Exhibit 10 (2)
EXECUTION VERSION
LETTER AMENDMENT NO.3
TO
MASTER SHELF AGREEMENT
June 16, 2006
Prudential Investment Management, Inc.
The Prudential Insurance Company of America
Pruco Life Insurance Company
Security Life of Denver Insurance Company
American Skandia Life Assurance Corporation
Prudential Retirement Insurance and Annuity Company
Time Insurance Company (f/k/a Fortis Insurance Company)
American Memorial Life Insurance Company
Physicians Mutual Insurance Company
c/o Prudential Capital Group
2200 Ross Avenue, Suite 4200E
Dallas, Texas 75201
Ladies and Gentlemen:
     We refer to the Master Shelf Agreement dated as of July 31, 2003 and
amended by Letter Amendment No. 1 to Master Shelf Agreement dated May 15, 2004
and Amendment No. 2 to Master Shelf Agreement dated September 28, 2005 (as
amended, the “Agreement”) among Layne Christensen Company (the “Company”),
Prudential Investment Management, Inc., The Prudential Insurance Company of
America, Pruco Life Insurance Company, Security Life of Denver Insurance
Company, American Skandia Life Assurance Corporation, Prudential Retirement
Insurance and Annuity Company, Time Insurance Company (f/k/a Fortis Insurance
Company), American Memorial Life Insurance Company and Physicians Mutual
Insurance Company. Unless otherwise defined herein, the terms defined in the
Agreement shall be used herein as therein defined.
     The Company desires to amend the Agreement as set forth below, and
Prudential and the Purchasers are willing to agree to such amendments, upon and
subject to the terms and conditions set forth herein.
     Therefore, for good and valuable consideration, it is hereby agreed by you
and us as follows:
     1. Amendments to the Agreement. Subject to the accuracy of the
representations and warranties set forth in paragraph 2 hereof and satisfaction
of the conditions set forth

 

--------------------------------------------------------------------------------

 

in paragraph 3 hereof, the undersigned holders of the Notes hereby agree with
the Company to amend, effective as of the date first above written, the
Agreement as follows:
     (a) Paragraph 6. NEGATIVE COVENANTS. Paragraph 6 of the Agreement is
amended by:
     (I) amending Paragraph 6A(4) in its entirety as follows:
“6A(4). Priority Debt. The Company will not permit Priority Debt to exceed (i)
for all periods prior to September 1, 2008, the greater of (a) 10% of Tangible
Net Worth as calculated as of any date, and (b) $12,000,000, and (ii) for all
periods from and after September 1, 2008, 10% of Tangible Net Worth as
calculated as of any date.”
     (II) in Paragraph 6B(1), (A) deleting “and” at the end of clause
(x) thereof, (B) deleting the existing clause (xi), and (D) adding the following
new clauses (xi) and (xii) thereto:
“(xi) surety bonds listed on Exhibit A attached to the Third Amendment; and
(xii) Liens other than those described in clauses (i) — (xi) above that secure
Indebtedness (other than Indebtedness under the Bank Agreement); provided that
after granting such Lien the Company is in compliance with paragraph 6(A).”
     (b) Paragraph 10B. Other Terms. Paragraph 10B of the Agreement is amended
to:
     (I) add the following definition of “Third Amendment” in alphabetical
order:
“Third Amendment shall mean that certain Letter Amendment No. 3 to Master Shelf
Agreement dated as of June 16, 2006.”
     (II) amend the definition of “Indebtedness” by adding, at the end thereof,
the following:
“For purposes of calculating the financial covenants pursuant to paragraph 6,
the surety bonds listed on Exhibit A to the Third Amendment shall not be
considered Indebtedness.”

-2-

--------------------------------------------------------------------------------

 

2. Representations and Warranties. In order to induce Prudential and the
Purchasers to enter into this Amendment, the Company hereby represents and
warrants as follows:
     (a) No Defaults. No Default or Event of Default exists under the Agreement,
the Notes as amended by the Note Amendments, the Subsidiary Guaranty Agreement
or any other agreement or instrument executed in connection therewith and no
default or event of default exists under the Bank Agreement, any agreement or
instrument executed in connection therewith or any other material contract or
agreement to which the Company or any of the Subsidiary Guarantors is a party,
and, to the Company’s knowledge, no such default or event of default is
imminent.
     (b) Representations and Warranties. The representations and warranties of
the Company and the Subsidiary Guarantors set forth in the Agreement and the
Subsidiary Guaranty Agreement are true and correct on and as of the date hereof,
both before and after giving effect to the effectiveness of this Amendment
(except to the extent such representations and warranties expressly are limited
to an earlier date, in which such representations and warranties are true and
correct on and as of such earlier date).
3. Effectiveness. The effectiveness of this Letter Amendment is contingent on
Prudential and the Purchasers having received:

