Document:

GUARANTEE

    

    To:           ABN
AMRO Bank N.V., Tokyo Branch (the "Bank")

    

    Lazare
Kaplan International Inc. (the "Guarantor"), in consideration
of, amongst other things, the Bank granting or continuing to make available
banking facilities or other accommodation or granting time to or on account of
Lazare Kaplan Japan Inc. (the "Borrower"), hereby irrevocably
and unconditionally guarantees to and agrees with the Bank as
follows:

     

    
      	
              1.

            	
              GUARANTEE

            

    

     

    
      	
              1.1 

            	
              The
      Guarantor irrevocably and
unconditionally:

            

    

     

    
      	
               
      

            	
              (a)

            	
              guarantees
      to the Bank each and every obligation and liability the Borrower may now
      or hereafter have to the Bank (whether solely or jointly with one or more
      persons and whether as principal or as surety or in some other capacity)
      arising out of the Amended and Restated Facility Agreement dated as of
      February 28, 2009 between the Borrower and the Bank (the "Facility
      Agreement') and promises to pay to the Bank on first demand the unpaid
      balance of every sum (of principal, interest or otherwise) now or
      hereafter owing, due and not otherwise paid under the Facility Agreement
      by the Borrower to the Bank in respect of any such
      liability; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              agrees
      as a primary obligation to indemnify the Bank on first demand from and
      against any loss incurred by the Bank as a result of any such obligation
      or liability referred to in Section 1.1(a) being or becoming void,
      voidable, unenforceable or ineffective or being or becoming suspended
      (whether pursuant to any rehabilitation, reorganization or moratorium
      proceedings or otherwise) as against the Borrower for any reason
      whatsoever, whether or not known to the Bank, the amount of such loss
      being the amount which the Bank would otherwise have been entitled to
      recover from the Borrower.

            

    

     

    
      	
              1.2

            	
              The
      guarantee and indemnity contained in Clause 1.1 are in respect of all of
      the obligations and liabilities of the Borrower to the Bank (the "Liabilities").

            

    

     

    
      	
              2.

            	
              PRESERVATION
      OF RIGHTS

            

    

     

    
      	
              2.1

            	
              The
      obligations of the Guarantor contained in this Guarantee shall be in
      addition to and independent of every other security which the Bank may at
      any time hold in relation to any of the
  Liabilities.

            

    

     

    
      	
              2.2

            	
              Neither
      the obligations of the Guarantor contained in this Guarantee nor the
      rights, powers and remedies conferred in respect of the Guarantor upon the
      Bank by this Guarantee or by law shall be discharged, impaired or
      otherwise affected by:

            

    

     

    
      
        	
              	
                (a)

              	
                the
      bankruptcy, winding-up, dissolution, administration or reorganisation
      (where applicable) of the Borrower or any other person or any change in
      its status, function, control or
ownership;

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      
        	
              	
                (b)

              	
                any
      of the Liabilities or any of the obligations of the Borrower or any other
      person under any security relating to any of the Liabilities being or
      becoming illegal, invalid, unenforceable or ineffective or being or
      becoming suspended (whether pursuant to any rehabilitation, reorganization
      or moratorium proceedings or otherwise) in any
  respect;

              

      

    

     

    
      
        	
              	
                (c)

              	
                any
      time or other indulgence being granted or agreed to be granted to the
      Borrower or any other person in respect of any of the Liabilities or under
      any other security;

              

      

    

     

    
      
        	
              	
                (d)

              	
                any
      amendment to, or any variation, renewal, waiver or release of, any of the
      Liabilities or of any person under any other
  security;

              

      

    

     

    
      
        	
              	
                (e)

              	
                any
      failure to take, or fully to take, any security agreed to be taken in
      relation to any of the
Liabilities;

              

      

    

     

    
      
        	
              	
                (f)

              	
                any
      failure to realise or fully to realise the value of, or any release,
      discharge, exchange or substitution of, any security taken in respect of
      any of the Liabilities;

              

      

    

     

    
      
        	
              	
                (g)

              	
                any
      abstaining from proving or maintaining any right of proof or from claiming
      or enforcing payment of any dividend or composition;
  or

              

      

    

     

    
      
        	
              	
                (h)

              	
                any
      other act, event or omission which, but for this Clause 2.2, might
      operate to discharge, impair or otherwise affect any of the obligations of
      the Guarantor contained in this Guarantee or any of the rights, powers or
      remedies conferred upon the Bank by this Guarantee or by
    law.

