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                                                                    EXHIBIT 10.5

                                NATCO GROUP INC.

                         2000 EMPLOYEE STOCK OPTION PLAN


                                   I. PURPOSE

         The purpose of the NATCO GROUP INC. 2000 EMPLOYEE STOCK OPTION PLAN
(the "Plan") is to provide a means through which NATCO GROUP INC., a Delaware
corporation (the "Company"), and its subsidiaries may attract able persons to
enter the employ of the Company and its Affiliates and to provide a means
whereby those individuals can acquire and maintain stock ownership, thereby
strengthening their concern for the welfare of the Company. A further purpose of
the Plan is to provide such individuals with additional incentive and reward
opportunities designed to enhance the profitable growth of the Company and its
Affiliates. Accordingly, the Plan provides for stock options to employees on the
terms and conditions described herein.


                                 II. DEFINITIONS

The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:

(a) "AFFILIATE" means any entity that, directly or through one or more
intermediaries, is controlled by the Company or controls the Company as
determined by the Committee.

(b) "BOARD" means the Board of Directors of the Company.

(c) "CODE" means the Internal Revenue Code of 1986, as amended. Reference in the
Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations under such section.

(d) "COMMITTEE" means a committee of the Board that is selected by the Board as
provided in Paragraph IV(a).

(e) "COMMON STOCK" means the common stock, par value $0.01 per share, of the
Company.

(f) "COMPANY" means NATCO Group Inc., a Delaware corporation, or any successor
thereto.

(g) "CORPORATE CHANGE" means one of the following events: (i) the merger,
consolidation, or other reorganization of the Company in which the outstanding
Common Stock is converted into or exchanged for a different class of securities
of the Company, a class of securities of any other issuer (except a direct or
indirect wholly owned subsidiary of the Company), cash or other property; (ii)
the sale, lease, or exchange of all or substantially all of the assets of the
Company to any other corporation or entity (except a direct or indirect wholly
owned subsidiary of the Company); (iii) the adoption by the stockholders of the
Company of a plan of liquidation and dissolution; (iv) the acquisition (other
than any acquisition pursuant to any other clause of this definition) by any
person or entity, including without limitation a "group" as contemplated by
Section 13(d)(3) of the 1934 Act, of beneficial ownership, as contemplated by
such Section, of more than fifty percent (based on voting power) of the
Company's outstanding capital stock; or (v) 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.


(h) "EMPLOYEE" means any person in an employment relationship with the Company
or any of its affiliates.

(i) "FAIR MARKET VALUE" means, as of any specified date, the average of the high
and low sales prices of the Common Stock reported on the stock exchange
composite tape on that date or, if no prices are reported on that date, on the
last preceding date on which such prices of the Common Stock are so reported or,
if the Common Stock is not then listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the





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average of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotations Systems or such other system then in use, or, if on any such date,
the Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Committee. In the event Common
Stock is not publicly traded at the time a determination of its value is
required to be made hereunder, the determination of its fair market value shall
be made by the Committee in such manner as it deems appropriate. Notwithstanding
the foregoing, the Fair Market Value of a share of Common Stock on the date of
an initial public offering of Common Stock shall be the offering price under
such initial public offering.

(j) "INCENTIVE STOCK OPTION" means an incentive stock option within the meaning
of section 422 of the Code.

(k) "1934 ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

(l) "OPTION" means a stock option granted under Paragraph VII of the Plan.

(m) "OPTION AGREEMENT" means a written agreement between the Company and a
Optionee with respect to an Option.

(n) "OPTIONEE" means a person who has been granted an Option.

(o) "PLAN" means the NATCO Group Inc. 2000 Employee Stock Option Plan, as
amended from time to time.

(p) "SENIOR EXECUTIVE" means any Senior Vice President, President or Chief
Executive Officer of the Company.


                  III. EFFECTIVE DATE AND DURATION OF THE PLAN

     The Plan shall become effective upon the date of its adoption by the Board.
Except with respect to Options then outstanding, if not sooner terminated under
the provisions of Paragraph IX, the Plan shall terminate upon and no further
Options shall be granted after the expiration of ten years from the date of its
adoption by the Board.

                               IV. ADMINISTRATION

(a) COMPOSITION OF COMMITTEE. The Plan shall be administered by a committee of,
and appointed by, the Board.

