Nicholas Financial, Inc.



                                  Common Stock



                                 (no par value)





                             UNDERWRITING AGREEMENT



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



                                 April ___, 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 1,500,000 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 2,400,000 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 360,000 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



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Ferris Baker Watts, Inc.

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promulgated thereunder, is called the "Registration Statement." Any registration

statement filed 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. 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 conduct of

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