ZOLTEK COMPANIES INC, DEF 14A, 2000-01-14

ZOLTEK COMPANIES INC
DEF 14A, 2000-01-14
ELECTRICAL INDUSTRIAL APPARATUS

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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 (AMENDMENT NO. )

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
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12

ZOLTEK COMPANIES, 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)(1) 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:

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[ZOLTEK LOGO]

January 14, 2000

DEAR FELLOW SHAREHOLDERS:

Our Annual Meeting of Shareholders will be held at the
Missouri Historical Society History Museum, Lee Auditorium, located at
Lindell Boulevard and DeBaliviere Avenue, St. Louis, Missouri at 10:00
a.m., local time, on Tuesday, February 15, 2000. The Notice of Annual
Meeting of Shareholders, Proxy Statement and Proxy Card which accompany
this letter outline fully matters on which action is expected to be
taken at the Annual Meeting.

We cordially invite you to attend the Annual Meeting.
Please RSVP to 314-291-5110 if you plan to attend the meeting. Even if
you plan to be present at the meeting, you are requested to date, sign
and return the enclosed Proxy Card in the envelope provided so that your
shares will be represented. The mailing of an executed Proxy Card will
not affect your right to vote in person should you later decide to
attend the Annual Meeting.

Sincerely,

/s/ Zsolt Rumy

ZSOLT RUMY
Chairman of the Board, President
and Chief Executive Officer

Zoltek Companies, Inc. * 3101 McKelvey Rd. * St. Louis, Missouri 63044 (USA)
* 314/291-5110 * FAX: 314/291-8536

ZOLTEK COMPANIES, INC.
3101 MCKELVEY ROAD
ST. LOUIS, MISSOURI 63044

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 15, 2000

Dear Shareholder:

The Annual Meeting of Shareholders of Zoltek Companies, Inc.
(the "Company") will be held at the Missouri Historical Society History
Museum, Lee Auditorium, located on Lindell Boulevard and DeBaliviere
Avenue, St. Louis, Missouri on Tuesday, February 15, 2000, at 10:00
a.m., local time, for the following purposes:

1. To elect two Class I directors to hold office for a
term of three years.

2. To elect one Class II director to hold office for a
term of two years.

3. To consider and act upon a proposal to adopt the
Amended and Restated Zoltek Companies, Inc. 1992 Long
Term Incentive Plan.

4. To transact any and all other business that may
properly come before the meeting or any adjournment
thereof.

These items are more fully described in the following Proxy
Statement, which is hereby made a part of this Notice. Only
shareholders of record of the Company at the close of business on
December 30, 1999 are entitled to notice of, and to vote at, the meeting
or any adjournment thereof.

By order of the Board of Directors,

/s/ Daniel D. Greenwell

DANIEL D. GREENWELL
Chief Financial Officer and Secretary

January 14, 2000

ZOLTEK COMPANIES, INC.
3101 MCKELVEY ROAD
ST. LOUIS, MISSOURI 63044

PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 15, 2000

_________________

GENERAL INFORMATION

This Proxy Statement is furnished to the shareholders of
ZOLTEK COMPANIES, INC. (the "Company") in connection with the
solicitation of proxies for use at the Annual Meeting of Shareholders
to be held at the Missouri Historical Society History Museum, Lee
Auditorium, located at Lindell Boulevard and DeBaliviere Avenue,
St. Louis, Missouri at 10:00 a.m., local time, on Tuesday, February 15,
2000, and at all adjournments thereof (the "Annual Meeting"), for the
purposes set forth in the preceding Notice of Annual Meeting of
Shareholders.

This Proxy Statement, the Notice of Annual Meeting and the
accompanying Proxy Card were first mailed to the shareholders of the
Company on or about January 14, 2000.

The proxy reflected on the accompanying Proxy Card is being
solicited by the Board of Directors of the Company. A proxy may be
revoked at any time before it is voted by filing a written notice of
revocation or a later-dated Proxy Card with the Secretary of the Company
at the principal offices of the Company or by attending the Annual
Meeting and voting the shares in person. Attendance alone at the Annual
Meeting will not of itself revoke a proxy. Proxy Cards that are
properly executed, timely received and not revoked will be voted in the
manner indicated thereon at the Annual Meeting and any adjournment
thereof.

The Company will bear the entire expense of soliciting
proxies. Proxies will be solicited by mail initially. The directors,
executive officers and employees of the Company also may solicit proxies
personally or by telephone or other means but such persons will not be
specially compensated for such services. Certain holders of record,
such as brokers, custodians and nominees, are being requested to
distribute proxy materials to beneficial owners and will be reimbursed
by the Company for their reasonable expenses incurred in sending proxy
materials to beneficial owners.

Only shareholders of record at the close of business on
December 30, 1999 are entitled to notice of, and to vote at, the Annual
Meeting. On such date, there were 18,701,331 shares of the Company's
common stock, $.01 par value ("Common Stock"), issued and outstanding.

Each outstanding share of the Company's Common Stock is
entitled to one vote on each matter to be acted upon at the Annual
Meeting. A quorum is required for votes taken at the Annual Meeting to
be deemed valid. A quorum shall be attained if holders of a majority of
the Common Stock issued and outstanding are present at the Annual
Meeting in person or by proxy. After a quorum has been established, the
vote of the holders of a majority of the Common Stock present in person
or by proxy shall

be required for the election of any director and, except as required by the
Company's Restated Articles of Incorporation or applicable law, any other
matter submitted for a vote of the shareholders at the Annual Meeting requires
the vote of the holders of a majority of the Common Stock represented in
person or by proxy at the meeting. The affirmative vote of the holders
of a majority of the Common Stock present at the Annual Meeting by
person or by proxy is required for the approval of the proposed amendment
to the Company's 1992 Long Term Incentive Plan. See "Item 2. Adoption of
the Amended and Restated Zoltek Companies, Inc. 1992 Long Term Incentive
Plan."

Shares subject to abstentions will be treated as shares that
are present at the Annual Meeting for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the base
number of shares voting on a particular proposal. Accordingly,
abstentions will have the same effect as a vote withheld on the election
of directors or a vote against on other matters submitted to the
shareholders for a vote (including the proposal to adopt the Amended and
Restated Zoltek Companies, Inc. 1992 Long Term Incentive Plan), as the
case may be. If a broker or other nominee holder indicates on the Proxy
Card that it does not have discretionary authority to vote the shares it
holds of record on a proposal, those shares will not be considered as
voted for purposes of determining the approval of the shareholders on a
particular proposal.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The following table includes information as to the only
person known to management of the Company to beneficially own five
percent or more of the Company's outstanding Common Stock as of December
30, 1999:

<TABLE>
<CAPTION>
Number of Shares Percent of Outstanding
Name and Address of Beneficial Owner Beneficially Owned Common Stock<F1>
- ------------------------------------ ------------------ ----------------------
<S> <C> <C>
Zsolt Rumy 5,500,000<F2> 29.4%
3101 McKelvey Road
St. Louis, Missouri 63044

<FN>
_____________________

<F1> The percentage calculation is based upon 18,701,331 shares of the
Company's Common Stock that were issued and outstanding as of
December 30, 1999.

<F2> Pursuant to the Company's supply agreement with BF Goodrich
Aerospace, Mr. Rumy has agreed, subject to certain exceptions, to
negotiate exclusively with BF Goodrich Aerospace for a specified
period if he determines to sell a significant amount of his shares
of the Company's Common Stock.
</TABLE>

ITEM 1. ELECTION OF DIRECTORS

Two individuals will be elected at the Annual Meeting to
serve as Class I directors of the Company for a term of three years.
The two nominees receiving the vote of holders of a majority of the
shares entitled to vote and represented in person or by proxy at the
Annual Meeting will be elected. In addition, one individual will be
elected at the Annual Meeting to serve as a Class II director of the
Company for a term of one year. The nominee receiving the vote of
holders of a majority of the shares

- 2 -

entitled to vote and represented in person or by proxy at the Annual
Meeting will be elected. Shareholders do not have the right to
cumulate votes in the election of directors.

The persons named as proxies on the accompanying Proxy Card
intend to vote all duly executed proxies received by the Board of
Directors for the election of John L. Kardos and Linn Bealke as
Class I directors and John F. McDonnell as a Class II director, except
as otherwise directed by the shareholder on the Proxy Card. Messrs.
Kardos, Bealke and McDonnell are currently directors of the Company.
If for any reason Mr. Kardos, Mr. Bealke or Mr. McDonnell becomes
unavailable for election, which is not now anticipated, the persons
named in the accompanying Proxy Card will vote for such substitute
nominee as is designated by the Board of Directors.