              

      

    

     

    
      	
              2.3

            	
              Any
      settlement or discharge given by the Bank to the Guarantor in respect of
      the Guarantor's obligations under this Guarantee or any other agreement
      reached between the Bank and the Guarantor in relation to it shall be, and
      be deemed always to have been, void if any act on the faith of which the
      Bank gave the Guarantor that discharge or entered into that settlement or
      other agreement is subsequently avoided by or in pursuance of any
      provision of law.

            

    

     

    
      	
              2.4

            	
              The
      Bank shall not be obliged before exercising any of the rights, powers or
      remedies conferred upon it in respect of the Guarantor by this Guarantee
      or by law:

            

    

     

    
      
        	
              	
                (a)

              	
                to
      make any demand of the
Borrower;

              

      

    

     

    
      
        	
              	
                (b)

              	
                to
      take any action or obtain judgment in any court against the
      Borrower;

              

      

    

     

    
      
        	
              	
                (c)

              	
                to
      make or file any claim or proof in a winding-up or dissolution of the
      Borrower; or

              

      

    

     

    
      
        	
              	
                (d)

              	
                to
      enforce or seek to enforce any security taken in respect of any of the
      obligations of the Borrower in respect of the
  Liabilities.

              

      

    

     

    
      	
              2.5

            	
              So
      long as the Borrower is under any actual or contingent obligations in
      respect of any of the Liabilities, the Guarantor shall not exercise any
      rights which the Guarantor may at any time have by reason of performance
      by it of its obligations under this Guarantee or by any other means or on
      any other ground:

            

    

     

    
      
        	
              	
                (a)

              	
                to
      be indemnified by the Borrower or to receive any payment or collateral
      from the Borrower; and/or

              

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      
        	
              	
                (b)

              	
                to
      claim any contribution from any other guarantor of any of the
      Liabilities; and/or

              

      

    

     

    
      
        	
              	
                (c)

              	
                to
      make or enforce any claim or right against the Borrower or prove in
      competition with the Bank, whether in respect of any payment under this
      Guarantee by the Guarantor or otherwise;
and/or

              

      

    

     

    
      
        	
              	
                (d)

              	
                to
      claim, or have the benefit of, any set-off, counterclaim or proof against,
      or dividend, composition or payment by, the Borrower or the Borrower's
      estate; and/or

              

      

    

     

    
      
        	
              	
                (e)

              	
                to
      take the benefit (in whole or in part and whether by way of subrogation or
      otherwise) of any rights of the Bank in respect of any of the Liabilities
      or any other security taken pursuant to, or in connection with, any of the
      Liabilities by the Bank.

              

      

    

     

    
      	
              3.

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    The
Guarantor represents and warrants as set out in Clause 10.2 of the Facility
Agreement..

     

    
      	
              4.

            	
              PAYMENTS
      AND INTEREST

            

    

     

    
      	
              4.1

            	
              All
      payments to be made by the Guarantor to the Bank under this Guarantee
      shall be made without set-off or counterclaim and without any deduction or
      withholding whatsoever.  If the Guarantor is obliged by law to
      make any deduction or withholding from any such payment, the sum due from
      the Guarantor in respect of such payment shall be increased to the extent
      necessary to ensure that, after the making of such deduction or
      withholding, the Bank receives a net sum equal to the sum the Bank would
      have received had no such deduction or withholding been required to be
      made.

