Document:

BKF CAPITAL GROUP, INC.

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                           DEFERRED COMPENSATION PLAN

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                             BKF CAPITAL GROUP, INC.

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                           DEFERRED COMPENSATION PLAN

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1.       Purpose  ..........................................................   1

2.       Definitions........................................................   1

3.       Administration.....................................................   2

4.       Participation......................................................   3

5.       Deferrals..........................................................   3

6.       Deferral Accounts..................................................   4

7.       Settlement of Deferral Accounts....................................   6

8.       Provisions Relating to Section 16 of the Exchange Act
         and Section 162(m) of the Code.....................................   8

9.       Statements.........................................................   8

10.      Sources of Stock:  Limitation on Amount of
         Stock-Denominated Deferrals........................................   8

11.      Amendment/Termination..............................................   8

12.      General Provisions.................................................   9

13.      Effective Date.....................................................  11

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                             BKF CAPITAL GROUP, INC.

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                           DEFERRED COMPENSATION PLAN

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         1.       PURPOSE. The purpose of this Deferred Compensation Plan (the
"Plan") is to provide to members of a select group of management or highly
compensated employees of BKF Capital Group, Inc. ("BKF") and its subsidiaries
who are selected for participation in the Plan a means to defer receipt of
specified portions of compensation and to have such deferred amounts treated as
if invested in specified investment vehicles, in order to enhance the
competitiveness of BKF's executive compensation program and, therefore, its
ability to attract and retain qualified key personnel necessary for the
continued success and progress of BKF, and to encourage such persons to retain a
significant equity stake in BKF.

         2.       DEFINITIONS. In addition to the terms defined in Section 1
above, the following terms used in the Plan shall have the meanings set forth
below:

                  (a)      "Administrator" shall mean the Compensation Committee
of the Board of Directors or such other committee designated under Section 3(b),
to which the Board has delegated the authority to take action under the Plan.

                  (b)      "Beneficiary" shall mean the person, persons, trust
or trusts entitled by will or the laws of descent and distribution to receive
the benefits specified under the Plan upon a Participant's death, PROVIDED THAT,
if and to the extent authorized by the Administrator, a Participant may be
permitted to designate a Beneficiary, in which case the "Beneficiary" instead
will be the person, persons, trust or trusts (if any are then surviving) which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Administrator to receive the benefits
specified under the Plan upon such Participant's death. Unless otherwise
determined by the Administrator, a Participant's designation of a Beneficiary
other than the Participant's spouse shall be subject to the written consent of
the spouse.

                  (c)      "Board" or "Board of Directors" shall mean BKF's
Board of Directors.

                  (d)      "Cash Deferral" shall mean that portion of the assets
of a Participant's Deferral Account which is attributable to cash based
deferrals made by Participant and investment results earned (or lost) thereon.

                  (e)      "Code" shall mean the Internal Revenue Code of 1986,
as amended. References to any provision of the Code or regulation (including a
proposed regulation) thereunder shall include any successor provisions or
regulations.

                  (f)      "Deferral Account" shall mean the account or
subaccount established and maintained by BKF for specified deferrals by a
Participant, as described in Section 6. Deferral Accounts will be maintained
solely as bookkeeping entries by BKF to evidence its unfunded obligations.

                  (g)      "Deferred Stock" shall mean a credit to the
Participant's Deferral Account representing the right to receive one share of
Stock for each share of Deferred Stock so credited, together with rights to
dividend equivalents and other rights and limitations specified in the Plan.

                  (h)      "Disability" shall mean a Participant's inability,
due to physical or mental incapacity, to substantially perform his or her duties
and responsibilities of employment for a period of 180 days in any consecutive
nine-month period.

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                  (i)      "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended. References to any provision of the Exchange Act or rule
thereunder shall include any successor provisions or rules.

                  (j)      "Incentive Compensation Plan" means the BKF 1998
Incentive Compensation Plan.

                  (k)      "Participant" shall mean any employee of BKF or any
subsidiary who is designated by the Administrator as eligible to participate and
who participates or makes an election to participate in the Plan.

                  (l)      "Retirement" shall mean a Participant's termination
of employment after reaching 65 years of age, or after reaching 55 years of age
and completing at least 10 years of service with BKF or any of its subsidiaries
or affiliates.

                  (m)      "Stock" shall mean BKF's Common Stock and such other
securities as may be substituted (or resubstituted) for BKF Common Stock
pursuant to Section 10(c) of the BKF 1998 Incentive Compensation Plan.

                  (n)      "Trust" shall mean any trust or trusts established by
BKF as part of the Plan; PROVIDED, HOWEVER, that the assets of such trusts shall
remain subject to the claims of BKF's general creditors.

