<SUBMISSION>
<ACCESSION-NUMBER>0000950123-02-011714
<TYPE>SC TO-I
<PUBLIC-DOCUMENT-COUNT>8
<FILING-DATE>20021211
<SUBJECT-COMPANY>
<COMPANY-DATA>
<CONFORMED-NAME>BKF CAPITAL GROUP INC
<CIK>0000009235
<ASSIGNED-SIC>6282
<IRS-NUMBER>360767530
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC TO-I
<ACT>34
<FILE-NUMBER>005-10454
<FILM-NUMBER>02855030
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>200 W. MADISON ST.
<STREET2>SUITE 3510
<CITY>CHICAGO
<STATE>IL
<ZIP>60606
<PHONE>2123328400
</BUSINESS-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BAKER FENTRESS & CO ET AL
<DATE-CHANGED>19940714
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BAKER FENTRESS & CO
<DATE-CHANGED>19970829
</FORMER-COMPANY>
</SUBJECT-COMPANY>
<FILED-BY>
<COMPANY-DATA>
<CONFORMED-NAME>BKF CAPITAL GROUP INC
<CIK>0000009235
<ASSIGNED-SIC>6282
<IRS-NUMBER>360767530
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC TO-I
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>200 W. MADISON ST.
<STREET2>SUITE 3510
<CITY>CHICAGO
<STATE>IL
<ZIP>60606
<PHONE>2123328400
</BUSINESS-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BAKER FENTRESS & CO ET AL
<DATE-CHANGED>19940714
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BAKER FENTRESS & CO
<DATE-CHANGED>19970829
</FORMER-COMPANY>
</FILED-BY>
<DOCUMENT>
<TYPE>SC TO-I
<SEQUENCE>1
<FILENAME>y66399sctovi.txt
<DESCRIPTION>BKF CAPITAL GROUP, INC.
<TEXT>
<PAGE>

   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 2002
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  SCHEDULE TO
                                  (RULE 13e-4)
          TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                            BKF CAPITAL GROUP, INC.
     (Name of Subject Company (Issuer) and Name of Filing Person (Offeror))
                       OPTIONS TO PURCHASE COMMON STOCK,
                           PAR VALUE $1.00 PER SHARE
                         (Title of Class of Securities)
                                   05548G102
                     (CUSIP Number of Class of Securities)
                           (Underlying Common Stock)
                                 NORRIS NISSIM
                 VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
                            BKF CAPITAL GROUP, INC.
                             ONE ROCKEFELLER PLAZA
                            NEW YORK, NEW YORK 10020
                                 (212) 332-8400
 (Name, address, and telephone numbers of person authorized to receive notices
                and communications on behalf of filing persons)

                                    COPY TO:
                             JOHN C. KENNEDY, ESQ.
                    PAUL, WEISS, RIFKIND, WHARTON & GARRISON
                          1285 AVENUE OF THE AMERICAS
                         NEW YORK, NEW YORK 10019-6064
                                 (212) 373-3000

                           CALCULATION OF FILING FEE

<Table>
<Caption>
<S>                                            <C>
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
    Transaction Valuation:*    $2,083,175             Amount of Filing Fee:    $192.00
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</Table>

* Calculated solely for the purpose of determining the amount of filing fee.
  This amount assumes that options to purchase 333,308 shares of common stock of
  BKF Capital Group, Inc. will be exchanged pursuant to this offer. The
  aggregate value of such options was calculated based on the Black-Scholes
  option pricing model. The amount of the filing fee, calculated in accordance
  with Section 13(e)(3) of the Securities Exchange Act of 1934, as amended, and
  Rule 0-11(b) thereunder, equals the transaction value multiplied by $92.00 per
  million.

[ ]  Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.

<Table>
<S>                         <C>
Amount Previously Paid:     Not Applicable.
Form or Registration No.:   Not Applicable.
Filing Party:               Not Applicable.
Date Filed:                 Not Applicable.
</Table>

[ ]  Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the
statement relates:

[ ]  third-party tender offer subject to Rule 14d-1.

[X]  issuer tender offer subject to Rule 13e-4.

[ ]  going-private transaction subject to Rule 13e-3.

[ ]  amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing fee is a final amendment reporting the
results of the tender offer:  [ ]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

ITEM 1.  SUMMARY TERM SHEET

     The information set forth under "Summary Term Sheet" in the Offer to
Exchange, dated December 11, 2002 (the "Offer to Exchange"), attached hereto as
Exhibit (a)(1), is incorporated herein by reference.

ITEM 2.  SUBJECT COMPANY INFORMATION

     (a) The name of the issuer is BKF Capital Group, Inc., a Delaware
corporation (the "Company"), and the address of its principal executive office
is One Rockefeller Plaza, New York, New York 10020. The Company's telephone
number is (212) 332-8400. The information set forth in the Offer to Exchange
Section 9 ("Information Concerning BKF Capital Group, Inc.") is incorporated
herein by reference.

     (b) This Tender Offer Statement on Schedule TO relates to an offer by the
Company to its eligible employees (as defined in Section 1 of the Offer to
Exchange) to exchange all eligible options (as defined in Section 1 of the Offer
to Exchange) granted under the BKF Capital Group, Inc. 1998 Incentive
Compensation Plan (the "Plan") to purchase shares of the Company's Common Stock,
par value $1.00 per share, for shares of deferred stock ("restricted stock
units") to be granted by the Company under the Plan and upon the terms and
conditions described in the Offer to Exchange and the related Letter of
Transmittal and Deferred Stock Award Agreement attached hereto as Exhibits
(a)(2) and (a)(3). Each restricted stock unit represents the right to receive
one share of the Company's common stock if certain conditions are met.
Restricted stock units are subject to forfeiture and other restrictions until
they vest and are delivered. There are 333,308 eligible options outstanding. The
information set forth in the Offer to Exchange under "Summary Term Sheet,"
Section 1 ("Number of Options; Expiration Date"), Section 5 ("Acceptance of
Options for Exchange and Issuance of Restricted Stock Units") and Section 8
("Source and Amount of Consideration; Terms of Restricted Stock Units") is
incorporated herein by reference.

     (c) The information set forth in the offer to Exchange under Section 7
("Price Range of Common Stock Underlying the Options and Restricted Stock
Units") is incorporated herein by reference.

ITEM 3.  IDENTITY AND BACKGROUND OF FILING PERSON

     (a) The information set forth under Item 2(a) above is incorporated herein
by reference.

ITEM 4.  TERMS OF THE TRANSACTION

     (a) The information set forth in the Offer to Exchange under "Summary Term
Sheet," Section 1 ("Number of Options; Expiration Date"), Section 3 ("Procedures
for Electing to Exchange Options"), Section 4 ("Withdrawal Rights"), Section 5
("Acceptance of Options for Exchange and Issuance of Restricted Stock Units"),
Section 6 ("Conditions of the Offer"), Section 8 ("Source and Amount of
Consideration; Terms of Restricted Stock Units"), Section 11 ("Status of Options
Acquired by Us in the Offer; Accounting Consequences of the Offer"), Section 12
("Legal Matters; Regulatory Approvals"), Section 13 ("Material U.S. Federal
Income Tax Consequences") and Section 14 ("Extension of Offer; Termination;
Amendment") is incorporated herein by reference.

     (b) The information set forth in the Offer to Exchange under Section 10
("Interests of Directors and Officers; Transactions and Arrangements Concerning
the Options") is incorporated herein by reference.

ITEM 5.  PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS

     (e) The information set forth in the Offer to Exchange under Section 10
("Interests of Directors and Officers; Transactions and Arrangements Concerning
the Options") is incorporated herein by reference.

ITEM 6.  PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS

     (a) The information set forth in the Offer to Exchange under Section 2
("Purpose of the Offer") is incorporated herein by reference.

                                        1
<PAGE>

     (b) The information set forth in the Offer to Exchange under Section 5
("Acceptance of Options for Exchange and Issuance of Restricted Stock Units")
and Section 11 ("Status of Options Acquired by Us in the Offer; Accounting
Consequences of the Offer") is incorporated herein by reference.

     (c) The information set forth in the Offer to Exchange under Section 2
("Purpose of the Offer") is incorporated herein by reference.

ITEM 7.  SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

     (a) The information set forth in the Offer to Exchange under Section 8
("Source and Amount of Consideration; Terms of Restricted Stock Units") and
Section 15 ("Fees and Expenses") is incorporated herein by reference.

     (b) Not applicable.

     (d) Not applicable.

ITEM 8.  INTEREST IN SECURITIES OF THE SUBJECT COMPANY

     The information set forth in the Offer to Exchange under Section 10
("Interests of Directors and Officers; Transactions and Arrangements Concerning
the Options") is incorporated herein by reference.

ITEM 9.  PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED

     (a) Not applicable.

ITEM 10.  FINANCIAL STATEMENTS

     (a) The information set forth in the Offer to Exchange under Section 9
("Information Concerning BKF Capital Group, Inc.") and Section 16 ("Additional
Information"), and pages F-4 through F-23 of the Company's Annual Report on Form
10-K for its fiscal year ended December 31, 2001, and pages 2 through 8 of the
Company's Quarterly Report on Form 10-Q for its fiscal quarter ended September
30, 2002 is incorporated herein by reference.

     (b) Not applicable.

ITEM 11.  ADDITIONAL INFORMATION

     (a) The information set forth in the Offer to Exchange under Section 10
("Interests of Directors and Officers; Transactions and Arrangements Concerning
the Options") and Section 12 ("Legal Matters; Regulatory Approvals") is
incorporated herein by reference.

     (b) Not applicable.

ITEM 12.  EXHIBITS

     (a) (1) Offer to Exchange, dated December 11, 2002.

          (2) Form of Letter of Transmittal.

          (3) Form of Deferred Stock Award Agreement.

          (4) Form of Election Withdrawal Notice.

          (5) Form of Letter to Eligible Option Holders.

          (6) Form of Acceptance.

          (7) Press Release, dated December 11, 2002 announcing the Offer.

                                        2
<PAGE>

          (8) The Company's Annual Report on Form 10-K for its fiscal year ended
              December 31, 2001, filed with the Securities and Exchange
              Commission on April 1, 2002 (incorporated herein by reference)
              (SEC File No. 1-10024).

          (9) The Company's Quarterly Report on Form 10-Q for its fiscal quarter
              ended March 31, 2002, filed with the Securities and Exchange
              Commission on May 14, 2002 (incorporated herein by reference) (SEC
              File No. 1-10024).

