EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Employment Agreement"), made as of this 26th day of
June, 2006, 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 Patrick M. McCarthy (hereinafter referred to as "the Executive").

WITNESSETH

WHEREAS, NATCO and the Executive have previously entered into that certain
Employment Agreement dated December 11, 2002, amended as of September 30, 2004,
and amended further as of September 17, 2005 (collectively, the "Original
Employment Agreement");

WHEREAS, NATCO's Board of Directors (the "Board") has determined that it is in
the best interests of NATCO and its stockholders for the Executive to continue
in his current role as President of the Company and to assume the role of Chief
Operating Officer of the Company;

WHEREAS, NATCO desires to provide the Executive an increase in his annual base
compensation and to update certain provisions of the Employment Agreement to
address issues arising under Section 409A of the Internal Revenue Code of 1986,
as amended (the "Code");

WHEREAS, the Executive agrees to accept such continuation of his employment on
the terms and conditions hereinafter set forth; and

WHEREAS, NATCO and the Executive mutually desire to amend and restate the terms
of the Original Employment Agreement as set forth below.

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:

Capacity and Services

.

NATCO hereby agrees to continue to employ the Executive and the Executive hereby
agrees to accept such employment by NATCO as President and Chief Operating
Officer of NATCO on the terms and conditions set forth herein. The employment of
the Executive pursuant to this Employment Agreement shall commence on July 1,
2006 and continue through the Period of Active Employment, as defined in
Paragraph 1(e) of this Employment Agreement. In his capacity as President and
Chief Operating 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") or the Chief Executive Officer of NATCO (the "CEO"), consistent with
the Executive's position. The Executive agrees to perform such duties in
accordance with the Bylaws of NATCO, the instructions of the CEO and the Board,
and NATCO's policies.

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 activities that are directly or
indirectly competitive with any business then conducted by NATCO or any of its
affiliated companies.

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 Paragraph 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.

The Executive shall fully and faithfully discharge his duties under the
direction of the Board.

"Period of Active Employment", as used herein, shall mean the period beginning
on July 1, 2006 and terminating on the date on which the first of the following
events occurs:

The death of the Executive;

The Disability of the Executive, as provided in Paragraph 7 of this Employment
Agreement;

The termination of the Executive's employment, as provided in Paragraph 13 of
this Employment Agreement; or

Expiration of the Term of this Employment Agreement, as provided in Paragraph 2
hereof (or as such expiration may be extended pursuant to Paragraph 3 hereof).

Term of Employment, Effect of Restatement

.

The term ("Term") of this Employment Agreement shall commence on July 1, 2006
(the "Commencement Date") and unless extended or terminated earlier as provided
hereunder, shall continue through the second anniversary of the Commencement
Date. The parties hereby agree and acknowledge that this Employment Agreement
amends and restates the Original Employment Agreement, that the Executive's
employment with NATCO is continuous with his employment under the Original
Employment Agreement and that the Executive's employment under the Original
Employment Agreement has not been terminated. Further, NATCO and the Executive
hereby agree and acknowledge that the terms of this Employment Agreement shall
govern with respect to the Executive's Employment with NATCO from and after July
1, 2006 and the terms of the Original Employment Agreement shall govern with
respect to Executive's employment with NATCO from December 11, 2002 through June
30, 2006. Further, NATCO and the Executive agree and acknowledge that no
duplication of benefits as between the Original Employment Agreement and this
Employment Agreement is intended or created under this Employment Agreement.

Term Extension

.

Commencing on the second anniversary of the Commencement Date (the "Extension
Date") and on each subsequent Extension Date each year thereafter, the Term of
this Employment Agreement shall automatically be extended for one additional
year, unless at least 90 days prior to such Extension Date, NATCO shall have
given notice that it does not wish to extend this Employment Agreement.
Notwithstanding the foregoing, upon the occurrence of a Change in Control, as
defined in Paragraph 13 hereof, during the Term of this Employment Agreement,
including any extensions thereof, this Employment Agreement shall automatically
be extended until the end of the Effective Period, as defined in Paragraph 13
hereof, and may not be terminated by NATCO during such time.

Compensation and Benefits

.

During the Period of Active Employment, NATCO shall pay to the Executive as base
compensation for his services hereunder, a base salary of $350,000 per annum
("Base Salary"), payable in arrears and subject to increase from time to time at
the sole discretion of the Board. Amounts payable shall be reduced by standard
withholding and other authorized deductions.

During the Period of Active Employment, the Executive shall have the right to
participate in any of NATCO's fringe benefit and insurance plans presently in
effect or that may be established for the benefit of executives of NATCO. NATCO
reserves the right to modify, suspend or discontinue any or all such plans or
benefits at any time without recourse by the Executive.

The Executive shall be entitled to take vacation in accordance with NATCO's
policy and practices for senior executives.

During the Period of Active Employment, NATCO shall, upon receipt of appropriate
itemized vouchers for expenses, submitted to NATCO on a monthly basis in
accordance with NATCO's procedures from time to time in effect, reimburse the
Executive for any reasonable and actual costs of leasing an automobile for the
Executive's business and private use during the Period of Active Employment
("Monthly Automobile Lease Cost"). The make, model, color and year of the leased
automobile described herein may be selected by the Executive. In addition to
reimbursement of the Monthly Automobile Lease Cost, during the Period of Active
Employment, NATCO shall, upon receipt of itemized vouchers for expenses,
submitted to NATCO on a monthly basis in accordance with NATCO's procedures from
time to time in effect, reimburse the Executive for his reasonable and necessary
expenses, including maintenance, repairs, gasoline and insurance, incurred in
the operation of the leased automobile described herein.

Bonus Compensation

.

During each fiscal year in which the Executive is employed by NATCO under the
terms and conditions of this Employment Agreement, the Executive will be
eligible to receive bonus compensation ("Bonus Compensation") pursuant to the
Natco Group Inc. Target Bonus Plan (the "Bonus Plan"), which Bonus Compensation
shall be payable at the time and in the manner provided for (or elected) under
the terms of the Bonus Plan. For these purposes, Executive's "target" annual
bonus will be 60% of his Base Salary. The Board will determine, annually, the
criteria which determine "target" performance.

In the event the Executive is employed by NATCO under the terms and conditions
of this Employment Agreement for a period less than any full fiscal year and the
Executive's employment with NATCO has been terminated due to the Executive's
death or Disability pursuant to Section 13(a), or by NATCO without Cause or by
the Executive for Good Reason pursuant to Paragraph 13(d) hereof, any Bonus
Compensation payable to the Executive under Paragraph 5(a) of this Employment
Agreement shall be prorated accordingly. If the Executive terminates his
employment without Good Reason as provided in Paragraph 13(b) hereof or NATCO
terminates the Executive's employment for Cause as provided in Paragraph 13(c)
hereof, the Executive shall not be eligible for any Bonus Compensation under
this Employment Agreement for the year in which such termination occurs.