                  (o)      "Trustee" shall mean the trustee of a Trust.

                  (p)      "Trust Agreement" shall mean the agreement entered
into between BKF and the Trustee to carry out the purposes of the Plan, as
amended or restated from time to time.

                  (q)      "Valuation Date" shall mean the close of business on
the last business day of each calendar quarter or other periodic date specified
by the Administrator.

         3.       ADMINISTRATION.

                  (a)      AUTHORITY. The Administrator (subject to the Board's
ability to restrict the Administrator) shall administer the Plan in accordance
with its terms, and shall have all powers necessary to accomplish such purpose,
including the power and authority to construe and interpret the Plan, to define
the terms used herein, to prescribe, amend and rescind rules and regulations,
agreements, forms, and notices relating to the administration of the Plan, to
make all other determinations necessary or advisable for the administration of
the Plan, and to determine whether to terminate participation of and accelerate
distributions to Participants, including Participants who engage in activities
competitive with or not in BKF's best interests. Any actions of the
Administrator with respect to the Plan and determination in all matters referred
to herein shall be conclusive and binding for all purposes and upon all persons
including BKF, the Administrator and members of the committee serving as such,
Participants and employees, and their respective successors in interest (subject
to the Board's authority to oversee the Administrator). The Administrator may
appoint agents and delegate thereto powers and duties under the Plan, except as
otherwise limited by the Plan.

                  (b)      ADMINISTRATOR. The Administrator shall consist of
such number of members as the Board shall determine, each of whom shall be
appointed by, shall remain in office at the will of, and may be removed, with or
without cause, by the Board, and any member of the

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Administrator may resign at any time. The Administrator may delegate
administrative and other functions under the Plan to officers or employees of
BKF and its subsidiaries. No member of the committee serving as Administrator
shall be entitled to act on or decide any matter relating solely to himself or
herself or any of his or her rights or benefits under the Plan. No bond or other
security shall be required in connection with the Plan of the Administrator or
any member of the committee serving as such in any jurisdiction.

                  (c)      LIMITATION OF LIABILITY. Each committee member
serving as Administrator shall be entitled to, in good faith, rely or act upon
any report or other information furnished to him or her by any officer or other
employee of BKF or any subsidiary, BKF's independent certified public
accountants, or any executive compensation consultant, legal counsel, or other
professional retained by BKF to assist in the administration of the Plan. To the
maximum extent permitted by law, no committee member serving as Administrator,
nor any person to whom ministerial duties have been delegated under the Plan,
shall be liable to any person for any action taken or omitted in connection with
the interpretation and administration of the Plan, except for the willful
misconduct or gross negligence of such member or person.

         4.       PARTICIPATION. The Administrator shall determine those
employees of BKF and its subsidiaries, from among the senior executives who
qualify as a select group of management or highly compensated employees, who
will be eligible to participate in the Plan.

         5.       DEFERRALS. To the extent authorized by the Administrator, a
Participant may elect to defer compensation or awards which may be in the form
of cash, Stock, Stock-denominated awards or other property to be received from
BKF or a subsidiary, including salary, annual bonus awards, long-term awards,
shares issuable on stock option exercise and compensation payable under other
plans and programs, employment agreements or other arrangements, or otherwise,
as may be provided under the terms of such plans, programs and arrangements or
as designated by the Administrator. Stock-denominated awards that the
Administrator may authorize for deferral include (i) stock unit awards such as
Deferred Stock granted under BKF's Incentive Compensation Plan and (ii) the
shares representing the profit upon exercise of stock options granted under any
BKF plan, in circumstances in which the option exercise price is paid by the
surrender of previously acquired shares. In addition to any terms and conditions
of deferral set forth under plans, programs or arrangements from which receipt
of compensation or awards is deferred, the Administrator may impose limitations
on the amounts permitted to be deferred and other terms and conditions on
deferrals under the Plan. Any such limitations, and other terms and conditions
of deferral, shall be specified in documents setting forth terms and conditions
of deferrals under the Plan, rules relating to the Plan or election forms, other
forms, or instructions published by or at the Administrator's direction. The
Administrator may permit awards and other amounts to be treated as deferrals
under the Plan, including deferrals that may be mandatory as determined by the
Administrator in its sole discretion or under the terms of another plan or
arrangement of BKF, for administrative convenience or otherwise to serve the
purposes of the Plan and such other plan or arrangement.