The Board of Directors recommends a vote "FOR" the election
of John L. Kardos and Linn Bealke as Class I directors and John F.
McDonnell as a Class II director.

The name, age, principal occupation or position and other
directorships with respect to Messrs. Kardos, Bealke and McDonnell and
the other directors whose terms of office will continue after the Annual
Meeting is set forth below.

CLASS I - TO BE ELECTED FOR A TERM OF THREE YEARS EXPIRING IN 2003

John L. Kardos, age 60, has served as a Director of the
Company since August 1992. For more than the past five years, he has
been Professor of Chemical Engineering of Washington University,
St. Louis, Missouri, where he is a past Chairman of the Department of
Chemical Engineering. From June 1971 to July 1991, he was Chairman of
the Graduate Program in Materials Science and Engineering and Director
of the Materials Research Laboratory of Washington University.

Linn Bealke, age 55, has served as a Director of the Company
since August 1992. For more than the past five years, he has been
President and Director of Mississippi Valley Bancshares, Inc. (a bank
holding company) and Vice Chairman of Southwest Bank of St. Louis (a
commercial bank).

CLASS II - TO BE ELECTED FOR A TERM OF ONE YEAR EXPIRING IN 2001

John F. McDonnell, age 61, has served as a Director of the
Company since July 1999. Mr. McDonnell has been engaged in private
investment activities since his retirement as Chairman of the Board of
McDonnell Douglas Corporation in August 1997. From 1962 to 1997, Mr.
McDonnell held various positions with McDonnell Douglas Corporation,
including Chairman of the Board from 1994 to1997 and Chairman and Chief
Executive Officer from 1988 to 1994. Mr. McDonnell also serves as a
director of The Boeing Company (an aerospace company) and Ralston Purina
Company (a pet food and agricultural products company).

CLASS II - TO CONTINUE IN OFFICE UNTIL 2001

James W. Betts, age 62, has served as a Director of the
Company since August 1992. For more than the past five years, he has
been Vice President Raw Materials of Great Lakes Carbon Corp. (a
producer of carbon products).

- 3 -

CLASS III - TO CONTINUE IN OFFICE UNTIL 2002

Zsolt Rumy, age 57, is the founder of the Company and has
served as its Chairman, President and Chief Executive Officer and as a
Director since 1975. Prior to founding the Company, Mr. Rumy served as
Industrial Marketing Manager and Process Engineer for Monsanto Company,
Accounts Manager for General Electric Company and Technical Sales
Representative for W.R. Grace Company. Since May 1996, Mr. Rumy has
served as a director of Southwest Bank of St. Louis, with which the
Company maintains its primary banking relationships.

Charles A. Dill, age 59, has served as a Director of the
Company since August 1992. Since October 1995, he has been a managing
partner of Gateway Venture Associates, L.P., a venture capital firm.
He served as Chief Executive Officer of Bridge Information Systems, Inc.
(a provider of databases and systems to institutional investors) from
October 1992 to April 1995. Mr. Dill serves as a director of Stifel
Financial Corp., the parent of Stifel, Nicolaus & Company, Incorporated
(a securities brokerage, investment management and investment banking
firm), and DT Industries, Inc. (a developer and manufacturer of
automated production equipment and systems).

BOARD OF DIRECTORS AND COMMITTEES

During fiscal 1999, the Board of Directors of the Company
met five times and acted three times by unanimous written consent. Each
of the directors and nominees attended not less than 75% of the meetings
of the Board of Directors and committees of which such director or
nominee was a member during fiscal 1999.

The Board of Directors has a standing Audit Committee,
Compensation Committee and Technology Committee.

The members of the Audit Committee are Messrs. Bealke and
Dill. During fiscal 1999, the Audit Committee was comprised of Linn
Bealke and James Dorr. Mr. Dorr retired from the Board of Directors for
personal reasons in July 1999, and the Board of Directors elected Mr.
Dill to fill the vacancy on the committee. The Audit Committee reviews
the scope of the Company's engagement of its independent public
accountant and their reports. The Audit Committee also meets with the
financial staff of the Company to review accounting procedures and
reports. The Audit Committee met one time in fiscal 1999.

The Compensation Committee is composed of Messrs. Betts and
Dill. The Compensation Committee is authorized to review and make
recommendations to the Board of Directors regarding the salaries and
bonuses to be paid executive officers and to administer the Company's
Long Term Incentive Plan. The Compensation Committee met one time
during fiscal 1999.

In November 1999, the Board of Directors established a
Technology Committee to advise the Company's management and the other
members of the Board of Directors regarding strategic technology issues,
including recruitment and retention of engineering and technical
employees, and research and development policy issues. The Technology
Committee is comprised of Messrs. McDonnell and Kardos.

- 4 -

DIRECTORS' FEES

Directors who are not also employees of the Company are paid
$750 per board meeting attended. In addition, each of the directors who
is not also an employee of the Company (an "Eligible Director")
participates in the Zoltek Directors Stock Option Plan (the "Directors
Plan"). The Directors Plan provides for the granting of non-qualified
stock options to Eligible Directors. Under the Directors Plan, each
person who is an Eligible Director on the first business day after the
date of the Company's annual meeting of shareholders is granted options
to acquire 7,500 shares of Common Stock. In addition, newly elected
directors who are not also employees also receive an initial grant of
options to purchase 7,500 at the time of their election. The Directors
Plan otherwise does not establish a limit on the aggregate number of
options that may be granted thereunder. Options granted pursuant to
the Directors Plan entitle the director to purchase the Company's
Common Stock at a price equal to the Fair Market Value (as defined in
the Directors Plan) on the date of grant. The option by its terms is
not transferable by the director except by will or the laws of
descent and distribution or pursuant to a qualified domestic relations
order. The option is exercisable during the director's lifetime solely
by the director. Each option is immediately exercisable as to any or
all shares and may be exercised at any time or from time to time.
Options that are outstanding and unexercised at the time the holder
ceases to be a director of the Company for any reason terminate on the
first to occur of the expiration date of the option or the expiration of
24 months after the date the holder ceases to be a director. Unless
exercised or terminated sooner, each option expires on the tenth
anniversary of the date of grant.

SECURITY OWNERSHIP BY MANAGEMENT

The following table indicates, as of December 30, 1999, the
beneficial ownership of the Company's Common Stock by each director of
the Company, each nominee for election as a director of the Company, the
executive officers named in the Summary Compensation Table and all
directors and executive officers of the Company as a group:

<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Class<F1>
- ------------------------ ------------------ --------------------
<S> <C> <C>
Zsolt Rumy<F2> 5,500,000 29.40%
Paul James Rudling 876,363 4.68%
Linn Bealke 45,000<F3> <F*>
James W. Betts 64,500<F4> <F*>
Charles A. Dill 58,500<F4> <F*>
John F. McDonnell 159,500<F5> <F*>
John L. Kardos 37,500<F6> <F*>
Daniel D. Greenwell 1,842<F7> <F*>
All directors and executive officers as a group
(7 persons) 6,743,205<F8> 35.74%
<FN>
_____________________

<F*> Less than one percent

<F1> Based upon 18,701,331 shares of the Company's Common Stock issued
and outstanding as of December 30, 1999 and, for each director or
executive officer or the group, the number of shares subject to
options that may be acquired upon exercise thereof by such
director or executive officer or the group within 60 days of
December 30, 1999.

- 5 -

<F3> Includes 30,000 shares subject to presently exercisable stock
options.

<F4> Includes 43,500 shares subject to presently exercisable stock
options.

<F5> Includes 7,500 shares subject to presently exercisable stock
options.

<F6> Includes 37,500 shares subject to presently exercisable stock
options.

<F7> Includes 342 shares held jointly with spouse.

<F8> Includes 162,000 shares subject to presently exercisable stock
options.
</TABLE>

COMPENSATION OF EXECUTIVE OFFICERS

For the years ended September 30, 1999, 1998 and 1997, the
following table sets forth summary information concerning compensation
awarded or paid to, or earned by, the Chief Executive Officer and each
other executive officer of the Company whose salary and bonus exceeded
$100,000 for the fiscal year ended September 30, 1999.

