SCHEDULE 14A (RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Under Rule 14a-12
DYADIC INTERNATIONAL, 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)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[LOGO] DYADIC
DYADIC INTERNATIONAL, INC.
140 Intracoastal Pointe Drive, Suite 404
Jupiter, FL 33477
(561) 743-8333
Dear Stockholder:
You are cordially invited to attend the 2005 Annual Meeting of
Stockholders of Dyadic International Inc., a Delaware corporation, to be held at
10:00 a.m., Eastern time, on May 24, 2005, at The Club at Admiral's Cove located
at 200 Admiral's Cove Boulevard, Jupiter, Florida 33477.
The Notice of Annual Meeting of Stockholders and a Proxy Statement, which
describe the formal business to be conducted at the Annual Meeting, follow this
letter. We have also included with these documents a copy of our Annual Report
on Form 10-KSB for calendar year 2004 filed with the U.S. Securities and
Exchange Commission. These proxy solicitation materials will first be mailed on
or about May 4, 2005 to all stockholders entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE IN
FAVOR OF THE ELECTION OF THE NOMINATED DIRECTORS AND THE RATIFICATION OF OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Your vote at the Annual Meeting is important to us. Whether or not you
plan to attend the Annual Meeting, please mark, sign, date and return your proxy
card in the enclosed envelope as soon as possible. Your stock will be voted in
accordance with the instructions you have given in your proxy. If you attend the
Annual Meeting, you may revoke your proxy and vote in person if you wish, even
if you have previously returned your proxy card. Simply attending the Annual
Meeting, however, will not revoke your proxy; you must vote at the Annual
Meeting. If you do not attend the Annual Meeting, you may still revoke your
proxy at any time prior to the Annual Meeting by providing a later dated proxy
or by providing written notice of your revocation to the Secretary of our
Company. Your prompt cooperation will be greatly appreciated.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued support and interest in Dyadic International,
Inc. We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Mark A. Emalfarb
Mark A. Emalfarb
Chairman, President and
Chief Executive Officer
Jupiter, Florida
May 2, 2005
[LOGO] DYADIC
DYADIC INTERNATIONAL, INC.
140 Intracoastal Pointe Drive, Suite 404
Jupiter, FL 33477
(561) 743-8333
NOTICE OF 2005 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2005
TO THE STOCKHOLDERS OF DYADIC INTERNATIONAL, INC.:
NOTICE IS HEREBY GIVEN that the 2005 Annual Meeting of Stockholders of
Dyadic International, Inc., a Delaware corporation, will be held on May 24,
2005, beginning at 10:00 a.m., Eastern time, at The Club at Admiral's Cove
located at 200 Admiral's Cove Boulevard, Jupiter, Florida 33477, for the
following purposes:
1. To elect two Class I directors to serve until the 2008 Annual
Meeting of Stockholders and until their successors are duly elected
and qualified;
2. To consider a proposal to ratify the appointment of Ernst & Young
LLP as the independent registered public accounting firm of our
Company for our fiscal year ending December 31, 2005; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
The foregoing matters are described in more detail in the enclosed Proxy
Statement. Our Board of Directors has fixed the close of business on April 29,
2005 as the record date for the determination of our stockholders entitled to
notice of, and to vote at, the Annual Meeting and any postponement or
adjournment of the Annual Meeting. Only those stockholders of record as of the
close of business on that date are entitled to notice of and to vote at the
Annual Meeting. Our stock transfer books will remain open between the record
date and the date of the Annual Meeting. A list of stockholders entitled to vote
at the Annual Meeting will be available for inspection by any stockholder of our
Company, for any purpose germane to the Annual Meeting, at the Annual Meeting
and during ordinary business hours at our executive offices for a period of ten
days prior to the Annual Meeting.
Stockholders are urged to review carefully the information contained in
the Proxy Statement attached hereto prior to deciding how to vote their shares
at the Annual Meeting. Your participation in the Annual Meeting, in person or by
proxy, is important. We hope you will be able to attend the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. If you attend the Annual
Meeting, you may revoke your proxy and vote in person if you wish, even if you
have previously returned your proxy card. Simply attending the Annual Meeting,
however, will not revoke your proxy; you must vote at the Annual Meeting. If you
do not attend the Annual Meeting, you may still revoke your proxy at any time
prior to the Annual Meeting by providing a later dated proxy or by providing
written notice of your revocation to the Secretary of our Company. Your prompt
cooperation will be greatly appreciated.
All stockholders are cordially invited to attend the meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Mark A. Emalfarb
Mark A. Emalfarb,
Chairman, President and
Chief Executive Officer
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, AND VOTE EITHER BY PROXY OR BY
ATTENDING THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE IN THE ENVELOPE ENCLOSED FOR YOUR CONVENIENCE.
DYADIC INTERNATIONAL, INC.
140 Intracoastal Pointe Drive, Suite 404
Jupiter, FL 33477
(561) 743-8333
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
The accompanying proxy is being solicited by the Board of Directors of
Dyadic International, Inc., a Delaware corporation (the "Company" or "Dyadic"),
and contains information related to the Annual Meeting of Stockholders to be
held on May 24, 2005, beginning at 10:00 a.m., Eastern time, or any adjournment
or postponement thereof, for the purposes described in the accompanying Notice
of Annual Meeting. The Annual Meeting will be held at The Club at Admiral's Cove
located at 200 Admiral's Cove Boulevard, Jupiter, Florida 33477. This Proxy
Statement was filed with the United States Securities and Exchange Commission on
May 2, 2005, and the approximate date on which the Proxy Statement and the
accompanying form of proxy were first sent or given to stockholders was May 4,
2005.
The Company will bear the cost of soliciting proxies. We may solicit
stockholder proxies by mail, through our regular employees, and may request
banks and brokers and other custodians, nominees and fiduciaries, to solicit
their customers who have shares of Dyadic stock registered in their names and
will reimburse them for their reasonable, out-of-pocket costs. We may use the
services of our officers, directors and others to solicit proxies, personally or
by telephone, without additional compensation.
ABOUT THE MEETING
WHY AM I RECEIVING THESE PROXY MATERIALS?
The Board of Directors of the Company (the "Board of Directors" or
"Board") is furnishing these proxy materials to you in connection with the
Company's 2005 Annual Meeting of Stockholders (the "Annual Meeting"). The Annual
Meeting will begin at 10:00 a.m., Eastern time, at The Club at Admiral's Cove
located at 200 Admiral's Cove Boulevard, Jupiter, Florida 33477. You are invited
to attend the Annual Meeting and are entitled to vote on the proposals outlined
in this Proxy Statement.
WHAT PROPOSALS WILL BE VOTED ON AT THE ANNUAL MEETING?
The following proposals will be presented at the Annual Meeting by the
Board of Directors:
PROPOSAL 1 - THE ELECTION OF DIRECTORS PROPOSAL
To elect two Class I directors to serve until the 2008 Annual Meeting of
Stockholders and until their successors are duly elected and qualified.
PROPOSAL 2 - THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM RATIFICATION PROPOSAL
To consider a proposal to ratify the appointment of Ernst & Young LLP as
independent registered public accounting firm of our Company for the
fiscal year ending December 31, 2005.
As to any other business which may properly come before the Annual
Meeting, the persons named on the enclosed proxy card will vote according to
their best judgment. We do not know of any other matters to be presented at the
Annual Meeting.
1
WHAT ARE THE RECOMMENDATIONS OF THE COMPANY'S BOARD OF DIRECTORS?
The Board recommends that you vote "FOR" the election of each of the Class
I directors and "FOR" the ratification of the appointment of Ernst & Young LLP
as the Company's independent registered public accounting firm for the calendar
year ending December 31, 2005.
WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN?
The record date for the Annual Meeting is April 29, 2005. The record date
is established by the Board as required by Delaware law. Holders of shares of
the Company's common stock, par value $0.001 per share ("Common Stock"), which
is the only class of capital stock of the Company now issued and outstanding, at
the close of business on the record date, are entitled to receive notice of the
Annual Meeting and to vote at the Annual Meeting and any adjournments or
postponements thereof.
WHAT SHARES CAN I VOTE?
Each stockholder of the Company is entitled to one vote for each share of
Common Stock owned as of the record date. At the record date, 22,241,105 shares
of Common Stock were issued and outstanding.
HOW DO I VOTE MY SHARES?
If you are a Stockholder of record, you can either attend the Annual
Meeting and vote in person or give a proxy to be voted by mailing the enclosed
proxy card.
HOW DO I FILE A PROXY?
To vote by proxy you must sign and return the enclosed form of proxy, in
which case your shares represented will be voted at the Annual Meeting in
accordance with your specified instructions.
If you do not specify how your shares of Common Stock are to be voted in
your proxy, they will be voted "FOR" the election of the directors proposed by
the Board of Directors unless the authority to vote for the election of a
director is withheld.
Further, if no contrary instructions are given, the proxy will be voted
FOR the ratification of Ernst & Young LLP as our independent registered public
accounting firm.
WHO WILL TABULATE THE VOTES?
All votes will be tabulated by the inspector of election appointed for the
Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes.
IS MY VOTE CONFIDENTIAL?
Proxy instructions, ballots and voting tabulations that identify
stockholders are handled in a manner that protects your voting privacy. Your
vote will not be disclosed either within the Company or to third parties, except
(i) as necessary to meet applicable legal requirements, (ii) to allow for the
tabulation and/or certification of the vote, or (iii) to facilitate a successful
proxy solicitation by the Board. Occasionally, stockholders provide written
comments on their proxy cards, which are then forwarded to the Company's
management.
WHAT IS THE QUORUM REQUIREMENT?
The presence, in person or by proxy, of the holders of a majority of the
shares of the Company's Common Stock entitled to vote is necessary to constitute
a quorum at the Annual Meeting. A quorum of the outstanding shares is required
before any business can be conducted at the Annual Meeting. Under the General
Corporation Law of the State of Delaware, an abstention and a broker "non-vote"
are counted as present and are, therefore, included for purposes of determining
whether a quorum of shares of Common Stock is present at the Annual Meeting.
2
WHAT ARE THE VOTING REQUIREMENTS?
With respect to Proposal 1 - the election of Class I directors - a
plurality of the votes duly cast is required for the election of directors. The
nominees receiving the greatest number of votes will be elected.
With respect to Proposal 2 - the ratification of the appointment of the
Company's independent registered public accounting firm for 2005 - and any other
matters (other than the election of directors) on which stockholders of the
Company are entitled to vote, the affirmative vote of the holders of a majority
of the stockholders' shares present in person or by proxies and entitled to vote
is required.
Broker "non-votes" are not included in the tabulation of the voting
results on the election of directors or issues requiring approval of a majority
of shares of Common Stock present in person or represented by proxies and
entitled to vote at the Annual Meeting and, therefore, do not have an effect on
Proposals 1 and 2. A broker "non-vote" occurs when a nominee holding shares for
a beneficial owner does not vote on a particular proposal because the nominee
does not have the discretionary voting power with respect to the item and has
not received instructions from the beneficial owner. Under the rules that govern
brokers who are voting with respect to shares held by them as nominee, brokers
have the discretion to vote such shares on routine matters, but not on
non-routine matters. Routine matters include, among others, the election of
directors and ratification of an independent registered public accounting firm.
Non-routine matters include, among others, amendments to stock option plans.
For the purpose of determining whether the Company's stockholders have
approved matters other than the election of directors, abstentions are treated
as shares present or represented and entitled to vote, so abstentions have the
same effect as negative votes.
CAN I CHANGE MY VOTE AFTER SUBMITTING MY PROXY?
You may revoke or change your proxy at any time before the Annual Meeting
by filing with our corporate Secretary at 140 Intracoastal Pointe Drive, Suite
404, Jupiter, FL 33477, a notice of revocation or another signed proxy with a
later date. You may also revoke your proxy by attending the Annual Meeting and
voting in person. Simply attending the Annual Meeting, however, will not revoke
your proxy; you must vote at the Annual Meeting.
WHO IS PAYING FOR THIS PROXY SOLICITATION?
The Company will bear the entire cost of soliciting proxies, including the
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
and any additional solicitation materials furnished to our stockholders. Copies
of solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, we may reimburse such persons for costs incurred in forwarding the
solicitation materials to such beneficial owners. The original solicitation of
proxies by mail may be supplemented by a solicitation by telephone, telegram or
other means by our directors, officers or employees. No additional compensation
will be paid to these individuals for soliciting. Except as described above, we
do not presently intend to solicit proxies other than by mail.
