SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check to 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 Rule 14a-11(c) or Rule 14a-12
INTERNATIONAL SMART SOURCING, INC.
(Name of Registrant as Specified in its Charter)
(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)(4) and O-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 O-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:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any partof the fee is offset as provided by Exchange Act
Rule O-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>
INTERNATIONAL SMART SOURCING, INC.
320 Broad Hollow Road
Farmingdale, NY 11735
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 2000
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders (the "Annual
Meeting") of International Smart Sourcing, Inc. (the "Company") will be held on
Thursday, June 15 at 9:00 a.m. New York time at the Huntington Hilton, 598 Broad
Hollow Road, Melville, NY 11747, for the following purposes :
1. To elect six directors of the Company to serve until the 2001
Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified.
2. To consider and act upon a proposal to approve an amendment to
the Company's 1998 Stock Option and Grant Plan (the "Grant Plan")
to increase the total number of shares of common stock, par value
$.001 per share, of the Company (the "Common Stock") that may be
issued under the Grant Plan from 300,000 to 800,000.
3. To consider and act upon a proposal to amend the Certificate of
Incorporation of the Company to change the name of the Company
from International Smart Sourcing, Inc. to ChinaB2Bsourcing.com.
Inc.
4. To consider and act upon any other matters that may properly be
brought before the Annual Meeting and at any adjournments or
postponements thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on the
date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on April 28, 2000 as the
record date for determining the stockholders entitled to notice of and to vote
at the Annual Meeting and at any adjournments or postponements thereof. Only
stockholders of record of the Common Stock at the close of business on that date
will be entitled to notice of and to vote at the Annual Meeting and at any
adjournments or postponements thereof.
You are requested to fill in and sign the enclosed form of proxy, which is being
solicited by the Board of Directors of the Company, and to mail it promptly in
the enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
Harry Goodman
Secretary
Farmingdale, New York
April 28, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE, AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID
ENVELOPE PROVIDED. IF YOU ARE A STOCKHOLDER OF RECORD AND YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
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<PAGE>
INTERNATIONAL SMART SOURCING, INC.
320 Broad Hollow Road
Farmingdale, NY 11735
PROXY STATEMENT
FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 2000
April 28, 2000
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of International Smart Sourcing, Inc. (the "Company")
for use at the 2000 Annual Meeting of Stockholders of the Company to be held on
Thursday, June 15, 2000, and at any adjournments or postponements thereof (the
"Annual Meeting"). At the Annual Meeting, stockholders will be asked to vote
upon the election of six directors of the Company, to consider and act upon a
proposal to approve an amendment to the Company's 1998 Stock Option and Grant
Plan (the "Grant Plan"), to consider and act upon a proposal to amend the
Certificate of Incorporation of the Company (the "Certificate of Incorporation")
to change the name of the Company, and to act upon any other matters properly
brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
Card are first being sent to stockholders on or about April 28, 2000. The Board
of Directors has fixed the close of business on April 28, 1999 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting (the "Record Date"). Only stockholders of record of the
Company's common stock, par value $.001 per share (the "Common Stock"), at the
close of business on the Record Date will be entitled to notice of and to vote
at the Annual Meeting. Holders of Common Stock outstanding as of the close of
business on the Record Date will be entitled to one vote for each share held by
them.
The presence, in person or by proxy, of holders of at least a majority of the
total number of shares of Common Stock outstanding and entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Both abstentions and broker non-votes (as defined below) will be
counted as present in determining the presence of a quorum. A plurality of votes
cast shall be sufficient for the election of directors. Abstentions and broker
non-votes will be disregarded in determining the "votes cast" for purposes of
electing directors and will not affect the election of the candidates receiving
a plurality of votes. The affirmative vote of the holders of a majority of the
shares of Common Stock present or represented and entitled to vote is required
to approve the amendment to the Grant Plan and the amendment to the Certificate
of Incorporation. Abstentions will be included in determining the number of
shares of Common Stock present or represented and entitled to vote for purposes
of approval of the proposal to amend the Grant Plan and the proposal to the
Certificate of Incorporation, and will therefore have the effect of votes
"against" such proposals. Broker non-votes will not be counted in determining
the number of shares of Common Stock present or represented and entitled to vote
to approve the amendment to the Grant Plan and the amendment to the Certificate
of Incorporation and will therefore not have the effect of votes either "for" or
"against" such proposals. A "broker non-vote" is a proxy from a broker or other
nominee indicating that such person has not received instructions from the
beneficial owner or other person entitled to vote the shares which are the
subject of the proxy on a particular matter with respect to which the broker or
other nominee does not have discretionary voting power.
