SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
................................................................................
(Name of Registrant as Specified In Its Charter)
UMB Tax-Free Money Market Fund, Inc.
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
....................................................................
2) Aggregate number of securities to which transaction applies:
....................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
....................................................................
4) Proposed maximum aggregate value of transaction:
....................................................................
5) Total fee paid:
....................................................................
[ X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
...........................................................
2) Form, Schedule or Registration Statement No.:
...........................................................
3) Filing Party:
...........................................................
4) Date Filed:
...........................................................
<PAGE>
THE UMB TAX-FREE MONEY MARKET FUND, INC.
THREE CROWN CENTER
2440 Pershing Road
Kansas City, Missouri 64108
To The Shareholders:
The attached proxy statement discusses a proposal related to the change
in investment counsel for the UMB Tax-Free Money Market Fund, Inc. As a
shareholder in UMB Tax-Free Money Market Fund, Inc. (the "Fund"), we ask you to
review the statement and cast your vote on the Proposal. The Fund's Board of
Directors has recommended that shareholders approve the Proposal.
Under the terms of the proposal, UMB Bank, n.a. will replace David L.
Babson & Co. Inc. as investment counsel to the Fund. The proposed change in
investment counsel will necessitate an amendment to the Fund's existing
investment management agreement with Jones & Babson, Inc., to identify UMB Bank,
n.a. as the new investment counsel in the agreement, which will require approval
by the shareholders of the Fund. Approval of the management agreement will also
constitute approval of the new investment counsel agreement. The proposed new
investment management and investment counsel agreements are identical in all
substantive respects to the existing agreements, differing only in their
effective and termination dates.
We look forward to receiving your vote in favor of the Proposal. Thank
you for your support of the Fund.
Sincerely,
Larry D. Armel
President
<PAGE>2
IMPORTANT...
PLEASE VOTE AND RETURN YOUR PROXY PROMPTLY
We urge you to vote on the proposal, Date, Sign and Return the Enclosed Proxy
Promptly. This will assist your Fund in obtaining a Quorum at its Special
Meeting and Avoid the Expense of an Adjournment Until a Quorum can be obtained.
Thank You.
UMB TAX-FREE MONEY MARKET FUND, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
April 24, 1995
TO THE SHAREHOLDERS:
A special meeting of shareholders of UMB Tax-Free Money Market Fund,
Inc. (known as the "Fund") will be held at its office, Three Crown Center, 2440
Pershing Road, Kansas City, Missouri, 64108 on April 24, 1995 at 9:00 a.m. for
the following purposes:
(1) To approve or disapprove a new Management Agreement with Jones and
Babson, Inc. which also shall constitute approval or disapproval of a new
Investment Counsel Agreement of the same date between Jones & Babson, Inc.
and UMB Bank, n.a., both of which are identical in all substantive respects
to the existing agreements, differing only in their effective and
termination dates and termination of the investment counsel status of David
L. Babson & Co. Inc.
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on March 31,
1995, as the record date for determining shareholders entitled to notice of and
to vote at the meeting.
Kansas City, Missouri By order of the Board of Directors
March 31, 1995 Martin A. Cramer, Secretary
<PAGE>3
PROXY STATEMENT
UMB TAX-FREE MONEY MARKET FUND, INC.
SPECIAL MEETING OF SHAREHOLDERS, APRIL 24, 1995
THIS STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY THE BOARD OF DIRECTORS OF UMB TAX-FREE MONEY MARKET FUND, INC. to be
voted at the special meeting of shareholders of the Fund to be held on April 24,
1995, at Three Crown Center, 2440 Pershing Road, Kansas City, Missouri 64108 at
9:00 a.m. and at all adjournments thereof. The date of the first mailing of this
proxy to shareholders was on or prior to April 10, 1995.
If your Proxy is properly executed and returned in time to be voted at
the meeting, the shares represented by it and which have not been redeemed at
the time will be voted as you have instructed. IF NO CHOICE IS INDICATED,
PROXIES WILL BE VOTED IN FAVOR OF THE PROPOSAL STATED IN THE NOTICE OF THE
MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE BY
PRESENTING TO THE PROXY HOLDERS A WRITTEN REVOCATION SIGNED IN THE SAME MANNER
AS THE PROXY. Abstentions and broker non-votes will be included for the purposes
of determining whether a quorum is present at the meeting, but will be treated
as votes not cast and, therefore will not be counted for purposes of determining
whether matters to be voted upon at the meeting have been approved.
The costs of this meeting, including the solicitation of proxies, will
be borne by Jones & Babson, Inc. The principal solicitation of proxies will be
by mail, but they may be solicited on behalf of management by telephone,
telegraph and personal contact through Directors, officers and regular employees
of the management.