            

    

     

    
      	
              4.2

            	
              If
      the Guarantor fails to pay any sum payable by it under this Guarantee on
      demand, to the extent that interest at a default rate is not otherwise
      accruing in respect of such sum(s), interest shall accrue on the overdue
      sum from the date of demand up to the date of actual payment (both before
      and after judgment)
      at 4% over the Bank's costs of funds.  Any interest
      accruing under this Clause 4.2 shall be immediately payable by the
      Guarantor on demand by the Bank.

            

    

     

    
      	
              4.3

            	
              If
      default interest is overdue, such overdue default interest shall be added
      to any other overdue sum and the whole shall bear interest at the default
      interest rate as provided in Clause
4.2.

            

    

     

    
      	
              5

            	
              CURRENCY
      CONVERSION AND INDEMNITY

            

    

     

    
      	
              5.1

            	
              The
      Bank may convert any money received or realised by it under or pursuant to
      this Guarantee which is not in the currency in which such sum is due and
      payable by the Guarantor under this Deed from that currency into the
      currency in which such sum is due, at the Bank's spot rate of exchange for
      the time being for the relevant
conversion.

            

    

     

    
      	
              5.2

            	
              The
      Guarantor shall, as an independent obligation, indemnify the Bank upon
      demand against any cost, loss or liability arising out or as a result of
      the conversion referred to in Clause
5.1.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              6

            	
              CONTINUING
      SECURITY

            

    

     

    
      	
              6.1

            	
              The
      guarantee constituted by this Guarantee shall be continuing and shall
      extend to the ultimate balance of the Liabilities and to the performance
      in full of all obligations guaranteed hereunder, regardless of any
      intermediate payment or discharge in whole or in part or performance in
      part and shall continue in full force and effect until final payment in
      full of all amounts owing by the Borrower in respect of the Liabilities
      and total satisfaction of all the Borrower's actual and contingent
      obligations in relation to the
Liabilities.

            

    

     

    
      	
              6.2

            	
              If
      for any reason this Guarantee ceases to be a continuing security, the Bank
      may either continue any then existing account(s) or open new account(s)
      for the Borrower, but in any case the Guarantor's obligations under this
      Guarantee shall be unaffected by, and shall be calculated without regard
      to, any payment into or out of any such account after this Guarantee has
      ceased to be a continuing security.

            

    

     

    
      	
              7

            	
              SUSPENSE
      ACCOUNT

            

    

     

    All
monies received, recovered or realised by the Bank under or pursuant to this
Guarantee (including the proceeds of any conversion of currency) may in its
discretion be credited to and held in any suspense or impersonal account pending
their application from time to time in or towards the discharge of this
Guarantee.  The Guarantor shall not and may not direct the application
by the Bank of any sums received or recovered by the Bank from the Guarantor
under or pursuant to any of the terms of this Guarantee.

     

    
      	
              8

            	
              SET-OFF

            

    

     

    The Bank
may at any time apply any credit balance to which the Guarantor is entitled, on
any account maintained (whether in its own name or in joint names) with the head
office and/or any branch of the Bank wheresoever situated in any currency, in
satisfaction of any sum due and payable from the Guarantor to the Bank but
unpaid.

     

    
      	
              9

            	
              NOTICES

            

    

     

    
      	
               
      

            	
              Any
      notice or demand to be made by one person to another in respect of this
      Guarantee may be served by leaving it at the address set out in Clause 24
      of the Facility Agreement.

            

    

     

    
      	
              10

            	
              APPROVALS,
      CONSENTS AND AUTHORISATIONS

            

    

     

    The
Guarantor shall obtain and maintain at its own expense any approval, consent,
authorisation, licence or permission which may be required in order to enable
the Bank to have the full benefit of this Guarantee.