HOW CAN I FIND OUT THE VOTING RESULTS?
The Company will announce the preliminary results at the Annual Meeting
and publish the final results in the Company's Quarterly Report on Form 10-QSB
for the second quarter of calendar year 2005.
WHEN ARE STOCKHOLDER PROPOSALS DUE FOR NEXT YEAR'S ANNUAL MEETING?
Under the Company's bylaws, for a stockholder proposal to be considered
timely in order to be brought before the 2006 Annual Meeting, the proposing
stockholder must deliver a notice in writing to the Secretary of the Company at
its principal executive offices not less than 90 days nor more than 120 days
prior to the anniversary of the 2005 Annual Meeting. If the date of the 2006
Annual Meeting is advanced more than 30 days prior to or delayed more than 30
days after the anniversary of the 2005 Annual Meeting, to be given on time, a
stockholder's notice must be received not earlier than the close of business 120
days prior to and not more than 90 days prior to the date of the 2006 Annual
Meeting or the 10th day following the day on which a public announcement of the
date of the 2006 Annual Meeting is first made. If the proposal is not timely
submitted, the Company's proxies will have discretionary voting authority on any
vote with respect to such proposal, if presented at the meeting. A stockholder's
notice to the Secretary must set forth as to each matter the stockholder
proposes to bring before the 2006 Annual Meeting the information required by
Section 3.02 of the Company's bylaws.
3
The Company is not currently subject to the proxy solicitation rules of
the Securities and Exchange Commission ("SEC"). Nevertheless, the Company is
electing voluntarily to file this proxy statement with the SEC. Until the
Company becomes subject to such proxy rules, the Company does not intend to
include any stockholder proposals in the Company's proxy materials. If the
Company becomes subject to the SEC's proxy rules prior to the 2006 Annual
Meeting, stockholder proposals submitted pursuant to SEC Rule 14a-8, and
intended to be presented at the Company's 2006 Annual Meeting must be received
by the Company not later than November 3, 2005, in order to be eligible for
inclusion in the Company's proxy materials. Any stockholder proposal received
after that date will be considered untimely for purposes of Rule 14a-8. All
proposals should be submitted to our Secretary at the address of our principal
executive offices shown on the first page of this proxy statement. All proposals
under SEC Rule 14a-8 must be in writing and otherwise in compliance with
applicable SEC requirements.
4
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL ONE: ELECTION OF DIRECTORS
GENERAL
The Board is divided into three classes as nearly equal in number as
possible. The members of each class of directors serve staggered three-year
terms. Currently, the Board is composed of the following five individuals:
Class Directors Term Expiration
----- --------- ---------------
Class I Richard J. Berman 2005 Annual Meeting
Class I Robert B. Shapiro 2005 Annual Meeting
Class II Stephen J. Warner 2006 Annual Meeting
Class II Harry Z. Rosengart 2006 Annual Meeting
Class III Mark A. Emalfarb 2007 Annual Meeting
The Nominating Committee of the Board has recommended, and the Board has
nominated, the two nominees named below for election as Class I directors of the
Company, each to serve a three-year term until the 2008 Annual Meeting and until
a qualified successor is elected and qualified or until the director's earlier
death, resignation or removal. Each of the nominees has consented, if elected,
to serve until his term expires. The Board has no reason to believe each of the
nominees will not serve if elected, but if either one of them should become
unavailable to serve as a director, and if the Board designates a substitute
nominee, the person named as proxies will vote for the substitute nominee
designated by the Board.
CLASS I NOMINEES FOR THREE YEAR TERMS THAT WILL EXPIRE IN 2008
RICHARD J. BERMAN Mr. Berman became a member of the Board in
Age 62 January 2005.
See the biographical information about Mr.
Berman presented below.
ROBERT B. SHAPIRO Mr. Shapiro became a member of the Board in
Age 66 March 2005.
See the biographical information about Mr.
Shapiro presented below.
Set forth below is certain information about the nominees.
RICHARD J. BERMAN. Mr. Berman was appointed as a director of the Company
on January 11, 2005, and acts as the Company's "Lead Director." In that
capacity, he is responsible for meeting regularly with our Chairman of the Board
and Chief Executive Officer to review monthly financials, agendae and minutes of
committee meetings and pertinent Board issues, presiding, if requested by the
Board, as chairman of any of the committees of the Board and presiding at any
meetings of the independent and nonemployee directors. He currently serves as
Chairman of National Investment Managers, Inc., a public financial services
company, and one private company, a human resources services company that
delivers its services over the internet. From 1998 to 2000, Mr. Berman served as
Chairman and CEO of Internet Commerce Corporation. Over the course of his
career, he has worked with several investment banking firms and has extensive
experience in venture capital, management and mergers and acquisitions. He has
also served as a director in the past for numerous companies. His last
investment banking firm position was with Bankers Trust Company from 1975 to
1982, where he served as Senior Vice President and head of the Merger and
Acquisition Department and Equity Investment Department. Since 1980, he has been
a private investor in real estate developments, and currently owns seven
commercial or office properties located in New York City. Currently, he is a
director of five other public companies - International Microcomputer Software,
Inc., Internet Commerce Corporation, MediaBay, Inc., NexMed, Inc. and GVI
Security Solutions Inc. He is a past director of the Stern School of Business of
New York University, from which he received B.S. and M.B.A. degrees. He also has
U.S. and foreign law degrees from Boston College and The Hague Academy of
International Law.
5
ROBERT B. SHAPIRO. During the past five years Mr. Shapiro has served as a
member of the Board of Directors of the New York Stock Exchange (on which he
still serves), Citigroup, Inc. and Rockwell International, as Chairman of
Pharmacia Corporation's Board of Directors and, prior to its merger with
Phamacia & Upjohn, as Chairman and Chief Executive Officer of Monsanto Company
(1995 through 2001). Prior to becoming the Chairman and Chief Executive Officer
of Monsanto, Mr. Shapiro served in various executive capacities with Monsanto
from 1985, and with G.D. Searle & Company, a diversified electronics company,
first as its general counsel (1972 through 1982), and then as President of its
newly formed NutraSweet Group (1982 to 1985). Mr. Shapiro is a 1959 graduate of
Harvard College and a 1962 graduate of Columbia University School of Law.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION
TO THE BOARD OF EACH OF THE NOMINEES NAMED ABOVE
The Company's directors listed below will continue in office for the
remainder of their terms or earlier, in accordance with the Company's bylaws.
Information concerning the business experience of each such director is provided
below
CLASS II DIRECTORS WHOSE TERM WILL EXPIRE IN 2006
STEPHEN J. WARNER. Mr. Warner, age 65, has served as a director of the
Company since October 2004, and as a member of the Board of Directors of the
Company's wholly-owned subsidiary, Dyadic International (USA), Inc., a Florida
corporation ("Dyadic-Florida"), since August 15, 2004. Mr. Warner currently is
the managing member of Bioform LLC, a newly established Florida-based venture
capital fund. Mr. Warner also serves as chairman of Maxim TEP, Inc. a private
energy company based in Houston, TX, and is a director of UCT Coatings Inc., a
private, metal finishing technology company in Stuart, Florida. Mr. Warner has
over 25 years of venture capital experience. In 1981, Mr. Warner founded Merrill
Lynch Venture Capital Inc., a wholly-owned subsidiary of Merrill Lynch & Co.
Inc. in New York and served as its President and Chief Executive Officer from
1981 to 1990. Under his leadership, Merrill Lynch Venture Capital managed over
$250 million and made over 50 venture capital investments. In 1999, Mr. Warner
co-founded, and became Chairman and CEO, of Crossbow Ventures Inc., a private
equity fund that invests in early and expansion stage technology companies
primarily located in Florida and the Southeast, with over 20 venture capital
investments in Florida. Mr. Warner earned a B.S. degree from the Massachusetts
Institute of Technology and an MBA from the Wharton School of Business,
University of Pennsylvania.
HARRY Z. ROSENGART. Mr. Rosengart, age 55, was appointed to our Board on
April 26, 2005. During the past five years, Mr. Rosengart has served (and
currently serves) as the President and CEO of HK & Associates, an investment and
consulting firm which provides advice to small and medium-sized life sciences
companies. Mr. Rosengart is a founder of several privately held companies,
including: LigoChem, Inc., a DNA\RNA and macromolecule bioseparations company
founded in 1995, of which he is a former President and CEO and a current member
of its board of directors; SunPharm Corporation, a polyamine based anti-cancer
drug development-stage company founded in 1991, of which he is a former COO, CFO
and member of its board of directors; and Syncom Pharmaceuticals, Inc, a
contract sales force organization founded in 1991, of which he has had a variety
of interim positions and served on its board of directors. Between 1981 and
1990, Mr. Rosengart spent almost 10 years as a banker and investment banker with
the Chase Manhattan Bank, NA focused on the pharmaceutical and chemical
industries. Prior to joining Chase Manhattan Bank, Mr. Rosengart spent over 10
years with several pharmaceutical and muntinational chemical companies in
various managerial positions. Mr. Rosengart holds a B.S. in Chemical Engineering
and an MBA from Rutgers University.
CLASS III DIRECTORS WHOSE TERM WILL EXPIRE IN 2007
MARK A. EMALFARB. Mr. Emalfarb, age 50, has served as a director of the
Company and its Chairman, President and Chief Executive Officer since October
2004 and as the President and member of the Board of Directors of Dyadic-Florida
since its inception. Since founding Dyadic-Florida in 1979, Mr. Emalfarb has
successfully led and managed the evolution of Dyadic-Florida -- from its origins
as a pioneer and leader in providing ingredients used in stone-washing of blue
jeans -- to the discovery, development, manufacturing and commercialization of
specialty enzymes used in various industrial applications and the development of
the C1 Expression System. Mr. Emalfarb is an inventor of over 25 U.S. and
foreign biotechnology patents and patent applications resulting from discoveries
related to Dyadic-Florida's proprietary C1 microorganism, and has been the
architect behind its formation of several strategic R&D, manufacturing and
marketing relationships with U.S. and international partners. Mr. Emalfarb
earned a B.A. degree from the University of Iowa.
6
BOARD COMMITTEES AND MEETINGS
Since the consummation of the reverse merger of the Company and
Dyadic-Florida, completed in October 2004, the Board met only once in 2004. In
January 2005, the Board established three committees: the Audit Committee, the
Nominating Committee and the Compensation Committee. These committees were
constituted to assist the Board in carrying out its duties. In particular, these
committees will work on key issues in greater detail than would be practical at
a full meeting of the Board. Each committee reviews the results of its meetings
with the full Board. Each of the committees has a written charter which can be
found on the Company's website at www.dyadic-group.com. Currently, Messrs.
Warner and Berman are the sole members of each of the three committees. Mr.
Berman, as Lead Director, serves as the Chairman of each committee.
The Audit Committee
The Audit Committee's functions include: reviewing with our independent
registered public accounting firm and management the Company's unaudited
quarterly financial statements, the Company's audited annual financial
statements and independent registered public accounting firm's opinion;
reviewing and maintaining direct oversight of the plan, scope and results of the
audit by the independent registered public accounting firm; reviewing and
approving all professional services performed and related fees charged by the
independent registered public accounting firm; being solely responsible for the
retention or replacement of the registered independent public accounting firm;
monitoring the adequacy of the Company's accounting and financial policies,
internal controls, disclosure controls and procedures, reporting systems and
filings with the SEC; and reviewing and updating our code of business ethics and
monitoring compliance therewith. The Audit Committee was organized in January
2005. The Board has adopted a written charter for the Audit Committee, a copy of
which is attached as Appendix A to this Proxy Statement.
The Board of Directors has determined that the Audit Committee's current
member composition satisfies (i) the corporate governance rules of the American
Stock Exchange ("AMEX") that govern audit committee composition for small
business issuers listed on AMEX, including the requirement that all audit
committee members be able to read and understand fundamental financial
statements and be "independent directors" as that term is defined by Section 121
of the AMEX rules, and (ii) the independence standards under the SEC regulations
relating to audit committee members. The Company has applied to list its common
stock for trading with AMEX. Additionally, the SEC's rules require the Company
to disclose whether it has at least one member of the Audit Committee that meets
the SEC's definition of an "audit committee financial expert" based on past
employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background
which results in the individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities. Richard Berman and Stephen
Warner have been determined by the Board of Directors to be "audit committee
financial experts."