The Fund has only one class of voting stock, its common capital stock.
Shareholders are entitled to one vote per share on all business of the meeting.
Shares entitled to be voted at the meeting or any adjournment thereof are those
full and fractional shares owned by shareholders of record as of the close of
business on March 31, 1995, and which have not been redeemed at the time they
are to be voted. There were approximately 139,053,339 shares outstanding on
the record date. To the knowledge of the Fund, there is no beneficial owner of
more than 5% of the outstanding common capital stock of the Fund. At March 31,
1995, the officers and Directors of the Fund as a group beneficially owned less
than 1% of the shares of the Fund.
In the event a quorum is not present at the meeting or in the event
that a quorum is present but sufficient votes to approve the proposed item are
not received, the persons named as proxies may propose one or more adjournments
of the meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares represented at
the meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR any such proposal, in favor
<PAGE>4
of such an adjournment, and will vote those proxies required to be voted AGAINST
any such proposal, against any such adjournment.
Jones & Babson, Inc. ("Jones & Babson"), Three Crown Center, 2440
Pershing Road, Kansas City, Missouri 64108, serves as the Fund's investment
manager, principal underwriter and administrator.
At a meeting held on February 28, 1995, the Board of Directors of the
"UMB Funds" voted to change the name of each Fund, including the UMB Tax-Free
Money Market Fund, Inc., by deleting "UMB" and adding in its place "Scout,"
effective April 30, 1995. The New Management Agreement and the New Investment
Counsel Agreement at Exhibit A to this proxy statement contain the new Fund
name.
(1) APPROVAL OR DISAPPROVAL OF THE NEW MANAGEMENT AGREEMENT
The Directors of the Fund are proposing that shareholders of the Fund
approve a new investment management agreement (the "New Management Agreement")
and a new investment counsel agreement (the "New Investment Counsel Agreement")
(collectively, the "New Management Agreements"). The proposed New Management
Agreement and the proposed New Investment Counsel Agreement appoint UMB Bank,
n.a. ("UMB") as investment counsel to replace David L. Babson & Co. Inc., the
current investment counsel and are otherwise identical in all substantive
respects to the existing Agreements (the "Old Management Agreements"), differing
only in their effective and termination dates. Shareholder approval is required
for the New Management Agreements.
In connection with their approval of the proposed New Management
Agreements, the Directors considered that the terms of the New Management
Agreements do not contemplate any change in the Fund's investment objectives or
policies, the management or operation of the investment manager, or the
shareholder services or other business activities of the Fund.
While Jones & Babson is the statutory investment manager of all of the
UMB Funds, currently, the investment counsel duties of day-to-day portfolio
management are split between David L. Babson & Co. Inc., Cambridge,
Massachusetts, and UMB. UMB acts as investment counsel for UMB Bond Fund, UMB
Heartland Fund, UMB Stock Fund, and UMB WorldWide Fund, while David L. Babson &
Co. Inc. is investment counsel for UMB Money Market Fund and UMB Tax-Free Money
Market Fund (the "UMB Funds"). Management believes that investment and
administrative activities can be conducted in a more cost efficient and
effective manner if all investment counsel functions are performed by UMB. The
proposed arrangement may also be more generally pleasing to Fund shareholders, a
large proportion of which availed themselves of banking and other related
services offered by UMB. The proposed arrangement does not involve any increase
in fees charged to Fund shareholders. It is possible that the efficiencies which
may be achieved could positively impact the Funds' operating costs in the
future. There is no guarantee that this will occur.
<PAGE>5
At a meeting held on February 28, 1995, the Directors of the Fund,
including a majority of independent Directors, approved the New Management
Agreements. The Directors recommend that shareholders vote to approve the New
Management Agreements.
As is the case with all UMB Funds, substantially all Fund management
and normal operating functions are provided by Jones & Babson. It is assisted in
the portfolio supervision by its investment counsel.
The management fee covers all of the Fund's normal operating expenses
exclusive of taxes, brokerage, interest and fees and other charges of
governments and their agencies including the cost of qualifying the Fund's
shares for sale in any jurisdiction. Not considered normal operating expenses
and therefore payable by the Fund would be legal and accounting fees incurred in
anticipation of or arising out of litigation or administrative proceedings to
which the Fund, its Directors or officers may be subject or a party thereto.
