Letter Of Transmittal - BKF CAPITAL GROUP INC - 12-11-2002

					EXHIBIT (A)(2) BKF CAPITAL GROUP, INC. LETTER OF TRANSMITTAL PARTICIPATION INSTRUCTIONS: COMPLETE THIS FORM, INCLUDING EXHIBIT A ATTACHED HERETO, SIGN IT, AND SEND IT, ALONG WITH AN EXECUTED DEFERRED STOCK AWARD AGREEMENT, TO NORRIS NISSIM IN PERSON OR BY MAIL TO BKF CAPITAL GROUP, INC., ATTN: NORRIS NISSIM, ONE ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020, THIS FORM MUST ARRIVE BEFORE 11:59 P.M., EASTERN STANDARD TIME, ON JANUARY 10, 2003. IF YOU ELECT TO DELIVER YOUR SIGNED LETTER OF TRANSMITTAL BY MAIL, THE COMPANY RECOMMENDS THAT YOU USE REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. FOR ANY METHOD USED, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY. Name of Participant: Social Security Number: I am a participant in the BKF Capital Group, Inc. 1998 Incentive Compensation Plan (the "Plan") and currently employed by BKF Capital Group, Inc. (the "Company"), or one of its subsidiaries. I have received and read the Offer to Exchange from BKF Capital Group, Inc., and I am eligible to participate in the offer described therein. I understand that I may elect to exchange the eligible options (as defined in the Offer to Exchange) that were granted to me under the Plan. I also understand that if I exchange any of my eligible options, I must exchange all eligible options granted to me under the Plan. In return, for the eligible options that I elect to exchange and that the Company accepts for exchange, the Company will grant me shares of deferred stock, also referred to as restricted stock units, each of which, as described further in the Offer to Exchange, represents the right to receive one share of the Company's common stock, PROVIDED THAT I AM STILL EMPLOYED BY THE COMPANY OR ONE OF ITS SUBSIDIARIES ON THE OFFER'S EXPIRATION DATE. The number of restricted stock units that I receive will be determined by dividing the number of eligible options that I tendered by 3.0 and rounding the result to the nearest whole share. The restricted stock units shall vest and be delivered as set forth in the Offer to Exchange and are subject to forfeiture. I recognize that, under certain circumstances stated in the Offer to Exchange, the Company may terminate or amend the offer and postpone its acceptance and cancellation of any options elected for exchange. In any such event, I understand that the options elected for exchange pursuant to this Letter of Transmittal but not accepted for exchange will be returned to me. I have reviewed the list of all of my eligible options that the Company has attached as Exhibit A to this Letter of Transmittal. I hereby give up my entire ownership interest in all of my eligible options as set forth on Exhibit A, and I understand that such options will become null and void on the date the Company accepts my options for exchange. I acknowledge that this election is entirely voluntary. I ALSO ACKNOWLEDGE THAT I WILL BE UNABLE TO REVOKE THE ELECTION DESCRIBED IN THIS LETTER OF TRANSMITTAL AFTER 11:59 P.M., EASTERN STANDARD TIME, ON JANUARY 10, 2003. PLEASE TURN TO EXHIBIT A ON THE FOLLOWING PAGE

EXHIBIT A [Insert Participant Name]

EXHIBIT A [Insert Participant Name] I hereby make the following election with regard to all of my eligible options granted under the Plan: - If you wish to ACCEPT this offer with respect to all of your eligible options set forth below, please check the box below. - If you do not wish to accept this offer with respect to all of your eligible options set forth below, do NOT check the box below. Your eligible options will NOT be exchanged for restricted stock units and you will retain your eligible options.
---------------------------------------------------------------------------------------------SUMMARY OF ELIGIBLE OPTIONS ---------------------------------------------------------------------------------------------GRANT DATE EXERCISE PRICE NUMBER OF ELIGIBLE OPTIONS ---------------------------------------------------------------------------------------------12/13/2001 $28.27 ----------------------------------------------------------------------------------------------

Check box to ACCEPT this offer [ ] Signature of Holder Print Name: Home Telephone: ( ) Date: Address:

