Underwriting Agreement

Exhibit 1.1

Execution Copy

PICO Holdings, Inc.

3,055,556 Shares ¹

Common Stock

($0.001 par value)

Underwriting Agreement

June 4, 2009

ThinkEquity LLC

600 Montgomery Street

3 ^rd Floor

San Francisco, California 94111

Ladies and Gentlemen:

Introductory . PICO Holdings, Inc., a California corporation (“ Company ”), proposes to issue and sell (the “ Offering ”) to ThinkEquity LLC (the “ Underwriter ”) an aggregate of 3,055,556 shares of the Company’s Common Stock, par value $0.001 (the “ Underwritten Securities ”). The Company also proposes to issue and sell at the Underwriter’s option, solely to cover over-allotments, an aggregate of up to 458,333 additional shares of the Company’s Common Stock, par value $0.001 (the “ Option Securities ”, and together with the Underwritten Securities, the “ Securities ”) as set forth below.

In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows:

1. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the Underwriter that:

(a) Filing and Effectiveness of Registration Statement; Certain Defined Terms . The Company has filed with the Commission a registration statement on Form S-3 (No. 333-147547), including a related prospectus or prospectuses, covering the registration of the Securities under the Act, which has become effective. “ Registration Statement ” at any particular time means such registration statement in the form then filed with the Commission, including any amendment thereto, any document incorporated by reference therein (collectively, the “ Incorporated Documents ”) and all 430B Information and all 430C Information with respect to such registration statement, that in any case has not been superseded or modified. “ Registration Statement ” without reference to a time means the Registration Statement as of the Effective Time. For purposes of this definition, 430B Information shall be considered to be included in the Registration Statement as of the time specified in Rule 430B.

¹ Plus an option to purchase from the Company up to 458,333 shares to cover over-allotments.

For purposes of this Agreement:

“ 430B Information ” means information included in a prospectus then deemed to be a part of the Registration Statement pursuant to Rule 430B(e) or retroactively deemed to be a part of the Registration Statement pursuant to Rule 430B(f).

“ 430C Information ” means information included in a prospectus then deemed to be a part of the Registration Statement pursuant to Rule 430C.

“ Act ” means the United States Securities Act of 1933, as amended.

“ Applicable Time ” means 9:00 pm (Eastern time) on the date of this Agreement.

“ Closing Date ” has the meaning defined in Section 2 hereof.

“ Commission ” means the United States Securities and Exchange Commission.

“ Effective Time ” of the Registration Statement relating to the Securities means the time of execution of this Agreement.

“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended.

“ Final Prospectus ” means the Statutory Prospectus that discloses the public offering price, other 430B Information and other final terms of the Securities and otherwise satisfies Section 10(a) of the Act.

“ General Use Issuer Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being so specified in Schedule I to this Agreement.

“ Issuer Free Writing Prospectus ” means any “issuer free writing prospectus,” as defined in Rule 433, relating to the Securities in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).

“ Limited Use Issuer Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is not a General Use Issuer Free Writing Prospectus.

“ Option Closing Date ” has the meaning defined in Section 2 hereof.

“ Rules and Regulations ” means the rules and regulations of the Commission.

“ Securities Laws ” means, collectively, the United States Sarbanes-Oxley Act of 2002 (“ Sarbanes-Oxley ”), the Act, the Exchange Act, the Rules and Regulations, the auditing principles, rules, standards and practices applicable to auditors of “issuers” (as defined in Sarbanes-Oxley) promulgated or approved by the Public Company Accounting Oversight Board and, as applicable, the rules of The NASDAQ Stock Market (“ Exchange Rules ”).

“ Statutory Prospectus ” with reference to any particular time means the prospectus relating to the Securities that is included in the Registration Statement immediately prior to that time,

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including all 430B Information and all 430C Information with respect to the Registration Statement and all documents incorporated by reference therein. For purposes of the foregoing definition, 430B Information shall be considered to be included in the Statutory Prospectus only as of the actual time that form of prospectus (including a prospectus supplement) is filed with the Commission pursuant to Rule 424(b) and not retroactively.