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<PAGE>
Stockholders of the Company are requested to complete, sign, date, and promptly
return the accompanying Proxy Card in the enclosed, postage-prepaid envelope.
Shares represented by a properly executed proxy received prior to the vote at
the Annual Meeting and not revoked will be voted at the Annual Meeting as
directed on the proxy. If a properly executed proxy is submitted and no
instructions are given, the proxy will be voted FOR the election of the nominees
for director of the Company named in this Proxy Statement and FOR the proposals
to approve the amendments to the Grant Plan and the Certificate of
Incorporation. It is not anticipated that any matters other than the election of
directors and the amendments to the Grant Plan and the Certificate of
Incorporation will be presented at the Annual Meeting. If other matters are
presented, proxies will be voted in accordance with the discretion of the proxy
holders.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above; by filing a duly executed proxy
bearing a later date; or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not such stockholder has previously
given a proxy, but the presence (without further action) of a stockholder at the
Annual Meeting will not constitute revocation of a previously given proxy.
The Company's 1999 Annual Report, including audited financial statements for the
fiscal year ended December 31, 1999 ("Fiscal 1999"), is being mailed to
stockholders concurrently with this Proxy Statement. The Annual Report, however,
is not part of the proxy solicitation materials.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of six members. At the
Annual Meeting, six directors will be elected to serve until the 2001 Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualified. The Board of Directors has nominated Andrew Franzone, David
Kassel, Harry Goodman, Bao-Wen Chen, Carl Seldin Koerner and Mitchell Solomon
(each a "Nominee") to serve as directors. Each of the Nominees is currently
serving as a director of the Company. The Board of Directors anticipates that
each of the Nominees will serve, if elected, as a director. However, if any
Nominee is unable to accept election, the proxies will be voted for the election
of such other person or persons as the Board of Directors may recommend. The
Board of Directors will consider a Nominee for election to the Board of
Directors recommended by a stockholder of record if the stockholder submits the
nomination in compliance with the requirements of the Company's By-laws (the
"By-laws"). See "Other Matters-Stockholder Proposals" for a summary of these
requirements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
---
Information Regarding the Directors/Nominees
The names, ages, and a description of the business experience, principal
occupation and past employment during the last five years of each of the
Nominees are set forth below.
Name Age Position
Andrew Franzone 62 Chief Executive Officer and President,
Director
David L. Kassel (1)(2) 64 Chairman of the Board of Directors
Harry Goodman 73 Vice President and Secretary, Director
Bao-Wen Chen 32 Director
Carl Seldin Koerner (1)(2) 50 Director
Mitchell Solomon (1)(2) 40 Director
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
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<PAGE>
Andrew Franzone has served as President of Electronic Hardware Corp., a wholly
owned subsidiary of the Company ("EHC") since 1987. Mr. Franzone has also served
as President of Allen Field Company, Inc.("AFC") since 1984. Mr. Franzone served
as Chairman of the Board of Directors and President of Ackerman Bodnar Corp., a
manufacturer of interior aircraft lighting, from 1974 through 1983.
David L. Kassel founded EHC in 1970. Mr. Kassel has served as Chairman of EHC
since 1975 and President of Compact Disc Packaging Corp., a wholly owned
subsidiary of the Company ("CDP") since 1995. From 1983 until 1995, he was
Chairman of the Board of Directors of American Safety Closure Corp., a company
engaged in the manufacturing of bottle caps. Mr. Kassel has been the Chairman
and principal stockholder of AFC since 1984. Mr. Kassel has been the Chairman of
Memory Protection Devices, Inc., a company engaged in the manufacturing of
devices for the protection of computer memory, since 1987. Mr. Kassel has been a
partner in K&G Realty Associates, a privately held real estate company, since
1978.
