LAZARE KAPLAN INTERNATIONAL INC.SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT

This Second Amendment (herein, the Amendment) to Revolving Credit Agreement is entered into as of August __, 2007, between Lazare Kaplan International Inc., a Delaware corporation (the Borrower) and HSBC
Bank USA, National Association, as lender (the Bank).

PRELIMINARY STATEMENTS

A.           The Borrower and Bank entered into a certain Revolving Credit Agreement, dated as of September 28, 2004, as amended by the First Amendment to Revolving Credit Agreement between Borrower and Bank dated as of December 1, 2005
(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.           To induce Bank to continue to extend the credit facility to Borrower and to provide for certain requests of Borrower with respect to additional permitted Indebtedness, Bank and Borrower have agreed to amend the Credit
Agreement as set forth below.

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
      following definitions shall be inserted in appropriate alphabetical order
      in Section 1 of the Credit Agreement: ABN Amro Bank Line: The secured
      line of credit given by ABN Amro to Gulfdiam in the aggregate amount of
      up to U.S.$50,000,000, to be used by Gulfdiam for the purpose of financing
      of purchases and sales of rough diamonds (and possibly working capital
      needs) in Angola. ABN Amro: ABN Amro Bank N.V. Gulfdiam: Gulfdiam DMCC, a joint
      venture partially owned by a wholly-owned subsidiary of Borrower. Gulfdiam Guaranty: That certain
      unsecured limited guaranty executed by Borrower in favor of ABN Amro, pursuant
      to which Borrower shall guaranty 50% of the net outstanding obligations
      from time to time of Gulfdiam under the ABN Amro Bank Line, not to exceed
      U.S.$25,000,000 in the aggregate (or its equivalent in foreign currencies,
      at


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conversion rates established by ABN Amro),
      plus any interest accrued thereon, charges relating thereto including,
      without limitation, monetary corrections, if any, and all costs and expenses
      of enforcement of the Gulfdiam Guaranty. Nedbank Guaranty: That certain
      guaranty of up to $6,000,000 in Indebtedness (which shall include all
      Indebtedness of Subsidiaries of Borrower) executed by Borrower in favor
      of Nedbank, Limited, South Africa, which shall include guaranties by the
      Borrower and Subsidiaries of the Borrower in connection with such Indebtedness. 1.2The
      definition of Commitment appearing in Section 1 of the Credit
      Agreement shall be amended in its entirety to read as follows: Commitment:
      The obligation of Bank to make Loans to the Borrower up to an aggregate
      outstanding principal amount not to exceed $20,000,000, as such amount
      may be reduced from time to time or terminated according to the terms of
      this Agreement, including, without limitation, Section 2.3(b) hereof. 1.3           The
      definition of Termination Date appearing in Section 1 of the
      Credit Agreement shall be amended in its entirety to read as follows: Termination
      Date: June 30, 2008. 1.4           The
      following sentence is hereby added to the end of the definition of Contingent
      Obligations as follows: Notwithstanding the forgoing, the Nedbank
      Guaranty and the Gulfdiam Guaranty shall not be deemed to be Contingent
      Obligations for the purposes of this Agreement. 1.5           Section
      2.3 of the Credit Agreement shall be amended in its entirety to read as
      follows: Section 2.3. Repayments and Prepayments.
      (a) Optional Prepayment or Repayment. The Borrower hereby agrees to pay
      to Bank, no later than the Maturity Date, the entire unpaid principal of
      and interest on the Loans. The Borrower may elect to prepay the outstanding
      principal of all or any part of any Loan, without premium or penalty, provided
      that (a) any full or partial prepayment of the outstanding amount of any
      LIBOR Rate Loans pursuant to this Section 2.3(a) may be made only on the
      last day of the Interest Period relating thereto, and (b) any such prepayments
      of LIBOR Rate Loans shall be in a minimum amount of $300,000 or a whole
      multiple of $100,000 in addition thereto. The Borrower shall give Bank
      Notice of the date and amount of any proposed prepayment pursuant to this
      Section 2.3(a) (y) no less than three (3) LIBOR Business Days prior to
      any such proposed prepayment of any LIBOR Rate Loans, and (z) no later
      than 10:00 a.m., New York time, on the date of any such prepayment of any
      Base Rate Loan. The Borrower shall be entitled to reborrow before the Termination
      Date such amounts, upon the terms and subject to the conditions of this
      Agreement. Each repayment or prepayment of principal of any Loan shall
      be accompanied by payment of the unpaid interest accrued to such date on
      the principal being repaid or prepaid and shall be applied, in the absence
      of instruction by the Borrower, first to the principal of Base Rate Loans
      and then to the principal of LIBOR Rate Loans. If at any time the aggregate
      amount of


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Loans outstanding shall exceed the Commitment,
      the Borrower shall immediately pay the amount of such excess to Bank for
      application to the Loans. The Borrower may elect to reduce or terminate
      the Commitment by a minimum principal amount of $100,000 or an integral
      multiple thereof of the amount reduced or, as the case may be, terminated,
      upon Notice to Bank given by 10:00 a.m., New York time, at least two (2)
      Business Days prior to the date of such reduction or termination. The Borrower
      shall not be entitled to reinstate the respective Commitment following
      such reduction or termination. (b) Mandatory Repayment. The Borrower hereby
      agrees to pay to Bank on the following dates the principal amount of the
      Loans listed next to such date, each payment shall reduce the Commitment
      by each respective amount. Date
        
