Document:

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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.<PAGE>

                                                                    EXHIBIT 10.6

                                NATCO GROUP INC.

                            2001 STOCK INCENTIVE PLAN

         I.       BACKGROUND; EFFECT OF AMENDMENT AND RESTATEMENT OF THE PLAN;
                  PURPOSE OF THE PLAN

BACKGROUND AND EFFECT OF AMENDMENT AND RESTATEMENT OF THE PLAN. The NATCO Group
Inc. 2000 Employee Stock Option Plan (the "Plan") was adopted by the Board of
Directors of NATCO Group Inc., a Delaware corporation (the "Company"), on
November 9, 2000. The plan as set forth herein constitutes an amendment and
restatement of the Plan as previously adopted by the Company, and shall
supersede and replace in its entirety such previously adopted plan. This
amendment and restatement of the Plan shall be effective as of May 25, 2001,
provided this amendment and restatement of the Plan is approved by the
stockholders of the Company on such date at the Company's 2001 Annual Meeting of
Stockholders. No Awards may be granted under the Plan prior to approval of this
amendment and restatement of the Plan by the stockholders of the Company other
than Options authorized under the terms of the Plan prior to its amendment and
restatement. If this amendment and restatement of the Plan is not so approved by
the stockholders, then no Awards shall be granted under the Plan on or after May
25, 2001.

PURPOSE OF THE PLAN. The purpose of the Plan is to provide a means through which
the Company and its Affiliates may attract able persons to serve as Directors or
Consultants or to enter the employ of the Company and its Affiliates and to
provide a means whereby those individuals upon whom the responsibilities of the
successful administration and management of the Company and its Affiliates rest,
and whose present and potential contributions to the Company and its Affiliates
are of importance, can acquire and maintain stock ownership, thereby
strengthening their concern for the welfare of the Company and its Affiliates. 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 granting
Incentive Stock Options, options that do not constitute Incentive Stock Options,
Restricted Stock Awards, Performance Awards, and Phantom Stock Awards, or any
combination of the foregoing, as is best suited to the circumstances of the
particular employee, Consultant, or Director as provided herein.

                                 II. DEFINITIONS

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

"AFFILIATE" means any corporation, partnership, limited liability company or
partnership, association, trust or other organization which, directly or
indirectly, controls, is controlled by, or is under common control with, the
Company. For purposes of the preceding sentence, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any entity or organization, shall mean the
possession, directly or indirectly, of the power (i) to vote more than 50% of
the securities having ordinary voting power for the election of directors of the
controlled entity or organization, or (ii) to direct or cause the direction of
the management and policies of the controlled entity or organization, whether
through the ownership of voting securities or by contract or otherwise.

"AWARD" means, individually or collectively, any Option, Restricted Stock Award,
Performance Award, or Phantom Stock Award.

"BOARD" means the Board of Directors of the Company.

"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.

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

<PAGE>

"COMMON STOCK" means the common stock, par value $0.01 per share, of the
Company, or any security into which such Common Stock may be changed by reason
of any transaction or event of the type described in Paragraph XI.

"COMPANY" means NATCO Group Inc., a Delaware corporation.

"CONSULTANT" means any person who is not an employee or a Director and who is
providing advisory or consulting services to the Company or any Affiliate.

"CORPORATE CHANGE" shall have the meaning assigned to such term in Paragraph
XI(c) of the Plan.

"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 the Plan is adopted by the Board or is elected to the Board
after such date.

An "EMPLOYEE" means any person (including a Director) in an employment
relationship with the Company or any Affiliate.

"FAIR MARKET VALUE" means, as of any specified date, the mean of the high and
low sales prices of the Common Stock reported by (i) the National Market System
or NASDAQ on that date or (ii) if the Common Stock is listed on a national stock
exchange, reported on the stock exchange composite tape on that date (or such
other reporting service approved by the Committee); or, in either case, if no
prices are reported on that date, on the last preceding date on which such
prices of the Common Stock are so reported. If the Common Stock is traded over
the counter at the time a determination of its fair market value is required to
be made hereunder, its fair market value shall be deemed to be equal to the
average between the reported high and low or closing bid and asked prices of
Common Stock on the most recent date on which Common Stock was publicly traded.
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.

