Exhibit 6
Draft 3/7/97
DISTRIBUTION AGREEMENT
The SBI Fund, Inc. (the "Fund") has agreed that Lamaute
Capital, Inc. ("LCI") shall be, for the period of this agree-
ment, the distributor of shares of each Series of the Fund.
For purposes of this agreement the term "Shares" shall mean the
authorized shares of the relevant Series.
1. Services as Distributor
1.1 LCI will act as agent for the distribution of Shares
covered by, and in accordance with, the registration statement
and prospectus then in effect under the Securities Act of 1933,
as amended, and will transmit promptly any orders received by
LCI for purchase or redemption of Shares to the Transfer and
Dividend Disbursing Agent for the Fund of which the Fund has
notified LCI in writing.
1.2 LCI agrees to use its best efforts to distribute the
appropriate sales literature, applications and prospectuses in
the manner agreed upon between the Fund and LCI from time to
time.
1.3 LCI shall act as distributor of Shares in compliance
with all applicable laws, rules and regulations, including,
without limitations, all rules and regulations made or adopted
pursuant to the Investment Company Act of 1940, as amended, by
the Securities and Exchange Commission or any securities asso-
ciation registered under the Securities Exchange Act of 1934,
as amended.
1.4 Whenever in their judgment such action is warranted
by market, economic or political conditions, or by abnormal
circumstances of any kind deemed by the parties hereto to
render sales of the Fund's Shares not in the best interest of
the Fund, the parties hereto may decline to accept any orders
for, or make any sales of, any Shares until such time as those
parties deem it advisable to accept such orders and to make
such sales and each party shall advise promptly the other party
of any such determination.
1.5 LCI will act only on its own behalf as principal if
LCI chooses to enter into selling agreements with selected
dealers or others. Any payments to selected dealers shall be
governed by a separate agreement between LCI and such dealer
and by the Fund's then-current prospectus.
1.6 The Fund agrees to pay all costs and expenses in con-
nection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and
for supplying information, prices, and other data to be
furnished by the Fund hereunder, and all expenses in connection
with the preparation, printing, and delivery of the Fund's
prospectuses and statements of additional information for regu-
latory purposes and for distribution to shareholders.
1.7 LCI agrees to pay for all expenses incurred by LCI in
connection with (i) printing and distributing such number of
copies of the prospectus as agreed upon by the Fund and LCI
from time to time for use in connection with offering the
Shares to prospective investors, (ii) preparing, printing and
distributing any literature and advertising as agreed upon by
the Fund and LCI from time to time for use in connection with
offering the Shares for sale, and (iii) all other expenses in-
curred in connection with the sale of the Shares as contem-
plated by this Agreement. In addition, it is understood and
agreed that, so long as a plan of distribution of the Fund
adopted pursuant to Rule 12b-1 under the 1940 Act (the "Plan")
continues in effect, any expenses incurred by LCI hereunder may
be paid from amounts received by it from the Fund under the
Plan. So long as the Plan continues in effect, LCI shall be
entitled to receive quarterly payments not exceeding in the
aggregate a maximum annual amount equal to 0.05% of the average
daily net asset value of the Fund during each fiscal year of
the Fund. The appropriate officer of the Fund shall provide to
the Board of Directors of the Fund, and the Board of Director
shall review, at least quarterly, a written report of the
amounts expended pursuant to the Plan and the purposes for
which such expenditures were made.
1.8 The Fund agrees to execute any and all documents and
to furnish any and all information and otherwise take all
actions which may be reasonably necessary in the discretion of
the Fund's officers in connection with filings required to be
made in connection with the sale of Shares in such states as
LCI may designate to the Fund and the Fund may approve. LCI
shall be responsible for all expenses connected with its own
qualification as a broker-dealer under Federal law and the
state laws of California, Georgia and Florida. All other
expenses in connection with the sale of Shares in states other
than those specifically referenced in this agreement shall be
incurred by the Fund or reimbursed to LCI by the Fund.
