Nicholas Financial, Inc.



                                  Common Stock

                                 (no par value)



                             UNDERWRITING AGREEMENT



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



                                 May ___, 2004



Ferris, Baker Watts, Incorporated

100 Light Street, 8th Floor

Baltimore, Maryland  21202



Ladies and Gentlemen:



         Section 1. Introductory.



         Subject to the terms and conditions stated herein, Nicholas Financial,

Inc., a corporation organized under the laws of British Columbia, Canada (the

"Company"), proposes to issue and sell to Ferris Baker Watts, Incorporated (the

"Underwriter") an aggregate of 1,100,000 shares of its common stock, no par

value (the "Common Stock"), and the stockholders listed in Schedule A hereto

(the "Selling Stockholders") propose severally to sell an aggregate of 900,000

shares of Common Stock (such 2,000,000 shares of Common Stock being hereafter

referred to as the "Firm Common Shares".



         In addition, the Company has granted to the Underwriter an option to

purchase up to an additional 300,000 shares of Common Stock, as provided in

Section 3 (such additional shares, the "Optional Common Shares"). The Firm

Common Shares and, if and to the extent such option is exercised, the Optional

Common Shares are collectively called the "Common Shares").



         The Company has prepared and filed with the Securities and Exchange

Commission (the "Commission") a registration statement on Form S-2 (File No.

333-113215), which contains a form of prospectus, subject to completion, to be

used in connection with the public offering and sale of the Common Shares. Such

registration statement, as amended, including the financial statements, exhibits

and schedules thereto, in the form in which it was declared effective by the

Commission under the Securities Act of 1933, as amended, and the rules and

regulations promulgated thereunder (collectively, the "Securities Act"),

including any information deemed to be a part thereof at the time of

effectiveness pursuant to the Securities Act or any rule promulgated thereunder,

is called the "Registration Statement." Any registration statement filed







Nicholas Financial, Inc.



Ferris Baker Watts, Inc.

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by the Company pursuant to Rule 462(b) under the Securities Act is called the

"Rule 462(b) Registration Statement," and from and after the date and time of

filing of the Rule 462(b) Registration Statement, the term "Registration

Statement" shall include any Rule 462(b) Registration Statement. The prospectus

in the form included in the Registration Statement at the time it becomes

effective or, if the prospectus included in the Registration Statement omits

certain information in reliance upon Rule 430A under the Securities Act and such

information is thereafter included in a prospectus filed with the Commission

pursuant to Rule 424(b) under the Securities Act or as part of a post-effective

amendment to the Registration Statement after the Registration Statement becomes

effective, the prospectus as so filed, is referred to in this Agreement as the

"Prospectus." Any reference herein to the Registration Statement, the 462(b)

Registration Statement, the Prospectus or any amendment or supplement thereto

shall be deemed to refer to and include the documents incorporated by reference

therein pursuant to Item 12 of Form S-2 under the Securities Act, as of the

effective date of the Registration Statement or the date of such Prospectus, as

the case may be, as such documents are modified or superseded by such Prospectus

(the "Incorporated Documents"). For purposes of this Agreement, all references

to the Registration Statement, the 462(b) Registration Statement, the

Prospectus, any preliminary prospectus or to any amendment or supplement thereto

shall be deemed to include any copy filed with the Commission pursuant to its

Electronic Data Gathering Analysis and Retrieval System (EDGAR).



         Each of the Company and the Selling Shareholders, severally but not

jointly, hereby confirms its agreements with the Underwriter as follows:



         Section 2. Representations and Warranties.



                  (a)      The Company hereby represents and warrants to the

Underwriter on the date hereof and shall be deemed to represent and warrant to

the Underwriter on each Closing Date as follows:



                           (i)      Compliance with Registration Requirements.

The Registration Statement has been filed with the Commission and has been

declared effective by the Commission under the Securities Act and no

post-effective amendment to the Registration Statement has been filed as of the

date of this Agreement. The Company has complied with all written requests of

the Commission (and all oral requests of the Commission to an executive officer

of the Company) for additional or supplemental information relating to the

Registration Statement, except for post-ffective amendment No.1 to the

Registration Statement. The Company has not received any notice that a stop

order suspending the effectiveness of the Registration Statement or any Rule

462(b) Registration Statement has been issued by the Commission or that any

proceedings for such purpose have been instituted by the Commission and, to the

Company's knowledge, no such proceedings are contemplated or threatened by the

Commission.







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Ferris Baker Watts, Inc.

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                                    Each preliminary prospectus and the

Prospectus when filed and any supplement or amendment thereto when filed with

the Commission under Rule 424(b) of the Securities Act complied or will comply,

as the case may be, in all material respects as to form with the Securities Act

and at any such time did not contain any untrue statement of a material fact or

omit to state a material fact required to be stated therein or necessary to make

the statements therein not misleading. The Registration Statement (including any

Rule 462(b) Registration Statement), in the form it became effective, and any

post-effective amendment thereto in the form it becomes effective, complied or

will comply, as the case may be, as to form in all material respects with the

Securities Act and at any such time did not contain any untrue statement of a

material fact or omit to state a material fact required to be stated therein or

necessary to make the statements therein not misleading. The representations and

warranties set forth in the two immediately preceding sentences do not apply to

statements in or omissions from the Registration Statement (including any Rule

462(b) Registration Statement) or any post-effective amendment thereto, any

preliminary prospectus, or the Prospectus, or any amendments or supplements

thereto, made in reliance upon and in conformity with information relating to

the Underwriter furnished to the Company.



