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
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
ss.240.14a-11(c) orss.240.14a-12
Horizon Telcom, Inc.
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(Name of Registrant as Specified in Its Charter)
N/A
-----------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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[LOGO]
April 29, 2002
To the Stockholders of Horizon Telcom, Inc.:
Our Annual Stockholders Meeting will be held at 3:00 P.M. on Wednesday, May 15,
2002, at the offices of Horizon Technology, Inc., 1410 Industrial Drive, Gateway
Industrial Park, Chillicothe, Ohio 45601. A map is enclosed. We hope you will
attend. These continue to be exciting times for your company and this is your
opportunity to hear up-to-date reports and ask questions. As always,
refreshments will be provided.
Included with this letter are copies of our 2001 Annual Report to Stockholders,
Form 10-K, a notice of the meeting, and a proxy statement. Holders of class A
shares will also receive a form of proxy.
We look forward to seeing you on May 15.
Sincerely yours,
/s/ Robert McKell
Robert McKell
Chairman
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HORIZON TELCOM, INC.
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[LOGO]
68 EAST MAIN STREET
CHILLICOTHE, OHIO 45601-0480
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 2002
TO THE STOCKHOLDERS OF
HORIZON TELCOM, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of HORIZON
TELCOM, INC. ("Horizon") will be held at the offices of Horizon Technology,
Inc., 1410 Industrial Drive, Gateway Industrial Park, Chillicothe, Ohio 45601 on
May 15, 2002 at 3:00 p.m. (E.D.T.), for the following purposes:
1. To elect nine (9) directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and have qualified.
2. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The proxy statement dated April 29, 2002 is attached. Only record holders
of Horizon's class A common stock will be eligible to vote at the meeting. Class
B common stock is non-voting. This material is provided for the information of
all stockholders. The record date for determining the record holders of Horizon
Class A common stock entitled to notice of the meeting is April 28, 2002. The
record date for determining the record holders of Horizon Class A common stock
entitled to vote at the meeting is May 14, 2002.
If you are not able to attend the meeting and you own class A common stock,
please execute, complete, date and return the proxy in the enclosed envelope. If
you attend the meeting, you may revoke the proxy and vote in person.
By Order of the Board of Directors:
/s/ Jack E. Thompson
JACK E. THOMPSON
Secretary
Date: April 29, 2002
Copies of the Annual Report to Stockholders and the Form 10-K for the year
ended December 31, 2001 containing financial statements are enclosed.
[LOGO]
68 EAST MAIN STREET
CHILLICOTHE, OHIO 45601-0480
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 2002
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Horizon Telcom, Inc., an Ohio corporation ("Horizon"),
of proxies from holders of class A common stock for use at the 2002 Annual
Meeting of Stockholders to be held on May 15, 2002 at 3:00 p.m. (E.D.T.), at the
offices of Horizon Technology, Inc., 1410 Industrial Drive, Gateway Industrial
Park, Chillicothe, Ohio 45601.
This proxy statement and the accompanying form of proxy are being first
mailed to stockholders on or about April 29, 2002. The stockholder giving the
proxy may revoke it at any time before it is exercised at the meeting by: (i)
delivering to the Secretary of Horizon a written instrument of revocation
bearing a date later than the date of the proxy; (ii) duly executing and
delivering to the Secretary a subsequent proxy relating to the same shares; or
(iii) attending the meeting and voting in person; however, attendance at the
meeting will not in and of itself constitute revocation of a proxy. Any proxy
which is not revoked will be voted at the annual meeting in accordance with the
stockholder's instructions. If a stockholder returns a properly signed and dated
proxy card but does not mark any choices on one or more items, his or her shares
will be voted in accordance with the recommendations of the Board of Directors
as to such items. The proxy card gives authority to the proxies to vote shares
in their discretion on any other matter properly presented at the annual
meeting.
Proxies are being solicited from holders of Horizon's class A common stock
by mail. Holders of class B common stock are not entitled to vote. Horizon will
pay all expenses in connection with the solicitation, including postage,
printing and handling, and the expenses incurred by brokers, custodians,
nominees and fiduciaries in forwarding proxy material to beneficial owners. It
is possible that directors, officers and regular employees of Horizon may make
further solicitation personally or by telephone, telegraph or mail. Directors,
officers and regular employees of Horizon will receive no additional
compensation for any such further solicitation.