Jones & Babson agrees to provide all management, supervisory, administrative and
normal operating services required by the Fund. As a condition of this
Agreement, Jones & Babson must employ at its own expense, an independent
investment counseling firm to assist it in the investment advisory function. As
compensation for all of the foregoing services, the Fund pays Jones & Babson
fees based on average daily net assets of the Fund at an annual rate of 50/100
of 1% (.50%), which will be computed daily and paid semimonthly. UMB has a broad
investment analysis and research staff which eliminates the need for Jones &
Babson and the Fund to maintain an extensive duplicate staff, with the
consequent increase in the cost of investment advisory service. The cost of the
services of the existing investment counsel, David L. Babson is included in the
services of Jones & Babson. For its investment supervisory services and counsel,
Jones & Babson pays David L. Babson 1/10 of 1% (.1%) of net assets. It is
proposed that UMB assume the duties of Investment Counsel of the Fund, which
consist primarily of assisting Jones & Babson in the portfolio supervision of
the Fund. The cost of the services of UMB will also be included in the services
of Jones & Babson. For its investment supervisory services and counsel, Jones &
Babson will pay UMB 1/10 of 1% (.1%) of net assets, which is identical to fees
currently paid to the existing Investment Counsel. In addition to the investment
counsel fee, other normal operating expenses paid by Jones & Babson include fees
of the custodian, officers and other personnel; rent; shareholder services,
including maintenance of the shareholder accounting system and transfer agency;
and such other items as are incidental to corporate administration. Normally,
the Fund's ratio of expenses to assets will be the management fee. In comparing
the operating costs of the Fund with other funds of similar size and
circumstance, the management fee should be compared to the operating expense
ratio of those funds whose investment advisory fee does not include such a
comprehensive list of services and whose operating expense ratio includes the
investment advisory fee plus all other operating expenses paid by the Fund.
For the most recent fiscal year ending June 30,1994, the Fund paid
Jones & Babson $439,762 in management fees out of which Jones & Babson paid
David L. Babson & Co. Inc. $88,204 for its investment counsel services and all
the Fund's expenses except those payable directly by the Fund. If the proposed
New Investment Counsel Agreement with
<PAGE>6
UMB had been in effect during the most recent fiscal year of the Fund, the fees
paid to UMB would have been identical to the fees paid David L. Babson & Co.
Inc., and the fees paid to Jones & Babson would have been the same if the New
Management Agreement had been in effect.
Annual Fund Operating Expenses. As described in more detail above,
Jones & Babson pays the Investment Counsel fee from the fee it receives as
Investment Manager to the Fund. The proposed New Investment Counsel Agreement
provides for payment of a fee identical to the fee payable under the existing
Investment Counsel Agreement. The proposed New Management Agreement provides for
payment of a fee identical to the fee payable under the existing Management
Agreement. Total Fund operating expenses at the end of the most recent fiscal
year were .53% of average net assets. If the proposed new Investment Counsel
Agreement and the New Management Agreement had been in effect during the most
recent fiscal year, total Fund operating expenses would have been .53% of
average net assets.
The Old and the New Management Agreements, respectively, provide that
the manager and the investment counsel, including but not limited to the
officers, Directors, employees and other personnel of each, shall not be liable
to the Fund or any shareholder for anything done or omitted, except acts or
omissions involving misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed on the manager by the Old and the New Management
Agreement or for any losses that may be sustained in the purchase, holding or
sale of any security.
The Old Management Agreements between the Fund and Jones & Babson and
between Jones & Babson and David L. Babson & Co. Inc., respectively, which
became effective on September 30, 1993, were last approved by shareholders on
September 24, 1993 and last approved by the Board of Directors on October 19,
1994. The proposed New Management Agreement between the Fund and Jones & Babson
and the New Investment Counsel Agreement between Jones & Babson and UMB will
become effective on April 30, 1995, if approved by shareholders at this Special
Meeting. The Agreements were approved by the Board of Directors on February 28,
1995. The terms of the Old and New Management Agreements, respectively, provide
that the agreements will continue automatically for successive annual periods so
long as such continuance is specifically approved at least annually by the Board
of Directors of the Fund or by the vote of a majority of the outstanding voting
securities of the Fund (for the purpose of an initial approval or a continuance,
approval by the lesser of either 50% of the total voting shares of the Fund or
67% of the shares present at a shareholder meeting, if the holders of more than
50% of the outstanding shares entitled to vote at the meeting are present in
person or by proxy, shall constitute shareholder approval) and provided also
that such continuance is approved by a vote of the majority of the Directors who
are not parties to the Agreement or interested persons of any such party at a
meeting held in person and called specifically for the purpose of evaluating and
voting on such approval.
