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     **3.3.****Termination.**Except for post-employment termination payments provided in thisAgreement, this Agreement shall terminate upon the termination of Executive’s employment withCompany.**IV. Compensation**     **4.1.****Regular Compensation.**For all services rendered by Executive in any capacity,Executive shall be entitled to receive regular compensation at therate of $300,000 per annum. Suchcompensation shall be payable in accordance with Company’s normal payroll procedures but not lessthan monthly.     **4.2.****Long-Term Incentive Plan.** Executive shall beentitled to participate inCompany’s Long-Term Incentive Plan on terms consistent with Executive’s position and othersimilarly situated executives of Company. Executive shall receive a restricted stock grant award of25,000 shares that will vest over 3 years under the following schedule: 1/6th of theaward will vest on the first anniversary of this Agreement,2/6ths of the award willvest on the second anniversary of this Agreement and3/6ths of the award will vest onthe third anniversary of this Agreement; provided, however, that Executive is an employee ofCompany on each date of vesting.     **4.3.****Withholding.**All payments of regular compensation shall be reduced by amountsthat are required to be withheld by federal, state or local law.**V. Fringe Benefits**     **5.1.****General.** Executive shall be entitled to participate with other employees ofCompany, so long as Executive meets the applicable eligibility requirements, in Company’s employeebenefit plans and subject to the terms of those plans, including 401(k) plans, health, dental anddisability insurance, and other similar employee fringe benefits as may be adopted from time totime. Specifically, Executive will commence participating in suchplans as in effect on March 10, 2008.     **5.2.****Vacation.** Executive shall be entitled to paid vacation according to Company’sstandard vacation plan.**VI. Expenses**     **6.1.****General.** Reasonable expenses incurred by Executive in the conduct of heremployment by Company, including expenses for transportation, travel, telephone, and similar items,shall be reimbursed by Company in accordance with Company’s normal and customary reimbursementprocedures. Such expenses shall be paid by Company or reimbursed to Executive upon Executive’spresenting to Company an itemized expense statement with supporting receipts or vouchers withrespect thereto; provided that no such reimbursement will be made later than the end of thecalendar year following the calendar year in which the expenses are incurred.
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**VII. Death or Disability of Executive**     **7.1.****Death.** In the event of Executive’s death during the term of this Agreement(whether Executive is then actively engaged in the performance of services for Company or is beingcompensated for Disability), this Agreement shall terminate immediately and Executive’s estateshall be entitled to receive from Company an amount equal to the Base Salary then in effect whichhad accrued to the date of Executive’s death along with accrued but unused vacation days and anybenefits receivable under the Long-Term Incentive Plan or pursuant toa bonus payable under Article V hereof, and Executive’sheirs or estate shall be entitled to no further compensation or benefitsfrom Company.     **7.2.****Disability.** Upon Executive’s Disability Executive’s employment may be terminated.If Executive’s employment is terminated by reason of Disability, Executive shall be entitled toreceive from Company only the unpaid portion of the Base Salary then in effect which has accrued tothe date of termination along with accrued but unused vacation days and any benefits receivableunder the Long-Term Incentive Plan or pursuant to a bonus payable under Article V, and Executivewill be entitled to no further compensation or benefits from Company.**VIII. Termination of Employment**     **8.1.****Termination of Employment.**In the event of a termination of Executive by Companyfor Cause, or if Executive voluntarily terminates her employment with Company for other than GoodReason (other than voluntary termination following a Change of Control), Company shall payExecutive the Base Salary then in effect which has accrued to thetermination date, along withaccrued but unused vacation days, and Executive will be entitled to no further compensation orbenefits from Company.     In the event Executive’s employment pursuant to this Agreement is terminated by Company forany reason other than Cause or by Executive for Good Reason or following a Change of Control,Company shall continue to pay Executive the Base Salary then in effect for the remaining term ofthis Agreement following such termination and Executive will continue to receive such othercompensation and benefits from Company as Executive would have received as if Executive’semployment had not been terminated, including Long-Term IncentivePlan benefits, through the end ofthe term of this Agreement. In lieu of providing any benefits due Executive under this paragraph,the Company may, in its discretion and subject to the limitations described below, substitute cashpayments for the current value of such benefits to Executive (determined without regard to the taxconsequences), which cash payments shall made in accordance with the Company’s normal payrollprocedures.     Inall cases, a termination of employment shall only occur upon separation from service fromCompany and all of its affiliates, as defined in Treasury regulations under Section 409A of theCode (generally, separation from the 50% controlled group that includes Company, including adecrease in the performance of services to no more than 20% of the average for the preceding36-month period, and disregarding leaves of absence up to six months where there is a reasonableexpectation Executive will return).