Unless otherwise specified, a reference to a “Rule” is to the indicated rule under the Act.

(b) Compliance with Securities Act Requirements . (i) (A) At the Effective Time relating to the Securities and (B) on the Closing Date and the Option Closing Date, as the case may be, the Registration Statement conformed and will conform in all material respects to the requirements of the Act and the Rules and Regulations, and it did not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) (A) on the date of the Final Prospectus and (B) on the Closing Date and the Option Closing Date, as the case may be, the Final Prospectus will conform in all material respects to the requirements of the Act and the Rules and Regulations, and will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from any such document based upon written information furnished to the Company by the Underwriter specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 7(b) .

(c) Shelf Registration Statement . The date of this Agreement is not more than three years subsequent to the initial effective time of the Registration Statement.

(d) Ineligible Issuer Status . (i) At the earliest time after the filing of the Registration Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2)) of the Securities and (ii) at the date of this Agreement, the Company was not and is not an “ineligible issuer,” as defined in Rule 405, including (x) the Company or any subsidiary of the Company (each, a “ Subsidiary ”) in the preceding three years not having been convicted of a felony or misdemeanor or having been made the subject of a judicial or administrative decree or order as described in Rule 405 and (y) the Company in the preceding three years not having been the subject of a bankruptcy petition or insolvency or similar proceeding, not having had a registration statement be the subject of a proceeding under Section 8 of the Act and not being the subject of a proceeding under Section 8A of the Act in connection with the offering of the Securities, all as described in Rule 405. The Company is eligible to use Form S-3 for the Offering.

(e) General Disclosure Package . As of the Applicable Time, neither (i) the General Use Issuer Free Writing Prospectus(es) issued at or prior to the Applicable Time and any preliminary prospectus supplement, including the base prospectus, dated December 3, 2007 (which is the most recent Statutory Prospectus distributed to investors generally), and the other information, if any, stated in Schedule I to this Agreement to be included in the General Disclosure Package, all considered together (collectively, the “ General Disclosure Package ”), nor (ii) any individual Limited Use Issuer Free Writing Prospectus, when considered together with the General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to

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statements in or omissions from any Statutory Prospectus or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by the Underwriter specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 7(b) .

(f) Issuer Free Writing Prospectuses . Each Issuer Free Writing Prospectus, as of its issue date did not include any information that conflicted with the information then contained in the Registration Statement. If, at any time following issuance of an Issuer Free Writing Prospectus through the completion of the offer and sale of the Securities, there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement or as a result of which such Issuer Free Writing Prospectus, if republished immediately following such event or development, would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (i) the Company has promptly notified or will promptly notify the Underwriter and (ii) the Company has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

(g) Good Standing of the Company . The Company has been duly incorporated and is existing and in good standing under the laws of the State of California, with corporate power and authority to own its properties and conduct its business as described in the General Disclosure Package; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except to the extent that the failure to be so qualified or in good standing would not, individually or in the aggregate, result in a material adverse effect on the condition (financial or otherwise), results of operations, business or properties of the Company and its Subsidiaries taken as a whole (a “ Material Adverse Effect ”).

(h) Subsidiaries . Each Subsidiary of the Company that is a “significant subsidiary” of the Company within the meaning of Rule 1-02(w) of Regulation S-X has been duly organized, and each Subsidiary is existing and in good standing under the laws of the jurisdiction of its organization, with power and authority (corporate and other) to own its properties and conduct its business as described in the General Disclosure Package; and each Subsidiary of the Company is duly qualified to do business as a foreign entity in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except to the extent that the failure to be so qualified or in good standing would not, individually or in the aggregate, result in a Material Adverse Effect; all of the issued and outstanding capital stock or similar equity interests of each Subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; and the capital stock (or similar equity interests) of each Subsidiary owned by the Company, directly or through Subsidiaries, is owned free from liens, encumbrances and defects.