Only holders of record of Horizon's class A common stock are entitled to
vote at the annual meeting. The record date for determining class A record
stockholders entitled to notice of the meeting is April 28, 2002. The record
date for determining class A record stockholders entitled to vote at the meeting
is May 14, 2002. On April 28, 2002, Horizon had outstanding a total of 90,552
shares of class A common stock, excluding treasury stock held by Horizon, which
is not entitled to vote. Each share of class A common stock is entitled to one
vote on each matter to be considered at the annual meeting. However, class A
stockholders are entitled to vote cumulatively in the election of directors, as
described below. A majority of the outstanding shares of class A common stock,
present in person or represented by proxy at the annual meeting, will constitute
a quorum for the transaction of business at the annual meeting. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business.
Nominees for election as directors will be elected by a plurality of the
votes cast by the holders of shares entitled to vote in the election.
Accordingly, the nine (9) nominees receiving the highest vote totals will be
elected as directors of Horizon at the annual meeting. With respect to election
of directors, abstentions, votes "withheld" and broker non-votes will be
disregarded and have no effect on the outcome of the vote. There are no rights
of appraisal or similar dissenter's rights with respect to any matter to be
acted upon pursuant to this proxy statement.
Votes cast by proxy or in person at the annual meeting will be counted by
the persons appointed by Horizon to act as election inspectors for the meeting.
The inspectors will ascertain the number of shares outstanding and the voting
power of each of such shares, determine the shares represented at the meeting
and the validity of proxies and ballots, count all votes and ballots and perform
certain other duties.
CUMULATIVE VOTING
Class A stockholders are entitled to vote their shares cumulatively in the
election of directors, so long as the following procedure is followed. At least
one class A stockholder must demand cumulative voting by providing notice in the
following manner:
o Notice must be in writing.
o The notice must state that the holder desires the voting at the
election of directors to be cumulative.
o The notice must be addressed to either the president, a vice
president, or the secretary of Horizon, at the address of Horizon's
principal executive offices.
o The notice must be mailed no later than 3:00 p.m. on Monday, May 13,
2002 (at least 48 hours before the time of the meeting).
The demand must be announced at the commencement of the meeting by the chairman,
the secretary, the shareholder who gave the notice, or someone on behalf of the
shareholder who gave the notice. If there is no such notice and demand, votes
may not be cumulated.
If voting in the election is cumulative, the number of votes to which each
class A shareholder otherwise is entitled (the number of shares held) will be
multiplied by nine (9) (the number of directors to be elected). Each shareholder
will then be free to allocate that aggregate number of votes in whatever way the
shareholder sees fit. Thus, the shareholder could cast the entire aggregate
number all in favor of one candidate, if the shareholder so chose.
If the election of directors entails cumulative voting, the proxy holders
appointed by the enclosed proxy card intend to cumulate the votes represented by
the proxies. Absent contrary instructions, the proxy holders will evenly divide
proxy votes among the nominees named below, unless it appears that casting the
votes this way makes it less likely that all of such nominees will be elected.
In that event, the proxy holders will cast the votes in such a way as seems
likely to elect as many of such nominees as possible.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of Horizon recommends a vote FOR the election of
each of the nominees named below for election as director.
ELECTION OF DIRECTORS
The proxy holders intend to vote FOR election of the nominees named below
as directors of Horizon, unless otherwise specified on the proxy card signed by
the shareholder. Directors of Horizon elected at the annual meeting to be held
on May 15, 2002 will hold office until the next annual meeting or until their
successors are elected and qualified.
Each of the nominees has consented to serve on the Board of Directors, if
elected. Should any nominee for the office of director become unable to accept
nomination or election, which is not anticipated, it is the intention of the
persons named in the proxy, unless otherwise specifically instructed in the
proxy, to vote for the election of such other person as the Board of Directors
may recommend.
