THIS EMPLOYMENT AGREEMENT, made as of this 11th day of December, 2002,

by and between Natco Group Inc., a corporation organized and existing under the

laws of the State of Delaware (hereinafter referred to as "NATCO"), and

Nathaniel A. Gregory (hereinafter referred to as "the Executive").



                                   WITNESSETH



         WHEREAS, the Executive and a subsidiary of NATCO entered into an

employment agreement dated March 15, 1994, which agreement was amended on July

31, 1996 and July 31, 1997 (the "Previous Employment Agreement"), under which

the Executive has agreed to employment by such subsidiary under certain terms

and conditions, and under which the Executive is entitled to certain

compensation, including various provisions in the event of a change in control

of NATCO under certain terms and conditions; and



         WHEREAS, the Executive and NATCO desire to clarify and amend the

Previous Employment Agreement to specify terms and conditions for compensation

in the event of a change in control and to further modify other provisions as

necessary to effect such amendments; and



         WHEREAS, NATCO desires to continue the Executive in the employment

capacity hereinafter set forth and the Executive agrees to accept such

employment on the terms and conditions hereinafter set forth;



         NOW, THEREFORE, in consideration of the promises and mutual covenants

herein contained, it is hereby agreed by and between NATCO and the Executive as

follows:



         1.       Capacity and Services.



                  (a) NATCO hereby agrees to continue to employ the Executive

and the Executive hereby agrees to accept such employment by NATCO as Chairman

and Chief Executive Officer of NATCO on the terms and conditions set forth

herein. The employment of the Executive pursuant to this Employment Agreement

shall commence on December 11, 2002 and continue through the Period of Active

Employment, as defined in Section 1(e) of this Employment Agreement. In his

capacity as Chairman and Chief Executive Officer of NATCO, the Executive shall

assume such responsibilities, perform such duties, and have such authority, as

may from time to time be assigned or delegated by the Board of Directors of

NATCO (the "Board") consistent with the Executive's position. The Executive

agrees to perform such duties in accordance with the By-laws of NATCO, the

Board's instructions, and NATCO's policies.



                  (b) The Executive shall devote his full business time to his

duties hereunder, provided, however, that the foregoing shall not prevent the

Executive from serving as a member of the board of directors of a corporation if

the Board, or the appropriate Committee thereof, determines in its sole

discretion that such membership is not adverse to the interests of NATCO.

Subject to the foregoing, the Executive shall not engage in any business





                                       1





activities that are directly or indirectly competitive with any business then

conducted by NATCO or any of its affiliated companies.



                  (c) The Executive may be an investor, shareholder, joint

venturer, or partner (hereinafter referred to as an "Investor") in any

enterprise, association, corporation, joint venture or partnership (hereinafter

referred to as an "Investment"), provided, however, that any such Investment

does not (i) violate NATCO's conflict of interest policy as in effect from time

to time, (ii) require the Executive's involvement in the management (except

service on boards of directors to the extent permitted by Section 1(b) of this

Employment Agreement) or operation of such Investment (recognizing that the

Executive shall be permitted to monitor and oversee the Investment, as would any

prudent Investor) or (iii) interfere with the performance of the Executive's

duties and obligations hereunder.



                  (d) The Executive shall fully and faithfully discharge his

duties under the direction of the Board.



                  (e) "Period of Active Employment", as used herein, shall mean

the period beginning on December 11, 2002 and terminating on the date on which

the first of the following events occurs:



                     (i)    The death of the Executive;



                     (ii)   The Disability of the Executive, as provided in

                            Section 7 of this Employment Agreement;



                     (iii)  The termination of the Executive's employment, as

                            provided in Section 12 of this Employment Agreement;

                            or



                     (iv)   Expiration of the Term of this Employment Agreement,

                            as provided in Section 2 hereof (or as such

                            expiration may be extended pursuant to Section 3

                            hereof).

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