PORTEC RAIL PRODUCTS, INC.
                             2006 STOCK OPTION PLAN
                                     FORM OF
                             STOCK OPTION AGREEMENT

     A. STOCK OPTIONS  ("Options")  for a total of  __________  shares of Common
Stock, par value $1.00 per share, of Portec Rail Products,  Inc. (the "Company")
are hereby granted to _______________ (the  "Participant").  The grant and terms
of the Options  shall be subject in all  respects  to the Portec Rail  Products,
Inc.  2006  Stock  Option  Plan (the  "Plan").  The terms of this  Stock  Option
Agreement are subject to the terms and conditions of the Plan.

     B. The Option  exercise  price of the Common Stock is $_________ per share,
the  Fair  Market  Value  (as  defined  in the  Plan)  of the  Common  Stock  on
____________ __, 200__, the date of grant.

     C. The Options  granted  hereunder shall vest in ________ (__) equal annual
installments,  with the  first  installment  becoming  exercisable  on the first
anniversary  of the date of grant,  or  __________  __,  200__,  and  succeeding
installments on each anniversary  thereafter through  ____________ __, 20__. The
Options  granted  hereunder  may be exercised  for up to ten (10) years from the
date of grant, subject to sub-paragraph E below.

     D. All Options granted to the  Participant  shall be deemed to be Incentive
Stock  Options to the  extent  permitted  under the  Internal  Revenue  Code and
regulations.

     E. If the  Participant  terminates  Continuous  Service  (as defined in the
Plan) with the Company or an  Affiliate  (as defined in the Plan) for any reason
other than Disability (as defined in the Plan), death, Termination for Cause (as
defined in the Plan) or termination following a Change in Control (as defined in
the Plan),  other than for Cause following a Change in Control,  Options will be
exercisable  only as to those  Options  which  have  vested  at the time of such
termination  and will be  exercisable  for a period  of up to three  (3)  months
following such termination.  If the Participant  terminates  Continuous  Service
with the Company or an Affiliate due to death, Disability, or following a Change
in Control, Options granted hereunder,  whether or not vested at such time, will
vest and become exercisable by the Participant (or his/her legal  representative
or  beneficiary)  for one (1) year  following  the date of such  termination  of
Continuous  Service;  provided,   however,  except  in  the  case  of  death  or
Disability,  such Options shall not be eligible for treatment as Incentive Stock
Options  in the event  such  Options  are  exercised  more than three (3) months
following  termination.  In order to obtain Incentive Stock Option treatment for
an Option  exercised by the heirs or devisees of the  Participant,  the death of
the  Participant  must have occurred while the  Participant  was employed by the
Company  or an  Affiliate,  or  within  three (3)  months  of the  Participant's
termination  of  Continuous  Service.  In no event will the  period of  exercise
extend beyond the expiration of the Option term. In the event of Termination for
Cause, all rights under the Options will expire upon termination.

     F.  Options may not be  exercised if the issuance of shares of Common Stock
of the Company upon such exercise would constitute a violation of any applicable
federal or state securities or other law or regulation.  The  Participant,  as a
condition  to exercise of the Options,  shall  represent to the Company that the
shares of Common  Stock of the  Company  that he/she  acquires  pursuant to such
exercise are being  acquired by such  Participant  for investment and not with a
present view to distribution  or resale,  unless counsel for the Company is then
of the opinion that such a  representation  is not required under the Securities
Act of 1933 or any other applicable law, regulation, or rule of any governmental
agency.

<PAGE>

     G. All Options  granted to the  Participant as Incentive  Stock Options may
not be transferred in any manner otherwise than by will or the laws of intestate
succession,  and may be exercised during the lifetime of the Participant only by
such Participant.

     H. A copy of the Plan has been provided to the Participant. The Participant
is not required to exercise the Options as to any particular number of shares at
one  time,  but the  Options  must  be  exercised,  if at all and to the  extent
exercised, by no later than ten years from the date of grant. The Options may be
exercised during such term only in accordance with the terms of the Plan. In the
event of any inconsistency between this Agreement and the Plan, the terms of the
Plan will control.

     I. All exercises of the Options must be made by executing and returning the
Notice of  Exercise  of Stock  Options  attached  hereto as  Exhibit A, and upon
receipt of any shares of Common  Stock upon the  exercise  of any  Options,  the
recipient shall complete and return to the Company the Acknowledgment of Receipt
of Stock Option Shares attached hereto as Exhibit B.

     J.  This  Agreement  shall  not be  deemed  to  constitute  a  contract  of
employment  between the parties hereto,  nor shall any provision hereof restrict
the right of the Company to discharge the  Participant  or restrict the right of
the Participant to terminate his employment.

     K.  The  Participant  acknowledges  receipt  of a copy of the  Portec  Rail
Products,  Inc. 2006 Stock Option Plan and  represents  that he is familiar with
the terms and provisions  thereof.  The  Participant  hereby accepts the Options
subject to all the terms and  provisions of such Plan.  The  Participant  hereby
agrees  to  accept  as  binding,   conclusive,   and  final  all  decisions  and
interpretations  of the Committee  established to administer  such Plan upon any
questions arising under such Plan.


Date: __________ __, 200__



ATTEST:                                PORTEC RAIL PRODUCTS, INC.


___________________________            _________________________________

WITNESS:                               PARTICIPANT


___________________________            _________________________________

      This Stock Option Agreement must be executed in duplicate originals,
           with one original retained by the Company and one original
                           retained by the Participant





                                       2