights to Collateral against prior parties or to marshal any Collateral for the benefit of any Person.  Borrower agrees that if Lender

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conducts a private sale of any Collateral by requesting bids from 5 or more dealers, distributors, or lessors in that type of Collateral, any sale by Lender of such Collateral, in bulk or in parcels, to the bidder submitting the highest cash bid therefor, which occurs within 120 days of the later to occur of (a) Lender taking possession and control of such Collateral, or (b) Lender being otherwise authorized or permitted to sell such Collateral, is a commercially reasonable sale of such Collateral under the UCC.  Borrower further agrees that 10 (ten) or more days prior written notice will be commercially reasonable notice of any public or private sale.  Borrower agrees that the purchase of any Collateral by a Vendor, as provided in any agreement between Lender and the Vendor, is a commercially reasonable disposition and private sale of such Collateral under the UCC, and no request for bids shall be required.  Borrower irrevocably waives any requirement that Lender retain possession and not dispose of any Collateral until after an arbitration hearing, arbitration award, confirmation, trial or final judgment.  If Lender disposes of any such Collateral other than as herein contemplated, the commercial reasonableness of such disposition will be determined in accordance with the laws of the state governing this Agreement.

17.3.9.Joint and Several.  Each Obligation and liability of Borrower to Lender, including the Loan Obligations, are the joint and several obligations of Borrower, and Lender may proceed directly against any Borrower, or all Borrowers, or any Guarantor, or any Collateral, or all of the foregoing, or any one of the foregoing or any combination of the foregoing, without first proceeding against Borrower or any Collateral, or without joining all Persons liable or potentially liable for any portion of the Loan Obligations in one action.  Each Borrower shall be jointly and severally liable as primary obligor and not merely as surety for repayment of all Loan Obligations arising under the Loan Documents.  Such joint and several liability shall apply to Borrower regardless of whether any Advance was only requested by or on behalf of or made to any other Borrower or the proceeds of any Advance were used only by or on behalf of any other Borrower or any indemnification Obligation or any other Obligation arose only as a result of the action of any other Borrower.  If any Borrower makes a payment in respect of the Loan Obligations hereunder and under the other Loan Documents, it shall have the rights of contribution described in this Section below against the other Borrower or Borrowers; provided that such Borrower shall not exercise its right of contribution until Payment in Full; provided, however, that Lender is hereby granted, a Security Interest in such right of contribution and may enforce such right during an Existing Default.  It is the intent of Borrower and Lender, that Borrower’s maximum obligation to repay the Loan Obligations hereunder and under the other Loan Documents (the “Loan Obligation Limit”) shall not exceed the greater of (i) the amount actually borrowed or received directly or indirectly by such Borrower with respect thereto and (ii) the amount which is $1.00 less than the amount which, if recorded by such Borrower as a liability, would render such Borrower not Solvent.  To the extent that any Borrower makes a payment on any of the Loan Obligations (a “Loan Obligation Payment”), such Borrower (the “Entitled Borrower”) is entitled to contribution and indemnification from, and reimbursement by, each other Borrower (a “Contributing Borrower”) in the amount of the Contribution Obligation of such Contributing Borrower hereunder.  The “Contribution Obligation” of a Contributing Borrower with respect to the Loan Obligation Payment of an Entitled Borrower is an amount equal to the greater of (1) the lesser of (x) such Contributing Borrower’s Loan Obligation Limit at the time the Loan Obligation Payment is made and (y) such Contributing Borrower’s Allocable Share of the Loan Obligation

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Payment, and (2) the amount of all proceeds from the Loan Obligations actually received by such Contributing Borrower or applied by the recipient thereof directly or indirectly for the benefit of such Contributing Borrower, less the sum of any repayments thereof and any Loan Obligation Payments made by such Contributing Borrower prior to the time the applicable Loan Obligation Payment is made.  The “Allocable Share” of a Contributing Borrower is a fraction, the numerator of which is such Contributing Borrower’s Loan Obligation Limit at the time the applicable Loan Obligation Payment is made and the denominator of which is the sum of the Loan Obligation Limits of all of the Contributing Borrowers (plus a similarly computed amount for any Guarantor which has a similar obligation to make a contribution) as of such time.

17.3.10.Miscellaneous.  Upon the occurrence of an Event of Default and at any time thereafter, Lender may exercise any other rights and remedies available to Lender under the Loan Documents or otherwise available to Lender at law or in equity.

17.4.Application of Funds.  Any funds received by Lender with respect to any Loan Obligation after its Maturity, including proceeds of Collateral, shall be applied as follows:  (i) first, to reimburse Lender all unreimbursed costs and expenses paid or incurred by Lender that are payable or reimbursable by Borrower hereunder; (ii) second, to the payment of accrued and unpaid fees due hereunder and all other amounts due hereunder; (iii) third, to the payment of interest accrued on the Loans to Lender; and to the payment (pari passu with the foregoing) of any Interest/Currency Hedge Obligations; (iv) fourth, to the payment of the Loans, in such order as Lender determines in its absolute discretion; and (v) fifth, to the payment of the other Loan Obligations.  Any further remaining amounts shall be paid to Borrower or such other Persons as shall be legally entitled thereto.  Except as expressly provided otherwise herein, Lender may apply, and reverse and reapply, payments and proceeds of the Collateral to the Loan Obligations in such order and manner as Lender determines in its absolute discretion.  Borrower hereby irrevocably waives the right to direct the application of payments and proceeds of the Collateral.  Notwithstanding the foregoing, Lender may, with respect to the Floorplan Loan Facility apply: (i) at any time, payments to reduce finance charges first and then principal, regardless of Borrower’s instructions; and (ii) principal payments to the oldest (earliest) invoice for Collateral financed by Lender under the Floorplan Loan Facility, but, in any event, all principal payments will first be applied to such Collateral financed by Lender under the Floorplan Loan Facility  which is sold, lost, stolen, damaged, rented, leased, or otherwise disposed of or unaccounted for.

17.5.Limitation of Liability; Waiver.  Lender shall not be liable to Borrower as a result of any commercially reasonable possession, repossession, collection or sale by Lender of Collateral; and Borrower hereby waives all rights of redemption from any such sale and the benefit of all valuation, appraisal and exemption Laws.  If Lender seeks to take possession of any of the Collateral by replevin or other court process, Borrower hereby irrevocably waives (i) the posting of any bonds, surety and security relating thereto required by any statute, court rule or otherwise as an incident to such possession, (ii) any demand for possession of the Collateral prior to the commencement of any suit or action to recover possession thereof, (iii) any requirement that Lender retain possession and not dispose of any Collateral until after trial or final judgment, and (iv) to the extent permitted by applicable Law, all rights to notice and hearing prior to the exercise by Lender of Lender’s right to repossess the Collateral without judicial process or to replevy, attach or levy upon the Collateral without notice or hearing.  Lender shall have no obligation to preserve rights to the Collateral or to marshal any Collateral for the benefit of any Person.

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17.6.Notice.  Any notice of intended action required to be given by Lender (including notice of a public or private sale of Collateral), if given as provided in Section 21.1 at least 10 days prior to such proposed action, shall be effective and constitute reasonable and fair notice to Borrower.

17.7.No Liability.  Lender shall not be responsible for any action taken or omitted to be taken by it under or in connection with any Loan Document, except for its own gross negligence or willful misconduct.  Lender may execute any of its duties hereunder through its officers, directors, employees, agents and attorneys-in-fact, and Lender may employ agents and attorneys in fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys in fact selected by it with reasonable care.  Lender shall be entitled to rely upon any certification, notice, instrument, writing, or other communication (including, without limitation, any thereof by telephone or telecopy) believed by it to be genuine and correct and to have been signed, sent or made by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel (including counsel for any Covered Person), independent accountants, and other experts selected by Lender.  Lender shall be entitled to seek and rely upon the advice of counsel concerning all matters hereunder and shall not be liable to Borrower for acting or failing to act as advised by such counsel.

18.Intentionally Omitted.

19.General.

19.1.Lender’s Right to Cure.  Lender may (but shall not be obligated to), from time to time, in its absolute discretion, for Borrower’s account and at Borrower’s expense, pay (or, make a Floorplan Loan Advance to pay) any amount or do any act required of Borrower hereunder or requested by Lender to preserve, protect, maintain or enforce the Loan Obligations, the Collateral or Lender’s Security Interests therein, and which Borrower fails to pay or do, including payment of any judgment against Borrower, insurance premium, Taxes, warehouse charge, finishing or processing charge, landlord’s claim, and any other Security Interest upon or with respect to the Collateral.  All payments that Lender make pursuant to this Section and all reasonable out-of-pocket costs and expenses that Lender pay or incur in connection with any action taken by it hereunder shall be a part of the Loan Obligations, the repayment of which shall be secured by the Collateral.  Any payment made or other action taken by Lender pursuant to this Section shall be without prejudice to any right to assert an Event of Default hereunder and to pursue Lender’s other rights and remedies with respect thereto.

19.2.Rights Not Exclusive.  Every right granted to Lender hereunder or under any other Loan Document or allowed to it at law or in equity shall be deemed cumulative and may be exercised from time to time.

