Phillip Frost and Carl Icahn Entities Agree to Convert $70 Million of Vector Notes

In connection with the conversion of the Notes, the Company agreedto issue an additional 916,697 shares of its common stock to theseholders and to pay these holders $1,738,100 of accrued interest. Theadditional shares and accrued interest will be issued and paid as aninducement to these holders to convert the Notes. The Notes beingconverted are currently callable at a redemption price of 102.083% ofprincipal amount or approximately $71.5 million, plus accruedinterest.

The Company expects to recognize pre-tax non-cash interest expenseof approximately $15.6 million in connection with these transactionsin the second quarter of 2006.

About Vector Group Ltd.

Vector Group is a holding company that indirectly owns LiggettGroup Inc., Vector Tobacco Inc. and New Valley LLC. Additionalinformation concerning the company is available on the company'swebsite, www.VectorGroupLtd.com.