SUBJECT:        Division Management Incentive Compensation Plan
                                                                        



      The following Plan is to  be in effect for  the calendar year 1997.   It
will be reviewed at the close of that year and will be continued, modified, or
cancelled  with respect  to succeeding years  solely at the  discretion of the
Stock Option and Compensation  Committee of the PORTEC,  Inc. Board of  Direc-
tors.

 1.   PARTICIPATION

      a.    The President  & General Manager  and key management  employees of
            each division,  employed as of January  1 of the year,  will, upon
            recommendation by  the President & General Manager  and subject to
            approval  of the  President &  Chief Executive Officer  of PORTEC,
            Inc., participate in the plan for such division.  Persons promoted
            or employed subsequent to January 1 to fill an eligible management
            position  vacancy  may be  included  in  the division's  incentive
            compensation program on  a pro  rata basis, upon  the President  &
            Chief Executive  Officer's approval.   The incentive  compensation
            payable to such an employee shall be based on the number of calen-
            dar months during  the year  the person has  held that  management
            position.    However, the  inclusion of  such  an employee  in the
            program shall not result in a  reduction of the Total Target Bonus
            Fund, defined below, for the other participants.

      b.    "Individual Target  Bonus Levels" for each  eligible position will
            be  established as a percentage  of actual salary  paid during the
            calendar year, or portion of the years determined by date of entry
            into  the  program, in  accordance  with  the corporate  standards
            relating to the position of the participant  (Exhibit A attached).
            Exceptions to these standards require approval of the President  &
            Chief Executive Officer.   "Individual Maximum Bonus Levels" shall
            equal double the Individual Target Bonus Levels.

 2.   DIVISION TARGET BONUS FUND

      a.    A "Total Target Bonus  Fund" will be calculated for each division
            by  means of  bonus  formulas such  that  if certain  targets  for
            Pre-Tax Profit and Working Capital to Sales  Objectives are satis-
            factorily attained, an amount  equal to the sum of  the Individual
            Target Bonus Levels for  eligible management people in that  divi-
            sion will accrue.

      b.    The  minimum point  below which  no bonus  fund will  be developed
            relating to the Pre-Tax Profit and Working Capital to Sales Objec-
            tives is called the "threshold" which will generally be established
            at 70  percent of the target  performance.  Below this level,  no
            bonus will be paid.



DIVISION TARGET BONUS FUND (CONTINUED)
--------------------------------------

      c.    The  "Total Maximum Bonus Fund" shall equal twice the Total Target
            Bonus Fund and will  generally be established in the range  of 130
            percent to 150 percent of the target performance.

      d.    The bonus fund  (meaning the  total actual bonuses  paid) will  be
            limited  to  8 percent  of  Pre-Tax Profits,  regardless  of other
            calculations. 


 3.   GENERAL PERFORMANCE OBJECTIVES

      a.    Shortly  after the beginning of  each year, the  President & Chief
            Executive Officer will consider  the approved profit plan, current
            backlog, and invested capital of each division  together with such
            other  factors as he deems  appropriate to set  Pre-Tax Profit and
            Working Capital  to Sales Objectives for each  Division subject to
            approval of  the Board of Directors' Stock Option and Compensation
            Committee.   These  targets  will normally  be  determined at  the
            performance level set by the approved business plan for that year.
            However,  the President & Chief Executive  Officer may set targets
            which  are different  than  profit plan  performance depending  on
            specific circumstances.

      b.    The percentage of such  Total Target Bonus Fund for  each division
            related to Pre-Tax Profit and Working Capital to Sales Objectives,
            and  the objectives  established for  Pre-Tax Profits  and Working
            Capital to Sales are shown in Exhibit B.

 4.   INDIVIDUAL ALLOCATION AND ADJUSTMENT

      a.    Customary practice will be to distribute available bonus funds pro
            rata  over the  Target  Bonus levels  of  participants.   However,
            unless  a participant  is  actively at  work  for the  Company  on
            December  31,  or retires  (within  the meaning  of  the Company's
            plan),  becomes disabled,  or dies  during the operating  year, no
            incentive compensation shall be  payable to him.  If  any partici-
            pant  shall retire, become disabled,  or die during  the year, the
            incentive compensation for such year payable to him, his estate or
            designee, shall be based on  the number of months during  the year
            he  was in the active employ of  the Company.  Incentive compensa-
            tion that would  have been  payable to participants  had they  re-
            mained in the employ of the Company during the full calendar year,
            but  not payable to them under the foregoing provisions, shall not
            be  used  to  increase the  incentive  compensation  of  the other
            participants.



INDIVIDUAL ALLOCATION AND ADJUSTMENT (CONTINUED)
------------------------------------------------

      b.    Notwithstanding, the preceding paragraph, the President &  General
            Manager  can adjust the bonus level of any participant, other than
            himself by a factor of 75 percent to 125 percent to reflect low or
            high  personal  performance  during the  year.    The President  &
            General Manager's bonus level  may be adjusted in the  same manner
            as recommended  and approved  by the President  & Chief  Executive
            Officer.

            However, such adjustments cannot increase the Total  Bonus Fund as
            determined  in Paragraph  2 or  exceed a  participant's Individual
            Maximum  Bonus Level.  Available bonus funds will then be distrib-
            uted  pro rata over the  bonus levels which  exclude these adjust-
            ments.

      c.    The adjustment recommendations of each President & General Manager
            will be submitted to and will be subject to the  final approval of
            the President & Chief Executive Officer of PORTEC, Inc.  Recommen-
            dations as to  the incentive  compensation to be  paid to  General
            Managers will be made by the President & Chief Executive Officer.