<PAGE>7
If the Board's approval is ratified by either more than 50% of the
Fund's outstanding shares entitled to vote at the meeting or by a two-thirds
majority of the shares present at such meeting if the holders of more than 50%
of the outstanding shares entitled to vote at the meeting are present in person
or by proxy, the New Management Agreement and the New Investment Counsel
Agreement will be approved. No arrangements have been made in connection with
the New Management Agreement and the New Investment Counsel Agreement with
respect to the composition of the Board of Directors of the Fund or UMB. The
Fund paid custodian fees to UMB during the most recent fiscal year in the amount
of $132,306 and $2,264 (partial period) for portfolio accounting services. These
services will continue to be provided after the New Management Agreement and the
New Investment Counsel Agreement are approved. UMB does not currently serve as
investment counsel to any other Fund having a similar investment objective. UMB
does serve as investment counsel to: UMB Stock Fund, Inc., UMB Bond Fund, Inc.,
UMB Heartland Fund, Inc. and UMB WorldWide Fund, Inc. UMB receives an investment
counsel fee from Jones & Babson in the amount of 0.35% annually for each of the
aforementioned funds. If the New Management Agreement and the New Investment
Counsel Agreement are not approved, the Board will meet and consider what
further action must be taken.
The proposed New Management Agreement between the Fund and Jones &
Babson, which includes the New Investment Counsel Agreement between Jones &
Babson and UMB is set out under Exhibit A.
Approval or disapproval of the New Management Agreement constitutes
approval or disapproval of the New Investment Counsel Agreement.
The Board of Directors recommends that shareholders vote to approve the
New Management Agreement.
(2) OTHER BUSINESS
The Board of Directors knows of no other business to be brought before
the meeting, however, if other matters properly come before the meeting, it is
intended that the persons named in the accompanying proxy will vote all proxies
not containing specific instructions to the contrary in accordance with their
best judgment on such other matters.
<PAGE>8
THE PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF
JONES & BABSON
Name and Address Principal Occupation
Larry D.Armel 1 President and Director of Jones & Babson, the
Fund and other funds managed by Jones &
Babson.
Stephen S. Soden 2 Chairman; also President, BMA Financial
Services, Inc.
Giorgio Balzer 2 Director; also, Chairman and Chief Executive
Officer Business Men's Assurance Company of
America; Director of Commerce Bancshares,
Inc. and Home Office Reference Laboratory,
Inc.
J. William Saylor 2 Director; also, President, Business Men's
Assurance Company of America; Director of
American Royal Association, Life Insurance
Marketing Research Association and St. Luke's
Hospital - Kansas City, MO.
Edward S. Ritter 2 Director; also, Vice President, Business
Men's Assurance Company of America; Director
of Preferred Physicians Mutual Risk Retention
Group and U.S. Physicians Mutual Risk
Retention group.
Robert N. Sawyer 2 Director; Senior Vice President, Business
Men's Assurance Company of America.
Vernon W. Voorhees 2 Director; Senior Vice President, Business
Men's Assurance Company of America.
Richard S. Graber 1 Senior Vice President - Marketing, Jones &
Babson.
P. Bradley Adams 1 Vice President, Chief Financial Officer and
Treasurer, Jones & Babson; Vice President and
Treasurer of the Fund and other funds managed
by Jones & Babson.
Michael A. Brummel 1 Vice President, Chief Administrative Officer,
Assistant, Secretary and Assistant Treasurer,
Jones & Babson. Vice President, Assistant
Secretary and Assistant Treasurer of the Fund
and other Funds managed by Jones & Babson.
<PAGE>9
Name and Address Principal Occupation
Martin A. Cramer 1 Vice President and Secretary, Jones & Babson,
the Fund and other funds managed by Jones &
Babson.
Ruth Evans 1 Vice President, Jones & Babson, the Fund and
other funds managed by Jones & Babson.
Elizabeth L. Allwood 1 Assistant Vice President and Assistant
Secretary, Jones & Babson.
John G. Dyer 1 Assistant Secretary and Legal Counsel, Jones
& Babson, Vice President and Legal Counsel,
the Fund and Assistant Secretary and Legal
Counsel for the other funds managed by Jones
& Babson.
Constance E. Martin 1 Assistant Vice President, Jones & Babson.
Each officer or director of the Fund who is also an officer, employee,
or director of Jones & Babson, is listed above. No officer or director of the
Fund is an officer, employee or director of UMB. UMB is a national bank
subsidiary of UMB Financial Corporation, a publicly held bank holding company.
UMB will be retained by Jones & Babson as its investment counsel to provide
research and to assist in its investment advisory duties.
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF UMB3
Directors; Don R. Armacost, Jr., J. Fred Ball, Paul D. Bartlett, Jr., Walter E.