<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Long Term
Compensation Compensation
------------ ---------------
Securities
Underlying All Other
Name and Principal Position Year Salary($) Bonus Options/SARs(#) Compensation<F1>
- --------------------------- ---- --------- ----- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Zsolt Rumy 1999 $200,000 -- --/-- $19,551
Chairman of the Board, President 1998 $150,000 -- --/-- $19,551
and Chief Executive Officer 1997 $150,000 $200,000 --/-- $16,152

Daniel D. Greenwell 1999 $120,000 -- 15,000/-- $ 5,100
Chief Financial Officer and 1998 $120,000 -- --/-- $ 5,100
Secretary 1997 $100,000 -- --/-- --

<FN>
_____________________

<F1> Total includes amounts allocated to the named executive officer's
account pursuant to the Company's defined contribution profit
sharing plan.
</TABLE>

OPTION GRANTS IN LAST YEAR

The following table sets forth information concerning stock
option grants made in the year ended September 30, 1999 to the executive
officers named in the Summary Compensation Table. No SARs were granted
to the named executive officers in 1999.

- 6 -

<TABLE>
<CAPTION>
Individual Grant Potential Realizable Value
-------------------------------------------------------------------- At Assumed Annual Rates
Number of Percent of of Stock Price
Securities Total Options Market Appreciation for
Underlying Granted to Exercise Price on Option Term<F2>
Options Employees in or Base Date of Expiration --------------------------
Name Granted (#) Fiscal Year Price ($/Sh) Grant ($) Date 5% ($) 10% ($)
- ---- ----------- ----------- ------------ --------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Zsolt Rumy -- -- -- -- -- -- --

Daniel D. Greenwell 15,000<F1> 7.38 7.69 7.69 9/13/2009 72,543 183,838

<FN>
_____________________

<F1> The option set forth above will become exercisable with respect to
the total number of shares subject to the option on September 13,
2002, provided optionee continues to be employed by the Company.
Options terminate on the earlier of (i) September 13, 2009,
(ii) twelve months after termination of employment as a result of
death, retirement or disability, or (iii) three months after any
other termination of the optionee's employment.

<F2> The indicated 5% and 10% rates of appreciation are provided to
comply with Securities and Exchange Commission regulations and do
not necessarily reflect the views of the Company as to the likely
trend in the Common Stock price. Actual gains, if any, on stock
option exercises and Common Stock holdings will be dependent on,
among other things, the future performance of the Common Stock and
overall market conditions. There can be no assurance that the
amounts reflected above will be achieved.
</TABLE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES

The following table sets forth information concerning the
number of exercisable and unexercisable stock options at September 30,
1999, as well as the value of such stock options having an exercise
price lower than the last reported trading price on September 30, 1999
("in-the-money" options) held by the executive officers named in the
Summary Compensation Table. No stock options were exercised by such
individuals during the 1999 fiscal year.

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-
Underlying Unexercised The-Money Options at
Options at Fiscal Year-End(#) Fiscal Year-End ($)<F1>
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- -------------------------
<S> <C> <C>
Zsolt Rumy 0/150,000 $0/$393,750
Daniel D. Greenwell 0/60,000 $0/$0
0/15,000 $0/$4,650
<FN>
_____________________

<F1> Based on a price per share of $8.00, being the last reported
trading price before the fiscal year end.
</TABLE>

- 7 -

REPORT OF THE COMPENSATION COMMITTEE
REGARDING EXECUTIVE COMPENSATION

The Company's executive compensation program is administered
under the direction of the Compensation Committee of the Board of
Directors. The Committee's compensation policies are based upon the
principle that the financial rewards of the Company's executives should
be aligned with the financial interests of its shareholders. In this
manner, the Company seeks to meet its ultimate responsibility to its
shareholders by striving to create superior long-term return on their
investment through earnings growth and prudent management of the
Company's business.

In determining the appropriate level of executive
compensation in fiscal 1999, the Committee considered the Company's
financial results during the period and management's continuing success
over the past several years in achieving the Company's goal of building
long-term shareholder value through the commercialization of carbon
fibers. The Committee did not assign specific weights to individual
factors, but rather considered all such factors as a whole.

The Company's executive compensation policy in fiscal 1999
consisted of base salary, non-cash benefits and long- and short-term
compensation. In determining its policy, the Committee also considered
the strategic accomplishments of management in fiscal 1999 toward the
Company's strategic plan to become the world's leading carbon fiber
producer by the year 2000. During fiscal 1999, management continued to
implement and enhance three elements of the Company's business strategy
relating to achieving reductions of production costs, maintaining the
Company's position as the lowest-cost producer of carbon fibers and
completing the Company's capacity expansion program. In addition,
management made significant progress toward the fourth element of the
Company's strategy - to accelerate the commercialization of carbon
fibers across a broad range of mass market applications. During fiscal
1999, management pursued various initiatives for the Company to act as a
catalyst in the development of new applications, including the
completion in October and November 1999 of four downstream acquisitions.
Notwithstanding these developments, compared to fiscal 1998, net sales
for fiscal 1999 decreased 17.8% to $68.5 million, and the Company
reported a net loss of $2.6 million, compared to net income of $9.6
million for fiscal 1998.

The Company's incentive compensation program consists of
long-term and short-term components. The long-term component is in the
form of stock option grants to the Company's executives, which grants
have been linked to the Company's ZOLTEK 2000 five-year strategic plan
to become the world's leading carbon fiber producer. Each of such
grants include provisions pursuant to which such options vest and become
exercisable in October 2000 upon the scheduled completion of the ZOLTEK
2000 plan.

The Company's short-term incentive compensation program
consists of cash bonuses paid based upon the Company's actual results
and progress toward its strategic plans, and an evaluation of each
individual's contributions thereto. In considering the advisability of
short-term compensation for fiscal 1999, the Committee determined that,
while significant contributions were made by executive management for
fiscal 1999 toward the Company's strategic plans, no cash bonuses should
be paid to executive officers for fiscal 1999. The Committee
anticipates that cash bonuses will be forgone until future periods in
which significant advances in both the Company's strategic plans and in
the Company's actual financial performance are achieved.

Mr. Rumy's base salary was increased in fiscal 1999 to
$200,000 from $150,000 in fiscal 1998 in recognition of Mr. Rumy's
contributions in establishing and implementing the Company's business

- 8 -

<PAGE>
<PAGE>
strategy. At Mr. Rumy's suggestion, in order to minimize the Company's
administrative overhead the amount of Mr. Rumy's base salary remains
below the level which the Committee believes the Company could otherwise
expect to pay for an executive of Mr. Rumy's background and responsibilities.
As set forth above, in light of the Committee's evaluation of the factors
deemed relevant Mr. Rumy did not receive a bonus for fiscal 1999. Based
upon his ownership of the Company's Common Stock and prior year stock option
grants, Mr. Rumy was not granted any stock options in fiscal 1999.

Although the foregoing describes the Committee's current
compensation policies applicable to the Company's executive officers,
the Committee reserves the right to amend these policies at such times
in the future and in such manner as the Committee deems necessary or
advisable.

Section 162(m) of the Internal Revenue Code of 1986, as
amended, generally limits federal income tax deductions for compensation
paid after 1993 to the chief executive officer and the four other most
highly compensated officers of the Company to $1 million per year, but
contains an exception for performance-based compensation that satisfies
certain conditions. In making compensation decisions, the Committee
will consider the net cost of compensation to the Company and whether it
is practicable and consistent with other compensation objectives to
qualify the Company's incentive compensation under the applicable
exemption of Section 162(m). The Committee anticipates that
deductibility of compensation payments will be one among a number of
factors used by the Committee in ascertaining appropriate levels or
modes of compensation, and the Committee will make its compensation
decisions based upon an overall determination of what it believes to be
in the best interests of the Company and its shareholders.

SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
CHARLES A. DILL JAMES W. BETTS

ITEM 2. ADOPTION OF THE AMENDED AND RESTATED ZOLTEK COMPANIES, INC.
1992 LONG TERM INCENTIVE PLAN

The Zoltek Companies, Inc. 1992 Long Term Incentive Plan
(the "Plan") provides for the granting of stock options and other stock-
based awards to officers and key employees of the Company and its
subsidiaries. In November 1999, the Board of Directors of the Company
adopted the Amended and Restated Zoltek Companies, Inc. 1992 Long Term
Incentive Plan (the "Amended Plan") and directed the Amended Plan be
submitted to the shareholders for approval at the Annual Meeting. The
Amended Plan increases the total number of shares authorized for
issuance under the Plan from 1,500,000 to 2,500,000.

A maximum of 1,500,000 shares of Common Stock are presently
authorized for issuance (from treasury stock or authorized but unissued
shares) under the Plan. As of December 31, 1999, 1,461,000 shares were
subject to outstanding grants under the Plan and 39,000 shares were
available for future grants. The Amended Plan would increase the total
number of shares of Common Stock authorized for issuance from 1,500,000
to 2,500,000 shares. The Board of Directors believes that the increase
in the number of shares authorized for issuance under the Amended Plan
is appropriate and will enhance the ability of the Company to continue
to provide incentives to its key employees and to induce qualified
individuals to serve as, or to remain, employees of the Company.