Harry Goodman served as Vice President of EHC since 1986. Mr. Goodman served as
President of EHC from 1976 to 1986 and began working as an officer of EHC in
1970. Mr. Goodman has been a partner at K&G Realty Associates since 1978. Mr.
Goodman has served as an officer of AFC since 1984. Mr. Goodman has served as an
officer of Memory Protection Devices, Inc. since 1987.
Bao-Wen Chen joined the Company in 1998 as a director. Ms. Chen currently serves
as the president of B.C. China Business Consulting, Inc., a partner of China
Trade Limited and Secretary General of the U.S.-China Economics and Trade
Promotion Council. In 1995, Ms. Chen formed B.C. China Business Consulting,
Inc., a provider of advisory and consulting services to clients engaging in
transactions between U.S. and Chinese companies, and currently serves as its
president. In January 1998, Ms. Chen became a partner of China Trade Limited, a
company comprised of U.S. businessmen, international attorneys and U.S. resident
Chinese nationals formed to assist clients in representation and trade, sales
and distribution and strategic service in transactions between U.S. and Chinese
companies. Since 1992, Ms. Chen has served as Secretary General of the U.S.China
Economics and Trade Promotion Council, a non-profit government trade
organization providing a forum to promote economic exchange and trade between
Chinese and U.S. companies.
Carl Seldin Koerner joined the Company in 1998 as a director. Mr. Koerner has
been a practicing attorney since 1976 and is a managing partner in the law firm
of Koerner Silberberg & Weiner, LLP. Mr. Koerner established Koerner Silberberg
& Weiner, LLP, in 1986 and has served as counsel to the Company since 1976. Mr.
Koerner has served as a principal of Koerner Kronenfeld Partners, LLC, a
production company, since 1996 and has served on the board of directors of ASI
Solutions Incorporated (NASDAQ: ASIS), a human resources outsourcing firm, since
1997.
Mitchell Solomon joined the Company in 1998 as a director. Mr. Solomon has
served as President and director of Eby Electro Inc., a privately held
corporation, since 1993 and serves as President and director of Aspro Technology
Inc. and ECAM Technology Inc., both privately held corporations.
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<PAGE>
Board Committees
The Board of Directors of the Company has established a compensation committee
(the "Compensation Committee") and an audit committee (the "Audit Committee").
The Compensation Committee, which consists of David L. Kassel and two
non-employee directors, Carl Seldin Koerner and Mitchell Solomon, determines the
salaries and bonuses of the Company's executive officers. The Compensation
Committee also administers the Company's 1998 Stock Option and Grant Plan. Mr.
Kassel, Mr. Koerner, and Mr. Solomon also serve as members of the Audit
Committee. The Audit Committee recommends the appointment of auditors and
oversees the accounting and audit functions of the Company.
Meetings of the Board
During Fiscal 1999, the Board of Directors met three times. During Fiscal 1999,
each director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors (held during the period for which such
director served on the Board of Directors) and (ii) the total number of meetings
of all committees of the Board of Directors on which such director served
(during the periods for which such director served on such committee or
committees).
Compensation of Directors
Directors of the Company who are also employees receive no additional
compensation for their service as directors. Non employee Directors of the
Company receive a fee of $ 300 a month for serving on the Board of Directors and
reimbursement of reasonable expenses incurred in attending meetings.
Information Regarding Executive Officers
The names, ages and positions of each of the executive officers of the Company,
as well as a description of their business experience and past employment, are
as set forth below:
Name Age Position
Andrew Franzone 62 Chief Executive Officer and President,
Director
David L. Kassel 64 Chairman of the Board of Directors
Harry Goodman 73 Vice President and Secretary, Director
Steven Sgammato 40 Chief Financial Officer
Frank Pellegrino 53 Vice President of Engineering
For biographical information regarding Messrs. Franzone, Kassel, and Goodman,
see "-Information Regarding the Directors/Nominees."
Steven Sgammato has served as Chief Financial Officer of EHC since 1987. Mr.
Sgammato served as a manager in accounting for Gimbel's Corp. from 1982 to 1986,
and a manager in accounting of Conran's Habitat from 1986 to 1987. Mr. Sgammato
earned an MBA in Management from Dowling College, located in Oakdale, New York,
in 1997.