        (10) The Company's Quarterly Report on Form 10-Q for its fiscal quarter
             ended June 30, 2002, filed with the Securities and Exchange
             Commission on August 14, 2002 (incorporated herein by reference)
             (SEC File No. 1-10024).

        (11) The Company's Quarterly Report on Form 10-Q for its fiscal quarter
             ended September 30, 2002, filed with the Securities and Exchange
             Commission on November 14, 2002 (incorporated herein by reference)
             (SEC File No. 1-10024).

     (b) Not applicable.

     (d) (1) The Company's 1998 Incentive Compensation Plan (incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 2001 filed with the Securities and Exchange Commission on
August 14, 2001) (SEC File No. 1-10024).

     (g) Not applicable.

     (h) Not applicable.

                                        3
<PAGE>

                                   SIGNATURES

     After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule TO is true, complete and
correct.

                                          BKF CAPITAL GROUP, INC.

                                          By:       /s/ NORRIS NISSIM
                                            ------------------------------------
                                                       Norris Nissim
                                              Vice President, General Counsel
                                                       and Secretary

Date: December 11, 2002

                                        4
<PAGE>

                               INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER
-------
<C>     <C>   <S>
  (a)    (1)  Offer to Exchange, dated December 11, 2002.
         (2)  Form of Letter of Transmittal.
         (3)  Form of Deferred Stock Award Agreement.
         (4)  Form of Election Withdrawal Notice.
         (5)  Form of Letter to Eligible Option Holders.
         (6)  Form of Acceptance.
         (7)  Press Release, dated December 11, 2002 announcing the Offer.
         (8)  The Company's Annual Report on Form 10-K for its fiscal year
              ended December 31, 2001, filed with the Securities and
              Exchange Commission on April 1, 2002 (incorporated herein by
              reference) (SEC File No. 1-10024).
         (9)  The Company's Quarterly Report on Form 10-Q for its fiscal
              quarter ended March 31, 2002, filed with the Securities and
              Exchange Commission on May 14, 2002 (incorporated herein by
              reference) (SEC File No. 1-10024).
        (10)  The Company's Quarterly Report on Form 10-Q for its fiscal
              quarter ended June 30, 2002, filed with the Securities and
              Exchange Commission on August 14, 2002 (incorporated herein
              by reference) (SEC File No. 1-10024).
        (11)  The Company's Quarterly Report on Form 10-Q for its fiscal
              quarter ended September 30, 2002, filed with the Securities
              and Exchange Commission on November 14, 2002 (incorporated
              herein by reference) (SEC File No. 1-10024).
  (b)   Not applicable.
  (d)    (1)  The Company's 1998 Incentive Compensation Plan (incorporated
              by reference to Exhibit 10.1 to the Company's Quarterly
              Report on Form 10-Q for the period ended June 30, 2001 filed
              with the Securities and Exchange Commission on August 14,
              2001) (SEC File No. 1-10024).
  (g)   Not applicable.
  (h)   Not applicable.
</Table>

                                        5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.1
<SEQUENCE>3
<FILENAME>y66399exv99waw1.txt
<DESCRIPTION>OFFER TO EXCHANGE
<TEXT>
<PAGE>

                                                                  EXHIBIT (A)(1)

                            BKF CAPITAL GROUP, INC.

                               OFFER TO EXCHANGE
                  OUTSTANDING OPTIONS TO PURCHASE COMMON STOCK
                       UNDER THE BKF CAPITAL GROUP, INC.
                        1998 INCENTIVE COMPENSATION PLAN

            THE OFFER AND THE ASSOCIATED WITHDRAWAL RIGHTS EXPIRE ON
             JANUARY 10, 2003 AT 11:59 P.M., EASTERN STANDARD TIME,
                          UNLESS THE OFFER IS EXTENDED

     BKF Capital Group, Inc. (the "Company") is offering eligible employees the
opportunity to exchange all outstanding eligible options (as defined below)
granted under the BKF Capital Group, Inc. 1998 Incentive Compensation Plan (the
"Plan") for shares of our deferred stock, which we refer to as restricted stock
units or RSUs, that we will grant under the Plan. We are making this offer upon
the terms and subject to the conditions set forth in this Offer to Exchange and
in the accompanying Letter of Transmittal and Deferred Stock Award Agreement
(which together, as they may be amended from time to time, constitute the
"offer"). We will grant the restricted stock units on or about January 10, 2003.
If you elect to exchange any of your eligible options, you must exchange all
eligible options granted to you.

     This offer is not conditioned upon a minimum number of options being
elected for exchange. This offer is subject to conditions, which we describe in
Section 6 of this offer.

     You may tender eligible options at any time prior to 11:59 p.m., Eastern
Standard Time, on January 10, 2003 (such date, or such later date to which we
extend the offer as described herein, the "expiration date").

     "Eligible employees" are all employees of the Company and its subsidiaries
who are actively employed on the expiration date.

     "Eligible options" are the options to purchase shares of our common stock,
granted under the Plan on December 13, 2001, having an exercise price of $28.27
per share.

     Each restricted stock unit, as described further in this Offer to Exchange,
represents the right to receive one share of our common stock if certain
conditions are met. Restricted stock units are subject to forfeiture and other
restrictions until they vest and the underlying shares of common stock are
delivered, at which time the related shares of common stock will be distributed
to you without restrictions. Restricted stock units will be subject to the terms
of a Deferred Stock Award Agreement between each tendering option holder and the
Company. The number of restricted stock units that you receive with respect to
the options that you exchange and that the Company accepts for exchange will be
determined by dividing the number of these options by 3.0 and rounding the
result to the nearest whole share. An example of this calculation is given in
the "Summary Term Sheet" following the Table of Contents in this Offer to
Exchange.

     If you elect to exchange options as described in the offer and if your
options are accepted for exchange, we will cancel your outstanding options and
grant you restricted stock units under the Plan pursuant to a Deferred Stock
Award Agreement between you and us.

     If your employment is terminated for any reason after you tender options
pursuant to the offer but prior to the expiration date, your participation in
the offer will be automatically cancelled and you will not receive any
restricted stock units. In this case, your options will be treated as if they
had not been tendered, and your options will remain outstanding on their
existing terms and conditions, including the applicable termination provisions
contained in the existing stock option award agreements between you and us.
<PAGE>

     Shares of our common stock are quoted on the New York Stock Exchange under
the symbol "BKF". On December 10, 2002 the last sale price of our common stock
as reported on the New York Stock Exchange was $18.75 per share. We recommend
that you obtain current market quotations for our common stock before deciding
whether to exchange your options.

     You should direct questions about this offer or requests for assistance or
for additional copies of this Offer to Exchange, the Letter of Transmittal,
Deferred Stock Award Agreement or other materials relating to the offer to
Norris Nissim at (212) 332-8437 or Glenn Aigen at (212) 332-8460.
<PAGE>

                                   IMPORTANT

     If you wish to exchange your options, you must complete and sign the
enclosed Letter of Transmittal and Deferred Stock Award Agreement in accordance
with their instructions, and send them and any other required documents to
Norris Nissim of BKF Capital Group, Inc. in person or by mail to BKF Capital
Group, Inc., Attn: Norris Nissim, One Rockefeller Plaza, New York, New York
10020. WE MUST RECEIVE YOUR LETTER OF TRANSMITTAL AND DEFERRED STOCK AWARD
AGREEMENT BY 11:59 P.M., EASTERN STANDARD TIME, ON JANUARY 10, 2003, OR THEY
WILL NOT BE GIVEN EFFECT.

     We are not aware of any jurisdiction where the making of the offer violates
applicable law. If we become aware of any jurisdiction where the making of the
offer violates applicable law, we will make a good faith effort to comply with
such law. If, after such good faith effort, we cannot comply with such law, the
offer will not be made to, nor will elections to exchange options be accepted
from the option holders residing in such jurisdiction.

     We have not authorized any person to make any recommendation on our behalf
as to whether you should elect to exchange or refrain from exchanging your
options pursuant to the offer. You should rely only on the information contained
in this document or to which we have referred you. We have not authorized anyone
to give you any information or to make any representations in connection with
the offer other than the information and representations contained in this
document or in the accompanying Letter of Transmittal. If anyone makes any
recommendation or representation to you or gives you any information, you must
not rely upon that recommendation, representation or information as having been
authorized by us.

     The date of this Offer to Exchange is December 11, 2002.

                                        i
<PAGE>

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                               PAGE
                                                               ----
<S>                                                            <C>
SUMMARY TERM SHEET..........................................     1
GENERAL QUESTIONS ABOUT THE OFFER TO EXCHANGE...............     1
SPECIFIC QUESTIONS ABOUT THE EXCHANGED OPTIONS..............     4
SPECIFIC QUESTIONS ABOUT THE RESTRICTED STOCK UNITS.........     4
THE OFFER...................................................     6
 1.  NUMBER OF OPTIONS; EXPIRATION DATE.....................     6
 2.  PURPOSE OF THE OFFER...................................     7
 3.  PROCEDURES FOR ELECTING TO EXCHANGE OPTIONS............     8
 4.  WITHDRAWAL RIGHTS......................................     8
 5.  ACCEPTANCE OF OPTIONS FOR EXCHANGE AND ISSUANCE OF
     RESTRICTED STOCK UNITS.................................     9
 6.  CONDITIONS OF THE OFFER................................     9
 7.  PRICE RANGE OF COMMON STOCK UNDERLYING THE OPTIONS AND
     RESTRICTED STOCK UNITS.................................    12
 8.  SOURCE AND AMOUNT OF CONSIDERATION; TERMS OF RESTRICTED
     STOCK UNITS............................................    12
 9.  INFORMATION CONCERNING BKF CAPITAL GROUP, INC. ........    14
10.  INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND
     ARRANGEMENTS CONCERNING THE OPTIONS....................    15
11.  STATUS OF OPTIONS ACQUIRED BY US IN THE OFFER;
     ACCOUNTING CONSEQUENCES OF THE OFFER...................    16
12.  LEGAL MATTERS; REGULATORY APPROVALS....................    16
13.  MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES..........    16
14.  EXTENSION OF OFFER; TERMINATION; AMENDMENT.............    17
15.  FEES AND EXPENSES......................................    18
16.  ADDITIONAL INFORMATION.................................    18
17.  FORWARD LOOKING STATEMENTS.............................    19
18.  MISCELLANEOUS..........................................    20
</Table>

                                        ii
<PAGE>

                               SUMMARY TERM SHEET

     This summary term sheet answers some of the questions that you may have
about the offer. Nothing contained in this summary term sheet or any of the
documents included herewith may be interpreted as a recommendation by the
Company or its affiliates about whether or not to participate in the offer. We
have included references to the relevant sections of this Offer to Exchange
where you can find more complete descriptions of the topics in this summary.