Any Bonus Compensation payment to which the Executive is entitled under the
terms of Paragraph 5(a) of this Employment Agreement shall be paid to the
Executive as soon as practicable after financial statements have been prepared
for the fiscal period to which such Bonus Compensation payment relates, but no
later than 2-1/2 months after the end of the fiscal period to which such Bonus
Compensation payments relates.

During each fiscal year in which the Executive is employed by NATCO under the
terms and conditions of this Employment Agreement, the Executive will be
eligible to receive additional bonus payments as the Board deems appropriate in
its sole and absolute discretion.

All references to Bonus Compensation herein are to the gross amounts thereof.
NATCO shall have the right to deduct therefrom all taxes which may be required
to be deducted or withheld under any provision of applicable law now in effect
or which may become effective any time during the term of this Employment
Agreement.

Certain Expenses Incident to Employment

.

Subject to such rules and procedures as from time to time are specified by NATCO
or the Board, NATCO agrees to reimburse the Executive for travel, entertainment
or other reasonable business expenses or disbursements incurred ordinarily by
the Executive as part of and in connection with the performance of his duties
under this Employment Agreement.

Disability

.

"Disability" or "Disabled", as used in Paragraphs 1(e) and 13(a) of this
Employment Agreement, shall mean a physical or mental incapacity of the
Executive which has prevented him from performing the duties customarily
assigned him by the Board for ninety (90) days, whether or not consecutive, out
of any twelve (12) consecutive months and which thereafter can reasonably be
expected, in the judgment of a physician selected by NATCO, to continue.

Access to Information; Agreement Not to Compete and Solicit

.

NATCO shall, during the time that the Executive is employed by NATCO, (a)
disclose or entrust to the Executive, or provide the Executive access to, or
place the Executive in a position to create or develop trade secrets or
confidential information belonging to the Related Parties (as defined below),
(b) place the Executive in a position to develop business goodwill belonging to
the Related Parties or (c) disclose or entrust to the Executive business
opportunities to be developed for the Related Parties.

Except as otherwise provided by this Employment Agreement, the Executive hereby
agrees that, during the Period of Active Employment, the Executive will not
directly or indirectly, either through any form of ownership (other than
ownership of securities of a publicly held corporation of which the Executive
owns less than one percent of any class of outstanding securities), or as a
director, officer, principal agent, employer, advisor, consultant, copartner, or
in any individual or representative capacity, either for his own benefit or for
the benefit of any other person, firm, corporation or other entity, engage in
any business that is in competition with any of the Related Parties.

The Executive and NATCO agree to the non-competition and non-solicitation
provisions of this Paragraph 8 in view of (i) the unique and valuable services
it is expected the Executive will render to NATCO, (ii) Executive's knowledge of
the customers, trade secrets, and other proprietary information relating to the
business of the Related Parties and their customers and suppliers and similar
knowledge regarding the Related Parties it is expected that the Executive will
obtain, (iii) to protect the trade secrets and confidential information of the
Related Parties disclosed or entrusted to the Executive by the Related Parties
or created or developed by the Executive for the Related Parties, the business
goodwill of the Related Parties developed through the efforts of the Executive
and/or the business opportunities disclosed or entrusted to the Executive by the
Related Parties, and (iv) and in consideration of the compensation to be
received under this Paragraph 8, Executive agrees that in the event his
employment with NATCO is terminated by NATCO without Cause (as defined in
Paragraph 13(j)(i) hereof or by the Executive for Good Reason as defined in
Paragraph 13(j)(v) hereof) during the Effective Period (as defined in Paragraph
13(j)(iv) hereof), or by the Executive pursuant to Paragraph 13(f) he will not,
directly or indirectly for a period beginning on the Date of Termination and
ending on the first anniversary of such Date of Termination:

serve as an officer, director, employee, principal, partner, agent, independent
contractor or consultant of or for, or otherwise have a financial interest in,
any Prohibited Business (as defined below) which sells or offers to sell
products or services in competition with any of the Related Parties in the
Geographic Territory (as defined below); provided that this covenant will not
prevent the Executive from purchasing or owning not more than one percent (1%)
of any class of securities of any corporation, whether or not such corporation
is a Prohibited Business;

sell or offer to sell to any Person in the Geographic Territory any goods or
services of any type then sold or offered by any of the Related Parties;

otherwise intentionally interfere with or cause a reduction or termination of
the business between any of the Related Parties and any customer or prospective
customer of any of the Related Parties;

hire or attempt to hire any person employed or engaged by any of the Related
Parties or encourage or solicit any such person to terminate his or her
employment or engagement with any of the Related Parties;

intentionally interfere with or cause a reduction or termination of the business
relationship between any of the Related Parties and any business which supplies
or supplied goods or services to any of the Related Parties; or

make any public statement which is either intended to be or reasonably likely to
be injurious or detrimental to any of the Related Parties or which is derogatory
to any current or former director, officer or employee of any of the Related
Parties.

The Executive acknowledges and agrees that, given the nature of the businesses
in which the Related Parties are engaged and given his present and past service
as President and Chief Operating Officer of NATCO, the restrictive covenants
contained above and the restrictions of Paragraphs 9 and 10 are the result of
arms' length bargaining and are reasonable in the sense that they are no greater
than is necessary to protect the legitimate interests of the Related Parties and
not unduly harsh and oppressive in curtailing the Executive's legitimate efforts
to earn a livelihood. The parties therefore intend that these restrictive
covenants be enforced to the fullest extent permitted by applicable law, whether
now or hereafter in effect and therefore, to the extent permitted by applicable
law, the Executive and Company hereto waive any provision of applicable law that
would render any provision of Paragraphs 8, 9 or 10 invalid or unenforceable.
Each of these restrictive covenants is a separate and independent contractual
provision.

For purpose of this Employment Agreement, "Prohibited Business" means any Person
that is in competition with NATCO or any of its subsidiaries or affiliates in
the oil and gas process equipment business; "Geographic Territory" means the
United States of America; "Person" means any corporation, partnership, joint
venture, trust, sole proprietorship, limited liability company, unincorporated
business association, individual or other entity; and "Related Party" and
"Related Parties" means NATCO, its subsidiaries and other affiliates,
individually and collectively, as the context requires.

In consideration of the restrictive covenants set forth in this Paragraph 8,
NATCO shall pay in a lump sum to the Executive, on or within thirty (30) days
after the Executive's Date of Termination, cash in an amount equal to the
Executive's Base Salary in effect on the Date of Termination.

Intangible and Other Property Rights

.