19.3.Survival of Agreements.  All covenants and agreements made herein and in the other Loan Documents shall survive the execution and delivery of this Agreement, and other Loan Documents and the making of every Advance.  All agreements, obligations and liabilities of Borrower under this Agreement concerning the payment of money to Lender, including Borrower’s obligations under Sections 19.5 and 19.6, but excluding the obligation to repay the Loans and interest accrued thereon, shall survive the repayment in full of the Loans and interest accrued thereon, whether or not indefeasible and the termination of the Floorplan Loan Facility.

19.4.Assignments; Participations.

19.4.1.Assignments.  At any time after the Execution Date, Lender may assign all of its rights and obligations under this Agreement without the consent or approval of

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Borrower.  Upon execution, delivery, and acceptance of an assignment and acceptance in form and substance acceptable to Lender, the assignee thereunder shall be a party hereto and, have the obligations, rights, and benefits of Lender hereunder and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Agreement.  Upon the consummation of any assignment pursuant to this Section, the assignor and the Borrower shall make appropriate arrangements so that, if required, new notes are issued to the assignee.   If the assignee is not incorporated under the laws of the United States of America or a State thereof, it shall deliver to the Borrower and the Lender certification as to the exemption from deduction or withholding of Taxes in accordance with applicable laws and as otherwise required by Lender.  Lender shall give prompt notice thereof to Borrower and Borrower shall be obligated to assignee to the same extent Borrower was obligated to such assignor.  Notwithstanding any other provision set forth in this Agreement, Lender may at any time assign and pledge all or any portion of its Loans to any Federal Reserve Bank as collateral security pursuant.  No such assignment shall release Lender from its obligations hereunder.

19.4.2.Sale of Participations.  Lender may sell one or more participations from time to time in its Loans to any other Person without the consent or approval of Borrower.

19.4.3.Information.  Lender may furnish any information concerning the Borrower or any of its Subsidiaries in the possession of Lender from time to time to assignees, affiliates or participants (including prospective assignees and participants)  Lender will use reasonable efforts to provide notice to Borrower prior to disclosing any such information, but shall have no liability for failure to provide such notice unless failure was willful.

19.5.Payment of Expenses.  Borrower agrees to pay or reimburse to Lender all of Lender’s reasonable out-of-pocket costs incurred in connection with Lender’s due diligence review before execution of the Loan Documents; the negotiation and preparation of proposals, a commitment letter and the Loan Documents; the assignment of the Loans; any participation of the Loans; the administration of this Agreement, the Loan Documents and the Loans; the perfection of Lender’s Security Interests in the Collateral; the interpretation of any of the Loan Documents; the enforcement of Lender’s rights and remedies under the Loan Documents after a Default or Event of Default; any amendment of or supplementation to any of the Loan Documents; and any waiver, consent or forbearance with respect to any Default or Event of Default.  Lender’s reasonable out-of-pocket costs may include but are not limited to the following, to the extent they are actually paid or incurred by Lender: title insurance fees and premiums; the cost of searches for Security Interests existing against Covered Persons or Guarantors; recording and filing fees and taxes; appraisal fees; travel expenses; environmental consultant fees; litigation costs; reasonable attorneys’ and paralegals’ expenses and reasonable fees; and costs and expenses (for both internal and external examiners) for any field examinations.  Attorneys’ and paralegals’ expenses may include but are not limited to filing charges; telephone, data transmission, facsimile and other communication costs; courier and other delivery charges; and photocopying charges.  Litigation costs may include but are not limited to filing fees, deposition costs, expert witness fees, expenses of service of process, and other such costs paid or incurred in any administrative, arbitration, or court proceedings involving Lender and any Covered Person, including proceedings under the Bankruptcy Code.  All costs which Borrower is obligated to pay or reimburse Lender are Loan Obligations payable to Lender and are payable on demand by Lender.

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19.6.General Indemnity.

19.6.1.Borrower agrees to indemnify and hold harmless Lender, and each of its affiliates and its respective officers, directors, employees, attorneys, representatives, agents, and advisors (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities, costs, and expenses (including, without limitation, reasonable attorneys’ fees) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation, or proceeding or preparation of defense in connection therewith) the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Loans (including, without limitation, any payments made by Lender to any Person (other than Borrower) who is a party to any blocked account and/or lockbox agreement, including, without limitation, any indemnity payments by Lender thereunder), or the manufacture, storage, transportation, release or disposal of any Hazardous Material on, from, over or affecting any of the Collateral or any of the assets, properties, or operations of any Covered Person or any predecessor in interest, directly or indirectly, except to the extent such claim, damage, loss, liability, cost, or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.  In the case of an investigation, litigation or other proceeding to which the indemnity in this Section applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated.  The Borrower agrees not to assert and agrees that it will not direct any other Covered Person to assert, any claim against any Indemnified Party, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Loans.  Borrower also agrees to pay, indemnify and hold harmless the Indemnified Parties for, from and against, and shall promptly reimburse the Indemnified Parties for, any and all claims, damages, liabilities, losses, costs and expenses (including reasonable attorneys’ fees and expenses and amounts paid in settlement) incurred, paid or sustained by the Indemnified Parties, or enforcement by Lender of any of its rights with respect thereto, except to the extent such claim, damage, loss, liability, cost, or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.  Each Borrower covenants and agrees to assume liability for and to protect, indemnify and hold harmless Lender, from any and all liabilities, obligations, damages, penalties, claims, causes of action, costs, charges and expenses (including without limitation, attorneys’ fees), which may be incurred by, imposed or asserted against Lender, howsoever arising or incurred because of. out of or in connection with the disbursements of Floorplan Loans; provided, however, the liability of the Borrowers pursuant to this indemnity shall not extend to any liability, obligation, damage, penalty, claim, cause of action, cost, charge or expense caused by or arising out of the gross negligence or willful misconduct of Lender.  Borrower:  (i) is obligated to pay any Loan Obligation even if any Collateral is defective or fails to conform to any warranties extended by any third party; (ii) shall not assert against Lender, or any other Indemnified Party any claim or defense Borrower has against any third party; and (iii) indemnify and hold Lender and any other Indemnified Party harmless against all claims and defenses asserted by any buyer of the Collateral relating to the condition of, or any representations regarding, any of the Collateral.  Borrower irrevocably waives all rights of offset and counterclaims Borrower

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may have against Lender, except counterclaims arising in cases of Lender’s gross negligence or willful misconduct.

19.6.2.        The obligations of Borrower under this Section 19.6 shall survive the termination of the Floorplan Loan Facility, the full payment in cash and satisfaction of all of the Loan Obligations, and the release of the Collateral.  All amounts, obligations and liabilities referred to in Section 19.6.1 shall be deemed to be a part of the Loan Obligations and shall be paid to Lender on demand.

19.6.3.        To the extent that any of the indemnities required from Borrower under this Section are unenforceable because they violate any Law or public policy, Borrower shall pay the maximum amount which it is permitted to pay under applicable Law.

19.6.4.        The foregoing indemnification shall not apply to the extent such liabilities and costs are determined to have resulted or been caused, in whole or in part, by the gross negligence or willful misconduct on the part of such Indemnified Party.  THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND EXCEPT AS PROVIDED BY THE IMMEDIATELY PRECEDING SENTENCE.

19.6.5.In exchange for, among other things, Lender’s agreement to make any payments to any Person (other than Borrower or a Covered Person) who is a party to any blocked account, lockbox agreement, bailee letter, landlord waiver or other similar agreement entered into in connection herewith (including any indemnity payments by Lender thereunder, collectively, “Third Person Reimbursement Agreements”), Borrower hereby indemnifies, releases, discharges and acquits forever Lender and any of its respective officers, directors, servants, agents, employees and attorneys, past, present and future, from any and all claims, demands and causes of action, of whatever nature, whether in contract or tort, accrued or to accrue, contingent or vested, known or unknown, running in favor of Borrower or any Covered Person arising out of or relating to such Third Person Reimbursement Agreements, except those arising from Lender’s gross negligence or willful misconduct.

19.7.       Changes in Accounting Principles.  If any Covered Person, at the end of its fiscal year and with the concurrence of its independent certified public accountants, changes the method of valuing the Inventory of such Covered Person, or if any other changes in accounting principles from those used in the preparation of any of the Financial Statements are required by or result from the promulgation of principles, rules, regulations, guidelines, pronouncements or opinions by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or bodies with similar functions), and any of such changes result in a change in the method of calculation of, or affect the results of such calculation of, any of the financial covenants, standards or terms found herein, then the parties hereto agree to enter into and diligently pursue negotiations in order to amend such financial covenants, standards or terms so as to equitably reflect such changes, with the desired result that the criteria for evaluating the financial condition and results of operations of such Covered Person shall be the same after such changes as if such changes had not been made; provided, however, that until such amendments are made, all financial covenants herein and all the provisions hereof which contemplate financial calculation hereunder shall remain in full force and effect.

