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April 20, 1999 Is To The Amended And Restated Credit Agreement - LAYNE CHRISTENSEN CO - 6-11-1999

VIEWS: 5 PAGES: 14

									EXHIBIT 10 (1) FOURTH AMENDMENT THIS FOURTH AMENDMENT (this "Fourth Amendment") dated as of April 20, 1999 is to the Amended and Restated Credit Agreement (as previously amended, the "Credit Agreement") dated as of July 25, 1997 among LAYNE CHRISTENSEN COMPANY (the "Company"), LAYNE CHRISTENSEN AUSTRALIA PTY LIMITED ("Layne Australia"), various financial institutions and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent (in such capacity, the "Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as defined therein. WHEREAS, the parties hereto have entered into the Credit Agreement which provides for (i) the Banks to make U.S. Loans to the Company from time to time, (ii) the Australian Banks to make Australian Loans to Layne Australia from time to time, and (iii) the Issuer to issue Letters of Credit for the account of the Company (or jointly for the account of the Company and any Subsidiary) from time to time and for the Banks to purchase participations therein; and WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects as more fully set forth below; 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: SECTION 1. AMENDMENT. Effective on (and subject to the occurrence of) the Fourth Amendment Effective Date (as defined below), the Credit Agreement shall be amended as set forth below. SECTION 1.1 ADDITION OF DEFINITION. The following definition is added to Section 1.1 in appropriate alphabetical sequence: "OPERATING CONTROL means control sufficient to allow consolidation of the controlled Person in accordance with GAAP." SECTION 1.2 AMENDMENT OF DEFINITIONS. The definitions of "Adjusted EBITA" and "Subsidiary" are amended in their entirety to read as follows, respectively: "ADJUSTED EBITA means, for any Computation Period, EBITA for such Computation Period LESS affiliate equity earnings, PLUS affiliate dividends (limited to the amount of affiliate equity earnings) PLUS, for any Computation Period which includes the Fiscal Quarter ending January 31, 1999, $5,340,000."

"SUBSIDIARY means, with respect to any Person, a corporation or limited liability company (a) of which such Person and/or its other Subsidiaries own, directly or indirectly, (i) such number of outstanding shares as have more than 50% of the ordinary voting power for the election of directors in the case of a corporation or (ii) in excess of 50% of the membership interests (including voting control) in the case of a limited liability company, (b) organized under the laws of Australia or a state or territory thereof and which is otherwise a subsidiary of such Person within the meaning of Section 9 of the Corporations Law of Australia or (c) of which such Person and/or its other Subsidiaries has Operating Control. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Company." SECTION 1.3 AMENDMENT TO INTEREST COVERAGE COVENANT. Section 10.6.1 is amended in its entirety to read as follows: "10.6.1 MINIMUM INTEREST COVERAGE. Not permit the Interest Coverage Ratio for any Computation Period set forth below to be less than the applicable ratio set forth below for such

"SUBSIDIARY means, with respect to any Person, a corporation or limited liability company (a) of which such Person and/or its other Subsidiaries own, directly or indirectly, (i) such number of outstanding shares as have more than 50% of the ordinary voting power for the election of directors in the case of a corporation or (ii) in excess of 50% of the membership interests (including voting control) in the case of a limited liability company, (b) organized under the laws of Australia or a state or territory thereof and which is otherwise a subsidiary of such Person within the meaning of Section 9 of the Corporations Law of Australia or (c) of which such Person and/or its other Subsidiaries has Operating Control. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Company." SECTION 1.3 AMENDMENT TO INTEREST COVERAGE COVENANT. Section 10.6.1 is amended in its entirety to read as follows: "10.6.1 MINIMUM INTEREST COVERAGE. Not permit the Interest Coverage Ratio for any Computation Period set forth below to be less than the applicable ratio set forth below for such
Computation Period: Computation Period Ending ------------4/30/99 - 1/31/00 4/30/00 - 7/31/00 10/31/00 - 1/31/01 4/30/01 - 7/31/01 10/31/01 - 1/31/02 Thereafter

Ratio ----1.15 to 1.35 to 1.50 to 1.75 to 2.25 to 2.50 to

1 1 1 1 1 l."