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

"1934 ACT" means the Securities Exchange Act of 1934, as amended.

"OPTION" means an Award granted under Paragraph VII of the Plan and includes
both Incentive Stock Options to purchase Common Stock and Options that do not
constitute Incentive Stock Options to purchase Common Stock.

"OPTION AGREEMENT" means a written agreement between the Company and a
Participant with respect to an Option.

"PARTICIPANT" means an employee, Consultant, or Director who has been granted an
Award.

"PERFORMANCE AWARD" means an Award granted under Paragraph IX of the Plan.

"PERFORMANCE AWARD AGREEMENT" means a written agreement between the Company and
a Participant with respect to Performance Awards.

"PHANTOM STOCK AWARD" means an Award granted under Paragraph IX of the Plan.

"PHANTOM STOCK AWARD AGREEMENT" means a written agreement between the Company
and a Participant with respect to a Phantom Stock Award.

"PLAN" means the NATCO Group Inc. 2001 Stock Incentive Plan, as amended from
time to time.

"RESTRICTED STOCK AGREEMENT" means a written agreement between the Company and a
Participant with respect to a Restricted Stock Award.

"RESTRICTED STOCK AWARD" means an Award granted under Paragraph VIII of the
Plan.

"RULE 16b-3" means SEC Rule 16b-3 promulgated under the 1934 Act, as such may be
amended from time to time, and any successor rule, regulation or statute
fulfilling the same or a similar function.

<PAGE>

"STOCK APPRECIATION RIGHT" shall have the meaning assigned to such term in
Paragraph VII(d) of the Plan.

                            III. DURATION OF THE PLAN

     No further Awards may be granted under the Plan after 10 years from the
date this amendment and restatement of the Plan is adopted by the Board. The
Plan shall remain in effect until all Options granted under the Plan have been
exercised or expired, all Restricted Stock Awards granted under the Plan have
vested or been forfeited, and all Performance Awards and Phantom Stock Awards
have been satisfied or expired.

                               IV. ADMINISTRATION

COMPOSITION OF COMMITTEE. The Plan shall be administered by a committee or, and
appointed by, the Board that shall be comprised solely of two or more outside
Directors (within the meaning of the term "outside directors" as used in section
162(m) of the Code and applicable interpretive authority thereunder and within
the meaning of the term "Non-Employee Director" as defined in Rule 16b-3).

POWERS. Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine which employees, Consultants or
Directors shall receive an Award, the time or times when such Award shall be
made, the type of Award that shall be made, the number of shares to be subject
to each Option or Restricted Stock Award, the number of shares subject to or the
value of each Performance Award, and the value of each Phantom Stock Award. In
making such determinations, the Committee shall take into account the nature of
the services rendered by the respective employees, Consultants, or Directors,
their present and potential contribution to the Company's success and such other
factors as the Committee in its sole discretion shall deem relevant.

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 Award, including such terms, restrictions and
provisions as shall be requisite in the judgment of the Committee to cause
designated Options to qualify as 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 Award 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. SHARES SUBJECT TO THE PLAN; AWARD LIMITS;
                                 GRANT OF AWARDS