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     Notwithstanding anything to the contrary in this Agreement, if Executive is a “SpecifiedEmployee” on the date of termination, Executive may not receive a payment of “nonqualified deferredcompensation” for which the “payment event” is “separation from service,” as defined in CodeSection 409A and the regulations thereunder, until at least 6months after a date of termination.Any payment of nonqualified deferred compensation otherwise due in such 6 month period shall besuspended and shall be paid immediately following the end of such 6 month period. A “SpecifiedEmployee” means a specified employee as defined in Treas. Reg. §1.409A-1(i) (generally, officersearning more than $145,000 per year, as indexed for inflation, who are among the 50 highest paidemployees).**IX. Files and Records**     **9.1.****Company Property.** All files, records, documents, reports and other writteninstruments concerning finances or customers of Company, including, without limitation, clients andcustomers consulted, interviewed or served by Executive during the term of this Agreement shallbelong to and remain the property of Company.**X. Limitation on Competition**     **10.1 Non-Competition Agreement.** As long as Executive is an employee of Companypursuant to the terms of this Agreement, and during the two year period following thetermination of this Agreement by Company for Cause or voluntarily by Executive without GoodReason, Executive shall not, as an owner, employee, consultant or otherwise, individually orcollectively, acquire an interest in (other than Executive’s ownership of not more than 2.0% of theoutstanding equity securities of a publicly-traded company), become an employee of or consultant toa person or entity engaged in a business which is directly competitive with Company. This sectiononly applies to persons or entities, which are in direct competition with Company or are seekingbusiness, which will be in direct competition with Company.     **10.2.****Non-solicitation Agreement.** As long as Executive is an employee of Companypursuant to the terms of this Agreement, and during the two-year period following the terminationof this Agreement by Company for Cause or voluntarily by Executive without Good Reason, Executivewill not take any action or perform any services which call upon,compete for, solicit, divert, ortake away any of the customers of Company.     **10.3.****Termination of Provisions.** Notwithstanding the provisions hereof regardingtermination of this Agreement, the provisions of this Section shall remain in full force and effectprovided for hereunder.**XI. Arbitration Procedure.**     **11.1.****Submittal of Claim.**The parties hereto agree that any controversy or claimarising out of or relating to the termination of Executive’semployment must be submitted forfinal and binding resolution by a jointly selected private and impartial arbitrator.     **11.2.****Binding Arbitration.** Either party may submit an unresolved dispute forresolution by final binding arbitration under this Procedure. The arbitration will be conductedunder the National Rules for the Resolution of Employment Disputes of the American
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Arbitration Association (“AAA”), as amended, which are incorporated by reference into thisProcedure, except as described below.     a. Any conflict between the rules and procedures set forth in the AAA rules and thoseset forth in this Agreement shall be resolved in favor of those in this Agreement.     b.The burden of proof at arbitration shall at all times be on the party seekingrelief.     c.In reaching a decision, the arbitrator shall apply the governing substantive lawapplicable to the claims, causes of action, and defenses asserted by the parties. Thearbitrator shall have the power to award all remedies that could be awarded by a court oradministrative agency in accordance with the governing and applicable substantive law.     A copy of the complete AAA rules may be obtained at www.adr.org.     **11.3.****Time Limits and Procedures.**The aggrieved party must give written notice of anyclaim to the other party within 3 months of the date the aggrieved first knew or should have knownof the facts giving rise to the claim; otherwise, the claim shall be void and deemed waived. Thewritten notice shall describe the nature of all claims asserted and the facts upon which thoseclaims are based and shall be mailed to the other party by certified or registered mail, returnreceipt requested.     a. Any arbitration conducted under this Agreement shall take place in St. Louis,Missouri, unless an alternative location is chosen by the mutual agreement of the parties.The arbitrator shall render a decision and award within 30 days after the close of thearbitration hearing or at any later time on which the parties may agree. The award shall bein writing and signed and dated by the arbitrator and shall contain express findings offact and the basis for the award.     b.The parties agree to share equally the AAA’s administrative fees and thearbitrator’s fees and expenses. All other costs and expenses associated with thearbitration, including, without limitation, each party’s respective attorneys’ fees, shallbe borne by the party incurring the expense.     c. Judgment upon the award rendered by the arbitrator may be entered in any courthaving jurisdiction. The award may be vacated or modified only on the grounds specified inthe Federal Arbitration Act or other applicable law.     **11.4.****Effect of Signature/Waiver of Right to Proceed in Court.** Both parties understandthat by agreeing to the terms in this procedure, both are giving up any constitutional or statutoryright they may possess to have covered claims decided in a court of law before a judge or a jury.**XII. Definitions**The following terms, for purposes of this Agreement have these meanings:
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     **12.1.“Base Salary”**means the regular, annual compensation of Executive, at the time specifiedin this Agreement, as determined under Section 4.1.     **12.2. “Board”**means the Board of Directors of Company.     **12.3. “Cause”**means:     a.Executive’s embezzlement or misappropriation of money or otherproperty of Companyor conviction of a felony.     b. Executive’s willful refusal to execute her duties under this Agreement.     c.Executive’s breach of the terms of this Agreement.     d. Executive’s willful negligence in the performance or nonperformance Executive’sduties under this Agreement.     e. Executive’s violation of Company’s ethics rules.     f. Executive’s violation or non-compliance with the public company rules andregulations.     None of the acts set forth above shall constitute Cause unless Executive has first receivedwritten notice containing a reasonably detailed description of such occurrence and is given aperiod of 30 business days from receipt of such notice to cure such occurrence and an opportunity,and together with her counselor other representatives, to be heard with respect to such matterbefore the Board.     **12.4.“Change of Control”**means a change in the ownership oreffective control of Company or achange in the ownership of a substantial portion of the assets of Company within the meaning ofSection 1.409A-3(i)(5) of Proposed Treasury Regulations or successor Treasury Regulations.     **12.5. “Code”**means the Internal Revenue Code of 1986, as amended.     **12.6.“Disability”**means, in the determination of an independent, licensed physicianmutually selected by the Board and Executive, the inability, because of the physical or mentalillness or incapacity of Executive, to perform her duties under this Agreement for a period ofthree consecutive calendar months or for a period of four calendar months in any twelve consecutivemonth period.     **12.7. “Good Reason”**means, without Executive’s express written consent:     a. The failure to pay or a reduction by Company of Executive’s Base Salary.     b. Any refusal by Company to provide Executive the benefits set forth in thisAgreement.