The Compensation Committee
The Compensation Committee's functions include: reviewing and approving,
on an annual basis, the corporate goals and objectives relevant to the
compensation of the Chief Executive Officer and other senior executive officers
of the Company; evaluating their performance in light of these goals and
objectives; making recommendations with respect to and, together with the other
independent members of the Board of Directors, determining and approving the
compensation of the Chief Executive Officer of the Company based upon the
foregoing evaluation of his performance; making recommendations to the Board of
Directors with respect to the establishment or amendment of
incentive-compensation plans and equity-based plans; and determining and
approving the compensation of the other senior executive officers of the Company
based upon the recommendations of, and in consultation with, the Chief Executive
Officer. The Compensation Committee was organized in January 2005.
7
The Board of Directors has determined that the Compensation Committee's
current member composition satisfies the AMEX rule that governs compensation
committee composition for companies listed on AMEX, including the requirement
that all compensation committee members be "independent directors" as that term
is defined by Section 121 of the AMEX rules.
The Nominating Committee
The Nominating Committee's functions include: establishing criteria for
the selection of new directors to serve on the Board of Directors; identifying
individuals believed to be qualified as candidates to serve on the Board of
Directors; recommending for selection by the Board of Directors the candidates
for all directorships to be filled by the Board of Directors or by the
stockholders at an annual or special meeting; reviewing the Board of Director's
committee structure and recommending to the Board of Directors the directors to
serve on the committees of the Board; recommending members of the Board of
Directors to serve as the respective Chairs of the committees of the Board of
Directors; developing and recommending to the Board of Directors, for its
approval, an annual self-evaluation process of the Board of Directors and its
committees and, based on those results, making recommendations to the Board of
Directors regarding those Board processes; and performing any other activities
consistent with the Committee's Charter, the Company's Bylaws and governing law
as the Committee or the Board of Directors deems appropriate. The Nominating
Committee was organized in January 2005.
The Nominating Committee does not currently have any formal minimum
qualification requirements that must be met by a nominee for a position on the
Board of Directors. In the fulfillment of their responsibilities to identify and
recommend to the Board of Directors individuals qualified to become Board
members, the members of the Nominating Committee will take into account all
factors they consider appropriate, which may include experience,
accomplishments, education, understanding of the business and the industries in
which the Company operates, specific skills, general business acumen and the
highest personal and professional integrity. Generally, the members of the
Nominating Committee will first consider current Board members because they meet
the criteria listed above and possess knowledge of the Company, its history,
strengths, weaknesses, goals and objectives.
The Nominating Committee currently has no fixed process for identifying
new nominees for election as a director, thereby retaining the flexibility to
adapt its process to the circumstances. The Nominating Committee has the
ability, if it deems it necessary or appropriate, to retain the services of an
independent search firm to identify new director candidates. The Nominating
Committee has determined that it will give consideration to any potential
candidate proposed by a member of our Board or senior management. Any
non-incumbent director so proposed will be personally interviewed by at least
one member of the Nominating Committee and the Chief Executive Officer and their
assessment of his or her qualifications will be provided to the full Nominating
Committee. For this Annual Meeting, the Nominating Committee received no
proposals for non-incumbent candidates, and considered only the incumbent
directors, for nomination as directors.
Our policy and procedures regarding securityholder recommended candidates
for director are contained in the Charter of the Nominating Committee. The
Nominating Committee may consider for inclusion in its nominations for new
directors any candidates recommended by stockholders, but must consider any
candidate for director recommended by (i) any stockholder beneficially owning
more than 5% of the Company's outstanding common stock for at least one year as
of the date the recommendation was made or (ii) a group of stockholders that
beneficially owned, in the aggregate, more than 5% of the Company's outstanding
common stock, with each of the shares used to calculate that ownership held for
at least one year as of the date the recommendation was made. The Nominating
Committee will consider the candidate based on the same criteria established for
selection of director nominees generally. The Nominating Committee reserves the
right to reject any candidate in its discretion, including, without limitation,
rejection of a candidate who has a special interest agenda other than the best
interests of the Company and its stockholders, generally. Any stockholder who
wishes to recommend for the Nominating Committee's consideration a prospective
nominee to serve on the Board of Directors should follow the following
procedures;
o Submit the following information about the candidate in written
correspondence mailed to the Nominating Committee, c/o Dyadic
International, Inc., 140 Intracoastal Pointe Drive, Suite 404,
Jupiter, Florida 33477, Attention Chairperson of Nominating
Committee, the name, mailing address, telephone number, email
address, resume, business history, listing of other past and present
directorships and director committees, any biotech industry
experience and other relevant information;
8
o Explain in the submission why the stockholder believes the candidate
would be an appropriate member of our Board of Directors and the
benefits and attributes that the candidate will provide to us in
serving as a director;
o Provide evidence of the requisite ownership of our securities along
with the recommendation; and
o Indicate whether we may identify the stockholder in any public
disclosures that we make regarding the consideration of the director
candidate.
For a candidate to be considered by the Nominating Committee for nomination at
the 2006 Annual Meeting of Stockholders, the submission must be received by us
no later than November 3, 2005.
The Board of Directors has determined that the Nominating Committee's
current member composition satisfies the AMEX rule that governs nominating
committee composition for companies listed on AMEX, including the requirement
that all nominating committee members be "independent directors" as that term is
defined by Section 121 of the AMEX rules.
CONTACTING THE BOARD OF DIRECTORS
Any stockholder who desires to contact our Board of Directors may do so by
writing to the following address: Board of Directors, 140 Intracoastal Pointe
Drive, Suite 404, Jupiter, Florida 33477. Communications received are
distributed to an independent member of the Board of Directors or to the other
members of the Board of Directors as appropriate depending on the facts and
circumstances outlined in the communication received.
DIRECTOR INDEPENDENCE
The Board of Directors has determined that, except for Mr. Emalfarb, each
of our directors and nominees qualifies as an independent director under the
rules of AMEX. Mr. Emalfarb is not considered independent because he holds the
office of Chairman, President and Chief Executive Officer of the Company.
DIRECTOR COMPENSATION
In January 2005, the Board adopted a director compensation policy.
Directors who are also employees or officers do not receive any separate
compensation as a director. Other directors who are not our officers or
employees receive $2,000 per month cash retainer, and options to purchase shares
of our common stock under the Dyadic International, Inc. 2001 Equity
Compensation Plan (the "Equity Compensation Plan"). The chairman of the Audit
Committee will receive an additional $800 per month cash retainer. Upon
commencement of a qualified director's service, the director receives an option
to purchase 30,000 shares of our common stock, except that the Lead Director
receives options to purchase 50,000 shares. These options are vested 25% upon
grant. The unvested portion of the options vest over a four-year period, at a
rate of 25% per year, conditioned upon the director's continued service on the
Board. The options generally expire five years from the date of grant and have
an exercise price at least equal to the fair market value of our common stock on
the date of grant as determined in accordance with the Equity Compensation Plan.
At the end of each year, the qualified directors who served on the Board during
that year will receive an additional option to purchase 25,000 shares of our
common stock, or a pro rata portion based on the number of months that the
director served on the Board during that year, subject to the same vesting
provisions as described above. All qualified directors also are reimbursed for
their reasonable travel costs related to attendance at Board meetings and
meetings of Board committees.
In accordance with the director compensation policy, in January 2005, we
granted to Mr. Berman an option to purchase 50,000 shares of our Common Stock
and to Mr. Warner an option to purchase 30,000 shares of our Common Stock. Both
options are exercisable at $5.93 per share, are 25% vested and have a four-year
vesting schedule as to 75% of the options. Each of the options expires on
December 31, 2009. In March 2005, we granted to Mr. Shapiro an option to
purchase 30,000 shares of our Common Stock, which is exercisable at $2.895 per
share, is 25% vested on the date of grant, has a four-year vesting schedule as
to the 75% balance of the option and expires March 29, 2010. In April 2005, we
granted to Mr. Rosengart an option to purchase 30,000 shares of our Common
Stock, which is exercisable at $2.695 per share, is 25% vested on the date of
grant, has a four-year vesting schedule as to the 75% balance of the option and
expires April 26, 2010.
9
VOTE REQUIRED
Directors are elected by a plurality of the votes of the shares present at
the Annual Meeting in person or represented by proxy and entitled to vote on the
election of directors.
DIRECTOR ATTENDANCE AT MEETINGS AND ANNUAL MEETING
No director attended fewer than 75% of the aggregate of (i) the total
number of meetings of the Board of Directors and (ii) the total number of
meetings held by all committees of the Board of Directors on which such director
served. We do not have a formal policy regarding attendance by members of the
Board of Directors at our Annual Meeting, but strongly encourage directors to
attend. We make every effort to schedule our Annual Meeting at a time and date
to permit attendance by directors, taking into account the directors' schedules
and the timing requirements of applicable law.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
OUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE NOMINEES LISTED ABOVE.
PROPOSAL TWO: RATIFICATION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PREVIOUS INDEPENDENT ACCOUNTANTS
Rogoff & Co., P.C. was the Company's independent certifying accountant for
the fiscal year ended December 31, 2002. On February 10, 2004, Rogoff & Co.,
P.C. declined to stand for reappointment. Subsequently, the Company engaged
Sherb & Co., LLP as our independent registered public accounting firm for the
fiscal year ended December 31, 2003. The appointment of Sherb & Co., LLP was
approved by our Board of Directors. The report of Rogoff & Co., P.C. on the
Company's financial statements for the fiscal year ended December 31, 2002,
contained no adverse opinion or disclaimer of opinion, nor was it qualified or
modified as to uncertainty, audit scope or accounting principle. In connection
with the audit of the fiscal year ended December 31, 2002 and during the
subsequent period preceding its declination, there were no disagreements between
the Company and Rogoff & Co., P.C. on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to its satisfaction, would have caused
Rogoff & Co., P.C. to make reference to the subject matter of the disagreement
in connection with its reports. During the 2002 fiscal year, and through the
date of its declination, the Company was not advised by Rogoff & Co., P.C. of
any information that would be required to be reported under Item
304(a)(1)(vi)(B) of Regulation S-B.
On December 22, 2004, Sherb & Co., LLP was dismissed as our independent
registered public accounting firm effective as of that date. No work had been
performed by them in connection with the audit of our financial statements for
the fiscal year ended December 31, 2004. Prior to their dismissal, there were no
disagreements between the Company and Sherb & Co., LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to the satisfaction of Sherb & Co.,
LLP, would have caused Sherb & Co., LLP to make reference to the subject matter
of the disagreement in connection with its reports. Prior to the dismissal of
Sherb & Co., LLP, it served as the Company's independent registered public
accounting firm for the Company's fiscal year ended December 31, 2003. The
report of Sherb & Co., LLP on the Company's financial statements for the 2003
fiscal year did not contain an adverse opinion or a disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope, or accounting
principles, but did include an explanatory paragraph relating to the Company's
ability to continue as a "going concern." During the 2003 fiscal year and
through the date of the dismissal of Sherb & Co., LLP, the Company was not
advised by Sherb & Co., LLP of any information that would be required to be
reported under Item 304(a)(1)(iv)(B) of Regulation S-B.
10
APPOINTMENT AND RATIFICATION OF ERNST & YOUNG LLP
By reason of the reverse merger of the Company and Dyadic-Florida
consummated in October 2004, the historical financial statements of
Dyadic-Florida have become the historical financial statements of the Company.
Ernst & Young LLP has been the independent registered public accounting firm of
the Company's wholly-owned subsidiary Dyadic-Florida for more than two fiscal
years. Prior to the establishment of the Audit Committee, the Board appointed
the firm of Ernst & Young LLP as our independent registered public accounting
firm on December 10, 2004 for the purpose of expressing an opinion on the
financial statements of the Company dated December 31, 2004.
The Audit Committee has selected Ernst & Young LLP to serve as our
independent registered public accounting firm for the year ending December 31,
2005. Our Board of Directors is asking you to ratify this appointment.
Stockholder ratification of the appointment is not required by our bylaws, by
any applicable law or by AMEX rules and will not obligate the Company to
continue the services of such firm. However, the Board and the Audit Committee
are submitting the appointment of Ernst & Young LLP to the Company's
stockholders for ratification as a matter of good corporate practice. If the
appointment is not ratified, the Audit Committee must then determine whether to
appoint another independent registered public accounting firm before the end of
the current fiscal year.
