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                                                                   Exhibit 10(y)

                        LAZARE KAPLAN INTERNATIONAL INC.
                 FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT

     This Fourth Amendment to Revolving Credit Agreement (herein, the
"Amendment") is entered into as of November 24, 2004, between Lazare Kaplan
International Inc., a Delaware corporation (the "Borrower"), and ABN AMRO Bank
N.V., as Administrative Agent (the "Agent"), ABN AMRO Bank N.V., as a lender
("ABN AMRO") and Bank Leumi USA, as a lender ("Leumi" and together with ABN
AMRO, the "Banks").

                             PRELIMINARY STATEMENTS

     A. The Borrower, the Agent and the Banks entered into a certain Revolving
Credit Agreement, dated as of August 14, 2002, as amended by the First Amendment
to Revolving Credit Agreement between the Borrower and the Banks dated May 28,
2003, a Second Amendment dated November 24, 2003 and a Third Amendment dated
September 13, 2004 (the Revolving Credit Agreement, as the same has been amended
prior to the date hereof, being referred to herein as the "Credit Agreement").
All capitalized terms used herein without definition shall have the same
meanings herein as such terms have in the Credit Agreement.

     B. The Borrower has requested that the Banks extend the existing
Termination Date of December 1, 2005 in accordance with Section 24 and to make
certain other amendments to the Credit Agreement and the Banks are willing to do
so under the terms and conditions set forth in this Amendment.

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

SECTION 1. AMENDMENTS.

     Subject to the satisfaction of the conditions precedent set forth in
Section 2 below, the Credit Agreement shall be and hereby is amended as follows:

          1.1. The definition of "Termination Date" in Section 1 of the Credit
     Agreement shall be amended and restated in its entirety to read as follows:

          Termination Date: December 1, 2006, or such later date as may be
          extended pursuant to Section 24 hereof.

          1.2. Section 8.2(b)(i) shall be amended by deleting the present
     wording thereof and inserting in its place the following:

          "(i) liens granted by Pegasus in favor of Littlejohn & Co. or an
          affiliate thereof ("Littlejohn") on inventories of gem diamonds
          purchased by Pegasus from Littlejohn for processing;"

          1.3. Section 8.2(h) shall be amended by deleting the period at the end
     thereof and adding the following wording thereto:




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          ", provided, however, that for fiscal year ending May 31, 2005,
          Capital Expenditures shall not exceed $3,500,000."

          1.4 Present Exhibit C to the Credit Agreement shall be deleted and
     there shall be substituted in its place Exhibit C hereto.

SECTION 2. CONDITIONS PRECEDENT.

     The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:

          2.1. The Borrower, the Agent and the Banks shall have executed and
     delivered this Amendment, and the Borrower shall have executed replacement
     Promissory Notes to the Banks.

          2.2. The Agent shall have received copies (executed or certified, as
     may be appropriate) of all legal documents or proceedings taken in
     connection with the execution and delivery of this Amendment to the extent
     the Agent or its counsel may reasonably request.

          2.3. Legal matters incident to the execution and delivery of this
     Amendment shall be satisfactory to the Agent and its counsel.

          2.4. Lazare Kaplan Europe Inc., Lazare Kaplan Japan Inc. and Lazare
     Kaplan Africa Inc. shall have executed and delivered to the Agent their
     consent to this Amendment in the form set forth below.

SECTION 3. REPRESENTATIONS.

     In order to induce the Banks to execute and deliver this Amendment, the
Borrower hereby represents to the Banks that as of the date hereof the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 6(d) shall be deemed to refer to the most recent financial
statements of the Borrower delivered to the Banks) and the Borrower is in
compliance with the terms and conditions of the Credit Agreement and no Default
or Event of Default has occurred and is continuing under the Credit Agreement or
shall result after giving effect to this Amendment.

SECTION 4. MISCELLANEOUS.

     4.1. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.


                                      -2-




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     4.2. The Borrower agrees to pay on demand all costs and expenses of or
incurred by the Agent in connection with the negotiation, preparation, execution
and delivery of this Amendment, including the fees and expenses of counsel for
the Agent.

     4.3. This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of New York.

                           [SIGNATURE PAGE TO FOLLOW]


                                      -3-




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     This Fourth Amendment to Revolving Credit Agreement is entered into as of
the date and year first above written.

                                        LAZARE KAPLAN INTERNATIONAL INC.


                                        By

                                           Name
                                                --------------------------------
                                           Title
                                                 -------------------------------

     Accepted and agreed to:


                                        ABN AMRO BANK N.V., individually and as
                                           Agent


                                        By

                                           Name
                                                --------------------------------
                                           Title
                                                 -------------------------------


                                        By

                                           Name
                                                --------------------------------
                                           Title
                                                 -------------------------------


                                        BANK LEUMI USA


                                        By

                                           Name
                                                --------------------------------
                                           Title
                                                 -------------------------------


                                      -4-




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                     GUARANTOR'S ACKNOWLEDGEMENT AND CONSENT

     Each of the undersigned heretofore executed and delivered to the Bank a
Guaranty dated August 14, 2002. 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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                                    EXHIBIT C
                                     AMENDED
                                 PROMISSORY NOTE

                                                              New York, New York
$_____________                                                 November 24, 2004

     On December 1, 2006, FOR VALUE RECEIVED, the undersigned, LAZARE KAPLAN
INTERNATIONAL INC., a Delaware corporation (the "Borrower") promises to pay to
the order of [_________________] at its ________ office at
_____________________________________________ the principal sum of
____________________________ Dollars ($____________), or such lesser amount as
may be advanced to the Borrower hereon pursuant to the Agreement hereinafter
identified.

     The Borrower hereby promises to pay interest (computed on the basis of a
year of 360 days for the actual number of days elapsed) on the principal amount
from time to time remaining unpaid hereon from the date hereof until paid at the
rates, and payable in the manner and on the dates, specified in the Agreement.

     All loans made by the payee hereof against this Note, and all payments made
by the Borrower on account of the unpaid principal amount hereof, shall be
recorded on the books and records of the holder hereof and endorsed hereon prior
to any transfer hereof, and the Borrower agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the amount shown as
owing on this Note on the books and records of the holder hereof shall be deemed
prima facie correct.

     This Note is issued in replacement of the prior Amended Promissory Note of
the Borrower dated August 14, 2002, issued under the terms and provisions of
Revolving Credit Agreement bearing even date herewith by and among the Borrower,
ABN AMRO BANK N.V and Bank Leumi USA (the "Agreement"), and this replacement
Note and the holder hereof are entitled to all of the benefits provided for by
said Agreement or referred to therein, including the ability of the Bank to
accelerate the payment of this Note upon the occurrence of an Event of Default,
to which Agreement reference is hereby made for a statement thereof. All
obligations of the Borrower evidenced by the prior Promissory Note shall
continue and shall be deemed to be evidenced hereby.

     This Note shall be construed in accordance with, and governed by, the
internal laws of the State of New York.

     The Borrower hereby promises to pay all costs and expenses (including
attorneys' fees) suffered or incurred by the holder hereof in collecting this
Note or in enforcing any rights in any collateral therefor. The Borrower hereby
waives presentment for payment and notice of dishonor.

                                        LAZARE KAPLAN INTERNATIONAL INC.


                                        By:
                                            ------------------------------------
                                            Its:
                                                 -------------------------------