The name and age of each nominee and the period during which such person
has served as a director are set forth below:
2
SERVICE AS
NAME OF NOMINEE AGE DIRECTOR POSITION
- --------------- --- ---------- --------
Robert McKell 78 Since 1996 Chairman of the Board, Director
Thomas McKell 66 Since 1996 President, Director, President of Chillicothe Telephone
Jack E. Thompson 68 Since 1996 Secretary, Director
Joseph S. McKell 76 Since 1996 Director
David McKell 74 Since 1996 Director
Helen M. Sproat 69 Since 1996 Director
John E. Herrnstein(1) (2) 64 Since 1996 Director
Joseph G. Kear(1) (2) 78 Since 1996 Director
Jerry B. Whited(1) 52 Since 2001 Director
________________________
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
The biographical profiles of, and relationships among, the director
nominees are incorporated herein by reference from Item 10 of Horizon's Form
10-K, a copy of which is enclosed.
INFORMATION ABOUT THE BOARD OF DIRECTORS
MEETINGS OF THE BOARD OF DIRECTORS--During 2001 there were four meetings of
the Board of Directors. Each incumbent director attended more than 75% of all
meetings of the Board of Directors and any committees on which that director
served.
DIRECTOR COMPENSATION--Directors who are not otherwise employed by Horizon
or its subsidiaries receive $2,350 per quarter as director compensation. Robert
McKell, Thomas McKell, and Jack Thompson receive $50 per quarter.
BOARD COMMITTEES
Audit Committee. Horizon currently has an audit committee which is
responsible for recommending to the Board of Directors the engagement of its
independent public accountants and reviewing with the independent auditors the
scope and results of the audits, its internal accounting controls, audit
practices and the professional services furnished by the independent auditors.
The audit committee, initially organized in November 2001, is currently
comprised of three members, Messrs. Whited, Herrnstein and Kear. It met in
November 2001, February 2002, and March 2002.
Compensation Committee. Horizon also has a compensation committee, which is
responsible for reviewing and approving all compensation arrangements for its
officers, as well as administering the stock option plan. The compensation
committee is currently comprised of two members, Messrs. Herrnstein and Kear. It
did not meet during 2001, but did meet in February 2002.
Nominating Committee. Horizon does not have a nominating committee.
Instead, the entire Board of Directors performs the functions of a nominating
committee, at regularly scheduled and special meetings of the Board.
3
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission (the "Commission") or subject to Regulations 14A or 14C of the
Commission or to the liabilities of Section 18 of the Securities and Exchange
Act of 1934 (the "Exchange Act") and shall not be deemed incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
notwithstanding any general incorporation by reference of this Proxy Statement
into any other document.
The Board of Directors maintains an Audit Committee comprised of three of
the Company's outside directors. The Board of Directors and the Audit Committee
believe that the Audit Committee's current members are all "independent
directors" as that term is defined by Rule 4200(a)(14) of the National
Association of Securities Dealers, Inc. The Board of Directors has reviewed a
written Charter of the Audit Committee, a copy of which is attached as Appendix
A hereto, and management expects the Board of Directors to approve it at the
meeting of the Board in May 2002.
The Audit Committee oversees the Company's financial process on behalf of
the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. The independent public accountants are responsible for expressing an
opinion on the conformity of the financial statements with accounting principles
generally accepted in the United States. In fulfilling its oversight
responsibilities, in February 2002, the Audit Committee reviewed and discussed
the audited financial statements in the Annual Report on Form 10-K for the year
ended December 31, 2001 with management and the independent auditors, including
without limitation, a discussion with the independent public accountants of the
matters required to be discussed with the Audit Committee under Statement on
Auditing Standards No. 61. In addition, the Audit Committee has discussed with
the independent public accountants the auditors' independence from management
and Horizon, including the matters in the written disclosures and the letter
from the independent public accountants required by the Independence Standards
Board, Standard No. 1.
Although Mr. Whited is a certified public accountant, the other members of
the Audit Committee are not professionally engaged in the practice of auditing
or accounting and are not experts in the fields of accounting or auditing,
including in respect of auditor independence. Furthermore, Mr. Whited is not
engaged as the Company's independent public accountant. Members of the Committee
rely without independent verification on the information provided to them and on
the representations made by management and the independent public accountants.