19.8.       Loan Records.  The date and amount of all Advances to Borrower and payments of amounts due from Borrower under the Loan Documents will be recorded in the records that

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Lender normally maintains for such types of transactions.  The failure to record, or any error in recording, any of the foregoing shall not, however, affect the obligation of Borrower to repay the Loans and other amounts payable under the Loan Documents.  Borrower shall have the burden of proving that such records are not correct.  Borrower agrees that Lender’s books and records showing the Loan Obligations and the transactions pursuant to this Agreement shall be admissible in any action or proceeding arising therefrom, and shall constitute prima facie proof thereof, irrespective of whether any Loan Obligation is also evidenced by a promissory note or other instrument.  Any statement sent by Lender to a Covered Person shall be deemed correct, accurate and binding on Borrower and an account stated (except for reversals and reapplications of payments as provided in Section 7.5 and corrections of errors discovered by Lender), unless Borrower notifies Lender in writing to the contrary within 60 days after such statement is rendered (regardless of whether a shorter period is provided for in any Transaction Statement).  In the event a timely written notice of objections is given by Borrower, only the items to which exception is expressly made will be considered to be disputed by Borrower.

19.9.       Other Security and Guaranties.  Lender may, without notice or demand and without affecting Borrower’s obligations hereunder, from time to time,: (a) take from any Person and hold collateral (other than the Collateral) for the payment of all or any part of the Loan Obligations and exchange, enforce and release such collateral or any part thereof; and (b) accept and hold any endorsement or Guaranty of payment of all or any part of the Loan Obligations and release or substitute any such endorser or Guarantor, or any Person who has given any Security Interest in any other collateral as security for the payment of all or any part of the Loan Obligations, or any other Person in any way obligated to pay all or any part of the Loan Obligations.

19.10.     Loan Obligations Payable in Dollars.  All Loan Obligations shall be payable only in Dollars.  If, however, to obtain a judgment in any court it is necessary to convert a Loan Obligation payable in Dollars into another currency, the rate of exchange used shall be that at which Lender, using its customary procedures, could purchase Dollars with such other currency in New York, New York on the Business Day immediately preceding the day on which such judgment is rendered.  If any sum in another currency is paid to Lender or received by Lender and applied to a Loan Obligation payable in Dollars, such Loan Obligation shall be deemed paid and discharged only to the extent of the amount of Dollars that Lender, using its customary procedures, is able to purchase in New York, New York with such sum on the Business Day immediately following receipt thereof.  Borrower agrees to indemnify Lender against any loss in Dollars that it may incur on such Loan Obligation as a result of such payment or receipt and application to such Loan Obligation.

19.11.     Disclosure.

19.11.1.     Borrower irrevocably authorizes Lender to investigate and make inquiries of former, current, or future creditors or other persons and credit bureaus regarding or relating to Borrower (including, to the extent permitted by law, any equity holders of Borrower).  Lender may provide to any Affiliate of Lender or any third parties any financial, credit or other information regarding Borrower that Lender may at any time possess, whether such information was supplied by Borrower to Lender or otherwise obtained by Lender.  Further, Borrower irrevocably authorizes and instructs any third parties (including without limitation, any Vendors or customers of Borrower) to provide to Lender any credit, financial or other information regarding Borrower that such third parties may at any time possess, whether such information was supplied by Borrower to such third parties or otherwise obtained by such third parties.

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19.11.2.     Lender may obtain from any vendor any credit, financial or other information regarding Borrower that such vendor may from time to time possess.

19.11.3.     Notwithstanding the terms of Section 19.11.1, Lender may, disclose information regarding Borrower, or its operations or finances, to their Affiliates, to each other, to each other’s Affiliates, to any actual or prospective assignee, participant, trustee or purchaser (including any purchaser of any interest in a trust or other special purpose entity), and to all of the officers, attorneys, auditors, accountants, bank examiners, agents and representatives of the foregoing, in connection with the administration or the securitization, participation, or other disposition of all or any portion of the Loans or Loan Documents, or the interpretation or enforcement of the Loan Documents, or the lending and collection activity contemplated therein, or to the extent required by Law or a Governmental Authority, or to the extent required for the assignment, securitization, participation, or other disposition of all or any portion of the Loans or Loan Documents.  Lender shall use its reasonable efforts to cause such Persons to which information is to be disclosed as part of an assignment of, or participation in, the Loans to execute non-disclosure agreements with respect to such information, but shall have no liability for failure to do so, unless such failure is intentionally willful.  Notwithstanding the terms of Section 19.11.1, Lender may also disclose without restriction any such information in any documents that it files in any legal proceeding to pursue, enforce or preserve its rights under the Loan Documents.  Notwithstanding the terms of Section 19.11.1, Lender may also disclose customary credit, financial, or other information on Borrower in Lender’s possession to Vendors and potential Vendors, credit rating agencies, suppliers of Borrower, any Persons liable for the Loan Obligations, or any Person involved in the Floorplan Loan Facility, and Lender shall use its reasonable efforts to advise such Persons that such information is to be treated as confidential, but shall have no liability for failure to do so, unless such failure is intentionally willful.  Lender’s non-disclosure obligation shall not apply to any information that (i) is disclosed to Lender by a third Person not affiliated with or employed by Borrower who does not, to Lender’s knowledge, have a commensurate duty of non-disclosure, or (ii) is or becomes publicly known other than as a result of disclosure by Lender.

19.12.     Tax Treatment Waiver.  Notwithstanding any provision of this Agreement to the contrary, any party hereto (and each employee, representative, or other agent of each such party) may disclose to any and all Persons, without limitation of any kind, the “tax treatment,” “tax structure,” and “tax strategies” of the transactions contemplated hereby and the other Loan Documents and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to any such tax treatment, tax structure, or tax strategy.  This authorization is effective immediately upon the Effective Date.  The terms “tax treatment,” “tax structure,” and “tax strategies” shall be ascribed the meaning set forth in Treas. Reg. §1.6011-4, and this paragraph shall be construed so as to cause the subject transaction not to have been offered or entered into under conditions of confidentiality as described in Treas. Reg. §1.6011-4(b)(3).

20.          Binding Arbitration.

20.1.       Arbitrable Claims.  Except as otherwise specified below, all actions, disputes, claims and controversies under common law, statutory law or in equity of any type or nature whatsoever, whether arising before or after the date of this Agreement and the Loan Documents, and whether directly or indirectly relating to: (a) this Agreement or any amendments, modifications, restatements, waivers, and addenda hereto, or the breach, invalidity or termination hereof; (b) any

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previous or subsequent agreement between or among Lender, Borrower and any other Covered Person; (c) any act committed by Lender or by any parent company, subsidiary or affiliated company of Lender (the “Lender Companies”), or by any employee, agent, officer or director of a Lender Company whether or not arising within the scope and course of employment or other contractual representation of the Lender Companies provided that such act arises under a relationship, transaction or dealing between Lender, Borrower and any other Covered Person; or (d) any other relationship, transaction or dealing between or among, Lender, Borrower and any Covered Person (collectively, for clauses (a) through and including (d), the “Disputes”), will be subject to and resolved by binding arbitration.  Notwithstanding the foregoing, the parties agree that either party may pursue claims against the other that do not exceed Fifteen Thousand Dollars ($15,000) in the aggregate in a court of competent jurisdiction.  Service of arbitration claims shall be acceptable if made by U.S. mail or overnight delivery to the address for the party described herein.

20.2.       Administrative Body.  All arbitration hereunder will be conducted in accordance with the Commercial Arbitration Rules of either: (a) The American Arbitration Association (“AAA”); or (b) United States Arbitration & Mediation (“USA&M”).  The party first filing an arbitration claim shall designate which arbitration forum and rules are to be applied for all Disputes between the parties.  The arbitration rules are found at www.adr.org for AAA, and at www.usam-midwest.com. for USA&M.  AAA claims may be filed in any AAA office.  Claims filed with USA&M shall be filed in their Midwest office located at 720 Olive Street, Suite 2020, St. Louis, Missouri 63101.  All arbitrator(s) selected will be attorneys with at least five (5) years secured transactions experience.  A panel of three arbitrators shall hear all claims exceeding One Million Dollars ($1,000,000), exclusive of interest, costs and attorneys’ fees.  The arbitrator(s) will decide if any inconsistency exists between the rules of the applicable arbitral forum and the arbitration provisions contained herein.  If such inconsistency exists, the arbitration provisions contained herein will control and supersede such rules.  The arbitrator shall follow the terms of this Agreement and the applicable law, including the attorney-client privilege and the attorney work product doctrine.

20.3.       Hearings.  Each party hereby consents to a documentary hearing for all arbitration claims, by submitting the Dispute to the arbitrator(s) by written briefs and affidavits, along with relevant documents.  However, arbitration claims will be submitted by way of an oral hearing if any party requests an oral hearing within thirty (30) days after service of the claim, and that party remits the appropriate amount for AAA’s or USA&M’s (as applicable) fees and arbitrator compensation within ten (10) days of the designated arbitration association’s statement for payment of all fees and arbitrator compensation relating to the oral hearing.  Each party agrees that failure to timely pay all fees and arbitrator compensation billed to the party requesting the oral hearing will be deemed such party’s consent to submitting the Dispute to the arbitrator on documents and such party’s waiver of its request for an oral hearing.  The site of all oral arbitration hearings will be in the Division of the Federal Judicial District in which the designated arbitration association maintains a regional office that is closest to Borrower.