SHARES SUBJECT TO THE PLAN AND AWARD LIMITS. Subject to adjustment in the same
manner as provided in Paragraph XI with respect to shares of Common Stock
subject to Options then outstanding, the aggregate number of shares of Common
Stock that may be issued under the Plan shall not exceed 1,000,000 shares (which
shall include the shares authorized under the Plan prior to this amendment and
restatement). Shares shall be deemed to have been issued under the Plan only (i)
to the extent actually issued and delivered pursuant to an Award or (ii) to the
extent an Award denominated in shares of Common Stock is settled in cash. To the
extent that an Award lapses or the rights of its holder terminate, any shares of
Common Stock subject to such Award shall again be available for the grant of an
Award under the Plan. Notwithstanding any provision in the Plan to the contrary,
the maximum number of shares of Common Stock that may be subject to Options,
Restricted Stock Awards and Performance Awards denominated in shares of Common
Stock granted to any one individual during any calendar year may not exceed
100,000 shares of Common Stock (subject to adjustment in the same manner as
provided in Paragraph XI with respect to shares of Common Stock subject to
Options then outstanding), and the maximum amount of compensation that may be
paid under all Performance Awards denominated in cash (including the Fair Market
Value of any shares of Common Stock paid in satisfaction of such Performance
Awards) granted to any one individual during any calendar year may not exceed
$1,000,000, and any payment due with respect to a Performance Award shall be
paid no later than 10 years after the date of grant of such Performance Award.
The limitations set forth in the preceding sentence shall be applied in a manner
that will permit compensation generated under the Plan to constitute
"performance-based" compensation for purposes of section 162(m) of the Code,
including, without limitation, counting against such maximum number of shares,
to the extent required under section 162(m) of the Code and applicable
interpretive authority thereunder, any shares subject to Options that are
canceled or repriced.

<PAGE>

GRANT OF AWARDS. The Committee may from time to time grant Awards to one or more
employees, Consultants, or Directors determined by it to be eligible for
participation in the Plan in accordance with the terms of the Plan.

STOCK OFFERED. Subject to the limitations set forth in Paragraph V(a), the stock
to be offered pursuant to the grant of an Award may be authorized but unissued
Common Stock or Common Stock previously issued and outstanding and reacquired by
the Company. Any of such shares which remain unissued and which are not subject
to outstanding Awards at the termination of the Plan shall cease to be subject
to the Plan but, until termination of the Plan, the Company shall at all times
make available a sufficient number of shares to meet the requirements of the
Plan.

                                 VI. ELIGIBILITY

     Awards may be granted only to persons who, at the time of grant, are
employees, Consultants, or Directors. An Award may be granted on more than one
occasion to the same person, and, subject to the limitations set forth in the
Plan, such Award may include an Incentive Stock Option, an Option that is not an
Incentive Stock Option, a Restricted Stock Award, a Performance Award, a Phantom
Stock Award, or any combination thereof.

                               VII. STOCK OPTIONS

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

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.

SPECIAL LIMITATIONS ON INCENTIVE STOCK OPTIONS. An Incentive Stock Option may be
granted only to an individual who is employed by the Company or any parent or
subsidiary corporation (as defined in section 424 of the Code) at the time the
Option is granted. To the extent that the aggregate Fair Market Value
(determined at the time the respective Incentive Stock Option is granted) of
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by an individual during any calendar year under all incentive
stock option plans of the Company and its parent and subsidiary corporations
exceeds $100,000, such Incentive Stock Options shall be treated as Options which
do not constitute Incentive Stock Options. The Committee shall determine, in
accordance with applicable provisions of the Code, Treasury Regulations and
other administrative pronouncements, which of a Participant's Incentive Stock
Options will not constitute Incentive Stock Options because of such limitation
and shall notify the Participant of such determination as soon as practicable
after such determination. No Incentive Stock Option shall be granted to an
individual if, at the time the Option is granted, such individual owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of its parent or subsidiary corporation, within the
meaning of section 422(b)(6) of the Code, unless (i) at the time such Option is
granted the option price is at least 110% of the Fair Market Value of the Common
Stock subject to the Option and (ii) such Option by its terms is not exercisable
after the expiration of five years from the date of grant. An Incentive Stock
Option shall not be transferable otherwise than by will or the laws of descent
and distribution, and shall be exercisable during the Participant's lifetime
only by such Participant or the Participant's guardian or legal representative.