  (i)   duly executed counterparts of this Letter Amendment from all parties
hereto;     (ii)   satisfactory written evidence of the consent to the execution
and delivery of this Letter Amendment by the Subsidiary Guarantors;     (iii)  
satisfactory written evidence of the consent to the execution and delivery of
this Letter Amendment by the Company’s senior lenders under the Bank Agreement;
    (iv)   a Guarantor Supplement duly executed and delivered by Collector Wells
International, Inc. and International Water Consultants, Inc.; and     (v)   all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the amendments to the Agreement herein
contained.

4. Miscellaneous.
     (a) Effect on Agreement. On and after the effective date of this Letter
Amendment, each reference in the Agreement to “this Agreement”, “hereunder”,
“hereof’, or words of like import referring to the Agreement, and each reference
in the Notes to “the Agreement”, “thereunder”, “thereof’, or words of like
import referring to the Agreement, shall mean the Agreement as amended by this
Letter Amendment. The Agreement, as amended by this Letter Amendment, is and
shall continue to be in full

-3-

--------------------------------------------------------------------------------

 

force and effect and is hereby in all respects ratified and confirmed. The
execution, delivery and effectiveness of this Letter Amendment shall not, except
as expressly provided herein, operate as a waiver of any right, power or remedy
under the Agreement nor constitute a waiver of any provision of the Agreement.
     (b) Counterparts. This Letter Amendment may be executed in any number of
counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same letter amendment.
     If you agree to the terms and provisions hereof, please evidence your
agreement by executing and returning at least a counterpart of this Letter
Amendment to Layne Christensen Company, 1900 Shawnee Mission Parkway, Mission
Woods, Kansas 66205, Attention: Vice President — Finance and Treasurer. This
Letter Amendment shall become effective as of the date first above written when
and if counterparts of this Letter Amendment shall have been executed by us and
you and the consent attached hereto shall have been executed by each of the
Subsidiary Guarantors.
(Remainder of Page Intentionally Left Blank; Signature Pages Follow)

-4-

--------------------------------------------------------------------------------

 

            Very truly yours,

LAYNE CHRISTENSEN COMPANY
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Senior Vice President     

Agreed as of the date first above written:

          PRUDENTIAL INVESTMENT MANAGEMENT, INC.    
 
       
By:
  /s/ BL       /s/ WHB    
 
 
 
Vice President    
 
        THE PRUDENTIAL INSURANCE COMPANY OF AMERICA    
 
       
By:
  /s/ BL       /s/ WHB    
 
 
 
Vice President    
 
        PRUCO LIFE INSURANCE COMPANY    
 
       
By:
  /s/ BL       /s/ WHB    
 
 
 
Vice President    
 
        SECURITY LIFE OF DENVER INSURANCE COMPANY    

     
By:
  Prudential Private Placement Investors,
 
  L.P. (as Investment Advisor)
 
   
By:
  Prudential Private Placement Investors, Inc.
 
  (as its General Partner)

             
 
  By:   /s/ BL       /s/ WHB    
 
     
 
Vice President    

Signature Page to Letter Amendment No. 3 to Master Shelf Agreement

 

--------------------------------------------------------------------------------

 

              AMERICAN SKANDIA LIFE ASSURANCE CORPORATION    
 
            By:   Prudential Investment Management, Inc.,         as investment
manager    
 
           
 
  By:   /s/ BL       /s/ WHB    
 
     
 
Vice President    
 
            PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY    
 
            By:   Prudential Investment Management, Inc.,         as investment
manager    
 
           
 
  By:   /s/ BL       /s/ WHB    
 
     
 
Vice President    
 
            TIME INSURANCE COMPANY     (F/K/A FORTIS INSURANCE COMPANY)    
 
            By:   Prudential Private Placement Investors,         LP. (as
Investment Advisor)    
 
            By:   Prudential Private Placement Investors, Inc.         (as its
General Partner)    
 