EXHIBIT (A)(3) BKF CAPITAL GROUP, INC. DEFERRED STOCK AWARD AGREEMENT THIS DEFERRED STOCK AWARD AGREEMENT (the "Agreement") is made and entered into as of January 10, 2003 (the "Grant Date"), between BKF Capital Group, Inc., a Delaware corporation ("BKF") and (the "Employee") pursuant to the terms and conditions of the BKF 1998 Incentive Compensation Plan, as amended and restated (the "Plan"). Capitalized terms not defined in this Agreement shall have the meanings set forth in the Plan. 1. Award of Deferred Stock. Pursuant to the Plan, BKF hereby awards to Employee shares of Deferred Stock (the "Deferred Stock") corresponding to shares of BKF common stock (the "Stock"), subject to the terms and conditions set forth in this Agreement and the Plan. A copy of the Plan has been delivered to the Employee. By signing below, the Employee agrees to be bound by all the provisions of the Plan. Each share of Deferred Stock constitutes an unsecured promise of BKF to deliver a share of Stock to Employee on the Delivery Date (as defined below). As a holder of any Deferred Stock, Employee has the rights of a general unsecured creditor of BKF. 2. Vesting Schedule. Subject to continued employment with BKF and/or its affiliates as of the vesting date, the Deferred Stock shall vest in two installments: 50% on December 31, 2003 and 50% on December 31, 2004 (each date, a "Vesting Date"); provided, however, that, subject to continued employment with BKF and/or its affiliates, all unvested shares shall vest on the earlier of (i) a Change in Control (as defined below), (ii) Employee's

EXHIBIT (A)(3) BKF CAPITAL GROUP, INC. DEFERRED STOCK AWARD AGREEMENT THIS DEFERRED STOCK AWARD AGREEMENT (the "Agreement") is made and entered into as of January 10, 2003 (the "Grant Date"), between BKF Capital Group, Inc., a Delaware corporation ("BKF") and (the "Employee") pursuant to the terms and conditions of the BKF 1998 Incentive Compensation Plan, as amended and restated (the "Plan"). Capitalized terms not defined in this Agreement shall have the meanings set forth in the Plan. 1. Award of Deferred Stock. Pursuant to the Plan, BKF hereby awards to Employee shares of Deferred Stock (the "Deferred Stock") corresponding to shares of BKF common stock (the "Stock"), subject to the terms and conditions set forth in this Agreement and the Plan. A copy of the Plan has been delivered to the Employee. By signing below, the Employee agrees to be bound by all the provisions of the Plan. Each share of Deferred Stock constitutes an unsecured promise of BKF to deliver a share of Stock to Employee on the Delivery Date (as defined below). As a holder of any Deferred Stock, Employee has the rights of a general unsecured creditor of BKF. 2. Vesting Schedule. Subject to continued employment with BKF and/or its affiliates as of the vesting date, the Deferred Stock shall vest in two installments: 50% on December 31, 2003 and 50% on December 31, 2004 (each date, a "Vesting Date"); provided, however, that, subject to continued employment with BKF and/or its affiliates, all unvested shares shall vest on the earlier of (i) a Change in Control (as defined below), (ii) Employee's termination due to Disability (as defined below) or (iii) Employee's death. In addition, in the event of Employee's termination by BKF and/or its affiliates without Cause (as defined below), all unvested shares of Deferred Stock as of the termination date shall vest as of such date. 3. Payment or Conversion of Deferred Stock. (a) Subject to Section 4, BKF shall deliver to Employee on the Delivery Date the number of shares of Stock corresponding to such Deferred Stock, unless Employee has otherwise elected to defer receipt of such shares in accordance with Committee authorization. (b) For so long as Employee holds shares of Deferred Stock, at the time any dividend is paid with respect to a share of Stock, BKF shall pay to Employee in respect of each share of Deferred Stock an amount in cash, Stock, or other property, or in a combination thereof, in each case having a value equal to the Fair Market Value of such dividend (hereinafter "Dividend Equivalents"), subject to any deferral election by Employee in accordance with Committee authorization and/or any determination by the Committee to subject such Dividend Equivalent payment in respect of stock dividends, dividends in kind or extraordinary dividends to the delayed delivery provisions applicable to such Deferred Stock. 4. Termination of Deferred Stock and Non-Delivery Upon Certain Other Events. (a) Unless the Committee determines otherwise, Employee's rights in respect of any outstanding Deferred Stock shall immediately terminate and no shares of Stock shall be delivered in respect of such Deferred Stock if prior to the Delivery Date (A) Employee engages in conduct specified in Section 4(b), or (B) Employee fails to provide the representations and certifications required under Section 4(c); provided, however, that in the event Employee is terminated by BKF and/or its subsidiaries or affiliates without Cause, Employee shall not be required to refrain from the conduct specified in Section 4(b) or provide the representations and certifications required under Section 4(c) in order to receive on the Delivery Date the number of shares of Stock corresponding to the number of shares of Deferred Stock that have vested prior to the date of such Employee's termination without Cause. 1