GENERAL QUESTIONS ABOUT THE OFFER TO EXCHANGE

1.  WHAT SECURITIES IS THE COMPANY OFFERING TO EXCHANGE?

     We are offering to exchange all options to purchase shares of our common
stock granted under the BKF Capital Group, Inc. 1998 Incentive Compensation Plan
(the "Plan") on December 13, 2001, having an exercise price of $28.27 (the
"eligible options") for restricted stock units under the Plan. (Section 1)

2.  WHY IS THE COMPANY MAKING THE OFFER TO EXCHANGE?

     We are making this offer in order to allow employees to hold equity
interests in the Company through restricted stock units rather than through
stock options. We believe that the restricted stock units will better serve the
purposes of retaining and motivating our employees. The restricted stock units
will vest and be deliverable later than the options for which they are being
exchanged and may have a greater potential to increase in value (as the exercise
price of the options is higher than the current price of the Company's common
stock). We also believe that restricted stock units, as compared to options,
tend to motivate employees to preserve a business' value. Finally, we believe
that as a general matter, the compensation expense associated with restricted
stock units may be more clearly explained to stockholders than the expense that
may be determined with respect to option grants. We are offering this program on
a voluntary basis to allow certain of our employees to choose between keeping
their existing stock options at their current exercise price and exchanging
those options for restricted stock units with an equivalent value, as determined
by the Board. These restricted stock units will be granted on January 10, 2003.

3.  WHO QUALIFIES AS AN ELIGIBLE EMPLOYEE?

     "Eligible employees" are all employees of the Company and its subsidiaries
who are actively employed on January 10, 2003. An employee will not be
considered an "eligible employee" and, accordingly, will not be eligible to
participate in this offer if, on or before the date the offer expires, such
employee receives a notice of termination or ceases his or her employment.
(Section 1)

4.  HOW DOES THE OFFER TO EXCHANGE WORK?

     The Offer to Exchange requires that an employee make a voluntary election
that will become irrevocable at 11:59 p.m., Eastern Standard Time, on January
10, 2003 to exchange all of his or her eligible options for a grant of
restricted stock units.

5.  HOW MANY RESTRICTED STOCK UNITS WILL I RECEIVE IN EXCHANGE FOR THE OPTIONS
THAT I TENDER?

     The number of restricted stock units that you receive with respect to the
options that you tender will be determined by dividing the number of options you
tender and that the Company accepts for exchange by the exchange factor and
rounding the result to the nearest whole number. The exchange factor is 3.0.

     For example, if you tender 1,000 eligible options, then:

     - the number of your options (1,000) is divided by

     - the exchange factor 3.0,

     - resulting in 333.3, which, after rounding to the nearest whole number,
       would result in 333 restricted stock units to be granted in exchange for
       your options.

                                        1
<PAGE>

     You will not be required to pay cash for the restricted stock units you
receive or the shares of common stock underlying the restricted stock units.
When the shares of common stock are to be delivered, we expect to utilize a
portion of the shares otherwise distributable to you to satisfy your withholding
tax obligation. (Section 8).

6.  WHAT DO I NEED TO DO TO PARTICIPATE IN THE OFFER TO EXCHANGE AND WHAT IS THE
DEADLINE?

     To participate, you must complete the Letter of Transmittal, including
Exhibit A thereto, and the Deferred Stock Award Agreement that are included with
this summary of terms, sign them, and send them to Norris Nissim in person or by
mail to BKF Capital Group, Inc., Attn: Norris Nissim, One Rockefeller Plaza, New
York, New York 10020. WE MUST RECEIVE YOUR LETTER OF TRANSMITTAL BY 11:59 P.M.,
EASTERN STANDARD TIME, ON JANUARY 10, 2003 (SUCH DATE OR SUCH LATER DATE TO
WHICH WE EXTEND THE OFFER, THE "EXPIRATION DATE"), OR IT WILL NOT BE GIVEN
EFFECT. We may, in our discretion, extend the offer at any time, but we cannot
assure you that the offer will be extended or, if it is extended, for how long.
(Section 3)

     If you elect to exchange any of your eligible options, you must exchange
all eligible options granted to you. We reserve the right to reject any or all
eligible options elected for exchange that we determine are not in appropriate
form or that we determine are unlawful to accept. Subject to our rights to
extend, terminate, and amend the offer, we currently expect that we will accept
all eligible options for which you have made a proper and timely election that
is not withdrawn promptly upon the expiration of the offer. (Section 3)

7.  WHAT HAPPENS IF THE COMPANY IS SUBJECT TO A CHANGE IN CONTROL BEFORE OR
    AFTER THE RESTRICTED STOCK UNITS ARE GRANTED?

     If there is a "Change in Control" (as defined in the Deferred Stock Award
Agreement) of the Company prior to the expiration of the offer, whether by
merger, acquisition or asset sale, you may withdraw your tendered options and
retain all the rights afforded you to acquire our common stock under the
existing agreements evidencing those options.

     If we acquire another company or there is a Change in Control and the
Company is the surviving public company, you will have the same rights with
respect to any tendered options or restricted stock units as otherwise set forth
in this Offer to Exchange.

     We reserve the right to take any action that our Board of Directors
believes is in our and our stockholders' best interest. (Section 5)

8.  WHY CAN'T I JUST BE GRANTED A NEW AWARD?

     The number of equity awards that we are able to grant under the Plan is
limited, so we must conserve our currently available awards for future grants.
Because the Plan allows cancelled options to become available again for grant as
restricted stock units, options or other equity awards and the number of common
shares underlying the restricted stock units is less than the number of shares
underlying the options to be cancelled, the exchange of options will make more
shares available for grant under the Plan.

9.  WHAT WILL HAPPEN IF I DO NOT TURN IN MY FORM BY THE DEADLINE?

     If you do not turn in your election form by the expiration date, then you
will not participate in the option exchange, and all eligible options you
currently hold will remain unchanged with their original exercise price and
original terms. (Section 3)

10.  DURING WHAT PERIOD OF TIME MAY I WITHDRAW A PREVIOUS ELECTION TO EXCHANGE
OPTIONS?

     You may withdraw your election to exchange options at any time before the
expiration time, currently scheduled at 11:59 p.m. Eastern Standard Time, on
January 10, 2003. If we extend the offer beyond that

                                        2
<PAGE>

time, you may withdraw your election at any time until the expiration of the
extended offer. To withdraw an election to exchange options, you must deliver to
Norris Nissim of the Company an Election Withdrawal Notice in the form attached
prior to 11:59 p.m. Eastern Standard Time, on January 10, 2003, or any later
time to which we may extend the offer. Once you have withdrawn an election to
exchange options, you may re-elect to exchange options only by again following
the election procedure described in the answer to Question 5. (Section 4)

11.  AM I ELIGIBLE TO RECEIVE FUTURE GRANTS OF OPTIONS DURING THE SIX-MONTH
     PERIOD FOLLOWING EXPIRATION OF THE OFFER IF I PARTICIPATE IN THIS EXCHANGE?

     No. Because of unfavorable accounting charge consequences, if you exchange
your options for restricted stock units you will be ineligible to receive any
additional option grants until six months after the replacement grant date. We
do not currently anticipate making any option grants in the six months after the
replacement grant date.

12.  WILL I HAVE TO PAY TAXES WHEN I EXCHANGE MY OPTIONS IN THE OFFER?

     If you are a U.S. taxpayer or resident, you will incur no immediate tax
consequences when you exchange your options.

13.  WHAT ARE THE INCOME AND WITHHOLDING TAX CONSEQUENCES OF THE VESTING AND
     DELIVERY OF RESTRICTED STOCK UNITS?

     If you are a U.S. citizen or resident and tender options in exchange for
restricted stock units, when your restricted stock units vest and the underlying
shares of common stock are delivered to you, you will recognize ordinary income
equal to the fair market value of the shares distributed to you. We will
determine the fair market value of the shares based on the average of the high
and low prices of our common stock on the New York Stock Exchange on the date
the shares are distributed to you or, if no sales are reported on that date, in
accordance with applicable tax laws.

     The ordinary income resulting from the delivery of the underlying shares of
common stock will be reflected in the Form W-2 reported to the Internal Revenue
Service for the year in which the delivery of the shares of common stock occurs.

     At the time you recognize ordinary income on the delivery of the shares of
common stock underlying the restricted stock units, you will have an income and
payroll withholding tax obligation with respect to that income, much like the
obligation that arises when we pay you salary or a bonus. You may elect to
utilize a portion of the shares otherwise distributable to you to satisfy your
withholding tax obligation.

     WE RECOMMEND THAT YOU CONSULT WITH YOUR OWN TAX ADVISOR TO DETERMINE THE
TAX CONSEQUENCES OF YOUR PARTICIPATION IN THE OFFER. (Section 13).

14.  HOW SHOULD I DECIDE WHETHER OR NOT TO PARTICIPATE?

     We understand that the decision whether or not to exchange options may be a
challenging one for many employees. The offer does carry considerable risk, and
there are no guarantees of our future stock performance. So, the decision to
participate must be each individual employee's personal decision, and it will
depend largely on each employee's assumptions about the future overall economic
environment, the performance of the overall market and companies in our sector,
and our own business. (Section 9)

15.  WHAT ARE THE CONDITIONS TO THE OFFER?

     The offer is not conditioned upon a minimum number of eligible options
being elected for exchange. However, the offer is subject to a number of
conditions, including the conditions described in Section 6.