(i) Securities . The Securities and all other outstanding shares of capital stock of the Company have been duly authorized; the authorized equity capitalization of the Company is as set forth in the General Disclosure Package; all outstanding shares of capital stock of the Company are, and, when the Securities have been delivered and paid for in accordance with this Agreement on the Closing Date and the Option Closing Date, as the case may be, the Securities will have been, validly issued, fully paid and nonassessable, will conform to the information in

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the General Disclosure Package and to the description of the Securities contained in the Final Prospectus; the shareholders of the Company have no preemptive rights with respect to the Securities; and none of the outstanding shares of capital stock of the Company have been issued in violation of any preemptive or similar rights of any security holder.

(j) No Finder’s Fee . Except as disclosed in the General Disclosure Package, 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.

(k) Registration Rights . Except as disclosed in the General Disclosure Package, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to include securities held by such person in this Offering.

(l) Listing. The Company’s Common Stock, par value $0.001, is registered under Section 12(b) of the Exchange Act and listed on The NASDAQ Global Market.

(m) Absence of Further Requirements . No consent, approval, authorization, or order of, or filing or registration with, any person (including any governmental agency or body or any court) is required for the consummation by the Company of the transactions contemplated by this Agreement in connection with the Offering, except such as have been obtained, or made and such as may be required under state securities or Blue Sky laws or the bylaws and rules of the Financial Industry Regulatory Authority, Inc. (“ FINRA ”) in connection with the Offering.

(n) Title to Property . Except as disclosed in the General Disclosure Package, the Company and its Subsidiaries have good and marketable title to all real properties (including all water rights of the Company and its Subsidiaries described in the General Disclosure Package, subject to the qualifications and conditions contained in, and with respect to transfers, any consents and approvals required under, any underlying water rights permits or applicable law) owned by them, in each case free from liens, charges, encumbrances and defects that would materially affect the aggregate value thereof or materially interfere with the aggregate use made or to be made thereof by them and, except as disclosed in the General Disclosure Package, the Company and its Subsidiaries hold any leased real or personal property under valid and enforceable leases with no terms or provisions that would materially interfere with the aggregate use made or to be made thereof by them.

(o) Absence of Defaults and Conflicts Resulting from Transaction . The execution, delivery and performance of this Agreement and the issuance and sale of the Securities will not result in a breach or violation of any of the terms and provisions of, or constitute a default or a Debt Repayment Triggering Event (as defined below) under, or result in the imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of its Subsidiaries, (ii) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its Subsidiaries or any of their properties, or (iii) any agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the properties of the Company or any of its Subsidiaries is subject, except in the cases of clauses (ii) and (iii), any breach, violation, default, lien, charge or encumbrance that would not, individually or in the aggregate, result in a Material Adverse Effect; a “ Debt Repayment Triggering Event ” means

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any event or condition that gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture, or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its Subsidiaries.

(p) Absence of Existing Defaults and Conflicts . Neither the Company nor any of its Subsidiaries is in violation of its respective charter or by-laws or in default (or with the giving of notice or lapse of time would be in default) under any existing obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument to which any of them is a party or by which any of them is bound or to which any of the properties of any of them is subject, except such defaults that would not, individually or in the aggregate, result in a Material Adverse Effect.

(q) Authorization of Agreements . This Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable in accordance with its terms, except that (a) the validity of the indemnification and contribution provisions of Section 7 of this Agreement may be limited by public policy considerations, and (b) the validity of Section 7 of this Agreement may be limited by the public policy of the State of New York, and may be subject to the discretion of the United States federal or New York State courts with respect to venue, as provided in 28 U.S.C. Section 1404(a) and/or New York CPLR Section 510, respectively.

