In the case asked about, if her husband doesn't embrace Islam, she separates from him and there is no need for the divorce contract to be carried out. Of course, she needs to observe the iddah (waiting period).

Annexations:

The following are the responses of the grand maraji' to this question:[1]

Grand Ayatullah Khamenei (may Allah prolong his life):

She must separate from him and there is no need for the divorce contract.

Grand Ayatullah Sistani (may Allah prolong his life):

There is no need for the divorce contract and she must separate from him as soon as she embraces Islam.

Grand Ayatullah Makarim Shirazi (may Allah prolong his life):

In the case asked about, if her husband does not embrace Islam, she will separate from him.

Grand Ayatullah Saafi Golpaygani (may Allah prolong his life):

[The woman] needs to finish the waiting period; if her husband embraces Islam by then, the marriage will hold, but if he doesn't, then the wife separates from him without the divorce contract and the marriage is terminated.