                  (a)      ELECTIONS. Once an election form, properly completed,
is received by BKF, the Participant's elections shall be irrevocable; PROVIDED,
HOWEVER, that the Administrator may in its discretion determine that elections
are revocable until the deadline specified for the filing of such election;
PROVIDED, FURTHER, that the Administrator may, in its discretion, permit a
Participant to elect a further deferral of amounts credited to a Deferral
Account by filing a later election form; and PROVIDED, FURTHER, that, unless
otherwise approved by the Administrator, any election to further defer amounts
credited to a Deferral Account must be made at least one year prior to the date
such amounts would otherwise be payable.

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                  (b)      DATE OF ELECTION. An election to defer compensation
or awards hereunder must be received by the Administrator prior to the date
specified by or at the Administrator's direction. Under no circumstances may a
Participant defer compensation or awards to which the Participant has attained,
at the time of deferral, a legally enforceable right to current receipt of such
compensation or awards.

         6.       DEFERRAL ACCOUNTS.

                  (a)      ESTABLISHMENT; CREDITING OF AMOUNTS DEFERRED. One or
more Deferral Accounts will be established for each Participant, as determined
by the Administrator. The amount of compensation or awards deferred with respect
to each Deferral Account will be credited to such Account as of the date on
which such amounts would have been paid to the Participant but for the
Participant's election to defer receipt hereunder, unless otherwise determined
by the Administrator. With respect to any fractional shares of Stock or
Stock-denominated awards, the Administrator shall determine whether to credit
the Deferral Account with a fraction of a share, to pay cash in lieu of the
fractional share or carry forward such cash amount under the Plan, round to the
nearest whole share, round to the next whole share, or round down to eliminate
the fractional share or otherwise make provision for the fractional share. With
respect to Cash Deferrals, amounts of hypothetical income and appreciation and
depreciation in value of such account will be credited and debited to, or
otherwise reflected in, such Account from time to time. Unless otherwise
determined by the Administrator (including under Section 6(e)), Cash Deferrals
shall be deemed invested in a hypothetical investment as of the date of
deferral.

                  (b)      INVESTMENT VEHICLES.

         (i)      Amounts credited as Deferred Stock to a Participant's Deferral
                  Account (whether or not as a result of a Cash Deferral) may
                  not be reallocated or deemed reinvested in any other
                  investment vehicle, but shall remain as Deferred Stock until
                  such time as the Deferral Account is settled in accordance
                  with Section 7.

         (ii)     Subject to the provisions of Sections 6(d) and 8, Cash
                  Deferral amounts shall be deemed to be invested, at the
                  Participant's direction, in one or more investment vehicles as
                  may be specified from time to time by the Administrator;
                  PROVIDED, HOWEVER, that the Administrator may expressly
                  reserve the right to approve or disapprove any investment
                  direction given by a Participant. The Administrator may change
                  or discontinue any hypothetical investment vehicle available
                  under the Plan in its discretion; PROVIDED, HOWEVER, that each
                  affected Participant shall be given the opportunity, without
                  limiting or otherwise impairing any other right of such
                  Participant regarding changes in investment directions, to
                  redirect the allocation of his or her Cash Deferral amount
                  deemed invested in the discontinued investment vehicle among
                  the other hypothetical investment vehicles, including any
                  replacement vehicle.

                  (c)      DIVIDEND EQUIVALENTS AND ADJUSTMENTS. Deferred Stock
credited to a Participant's Deferral Account will be credited with Dividend
Equivalents and subject to adjustment as provided in this Section 6(c):

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         (i)      CASH DIVIDENDS. If BKF declares and pays a cash dividend on
                  Stock, then a number of additional shares of Deferred Stock
                  shall be credited to a Participant's Deferral Account as of
                  the payment date for such dividend equal to (A) the number of
                  shares of Deferred Stock credited to the Deferral Account as
                  of the record date for such dividend, multiplied by (B) the
                  amount of cash actually paid as a dividend on each share at
                  such payment date, divided by (C) the fair market value of a
                  share of Stock at such payment date.

         (ii)     NON-STOCK DIVIDENDS. If BKF declares and pays a dividend on
                  Stock in the form of property other than shares of Stock, then
                  a number of additional shares of Deferred Stock shall be
                  credited to a Participant's Deferral Account as of the payment
                  date for such dividend equal to (A) the number of shares of
                  Deferred Stock credited to the Deferral Account as of the
                  record date for such dividend, multiplied by (B) the fair
                  market value of any property other than shares actually paid
                  as a dividend on each share at such payment date, divided by
                  (C) the fair market value of a share of Stock on the day after
                  such payment date.

