EMPLOYMENT AGREEMENT

Exhibit 10.1

EMPLOYMENT AGREEMENT

      AGREEMENT made as of November 11, 2005 between RONALD J. BERNSTEIN (“Executive”) and LIGGETT GROUP INC. (the “Company”).

      WHEREAS , the Board of Directors of the Company (the “Board”) wishes Executive to continue to serve as the President and Chief Executive Officer of the Company; and

      WHEREAS , Executive is willing to continue to provide his services and experience to the Company, Liggett Vector Brands Inc. and their affiliates in such capacities upon the terms and conditions herein set forth.

      NOW, THEREFORE , in consideration of the mutual promises and agreements set forth herein, the parties agree as follows:

1. TERM .

     (a) Subject to paragraph (b) of this Section 1, the term of employment under this Agreement (the “Contract Term”) will commence on October 1, 2005 (the “Employment Date”) and will expire on December 31, 2008, unless earlier terminated as provided in Section 6.

     (b) The Contract Term shall automatically be extended on December 31, 2008 and each subsequent December 31 for an additional year unless, not later than at least six (6) months prior to any such date, either party to this Agreement, shall have given written notice to the other party that he or it does not wish to extend the Contract Term, in which case no further extension of the Contract Term shall occur pursuant hereto.

2. POSITION AND DUTIES .

     (a) General . During the Contract Term the Company agrees to employ Executive as, and Executive agrees to accept the office of, and serve as, the President and Chief Executive Officer of the Company. In such position, Executive shall have the duties, responsibilities and authorities normally associated with the office and position of president and chief executive officer of a corporation including, but not limited to management authority and responsibility for the day-to-day operations and business affairs of the Company. Executive shall report to the Board and to the Chairman of the Board and the Chief Executive Officer of the Company’s

indirect parent, Vector Group Ltd. (“VGR”). Commencing with the Employment Date, Executive shall perform his duties and conduct his business at the principal executive offices of the Company in North Carolina, except for required travel on the Company’s behalf. Executive may also, from time to time, be requested to oversee operations of other of the Company’s and its affiliate’s businesses, without additional compensation, all as may be determined by the Board and VGR and reasonably acceptable to Executive. Executive shall serve other positions with the Company’s affiliates, as may be mutually determined from time to time, without additional compensation. During the Contract Term, Executive shall serve, without additional compensation, on the Board and, if elected, on the board of VGR.

     (b)  Exclusive Services . Commencing with the Employment Date, Executive shall, except as hereinafter provided and except for vacation periods, holidays recognized by the Company and periods of illness, serve on a full-time basis, devoting his skill and experience to the affairs of the Company and its affiliates and, for so long as he serves as President and Chief Executive Officer of the Company, faithfully discharge the duties of those offices. Executive shall not, directly or indirectly, render services to any other person or organization for which he receives compensation without the prior written consent of the Board, or otherwise engage in any activity (including, without limitation, acting as a director, partner, joint venturer, advisor or shareholder) that substantially interferes or is reasonably likely to interfere substantially with his faithful performance of his duties and responsibilities hereunder.

     (c)  Charitable and Other Activities . Executive shall be allowed, to the extent such activities do not substantially interfere with the performance of his duties and responsibilities hereunder, (i) to manage his personal, financial and legal affairs, and (ii) to be engaged in civic, charitable, religious and educational activities.

3. COMPENSATION AND OTHER BENEFITS .

     (a)  Salary . During the Contract Term, commencing with the Employment Date, the Company shall pay Executive a base salary of $750,000 per annum, as the same may be increased from time to time as provided herein (the “Salary”), payable in installments at such regular intervals as the Company customarily pays its other executives (but in no event less often than monthly). The Salary shall be increased, as of January 1 of each year commencing January

1, 2006, as necessary to reflect year over year increases in the cost of living since the prior Salary increase, determined by reference to the Consumer Price Index, Northeast Region, All Items (1982-1984 = 100) (the “Index”), or, if publication of the Index is terminated, any substantially equivalent successor thereto.

     (b)  Special Bonus . Executive will receive a $500,000 special bonus from the Company within ten (10) days of execution of this Agreement.

     (c)  Stock Options . Six (6) months and a day after the execution of this Agreement and the letter attached hereto as Exhibit “A” (the “Grant Date”), if Executive is employed under this Agreement on such date, VGR shall replace Executive’s 2001 stock option grant with non-qualified stock options to purchase 250,000 shares of common stock of VGR (the “New Option Grant”) under the Vector Group Ltd. Amended and Restated 1999 Long-Term Incentive Plan (the “LTIP”), at an exercise price equal to the fair market value of VGR’s common stock on the Grant Date, as more particularly described in the letter attached hereto as Exhibit “A”. The New Option Grant will be governed by the Non-Qualified Stock Option Agreement in substantially the form annexed hereto as Exhibit “B”.