All right, title and interest of every kind and nature whatsoever, whether now
known or unknown, in and to any intangible property, including all trade names,
unregistered trademarks and service marks, brand names, patents, copyrights,
registered trademarks and service marks and all trade secrets and confidential
know how (the "Intangible Property"), invented, created, written, developed,
furnished, produced or disclosed by the Executive hereunder shall, as between
the parties hereto, be and remain the sole and exclusive property of NATCO for
any and all purposes and uses whatsoever, and the Executive shall have no right,
title or interest of any kind or nature therein or thereto, or in or to any
results or proceeds therefrom. The Executive will, at the request of NATCO,
execute such assignments, certificates and other instruments as NATCO may from
time to time deem necessary or desirable to evidence, establish, maintain,
perfect, protect, enforce or defend its right, title and interest in and to any
of the foregoing.

The Executive agrees that all "Intangible Property", materials, books, files,
reports, correspondence, records and documents (collectively "NATCO Material")
used, prepared or made available to the Executive in the course of rendering his
services to NATCO hereunder shall remain the property of NATCO. At the end of
the Period of Active Employment, all NATCO Material shall be returned
immediately to NATCO.

Confidentiality

.

The Executive shall hold in a fiduciary capacity for the benefit of NATCO all
secret or confidential information, knowledge or data relating to NATCO and its
affiliates, which shall have been obtained by the Executive during his
employment by NATCO and which shall not be public knowledge. After termination
of the Executive's employment with NATCO, he shall not, without the prior
written consent of the Board, communicate or divulge any such information,
knowledge or data to anyone other than the Board and those designated by the
Board.

Rights and Remedies Upon Breach

.

The Executive hereby acknowledges and agrees that he has read and understands
the provisions contained in Paragraphs 8, 9, and 10 of this Employment Agreement
(the "Restrictive Covenants"), and he agrees that such provisions are reasonable
and valid in duration and in all other respects, and that any breach of the
covenants contained in such Paragraphs would cause irreparable injury to NATCO.
The Executive understands that the Restricted Covenants may limit the
Executive's ability to engage in certain businesses anywhere in the United
States until the first anniversary of his Date of Termination, but acknowledges
that the Executive will receive sufficiently high remuneration and other
benefits from NATCO to justify such restriction. Further, the Executive
acknowledges that his skills are such that he can be gainfully employed in
non-competitive employment, and that the agreement not to compete will in no way
prevent him from earning a living. Nevertheless, if any of the aforesaid
restrictions are found by a court of competent jurisdiction to be unreasonable,
or overly broad as to geographic area or time, or otherwise unenforceable, the
parties intend for the restrictions therein set forth to be modified by the
court making such determination so as to be reasonable and enforceable and, as
so modified, to be fully enforced. By agreeing to this contractual modification
prospectively at this time, Company and the Executive intend to make this
provision enforceable under the law or laws of all applicable states so that the
entire agreement not to compete and this Employment Agreement as prospectively
modified shall remain in full force and effect and shall not be rendered void or
illegal. Such modification shall not affect the payments made to the Executive
under this Employment Agreement.

If the Executive breaches, or threatens to commit a breach of, any of the
Restrictive Covenants, NATCO will have the following rights and remedies, each
of which rights and remedies will be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to NATCO under law or in equity:

Specific Performance

. The right and remedy to have the Restrictive Covenants specifically enforced
by any court of competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause irreparable injury to
NATCO and that money damages would not provide an adequate remedy to NATCO.

Accounting

. The right and remedy to require the Executive to account for and pay over to
NATCO all compensation, profits, monies, accruals, increments or other benefits
derived or received by the Executive as the result of any action constituting a
breach of the Restrictive Covenants.

Cessation of Severance Benefits

. The right and remedy to cease any further severance, benefit or other
compensation payments under this Employment Agreement to the Executive or the
Executive's Beneficiary from and after the commencement of such breach by the
Executive.

Notice of Termination

.

Any termination of the Executive's employment by NATCO, or by any affiliate of
NATCO by which the Executive is employed, for Cause or by the Executive for Good
Reason, both terms as defined in Paragraph 13 hereof, shall be communicated by a
Notice of Termination to the other party hereto given in accordance with
Paragraph 25 of this Employment Agreement. For purposes of this Employment
Agreement, a Notice of Termination for termination of employment for Cause or
Good Reason means a written notice which (i) is given at least thirty (30) days
prior to the effective date of the Executive's termination of employment (the
"Date of Termination"); (ii) indicates the specific termination provision in
this Employment Agreement relied upon; (iii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated; (iv) specifies the employment termination date; and (v) allows the
recipient of the Notice of Termination at least thirty (30) days to cure the act
or omission relied upon in the Notice of Termination. The failure to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause will not waive any right of the party giving the
Notice of Termination hereunder or preclude such party from asserting such fact
or circumstance in enforcing its rights hereunder.

A termination of employment of the Executive will not be deemed to be for Cause,
as defined in Paragraph 13 hereof, unless and until there has been delivered to
the Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive has engaged in the conduct described in Paragraph
13(j)(i) hereof, and specifying the particulars of such conduct.

A termination of employment of the Executive will not be deemed to be for Good
Reason, as defined in Paragraph 13 hereof, unless the Executive gives the Notice
of Termination provided for herein within twelve (12) months after the Executive
has actual knowledge of the act or omission of NATCO constituting such Good
Reason.

Termination of Employment

.

Termination Upon Death or Disability of Executive

. If the Executive dies or becomes Disabled during the Term hereof, this
Employment Agreement will terminate in accordance with Paragraph 1(e) hereof;
provided, however, that in any such event NATCO will pay to the Executive, or to
his estate or designated beneficiary, as the case may be, (i) a lump sum in cash
equal to the Executive's Base Salary through the date of termination, to the
extent not theretofore paid, (ii) such other benefits that have vested in the
Executive at the time of such termination as a result of his participation in
any benefits plans of NATCO or any of its affiliates, in accordance with and
subject to the provisions of such plans, (iii) an amount equal to $388,470, (iv)
the full amount of any bonus to which the Executive was or would have become
entitled to for any completed fiscal year prior to the fiscal year during which
the Executive died or became Disabled, to the extent such bonus has not already
been paid to the Executive, and (v) if the Executive dies or becomes Disabled
during a fiscal year, an amount equal to the Executive's pro rata bonus for the
period beginning on the first day of such fiscal year and ending with his Date
of Termination, payable in accordance with the terms of the applicable bonus
plan then in effect.