20.4.       Discovery.  Discovery permitted in any arbitration proceeding commenced hereunder is limited as follows.  No later than forty (40) days after the filing and service of a claim for arbitration, the parties in contested cases will exchange detailed statements setting forth the facts supporting the claim(s) and all defenses to be raised during the arbitration, and a list of all exhibits and witnesses.  No later than twenty-one (21) days prior to the oral arbitration hearing, the parties will exchange a final list of all exhibits and all witnesses, including any designation of any expert witness(es) together with a summary of their testimony; a copy of all documents and a detailed description of any property to be introduced at the hearing.  Under no circumstances will

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the use of interrogatories, requests for admission, requests for the production of documents or the taking of depositions be permitted.  However, if of the designation of any expert witness(es), the following will occur: (i) all information and documents relied upon by the expert witness(es) will be delivered to the opposing party; (ii) the opposing party will be permitted to depose the expert witness(es); (iii) the opposing party will be permitted to designate rebuttal expert witness(es); and (iv) the arbitration hearing will be continued to the earliest possible date that enables the foregoing limited discovery to be accomplished.

20.5.       Exemplary or Punitive Damages.  The Arbitrator(s) will not have the authority to award exemplary or punitive damages.

20.6.       Confidentiality of Awards.  All arbitration proceedings, including testimony or evidence at hearings, will be kept confidential, although any award or order rendered by the arbitrator(s) pursuant to the terms of this Agreement may be confirmed as a judgment or order in any state or federal court of competent jurisdiction within the federal judicial district which includes the residence of the party against whom such award or order was entered.  This Agreement concerns transactions involving commerce among the several states.  The Federal Arbitration Act, Title 9 U.S.C. Sections 1 et seq., as amended (“FAA”) will govern all arbitration(s) and confirmation proceedings hereunder.

20.7.       Prejudgment and Provisional Remedies.  Nothing herein will be construed to prevent Lender’s, Borrower’s or any Covered Person’s use of bankruptcy, receivership, injunction, repossession, replevin, claim and delivery, sequestration, seizure, attachment, foreclosure, or any other prejudgment or provisional action or remedy relating to any Collateral for any current or future debt owed by either party to the other.  Any such action or remedy will not waive Lender’s, Borrower’s or any Covered Person’s right to compel arbitration of any Dispute.

20.8.       Attorneys’ Fees.  If Lender, Borrower or any Covered Person brings any other action for judicial relief with respect to any Dispute (other than those set forth in Sections 20.1 or 20.7), the party bringing such action will be liable for and immediately pay all of the other party’s costs and expenses (including attorneys’ fees) incurred to stay or dismiss such action and remove or refer such Dispute to arbitration.  If Lender, Borrower or any Covered Person brings or appeals an action to vacate or modify an arbitration award and such party does not prevail, such party will pay all costs and expenses, including attorneys’ fees, incurred by the other party in defending such action.  Additionally, if Borrower or any Covered Person sues Lender or institutes any arbitration claim or counterclaim against Lender in which Lender is the prevailing party, Borrower or any such Covered Person will pay all costs and expenses (including attorneys’ fees) incurred by Lender in the course of defending such action or proceeding.

20.9.       Limitations.  Any arbitration proceeding must be instituted:  (i) with respect to any Dispute for the collection of any debt owed by either party to the other, before the second anniversary of the date the last payment by or on behalf of the payor was received and applied in respect of such debt by the payee; and (ii) with respect to any other Dispute, before the second anniversary of the date the incident giving rise thereto occurred, whether or not any damage was sustained or capable of ascertainment or either party knew of such incident.  Failure to institute an arbitration proceeding within such period will constitute an absolute bar and waiver to the institution of any proceeding, whether arbitration or a court proceeding, with respect to such Dispute.   Notwithstanding the foregoing, this limitations provision will be suspended temporarily, as of the date any of the following events occur, and will not resume until the date following the date either party is no longer subject to, (a) bankruptcy; (b) receivership; (c) any proceeding regarding an assignment for the benefit of creditors; or (d) any legal proceeding, civil

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or criminal, which prohibits either party from foreclosing any interest it might have in the collateral of the other party.

20.10.     Survival After Termination.  The agreement to arbitrate will survive the termination of this Agreement.

20.11.     Invalidity/Unenforceability of Binding Arbitration; Jury Trial Waiver; Service of Process; Forum.  IF THIS AGREEMENT IS FOUND TO BE NOT SUBJECT TO ARBITRATION, THEN:

20.11.1.     Jury Trial Waiver.  ANY LEGAL PROCEEDING WITH RESPECT TO ANY DISPUTE (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, or (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER OR NOT SOUNDING IN CONTRACT OR TORT OR OTHERWISE, WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A JURY.  EACH BORROWER AND LENDER WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH PROCEEDING.  Each Borrower and Lender further agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury and that either may file an original counterpart or a copy of this Agreement with any court as written evidence of the consent of the parties hereto to the waiver of their right to trial by jury.

20.11.2.     Choice of Forum.  Subject only to the exception in the next sentence, Borrower and Lender hereby agrees to the exclusive jurisdiction of the federal court of the Northern District of Illinois and the state courts of Illinois located in Cook County, Illinois and waives any objection based on venue or forum non conveniens with respect to any action instituted therein, and agrees that any dispute concerning the relationship between Lender and Borrower or the conduct of any of them in connection with this Agreement or otherwise shall be heard only in the courts described above.  Notwithstanding the foregoing: (1)  Lender shall have the right to bring any action or proceeding against any Borrower or its property in any courts of any other jurisdiction Lender deem necessary or appropriate in order to realize on the Collateral, real estate or other security for the Loan Obligations, and (2) each party hereto acknowledges that any appeals from the courts described in the immediately preceding sentence may have to be heard by a court located outside those jurisdictions.

20.11.3.     Service of Process.  Each Borrower hereby waives personal service of any and all process upon it and consents that all such service of process may be made by registered mail (return receipt requested) directed to Borrower at its address set forth on the signature pages hereof, and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, registered mail, return receipt requested; or at Lender’s option, by service upon CT Corporation which Borrower irrevocably appoints as such Borrower’s agent for the purpose of accepting service of process.  Lender shall promptly forward by registered mail any process so served upon said agent to Borrower at its address on the signature pages hereof.  Nothing

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in this Section shall affect the right of Lender to serve legal process in any other manner permitted by Law.

21.          Miscellaneous.

21.1.       Notices.  All notices, consents, requests and demands to or upon the respective parties hereto shall be in writing, and shall be deemed to have been given or made when delivered in person to those Persons listed on the signature pages hereof or four (4) days after the date when deposited in the United States mail, postage prepaid, or, in the case of the overnight courier services, when delivered to the overnight courier service, or in the case of telecopy or e-mail (if expressly permitted herein) notice, when sent, verification received, in each case addressed as set forth on the signature pages hereof, or to such other address as either party may designate by notice to the other in accordance with the terms of this Section.  No notice given to or demand made on Borrower by Lender in any instance shall entitle Borrower to notice or demand in any other instance.

21.2.       Amendments and Modifications; Waivers and Consents.

21.2.1.        No amendment to or modification of any provision of this Agreement, or of any of the other Loan Documents shall be effective unless it is in writing and signed by authorized officers of Lender and Borrower.  Unless otherwise provided herein, no waiver of, or consent to any departure by Borrower from, the requirements of any provision of this Agreement or any of the other Loan Documents shall be effective unless it is in writing and signed by authorized officers or representatives of Lender.

21.2.2.        Any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice to or demand on Borrower in any instance shall entitle Borrower to any other or further notice or demand in another similar or different instance.  No failure by Lender to exercise, and no delay by Lender in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any right, remedy, power or privilege hereunder preclude any other exercise thereof, or the exercise of any other right, remedy, power or privilege existing under any Law or otherwise.

21.3.       Course of Dealing.  ACCEPTANCE OF OR ACQUIESCENCE IN A COURSE OF PERFORMANCE OR COURSE OF DEALING RENDERED OR TAKEN UNDER OR WITH RESPECT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS WILL NOT BE RELEVANT IN ANY RESPECT TO DETERMINE THE MEANING OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS OR LIABILITIES OF THE PARTIES HERETO UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, EVEN THOUGH THE ACCEPTING OR ACQUIESCING PARTY HAD KNOWLEDGE OF THE NATURE OF THE PERFORMANCE AND OPPORTUNITY FOR OBJECTION.

21.4.       Rights Cumulative.  Each of the rights and remedies of Lender under this Agreement shall be in addition to all of its other rights and remedies under applicable Law, and nothing in this Agreement shall be construed as limiting any such rights or remedies.

21.5.       Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that Borrower may not assign, delegate or transfer any of its rights or obligations under this Agreement without the prior written consent of Lender.  With respect to Borrower’s successors and assigns, such successors and assigns shall include any receiver, trustee or debtor-in-possession of or for Borrower.

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21.6.       Severability.  Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or lack of authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction unless the ineffectiveness of such provision would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable.

21.7.       Counterparts.  This Agreement may be executed by the parties hereto on any number of separate counterparts, and all such counterparts taken together shall constitute one and the same instrument.  It shall not be necessary in making proof of this Agreement to produce or account for more than one counterpart signed by the party to be charged.

21.8.       Governing Law; No Third Party Rights.  This Agreement, and the other Loan Documents and the rights and obligations of the parties hereunder and thereunder shall be governed by and construed and interpreted in accordance with the internal Laws of the State of Illinois applicable to contracts made and to be performed wholly within such state, without regard to choice or conflicts of law principles; except that the provisions of the Loan Documents pertaining to the creation or perfection of Security Interests or the enforcement of rights of Lender in Collateral located in a State other that the State of Illinois shall be governed by the Laws of such State to the extent such law is applicable thereto.  This Agreement is solely for the benefit of the parties hereto and their respective successors and assigns, and no other Person shall have any right, benefit, priority or interest under, or because of the existence of, this Agreement.