     

    
      	
              11

            	
              CALCULATIONS
      AND CERTIFICATES

            

    

     

    Any
certification or determination by the Bank of a rate or any sum relating to the
Liabilities or the Guarantor's liability under this Guarantee is, in the absence
of manifest error, conclusive evidence of the matter to which it
relates.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              12

            	
              COSTS
      AND EXPENSES

            

    

     

    All the
Bank's reasonable out-of-pocket costs and expenses (including legal fees, stamp
duties and any value added tax) incurred in connection with the execution or
enforcement of this Guarantee or otherwise in relation to it shall be reimbursed
by the Guarantor on demand on a full indemnity basis together with interest from
the date such costs and expenses were incurred to the date of payment at such
rates as the Bank may reasonably determine.

     

    
      	
              13

            	
              ASSIGNMENTS
      AND SUCCESSORS

            

    

     

    
      	
              13.1

            	
              The
      Bank may at any time assign all or any of its rights and benefits under
      this Guarantee.

            

    

     

    
      	
              13.2

            	
              This
      Guarantee shall remain in effect and binding on the Guarantor
      despite:

            

    

     

    
      	
               
      

            	
              (a)

            	
              any
      amalgamation or merger that may be effected by the Bank with any other
      person;

            

    

     

    
      	
               
      

            	
              (a)

            	
              any
      reconstruction by the Bank involving the formation and transfer of the
      whole or any part of its undertaking and assets to any other person;
      or

            

    

     

    
      	
               
      

            	
              (c)

            	
              any
      sale or transfer of all or any part of its undertaking and assets to any
      other person,

            

    

     

    notwithstanding
that such other person (with which the Bank amalgamates or merges or to which
the Bank transfers all or any part of its undertaking and assets either by way
of reconstruction, sale or transfer or otherwise) may differ from the Bank in
its objects, character or construction.

     

    
      	
              13.3

            	
              The
      Guarantor may not assign any of its rights or transfer any of its rights
      and/or obligations under this
Guarantee.

            

    

     

    
      	
              13.4

            	
              The
      Bank may disclose, to any person related to the Bank and/or any person to
      whom it is proposing to transfer or assign or has transferred or assigned
      any of its rights under this Guarantee, this Guarantee and any information
      relating to this Guarantee and/or the
Guarantor.

            

    

     

    
      	
              14

            	
              PARTIAL
      INVALIDITY

            

    

     

    If at any
time any provision of this Guarantee is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions of this
Guarantee nor of such provision under the law of any other jurisdiction shall in
any way be affected or impaired thereby.

     

    
      	
              15

            	
              REMEDIES
      AND WAIVERS

            

    

     

    No
failure to exercise, nor any delay in exercising, on the part of the Bank, any
right or remedy under this Guarantee shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy prevent any further
or other exercise thereof or the exercise of any other right or
remedy.  The rights and remedies provided in this Guarantee are
cumulative and not exclusive of any rights or remedies provided by
law.

     

    
      	
              16

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              16.1

            	
              This
      Guarantee is governed by the laws of
Japan.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              16.2

            	
              The
      parties hereto submit to the exclusive jurisdiction of the Tokyo District
      Court in connection with any disputes that may arise
      hereunder.

            

    

     

    
      	
              17

            	
              INTERPRETATION

            

    

     

    Any
reference in this Guarantee to:

     

    
      
        	
              	
                (a)

              	
                "Bank" includes (i) the
      head office and all the branches, wheresoever situated, of the Bank; and
      (ii) any assignee or successor in title of the Bank (including, without
      limitation, any person referred to in Clause 14.2 with which the Bank
      amalgamates or merges or to which the Bank transfers all or any part of
      its undertaking and assets either by way of reconstruction, sale or
      transfer or otherwise) and any person who, under the laws of its
      jurisdiction of incorporation or domicile, has assumed the rights and
      obligations of the Bank under this Guarantee or to which under such laws
      the same have been
transferred;

              

      

    

     

    
      
        	
              	
                (b)

              	
                "Guarantor" means Lazare
      Kaplan International Inc. and includes its successors in title and any
      receiver;

              

      

    

     

    
      
        	
              	
                (c)

              	
                a
      "person" includes
      any individual, firm, company, corporation, government, state or agency of
      a state or any association, trust or partnership (whether or not having
      separate legal personality) of two or more of the foregoing;
      and

              

      

    

     

    
      
        	
              	
                (d)

              	
                an
      agreement or a document is a reference to that agreement or document as
      amended or novated.