         (iii)    STOCK DIVIDENDS AND SPLITS. If BKF declares and pays a
                  dividend on Stock in the form of additional shares of Stock,
                  or there occurs a forward split of Stock, then a number of
                  additional shares of Deferred Stock shall be credited to
                  Participant's Deferral Account as of the payment date for such
                  dividend or forward Stock split equal to (A) the number of
                  shares of Deferred Stock credited to the Deferral Account as
                  of the record date for such dividend or split, multiplied by
                  (B) the number of additional shares actually paid as a
                  dividend or issued in such split in respect of each share of
                  Stock.

         (iv)     MODIFICATIONS TO DIVIDEND EQUIVALENTS POLICY. Other provisions
                  of this Section 6(c) notwithstanding, the Administrator may
                  modify the manner of payment or crediting of Dividend
                  Equivalents hereunder, in order to coordinate the value of
                  Deferral Accounts with any trust holding shares established
                  under Section 6(e), for administrative convenience, or for any
                  other reason.

         (v)      ADJUSTMENTS. The number of shares of Deferred Stock credited
                  to the Participant's Account may be adjusted by the
                  Administrator in order to prevent dilution or enlargement of
                  Participants' rights with respect to Deferred Stock, in the
                  event of any unusual corporate transaction or event which
                  affects the value of Stock, provided that any such adjustment
                  shall be made taking into account any crediting of Deferred
                  Stock to the Participant under other provisions of this
                  Section 6(c) in connection with such transaction or event.

                  (d)      ALLOCATION AND REALLOCATION OF HYPOTHETICAL
INVESTMENTS. A Participant may allocate the Cash Deferral portion of his or her
Deferral Account to one or more of the hypothetical investment vehicles
authorized under the Plan. Subject to Section 6(b)(i) and any rules established
by the Administrator, a Participant may reallocate such Cash Deferrals as of the
Valuation Date or other date specified by the Administrator at or following the
filing of Participant's election to one or more of such hypothetical investment
vehicles, by filing with the Administrator a notice in such form as may be
specified by the Administrator. The Administrator may, in its discretion,
restrict allocation into or reallocation by specified Participants into or out
of specified investment vehicles or specify minimum or maximum amounts that may
be allocated or reallocated by Participants.

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                  (e)      TRUSTS. The Administrator may, in its discretion,
establish one or more Trusts (including sub-accounts under such Trust(s)), and
deposit therein amounts of cash, Stock, or other property not exceeding the
amount of BKF's obligations with respect to a Participant's Deferral Account
established under this Section 6. In such case, the amounts of hypothetical
income and appreciation and depreciation in value of such Deferral Account shall
be equal to the actual income on, and appreciation and depreciation of, the
assets in such Trust(s). Other provisions of this Section 6 notwithstanding, the
timing of allocations and reallocations of assets in such a Deferral Account,
and the investment vehicles available with respect to the Cash Deferral portion
of the Deferral Account, may be varied to reflect the timing of actual
investments of the assets of such Trust(s) and the actual investments available
to such Trust(s).

                  (f)      CASHLESS EXERCISE. If and to the extent permitted by
the Administrator, and subject to such terms and conditions as may be
established by the Administrator from time to time, a Participant may submit a
request to the Administrator to surrender (or constructively surrender) Deferred
Stock allocated to his or her Deferral Account to pay the purchase price of any
stock options of BKF granted to the Participant under another plan, program or
arrangement.

                  (g)      RESTRICTIONS ON PARTICIPANT DIRECTION. The provisions
of Sections 6(b), 6(d), and 7(c) notwithstanding, the Administrator may restrict
or prohibit reallocations of amounts deemed invested in specified investment
vehicles, and subject such amounts to a risk of forfeiture and other
restrictions, in order to conform to restrictions applicable to Stock, a
Stock-denominated award, or any other award or amount deferred under the Plan
and resulting in such deemed investment, to comply with any applicable law or
regulation, or for such other purpose as the Administrator may determine is not
inconsistent with the Plan.

         7.       SETTLEMENT OF DEFERRAL ACCOUNTS.

                  (a)      FORM OF PAYMENT. BKF shall settle a Participant's
Deferral Account, and discharge all of its obligations to pay deferred
compensation under the Plan with respect to such Deferral Account, as follows:

         (i)      with respect to Cash Deferrals, payment of cash or, in the
                  discretion of the Administrator, by delivery of other liquid
                  assets (including Stock) having a fair market value equal to
                  the Cash Deferral amount credited to the Deferral Account; or

         (ii)     with respect to Stock based deferral amounts, by delivery of
                  shares of Stock, including shares of Stock delivered out of
                  the assets of the Trust.