The affirmative vote of the holders of a majority of the
shares of Common Stock represented in person or by proxy at the Annual
Meeting is required for approval of the Amended Plan. If the Amended
Plan is not approved, the Amended Plan not be implemented and the
existing Plan will continue in effect. A copy of the Amended Plan as
proposed is attached as Appendix A to this Proxy

- 9 -

<PAGE>
<PAGE>
Statement and the following description of the Amended Plan is qualified
by reference to Appendix A. Capitalized terms used in this discussion
and not otherwise defined herein shall have the meanings ascribed to
them in the Amended Plan.

DESCRIPTION OF THE PLAN

The Plan is administered by the Compensation Committee of
the Board of Directors (the "Committee"), consisting of two or more
directors of the Company. The Committee, by majority action thereof, is
authorized to determine the individuals to whom the benefits will be
granted, the type and amount of such benefits and the terms of the
benefit grants, as well as to interpret the Plan and to make all other
determinations necessary or advisable for the administration of the Plan
to the extent not contrary to the express provisions of the Plan. The
determinations and interpretations made by the Committee under the Plan
are made based upon the recommendations of the Chief Executive Officer
and management of the Company, information made available to the
Committee and the Committee's judgment as to the best interests of the
Company and its shareholders.

Under the terms of the Plan, key employees of the Company
and its subsidiaries as determined in the sole discretion of the
Committee are eligible to receive (a) stock options ("Stock Options")
exercisable into shares of the Company's Common Stock which may or may
not qualify as incentive stock options within the meaning of Section 422
of the Internal Revenue Code, as amended, (b) stock appreciation rights,
(c) restricted shares of the Company's Common Stock ("Restricted
Stock"), and (d) performance awards ("Performance Awards"). As provided
in the Plan, the Committee has complete discretion to determine the type
and number of benefits granted to any participating officer or employee
and the terms and conditions which attach to each grant, which terms and
conditions need not be uniform as between different participants. The
receipt by a participant of one type of grant under the Plan does not
entitle the participant to receipt of any other type of grant.

Stock Options. Stock Options granted under the Plan entitle
the holder thereof to purchase the Company's Common Stock at a purchase
price established therefor by the Committee, which price shall not be
less than the Fair Market Value (as defined in the Plan) of the
Company's Common Stock on the date of grant for incentive stock options
and not less than 85% of Fair Market Value on the date of grant for
options which are not incentive stock options ("non-qualified stock
options"). The Committee shall determine the term of such Stock Options
and the times at, and conditions under which, such Stock Options will
become exercisable. Stock Options are not exercisable earlier than six
months from the date of grant (except in the case of death or disability
of the employee holding the same), nor later than ten years from the
date of the grant. For any employee, the aggregate fair market value of
the Company's Common Stock subject to qualifying incentive stock options
that are exercisable for the first time in any calendar year may not
exceed $100,000.

Stock Appreciation Rights. The Committee may grant stock
appreciation rights (a "SAR") giving the holder thereof a right to
receive, at the time of surrender, Common Stock of the Company equal in
value to the difference between the Fair Market Value of such stock at
the date of surrender of the SAR and the "Base Price" established by the
Committee therefor at the time of grant, subject to any limitation
imposed by the Committee on appreciation. The "Base Price" shall not be
less than the Fair Market Value of the Company's Common Stock on the
date of the grant of the SAR. In the Committee's discretion, the value
of a SAR may be paid in cash or Common Stock, or a combination thereof.
A SAR may be granted either independent of, or in conjunction with, any
Stock Option. If granted in conjunction with a Stock Option, at the
discretion of the Committee a SAR may either be surrendered (a) in lieu
of the exercise of such Stock Option, (b) in conjunction with the
exercise of such Stock Option,

- 10 -

or (c) upon expiration of such Stock Option. The term of any SAR shall
be established by the Committee, but in no event shall such term exceed
ten years from the date of grant.

Restricted Stock. The Committee may issue shares of the
Company's Common Stock either as a stock bonus or at a purchase price
of less than fair market value, subject to the restrictions or
conditions specified by the Committee at the time of grant. In addition
to any other restrictions or conditions that may be imposed on the
Restricted Stock, shares of Restricted Stock may not be sold or disposed
of for a period of six months after the date of grant. During the
period of restriction, holders of Restricted Stock shall be entitled to
receive all dividends and other distributions made in respect of such
stock and to vote such stock without limitation.

Performance Awards. The Committee may grant Performance
Awards consisting of shares of the Company's Common Stock, monetary
units payable in cash or a combination thereof. These grants would
result in the issuance, without payment therefor, of Common Stock or the
payment of cash upon the achievement of certain pre-established
performance criteria (such as return on average total capital employed,
earnings per share or return on shareholders' equity) during a specified
performance period not to exceed five years. The participating employee
would have no right to receive dividends on or to vote any shares
subject to Performance Awards until the award is actually earned and the
shares are issued.

The Plan is to remain in effect until the Board terminates
the Plan or September 1, 2002, whichever shall first occur. The Board,
in its sole discretion may terminate the Plan at any time and from time
to time may amend or modify the Plan; provided, however, that no such
action of the Board may, without the approval of the shareholders of the
Company, change the total number of shares which may be issued under the
Plan and no amendments requiring shareholder approval in order to meet
the requirements of Rule 16b-3 shall be effective unless such
shareholder approval is obtained. No amendment, modification or
termination of the Plan shall in any manner adversely affect any award
theretofore granted under the Plan, without the consent of the
participant affected thereby.

FEDERAL INCOME TAX CONSEQUENCES

No income will be realized by a participating officer or
employee on the grant of an incentive stock option or a non-qualified
stock option or upon the award of Restricted Stock, and the Company will
not be entitled to a deduction at such time. If a holder exercises an
incentive stock option and does not dispose of the shares acquired
within two years from the date of the grant, or within one year from the
date of exercise of the option, no income will be realized by the holder
at the time of exercise. The Company will not be entitled to a
deduction by reason of the exercise.

If a holder disposes of the shares acquired pursuant to an
incentive stock option within two years from the date of grant of the
option or within one year from the date of exercise of the option, the
holder will realize ordinary income at the time of disposition which
will equal the excess, if any, of the lesser of (a) the amount realized
on the disposition, or (b) the fair market value of the shares on the
date of exercise, over the holder's basis in the shares. The Company
generally will be entitled to a deduction in an amount equal to such
income in the year of the disqualifying disposition.

Upon the exercise of a non-qualified option, the excess, if
any, of the fair market value of the stock on the date of exercise over
the purchase price is ordinary income to the holder as of the date of
exercise. The Company generally will be entitled to a deduction equal
to such excess amount in the year of exercise.

- 11 -

Subject to a voluntary election by the holder under Section
83(b) of the Internal Revenue Code of 1986, as amended (the "Code"), a
holder will realize income as a result of the award of Restricted Stock
at the time the restrictions expire on such shares. An election
pursuant to Section 83(b) of the Code would have the effect of causing
the holder to realize income in the year in which such award was
granted. The amount of income realized will be the difference between
the fair market value of the shares on the date such restrictions expire
(or on the date of issuance of the shares, in the event of a Section
83(b) election) over the purchase price, if any, of such shares. The
Company generally will be entitled to a deduction equal to the income
realized in the year in which the holder is required to report such income.

An employee will realize income as a result of a Performance
Award at the time the award is issued or paid. The amount of income
realized by the participant will be equal to the fair market value of
the shares on the date of issuance, in the case of a stock award, and to
the amount of the cash paid, in the event of a cash award. The Company
will be entitled to a corresponding deduction equal to the income
realized in the year of such issuance or payment.

The Board of Directors recommends a vote "FOR" the adoption
of the Amended and Restated Zoltek Companies, Inc. 1992 Long Term
Incentive Plan, which is Item 2 on the Proxy Card.

PERFORMANCE GRAPH

The following Performance Graph compares the cumulative
total shareholder return, including the reinvestment of dividends, on
the Company's Common Stock with the cumulative return of the NASDAQ
Industrial Index and the Russell 2000 Index for the period from November
6, 1992 to September 30, 1999.