If the stockholders of the Company fail to ratify the appointment, the
Audit Committee will reconsider whether or not to retain Ernst & Young LLP. Even
if the appointment is ratified, our Audit Committee in its discretion may direct
the appointment of a different independent registered public accounting firm at
any time during the year if our Audit Committee believes that such a change
would be in the best interests of the Company and the stockholders.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting, will have the opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions.
FEES BILLED TO COMPANY BY ERNST & YOUNG LLP
Audit Fees
Fees billed by Ernst & Young LLP for the audit of the consolidated
financial statements of the Company and its predecessor Dyadic-Florida for the
years ended December 31, 2003 and 2004 and for the filing of the Company's Form
SB-2 Registration Statement in 2004, totaled $153,675 for 2003 and $709,977 for
2004. There were no charges related to regulatory filings for 2003.
Audit Related Fees
No fees were billed by Ernst & Young LLP during 2003 or 2004 for assurance
and related services that were reasonably related to the performance of the
audit or review of our financial statements.
Tax Fees
No fees were billed by Ernst & Young LLP during 2003 or 2004 for
professional services rendered for tax compliance, tax advice or tax planning.
11
All Other Fees
Other fees are those associated with services not captured in any of the
foregoing categories. During 2004, Ernst & Young LLP did not bill the Company
for any other professional services with respect to any matters concerning the
Company. During 2003, Ernst & Young LLP billed the Company $2,206 for other
professional services.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Consistent with SEC policies regarding auditor independence, the Audit
Committee has responsibility for appointing, setting fees and overseeing the
work of the independent registered public accounting firm. In recognition of
this responsibility, the Audit Committee has established a policy to pre-approve
all audit and permissible non-audit services provided by the independent
registered public accounting firm.
Prior to engagement of the independent registered public accounting firm
for the next year's audit, management will submit to the Audit Committee for
approval an aggregate of services expected to be rendered during that year for
each of four categories of services. Prior to engagement, the Audit Committee
pre-approves these services by category of service. The fees are budgeted, and
the Audit Committee requires the independent registered public accounting firm
and management to report actual fees versus the budget periodically throughout
the year by category of service. During the year, circumstances may arise when
it may become necessary to engage the independent registered public accounting
firm for additional services not contemplated in the original pre-approval. In
those instances, the Audit Committee requires specific pre-approval before
engaging the independent registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one or more of
its members. The member to whom such authority is delegated must report, for
informational purposes only, any pre-approval decisions to the Audit Committee
at its next scheduled meeting
VOTE REQUIRED
The ratification of the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal year ending
December 31, 2005 requires the affirmative vote of the holders of a majority of
the Company's shares present at the Annual Meeting in person or by proxies and
entitled to vote.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
OUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2005.
12
STOCK OWNERSHIP
The following table sets forth information regarding the number of shares
of our common stock beneficially owned on April 20, 2005, by:
o any person or "group," as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, known to us to own beneficially
more than five percent of the outstanding shares of our common
stock,
o each of our directors and director nominees,
o each of our past or present executive officers named in the Summary
Compensation Table, and
o all of our directors and executive officers as a group.
Except as indicated below, the persons named in the table have sole voting
and investment power with respect to all shares shown as beneficially owned by
them, subject to community property laws, where applicable. Unless otherwise
indicated, the address for each more than 5% stockholder is c/o Dyadic
International, Inc., 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida
33477. Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting or investment power with respect to
securities. Percentage of beneficial ownership is based on 22,241,105 shares
outstanding as of April 20, 2005.
SHARES ISSUABLE PURSUANT TO
NUMBER OPTIONS, WARRANTS & PERCENTAGE
OF SHARES CONVERTIBLE SECURITIES OF SHARES
BENEFICIALLY EXERCISABLE BENEFICIALLY
BENEFICIAL OWNER OWNED WITHIN 60 DAYS OWNED (1)
---------------- ----- --------------- ---------
Mark A. Emalfarb (2) 5,570,827 1,527,732 29.9%
The Francisco Trust (3) 4,422,041 222,537 20.7%
c\o Robert S. Levin, Esq
Levin & Ginsburg, Ltd.
180 N. LaSalle, Suite 3200
Chicago, Illinois 60601
Stephen Warner (4) 300,000 157,500 2.0%
400 N. Flagler Drive, Suite 1601
West Palm Beach, Florida 33401
Robert Shapiro -- 7,500 *
Richard Berman -- 12,500 *
Ratnesh (Ray) Chandra 28,716 17,000 *
Kent Sproat 53,716 12,000 *
Alexander (Sasha) Bondar 3,716 22,000 *
All executive officers and directors 5,956,975 1,756,232 32.1%
as a group (5)
- ----------
* Denotes less than one percent (1.0%).
13
(1) The percentages of beneficial ownership as to each person, entity or group
assume the exercise or conversion of all options, warrants and convertible
securities held by such person, entity or group which are exercisable or
convertible within 60 days, but not the exercise or conversion of options,
warrants and convertible securities held by others shown in the table.
(2) Held of record by the Mark A. Emalfarb Trust U/A/D October 1, 1987, for
which Mr. Emalfarb serves as sole trustee, and represents the rights to
purchase 1,092,500 shares under Bridge Loan Warrants, and 251,298 shares
pursuant to the terms of a convertible note originally in the principal
amount of $750,766, but increased to $836,824 on October 29, 2004, to
reflect accrued interest of $86,058 through that date, at $3.33 per share.
Also includes 183,934 warrants to purchase shares at $5.50 per share
related to the cancellation of a note payable to the Mark A. Emalfarb
Trust through the sale of Investment Units in the October 2004 offering.
(3) Includes the right to purchase 222,537 shares pursuant to the terms of a
convertible note originally in the principal amount of $664,838, but
increased to $741,047 on October 29, 2004, to reflect accrued interest of
$76,209 through that date, at $3.33 per share. The Francisco Trust has as
its beneficiaries the spouse and descendants of Mark A. Emalfarb, and as
its trustee an unrelated third party, Robert S. Levin, Esq.
(4) All securities held of record by Bioform, LLC, of which Mr. Warner is the
managing member, except for warrants to purchase 7,500 shares at $5.93 per
share that are held of record by Mr. Warner.
(5) Includes beneficial ownership of all persons listed other than the
Francisco Trust.
14
MANAGEMENT
Our current executive officers and key employees, their ages and positions
held and tenure are set forth in the table below.
NAME AGE POSITION
---- --- --------
Mark A. Emalfarb 50 Director, Chairman, President, Chief
Executive Officer, Secretary and Treasurer
Wayne Moor 53 Chief Financial Officer and Vice
President
Kent M. Sproat (1) 58 Executive Vice President, Enzyme
Business Systems
Ratnesh (Ray) Chandra (2) 57 Senior Vice President, Marketing -
Biotechnology
Alexander (Sasha) Bondar (3) 33 Vice President, Strategy & Corporate
Development
Daniel Michalopoulos, Ph.D. (4) 52 Vice President, Pulp & Paper
Richard Burlingame, Ph.D. (4) 52 Executive Director, Research &
Development
(1) Mr. Sproat served as Vice President, Manufacturing from 1997 through March
2005.
(2) Mr. Chandra served as Vice President, Marketing - BioSciences, from 2000
to March 2005.
(3) Mr. Bondar served as Executive Director, Business Development from 2003
through March 2005.
(4) Dr. Burlingame and Dr. Michalopoulos are key employees.
The following biographies describe the business experience of our
executive officers and key employees. Information concerning the business
experience of Mark A. Emalfarb is set forth above under "Proposal One: Election
of Directors."
Wayne Moor. Mr. Moor joined the Company in January 2005. During the past
five years Mr. Moor has served as a Chief Financial Officer of several public
companies, and has over 25 years experience in real estate and hotel operations,
asset management, debt restructurings, recapitalizations and developing
strategic turnaround plans. From October 2002 through December 2004, Mr. Moor
served as the Senior Vice President, Treasurer and Chief Financial Officer of
Boca Resorts, Inc, a hospitality company. From October 2001 to October 2002, Mr.
Moor was Senior Vice President and Chief Financial Officer for ANC, the parent
company of Alamo and National rental car companies. In November 2001, following
the terrorist attacks of September 11, 2001, ANC and its U.S. operating
subsidiaries voluntarily filed petitions for reorganization under Chapter 11 of
the U.S. Bankruptcy Code in Wilmington, Delaware. From September 2000 to October
2001, Mr. Moor was Senior Vice President and Chief Financial Officer for Gerald
Stevens, Inc., a floral products marketer and retailer. In April 2001, Gerald
Stevens, Inc. and certain operating subsidiaries voluntarily filed petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in Miami, Florida.
From June 1997 to January 2000, Mr. Moor was Executive Vice President and Chief
Financial Officer for US Diagnostic, Inc., an operator of outpatient medical
diagnostic imaging and related facilities. Prior to that, Mr. Moor held the
position of Chief Financial Officer or Executive Vice President for a number of
privately and publicly held financial institutions and real estate operating
companies. He began his career in public accounting.
Kent M. Sproat. Mr. Sproat is the Company's Executive Vice President,
Enzyme Business, responsible for all manufacturing, applications, sales, and
marketing functions of the Company's enzymes business activities, and was
formerly Vice President, Manufacturing. Mr. Sproat joined Dyadic-Florida in 1997
from Genencor International, where since 1996 he served as its Elkhart Site
Manager. From 1990 to 1996, Mr. Sproat was Vice President, Manufacturing, of
Solvay Enzymes, Inc. From 1989 to 1990, he was Director of International
Manufacturing of the Enzyme Division of Miles, Inc. Between 1981 and 1990, he
served as Plant Manager of Miles' Elkhart, Indiana and Clifton, New Jersey-based
enzyme plants. Between 1973 and 1981, Mr. Sproat was a Production Superintendent
at Miles' Citric Acid Division; Start Up Manager of Miles' citric acid facility
in Brazil; and Production Supervisor and Project Engineer. Mr. Sproat is the
recipient of a patent for his design in the purification process of amylases.
Mr. Sproat is a chemical engineer with a B.S. degree from Purdue University.
15
Ratnesh (Ray) Chandra. Mr. Chandra is the Company's Senior Vice President,
Marketing - Biotechnology Systems, responsible for business development for the
Company's biosciences business activities, and was formerly Vice President,
Marketing - BioSciences. Mr. Chandra joined Dyadic-Florida from Genencor
International in 2000. He had served at Genencor as the Director, New Business
Development since 1993. From 1987 to 1993, he was with Merck & Co. holding the
positions of Director, Business/Market Intelligence and Director, Business
Systems in their Human Health Marketing Division. From 1976 to 1987, he was with
Schering-Plough Corp. in the positions of Director Economic Analysis, Manager
Capital Planning and Senior Operations Analyst. Mr. Chandra has an M.B.A. from
New York University and an M.S. in engineering from Columbia University.
Alexander (Sasha) Bondar. Mr. Bondar is the Company's Vice President,
Strategy & Corporate Development, with primary responsibility for corporate
development, organization planning, merger & acquisition opportunities,
fund-raising activities and investor and public relations, and secondarily, when
requested, for assisting in business development for the Company's biosciences
and enzyme businesses, and was formerly Executive Director, Business
Development. Mr. Bondar joined Dyadic-Florida in May 2003 from The Aurora Funds,
a venture capital firm based in Research Triangle Park, North Carolina, where he
was focused on investing in early stage life sciences companies. Prior to that,
from 1996 to 2001, Mr. Bondar served in a variety of management roles at Incyte
Genomics, now Incyte Corporation, in Palo Alto, California, and from 1999 to
2001 as Associate Director, Corporate Business Development. From 1997 to 1999,
he served as Manager, Pharmacogenomics Business Development, and was a major
contributor to the successful launch of Incyte's pharmacogenomics program. From
1996 to 1997, he served as Technical Advisor to the intellectual property group
at Incyte, contributing to the creation of the largest portfolio of gene patents
in the world. Mr. Bondar holds a B.S. degree in Biotechnology Management from
Menlo College and an M.B.A. in Corporate Finance and Health Sector Management
from Duke University's Fuqua School of Business.