Termination by the Executive

. If the Executive terminates this Employment Agreement for any reason other
than Good Reason, death or Disability, NATCO will pay to the executive (1) a
lump sum in cash equal to the Executive's Base Salary through the date of
termination, to the extent not theretofore paid; (2) subject to the Executive
complying with his obligations in Section 8(b) of the Employment Agreement, but
in lieu of payment of one-year's base salary in consideration for Executive's
agreement in Section 8(b) of the Employment Agreement, an amount equal to
$388,470 plus an amount equal to the Executive's target bonus for the fiscal
year in which the Date of Termination occurs payable in a lump-sum; (3)
the full amount of any bonus to which the Executive was or would have become
entitled to for any completed fiscal year prior to the fiscal year in which the
Date of Termination occurs, to the extent such bonus has not already been paid
to the Executive, payable in accordance with the applicable terms of the bonus
plan
; (4) an amount equal to the Executive's pro rata bonus for the period beginning
with the first day of the fiscal year in which the Date of Termination occurs
and ending on the Date of Termination, payable in accordance with the terms of
the applicable bonus plan then in effect but, subject to Paragraph 15, in no
event later than 2-1/2 months following the end of the calendar month in which
such Bonus Compensation was earned; and (5) reimbursement of COBRA payments made
by the Executive for continuation of coverage for the Executive and eligible
dependents for up to 18 months following such termination. The Executive may
exercise any of his stock options that are outstanding and then vested, at any
time on or before the date occurring 90 days after his Date of Termination, but
any such options not exercised within that 90-day period shall terminate and be
canceled as of that date, and he shall no longer have any rights with respect to
those options. NATCO shall have no further obligations or responsibilities
hereunder. Any benefits that have vested in the Executive at the time of such
termination as a result of his participation in any of NATCO's benefit plans
will be paid to the Executive, or to his estate or designated beneficiary,
subject to the provisions of such plans. In the event of the Executive's death
after the Term hereof, any amounts due pursuant to this Employment Agreement
shall be paid to the Executive's estate.

Termination for Cause

. NATCO has the right, at any time during the Term of this Employment Agreement,
subject to all of the provisions hereof, and exercisable by serving a Notice of
Termination in accordance with Paragraph 12 above, to terminate the Executive's
employment under this Employment Agreement and discharge the Executive for
Cause. If such right is exercised, the obligations of NATCO to the Executive
will be limited solely to payment by NATCO of unpaid Base Salary accrued, and
subject to the provisions of the applicable benefit plans, any benefits vested,
up to the effective date specified in the Notice of Termination, and the
Executive shall not be entitled to receive any Bonus Compensation pursuant to
Paragraph 5(a) hereof or any severance pay specified in any severance plan or
policy that NATCO presently has in effect or may establish in the future for
employees of NATCO. Any Bonus Compensation that has been earned under the Bonus
Plan, the payment of which has been deferred under the terms of the Bonus Plan,
will be paid to the Executive in accordance with the terms of the Bonus Plan.

Termination by NATCO Without Cause or by the Executive for Good Reason Outside
the Effective Period

. Between July 1, 2006 and October 1, 2006, NATCO may terminate the Executive's
employment under this Employment Agreement only for Cause. From and after
October 1, 2006, NATCO has the right, at any time during the remaining Term,
subject to all of the provisions hereof, to terminate the Executive's employment
under this Employment Agreement and discharge the Executive without Cause.
Furthermore, notwithstanding any other provision of this Employment Agreement,
the Executive's employment under this Employment Agreement may be terminated at
any time during the Term by the Executive for Good Reason.

In the event of termination of employment by NATCO without Cause on a date that
is outside the Effective Period, or by the Executive for Good Reason prior to
the occurrence of a Change in Control (as such terms are defined in Paragraph
13(i) below), the Executive shall be entitled to severance pay in accordance
with any severance plan or policy that NATCO then has in effect. Any Bonus
Compensation that has been earned under the Bonus Plan, the payment of which has
been deferred under the terms of the Bonus Plan, will be paid to the Executive
in accordance with the terms of the Bonus Plan.

In the event of a termination of employment by NATCO without Cause on a date
that is outside the Effective Period, the Executive shall be entitled to payment
of: (1) his base salary and accrued vacation earned through the Date of
Termination; (2) subject to the Executive complying with his obligations in
Paragraph 8(b) hereof, but in lieu of payment of one-year's base salary in
consideration for Executive's agreement in Section 8(b) of the Employment
Agreement, an amount equal to $388,470 plus an amount equal to the Executive's
target bonus payable in a lump-sum; (3) the full amount of any bonus to which
the Executive was entitled to for fiscal year prior to the fiscal year during
which the Date of Termination occurs, to the extent such bonus has not already
been paid to the Executive; (4) if such termination occurs during a fiscal year,
an amount equal to the Executive's pro rata bonus for the period beginning on
the first day of such fiscal year and ending with his Date of Termination,
calculated at no less than the Executive's target rate and payable in accordance
with the terms of the applicable bonus plan then in effect but, subject to
Paragraph 15, in no event later than 2-1/2 months following the end of the
calendar year in which such Bonus Compensation was earned; and (5) reimbursement
of COBRA payments made by the Executive for continuation of coverage for the
Executive and eligible dependents for up to 18 months following such
termination. The Executive may exercise any of his stock options granted by
NATCO that are outstanding and then vested, at any time on or before the date
occurring 90 days after his Date of Termination, but any such options not
exercised during that period shall terminate and be canceled as of that date,
and he shall no longer have any rights with respect to those options.

In the event of a termination of employment by NATCO without Cause following a
Change in Control, the Executive shall be entitled to the greater of the
benefits described in subparagraph (ii) above or those described in Paragraph
13(e).

Termination of Employment Following a Change in Control

. If, during the Effective Period, as defined herein, NATCO terminates the
Executive's employment other than for Cause or the Executive terminates his
employment with NATCO for Good Reason, NATCO will pay the following to the
Executive upon the Date of Termination, or as soon as practicable following such
date but in no event later than thirty (30) days, or such period otherwise
specifically provided, thereafter:

cash in the amount of the Executive's Base Salary through the Date of
Termination to the extent not theretofore paid, including amounts due for
accrued but unused vacation time;

cash in the amount of any bonus to which the Executive was or would have become
entitled to for any completed fiscal year prior to the fiscal year in which the
Date of Termination occurs, to the extent such bonus has not already been paid
to the Executive;

cash in the amount of the Bonus Compensation earned by the Executive with
respect to the fiscal year that includes the Date of Termination under the Bonus
Plan in accordance with its terms, based on NATCO's performance through such
date and prorationed by multiplying such Bonus Compensation by the fraction
obtained by dividing the number of days in the year through the Date of
Termination by 365, payable no later than sixty (60) days following the Date of
Termination;

cash in an amount equal to the product of two times the Executive's Base Salary
at the greater of (A) the rate in effect at the time Notice of Termination is
given or (B) the rate in effect immediately preceding the Change in Control,
payable in a lump sum;

a lump sum cash amount equal to the product of three times the target Bonus
Compensation at the greater of (A) the target Bonus Compensation in effect at
the time Notice of Termination is given or (B) the target Bonus Compensation in
effect immediately preceding the Change in Control; and

the continuation of the provision of health insurance, dental insurance and life
insurance benefits for a period of three years following the date of termination
to the Executive and the Executive's family at least equal to and to the same
extent as those which would have been provided to them in accordance with this
Employment Agreement and the plans, programs, practices and policies of NATCO as
in effect and applicable generally to other peer executives and their families
during the 90-day period immediately preceding the Effective Period or on the
Date of Termination, at the election of the Executive; provided, however, that
if the Executive becomes re-employed with another employer and is eligible to
receive medical or other welfare benefits under another employer provided plan,
the medical and other welfare benefits described herein will be secondary to
those provided under such other plan during such applicable period of
eligibility; and provided further, however, that if the period of benefit
continuation, or types of benefits to be continued (including applicable
coverage levels) would cause such benefits on this Employment Agreement to
become subject to Section 409A of the Code, as determined by the Governance,
Nominating and Compensation Committee of the Board, NATCO shall pay to the
Executive an amount equal to the cost to NATCO of providing such coverages in a
lump sum on the payment date described above (subject to any required Delay
Period pursuant to Paragraph 15).