Frank Pellegrino has served as the Vice President of Engineering of EHC since
1974.
Executive Compensation
Summary Compensation Table. The following table sets forth cash compensation
paid or accrued during the indicated periods by the Company's Chief Executive
Officer and the Company's other executive officers whose total salary and bonus
exceeded $100,000 during Fiscal 1999 (collectively, the "Named Executive
Officers"). No other officers received compensation in excess of $ 100,000 in
1999.
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Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
Awards
-------------------------------------- ----------
Fiscal Salary Bonus Options All Other
Year $ $ # Compensation
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David Kassel 1999 101,152 -- -- 7,800
Chairman of the Board 1998 209,399(1) -- -- 10,400
Andrew Franzone 1999 155,507 -- -- 7,800
Chief Executive Officer and 1998 99,176 -- -- 7,800
President
Harry Goodman 1999 100,000 -- -- 7,800
Executive Vice President 1998 44,985 -- -- 6,700
and Secretary
</TABLE>
(1) Includes $ 150,000 in consideration for consulting services provided by
Mr. Kassel to the Company.
Option Grants. The following table sets forth the option grants made during
Fiscal 1999 to the Named Executive Officers.
Option Grants in Fiscal 1999
Individual Grants
-------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Granted (1) Fiscal Year ($/Share) Date
--------------- ---------------- ---------------- -----------
David Kassel -- -- -- --
Andrew Franzone -- -- -- --
Harry Goodman -- -- -- --
Steven Sgammato 20,000 12.4 4.00 08/06/2004
Frank Pellegrino 20,000 12.4 4.00 08/06/2004
Carl S. Koerner 15,000 9.3 4.00 08/06/2004
Bao-Wen Chen 25,000 15.5 4.50 04/23/2009
(1) These options are fully exercisable after two years from the date of the
grant.
Year-End Option Holdings. The following table sets forth the value of options
held at the end of Fiscal 1999 by the Named Executive Officers. None of the
Named Executive Officers exercised any options during Fiscal 1999.
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Fiscal 1999 Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End (#) At Fiscal Year-End ($)
Exercisable/Unexercisable Exercisable/Unexercisable (1)
David Kassel -- --
Andrew Franzone -- --
Harry Goodman -- --
Bao-Wen Chen 0/25,000 0/$ 56,250
Carl S. Koerner 0/15,000 0/$ 41,250
Frank Pellegrino 0/20,000 0/$ 55,000
Steven Sgammato 0/20,000 0/$ 55,000
(1) Based on $6.75 per share, the price of the last reported trade of the Common
Stock on the Nasdaq SmallCap Market on December 31, 1999.
Employment Agreements
The Company entered into executive employment agreements as of March 15, 1998
with Andrew Franzone, David Kassel and Harry Goodman each an "Executive". The
term of each of the employment, agreements lasts until March 2, 2008 (the
"Term"). The annual base salaries of Messrs. Franzone, Kassel and Goodman under
their employment agreements are $ 125,000, $ 100,000 and $ 100,000,
respectively, with annual salary adjustments equal to the greater of 5 % or
the increase in the Consumer Price Index. Each Executive is entitled to fringe
benefits and an annual bonus to be determined by the Compensation Committee of
the Board of Directors. Each Executive can be terminated for cause (as defined
in the employment agreements) with all future compensation ceasing. If the
Executive dies during the Term or is unable to competently and continuously
perform the duties assigned to him because of ill health or other disability (as
defined in the employment agreements), the Executive or the Executive's estate
or beneficiaries shall be entitled to full compensation for three years
following the date thereof. If the executive is terminated without cause, the
executive shall be entitled to full compensation for the remainder of the Term.
If the Executive resigns, his compensation ceases as of the date of his
resignation. During the period of employment and for two years thereafter the
Executives are prohibited from competing with the Company; provided, however,
that the Executives may provide services to other noncompeting business. In
order for a restrictive covenant to be enforceable under applicable state law,
the covenant must be limited in terms of scope and duration. While the Company
believes that the covenants in the employment contracts are enforceable, there
can be no assurance that a court will declare them enforceable under particular
circumstances.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Interest of Counsel
Koerner Silberberg & Weiner, LLP has been general counsel to the Company since
1986. During Fiscal 1999, the Company paid legal fees of $123,000 to Koerner
Silberberg & Weiner, LLP. The Company believes that the fees paid to Koerner
Silberberg & Weiner, LLP are comparable to those fees that would have been paid
to an unrelated third party law firm.