Bixby, Mike DeFabis, Frederick M. Dierks*, Cathleen Dodson, Louis Fox*, Charles
A. Garney, Peter J. Genovese*, Robert K. Green, Jeffrey B. Hanes, Barnett C.
Helzberg, Jr., Richard F. Jones, Alexander C. Kemper, R. Crosby Kemper, R.
Crosby Kemper, III, Timothy A. Lambeth, Edward J. McShane, Jr.*, Henry Nottberg,
III, Douglas F. Page*, Edward S. Riss, Dave G. Rut Jr. James A. Sangster II*,
Samuel L. Sawyer, Charles A. Sullivan, Craig D. Sutherland, Herman R.
Sutherland, H. Stephen Taige, John W. Uhlmann, E. Frank Wars* and J. Lyle Wells,
Jr. (Advisory*).
Executive Officers
R. Crosby Kemper Chairman, Chief Executive Officer and Member
of the Management Committee
G. Richards Ahsmuhs President, Community Banking Division, a
Member of the Management Committee and
Assistant Secretary
<PAGE>10
Timothy M. Connealy Senior Vice President-Finance and a Member of
the Management Committee
Alexander C. Kemper President and a Member of the Management
Committee
Edward J. McShane, Jr. Divisional Executive Vice President, a Member
of the Management Committee and Assistant
Secretary
Douglas F. Page Executive Vice President and a Member of the
Management Committee
T. Michael Porter Senior Vice President, Director of Operations
and a Member of the Management Committee
James A. Snagster, II Divisional Executive Vice President and a
Member of the Management Committee
James C. "Pat" Thompson, Jr. Divisional Executive Vice President and a
Member of the Management Committee
Dennis L. Triplett Divisional Executive Vice President Retail
Banking Division and a Member of the
Management Committee
E. Frank Ware Executive Vice President and a Member of the
Management Committee
J. Lyle Wells, Jr. Vice Chairman of the Board and a Member of
the Management Committee
---------------------
1 Unless otherwise noted, the address of the officers and directors of
Jones & Babson is Three Crown Center, 2440 Pershing Road, Suite G-15,
Kansas City, Missouri 64108.
2 The address of the officers and directors of Business Men's Assurance
Company of American ("BMA") is BMA Tower, One Penn Valley Park, Kansas
City, Missouri 64141.
3 The address of the officers and directors of UMB, is 1010 Grand Avenue,
Kansas City, Missouri 64141.
<PAGE>11
PORTFOLIO TRANSACTIONS
Although Jones & Babson is registered as a securities broker and dealer
it does not conduct a general brokerage business. It does not execute any of the
Fund's portfolio transactions nor receive any commissions therefrom. The Fund
does not allocate its portfolio brokerage on the basis of the sale of its
shares, although brokerage firms whose customers purchase shares may participate
in brokerage commissions. Brokerage is not given to any person affiliated with
the Fund, the investment manager or the investment counsel.
Kansas City, Missouri UMB TAX-FREE MONEY MARKET FUND, INC.
1995 Martin A. Cramer, Secretary
<PAGE>12
FINANCIAL STATEMENTS
Financial statements of the Fund are on file with the Securities and
Exchange Commission, Washington, D.C. 20549. These statements appear in the
annual report of the Fund which preceded this Proxy Statement. The Fund will
furnish, without charge, a copy of the annual report and the most recent
semi-annual report succeeding the annual report, to a shareholder upon request.
A shareholder may obtain the Fund's annual and semi-annual reports by
contacting: Jones & Babson Inc, Three Crown Center, 2440 Pershing Road, Kansas
City, Missouri 64108, 1-800-422-2766.
SHAREHOLDER PROPOSALS
The Fund does not hold annual shareholder meetings. To be considered
for presentation at a shareholders' meeting, rules promulgated by the Commission
require that, among other things, a shareholder proposal be received at the
office of the Fund at least 120 calendar days in advance of the anniversary of
the release date of the proxy statement relating to the annual meeting held by
such Fund in the previous year, or if no annual meeting was held by the Fund in
the previous year, such shareholder proposal must be received by the Fund a
reasonable time before a solicitation is made.
<PAGE>13
EXHIBIT A
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
SCOUT TAX-FREE MONEY MARKET FUND, INC.
THIS AGREEMENT, made and entered into this 30th day of April 1995, by
and between SCOUT TAX-FREE MONEY MARKET FUND, INC., (a Maryland corporation,
hereinafter referred to as the "Fund") and JONES & BABSON, Inc., a corporation
organized under the laws of the State of Missouri (hereinafter referred to as
the Manager), and which Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute but one instrument.