SECTION 1.4 AMENDMENT TO SECTION 10.11(g). Clause (g) of Section 10.11 is amended in its entirety to read as follows: "(g) any loan to a Person to finance the purchase of real property, personal property, services or equipment from the Company or any Subsidiary; PROVIDED that (i) if such loan exceeds a Dollar Equivalent amount of U.S.$200,000, the Company or such Subsidiary shall retain a first Lien on any property or equipment sold to the extent permitted under applicable law, (ii) the aggregate principal amount of all such loans to any Person and its affiliates outstanding at any time shall not exceed a Dollar Equivalent amount of U.S.$5,000,000 and (iii) the aggregate principal amount

of all such loans outstanding at any time shall not exceed a Dollar Equivalent amount of U.S.$10,000,000;" SECTION 1.5 AMENDMENT TO SECTION 10.11(j). Clause (j) of Section 10.11 is amended by (i) deleting the amount "U.S.$15,000,000" therein and (ii) substituting "U.S.$20,000,000" therefor. SECTION 1.6 AMENDMENT TO PRICING SCHEDULE. Schedule 1.1(b) is amended in its entirety by substituting SCHEDULE 1.1(b) hereto therefor. SECTION 2. EFFECTIVENESS. The amendments set forth in SECTION 1 above shall become effective, as of the day and year first above written, on the date (the "Fourth Amendment Effective Date") that the Agent shall have received counterparts of this Fourth Amendment executed by the Company and the Required Banks and the Company shall have paid to the Agent for the respective accounts of the applicable Banks an amendment fee of 0.15% of the Commitment of each Bank approving this Fourth Amendment on or prior to the Fourth Amendment Effective Date. SECTION 3. MISCELLANEOUS.

of all such loans outstanding at any time shall not exceed a Dollar Equivalent amount of U.S.$10,000,000;" SECTION 1.5 AMENDMENT TO SECTION 10.11(j). Clause (j) of Section 10.11 is amended by (i) deleting the amount "U.S.$15,000,000" therein and (ii) substituting "U.S.$20,000,000" therefor. SECTION 1.6 AMENDMENT TO PRICING SCHEDULE. Schedule 1.1(b) is amended in its entirety by substituting SCHEDULE 1.1(b) hereto therefor. SECTION 2. EFFECTIVENESS. The amendments set forth in SECTION 1 above shall become effective, as of the day and year first above written, on the date (the "Fourth Amendment Effective Date") that the Agent shall have received counterparts of this Fourth Amendment executed by the Company and the Required Banks and the Company shall have paid to the Agent for the respective accounts of the applicable Banks an amendment fee of 0.15% of the Commitment of each Bank approving this Fourth Amendment on or prior to the Fourth Amendment Effective Date. SECTION 3. MISCELLANEOUS. SECTION 3.1 CONTINUING EFFECTIVENESS, ETC. As herein amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. SECTION 3.2 COUNTERPARTS. This Fourth Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Fourth Amendment. SECTION 3.3 GOVERNING LAW. This Fourth Amendment shall be a contract made under and governed by the internal laws of the State of Illinois. SECTION 3.4 SUCCESSORS AND ASSIGNS. This Fourth Amendment shall be binding upon the Company, Layne Australia, the Banks and the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, Layne Australia, the Banks and the Agent and the successors and assigns of the Banks and the Agent. SECTION 3.5 CONFIRMATION OF COMMITMENT REDUCTION SCHEDULE. The Company and the Banks acknowledge and agree that, after giving effect to the voluntary reduction of the Aggregate Commitment to $80,000,000 by the Company on April 15, 1999, the remaining scheduled reductions of the Aggregate Commitment are as set forth on ATTACHMENT 1 hereto.

Delivered at Chicago, Illinois, as of the day and year first above written. LAYNE CHRISTENSEN COMPANY
By: /s/ Jerry W. Fanska ----------------------------------Title: Vice President-Finance

BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent
By: /s/ Valerie C. Mills ----------------------------------Managing Director

Delivered at Chicago, Illinois, as of the day and year first above written. LAYNE CHRISTENSEN COMPANY
By: /s/ Jerry W. Fanska ----------------------------------Title: Vice President-Finance

BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent
By: /s/ Valerie C. Mills ----------------------------------Managing Director

BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank
By: /s/ Valerie C. Mills ----------------------------------Managing Director

