AMENDMENT
      NO. 1 

    


    AMENDMENT
      NO. 1 dated as of August 7, 2008 (this “Amendment”)
      with
      respect to the Credit Agreement, dated as of September 30, 2007 (the
“Credit
      Agreement”)
      by and
      between Lazare Kaplan International Inc. (“Borrower”)
      and
      Bank Leumi USA (the “Bank”).

    


    WITNESSETH:

    


    WHEREAS,
      pursuant to the Credit Agreement, the Bank has made Loans and other financial
      accommodations to the Borrower which remain outstanding; and

    


    WHEREAS,
      the Borrower has requested that the Credit Agreement be modified on the terms
      and conditions set forth herein; 

    


    NOW,
      THEREFORE, in consideration of the premises and for other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      the
      parties hereto hereby agree as follows:

    


    ARTICLE
      I

    AMENDMENTS

    


    Section
      1.1 Amendments.
      

    


    (a) Section
      1
      of the Credit Agreement is hereby amended by adding the following
      definitions:

    


    “NamGem
      Belgium” means NamGem Trading BVBA, a company organized and existing under the
      laws of the Kingdom of Belgium and a Subsidiary of the Borrower. 

    


    “NamGem
      BVI” means NamGem Trading BVI Limited, a company limited by shares organized and
      existing under the laws of the British Virgin Islands and a Subsidiary of the
      Borrower.

    


    “OPIC”
      means the Overseas Private Investment Corporation, an agency of the United
      States of America. 

    


    “OPIC
      Financing Agreement” means that certain First Amended and Restated Finance
      Agreement between OPIC and NamGem BVI dated as of June 10, 2008, as the same
      may
      be amended, modified or supplemented from time to time.” 

    


    (b) The
      definition of “Total Funded Debt” in Section 1 of the Credit Agreement is hereby
      deleted in its entirety and replaced as follows:

    


    “Total
      Funded Debt: At any time the same is to be determined, the aggregate of all
      Indebtedness of the Borrower and its Subsidiaries at such time, including all
      Indebtedness of any other Person which is directly or indirectly guaranteed
      by
      the Borrower (other than amounts guaranteed by Borrower in respect of the
      Gulfdiam Obligation, the Nedbank Loan and up to $25,200,000 in Indebtedness
      of
      the Borrower and/or any Subsidiary thereof to OPIC and the obligations of
      Borrower and NamGem Belgium with respect to the transactions contemplated by
      the
      OPIC Financing Agreement evidencing such Indebtedness) or any of its
      Subsidiaries or which the Borrower or any of its Subsidiaries has agreed
      (contingently or otherwise) to purchase or otherwise acquire or in respect
      of
      which the Borrower or any of its Subsidiaries has otherwise assured a creditor
      against loss.”


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (c) Section
      8.2(a) of the Credit Agreement is hereby amended by deleting the term “and”
appearing immediately prior to clause (x) and adding a new clause (xi) as
      follows:

    


    “and
      (xi)
      up to $25,200,000 in Indebtedness of the Borrower and/or any Subsidiary thereof
      to OPIC and the obligations of Borrower and NamGem Belgium with respect to
      the
      transactions contemplated by the OPIC Financing Agreement evidencing such
      Indebtedness.”

    


    (d) Section
      8.2(b) of the Credit Agreement is hereby amended by deleting the term “and”
appearing immediately prior to clause (vi) and adding a new clause (vii) as
      follows:

    


    “and
      (vii) Liens granted by Subsidiaries of the Borrower on the property and capital
      stock of such Subsidiaries to secure Indebtedness permitted by Section
      8.2(a)(xi) above.”

    


    (e) Section
      8.2(c) clause (vi) of the Credit Agreement is hereby amended by adding the
      following proviso at the end of such clause as follows:

    


    “;
      provided further that such limitation shall not apply to investments by the
      Borrower and its Subsidiaries in an aggregate amount of up to $10,800,000 in
      NamGem BVI.”

    


    (f) Section
      8.3 of the Credit Agreement is hereby amended by adding the following proviso
      at
      the end of such Section as follows:

    


    “;
      provided, that, for the purpose of calculating compliance with any subsection
      of
      this Section 8.3 for any period, Borrower’s investment in NamGem BVI and NamGem
      Belgium shall be accounted for using the equity method of
      accounting.”

