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                                                                   EXHIBIT 10.24


                              EMPLOYMENT AGREEMENT


         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


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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).

         2.       Term of Employment.

The term ("Term") of this Employment Agreement shall commence on December 11,
2002 (the "Commencement Date") and unless extended or terminated earlier as
provided hereunder, shall continue through the third anniversary of the
Commencement Date.

         3.       Term Extension.

         Commencing on the 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 Section 12 hereof, during the Term of this Agreement, including any
extensions thereof, this Employment Agreement shall automatically be extended


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until the end of the Effective Period, as defined in Section 12 hereof, and may
not be terminated by NATCO during such time.

         4.       Compensation and Benefits.

                  (a) During the Period of Active Employment, NATCO shall pay to
the Executive as base compensation for his services hereunder, a base salary of
$400,000 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.

                  (b) 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.

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

                  (d) 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.

                  (e) 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 rent payment required of
and made by the Executive in connection with the Executive's rental of an hotel
room, house, apartment or condominium in the Houston, Texas area, on an
income-tax grossed-up basis.

                  (f) During the Period of Active Employment, NATCO shall
reimburse the Executive for all actual and reasonable expenses associated with
the Executive's personal travel between Houston, Texas and Greenwich,
Connecticut.



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         5.       Bonus Compensation.

                  (a) 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 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 75% of his Base Salary. The Board will determine, annually, the criteria
which determine "target" performance.

                  (b) 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 death or Disability pursuant to Section 12(a), or by NATCO without Cause
or by the Executive for Good Reason pursuant to Section 12(d) hereof, any Bonus
Compensation payable to the Executive under Section 5(a) of this Employment
Agreement shall be prorated accordingly. If the Executive terminates his
employment without Good Reason as provided in Section 12(b) hereof or NATCO
terminates the Executive's employment for Cause as provided in Section 12(c)
hereof, the Executive shall not be eligible for any Bonus Compensation under
this Employment Agreement for the year in which such termination occurs.

                  (c) Any Bonus Compensation payment to which the Executive is
entitled under the terms of Section 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 ninety days from the date such financial statements
shall have been prepared.

                  (d) 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.

                  (e) 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.

         6.       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.

         7.       Disability.

                  "Disability" or "Disabled", as used in Sections 1(e) and 12(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)

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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.

         8.       Agreement Not to Compete.

                  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 NATCO or any of its
affiliated companies.

         9.       Intangible and Other Property Rights.

                  (a) 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.

                  (b) 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.

         10.      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.



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         11.      Notice of Termination.

                  (a) 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 Section 12 hereof, shall
be communicated by a Notice of Termination to the other party hereto given in
accordance with Section 24 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 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.

                  (b) A Termination of Employment of the Executive will not be
deemed to be for Cause, as defined by Section 12 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 Section 12(j)(i) hereof, and specifying the particulars of such
conduct.

                  (c) A Termination of Employment of the Executive will not be
deemed to be for Good Reason, as defined by Section 12 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 the
Company constituting such Good Reason.

         12.      Termination of Employment.

                  (a) 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 Section 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, and (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. 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, or to his estate or
designated beneficiary, as the case may be, in accordance with the terms of the
Bonus Plan.



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                  (b) Termination by the Executive. If the Executive terminates
this Employment Agreement for any reason other than Good Reason, as defined
below, NATCO shall have no further obligations or responsibilities hereunder
(except for Base Salary amounts earned but not yet paid to the Executive through
the date of the Executive's termination) and the Executive shall not be entitled
to receive any Bonus Compensation pursuant to Section 5 of this Employment
Agreement nor 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. 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 terms of
such plans.

                  (c) Termination for Cause. The Company 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 Section 11 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 Section 5 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.

                  (d) Termination by the Company Without Cause or by the
Executive for Good Reason. NATCO has the right, at any time during the 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 Agreement may be terminated at any time
during the Term by the Executive for Good Reason. In the event of termination of
employment either by NATCO without Cause or by the Executive for Good Reason
prior to the occurrence of a Change in Control, 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.

                  (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 as soon as practicable following the date of termination, but in no
event later than thirty (30) days, or such period otherwise specifically
provided, thereafter:


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                     (i)    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;

                     (ii)   cash in the amount of the Bonus Compensation earned
                            by the Executive under the Bonus Plan in accordance
                            with its terms through the date of termination,
                            based on NATCO 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;

                     (iii)  cash in an amount equal to the product of three
                            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;

                     (iv)   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;

                     (v)    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;

                     (vi)   any and all deferred Bonus Compensation under the
                            Bonus Plan at the time and in the manner provided
                            for (or elected) under the terms of the Bonus Plan.


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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 Sections 12(b)
and 12(c), as the case may be.

                  (f) "Compensation" Under Retirement Plans. Any and all amounts
paid under Section 12 of this Employment Agreement in the amount of or otherwise
in respect of the Executive's Base Salary and Bonus Compensation, whether or not
deferred under a deferred compensation plan or program, are intended to be and
will be "Compensation" for purposes of determining Compensation under any and
all retirement plans sponsored or maintained by the Company or by any affiliate
controlled by the Company.

                  (g) 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 Section 12 , if any, such
payments and benefits will be paid to the Executive's beneficiary.