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1.9 The Fund shall furnish LCI from time to time, for use
in connection with the sale of Shares, such information with
respect to the Fund or any relevant Series and the Shares as
LCI may reasonably request, all of which shall be signed by one
or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and cor-
rect. The Fund also shall furnish LCI upon request with: (a)
semi-annual reports and annual audited reports of the Fund's
books and accounts made by independent public accountants regu-
larly retained by the Fund, (b) quarterly earnings statements
prepared by the Fund, (c) a monthly itemized list of the secu-
rities in the Fund's or, if applicable, each Series' portfolio,
(d) monthly balance sheets as soon as practical after the end
of each month, and (e) from time to time such additional infor-
mation regarding the Fund's financial condition as LCI may rea-
sonably request.
1.10 The Fund represents to LCI that all registration
statements and prospectuses filed by the Fund with the Securi-
ties and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as
amended, with respect to the Shares have been prepared in con-
formity in all material respects with the requirements of said
Acts and rules and regulations of the Securities and Exchange
Commission thereunder. As used in this agreement the terms
"registration statement" and "prospectus" shall mean any regis-
tration statement and prospectus, including the statement of
additional information incorporated by reference therein, filed
with the Securities and Exchange Commission and any amendments
and supplements thereto which at any time shall have been filed
with said Commission. The Fund represents and warrants to LCI
that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an
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 Fund may, but shall not
be obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement or
supplements to any prospectus as, in the light of future devel-
opments, may, in the opinion of the Fund's counsel, be neces-
sary or advisable. If the Fund shall not propose any such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt of the Fund of a written request
from LCI to do so, LCI may, at its option, terminate this
agreement or decline to make offers of the Fund's securities
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until such amendments are made. The Fund shall not file any
amendment to any registration statement or supplement to any
prospectus without giving LCI reasonable notice thereof in ad-
xxxxx; provided, however, that nothing contained in this agree-
ment shall in any way limit the Fund's right to file at any
time such amendments to any registration statement and/or sup-
plements to any prospectus, of whatever character, as the Fund
may deem advisable, such right being in all respects absolute
and unconditional.
1.11 The Fund authorizes LCI and any dealers with whom
LCI shall enter into dealer agreements to use any prospectus in
the form furnished by the Fund from time to time in connection
with the sale and distribution of Shares. The Fund agrees to
indemnify, defend and hold LCI, its several officers and direc-
tors, and any person who controls LCI within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabil-
ities and expenses (including the reasonable cost of investi-
gating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which
LCI, its officers and directors, or any such controlling per-
sons, may incur under the Securities Act of 1933, as amended,
the Investment Company Act of 1940, as amended, or common law
or otherwise, arising out of or on the basis of any untrue
statement, or alleged untrue statement, of a material fact
required to be stated in either any registration statement or
any prospectus or any statement of additional information, or
arising out of or based upon any omission, or alleged omission,
to state a material fact required to be stated in any registra-
tion statement, any prospectus or any statement or additional
information or necessary to make the statements in any of them
not misleading, except that the Fund's agreement to indemnify
LCI, its officers or directors, and any such controlling person
will not be deemed to cover any such claim, demand, liability
or expense to the extent that it arises out of or is based upon
any such untrue statement, alleged untrue statement, omission
or alleged omission made in any registration statement, any
prospectus or any statement of additional information in reli-
ance upon information furnished by LCI, its officers, directors
or any such controlling person to the Fund or to its represen-
tatives for use in the preparation thereof, and except that the
Fund's agreement to indemnify LCI, its officers or directors,
and any such controlling person, and the Fund's representations
and warranties set out in paragraph 1.10 of this Agreement will
not be deemed to cover any liability to the Fund or its share-
holders to which LCI would otherwise be subject by reason of
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willful misfeasance, bad faith or gross negligence in the per-
formance of its duties, or by reason of its reckless disregard
of its obligations and duties under this Agreement ("Disquali-
fying Conduct"). The Fund's agreement to indemnify LCI, its
officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being noti-
fied of any action brought against LCI, its officers or direc-
tors, or any such controlling person, such notification to be
given by letter, facsimile or by telegram addressed to the Fund
at its address set forth above as promptly as practical after
the summons or other first legal process shall have been
served. The failure so to notify the Fund of any such action
shall not relieve the Fund from any liability which the Fund
may have to the person against whom such action is brought by
reason of any such untrue, or alleged untrue, statement or
omission, or alleged omission, otherwise than on account of the
Fund's indemnity agreement contained in this paragraph 1.11.