Accordingly, the Audit Committee's oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting principles or appropriate internal control and procedures
designed to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's considerations and discussions
referred to above do not assure that the audit of the Company's financial
statements has been carried out in accordance with auditing standards generally
accepted in the United States, that the financial statements are presented in
accordance with accounting principles generally accepted in the United States or
that the Company's auditors are in fact "independent."
In reliance on the reviews and discussion referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 for filing with Securities and Exchange
Commission.
AUDIT COMMITTEE
Jerry B. Whited, Chairman
John E. Herrnstein
Joseph G. Kear
The Company incurred the following fees for services performed by Arthur
Andersen LLP in 2001:
4
AUDIT FEES
The audit fees billed or expected to be billed for the audit of the
Company's consolidated financial statements for the year ended December 31,
2001, including reviews of interim financial statements included in the
Company's quarterly reports on Form 10-Q during the same period were $449,715.
Approximately 39% of these fees were incurred and paid by Horizon PCS.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Arthur Andersen LLP did not render any services related to financial
information systems design and implementation for the year ended December 31,
2001.
ALL OTHER FEES
Fees for audit-related work were $292,835 for the year ended December 31,
2001 and included audits of employee benefit plans, assistance with offering
memorandums, SEC filings and internal audit services. Aggregate fees billed for
other services rendered by Arthur Andersen LLP for the year ended December 31,
2001 were $272,645, primarily for tax compliance and consulting work. Aggregate
fees billed for audit-related and all other services for the year ended December
31, 2001 were $565,480. Of these, approximately 64% were incurred and paid by
Horizon PCS.
The Audit Committee considered whether the payments made to Horizon's
independent public accountants for non-audit services for 2001 are compatible
with maintaining such auditors' independence, and concluded they are compatible.
REPORT OF THE BOARD OF DIRECTORS AND
THE COMPENSATION COMMITTEE
The following Report of the Compensation Committee shall not be deemed to
be "soliciting material" or to be "filed" with the Commission or subject to
Regulations 14A or 14C of the Commission or to the liabilities of Section 18 of
the Exchange Act and shall not be deemed incorporated by reference into any
filing under the Securities Act of 1933 or the Exchange Act, notwithstanding any
general incorporation by reference of this Proxy Statement into any other
document.
Horizon's Board of Directors historically took a long-term view toward
overall compensation levels, consistent with the long-term commitment of most of
its personnel, and compensated its key management personnel with annual cash
salaries plus bonuses. Factors taken into consideration in setting salary and
bonus levels included experience, performance, responsibility and
qualifications. All of these factors were considered subjectively, with no
particular emphasis or weight given to any one factor.
The Company has not traditionally used stock as compensation, because the
Company was closely held. However, in 1999 it established the 1999 Stock Option
Plan, which permits granting both incentive stock options and nonqualified stock
options, for class B common stock to employees. The maximum number of shares
issuable is 10,000 shares of class B common stock. In 1999, the Company granted
options to purchase 950 shares of class B common stock at an exercise price of
$60.00 per share. No options were granted in 2000 or 2001.
During 2001, the Board of Directors reviewed and approved the compensation
of Robert McKell, Thomas McKell and Jack Thompson, the Chairman of the Board,
the President and the Secretary of Horizon, respectively. Robert McKell and
Thomas McKell, with their families, already hold significant amounts of stock in
Horizon. The Board of Directors therefore believes they do not need additional
stock-based incentives to maximize shareholder value. However, in recognition of
his contributions to the Company, Jack Thompson was granted options to purchase
150 shares of class B common stock in 1999, under the 1999 Stock Option Plan.
The Compensation Committee, formed in November 2001, is to consider and
establish compensation policies, specifically setting salary, annual incentive
levels, and long-term incentive levels for the Chairman of the Board, President
5
and the Secretary. The Compensation Committee plans to follow substantially the
same philosophy as the Board of Directors in determining compensation.
The compensation of the executive officers of Horizon PCS is determined by
Horizon PCS' Board of Directors. The Board of Directors and Compensation
Committee note that several of Horizon PCS' directors are third-party investors.
As such, they feel these investor/directors have an interest in maintaining
balance between providing incentives and avoiding excessive compensation.