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<PAGE>
Leases
EHC lease its facility in Farmingdale, New York from K & G Realty Associates ("K
& G"), a partnership owned by David L. Kassel and Harry Goodman, both officers
and directors of the Company. The lease agreement has been extended until
December 31, 2005. The annual rent is currently $ 145,000, with increases equal
to the greater of the increase in the Consumer Price Index or 5 %. Pursuant to a
rider of the lease agreement dated as of March 1, 1998, EHC shall pay as an
additional rent, any and all real property taxes for the demised premises in
excess of $ 26,000 per annum. In 1999, the taxes were approximately $34,000. The
mortgage agreement between Long Island Commercial Bank and K & G dated November
28, 1995, is a 15 year self liquidating adjustable mortgage currently bearing
9.5 % interest in the original principal amount of $ 610,000. The mortgage is
guaranteed by EHC. By agreement dated November 28, 1995, K & G has assigned all
rents due from EHC to the Long Island Commercial Bank. The Company believes that
the terms and consideration of this lease are no less favorable to the Company
than a lease from a third party.
Officer Loans
Messrs. Kassel and Goodman have advanced funds to the Company for working
capital. The loans advanced by Mr. Kassel are represented by the following two
notes (i) a promissory note, dated September 13, 1994, from EHC in favor of
David Kassel Defined Benefit Plan for the principal amount of $125,000, bearing
interest at a rate of 10% per annum, payable in monthly installments of
approximately $ 2,656 per month. The note was paid in full by September of 1999,
and (ii) a promissory note, dated August 1, 1996, from EHC in favor of Kassel
MGT Defined Benefit Plan for the principal amount of $219,483, bearing interest
at a rate of 10 % per annum, payable in 60 monthly installments of approximately
$ 4,663 per month.
The loans advanced by Mr. Goodman are represented by the following two notes (i)
a demand negotiable promissory note, dated September 1, 1994, from EHC in favor
of Mr. Goodman for the principal amount of $ 125,000, bearing interest at a rate
of 10% per annum and payable over 5 years. The note was paid in full by
September of 1999, and (ii) a demand negotiable promissory note, dated August 1,
1996 from EHC in favor of Mr. Goodman, for the principal amount of $ 175,000
bearing interest at a rate of 10% per annum and payable over 5 years.
Affiliated Transactions
EHC and AFC have entered into an engineering consulting and services agreement
on a fee for service basis. Under such agreement, (a) EHC will have the
exclusive right to manufacture or contract for the manufacturing of certain AFC
products on a time and materials basis and (b) EHC will not develop products in
the following lines other than for AFC: (i) point of sale display items; and
(ii) cabinet and furniture plastic hardware. The Company believes the terms and
consideration of this agreement are no less favorable to the Company than
agreements with similar unrelated third party companies. The President of AFC,
Andrew Franzone Jr., is the son of the President and Chief Executive Officer of
the Company. AFC is owned by three officer/stockholders of the Company.
The Company recorded sales during the years ended December 31, 1999 and December
26, 1998 of $483,000 and $1,227,000, respectively to Allen Field Company, Inc.
("AFC"). Gross Profit on such sales was approximately $111,090 and $363,000 for
the years ended December 31,1999 and December 26, 1998, respectively. Accounts
receivable from AFC were $42,894 at December 31, 1999. On or about September 1,
1999 the Company converted the outstanding accounts receivable ($253,150) from
AFC into a term loan with payments of $5,132.97 per month including principal
and interest for 5 years starting January 1, 2000.
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Ms. Bao-Wen Chen, a director of the Company, also provides consulting services
to the Company on behalf of her company, B.C. China Business Consulting, Inc.
