Document:

<PAGE>   1
                                                                     EXHIBIT 4.3

                                  SCANSOFT, INC.

                    STAND-ALONE STOCK OPTION AGREEMENT NO. 1

I. NOTICE OF GRANT

        You, Paul A. Ricci (the "Optionee"), have been granted a Nonstatutory
Stock Option to purchase Common Stock of the Company, subject to the terms and
conditions of this Agreement, as follows:

<TABLE>
<S>                                                <C>
        Date of Agreement/Grant:                   August 21, 2000

        Exercise Price per Share:                  $1.4375

        Total Number of Shares
           Purchasable Under this Option:          1,500,000

        Total Exercise Price:                      $2,156,250.00

        Expiration Date:                           August 21, 2010
</TABLE>

        Vesting Schedule:

        This Option shall vest and become exercisable with respect to the number
of Shares of Common Stock, and on the scheduled vesting dates as set forth
below, provided that the Optionee continues to be a Service Provider on each
such date:

<TABLE>
<CAPTION>
        SCHEDULED VESTING DATES                 NUMBER OF SHARES
        -----------------------                 ----------------
<S>                                             <C>
        November 21, 2000                          187,500
        February 21, 2001                          187,500
        May 21, 2001                               187,500
        August 21, 2001                            187,500
        November 21, 2001                          187,500
        February 21, 2002                          187,500
        May 21, 2002                               187,500
        August 21, 2002                            187,500
</TABLE>

        Termination Period:

                                      -23-
<PAGE>   2
        This Option may be exercised, to the extent it is then vested, within
three (3) months after the Optionee ceases to be a Service Provider in
accordance with Section 7 of Part II of this Agreement. Upon the death or
Disability of the Optionee, this Option may be exercised, to the extent it is
then vested, within twelve (12) months after the Optionee ceases to be a Service
Provider in accordance with Sections 8 and 9 of Part II of this Agreement.
Notwithstanding the foregoing, in no event shall this Option be exercised later
than the Expiration Date set forth above.

II. AGREEMENT

        1. Definitions. As used herein, the following definitions shall apply:

               (a) "Administrator" means the Board or any committee of the Board
that has been designated by the Board to administer this Agreement, in
accordance with Section(k) below.

               (b) "Agreement" means this stock option agreement between the
Company and Optionee evidencing the terms and conditions of this Option.

               (c) "Applicable Laws" means the requirements relating to the
administration of stock options under U.S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on
which the Common Stock is listed or quoted and the applicable laws of any
foreign country or jurisdiction that may apply to this Option.

               (d) "Board" means the Board of Directors of the Company.

               (e) "Code" means the Internal Revenue Code of 1986, as amended.

               (f) "Common Stock" means the common stock of the Company.

               (g) "Company" means ScanSoft, Inc., a Delaware corporation.

               (h) "Consultant" means a person, including an advisor, engaged by
the Company or a Parent or Subsidiary of the Company to render services to such
entity.

               (i) "Director" means a member of the Board.

               (j) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.

               (k) "Employee" means an employee of the Company or any Parent or
Subsidiary of the Company. A Service Provider shall not cease to be an Employee
in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent,
any Subsidiary of the Company, or any successor.

               (l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                                      -24-
<PAGE>   3
               (m) "Exercise Price" means the price at which a Share may be
purchased by the Optionee pursuant to the exercise of this Option, which is the
Fair Market Value per Share on the date of this Agreement.

               (n) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                    (1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

                    (2) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or

                    (3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

               (o) "Nonstatutory Stock Option" means a stock option to purchase
Shares that is not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated thereunder.

               (p) "Notice of Grant" means the written notice set forth in Part
I of this Agreement, which evidences certain terms and conditions of this Option
grant. The Notice of Grant is part of the Agreement.

               (q) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

               (r) "Option" means this Nonstatutory Stock Option.

               (s) "Optioned Stock" means the Common Stock subject to this
Option.

               (t) "Optionee" means Paul A. Ricci or his successor.

               (u) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

               (v) "Service Provider" means an Employee, Director or Consultant.

               (w) "Share" means a share of Common Stock, as adjusted in
accordance with Section 10 of Part II of this Agreement.