                  (h) Mitigation of Damages. The Executive will not be required
to mitigate damages or the amount of any payment provided for under Section 12
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 Section 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.

                  (i) Stock Options. The benefits provided under Section 12 of
this Employment Agreement are intended to be in addition to the value of any
options to acquire common stock of NATCO awarded to the Executive pursuant to
Stock Option Agreements entered into by and between the Company and the
Executive dated July 31, 1996, July 31, 1997, as amended July 12, 1999
(collectively the "1996 and 1997 Stock Option Agreements"), and May 2, 2000, or
awarded under the Natco Group Inc. 2001 Stock Incentive Plan (the "Stock Plan")
and any other incentive or similar plan or award agreement heretofore or
hereafter adopted by NATCO. Notwithstanding provisions to the contrary contained
in Section 5(a)(3) of the 1996 and 1997 Stock Option Agreements, or the terms of
the Stock Plan or of any other incentive plan or other award agreement
evidencing awards of stock options to purchase stock of NATCO, 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; provided, however, that if NATCO terminates the Executive's employment
other than for Cause or the Executive terminates employment with NATCO for Good
Reason during the Effective Period, then the stock options granted under the
Stock Option Agreement dated May 2, 2000 and under the Stock Plan 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. In the event NATCO terminates the Executive's employment
other than for Cause or the Executive terminates employment with NATCO for Good
Reason during the Effective Period, then the stock options granted under the
1996 and 1997 Stock Option Agreements shall remain exercisable in accordance
with the terms of the 1996 and 1997 Stock Option Agreements, other


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<PAGE>

than Section 5(a)(3) of the 1996 and 1997 Stock Option Agreements, which
provision is superseded hereby and of no further force or effect.

                  (j) Definitions. The following terms shall have the meanings
ascribed to them as follows:

                     (i)    "Cause" means:

                            (A)    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;

                            (B)    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

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

                            (D)    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.

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

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


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<PAGE>

                            (B)    the Company sells, leases or exchanges, or
                                   agrees to sell, lease or exchange, all or
                                   substantially all of its assets to any other
                                   person or entity;

                            (C)    the Company is to be dissolved and
                                   liquidated;

                            (D)    any person or entity, including a "group" as
                                   contemplated by Section 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 the Company's voting stock (based
                                   upon voting power); or

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

                     (iii)  "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 Agreement or who is
                            elected to the Board after such date.

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

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

                            (A)    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
                                   the Company or the Executive's employer
                                   promptly after receipt of notice thereof
                                   given by the Executive;

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

                            (C)    an unreasonable change in the Executive's
                                   current office location;

                            (D)    following a Change in Control, unless a plan
                                   providing a substantially similar
                                   compensation or benefit is substituted,


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<PAGE>

                                   (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

                            (E)    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.

                            (F)    any purported termination of the Executive's
                                   employment by NATCO which is not effected
                                   pursuant to a Notice of Termination
                                   satisfying the requirements of Section 11
                                   hereof; and for purposes of this Employment
                                   Agreement, no such purported termination
                                   shall be effective.

                            (G)    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.

         13.      Limitation of Benefits

                  (a) Anything in this 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 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.


                                        12
<PAGE>

                  (b) All determinations required to be made under this Section
13, 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 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. 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 Section 13 (the "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 13, 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.

         14.      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.

         15.      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.

         16.      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


                                        13
<PAGE>

transferred by will or operation of law, this Agreement shall not, without the
prior written consent of the Board, be assignable by the Executive.

         17.      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.

         18.      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."

         19.      Entire Agreement.

                  This Employment Agreement constitutes the entire agreement
between the parties hereto with respect to the employment of the Executive by
NATCO and 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 (collectively the "Promissory Notes") and
that certain Registration Rights Agreement ("Registration Rights Agreement")
entered into on or about November 18, 1998 by and among Natco Group, Inc.,
Capricorn Investors, LP, a Delaware limited partnership, and Capricorn Investors
II, LP, a Delaware limited partnership, which Promissory Notes and Registration
Rights Agreement shall remain in full force and effect. 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.

         20.      Section Headings

                  The section 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.

         21.      Governing Law.

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

         22.      Arbitration.

                  Any dispute between the parties to this Employment Agreement
relating to or in respect of this Employment Agreement, its negotiation,
execution, performance, subject


                                        14



<PAGE>

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 New York,
New York. 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.

         23.      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.

         24.      Notice

                  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:
                  Nathaniel A. Gregory
                  Frost Road
                  Greenwich, Connecticut 06830

                  If to NATCO, to it at:

                  Brookhollow Central III
                  2950 North Loop West, Suite 750
                  Houston, Texas 77092
                  Attention: Chief Financial Officer

                  With a copy to:

                  O'Melveney & Myers
                  Citigroup Center
                  153 East 53rd Street
                  New York, New York  10022-4611
                  Attention:  Mr. Mark Thierfelder

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.


                                        15


<PAGE>

         25.      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.

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


On behalf of
NATCO GROUP INC.                              NATHANIEL A. GREGORY

By: /s/ J. Michael Mayer                      /s/ Nathaniel A. Gregory
   -----------------------------              --------------------------

Title: Senior Vice President and
       Chief Financial Officer
      --------------------------




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