     (d)  Restricted Stock Grant . Upon execution of this Agreement, Executive shall receive a restricted stock grant of 50,000 shares of common stock of VGR (the “Restricted Stock Grant”), under the LTIP and pursuant to the Restricted Share Award Agreement in substantially the form annexed hereto as Exhibit “C”.

     (e)  Plans, Policies and Programs . During the Contract Term, Executive, Executive’s wife and their eligible dependents shall be eligible to participate in and be covered under any and all of the welfare, benefit and perquisite plans, policies and programs maintained by the Company from time to time for its executives and/or other employees, including, without limitation, 401(k), profit sharing, incentive plan, medical, hospitalization, dental, disability, life, accidental death and dismemberment and travel accident insurance plans and programs, such participation and coverage to be on terms and conditions no less favorable to Executive than to the Company’s other executives.

     (f) Annual Incentive Compensation. Subject to approval of VGR’s Senior Executive Annual Bonus Plan (the “Plan”) at VGR’s 2006 annual shareholders’ meeting and approval by VGR’s Compensation Committee, Executive shall be eligible under the Plan, commencing with

the calendar year ending December 31, 2006, to receive an annual bonus of up to 100% of Salary, with the bonus beginning to accrue at 100% of target earnings before interest and taxes (“EBIT”) for the Company, with a bonus equal to 50% of Salary at 100% of target EBIT and 100% of Salary at 105% of target EBIT. Target EBIT for the year shall be determined by VGR’s Compensation Committee in accordance with the Plan, based on the performance goals for the Company and any such bonus shall be paid in accordance with the terms of the Plan. Subject to approval of VGR’s Compensation Committee, Executive shall be entitled to a bonus for the calendar year ending December 31, 2005 as set forth in Exhibit “D” annexed hereto. The bonus for 2005, if any, will be paid to Executive by the Company as soon as practicable after the closing of the books of the Company for such calendar year, but in no event later than March 15, 2006.

     (g)  Vacation . Executive shall be entitled to not less than four (4) weeks of paid vacation each year of his employment hereunder, but, shall not be entitled to cash in lieu of vacation. Vacation shall not accrue from year-to-year.

     (h)  Waiver of Benefits . Executive shall be entitled to receive only those benefits expressly provided herein. Executive waives his rights under the Company’s Executive Termination Policy unless otherwise agreed to in writing by the parties.

4. REIMBURSEMENT OF EXPENSES .

     In the course of performing his duties under this Agreement, Executive may incur reasonable out-of-pocket travel, entertainment and other business expenses for the account of the Company. Executive shall be entitled to prompt reimbursement for all reasonable out-of-pocket business expenses so incurred, upon submission to the Company of an adequate, written accounting which complies in form and substance with the Company’s policy regarding records to support reimbursement for business expenses incurred for the account of the Company. Executive shall have access to the use of corporate aircraft in accordance with VGR’s Corporate Aircraft Policy in effect from time to time.

5. TERMINATION OF EMPLOYMENT .

     (a) Voluntary Termination.

     (i) Executive has the right to voluntarily terminate his employment hereunder at any time during the Contract Term upon not less than three (3) months’ prior written notice to the Company (which the Company may in its sole discretion make effective earlier), unless his termination is for Good Reason (as defined below) in which event only thirty (30) business days’ prior written notice is required. In the event of a voluntary termination of employment, unless Executive has terminated his employment for Good Reason (in which case he shall receive the amounts and benefits set forth in, and subject to the terms of, Section 5(b)(i)), the Contract Term shall terminate immediately after the three (3) month notice period, unless sooner terminated by the Company, and Executive shall only be entitled to receive within thirty (30) days of such termination or such later date as otherwise provided for herein or in accordance with the then applicable plan, policy or program:

     (ii) For purposes of this Agreement, “Good Reason” shall exist if, at any time prior to the expiration of the Contract Term, without the prior written consent of the Executive;

provided , however , that the term “Good Reason” shall not include the occurrence of any of the above if such occurrence is remedied by the Company or any successor within thirty (30) business days after receipt of Executive’s written notice of resignation for Good Reason setting forth in specific detail the facts and circumstances resulting in the Good Reason upon which his resignation is based.

     (b)  Involuntary Termination .

          (i) The Company has the right to terminate Executive’s employment, on written notice to Executive, at any time without Cause (as defined below). In the event the Company terminates Executive’s employment without Cause during the Contract Term, the Contract Term shall terminate immediately and Executive shall only be entitled to receive in cash, within thirty (30) days of such termination or such later date as otherwise provided for herein or in accordance with the then applicable plan, policy or program: