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EXHIBIT 10.3

P & F INDUSTRIES, INC.

1992 INCENTIVE STOCK OPTION PLAN

(Amended and Restated as of March 13, 1997)

1.Purpose.

        The purpose of the P&F Industries, Inc. 1992 Incentive Stock Option Plan
(the "Plan) is to induce directors, key executives and other key employees to
remain in the service of P&F Industries, Inc. (the "Company"), to attract new
directors and employees and to encourage such directors and employees to acquire
stock ownership in the Company. The Board of Directors of the Company (the
"Board") believes that the granting of stock options ("Options") under the Plan
will promote continuity of the Board and management and increased incentive and
personal interest in the welfare of the Company by those who are or may become
primarily responsible for shaping and carrying out the long range plans of the
Company and securing its continued growth and financial success. It is intended
that certain Options granted hereunder will qualify as "incentive stock options"
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
("Incentive Stock Options") while other Options will not be so qualified
("Nonqualified Stock Options").

2.Effective Date of the Plan.

        The effective date of the Plan, as amended and restated, is March 13,
1997, the date on which the Plan was amended and restated by the Board, but the
Plan is subject to approval by the holders of a majority of the outstanding
shares of common stock of the Company participating in the vote. If by no later
than March 12, 1998 the Plan is not so approved, then the Plan shall continue as
it existed prior to the amendment and restatement and all Options granted
hereunder shall be pursuant to the terms of the Plan as it existed prior to the
amendment and restatement.

3.Stock Subject to Plan.

        Subject to adjustment as provided in Section 12 hereof, the number of
shares of the common stock, $1.00 par value, of the Company (the "Common Stock")
available for delivery upon the exercise of Options under the Plan shall not
exceed 1,100,000 shares of Common Stock, which are hereby reserved for issuance
upon exercise of Options. The shares of Common Stock to be delivered upon
exercise of Options may be authorized and unissued shares or treasury shares. If
any Options expire or terminate for any reason without having been exercised in
full, the unissued shares subject thereto shall again become available for the
purposes of the Plan.

4.Administration.

        (a)   The Plan shall be administered by a stock option committee (the
"Committee") consisting of not less than two members of the Board, each of whom,
at the time action is taken with respect to the Plan, shall be a "non-employee
director" within the meaning of Rule 16b-3 of the Securities Exchange Act of
1934, as amended, and an "outside director" within the meaning of Section 162(m)
of the Code. The members of the Committee shall be appointed by the Board and
shall serve at the pleasure of the Board.

        (b)   The Committee shall have the authority in its discretion (i) to
construe and interpret the Plan and all Options granted thereunder, and to
determine the terms and provisions (and amendments thereof) of the Options
granted under the Plan (which need not be identical), including such terms and
provisions of (and amendments) as shall be required in the judgment of the
Committee to provide that Options intended to be Incentive Stock Options under
the Plan will be so qualified under the Code as

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it now exists or may from time to time be amended and/or superseded or to
conform to any change in any law or regulations applicable thereto; (ii) to
define the terms used in the Plan and in the Options granted thereunder;
(iii) to prescribe, amend and rescind rules and regulations relating to the
Plan; (iv) to determine the individuals to whom and the time or times at which
Options shall be granted, the number of shares to be subject to each Option, the
vesting schedule, the term of each Option, and the option price, taking into
consideration any requirements of the Code applicable to Incentive Stock
Options; and (v) to make all other determinations necessary or advisable for the
administration of the Plan. All determinations and interpretations made by the
Committee shall be final, binding and conclusive on all participants in the Plan
and on their legal representatives and beneficiaries.

        (c)   Any action of the Committee with respect to the Plan shall be
taken by majority vote at a meeting of the Committee or by written consent of a
majority of the members of the Committee without a meeting.

5.Selection of Grantees.

        (a)   Options may be granted only to employees (which term as used
herein includes officers) who hold positions of responsibility, are able to
contribute significantly to the Company's success and progress and are
determined to be key employees ("Employees"), and to directors of the Company
who are not also Employees ("Eligible Persons"); provided, however, that
Incentive Stock Options may only be granted to Employees. In determining the
Eligible Persons to whom Options shall be granted and the number of shares to be
covered by any such Options, the Committee may take into account the nature of
the services rendered by the proposed optionees, their present and potential
contributions to the success of the Company and such other factors as the
Committee in its discretion shall deem relevant; provided, however, that no
Eligible Person may receive Options with respect to more than 250,000 shares of
Common Stock in any single calendar year.

        (b)   Incentive Stock Options may be granted hereunder to an Employee
who owns immediately after such option is granted ten (10%) percent or more of
either the outstanding voting shares of the Company or the value of all classes
of stock of the Company ("10% Shareholder") as defined in Sections 422 and 424
of the Code, only in accordance with the provisions of Sections 6(a) and 7
hereof. For purposes of this Plan, an Employee will be considered as owning the
stock in accordance with Section 424 of the Code.

6.Option Price.

        (a)   The purchase price of the shares covered by each Option shall be
determined by the Committee, but, with respect to Incentive Stock Options, shall
not be less than 100% of the fair market value of such shares at the time of
granting the Option. The purchase price of the shares under Incentive Stock
Options granted pursuant to the Plan to a 10% Shareholder shall not be less than
110% of the fair market value of such shares at the time the Option is granted.

        (b)   The purchase price of the shares as to which an Option shall be
exercised shall be paid in full in cash, or shares of Common Stock held by an
Option holder for at least six months at the time of exercise, or by such other
means as shall be determined by the Committee.

7.Term of Options.

        An Option may provide for exercise in full at any time or from time to
time during the term of the Option, or in installments at such times as the
Committee may determine. The term of each Option shall be not more than 10 years
form the date of grant. Notwithstanding the above, any Incentive Stock Option
granted pursuant to the Plan to a 10% Shareholder shall not be exercisable after
the expiration of 5 years from the date the Incentive Stock Option is first
granted.

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8.$100,000 Limitation on Exercise of Incentive Stock Options.

        To the extent the aggregate fair market value per share (determined as
of the time the Option is granted) with respect to which any Options granted
hereunder which are intended to be Incentive Stock Options may be exercisable
for the first time by the Option holder in any calendar year (under this Plan or
any other stock option plan of the Company or any parent or subsidiary thereof)
exceeds $100,000, the excess of such Options shall not be considered Incentive
Stock Options but rather shall be Nonqualified Stock Options.

9.Non-Transferability of Options.

        No Option granted under the Plan shall be transferable or assignable
otherwise than by will or the laws of descent and distribution and an Option may
be exercised, during the lifetime of the holder thereof, only by him.

10.Termination of Employment.

        Unless otherwise determined by the Committee, if a holder of an Option
ceases to be either an employee or a director of the Company for any reason
other than death or disability, his Option shall terminate three months after
the date he ceases to be an employee or director, unless by its terms it expires
sooner. Unless otherwise determined by the Committee, during the three month
period after an Option holder ceases to be either an employee or a director, all
vesting with respect to his Options shall cease and his Options may be exercised
only as to shares which he could have purchased at the time of such cessation
and no more.

11.Death or Disability of Option Holder.

        Unless otherwise determined by the Committee, if a holder of an Option
shall die or become disabled (as acknowledged by the Committee) while he is an
employee or a director of the Company, his Option shall terminate one year from
the date of his death or disability, unless by its terms it expires sooner.
Unless otherwise determined by the Committee, during the period after his death
or disability, all vesting with respect to his Options shall cease and his
Options may be exercised only as to shares which he could have purchased at the
time of his death or disability and no more.

12.Adjustments.

        In the event of (a) a combination or subdivision of shares purchasable
under any Option, (b) other recapitalization affecting such shares, or (c) an
exchange of such shares for other securities in any plan of disposition,
acquisition or merger, a holder of an Option shall be entitled to purchase the
securities exchangeable for the securities theretofore purchasable under his
Option with the purchase price per share or other unit of securities
proportionately adjusted. In the event of any other material change in the
capital structure of the Company, the Board may make an equitable and
proportionate adjustment of the terms of any Option, and its decision thereon
shall be final, binding and conclusive.

13.Amendment of Plan.

        The Board may at any time make such amendments to the Plan as it shall
deem advisable; provided, however, that the Board may not without further
approval of the holders of a majority of the shares of the Common Stock present
in person or by proxy at any special or annual meeting of stockholders, increase
the number of shares as to which Options may be granted under the Plan (as
adjusted in accordance with the provisions of Section 12 hereof), increase the
maximum number of shares with respect to which Options may be granted in any
single calendar year to any Eligible Person, or change the class of persons
eligible to receive Incentive Stock Options under the Plan. Except as otherwise
provided in Section 14 hereof, no termination or amendment of the Plan may,
without the consent of the participant to whom any Option shall theretofore have
been granted, adversely affect the rights of such participant under such Option.

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14.Expiration and Termination of the Plan.

        The Board may at any time terminate the Plan; provided, however, any
Option outstanding under the Plan at the time of termination of the Plan shall
remain in effect until such Option shall have been exercised or shall have
expired in accordance with its terms. Options may be granted under the Plan at
any time and from time to time prior to its termination. Unless previously
terminated, the Plan shall terminate on April 8, 2002.

15.Privileges of Stock Ownership.

        No person entitled to exercise any Option granted under the Plan shall
have any of the rights or privileges of a stockholder of the Company in respect
of any shares issuable upon exercise of such Option until such Option shall have
been validly exercised.

16.Registration Requirements.

        All Options shall include such provisions as are necessary or advisable
in the opinion of counsel for the Company to comply with the requirements of the
Securities Act of 1933, as amended. No shares shall be issued and delivered upon
exercise of any Option unless and until, in the opinion of counsel for the
Company, any applicable requirements of the Securities Act of 1933, any national
securities exchange on which stock of the Company is then listed, or other laws
or rules have been fully complied with.

17.Indemnification of Committee.

        In addition to such other rights of indemnification as they may have as
members of the Board or as members of the Committee, the Company shall indemnify
each member of the Committee against all costs and expenses reasonably incurred
by such member in connection with any action, suit or proceeding to which such
member may be party by reason of any action taken or failure to act under or in
connection with the Plan or any award made under the Plan, and against all
amounts paid by such member in satisfaction of a judgment in any action, except
a judgment based upon a finding of bad faith.

As adopted by the Board of Directors
of P&F Industries, Inc. on April 9, 1992
and amended and restated as of March 13, 1997

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EXHIBIT 10.3

P & F INDUSTRIES, INC. 1992 INCENTIVE STOCK OPTION PLAN (Amended and Restated as
of March 13, 1997)