MERCANTILE BANK, as Co-Agent and as a Bank
By: /s/ Roger A. Lumley ----------------------------------Title: Senior Vice President --------------------------------

MICHIGAN NATIONAL BANK, as Co-Agent and as a Bank
By: /s/ Christopher J. Mayone ----------------------------------Title: Commercial Relationship Manager --------------------------------

THE BANK OF NOVA SCOTIA
By: /s/ F. C. H. Ashby ----------------------------------Title: Senior Manager Loan Operations --------------------------------

SOCIETE GENERALE - CHICAGO BRANCH By: Title:

THE BANK OF NOVA SCOTIA
By: /s/ F. C. H. Ashby ----------------------------------Title: Senior Manager Loan Operations --------------------------------

SOCIETE GENERALE - CHICAGO BRANCH By: Title:

SCHEDULE 1.1(b) PRICING SCHEDULE The Margin, the Facility Fee Rate and the LC Fee Rate (for the applicable type of Letter of Credit) shall be determined based on the applicable Debt to Capitalization Ratio as set forth below.
LC Fee Rate Financial Letters of Credit ----------------0.500% LC Fee Rate Non-Financial Letters of Credit ----------------0.125%

Debt to Capitalization Ratio -------------------Less than or equal to 0.3 to 1 Greater than 0.30 to 1 but less than 0.45 to 1 Equal to or greater than 0.45 to 1

Margin -----0.500%

Facility Fee Rate -------0.250%

0.700%

0.300%

0.700%

0.200%

0.875%

0.375%

0.875%

0.250%

Effective on the Fourth Amendment Effective Date (as defined in the Fourth Amendment to this Agreement), the Margin shall be 0.7%, the Facility Fee Rate shall be 0.3%, the LC Fee Rate for Financial Letters of Credit shall be 0.7% and the LC Fee Rate for Non-Financial Letters of Credit shall be 0.2% (it being understood that prior to such date the Margin shall be based on this SCHEDULE 1.1(b) as in effect prior to the effectiveness of such Fourth Amendment). Each of the foregoing shall be adjusted, to the extent applicable, 45 days (or, in the case of the last Fiscal Quarter of any Fiscal Year, 90 days) after the end of each Fiscal Quarter beginning with the Fiscal Quarter ending April 30, 1999 based on the Debt to Capitalization Ratio as of the last day of such Fiscal Quarter; PROVIDED that if the Company fails to deliver the financial statements required by SECTION 10.1.1 or 10.1.2, as applicable, by the due date therefor, the Margin, the Facility Fee Rate and the LC Fee Rate (for each type of Letter of Credit) that would apply if the Debt to Capitalization Ratio were greater than 0.45 to 1 shall apply from such due date until such financial statements are delivered.

REMAINING SCHEDULED COMMITMENT REDUCTIONS
Commitment Reduction Date ---------July 31, 2000 October 31, 2000 January 31, 2001 April 30, 2001 Aggregate Commitment Reduced to: ----------$78,000,000 $74,500,000 $71,000,000 $67,500,000

SCHEDULE 1.1(b) PRICING SCHEDULE The Margin, the Facility Fee Rate and the LC Fee Rate (for the applicable type of Letter of Credit) shall be determined based on the applicable Debt to Capitalization Ratio as set forth below.
LC Fee Rate Financial Letters of Credit ----------------0.500% LC Fee Rate Non-Financial Letters of Credit ----------------0.125%

Debt to Capitalization Ratio -------------------Less than or equal to 0.3 to 1 Greater than 0.30 to 1 but less than 0.45 to 1 Equal to or greater than 0.45 to 1

Margin -----0.500%

Facility Fee Rate -------0.250%

0.700%

0.300%

0.700%

0.200%

0.875%

0.375%

0.875%

0.250%

Effective on the Fourth Amendment Effective Date (as defined in the Fourth Amendment to this Agreement), the Margin shall be 0.7%, the Facility Fee Rate shall be 0.3%, the LC Fee Rate for Financial Letters of Credit shall be 0.7% and the LC Fee Rate for Non-Financial Letters of Credit shall be 0.2% (it being understood that prior to such date the Margin shall be based on this SCHEDULE 1.1(b) as in effect prior to the effectiveness of such Fourth Amendment). Each of the foregoing shall be adjusted, to the extent applicable, 45 days (or, in the case of the last Fiscal Quarter of any Fiscal Year, 90 days) after the end of each Fiscal Quarter beginning with the Fiscal Quarter ending April 30, 1999 based on the Debt to Capitalization Ratio as of the last day of such Fiscal Quarter; PROVIDED that if the Company fails to deliver the financial statements required by SECTION 10.1.1 or 10.1.2, as applicable, by the due date therefor, the Margin, the Facility Fee Rate and the LC Fee Rate (for each type of Letter of Credit) that would apply if the Debt to Capitalization Ratio were greater than 0.45 to 1 shall apply from such due date until such financial statements are delivered.