Daniel Michalopoulos, Ph.D. Dr. Michalopoulos joined the Company in
February 2005 as its Vice President, Pulp & Paper and is focused on growing the
Company's pulp and paper effort. Prior to the Company, he served as Senior
Program Manager for Hercules' Pulp and Paper Division from 1998 to 2005 where he
managed a staff of 40 people with an annual budget of $8 million. Prior to that,
he served as Research Director at BetzDearborn Pulp and Paper Division and held
other research and management positions at Betz PaperChem. Dr. Michalopoulos
conducted his post-doctoral work at Rice University, received his Ph.D. in
Chemistry from Colorado State University and his B.S. in Chemistry from Lowell
Technological Institute.
Richard P. Burlingame, Ph.D. Dr. Burlingame is the Company's Executive
Director, Research & Development, responsible for management of the day-to-day
research and development activities engaged in by the Company worldwide. Dr.
Burlingame joined Dyadic-Florida in October 2001 and is focused on leading the
Dyadic R&D team in its development of the C1 Expression System and C1 Host
Technology. Prior to that, Dr. Burlingame was a research manager at BioTechnical
Resources, Inc., or BTR, from 1989 to 2001, leading a number of programs in the
areas of metabolic engineering, biocatalysis, gene expression, and strain and
process development for the production of fungal enzymes. He was the primary
liaison and chief scientific officer for BTR's collaborations with Dyadic.
Between 1986 and 1989, Dr. Burlingame was a researcher at Bio-Technical
International, Inc. where he was primarily involved with generating recombinant
strains for the production of amino acids and development of genetic engineering
tools. His postdoctoral work was at the University of Wisconsin-Madison in the
area of bacteriophage genetics and molecular biology. Dr. Burlingame received
his Ph.D. degree in biochemistry from the University of Minnesota, where he
studied microbial biochemistry, physiology, and genetics and his B.S. degree,
also in biochemistry, from the University of Illinois.
Our officers are elected annually by our Board of Directors at a meeting
held following each Annual Meeting of Stockholders, or as necessary and
convenient in order to fill vacancies or newly created offices. Each officer
serves at the discretion of our Board of Directors. Any officer elected or
appointed by our Board of Directors may be removed by our Board of Directors
whenever in its judgment our best interests will be served, but a removal is
without prejudice to the contractual rights, if any, of the person so removed.
See "Employment Agreements."
We are not aware of any family relationship among any of our directors or
officers.
16
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY COMPENSATION TABLE
The following summary compensation table indicates the cash and non-cash
compensation earned during the fiscal years ended December 31, 2004, December
31, 2003, and December 31, 2002, respectively, by our Chief Executive Officer
and each of our four other highest compensated executive officers (determined on
the basis of their salary and bonus for the fiscal year ended December 31, 2004)
whose total compensation exceeded $100,000 during 2004. The listed individuals
are referred to in this Proxy Statement as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION (1) COMPENSATION AWARDS
----------------------------------- ---------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING
NAME AND POSITION YEAR SALARY ($) BONUS ($) AWARDS OPTIONS
- ----------------- ---- ---------- --------- --------- ---------
Mark A. Emalfarb(2) 2004 300,000 75,000 -- --
President, Chief Executive 2003 300,000 35,970 -- --
Officer and Director 2002 300,000 32,700 -- --
Ratnesh (Ray) Chandra (3) 2004 149,856 30,000 -- 60,000
Senior Vice President, 2003 144,004 23,250 3,716 15,000
Marketing - Biotech- 2002 140,333 13,900 -- --
nology Systems
Kent M. Sproat (4) 2004 145,206 30,000 -- 80,000
Executive Vice President, 2003 139,505 23,250 3,716 10,000
Manufacturing 2002 131,667 12,000 -- --
Alexander (Sasha) Bondar (5) 2004 138,105 25,000 -- 45,000
Vice President, Strategy & 2003 74,157 23,250 3,716 25,000
Corporate Development 2002 -- -- -- --
Thomas Bailey (6) 2004 126,880 -- -- 10,000
Vice President, Marketing 2003 115,670 25,700 4,054 20,000
Enzymes 2002 106,250 6,300 -- --
- ---------------------
(1) Annual compensation does not include the cost to the Company of benefits
certain executive officers receive in addition to salary and cash bonuses.
The aggregate amounts of such personal benefits, however, did not exceed
the lesser of either $50,000 or 10% of the total annual compensation of
such executive officer. The bonus amount reflected for each of the Named
Executive Officers, other than Mr. Emalfarb, for each fiscal year was
actually paid in the succeeding fiscal year.
(2) Bonuses listed for Mr. Emalfarb for 2002 and 2003 were accrued but not
paid until January 2005. Mr. Emalfarb's bonus for 2004 has been accrued,
and will be paid upon the first to occur of (i) the closing of either (x)
the Company's next significant financing transaction or (y) a transaction
in which the Company receives a significant influx of cash, as determined
by the Compensation Committee in its reasonable discretion, or (ii) the
date the percentage of the Company's outstanding shares held by the CEO
falls below 50% of what that percentage is on the date hereof.
17
(3) Mr. Chandra has received the following awards under the Dyadic
International, Inc. 2001 Equity Compensation Plan ("Equity Compensation
Plan"): (a) in March 2005, options to purchase 50,000 shares of common
stock at an exercise price of $3.025 for services rendered in 2004, which
vest at the rate of 25% per year on each anniversary of the date of grant;
(b) in July 2004, options to purchase 10,000 shares of common stock at an
exercise price of $3.33 for services rendered in 2003 and 2004, which are
20% vested and vest as to the balance at the rate of 20% for each 12 month
period of employment thereafter; (c) in July 2004, 3,716 shares of common
stock, valued at $3.33 per share on the date of issuance, for a bonus
accrued in 2003, which are fully vested; and (d) in July 2003, options to
purchase 15,000 shares of common stock at an exercise price of $4.50 for
services rendered in 2003 and 2002, which are fully vested.
(4) Mr. Sproat has received the following awards under the Equity Compensation
Plan: (a) in March 2005, options to purchase 70,000 shares of common stock
at an exercise price of $3.025 for services rendered in 2004, which vest
at the rate of 25% per year on each anniversary of the date of grant; (b)
in July 2004, options to purchase 10,000 shares of common stock at an
exercise price of $3.33 for services rendered in 2003 and 2004, which are
20% vested and vest as to the balance at the rate of 20% for each 12 month
period of employment thereafter; (c) in July 2004, 3,716 shares of common
stock, valued at $3.33 per share on the date of issuance, for a bonus
accrued in 2003, which are fully vested; and (d) in July 2003, options to
purchase 10,000 shares of common stock at an exercise price of $4.50 for
services rendered in 2003 and 2002, which are fully vested.
(5) Mr. Bondar has received the following awards under the Equity Compensation
Plan: (a) in March 2005, options to purchase 35,000 shares of common stock
at an exercise price of $3.025 for services rendered in 2004, which vest
at the rate of 25% per year on each anniversary of the date of grant; (b)
in July 2004, options to purchase 10,000 shares of common stock at an
exercise price of $3.33 for services rendered in 2003 and 2004, which are
20% vested and vest as to the balance at the rate of 20% for each 12 month
period of employment thereafter; (c) in July 2004, 3,716 shares of common
stock for a bonus accrued in 2003, valued at $3.33 per share on the date
of issuance, which are fully vested; (d) in July 2003, options to purchase
15,000 shares of common stock at an exercise price of $4.50 for services
rendered in 2003, which are fully vested; and (e) in July 2003, options to
purchase 10,000 shares of common stock at an exercise price of $4.50 for
services rendered in 2003, which vest 20% per year beginning on December
31, 2003. Mr. Bondar's employment with the Company began in May 2003.
(6) Mr. Bailey resigned as an employee and officer effective January 14, 2005.
Prior to his resignation, he had received the following awards under the
Equity Compensation Plan: (a) in July 2004, options to purchase 10,000
shares of common stock at an exercise price of $3.33 for services rendered
in 2003 and 2004, which are 20% vested and vest as to the balance at the
rate of 20% for each 12 month period of employment thereafter; (b) in July
2004, 4,054 shares of common stock, valued at $3.33 per share on the date
of issuance for a bonus accrued in 2003, which are fully vested; and (c)
in July 2003, options to purchase 20,000 shares of common stock at an
exercise price of $4.50 for services rendered in 2003 and 2002, which are
fully vested.
18
STOCK OPTION GRANTS
The following table provides information related to options Dyadic-Florida
granted to the Named Executive Officers during 2004. These options were assumed
by us incident to the merger.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE
- ---- ----------- -------------- ----------- ----------
Mark A. Emalfarb (1) -- -- -- --
Ratnesh (Ray) Chandra 10,000 2.9% $ 3.33 07/28/09
Kent M. Sproat 10,000 2.9% 3.33 07/28/09
Alexander (Sasha) Bondar 10,000 2.9% 3.33 07/28/09
Thomas Bailey 10,000 2.9% 3.33 07/28/09
- ----------
(1) Excludes Bridge Loan Warrants granted to Mr. Emalfarb. See "Certain
Relationships and Related Transactions."
The following table sets forth information concerning unexercised options
held by the Named Executive Officers as of December 31, 2004. Except for the
exercise in November 2004 by two of our executives of options granted to them in
2001 by one of our principal stockholders with respect to previously issued and
outstanding shares, no options were exercised by the Named Executive Officers
during 2004.
AGGREGATE OPTIONS AND OPTION VALUES AT DECEMBER 31, 2004
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2004 (#) DECEMBER 31, 2004 ($) (5)
--------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
Mark A. Emalfarb (6) -- -- -- --
Ratnesh (Ray) Chandra 17,000(1) 8,000(1) 39,740 26,960
Kent M. Sproat 12,000(2) 8,000(2) 28,740 26,960
Alexander (Sasha) Bondar 22,000(3) 13,000(3) 50,740 37,960
Thomas Bailey 37,000(4) 8,000(4) 83,740 26,960
- ----------
(1) 15,000 of the exercisable options have an exercise price of $4.50 per
share and 2,000 have an exercise price of $3.33, and all of the
unexercisable options have an exercise price of $3.33.
(2) 10,000 of the exercisable options have an exercise price of $4.50 per
share and 2,000 have an exercise price of $3.33, and all of the
unexercisable options have an exercise price of $3.33.
(3) 20,000 of the exercisable options have an exercise price of $4.50 per
share and 2,000 have an exercise price of $3.33, and 5,000 of the
unexercisable options have an exercise price of $4.50, and 8,000 have an
exercise price of $3.33.
(4) 35,000 of the exercisable options have an exercise price of $4.50 per
share and 2,000 have an exercise price of $3.33, and all of the
unexercisable options have an exercise price of $3.33.
19
(5) Based on the closing bid price for our common stock of $6.70 per share as
of December 31, 2004.
(6) Excludes Bridge Loan Warrants owned by Mr. Emalfarb. See "Certain
Relationships and Related Transactions."
Mr. Chandra was granted an option to purchase 25,000 shares of common
stock in 2001 from one of our stockholders, the Francisco Trust, for services
rendered to Dyadic-Florida in 2001 and 2000. The option was exercisable at a
price of $4.50 per share. On November 3, 2004, Mr. Chandra exercised in its
entirety this option to purchase shares from the Francisco Trust by executing
and delivering to the Francisco Trust an exercise agreement under which he
agreed to pay the entire exercise price, together with interest at a rate of
2.37% per annum, on the first to occur of October 31, 2005 or 60 days following
the date of Mr. Chandra's termination of employment with us.
Mr. Sproat was granted an option to purchase 50,000 shares of common stock
in 2001 from one of our stockholders, the Francisco Trust, for services rendered
to Dyadic-Florida in 2001 and 2000. The option was exercisable at a price of
$2.00 per share. On November 3, 2004, Mr. Sproat exercised in its entirety this
option to purchase shares from the Francisco Trust by executing and delivering
to the Francisco Trust an exercise agreement under which he agreed to pay the
entire exercise price, together with interest at a rate of 2.37% per annum, on
the first to occur of October 31, 2005 or 60 days following the date of Mr.
Sproat's termination of employment with us.