           
 
  By:   /s/ BL       /s/ WHB    
 
     
 
Vice President    
 
            AMERICAN MEMORIAL LIFE INSURANCE COMPANY)    
 
            By:   Prudential Private Placement Investors,         LP. (as
Investment Advisor)    
 
            By:   Prudential Private Placement Investors, Inc.         (as its
General Partner)    
 
           
 
  By:   /s/ BL       /s/ WHB    
 
     
 
Vice President    

Signature Page to Letter Amendment No. 3 to Master Shelf Agreement

 

--------------------------------------------------------------------------------

 

              PHYSICIANS MUTUAL INSURANCE COMPANY     By:   Prudential Private
Placement Investors,         LP. (as Investment Advisor)    
 
            By:   Prudential Private Placement Investors, Inc.         (as its
General Partner)    
 
           
 
  By:   /s/ BL       /s/ WHB    
 
     
 
Vice President    

Signature Page to Letter Amendment No. 3 to Master Shelf Agreement

 

--------------------------------------------------------------------------------

 

CONSENT
          The undersigned, as Guarantors under the Subsidiary Guaranty Agreement
dated as of July 31, 2003 (the “Guaranty”) in favor of the holders from time to
time of the Notes issued pursuant to the Agreement referred to in the foregoing
Letter Amendment, hereby consent to said Letter Amendment and hereby confirm and
agree that the Guaranty is, and shall continue to be, in full force and effect
and is hereby confirmed and ratified in all respects except that, upon the
effectiveness of, and on and after the date of, said Letter Amendment, all
references in the Guaranty to the Agreement, “thereunder”, “thereof’, or words
of like import referring to the Agreement shall mean the Agreement as amended by
said Letter Amendment.

            BOYLES BROS. DRILLING COMPANY,
a Utah corporation
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            CHRISTENSEN BOYLES CORPORATION,
a Delaware corporation
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            INTERNATIONAL DIRECTIONAL
SERVICES, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE TEXAS, INCORPORATED, a Delaware corporation
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

 

--------------------------------------------------------------------------------

 

            MID-CONTINENT DRILLING COMPANY, a Delaware corporation
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            SHAWNEE OIL & GAS, L.L.C., a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            STAMM-SCHEELE INCORPORATED, a Louisiana corporation
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            TOLEDO OIL L& GAS SERVICES, INC., a Louisiana
corporation
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            VIBRATION TECHNOLOGY, INC., a Delaware corporation
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE DRILLING PTY LTD, an Australian company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Director   

 

--------------------------------------------------------------------------------

 

         

            LAYNE CHRISTENSEN AUSTRALIA PTY LTD, an Australian company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Director     

            STANLEY MINING SERVICES PTY LTD,
an Australian company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Director     

            SMS HOLDINGS PTY LTD, an Australian company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Director     

            WEST AFRICAN HOLDINGS PTY LTD, an Australian company       By:   /s/
Jerry W. Fanska         Name:   Jerry W. Fanska        Title:   Director     

            WEST AFRICAN DRILLING SERVICES PTY LTD, an Australian company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Director     

            WEST AFRICAN DRILLING SERVICES PTY
(NO. 2) LTD, an Australian company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Director     

 

--------------------------------------------------------------------------------

 

            LAYNE ENERGY, INC., a Delaware corporation
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY CHERRYVALE, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY CHERRYVALE PIPELINE, LLC, a Delaware limited liability
company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY DAWSON, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY DAWSON PIPELINE, LLC, a Delaware limited liability
company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY ILLINOIS, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President   

 

--------------------------------------------------------------------------------

 

         

            LAYNE ENERGY ILLINOIS PIPELINE, LLC,
a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY MARKETING, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY OPERATING, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY OSAGE, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY PIPELINE, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY PRODUCTION, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

 

--------------------------------------------------------------------------------

 

            LAYNE ENERGY RESOURCES, INC., a Delaware corporation
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY SYCAMORE, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE ENERGY SYCAMORE PIPELINE, LLC, a Delaware limited liability
company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            LAYNE WATER DEVELOPMENT AND
STORAGE, LLC, a Delaware limited liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President     

            CHERRYVALE PIPELINE, LLC, a Kansas limited
liability company
      By:   /s/ Jerry W. Fanska         Name:   Jerry W. Fanska        Title:  
Vice President