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     c. The assignment to Executive of duties inconsistent with those described in ArticleIII. which assignment is not cured by Company within 30 business days after writtennotifications thereby by Executive.     d. A change in Executive’s title of Chief Operating Officer.     e. A breach of this Agreement by Company which is not cured by Company within a periodof 30 business days after receipt of written notice by Executive of such breach.     f.The failure of a successor business to Company to accept the terms of thisAgreement.     **12.8. “Long-Term Incentive Plan”**means the long-term incentive plan, as described in Section4.2.     **12.9. “Procedure”**means the arbitration procedure, as described in Section XI.**XIII. General Provisions**     **13.1.****Waiver.** The waiver by either party of a breach or violation of any provision ofthis Agreement shall not operate as or be construed to be a waiver ofany subsequent breach hereof.     **13.2.****Severability.** Should any one or more sections of this Agreement be found to beinvalid, illegal, or unenforceable in any respect, the validity, legality and enforceability of theremaining sections contained herein shall not in any way be affected or impaired thereby. Inaddition, if any section hereof is found to be partially enforceable, then it shall be enforced tothat extent.     **13.3.****Notices.** Any and all notices required or permitted to be given under thisAgreement shall be sufficient if furnished in writing and personally delivered or sent byregistered or certified mail to the last known residence address of Executive or to Company, orsuch other place as it may subsequently designated in writing.     **13.4.****Governing Law.** This Agreement shall be interpreted, construed and governedaccording to the laws of the State of Missouri.     **13.5.****Venue.** In the event of litigation arising out of or in connection with thisAgreement, the parties hereto agree to submit to the jurisdiction of Federal and state courtslocated in the State of Missouri.     **13.6.****Section Headings.** The section headings contained in this Agreement are forconvenience only and shall in no manner be construed to limit or define the terms of thisAgreement.
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     **13.7.****Counterparts.** This Agreement shall be executed in two or more counterparts, eachof which shall be deemed an original and together they shallconstitute one and the same Agreement,with at least one counterpart being delivered to each party hereto.     **13.8.****Assignabillity.** Company shall have the right to assign this Agreement to athird party which purchases substantially all of the then assets of the business formerly operatedby Company. The Agreement may not be assigned by Executive.     **13.9.****Successors and Assigns Bound.** This Agreement shall be binding upon and inure tothe benefit of the parties hereto and their respective heirs,personal representatives, successorsand assigns.     **13.10.****Entire Agreement.** This is the entire and only Agreement between the partiesrespecting the subject matter hereof. This Agreement may be modified only by a written instrumentexecuted by all parties hereto.     **13.11.****Indemnification.** In the event Executive is made a party to any threatened,pending or completed action, suit or proceeding, whether civil, criminal, administrative orinvestigative, by reason of the fact that she is or was performingservices under this Agreement,then Company shall indemnify Executive against all expenses (including attorneys’ fees anddisbursements), judgments, fines and amounts paid in settlement, as actually and reasonablyincurred by Executive in connection therewith to the fullest extent provided by Missouri law unlessit is finally judicially determined that such expenses, judgments, fines and amounts paid insettlement arose primarily out of the gross negligence or willful misconduct of Executive.     **13.12.****Remedies.** In addition to whatever other remedies the non-breaching party and/orits successors or assigns may have at law or in equity, each party specifically covenants andagrees that, in the event of default under or breach of thisAgreement, the non-breaching partyand/or its successors and assigns shall be entitled to apply to any court of competent jurisdictionto enjoin any breach, threatened or actual, by the breaching party, and/or to sue to obtain damagesfor default under or any breach of this Agreement. In the event of default under or breach of thisAgreement by Executive, Executive hereby agrees to pay all costs of enforcement and collection ofany and all remedies and damages under this Agreement incurred, including reasonable attorneys’fees as determined by a court of competent jurisdiction.*     *     *     *     *
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     **IN WITNESS WHEREOF**, Company has caused this Agreement to be executed by its duly authorizedofficers, and Executive has executed this Agreement as of the date first written above.       ZOLTEK COMPANIES, INC.       By /s/ Zsolt Rumy       Zsolt Rumy  Chairman, CEO and President       /s/ Karen M. Bomba     Karen M. Bomba