Exhibit 10.3

DYADIC INTERNATIONAL, INC.
Form of
Non-Employee Director Option Agreement
for 2006 Stock Option Plan
 
 

DYADIC INTERNATIONAL, INC.
2006 STOCK OPTION PLAN
STOCK OPTION GRANT AGREEMENT

This STOCK OPTION GRANT AGREEMENT (this “Agreement”), dated as of the ___ day of
[INSERT DATE], 20__ (the “Date of Grant”), is delivered by Dyadic International,
Inc. (the “Company”) to [INSERT DIRECTOR’S NAME] (the “Grantee”).

RECITALS

RECITALS - GRANT TO NEW BOARD MEMBER

A Concurrently with the execution and delivery of this Agreement, the Grantee
has accepted an appointment to the Board of Directors of the Company (the
“Board”). 

B. The Dyadic International, Inc. 2006 Stock Option Plan (as may be amended,
restated or otherwise modified, the “Plan”) provides for the grant of options to
purchase shares of common stock of the Company (“Shares”). The Plan is
administered by the Compensation Committee of the Board (the “Committee”). A
copy of the Plan has heretofore been furnished to the Grantee, receipt of which
is hereby expressly acknowledged. Capitalized terms used but not otherwise
defined herein shall have the meanings given such terms in the Plan.

C. In accordance with the Director Compensation Policy of the Company adopted by
the Board on January 10, 2005 (the “Director Compensation Policy”), to induce
the Grantee to join the Board and to promote the best interests of the Company
and its stockholders, the Committee of the Board has elected to grant a
non-statutory stock option to the Grantee.

RECITALS - ANNUAL GRANT TO EXISTING BOARD MEMBER

A. The Grantee serves as a member of the Board of Directors of the Company (the
“Board”).

B. The Dyadic International, Inc. 2006 Stock Option Plan (as may be amended,
restated or otherwise modified, the “Plan”) provides for the grant of options to
purchase shares of common stock of the Company (“Shares”). The Plan is
administered by the Compensation Committee of the Board (the “Committee”). A
copy of the Plan has heretofore been furnished to the Grantee, receipt of which
is hereby expressly acknowledged. Capitalized terms used but not otherwise
defined herein shall have the meanings given such terms in the Plan.

C. The Grantee is entitled to receive an award of a non-statutory option to
purchase Shares under the Plan as additional remuneration for his prior year’s
service as a Director (“Annual Director Option Awards”) in accordance with the
terms of the Statement of Director Compensation Policy adopted by the Board on
January 10, 2005 (the “Director Compensation Policy”).

D. Based upon the Grantee’s service on the Board in [INSERT APPLICABLE CALENDAR
YEAR], pursuant to the terms of the Director Compensation Policy, the Grantee is
being awarded an option to purchase the number

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of shares of common stock of the Company fixed in Section 1 hereof.

AGREEMENT:

NOW, THEREFORE. the parties to this Agreement, intending to be legally bound
hereby, agree as follows:
 
1.  Grant of Option.Subject to the terms and conditions set forth in this
Agreement and in the Plan, the Company hereby grants to the Grantee an Option to
purchase [INSERT NUMBER OF SHARES] Shares at an exercise price of [INSERT
EXERCISE PRICE] $_______ per Share (which is the Fair Market Value on the date
of Grant as fixed by the terms of the Plan). The Option shall become exercisable
in accordance with the terms of Paragraph 2 below. In accordance with Section
5(g) of the Plan, the Option shall be treated as an Incentive Stock Option
except to the extent that the aggregate Fair Market Value of the Shares as of
the date of the grant with respect to which the Incentive Stock Option is
exercisable for the first time by the Grantee during any calendar year under the
Plan exceeds $100,000, then the Option, as to such excess, shall be treated as a
Nonqualified Stock Option.
 