("BCI"), in connection with the Company's manufacturing in China. The agreement
between the Company and BCI provides that BCI will provide such consulting
services until March 1, 2008 at an hourly rate as mutually determined and agreed
upon by the Company and the Consultant from time to time and an amount
equivalent to 1.5% of the net cost of products manufactured in China up to
$5,000,000 per year and 1% of net costs exceeding $5,000,000. In consideration
for her services to the Company, Ms. Chen received on April 23, 1999 ("the
Effective Date") an aggregate amount of (i) 25,000 shares of unregistered Common
Stock granted pursuant to the Grant Plan which Ms Chen subsequently returned to
the Company and (ii) 25,000 options granted pursuant to the Grant Plan,
exercisable at $4.50 per share, and fully vesting on the second anniversary of
the Effective Date and terminating on the tenth anniversary of the Effective
Date. The Company believes that consulting fees paid to Ms. Chen and grants of
Common Stock and options are no less favorable to the Company than consideration
it would pay to other third party consultants, as the Consultant's consideration
was determined through arms' length transaction between the Consultant and the
Company at a time when the Consultant was not affiliated in any way with the
Company.
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PROPOSAL 2: APPROVAL OF AN AMENDMENT
TO THE COMPANY'S 1998 STOCK OPTION AND GRANT PLAN
Introduction
The Board of Directors has adopted, subject to stockholder approval at the
Annual Meeting, an amendment to the Grant Plan (the "Plan Amendment") pursuant
to which the number of shares of Common Stock reserved for issuance under the
Grant Plan will be increased from 300,000 to 800,000.
The Board of Directors believes that the Company's growth and long-term success
depend in large part upon retaining and motivating key personnel and that such
retention and motivation can be achieved in part through the grant of stock
options. The Board of Directors also believes that stock options can play an
important role in the success of the Company by encouraging and enabling the
officers and other employees of the Company, upon whose judgment, initiative and
efforts the Company depends for sustained growth and profitability, to acquire a
proprietary interest in the long-term performance of the Company. The Board of
Directors anticipates that providing such persons with a direct stake in the
Company will ensure a closer identification of the interests of the participants
in the Grant Plan with those of the Company, thereby stimulating the efforts of
such participants to promote the Company's future success and strengthen their
desire to remain with the Company. The Board of Directors believes that the
proposed increase in the number of shares issuable under the Grant Plan will
help the Company accomplish these goals and will keep the Company's equity
incentive compensation in line with that of its competitors.
As of the date of this Proxy Statement, options to purchase 161,000 shares of
Common Stock currently reserved for issuance under the Grant Plan have been
granted.
Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE GRANT PLAN.
Summary of the Grant Plan
The following description of certain features of the Grant Plan is intended to
be a summary only and does not describe every provision of the Grant Plan.
The Stock Option and Grant Plan (the "Grant Plan") was adopted by the Company's
Board of Directors as of March 17, 1998 and approved by its stockholders as of
March 17, 1998. Officers, directors, employees, consultants, and key persons of
the Company are eligible to participate in the Grant Plan. The Grant Plan is
designed to provide employees and such other individuals with a performance
incentive, a direct stake in the Company's future welfare and an incentive to
remain with the Company. The Company believes that the Grant Plan will encourage
qualified persons to seek employment with the Company.
The Grant Plan provides for grants of an aggregate of 300,000 shares of Common
Stock or options to purchase shares of Common Stock intended to qualify as
incentive stock options ("Incentive Options"), under Section 422 of the Internal
Revenue Code of 1986, as amended (the"Code") as well as options that do not so
qualify ("Non-Qualified Options"). The Incentive Options shall be granted only
to employees or employee-directors of the Company. Such Incentive Options shall
be exercisable for shares of Common Stock at an exercise price no less than the
fair market value of the share of Common Stock on the date of grant and are not
exercisable after the tenth anniversary of the date of grant. Notwithstanding
the foregoing, pursuant to Section 422 of the Code, optionees who beneficially
own in excess of 10% of the Company's voting stock are not entitled to receive
Incentive Options unless the exercise price of such options is no less that 110%
of the fair market value of the Common Stock on the date of grant and such
options are not exercisable more than five years from the date of grant.
Additionally, to the extent that the aggregate fair market value of the Common
Stock with respect to which the Incentive Options are exercisable for the first
time during any calendar year exceeds $100,000, the options attributable to the
excess over $100,000 shall be treated as Non-Qualified Options under the Code.