WHEREAS the Fund was founded and incorporated by the Manager for the
purpose of engaging in the business of investing and reinvesting its property
and assets and to operate as an open-end, diversified, management investment
company, as defined in the Investment Company Act of 1940 as amended (Act),
under which it is registered with the Securities and Exchange Commission, and
WHEREAS the Manager was formed for an is engaged in the business of
supplying investment advice and management service to the Fund, as an
independent contractor and,
WHEREAS the Fund Manager desires to enter into a contractual
arrangement whereby the Manager provides investment advise and management
service to the Fund for a fee.
NOW THEREFORE, in consideration of the mutual promises herein
contained, and other good and valuable consideration, receipt of which is hereby
acknowledged, it is mutually agreed and contracted by and between the parties
hereto that:
1. The Fund hereby employs the Manager, for the period set forth in
Paragraph 5 hereof, and on the terms set forth herein, to render investment
advice and management service to the Fund, subject to the supervision and
direction of the Board of Directors of the Fund. The Manager hereby accepts such
employment and agrees, during such period, to render the services and assume the
obligations herein set forth, for the compensation herein provided. The
Management shall, for all purposes herein, be deemed to be an independent
contractor, and shall, except as provided in the Underwriting Agreement between
the
<PAGE>14
Manager and the Fund or unless otherwise expressly provided and authorized, have
no authority to act for or represent the Fund in any way, or in any other way be
deemed an agent of the Fund.
The Manager shall furnish the Fund investment management and
administrative services. Investment management shall include analysis, research
and portfolio recommendations consistent with the Fund's objectives and
policies. Administrative services shall include the services and compensation of
such members of the manager's organization as shall be duly elected officers
and/or Directors of the Fund and such other personnel as shall be necessary to
carry out its normal operations; fees of the independent Directors, the
custodian, the independent public accountant and legal counsel (but not legal
and audit fees and other costs in contemplation of or arising out of litigation
or administrative actions to which the Fund, its officers or Directors are a
party or incurred in anticipation of becoming a party); rent; the cost of a
transfer and dividend disbursing agent or similar in-house services;
bookkeeping; accounting; and all other clerical and administrative functions as
may be reasonable and necessary to maintain the Fund's records and for it to
operate as an open-end management investment company. Exclusive of the
management fee, the Fund shall bear the cost of any interest, taxes, dues, fees
and other charges of governments and their agencies including the cost of
qualifying the Fund's shares for sale in any jurisdiction, brokerage
commissions, or any other expenses incurred by it which are not assumed herein
by the Manager.
All property, equipment and information used by the Manager in the
management and administration of the Fund shall belong to the manager. Should
the management and administrative relationship between the Fund and the manager
terminate, the Fund shall be entitled to, and the manager shall provide the
Fund, a copy of all information and records in the Manager's file necessary for
the Fund to continue its functions, which shall include computer systems and
programs in use as of the date of such termination; but nothing herein shall
prohibit thereafter the use of such information, systems or programs by the
manager, so long as such does not unfairly interfere with the continued
operation of the Fund.
2. As compensation for the services to be rendered to the Fund by the
Manager under the provisions of this agreement, the Fund agrees to pay
semimonthly to the Manager an annual fee based on the average total net assets
of the Fund computed daily in accordance with its Certificate of Incorporation
and By-Laws as follows:
a. fifty one-hundredths of one percent (50/100%) of the average
total net assets of the Fund.
b. Should the Fund's normal operating expenses exclusive of taxes,
interest, brokerage commission and extraordinary costs exceed
limits established by any law, rule or regulation of any
jurisdiction in which the Fund's shares are registered for sale,
the Manager shall reimburse the Fund in the amount of the excess.
<PAGE>15
3. It is understood and agreed that the services to be rendered by the
Manager to the Fund under the provisions of the Agreement are not to be deemed
exclusive, and the Manager shall be free to render similar or different services
to others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
4. It is understood and agreed that the Directors, officers, agents,
employees, and shareholders of the Fund may be interested in the Manager as
owners, employees, agents or otherwise, and that owners, employees and agents of
the Manager may be interested in the Fund as shareholders or otherwise. It is
understood and agreed that shareholders, officers, Directors, and other
personnel of the Manager are and may continue to be officers and Directors of
the Fund, but that they receive no remuneration from the Fund solely for acting
in those capacities.