                                      -25-
<PAGE>   4
               (x) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

        2. Grant of Option. The Board hereby grants to the Optionee the Option
to purchase, on the terms and conditions set forth in this Agreement, all or any
part of the total number of Shares set forth in the Notice of Grant, at the
Exercise Price set forth in the Notice of Grant. The Shares may be authorized,
but unissued or reacquired Shares.

        3. Exercise of Option.

               (a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set forth in the Notice of Grant and the
applicable provisions of this Agreement.

               (b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached hereto as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company. The Exercise Notice shall be completed by the Optionee and
delivered to the [Stock Administration Department] of the Company (or its
designee). The Exercise Notice shall be accompanied by full payment of the
aggregate Exercise Price of the Exercised Shares (and the amount of any income
or employment tax the Company is required by law to withhold by reason of such
exercise). This Option shall be deemed to be exercised upon receipt by the
[Stock Administration Department] of the Company (or its designee) of such
properly completed Exercise Notice accompanied by such aggregate Exercise Price
(and any withholding tax).

               Notwithstanding the foregoing, no Shares shall be issued pursuant
to the exercise of this Option unless such issuance and exercise complies with
Applicable Laws. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.

        4. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:

               (a) cash or check;

               (b) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with
this Agreement; or

               (c) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.

        5. Limited Transferability of Option. This Option may not be transferred
in any manner other than by will or by the laws of descent or distribution, and
may be exercised during the lifetime of the Optionee only by the Optionee.
Notwithstanding the foregoing, the Optionee may, in a manner specified by the
Administrator, transfer the Option (or a portion thereof) by bona fide gift and
not for any consideration, to a member of the Optionee's immediate family. The
terms of this Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.

                                      -26-
<PAGE>   5

        6. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the terms of this Agreement.

        7. Termination of Relationship as a Service Provider. If the Optionee
ceases to be a Service Provider (other than upon his death or Disability), this
Option may be exercised for a period of three (3) months after the date of such
termination (but in no event later than the Expiration Date of this Option as
set forth in the Notice of Grant), but only to the extent that the Option is
vested on the date of such termination. To the extent that the Optionee does not
exercise this Option within the time specified herein, the Option shall
terminate.

        8. Disability of Optionee. If the Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, this Option may be exercised
for a period of twelve (12) months after the date of such termination (but in no
event later than the Expiration Date of this Option as set forth in the Notice
of Grant), but only to the extent that the Option is vested on the date of such
termination. To the extent that Optionee does not exercise this Option within
the time specified herein, the Option shall terminate.

        9. Death of Optionee. If the Optionee dies while he is a Service
Provider, this Option may be exercised for a period of twelve (12) months after
the date of death (but in no event later than the Expiration Date of this Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. To the extent that the Optionee's estate or a person who acquired
the right to exercise the Option by bequest or inheritance does not exercise
this Option within the time specified herein, the Option shall terminate.

        10. Adjustments Upon Changes in Capitalization, Dissolution,
Merger or Asset Sale.

               (a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of Shares of the Optioned Stock, as
well as the Exercise Price of the Optioned Stock, shall be proportionately
adjusted for any increase or decrease in the number of issued Shares resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company; provided, however, that a conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of Shares
of the Optioned Stock or the Exercise Price of the Optioned Stock.

                                      -27-
<PAGE>   6
               (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
as soon as practicable prior to the effective date of such proposed transaction.
The Board, in its discretion, may provide for the Optionee to have the right to
exercise his Option until ten (10) days prior to such transaction as to all of
the Optioned Stock covered thereby, including Shares as to which the Option
would not otherwise be exercisable. To the extent it has not been previously
exercised, the Option will terminate immediately prior to the consummation of
such proposed.

               (c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, the Option shall be assumed or an equivalent option substituted
by the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the successor corporation refuses to assume or
substitute for the Option, the Optionee shall fully vest in and have the right
to exercise the Option as to all of the Optioned Stock, including Shares as to
which it would not otherwise be vested or exercisable. If the Option becomes
fully vested and exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Board shall notify the Optionee that the
Option shall be fully exercisable for a period of fifteen (15) days from the
date of such notice, and the Option shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger or sale of assets, the option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration received
by holders of Common Stock in the merger or sale of assets.