(r) Possession of Licenses and Permits . The Company and its Subsidiaries possess all certificates, authorizations, franchises, licenses and permits (“ Licenses ”) necessary to the conduct of the business now conducted by them and are not in violation of, and have not received any notice of proceedings relating to the revocation or modification of, any Licenses except where such violation would or such proceedings if determined adversely to the Company or any of its Subsidiaries would, in each case, individually or in the aggregate, have a Material Adverse Effect.

(s) Absence of Labor Dispute . No labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is imminent that could have a Material Adverse Effect.

(t) Possession of Intellectual Property . The Company and its Subsidiaries own, or have the right to use, inventions, know-how, patents, copyrights, trademarks and other proprietary rights (collectively, “ intellectual property rights ”) as are necessary to operate the business as currently conducted. The Company and its Subsidiaries have not received any written notice of infringement of the intellectual property rights of any third party, which infringement, if determined adversely to the Company or any of its Subsidiaries, would individually or in the aggregate have a Material Adverse Effect.

(u) Environmental Laws . Except as disclosed in the General Disclosure Package and in each case as would not individually or in the aggregate have a Material Adverse Effect, (a)(i) to the knowledge of the Company, neither the Company nor any of its Subsidiaries is in violation of, or has any liability under, any federal, state, local or non-U.S. statute, law, rule, regulation, ordinance, code, other requirement or rule of law (including common law), or decision or order of any governmental agency, governmental body or court, relating to pollution, to the use, handling, transportation, treatment, storage, discharge, disposal or release of Hazardous Substances, to the protection or restoration of the environment or natural resources (including biota), to health and

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safety including as such relates to exposure to Hazardous Substances, and to natural resource damages (collectively, “ Environmental Laws ”), (ii) neither the Company nor any of its Subsidiaries owns, occupies, operates or uses any real property contaminated with Hazardous Substances, (iii) neither the Company nor any of its Subsidiaries is conducting or funding any investigation, remediation, remedial action or monitoring of actual or suspected Hazardous Substances in the environment, (iv) to the knowledge of the Company, neither the Company nor any of its Subsidiaries is liable or allegedly liable for any release or threatened release of Hazardous Substances, including at any off-site treatment, storage or disposal site, (v) to the knowledge of the Company, neither the Company nor any of its Subsidiaries is subject to any claim by any governmental agency or governmental body or person relating to Environmental Laws or Hazardous Substances, and (vi) the Company and its Subsidiaries have received and are in compliance with all, and have no liability under any, permits, licenses, authorizations, identification numbers or other approvals required under applicable Environmental Laws to conduct their respective businesses; and (b) to the knowledge of the Company, there are no facts or circumstances that would reasonably be expected to result in a violation of, liability under, or claim pursuant to any Environmental Law. For purposes of this Section 1(u) “ Hazardous Substances ” means (A) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and mold, and (B) any other chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant, contaminant or waste under Environmental Laws.

(v) Accurate Disclosure . The statements in the General Disclosure Package and the Final Prospectus under the headings “Tax Matters,” “Description of Capital Stock,” and “Legal Proceedings,” insofar as such statements summarize agreements, documents or proceedings discussed therein, are fair summaries of such agreements, documents or proceedings.

(w) Offering Material . The Company has not distributed, and will not distribute prior to the Closing Date and the Option Closing Date, as the case may be, any offering material in connection with the Offering other than any preliminary prospectuses, any Issuer Free Writing Prospectus, the Final Prospectus and the Registration Statement.

(x) Absence of Manipulation . The Company has not taken, directly or indirectly, any action that is designed to or that has constituted or that would reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.