5. This Agreement shall become effective pursuant to its approval by
the Fund's Board of Directors and by the vote of a majority of the outstanding
shares of the Fund as prescribed by the Act. It shall remain in force through
the 31st day of October 1995, and thereafter may be renewed for successive
periods not exceeding one year only so long as such renewal and continuance is
specifically approved at least annually by the Board of Directors or by vote of
a majority of the outstanding shares of the Fund as prescribed by the Act, and
only if the terms and the renewal of this Agreement have been approved by a vote
of a majority of the Directors of the Fund including a majority of the Directors
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
No amendment to this Agreement shall be effective unless the terms thereof have
been approved by the vote of a majority of outstanding shares of the Fund as
prescribed by the Act and by vote of a majority of the Directors of the Fund who
are not parties to the Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval. It
shall be the duty of the Directors of the Fund to request and evaluate, and the
duty of the Manager to furnish, such information as may reasonably be necessary
to evaluate the terms of this Agreement and any amendment thereto. This
Agreement may be terminated at any time, without the payment of any penalty, by
the Directors of the Fund, or by the vote of a majority of the outstanding
voting shares of the Fund as prescribed by the Act on not more than sixty days
written notice to the Manager, and it may be terminated by the Manager upon not
less than sixty days written noice to the Fund. It shall terminate automatically
in the event of its assignment by either party unless the parties hereby, by
agreement, obtain an exemption from the Securities and Exchange Commission from
the provisions of the Act pertaining to the subject matter of this paragraph.
Any notice, request or instruction provided for herein, or for the giving of
which, the occasion may arise hereunder, shall be deemed duly given, if in
writing and mailed by registered mail, postage prepaid, addressed to the regular
executive office of the Fund or the Manager as the case may be. As used in this
Agreement, the terms "assignment," "a majority of the outstanding voting
shares," and "interest persons" shall have the same meaning as similar terms
contained in the Act.
<PAGE>16
6. It is specifically provided in this Agreement that the Manager is to
secure the services of UMB Bank, n.a. of Kansas City, Missouri (at the sole
expense of the Manager), as its Investment Counsel to furnish advice and
recommendations with respect to the purchase and sale of securities and the
making of portfolio commitments; to place at the disposal of the Manager such
statistical information as may reasonably be required and in general to
superintend the investments of the Fund, subject to the control and approval of
the Board of Directors of the Manager and the Board of Directors of the Fund.
7. The Manager shall not be liable for any error in judgment or mistake
at law for any loss suffered by the Fund in connection with any matters to which
this Agreement relates, except that nothing herein contained shall be construed
to protect the Investment Manager against any liability by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reckless disregard of its obligations or duties under this Agreement.
8. This Agreement may not be amended, transferred, assigned, sold or in
any manner hypothecated or pledged nor may any new Agreement become effective
without affirmation vote or written consent of the holders of a majority of the
shares of the Fund.
SCOUT TAX-FREE MONEY MARKET FUND, INC.
By ____________________________________
ATTEST:
____________________________ JONES & BABSON, INC.
By ____________________________________
ATTEST:
____________________________
<PAGE>17
INVESTMENT COUNSEL AGREEMENT
Between
JONES & BABSON, INC.
and
UMB BANK, n.a.
THIS AGREEMENT by and between JONES & BABSON, INC., a Missouri
corporation with its principal office at Three Crown Center, 2440 Pershing Road,
Kansas City, Missouri 64108 (hereinafter referred to as Manager) and UMB BANK,
n.a., with its principal office at 1010 Grand Avenue, Kansas City, Missouri
64141 (hereinafter referred to as Investment Counsel), is made pursuant to the
approval and direction of the parties' respective Board of Directors and may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one instrument.
WITNESSETH:
WHEREAS, the Manager has entered into a Management Agreement with the
SCOUT TAX-FREE MONEY MARKET FUND, INC. (Fund) of concurrent date to provide
management services, including investment advisory services, the Manager desires
the assistance of the Investment Counsel which can supply the following
services:
Research, analysis, advice and recommendations with respect to the
purchase and sale of securities and the making of investment commitments;
statistical information and reports as may reasonably be required, and general
assistance in the supervision of the investments of the Fund, subject to the
control of the Directors of the Fund and the Directors of JONES & BABSON, INC.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties agree as follows:
1. During the term of this Agreement, or any extension or extensions
thereof, the Investment Counsel will, to the best of its ability, furnish the
foregoing services.
2. As compensation, the Manager will pay Investment Counsel for its
services the following annual fee computed daily as determined by the Fund's
price make-up sheet and which shall be payable monthly or at such other
intervals as agreed by the parties.
<PAGE>18
a. ten one-hundredths of one percent (10/100%) of the average daily
total net assets of the Fund.
3. This Agreement shall become effective and run concurrently with the
Management Agreement of the same date between Manager and the Fund, an executed
copy of which shall be supplied to the Investment Counsel.
