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                                PLEDGE AGREEMENT

         PLEDGE AGREEMENT dated the 8th day of December, 1999 by and between
FLEET BANK, N.A., a national banking association with a place of business at 111
Westminster Street, Providence, Rhode Island 02903, telecopier #401-278-3077
(the "Lender"), and LAZARE KAPLAN INTERNATIONAL INC., a Delaware corporation
with an address of 529 Fifth Avenue, New York, New York 10017, telecopier
#212-972-9700 (the "Pledgor").

                                WITNESSETH THAT:

         WHEREAS, the Pledgor has delivered its Guaranty Agreement dated the
date hereof (the "Guaranty Agreement") whereby it has guaranteed the payment and
performance of all obligations, liabilities and indebtedness of Lazare Kaplan
Japan, Inc., a corporation organized under the laws of Japan (the "Borrower") to
the Lender, including, without limitation, all obligations, liabilities and
indebtedness of the Borrower to the Lender under that certain Loan Agreement
between the Borrower and the Lender dated the date hereof (the "Loan Agreement")
and that certain Promissory Note (the "Note") of the Borrower payable to the
Lender dated the date hereof in the original principal amount of One Billion One
Hundred Million Japanese Yen 'Y'1,100,000,000; and

         WHEREAS, the Pledgor has agreed to secure the Guaranty Agreement by
delivering and pledging to the Lender cash collateral in the sum of Ten Million
Ten Thousand Ten and 01/100 U.S. Dollars ($10,010,010.01);

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

         1. Pledge. As an inducement for Lender to extend the loan to the
Borrower, the Pledgor has deposited with the Lender and hereby pledges to Lender
as collateral security for, and hereby grants to Lender a security interest to
secure, the payment of the Obligations (as hereinafter defined) any and all
property for which Lender or U.S. Clearing, a division of Fleet Securities, Inc.
has receipted, including, without limitation, Account #813-30058 in the name of
the Pledgor at U.S. Clearing, a division of Fleet Securities, Inc., all cash,
certificate of deposits, other cash equivalent, and United States Treasury
obligations (bills, notes and bonds), corporate securities, bonds and other
personal property contained therein, together with all certificates, rights,
interests, or other distributions evidencing or issued as an addition to, in
substitution or in exchange for, or on account of, any such certificate,
together with all replacements and substitutions therefore and all proceeds
thereof, and all proceeds of all of the foregoing, in each case whether now
existing or hereafter arising (all of the foregoing being hereinafter
collectively called the "Account"), being pledged and impressed with a lien for
the payment of all of the Obligations secured hereby. Following the occurrence
and during the continuance of an Event of Default, the Lender shall have the
right, but no duty, to sue, compromise, settle and realize upon the Account, by
foreclosure or otherwise, to fix or preserve the liability of any party, to
deposit the Account under any protective plan, to protect and preserve the
Account and to transfer the Account into the name of the Lender, or








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the name of a nominee or nominees, and to be free of liability when acting in
good faith, other than for due care in the custody of the Account or proceeds
thereof actually in the possession of the Lender.

         2. Obligations. "Obligations" means the payment and performance of (a)
that certain Guaranty Agreement of the Pledgor dated the date hereof in favor of
the Lender, as the same may be amended from time to time (as amended, the
"Guaranty Agreement"), pursuant to which the Pledgor has guaranteed the payment
and performance of all obligations, liabilities and indebtedness of (the
Borrower to the Lender, including without limitation, the payment and
performance of the Loan Agreement), and the Note of; and (b) any and all other
obligations and liabilities of Pledgor to Lender of every kind and description,
secured or unsecured, joint or several, absolute or contingent, due or to become
due, whether for payment or performance, now existing or hereafter arising,
regardless of how the same arise or by what instrument, agreement or book
account they may be evidenced, or whether evidenced by any instrument, agreement
or book account; and all indebtedness, liabilities or obligations owing from
Pledgor to others which Lender may have obtained by purchase, negotiation,
discount, assignment or otherwise.

         3. Pledgor's Representations. The Pledgor represents and warrants that:

            (a) Pledgor has, and has duly exercised, all requisite power and
         authority to enter into this Agreement, to pledge the Account for the
         purposes described herein, and to carry out the transactions
         contemplated by this Agreement;

            (b) Pledgor is the legal and beneficial owner of the Account;

            (c) The Account is owned by the Pledgor free of any pledge,
         mortgage, hypothecation, lien, charge, encumbrance or security
         interest, except for that granted hereunder or permitted hereunder;

            (d) The execution and delivery of this Agreement, and the
         performance of its terms, will not violate or constitute a default
         under the terms of any material agreement, trust indenture, endowment,
         indenture or other instrument, license, judgment, decree, order, law,
         statute, ordinance or other governmental rule or regulation applicable
         to the Pledgor or any of Pledgor's property; and

            (e) This Agreement creates a valid first lien upon and perfected
         security interest in the Account and the proceeds thereof, subject to
         no prior security interest, lien, charge or encumbrance, or agreement
         purporting to grant to any third party a security interest in the
         property or assets of the Pledgor which would include the Account.