(y) Internal Controls and Compliance with the Sarbanes-Oxley Act . Except as set forth in the General Disclosure Package, the Company, its Subsidiaries and, to the Company’s knowledge, the Company’s Board of Directors (the “ Board ”) are in compliance in all material respects with Sarbanes-Oxley and all applicable Exchange Rules. The Company maintains internal controls over financial reporting and disclosure controls and procedures, each as defined in Rule 13a-15 under the Exchange Act and a system of internal controls over accounting matters (collectively, “ Internal Controls ”) that are designed to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles of the United States (“ GAAP ”) and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with

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respect to any differences. The Internal Controls are overseen by the Audit Committee (the “ Audit Committee ”) of the Board in accordance with Exchange Rules. Since the date of the latest audited financial statements included in the General Disclosure Package, the Company has not identified (i) any material weakness in the Company’s internal control over financial reporting (whether or not remediated) or (ii) any change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Since the later of the date of the Company’s last quarterly report on Form 10-Q or annual report on Form 10-K, the Company has not determined that its disclosure controls and procedures are ineffective to perform the functions for which they were established.

(z) Litigation . Except as disclosed in the General Disclosure Package, there are no pending or, to the knowledge of the Company, threatened actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body) against or affecting the Company, any of its Subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its Subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under this Agreement.

(aa) Financial Statements . The financial statements included in the Registration Statement and the General Disclosure Package present fairly in all material respects the financial position of the Company and its consolidated Subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with GAAP applied on a consistent basis.

(bb) No Material Adverse Change in Business . Except as disclosed in the General Disclosure Package, since the end of the period covered by the latest audited financial statements included in the General Disclosure Package (i) there has been no material adverse change in the condition (financial or otherwise), results of operations, business or properties of the Company and its Subsidiaries, taken as a whole, (ii) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock, and (iii) there has been no material adverse change in the capital stock, short-term indebtedness, long-term indebtedness, net current assets or net assets of the Company and its Subsidiaries.

(cc) Investment Company Act . The Company is not and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the General Disclosure Package, will not be an “investment company” as defined in the Investment Company Act of 1940 (the “ Investment Company Act ”).

(dd) FCPA; Anti-Money Laundering . To the Company’s knowledge, each of the Company, its Subsidiaries, and any of their respective officers, directors, agents, or employees, that it has not violated and its participation in the Offering will not violate any of the following laws: (a) anti-bribery laws, including but not limited to, any applicable law, rule, or regulation of any locality, including but not limited to any law, rule, or regulation promulgated to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed December 17, 1997, including the U.S. Foreign Corrupt Practices Act of 1977 or any other law, rule or regulation of similar purpose and scope, (b) anti-money laundering laws, including but not limited to, applicable federal, state, international, foreign or other laws, regulations or government guidance regarding anti-money laundering, including, without

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limitation, Title 18 U.S. Code section 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and international anti-money laundering principals or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur, all as amended, and any Executive order, directive, or regulation pursuant to the authority of any of the foregoing, or any orders or licenses issued thereunder, or (c) laws and regulations imposing U.S. economic sanctions measures, including, but not limited to, the International Emergency Economic Powers Act, the Trading with the Enemy Act, the United Nations Participation Act, and the Syria Accountability and Lebanese Sovereignty Act, all as amended, and any Executive Order, directive, or regulation pursuant to the authority of any of the foregoing, including the regulations of the United States Treasury Department set forth under 31 CFR, Subtitle B, Chapter V, as amended, or any orders or licenses issued thereunder.

(ee) Tax Returns . The Company and its Subsidiaries have filed all U.S. federal, state, local and non-U.S. tax returns that are required to be filed or have requested extensions thereof (except in any case in which the failure so to file would not have a Material Adverse Effect); and, except as set forth in the General Disclosure Package, the Company and its Subsidiaries have paid all taxes (including any assessments, fines or penalties) required to be paid by them, except for any such taxes, assessments, fines or penalties currently being contested in good faith or as would not, individually or in the aggregate, have a Material Adverse Effect.