(b) POWERS. Subject to the express provisions of the Plan, the Committee shall
have authority, in its discretion, to determine which Employees shall receive an
Option, the time or times when such Option shall be made, whether an Option
shall be granted, and the number of shares to be subject to each Option. In
making such determinations, the Committee shall take into account the nature of
the services rendered by the respective Employees, their present and potential
contribution to the Company's or its Affiliates' success, and such other factors
as the Committee in its discretion shall deem relevant.

(c) ADDITIONAL POWERS. The Committee shall have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, this shall include the power to construe the Plan and
the respective agreements executed hereunder, to prescribe rules and regulations
relating to the Plan, and to determine the terms, restrictions and provisions of
the agreement relating to each Option, and to make all other determinations
necessary or advisable for administering the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any agreement relating to an Option in the manner and to the extent it shall
deem expedient to carry it into effect. The determinations of the Committee on
the matters referred to in this Paragraph IV shall be conclusive.



                 V. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN

(a) STOCK GRANTS AND OPTION LIMITS. The Committee may from time to time grant
Options to one or more Employees determined by it to be eligible for
participation in the Plan in accordance with the provisions of Paragraph VI.
Subject to adjustment in the same manner as provided in Paragraph VIII with
respect to shares of Common Stock subject to Options then outstanding, the
aggregate number of shares of Common Stock that may be







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issued under the Plan shall not exceed 300,000 shares; provided, however, that
the Board may, in its sole discretion, amend the Plan to increase the aggregate
number of shares of Common Stock that may be issued under the Plan. Shares shall
be deemed to have been issued under the Plan only (i) to the extent actually
issued and delivered pursuant to the exercise of an Option or (ii) to the extent
an Option is settled in cash. To the extent that an Option lapses or the rights
of its Optionee terminate, any shares of Common Stock subject to such Option
shall again be available for the grant of an Option.

(b) STOCK OFFERED. The stock to be offered pursuant to the grant of an Option
may, at the discretion of the Company, be authorized but unissued Common Stock
or Common Stock previously issued and outstanding and reacquired by the Company.

                                 VI. ELIGIBILITY

     Options may be granted only to persons who, at the time of grant, are
Employees other than Senior Executives or members of the Board. An Option may be
granted on more than one occasion to the same person.


                               VII. STOCK OPTIONS

(a) OPTION PERIOD. The term of each Option shall be as specified by the
Committee at the date of grant.

(b) LIMITATIONS ON EXERCISE OF OPTION. An Option shall be exercisable in whole
or in such installments and at such times as determined by the Committee.

(c) NO INCENTIVE STOCK OPTIONS. No Options granted under the Plan shall be
Incentive Stock Options.

(d) OPTION AGREEMENT. Each Option shall be evidenced by an Option Agreement in
such form and containing such provisions not inconsistent with the provisions of
the Plan as the Committee from time to time shall approve. Each Option Agreement
shall specify the effect of termination of employment on the exercisability of
the Option. An Option Agreement may provide for the payment of the option price,
in whole or in part, (1) in cash or (2) by the delivery of a number of shares of
Common Stock (plus cash if necessary) valued at their Fair Market Value.
Moreover, an Option Agreement may provide for a "cashless exercise" of the
Option pursuant to procedures established by the Committee (as the same may be
amended from time to time). The terms and conditions of the respective Option
Agreements need not be identical.

(e) OPTION VESTING. The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted. At any time after grant of an
Option, the Committee may, in its sole and absolute discretion and subject to
whatever terms and conditions it selects, accelerate the period during which an
Option vests.

(f) OPTION PRICE AND PAYMENT. The price at which a share of Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee. The
Option or portion thereof may be exercised by delivery of an irrevocable notice
of exercise to the Company in a manner specified by the Committee. The purchase
price of the Option or portion thereof shall be paid in full in the manner
prescribed by the Committee.

(g) SHAREHOLDER RIGHTS AND PRIVILEGES. The Optionee shall be entitled to all the
privileges and rights of a stockholder only with respect to such shares of
Common Stock as have been purchased under the Option and for which certificates
of stock have been registered in the Optionee's name.

(h) OPTIONS AND RIGHTS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
CORPORATIONS. Options may be granted under the Plan from time to time in
substitution for stock options held by individuals employed by corporations who
become Employees as a result of a merger or consolidation of the employing
corporation with the Company or any subsidiary, or the acquisition by the
Company or a subsidiary of the assets of the employing corporation, or the
acquisition by the Company or a subsidiary of stock of the employing corporation
with the result that such employing corporation becomes a subsidiary.

(i) OWNERSHIP AND TRANSFER RESTRICTIONS. The Committee, in its absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Option Agreement and
may be referred to on the certificates evidencing such shares.