(b) Employee will have engaged in conduct specified in this Section 4(b) if, as determined by the Committee, at any time prior to the Delivery Date, Employee:

(b) Employee will have engaged in conduct specified in this Section 4(b) if, as determined by the Committee, at any time prior to the Delivery Date, Employee: (i) competes, directly or indirectly, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, with BKF and/or its subsidiaries or affiliates in the United States in the money management business ("Competitive Endeavors") or undertakes any planning for any business that would constitute a Competitive Endeavor. For purposes of this Section 4(b)(i), the business of BKF and/or its subsidiaries or affiliates shall include all Products and Services (as defined below) offered by BKF or any of its subsidiaries or affiliates or under development, and the Employee's undertaking shall encompass all products and services that may be used in substitution for Products and Services. (ii) undertakes any outside activity without the prior written approval of the Committee, whether or not competitive with the business of BKF and/or its subsidiaries or affiliates, that could reasonably give rise to a conflict of interest or otherwise interfere with the Employee's duties and obligations to BKF and/or any of its subsidiaries or affiliates. Notwithstanding the foregoing, the Employee may (A) to the extent such activities are not competitive with the business of BKF and/or its subsidiaries or affiliates, engage in charitable, civic or other community activities without compensation to the Employee, and (B) render without compensation investment advisory and trust services to immediate members of the Employee's family, which shall include the Employee and any trust or account that is comprised primarily of assets held for the benefit of such Employee and/or immediate members of his family. (iii) directly or indirectly, (A) hires or attempts to hire any person who is, or during the prior six-month period, was an employee of BKF and/or any of its subsidiaries or affiliates, (B) assists another in hiring or attempting to hire any such person, (C) encourages any such person to terminate his or her employment with BKF and/or any of its subsidiaries or affiliates (other than in the course of the Employee's proper performance of his duties hereunder), (D) solicits or accepts business from any person or entity which is, or during the prior six-month period, was a client of BKF and/or any of its subsidiaries or affiliates, (E) assists another in soliciting or accepting business from any such person or entity, or (F) encourages any such person or entity to terminate its business relationship with BKF and/or any of its subsidiaries or affiliates (other than in the conduct of the Employee's proper performance of his duties). (iv) fails to (A) comply with the code of ethics of BKF, as in effect from time to time, or (B) notify the Committee of all directorships or memberships on a board of directors or board of trustees held by the Employee, regardless of whether (y) such office was held by the Employee prior to the date hereof or (z) such office would require prior written consent of the Committee. (c) Employee must certify to BKF, in accordance with procedures established by the Committee, that Employee has complied with all the terms and conditions of this Agreement as of the Delivery Date. By accepting the delivery of shares of Stock under this Agreement, Employee shall be deemed to have represented and certified at such time that Employee has complied with all the terms and conditions of this Agreement. Unless the Committee determines otherwise, if the Delivery Date in respect of any outstanding Deferred Stock occurs, and shares of Stock with respect to such Deferred Stock would be deliverable under the terms and conditions of this Agreement except that Employee has not complied with the conditions or Employee's obligations under this Section 4 (except in the event of Employee's death or a Disability that impairs Employee's ability to so comply), all of Employee's rights with respect to such Deferred Stock shall terminate, and no shares of Stock shall be delivered. The parties intend that the foregoing provisions of this Section 4 be deemed to be a series of separate covenants, one for each and every county of each and every state of the United States of America and each and every political subdivision of each and every country outside the United States of America where this provision is intended to be effective. 5. Repayment. If, following the delivery of Stock with respect to any Delivery Date, the Committee determines that all terms and conditions of this Agreement in respect of such delivery were not satisfied, BKF shall be entitled to receive, and Employee shall be obligated to pay BKF immediately upon demand therefor, 2