                                    (ii)     Offering Materials Furnished to the

Underwriter. The Company has delivered to the Underwriter a complete manually

signed copy of the Registration Statement and of each consent filed as a part

thereof, and conformed copies of the Registration Statement (without exhibits)

and preliminary prospectuses and the Prospectus, as amended or supplemented, in

such quantities and at such places as the Underwriter has reasonably requested.



                                    (iii)    Exhibits; Material Contracts. There

are no contracts or other documents required to be described in the Prospectus

or to be filed as exhibits to the Registration Statement which have not been

described or filed as required. The contracts so described in the Prospectus to

which the Company or any Subsidiary of the Company is a party have been duly

authorized, executed and delivered by the Company, constitute valid and binding

agreements of the Company, and are enforceable against and by the Company in

accordance with their respective terms, except as may be limited by bankruptcy,

insolvency, reorganization, moratorium or similar laws relating to or affecting

creditors' rights generally or by general principles of equity or the

availability of specific performance, injunctive relief and other equitable

principles. Neither the Company, nor, to the best of the Company's knowledge,

any other party is in material breach of or material default under any of such

contracts.



                                    (iv)     No Brokerage Commissions, etc.

Except as disclosed in the Prospectus, there are no contracts, agreements or

understandings between the Company and any person that would give rise to a

valid claim against the Company or the Underwriter for a brokerage commission,

finder's fee or other like payment in connection with this offering.







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                                    (v)      The Underwriting Agreement. The

execution and delivery of this Agreement by the Company has been duly authorized

by all necessary corporate action.



                                    (vi)     Authorization of the Common Shares.

The Common Shares to be sold by the Company have been duly authorized for

issuance and sale pursuant to this Agreement; all other outstanding shares of

capital stock of the Company are, and, when the Common Shares have been issued

and delivered by the Company to the Underwriter against payment therefor in

accordance with the terms of this Agreement, such Common Shares will be validly

issued, fully paid and non-assessable.



                                    (vii)    No Applicable Registration or Other

Similar Rights. There are no persons other than the Selling Stockholders with

registration or other similar rights to have any equity or debt securities

registered for sale under the Registration Statement or included in the offering

contemplated by this Agreement, except for such rights as have been duly

satisfied or waived.



                                    (viii)   No Material Adverse Change. Except

as otherwise disclosed or incorporated by reference in the Prospectus (or any

amendment or supplement thereto) subsequent to the respective dates as of which

information is given in such Prospectus: (i) there has been no material adverse

change, or any development that could reasonably be expected to result in a

material adverse change, in the condition, financial or otherwise, or in the

earnings, business or operations, whether or not arising from transactions in

the ordinary course of business, of the Company and its subsidiaries, considered

as one enterprise (any such change or development is called a "Material Adverse

Change"); (ii) the Company and its subsidiaries, considered as one enterprise,

have not incurred any material liability or obligation, indirect, direct or

contingent, not in the ordinary course of business, nor entered into any

material transaction or agreement not in the ordinary course of business; and

(iii) there has been no dividend or distribution of any kind declared, paid or

made by the Company, except for dividends or distributions paid to the Company

or its subsidiaries on any class of capital stock or other equity interests, or

repurchases or redemptions by the Company or any of its subsidiaries of any

class of capital stock or other equity interests.



                                    (ix)     Independent Accountants. Ernst &

Young LLP, who has expressed its opinions with respect to the financial

statements (which term as used in this Agreement includes the related notes

thereto) filed with the Commission as a part of or incorporated by reference in

the Registration Statement and included in the Prospectus, are, to the Company's

knowledge, independent public accountants as required by the Securities Act.



                                    (x)      Preparation of the Financial

Statements. The consolidated financial statements of the Company filed with the

Commission as a part of the Registration







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Statement and included in the Prospectus (and any amendment or supplement

thereto) present fairly in all material respects, the consolidated financial

position of the Company and its subsidiaries as of and at the dates indicated

and the results of their operations and cash flows for the periods specified.

Any supporting schedules included in the Registration Statement present fairly

and accurately, in all material respects, the information required to be stated

therein. Such financial statements and supporting schedules have been prepared

in conformity with generally accepted accounting principles in the United States

applied on a consistent basis throughout the periods involved, except as may be

expressly stated in the related notes thereto. No financial statements or

supporting schedules are required to be included or incorporated by reference in

the Registration Statement that have not been so included or incorporated. The

financial data set forth in the Prospectus under the captions "Selected

Financial Data" and "Capitalization" are accurately presented and prepared on a

basis consistent with the financial statements contained in the Registration

Statement and the books and records of the Company and fairly and accurately

present, in all material respects, the information set forth therein on a basis

consistent with that of such financial statements when read in conjunction with

the textual information included in those sections.



                                    (xi)     Organization and Good Standing of

the Company and its Subsidiaries. Each of the Company and its direct and

indirect subsidiaries has been duly incorporated or formed, as the case may be,

and is validly existing as a corporation, in good standing or of active status

(if incorporated in the State of Florida) under the laws of the jurisdiction of

its incorporation or formation, as the case may be, and has power and authority

to own, lease and operate its properties and to conduct its business as

described in the Prospectus and, in the case of the Company, to enter into and

perform its obligations under this Agreement. Each of the Company and its

subsidiaries is duly qualified as a foreign corporation to transact business and

is in good standing in each other jurisdiction in which such qualification is

required, whether by reason of the ownership or leasing of property or the

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