If, during the Effective Period as defined herein, NATCO terminates the
Executive's employment for Cause, or the Executive terminates his employment
without Good Reason, NATCO's obligations and responsibilities to the Executive
under this Employment Agreement are limited to those stated in Paragraphs 13(b)
and 13(c), as the case may be.

Effect of Death

. In the event of the Executive's death following the Executive's date of
termination, but prior to the payment of any severance payments and benefits
provided under this Paragraph 13, if any, such payments and benefits will be
paid to the Executive's beneficiary.

Mitigation of Damages

. The Executive will not be required to mitigate damages or the amount of any
payment provided for under Paragraph 13 of this Employment Agreement by seeking
other employment or otherwise. Except as otherwise specifically provided in this
Employment Agreement, the amount of any payment provided for under Paragraph 12
of this Employment Agreement will not be reduced by any compensation earned by
the Executive as the result of self-employment or employment by another employer
or otherwise.

Stock Options and Other Awards

. The benefits provided under Paragraph 13 of this Employment Agreement are
intended to be in addition to the value of any options to acquire common stock
of NATCO ("Stock Options") awarded to the Executive under the NATCO Group Inc.
1998 Employee Stock Incentive Plan, the NATCO Group Inc. 2001 Stock Incentive
Plan, the NATCO Group Inc. 2004 Stock Incentive Plan, and the NATCO Group Inc.
2006 Long-Term Incentive Compensation Plan (collectively the "Stock Plans") and
any other incentive or similar plan or agreement heretofore or hereafter adopted
by NATCO, and any other awards under such plans or agreements. Notwithstanding
the terms of the Stock Plans, any other incentive plan or agreement, or any
award agreement entered into pursuant thereto, all outstanding Stock Options
held by the Executive shall fully vest as of the date of the Change in Control
and become immediately exercisable in accordance with their terms; all
restrictions on restricted stock awards that have not theretofore lapsed shall
lapse as of the date of the Change in Control; and all vesting and/or
performance requirements on any other forms of awards that have been granted to
the Executive under any Stock Plan shall be automatically accelerated and/or
deemed to have been met at target levels, unless such treatment shall cause an
award to become subject to the tax under Section 409A of the Code, in which case
such treatment shall not apply; provided, further, however, that if the Company
terminates the Executive's employment other than for Cause or the Executive
terminates his or her employment with the Company for Good Reason during the
Effective Period, then such Stock Options shall be exercisable for the longer
period of (a) three months after the Executive's Date of Termination or (b)
eighteen months after the effective date of the Change in Control, unless the
term of the Stock Option expires before the end of such longer period, in which
case the Stock Option shall be exercisable until the expiration of its term;
provided further, however, that if such extension of the exercisability of the
Stock Options would cause the Stock Options to become subject to the provisions
of Section 409A of the Code, as determined by the Governance, Nominating and
Compensation Committee of the Board, the exercisability shall be extended only
to the extent that the Stock Options, after such more limited extension, would
not be considered to have been modified in a way that creates a new grant date
for purposes of Section 409A of the Code in accordance with regulations or other
applicable authoritative guidance to issued under Section 409A of the Code.

Definitions.

The following terms shall have the meanings ascribed to them as follows:

"Cause" means:

the Executive's willful and continued failure to substantially perform the
Executive's duties with NATCO or its affiliates, as provided in this Employment
Agreement (other than any such failure resulting from the Executive's incapacity
due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by NATCO which specifically identifies
the manner in which NATCO believes that the Executive has not substantially
performed his or her duties;

the final

conviction
of the Executive, or an entering of a guilty plea or a plea of no contest by the
Executive, to a felony or of a misdemeanor involving moral turpitude; or

the willful engaging by the Executive in illegal conduct or gross misconduct
which is materially and demonstrably injurious to NATCO; or

a material breach by the Executive of the terms of this Employment Agreement.

For purposes of this definition, no act or failure to act on the part of the
Executive shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without a reasonable belief that the
action or omission was in the best interests of NATCO or its affiliates. Any
act, or failure to act, based on authority given pursuant to a resolution duly
adopted by the Board or the advice of counsel to NATCO or its affiliates will be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interest of NATCO and its affiliates.

"Change in Control" means the occurrence of any one of the following events:

NATCO is not the surviving entity in any merger or consolidation (or survives
only as a subsidiary of an entity);

NATCO sells, leases or exchanges, or agrees to sell, lease or exchange, all or
substantially all of its assets to any other person or entity;

NATCO is to be dissolved and liquidated;

any person or entity, including a "group" as contemplated by Paragraph 13(d)(3)
of the Securities Exchange Act of 1934, as amended, acquires or gains ownership
or control (including, without limitation, power to vote) of more than 50% of
the outstanding shares of NATCO's voting stock (based upon voting power); or

as a result of or in connection with a contested election of Directors, the
persons who were Directors of NATCO before such election shall cease to
constitute a majority of the Board.

"Director" means an individual elected to the Board by the stockholders of the
Company or by the Board under applicable corporate law who is serving on the
Board on the date of this Employment Agreement or who is elected to the Board
after such date.

"Effective Period" means the 36-month period following a Change in Control.

"Good Reason" means, unless the Executive has consented in writing thereto, the
occurrence of any of the following:

the assignment to the Executive of any duties inconsistent with the Executive's
position, including any material change in status, title, authority, duties or
responsibilities or any other action which results in a material diminution in
such status, title, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad faith
and which is remedied by NATCO or the Executive's employer promptly after
receipt of notice thereof given by the Executive;

a reduction by NATCO or the Executive's employer of the Executive's Base Salary;

the relocation of the Executive's office to a location more than 35 miles from
its location on the Commencement Date;

following a Change in Control, unless a plan providing a substantially similar
compensation or benefit is substituted, (A) the failure by NATCO or any of its
affiliates or successors to continue in effect any material fringe benefit or
compensation plan, retirement plan, life insurance plan, health and accident
plan or disability plan in which the Executive is participating prior to the
Change in Control, or (B) the taking of any action by NATCO or any of its
affiliates or successors which would adversely affect the Executive's
participation in or materially reduce his benefits under any of such plans or
deprive him of any material fringe benefit; or

following a Change in Control, the failure of NATCO or the affiliate of NATCO by
which the Executive is employed, or any affiliate which directly or indirectly
owns or controls any affiliate by which the Executive is employed, to obtain the
assumption in writing of NATCO's obligation to perform this Employment Agreement
by any successor to all or substantially all of the assets of NATCO or such
affiliate within fifteen (15) days after a reorganization, merger,
consolidation, sale or other disposition of assets of NATCO or such affiliate.

any purported termination of the Executive's employment by NATCO which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Paragraph 12 hereof; and for purposes of this Employment Agreement, no such
purported termination shall be effective.

a termination of employment by the Executive for any reason or no reason at all
during the 30-day period immediately following the first anniversary of a Change
in Control, which shall be deemed to be a termination for Good Reason.