21.9.       Counterpart Facsimile Execution.  For purposes of this Agreement, a document (or signature page thereto) signed and transmitted by facsimile machine or telecopier or via e-mail as a PDF attachment is to be treated as an original document.  The signature of any Person thereon, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature on an original document.  At the request of any party hereto, any facsimile, telecopy or PDF document is to be re-executed in original form by the Persons who executed the facsimile, telecopy or PDF document.  No party hereto may raise the use of a facsimile machine, telecopier, e-mail or the fact that any signature was transmitted through the use of a facsimile machine, telecopier or e-mail as a defense to the enforcement of this Agreement or any amendment or other document executed in compliance with this Section.

21.10.     No Other Agreements.  There are no other agreements between Lender and Borrower, oral or written, concerning the subject matter of the Loan Documents, and all prior agreements concerning the same subject matter, including any proposal or commitment letter, are merged into the Loan Documents and thereby extinguished.

21.11.     Negotiated Transaction.  Borrower and Lender represent each to the others that in the negotiation and drafting of this Agreement and the other Loan Documents they have been represented by and have relied upon the advice of counsel of their choice.  Borrower and Lender affirm that their counsel have both had substantial roles in the drafting and negotiation of this Agreement; therefore, this Agreement will be deemed drafted by Borrower and Lender, and the rule of construction to the effect that any ambiguities are to be resolved against the drafter will not be employed in the interpretation of this Agreement.

21.12.     Waiver of Punitive and Exemplary Damages.  Each party to this Agreement hereby waives any right to bring any action or claim against any other party to this Agreement for exemplary or punitive damages arising out of or otherwise relating to the this Agreement, Loan

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Documents, any of the transactions contemplated herein, or the actual or proposed use of the proceeds of the Loans.

21.13.     Incorporation By Reference.  All of the terms of the other Loan Documents are incorporated in and made a part of this Agreement by this reference.

21.14.     Statutory Notice-Insurance.  The following notice is given pursuant to Section 180/15 of the Collateral Protection Act set forth in Chapter 815 Section 180/1 of the Illinois Compiled Statutes; nothing contained in such notice shall be deemed to limit or modify the terms of this Agreement:

UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY YOUR AGREEMENT WITH US, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTERESTS IN YOUR COLLATERAL.  THIS INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS.  THE COVERAGE THAT WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM THAT IS MADE AGAINST YOU IN CONNECTION WITH THE COLLATERAL.  YOU MAY LATER CANCEL ANY INSURANCE PURCHASED BY US, BUT ONLY AFTER PROVIDING EVIDENCE THAT YOU HAVE OBTAINED INSURANCE AS REQUIRED BY OUR AGREEMENT.  IF WE PURCHASE INSURANCE FOR THE COLLATERAL, YOU WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES WE MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE.  THE COSTS OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL OUTSTANDING BALANCE OR OBLIGATION.  THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE YOU MAY BE ABLE TO OBTAIN ON YOUR OWN.

21.15.     Statutory Notice—Oral Commitments.  ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

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signature pages follow}

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THIS CONTRACT CONTAINS A BINDING ARBITRATION CLAUSE WHICH MAY BE ENFORCED BY THE PARTIES.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by appropriate duly authorized officers as of the Effective Date.

GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION,

as Lender

By:	/s/ Joseph Kinkenon
Name:	Joseph Kinkenon
Title:	Wholesale Risk Leader
		Notice Address:
		Joseph Kinkenon
		GE Capital Americas - Equipment Finance
		125 John Carpenter Freeway
		Irving, TX 75062
		FAX # (314) 228-0163
		TEL # (972) 830-6009
		with a copy to:
		Joe Cistulli, General Counsel,
		GE Capital Americas - Equipment Finance
		300 John Carpenter Freeway
		Irving, TX 75062
		FAX #) (469) 519-4148
		TEL # ( 469) 586-2091
		and
		GE Commercial Distribution Finance Corporation
		5595 Trillium Boulevard
		Hoffman Estates, IL 60192-3405
		Attn: Peter Muniz, General Counsel
		FAX # (847) 747-7455
		TEL # (847) 747-7552

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TITAN MACHINERY INC., as Borrower
By:	/s/ Ted O. Christianson
Name:	Ted O. Christianson
Title:	Vice President-Finance
Notice Address for the Borrower:
Titan Machinery Inc.
4876 Rocking Horse Circle
Fargo, ND 58104-6049
Telephone: 701-356-0130
Attn: Ted O. Christianson
with a copy to:
Simon C. Root, Esq.
Fredrikson & Byron, P.A.
200 South Sixth Street
Minneapolis, MN 55402-1425
Telephone: 612-492-7000

{remainder of page intentionally left blank}

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EXHIBIT 4.1

GLOSSARY AND INDEX OF DEFINED TERMS

AAA — is defined in Section 20.2.

ACCOUNT — as to any Person, the right of such Person to payment for goods sold or leased or for services rendered by such Person.

ACCOUNT DEBTOR — the obligor on any Account.

ACQUISITION means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or division of a Person, (b) the acquisition of 50% or more of the Capital Securities of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is already a Subsidiary).

ADJUSTED LIBOR RATE — is defined in Section 6.3.

ADDITIONAL AND AMENDED FINANCIAL COVENANT — shall mean any new or amended covenant or similar restriction measuring the financial performance of the Borrower or any other Covered Person (regardless of whether such provision is labeled or otherwise characterized as a covenant) including, without limitation, (i) is similar to that of the covenants in Section 16 of this Agreement, or related definitions of this Agreement, but contains one or more percentages, amounts or formulas that is more restrictive than those set forth in this Agreement or more beneficial to the holder or holders of the Indebtedness created or evidenced by the document in which such covenant or similar restriction is contained (and such covenant or similar restriction shall be deemed an Additional and Amended Covenant only to the extent that it is more restrictive or more beneficial) or (ii) is different from the subject matter of the covenants in Section 16 of this Agreement, or related definitions of this Agreement.

ADVANCE — an Floorplan Loan Advance.

ADVANCE DATE — the date on which an Advance is requested by Borrower to be made, or is otherwise contemplated or intended to be made, as provided herein.

AFFILIATE — with respect to any Person, (a) any other Person who is a partner, director, officer or stockholder of such Person; and (b) any other Person which, directly or indirectly, is in control of, is controlled by or is under common control with such Person, and any partner, director, officer or stockholder of such other Person described.  For purposes of this Agreement, control of a Person by another Person shall be deemed to exist if such other Person has the power, directly or indirectly, either to (i) vote twenty percent (20%) or more of the securities having the power to vote in an election of directors of such Person, or (ii) direct the management of such Person, whether by contract or otherwise and whether alone or in combination with others.  Notwithstanding the foregoing, in no event will any stockholder of Borrower who is not also an officer or director of Borrower be considered to be an “Affiliate” of Borrower.

AGREEMENT — this document (including every document that is stated herein to be an appendix, exhibit or schedule hereto, whether or not physically attached to this document), as amended from time to time.

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APPLICABLE LENDING OFFICE — means, for Lender and for each Loan, the “Applicable Lending Office” of Lender (or of an affiliate of Lender) designated for such Loan on the signature pages hereof or such other office of Lender (or an affiliate of Lender) as Lender may from time to time specify to the Borrower by written notice in accordance with the terms hereof as the office by which its Loans are to be made and maintained.

APPROVAL — means Lender’s approval to finance particular Inventory for Borrower which is evidenced by Lender issuing a financing approval number to the Vendor of such Inventory.  “Approval” also means (i) any open-to-buy authorization given by Lender to a Vendor, pursuant to which Lender may authorize such vendor to assume Lender’s approval to finance Inventory until Lender affirmatively withdraws such authorization, and (ii) any Approval for which Lender has not made a Floorplan Loan Advance as a result of Lender not receiving the invoice from the Vendor for the Inventory which is subject to the Approval.

ASBESTOS MATERIAL — either asbestos or asbestos-containing materials.

AVERAGE DAILY BALANCE — is defined in Section 6.1.3.

BORROWING OFFICER — each officer of the Borrower who is authorized to submit a request for an Advance or take such other action on behalf of the Borrower in a writing delivered to Lender.

BUSINESS DAY — any day on which the Federal Reserve Bank of Chicago is open for the transaction of business.

CAPITAL EXPENDITURE — is defined in Section 16.1.

CAPITAL EXPENDITURE EQUIVALENT — means, with respect to a Capital Lease, the amount that would have been the aggregate cost of the property leased if it had been purchased rather than leased.

CAPITAL LEASE — any lease that has been or should be capitalized under GAAP.

CAPITAL SECURITIES means, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the Effective Date, including common shares, preferred shares, membership interests in a limited liability company, limited or general partnership interests in a partnership, interests in a trust, interests in other unincorporated organizations or any other equivalent of such ownership interest.

CASH COLLATERAL ACCOUNT — the account(s) with such financial institution as selected or designated by Lender from time to time that is designated by Lender as the Cash Collateral Account during an Existing Default.