        11. Administration of the Agreement. The Administrator shall have the
authority, in its discretion, to construe and interpret the terms of this
Agreement and the Option granted pursuant thereto, to prescribe, amend and
rescind rules and regulations relating to the Agreement, to determine the Fair
Market Value of the Common Stock, and to make all other determinations deemed
necessary or advisable for administering the Agreement. The Administrator's
decisions, determinations and interpretations shall be final and binding on the
Optionee and all other persons.

        12. Notices. Any notice to be given to the Company hereunder shall be in
writing and shall be addressed to the Company at its then current principal
executive office or to such other address as the Company may hereafter designate
to the Optionee by notice as provided in this Section. Any notice to be given to
the Optionee hereunder shall be addressed to the Optionee at the address set
forth beneath his signature hereto, or at such other address as the Optionee may
hereafter designate to the Company by notice as provided herein. A notice shall
be deemed to have been duly

                                      -28-
<PAGE>   7
given when personally delivered or mailed by registered or certified mail to the
party entitled to receive it.

        13. Withholding Taxes. The Optionee agrees to make appropriate
arrangements with the Company (or the Parent or Subsidiary of the Company
employing or retaining the Optionee) for the satisfaction of all federal, state,
and local income and employment tax withholding requirements applicable to the
Option exercise. The Optionee acknowledges and agrees that the Company may
refuse to honor the exercise and refuse to deliver Shares if such withholding
amounts are not delivered at the time of exercise.

        14. Entire Agreement; Governing Law. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersedes in its entirety all prior undertakings and agreements of the Company
and the Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This Agreement is governed by the internal
substantive laws, but not the choice of law rules, of Massachusetts.

        15. NO GUARANTEE OF CONTINUED SERVICE. THE OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE SET FORTH IN
THE NOTICE OF GRANT IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE
WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN
OPTION OR PURCHASING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
VESTING SCHEDULE SET FORTH IN THE NOTICE OF GRANT DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE OPTIONEE'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE THE OPTIONEE'S RELATIONSHIP AS A
SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

        By your signature and the signature of the Company's representative
below, you (the "Optionee") and the Company agree that this Option is granted
under and governed by the terms and conditions of the Plan and this Option
Agreement. The Optionee hereby acknowledges and confirms that the Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
The Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions relating to
the Plan and Option Agreement. The Optionee further agrees to notify the Company
in writing of any change in the residence address indicated below.

                                      -29-
<PAGE>   8
OPTIONEE                                   SCANSOFT, INC.

--------------------------------           -------------------------------------
Signature                                  By

--------------------------------           -------------------------------------
Print Name                                 Title

--------------------------------
Residence Address

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

                                      -30-
<PAGE>   9

                                    EXHIBIT A

                                 SCANSOFT, INC.

                    STAND-ALONE STOCK OPTION AGREEMENT NO. 1

                                 EXERCISE NOTICE

ScanSoft, Inc.
9 Centennial Drive
Peabody, MA 01960

Attention: Stock Administration Department of ScanSoft, Inc.

     1.   Exercise of Option. Effective as of today, ________________, 20__, the
undersigned (the "Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of ScanSoft, Inc. (the "Company") under and
pursuant to the Stand-Alone Stock Option Agreement No. 1, dated August 21, 2000
(the "Option Agreement"). The exercise price for each such Share shall be
$1.4375, as set forth in Part I of the Option Agreement.

     2.   Delivery of Payment. The Purchaser herewith delivers to the Company
the full exercise price of the Shares.

     3.   Representations of the Purchaser. The Purchaser hereby acknowledges
that he has received, read and understood the Option Agreement and agrees to
abide by and be bound by its terms and conditions.

     4.   Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder of the Company shall exist with respect to the
Shares, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Purchaser as soon as practicable after the exercise of the
Option. No adjustment will be made for a dividend or other right for which the
record date is prior to the date of issuance, except as provided in Section 10
of Part II of the Option Agreement.

     5.   Tax Consultation. The Purchaser hereby acknowledges and confirms that
he understands that he may suffer adverse tax consequences as a result of his
purchase or disposition of the Shares. The Purchaser hereby represents that he
has consulted with any tax consultants he deems advisable in connection with the
purchase or disposition of the Shares and that he is not relying on the Company
for any tax advice.