Compensation of the Chief Executive Officer
The annual base salary of the Chief Executive Officer is determined by the
Board of Directors in recognition of his leadership role in formulating and
executing strategies for responding to the challenges of our industry, and their
assessment of his past performance and expectations for his future contributions
in leading the Company. The 2001 base salary was not set in response to
attainment of any specific goal by the Company, although the Board of Directors
took into consideration his individual contributions to the Company's
performance.
Compliance with Code Section 162(m)
The maximum amount which an employer may claim as a compensation deduction
with respect to certain employees in a given fiscal year, pursuant to Section
162(m) of the Code is $1.0 million, unless an exemption for performance-based
compensation is met. The Compensation Committee believes it is unlikely that any
executive officers of the Company will, in the near future, receive in excess of
$1.0 million in aggregate compensation, other than those individuals with
respect to whom the performance-based compensation exemption has been satisfied.
BOARD OF DIRECTORS COMPENSATION COMMITTEE
Robert McKell Helen M. Sproat John E. Herrnstein, Chairman
Thomas McKell John E. Herrnstein Joseph G. Kear
Jack E. Thompson Joseph G. Kear
Joseph S. McKell Jerry B. Whited
David McKell
EXECUTIVE COMPENSATION AND RELATED PARTY TRANSACTIONS
Information regarding executive compensation and related party transactions
is incorporated by reference to Items 11 and 13 of Horizon's Form 10-K, a copy
of which is enclosed.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Horizon's executive officers and
directors and persons who beneficially own more than 10% of Horizon's stock to
file initial reports of ownership and reports of changes in ownership with the
Commission and the National Association of Securities Dealers, Inc. Executive
officers, directors and greater than 10% beneficial owners are required by
Commission regulations to furnish Horizon with copies of all Section 16(a) forms
they file.
Based solely on its review of copies of forms received by it pursuant to
Section 16(a) of the Exchange Act, or written representations from certain
reporting persons, Horizon believes that during 2001, all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
10% beneficial owners were complied with, except that Mr. Whited filed one late
Form 3 and Mr. Gates failed to file a Form 3 prior to his resignation as a
director.
6
OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS
AND CERTAIN EXECUTIVE OFFICERS
Information regarding ownership of Horizon's common stock by principal
stockholders, directors and certain executive officers is incorporated herein by
reference to Item 12 of Horizon's Form 10-K, a copy of which is enclosed.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Arthur Andersen LLP has been Horizon's independent
certified public accountants for more than 35 years, and has been selected for
the current year. Approval or selection of Horizon's independent certified
public accountants is not submitted for a vote at the Annual Meeting of
Stockholders. Horizon's Board of Directors has historically selected the
independent certified public accountants, and the Board believes that it would
be to the detriment of Horizon and its stockholders for there to be any
impediment, such as selection or ratification by the stockholders, to the
Board's exercising its judgment to remove Horizon's independent certified public
accountants if, in its opinion, such removal is in the best interest of Horizon
and its stockholders.
Horizon does not expect a representative from the accounting firm of Arthur
Andersen LLP to attend the Annual Meeting of Stockholders.
STOCKHOLDER PROPOSALS FOR
NEXT YEAR'S ANNUAL MEETING
In order for a holder of Class A shares to present a proposal to be
considered for inclusion in Horizon's proxy statement and form of proxy for the
2003 Annual Meeting of Stockholders, as provided by Rule 14a-8 of the Commission
(promulgated under the Exchange Act), Horizon must receive the proposal by
December 30, 2002. Proxy holders will have discretionary voting authority with
regard to any stockholder proposal brought before the 2003 annual meeting unless
Horizon receives notice of the proposal by March 15, 2003. If the date of the
2003 annual meeting is advanced or delayed by more than 30 calendar days from
May 15, Horizon will inform the stockholders in a timely manner that the date
has changed, and provide new dates by which it must receive stockholder
proposals.
ANNUAL REPORT
Copies of Horizon's 2001 Annual Report and Form 10-K are being mailed with
this Proxy Statement. However, except as specifically incorporated by reference,
they are not a part of this proxy statement. For free, additional copies of the
Annual Report and Form 10-K, including the financial statements and schedules
(but not including the exhibits), send your request in writing to:
HORIZON TELCOM, INC.