CHANGE OF CONTROL — means the occurrence of any of the following events with respect to Parent:  (a) any Person or group of Persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934) shall acquire beneficial ownership (within the meaning of Rule 13d-3 promulgated under such Act) of more than 35% of the outstanding Capital Securities (on a fully diluted basis and taking into account any securities or contract rights exercisable, exchangeable or convertible into equity securities) of Parent having voting rights in the election of directors under normal circumstances; or (b) the sale of all or substantially all of the assets of Parent.

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CHARTER DOCUMENTS — the articles or certificate of incorporation and bylaws of a corporation; the certificate of limited partnership and partnership agreement of a limited partnership; the partnership agreement of a general partnership; the articles of organization and operating agreement of a limited liability company; or the indenture of a trust.

CLAIMS Act — the Assignment of Claims Act of 1940.

COBRA — the Consolidated Omnibus Budget Reconciliation Act.

CODE — the Internal Revenue Code of 1986 and all regulations thereunder of the IRS.

COLLATERAL — all of the Personal Property Collateral, and any other property or asset in which Lender has a Security Interest, from time to time, to secure payment or performance of the Loan Obligations, and all proceeds (including, without limitation, Accounts, insurance and sale proceeds) thereof.

CONTRACT — any contract, capital lease, operating lease, note, bond, indenture, deed, mortgage, deed of trust, security agreement, pledge, hypothecation agreement, assignment, or other agreement or undertaking.

COVERED PERSON — is defined in Section 4.4.

CREDIT AGREEMENT — This Agreement.

DAILY CHARGE — is defined in Section 6.1.3.

DAILY RATE — is defined in Section 6.1.3.

DEFAULT — any of the events listed in Section 17.1 of this Agreement, without giving effect to any requirement for the giving of notice, for the lapse of time, or both, or for the happening of any other condition, event or act.

DEFAULT RATE — the rate of interest payable on each Loan after its Maturity and in certain other circumstances as provided in Section 6.6.

DISCLOSURE SCHEDULE — the disclosure schedule of Borrower attached hereto as Exhibit 12.

DISPUTES — is defined in Section 20.1.

DOL — the United States Department of Labor.

DOLLARS and the sign $ — lawful money of the United States.

EBITDA — is defined in Section 16.1.

EFFECTIVE DATE — the date when this Agreement is effective as provided in Section 1.

EMPLOYMENT LAW — ERISA, the Occupational Safety and Health Act, the Fair Labor Standards Act, or any other Law pertaining to the terms or conditions of labor or safety in the workplace or discrimination or sexual harassment in the workplace.

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ENVIRONMENTAL LAW — the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Clean Air Act, or any other Law pertaining to environmental quality or remediation of Hazardous Material.

EPA — the United States Environmental Protection Agency.

ERISA — the Employee Retirement Income Security Act of 1974.

ERISA AFFILIATE — as to any Borrower, any trade or business (irrespective of whether incorporated) which is a member of a group of which such Person is a member and thereafter treated as a single employer under §414(b), (c), (m) or (o) of the Code or applicable Treasury Regulations.

EVENT OF DEFAULT — any of the events listed in Section 17.1 of this Agreement as to which any requirement for the giving of notice, for the lapse of time, or both, or for the happening of any further condition, event or act has been satisfied.

EXECUTION DATE — the date when this Agreement has been executed.

EXISTING DEFAULT — an Event of Default which has occurred and is continuing and which has not been waived in writing by Lender.

EXISTING LOAN DOCUMENTS — the “Loan Documents” as such term is defined in the Prior AWF, and includes, without limitation, each document and agreement specified therein and any other existing document or agreement granting, or purporting to grant, in favor of Administrative Agent (as defined therein), a Security Interest on any asset of the Borrower or any other Covered Person.

FAA — is defined in Section 20.6.

FINANCIAL STATEMENTS — the most recent of the Initial Financial Statements and the financial statements of Borrower required to be furnished to Lender under this Agreement.

FLOORPLAN INVENTORY VALUE — means one hundred percent (100%) of the total aggregate wholesale invoice price of all of Borrower’s Inventory financed under the Floorplan Loan Facility in which Lender has a first priority, perfected Security Interest (subject to no other Security Interest) that is unsold and not leased by Borrower and is in Borrower’s possession and control as of the date of determination, less the amount of any such Inventory reported by the Borrower (if the Borrower is required by Lender to report) as demonstration items or Inventory that is obsolete or otherwise unmerchantable or if in the possession or control of Borrower for 180 days or more from the date of the invoice for such Inventory.  If any Inventory financed under the Floorplan Loan Facility with a value in excess of $0.00 for each location is located on any premises that are not owned by Borrower (not including any lessee or other person to whom Inventory is leased or rented in the ordinary course of such Covered Person’s business, or other locations where Borrower is not obligated to pay rent for up to 30 consecutive days) and Borrower has not obtained or caused to be obtained written waivers or consents, in form and substance satisfactory to Lender, then such Inventory shall be deemed to have a “Floorplan Inventory Value” of zero Dollars ($0.00).

FLOORPLAN LOAN — any Floorplan Loan Advance.

FLOORPLAN LOAN ADVANCE — an Advance by Lender that is to be funded under the Floorplan Loan Facility.

4

FLOORPLAN LOAN FACILITY — the discretionary line of credit of Lender as stated in Section  5.1.1 to fund Floorplan Loan Advances.

FLOORPLAN LOAN MATURITY DATE — is defined in Section 7.1.3.

FLOORPLAN PAYMENT DEFAULT — is defined in Section 17.1.1.

FLOORPLAN SHORTFALL — means the amount, if any, by which (a) the sum of the Floorplan Loans (less the amount of the Floorplan Loans attributable to Inventory purchased by Borrower during the In Transit Period (defined below) as evidenced by the invoice date) outstanding on any date of determination, exceeds (b) the Floorplan Inventory Value as determined by Lender as of such date of determination.  “In Transit Period” shall mean a period determined by Lender which reasonably estimates the time period it takes Inventory ordered by Borrower and shipped by a Vendor to arrive at Borrower’s location.  Until notice is given by Lender to Borrower of a change in the In Transit Period, the In-Transit Period shall be the two (2) day period immediately preceding the date of the most recent Schedule of Inventory.

FLOORPLAN TERMINATION DATE — is defined in Section 5.1.8.

FRB — the Board of Governors of the Federal Reserve System and any successor thereto or to the functions thereof.

GAAP — those generally accepted accounting principles set forth in Statements of the Financial Accounting Standards Board and in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants or which have other substantial authoritative support in the United States and are applicable in the circumstances, as applied on a consistent basis.

GOVERNMENTAL AUTHORITY — the federal government of the United States; the government of any foreign country that is recognized by the United States or is a member of the United Nations; any state of the United States; any local government or municipality within the territory or under the jurisdiction of any of the foregoing; any department, agency, division, or instrumentality of any of the foregoing; and any court, arbitrator, or board of arbitrators whose orders or judgments are enforceable by or within the territory of any of the foregoing.

GUARANTOR — any Person who at any time guaranties the Loan Obligations.  As of the Execution Date, there is no Guarantor.

HAZARDOUS MATERIAL — any hazardous, radioactive, toxic, solid or special waste, material, substance or constituent thereof, or any other such substance (as defined under any applicable Law or regulation), including Asbestos Material.

IMPOSITIONS — is defined in Section 6.7.2.

INDEBTEDNESS — as to any Person at any particular date, any contractual obligation enforceable against such Person (i) to repay borrowed money; (ii) to pay the deferred purchase price of property or services; (iii) to make payments or reimbursements with respect to bank acceptances or to a factor; (iv) to make payments or reimbursements with respect to letters of credit whether or not there have been drawings thereunder; (v) with respect to which there is any Security Interest in any property of such Person; (vi) to make any payment or contribution to a Multi-Employer Plan; (vii) that is evidenced by a note, bond, debenture or similar instrument; (viii) under any conditional sale agreement or title retention agreement; (ix) all Liabilities (as

5

defined by GAAP) under any Capital Lease or (x) to pay interest or fees with respect to any of the foregoing.  INDEBTEDNESS also includes any other Obligation that either (i) is non-contingent and liquidated in amount or (ii) should under GAAP be included in liabilities and not just as a footnote on a balance sheet.  In no event shall “Indebtedness” include trade accounts payable.

INDIRECT OBLIGATION — as to any Person, (a) any guaranty by such Person of any Obligation of another Person; (b) any Security Interest in any property of such Person that secures any Obligation of another Person; (c) any enforceable contractual requirement that such Person (i) purchase an Obligation of another Person or any property that is security for such Obligation, (ii) advance or contribute funds to another Person for the payment of an Obligation of such other Person or to maintain the working capital, net worth or solvency of such other Person as required in any documents evidencing an Obligation of such other Person, (iii) purchase property, securities or services from another Person for the purpose of assuring the beneficiary of any Obligation of such other Person that such other Person has the ability to timely pay or discharge such Obligation, (iv) grant a Security Interest in any property of such Person to secure any Obligation of another Person, (v) otherwise assure or hold harmless the beneficiary of any Obligation of another Person against loss in respect thereof; (d) any Obligation arising from the endorsement by such Person of an instrument (e) any Obligation of such Person as a surety; and (f) any other contractual requirement enforceable against such Person that has the same substantive effect as any of the foregoing.  The term INDIRECT OBLIGATION does not, however, include the endorsement by a Person of instruments for deposit or collection in the ordinary course of business or the liability of a general partner of a partnership for Obligations of such partnership.  The amount of any Indirect Obligation of a Person shall be deemed to be the stated or determinable amount of the Obligation in respect of which such Indirect Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith.