                  (b)      FORFEITURES UNDER OTHER PLANS AND ARRANGEMENTS. To
the extent that Stock or any other award or amount (i) is deposited in a Trust
pursuant to Section 6 in connection with a deferral of Stock, a
Stock-denominated award, or any other award or amount under another plan,
program, employment agreement or other arrangement, or otherwise is deemed to be
deferred under the Plan without such a deposit, and (ii) is forfeited pursuant
to the terms of such plan, program, agreement or arrangement, the Participant
shall not be entitled to the value of such Stock and other property related
thereto (including without limitation, dividends and distributions thereon) or
other award or amount, or proceeds thereof. Any Stock or Stock-denominated
awards, other property or other award or amount (and proceeds thereof) forfeited
shall be returned to BKF.

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                  (c)      TIMING OF PAYMENTS. Payments in settlement of a
Deferral Account shall be made as soon as practicable after the date or dates
(including upon the occurrence of specified events), and in such number of
installments, as may be directed by the Participant in his or her election
relating to such Deferral Account, PROVIDED THAT, in the event of termination of
employment for reasons other than Retirement, death or Disability, a single lump
sum payment in settlement of any Deferral Account (including a Deferral Account
with respect to which one or more installment payments have previously been
made) shall be made as promptly as practicable following the next Valuation
Date, unless otherwise determined by the Administrator; PROVIDED, FURTHER, that
payments in settlement of a Deferral Account will be made in accordance with
Section 7(d) in the event of a Change in Control; and PROVIDED, FURTHER, that,
unless otherwise determined by the Administrator, payments in settlement of a
Deferral Account will be made in not more than ten installments and in no event
later than ten years after the Participant's termination of employment due to
Retirement, death or Disability.

                  (d)      CHANGE IN CONTROL. In the event of a "Change in
Control," as defined in this Section 7(d), the following provisions shall apply:

         (i)      All deferral periods will be automatically accelerated to end
                  at the time of the Change in Control, and each Deferral
                  Account will be settled within five business days after the
                  end of the deferral period, provided that the Administrator
                  may accelerate this settlement (for all or specified parts of
                  a Deferral Account) in anticipation of a Change in Control for
                  any reason, subject to such conditions as the Administrator
                  may impose; and

         (ii)     If the Change in Control involves a transaction that is to be
                  accounted for as a pooling of interests, then, regardless of
                  any other rights the Participant may have hereunder, each
                  Participant's rights hereunder will be adjusted or restricted
                  to the extent necessary to ensure that such rights will not
                  impair the pooling-of-interests accounting treatment of the
                  transaction.

For purposes of the Plan, the term "Change in Control" has the meaning defined
in any employment agreement or change-in-control severance agreement between BKF
and the Participant in effect at the time such event occurs or, if no such
agreement is in effect at the relevant date, the meaning as defined in BKF's
Incentive Compensation Plan.

                  (e)      FINANCIAL EMERGENCY AND OTHER PAYMENTS. Other
provisions of the Plan (except Section 8) notwithstanding, if, upon the written
application of a Participant, the Administrator determines that the Participant
has a financial emergency of such a substantial nature, beyond the Participant's
control, and as to which the Participant lacks other readily available assets
that could be used to timely address the emergency, so that payment of amounts
previously deferred under the Plan is warranted, the Administrator may direct
the payment to the Participant of all or a portion of the balance of a Deferral
Account and the time and manner of such payment.

                  (f)      VOLUNTARY WITHDRAWAL WITH 10% PENALTY. A Participant
may voluntarily withdraw all or a portion of his or her Deferral Account balance
upon 30 days' notice to the Administrator, subject to a penalty equal to 10% of
the amount withdrawn; PROVIDED, HOWEVER, that the Participant shall have no
right to withdraw Deferred Stock under this Section 7(f) if the existence of
such right would result in "variable" accounting under APB 25 with respect to
any Deferred Stock or if such withdrawal is otherwise not approved by the
Administrator. The amount of any penalty under this Section 7(f) will be
forfeited and paid over to BKF.

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        8.        PROVISIONS RELATING TO SECTION 16 OF THE EXCHANGE ACT AND
                  SECTION 162(M) OF THE CODE.

                  (a)      AVOIDANCE OF LIABILITY UNDER SECTION 16. With respect
to a Participant who is then subject to the reporting requirements of Section
16(a) of the Exchange Act, the Administrator shall implement transactions under
the Plan and administer the Plan in a manner that will ensure that each
transaction by such a Participant is exempt from liability under Rule 16b-3 or
otherwise will not result in liability under Section 16(b) of the Exchange Act.