REMAINING SCHEDULED COMMITMENT REDUCTIONS
Commitment Reduction Date ---------July 31, 2000 October 31, 2000 January 31, 2001 April 30, 2001 July 31, 2001 October 31, 2001 January 31, 2002 April 30, 2002 July 31, 2002 Aggregate Commitment Reduced to: ----------$78,000,000 $74,500,000 $71,000,000 $67,500,000 $64,000,000 $60,500,000 $57,000,000 $53,500,000 $ 0

EXHIBIT 10 (2) LAYNE CHRISTENSEN COMPANY INCENTIVE STOCK OPTION AGREEMENT

REMAINING SCHEDULED COMMITMENT REDUCTIONS
Commitment Reduction Date ---------July 31, 2000 October 31, 2000 January 31, 2001 April 30, 2001 July 31, 2001 October 31, 2001 January 31, 2002 April 30, 2002 July 31, 2002 Aggregate Commitment Reduced to: ----------$78,000,000 $74,500,000 $71,000,000 $67,500,000 $64,000,000 $60,500,000 $57,000,000 $53,500,000 $ 0

EXHIBIT 10 (2) LAYNE CHRISTENSEN COMPANY INCENTIVE STOCK OPTION AGREEMENT THIS AGREEMENT dated __________________ (the "Granting Date"), is made by and between Layne Christensen Company, a Delaware corporation (the "Company"), and _________________ (the "Optionee"). WHEREAS, the Company has adopted the Layne Christensen Company 1992 Stock Option Plan (the "Plan") pursuant to which the Company may, from time to time, grant options to Key Employees to purchase shares of the Company's common stock; WHEREAS, the Board of Directors has determined that the Optionee is a Key Employee of the Company or a Subsidiary who has made or is expected to make a significant contribution to the Company or a Subsidiary; and WHEREAS, the Company desires to grant to the Optionee an incentive stock option (under Section 422 of the Internal Revenue Code of 1986, as amended) to purchase shares of the Company's common stock on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. INCORPORATION OF PLAN. The Plan is attached hereto as EXHIBIT A and incorporated herein by this reference, and all of the terms and conditions therein shall be deemed to be included as part of the terms and conditions of this Agreement. In the event of a conflict, the terms and conditions of the Plan shall control. All terms used herein which are defined in the Plan shall have the meanings given them in the Plan. 2. GRANT OF STOCK OPTION. The Company hereby grants the Optionee an option (the "Option") to purchase at the times hereinafter set forth, in one or more exercises, all or any part of an aggregate of ___________ shares of the Company's common stock (the "Shares") for an exercise price of $______ per share. 3. CONSIDERATION TO THE COMPANY. In consideration of the granting of this Option by the Company, the Optionee agrees to render faithful and efficient services to the Company or a Subsidiary, with such duties and responsibilities as the Company shall from time to time prescribe. Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any time for any reason whatsoever, with or without cause. In addition, nothing in this Agreement or in the Plan shall require the Optionee to continue in the employ of the Company or any Subsidiary.