For purposes of this Employment Agreement, any determination of "Good Reason"
made by the Executive in good faith based upon his reasonable belief and
understanding shall be conclusive.

General

. Any amounts payable pursuant to this Paragraph 13 shall be subject to standard
withholding and other authorized deductions, and will be further subject to the
requirements of Paragraph 14, below. The making of any severance payment or
provision of any other severance benefit by NATCO pursuant to this Employment
Agreement is subject to the Executive signing a general release with respect to
labor and employment matters in substantially the form attached hereto as
Exhibit A
.

Limitation of Benefits

.

Anything in this Employment Agreement to the contrary notwithstanding, in the
event it shall be determined that any benefit, payment or distribution by NATCO
to or for the benefit of the Executive (whether payable or distributable
pursuant to the terms of this Employment Agreement or otherwise) (a "Payment")
would, if paid, be subject to the excise tax imposed by Section 4999 of the Code
(the "Excise Tax"), then the Payment shall be reduced to the extent necessary to
avoid the imposition of the Excise Tax. The Executive may select the Payments to
be limited or reduced.

All determinations required to be made under this Paragraph 14, including
whether an Excise Tax would otherwise be imposed and the assumptions to be
utilized in arriving at such determination, shall be made by Independent Tax
Counsel which shall provide detailed supporting calculations both to the NATCO
and the Executive within fifteen (15) business days of the receipt of notice
from the Executive that a Payment is due to be made, or such earlier time as is
requested by NATCO. For purposes of this paragraph, "Independent Tax Counsel"
will mean a lawyer, a certified public accountant with a nationally recognized
accounting firm, or a compensation consultant with a nationally recognized
actuarial and benefits consulting firm with expertise in the area of executive
compensation, who will be selected by NATCO and will be reasonably acceptable to
the Executive, and whose fees and disbursements will be paid by NATCO. Any
determination by the Independent Tax Counsel shall be binding upon NATCO and the
Executive. If, as a result of any uncertainty in the application of Section 4999
of the Code at the time the initial determination is made by the Independent Tax
Counsel hereunder, Payments hereunder have been unnecessarily limited by this
Paragraph 14 ("Underpayment"), consistent with the calculations required to be
made hereunder, then the Independent Tax Counsel shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be properly
paid by NATCO to or for the benefit of the Executive. If, however, Payments
hereunder have not been sufficiently limited by this Section 14, consistent with
the calculations required to be made hereunder, to prevent the imposition of an
Excise Tax upon the Executive (the "Overpayment"), then the Executive shall
notify NATCO in writing within fifteen (15) days of any claim by the Internal
Revenue Service, that, if successful, would require the payment by the Executive
of any Excise Tax, and the Independent Tax Counsel shall determine the amount of
Overpayment that has occurred and any such Overpayment shall be properly
refunded by the Executive by or for the benefit of NATCO so as to properly
prevent the imposition of the Excise Tax.

Delayed Payment and Benefits Requirement; Section 409A Compliance

.

Notwithstanding anything to the contrary herein, if the Executive is a
"specified employee" (as defined under Section 409A(a)(2)(B)(i) of the Code) at
the time of his "separation from service" (as defined under Section
409A(a)(2)(A)(i) of the Code), no payment pursuant to this Employment Agreement
or otherwise of any amount or provision of any benefit on account of such
separation from service that constitutes nonqualified deferred compensation
within the meaning of Section 409A of the Code shall be made or commence, as
applicable, until the date that is six months after the date of such separation
from service (such required period of delay, the "Delay Period"). (For sake of
clarity, under the applicable guidance issued through the effective date of this
Employment Agreement, the payments and benefits subject to the Delay Period
include the payments and benefits for which the Executive may become eligible
under: (a) Paragraphs 13(a)(iii) and 13(a)(v), but only if the Executive's
condition does not constitute a "disability" within the meaning of Section
409A(a)(2)(B)(i) of the Code; (b) Paragraphs 13(b)(2) and 13(b)(3); (c) in the
case of a termination by the Executive for Good Reason, Paragraphs 13(d)(ii)(2),
13(d)(ii)(4), 13(e)(iii)-(v); and (d) Paragraph 13(e)(vi)). Any payment that is
required to be subjected to the Delay Period shall be paid (or commence to be
paid or provided in the case of installment payments or provision of in-kind
benefits or reimbursements, as applicable) on the date that is six months
following the Executive's separation from service. In the event of any benefit
continuations that would otherwise be made available pursuant to this Employment
Agreement immediately upon separation from service but for the application of
the Delay Period, the Executive may continue such benefits in accordance with
the terms of the applicable plans during the Delay Period and then receive
reimbursement from NATCO for the cost of such benefit continuations on the date
that is six months following his separation from service. Notwithstanding the
requirement that a payment be made or installments or in-kind benefits or
reimbursements commence to be paid or provided on the date that is six months
following the Executive's separation from service, such payments and benefits
shall be considered to be timely made or provided if paid or commenced, as
applicable, as soon as reasonably practicable following the applicable due date
(after the Delay Period) but in no event later than the later of the 15th day of
the third calendar month following the applicable due date (after the Delay
Period) or last day of the calendar year containing such applicable due date.
Further, in the event that any provision of this Employment Agreement would
cause any compensation or benefits to the Executive to become subject to the tax
under Section 409A of the Code, as determined in the reasonable judgment of the
Governance, Nominating and Compensation Committee of the Board, the Executive
and NATCO shall amend this Employment Agreement in a mutually agreeable manner
intended to avoid the application of such tax, to the extent possible and
without additional economic effect to NATCO.

Performance Based Compensation Payment Deferral

.

If and to the extent that the payment of any compensation to the Executive
pursuant to this Employment Agreement or otherwise would cause NATCO to
experience a limitation on or elimination of the deduction of such compensation
for purposes of its federal income tax liability because of the limitations of
Section 162(m) of the Code, NATCO may, at its sole discretion, delay the payment
of such compensation until the earliest date at which NATCO reasonably
anticipates that the deduction for such compensation will not be so eliminated
or limited.

Representation and Warranty

.