                                        3
<PAGE>

SPECIFIC QUESTIONS ABOUT THE EXCHANGED OPTIONS

16.  CAN I EXCHANGE AN OPTION ONLY AS TO CERTAIN SHARES?

     No. If you elect to exchange any eligible options, you must elect to
exchange any and all eligible options granted to you under the Plan. (Section 1)

17.  IF I CHOOSE TO PARTICIPATE, WHAT WILL HAPPEN TO MY OPTIONS THAT WILL BE
     EXCHANGED?

     If you elect to participate in this program, then on the expiration date,
we will cancel all of your eligible options that are accepted by the Company for
exchange. (Section 11)

SPECIFIC QUESTIONS ABOUT THE RESTRICTED STOCK UNITS

18.  WHAT ARE RESTRICTED STOCK UNITS?

     Restricted stock units represent the right to receive shares of our common
stock upon vesting and the satisfaction of the delivery requirements. The
restricted stock units are considered "restricted" because they are subject to
forfeiture and restrictions on transfer prior to vesting and the subsequent
delivery of shares. You are not a stockholder as a result of holding restricted
stock units, and restricted stock units do not entitle you to vote or receive
notice of meetings, and other materials provided to the Company's stockholders
until the restricted stock units vest and the delivery requirements have been
satisfied, at which time the related shares will be distributed to you. However,
you will be entitled to receive dividends or "Dividend Equivalents" (as defined
in the Deferred Stock Award Agreement). The restricted stock units will be
granted under the Plan and will be subject to the terms of the Deferred Stock
Award Agreement entered into by you and the Company. After restricted stock
units have vested, the delivery requirements have been satisfied, and the
related shares are distributed to you, you will have stockholder rights (such as
voting rights) with respect to those shares and may transfer or sell the shares,
subject to applicable securities laws. (Section 8)

19.  HOW WAS THE EXCHANGE FACTOR FOR THE OPTIONS DETERMINED?

     The exchange factor was determined after considering several elements,
which included primarily the remaining Black-Scholes value (a method of valuing
stock options, which considers factors such as the remaining life of an option,
the difference between the exercise price and the stock price, and the
volatility of the stock price) of the outstanding stock options, the
risk-adjusted relative value of stock options versus restricted stock units, the
additional compensation expense to the Company associated with the offer, and
the number of shares available for restricted stock unit grants under the Plan.
We have available under the Plan approximately 518,939 shares that can be used
for restricted stock unit awards. Our calculations used an estimated stock price
of approximately $18.75 per share, resulting in a total compensation expense of
roughly $2.1 million over the life of the awards. That estimated value was
deemed to be the maximum "replaceable Black-Scholes value" for purposes of the
offer.

20.  WHAT IS THE VESTING SCHEDULE FOR THE RESTRICTED STOCK UNITS?

     So long as you remain employed with the Company or its subsidiaries, the
restricted stock units will vest in two annual installments with fifty percent
(50%) vesting on December 31, 2003 and fifty percent (50%) vesting on December
31, 2004.

     The restricted stock units may also vest earlier upon the occurrence of
certain events described in Section 8.

                                        4
<PAGE>

     IF YOUR EMPLOYMENT IS TERMINATED PRIOR TO THE VESTING DATE OF THE
RESTRICTED STOCK UNITS OR THE DELIVERY DATE OF THE UNDERLYING SHARES OF COMMON
STOCK, ALL OR A PORTION OF THE UNVESTED OR UNDELIVERED RESTRICTED STOCK UNITS
MAY BE FORFEITED. (Section 8 and Question 23 below)

21.  WHEN WILL I RECEIVE MY RESTRICTED STOCK UNITS AND THE RELATED SHARES OF
     COMMON STOCK?

     If you properly tender eligible options and we accept all eligible options
tendered, the grant of the restricted stock units will be effective as of the
expiration date unless we reject all eligible options tendered in accordance
with Section 6. Your award of restricted stock units will be evidenced by the
Deferred Stock Award Agreement between you and the Company. Subject to the
conditions in the Deferred Stock Award Agreement, common stock underlying
restricted stock units that have vested will be deliverable to you at the
earliest of (1) a Change in Control, (2) your termination due to "Disability"
(as defined in the Deferred Stock Award Agreement), (3) your death, (4) December
31, 2004, and (5) any earlier date determined by the Compensation Committee.
Pursuant to the BKF Capital Group, Inc. Deferred Compensation Plan, recipients
of restricted stock units have the choice to defer the scheduled delivery of
shares of common stock underlying restricted stock units.

22.  WHAT HAPPENS TO THE RESTRICTED STOCK UNITS VERSUS MY EXISTING STOCK OPTIONS
     IF MY EMPLOYMENT TERMINATES?

     The terms and conditions of the restricted stock units provide that any
unvested or undelivered portion of the grant may be forfeited upon a termination
of employment, depending upon how your employment was terminated and your
actions prior to the delivery date. Employment can terminate for a number of
reasons, including death, disability, voluntary termination, involuntary
termination for cause, because of the outsourcing of your position, or
otherwise.

     The vesting and delivery schedules for the restricted stock units differ
from the vesting schedule of the options. As a result, by participating in the
exchange, an eligible employee could forgo the right to receive shares of common
stock underlying options that vest prior to the restricted stock units. (Section
8).

23.  HOW WILL MOVEMENTS IN THE COMPANY'S STOCK PRICE DURING THE OFFER PERIOD
     AFFECT THE VALUE OF MY OPTIONS VERSUS THE RESTRICTED STOCK UNITS?

     The theoretical values of both your existing options and the restricted
stock units you would receive if you participate in the offer would be affected
by stock price movements during the offer period, although the impact on value
would not be the same. A restricted stock unit is said to be more "sensitive" to
stock price movements because the theoretical value of a restricted stock unit
changes in direct relationship to changes in the price of our common stock,
while your options are said to be less sensitive because each of your options
will only fractionally change in value with changes in the price of our common
stock because of the exercise price. An option becomes less sensitive to stock
price movements as the stock price falls further below the option's exercise
price. However, please note that although the theoretical value of your options
is less sensitive to stock price changes than the restricted stock units you
would receive in exchange, your options will ultimately have no value if the
stock price does not appreciate above the relevant exercise price by the time of
the relevant expiration date for each option. Also note that you will receive
fewer restricted stock units than the number of eligible options you will give
up, and you will not be able to sell the restricted stock units until they vest
and the related shares of common stock are delivered to you. As of the time of
making this offering, the current price of our common stock is lower than the
exercise price of all of your eligible options.

                                        5
<PAGE>

24.  WHAT HAPPENS TO THE RESTRICTED STOCK UNITS VERSUS MY EXISTING STOCK OPTIONS
     IF THERE IS A CHANGE IN CONTROL OF BKF?

     Treatment of Restricted Stock Units upon a Change in Control.  The Deferred
Stock Award Agreement provides that if a Change in Control occurs before the
restricted stock units are delivered to you, your restricted stock units would
fully vest and the related shares of common stock would be distributed to you.
You should also note that your restricted stock units may not vest if you are
terminated after the announcement of a transaction that would constitute a
Change in Control but before the completion of that transaction.

     Treatment of Stock Options upon a Change in Control.  Eligible options
generally provide that if a Change in Control occurs, the options would fully
vest. You should also note, however that your eligible options may not fully
vest if you are terminated after the announcement of a transaction which would
constitute a Change in Control but before the completion of that transaction.
Your individual stock option agreements may or may not be more favorable than
the general terms described above. Please review your existing stock option
agreements carefully.

                                   THE OFFER

1.  NUMBER OF OPTIONS; EXPIRATION DATE

     Upon the terms and subject to the conditions of this Offer to Exchange, the
Company is offering to eligible employees the opportunity to exchange all
eligible options that are properly elected for exchange and not validly
withdrawn in accordance with Section 4 before 11:59 p.m. Eastern Standard Time,
on January 10, 2003 (such date, or such later date to which we extend the offer
as described herein, the "expiration date") for restricted stock units under the
Plan. Each restricted stock unit represents the right to receive one share of
our common stock if certain conditions are met. Restricted stock units are
subject to forfeiture and other restrictions until they vest and the underlying
shares of common stock are delivered. Restricted stock units will be subject to
the terms of a Deferred Stock Award Agreement between each tendering option
holder and the Company. The number of restricted stock units that you receive
with respect to your options will be determined by dividing the number of
options you tender and that the Company accepts for exchange by 3.0 (the
"exchange factor") and rounding the result to the nearest whole share. If you
elect to exchange any of your eligible options you must exchange all of your
eligible options.

     "Eligible employees" are employees of the Company and its subsidiaries who
are actively employed on January 10, 2003, the date the offer expires.

     "Eligible options" are the options to purchase shares of our common stock
granted under the Plan on December 13, 2001, having an exercise price of $28.27
per share. There are 333,308 eligible options outstanding.

     If we decide to take any of the following actions, we will notify you of
such action, and we will extend the offer for a period of no fewer than ten
business days after the date of such notice:

     - we increase or decrease:

      - the amount of consideration offered for the options; or

      - the number of options eligible to be elected for exchange in the offer,
        except that in the case of an increase, it must be by an amount that
        exceeds 2% of the shares of common stock issuable upon exercise of the
        options that are subject to the offer immediately prior to the increase;
        and

     - the offer is scheduled to expire at any time earlier than the end of the
       tenth business day from, and including, the date that notice of such
       increase or decrease is first published, sent or given in the manner
       specified in Section 14.

     For purposes of the offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, Eastern Standard Time.

                                        6
<PAGE>

2.  PURPOSE OF THE OFFER

     We issued the options outstanding under the Plan to provide our employees
an opportunity to acquire or increase their ownership stake in the Company,
create a stronger incentive to expend maximum effort for our growth and success
and encourage our employees to continue their employment with us.

     We believe that restricted units may better serve the Company's purposes
than the options that have been granted. The restricted stock units will vest
and be deliverable later than the options for which they are being exchanged
and, although there can be no assurances, the restricted stock units may have a
greater potential to increase in value (as the exercise price of the options is
significantly higher than the current price of the Company's common stock). We
also believe that restricted stock units, as compared to options, tend to
motivate employees to preserve a business' value. Finally, we believe that as a
general matter, the compensation expense associated with restricted stock units
may be more clearly explained to stockholders than the expense that may be
determined with respect to option grants.

     In addition, the number of equity awards that we are able to grant under
the Plan is limited, so we must conserve our currently available awards for
future grants. However, because the Plan allows cancelled options to become
available again for grant as restricted stock units, options or other equity
awards and the number of common shares underlying the restricted stock units is
less than the number of shares underlying the options to be cancelled, the
exchange of options will make more shares available for grant under the Plan.