     6.   Successors and Assigns. The Company may assign any of its rights under
this Exercise Notice to single or multiple assignees, and this Exercise Notice
shall inure to the benefit of

<PAGE>   10

the successors and assigns of the Company. Subject to the restrictions on
transfer herein set forth, this Exercise Notice shall be binding upon the
Purchaser and his heirs, executors, administrators, successors and assigns.

     7.   Interpretation. Any dispute regarding the interpretation of this
Exercise Notice shall be submitted by the Purchaser or by the Company forthwith
to the Administrator (as defined in the Option Agreement). The resolution of
such a dispute by the Administrator shall be final and binding on all parties.

     8.   Entire Agreement; Governing Law. The Option Agreement is incorporated
herein by reference. This Exercise Notice and the Option Agreement constitute
the entire agreement (the "Agreement") of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. The internal substantive
laws, but not the choice of law rules, of Massachusetts, govern this Agreement.

Submitted by:                           Accepted by:

PURCHASER:                              SCANSOFT, INC.

--------------------------------------  ----------------------------------------
Signature                               By

Paul A. Ricci
--------------------------------------  ----------------------------------------
Print Name                              Its

Address:                                Address:

                                        SCANSOFT, INC.
--------------------------------------  9 Centennial Drive
                                        Peabody, MA 01970
--------------------------------------

                                         Date Received:
                                                       -------------------------Exhibit - 10 ii

                           Reimbursement Agreements

The Scott James Fund will reimburse officers and directors not affiliated with
the Investment Adviser to compensate for travel expenses associated with
performance of their duties.  As the Fund grows in total assets, the  Board of
Directors may place them on salaries commensurate with their duties.

The Fund has no plans to compensate officers, employees and directors  who  are
affiliated with the Investment Adviser  except indirectly through payment of the
management fee.

/s/ Scott S. James
Scott S. James, President

Exhibit - 10 iii

Custodian Agreement

Safekeeping Agreement (Pursuant to Rule 17F-2)

Gentlemen:

     This letter will confirm our agreement with respect to our designation of
First Virginia Bank as the safekeeping agent for the securities and similar
investments of The Scott James Fund, Inc.

     The Bank has been duly designated and appointed by the Board of Directors
of the Corporation as the safekeeping agent for the Corporation's securities
and similar investments pursuant to the Investment Company Act of 1940 and the
rules and regulations of the Securities and Exchange Commission thereunder.

     The securities and similar investments of the Corporation shall be
deposited in the safekeeping of, or in a vault or other depository maintained
by, the Bank, and the securities and similar investments so deposited shall be
physically segregated at all times from those of any other persons, firms, or
corporations.

     Any two of the following directors, to-wit, Scott S. James and Zhifeng
Sun of the Corporation are authorized and permitted to have access to the
securities and similar investments so deposited, and such access to such
securities and similar investments so deposited shall be had only by two or
more of such persons jointly.

     Access to such securities and similar investments shall be permitted to
the properly authorized officers and employees of the Bank.  Access to such
securities and similar investments shall be permitted, jointly with any two
of the above designated directors of the Corporation or with any officer or
employee of the Bank, to an independent public accountant for the purpose of
the examination of the Corporation's securities and similar investments
required by the rules and regulations of the Securities and Exchange Commission.

     Such securities and similar investments shall at all times be subject to
inspection by the Securities and Exchange Commission through its authorized
employees or agents, accompanied, unless otherwise directed by order of the
Commission, by one or more of the designated officers of the Corporation, or
one or more of the officers or employees of the Bank.

     Each person when depositing such securities or similar investments in, or
withdrawing them from, the Bank, or when ordering their withdrawal or delivery
from the safekeeping of the Bank, shall sign a notation in duplicate in respect
to such deposit, withdrawal or order which shall show (1) the date and time of
deposit, withdrawal or order, (2) the title and amount of the similar securities
or similar investments deposited, withdrawn or ordered to be withdrawn, and an
identification thereof by a certificate number or otherwise, (3) the manner
of acquisition of the securities or similar investments deposited, or the
purpose for which they have been withdrawn or ordered to be withdrawn and
(4) if withdrawn and delivered to any other person, the name of such person.
A copy of such notation shall be transmitted promptly by the Bank to Xiongwu
Wu, a Non-Interested Director of the Corporation.  Such notation shall be on
serially-numbered forms and shall be preserved for at least one year.