In connection with his employment on January 31, 2005, Mr. Moor was
granted an option to purchase 277,889 shares of common stock in accordance with
the Equity Compensation Plan at an exercise price of $3.68 per share pursuant to
the Company's then standard form employee stock option agreement. The option
becomes exercisable, conditioned upon Mr. Moor's continued service as an
employee of the Company, as to 25% of the shares on each of the next four
anniversaries of the date of the commencement of his employment, and expires on
January 31, 2010.
In connection with his employment on February 28, 2005, Daniel
Michalopoulos, Ph.D. was granted an option to purchase 25,000 shares of common
stock in accordance with the Equity Compensation Plan at an exercise price of
$3.80 per share pursuant to the Company's then standard form employee stock
option agreement. The option becomes exercisable, conditioned upon Dr.
Michalopoulos' continued service as an employee of the Company, as to 25% of the
shares on each of the next four anniversaries of the date of the commencement of
his employment, and expires on February 28, 2010.
In connection with the entry into their employment agreements with the
Company on March 30, 2005, Kent M. Sproat, Ratnesh (Ray) Chandra, Alexander
(Sasha) Bondar, and Richard Burlingame, Ph.D. were granted options under the
Equity Compensation Plan to purchase 70,000, 50,000, 35,000 and 40,000 shares of
common stock, respectively, at an exercise price of $3.025 per share pursuant to
the Company's then standard form employee stock option agreement. Each option
becomes exercisable, conditioned upon that executive's continued service as an
employee of the Company, as to 25% of the shares on each of the next four
anniversaries of the date of his employment agreement, and expires on March 30,
2010.
20
EQUITY COMPENSATION PLANS
The following table provides information as of December 31, 2004, with
respect to the shares of our common stock that may be issued under our existing
equity compensation plans.
NUMBER OF
SECURITIES TO BE NUMBER OF SECURITIES
ISSUED UPON WEIGHTED AVERAGE REMAINING AVAILABLE
EXERCISE OF EXERCISE PRICE OF FOR FUTURE ISSUANCE
OUTSTANDING OUTSTANDING UNDER EQUITY
PLAN CATEGORY OPTIONS OPTIONS COMPENSATION PLANS
- ------------------------------ ------------------------- ------------------------ --------------------------
Equity Compensation 750,000 $4.08 4,383,823 (2)
Plans Approved by
Stockholders (1)
Equity Compensation
Plans Not Approved N/A N/A N/A
by Stockholders
------------------------- ------------------------ --------------------------
Total 750,000 $4.08 4,383,823 (2)
- ----------
(1) Consists of Dyadic International, Inc. 2001 Equity Compensation Plan,
which we assumed in connection with the merger consummated on October 29,
2004.
(2) Excludes 18,624 shares that were awarded to Dyadic-Florida employees under
the Dyadic International, Inc. 2001 Equity Compensation Plan in 2004.
DYADIC INTERNATIONAL, INC. 2001 EQUITY COMPENSATION PLAN
Incident to the consummation of the merger, we assumed the Dyadic
International, Inc. 2001 Equity Compensation Plan adopted by Dyadic-Florida in
2001. The Equity Compensation Plan provides for the grant of options intended to
qualify as incentive stock options or nonstatutory stock options that are not
intended to so qualify, and awards of shares and stock appreciation rights.
Options or awards may be granted to our employees, officers, directors,
consultants and advisors and those of our subsidiaries. In addition to 1,350,389
shares of common stock we had reserved for issuance for outstanding options
granted under the Equity Compensation Plan, as of April 20, 2005, we had an
additional 3,783,434 shares reserved for future options and awards under the
Equity Compensation Plan, subject to adjustment in the event of a stock split,
stock dividend, recapitalization or similar capital change. The Equity
Compensation Plan is administrated by a plan administrator, presently the
Compensation Committee of our Board of Directors, which:
o selects the eligible persons to whom awards and options are granted;
o determines the number of shares subject to each award or option, the
exercise price or purchase price for options, vesting or
exercisability schedules, and such other terms and conditions as the
administrator deems necessary or appropriate;
o interprets the provisions of the Equity Compensation Plan; and
o may, subject to certain limitations, amend the Equity Compensation
Plan.
Each award or option granted under the Equity Compensation Plan is required to
be evidenced by a written agreement between us and the recipient of the award or
option.
21
The exercise period, vesting schedule and the exercise price for all
options granted under the Equity Compensation Plan is determined by the plan
administrator. The exercise price for incentive stock options may not be less
than the fair market value of our common stock on the date the option is
granted, except for incentive stock options granted to 10% stockholders, which
must have an exercise price of not less than 110% of the fair market value of
our common stock on the date the option is granted. The exercise price for all
nonstatutory stock options must be equal to or greater than the fair market
value of our common stock. Incentive stock options have a maximum term of ten
years, except for 10% stockholders who are subject to a maximum term of five
years. Options are not transferable other than by will and the laws of descent
and distribution. Options generally expire not later than 90 days following a
termination of employment, 12 months following the optionee's disability, or not
later than 12 months following the optionee's death. If any option expires,
terminates or is canceled for any reason, or if shares of stock issued subject
to a right of repurchase are repurchased by us, the shares allocable to the
unexercised option or the repurchased shares will become available for
additional option grants under the Equity Compensation Plan. The Equity
Compensation Plan also confers discretion upon the plan administrator to
accelerate the vesting schedules applicable to all awards and options upon the
occurrence of a change of control. The term "change in control" is defined under
the Equity Compensation Plan to mean:
o a sale of all or substantially all of our assets, or our liquidation
or dissolution, or a merger or consolidation in which our
stockholders immediately prior to the transaction own less than a
majority of the voting securities of the surviving corporation;
o the commencement of a tender offer for 30% or more of the voting
power of our outstanding shares of common stock;
o any person coming to own more than 50% of the voting power of our
outstanding shares of common stock; or
o a change in the composition of our Board of Directors, in which less
than two-thirds of its members have been members for two consecutive
years.
EMPLOYMENT AGREEMENTS
We have employment agreements with each of our Named Executive Officers.
In April 2001, Dyadic-Florida and Mark A. Emalfarb, our Chief Executive Officer
and the founder of Dyadic-Florida, entered into an Employment Agreement pursuant
to which he has been employed by Dyadic-Florida as its President and Chief
Executive Officer which we assumed incident to the consummation of the merger
with Dyadic-Florida. The initial term was for three years with automatic
two-year renewals unless either party furnishes the other a notice of
non-renewal not less than 60 days prior to the expiration of the then term.
Because no notice of termination has been furnished by either party, the current
expiration of the employment agreement is April 2006. Mr. Emalfarb's base annual
compensation was initially fixed at $300,000. He is eligible to earn a bonus
annually based upon goals and objectives mutually agreed upon by him and our
Board of Directors. Mr. Emalfarb has received no salary increases since the
employment agreement was executed. The employment agreement is terminable only
on account of Mr. Emalfarb's death or disability, by us only "for Cause," and by
Mr. Emalfarb only "for Good Reason." The phrase "for Cause" is defined to
include failure to substantially perform assigned duties for a period of 20 days
following a written demand for his substantial performance that identifies the
manner in which he has failed to substantially perform, a material breach of the
employment agreement, a material breach of his proprietary rights agreement with
us, his illegal or gross misconduct which is willful and causes damages to us,
the conviction of a felony or plea of no contest, substance abuse or violation
of our policies against racial or sexual discrimination. The phrase "for Good
Reason" is defined to mean the assignment of duties to Mr. Emalfarb inconsistent
with his position, our failure to honor our compensation commitments to Mr.
Emalfarb fixed by his employment agreement, our failure to cause Mr. Emalfarb to
be elected to our Board of Directors and our demotion of Mr. Emalfarb. If Mr.
Emalfarb's employment is terminated by us other than "for Cause" or by Mr.
Emalfarb "for Good Reason," he is entitled to receive a one year severance
benefit plus an amount equal to a portion of his annual bonus for the preceding
year, prorated for the portion of the current year worked. For its benefit,
Dyadic-Florida also maintains a term life insurance policy insuring Mr.
Emalfarb's life in the face amount of $5,000,000.
22
On January 31, 2005, we hired Mr. Wayne Moor to become the Company's Chief
Financial Officer and a Vice President pursuant to the terms of an employment
agreement of that date. The initial term of Mr. Moor's employment expires
December 31, 2007, with automatic one-year renewals unless either party
furnishes the other a notice of non-renewal not less than 90 days prior to the
expiration of the then term. Mr. Moor's annual base compensation is $225,000,
and he is eligible to earn a bonus each year of up to 40% of his annual base
compensation based upon a bonus plan to be adopted and maintained by the
Compensation Committee for such year.
On February 28, 2005, we hired Dr. Michalopoulos to become the Company's
Vice President, Pulp & Paper pursuant to the terms of an employment agreement of
that date. The initial term of Dr. Michalopoulos' employment expires December
31, 2007, with automatic one-year renewals unless either party furnishes the
other a notice of non-renewal not less than 90 days prior to the expiration of
the then term. Dr. Michalopoulos' annual base compensation is $140,000, and he
is eligible to earn a bonus each year of up to 40% of his annual base
compensation based upon a bonus plan to be adopted and maintained by the
Compensation Committee for such year.
On March 30, 2005, we entered into employment agreements with three of our
executives, Kent M. Sproat, Ratnesh (Ray) Chandra and Alexander (Sasha) Bondar,
and a key employee, Richard Burlingame, Ph.D. In the case of Mr. Chandra, his
employment agreement replaced a previously existing employment agreement dated
May 1, 2000. The initial term of employment under all four employment agreements
expires December 31, 2007, with automatic one-year renewals unless either party
furnishes the other a notice of non-renewal not less than 90 days prior to the
expiration of the then term. The annual base compensation of Mr. Sproat, Mr.
Chandra, Dr. Burlingame and Mr. Bondar is $190,000, $170,250, $148,500 and
$143,000, respectively, and each of them is eligible to earn a bonus each year
of up to 40% of his annual base compensation based upon a bonus plan to be
adopted and maintained by the Compensation Committee for such year.
Each of the employment agreements for the executives and key employees,
other than Mr. Emalfarb, is terminable on account of the executive's death or
disability, or by the Company without cause or "for Cause." The phrase "for
Cause" is defined to include a material breach of the employment agreement, acts
of disloyalty to the Company (including but not limited to acts of dishonesty or
diversion of corporate opportunities), the unauthorized disclosure of the
Company's confidential information, or acts determined in good faith by the
Compensation Committee to be detrimental to the Company's interests, provided
that the executive must be afforded an opportunity to have a face-to-face
meeting with the Compensation Committee before any determination is made by it
that he was guilty of "for Cause" conduct. If the executive's or key employee's
employment is terminated by the Company other than "for Cause," upon the
condition that he furnish the Company with a full general release, he is
entitled to receive a severance benefit of his then monthly base compensation
for the lesser of six months or until he has obtained other full or part-time
employment as an employee or consultant. Under each employment agreement, the
Company is also obligated to indemnify the subject executive to the fullest
extent permitted by applicable law. Further, the Company agrees to advance
expenses he may spend as a result of any proceeding against him as to which he
could be indemnified.
Mr. Sproat's and Mr. Chandra's employment agreements also include
provisions that might entitle them to extended severance benefits following the
occurrence of a "Change of Control" of the Company, in the case of Mr. Chandra,
and following the occurrence of a "Change of Control" of either the Company or
Dyadic-Florida, in the case of Mr. Sproat, as those terms are defined in their
respective agreements. Under both agreements, upon a termination of the
executive's employment by the Company or its successor-in-interest other than
"for Cause," or a termination of his employment by the executive which is a
"Constructive Termination of Employment Without Cause" within 12 months
following the occurrence of a Change of Control, he will become entitled to a
severance benefit of his then monthly base compensation for the lesser of 18
months, or until he has obtained other full or part-time employment as an
employee or consultant. The phrase "Change of Control" means: (i) a sale, lease,
exchange or other transfer of all or substantially all of the assets of the
Company; (ii) a merger or consolidation of the Company in which less than a
majority of the outstanding voting securities of the surviving corporation are
not owned by stockholders of the Company immediately prior to such merger or
consolidation; (iii) a "person" or "group" (as those terms are defined in
Section 13(d) and 14(d) of the Exchange Act of 1934, as amended) not beneficial
owners of voting securities of the Company on March 30, 2005 become the
beneficial owners, directly or indirectly, of more than 50% of the outstanding
voting securities of the Company other than as a result of the purchase of such
voting securities from the Company in a transaction or series of transactions
approved by the affirmative vote of a majority of the directors who were members
of the Board one month prior to the date of such transaction; (iv) a sale,
lease, exchange or other transfer of all or substantially all of the assets of
the Company's Enzyme Business (in the case of Mr. Sproat) or the BioSciences
Business (in the case of Mr. Chandra) in a transaction in which, following such
transaction, the transferee is not an affiliate of the Company; or (v) a
consolidation or merger of any subsidiary or affiliate of the Company that owns
substantially all of the assets used in the conduct of the Company's Enzyme
Business (in the case of Mr. Sproat) or the BioSciences Business (in the case of
Mr. Chandra) with another party, the survivor of which is not an affiliate of
the Company. The phrase "Constructive Termination of Employment Without Cause"
in both agreements is defined to mean a termination of employment at the
election of the executive made within 12 months following a Change of Control
and within 60 days following the occurrence of any of the following events: (i)
a material demotion in his office, duties or responsibilities; (ii) a reduction
in his annual base compensation or potential annual bonus; (iii) the imposition
of a requirement that he relocate his principal residence outside a 50 mile
radius of the Company's current principal place of business; or (iv) the failure
of the Company or its successor-in-interest to comply with the terms of his
employment agreement.