68 EAST MAIN STREET
CHILLICOTHE, OHIO 45601-0480
ATTN: MS. BETTY UHRIG
7
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. HOLDERS OF CLASS A COMMON
STOCK WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO SIGN,
COMPLETE, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE. YOU NEED NOT
AFFIX POSTAGE.
By Order of the Board of Directors
/s/ Jack E. Thompson
JACK E. THOMPSON
Secretary
Dated: April 29, 2002
8
APPENDIX A
HORIZON TELCOM, INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee (the "Committee") shall provide assistance to the Board of
Directors of Horizon Telcom, Inc. (the "Corporation") in fulfilling their
responsibility to the shareholders with respect to oversight of the accounting
and financial reporting practices, the quality and integrity of the financial
reports, the adequacy of the systems of internal controls, and the independence
and performance of the internal audit department and independent auditor of the
Corporation and its subsidiaries.
COMPOSITION
The Committee shall be composed of a minimum of three Directors, including a
Chairperson. Each of the Committee members shall meet the independence
requirements of the Nasdaq Stock Market, Inc. (the "Nasdaq"). In accordance with
Nasdaq requirements, all members of the Committee upon appointment or within a
reasonable time after appointment to the Committee shall be "financially
literate," i.e., able to read and understand fundamental financial statements,
including the Corporation's balance sheet, income statement and cash flow
statement, and at least one member of the Committee shall have past employment
experience in finance or accounting, requisite professional certification in
accounting, or other comparable experience or background, including a current or
past position as a chief executive or financial officer or other senior officer
with financial oversight responsibilities.
MEETINGS
The Committee shall meet four times per year or more frequently as circumstances
require. The Committee may ask members of management or others to attend
meetings and provide pertinent information as necessary. The Committee shall
keep written minutes of its meetings.
FUNCTION
The Committee's function is one of oversight and review, and it is not expected
to audit the Corporation, to control the Corporation's accounting or financial
practices or to define the standards to be used in preparation by management of
the Corporation's financial statements.
In carrying out its oversight and review responsibilities, the Committee shall:
o maintain direct lines of communication between itself, the Board of
Directors, the independent auditor, the internal audit department, the
financial and senior management of the Corporation and legal counsel.
o annually review and recommend to the Board of Directors the
independent auditor, which is ultimately accountable to the Committee
and the Board of Directors, to audit the financial statements of the
Corporation.
o receive on an annual basis from the independent auditor the written
disclosures and statement, as required by Independence Standards Board
Standard 1, Independence Discussions With Audit Committees, regarding
the auditor's independence, actively engage in a dialogue with the
independent auditor with respect to any disclosed relationships or
services that may impact the objectivity and independence of the
independent auditor, and recommend, if necessary, that the Board of
Directors take appropriate action to oversee that the Corporation has
engaged an independent auditor.
A-1
o review as required legal and regulatory matters including reports
received from regulators that may have a material impact on the
Corporation's financial statements.
o meet with the independent auditor and management of the Corporation
prior to the conduct of the annual financial statement audit to review
the scope of the proposed audit for the current year.
o discuss with management and the independent auditor the Corporation's
quarterly financial statements prior to the filing of its Quarterly
Report on Form 10-Q with the Securities and Exchange Commission (the
"SEC"). The discussions would properly include issues concerning
significant adjustments, management judgments and accounting
estimates, significant new accounting policies and disagreements with
management.
o review and discuss with management the Corporation's audited annual
financial statements and the independent auditor's opinion rendered
with respect to such financial statements.
o discuss with the independent auditor the matters required to be
discussed pursuant to Statement on Auditing Standards No. 61 (SAS 61),
Communications With Audit Committees, as amended, relating to the
conduct of the annual audit, including the quality, not just the
acceptability, of the Corporation's accounting principles and
underlying estimates in its audited financial statements. The
discussions under SAS 61 would properly include significant proposed
and actual changes to the Corporation's accounting principles or
applications thereof. The Committee shall also discuss with the
independent auditor the last peer review and the status of significant
litigation or disciplinary actions by the SEC or others.