EXHIBIT 10 (2) LAYNE CHRISTENSEN COMPANY INCENTIVE STOCK OPTION AGREEMENT THIS AGREEMENT dated __________________ (the "Granting Date"), is made by and between Layne Christensen Company, a Delaware corporation (the "Company"), and _________________ (the "Optionee"). WHEREAS, the Company has adopted the Layne Christensen Company 1992 Stock Option Plan (the "Plan") pursuant to which the Company may, from time to time, grant options to Key Employees to purchase shares of the Company's common stock; WHEREAS, the Board of Directors has determined that the Optionee is a Key Employee of the Company or a Subsidiary who has made or is expected to make a significant contribution to the Company or a Subsidiary; and WHEREAS, the Company desires to grant to the Optionee an incentive stock option (under Section 422 of the Internal Revenue Code of 1986, as amended) to purchase shares of the Company's common stock on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. INCORPORATION OF PLAN. The Plan is attached hereto as EXHIBIT A and incorporated herein by this reference, and all of the terms and conditions therein shall be deemed to be included as part of the terms and conditions of this Agreement. In the event of a conflict, the terms and conditions of the Plan shall control. All terms used herein which are defined in the Plan shall have the meanings given them in the Plan. 2. GRANT OF STOCK OPTION. The Company hereby grants the Optionee an option (the "Option") to purchase at the times hereinafter set forth, in one or more exercises, all or any part of an aggregate of ___________ shares of the Company's common stock (the "Shares") for an exercise price of $______ per share. 3. CONSIDERATION TO THE COMPANY. In consideration of the granting of this Option by the Company, the Optionee agrees to render faithful and efficient services to the Company or a Subsidiary, with such duties and responsibilities as the Company shall from time to time prescribe. Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any time for any reason whatsoever, with or without cause. In addition, nothing in this Agreement or in the Plan shall require the Optionee to continue in the employ of the Company or any Subsidiary. 4. TIMING AND MANNER OF EXERCISE. The Option shall be and become exercisable as follows: 25% on the day after the first anniversary of the Granting Date, 50% on the day after the second anniversary of the Granting Date, 75% on the day after the third

anniversary of the Granting Date, and 100% on the day after the fourth anniversary of the Granting Date. Provided, however, that the Option shall be 100% exercisable upon and after a "Change in Control." A Change in Control shall be deemed to exist if: (i) less than a majority of the Directors are persons who were either nominated or selected by the Board; or (ii) any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than KKR Associates, L.P. and/or any of its affiliates, a Director nominated or selected by the Board or an Officer elected by the Board, the Company, a subsidiary, an affiliate, or a Company employee benefit plan, including any trustee of such plan acting as trustee) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (or a successor to the Company) representing 35% or

anniversary of the Granting Date, and 100% on the day after the fourth anniversary of the Granting Date. Provided, however, that the Option shall be 100% exercisable upon and after a "Change in Control." A Change in Control shall be deemed to exist if: (i) less than a majority of the Directors are persons who were either nominated or selected by the Board; or (ii) any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than KKR Associates, L.P. and/or any of its affiliates, a Director nominated or selected by the Board or an Officer elected by the Board, the Company, a subsidiary, an affiliate, or a Company employee benefit plan, including any trustee of such plan acting as trustee) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (or a successor to the Company) representing 35% or more of the combined voting power of the then outstanding securities of the Company or such successor; or (iii) (A) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities (as defined below) of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, or (C) any other event which the Board determines, in its discretion, would materially alter the structure of the Company or its ownership. As used in this paragraph, "Voting Securities" shall mean any securities of the Company which vote generally in the election of Directors. No additional portion of the Option shall become exercisable after the Optionee's Termination of Employment. The Option shall expire as to all of the Shares ten (10) years after the Granting Date except the Option (or a portion thereof) shall terminate earlier as provided in Section 4.3(a) of the Plan. The Optionee may exercise the Option for all or any part of the Shares subject to each installment listed above on or after the respective exercise date listed above by delivering to the Company a written notice in accordance with Section 4.3(d) of the Plan. 5. NOTICES. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Secretary of the Company at Layne Christensen Company, 1900 Shawnee Mission Parkway, Mission Woods, Kansas 66205, and any notice to be given to the Optionee shall be addressed to him at the address given beneath his signature hereto. By a notice given pursuant to this Section 5, either party may hereafter designate a different address for notices to be given to him. Any notice which is required to be given to the Optionee shall, if

the Optionee is then deceased, be given to the Optionee's personal representative if such representative has previously informed the Company of his status and address by written notice under this Section 5. Any notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service. 6. NOTIFICATION OF DISPOSITION. The Optionee shall give prompt notice to the Company of any disposition or other transfer of any shares of stock acquired under this Agreement if such disposition or transfer is made (a) within two (2) years from the Granting Date of the Option with respect to such shares or (b) within one (1) year after the transfer of such shares to him. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Optionee in such disposition or other transfer. 7. TITLES. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or