                  (b)      COMPLIANCE WITH CODE SECTION 162(M). It is the intent
of BKF that any compensation (including any award) deferred under the Plan by a
person who is, with respect to the year of payout, determined by the
Administrator likely to be a "covered employee" within the meaning of Code
Section 162(m) and regulations thereunder, shall not, as a result of deferral
hereunder, become compensation with respect to which BKF would not be entitled
to a tax deduction under Code Section 162(m). Accordingly, unless otherwise
determined by the Administrator, if any payment in settlement of a Deferral
Account would be subject to a loss of deductibility by BKF at the time of
scheduled settlement hereunder, the terms of such deferral shall be
automatically modified to the extent necessary to ensure that the compensation
will be, at the time of settlement hereunder, fully deductible by BKF.

         9.       STATEMENTS. The Administrator will furnish statements, at
least once each calendar year, to each Participant reflecting the amounts
credited to a Participant's Deferral Accounts, transactions therein since the
date reported on in the last previous statement, and other information deemed
relevant by the Administrator.

         10.      SOURCES OF STOCK: LIMITATION ON AMOUNT OF STOCK-DENOMINATED
DEFERRALS. Shares of Stock deliverable in settlement of Deferred Stock,
including shares deposited under the Plan in a Trust pursuant to Section 6 in
connection with a deferral of a Stock-denominated award granted or acquired
under another plan, program, employment agreement or other arrangement that
provides for the issuance of shares, shall be deemed to have originated, and
shall be counted against the number of shares reserved, under such other plan,
program or arrangement. Shares of Stock actually delivered in settlement of such
deferral shall be originally issued shares or treasury shares in accordance with
the terms of such other plan, program or arrangement. If the Administrator
authorizes deemed investments in Deferred Stock by Participants deferring cash,
any shares to be deposited under the Plan in a Trust in connection with such
deemed investments in Deferred Stock or otherwise to be delivered in settlement
of Deferred Stock shall be solely treasury shares or shares acquired in the
market by or on behalf of the Trust. The Administrator shall reserve a specified
number of shares of Stock held in treasury by BKF for the delivery in connection
with such cash deferrals at the time it authorizes Deferred Stock as an
investment vehicle for Cash Deferrals.

         11.      AMENDMENT/TERMINATION. The Board may, with prospective or
retroactive effect, amend, alter, suspend, discontinue, or terminate the Plan at
any time without the consent of Participants, stockholders, or any other person;
provided, HOWEVER, that, without the consent of a Participant, no such action
shall materially and adversely affect the rights of such Participant with
respect to any rights to payment of amounts credited to such Participant's
Deferral Account. The foregoing notwithstanding, the Board may terminate the
Plan (in whole or in part) and distribute to Participants (in whole or in part)
the amounts credited to his or her Deferral Accounts, and reserves the right to
accelerate the settlement of any individual Participant's Deferral Account (in
whole or in part).

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         12.      GENERAL PROVISIONS.

                  (a)      LIMITS ON TRANSFER OF AWARDS. Other than by will or
the laws of descent and distribution, no right, title or interest of any kind in
the Plan or to a payment under the Plan shall be transferable or assignable by a
Participant or his or her Beneficiary, shall be subject to alienation,
anticipation, encumbrance, garnishment, attachment, levy, execution or other
legal or equitable process, nor shall be subject to the debts, contracts,
liabilities or engagements, or torts of any Participant or his or her
Beneficiary. Any attempt to alienate, sell, transfer, assign, pledge, garnish,
attach or take any other action subject to legal or equitable process or
encumber or dispose of any interest in the Plan shall be void.

                  (b)      RECEIPT AND RELEASE. Payments (in any form) to any
Participant or Beneficiary in accordance with the provisions of the Plan shall,
to the extent thereof, be in full satisfaction of all claims for the
compensation or awards deferred and relating to the Deferral Account to which
the payments relate against BKF or any subsidiary, and the Administrator may
require such Participant or Beneficiary, as a condition to such payments, to
execute a receipt and release to such effect. In the case of any payment under
the Plan of less than all amounts then credited to an account in the form of
Deferred Stock, the amounts paid shall be deemed to relate to the Deferred Stock
credited to the account at the earliest time.

                  (c)      UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The
Plan is intended to constitute an "unfunded" plan for deferred compensation and
Participants shall rely solely on the unsecured promise of BKF for payment
hereunder. With respect to any payment not yet made to a Participant under the
Plan, nothing contained in the Plan shall give a Participant any rights that are
greater than those of a general unsecured creditor of BKF; PROVIDED, HOWEVER,
that the Administrator may authorize the creation of Trusts, including without
limitation, the Trusts referred to in Section 6 hereof, or make other
arrangements to meet BKF's obligations under the Plan, which Trusts or other
arrangements shall be consistent with the Plan's "unfunded" status unless the
Administrator otherwise determines with the consent of each affected
Participant.