[GRAPH]

<TABLE>
ASSUMES $100 INVESTED ON NOVEMBER 6, 1992 IN
ZOLTEK COMPANIES, INC. COMMON STOCK,
THE NASDAQ INDUSTRIAL INDEX AND
THE RUSSELL 2000 INDEX
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Nov. 6, Sep. 30, Sep. 30, Sep. 30, Sep. 30, Sep. 30, Sep. 30, Sep. 30,
1992 1993 1994 1995 1996 1997 1998 1999
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Zoltek Companies, Inc. 100 168.75 281.26 618.77 2850.07 4668.87 871.90 600.02
- -------------------------------------------------------------------------------------------------------------------------------

- 12 -

- -------------------------------------------------------------------------------------------------------------------------------
NASDAQ Industrial Index 100 122.37 121.69 169.61 198.03 265.90 269.12 453.16
- -------------------------------------------------------------------------------------------------------------------------------
The Russell 2000 Index 100 127.31 130.64 161.21 182.39 242.92 196.73 234.24
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

CERTAIN TRANSACTIONS

Mr. Bealke, who is a director of the Company, also is Vice
Chairman of Southwest Bank of St. Louis ("Southwest Bank"), which is a
bank lender to the Company. Mr. Rumy, the Chairman, President and Chief
Executive Officer of the Company, has served as a director of Southwest
Bank since May 1996. As of September 30, 1999, the Company's borrowings
from Southwest Bank aggregated $2,158,511. During the fiscal year ended
September 30, 1999, the Company's aggregate interest payments to
Southwest Bank aggregated $234,214. On January 1, 1999, the Company
entered into a sale and leaseback transaction with Southwest Bank
pursuant to which the Company sold its nitrogen generation plant at its
Abilene, Texas facility for $5,000,000 (the book value of the facility),
and leased the facility back under a seven-year operating lease. During
the fiscal year ended September 30, 1999, the Company's aggregate
payments under such operating lease was $187,500.

During fiscal 1999, in connection with the Company's
operations, the Company from time to time chartered an airplane from
Twin Springs Aviation, Inc., a corporation wholly owned by Mr. Rumy, the
Chairman, President and Chief Executive Officer of the Company. The
total of all such charter payments made by the Company during fiscal
1999 was $345,206.

The Company believes that all of the transactions set forth
above were made on terms not less favorable to the Company than would
have been obtained from unaffiliated third parties. All future
transactions (including loans) between the Company and its officers,
directors, principal shareholders and affiliates are required to be
approved by a majority of the Board of Directors, including a majority
of the independent and disinterested outside directors, and must be on
terms no less favorable to the Company than could be obtained from
unaffiliated third parties.

APPOINTMENT OF AUDITORS

PricewaterhouseCoopers LLP served as the Company's
independent accountants for fiscal 1999. The Board of Directors
anticipates that representatives of PricewaterhouseCoopers LLP will be
present at the Annual Meeting of Shareholders to respond to appropriate
questions and to make a statement if they desire. The Board of
Directors has not yet appointed independent accountants to be the
Company's auditors for fiscal 2000. The Company expects that the
Company's auditors for fiscal 2000 will be appointed by the end of the
second quarter of fiscal 2000.

PROPOSALS OF SHAREHOLDERS

Under applicable regulations of the Securities and Exchange
Commission, all proposals of shareholders to be considered for inclusion
in the proxy statement for the 2000 Annual Meeting of Shareholders must
be received at the offices of the Company, c/o Daniel D. Greenwell,
Chief Financial Officer and Corporate Secretary, 3101 McKelvey Road,
St. Louis, Missouri 63044 by not later than September 16, 2000. The
Company's By-Laws also prescribe certain time limitations and procedures
which must be complied with for proposals of shareholders, including
nominations of directors, to be considered at, such annual meeting. The
By-Laws of the Company provide that shareholder proposals

- 13 -

which do not appear in the proxy statement may be considered at a meeting
of shareholders only if written notice of the proposal is received by the
Secretary of the Company not less than 30 and not more than 60 days
before the annual meeting; provided, however, that, in the event that
less than 40 days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to
be timely must be received not later than the close of business on the
tenth day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure was made.

Any written notice of a shareholder proposal must include
the following information: (a) as to each person whom the shareholder
proposes to nominate for election or re-election as a director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including such person's written
consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of
the business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in
such business of such shareholder; and (c) as to the shareholder giving
the notice, (i) the name and address of such shareholder, as it appears
ion the Company's books, and (ii) the class and number of shares of the
Company which are owned beneficially by such shareholder.

ANNUAL REPORT

The annual report of the Company for the year ended
September 30, 1999 has simultaneously been mailed to the shareholders of
the Company.

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED SEPTEMBER 30, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (EXCLUDING EXHIBITS), MAY BE OBTAINED BY ANY STOCKHOLDER,
WITHOUT CHARGE, UPON WRITTEN REQUEST TO DANIEL D. GREENWELL, CHIEF
FINANCIAL OFFICER, ZOLTEK COMPANIES, INC., 3101 MCKELVEY ROAD, ST.
LOUIS, MISSOURI 63044, TELEPHONE NUMBER: (314)291-5110.

OTHER MATTERS

The Board of Directors of the Company does not intend to present
at the Annual Meeting any business other than that referred to in the
accompanying Notice of Annual Meeting. As of the date hereof, the Board
of Directors was not aware of any other matters which may properly be
presented for action at the Annual Meeting. If, however, any other matters
should properly come before the Annual Meeting, it is the intention of the
persons named on the Proxy Card to vote the shares represented thereby in
accordance with their judgment as to the best interest of the Company on
such matters.

ZSOLT RUMY
Chairman of the Board, President
and Chief Executive Officer

January 14, 2000

- 14 -

<PAGE>
<PAGE>
APPENDIX A
----------

AMENDED AND RESTATED
ZOLTEK COMPANIES, INC.
1992 LONG TERM INCENTIVE PLAN

Zoltek Companies, Inc. (the "Company") adopted the Zoltek
Companies, Inc. 1992 Long Term Incentive Plan (the "Plan") effective
July 31, 1992. The Company amended the Plan in 1996 to, among other
things, increase the number of shares reserved for issuance under the
Plan from 900,000 to 1,500,000. On November 20, 1999, the Board of
Directors approved an amendment to further increase the number of shares
reserved for issuance under the Plan to 2,500,000. The amendments to
the Plan became effective immediately upon approval by the Board of
Directors and were submitted for approval of the shareholders of the
Company at the 2000 Annual Meeting of Shareholders held February 15,
2000.

Pursuant to the authority reserved in Section 17 of the Plan, the
Board of Directors of the Company hereby amends and completely restates
the Plan to read in its entirety as follows:

SECTION 1. PURPOSE.

The purpose of this Plan is to encourage certain employees of the
Company, and of such subsidiaries of the Company as the Committee
administering the Plan designates, to acquire Common Stock of the
Company or to receive monetary payments based on the value of such stock
or based upon achieving certain goals on a basis mutually advantageous
to such employees and the Company and thus provide an incentive for
continuation of the efforts of employees for the success of the Company
and for continuity of employment.

SECTION 2. DEFINITIONS.

Whenever used herein, the following terms shall have the
respective meanings set forth below:

(a) AWARD means any Stock Option, Stock Appreciation Right,
Restricted Stock, or Performance Award granted under the
Plan.

(b) AWARD AGREEMENT means the written agreement evidencing an
award under the Plan, which shall be executed by the Company
and the Participant.

(c) BASE PRICE means, in the case of an Option or a Stock
Appreciation Right, a price fixed by the Committee, which
shall not be less than 100% of the par value of a share of
Stock on the date of grant of such Option or SAR.

(d) BOARD means the Board of Directors of the Company.

(e) CHANGE OF CONTROL is as defined in Section 18.

(f) CODE means the Internal Revenue Code of 1986, as amended and
in effect from time to time.

A-1

<PAGE>
<PAGE>
(g) COMMITTEE means those members of the Compensation Committee
of the Board, each of whom is both (i) qualified to
administer the Plan as contemplated by Rule 16b-3 and
(ii) an "outside director" as contemplated by Section 162(m)
of the Code.

(h) COMPANY means Zoltek Companies, Inc., a Missouri
corporation.

(i) DISABILITY means permanent and total disability as defined
in Section 22(e)(3) of the Code, as determined by the
Committee in good faith, upon receipt of and in reliance on
sufficient competent medical advice.

(j) EMPLOYEE means a salaried employee (including officers and
directors who are also employees) of any member of the
Group.

(k) EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.