     Such securities and similar investments shall be verified by complete
examination of an independent public accountant to be retained by the
Corporation at least three times during each fiscal year, at least two of
which times shall be chosen by the said accountant without prior notice
to the Corporation.

     The Secretary and the President of this Corporation, and each of them,
have been authorized and directed to certify to the Bank that resolutions
incorporating the terms of this agreement, copies of which are attached, have
been duly adopted, and do further certify the names and specimen signatures,
copies of which are attached, of the directors of the Corporation designated
above.

     The Corporation undertakes to notify the Bank of any changes in the names
and signatures of the officers of the Corporation designated above.

     If the above correctly states our understanding and agreement, would you
kindly indicate your acceptance thereof by signing the name of the Bank, by
its duly authorized officer, in the space provided below, and return a copy
of this agreement to the Corporation.

                                      Very truly yours,

                                      By: /s/ Scott S. James

First Virginia Bank

By: /s/ Josephina Dela Rosa

Exhibit - 11 i

Legal Opinion

Albanese & Associates, P.C.
Attorneys at Law
4041 University Drive, Suite #301
Fairfax, VA  22031

June 21, 2000

Board of Directors
The Scott James Fund, Inc.
6700 Arlington Boulevard
Falls Church, VA  22042

Re:  Opinion letter for The Scott James Fund, Inc. and 25,000.00 Shares of
Common Stock with .004 par value per share.

Gentlemen:

In our capacity as Counsel to The Scott James Fund, Inc. the undersigned has
examined and herein relies on copies of the following:
1.  The Articles of Incorporation filed with the State Corporation Commission
for the Commonwealth of Virginia;
2.  The By-Laws of The Scott James Fund, Inc.
3.  The Shareholder Records of The Scott James Fund, Inc.
4.  Certificate of the Commonwealth of Virginia, dated June 16, 2000, issued
by the State Corporation Commission certifying that the Certificate of
Incorporation is issued to The Scott James Fund, Inc.

I have also examined other such documents, records and matters of law as we
have deemed necessary for purposes of furnishing this opinion.

It should be noted that in rendering this opinion (i) the undersigned is unaware
of the untruth/omission or invalidity of any representation called for in any
of the above documents.  In rendering his opinion, the undersigned has
examined the following Virginia Code statute as it pertains to the corporation.

1.  Section 13.1-643 of the Virginia Code.

Based upon such examinations and investigations, and such other investigations
and examinations, that the undersigned has deemed necessary for the purposes
of the opinions expressed herein and subject to the foregoing examination
limitations and qualifications expressed herein the undersigned opines as
follows:

1.  Company is duly incorporated and organized, validly existing and in good
standing under the laws of the Commonwealth of Virginia.

2.  The Open Shares per The Scott James Fund, Inc. Shareholder Records to be
sold by the Company are duly authorized and when issued and delivered to
investors under the terms of the Prospectus and Statement of Additional
Information against payment of the appropriate consideration will be duly
and validly issued, full paid and non-assessable.

The opinions expressed in this letter are qualified to the following extent:

A.  The undersigned is a memeber of the bar of the Commonwealth of Virginia,
and the opinions expressed in this letter (except where otherwise expressly
stated) are limmited to the laws of the Commonwealth of Virginia.

B.  The services of the undersigned have been limited to rendering the foregoing
opinion based upon his review of such documents as he deemed necessary to make
the the statement contained herein.

C.  This opinion does not extend beyond the documents or to any information
and/or the the validity, and/or to any representation contained in, and/or
whether or not The Scott James Fund, Inc., has or has not complied with any
law and/or regulation concerning the Prospectus and Statement of Additional
Information by The Scott James Fund, Inc. for the Sale of Securities.

D.  The business or financial resources of The Scott James Fund, Inc. have not
been reviewed by the undersigned and therefore, expresses no opinion as to the
accuracy or completeness of any information that may have been relied upon by
anyone in making its decision to either approve the Prospectus and Statement of
Additional Information or by anyone offering to purchase share(s) of stock in
The Scott James Fund, Inc.