(ff) Insurance.  The Company and its Subsidiaries are insured by insurers against such losses and risks and in such amounts as the Company deems adequate; all policies of insurance and fidelity or surety bonds insuring the Company or any of its Subsidiaries or their respective businesses, assets, employees, officers and directors are in full force and effect; and the Company and its Subsidiaries are in compliance with the terms of such policies and instruments in all material respects.

(gg) Exemption from FINRA Filing . As of the date of this Agreement, the Company satisfies the eligibility requirements in existence prior to October 21, 1992 for the use of a registration statement on Form S-3 for the offering of the Securities.

2. Purchase, Sale and Delivery of the Securities.

(a) On the basis of the representations, warranties and covenants herein contained, and subject to the conditions herein set forth, the Company agrees to sell to the Underwriter and the Underwriter agrees to purchase, at a price of $25.65 per share, the Underwritten Securities.

(b) Payment for the Underwritten Securities to be sold hereunder is to be made in Federal (same day) funds against delivery of certificates therefor to the Underwriter. Such payment and delivery are to be made through the facilities of The Depository Trust Company, New York, New York at 10:00 am (Eastern time), on the fourth business day after the date of this Agreement or at such other time and date not later than five business days thereafter as the Underwriter and the Company shall agree upon, such time and date being herein referred to as the “ Closing Date .” As used herein, “ business day ” means a day on which the New York Stock Exchange and The NASDAQ Stock Market are open for trading and on which banks in New York are open for business and are not permitted by law or executive order to be closed.

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(c) In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriter to purchase the Option Securities at the price per share as set forth in paragraph (a) of this Section 2 . The option granted hereby may be exercised at any time and from time to time, in whole or in part, within 30 days after the date of this Agreement, upon written notice by the Underwriter to the Company setting forth the number of Option Securities as to which the Underwriter is exercising the option and the time and date at which such certificates are to be delivered. The time and date at which certificates for Option Securities are to be delivered shall be determined by the Underwriter but shall not be earlier than three nor later than 10 full business days after the exercise of such option, nor in any event prior to the Closing Date (each such time and date being herein referred to as an “ Option Closing Date ”). If the date of exercise of the option is three or more days before the Closing Date, the notice of exercise shall set the Closing Date as the Option Closing Date. The option with respect to the Option Securities granted hereunder may be exercised only to cover over-allotments in the sale of the Underwritten Securities by the Underwriter. The Underwriter may cancel such option at any time prior to its expiration by giving written notice of such cancellation to the Company. To the extent, if any, that the option is exercised, payment for the Option Securities shall be made on the Option Closing Date in Federal (same day funds) through the facilities of The Depository Trust Company in New York, New York drawn to the order of the Company.

3. Offering by the Underwriter.

It is understood that the Underwriter is to make a public offering of the Underwritten Securities as soon as the Underwriter deems it advisable to do so. The Underwritten Securities are to be initially offered to the public at the initial public offering price set forth in the Prospectus. The Underwriter may from time to time thereafter change the public offering price and other selling terms.

4. Certain Agreements of the Company. The Company agrees with the Underwriter that:

(a) Filing of Prospectuses. The Company has filed or will file each Statutory Prospectus (including the Final Prospectus) pursuant to and in accordance with Rule 424(b)(2) (or, if applicable and consented to by the Underwriter, subparagraph (5)) not later than the second business day following the earlier of the date it is first used and the execution and delivery of this Agreement. The Company has complied and will comply with Rule 433 with respect to a prospectus relating to the Securities.

(b) Filing of Amendments; Response to Commission Requests . The Company will promptly advise the Underwriter of any proposal to amend or supplement the Registration Statement or any Statutory Prospectus at any time (including by incorporation by reference of any report filed under the Exchange Act) and will offer the Underwriter a reasonable opportunity to comment on any such amendment or supplement; and the Company will also advise the Underwriter promptly of (i) the filing of any such amendment or supplement, (ii) any request by the Commission or its staff for any amendment to the Registration Statement, for any supplement to any Statutory Prospectus or for any additional information, (iii) the institution by the Commission of any stop order proceedings in respect of the Registration Statement or the threatening of any proceeding for that purpose, and (iv) the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities in any jurisdiction or the institution or threatening of any proceedings for such purpose. The Company will use reasonable best efforts to prevent the issuance of any such stop order or the suspension of any such qualification and, if issued, to obtain as soon as possible the withdrawal thereof.