(l) FAIR MARKET VALUE means, for any particular date, (i) for
any period during which the Stock shall not be listed for
trading on a national securities exchange, but when prices
for the Stock shall be reported by the National Market
System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), the last transaction
price per share as quoted by National Market System of
NASDAQ, (ii) for any period during which the Stock shall not
be listed for trading or a national securities exchange or
its price reported by the National Market System of NASDAQ,
but when prices for the Stock shall be reported by NASDAQ,
the closing bid price as reported by the NASDAQ, (iii) for
any period during which the Stock shall be listed for
trading on a national securities exchange, the closing price
per share of Stock on such exchange as of the close of such
trading day or (iv) the market price per share of Stock as
determined by a nationally recognized investment banking
firm selected by the Board of Directors in the event neither
(i), (ii) or (iii) above shall be applicable. If Fair
Market Value is to be determined as of a day when the
securities markets are not open, the Fair Market Value on
that day shall be the Market Price on the preceding day when
the markets were open.

(m) GROUP means the Company and every Subsidiary of the Company.

(n) OPTION means the right to purchase Stock at the Base Price
for a specified period of time. For purposes of the Plan,
an Option may be an INCENTIVE STOCK OPTION within the
meaning of Section 422 of the Code, a NONSTATUTORY STOCK
OPTION, or any other type of option encompassed by the Code.

(o) PARTICIPANT means any Employee designated by the Committee
to participate in the Plan.

(p) PERFORMANCE AWARD means a right to receive a payment equal
to the value of a unit or other measure as determined by the
Committee based on performance during a Performance Period.

(q) PERFORMANCE PERIOD means a period of not more than ten years
established by the Committee during which certain
performance goals set by the Committee are to be met.

A-2

(r) PERIOD OF RESTRICTION means the period during which a grant
of shares of Restricted Stock is restricted pursuant to
Section 11 of the Plan.

(s) PERMITTED TRANSFEREE means either (i) the spouse, children
or grandchildren of a Participant ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, or (iii) a partnership in
which such Immediate Family Members are the only partners.

(t) REPORTING PERSON means a person subject to Section 16 of the
Securities Exchange Act of 1934, as amended.

(u) RESTRICTED STOCK means Stock granted pursuant to Section 11
of the Plan, but a share of such Stock shall cease to be
Restricted Stock when the conditions to and limitations on
transferability under Section 11 have been satisfied or have
expired, respectively.

(v) RETIREMENT (including NORMAL, EARLY, and DISABILITY
Retirement) means termination of employment with eligibility
for normal, early or disability retirement benefits under
the terms of the Zoltek Companies, Inc. Profit Sharing Plan,
as amended and in effect at the time of such termination of
employment.

(w) RULE 16B-3 means Rule 16b-3 promulgated by the Securities
and Exchange Commission pursuant to the Exchange Act, or any
successor regulation.

(x) STOCK means the Common Stock of the Company, $.01 par value
per share.

(y) STOCK APPRECIATION RIGHT or SAR means the right to receive a
payment from the Company equal to the excess of the Fair
Market Value of a share of Stock at the date of exercise
over the Base Price. In the case of a Stock Appreciation
Right which is granted in conjunction with an Option, the
Base Price shall be the Option exercise price.

(z) SUBSIDIARY means a subsidiary corporation as defined in
Section 425 of the Code.

(aa) TAXABLE EVENT means an event requiring Federal, state or
local tax to be withheld with respect to an Award hereunder,
including but not limited to the exercise of Nonqualified
Stock Options or SARs, the ending of a Period of Restriction
with respect to Restricted Stock, the making by a
Participant of an election under Section 83(b) of the Code,
or any of the foregoing with respect to a Performance Award.

SECTION 3. ADMINISTRATION.

The Plan will be administered by the Committee. The determinations
of the Committee shall be made in accordance with their judgment as to
the best interests of the Company and its stockholders and in accordance
with the purpose of the Plan. Notwithstanding the foregoing, the Committee
may delegate to executive officers, administration of the Plan solely as
it relates to Participants who are not Reporting Persons. A majority of
members of the Committee shall constitute a quorum, and all determinations
of the Committee shall be made by a majority of its members. Any
determination of the Committee under the Plan may be made without notice
or meeting of the Committee, by a writing signed by a majority of the

A-3

Committee members. Determinations, interpretations, or other actions
made or taken by the Committee pursuant to the provisions of the Plan
shall be final and binding and conclusive for all purposes and upon
all persons whomsoever.

SECTION 4. SHARES RESERVED UNDER THE PLAN;
LIMITS ON AWARDS TO PARTICIPANTS.

There is hereby reserved for issuance under the Plan an aggregate
of 2,500,000 shares of Stock, which may be authorized but unissued or
treasury shares. Stock underlying outstanding options or Performance
Awards will be counted against the Plan maximum while such options or
awards are outstanding. Calculations of the number of shares remaining
available for issuance under the Plan shall be by those methods
permissible under Rule 16b-3 which result in the greatest number of
shares remaining available for issuance. In accordance with the
requirements under Section 162(m) of the Code, no Participant shall
receive a grant of Awards with respect to more than 300,000 shares of
Stock in any year.

SECTION 5. PARTICIPANTS.

Participants will consist of such officers and key employees of
the Company or any designated subsidiary as the Committee in its sole
discretion determines have a major impact on the success and future
growth and profitability of the Company. Designation of a Participant
in any year shall not require the Committee to designate such person to
receive an Award in any other year or to receive the same type or amount
of Award as granted to the Participant in any other year or as granted
to any other Participant in any year. The Committee shall consider such
factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards.

SECTION 6. TYPES OF AWARDS.

The following Awards may be granted under the Plan: (a) Incentive
Stock Options; (b) Nonqualified Stock Options; (c) Stock Appreciation
Rights; (d) Restricted Stock; and (e) Performance Awards; all as
described below. Except as specifically limited herein, the Committee
shall have complete discretion in determining the type and number of
Awards to be granted to any Participant, and the terms and conditions
which attach to each Award, which terms and conditions need not be
uniform as between different Participants. All Awards shall be in
writing.

SECTION 7. GRANTING OF AWARDS.

All Awards granted under the Plan shall be granted as of an Award
Date. Within ten business days after each Award Date, the Company shall
notify the Participant of the grant of the Award, and shall hand deliver
or mail to the Participant an Award Agreement and a Confidentiality
Agreement, duly executed by and on behalf of the Company, with the
request that the Participant execute the Agreements within 30 days after
the date of mailing or delivery by the Company of the Agreements to the
Participant. If the Participant shall fail to execute and deliver to
the Company the written Award Agreement and Confidentiality Agreement
within said 30-day period, his or her Award shall be automatically
terminated.

SECTION 8. INCENTIVE STOCK OPTIONS.

Incentive Stock Options shall consist of options to purchase
shares of Stock at purchase prices not less than 100% of the fair market
value of the shares on the date the option is granted. Said purchase
price may be paid by check or, in the discretion of the Committee, by
the delivery of shares of Stock then owned

A-4

by the Participant, provided such shares have been held by such
Participant or Permitted Transferee, as the case may be, for longer
than six months. Incentive Stock Options will be exercisable not later
than ten years after the date they are granted and will terminate not
later than three months after termination of employment for any reason
other than death or Disability. In the event termination of employment
occurs as a result of death or Disability, such an option will be
exercisable for 12 months after such termination. If the optionee dies
within 12 months after termination of employment by reason of Disability,
then the period of exercise following death shall be the remainder of the
12-month period, or three months, whichever is longer. If the optionee
dies within three months after termination of employment for any other
reason, then the period of exercise following death shall be three months.
However, in no event shall any Incentive Stock Option be exercised more
than ten years after its grant. Leaves of absence granted by the Company
for military service, illness, and transfers of employment between the
Company and any subsidiary thereof shall not constitute termination of
employment. The aggregate Fair Market Value (determined as of the time
an option is granted) of the stock with respect to which an Incentive
Stock Option is exercisable for the first time during any calendar year
(under all option plans of the Company and its subsidiary corporations)
shall not exceed $100,000.

SECTION 9. NONQUALIFIED STOCK OPTIONS.

Nonqualified Stock Options shall consist of nonqualified stock
options to purchase shares of Stock at purchase prices not less than 85%
of the fair market value of the shares on the date the option is
granted. Said purchase price may be paid by check or, in the discretion
of the Committee, by the delivery of shares of Stock then owned by the
Participant, provided such shares have been held by such Participant for
longer than six months. Nonqualified Stock Options will be exercisable
not earlier than six months and not later than ten years after the date
they are granted and will terminate not later than three months after
termination of employment for any reason other than death, Retirement or
Disability. In the event termination of employment occurs as a result
of death, Retirement or Disability, such an option will be exercisable
for 12 months after such termination. If the optionee dies within 12
months after termination of employment by Retirement or Disability, then
the period of exercise following death shall be three months. However,
in no event shall any option be exercised more than ten years after its
grant. Leaves of absence granted by the Company for military service,
illness, and transfers of employment between the Company and any
subsidiary thereof shall not constitute termination of employment. The
Committee shall have the right to determine at the time the option is
granted whether shares issued upon exercise of a Nonqualified Stock
Option shall be subject to restrictions, and if so, the nature of the
restrictions.