23
Incident to the consummation of the merger with Dyadic-Florida, we assumed
the rights and obligations of Dyadic-Florida under confidential information,
inventions assignment and non-compete agreements between Dyadic-Florida and each
of Mr. Emalfarb, Mr. Chandra, Mr. Sproat, Dr. Burlingame, Mr. Bondar and another
individual who was our Vice President, Marketing-Enzymes at the date of the
merger. Under the terms of these agreements, each executive confers upon us
customary proprietary rights in respect of our confidential information and
intellectual work product contributed to by them, as well as his covenant not to
compete with our business while employed by us and for three years after the
termination of his employment. These agreements with Mr. Chandra, Mr. Sproat,
Dr. Burlingame and Mr. Bondar were superceded by their new employment
agreements, except to the extent therein expressly provided.
24
AUDIT COMMITTEE REPORT
The information contained in this section shall not be deemed to be
"soliciting material" or "filed" or incorporated by reference in future filings
with the Securities and Exchange Commission, or subject to the liabilities of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), except to the extent that we specifically incorporate it by reference
into a document filed under the Securities Act of 1933, as amended, or the
Exchange Act.
The following is the report of the Audit Committee with respect to our
Company's audited financial statements for the fiscal year ended December 31,
2004, included in our Company's Annual Report on Form 10-KSB for that year.
The Audit Committee has reviewed and discussed these audited financial
statements with management of the Company.
The Audit Committee has discussed with the Company's independent
registered public accounting firm, Ernst & Young LLP, the matters required to be
discussed by SAS 61 (Codification of Statements on Auditing Standards, AU
Section 380), as amended, which includes, among other items, matters related to
the conduct of the audit of the Company's financial statements.
The Audit Committee has received the written disclosures and the letter
from Ernst & Young LLP required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as amended, and has discussed
with Ernst & Young LLP the independence of Ernst & Young LLP, from the Company.
Based on the review and discussions referred to above in this report, the
audit committee recommended to the Company's Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form 10-KSB,
for the year ended December 31, 2004, for filing with the Securities and
Exchange Commission.
Submitted by the Audit Committee
of the Board of Directors
Richard J. Berman
Stephen J. Warner
25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our President and Chief Executive Officer, Mark A. Emalfarb, is the
trustee and beneficiary of the Mark A. Emalfarb Trust, which is our largest
stockholder. The Mark A. Emalfarb Trust and our second largest stockholder, The
Francisco Trust, whose sole beneficiaries are the spouse and descendants of Mr.
Emalfarb, have made loans to Dyadic-Florida, which we assumed in connection with
the Company's merger with Dyadic-Florida (the "Merger"). The trustee for The
Francisco Trust is not related to or affiliated with Mr. Emalfarb or the Mark A.
Emalfarb Trust. The aggregate amount of our indebtedness to the Mark A. Emalfarb
Trust and The Francisco Trust is approximately $4.0 million, as of December 31,
2004, which is owed to them pursuant to the terms of three separate debt
instruments:
o $836,824 pursuant to a subordinated promissory note made payable to
the Mark A. Emalfarb Trust dated May 30, 2001, bearing interest at
the rate of 6% per annum and originally convertible into shares of
Dyadic common stock, which we refer to as the Emalfarb Convertible
Note;
o $741,048 pursuant to a subordinated promissory note made payable to
the Francisco Trust dated May 30, 2001, bearing interest at the rate
of 6% per annum and originally convertible into shares, which we
refer to as the Francisco Convertible Note; and
o $2,424,941 pursuant to a revolving note made payable to the Mark A.
Emalfarb Trust dated May 29, 2003 and bearing interest at the rate
of 8% per annum, which we refer to as the Bridge Loan Note. In
connection with the Bridge Loan Note, warrants, which we refer to as
the Bridge Loan Warrants, were issued to purchase 1,500,000 shares
of Dyadic-Florida common stock for the lesser of $4.50 or the
conversion price of the Series A convertible preferred stock of
Dyadic-Florida then outstanding, which we refer to as the Bridge
Loan Warrants.
In August 2004, the Mark A. Emalfarb Trust and Dyadic-Florida entered into
an agreement to facilitate the consummation of the merger. In accordance with
this agreement, subject to consummation of the merger:
o The Mark A. Emalfarb Trust agreed to exchange indebtedness of
Dyadic-Florida to the trust in the amount of $1,225,000 for 367,868
shares of our common stock and warrants to purchase 183,934 shares
of our common stock;
o Each of the Emalfarb Convertible Note, the Francisco Convertible
Note and the Bridge Loan Note were amended to extend their due date
from January 1, 2005 to January 1, 2007 and to permit their
prepayment in whole or part by Dyadic-Florida without premium or
penalty;
o The conversion prices under the Emalfarb Convertible Note and
Francisco Convertible Note were amended to fix the conversion price
at $3.33 per share in lieu of the then current fair market value of
shares of Dyadic-Florida common stock; and
o The Bridge Loan Warrants were amended to fix their exercise price at
$3.33 per share.
The amendments to the convertible notes and the Bridge Loan Warrants caused us
to recognize for accounting purposes additional borrowing costs of approximately
$350,000, which will be amortized over the period from October 30, 2004 through
January 1, 2007, and to recognize for accounting purposes a beneficial
conversion feature of $554,000 which will be amortized over the same period. All
accrued and unpaid interest due under the Emalfarb Convertible Note, the
Francisco Convertible Note and the Bridge Loan Note on the date of the
completion of the merger were added to the principal amount due under those
notes. Interest under the notes accruing after October 29, 2004, is payable on a
quarterly basis until the principal sum is paid in full.
Mark A. Emalfarb, Stephen J. Warner, Richard J. Berman, Robert B. Shapiro,
and Harry Z. Rosengart our five board members, are each parties to
indemnification agreements pursuant to which we agreed to indemnify them against
any liability arising out of their performance of their duties to us in their
capacities as directors. The agreements with Messrs. Emalfarb and Warner were
entered into by Dyadic-Florida on August 19, 2004 and assumed by us incident to
the merger. Incident to the consummation of the merger, they were amended to
substitute applicable Delaware law for any references contained in those
agreements to Florida law. The agreements with Mr. Berman, Mr. Shapiro and Mr.
Rosengart were entered into directly with us in 2005 when they became directors.
All of these indemnification agreements indemnify our directors in addition to
the indemnification provided by our restated certificate of incorporation and
amended and restated bylaws. Among other things, these agreements indemnify our
directors for certain expenses, including attorneys' fees, judgments, fines and
settlement amounts incurred by them in any action or proceeding, including any
action by or in the right of Dyadic arising out of such person's services to us
or to any of our subsidiaries or any other company or enterprise to which such
person provides services at our request. Further, we agree to advance expenses
they spend as a result of any proceeding against them as to which they could be
indemnified. At present, there is no pending litigation or proceeding involving
any of our directors where indemnification will be required or permitted, and we
are not aware of any threatened litigation or proceeding that may result in a
claim for such indemnification.
26
OTHER MATTERS
CODE OF BUSINESS CONDUCT AND ETHICS
The Company has adopted a Code of Business Conduct and Ethics that applies
to all directors, officers and employees, including the Company's principal
executive officer, principal financial officer, principal accounting officer or
controller and persons performing similar functions. The Code of Business
Conduct and Ethics may be found on the Company's website at
www.dyadic-group.com.
The Company intends to post amendments to or waivers from its Code of
Business Conduct and Ethics that apply to its principal executive officer,
principal financial officer, principal accounting officer or controller or
persons performing similar functions on its website at www.dyadic-group.com.
ANNUAL REPORT
A copy of our Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2004 accompanies this Proxy Statement sent to all stockholders
entitled to notice of and to vote at the Annual Meeting. The Annual Report is
not incorporated into this Proxy Statement and is not considered proxy
solicitation material. The Company will furnish copies of any exhibit to the
Form 10-KSB upon request of a stockholder to the Secretary of the Company at 140
Intracoastal Pointe Drive, Suite 404, Jupiter, FL 33477, and upon reimbursement
of the Company's reasonable expenses in furnishing the exhibit.
27
OTHER PROPOSALS
We know of no other matters that will be presented for consideration at
the Annual Meeting. If any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the enclosed form of proxy
to vote the shares they represent as the Board of Directors may recommend.
Discretionary authority with respect to other matters is granted by the
execution of the enclosed proxy, unless you specifically withhold that power.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT
OR ANNEXED HERETO TO VOTE ON THE MATTERS SET FORTH ABOVE. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED
IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED MAY 2, 2005. YOU SHOULD
NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS
OF ANY DATE OTHER THAN THAT DATE AND THE MAILING OF THIS PROXY STATEMENT TO
STOCKHOLDERS SHALL NOT CREATE ANY IMPLICATION TO THE CONTRARY.
By Order of the Board of Directors
/s/ Mark A. Emalfarb
Mark A. Emalfarb Chairman, President and Chief Executive Officer
Jupiter, Florida
28
APPENDIX A
DYADIC INTERNATIONAL, INC.
AUDIT COMMITTEE CHARTER
I. PURPOSE
The role of the Audit Committee is to oversee the accounting and financial
reporting processes of the Company and the audits of the financial statements of
the Company.
The Audit Committee shall also prepare the report required by the rules of the
Securities and Exchange Commission (the "SEC") to be included in the Company's
annual proxy statement.
II. COMPOSITION
A. Independence
The Audit Committee shall consist of two or more members of the Board of
Directors (the "Board"), each of whom is determined by the Board to be
"independent" under Section 10A(m)(3) of the Securities Exchange Act of
1934 (the "Exchange Act"), and Rule 10A-3(b)(1) promulgated thereunder
(subject to the exemptions provided in Rule 10A-3(c)), the rules of the
Nasdaq Stock Market or any other national securities exchange on which the
Company's common stock is then listed (the "Exchange") and the rules and
regulations of the SEC. No person who participated in the preparation of
the financial statements of the Company or any current subsidiary of the
Company at any time during the prior three years is qualified to serve as
a member of the Audit Committee.
B. Financial Expertise
All members of the Audit Committee must be able to read and understand
fundamental financial statements, including a company's balance sheet,
income statement and cash flow statement. At least one member of the Audit
Committee must (i) have past employment experience in finance or
accounting, the requisite professional certification in accounting or any
other comparable experience or background that has resulted in such
member's attainment of financial sophistication, including being or having
been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities and (ii) be an "audit
committee financial expert," as such term is defined by the SEC.
C. Simultaneous Service
If an Audit Committee member serves on the audit committee of more than
three public companies, the Board shall determine whether such
simultaneous service will impair the director's ability to effectively
serve on the Audit Committee and make such disclosures with respect to
such determination, if any, as required by the regulations of the
Exchange.
III. APPOINTMENT AND REMOVAL
The members of the Audit Committee shall be appointed by the Board and shall
serve until such member's successor is duly elected and qualified or until such
member's earlier resignation or removal. The members of the Audit Committee may
be removed, with or without cause, by a majority vote of the Board.