the Fair Market Value of the shares of Stock (determined as of the relevant Delivery Date) that were delivered with respect to such Delivery Date and without reduction for any shares of Stock applied to satisfy withholding tax or other obligations in respect of such shares. 6. Definitions. For purposes of this Agreement: (a) Unless otherwise defined in any employment agreement between Employee and BKF (in which case such definition shall apply with respect to such Employee), "Cause" means Employee's (i) conviction, whether following trial or by plea of guilty or nolo contendere (or similar plea), in a criminal proceeding (A) on a misdemeanor charge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting or extortion, or (B) on a felony charge or (C) on an equivalent charge to those in clauses (A) and (B) in jurisdictions that do not use those designations; (ii) engaging in any conduct that constitutes an employment disqualification under applicable law (including statutory disqualification as defined under the Securities and Exchange Act of 1934, as amended); (iii) willful failure to perform Employee's duties to BKF and/or any of its subsidiaries or affiliates; (iv) violation of any securities or commodities laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of any securities or commodities exchange or association of which BKF or any of its subsidiaries or affiliates is a member; (v) violation of any BKF policy concerning hedging or confidential or proprietary information, or Employee's material violation of any other BKF policy as in effect from time to time; (vi) engaging in any act or making any statement that impairs, impugns, denigrates, disparages or negatively reflects upon the name, reputation or business interests of BKF and/or any of its subsidiaries or affiliates; or (vii) engaging in any conduct detrimental to BKF and/or any of its subsidiaries or affiliates. The determination as to whether "Cause" has occurred shall be made by the Committee in its sole discretion. The Committee shall also have the authority in its sole discretion to waive the consequences under the Plan or any Agreement of the existence or occurrence of any of the events, acts or omissions constituting "Cause". (b) A "Change in Control" means the occurrence of any of the following: (i) any "person" as such term is currently used in Section 13(d) of the Exchange Act, other than John A. Levin or any entity directly or indirectly controlled by him, becomes a "beneficial owner", as such term is currently used in Rule 13d-3 promulgated under that Act, of 50% or more of BKF's Voting Stock (as defined); (ii) a majority of BKF's board of directors (the "Board") consists of individuals other than Incumbent Directors, which term means the members of the Board on the date of this Agreement; provided that any individual becoming a director subsequent to such date whose election or nomination for election was supported by a majority of the directors who then comprised the Incumbent Directors shall be considered an Incumbent Director; (iii) all or substantially all of the assets or business of BKF are disposed of pursuant to a merger, consolidation, or other transaction, unless (A) the shareholders of BKF immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they owned BKF's Voting Stock, all of the Voting Stock or other ownership interests of the entity or entities, if any, that succeed to the business of BKF, or (B) a majority of the board of directors of the surviving corporation in such a transaction consists of Incumbent Directors or directors appointed by Levin Management Co., Inc. but excluding directors who were members of the other entity's board of directors; (iv) the Board adopts any plan of liquidation providing for the distribution of all or substantially all of BKF's assets; or (v) BKF combines with another company and is the surviving corporation but, immediately after the combination, the shareholders of BKF immediately prior to the combination hold, directly or indirectly, 50% or less of the Voting Stock of the combined company (there being excluded from the number of shares held by such shareholders, but not from the Voting Stock of the combined company, any shares received by affiliates of such other company in exchange for securities of such other company). 3