2.  Exercisability of Option.The number of Shares in respect of which the
Grantee shall be permitted to exercise the Option shall be determined by
reference to the dates (each a “Vesting Date”) fixed in the table set forth
below, provided that: (a) exercisability of Shares is cumulative; and (b) there
must not have occurred a termination of the Grantee’s membership on the Board
(the “Directorship”) for any reason whatsoever (the date of such termination
being hereinafter referred to as the “Termination Date”) prior to a Vesting Date
in order for the Option to be exercisable in respect of the Shares indicated
opposite that Vesting Date:
 
Vesting Date   Additional Shares for Which the Option is Exercisable
The date of this Agreement   25% of the Option Shares
___________, 200_    18.75% of the Option Shares
___________, 200_    18.75% of the Option Shares
___________, 20__    18.75% of the Option Shares
___________, 20__    18.75% of the Option Shares
 
3.  Term of Option.
 
(a)  The Option shall be exercisable for a term commencing with the Date of
Grant and ending on the earlier of (i) [INSERT EXPIRATION DATE] or (ii) the
termination of the Plan, unless the Option is terminated at an earlier date in
accordance with the provisions of this Agreement or the Plan.
 
(b)  Any portion of the Option that is not exercisable on the Termination Date
shall terminate on that date.
 
(c)  The Option, to the extent exercisable, shall automatically terminate upon
the earlier of (x) the expiration of the period fixed in Paragraph 3(a), above,
or (y) the first to occur of any of the following events:
 
                (i)  Subject to clause (v) below, the expiration of the 90 day
period following the Termination Date, if the termination is for any reason
other than the Disability of the Grantee, his death or for Cause.
 
(ii)  Subject to clause (v) below, the expiration of the one (1) year period
after the Termination Date, to the extent the Option is then unvested, if the
termination of the Directorship was on account of the Grantee’s Disability.
 
(iii)  The expiration of the one (1) year period after the Termination Date, if
the reason for the termination of the Directorship was on account of the
Grantee’s death.
 
(iv)  The Termination Date, if the termination of the Directorship was for
Cause.
 
(v)  The provisions of clauses (i) and (ii) above to the contrary
notwithstanding, if the Grantee engages in conduct that constitutes Cause after
the Termination Date, the Option shall immediately terminate to the extent then
unexercised (regardless of vesting).
 
(d)  In accordance with Section 5(e)(ii) of the Plan, if the provisions of
either clause (iv) or clause (v) of Paragraph 3(c) applied to the termination of
the Option, the Grantee shall automatically forfeit all Shares underlying any
exercised portion of the Option for with the Company has not yet delivered the
share certificates, upon refund by the Company of the exercise price paid by the
Grantee for such Shares.
 
4.  Exercise Procedures.
 
(a)  Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may
exercise part or all of the exercisable portion of the Option by giving the
Committee written notice of intent to exercise in the manner provided in this
Agreement, specifying the number of Shares as to which the Option is to be
exercised. On the delivery date, the Grantee shall pay the exercise price (i) in
cash, (ii) with the approval of the Committee, by delivering Shares of the
Company which shall be valued at their fair market value on the date of delivery
(such valuation to be determined in the manner fixed in the Plan), (iii) payment
through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board or (iv) by such other method as the Committee may approve,
provided that the Committee may, in its absolute discretion, impose from time to
time such limitations as it deems appropriate on the use of Shares of the
Company to exercise the Option.
 
(b)  The obligation of the Company to deliver Shares upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such
approvals by governmental agencies as may be deemed appropriate by the
Committee, including such actions as Company counsel shall deem necessary or
appropriate to comply with relevant securities laws and regulations. The Company
may require that the Grantee (or other person exercising the Option after the
Grantee death) represent that the Grantee is purchasing Shares for the Grantee’s
own account and not with a view to or for sale in connection with any
distribution of the Shares, or such other representation
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as the Committee deems appropriate. All obligations of the Company under this
Agreement shall be subject to the rights of the Company as set forth in the Plan
to withhold amounts required to be withheld for any taxes, if applicable.
Subject to Committee approval, in its absolute discretion, the Grantee may elect
to satisfy any income tax withholding obligation of the Company with respect to
the Option by having Shares withheld up to an amount that does not exceed the
minimum applicable withholding tax rate for federal (including FICA), state and
local tax liabilities.
 
5.  Change of Control.The provisions of the Plan applicable to a Change of
Control shall apply to the Option, and, in the event of a Change of Control, the
Committee may take such actions as it deems appropriate pursuant to the Plan.
 