the Optionee is then deceased, be given to the Optionee's personal representative if such representative has previously informed the Company of his status and address by written notice under this Section 5. Any notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service. 6. NOTIFICATION OF DISPOSITION. The Optionee shall give prompt notice to the Company of any disposition or other transfer of any shares of stock acquired under this Agreement if such disposition or transfer is made (a) within two (2) years from the Granting Date of the Option with respect to such shares or (b) within one (1) year after the transfer of such shares to him. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Optionee in such disposition or other transfer. 7. TITLES. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 8. AMENDMENT. This Agreement may be amended only by a writing executed by the parties hereto which specifically states that it is amending this Agreement. 9. GOVERNING LAW. The laws of the State of Kansas shall govern the interpretation, validity and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws. 10. NON-ASSIGNABILITY. Except as otherwise provided herein or in the Plan, the Option and the rights and privileges conferred hereby shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment, or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Option, or of any right or privilege conferred hereby, or upon the levy of any attachment or similar process upon the rights and privileges conferred hereby, contrary to the provisions hereby, this Option and the rights and privileges conferred hereby shall immediately become null and void. 11. BINDING EFFECT. Except as expressly stated herein to the contrary, the Agreement shall be binding upon and inure to the benefit of the respective heirs, legal representatives, successors and assigns of the parties hereto. IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.
The Company: LAYNE CHRISTENSEN COMPANY By: -------------------------Name: Andrew B. Schmitt Title: President, Chief Executive Officer --------------------------Address of the Optionee: ----------------------------------------------------The Optionee:

EXHIBIT 10 (3) LAYNE CHRISTENSEN COMPANY NON-QUALIFIED STOCK OPTION AGREEMENT THIS AGREEMENT dated ___________________ (the "Granting Date"), is made by and between Layne Christensen Company, a Delaware corporation (the "Company"), and _________________ (the "Optionee"). WHEREAS, the Company has adopted the Layne Christensen Company 1996 District Stock Option Plan (the

EXHIBIT 10 (3) LAYNE CHRISTENSEN COMPANY NON-QUALIFIED STOCK OPTION AGREEMENT THIS AGREEMENT dated ___________________ (the "Granting Date"), is made by and between Layne Christensen Company, a Delaware corporation (the "Company"), and _________________ (the "Optionee"). WHEREAS, the Company has adopted the Layne Christensen Company 1996 District Stock Option Plan (the "Plan") pursuant to which the Company may, from time to time, grant options to Key Employees to purchase shares of the Company's common stock; WHEREAS, the Administrative Committee has determined that the Optionee is a Key Employee of the Company or a Subsidiary who has made or is expected to make a significant contribution to the Company or a Subsidiary; and WHEREAS, the Company desires to grant to the Optionee a Non-Qualified stock option to purchase shares of the Company's common stock on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. INCORPORATION OF PLAN. The Plan is attached hereto as EXHIBIT A and incorporated herein by this reference, and all of the terms and conditions therein shall be deemed to be included as part of the terms and conditions of this Agreement. In the event of a conflict, the terms and conditions of the Plan shall control. All terms used herein which are defined in the Plan shall have the meanings given them in the Plan. 2. GRANT OF STOCK OPTION. The Company hereby grants the Optionee an option (the "Option") to purchase at the times hereinafter set forth, in one or more exercises, all or any part of an aggregate of ___________ shares of the Company's common stock (the "Shares") for an exercise price of $______ per share. 3. CONSIDERATION TO THE COMPANY. In consideration of the granting of this Option by the Company, the Optionee agrees to render faithful and efficient services to the Company or a Subsidiary, with such duties and responsibilities as the Company shall from time to time prescribe. Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any time for any reason whatsoever, with or without cause. In addition, nothing in this Agreement or in the Plan shall require the Optionee to continue in the employ of the Company or any Subsidiary. 4. TIMING AND MANNER OF EXERCISE. The Option shall be and become exercisable as follows: 25% on the day after the first anniversary of the Granting Date, 50% on

the day after the second anniversary of the Granting Date, 75% on the day after the third anniversary of the Granting Date, and 100% on the day after the fourth anniversary of the Granting Date. Provided, however, that the Option shall be 100% exercisable upon and after a "Change in Control." A Change in Control shall be deemed to exist if: (i) less than a majority of the Directors are persons who were either nominated or selected by the Board; or (ii) any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than KKR Associates, L.P. and/or any of its affiliates, a Director nominated or selected by the Board or an Officer elected by the Board, the Company, a subsidiary, an affiliate, or a Company employee benefit plan, including any trustee of such plan acting as trustee) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (or a successor to the Company) representing 35% or