INTEREST RATE AND FEE LETTER  — collectively, any and all interest rate letters, fee letters and similar agreements between Borrower and Lender and entered into from time to time by Borrower and Lender.

INITIAL AWF — Investments permitted under Section 2.

INITIAL FINANCIAL STATEMENTS — the financial statements (not including the projections) of Borrower referred to in Section 11.1.2.

INSURANCE PROCEEDS — insurance and/or condemnation proceeds payable as a consequence of damage to or destruction of any of the Collateral.

INTEREST EXPENSE — is defined in Section 16.1.

INTEREST/CURRENCY HEDGE OBLIGATION — any obligations of Borrower to Lender or any of its respective Affiliates or Subsidiaries under an agreement or agreements between Borrower and Lender or any of its respective Affiliates or Subsidiaries under which the exposure of Borrower to fluctuations in interest rates or currencies is effectively limited, including, without limitation, whether in the form of one or more interest rate cap, collar, corridor agreements, interest rate swaps, currency swaps, or the like, or options therefor.

INVENTORY — goods owned, leased or held by a Person for sale, lease, sublease or resale or furnished or to be furnished under contracts for services, and raw materials, goods/work in process, materials, component parts and supplies used or consumed, or held for use or consumption in such Person’s business.

6

INVESTMENT — (a) a loan or advance of money or property to a Person, (b) Capital Securities in a Person, (c) a debt instrument issued by a Person, whether or not convertible to stock or other equity interest in such Person, or (d) any other interest in or rights with respect to a Person which include, in whole or in part, a right to share, with or without conditions or restrictions, some or all of the revenues or net income of such Person.

IRS — the Internal Revenue Service.

KNOWLEDGE — means, with respect to the Borrower or any Covered Person, that a Responsible Officer of Borrower or such Covered Person, as the case may be, has actual knowledge or conscious awareness of the fact or matter in question or reasonably should, in light of such Responsible Officer’s position, have knowledge of the fact or matter in question.

LAW — any statute, rule, regulation, order, judgment, award or decree of any Governmental Authority.

LENDER — GE Commercial Distribution Finance Corporation, and its successors and assigns.

LENDER COMPANIES — is defined in Section 20.1.

LIBOR ADVANCE — an Advance that will become a LIBOR Loan.

LIBOR INCREMENT — is defined in Section 6.3.

LIBOR LOAN — any portion of a Loan on which interest accrues at the Adjusted LIBOR Rate.

LOAN — a Floorplan Loan.

LOAN DOCUMENTS — this Agreement, the guaranties, the Security Documents, each Interest Rate and Fee Letter, Transaction Statements and all other agreements, certificates, documents, instruments and other writings executed in connection herewith or therewith from time to time.

LOAN OBLIGATIONS — all of Borrower’s Indebtedness owing to Lender under this Agreement and the other Loan Documents, and all other agreements, certificates, documents, instruments and other writings executed in connection therewith, whether as principal, interest, fees, or otherwise, including without limitation, the amount of all unfunded Approvals, any amounts set forth in Section 6.8, all obligations of Lender under any Third Person Reimbursement Agreements, and all other Obligations and liabilities of Borrower to Lender under this Agreement and the other Loan Documents and all Interest/Currency Hedge Obligations (in each case including all extensions, renewals, modifications, rearrangements, restructures, replacements and refinancings of the foregoing, whether or not the same involve modifications to interest rates or other payment terms), whether now existing or hereafter created, absolute or contingent, direct or indirect, joint or several, secured or unsecured, due or not due, contractual or tortious, liquidated or unliquidated, arising by operation of law or otherwise, including but not limited to the obligation of Borrower to repay future advances by Lender hereunder, whether or not made pursuant to commitment and whether or not presently contemplated by Borrower, Lender in the Loan Documents.

LOCAL TIME — means the local time in Chicago, Illinois.

MATERIAL ADVERSE EFFECT — as to the Borrower, any Guarantor or any other Covered Person, taken as a whole, and with respect to any event or occurrence of whatever nature (including any

7

adverse determination in any litigation, arbitration, investigation or proceeding), a material adverse effect on the business, operations, revenues, financial condition, property, or business prospects of Borrower and each other Covered Person taken as a whole, or the ability of Borrower, any Guarantor or such Covered Person to timely pay or perform Borrower’s, any Guarantor’s and each other Covered Person’s Obligations generally taken as a whole, or in the case of Borrower, the ability of Borrower to pay or perform any of Borrower’s Obligations to Lender, or in the case of a Guarantor, the ability of such Guarantor to pay or perform any of its Obligations guarantied under the terms of its Guaranty.

MATERIAL AGREEMENT — as to Borrower, any Guarantor or any other Covered Person, any Contract to which Borrower, any Guarantor or any Covered Person is a party or by which any such Borrower, any Guarantor or any other Covered Person is bound which, if violated or breached, has or is reasonably likely to have a Material Adverse Effect.

MATERIAL LAW — any separately enforceable provision of a Law whose violation by a Borrower, any Guarantor, or any other Covered Person has or is reasonably likely to have a Material Adverse Effect.

MATERIAL LICENSE — (i) as to any Covered Person, any license, permit or consent from a Governmental Authority or other Person and any registration and filing with a Governmental Authority or other Person which if not obtained, held or made by such Covered Person has or is reasonably likely to have a Material Adverse Effect, and (ii) as to any Person who is a party to this Agreement or any of the other Loan Documents, any license, permit or consent from a Governmental Authority or other Person and any registration or filing with a Governmental Authority or other Person that is necessary for the execution or performance by such party, or the validity or enforceability against such party, of this Agreement or such other Loan Document.

MATERIAL OBLIGATION — as to Borrower, any Guarantor or any Covered Person, an Obligation of such Person which if not fully and timely paid or performed has or is reasonably likely to have a Material Adverse Effect.

MATERIAL PROCEEDING — any litigation, investigation or other proceeding by or before any Governmental Authority (i) which involves any of the Loan Documents or any of the transactions contemplated thereby, or involves a Covered Person or a Guarantor as a party or any property of Covered Person or a Guarantor, and has or is reasonably likely to have a Material Adverse Effect if adversely determined, (ii) in which there has been issued an injunction, writ, temporary restraining order or any other order of any nature which purports to restrain or enjoin the making of any Advance, the consummation of any other transaction contemplated by the Loan Documents, or the enforceability of any provision of any of the Loan Documents, (iii) which involves the actual or alleged breach or violation by a Covered Person of, or default by a Covered Person under, any Material Agreement, or (iv) which involves the actual or alleged violation by a Covered Person or any Guarantor of any Material Law.

MATURITY — as to any Indebtedness, the time when it becomes payable in full, whether at a regularly scheduled time, because of acceleration or otherwise.

MULTI-EMPLOYER PLAN — a Pension Benefit Plan which is a multi-employer plan as defined in Section 4001(a)(3) of ERISA.

MORTGAGEE CONSENT AGREEMENT — means each agreement described in Section 9.1 in form and substance satisfactory Lender.

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NET INCOME — is defined in Section 16.1.

OBLIGATION — as to any Person, any Indebtedness of such Person, any guaranty by such Person of any Indebtedness of another Person, and any contractual requirement enforceable against such Person that does not constitute Indebtedness of such Person or a guaranty by such Person but which would involve the expenditure of money by such Person if complied with or enforced.

OPERATING LEASE — any lease that is not a Capital Lease.

PAYMENT IN FULL — collectively, (i) the full payment in cash or same day funds of all of the outstanding Loan Obligations, including, without limitation, all fees, costs and expenses owing to Lender hereunder and the other Loan Documents, (ii) Lender has no other commitment to extend credit or make advances to or for the account of Borrower or any Covered Person under this Agreement or the other Loan Documents, and (iii) all outstanding Approvals have been 100% cash collateralized and such cash collateral shall have been delivered to Lender in cash or same day funds; subject to per diem amounts, additional Advances made or Approvals given or payments received after the date of any request for a payoff.

PBGC — the Pension Benefit Guaranty Corporation.

PENSION BENEFIT PLAN — any pension plan within the meaning of Section 3(2) of ERISA, including a Multiemployer Plan that is covered by Title IV of ERISA or Section 412 of the Code.

PERMITTED ACQUISITION — is defined in Section 15.6.

PERMITTED INDEBTEDNESS — Indebtedness permitted under Section 15.2.

PERMITTED INDIRECT OBLIGATIONS — Indirect Obligations permitted under Section 15.4.

PERMITTED INVESTMENTS — Investments permitted under Section 15.1.

PERMITTED SECURITY INTERESTS — Security Interests that Borrower is permitted under Section 15.5 to create, incur, assume, or allow to exist.

PERSON — any individual, partnership, corporation, trust, unincorporated association, joint venture, limited liability company, Governmental Authority, or other organization in any form that has the legal capacity to sue or be sued.  If the context so implies or requires, the term Person includes Borrower.