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, including, without
limitation, provisions to qualify an Incentive Stock Option under section 422 of
the Code. Each Option Agreement shall specify the effect of termination of (i)
employment, (ii) the consulting or advisory relationship, or (iii) membership on
the Board, as applicable, on the exercisability of the Option. An Option
Agreement may provide for the payment of the option price, in whole or in part,
by the delivery of a number of shares of Common Stock (plus cash if necessary)
having a Fair Market Value equal to such option price. Moreover, an Option
Agreement may provide for a "cashless exercise" of the Option by establishing
procedures satisfactory to the Committee with respect thereto. Further, an
Option Agreement may provide for the surrender of the right to purchase shares
under the Option in return for a payment in cash or shares of Common Stock or a
combination of cash and shares of Common Stock equal in value to the excess of
the Fair Market Value of the shares with respect to which the right to purchase
is surrendered over the option price therefore ("Stock Appreciation Rights"), on
such terms and conditions as the Committee in its sole discretion may prescribe.
In the case of any such Stock Appreciation Right that is granted in connection
with an Incentive Stock Option, such right shall be exercisable only when the
Fair Market Value of the Common Stock exceeds the price specified therefore in
the Option or the portion thereof to be surrendered. The terms and conditions of
the respective Option Agreements need not be identical. Subject to the consent
of the Participant, the Committee may, in its sole discretion, amend an
outstanding Option Agreement from time to time in any manner that is not
inconsistent with the provisions of the Plan (including, without limitation, an
amendment that accelerates the time at which the Option, or a portion thereof,
may be

<PAGE>

exercisable)[; provided, however, that, except as provided in Paragraph XI, the
Committee may not, without approval of the stockholders of the Company, amend
any outstanding Option Agreement to lower the option price (or cancel and
replace any outstanding Option Agreement with Option Agreements having a lower
option price)].

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 but,
subject to adjustment as provided in Paragraph XI, such purchase price shall not
be less than the Fair Market Value of a share of Common Stock on the date such
Option is granted. The Option or portion thereof may be exercised by delivery of
an irrevocable notice of exercise to the Company, as 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. Separate stock certificates shall be issued
by the Company for those shares acquired pursuant to the exercise of an
Incentive Stock Option and for those shares acquired pursuant to the exercise of
any Option that does not constitute an Incentive Stock Option.

SHAREHOLDER RIGHTS AND PRIVILEGES. The Participant 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 Participant's name.

OPTIONS AND RIGHTS IN SUBSTITUTION FOR OPTIONS GRANTED BY OTHER EMPLOYERS.
Options and Stock Appreciation Rights may be granted under the Plan from time to
time in substitution for options held by individuals providing services to
corporations or other entities who become employees, Consultants, or Directors
as a result of a merger or consolidation or other business transaction with the
Company or any Affiliate.

                         VIII. RESTRICTED STOCK AWARDS

FORFEITURE RESTRICTIONS TO BE ESTABLISHED BY THE COMMITTEE. Shares of Common
Stock that are the subject of a Restricted Stock Award shall be subject to
restrictions on disposition by the Participant and an obligation of the
Participant to forfeit and surrender the shares to the Company under certain
circumstances (the "Forfeiture Restrictions"). The Forfeiture Restrictions shall
be determined by the Committee in its sole discretion, and the Committee may
provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of
one or more performance measures established by the Committee that are based on
(1) the price of a share of Common Stock, (2) the Company's earnings per share,
(3) the Company's market share, (4) the market share of a business unit of the
Company designated by the Committee, (5) the Company's sales, (6) the sales of a
business unit of the Company designated by the Committee, (7) the net income
(before or after taxes) of the Company or any business unit of the Company
designated by the Committee, (8) the cash flow return on investment of the
Company or any business unit of the Company designated by the Committee, (9) the
earnings before or after interest, taxes, depreciation, and/or amortization of
the Company or any business unit of the Company designated by the Committee,
(10) the economic value added, (11) the return on stockholders' equity achieved
by the Company, or (12) the total stockholders' return achieved by the Company,
(ii) the Participant's continued employment with the Company or continued
service as a Consultant or Director for a specified period of time, (iii) the
occurrence of any event or the satisfaction of any other condition specified by
the Committee in its sole discretion, or (iv) a combination of any of the
foregoing. The performance measures described in clause (i) of the preceding
sentence may be subject to adjustment for specified significant extraordinary
items or events, and may be absolute, relative to one or more other companies,
or relative to one or more indexes, and may be contingent upon future
performance of the Company or any Affiliate, division, or department thereof.
Each Restricted Stock Award may have different Forfeiture Restrictions, in the
discretion of the Committee.