        Payment AmountSeptember 28, 2007
        
        $1,000,000October 31, 2007
        
        $1,000,000November 30, 2007
        
        $1,000,000December 31, 2007
        
        $7,000,000March 31, 2008
        
        $5,000,000June 30, 2008
        
        the entire unpaid principalamount then outstanding
 1.6           Section
      7.2(a) of the Credit Agreement shall be amended in its entirety to read
      as follows:


(a) create, incur or assume any Indebtedness,
      other than (i) up to $145,000,000 in unsecured Indebtedness, including,
      without limitation, the Indebtedness to Bank, unsecured Indebtedness under
      the ABN AMRO Leumi Credit Agreement, Indebtedness (which shall include
      any Indebtedness of Lazare Kaplan Belgium (LKB) NV) under lines of credit
      from Antwerp Diamond Bank to it and such Subsidiary, including guaranties
      by Subsidiaries of the Borrower (including, without limitation, Material
      Domestic Subsidiaries) in connection with such Indebtedness, (ii) up to
      five hundred fifty million Yen in unsecured Indebtedness to ABN AMRO Bank
      N.V., Tokyo branch, including guaranties by Subsidiaries of the Borrower
      (including, without limitation, Material Domestic Subsidiaries) in connection
      with such Indebtedness, (iii) current liabilities of the Borrower not incurred
      through the borrowing of money or the obtaining of credit on an open account
      basis customarily extended, (iv) Indebtedness in respect of taxes or other
      governmental charges contested in good faith and by appropriate proceedings
      and for which adequate reserves have been taken, (v) Indebtedness


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under the Nedbank Guaranty, (vi) Indebtedness
      under the Gulfdiam Guaranty, and (vii) other unsecured Indebtedness not
      in excess of $250,000;


1.7           Clause
      (vi) of Section 7.2(b) of the Credit Agreement shall be amended in its
      entirety to read as follows:


"and (vi) Liens granted by Subsidiaries
      of the Borrower on the property of such Subsidiaries located outside of
      the UnitedStates to secure Indebtedness permitted
      by Section 7.2(a)(i), Section 7.2(a)(v) or Section 7.2(a)(vi);"


1.8           All
      references to the Note in the Credit Agreement shall be deemed
      to be references to the Second Amended and Restated Note, to be executed
      and delivered by the Borrower and payable to the order of the Bank, in
      the form of Exhibit A attached 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 and Bank shall have executed and delivered this Amendment and Borrower shall have executed and delivered to Bank the Second Amended and Restated Note.

2.2           Bank 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.

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

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

SECTION 3. REPRESENTATIONS.

In order to induce Bank to execute and deliver this Amendment, the Borrower hereby represents to Bank that as of the date hereof, except as set forth in that certain letter from Bank to the Borrower dated as of the date hereof,
the representations and warranties set forth in Section 5 of the Credit Agreement are and shall be and remain true and correct (except that the representations contained in Section 5(d) shall be deemed to refer to the most recent financial
statements of the Borrower delivered to Bank) 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.

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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
Note, 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.

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

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]





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

LAZARE KAPLAN INTERNATIONAL INC.By: _____________________Name:Title:HSBC BANK USA, NATIONAL ASSOCIATIONBy: _____________________Name:Title:


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GUARANTORS ACKNOWLEDGEMENT AND CONSENT

Each of the undersigned heretofore executed and delivered to Bank a Guaranty dated September 28, 2004. Each of the undersigned hereby consents to the Second Amendment to Revolving 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, specifically required by the Guaranty referred to above.

LAZARE KAPLAN EUROPE
          INC.By: ________________________Name:Title:LAZARE KAPLAN JAPAN
          INC.By: ________________________Name:Title:


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EXHIBIT A

SECOND AMENDED AND RESTATED PROMISSORY NOTE

|               | New York, New York            
|-------------- | ------------------------------
|$20,000,000.00 | Dated as of September 24, 2004

On June 30, 2008, FOR VALUE RECEIVED, the undersigned, LAZARE KAPLAN INTERNATIONAL INC., a Delaware corporation (the "Borrower") promises to pay to the order of HSBC BANK USA, National Association at
its principal office at 452 Fifth Avenue, New York, New York 10018 the principal sum of Twenty Million Dollars ($20,000,000.00), or such lesser amount as may be advanced to the Borrower hereon pursuant to the Agreement hereinafter identified.
This Note is subject to mandatory repayment in accordance with the terms and conditions set forth in the Agreement.

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 under the terms and provisions of Revolving Credit Agreement bearing even date herewith by and between the Borrower and HSBC BANK USA, National Association, as amended (the
"Agreement"), and this 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 Bank to accelerate the payment of the Note upon the occurrence of an Event of
Default, to which Agreement reference is hereby made for a statement thereof.

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.

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This Note evidences loans made by Bank to the Borrower, from time to time and amends and restates in its entirety that certain Amended and Restated Demand Promissory Note dated as of September 28,
2004 given by the Borrower to Bank (the Old Note) which evidenced outstanding loans made by Bank up to a maximum aggregate principal amount of $30,000,000.

| | LAZARE KAPLAN INTERNATIONAL
    INC.
| | ------------------------------------
| |                                     
| |                                     
| | By:                                 
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