PERSONAL PROPERTY COLLATERAL — means all Inventory of Borrower which is financed by Lender or against which Lender has advanced monies under this Agreement or the other Loan Documents, whether such property or debtor’s right, title or interest therein or thereto is now owned or existing or hereafter acquired or arising, and wherever located, all Accounts, Inventory, Equipment, Fixtures, other Goods, General Intangibles (including, without limitation, Payment Intangibles), Chattel Paper (whether tangible or electronic), Instruments (including, without limitation, Promissory Notes), Investment Property and Documents arising from or associated with the sale, lease, rental or other disposition of such property, all returns, repossessions, exchanges, substitutions, replacements, attachments, parts, accessories and accessions thereto, and all products and Proceeds of the foregoing.  The Personal Property Collateral also includes Borrower’s right to all price protection payments, rebates, discounts, credits, factory holdbacks, incentive payments and any other amounts due Borrower at any time from a Person from whom Borrower has purchased any of the foregoing property.  In addition, the Personal Property

9

Collateral includes, without limitation, all disks, tapes, media and other devices, electronic or otherwise, which evidence or otherwise relate to any of the foregoing property, and other devices in which such records are stored.

PRIOR AWF — Investments permitted under Section 2.

PRO FORMA FINANCIAL STATEMENTS — the projections of Borrower referred to in Section 11.1.2.

REGULATION T, REGULATION U, and REGULATION X  — respectively, Regulation T issued by the FRB, Regulation U issued by the FRB, and Regulation X issued by the FRB.

REPORTABLE EVENT — a reportable event as defined in Title IV of ERISA or the regulations thereunder excluding events with respect to which notice has been waived by the PBGC in writing.

REPRESENTATIONS AND WARRANTIES — The representations and warranties made by Borrower with respect to itself and other Covered Persons in Section 12, and the representations and warranties made in any certificate, report, opinion or other document delivered by Borrower pursuant to the Loan Documents, as such representations and warranties are modified from time to time as provided in Section 13.

RENTAL CONTRACTS — is defined in Section 15.26.

RESPONSIBLE OFFICER — as to any Person that is not an individual, partnership or trust, the Chairman of the Board of Directors, the President, the chief executive officer, the chief operating officer, the chief financial officer, the Treasurer, any Assistant to the Treasurer, or any Vice President in charge of a principal business unit; as to any partnership, any individual who is a general partner thereof or any individual who has general management or administrative authority over all or any principal unit of the partnership’s business; and as to any trust, any individual who is a trustee.

SCHEDULE OF INVENTORY — a listing of each item of existing Inventory (new and used), new Inventory purchases and items of Inventory sold, rented or assigned within the past thirty (30) days from the date of the last such schedule, containing the following: location, manufacturer, age, quantity, initial date of purchase or lease by Borrower, actual cost, total accrued depreciation, and net book value of then-existing Inventory in such reasonable detail as Lender may require.

SECURITY AGREEMENT — this Agreement and any security agreement required or contemplated under Section 9 to be executed and delivered to Lender or otherwise delivered to Lender from time to time.

SECURITY DOCUMENTS — all of the documents required or contemplated to be executed and delivered to Lender under Section 9, all other documents granting a Security Interest in any asset of Borrower or any other Person to secure the payment or performance of any of the Loan Obligations from time to time, including this Agreement and any such documents listed on Exhibit 11.1.1, all collateral assignments, and any similar documents at any time executed and delivered to Lender from time to time, by Borrower or any other Person to secure payment or performance of any of the Loan Obligations.

SECURITY INTEREST — as to any item of tangible or intangible property, any interest therein or right with respect thereto or assignment thereof that secures an Obligation or Indirect Obligation,

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whether such interest or right is created under a Contract, or by operation of law or statute (such as but not limited to a statutory lien for work or materials), or as a result of a judgment, or which arises under any form of preferential or title retention agreement or arrangement (including a conditional sale agreement or a lease) that has substantially the same economic effect as any of the foregoing.

SOLVENT — as to any Person, (i) such Person not being “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (the “UFTA”) or Section 3 of the Illinois Uniform Fraudulent Transfer Act set forth in Section 160/3 of the Illinois Compiled Statutes (1996) (the “Illinois UFTA”), (ii) such Person not having unreasonably small capital, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the Illinois UFTA, and (iii) such Person not being unable to pay such Person’s debts as they become due within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the Illinois UFTA, or any other applicable Law.

STATE — any state of the United States.

SUBSIDIARY — as to any Person, another Person with respect to which 50% or more of the outstanding Capital Securities of each class having ordinary voting power (other than Capital Securities having such power only by reason of the happening of a contingency) is at the time owned by such Person or by one or more Subsidiaries of such Person.

TAX — as to any Person, any tax, duty, impost, deduction, charges, withholdings, assessment, fee, or other charge levied by a Governmental Authority (and all liabilities associated therewith) on the income or property of such Person, including any interest or penalties thereon, and which is payable by such Person.

THIRD PERSON REIMBURSEMENT AGREEMENTS-  is defined in Section 19.6.5.

TOTAL AVAILABLE ASSETS — is defined in Section 16.1.

TOTAL FUNDED INDEBTEDNESS — is defined in Section 16.1.

TRANSACTION STATEMENT — is defined in Section 6.1.2.

UCC — the Uniform Commercial Code as in effect from time to time in the State of Illinois or such other similar statute as in effect from time to time in Illinois or any other appropriate jurisdiction.

UNITED STATES — when used in a geographical sense, all the states of the United States of America and the District of Columbia; and when used in a legal jurisdictional sense, the government of the country that is the United States of America.

VENDOR — is defined in Section 5.1.2.

VENDOR AGREEMENT — is defined in Section 5.1.9.

WELFARE BENEFIT PLAN — any plan described by Section 3(1) of ERISA.

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EX-10.43

Exhibit 10.43

Brett Davis

Senior Director, N.A. Commercial Lending

February 19, 2010

Titan Machinery, Inc.

4876 Rocking Horse Circle

Fargo, ND 58103-7256

Attn: Ted O. Christianson

Vice President, Finance and Treasurer

via electronic mail

Dear Mr. Christianson:

Titan Machinery, Inc. (“Titan”) and CNH Capital America LLC (“CNH”) are parties to an Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007, as amended from time to time, most recently amended in a letter dated December 16, 2009 (the “Agreement”). The Agreement provides that, among other things, between January 1, 2010 and February 28, 2010, the rate of interest charged on the first $25,000,000 on Credit Line 7 shall be Prime +4.00% and that Titan and CNH shall discuss, prior to February 28, 2010, the possibility of agreeing to an interest rate other than the rate provided by the Wholesale Finance Plans for the period after February 28, 2010.

By executing this letter agreement, the parties wish to further amend the terms of the Agreement as follows: a) Prime +4% shall be the interest rate applicable for all credit facilities under the Agreement; and b) CNH Capital will review interest rates under the Agreement on a quarterly basis, beginning on or before June 30, 2010.

Except as specifically amended herein, all other terms of the Agreement shall remain unchanged.

Very truly yours,

CNH Capital America LLC

Brett Davis, Sr. Director Commercial Lending, NA

Titan Machinery, Inc. agrees to the above described amendment to the Amended and Restated Wholesale, Floor Plan Credit Facility and Security Agreement dated November 13, 2007, as amended.

Titan Machinery, Inc.

Ted O. Christianson, VP Finance and Treasurer

CNH Capital

233 Lake Avenue
Racine, WI 53403

EX-23.1

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

        We hereby consent to the incorporation by reference in the Form 10-K of Titan Machinery Inc., of our reports dated April 15, 2010, related to the consolidated financial statements and internal control over financial reporting, which appear in Titan Machinery Inc.'s Form 10-K for the years ended January 31, 2010, 2009, and 2008.

        We also consent to the incorporation by reference of the above referenced reports in the Registration Statement of Titan Machinery Inc. on Form S-8 (File No. 333-149426, effective February 28, 2008).

/s/ Eide Bailly LLP

Minneapolis, Minnesota
April 15, 2010

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

EX-31.1

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EXHIBIT 31.1

CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, David J. Meyer, certify that:

1.

I have reviewed this report on Form 10-K of Titan Machinery Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 15, 2010

/s/ DAVID J. MEYER
David J. Meyer
Chairman and Chief Executive Officer

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EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

EX-31.2

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EXHIBIT 31.2

CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Peter J. Christianson, certify that:

1.

I have reviewed this report on Form 10-K of Titan Machinery Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 15, 2010

/s/ PETER J. CHRISTIANSON
Peter J. Christianson
President and Chief Financial Officer

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EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

EX-32.1

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EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of Titan Machinery Inc. (the "Company") on Form 10-K for the year ended January 31, 2010 as filed with the Securities and Exchange Commission (the "Report"), I, David J. Meyer, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

        The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 15, 2010

/s/ DAVID J. MEYER
David J. Meyer
Chairman and Chief Executive Officer

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EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.2

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EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of Titan Machinery Inc. (the "Company") on Form 10-K for the year ended January 31, 2010 as filed with the Securities and Exchange Commission (the "Report"), I, Peter J. Christianson, President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

        The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 15, 2010

/s/ PETER J. CHRISTIANSON
Peter J. Christianson
President and Chief Financial Officer

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EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002