         4. Pledgor's Covenants.

            (a) The Pledgor hereby covenants that, until all of the Obligations
         have been satisfied in full, Pledgor will not without the prior written
         consent of the Lender, sell, convey, or otherwise dispose of the
         Account, or any interest therein, or create,

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         incur, or permit to exist any pledge, mortgage, lien, charge,
         encumbrance or any security interest whatsoever in or with respect to
         the Account other than that created hereby.

            (b) The Pledgor warrants and will, at Pledgor's own expense, defend
         the Lender's right, title, special property and security interest in
         and to the Account against the claims of any person, firm, corporation
         or other entity and will reimburse the Lender, promptly upon the
         Lender's demand, for any reasonable legal or other expenses reasonably
         incurred by the Lender in such defense.

         5. Rights with respect to Account. The Pledgor agrees that whether or
not registered in a Lender's name as pledgee, the Lender shall be under no duty
to collect, exercise any rights pertaining to, fix or vote upon or otherwise
deal with the collateral in the Account or any income thereon, except that the
Lender shall use due care with respect to the safekeeping thereof while in its
possession, but nothing herein contained shall deprive the Lender of exercising
such rights at its election. No delay or omission on a Lender's part in
exercising any right hereunder or under any instrument evidencing any of the
Obligations secured hereby shall operate as a waiver of such right or of any
other right hereunder or under any such evidence or the Obligations. A waiver on
any one occasion shall not be construed as a bar to or waiver of any such right
and/or remedy on any future occasion. In the event that the Lender shall assign
or transfer any evidence of the Obligations which are secured hereby in
accordance with the provisions of the Loan Agreement, the Lender shall have full
power to assign and transfer its security interest in any or all of the Account
to such assignee or transferee. Such assignee or transferee shall have the same
powers with respect to the Account as are granted to the Lender hereunder, and
the Lender shall be relived and discharged from any liability respecting the
Account to assigned or transferred. Following the occurrence and during the
continuance of an Event of Default, the Lender may transfer the Account into its
name or that of its nominee and may receive the income and any distributions
thereon and hold the same as collateral for the Obligations, or apply the same
to any defaulted Obligation, whether or not a default or an Event of Default (as
defined by the Loan Agreement) has occurred.

         6. Release of, and Additions to, Collateral. Upon payment of the
outstanding principal balance of the Note on a quarterly basis by the Borrower,
and provided that no Event of Default then exists, the U.S. Dollar value of the
cash or cash equivalent deposits contained in the Account shall be
marked-to-market at the then current exchange rate for U.S. Dollars to Japanese
Yen. The Lender shall give written notice to the Pledgor of the results of such
calculation as soon as such calculation is finalized. To the extent that the
U.S. Dollar value of the Account exceeds the U.S. Dollar equivalent of the
principal balance of the Note then outstanding, and provided that no Event of
Default has occurred and is then continuing, an amount equal to such excess
shall be released form the Account to the Pledgor as soon as practical after the
quarterly calculation but in no event later than five (5) Business Days (as
defined in the Loan Agreement) after such calculation is complete. The Lender
will give any necessary notice to the Securities Intermediary (as hereinafter
defined) of the Lender's consent to the release of such excess collateral from
the Account in order to effectuate the foregoing release. To the extent that the
U.S. Dollar value of the Account is less than the U.S. Dollar equivalent of the
principal balance of the Note then

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outstanding, such deficiency (in the form of cash or cash equivalent deposits)
shall be deposited with and pledged to the Lender by the Pledgor as additional
collateral hereunder. Such additional collateral shall be deposited as soon as
practical after Pledgor is notified of the deficiency resulting from such
quarterly calculation but in no event later than five (5) Business Days after
Pledgor is notified of such deficiency.

         7. Proceeds of Account. From and after and during the continuance of an
Event of Default, the Pledgor will immediately upon receipt deposit and pledge
with the Lender as additional collateral any interest and other proceeds of the
Account. Provided that no Event of Default has occurred and is then continuing,
the Lender will give any necessary notice to the Securities Intermediary (as
hereinafter defined) of the Lender's consent to release of the interest and any
other proceeds of the Account to the Pledgor. Any notice that Lender gives the
Securities Intermediary shall remain in effect until the Securities Intermediary
receives notice from the Lender to the contrary.

         8. Investments of the Account. Provided that no Event of Default has
occurred and is then continuing, the Pledgor may originate trading instructions
to Securities Intermediary to make substitutions for, and additions to, the
Account, all of which are to be held subject to the pledge in favor of the
Lender, provided that that the Account shall at all times consist of cash or
cash equivalent deposits consisting of certificates of deposit or eurodollar
certificates of deposit or U.S. Treasury Notes which are acceptable to the
Lender.