SECTION 10. STOCK APPRECIATION RIGHTS.

Stock Appreciation Rights may be granted which, at the discretion
of the Committee, may be surrendered (1) in lieu of exercise of an
Option, (2) in conjunction with the exercise of an Option, (3) upon
lapse of an Option, (4) independent of an Option, or (5) each of the
above in connection with a previously awarded Option under the Plan. If
the Option referred to in (1), (2), or (3) above qualified as an
Incentive Stock Option pursuant to Section 422 of the Code, the related
SAR shall comply with the applicable provisions of the Code and the
regulations issued thereunder. At the time of grant, the Committee may
establish, in its sole discretion, a maximum amount per share which will
be payable upon surrender of a SAR, and may impose such conditions on
surrender of a SAR (including, without limitation, the right of the
Committee to limit the time of surrender to specified periods) as may be
required to satisfy the requirements of Rule 16b-3 (or any successor
rule), under the Exchange Act. At the discretion of the Committee,
payment for SARs may be made in cash or Stock, or in a combination
thereof. If SARs are

A-5

<PAGE>
<PAGE>
exercised for cash, shares of Stock equal to the number of SARs exercised
shall be restored to the number of shares available for issuance under the
Plan. The following will apply upon surrender of a SAR:

(a) Surrender of SARs in Lieu of Exercise of Options. SARs
------------------------------------------------
surrenderable in lieu of Options may be surrendered for all
or part of the shares of Stock subject to the related Option
upon the surrender of the right to exercise an equivalent
number of Options. A SAR may be surrendered only with
respect to the shares of Stock for which its related Option
is then exercisable.

(b) Surrender of SARs in Conjunction with Exercise of Options.
---------------------------------------------------------
SARs surrenderable in conjunction with the exercise of
Options shall be deemed to be surrendered upon the exercise
of the related Options.

(c) Surrender of SARs Upon Lapse of Options. SARs surrenderable
---------------------------------------
upon lapse of Options shall be deemed to have been
surrendered upon the lapse of the related Options as to the
number of shares of Stock subject to the Options.

(d) Surrender of SARs Independent of Options. SARs
----------------------------------------
surrenderable independent of Options may be surrendered upon
whatever terms and conditions the Committee, in its sole
discretion, imposes upon the SARs.

SECTION 11. RESTRICTED STOCK.

Restricted Stock shall consist of Stock issued or transferred
under the Plan (other than upon exercise of Stock Options or as
Performance Awards) at any purchase price less than the Fair Market
Value thereof on the date of issuance or transfer, or as a bonus. In
the case of any Restricted Stock:

(a) The purchase price, if any, will be determined by the
Committee.

(b) Restricted Stock may be subject to (i) restrictions on the
sale or other disposition thereof; (ii) rights of the Company to reacquire
such Restricted Stock at the purchase price, if any, originally paid
therefor upon termination of the employee's employment within specified
periods, (iii) representation by the employee that he or she intends to
acquire Restricted Stock for investment and not for resale, and (iv) such
other restrictions, conditions and terms as the Committee deems appropriate.

(c) The Participant shall be entitled to all dividends paid with
respect to Restricted Stock during the Period of Restriction and shall not
be required to return any such dividends to the Company in the event of the
forfeiture of the Restricted Stock.

(d) The Participant shall be entitled to vote the Restricted
Stock during the Period of Restriction.

(e) The Committee shall determine whether Restricted Stock is to be
delivered to the Participant with an appropriate legend imprinted on the
certificate or if the shares are to be deposited in escrow pending removal
of the restrictions.

A-6

SECTION 12. PERFORMANCE AWARDS.

Performance Awards shall consist of Stock, monetary units or some
combination thereof, to be issued without any payment therefor, in the
event that certain performance goals established by the Committee are
achieved during the Performance Period. The goals established by the
Committee may include return on average total capital employed, earnings
per share, return on stockholders' equity and such other goals as may be
established by the Committee. In the event the minimum Corporate goal
is not achieved at the conclusion of the Performance Period, no payment
shall be made to the Participant. Actual payment of the award earned
shall be in cash or in Stock or in a combination of both, in a single
sum or in periodic installments, all as the Committee in its sole
discretion determines. If Stock is used, the Participant shall not have
the right to vote and receive dividends until the goals are achieved and
the actual shares are issued. If an Award is paid in cash but the
number of shares available for issuance under the Plan had previously
been reduced to account for such Award, a number of shares equal to the
amount of the reduction shall be restored to the number of shares
remaining available for issuance.

SECTION 13. ADJUSTMENT PROVISIONS.

(a) If the Company shall at any time change the number of issued
shares of Stock without new consideration to the Company (such as by
stock dividends or stock splits), the total number of shares reserved
for issuance under this Plan, the number of shares which may be granted
in the form of Restricted Stock or Performance Awards, the maximum
number of shares available to a particular Participant, and the number
of shares covered by each outstanding Award, shall be adjusted so that
the aggregate consideration payable to the Company, if any, and the
value of each such Award shall not be changed. Awards may also contain
provisions for their continuation or for other equitable adjustments
after changes in the Stock resulting from reorganization, sale, merger,
consolidation, issuance of stock rights or warrants, or similar
occurrence.

(b) Notwithstanding any other provision of this Plan, and
without affecting the number of shares reserved or available hereunder,
the Board of Directors may authorize the issuance or assumption of
benefits in connection with any merger, consolidation, acquisition of
property or stock, or reorganization upon such terms and conditions as
it may deem appropriate.

SECTION 14. NONTRANSFERABILITY.

Each Award granted under the Plan to a Participant shall not be
transferable otherwise than by will or the laws of descent and
distribution; provided, however, a Participant may, in his or her sole
discretion, transfer all or a portion of a nonqualified stock option
granted to such Participant to a Permitted Transferee, provided that
(i) there may be no consideration paid for any such transfer, (ii) the
stock option agreement pursuant to which such options are granted must
be approved by the Committee, and must expressly provide for
transferability in a manner consistent with this Section 14 or such
proposed transfer must be approved by the Committee, (iii) subsequent
transfers of transferred nonqualified stock options shall be prohibited
except those (x) by will or the laws of descent and distribution or
(y) to any other Permitted Transferee of the Participant, and (iv) the
Participant shall remain subject to withholding taxes upon exercise of
the nonqualified stock option by a Permitted Transferee. Following
transfer, any such nonqualified stock option shall continue to be
subject to the same terms and conditions as were applicable immediately
prior to transfer. The Company shall have no obligation to provide a
Permitted Transferee with notice of the early termination of a
nonqualified stock option. Awards granted under this Plan to a
Participant shall be exercisable, during the Participant's lifetime,
only by the Participant or a Permitted

A-7

Transferee, as the case may be. In the event of the death of a
Participant, exercise or payment shall be made only:

(a) By or to the Permitted Transferee, the executor or
administrator of the estate of the deceased Participant or the person or
persons to whom the deceased Participant's rights under the Award shall
pass by will or the laws of descent and distribution; and

(b) To the extent that the deceased Participant or a Permitted
Transferee, as the case may be, was entitled thereto at the date of the
Participant's death.

SECTION 15. TAXES.

The Company shall be entitled to withhold the amount of any tax
attributable to any amounts payable or shares deliverable under the Plan
after giving the person entitled to receive such payment or delivery
notice as far in advance of the Taxable Event as practicable, and the
Company may defer making payment or delivery as to any Award, if any
such tax is payable, until indemnified to its satisfaction. The person
entitled to any such delivery may, by notice to the Company at the time
the requirement for such delivery is first established, elect to have
such withholding satisfied by a reduction of the number of shares
otherwise so deliverable (a "Stock Withholding Election"), such
reduction to be calculated based on a closing market price on the date
of such Taxable Event. Reporting Persons may make a Stock Withholding
Election only in accordance with the least restrictive methods then
permitted under Rule 16b-3.

SECTION 16. NO RIGHT TO EMPLOYMENT.

A Participant's right, if any, to continue to serve the Company
and its subsidiaries as an officer, employee, or otherwise, shall not be
enlarged or otherwise affected by his or her designation as a
Participant under the Plan.

SECTION 17. DURATION, AMENDMENT AND TERMINATION.