o prepare and review the Audit Committee Report, for inclusion in the
Corporation's annual proxy statement. The Audit Committee Report shall
state whether the Audit Committee:
1. has reviewed and discussed the audited consolidated financial
statements with management;
2. has discussed with the independent auditor the matters required
to be discussed by SAS 61, as amended;
3. has received the written disclosures and statement from the
independent auditor required by Independence Standards Board
Standard 1, as amended, and has discussed with the auditor the
independence of the auditor; and
4. has recommended to the Board of Directors, based on the
Committee's review and discussion of items 1 through 3 above,
that the Corporation's consolidated financial statements be
included in the Annual Report on Form 10-K for the last fiscal
year for filing with the SEC.
o review annually the internal audit department or accounting department
of the Corporation including the independence and authority of its
reporting obligations, the proposed plans of audit, and the
coordination of such plans with the independent auditor and the
Corporation's accounting and financial human resources.
o review with the independent auditor, the internal audit department,
and financial and accounting personnel, the adequacy and effectiveness
of the accounting and financial controls of the Corporation, any
recommendations for the improvement of such internal controls or
particular areas where new or additional controls or procedures are
desirable.
o receive prior to each Committee meeting, a summary of findings from
completed internal audits and a progress report on the approved
internal audit plan, with explanations for any deviations from the
original plan.
o provide sufficient opportunity for the internal audit department and
the independent auditor to meet with the members of the Committee
without members of management present.
o discuss with the Board of Directors significant matters from each
Committee meeting.
A-2
o investigate or authorize an investigation of any matter brought to the
Committee's attention within the scope of its duties, with the power
to retain independent accountants, counsel, or others for this
purpose.
o review and reassess the adequacy of this Committee's charter on an
annual basis and recommend proposed changes to the Board of Directors
for approval.
o review such other matters in relation to the financial affairs of the
Corporation and its internal and external audits as the Board of
Directors or the Committee considers appropriate.
A-3
HORIZON TELCOM, INC.
PROXY - CLASS A COMMON STOCK
ANNUAL MEETING MAY 15, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Robert McKell, Jack
E. Thompson and Thomas McKell, and each of them, as proxies, each with the power
to appoint his substitute, and hereby authorizes each of them to represent and
to vote, as designated herein, all the shares of common stock of Horizon Telcom,
Inc. ("Horizon") held of record by the undersigned on May 14, 2002, at the
Annual Meeting of Stockholders to be held on May 15, 2002 or any adjournment
thereof (the "Meeting").
THE PROXIES SHALL VOTE AS SPECIFIED BY THE STOCKHOLDER, OR IF NO INDICATION IS
MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF ALL NOMINEES FOR DIRECTOR NAMED
HEREIN AND IN ACCORDANCE WITH ITEM 2. IF VOTING FOR DIRECTORSHIPS IS CUMULATIVE
AND THE UNDERSIGNED HAS NOT INDICATED OTHERWISE, THEN THE PROXIES WILL HAVE FULL
DISCRETION AND AUTHORITY TO VOTE CUMULATIVELY AND, IN THEIR SOLE DISCRETION, TO
ALLOCATE VOTES AMONG ANY OR ALL OF THE NOMINEES.
1. Election of Directors
|_| FOR all of the nominees |_| FOR the nominees listed below |_| WITHHOLD AUTHORITY
listed below except as marked to the contrary to vote for all nominees listed below
(Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, strike a
line through that nominee's name in the list below)
DIRECTOR NOMINEES: John E. Herrnstein Joseph G. Kear David McKell Joseph S. McKell Robert McKell
Thomas McKell Helen M. Sproat Jack E. Thompson Jerry B. Whited
2. In the discretion of the proxies, upon such other business as may
properly come before the Meeting or any adjournment thereof.
Dated ______________, 2002 ________________________________________
________________________________________
Signature(s)
(Stockholders should sign exactly as name appears on stock
certificate. Where there is more than one owner, each should
sign. Executors, Administrators, Trustees and others signing
in a representative capacity should so indicate.)
If the address shown is incorrect, please make changes below:
____________________________________
Street
____________________________________
City
____________________________________
State & Zip
1457990v6