The Fund will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in
such case, such defense shall be conducted by counsel of good
standing chosen by the Fund and approved by LCI, which approval
shall not unreasonably be withheld. In the event the Fund
elects to assume the defense of any such suit and retain coun-
sel of good standing approved by LCI, the defendant or defen-
dants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but in case the
Fund does not elect to assume the defense of any such suit with
counsel reasonably acceptable to LCI, the Fund will reimburse
LCI, its officers and directors, or the controlling person or
persons named as the defendant or defendants in such suit, for
the reasonable fees and expenses of any counsel retained by LCI
or them. The Fund's indemnification agreement contained in
this paragraph 1.11 and the Fund's representations and warran-
ties in this Agreement shall remain operative and in full force
and effect regardless of any investigation made by or on behalf
of LCI, its officers and directors, or any controlling person,
and shall survive the delivery of any Shares. This agreement
of indemnity will inure exclusively to LCI's benefit, to the
benefit of its several officers and directors, and their
respective estates, and to the benefit of any controlling per-
sons and their successors. The Fund agrees promptly to notify
LCI of the commencement of any litigation or proceedings
against the Fund or any of its officers or directors in con-
nection with the issue and sale of Shares.
1.12 LCI agrees to indemnify, defend and hold the Fund,
its several officers and directors, and any person who controls
the Fund within the meaning of Section 15 of the Securities Act
of 1933, as amended, free and harmless from and against any and
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all claims, demands, liabilities and expenses (including the
reasonable cost of investigating or defending such claims, de-
mands or liabilities and any reasonable counsel fees incurred
in connection therewith) which the Fund, its officers or direc-
tors, or any such controlling person, may incur under the Secu-
rities Act of 1933, as amended, the Investment Company Act of
1940, as amended, or under common law or otherwise, but only to
the extent that such liability or expense incurred by the Fund,
its officers or directors, or such controlling person resulting
from such claims or demands, (a) shall arise out of or be based
upon any unauthorized sales literature, advertisements, infor-
mation, statements or representations or any Disqualifying Con-
duct in connection with the offering and sale of any Shares, or
(b) shall arise out of or be based upon any untrue, or alleged
untrue, statement of a material fact contained in information
furnished in writing by LCI to the Fund specifically for use in
the Fund's registration statement and used in the answers to
any of the items of the registration statement or in the cor-
responding statements made in the prospectus or statement of
additional information, or shall arise out of or be based upon
any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by LCI to
the Fund and required to be stated in such answers or necessary
to make such information not misleading. LCI's agreement to
indemnify the Fund, its officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon
LCI being notified of any action brought against the Fund, its
officers or directors, or any such controlling person, such
notification to be given by letter, by facsimile or by telegram
addressed to LCI at its address set forth above as promptly as
practicable after the summons or other first legal process
shall have been served. The failure so to notify LCI of any
such action shall not relieve LCI from any liability which LCI
may have to the Fund, its officers or directors, or to such
controlling person by reason of any such untrue, or alleged
untrue, statement or omission, otherwise than on account of
LCI's indemnity agreement contained in this paragraph 1.12.
LCI shall have the right to control the defense of such action,
with counsel of its own choosing, reasonably satisfactory to
the Fund, if such action is based solely upon such alleged mis-
statement or omission on LCI's part, and in any other event the
Fund, its officers or directors, or such controlling person
shall each have the right to participate in the defense or
preparation of the defense of any such action. This agreement
of indemnity will inure exclusively to the Fund's benefit, to
the benefit of the Fund's officers and directors, and their
respective estates, and to the benefit of any controlling per-
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sons and their successors. LCI agrees promptly to notify the
Fund of the commencement of any litigation or proceedings
against LCI or any of its officers or directors in connection
with the issue and sale of Fund Shares.