4. The last day of the initial period of this Agreement shall coincide
with the last day of the Management Agreement which shall be the 31st day of
October, 1995. Thereafter this Agreement may be renewed in conjunction with the
Management Agreement for successive periods not exceeding one year only so long
as such renewal and continuance is specifically approved at least annually by
the Board of Directors of the Fund or by a vote of the majority of the
outstanding voting securities of the Fund as prescribed by the Investment
Company Act of 1940 (Act) and provided further that such continuance is approved
at least annually thereafter by a vote of a majority of the Directors who are
not parties to such Agreement or interested persons (as defined by the Act) of
such party, cast in person at a meeting called for the purpose of voting on such
approval. The Investment Counsel shall provide the Manager such information as
may be reasonably necessary to assist the Directors of the Fund to evaluate the
terms of the Management Agreement. This Agreement automatically will terminate
with the Management Agreement without the payment of any penalty, upon sixty
days written notice by the Fund to the Manager that the Board of Directors or
the shareholders by vote of a majority of the outstanding voting securities of
the Fund, as provided by the Act, has terminated the Management Agreement. This
Agreement shall automatically terminate in the event of its assignment or
assignment of the Management Agreement unless such assignment is approved by the
Directors and the shareholders of the Fund as hereinbefore provided or unless an
exemption is obtained from the Securities and Exchange Commission from the
provisions of the Act pertaining to the subject matter of this paragraph. The
Manager shall promptly notify the Investment Counsel of any notice of
termination or of any circumstances which are likely to result in a termination
of the Management Agreement.
5. It is understood and agreed that the services to be rendered by the
Investment Counsel to the Manager under the provisions of this Agreement are not
to be deemed to be exclusive, and the Investment Counsel shall be free to render
similar or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby, and
provided further that the services to be rendered by the Investment Counsel to
the Manager under this Agreement and the compensation provided for in Paragraph
2 hereof shall be limited solely to services with reference to the Fund.
6. The Manager agrees that it will furnish currently to Investment
Counsel all information reasonably necessary to permit Investment Counsel to
give the advice called for under this Agreement and such information with
reference to the Fund that is reasonably necessary to permit Investment Counsel
to carry out its responsibilities under this Agreement, and the parties agree
that they will from time to time consult and make appropriate
<PAGE>19
arrangements as to specific information that is required under this paragraph
and the frequency and manner with which it shall be supplied.
7. The Investment Counsel shall not be liable for any error of judgment
or mistake at law or for any loss suffered by Manager of the Fund in connection
with any matters to which this Agreement relates except that nothing herein
contained shall be construed to protect the Investment Counsel against any
liability by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reckless disregard of its obligations or duties
under this agreement.
Each party hereby executes this Agreement as of the 30th day of April,
1995, pursuant to the authority granted by its Board of Directors.
UMB BANK, n.a.
By_________________________
ATTEST:
______________________________ JONES & BABSON, INC.
By_________________________
ATTEST:
______________________________
<PAGE>20
Please sign, date and return this proxy
promptly in the enclosed envelope.
UMB TAX-FREE MONEY MARKET FUND, INC.
Proxy for Special Meeting of Shareholders, April 24, 1995
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes
and appoints Larry D. Armel, John G. Dyer and Martin A. Cramer or either of
them, with power of substitution, as attorneys and proxies to appear and vote
all of the shares of stock standing in the name of the undersigned at the
special meeting of shareholders of UMB TAX-FREE MONEY MARKET FUND, INC. to be
held at Three Crown Center, 2440 Pershing Road, Kansas City, Missouri 64108 on
the 24th day of April, 1995, at 9:00 a.m., local time, and at any and all
adjournments thereof; and the undersigned hereby instructs said attorney to
vote:
1. The Approval of the Management Agreement between UMB Tax-Free Money
Market Fund, Inc. which also shall constitute approval of the Investment Counsel
Agreement between Jones & Babson, Inc. and UMB Bank, n.a.
FOR /_/ AGAINST /_/ ABSTAIN /_/
2. Upon any other business which may properly come before the meeting
or any other adjournment thereof. Management knows of no other such business
<PAGE>21
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED IN THE FOREGOING
ITEM 1, BUT IF NO CHOICE IS SPECIFIED, THEY WILL BE VOTED FOR APPROVAL OF ITEM
1.
Dated: ________________________, 1995
---------------------------------
(Signature of Shareholder)
---------------------------------
(Signature of Shareholder)
Signature of all joint owners is
required. Fiduciaries please indicate
your full title. If any other matters
properly come before the meeting about
which the proxy holders were not aware
prior to the time of the solicitation
authorization is given the proxy
holders to vote in accordance with the
views of management thereon.
Management is not aware of any such
matters.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND.