The Executive hereby represents and warrants that the execution and performance
of this Employment Agreement will not result in or constitute a default, breach
or violation, or an event which, with notice or lapse of time or both, would be
a default, breach or violation, of any understanding, agreement or commitment,
written or oral, express or implied, to which the Executive is a party or by
which the Executive or his property is bound.

Rights and Waivers

.

All rights and remedies of the parties hereto are separate and cumulative, and
no one of them, whether exercised or not, shall be deemed to be to the exclusion
of any other rights or remedies or shall be deemed to limit or prejudice any
other legal or equitable rights or remedies under this Employment Agreement
unless such waiver is in writing and signed by such party. No delay or omission
on the part of either party in exercising any right or remedy shall operate as a
waiver of such right or remedy or any other rights or remedies. A waiver on any
one occasion shall not be construed as a bar to or waiver of any right or remedy
on any future occasion.

Non-Assignability of Executive's Duties

.

This Employment Agreement is personal to the Executive and, with the exception
of the Executive's rights to compensation and benefits hereunder, which may be
transferred by will or operation of law, this Employment Agreement shall not,
without the prior written consent of the Board, be assignable by the Executive.

Savings Clause

.

If any provision of this Employment Agreement or the application hereof is held
invalid, the invalidity shall not affect other provisions or application of this
Employment Agreement that can be given effect without the invalid provisions or
application, and to this end the provisions of this Employment Agreement are
declared to be severable.

Construction

.

Each party has cooperated in the drafting and preparation of this Employment
Agreement. Hence, in any construction to be made of this Employment Agreement,
the same shall not be construed against any party on the basis of that party
being the "drafter."

Entire Agreement

.

With respect to the period of the Executive's employment commencing on July 1,
2006, this Employment Agreement supersedes all prior agreements between the
parties concerning the subject matter hereof, other than any and all promissory
notes entered into by and between the Executive and NATCO, and this Employment
Agreement constitutes the entire Employment Agreement between the parties with
respect thereto. This Employment Agreement may be modified only with a written
instrument duly executed by each of the parties. No person has any authority to
make any representations or promises on behalf of any of the parties not set
forth herein and this Employment Agreement has not been executed in reliance
upon any representation or promise except those contained herein.

Paragraph Headlines

.

The paragraph headings and captions of this Employment Agreement are for
reference purposes only, are not part of the provisions hereof and shall not
erect in any way the meaning or interpretation of this Employment Agreement.

Governing Law

.

This Employment Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, without reference to principles of conflict of
laws.

Arbitration

.

Any dispute between the parties to this Employment Agreement relating to or in
respect of this Employment Agreement, its negotiation, execution, performance,
subject matter, or any course of conduct or dealing or actions under or in
respect of this Employment Agreement, shall be submitted to, and resolved
exclusively by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association ("AAA"). Such arbitration shall take
place in Houston, Texas. Arbitration shall be commenced by filing a demand for
arbitration with the AAA within sixty (60) days after such dispute has arisen.
The prevailing party in such an arbitration proceeding shall be entitled to
recover reasonable attorneys' fees, all reasonable out of pocket costs and
disbursements, as well as any and all charges that may be made for the cost of
the arbitration and the fees of the arbitrators.

Enforcement of Arbitration Award

.

In the event of litigation to enforce an arbitration award in connection with or
concerning the subject matter of this Employment Agreement, the prevailing party
shall be entitled to recover all reasonable costs and expenses incurred by such
party in connection therewith, including reasonable attorneys' fees.

Notices

.

All notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

If to the Executive

, to him at:

Patrick M. McCarthy

14214 Whispering Lake Ct.

Cypress, Texas 77429

If to NATCO

, to it at:

Brookhollow Central III

2950 North Loop West, Suite 750

Houston, Texas 77092

Attention: Chief Financial Officer

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications hereunder shall be
effective when actually received by the addressee.

Legal Counsel

.

In entering into this Employment Agreement, the parties represent that they have
relied upon the advice of their attorneys, who are attorneys of their own
choice, and that the terms of this Employment Agreement have been completely
read and explained to them by their attorneys, and that those terms are fully
understood and voluntarily accepted by them. Without limiting the generality of
the foregoing, the Executive acknowledges and agrees that (a) he is not relying
upon any written or oral statement or representation of NATCO or any of its
representatives, agents or advisors regarding the tax effects associated with
the Executive's execution of this Amendment and his receipt of any payments or
other benefits hereunder and (b) in deciding to enter into this Amendment.

In witness whereof, the parties hereto have executed this Employment Agreement
as of the date first above written.

On behalf of

NATCO GROUP INC. PATRICK M. MCCARTHY

 

By: /s/ John U. Clarke /s/ Patrick M. McCarthy

John U. Clarke

Chairman & Chief Executive Officer

Exhibit A

RELEASE OF CLAIMS

This Release of Claims (this "Release") is entered into and effective as of
____________, ____, by and between NATCO Group Inc., a Delaware corporation
("NATCO"), and Patrick M. McCarthy (the "Executive").

1. In General. In consideration for the promises and payments received in the
Employment Agreement, entered into as of December 11, 2002, by and between NATCO
and Executive, as amended (the "Employment Agreement"), Executive irrevocably
and unconditionally releases, waives and discharges all Claims (as defined in
Section 2 below) that Executive has or may have through ______________, ____
(the "Separation Date") against the Released Parties (as defined herein), except
that Executive is not releasing (i) any Claim that relates to Executive's right
to enforce the Employment Agreement, (ii) any Claim against any Released Party
for the failure of NATCO or any of its subsidiaries and controlled affiliated
entities ("Subsidiaries") to provide to Executive any vested benefits or right
under its employee benefit plans (if any) in which Executive is vested or
entitled, (iii) any Claim that may arise based on acts or omission after the
Separation Date, (iv) any Claim for defense and/or indemnification under the
charter or bylaws of NATCO or any Subsidiary, any applicable agreement, any
other corporate document or any statute, or (v) any defense that may be
available to Executive with respect to any claim or cause of action that NATCO,
any Subsidiary or any other Released Party may hereafter assert against
Executive. For purposes of this Release, the "Released Parties" are NATCO and
all Subsidiaries (including corporations, limited liability companies,
partnerships, and joint ventures) and, with respect to each of NATCO and its
Subsidiaries, each of their respective predecessors and successors and (to the
extent relating to their positions or activities as such) past and present
employees, officers, directors, shareholders, owners, partners, members,
representatives, assigns, attorneys, as well as their employee benefit programs
(and, in their capacities as such, the trustees, administrators, fiduciaries,
and insurers of such programs), and any other persons acting by, through, under
or in concert with any of the foregoing identified Released Parties.