No Award shall be granted more than ten years after the date of
adoption of this Plan; provided, however, that the terms and conditions
applicable to any Award granted within such period may thereafter be
amended or modified by mutual agreement between the Company and the
Participant or such other person as may then have an interest therein.
Also, by mutual agreement between the Company and a Participant
hereunder, Stock Options or other Awards may be granted to such
Participant in substitution and exchange for, and in cancellation of,
any Awards previously granted such Participant under this Plan, provided
that any such substitution shall be deemed a new award for purposes of
calculating any applicable six-month holding periods. To the extent
that any Stock Options or other Awards which may be granted within the
terms of the Plan would qualify under present or future laws for tax
treatment that is beneficial to a recipient, then any such beneficial
treatment shall be considered within the intent, purpose and operational
purview of the Plan and the discretion of the Committee, and to the
extent that any such Stock Options or other Awards would so qualify
within the terms of the Plan, the Committee shall have full and complete
authority to grant Stock Options or other Awards that so qualify
(including the authority to grant, simultaneously or otherwise, Stock
Options or other Awards which do not so qualify) and to prescribe the
terms and conditions (which need not be identical as among recipients)
in respect to the grant or exercise of any such Stock Option or other
Awards under the Plan. The Board of Directors may amend the Plan from
time to time or terminate the Plan at any time. However, no action
authorized by this paragraph shall reduce the amount of any existing
Award or change the terms and conditions thereof without the

A-8

Participant's consent. No amendment of the Plan shall, without approval
of the stockholders of the Company increase the total number of shares
which may be issued under the Plan. No amendments requiring shareholder
approval in order to meet the requirements of Rule 16b-3 shall be
effective unless such shareowner approval is obtained.

SECTION 18. CHANGE OF CONTROL.

Notwithstanding any other provision of this Plan, if the terms of
an agreement under which the Committee has granted an Award under this
Plan shall so provide, upon a Change of Control outstanding Awards shall
become immediately and fully exercisable or payable according to the
following terms:

(a) Any outstanding and unexercised Option shall become immediately
and fully exercisable, and shall remain exercisable until it would otherwise
expire by reason of lapse of time.

(b) Any outstanding and unexercised Stock Appreciation Rights
shall become exercisable as follows:

(i) Any SAR described in subsections 10(a) or (b) shall
continue to be treated as provided in those
subsections, except that SARs exercised by Reporting
Persons for cash shall have been either (i) approved
by the Board or the Committee or (ii) held for six
months prior to exercise.

(ii) Any SAR described in subsection 10(c) shall be
deemed to have been exercised if and when the
Participant advises the Committee in writing that he
or she elects to have Options with respect to which
the SAR was granted treated as having lapsed, except
that SARs exercised by Reporting Persons for cash
shall have been either (i) approved by the Board or
the Committee or (ii) held for six months prior to
exercise.

(iii) Any SAR described in subsection 10(d) shall be
exercisable immediately, without regard to
limitations imposed upon such exercise which are
related to the passage of time, except that SARs
exercised by Reporting Persons for cash shall have
been either (i) approved by the Board or the
Committee or (ii) held for six months prior to
exercise.

(c) Any Restricted Stock awarded pursuant to Section 11 shall
become immediately and fully transferable, and the Committee shall be
deemed to have exercised its discretion to waive any automatic
forfeitures provided with respect to such Restricted Stock. Any shares
held in escrow shall be delivered to the Participant, and the share
certificates shall not contain the legend specified by subsection 11(e).
Unless such award of Restricted Stock shall have been approved by either
the Board or the Committee, Reporting Persons shall not dispose of any
Restricted Stock until six (6) months following the date of grant of
such Restricted Stock.

(d) Any Performance Award granted pursuant to Section 12 which
has not expired or been forfeited shall be deemed to have been earned on
the assumption that all performance goals have been achieved to the
fullest extent scheduled in the Award. All payments shall be made
promptly in a lump sum, notwithstanding any other provision for
installment or deferred payment prescribed in the Award.

A-9

(e) For purposes of this Plan, Change of Control shall mean a
change in control of the Company of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Act; provided that, for purposes of this Plan, a
Change in Control shall be deemed to have occurred if (i) any Person
(other than the Company or Zsolt Rumy is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Act), directly or indirectly,
of securities of the Company which represent 20% or more of the combined
voting power of the Company's then outstanding securities; (ii) during
any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election, by the Company's shareholders, of each new
director is approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of
the period but excluding any individual whose initial assumption of
office occurs as a result of either an actual or threatened election
contest (as such term is used in Rule 14a-11 of Regulation 14A
promulgated under the Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the Board;
(iii) there is consummated any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or
pursuant to which shares of Common Stock are converted into cash,
securities or other property, other than a merger of the Company in
which the holders of Common Stock immediately prior to the merger have
substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; (iv) there is
consummated any consolidation or merger of the Company in which the
Company is the continuing or surviving corporation in which the holders
of Common Stock immediately prior to the merger do not own seventy
percent (70%) or more of the stock of the surviving corporation
immediately after the merger; (v) there is consummated any sale, lease,
exchange, or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the
Company; or (vi) the shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company.

SECTION 19. MISCELLANEOUS PROVISIONS.

(a) Naming of Beneficiaries. In connection with an Award, a
-----------------------
Participant may name one or more beneficiaries to receive the
Participant's benefits, to the extent permissible pursuant to the
various provisions of the Plan, in the event of the death of the
Participant.

(b) Successors. All obligations of the Company under the Plan
----------
with respect to Awards issued hereunder shall be binding on any
successor to the Company.

(c) Governing Law. The Plan, and all agreements under the Plan,
-------------
shall be construed in accordance with, and governed by, the internal
laws of the State of Missouri, without reference to applicable conflict
of laws provisions.

SECTION 20. SHAREHOLDER APPROVAL.

The Plan was originally approved by the sole shareholder of the
Company as of July 31, 1992. The first amendment to the Plan was
adopted by the Board of Directors in November 1996 and was approved by
the shareholders of the Company at the 1997 Annual Meeting of
Shareholders held February 7, 1997. The Plan, as amended and restated
herein, was adopted by the Board of Directors in November 1999 and was
submitted for approval by the shareholders of the Company at the 2000
Annual Meeting of Shareholders held February 15, 2000.

A-10

ZOLTEK COMPANIES, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Zsolt Rumy and Daniel D. Greenwell, and
each of them, with or without the other, proxies, with full power of
substitution to vote, as designated below, all shares of stock that the
signatory hereof is entitled to vote at the Annual Meeting of Shareholders
of Zoltek Companies, Inc. to be held at the Missouri Historical Society
History Museum in the Lee Auditorium, located at Lindell Boulevard and
DeBaliviere Avenue, St. Louis, Missouri on Tuesday, February 15, 2000, at
10:00 a.m., local time, and all adjournments thereof, all in accordance with
and as more fully described in the Notice and accompanying Proxy Statement for
such meeting, receipt of which is hereby acknowledged.

1. ELECTION OF TWO CLASS I DIRECTORS

/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as written to the to vote for nominees
contrary below) as listed below

CLASS I - JOHN L. KARDOS and LINN BEALKE

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)

- -------------------------------------------------------------------------------

2. ELECTION OF ONE CLASS II DIRECTOR

/ / FOR the nominee listed below / / WITHHOLD AUTHORITY
(except as written to the to vote for the nominee
contrary below) listed below

CLASS II - JOHN F. MCDONNELL

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR THE NOMINEE
WRITE THE NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)

- -------------------------------------------------------------------------------

3. PROPOSAL TO ADOPT THE AMENDED AND RESTATED ZOLTEK COMPANIES, INC.
1992 LONG TERM INCENTIVE PLAN.

/ / FOR / / AGAINST / / ABSTAIN

- -------------------------------------------------------------------------------

4. IN THEIR DISCRETION UPON ANY BUSINESS WHICH MAY PROPERLY COME BEFORE THE
MEETING.

/ / FOR / / AGAINST / / ABSTAIN

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" EACH OF THE NOMINEES LISTED ABOVE IN THE ELECTION OF DIRECTORS AND
"FOR" THE PROPOSAL TO ADOPT THE AMENDED AND RESTATED ZOLTEK COMPANIES, INC.
1992 LONG TERM INCENTIVE PLAN.

Dated this ________ day of ______________, 2000.

PLEASE DATE, SIGN AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.

-------------------------------

-------------------------------
Signature

Please date and sign in the
exact name in which you own the
Company's Common Stock.
Executors, administrators,
trustees and others acting in a
representative or fiduciary
capacity should so indicate when
signing.

APPENDIX

Page 12 of the printed Proxy contains a Performance Graph. The
information contained in the graph has been presented in a tabular
format that may be processed by the EDGAR system.