E.  The law firm of Albanese & Associates, P.C., has provided this legal opinion
as to certain matters relating to the corporation pursuant to the laws of the
Commonwealth of Virginia.  The Prospectus and Statement of Additional
Information has been prepared by the Corporation's management and its advisors.
Therefore, no opinion in respect to the Prospectus and Statement of Additional
Information orthe information contained therein has been provided by the
undersigned and his law firm.

This opinion is given as the date of this correspondence only and is limited
to the specific issues discussed herein, and is issued to and for the sole
benefit of The Scott James Fund, Inc.

Pursuant to the request of the Board of Directors, the undersigned hereby
consents to the inclusions of this opinion as an exhibit to the Securities Act
Registration Statement of the Fund in the N1-A Filing, and to the reference
in the Fund's Prospectus and/or Statement of Additional Information.

ALBANESE & ASSOCIATES, P.C.

/s/ Mark S. Albanese

MSA/LC
GLM/gm

Exhibit 11 ii

CONSENT OF INDEPENDENT AUDITORS:

We consent to the inclusion in this pre-effective amendment number 11 to the
Initial Registration Statement of The Scott James Fund, Inc. on Form N-1A
(File Nos. 811-9809 and 333-96139) of our report dated May 31, 2000,
on our audit of the Statement of Assets and Liabilities of The Scott James
Fund, Inc., as of May 31, 2000 and the Statement of Operations of The Scott
James Fund, Inc. for the period January 20, 2000 (inception date) - May 31,
2000.  We also consent to the reference to our firm under the caption
"Auditors" in the Prospectus.

/s/ Tamba S. Mayah
Tamba S.Mayah
MAYAH & ASSOCIATES, CPAs
New Carrollton, MD
November 6, 2000

Exhibit 11 iii

INITIAL CAPITAL AGREEMENT

The initial capital deposited into The Scott James Fund, Inc., is for investment
purposes only and the initial capital is not for re-selling or redeeming.

/s/Scott S. James
Scott S. James, President

Exhibit 12 i

Code Of Ethics

I.  General Principles

The personal investment activites of any officer, director, trustee or employee
of The Scott James Fund, Inc. will be governed by the following principles:
(A) Covered Persons have a duty at all times to place first the interests of
Fund Shareholders (B) All securities transactions by Covered Persons shall
be consistent with this Code and in such a manner as to avoid any actual or
potential conflict of interest or any abuse of an individual's position of
trust and responsibility; and (C) Covered Persons should not take
inappropriate advantage of their positions with The Scott James Fund.

II. A) Specific Prohibitions

No person covered by this Code, shall purchase or sell a security, except an
Excepted Security, if there has been a determination to purchase or sell such
security for the Fund or if such a purchase or sale is under consideration for
the Fund, nor may such a person have any dealings in a security that he may not
purchase or sell for any other account in which he has Beneficial Ownership,
or disclose the information to anyone, until such purchase, sale or contemplated
action has either been completed or abandoned.

B)  Fund Rules Enforcer:  To ensure compliance with this code required documents
must be submitted according to procedures set forth below to the Fund
Rules Enforcer.  The Fund Rules Enforcer at a minimum will be Series 7
Registered with the Securities and Exchange Commission, and selection of this
Person must be approved by the Board of Directors. This position will not be
occupied by Scott S. James.

III.  Obtaining Advance Approval

Except as provided in Sections V and VI of this Code, all proposed transactions
in securities (privately or publicly owned) by Covered Persons, except
transactions in Excepted Securities, should be
approved consistent with the provisions of this Code in advance by
the Fund Rules Enforcer.  This request should
be submitted by e-mail to fundrulesenforcer@scottjamesgroup.com,
and requests will be answered within 7 days.