1.13 No Shares shall be offered by either LCI or the Fund
under any of the provisions of this agreement and no orders for
the purchase or sale of such Shares hereunder shall be accepted
by the Fund if and so long as the effectiveness of the regis-
tration statement then in effect or any necessary amendments
thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a cur-
rent prospectus as required by Section 10 of said Act, as
amended, is not on file with the Securities and Exchange Com-
mission; provided, however, that nothing contained in this
paragraph 1.13 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions
of the Fund's prospectus or charter documents.
1.14 The Fund agrees to advise LCI promptly in writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement or
prospectus then in effect or for additional information;
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending the ef-
fectiveness of the registration statement or prospectus then in
effect or the initiation of any proceeding for that purpose;
(c) of the happening of any event which makes un-
true any statement of a material fact made in the registration
statement or prospectus then in effect or which requires the
making of a change in such registration statement or prospectus
in order to make the statements therein not misleading; and
(d) of all actions of the Securities and Exchange
Commission with respect to any amendments to any registration
statement or prospectus which may from time to time be filed
with the Securities and Exchange Commission.
2. Offering Price
Shares of the Fund shall be offered for sale and sold at a
price per share (the "offering price") in accordance with the
provisions of the current prospectus applicable to such offer
and sale. The Fund will cause the net asset value to be deter-
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mined with such frequency and at such times and will cause the
offering price to be effective for such period as are set forth
in the then current prospectus of the Fund and the Fund will
cause such determinations to be furnished to LCI as often as
they are made.
3. Term
This Agreement shall become effective with respect to the
Fund as of the date hereof and will continue for one (1) year
and will continue thereafter automatically for successive an-
nual periods so long as such continuance is specifically ap-
proved at least annually (i) by the Fund's Board of Directors
or (ii) by vote of a majority (as defined in the Investment
Company Act of 1940) of the outstanding voting securities of
the Fund or the relevant Series, as the case may be, provided
that in either event its continuance also is approved by a
majority of the directors who are not "interested persons" (as
defined in said Act) of any party to this Agreement, by vote
cast in person at a meeting called for the purpose of voting on
such approval. This Agreement is terminable with respect to
the Fund, without penalty, on not less than sixty days' written
notice, by vote of a majority of the Fund's disinterested
directors as defined in Rule 12b-1 under the 1940 Act, by vote
of a majority (as defined in the Investment Company Act of
1940) of the outstanding voting securities of such Fund, or by
LCI. This Agreement shall terminate automatically in the event
of its assignment (as defined in said Act).
4. Miscellaneous
4.1 The Fund recognizes that LCI's directors, officers
and employees may from time to time serve as directors, trust-
ees, officers and employees of corporations and business trusts
(including other investment companies), and that LCI or its
affiliates may enter into distribution or other agreements with
such other entities, corporations and trusts. LCI agrees to
promptly give notice to the Fund upon entering into any distri-
bution agreements with such other entities, corporations and
trusts.
4.2 No provision of this agreement may be changed,
waived, discharged or terminated orally, but only by an in-
strument in writing signed by the party against which an en-
forcement of the change, waiver, discharge or termination is
sought.
4.3 This agreement shall be governed by the internal
laws of the State of Florida without giving effect to
principles of conflict of laws.
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4.4 If any provision of this agreement shall be held or
made invalid by a court decision, statute, rule, or otherwise,
the remainder of this Agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
5. Fees
The annual cost for these services is 5 basis points of
gross assets under management with a minimum annual fee of
$12,500 plus out-of-pocket expenses. The fee paid to LCI shall
be calculated on a daily basis and depends on the level of
total assets of the Fund. Such fees shall be paid quarterly,
in advance, each quarterly payment being based upon one quarter
of the anticipated annualized fee with the first payment due
within thirty (30) days of the commencement of operations of
the Fund.
THE SBI FUND, INC.
By:______________________
Name:
Title:
Date:
LAMAUTE CAPITAL INC.
By:______________________
Name:
Title:
Date:
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