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: 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. 2 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. 3 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. 4 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. 5 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. 6 Summary Compensation Table Long Term Annual Compensation Compensation Awards -------------------------------------- ---------- Fiscal Salary Bonus Options All Other Year $ $ # Compensation ------------------------------------------------------------------------- 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 (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 ($/Share) Date --------------- ---------------- ---------------- ----------- David Kassel -- -- -- -- Andrew Franzone -- -- -- -- Harry Goodman -- -- -- -- Steven Sgammato 20,000 12.4 4.00 08/06/2004 Frank Pellegrino 20,000 12.4 4.00 08/06/2004 Carl S. Koerner 15,000 9.3 4.00 08/06/2004 Bao-Wen Chen 25,000 15.5 4.50 04/23/2009 (1) These options are fully exercisable after two years from the date of the grant. Year-End Option Holdings. The following table sets forth the value of options held at the end of Fiscal 1999 by the Named Executive Officers. None of the Named Executive Officers exercised any options during Fiscal 1999. 7 Fiscal 1999 Year-End Option Values Number of Securities Underlying Unexercised Value of Unexercised Options at Fiscal In-the-Money Options Year-End (#) At Fiscal Year-End ($) 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. 8 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. 9 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. 10 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. 11 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. 12 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. 13 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. 14 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. 15