    


    ARTICLE
      II

    EFFECTIVE
      DATE

    


    Section
      2.1 Effective
      Date.
      This
      Amendment shall become effective upon the satisfaction of the following
      conditions precedent:

    


    (a) the
      Borrower and the Bank shall have executed and delivered this Amendment;


    


    (b) Lazare
      Kaplan Europe Inc., Lazare Kaplan Japan Inc. and Lazare Kaplan Africa Inc.
      shall
      have executed and delivered to the Bank their consent to this Amendment in
      the
      form set forth below; and

    


    (c) all
      of
      the representations and warranties set forth in Section 6 of the Credit
      Agreement shall be true and correct in all material respects with the same
      effect as if made on and as of the date hereof (or if any such representation
      or
      warranty is expressly stated to have been made as of a specific date, as of
      such
      date) and the Borrower shall be in compliance with the terms and conditions
      of
      the Credit Agreement and, after giving effect to this Amendment, no Default
      or
      Event of Default has occurred under the Credit Agreement.


    
      
         

      

      
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    ARTICLE
      III

    INTERPRETATION

    


    Section
      3.1. Continuing
      Effect of the Credit Agreement.
      The
      Borrower and the Bank hereby acknowledge and agree that the Credit Agreement
      shall continue to be and shall remain unchanged and in full force and effect
      in
      accordance with its terms, except as expressly modified hereby.

    


    Section
      3.2. No
      Waiver.
      Nothing
      contained in this Amendment be construed or interpreted or is intended as a
      waiver of any future Default or Event of Default or of any rights, powers,
      privileges or remedies that the Bank have or may have under the Credit
      Agreement, any other related document or applicable law on account of such
      Default or Event of Default.

    


    ARTICLE
      IV

    MISCELLANEOUS

    


    Section
      4.1. Representations
      and Warranties.
      The
      Borrower hereby represents and warrants as of the date hereof that, after giving
      effect to this Amendment, (a) no Default or Event of Default has occurred and
      is
      continuing and (b) all representations and warranties of the Borrower contained
      in the Credit Agreement are true and correct in all material respects with
      the
      same effect as if made on and as of such date (or if any such representation
      or
      warranty is expressly stated to have been made as of a specific date, as of
      such
      date).

    


    Section
      4.2. Counterparts.
      This
      Amendment may be executed by the parties hereto in any number of separate
      counterparts, and all of said counterparts taken together shall be deemed to
      constitute one and the same instrument.

    


    Section
      4.3. GOVERNING
      LAW.
      THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
      AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
      WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
      OF LAWS THEREOF.

    


    Section
      4.4. Reservation
      of Rights.
      Notwithstanding anything contained in this Amendment, the Borrower acknowledges
      that the Bank does not waive, and expressly reserves, the right to exercise,
      at
      any time, any and all of its rights and remedies under the Credit Agreement,
      any
      other related document and applicable law on account of any future Default
      or
      Event of Default.

    


    [Signature
      Page to Follow]


    
      
         

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
      executed and delivered by their proper and duly authorized officers as of the
      date first above written.

    


    
      	
              LAZARE
                KAPLAN INTERNATIONAL INC.

            
	 	 
	
              By:

            	    

	 	
              Title:

            
	 	 
	
              BANK
                LEUMI USA

            
	 	 
	
              By:

            	  

	 	
              Title:

            
	 	 
	
              By:

            	   

	 	
              Title:

            


    


    
      
         

      

      
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    Guarantor’s
      Acknowledgement and Consent

     

    Each
      of
      the undersigned heretofore executed and delivered to the Bank a Guaranty dated
      September 30, 2007. Each of the undersigned hereby consents to the Amendment
      to
      the Credit Agreement as set forth above and confirms that its Guaranty and
      all
      of the undersigned’s obligations thereunder remain in full force and effect.
      Each of the undersigned further agrees that the consent thereof to any further
      amendments to the Credit Agreement shall not be required as a result of this
      consent having been obtained, except to the extent, if any, required by the
      Guaranty referred to above.

     

    
      	
              Lazare
                Kaplan Europe Inc.

            
	 	 
	
              By

            	 
	
              Name

            	   

	
              Title

            	   

	 	 
	
              Lazare
                Kaplan Japan Inc.

            
	 	 
	
              By

            	 
	
              Name

            	   

	
              Title

            	   

	 	 
	
              Lazare
                Kaplan Africa Inc.

            
	 	 
	
              By

            	 
	
              Name

            	   

	
              Title

            	   



    


    
      
         

      

      
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