         9. Remedies. Upon failure to comply with Paragraph 7 hereof or upon the
occurrence of an Event of Default, the Lender may at any time or from time to
time thereafter, whether or not the Obligations are then due, sell or resell,
for cash or credit, assign and deliver or realize upon the collateral in the
Account and collateral substituted therefor or added thereto, at any broker's
board or at public or private sale, without demand for additional collateral,
demand, advertisement and notice (except as set forth above) being hereby
expressly waived, and may purchase any of the same at any public sale, or at
broker's board, discharged of all right of redemption. The net proceeds of any
such sale shall be applied to or toward the payment of the Obligations, and the
surplus shall be accounted for to the Pledgor. The Lender shall have no
obligation to sell or otherwise liquidate the collateral in the Account in any
particular order or to apply the proceeds thereof to any particular portion of
the Obligations.

         10. Further Assurances. The Pledgor shall at any time, and from time to
time, upon the written request of the Lender, execute and deliver such further
documents and do such further acts and things as the Lender may reasonably
request to effect the purposes of this Agreement, including, without limitation,
delivering to the Lender irrevocable proxies with respect to the Account in form
satisfactory to the Lender. Until receipt thereof, this Agreement shall
constitute the Pledgor's proxy to the Lender or its nominee to exercise all
voting and consensual rights of Pledgor, if any, with respect to the Account
after the occurrence and during the continuance of an Event of Default.

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         11. Miscellaneous.

            (a) Beyond the exercise of reasonable care to assure the safe
         custody of the Account while held hereunder, the Lender shall have no
         duty or liability to preserve rights pertaining thereto and shall be
         relieved of all responsibility for the Account upon surrendering it or
         tendering surrender of it to the Pledgor.

            (b) No course of dealing between the Pledgor and the Lender, nor any
         failure to exercise, nor any delay in exercising, any right, power or
         privilege of the Lender hereunder or under the Note or the Loan
         Agreement or under the Guaranty Agreement shall operate as a waiver
         thereof; nor shall any single or partial exercise of any right, power
         or privilege hereunder or thereunder preclude any other or further
         exercise thereof or the exercise of any other right, power or
         privilege.

            (c) The rights and remedies provided herein and in the Obligations
         and in any other agreements, instruments, and documents delivered
         pursuant to or in connection with the Obligations, are cumulative and
         are in addition to and not exclusive of any rights or remedies provided
         by law, including, but without limitation, the rights and remedies of a
         secured party under the Uniform Commercial Code.

            (d) The provisions of this Agreement are severable, and if any
         clause or provision shall be held invalid or unenforceable in whole or
         in part in any jurisdiction, then such invalidity or unenforceability
         shall affect only such clause or provision or part thereof in such
         jurisdiction and shall not in any manner affect such clause or
         provision in any other jurisdiction or any other clause or provision in
         this Agreement in any jurisdiction.

            (e) All notices and other communications hereunder shall be in
         writing, except as otherwise provided in this Agreement; and shall be
         sent by any one of the following: certified mail, return receipt
         requested; overnight courier; confirmed telecopier; or by hand and
         shall be addressed (i) if to the Pledgor, to it at the Pledgor's
         address set forth above, and (ii) if to the Lender, to it at the
         Lender's address set forth above. Notices shall be deemed effective
         three (3) days after deposit in the mail, if sent by certified mail;
         the next business day, if sent by overnight courier; upon confirmation,
         if sent by confirmed telecopier; and upon delivery, if sent by hand.
         The address of any party hereto for such demands, notices and other
         communications may be changed by giving notice in writing at any time
         to the other party hereto.

            (f) This Agreement shall inure to the benefit of and shall be
         binding upon the respective heirs, executors, administrators,
         successors and assigns of the parties hereto.

            (g) This Agreement shall be construed in accordance with the
         substantive law of the State of New York applicable to contracts made
         and to be performed in said State without regard to the conflicts of
         laws provisions thereof.

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            (h) The Pledgor will pay all expenses and costs of collection and
         realization on the Account and defense or enforcement of Lender's
         rights hereunder, including the reasonable fees of Lender's attorneys.

         12. Control Agreement.

         The parties hereto have entered into a Control Agreement (the "Control
Agreement") with the US Clearing Division of Fleet Securities, Inc. ("Securities
Intermediary"). The Control Agreement is intended to establish certain rights,
remedies and obligations of the Lender, the Securities Intermediary, and the
Pledgor. However, as between the Lender and the Pledgor, to the extent of any
inconsistency between the terms and provisions of this Pledge Agreement and the
Control Agreement, the terms and provisions of this Pledge Agreement shall
control and govern.

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.

<TABLE>
<S>                                     <C>
WITNESS:                                LAZARE KAPLAN INTERNATIONAL INC.

   [SIGNATURE ILLEGIBLE]                By: S.L. Ginsberg
----------------------------------         ------------------------------------
                                        Title: EVP & CFO

                                        FLEET BANK, N.A.

                                        By: [SIGNATURE ILLEGIBLE]
----------------------------------         ------------------------------------
                                        Title: SVP

                                        By: [SIGNATURE ILLEGIBLE]
----------------------------------         ------------------------------------
                                        Title: V.P.
</TABLE>

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