the day after the second anniversary of the Granting Date, 75% on the day after the third anniversary of the Granting Date, and 100% on the day after the fourth anniversary of the Granting Date. Provided, however, that the Option shall be 100% exercisable upon and after a "Change in Control." A Change in Control shall be deemed to exist if: (i) less than a majority of the Directors are persons who were either nominated or selected by the Board; or (ii) any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than KKR Associates, L.P. and/or any of its affiliates, a Director nominated or selected by the Board or an Officer elected by the Board, the Company, a subsidiary, an affiliate, or a Company employee benefit plan, including any trustee of such plan acting as trustee) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (or a successor to the Company) representing 35% or more of the combined voting power of the then outstanding securities of the Company or such successor; or (iii) (A) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities (as defined below) of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, or (C) any other event which the Board determines, in its discretion, would materially alter the structure of the Company or its ownership. As used in this paragraph, "Voting Securities" shall mean any securities of the Company which vote generally in the election of Directors. No additional portion of the Option shall become exercisable after the Optionee's Termination of Employment. The Option shall expire as to all of the Shares ten (10) years after the Granting Date except the Option (or a portion thereof) shall terminate earlier as provided in Section 4.3(a) of the Plan. The Optionee may exercise the Option for all or any part of the Shares subject to each installment listed above on or after the respective exercise date listed above by delivering to the Company a written notice in accordance with Section 4.3(d) of the Plan. 5. NOTICES. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Secretary of the Company at Layne Christensen Company, 1900 Shawnee Mission Parkway, Mission Woods, Kansas 66205, and any notice to be given to the Optionee shall be addressed to him at the address given beneath his signature hereto. By a

notice given pursuant to this Section 5, either party may hereafter designate a different address for notices to be given to him. Any notice which is required to be given to the Optionee shall, if the Optionee is then deceased, be given to the Optionee's personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section 5. Any notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service. 6. TITLES. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 7. AMENDMENT. This Agreement may be amended only by a writing executed by the parties hereto which specifically states that it is amending this Agreement. 8. GOVERNING LAW. The laws of the State of Kansas shall govern the interpretation, validity and performance of the terms of this Agreement regardless of the law that might be applied under principles of

notice given pursuant to this Section 5, either party may hereafter designate a different address for notices to be given to him. Any notice which is required to be given to the Optionee shall, if the Optionee is then deceased, be given to the Optionee's personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section 5. Any notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service. 6. TITLES. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 7. AMENDMENT. This Agreement may be amended only by a writing executed by the parties hereto which specifically states that it is amending this Agreement. 8. GOVERNING LAW. The laws of the State of Kansas shall govern the interpretation, validity and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws. 9. NON-ASSIGNABILITY. Except as otherwise provided herein or in the Plan, the Option and the rights and privileges conferred hereby shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment, or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Option, or of any right or privilege conferred hereby, or upon the levy of any attachment or similar process upon the rights and privileges conferred hereby, contrary to the provisions hereby, this Option and the rights and privileges conferred hereby shall immediately become null and void. 10. BINDING EFFECT. Except as expressly stated herein to the contrary, the Agreement shall be binding upon and inure to the benefit of the respective heirs, legal representatives, successors and assigns of the parties hereto. IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.
The Company: LAYNE CHRISTENSEN COMPANY By: -------------------------------Name: Andrew B. Schmitt Title: President and Chief Executive Officer

The Optionee: ------------------------------------Address of the Optionee: -------------------------------------------------------------------------------------------------------------

ARTICLE 5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES

3 MOS JAN 31 2000 APR 30 1999 2,213 0 57,868

ARTICLE 5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED

3 MOS JAN 31 2000 APR 30 1999 2,213 0 57,868 3,367 31,276 105,563 190,645 100,921 253,063 56,103 63,929 0 0 116 112,944 253,063 3,840 70,033 51,525 57,364 0 0 1,170 (1,824) (839) (1,214) 0 0 0 (1,214) (0.10) (0.10)


								
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