IV.  Reporting and Certification Requirements; Brokerage Confirmations

(1)  Except as provided in Sections V and VI of this code, within 10 days
following the end of each calendar quarter each Covered Person must file
with the Fund Rules Enforcer a signed Security Transaction
Reporting Form.  The form
must be signed and filed whether or not any security transaction has been
effected.  If any transaction has been effected during the quarter for the
Covered Person's account or for any account in which he has a direct or
indirect Beneficial Ownership, it must be reported.  Excepted from this
reporting requirement are transactions effected in any accounts over which
the Covered Person has no direct or indirect influence or control and
transactions in Excepted Securities.  The Fund Rules Enforcer is
responsible for reviewing these transactions promptly and
must address any apparent violation promptly.
(2)  Each employee of the Fund will upon commencement of employment and
annually thereafter disclose all personal securities holdings and annually
certify that: (i) they have read and understand this Code and recognize they
are subject hereto; and (ii) they have complied with the requirements of this
Code and disclosed or reported all securities transactions required to be
disclosed or reported pursuant to the requirements of this Code.
(3)  Each employee of the Fund will direct his brokerage firm to send copies of
all confirmations and all monthly statements directly to the Fund Rules
Enforcer.
(4)  Each employee of the Fund who has a Fully-Discretionary Account (as
defined in Section VI) shall disclose all pertinent facts regarding such
Account to the Fund Rules Enforcer upon commencement of employment.
Each such employee
or partner shall thereafter annually certify on the prescribed form that he
or she has not and will not exercise any direct or indirect influence or control
over such Account, and has not discussed any potential investment decisions with
such independent fiduciary in advance of any such transactions.

V.  Special Provisions Applicable to Outside Directors and Trustees of the Funds

The primary function of the Outside Directors and Trustees of the Funds is to
set policy and monitor the management performance of the Funds' officers and
employees involved in the management of the Fund.  Although they receive
complete information as to actual portfolio transactions, Outside Directors and
Trustees are not given advance information as to the Funds' contemplated
investment transactions.

An Outside Director or Trustee wishing to purchase or sell any security will
therefore generally not be required to obtain advance approval of his security
transactions.  If, however, during discussions at Board meetings or otherwise
an Outside Director or Trustee should learn in advance of the Funds' current or
contemplated investment transactions, then advance approval of transactions in
the securities of such company(ies) shall be required for a period of 30 days
from the date of such Board meeting.  In addition, an Outside Director or
Trustee can voluntarily obtain advance approval of any security transaction or
transactions at any time.

No report described in Section IV(1) will be required of an Outside Director
or Trustee unless he knew, or in the ordinary course of fulfilling his official
duties as a director or trustee should have known, at the time of his
transaction, that during the 15-day period immediately before or after the date
of the transaction (i.e., a total of 30 days) by the Outside Director or Trustee
such security was or was to be purchased or sold by the Fund or such a purchase
or sale was or was to be considered by the Fund.  If he makes any
transaction requiring such a report, he must report all securities transactions
effected during the quarter for his account or for any account in which he has a
direct or indirect Beneficial Ownership interest and over which he has any
direct or indirect influence or control.  Each Outside Director and Trustee will
direct his brokerage firm to send copies of all confirmations of securities
transactions to the Fund Rules Enforcer, and annually make the
certification required under Section IV(2)(i) and (ii).  Outside Directors' and
Trustees' transactions in Excepted Securities are excepted from the
provisions of this Code.

It shall be prohibited for an Outside Director or Trustee to trade on
material non-public information.  Prior to accepting an appointment as a
director of any company, an Outside Director or Trustee will advise and
discuss with the Board whether accepting
such appointment creates any conflict of interest or other issues.

VI. Additional Requirement relating to Employees of the Fund

It shall be prohibited for any employee of the Fund:
(1) to obtain or accept favors or preferential treatment of any kind or gift or
other thing having a value of more than $100 from any person or entity that
does business with or on behalf of the investment company.
(2) to trade on material non-public information or otherwise fail to comply
with the Fund's Statement of Policy and Procedures on Receipt and Use of
Inside Information adopted pursuant to Section 15(f) of the Securities
Exchange Act of 1934 and Section 204A of the Investment Advisers Act of
1940;
(3) to become a director of any company without the Firm's prior consent and
implementation of appropriate safeguards against conflicts of interest.

In connection with any request for approval, pursuant to Section III of
this Code, of an acquisition by employees of the Fund of any securities
in a private placement, prior approval will take into account, among
other factors, whether the investment opportunity should be reserved for any of
the Funds and their shareholders (or other clients of the Fund) and whether
the opportunity is being offered to the individual by virtue of the individual's
position with the Fund.  An individual's investment in privately-placed
securities will be disclosed to the Fund Rules Enforcer if such an individual is
involved in consideration of an investment by the Fund in the issuer of such
securities.  In such circumstances, the Fund's (or other client's) decision
to purchase securities of the issuer will be subject to independent review by
personnel with no personal interest in the issuer.