Non-Qualified Options shall be exercisable for shares of Common Stock at an
exercise price of no less than 85% of the fair market value of the Common Stock
on the date of grant and are not exercisable after the tenth anniversary of the
date of grant.
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The Grant Plan provides that it will be administered by the Compensation
Committee. The Compensation Committee determines which officers, directors,
employees, consultants and key persons shall receive shares or options, whether
the individual shall receive shares or options and if options, the terms and
conditions of the options, including the exercise price of each option, the term
of each option, the number of shares of Common Stock to be covered by each
option and any performance objectives or vesting standards applicable to each
option. Subject to the requirements of the Code, the Compensation Committee will
also designate whether the options granted shall be Incentive Options or
Non-Qualified Options.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth as of April 14, 2000 (except as otherwise
indicated) certain information regarding the beneficial ownership of Common
Stock by (i) each person or "group" (as that term is defined in Section 13(d)(3)
of the Exchange Act) known by the Company to be the beneficial owner of more
than 5% of the Common Stock, (ii) each executive officer of the Company, (iii)
each director and Nominee and (iv) all directors and executive officers as a
group (10 persons). Except as otherwise indicated, the Company believes, based
on information furnished by such persons, that each person listed below has sole
voting and investment power over the shares of Common Stock shown as
beneficially owned, subject, to community property laws, where applicable.
Number of Shares Percentage of
Name of Beneficial Owner Beneficially Owned (1) Common Stock Owned
---------------------- ------------------
David Kassel 840,000 24.8
Andrew Franzone 450,000 (1) 13.3
Harry Goodman 420,000 (1) 12.4
Steven Sgammato 10,000 (2) .3
All directors and
executive as a group 1,720,000 50.8
(1) Includes 100,000 shares owned by wife, of which beneficial ownership is
disclaimed.
(2) Includes 10,000 shares owned by wife, of which beneficial ownership is
disclaimed.
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PROPOSAL 3: APPROVAL OF AN AMENDMENT
TO THE CERTIFICATE OF INCORPORATION, OF THE COMPANY TO CHANGE
THE NAME OF THE COMPANY
The Board of Directors of the Company has unanimously approved and directed that
there be submitted to stockholders for their approval a proposal to amend the
Certificate of Incorporation of the Company to change the Company's name from
International Smart Sourcing, Inc. to ChinaB2Bsourcing.com Inc. (the "Name
Change Amendment"). In connection therewith, the Company also proposes to change
the quotation symbols on the Nasdaq Smallcap Market from "ISMT" and "ISMTW" to
"CHNA" and "CHNAW," respectively (the "Name Change Amendment"). To effect such a
change, the Company's Certificate of Incorporation will be amended to read in
its entirety as follows:
"FIRST: The name of the corporation is ChinaB2Bsourcing.com Inc."
The Amendment, if approved by stockholders, will become effective on the date
the Name Change Amendment is filed with the Office of the Secretary of State of
the State of Delaware. The Company anticipates that the filing to effect the
Name Change Amendment will be made as soon after the Annual Meeting as
practicable.
Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
NAME CHANGE AMENDMENT.
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and Nasdaq. Officers, directors and greater than 10%
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's knowledge, based solely
on a review of the copies of such reports provided to the Company and written
representations that no other reports were required during, or with respect to,
Fiscal 1999, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners have been satisfied.
Independent Public Accountants
The accounting firm of Feldman, Sherb, Horowitz & Co.P.C. served as the
Company's independent public accountants during Fiscal 1999 and is expected to
continue to do so for fiscal year 2000. A representative of Feldman, Sherb,
Horowitz & Co. P.C. is expected to be present at the Annual Meeting, will be
given an opportunity to make a statement if he desires and will be available to
respond to appropriate questions.
Expenses of Solicitation
The cost of solicitation of proxies will be borne by the Company. In an effort
to have as large a representation at the Annual Meeting as possible, special
solicitation of proxies may, in certain instances, be made personally or by
telephone, telegraph or mail by one or more employees of the Company. The
Company also may reimburse brokers, banks, nominees, and other fiduciaries for
postage and reasonable clerical expenses of forwarding the proxy materials to
their principals who are beneficial owners of Common Stock.