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IV. CHAIRPERSON
Unless a Chairperson is elected by the full Board, the members of the Audit
Committee shall designate a Chairperson by the majority vote of the full Audit
Committee membership. The Chairperson will chair all regular sessions of the
Audit Committee and set the agenda for Audit Committee meetings.
V. DELEGATION TO SUBCOMMITTEES
In fulfilling its responsibilities, the Audit Committee shall be entitled to
delegate any or all of its responsibilities to a subcommittee of the Audit
Committee.
VI. MEETINGS
The Audit Committee shall meet as often as it determines but no less than once
per quarter, either in person or telephonically, and at such times and places as
the Audit Committee shall determine. The Secretary of the Company, the Chairman
of the Board or any member of the Audit Committee may call meetings of the
Committee. The Audit Committee shall meet regularly with each of the Company's
management, its principal internal auditor and the Company's outside independent
auditing firm (the "outside auditing firm") in separate executive sessions to
discuss any matters that the Audit Committee or any of these named parties
believe should be discussed privately. In addition, the Audit Committee or its
chairperson shall meet with the independent auditors and management quarterly to
review the Company's financial statements. The Audit Committee may request any
officer or employee of the Company or the Company's outside counsel or outside
auditing firm to attend a meeting of the Audit Committee or to meet with any
members of, or consultants to, the Audit Committee.
VII. RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Audit Committee shall be directly responsible, in its capacity as a
committee of the Board, for the appointment, compensation, retention and
oversight of the work of the outside auditing firm. In this regard, the Audit
Committee shall have the sole authority to (A) appoint and retain, (B) determine
the funding for, and (C) when appropriate, terminate, the outside auditing firm,
which shall report directly to the Audit Committee. The Audit Committee will be
responsible for resolving any disputes between the outside auditing firm and the
Company's management.
VIII. FUNDING
The Company shall provide for appropriate funding of the Audit Committee, as it
may determine in its capacity as a committee of the Board, for the payment of:
1. Compensation to the outside auditing firm;
2. Compensation to any advisers employed by the Audit Committee under
the authority provided in this Charter; and
3. Ordinary administrative expenses of the Audit Committee that are
necessary or appropriate in carrying out its duties.
IX. DUTIES AND RESPONSIBILITIES
To fulfill its responsibilities and duties the Audit Committee shall:
A. Financial Reporting Processes and Documents/Reports Review
1. Review and discuss with the outside auditing firm: (A) the scope of the
audit, the results of the annual audit examination by the auditor and any
accompanying management letters, (B) any audit problems or difficulties the
auditor encountered in the course of their audit work, including any
restrictions on the scope of the outside auditing firm's activities or on access
to requested information, and any significant disagreements with management and
management's response to such audit problems or difficulties, and (C) any
reports of the outside auditing firm with respect to interim periods.
30
2. Review and discuss with management and the outside auditing firm the
annual audited and quarterly unaudited financial statements of the Company,
including (A) analyses of management and/or the outside auditor setting forth
significant financial reporting issues and judgments made in connection with the
preparation of the financial statements, including analyses of the effects of
alternative GAAP methods on the financial statements, (B) the Company's
disclosures under "Management's Discussion and Analysis of Financial Condition
and Results of Operations," including the development, selection and reporting
of accounting policies that may be regarded as critical, and (C) major issues
regarding the Company's accounting principles and financial statement
presentations, including any significant changes in the Company's selection or
application of accounting principles and financial statement presentations.
3. Recommend to the Board whether the financial statements should be
included in the Annual Report on Form 10-KSB.
4. Periodically review and discuss the adequacy of the Company's internal
controls, any significant deficiencies in internal controls (and any special
audit steps adopted in light of material control deficiencies), and significant
changes in such controls; and review and discuss with the principal internal
auditor of the Company and such others as the Audit Committee deems appropriate,
the scope and results of the internal audit program.
5. Periodically review and discuss the adequacy and effectiveness of the
Company's disclosure controls and procedures and management reports thereon.
6. Review disclosures made to the Audit Committee by the Company's Chief
Executive Officer and Chief Financial Officer during their certification process
for the Form 10-KSB and 10-QSB about any significant deficiencies in the design
or operation of internal controls or material weaknesses therein and any fraud
involving management or other employees who have a significant role in the
Company's internal controls.
7. Review and timely discuss with management and the outside auditors the
effect of regulatory and accounting initiatives, as well as any material
financial or non-financial arrangements of the Company that do not appear on the
financial statements of the Company.
8. Review and discuss with the independent auditors their report regarding
(A) all critical accounting policies and practices to be used, (B) all
alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management officials of the
Company, ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the independent auditors, and (C)
other material written communications between the outside auditing firm and
Company management, including a schedule of unadjusted differences.
9. Review with financial management and the independent accountants the
Company's filings with the SEC prior to their filing or prior to the release of
earnings reports. The Chair of the Audit Committee may represent the entire
Audit Committee for purposes of this review.
10. Prepare all reports required to be included in the Company's proxy
statement, pursuant to and in accordance with applicable rules and regulations
of the SEC.
11. Discuss and review earnings press releases, including the type and
presentation of information to be included in earnings press releases, in
particular the use of "pro forma" or "adjusted" non-GAAP information.
12. Discuss and review financial information and earnings guidance
provided to analysts and rating agencies.
13. Discuss policies with respect to risk assessment and risk management.
31
B. Independent Accountants
1. Approve in advance all audit, review or attest engagements required
under the securities laws to be provided by the outside auditing firm, including
fees and terms.
2 Establish policies and procedures for the engagement of the outside
auditing firm to provide permissible non-audit services, which shall require
preapproval by the Audit Committee (other than with respect to de minimis
exceptions described in Section 10A(i)(1)(B) of the Exchange Act that are
approved by the Audit Committee prior to the completion of the audit). Ensure
that approval of non-audit services are disclosed to investors in periodic
reports required by Section 13(a) of the Exchange Act.
3. The authority to grant preapproval of audit and non-audit services may
be delegated to one or more designated members of the Audit Committee who are
independent directors. Any such delegation shall be presented to the full Audit
Committee at its next scheduled meeting.
4. Review, at least annually, a report by the outside auditor describing
(A) the firm's internal quality-control procedures, (B) any material issues
raised by the most recent internal quality-control review, or peer review, of
the firm, or by any inquiry or investigation by governmental or professional
authorities, within the last five years, respecting one or more independent
audits carried out by the firm, and any steps taken to deal with any such
issues, and (C) all relationships between the independent auditor and the
Company.
5. In connection with the report review described in the previous
paragraph, review and evaluate the lead partner of the outside auditing firm and
present to the Board the Audit Committee's conclusions with respect to the
qualifications and performance of the outside auditing firm.
6. Consider, at least annually, the independence of the outside auditing
firm, including whether the outside auditing firm's performance of permissible
non-audit services is compatible with the auditor's independence; obtain and
review the report by the outside auditing firm describing any relationships
between the outside auditing firm and the Company referred to in paragraph four
above or any relationships between the outside auditing firm and the Company or
any other relationships that may adversely affect the independence of the
auditor; discuss with the outside auditing firm any disclosed relationship or
services that may impact the objectivity and independence of the auditor;
present to the Board the Audit Committee's conclusions with respect to the
independence of the outside auditing firm; and take, or recommend that the full
Board take, appropriate action to oversee the independence of the outside
auditor.
7. Ensure rotation of the audit partners of the outside auditing firm as
required by law and consider further whether, to assure continuing auditor
independence, there should be a regular rotation of the outside auditing firm
itself.
8. Establish policies for the hiring of employees and former employees of
the outside auditing firm.
C. Outside Advisors
The Audit Committee shall have the authority to retain such outside counsel,
accountants, experts and other advisors as it determines appropriate to assist
the Audit Committee in the performance of its duties. The Audit Committee shall
have sole authority to approve related fees and retention terms.
D. Ethical and Legal Compliance
1. Establish, review and update periodically a code of business ethics and
conduct that applies to the Company's employees and directors (the "Code of
Ethics"), ensure that management has established a system to enforce the Code of
Ethics, and consider and decide whether any waivers thereunder should, in
accordance with applicable law and good professional ethics, be granted. The
Audit Committee shall cause (i) the Code of Ethics to be publicly available and
(ii) any waivers granted to executive officers and directors of the Company
thereunder to be disclosed in accordance with applicable law.
32
2. Review and approve, if the duty is not delegated to a comparable body
of the Board, all related party transactions in accordance with the regulations
of the Exchange.
3. Review, with the Company's counsel, any legal matter that could have a
significant impact on the Company's financial statements.
4. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, including procedures for confidential, anonymous
submission of concerns by employees regarding accounting and auditing matters.
5. Perform any other activities consistent with this Charter, the
Company's bylaws and governing law, as the Audit Committee or the Board deems
necessary or appropriate.
X. REPORTS AND PERFORMANCE REVIEW
The Audit Committee shall report its actions and any recommendations to the
Board after each Audit Committee meeting and shall conduct and present to the
Board an annual performance evaluation of the Audit Committee. The Audit
Committee shall review at least annually the adequacy of this Charter and
recommend any proposed changes to the Board for approval.
XI. PROCEDURAL RULES
The Committee may establish its own rules for the conduct of its meetings and
proceedings, subject to the provisions of Section 4.11 of the Amended and
Restated Bylaws of the Company and the following requirements:
1. Each member of the Audit Committee shall have one vote;
2. A quorum of the Audit Committee shall consist of a majority of its
members;
3. The Audit Committee shall be authorized to take any permitted action
only by the affirmative vote of a majority of the members thereof present at any
meeting at which a quorum of its members is present, or by the unanimous written
consent of all of the members thereof;
4. Meetings of the Audit Committee shall be held at least annually and may
be held in person or by means of conference telephone equipment; and
5. The Audit Committee shall maintain and submit to the Board of Directors
copies of the minutes of each meeting of the Audit Committee, and each written
consent to action taken without a meeting, reflecting the actions so authorized
or taken by the Audit Committee since the preceding meeting of the Board of
Directors.
XII. LIMITATION OF AUDIT COMMITTEE'S ROLE
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements and disclosures are
complete and accurate and are in accordance with generally accepted accounting
principles and applicable rules and regulations. These are the responsibilities
of management and the outside auditor.
XIII. DISCLOSURE OF CHARTER
This Charter will be made available in accordance with applicable rules and
regulations.
Adopted by Resolution of the Board of Directors
January 12, 2005
33
PROXY
Annual Meeting of Stockholders May 24, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DYADIC INTERNATIONAL, INC.
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held May 24, 2005 and the
Proxy Statement and appoints Wayne Moor and Mark A. Emalfarb, and each of them,
the proxies of the undersigned, with full power of substitution, to vote all
shares of common stock of DYADIC INTERNATIONAL, INC. (the "Company") which the
undersigned is entitled to vote, either on his or her own behalf or on behalf of
any entity or entities, at the 2005 Annual Meeting of Stockholders of the
Company to be held at The Club at Admiral's Cove located at 200 Admiral's Cove
Boulevard, Jupiter, Florida 33477, on May 24, 2005 at 10:00 a.m. Eastern time
(the "Annual Meeting"), and at any adjournment or postponement thereof, with the
same force and effect as the undersigned might or could do if personally present
thereat. The shares represented by this Proxy shall be voted in the manner set
forth on this proxy card.
1. To elect two Class I directors to serve until the 2008 Annual Meeting of
Stockholders of the Company or until their successors are duly elected and
qualified.
WITHHOLD
FOR AUTHORITY TO VOTE
Richard J. Berman |_| |_|
Robert B. Shapiro |_| |_|
2. To ratify the appointment of Ernst & Young FOR AGAINST ABSTAIN
LLP as independent registered public |_| |_| |_|
accounting firm of the Company for the
fiscal year ending December 31, 2005
3. In accordance with the discretion of the FOR WITHHOLD
proxy holders, to act upon all matters |_| |_|
incident to the conduct of the meeting and
upon other matters as may properly come
before the meeting.
The Board of Directors recommends a vote FOR the directors listed above
and a vote FOR each of the listed proposals. This Proxy, when properly executed,
will be voted as specified above. IF NO SPECIFICATION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE DIRECTORS LISTED ABOVE AND FOR THE OTHER
PROPOSALS.
Please print the name(s) appearing
on each share certificate(s) over
which you have voting authority:
--------------------------------------
(Print name(s) on certificate)
Please sign
your name:
-------------------------------- --------------------------
Authorized Signature(s) Date