(c) "Delivery Date" means the earliest to occur of the following: (i) the occurrence of a Change in Control, (ii) upon Employee's termination due to Disability (as defined below), (iii) upon Employee's death, (iv) December 31, 2004 or (v) any earlier date as determined by the Committee in its sole discretion. (d) "Disability" means the Employee's inability, due to physical or mental incapacity, to substantially perform his duties and responsibilities of employment for a period of 180 days in any consecutive nine-month period. (e) "Products and Services" means all products and services offered, planned, researched, developed, tested, sold, licensed, marketed or otherwise provided by BKF and/or any of its subsidiaries or affiliates during the Employee's employment. (f) "Voting Stock" means the issued and outstanding capital stock or other securities of any class or classes having general voting power, under ordinary circumstances in the absence of contingencies, to elect the directors of a corporation. 7. Withholding Tax. Employee may be subject to withholding taxes as a result of the settlement of Deferred Stock. Unless the Committee permits otherwise, Employee shall pay to BKF in cash, promptly when the amount of such obligations become determinable, all applicable federal, state, local and foreign withholding taxes that BKF in its discretion determines result from such settlement. Unless the Committee otherwise determines and subject to such rules and procedures as the Committee may establish, Employee may make an election to have shares of Stock withheld by BKF or to tender any such securities to BKF to pay the amount of tax that BKF in its discretion determines to be required so to be withheld by BKF upon settlement of Deferred Stock, subject to satisfying any applicable requirements for compliance with Section 16(b) of the Exchange Act. Any shares of Stock or other securities so withheld or tendered will be valued as of the date they are withheld or tendered, provided that Stock shall be valued at Fair Market Value on such date. Unless otherwise permitted by the Committee, the value of shares withheld or tendered may not exceed the minimum federal, state, local and foreign withholding tax obligations as computed by BKF. 8. Non-transferability. Except to the extent otherwise determined by the Committee, no shares of Deferred Stock shall be assignable or otherwise transferable by Employee other than by will or by the laws of descent and distribution and, unless otherwise provided by the Committee, during the life of Employee any elections with respect to Deferred Stock may be made only by Employee or Employee's guardian or legal representative. 9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10. Governing Law. This Agreement shall be governed by the laws of the State of New York, without regard to conflict of law principles. BKF CAPITAL GROUP, INC. By: Name: John A. Levin Title: Chief Executive Officer [Name of Employee] 4

EXHIBIT (A)(4) ELECTION WITHDRAWAL NOTICE Instructions: If you previously elected to accept BKF Capital Group, Inc.'s Offer to Exchange eligible options for shares of