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                    VIII. RECAPITALIZATION OR REORGANIZATION


(a) The existence of the Plan and the Options granted hereunder shall not affect
in any way the right or power of the Board or the stockholders of the Company to
make or authorize any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities ahead of or
affecting Common Stock or the rights thereof, the dissolution or liquidation of
the Company or any sale, lease, exchange or other disposition of all or any part
of its assets or business or any other corporate act or proceeding.

(b) The shares with respect to which Options may be granted are shares of Common
Stock as presently constituted, but if, and whenever, prior to the expiration of
an Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend on
Common Stock without receipt of consideration by the Company, the number of
shares of Common Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased. Any fractional share resulting from
such adjustment shall be rounded up to the next whole share.

(c) If the Company recapitalizes, reclassifies its capital stock, or otherwise
changes its capital structure ( a "recapitalization"), the number and class of
shares of Common Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Optionee would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the Optionee had been the holder of record of the number of
shares of Common Stock then covered by such Option, and the purchase price per
share shall be adjusted so that the aggregate purchase price under the Option as
adjusted shall be the same as the aggregate purchase price of the shares covered
by the Option immediately prior to the adjustment.

(d) In the event of a Corporate Change, the Committee, acting in its sole
discretion without the consent or approval of any Optionee, shall effect one or
more of the following alternatives, which alternatives may vary among individual
Optionees and which may vary among Options held by any individual Optionee: (i)
accelerate the time at which Options then outstanding may be exercised so that
such Options may be exercised in full for a limited period of time on or before
a specified date (before or after such Corporate Change) fixed by the Committee,
after which specified date all unexercised Options and all rights of Optionees
thereunder shall terminate, (ii) require the mandatory surrender to the Company
by selected Optionees of some or all of the outstanding Options held by such
Optionees (irrespective of whether such Options are then exercisable under the
provisions of the Plan) as of a date, before or after such Corporate Change,
specified by the Committee, in which event the Committee shall thereupon cancel
such Options and pay to each Optionee an amount of cash per share equal to the
excess, if any. Of the amount calculated in SubParagraph (e) below (the
"Corporate Change Value") of the shares subject to such Option over the exercise
price(s) under such Options for such shares, (iii) make such adjustments to
Options then outstanding as the Committee deems appropriate to reflect such
Corporate Change (provided, however, that the Committee may determine in its
sole discretion that no adjustment is necessary to Options then outstanding), or
(iv) provide that the number and class of shares of Common Stock covered by an
Option theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares of stock or other securities or
property (including, without limitation, cash) to which the Optionee would have
been entitled pursuant to the terms of the agreement of merger, consolidation or
sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution, the Optionee had been the
holder of record of the number of shares of Common Stock then covered by such
Option.

(e) For the purposes of clause (ii) in SubParagraph (d) above, the "Change in
Control Value" shall equal the amount determined in clause (i), (ii) or (iii),
whichever is applicable, as follows: (i) the per share price offered to
stockholders of the Company in any such merger, consolidation, sale of assets or
dissolution transaction, (ii) the price per share offered to stockholders of the
Company in any tender offer or exchange offer whereby a Corporate Change takes
place, or (iii) if such Corporate Change occurs other than pursuant to a tender
or exchange offer, the fair market value per share of the shares into which such
Options being surrendered are exercisable, as determined by the Committee as of
the date determined by the Committee to be the date of cancellation and
surrender of such Options. In the event that the consideration offered to
stockholders of the Company in any transaction described in





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this SubParagraph (e) or SubParagraph (d) above consists of anything other than
cash, the Committee shall determine the fair cash equivalent of the portion of
the consideration offered which is other than cash.

         (i)      The Committee may provide, either automatically or upon the
                  Optionee's request, for either the purchase of any such Option
                  for an amount of cash equal to the amount that could have been
                  attained upon the exercise of such Option or realization of
                  the Optionee's rights had such Option been currently
                  exercisable or the replacement of such Option with other
                  rights or property selected by the Committee in its sole
                  discretion;

         (ii)     The Committee may provide, either by the terms of such Option
                  or by action taken prior to the occurrence of such transaction
                  or event that it cannot be exercised after such event;

         (iii)    The Committee may provide, either by the terms of such Option
                  or by action taken prior to the occurrence of such transaction
                  or event, that, for a specified period of time prior to such
                  transaction or event, such Option shall be exercisable as to
                  all shares covered thereby, notwithstanding anything to the
                  contrary in the provisions of such Option;