CONSIDERING THE RISKS ASSOCIATED WITH THE VOLATILE AND UNPREDICTABLE NATURE OF
THE STOCK MARKET, AND THE TRADING PRICES OF THE STOCK OF COMPANIES IN OUR
INDUSTRY IN PARTICULAR, THERE IS NO GUARANTEE THAT OVER TIME THE VALUE OF YOUR
RESTRICTED STOCK UNIT (OR THE UNDERLYING COMMON STOCK) WILL BE GREATER THAN THE
VALUE OF YOUR EXISTING ELIGIBLE OPTIONS OR THAT YOUR RESTRICTED STOCK UNIT (OR
THE UNDERLYING COMMON STOCK) WILL INCREASE IN VALUE OVER TIME.

     Subject to the foregoing, and except as otherwise disclosed in this Offer
to Exchange or in our filings with the Securities and Exchange Commission, we
have no plans or proposals that relate to or would result in:

     - an extraordinary transaction, such as a merger, reorganization or
       liquidation, involving us or any of our subsidiaries (however, although
       we have no pending plans or proposals for acquisitions or other business
       combinations, we expect to consider such matters from time to time in the
       future);

     - any purchase, sale or transfer of a material amount of our assets or the
       assets of any of our subsidiaries;

     - any material change in our present dividend rate or policy, or our
       indebtedness or capitalization;

     - any change in our present board of directors or management, including a
       change in the number or term of directors or to fill any existing board
       vacancies or to change any material terms of the employment contract of
       any executive officer;

     - any other material change in our corporate structure or business;

     - our common stock not being authorized for listing on the New York Stock
       Exchange;

     - our common stock becoming eligible for termination of registration
       pursuant to the Securities Exchange Act;

     - the suspension of our obligation to file reports under the Securities
       Exchange Act;

     - the acquisition by any person of any of our securities or the disposition
       of any of our securities; or

     - any changes in our certificate of incorporation, bylaws of other
       governing instruments or any actions that could impede the acquisition of
       control of us.

                                        7
<PAGE>

3.  PROCEDURES FOR ELECTING TO EXCHANGE OPTIONS

     Proper Exchange Of Options.  To elect to exchange your eligible options
pursuant to this offer, you must, in accordance with the terms of the Letter of
Transmittal that accompanies this Offer to Exchange, properly complete, duly
execute and deliver to us the Letter of Transmittal, along with the Deferred
Stock Award Agreement, or facsimiles of these documents, and any other required
documents. Norris Nissim of BKF Capital Group, Inc. must receive all of the
required documents prior to the expiration date in person or by mail to BKF
Capital Group, Inc., Attn: Norris Nissim, One Rockefeller Plaza, New York, New
York 10020.

     If we do not actually receive your election form by the expiration date,
then you will not participate in the option exchange, and all eligible options
you currently hold will remain unchanged at their original exercise price and
terms.

     THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING THE LETTER OF
TRANSMITTAL, THE DEFERRED STOCK AWARD AGREEMENT AND ANY OTHER REQUIRED
DOCUMENTS, IS AT THE ELECTION AND RISK OF THE ELECTING OPTION HOLDER. YOU SHOULD
ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY.

     Determination Of Validity; Rejection Of Options; Waiver Of Defects; No
Obligation To Give Notice Of Defects.  We will determine, in our discretion, all
questions as to form of documents and the validity, eligibility, including time
of receipt, and acceptance of any election to exchange eligible options. Our
determination of these matters will be final and binding on all parties. We
reserve the right to reject any or all elections to exchange options that we
determine are not in appropriate form or that we determine are unlawful to
accept. Otherwise, we will accept properly and timely elected options that are
not validly withdrawn. We also reserve the right to waive any of the conditions
of the offer or any defect or irregularity in any election with respect to any
particular options or any particular option holder. No election to exchange
eligible options will be valid until all defects or irregularities have been
cured by the electing option holder or waived by us. Neither we nor any other
person is obligated to give notice of any defects or irregularities in
elections, nor will anyone incur any liability for failure to give any such
notice.

     Our Acceptance Constitutes An Agreement.  Your election to exchange
eligible options pursuant to the procedures described above constitutes your
acceptance of the terms and conditions of the offer. OUR ACCEPTANCE FOR EXCHANGE
OF THE OPTIONS ELECTED FOR EXCHANGE BY YOU PURSUANT TO THE OFFER AND THE
DEFERRED STOCK AWARD AGREEMENT WILL CONSTITUTE A BINDING AGREEMENT BETWEEN US
AND YOU UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER.

     Subject to our rights to extend, terminate, and amend the offer, we
currently expect that we will accept promptly after the expiration of the offer
all properly elected options that have not been validly withdrawn.

4.  WITHDRAWAL RIGHTS

     You may withdraw the options you have elected to exchange only if you
comply with the provisions of this Section 4.

     You have the right to withdraw the options you have elected to exchange at
any time before 11:59 p.m. on January 10, 2003. If we extend the offer beyond
that time, you have the right to withdraw these options at any time until the
extended offer expires. In addition, if we do not accept your options for
exchange before February 7, 2003, the 40th business day following the
commencement of this offer to exchange, you may withdraw the options you have
elected for exchange at any time after February 7, 2003. If you tender your
eligible options, but before the expiration date you want to withdraw your
tender, you must withdraw the tender for all of your eligible options.

                                        8
<PAGE>

     To validly withdraw options, you must deliver to us a written notice of
withdrawal, or a facsimile thereof, with the required information, while you
still have the right to withdraw the election to exchange options. The notice of
withdrawal must include your name and the total number of options to be
withdrawn (which must equal all of your eligible options). Except as described
in the following sentence, the option holder who elected to exchange the options
(which are subsequently to be withdrawn) must sign the notice of withdrawal
exactly as such option holder's name appears on the Letter of Transmittal. If
the signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation, or another person acting in a
fiduciary or representative capacity, the signer's full title and proper
evidence of the authority of such person to act in such capacity must be
indicated on the notice of withdrawal.

     You may not rescind any withdrawal, and any options you withdraw will
thereafter be deemed not properly elected for exchange for purposes of the
offer, unless you properly re-elect to exchange all of your eligible options
before the expiration date by following the procedures described in Section 3.

     Neither we nor any other person is obligated to give notice of any defects
or irregularities in any notice of withdrawal, nor will anyone incur any
liability for failure to give any such notice. We will determine, in our
discretion, all questions as to the form and validity, including time of
receipt, of notices of withdrawal. Our determination of these matters will be
final and binding on all parties.

5.  ACCEPTANCE OF OPTIONS FOR EXCHANGE AND ISSUANCE OF RESTRICTED STOCK UNITS

     Upon the terms and subject to the conditions of this offer, we will accept
for exchange and cancel options properly elected for exchange and not validly
withdrawn before the expiration date. No Letter of Transmittal will be accepted
unless a Deferred Stock Award Agreement is returned to us in accordance with the
instructions in the Letter of Transmittal. The effective grant date for the
restricted stock units will be the expiration date unless, in accordance with
the conditions set forth in Section 6, we reject all tendered options. To the
extent that we accept the eligible options that you tender, the option agreement
evidencing the options tendered will be deemed null and void.

     For purposes of this offer, we will be deemed to have accepted eligible
options that are validly tendered and not properly withdrawn if and when we give
a written notice to holders of eligible options of our acceptance of such
options promptly following the expiration date.

     If there is a Change in Control of the Company, prior to the expiration of
the offer, whether by merger, acquisition or asset sale, you may withdraw your
tendered options and retain all the rights afforded you to acquire our common
stock under the existing agreements evidencing those options.

     If we acquire another company or there is a Change in Control and the
Company is the surviving public company, you would have the same rights with
respect to any tendered options or restricted stock units as set forth in this
Offer to Exchange.

     We reserve the right to take any action that our Board of Directors
believes is in our and our stockholders' best interests.

6.  CONDITIONS OF THE OFFER

     Promptly following the expiration date (which will be January 10, 2003 at
11:59 p.m., Eastern Standard Time, unless we extend it), subject to satisfaction
of conditions set forth below, we will accept all eligible options that are
properly tendered. If the conditions set forth below are not satisfied, we may
reject all (but not less than all) options that are properly tendered. If we
reject all options that are tendered, we will promptly communicate such
rejection to all holders of eligible options, and you will keep all your current
options and you will not receive any restricted stock units.

     Notwithstanding any other provision of the offer, we will not be required
to accept any options elected for exchange, and we may terminate or amend the
offer, or postpone our acceptance and cancellation of any options elected for
exchange, in each case, subject to Section 13e-4(f)(5) under the Securities
Exchange Act

                                        9
<PAGE>

of 1934 (the "Exchange Act"), if, at any time on or after the commencement of
the offer and prior to the expiration date, any of the following events has
occurred, or has been determined by us to have occurred, and, in our reasonable
judgment in any such case, including any action or omission to act by us, the
occurrence of such event or events makes it inadvisable for us to proceed with
the offer or with such acceptance and cancellation of options elected for
exchange:

     - there has been threatened or instituted or is pending any action or
       proceeding by any government or governmental, regulatory or
       administrative agency, authority or tribunal or any other person,
       domestic or foreign, before any court, authority, agency or tribunal that
       directly or indirectly (1) challenges the making of the offer, the
       acquisition of some or all of the options elected for exchange pursuant
       to the offer, the exchange of restricted stock units for such options, or
       otherwise relates in any manner to the offer or (2) in our reasonable
       judgment, could materially and adversely affect our business, condition
       (financial or other), income, operations or prospects, or otherwise
       materially impair in any way the contemplated future conduct of our
       business or the business of any of our subsidiaries or materially impair
       the contemplated benefits of the offer to us;

     - there has been any action threatened, pending or taken, or approval
       withheld, or any statute, rule, regulation, judgment, order or injunction
       threatened, proposed, sought, promulgated, enacted, entered, amended,
       enforced or deemed to be applicable to the offer or us or any of our
       subsidiaries, by any court or any authority, agency or tribunal that, in
       our reasonable judgment, would or might directly or indirectly:

      - make the acceptance for exchange of, or issuance of restricted stock
        units for, some or all of the options elected for exchange illegal or
        otherwise restrict or prohibit completion of the offer or otherwise
        relates in any manner to the offer;

      - delay or restrict our ability, or render us unable, to accept for
        exchange, or issue restricted stock units for, some or all of the
        options elected for exchange;