Other Terms and Conditions. Common Stock awarded pursuant to a Restricted Stock
Award shall be represented by a stock certificate registered in the name of the
Participant. Unless provided otherwise in a Restricted Stock Agreement, the
Participant shall have the right to receive dividends with respect to Common
Stock subject to a Restricted Stock Award, to vote Common Stock subject thereto
and to enjoy all other stockholder rights, except that (i) the Participant shall
not be entitled to delivery of the stock certificate until the Forfeiture
Restrictions have expired, (ii) the Company shall retain custody of the stock
until the Forfeiture Restrictions have expired, (iii) the Participant may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stock
until the Forfeiture Restrictions have expired, and (iv) a breach of the terms
and conditions established by the Committee pursuant to the Restricted Stock
Agreement shall cause a forfeiture of the Restricted Stock Award. At the time of
such Award, the Committee may, in its sole discretion, prescribe additional
terms, conditions or restrictions relating to Restricted Stock Awards,
including, but not limited to, rules pertaining to the termination of employment
or service as a Consultant or Director (by retirement, disability, death or
otherwise) of a Participant prior to expiration of the Forfeitures Restrictions.
Such additional terms, conditions or restrictions shall be set forth in a
Restricted Stock Agreement made in conjunction with the Award.

<PAGE>

PAYMENT FOR RESTRICTED STOCK. The Committee shall determine the amount and form
of any payment for Common Stock received pursuant to a Restricted Stock Award,
provided that in the absence of such a determination, a Participant shall not be
required to make any payment for Common Stock received pursuant to a Restricted
Stock Award, except to the extent otherwise required by law.

COMMITTEE'S DISCRETION TO ACCELERATE VESTING OF RESTRICTED STOCK AWARDS. The
Committee may, in its discretion and as of a date determined by the Committee,
fully vest any or all Common Stock awarded to a Participant pursuant to a
Restricted Stock Award and, upon such vesting, all restrictions applicable to
such Restricted Stock Award shall terminate as of such date. Any action by the
Committee pursuant to this Subparagraph may vary among individual Participants
and may vary among the Restricted Stock Awards held by any individual
Participant. Notwithstanding the preceding provisions of this Subparagraph, the
Committee may not take any action described in this Subparagraph with respect to
a Restricted Stock Award that has been granted to a "covered employee" (within
the meaning of Treasury Regulation section 1.162-27(c)(2)) if such Award has
been designed to meet the exception for performance-based compensation under
section 162(m) of the Code.

RESTRICTED STOCK AGREEMENTS. At the time any Award is made under this Paragraph
VIII, the Company and the Participant shall enter into a Restricted Stock
Agreement setting forth each of the matters contemplated hereby and such other
matters as the Committee may determine to be appropriate. The terms and
provisions of the respective Restricted Stock Agreements need not be identical.
Subject to the consent of the Participant and the restriction set forth in the
last sentence of Subparagraph (d) above, the Committee may, in its sole
discretion, amend an outstanding Restricted Stock Agreement from time to time in
any manner that is not consistent with the provisions of the Plan.

                             IX. PERFORMANCE AWARDS

PERFORMANCE PERIOD. The Committee shall establish, with respect to and at the
time of each Performance Award, the number of shares of Common Stock subject to,
or the maximum value of, the Performance Award and the performance period over
which the performance applicable to the Performance Award shall be measured.