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(c) Continued Compliance with Securities Laws . If, at any time when a prospectus relating to the Securities is (or but for the exemption in Rule 172 would be) required to be delivered under the Act by the Underwriter or any dealer, any event occurs as a result of which the Final Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Registration Statement or supplement the Final Prospectus to comply with the Act, the Company will promptly notify the Underwriter of such event and will promptly prepare and file with the Commission and furnish, at its own expense, to the Underwriter and any dealers upon request of the Underwriter, an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. Neither the Underwriter’s consent to, nor the Underwriter’s delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6 hereof.

(d) Rule 158. As soon as practicable, but not later than 16 months, after the date of this Agreement, the Company will make generally available to its securityholders an earnings statement covering a period of at least 12 months beginning after the date of this Agreement and satisfying the provisions of Section 11(a) of the Act and Rule 158.

(e) Furnishing of Prospectuses . The Company will furnish to the Underwriter copies of the Registration Statement, including all exhibits, any Statutory Prospectus, the Final Prospectus and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Underwriter reasonably requests. The Company will pay the expenses of printing and distributing to the Underwriter all such documents.

(f) Blue Sky Qualifications . The Company will arrange for the qualification of the Securities for sale under the laws of such jurisdictions as the Underwriter designates and will continue such qualifications in effect so long as required for the distribution; provided that the Company will not be required to qualify as a foreign corporation or to file a general consent to service of process in any such jurisdiction or take any action that would subject it to taxation in any such jurisdiction where it is not then so subject.

(g) Reporting Requirements . During the period of three years hereafter, the Company will furnish to the Underwriter as soon as practicable after the end of each fiscal year, a copy of its annual report to shareholders for such year; and the Company will furnish to the Underwriter (i) as soon as available, a copy of each report and any definitive proxy statement of the Company filed with the Commission under the Exchange Act or mailed to shareholders, and (ii) from time to time, such other information concerning the Company as the Underwriter may reasonably request. However, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act and is timely filing reports with the Commission on its Interactive Data Electronic Applications system, it is not required to furnish such reports or statements to the Underwriter.

(h) Payment of Expenses . The Company will pay all expenses incident to the performance of its obligations under this Agreement, including but not limited to (i) any filing fees and other expenses (including reasonable fees and disbursements of counsel to the Underwriter) incurred in

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connection with qualification of the Securities for sale under the state securities or blue sky laws as the Underwriter designates and the preparation and printing of memoranda relating thereto, (ii) Company costs and expenses relating to investor presentations or any “road show” in connection with the offering and sale of the Securities including, without limitation, any travel expenses of the Company’s officers and employees and any other expenses of the Company, (iii) fees and expenses incident to listing the Securities on The NASDAQ Global Market, (iv) fees and expenses in connection with the registration of the Securities under the Exchange Act, (v) expenses incurred in distributing preliminary prospectuses and the Final Prospectus (including any amendments and supplements thereto) to the Underwriter, and (vi) expenses incurred for preparing, printing and distributing any Issuer Free Writing Prospectuses to investors or prospective investors.

(i) Use of Proceeds . The Company will use the net proceeds received in connection with this Offering in the manner described in the “Use of Proceeds” section of the General Disclosure Package.

(j) Absence of Manipulation . The Company will not take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Securities.

(k) Restriction on Sale of Securities. For the period specified below (the “ Lock-Up Period ”), the Company will not, directly or indirectly, take any of the following actions with respect to its Common Stock, $0.001 par value, or any securities convertible into or exchangeable or exercisable for any of its Common Stock, $0.001 pa