      - materially impair the contemplated benefits of the offer to us; or

      - materially and adversely affect our business, condition (financial or
        other), income, operations or prospects, or otherwise materially impair
        in any way the contemplated future conduct of our business or the
        business of any of our subsidiaries or materially impair the
        contemplated benefits of the offer to us;

     - there has occurred:

      - any general suspension of trading in, or limitation on prices for,
        securities on any national securities exchange or in the
        over-the-counter market;

       - the declaration of a banking moratorium or any suspension of payments
         in respect of banks in the United States, whether or not mandatory;

       - the commencement or escalation of a war, armed hostilities or other
         international or national crisis directly or indirectly involving the
         United States;

       - any limitation, whether or not mandatory, by any governmental,
         regulatory or administrative agency or authority on, or any event that
         in our reasonable judgment might affect, the extension of credit by
         banks or other lending institutions in the United States;

       - any significant decrease in the market price of the shares of our
         common stock or any change in the general political, market, economic
         or financial conditions in the United States or abroad that could, in
         our reasonable judgment, have a material adverse effect on our
         business, condition (financial or other), operations or prospects or on
         the trading in our common stock;

      - any change in the general political, market, economic or financial
        conditions in the United States or abroad that could have a material
        adverse effect on our business, condition (financial or other),

                                        10
<PAGE>

        operations or prospects or that, in our reasonable judgment, makes it
        inadvisable to proceed with the offer;

      - in the case of any of the foregoing existing at the time of the
        commencement of the offer, a material acceleration, escalation or
        worsening thereof; or

      - any decline in either the Dow Jones Industrial Average or the Standard
        and Poor's Index of 500 Companies by an amount in excess of 10% measured
        during any time period after the commencement of the offer;

     - a tender or exchange offer with respect to some or all of our common
       stock, or a merger or acquisition proposal for us, shall have been
       proposed, announced or made by another person or entity or shall have
       been publicly disclosed, or we shall have learned that:

      - any person, entity or "group," within the meaning of Section 13(d)(3) of
        the Exchange Act, (other than any such person, entity or group that has
        filed a Schedule 13D or Schedule 13G with the Securities and Exchange
        Commission prior to the commencement of the offer to exchange) shall
        have acquired or proposed to acquire beneficial ownership of more than
        5% of the outstanding shares of our common stock, or any new group shall
        have been formed that beneficially owns more than 5% of the outstanding
        shares of our common stock (other than any such person, entity or group
        that has filed a Schedule 13D or Schedule 13G with the Securities and
        Exchange Commission prior to the commencement of the offer to exchange);

      - any such person, entity or group that has filed a Schedule 13D or
        Schedule 13G with the Securities and Exchange Commission before
        expiration of the offer shall have acquired or proposed to acquire
        beneficial ownership of an additional 2% or more of the outstanding
        shares of our common stock; or

      - any person, entity or group shall have filed a Notification and Report
        Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
        amended, or made a public announcement reflecting an intent to acquire
        us or any of the assets or securities of us; or

     - any change or changes shall have occurred in the business, condition
       (financial or other), assets, income, operations, prospects or stock
       ownership of the Company or its subsidiaries that, in our reasonable
       judgment, is or may be material to the Company or its subsidiaries.

     The conditions to the offer are for our benefit. We may assert them in our
discretion regardless of the circumstances giving rise to them prior to the
expiration date. We may waive them, in whole or in part, at any time and from
time to time prior to the expiration date, in our discretion, whether or not we
waive any other condition to the offer. Our failure at any time to exercise any
of these rights will not be deemed a waiver of any such rights. The waiver of
any of these rights with respect to particular facts and circumstances will not
be deemed a waiver with respect to any other rights. Any determination we make
concerning the events described in this section will be final and binding upon
all persons.

                                        11
<PAGE>

7.  PRICE RANGE OF COMMON STOCK UNDERLYING THE OPTIONS AND RESTRICTED STOCK
    UNITS

     Our common stock trades on the New York Stock Exchange under the symbol
"BKF". The following table presents the high and low sales prices per share of
our common stock for the periods indicated, as reported by the New York Stock
Exchange:

<Table>
<Caption>
                                                               HIGH     LOW
                                                              ------   ------
<S>                                                           <C>      <C>
Fiscal Year ending December 31, 2002:
First Quarter...............................................  $30.29   $26.51
Second Quarter..............................................  $32.36   $27.90
Third Quarter...............................................  $28.25   $20.80
Fourth Quarter (through December 10, 2002)..................  $20.83   $17.50

Fiscal Year ended December 31, 2001:
Fourth Quarter..............................................  $30.95   $24.00
Third Quarter...............................................  $32.54   $23.97
Second Quarter..............................................  $33.20   $20.75
First Quarter...............................................  $24.15   $18.06

Fiscal Year ended December 31, 2000:
Fourth Quarter..............................................  $19.38   $16.00
Third Quarter...............................................  $23.31   $15.56
Second Quarter..............................................  $15.88   $11.88
First Quarter...............................................  $14.44   $10.00
</Table>

     We recommend that you obtain current market quotations for our common stock
before deciding whether to exchange your options.

8.  SOURCE AND AMOUNT OF CONSIDERATION; TERMS OF RESTRICTED STOCK UNITS

    Consideration.  We will issue restricted stock units, each of which will
    represent the right to obtain one share of our common stock, in exchange for
outstanding eligible options accepted for exchange by us. The number of
restricted stock units to be granted to each option holder will be determined by
dividing the number of shares subject to the canceled options by the exchange
factor and rounding the result to the nearest whole share.

     Terms Of Restricted Stock Units.  The restricted stock units will be issued
under the Plan. The restricted stock units you receive in exchange for tendered
options accepted for payment will be subject to forfeiture and other
restrictions until the units have vested and the underlying shares of common
stock are delivered. These restrictions include prohibitions against any sale,
transfer, pledge or assignment, in each case until the restricted stock units
have vested and the underlying shares of common stock are delivered. These
restricted stock units will not entitle you to vote or receive notice of
meetings or proxy materials until they have vested and are delivered.

     Vesting.  So long as you remain employed with Company, the restricted stock
units you receive will vest as follows: (a) 50% will vest on December 31, 2003,
and (b) 50% will vest on December 31, 2004. Even if your eligible options will
be partially vested prior to January 10, 2003 the restricted stock units you
receive will be subject to vesting over this two-year period. Vesting will be
accelerated upon (a) your death, (b) your termination due to "Disability" (as
defined in the Deferred Stock Award Agreement), or (c) a Change in Control (as
defined in the Deferred Stock Award Agreement). Vesting will also be accelerated
upon your termination without "Cause" (as defined in the Deferred Stock Award
Agreement).

     Delivery.  Shares of common stock underlying the restricted stock units
will be deliverable to you at the earliest of (a) a Change in Control (as
defined in the Deferred Stock Award Agreement) (b) your

                                        12
<PAGE>

termination due to Disability (as defined in the Deferred Stock Award
Agreement), (c) your death, (d) December 31, 2004, and (e) any earlier date
determined by our Compensation Committee. Pursuant to the BKF Capital Group,
Inc., Deferred Compensation Plan, recipients of restricted stock units have the
option to defer the scheduled delivery of shares of common stock underlying
restricted stock units.

     Forfeiture.  Unless our Compensation Committee determines otherwise, any
unvested restricted stock units that you receive in the exchange and any common
stock underlying restricted stock units that have vested, will be forfeited if,
prior to the delivery date, (a) you engage in conduct specified in Section 4(b)
of the Deferred Stock Award Agreement, or (b) you fail to provide the
representations and certifications required under the Deferred Stock Award
Agreement.

     Stock Certificates.  Your restricted stock units will be evidenced by the
Deferred Stock Award Agreement between you and the Company. As the restricted
stock units vest and the delivery requirements for the underlying common stock
described above are satisfied, the underlying shares of common stock will be
distributed to you by electronic deposit into a book entry account designated by
you (less any shares you elect to withhold to satisfy your withholding tax
obligations). You will only receive a stock certificate for the shares upon a
request from you to the transfer agent.

     Tax Consequences.  You should refer to Section 13 for a discussion of the
material U.S. federal income tax consequences of the acquisition, holding and
vesting of restricted stock units, as well as the consequences of accepting
restricted stock units under this offer. Section 13 includes a general summary
of the material federal income tax consequences of the exchange for U.S.
citizens and residents.

     Registration Of Shares.  All shares of common stock underlying the
restricted stock units issuable in connection with this offer have been
registered under the Securities Act on a registration statement on Form S-8
filed with the Securities and Exchange Commission. Unless you are considered an
"affiliate" of the Company, upon vesting and delivery you will be able to sell
your shares underlying the restricted stock units free of any transfer
restrictions under applicable securities laws.

     IMPORTANT NOTE:  The statements in this offer concerning the Plan and the
restricted stock units are merely summaries and do not purport to be complete.
The statements are subject to, and are qualified in their entirety by reference
to, all provisions of the Plan and the forms of Deferred Stock Award Agreement,
both of which have been filed as exhibits to our Tender Offer Statement on
Schedule TO which has been filed with the SEC.

     Please contact Norris Nissim or Glenn Aigen of the Company to receive a
copy of the Plan or the Plan's prospectus. We will promptly furnish you copies
of these documents at our expense.

                                        13
<PAGE>

9.  INFORMATION CONCERNING BKF CAPITAL GROUP, INC.

     Overview.  The Company operates entirely through John A. Levin & Co., Inc.,
an investment adviser registered with the U.S. Securities and Exchange
Commission that was acquired by the Company in June 1996. The investment adviser
is a wholly owned subsidiary of Levin Management Co., Inc., which in turn is a
wholly owned subsidiary of the Company. Levin Management Co., Inc. and its
subsidiaries are referred to collectively as "Levco." Levco specializes in
managing equity portfolios for institutional and individual investors. Most
accounts are managed pursuant to value equity strategies; Levco also offers a
range of alternative investment products as well as other more specialized
investment programs. Most clients are based in the United States, though a
significant portion of investors in the alternative investment products are
located outside the United States.

     The Company was incorporated in Delaware in 1954. Its executive offices are
located at One Rockefeller Plaza, New York, New York 10020. Its telephone number
is (212) 332-8400, and its website address is www.bkfcapital.com.

     Additional information about BKF is available from the documents described
in Section 16.

     Recent Developments.  On December 3, 2002, the Company made an equity grant
of 450,768 restricted stock units to senior employees of the Company's asset
management subsidiary, John A. Levin & Co. Inc. The restricted stock units will
vest and be delivered no earlier than December 3, 2005. Some 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 a compensation expense of approximately $11.1 million
to be recognized from the date of grant through December 3, 2005.