2. Claims Released. Subject only to the exceptions noted in Section 1, Executive
is voluntarily releasing all known and unknown, suspected and unsuspected
claims, promises, causes of action, or similar rights of any type that EXECUTIVE
has or may have as of the Separation Date with respect to any Released Party (IN
SUCH released party's capacity as such) THAT RELATE TO EXECUTIVE'S EMPLOYMENT
WITH NATCO AND ITS SUBSIDIARIES AND/OR THE TERMINATION THEREOF ("CLAIMS").
Executive understands that the Claims Executive is releasing might arise under
general employment policies or agreements between NATCO and Executive or under
any constitution, law, regulation, or ordinance that may apply, including the
United States Constitution, the Texas or other state constitution, federal,
state and local statutes, regulations, other administrative guidance, or common
law doctrines, such as, but not limited to, the following:

Anti-discrimination statutes

, such as the Title VII of the Civil Rights Act of 1964, as amended by the Civil
Rights Act of 1991, Section 1981 of the Civil Rights Act of 1866, and Executive
Order 11,246, which prohibit discrimination based on race, color, national
origin, religion, or sex; the Equal Pay Act of 1963, which prohibits paying men
and women unequal pay for the same work; the Americans With Disabilities Act of
1990 and Sections 503 and 504 of the Rehabilitation Act of 1973, which prohibit
discrimination based on disability; the Equal Employment Opportunity Act of
1972; and any other federal, state, or local laws prohibiting employment
discrimination, all as amended.

Federal employment statutes

, such as the Workers Adjustment and Retraining Notification Act of 1988, which
requires that advance notice be given of certain work force reductions; the
Employee Retirement Income Security Act of 1974, which, among other things,
protects employee benefits; the Fair Labor Standards Act of 1938, as amended,
which regulates wage and hour matters; the Family and Medical Leave Act of 1993,
which requires employers to provide leaves of absence under certain
circumstances; the National Labor Relations Act, as amended; and any other
federal laws relating to employment, such as veterans' reemployment rights laws,
all as amended.

Other laws

, such as any federal, state, or local human rights, fair employment, and other
laws and regulations and/or executive orders prohibiting discrimination on
account of age, race, sex, sexual orientation, national origin, religion,
handicap, disability, marital status, citizenship, veterans status, or other
protected category; any federal, state, or local laws restricting an employer's
right to terminate employees, or otherwise regulating employment; any federal,
state, or local law enforcing express or implied employment contracts or
requiring an employer to deal with employees fairly or in good faith; any other
federal, state, or local laws providing recourse for alleged wrongful discharge,
breach of contract, tort, physical or personal injury, emotional distress,
fraud, negligent misrepresentation, defamation, and similar or related claims.

3. Release of Age Discrimination Claims. THIS RELEASE ALSO SPECIFICALLY WAIVES
ALL OF EXECUTIVE'S RIGHTS AND CLAIMS ARISING UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967 (29 U.S.C. sec. 621 et seq.), AS AMENDED, AND THE OLDER
WORKER'S BENEFIT PROTECTION ACT, AS AMENDED. It is understood that Executive is
not waiving any rights or claims under the Age Discrimination in Employment Act
of 1967, as amended, that may arise after this Release is executed. It is
understood that Executive can waive rights or claims only in exchange for
consideration that is in addition to anything of value to which Executive is
already entitled. Executive understands that he has been given the opportunity
to consult with his attorney and discuss the contents of this document and its
meaning prior to executing this Release. Executive understands that he may
consider his decision for 21 days before signing this Release. Executive
acknowledges that he was offered 21 days in which to consider this Release. If
Executive signs this Release prior to the end of the 21-day time period, he
certifies that, in accordance with 29 CFR sec. 1625.22 (e)(6), he knowingly and
voluntarily decided to sign this Release after considering it less than 21 days
and his decision to do so was not induced by NATCO through fraud,
misrepresentation, or a threat to withdraw or alter the offer prior to the
expiration of the 21-day time period.

Executive understands that he may revoke this Release at any time within 7 days
after he signs it and that this Release shall not become effective or
enforceable until the 7-day revocation period has expired. If Executive wishes
to revoke this Release during the 7 days after signing it, he will do so by
sending notice of same to the attention of NATCO's General Counsel by fax
(713/812-6654) and certified mail, return receipt requested (c/o NATCO Group
Inc., Brookhollow Central III, Suite 700, 2950 N. Loop West, Houston, TX 77092).
If after the passage of the 7-day period Executive does not intend to revoke
this Release, he shall execute and return the attached statement evidencing his
intent not to revoke this Release to NATCO's General Counsel as described above.
Executive acknowledges and understands that the above-mentioned consideration
will not be paid to him unless NATCO receives a properly executed original of
the attached notice evidencing his intent not to revoke this Release.

Executive's initials following this paragraph evidence his understanding and
voluntary waiver of all Claims against NATCO including, but not limited to,
those pursuant to the Age Discrimination in Employment Act and the Older
Worker's Benefit Protection Act. Initials: __________

4. Pursuit of Released Claims. Executive represents that neither Executive nor
his heirs, agents, representatives or attorneys have filed or caused to be filed
any lawsuit, complaint, or charge with respect to any Claim that Executive is
releasing in this Release of Claims. Executive represents that he has not
brought or filed, and to the extent permitted by law will not bring or file, any
claim, charge, or action with respect to any Claim against the Released Parties,
or any of them, and, except as prohibited by law, agrees not to seek any
recovery arising out of, based upon, or relating to matters released hereunder.
This Release binds not only Executive in respect to these Claims, but it also
binds his spouse, heirs, representatives, and legal assigns and successors.

5. Non-Admission of Liability. Nothing in this Employment Agreement shall be
construed as an admission of liability by the Released Parties; rather,
Executive and the Released Parties are resolving all matters arising out of the
employer-employee relationship between NATCO and its Subsidiaries and Executive,
as to each of which the Released Parties each deny any liability.

Executive affirmatively acknowledges that this Release has been read in full,
its terms and conditions are understood, and it is being freely signed.
Executive understands that independent legal counsel may be consulted prior to
signing this Release.

IN WITNESS WHEREOF, Executive and NATCO have executed this Release as set forth
below as of the date first set forth above.

"Executive"

By:

Patrick M. McCarthy

"Company" NATCO Group Inc.

 

By:

Name:

Title:

State of ______________________ ss.

County/Parish of _______________ ss.

SUBSCRIBED AND SWORN TO before me by ____________________________ this _____ day
of _______________ ____.

( S E A L )

______________________________

 

Seven-Day Notice

TO: General Counsel

NATCO Group Inc.

Brookhollow Central III

Suite 700

2950 N. Loop West

Houston, TX 77092

Via Fax: 713/812-6654

Original Via Certified Mail, Return Receipt Requested

I, ______________________________, acknowledge that I have had 7 days in which
to consider my consent and agreement to this Release and I have elected (please
initial the appropriate blank):

______ not to revoke the Release.

______ to revoke the Release.

_____________________________ _____/_____/____

State of ______________________ ss.

County/Parish of _______________ ss.

SUBSCRIBED AND SWORN TO before me by ____________________________ this _____ day
of _______________ ____.

( S E A L )

______________________________