              

      

    

     

    IN WITNESS WHEREOF, the
Guarantor has caused this Guarantee to be executed by its officers thereinto
duly authorised, as of the date indicated.

     

    LAZARE
KAPLAN INTERNATIONAL INC.

     

    
      
        
          
            
              	
                      By:

                    	 
      	 
      	
                      Date:

                    	 
      
	 
      	
                      Name:

                    	 
      	 
      	 
      
	 	 	 	 	 
	 
      	
                      Title:February
27, 2009

     

    Lazare
Kaplan International Inc.

    19 West
44th
Street

    New York,
New York 10036

    Attention:
Mr. William H. Moryto

     

    Re:           Amended
and Restated Facility Letter

     

    Ladies
and Gentlemen:

     

    In
accordance with our recent discussions, we are please to confirm ABN AMRO Bank
N.V.’s (the “Lender”) agreement to
hold available to Lazare Kaplan International Inc. (the “Borrower”) a
revolving loan facility for own-note borrowings (“Loans”) up to a
maximum aggregate principal amount of $7,800,000 (the “Facility”).  The
Facility will be available at the Lender’s discretion in accordance with this
letter agreement (the “Facility Letter”)
until the earlier to occur of (i) notice from the Lender that the Lender has
terminated the Facility or (ii) the Maturity Date (as such term is defined in
the Credit Agreement) (such date, the "Facility Termination
Date").

     

    Reference
is made to the Amended and Restated Revolving Credit Agreement dated as of
February 27, 2009 (as the same has been and may be amended, restated or
otherwise modified from time to time, the “Credit Agreement”) by
and among the Borrower and the Lender.  Terms used herein but not
otherwise defined shall have the meaning assigned to such terms in the Credit
Agreement and such terms are hereby incorporated herein by
reference.

     

    The
Lender’s agreement to make the Loans under the Facility is subject to the
following terms and conditions:

     

    The
proceeds of the Loans shall be used solely for working capital.  The
Borrower acknowledges and agrees that compliance by the Borrower with the terms
and conditions set forth herein, merely entitles the Borrower to make requests
for Loans hereunder, the granting of which, however, shall, in each case, remain
within the Lender’s sole and absolute discretion.

     

    The
interest rate applicable to the Loans made under this Facility shall be either
(i) the Base Rate or (ii) LIBOR plus the LIBOR Margin.  Each Base Rate
Loan shall bear interest for the period commencing with the Drawdown Date
thereof and ending on the Facility Termination Date.  Each LIBOR Rate
Loan shall bear interest for the period commencing with the Drawdown Date
thereof and ending on the last day of the Interest Period with respect
thereto.  Without limiting the uncommitted nature of this Facility
Letter and the Lender’s right to demand repayment of the Loans hereunder,
together with all interest accrued thereon and any other obligations thereunder,
the Borrower promises to pay interest on each Loan in arrears on each Interest
Payment Date with respect thereto and upon demand.  The Borrower
hereby further promises to pay to the order of the Lender, on demand, at the
place of payment indicated in the attached note, interest on any unpaid amounts
under this Facility Letter following an Event of Default under the Credit
Agreement or after demand by the Lender under this Facility Letter, at a rate
per annum equal to the Base Rate plus two percent (2%) until such amount is paid
in full.  You authorize us to debit all interest and fees when due to
your account on our books.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
4.1 and Section 11 of the Credit Agreement shall be applicable to all
Loans.  Please be advised that Loans with interest based on LIBOR are
made in the Lender’s sole and absolute discretion.