     Selected Financial Information.  The following table sets forth selected
consolidated financial operating data for the Company. The selected historical
statement of operations data for the years ended December 31, 2000 and 2001 and
the selected historical balance sheet data as of December 31, 2000 and 2001 have
been derived from the consolidated financial statements included in our annual
report on Form 10-K for the year ended December 31, 2001, and incorporated
herein by reference. The selected historical statement of operations data for
the nine-month periods ended September 30, 2002 and 2001 and the selected
historical balance sheet data as of September 30, 2002 have been derived from
the unaudited consolidated financial statements included in our quarterly report
on Form 10-Q for the quarter ended September 30, 2002, and incorporated herein
by reference. The information presented below should be read together with our
consolidated financial statements and the notes related thereto as well as the
section of our Form 10-K and Form 10-Q entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

<Table>
<Caption>
                                                       YEARS ENDED            NINE MONTHS ENDED
                                                      DECEMBER 31,              SEPTEMBER 30,
                                                 -----------------------   -----------------------
                                                    2001       2000(A)        2002         2001
                                                 ----------   ----------   ----------   ----------
                                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                              <C>          <C>          <C>          <C>
STATEMENT OF OPERATIONS INFORMATION:
Revenues.......................................   $91,458      $77,036      $71,351      $69,013
Total expenses.................................    84,993       76,648       69,359       64,789
Operating income...............................     6,465          388        1,992        4,224
Income before income taxes and cumulative
  effect of accounting change..................     9,344        1,410        1,990        6,344
Cumulative effect of change in accounting
  principle....................................        --      (53,374)          --           --
Net income (loss)..............................     1,496      (51,299)      (1,244)         916
---------------
(a) Pro forma
</Table>

                                        14
<PAGE>

<Table>
<Caption>
                                                       YEARS ENDED            NINE MONTHS ENDED
                                                      DECEMBER 31,              SEPTEMBER 30,
                                                 -----------------------   -----------------------
                                                    2001       2000(A)        2002         2001
                                                 ----------   ----------   ----------   ----------
                                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                              <C>          <C>          <C>          <C>
EARNINGS (LOSS) PER COMMON SHARE:
Basic:
Earnings (loss) before cumulative effect of
  accounting change............................   $  0.23      $  0.32      $ (0.19)     $  0.14
Cumulative effect of accounting changes........        --        (8.21)          --           --
                                                  -------      -------      -------      -------
Net earnings (loss)............................   $  0.23      $ (7.89)     $ (0.19)     $  0.14
                                                  =======      =======      =======      =======
Diluted:
Earnings (loss) before cumulative effect of
  accounting change............................   $  0.20      $  0.32      $ (0.19)     $  0.12
Cumulative effect of accounting changes........        --        (8.15)          --           --
                                                  -------      -------      -------      -------
Net earnings (loss)............................   $  0.20        (7.83)     $ (0.19)     $  0.12
                                                  =======      =======      =======      =======
---------------
(a) Pro forma
</Table>

<Table>
<Caption>
                                                         AT DECEMBER 31,           AT SEPTEMBER 30,
                                                       2001           2000               2002
                                                   ------------   ------------   --------------------
                                                    (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                      (UNAUDITED)
<S>                                                <C>            <C>            <C>
BALANCE SHEET INFORMATION:
Total assets (excluding intangibles).............    $100,590       $ 77,412           $ 99,285
Total assets.....................................     146,926        133,249            140,364
Total liabilities................................      43,442         33,118             37,533
Total stockholders' equity.......................     103,484        100,131            102,831
Book value per share                                 $  15.68       $  15.36           $  15.50
</Table>

10.   INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS

     The directors and executive officers of BKF Capital Group, Inc., their
positions and offices and their ownership of eligible options as of December 11,
2002 are set forth in the following table:

<Table>
<Caption>
NAME                                            POSITION                     ELIGIBLE OPTIONS
----                                            --------                     ----------------
<S>                           <C>                                            <C>
John A. Levin...............  Chairman, Chief Executive Officer and                45,000
                              President
Gregory T. Rogers...........  Executive Vice President and Chief Operating         20,000
                              Officer
Glenn A. Aigen..............  Senior Vice President, Chief Financial               15,000
                              Officer and Treasurer
Norris Nissim...............  Vice President, General Counsel and                   7,300
                              Secretary
J. Barton Goodwin...........  Director                                                  0
Burton G. Malkiel...........  Director                                                  0
Anson M. Beard, Jr..........  Director                                                  0
David D. Grumhaus...........  Director                                                  0
Peter J. Solomon............  Director                                                  0
Dean J. Takahashi...........  Director                                                  0
James S. Tisch..............  Director                                                  0
</Table>

                                        15
<PAGE>

     The address of each director and executive officer is c/o BKF Capital
Group, Inc., One Rockefeller Plaza, New York, New York 10020.

     Please see the definitive proxy statement for our 2002 annual meeting of
stockholders, filed with the Securities and Exchange Commission on April 22,
2002, for information regarding the amount of our securities beneficially owned
by our executive officers and directors as of March 31, 2002 and any agreement,
arrangement or understanding between the Company and any other person with
respect to the Company's common stock.

     We have been advised that all of our executive officers who are eligible to
participate intend to tender all of their eligible options pursuant to this
offer.

     Based upon our records and upon information provided to us by our
directors, executive officers, associates and subsidiaries, neither we nor, to
the best of our knowledge, any of our directors or executive officers of any of
our subsidiaries nor any associates or subsidiaries of any of the foregoing, has
effected any transactions in our common stock or stock options during the 60
days prior to the date hereof.

     Except for outstanding options to purchase common stock and restricted
stock unit awards granted from time to time to certain of our employees
(including executive officers) pursuant to the Plan, and except as set forth in
this Offer to Exchange, neither we nor any person controlling us nor, to our
knowledge, any of our directors or executive officers, is a party to any
contract, arrangement, understanding or relationship with any other person
relating, directly or indirectly, to the offer with respect to any of our
securities (including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations).

11.  STATUS OF OPTIONS ACQUIRED BY US IN THE OFFER; ACCOUNTING
     CONSEQUENCES OF THE OFFER.

     Eligible options we acquire in connection with the offer will be cancelled
by the Company. Neither the restricted stock units issued in the exchange nor
the eligible options that are not returned under this offer will be treated for
financial reporting purposes as variable awards. However, we will record a
non-cash compensation expense currently estimated to be approximately $2.1
million over the vesting period of the restricted stock units.

12.  LEGAL MATTERS; REGULATORY APPROVALS.

     We are not aware of any license or regulatory permit that appears to be
material to our business that might be adversely affected by our exchange of
options and issuance of restricted stock units as contemplated by the offer, or
of any approval or other action by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, that
would be required for the acquisition or ownership of our restricted stock units
as contemplated herein. Should any such approval or other action be required, we
contemplate that we will seek such approval or take such other action. We are
unable to predict whether we may determine that we are required to delay the
acceptance of options for exchange pending the outcome of any such matter. We
cannot assure you that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that the failure
to obtain any such approval or other action might not result in adverse
consequences to our business. Our obligation under the offer to accept options
elected for exchange is subject to conditions, including the conditions
described in Section 6.

13.  MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES.

     The following is a general summary of the material federal tax consequences
of the offer to U.S. citizens and residents. This discussion is based on the
Internal Revenue Code of 1986, as amended, its legislative history, Treasury
Regulations thereunder and administrative and judicial interpretations thereof,
as of the date

                                        16
<PAGE>

hereof. This summary does not discuss all the federal tax consequences that may
be relevant to you in light of your particular circumstances and is not intended
to be applicable in all respects to all categories of option holders. This
summary does not address taxes that may be due upon the subsequent sale of
shares of common stock you receive when the restricted stock units vest and the
underlying shares of common stock are delivered or in connection with dividends
paid with respect to such shares, if any.

     YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO YOUR
INDIVIDUAL TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER.

     GENERAL.

     There are no immediate tax consequences of receiving restricted stock
units. Social Security and Medicare employment taxes will apply at the time the
restricted stock units vest. When the underlying shares of common stock are
delivered to you, you will recognize ordinary income equal to the fair market
value of the shares distributed to you. We will determine the fair market value
of the shares based on the average of the high and low prices of our common
stock on the date the shares are delivered to you or, if no sales are reported
on that date, in accordance with applicable tax law.

     If you defer delivery of the shares of common stock pursuant to the
Company's Deferred Compensation Plan, in general the effect should be to defer
your receipt of ordinary income -- and resulting taxation -- until the time the
shares are delivered. Social Security and Medicare employment taxes generally
will NOT be deferred, however, so these taxes will still apply at the time the
restricted stock units vest. Upon settlement of restricted stock units, a
participant will recognize ordinary income equal to the fair market value at
that date of the shares of common stock or other property delivered. The tax
basis in such shares will be equal to the fair market value at that date (that
is, equal to the amount of ordinary income recognized).

     If you forfeit restricted stock units, no loss will be recognized for
federal income tax purposes. Generally, we will be entitled to a tax deduction
equal to any amount recognized as ordinary income by a participant, but a
transaction resulting in a capital gain or loss to a participant will not give
rise to a tax deduction for us.

     WITHHOLDING TAXES.

     At the time you recognize ordinary income on the vesting of the restricted
stock units (and the distribution of the corresponding shares of common stock),
we will have an income and payroll withholding tax obligation with respect to
that income, much like the obligation that arises when we pay you your salary or
a bonus. The ordinary income resulting from the vesting of the restricted stock
units (and the related distribution of shares of common stock) will be reflected
in the Form W-2 reported to the Internal Revenue Service for the year in which
the delivery occurs.

     You may elect to utilize a portion of the shares of common stock otherwise
deliverable to you to satisfy your withholding tax obligation. The withholding
of shares of common stock will be in accordance with the Deferred Stock Award
Agreement, which will provide that we may deduct or cause to be deducted from,
or collect or cause to be collected, any taxes required by law to be withheld or
paid with respect to your restricted stock units.

     By participating in this exchange and returning to us the completed
Deferred Stock Award Agreement, you will authorize us to take to the above
actions to pay withholding taxes. The income tax withholding may be insufficient
to cover your final income tax liability with respect to the share distribution.
You should consult with your own tax advisor to determine whether you should
make estimated tax payments for the year of the share distribution.