 5.   PAYMENT

      a.    Payment  of incentive compensation for  the year will  not be made
            until  after the completion of  the year-end Company  audit by the 
            outside Public Accountants.  Payment should  generally be made not
            later than February 28 of the next succeeding year.  However, the
            President & Chief  Executive Officer may elect  to pay 80%  of the
            estimated  bonus amounts prior to  December 31, with the remainder
            of  the  bonus amounts  paid after  the year-end  audit.   For the
            purpose of pension plan computations and for making deductions for
            withholding  and social  security  taxes,  incentive  compensation
            payments  will be  taken  into account  in  the year  of  payment.
            Incentive compensation payments will not influence levels of group
            insurance coverage.

      b.    Total bonus amounts  payable for each individual shall  be rounded
            to the nearest dollar.

 6.   ACCOUNTING PROCEDURES

      a.    PRE-TAX  PROFIT:  This portion of  the bonus will be determined by
            the relationship of actual Pre-Tax  Profit relative to the Pre-Tax
            Profit target.  In the determination  of Pre-Tax Profits, standard
            accounting practices (as shown below and covered in the Accounting
            Procedures  Manual of PORTEC, Inc.) currently in effect at PORTEC,
            Inc.  will be  continued, including  practices as  to depreciation
            charges, allocation of general office expense, methods of invento-
            ry  valuation, retirement fund provisions, divisional charges, and
            other operating procedures.  Gains or losses  on the disposition of
            fixed assets will be excluded except for  those realized in the
            ordinary course of business.  Incentive compensation will be in-
            cluded in the calculation of both target and actual Pre-Tax Profit.

      b.    WORKING CAPITAL TO SALES  (WC/S):  This portion of  the bonus will
            be determined by the  relationship of the actual WC/S  ratio rela-
            tive to the  Plan ratio for  that year.   The WC/S ratio for  this
            purpose is defined as:

                                          Average (A/R + Inventory - A/P)
                                          -------------------------------
            Working Capital to Sales  =
                                                      Gross Sales

            Where:   A/R = Net Accounts Receivable Trade balance at month-end.

                     INVENTORY = Net Inventory balance at month-end.

                     A/P = Net Accounts Payable Trade & Unvouchered balance at
                          month-end.

                     GROSS SALES = Gross sales for the year.

            In the determination of these items, standard accounting practices
            as shown in  the current Accounting  Procedures Manual of  Portec,
            Inc. will  be continued.   Twelve month-end balances  for (January
            through December) A/R, A/P, and Inventory will be averaged for the
            numerator of the ratio.

 7.   ADJUSTMENTS TO THE PLAN

      a.    Changes  of major  significance not  contemplated at the  time the
            Pre-Tax Profit Objectives  are determined for a  division, such as
            but not limited to, acquisitions of  products or businesses, major
            expenditures for  plant or  equipment expansion  or modernization,
            and disposition of assets or a product line may require a revision 
            in  the Pre-Tax Profit Objectives  for a particular  division.  In
            such cases, the President & Chief Executive Officer can adjust the
            Pre-Tax Profit Objectives, subject to the approval of the Board of
            Directors' Stock  Option and  Compensation Committee, in  order to
            establish  a  revised  basis  for  the  computation  of  incentive
            compensation.

      b.    In  unusual circumstances, it may  not be possible  to construct a
            bonus formula meeting all of  these criteria to provide reasonable
            incentives for division management.  In  this event, the President
            &  Chief Executive  Officer  can seek  approval of  an alternative
            bonus  formula from the Stock Option and Compensation Committee of
            the Board of Directors.

                                   EXHIBIT A

                             TARGET BONUS SCHEDULE




                                                 TARGET BONUS
                       POSITION                 AS % OF SALARY
                  ------------------            --------------

                  GENERAL MANAGER                     25%


                  DIRECT REPORTS TO G.M. OF:

                  MANUFACTURING,
                  ACCOUNTING, 
                  SALES, AND
                  ENGINEERING(1)                      20%


                  ALL OTHER PARTICIPANTS              15%









NOTES:

(1)  ALSO INCLUDES PLANT MANAGERS OF MAJOR REMOTELY LOCATED MANUFACTURING
     FACILITIES.







                                   EXHIBIT A

                             TARGET BONUS SCHEDULE   
                            MATERIALS HANDLING GROUP


                                                 TARGET BONUS
                       POSITION                 AS % OF SALARY
                  ------------------            --------------

                  VICE PRESIDENT & 
                  GENERAL MANAGER                     30%


                  DIRECT REPORTS TO G.M. OF:

                  MANUFACTURING,
                  ACCOUNTING, 
                  SALES, AND
                  ENGINEERING(1)                      20%


                  ALL OTHER PARTICIPANTS              15%





NOTES:

(1)  ALSO INCLUDES PLANT MANAGERS OF MAJOR REMOTELY LOCATED MANUFACTURING
     FACILITIES.






                                   EXHIBIT B

                       1997 BONUS PERFORMANCE OBJECTIVES



DIVISION:                                

          CATEGORY             WEIGHT       THRESHOLD       TARGET       MAXIMUM


          PRE-TAX PROFITS                   $               $            $ 
                                            

          WORKING CAPITAL                  
          TO SALES                          
                                   
                                    

          TOTAL                100%  




                            DISTRIBUTED ONLY TO THE

                              APPLICABLE DIVISION