PERFORMANCE MEASURES. A Performance Award shall be awarded to a Participant
contingent upon future performance of the Company of any Affiliate, division, or
department thereof during the performance period. The Committee shall establish
the performance measures applicable to such performance either (i) prior to the
beginning of the performance period or (ii) within 90 days after the beginning
of the performance period if the outcome of the performance targets is
substantially uncertain at the time such targets are established, but not later
than the date that 25% of the performance period has elapsed; provided such
measures may be made subject to adjustment for specified significant
extraordinary items or events. The performance measures may be absolute,
relative to one or more other companies, or relative to one or more indexes. The
performance measures established by the Committee may be based upon (1) the
price of a share of Common Stock, (2) the Company's earnings per share, (3) the
Company's market share, (4) the market share of a business unit of the Company
designated by the Committee, (5) the Company's sales, (6) the sales of a
business unit of the Company designated by the Committee, (7) the net income
(before or after taxes) of the Company or any business unit of the Company
designated by the Committee, (8) the cash flow return on investment of the
Company or any business unit of the Company designated by the Committee, (9) the
earnings before or after interest, taxes, depreciation, and/or amortization of
the Company or any business unit of the Company designated by the Committee,
(10) the economic value added, (11) the return on stockholders' equity achieved
by the Company, (12) the total stockholders' return achieved by the Company, or
(13) a combination of any of the foregoing. The Committee, in its sole
discretion, may provide for an adjustable Performance Award value based upon the
level of achievement of performance measures.

AWARDS CRITERIA. In determining the value of Performance Awards, the Committee
shall take into account a Participant's responsibility level, performance,
potential, other Awards, and such other considerations as it deems appropriate.
The Committee, in its sole discretion, may provide for a reduction in the value
of a Participant's Performance Award during the performance period.

PAYMENT. Following the end of the performance period, the holder of a
Performance Award shall be entitled to receive payment of an amount not
exceeding the number of shares of Common Stock subject to, or the maximum value
of, the Performance Award, based on the achievement of the performance measures
for such performance period, as determined and certified in writing by the
Committee. Payment of a Performance Award may be made in cash, Common Stock, or
a combination thereof, as determined by the Committee. Payment shall be made in
a lump sum or in installments as prescribed by the Committee. If a Performance
Award covering shares of Common Stock

<PAGE>

is to be paid in cash, such payment shall be based on the Fair Market Value of
the Common Stock on the payment date.

TERMINATION OF AWARD. A Performance Award shall terminate if the Participant
does not remain continuously in the employ of the Company and its Affiliates or
does not continue to perform services as a Consultant or a Director for the
Company and its Affiliates at all times during the applicable performance
period, except as may be determined by the Committee.

PERFORMANCE AWARD AGREEMENTS. At the time any Award is made under this Paragraph
IX, the Company and the Participant shall enter into a Performance Award
Agreement setting forth each of the matters contemplated hereby, and such
additional matters as the Committee may determine to be appropriate. The terms
and provisions of the respective Performance Award Agreements need not be
identical.

                             X. PHANTOM STOCK AWARDS

PHANTOM STOCK AWARDS. Phantom Stock Awards are rights to receive shares of
Common Stock (or the Fair Market Value thereof), or rights to receive an amount
equal to any appreciation or increase in the Fair Market Value of Common Stock
over a specified period of time, which vest over a period of time as established
by the Committee, without satisfaction of any performance criteria or
objectives. The Committee may, in its discretion, require payment or other
conditions of the Participant respecting any Phantom Stock Award.

AWARD PERIOD. The Committee shall establish, with respect to and at the time of
each Phantom Stock Award, a period over which the Award shall vest with respect
to the Participant.

AWARDS CRITERIA. In determining the value of Phantom Stock Awards, the Committee
shall take into account a Participant's responsibility level, performance,
potential, other Awards, and such other considerations as it deems appropriate.