6.  Restrictions on Exercise.Only the Grantee may exercise the Option during the
Grantee’s lifetime and, after the Grantee’s death, the Option shall be
exercisable (subject to the limitations specified in the Plan) solely by the
legal representatives of the Grantee, or by the person who acquires the right to
exercise the Option by will or by the laws of descent and distribution, to the
extent that the Option is exercisable pursuant to this Agreement.
 
7.  Grant Subject to Plan Provisions.This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan. The grant and exercise of the
Option are subject to the provisions of the Plan and to interpretations,
regulations and determinations concerning the Plan established from time to time
by the Committee in accordance with the provisions of the Plan, including, but
not limited to, provisions pertaining to (i) rights and obligations with respect
to withholding taxes, (ii) the registration, qualification or listing of the
Shares, (iii) changes in capitalization of the Company and (iv) other
requirements of applicable law. The Committee shall have the authority to
interpret and construe the Option pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.
 
8.  No Employment or Other Rights.The grant of the Option shall not confer upon
the Grantee any right to be retained by or in the employ or service of the
Company arid shall not interfere in any way with the right of the Company to
terminate the Grantee’s Directorship as permitted by law or by the terms of the
By-Laws of the Company.
 
9.  No Shareholder Rights.Neither the Grantee, nor any person entitled to
exercise the Grantee’s rights in the event of the Grantee’s death, shall have
any of the rights and privileges of a shareholder with respect to the Shares
subject to the Option, until certificates for Shares have been issued upon the
exercise of the Option.
 
10.  Assignment and Transfers.The rights and interests of the Grantee under this
Agreement may not be sold, assigned, encumbered or otherwise transferred except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. In the event of any attempt by the Grantee to alienate, assign,
pledge, hypothecate, or otherwise dispose of the Option or any right hereunder,
except as provided for in this Agreement, or in the event of the levy or any
attachment, execution or similar process upon the rights or interests hereby
conferred, the Company may terminate the Option by notice to the Grantee, and
the Option and all rights hereunder shall thereupon become null and void. The
rights and protections of the Company hereunder shall extend to any successors
or assigns of the Company and to the Company’s parents, subsidiaries, and
affiliates. This Agreement may be assigned by the Company without the Grantee’s
consent.
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11.  Applicable Law.The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the State of Florida, without giving effect to the conflicts of laws
provisions thereof
 
12.  Notice.Any notice to the Company provided for in this instrument shall be
addressed to the Company in care of the Chief Executive Officer at the Company’s
principal executive offices, and any notice to the Grantee shall be addressed to
such Grantee at the current address shown on the payroll of the Company, or to
such other address as the Grantee may designate to the Company in writing. Any
notice shall be delivered by hand, sent by telecopy or enclosed in a properly
sealed envelope addressed as stated above, registered and deposited, postage
prepaid, in a post office regularly maintained by the United States Postal
Service.
 
13.  Counterparts.This Agreement may be signed in any number of counterparts and
by facsimile signature, each of which shall be deemed to be an original, and all
of which taken together shall be deemed to be one and the same instrument.
 
14.  Complete Understanding.This Agreement, together with the Plan, contains the
entire agreement of the parties relating to the subject matter hereof and
supersedes all prior agreements and understanding with respect to such subject
matter, and the parties hereto have made no agreements, representations or
warranties relating to the subject matter of this Agreement which are not set
forth herein. Nothing contained in this Agreement shall be construed to limit or
affect in any manner or to any extent the restrictions or prohibitions that are
applicable to the Grantee under any consulting agreement between the Grantee and
the Company or the duration thereof. Similarly, except as expressly provided
otherwise in this Agreement, nothing contained in any consulting agreement
between the Company and the Grantee shall be construed to limit or affect in any
manner or to any extent the restrictions or prohibitions that are applicable to
the Grantee under this Agreement.
 
IN WITNESS WHEREOF, the Company has caused a duly authorized officer to execute
this Agreement, and the Grantee has executed this Agreement, effective as of the
Date of Grant.
 

 
THE COMPANY:      GRANTEE:
 
DYADIC INTERNATIONAL, INC.
 

 
By: _____________________________   Accepted: _____________________
 

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