14.  EXTENSION OF OFFER; TERMINATION; AMENDMENT.

     We expressly reserve the right, in our discretion, at any time and from
time to time, and regardless of whether or not any event set forth in Section 6
has occurred or is deemed by us to have occurred, to extend the period of time
during which the offer is open and thereby delay the acceptance for exchange of
any eligible options by giving oral, written, or electronic notice of such
extension to the option holders.

                                        17
<PAGE>

     We also expressly reserve the right, in our reasonable judgment, prior to
the expiration date, to terminate or amend the offer and to postpone our
acceptance and cancellation of any eligible options elected for exchange upon
the occurrence of any of the conditions specified in Section 6, by giving oral,
written, or electronic notice of such termination or postponement to the option
holders. Notwithstanding the foregoing, we will pay the consideration offered or
return the eligible options elected for exchange promptly after termination or
withdrawal of the offer to exchange.

     Subject to compliance with applicable law, we further reserve the right, in
our discretion, and regardless of whether any event set forth in Section 6 has
occurred or is deemed by us to have occurred, to amend the offer in any respect,
including, without limitation, by decreasing or increasing the consideration
offered to option holders in the program or by decreasing or increasing the
number of options being sought in the offer.

     Amendments to the offer may be made at any time and from time to time. In
the case of an extension, the amendment will be issued no later than 9:00 a.m.,
on the next business day after the last previously scheduled or announced
expiration date. Any amendment of the offer will be disseminated promptly to
holders of eligible options in a manner reasonably designated to inform such
holders of such change. Without limiting the manner in which we may choose to
disseminate any amendment of this offer, except as required by law, we have no
obligation to publish, advertise, or otherwise communicate any such
dissemination.

     If we materially change the terms of the offer or the information
concerning the offer, or if we waive a material condition of the offer, we may
extend the offer. Except for a change in price or a change in percentage of
securities sought, the amount of time by which we will extend the offer
following a material change in the term of the offer or information concerning
the offer will depend on the facts and circumstances, including the relative
materiality of such terms or information. If we decide to take any of the
following actions, we will notify you of such action, and we will extend the
offer for a period of no fewer than ten business days after the date of such
notice, if the offer would otherwise expire during that period:

     - we increase or decrease:

      - the amount of consideration offered for the options; or

      - the number of options eligible to be elected for exchange in the offer,
        except that in the case of an increase, it must be by an amount that
        exceeds 2% of the shares of common stock issuable upon exercise of the
        options that are subject to the offer immediately prior to the increase;
        and

     - the offer is scheduled to expire at any time earlier than the end of the
       tenth business day from, and including, the date that notice of such
       increase or decrease is first published, sent or given in the manner
       specified in this Section 14.

15.  FEES AND EXPENSES.

     We will not pay any fees or commissions to any broker, dealer or other
person for soliciting elections to exchange options pursuant to this offer to
exchange.

16.  ADDITIONAL INFORMATION.

     We recommend that, in addition to this offer to exchange, the Deferred
Stock Award Agreement, and the Letter of Transmittal, you review the following
materials, which we have filed with the Securities and Exchange Commission and
are incorporating by reference into this Offer to Exchange, before making a
decision on whether to elect to exchange your options:

     - our annual report on Form 10-K for the fiscal year ended December 31,
       2001, filed with the Securities and Exchange Commission on April 1, 2002;

     - our quarterly report on Form 10-Q for the fiscal quarter ended March 31,
       2002, filed with the Securities and Exchange Commission on May 14, 2002;

     - our quarterly report on Form 10-Q for the fiscal quarter ended June 30,
       2002, filed with the Securities and Exchange Commission on August 14,
       2002;

                                        18
<PAGE>

     - our quarterly report on Form 10-Q for the fiscal quarter ended September
       30, 2002, filed with the Securities and Exchange Commission on November
       14, 2002;

     - the Company's 1998 Incentive Compensation Plan (incorporated by reference
       to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
       period ended June 30, 2001 filed with the Securities and Exchange
       Commission on August 14, 2001).

     - the definitive proxy statement for our 2002 annual meeting of
       stockholders, filed with the Securities and Exchange Commission on April
       22, 2002;

     - the description of our common stock included in our registration
       statement on Form 8-A, which was filed with the Securities and Exchange
       Commission on November 4, 1993, including any amendments or reports we
       file for the purpose of updating that description.

     We hereby incorporate by reference any additional documents that we may
file with the Securities and Exchange Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act between the date of this offer
to exchange and the expiration date. These include periodic reports, such as
quarterly reports on Form 10-Q and current reports on Form 8-K, as well as proxy
statements.

     The Securities and Exchange Commission file number for all of these filings
is 1-10024. These filings and other reports, registration statements, proxy
statements and other filings can be inspected and copied at the reference
facilities maintained by the Securities and Exchange Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
copies of all or any part of these documents from this office upon the payment
of the fees prescribed by the Securities and Exchange Commission. You may obtain
information on the operation of the public reference rooms by calling the
Securities and Exchange Commission at 1-800-732-0330. These filings are also
available to the public on the web site of the Securities and Exchange
Commission at http://www.sec.gov.

     We will provide without charge to any holder of eligible options, upon the
written or oral request of any such person, a copy of any or all of the
documents to which we have referred you, including our reports, proxy statements
and other stockholder communications, other than exhibits to such documents
(unless such exhibits are specifically incorporated by reference into such
documents). Requests should be directed to: BKF Capital Group, Inc., Attn:
Norris Nissim, One Rockefeller Plaza, New York, New York 10020. You may also
make a request by telephone at (212) 332-8437 between the hours of 9:00 a.m. and
5:00 p.m., Eastern Standard Time, Monday through Friday.

     As you read the foregoing documents, you may find some inconsistencies in
information from one document to another. If you find inconsistencies between
the documents, or between a document and this Offer to Exchange, you should rely
on the statements made in the most recent document.

     The information contained in this Offer to Exchange about the Company
should be read together with the information contained in the documents to which
we have referred you.

17.  FORWARD LOOKING STATEMENTS

     This Offer to Exchange, as well as any documents incorporated herein by
reference, contains certain statements that are not historical facts, including,
most importantly, information concerning possible or assumed future results of
operations of the Company 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.
These forward-looking statements are based on the Company's current expectations
and are susceptible to a number of risks, uncertainties and other factors, and
the Company'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 publicity; changes in business
strategy; quality of management; availability, terms and deployment of capital;
business abilities and judgment of personnel;

                                        19
<PAGE>

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 the Company's 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 the Company's control. The Company 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 the Company's policy
generally not to make any specific projections as to future earnings, and the
Company does not endorse any projections regarding future performance that may
be made by third parties.

18.  MISCELLANEOUS.

     We are not aware of any jurisdiction where the making of the offer violates
applicable law. If we become aware of any jurisdiction where the making of the
offer violates applicable law, we will make a good faith effort to comply with
such law. If, after such good faith effort, we cannot comply with such law, the
offer will not be made to, nor will elections to exchange options be accepted
from or on behalf of, the option holders residing in such jurisdiction.

     We have not authorized any person to make any recommendation on our behalf
as to whether you should elect to exchange or refrain from exchanging your
options pursuant to the offer. You should rely only on the information contained
in this document or to which we have referred you. We have not authorized anyone
to give you any information or to make any representations in connection with
the offer other than the information and representations contained in this
document or in the accompanying Letter of Transmittal. If anyone makes any
recommendation or representation to you or gives you any information, you must
not rely upon that recommendation, representation or information as having been
authorized by us.

                                          BKF CAPITAL GROUP, INC.

December 11, 2002

                                        20

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.2
<SEQUENCE>4
<FILENAME>y66399exv99waw2.txt
<DESCRIPTION>FORM OF LETTER OT TRANSMITTAL
<TEXT>
<PAGE>

                                                                  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
<PAGE>

                                                                       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.

<Table>
<Caption>
----------------------------------------------------------------------------------------------
                                 SUMMARY OF ELIGIBLE OPTIONS
----------------------------------------------------------------------------------------------
          GRANT DATE                    EXERCISE PRICE            NUMBER OF ELIGIBLE OPTIONS
----------------------------------------------------------------------------------------------
<S>                             <C>                             <C>
          12/13/2001                        $28.27
----------------------------------------------------------------------------------------------
</Table>

Check box to ACCEPT this offer   [ ]

------------------------------------------------------
Signature of Holder

Print Name:
----------------------------------------

Home Telephone: (   )
---------------------------
Date:
-----------------------------------------------

Address:
--------------------------------------------

         -----------------------------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.3
<SEQUENCE>5
<FILENAME>y66399exv99waw3.txt
<DESCRIPTION>FORM OF DEFERRED STOCK AWARD AGREEMENT
<TEXT>
<PAGE>

                                                                  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
<PAGE>

     (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
<PAGE>

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
<PAGE>

     (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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.4
<SEQUENCE>6
<FILENAME>y66399exv99waw4.txt
<DESCRIPTION>FORM OF ELECTION WITHDRAWAL NOTICE
<TEXT>
<PAGE>

                                                                  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: ------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.5
<SEQUENCE>7
<FILENAME>y66399exv99waw5.txt
<DESCRIPTION>FORM OF LETTER TO ELIGIBLE OPTION HOLDERS
<TEXT>
<PAGE>

                                                                  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 212-332-8437 or Glenn Aigen at (212) 332-8460.

                                          Sincerely,

                                         /s/ JOHN A. LEVIN
                                          --------------------------------------
                                               John A. Levin
                                               President and Chief Executive
                                         Officer

Enclosures

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.6
<SEQUENCE>8
<FILENAME>y66399exv99waw6.txt
<DESCRIPTION>FORM OF ACCEPTANCE
<TEXT>
<PAGE>

                                                                  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
<PAGE>

                                                                      SCHEDULE A

Employee Name:

Employee ID Number:

<Table>
<Caption>
OPTION GRANT DATE                NO. OF ELIGIBLE OPTIONS TENDERED
-----------------                --------------------------------
<S>                      <C>
December 13, 2001
</Table>

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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.7
<SEQUENCE>9
<FILENAME>y66399exv99waw7.txt
<DESCRIPTION>PRESS RELEASE
<TEXT>
<PAGE>

                                                                  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 forward-looking 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
<PAGE>

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.

</TEXT>
</DOCUMENT>
</SUBMISSION>