PAYMENT. Following the end of the vesting period for a Phantom Stock Award (or
at such other time as the applicable Phantom Stock Award Agreement may provide),
the holder of a Phantom Stock Award shall be entitled to receive payment of an
amount, not exceeding the maximum value of the Phantom Stock Award, based on the
then vested value of the Award. Payment of a Phantom Stock Award may be made in
cash, Common Stock, or a combination thereof as determined by the Committee.
Payment shall be made in a lump sum or in installments as prescribed by the
Committee. Any payment to be made in cash shall be based on the Fair Market
Value of the Common Stock on the payment date. Cash dividend equivalents may be
paid during or after the vesting period with respect to a Phantom Stock Award,
as determined by the Committee.

TERMINATION OF AWARD. A Phantom Stock Award shall terminate if the Participant
does not remain continuously in the employ of the Company and its Affiliates or
does not continue to perform services as a Consultant or a Director of the
Company and its Affiliates at all times during the applicable vesting period,
except as may be otherwise determined by the Committee.

PHANTOM STOCK AWARD AGREEMENTS. At the time any Award is made under this
Paragraph X, the Company and the Participant shall enter into a Phantom Stock
Award Agreement setting forth each of the matters contemplated hereby, and such
additional matters as the Committee may determine to be appropriate. The terms
and provisions of the respective Phantom Stock Award Agreements need not be
identical.

                     XI. RECAPITALIZATION OR REORGANIZATION

NO EFFECT ON RIGHT OR POWER. The existence of the Plan and the Awards 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 or any
Affiliate's capital structure or its business, any merger or consolidation of
the Company or any Affiliate, 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 Affiliate 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.

SUBDIVISION OR CONSOLIDATION OF SHARES; STOCK DIVIDENDS. The shares with respect
to which Awards may be granted are shares of Common Stock as presently
constituted, but if, and whenever, prior to the expiration of an Award
theretofore granted, the Company shall effect a subdivision or consolidation of
shares of Common Stock or

<PAGE>

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
Award may thereafter be exercised or satisfied, as applicable (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.

RECAPITALIZATIONS AND CORPORATE CHANGES. 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 Award theretofore granted shall be adjusted so that such Award shall
thereafter cover the number and class of shares of stock and securities to which
the Participant would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to the recapitalization, the Participant
had been the holder of record of the number of shares of Common Stock then
covered by such Award. If (i) the Company shall not be the surviving entity in
any merger or consolidation (or survives only as a subsidiary of an entity),
(ii) 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, (iii) the
Company is to be dissolved and liquidated, (iv) any person or entity, including
a "group" as contemplated by Section 13(d)(3) of the 1934 Act, 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 (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 (each such event is referred
to herein as a "Corporate Change"), no later than (x) 10 days after the approval
by the stockholders of the Company of such merger, consolidation,
reorganization, sale, lease or exchange of assets or dissolution of such
election of Directors or (y) 30 days after a Corporate Change of the type
described in clause (iv), the Committee, acting in its sole discretion without
the consent or approval of any Participant, shall effect one or more of the
following alternatives, which alternatives may vary among individual
Participants and which may vary among Options held by any individual
Participant: (1) 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 Participants thereunder shall terminate, (2) require the mandatory
surrender to the Company by selected Participants of some or all of the
outstanding Options held by such Participants (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 the Company shall
pay (or cause to be paid) to each Participant an amount of cash per share equal
to the excess, if any, of the amount calculated in Subparagraph (d) below (the
"Change of Control Value") of the shares subject to such Option over the
exercise price(s) under such Options for such shares, or (3) 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), including, without limitation, adjusting an Option to provide that
the number and class of shares of Common Stock covered by such Option shall be
adjusted so that such Option shall thereafter cover securities of the surviving
or acquiring corporation or other property (including, without limitation, cash)
as determined by the Committee in its sole discretion.

CHANGE OF CONTROL VALUE. For the purposes of clause (2) in Subparagraph (c)
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 this Subparagraph (d) or Subparagraph (c) 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.