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<PAGE>
Stockholder Proposals
Any stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 and
intended to be presented at the Company's 2001 Annual Meeting of Stockholders
must be received by the Company at its principal executive office on or before
January 12, 2001 to be eligible for inclusion in the proxy statement and form of
proxy to be distributed by the Board of Directors in connection with such
meeting.
Any stockholder proposals (including recommendations of nominees for election to
the Board of Directors) intended to be presented at the Company's 2001 Annual
Meeting of Stockholders, other than a stockholder proposal submitted pursuant to
Exchange Act Rule 14a-8, must be received in writing at the principal executive
office of the Company no later than sixty (60) days prior to the date of such
meeting, nor prior to ninety (90) days prior to the date of such meeting,
together with all supporting documentation required by the By-laws; provided,
however, that in the event that less than seventy (70) days' notice or prior
public disclosure of the date of such meeting is given or made to stockholders,
stockholder proposals must be received, together with all required supporting
documentation, not later than the close of business on the tenth day following
the date on which such notice or public disclosure of the date of the annual
meeting is first made.
Other Matters
The Board of Directors does not know of any matters other than those described
in this Proxy Statement, which will be presented for action at the Annual
Meeting. If other matters are presented, proxies will be voted in accordance
with the best judgment of the proxy holders.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER
31, 1999 (INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO), WHICH WAS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 1999, WILL BE PROVIDED
WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROXY STATEMENT IS MAILED UPON THE
WRITTEN REQUEST OF ANY SUCH PERSON TO STEVEN SGAMMATO, CHIEF FINANCIAL OFFICER,
INTERNATIONAL SMART SOURCING, INC., 320 BROAD HOLLOW ROAD, FARMINGDALE, NEW YORK
11735.
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<PAGE>
INTERNATIONAL SMART SOURCING, INC.
320 Broad Hollow Road
Farmingdale, New York 11735
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Andrew Franzone and Steven Sgammato,
and each of them, proxies with full power of substitution to vote for and on
behalf of the undersigned at the Annual Meeting of Stockholders of International
Smart Sourcing, Inc. (the "Company"), to be held at the Huntington Hilton, 598
Broad Hollow Rd., Melville, NY on Thursday, June 15, 2000 at 9:00 a.m., New York
time, and at any adjournments or postponements thereof, hereby granting full
power and authority to act on behalf of the undersigned at said meeting and any
adjournments or postponements thereof. The undersigned hereby revokes any proxy
previously given in connection with such meeting and acknowledge receipt of the
Notice of Annual Meeting of Stockholders and Proxy Statement and the 1999 Annual
Report to Stockholders.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTION IS INDICATED
WITH RESPECT TO THE PROPOSALS BELOW, THE UNDERSIGNED'S VOTES WILL BE CAST "FOR"
EACH OF SUCH MATTERS. THE UNDERSIGNED'S VOTES WILL BE CAST IN ACCORDANCE WITH
THE PROXIES' DISCRETION ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. PLEASE SIGN AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
1. Proposal to elect David Kassel, Andrew Franzone, Harry Goodman,
Mitchell Solomon, Bao-Wen Chen and Carl Seldin Koerner as Directors of
the Company, each for a one year term to continue until the 2001 Annual
Meeting of Stockholders and until the successor of each is duly elected
and qualified.
[ ] FOR ALL [ ] WITHHELD FROM ALL
-----------------------------------------------
[ ] WITHHELD AS TO THE NOMINEE NOTED ABOVE
2. Proposal to approve the amendment to the Company's 1998 Stock Option
and Grant Plan to increase the number of shares of Common Stock of the
Company that may be issued therunder from 300,000 to 800,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to amend the Company's Certificate of Incorporation to change
the Company's name from International Smart Sourcing, Inc. to China
B2Bsourcing.com.Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To consider and act upon such other business as may properly come
before the meeting or any adjournments or postponements thereof.
Dated: _________________ Signature: __________________________________
Name: __________________________________
Signature (if held jointly): __________________________________
Name (if held jointly): __________________________________
NOTE: Please sign exactly as your name appears hereon. Joint owners should
each sign. When signing as an attorney, executor, administrator,
trustee, or guardian, please give full title of such.
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