     

    If, no
later than December 31, 2009, the Borrower and its Subsidiaries shall have no
less than US$35,000,000 in committed lending facilities in addition to the
Commitment and the committed portion of the Indebtedness described in Section
8.2(viii) of the Credit Agreement, then as provided in the Credit Agreement, the
Commitment shall automatically be reduced by $9,700,000 and any Loans
outstanding under the Credit Agreement in excess of $17,500,000, shall
thereafter be governed by this Facility Letter and the Borrower shall promptly
deliver to the Lender a note reflecting the increase in Loans governed by this
Facility Letter.

     

    As
security for the Facility, you will provide us with an unconditional guaranty in
favor of the Lender by the Guarantors.

     

    Without
in any way limiting the uncommitted nature of the Facility, you agree that if
any of the Borrower or its Subsidiaries shall default under any agreement or
agreements evidencing any indebtedness in excess of $100,000 owing to any
person, or if such Indebtedness shall be payable on demand, and demand shall be
made, or any affiliate thereof, or shall fail to pay such amounts thereunder
when due or demanded, irrespective of any applicable period of grace or cure
period, then the Lender may, by written notice to the Borrower, demand, and the
Borrower will make, immediate payment to the Lender of all Loans and other
amounts outstanding under the Facility, including but not limited to interest,
costs and expenses, whether mature, contingent or unmatured.

     

    Without
in any way affecting the uncommitted nature of this Facility, you agree that so
long as this Facility is in effect and until all Loans and obligations incurred
hereunder are paid in full, you shall comply with the covenants set forth in
Section 8 of the Credit Agreement.

     

    Without
in any way affecting the uncommitted nature of this Facility, you agree to pay
to the Lender, a fee at the rate per annum equal to one-fourth of one percent
(1/4 of 1%) (computed on the basis of a year of 360 days and the actual number
of days elapsed) on the maximum aggregate principal amount of the Facility
(whether drawn or undrawn).  Such fee shall be payable
quarter-annually in arrears on the last Business Day of each March, June,
September and December in each year (commencing on the first such date occurring
after the date hereof) and upon the Facility Termination Date.

     

    The terms
of this Facility Letter shall not be amended without the prior written consent
of each of the Borrower and the Lender.

     

    The
Borrower shall pay to the Lender, on demand, the reasonable costs, expenses and
disbursements (including, but not limited to legal fees) in connection with the
preparation, interpretation, administration, amendment, modification,
cancellation, enforcement or restructuring of the Borrower’s obligations under
this Facility Letter.

     

    All
obligations under this Facility are payable immediately on demand.  In
addition to any other rights the Lender may have, and without limiting the
uncommitted nature of this Facility, if the Borrower does not comply with any of
its undertakings in this letter agreement, or an Event of Default shall have
occurred under Section 9.1(a)-(j) of the Credit Agreement, or should any
guaranty issued in support of this Facility be canceled or in any other way
become ineffective or impaired, the Lender may, at its option, declare all Loans
and other obligations under this Facility to the Lender to be, whereupon they
shall become, immediately due and payable, without presentment, demand, protest
or further notice of any kind, all of which the Borrower hereby
waives.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    For the
avoidance of doubt, this is not a committed facility and the Lender may
terminate this Facility or demand the Loans at any time.  Section 16
and Section 20 of the Credit Agreement shall be applicable to this Facility
Letter and are hereby incorporated herein by reference.

     

    This
Facility Letter amends, restates, supersedes and replaces the Facility Letter
dated as of April 13, 2007 and all other prior letter agreements between us with
respect to the subject matter contained herein.

     

    If you
are in agreement with the foregoing, kindly indicate your acceptance by signing
the attached copy of this letter in the space provided and the attached
promissory note and returning the same to us.

     

    Very
truly yours,

     

    ABN AMRO
Bank N.V.

     

    

     

    
      
        	
                Susan
      C. Sigda

              	
                Rob
      Broedelet

              

      

    

    

     

    Accepted
and agreed:

    Lazare
Kaplan International Inc.

     

     

    
      
        
          
            
              	
                      By

                    	 
      	 
	
                      Name

                    	
                       
      

                    	 
	
                      Title

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