                  (d)      COMPLIANCE. A Participant in the Plan shall have no
right to receive payment (in any form) with respect to his or her Deferral
Account until legal and contractual obligations of BKF relating to establishment
of the Plan and the making of such payments shall have been complied with in
full. In addition, BKF shall impose such restrictions on Stock delivered to a
Participant hereunder and any other interest constituting a security as it may
deem advisable in order to comply with the Securities Act of 1933, as amended,
the requirements of the New York Stock Exchange or any other stock exchange or
automated quotation system upon which the Stock is then listed or quoted, any
state securities laws applicable to such a transfer, any provision of BKF's
Certificate of Incorporation or By-Laws, or any other law, regulation, or
binding contract to which BKF is a party.

                  (e)      OTHER PARTICIPANT RIGHTS. No Participant shall have
any of the rights or privileges of a stockholder of BKF under the Plan,
including as a result of the crediting of Stock equivalents or other amounts to
a Deferral Account, or the creation of any Trust and deposit of such Stock
therein, except at such time as Stock may be actually delivered in settlement of
a Deferral Account. No provision of the Plan or transaction hereunder shall
confer upon any Participant any right to be employed by BKF or a subsidiary or
affiliate, or to interfere in any way with the right of BKF or a subsidiary or
affiliate to increase or decrease the amount of any compensation payable to such
Participant. Subject to the limitations set forth in Section 12(a) hereof, the
Plan shall inure to the benefit of, and be binding upon, the parties hereto and
their successors and assigns.

<PAGE>

                  (f)      TAX WITHHOLDING. BKF and any subsidiary or affiliate
shall have the right to deduct from amounts otherwise payable by BKF or any
subsidiary or affiliate to the Participant, including compensation not subject
to deferral as well as amounts payable hereunder in settlement of the
Participant's Deferral Account, any sums that federal, state, local or foreign
tax law requires to be withheld with respect to the deferral of compensation
hereunder, transactions affecting the Participant's deferral account, and
payments in settlement of the Participant's Deferral Account, including FICA,
Medicare and other employment taxes. Shares may be withheld to satisfy such
obligations in any case where taxation would be imposed upon the delivery of
shares, except that shares issued or delivered under any plan, program,
employment agreement or other arrangement may be withheld only in accordance
with the terms of such plan, program, employment agreement or other arrangement
and any applicable rules, regulations, or resolutions thereunder.

                  (g)      RIGHT OF SETOFF. BKF or any subsidiary may, to the
extent permitted by applicable law, deduct from and set off against any amounts
BKF or a subsidiary may owe to the Participant from time to time, including
amounts payable in connection with Participant's Deferral Account, owed as
wages, fringe benefits, or other compensation owed to the Participant, such
amounts as may be owed by the Participant to BKF, although the Participant shall
remain liable for any part of the Participant's payment obligation not satisfied
through such deduction and setoff. By electing to participant in the Plan and
defer compensation hereunder, the Participant agrees to any deduction or setoff
under this Section 12(g).

                  (h)      GOVERNING LAW. The validity, construction, and effect
of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws, and applicable provisions of federal
law.

                  (i)      LIMITATION. A Participant and his or her Beneficiary
shall assume all risk in connection with any decrease in value of the Deferral
Account and neither BKF nor the Administrator shall be liable or responsible
therefor.

                  (j)      CONSTRUCTION. The captions and numbers preceding the
sections of the Plan are included solely as a matter of convenience of reference
and are not to be taken as limiting or extending the meaning of any of the terms
and provisions of the Plan. Whenever appropriate, words used in the singular
shall include the plural or the plural may be read as the singular.

                  (k)      SEVERABILITY. In the event that any provision of the
Plan shall be declared illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining provisions of the Plan but shall be
fully severable, and the Plan shall be construed and enforced as if said illegal
or invalid provision had never been inserted herein.

                  (l)      STATUS. The establishment and maintenance of, or
allocations and credits to, the Deferral Account of any Participant shall not
vest in any Participant any right, title or interest in and to any Plan assets
or benefits except at the time or times and upon the terms and conditions and to
the extent expressly set forth in the Plan and in accordance with the terms of
the Trust.

13.      EFFECTIVE DATE. The Plan shall be effective as of April 18, 2000.BKF CAPITAL GROUP, INC.
                          STOCK OPTION AWARD AGREEMENT

         THIS STOCK OPTION AWARD AGREEMENT (the "Agreement") is made and entered
into as of ____________, between BKF Capital Group, Inc., a Delaware corporation
(the "Company") and ______________ (the "Employee") pursuant to the terms and
conditions of the BKF Capital Group, Inc., 1998 Incentive Compensation Plan (the
"Plan"). Unless otherwise provided, capitalized terms not defined in this
Agreement shall have the meanings set forth in the Plan.