EXHIBIT (A)(4) ELECTION WITHDRAWAL NOTICE Instructions: If you previously elected to accept BKF Capital Group, Inc.'s Offer to Exchange eligible options for shares of deferred stock, also referred to as restricted stock units, and you would like to withdraw your election and reject the offer completely, you must FULLY COMPLETE and SIGN this Notice and return it to Norris Nissim, BKF Capital Group, Inc., One Rockefeller Plaza, New York, New York, 10020; either in person or by mail, but in the same manner in which you delivered the Letter of Transmittal and Deferred Stock Award Agreement before 11:59 p.m., Eastern Standard Time, on January 10, 2003, unless we extend the offer. If you have questions, please contact Norris Nissim at (212) 332-8437 or Glenn Aigen at (212) 332-8460. Capitalized terms used and not defined herein have the meaning ascribed to such terms in the Offer to Exchange. If you wish to make a new election upon or after you withdraw your current election, you must also submit a new Letter of Transmittal and Deferred Stock Award Agreement. Additional copies of the Letter of Transmittal and Deferred Stock Award Agreement are available from Norris Nissim at the phone number above. To BKF Capital Group, Inc.: I previously received a copy of the Offer to Exchange (dated December 11, 2002) and the related Letter of Transmittal and Deferred Stock Award Agreement. I signed and returned the Letter of Transmittal and Deferred Stock Award Agreement, in which I elected to accept BKF Capital Group, Inc.'s Offer to Exchange all of my eligible options for restricted stock units. I now wish to withdraw that election in its entirety. I understand that by signing this Notice and delivering it to Norris Nissim, I will be able to withdraw my acceptance of the offer and reject the offer to exchange options. I have read and understand all of the terms and conditions of the Offer to Exchange. I understand that in order to withdraw my election, I must sign and deliver this Notice to Norris Nissim, BKF Capital Group, Inc., One Rockefeller Plaza, New York, New York, 10020; either in person or by mail before 11:59 p.m., Eastern Standard Time, on January 10, 2003, or if BKF Capital Group, Inc. extends the deadline to exchange options, before the expiration of the extended offer. By rejecting the Offer to Exchange options, I understand that I will not receive any restricted stock units in exchange for the eligible options the tender of which I am now withdrawing, and I will keep all of my eligible options which are listed on Exhibit A to my Letter of Transmittal. These eligible options will continue to be governed by the Plan and relevant option agreement(s) between BKF Capital Group, Inc. and me. I understand that if I later wish to elect to accept the offer in respect of all of my eligible options, I must fully complete, sign, date and return a new Letter of Transmittal and Deferred Stock Award by Agreement to Norris Nissim before 11:59 p.m., Eastern Standard Time, on January 10, 2003. I have completed and signed this Notice exactly as my name appears on my original Letter of Transmittal and Deferred Stock Award Agreement. I withdraw my election to exchange eligible options. Date: Signature Name: -----------------------(Please Print) Social Security Number: ------------------------

EXHIBIT (A)(5) BKF CAPITAL GROUP, INC. One Rockefeller Plaza New York, New York 10020 December 11, 2002 Dear Participant: This letter is to notify you that BKF Capital Group, Inc. (the "Company") is conducting a stock option exchange program. This is a voluntary program for current employees who were granted options on December 13, 2001 to purchase shares of common stock of the Company at an exercise price of $28.27 per share. Such employees may elect to exchange all of these stock options that were granted to them for shares of deferred stock, also referred to as restricted stock units. The enclosed documents describe this stock option exchange program in detail, including the possible benefits and risks of this program. Please take the time to carefully review the documents and instructions enclosed with this letter and consider your decision carefully. We make no recommendations as to whether you should participate in the option exchange program, and we urge you to consult with your own advisors regarding your decision. If you decide to participate in the program, you need to return the enclosed Letter of Transmittal along with an executed Deferred Stock Award Agreement to us in accordance with their instructions no later than 11:59 P.M., EASTERN STANDARD TIME, ON JANUARY 10, 2003. Any election made prior to the expiration time may be withdrawn until that time, after which any election made will become irrevocable. If you have any questions about the stock option exchange program, please contact Norris Nissim at 212-3328437 or Glenn Aigen at (212) 332-8460. Sincerely,
/s/ JOHN A. LEVIN -------------------------------------John A. Levin President and Chief Executive Officer

Enclosures

EXHIBIT (A)(6) BKF CAPITAL GROUP, INC. One Rockefeller Plaza New York, New York 10020 January , 2003 Dear Employee: We are pleased to inform you that we successfully concluded the offer to exchange eligible options to purchase shares of common stock of BKF Capital Group, Inc. (the "Company") for shares of deferred stock, also referred to as restricted stock units (the "Offer"). The terms and conditions of the Offer are set forth in the Offer to Exchange, dated December 11, 2002 and the related Letter of Transmittal and Deferred Stock Award Agreement. The Offer expired at 11:59 p.m., Eastern Standard Time, on January 10, 2003. Promptly following the expiration of the Offer and pursuant to the terms and conditions of the Offer to Exchange, the Company accepted for exchange all eligible options tendered to it by eligible employees who elected to participate in the Offer