         (iv)     The Committee may provide, either by the terms of such Option
                  or by action taken prior to the occurrence of such transaction
                  or event, that upon such event, such Option be assumed by the
                  successor corporation, or a parent or subsidiary thereof, or
                  shall be substituted for by similar options covering the stock
                  of the successor corporation, or a parent or subsidiary
                  thereof, with appropriate adjustments as to the number and
                  kind of shares and prices;

         (v)      The Committee may make adjustments in the number and type of
                  shares of Common Stock (or other securities or property)
                  subject to outstanding Options and/or in the terms and
                  conditions of (including the grant or exercise price), the
                  criteria included in, outstanding Options and Options which
                  may be granted in the future;

         (vi)     The Committee may make adjustments to the aggregate number of
                  shares available for the granting of Options under the Plan
                  (and the aggregate number of shares that may be granted to any
                  one individual); and

         (vii)    With respect to any adjustment made or other action taken by
                  the Committee pursuant to its power under this SubParagraph,
                  the Committee's determination with regard to the
                  appropriateness, desirability, and/or necessity of such
                  adjustment or action shall be conclusive.


(h) Except as hereinbefore expressly provided, the issuance by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefore, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to Options theretofore granted or the purchase
price per share, if applicable.


                    IX. AMENDMENT AND TERMINATION OF THE PLAN

     The Board in its discretion may terminate the Plan at any time with respect
to any shares of Common Stock for which Options have not theretofore been
granted. The Board shall have the right to alter or amend the Plan or any part
thereof from time to time; provided that, other than as permitted pursuant to
Paragraph VIII, no change in any Option theretofore granted may be made which
would materially impair the rights of the Optionee without the consent of the
Optionee.

                                X. MISCELLANEOUS

(a) NO RIGHT TO AN OPTION. Neither the adoption of the Plan nor any action of
the Board or of the Committee shall be deemed to give an Employee any right to
be granted an Option or any other rights hereunder except as may be evidenced by
an Option Agreement duly executed on behalf of the Company, and then only to the
extent and on the terms and conditions expressly set forth therein. The Plan
shall be unfunded. The Company shall not be required to establish any special or
separate fund or to make any other segregation of funds or assets to assure the
payment of any Option.



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(b) NO EMPLOYMENT RIGHTS CONFERRED. Nothing contained in the Plan shall (i)
confer upon any Employee any right with respect to continuation of employment
with the Company or any subsidiary or (ii) interfere in any way with the right
of the Company or any subsidiary to terminate his or her employment relationship
at any time.

(c) OTHER LAWS; WITHHOLDING.

         (i)      The Company shall not be obligated to issue any Common Stock
                  pursuant to any Option granted under the Plan at any time when
                  the shares covered by such Option have not been registered
                  under the Securities Act of 1933 and such other state and
                  federal laws, rules or regulations as the Company or the
                  Committee deems applicable and, in the opinion of legal
                  counsel for the Company, there is no exemption from the
                  registration requirements of such laws, rules or regulations
                  available for the issuance and sale of such shares. No
                  fractional shares of Common Stock shall be delivered. The
                  Company shall have the right to deduct in connection with all
                  Options any taxes required by law to be withheld and to
                  require any payments required to enable it to satisfy its
                  withholding obligations.

         (ii)     The Company shall be entitled to require payment in cash or
                  deduction from other compensation payable to each Optionee of
                  any sums required by applicable tax law to be withheld to
                  satisfy minimum withholding obligations with respect to the
                  exercise of any

         (iii)    Option. The Committee may, in its discretion and in
                  satisfaction of the foregoing requirement, allow such Optionee
                  to elect to have the Company withhold shares of Common Stock
                  otherwise issuable under such Option or afterward (or allow
                  the return of shares of Common Stock) having a Fair Market
                  Value equal to the minimum tax sums required to be withheld by
                  the Company.


(d) NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan shall be
construed to prevent the Company or any subsidiary from taking any action which
is deemed by the Company or such subsidiary to be appropriate or in its best
interest, whether or not such action would have an adverse effect on the Plan or
any Option made under the Plan. No Employee, beneficiary or other person shall
have any claim against the Company or any subsidiary as a result of any such
action.

(e) RESTRICTIONS ON TRANSFER. An Option shall not be transferable otherwise than
(i) by will or the laws of descent and distribution, (ii) pursuant to an
qualified domestic relations order as defined by the Code of Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, or (iii) with the consent of the Committee.

(f) GOVERNING LAW. The Plan shall be governed by, and construed in accordance
with, the laws of the State of Texas.