OTHER CHANGES IN COMMON STOCK. In the event of changes in the outstanding Common
Stock by reason of recapitalizations, reorganizations, mergers, consolidations,
combinations, split-ups, split-offs, spin-offs, exchanges or other relevant
changes in capitalization or distributions to the holders of Common Stock
occurring after the date of the grant of any Award and not otherwise provided
for by this Paragraph XI, such Award and any agreement evidencing such Award
shall be subject to adjustment by the Committee at its sole discretion as to the
number and price of shares of Common Stock or other consideration subject to
such Award. In the event of any such change in the outstanding Common Stock or
distribution to the holders of Common Stock, the aggregate number of shares
available under the Plan and the maximum number of shares that may be subject to
Awards granted to any one

<PAGE>

individual may be appropriately adjusted by the Committee, whose determination
shall be conclusive. Notwithstanding the foregoing, except as otherwise provided
by the Committee, upon the occurrence of a Corporate Change, the Committee,
acting in its sole discretion without the consent or approval of any
Participant, may require the mandatory surrender to the Company by selected
Participants of some or all of the outstanding Performance Awards and Phantom
Stock Awards as of a date, before or after such Corporate Change, specified by
the Committee, in which event the Committee shall thereupon cancel such
Performance Awards and Phantom Stock Awards and the Company shall pay (or cause
to be paid) to each Participant an amount of cash equal to the maximum value of
such Performance Award or Phantom Stock Award which, in the event the applicable
performance or vesting period set forth in such Performance Award or Phantom
Stock Award has not been completed, shall be multiplied by a fraction, the
numerator of which is the number of days during the period beginning on the
first day of the applicable performance or vesting period and ending on the date
of the surrender, and the denominator of which is the aggregate number of days
in the applicable performance or vesting period.

STOCKHOLDER ACTION. Any adjustment provided for in the above Subparagraphs shall
be subject to any required stockholder action.

NO ADJUSTMENTS UNLESS OTHERWISE PROVIDED. 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 Awards
theretofore granted or the purchase price per share, if applicable.

                   XII. 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 Awards 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 no change in the Plan may be made that
would impair the rights of a Participant with respect to an Award theretofore
granted without the consent of the Participant, and provided, further, that the
Board may not, without approval of the stockholders of the Company, [(a)] amend
the Plan to increase the maximum aggregate number of shares that may be issued
under the Plan or change the class of individuals eligible to receive Awards
under the Plan[, or (b) amend or delete the final sentence of Paragraph VII(d)].

                               XIII. MISCELLANEOUS

NO RIGHT TO AN AWARD. Neither the adoption of the Plan nor any action of the
Board or of the Committee shall be deemed to give any individual any right to be
granted an Option, a right to a Restricted Stock Award, a right to a Performance
Award or a right to a Phantom Stock Award, or any other rights hereunder except
as may be evidenced by an Award 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 performance of its obligations under any Award.

NO EMPLOYMENT/MEMBERSHIP RIGHTS CONFERRED. Nothing contained in the Plan shall
(i) confer upon any employee or Consultant any right with respect to
continuation of employment or of a consulting or advisory relationship with the
Company or any Affiliate or (ii) interfere in any way with the right of the
Company or any Affiliate to terminate his or her employment or consulting or
advisory relationship at any time. Nothing contained in the Plan shall confer
upon any Director any right with respect to continuation of membership on the
Board.

OTHER LAWS; WITHHOLDING. The Company shall not be obligated to issue any Common
Stock pursuant to any Award granted under the Plan at any time when the shares
covered by such Award have not been registered under the Securities Act of 1933,
as amended, and such other state and federal laws, rules and 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 and regulations available for the issuance and sale of such
shares. No fractional shares of Common Stock shall be delivered, nor shall any
cash in lieu of fractional shares be paid. The Company shall have the right to
deduct in connection with all Awards any taxes required by law to be withheld
and to require any payments required to enable it to satisfy its withholding
obligations.

<PAGE>

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

RESTRICTIONS ON TRANSFER. An Award (other than an Incentive Stock Option, which
shall be subject to the transfer restrictions set forth in Paragraph VII(c))
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.

GOVERNING LAW. THE PLAN SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.

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