If a spouse of an employee of the Fund who is a director or an employee of,
or a consultant to, a company, receives a grant of options to purchase
securities in that company (or an affiliate), neither the receipt nor
the exercise of those options requires advance approval from the Fund or
reporting.  Any subsequent sale of the security acquired by the option exercise
by that spouse would require advance approval and is a reportable transaction.

Advance approval is not required for transactions in any account of a
Covered person if the Covered Person had no direct or indirect influence or
control (a "Fully-Discretionary Account").  A Covered person will be deemed to
have "no direct or indirect influence or control" over an account only if:
(i) investment discretion for the account has been delegated to an independent
fiduciary and such investment discretion is not shared with the employee,
(ii) the Covered Person certifies in writing that he or she has not and will not
discuss any potential investment decisions with such independent fiduciary
before any transaction the Fund Rules Enforcer has determined that the account
satisfies these requirements.  Transaction in Fully-Discretionary Accounts by
an employee of the Fund are subject to the post-trade reporting requirements
of this Code.

VII.  Enforcement

The Fund Rules Enforcer for The Scott James Fund, Inc. is charged with
the responsibility of enforcing this code, and may appoint one or more employees
to aid in carrying out these enforcement responsibilities.  The Fund Rules
Enforcer shall implement a procedure to monitor compliance with this Code
through a periodic review of
personal trading records provided under this Code against transactions in the
Fund. The Fund Rules Enforcer shall bring to the attention of the Funds' Audit
Committee any apparent violations of this Code, and the Audit Committee shall
determine what action shall be taken as a result of such violation.
The record of any violation of this Code and any action taken as a result
thereof, which may include suspension or removal of the violator from his or
her position, shall be made a part of the permanent record of the Fund.  An
annual report will be prepared for the directors or trustees of the Fund that
summarizes the Funds' procedures concerning personal investing, including the
procedures followed to determine whether to grant approvals under Section III
and the procedures followed by the Fund Rules Enforcer in determining
pursuant to Section IV whether the Fund has determined to purchase or sell a
security or are considering such a purchase or sale,
and any changes in those procedures during
the past year, and (b) identifies any recommended changes in the restrictions
imposed by this Code or in such procedures with respect to the Code and any
changes to the Code based upon experience with the Code, evolving industry
practices or developments in the regulatory environment.

VII.  Definitions

"Covered Person" means any officer, director, trustee, director or trustee
emeritus or employee of the Fund.  (See also definition of "Beneficial
Ownership.")

"Excepted Securities" are shares of the Funds, banker's acceptances, bank
certificates of deposit, commercial paper, shares of registered open-end
investment companies and U.S. Government securities.

"Outside Directors and Trustees" are directors and trustees who are not
"interested persons" as defined by the Investment Company Act of 1940.

"Security" means any stock, bond, debenture or in general any instrument
commonly known as a security and includes a warrant or right to subscribe to or
purchase any of the foregoing and also includes the writing of an option on
any of the foregoing.

"Beneficial Ownership" is interpreted in the same manner as it would be under
Section 16 of the Securities Exchange Act of 1934 and Rule 16a-1 thereunder.
Accordingly, a "beneficial owner" includes any Covered Person who, directly
or indirectly, though any contract, arrangement, understanding, relationship
or otherwise, has or shares a direct or indirect pecuniary interest (i.e. the
ability to share in profits derived from such security) in any equity security
including:
(i)  securities held by a person's immediate family sharing the same house
     (with certain exceptions);
(ii) a general partner's interest in portfolio securities held by a general
     or limited partnership;
(iii) a person's interest in securities held in trust as trustee, beneficiary
     or settlor, as provided in Rule 16a-8(b); and
(iv) a person's right to acquire securities through options, rights or other
     derivatives securities.

"Gender/Number" whenever the masculine gender is used herein, it includes
the feminine gender as well, and the singular includes the plural and the
plural includes the singular, unless in each case the contest clearly
indicates otherwise.

/s/ Scott S. James
Scott S. James, President

                                     - 1 -

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