EXHIBIT (A)(6) BKF CAPITAL GROUP, INC. One Rockefeller Plaza New York, New York 10020 January , 2003 Dear Employee: We are pleased to inform you that we successfully concluded the offer to exchange eligible options to purchase shares of common stock of BKF Capital Group, Inc. (the "Company") for shares of deferred stock, also referred to as restricted stock units (the "Offer"). The terms and conditions of the Offer are set forth in the Offer to Exchange, dated December 11, 2002 and the related Letter of Transmittal and Deferred Stock Award Agreement. The Offer expired at 11:59 p.m., Eastern Standard Time, on January 10, 2003. Promptly following the expiration of the Offer and pursuant to the terms and conditions of the Offer to Exchange, the Company accepted for exchange all eligible options tendered to it by eligible employees who elected to participate in the Offer representing a total of [ ] shares of common stock and canceled all such options. If you elected to participate in the Offer and tendered your eligible options, you are entitled to receive restricted stock units, subject to the terms and conditions of the Offer. The Company has accepted for exchange and canceled the number of eligible options tendered by you equal to the number of options set forth on Schedule A to this letter. The Company's grant of restricted stock units was effective January , 2003 (the "replacement grant date"). The Deferred Stock Award Agreement between you and the Company, a copy of which is hereby provided to you, is dated the replacement grant date. If you have any questions about your rights in connection with the grant of the restricted stock units, please contact Norris Nissim at (212) 332-8437 or Glenn Aigen at (212) 332-8460. Sincerely,
/s/ JOHN A. LEVIN -------------------------------------John A. Levin President and Chief Executive Officer

SCHEDULE A Employee Name: Employee ID Number:
OPTION GRANT DATE ----------------December 13, 2001 NO. OF ELIGIBLE OPTIONS TENDERED --------------------------------

Total number of restricted stock units granted to you on the replacement grant date:

EXHIBIT (A)(7)

SCHEDULE A Employee Name: Employee ID Number:
OPTION GRANT DATE ----------------December 13, 2001 NO. OF ELIGIBLE OPTIONS TENDERED --------------------------------

Total number of restricted stock units granted to you on the replacement grant date:

EXHIBIT (A)(7) BKF CAPITAL GROUP, INC. ANNOUNCES EQUITY GRANT TO JOHN A. LEVIN & CO., INC. EMPLOYEES BKF Capital Group has made an equity grant of 450,768 restricted stock units to senior employees of the firm's asset management subsidiary, John A. Levin & Co. Inc. The restricted stock units will generally vest and be delivered no earlier than three years from the date of grant. Certain executive officers of the Company are expected to receive restricted stock units in the first quarter of 2003, raising the amount of the combined grants to 594,373 restricted stock units. Based on BKF's closing stock price of $18.75 on the date of grant, the grant will result in compensation expense of approximately $11.1 million to be recognized from the date of grant through December 3, 2005. In addition, BKF has made an offer to its eligible employees to exchange an aggregate of up to 333,308 options granted in December 2001 in exchange for 111,103 restricted stock units. The exchange rate is based on the fair market value of the options to be tendered. The restricted stock units will be subject to vesting in equal amounts at December 31, 2003 and December 31, 2004 and generally will be delivered no earlier than December 31, 2004. BKF will record a compensation expense currently estimated to be approximately $2.1 million over the vesting period of the restricted stock units. John A. Levin, Chairman and Chief Executive Officer, highlighted the fact that "in the asset management industry, strong companies require significant employee ownership. We believe this step is needed to solidify the business and allow us to continue pursuing our strategic agenda." "We believe it is essential to make investments in the professionals of the firm, who build the client loyalty that is the foundation of our business" stated Gregory T. Rogers, Executive Vice President and Chief Operating Officer. As of November 30, 2002, John A. Levin & Co. had approximately $12 billion in assets under management. ***** BKF has filed a tender offer statement and may file other relevant documents concerning the tender offer with the Securities and Exchange Commission. Employees eligible to participate in the tender offer are urged to read the tender offer statement (including the offer to purchase, letter of transmittal and related tender offer documents) and any other documents filed with the SEC because they contain important information on the tender offer. Eligible employees may obtain these documents free of charge at the SEC's website (www.sec.gov). Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. In addition, documents filed with the SEC by BKF may be obtained free of charge by contacting BKF Capital Group, Inc., Attn: Investor Relations (tel: (212) 332-8400). Eligible employees should read the tender offer statement carefully before making any decision with respect to the tender offer. *****