         1.       AWARD OF OPTIONS. Pursuant to the Plan, the Company hereby
awards to Employee options (the "Options") to acquire ________ shares of Company
common stock (the "Stock") at the exercise price of $_____ per share (the
"Exercise Price"), 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. The Options granted hereunder are nonqualified stock options.

         2.       VESTING SCHEDULE. Subject to Sections 6 and 7 hereof, the
Options shall vest and become exercisable 33 1/3% on _____________, 33 1/3% on
_____________ and 33 1/3% remainder on _____________.

         3.       EXPIRATION DATE. Subject to Section 6 hereof, the Options
shall expire on _____________ (the "Expiration Date").

         4.       PAYMENT OF EXERCISE PRICE. The Exercise Price of the shares as
to which Options are exercised may be paid to the Company at the time of
exercise in cash or Stock or in such other consideration as shall be permitted
by the Committee at the time of exercise, in each case (a) pursuant to rules and
procedures established by the Committee and (b) having a total Fair Market Value
determined as of the date of exercise equal to the Exercise Price, or a
combination of cash or Stock or such other consideration having a total Fair
Market Value equal to such Exercise Price.

         5.       NON-TRANSFERABILITY. Except to the extent otherwise determined
by the Committee, the Options granted hereunder shall not be assignable or
otherwise transferable other than by will or the laws of descent and
distribution. Unless otherwise provided by the Committee, during Employee's
lifetime the Options shall be exercisable and elections with respect to the
Options may be made only by Employee or Employee's guardian or legal
representative.

         6.       TERMINATION OF EMPLOYMENT.

                  (a)      Except to the extent provided in Section 7 hereof or
any employment agreement or severance agreement between Employee and the
Company, the provisions of this Section 6 shall apply to the Options upon
Employee's termination of employment with the Company and all subsidiaries or
affiliates of the Company ("Termination") for any reason.

                  (b)      In the event of Employee's Termination by reason of
death, Disability (as defined) or Retirement (as defined), all Options shall
become immediately vested and shall be exercisable in whole or in part at any
time prior to the earlier of the Expiration Date and one year after the
Termination date.

<PAGE>

                  (c)      In the event of Employee's Termination for any reason
other than as provided in Section 6(b), Options which are unvested shall be
canceled and Options which are vested and exercisable may be exercised in whole
or in part at any time prior to the earlier of the Expiration Date and 30 days
after the Termination date.

         7.       CHANGE IN CONTROL. In the event of a Change in Control (as
defined) on or prior to Termination, any Option that was not previously
exercisable and vested shall become fully exercisable and vested at the time of
the Change in Control, except to the extent of any waiver by Employee and
subject to the applicable restrictions contained in any employment agreement or
severance agreement between Employee and the Company.

         8.       DEFINITIONS. For purposes of this Agreement:

                  (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 the Company's Voting Stock (as defined);

                           (ii)     a majority of the Company'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 the Company are disposed of pursuant to a merger, consolidation, or
other transaction (other than the asset distribution transactions contemplated
in the Company's proxy statement dated July 22, 1999) unless (A) the
shareholders of the Company immediately prior to such merger, consolidation or
other transaction beneficially own, directly or indirectly, in substantially the
same proportion as they owned the Company'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 the Company, 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 the Company's
assets; or

                           (v)      the Company combines with another company
and is the surviving corporation but, immediately after the combination, the
shareholders of the Company 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).

                  (b)      "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.

                                      - 2 -

<PAGE>

                  (c)      "Retirement" means Employee's Termination after
reaching 65 years of age, or after reaching 55 years of age and completing at
least 10 years of service with the Company or any of its subsidiaries or
affiliates.

                  (d)      "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.

         9.       WITHHOLDING TAX. Employee may be subject to withholding taxes
as a result of the exercise or settlement of an Option or other payment in
respect of an Option. Unless the Committee permits otherwise, Employee shall pay
to the Company in cash, promptly when the amount of such obligations become
determinable, all applicable federal, state, local and foreign withholding taxes
that the Company in its discretion determines result from each such exercise,
settlement or payment. 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 the Company or to tender any such
securities to the Company to pay the amount of tax that the Company in its
discretion determines to be required so to be withheld by the Company upon
exercise of an Option, 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 required federal, state, local and
foreign withholding tax obligations as computed by the Company.

         10.      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.

         11.      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]

                                      - 3 -

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