EXHIBIT (A)(7) BKF CAPITAL GROUP, INC. ANNOUNCES EQUITY GRANT TO JOHN A. LEVIN & CO., INC. EMPLOYEES BKF Capital Group has made an equity grant of 450,768 restricted stock units to senior employees of the firm's asset management subsidiary, John A. Levin & Co. Inc. The restricted stock units will generally vest and be delivered no earlier than three years from the date of grant. Certain executive officers of the Company are expected to receive restricted stock units in the first quarter of 2003, raising the amount of the combined grants to 594,373 restricted stock units. Based on BKF's closing stock price of $18.75 on the date of grant, the grant will result in compensation expense of approximately $11.1 million to be recognized from the date of grant through December 3, 2005. In addition, BKF has made an offer to its eligible employees to exchange an aggregate of up to 333,308 options granted in December 2001 in exchange for 111,103 restricted stock units. The exchange rate is based on the fair market value of the options to be tendered. The restricted stock units will be subject to vesting in equal amounts at December 31, 2003 and December 31, 2004 and generally will be delivered no earlier than December 31, 2004. BKF will record a compensation expense currently estimated to be approximately $2.1 million over the vesting period of the restricted stock units. John A. Levin, Chairman and Chief Executive Officer, highlighted the fact that "in the asset management industry, strong companies require significant employee ownership. We believe this step is needed to solidify the business and allow us to continue pursuing our strategic agenda." "We believe it is essential to make investments in the professionals of the firm, who build the client loyalty that is the foundation of our business" stated Gregory T. Rogers, Executive Vice President and Chief Operating Officer. As of November 30, 2002, John A. Levin & Co. had approximately $12 billion in assets under management. ***** BKF has filed a tender offer statement and may file other relevant documents concerning the tender offer with the Securities and Exchange Commission. Employees eligible to participate in the tender offer are urged to read the tender offer statement (including the offer to purchase, letter of transmittal and related tender offer documents) and any other documents filed with the SEC because they contain important information on the tender offer. Eligible employees may obtain these documents free of charge at the SEC's website (www.sec.gov). Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. In addition, documents filed with the SEC by BKF may be obtained free of charge by contacting BKF Capital Group, Inc., Attn: Investor Relations (tel: (212) 332-8400). Eligible employees should read the tender offer statement carefully before making any decision with respect to the tender offer. ***** This press release contains certain statements that are not historical facts, including, most importantly, information concerning possible or assumed future results of operations of BKF and statements preceded by, followed by or that include the words "may," "believes," "expects," "anticipates," or the negation thereof, or similar expressions, which constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). For those statements, BKF claims the protection of the safe harbor for forwardlooking statements contained in the Reform Act. These forward-looking statements are based on BKF's current expectations and are susceptible to a number of risks, uncertainties and other factors, and BKF's actual results, performance and achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include the following: retention and ability of qualified personnel; the performance of

the securities markets and of value stocks in particular; the investment performance of client accounts; the retention of significant client and/or distribution relationships; competition; the existence or absence of adverse

the securities markets and of value stocks in particular; the investment performance of client accounts; the retention of significant client and/or distribution relationships; competition; the existence or absence of adverse publicity; changes in business strategy; quality of management; availability, terms and deployment of capital; business abilities and judgment of personnel; labor and employee benefit costs; changes in, or failure to comply with, government regulations; the costs and other effects of legal and administrative proceedings; and other risks and uncertainties referred to in this document and in BKF's other current and periodic filings with the Securities and Exchange Commission, all of which are difficult or impossible to predict accurately and many of which are beyond BKF's control. BKF will not undertake and specifically declines any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. In addition, it is BKF's policy generally not to make any specific projections as to future earnings, and BKF does not endorse any projections regarding future performance that may be made by third parties.


				
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