8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 7, 2007

LAYNE CHRISTENSEN COMPANY

(Exact Name of Registrant as Specified in Charter)

Delaware	0-20578	48-0920712
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1900 Shawnee Mission Parkway
Mission Woods, Kansas 66205

(Address of Principal Executive Offices)

(913) 362-0510

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

SECTION 5 — CORPORATE GOVERNANCE AND MANAGEMENT

ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

Layne Energy, Inc. 2007 Stock Option Plan

     At the Annual Meeting of Stockholders of Layne Christensen Company (“Layne”, or the “Company”), held on June 7, 2007, the Company’s stockholders approved, among other things, the Layne Energy, Inc. 2007 Stock Option Plan (the “Energy Plan”). Subject to adjustment as provided in the Energy Plan and as explained below, no more than a total of 10,000 shares of Layne Energy, Inc. common stock are authorized for issuance under the Energy Plan in accordance with the provisions of the Energy Plan and subject to such restrictions or other provisions as the Committee may from time to time deem necessary. Mr. Colin B. Kinley, one of Layne’s executive officers, will participate in the Energy Plan.

     The following description of the Energy Plan does not purport to be complete and is qualified in its entirety by reference to the Energy Plan, which is filed as Exhibit 10.1 hereto and incorporated herein by reference, and a form of the Nonqualified Stock Option Agreement to be used in connection with the Energy Plan, which is filed as Exhibit 10.2 hereto and incorporated herein by reference.

General

     The objectives of the Energy Plan are to encourage the employees of Layne Energy, Inc. (“Layne Energy”) and the employees of our other affiliates to acquire a proprietary and vested interest in Layne Energy’s growth and performance and to assist us and Layne Energy in attracting and retaining key employees. The Energy Plan provides for grants of incentive stock options (“ISOs”), which are entitled to special tax treatment under Section 422 of the Internal Revenue Code (the “Code”), and non-qualified stock options (“NQSOs”), which are not entitled to such special tax treatment.

     The Energy Plan is not subject to any provisions of the Employee Retirement Income Security Act of 1974.

Administration

     Our Board of Directors will administer the Energy Plan. Our Board is permitted, however, to delegate its discretionary authority over the Energy Plan to a committee of the Board (the “Committee”), which, if such authority is delegated, will consist of at least two (2) directors, each of whom is a “non-employee director” (within the meaning of Rule 16b-3(b)(3) under the Securities Act of 1934) and an “outside director” (within the meaning of Code Section 162(m)). Members of the Committee may be removed at the discretion of the Board.

     The Committee is authorized to interpret the Energy Plan and to adopt rules from time to time to carry out the Energy Plan. The Committee also has the authority to (i) select the participants to whom options will be granted, (ii) determine the types of options to be granted and the number of shares covered by each option, (iii) set the terms and conditions of the options, and (iv) when initially establishing the terms for one or more stock options, determine the circumstances under which options may be canceled, forfeited or suspended. The Committee may also modify and amend the Energy Plan and appoint agents for the proper administration of the Energy Plan.

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Shares Reserved for Options

     The aggregate number of shares of Layne Energy’s common stock, $0.01 par value, that may be issued pursuant to the Energy Plan is limited to 10,000 shares. The shares issued under the Energy Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares, and to the extent any options under the Energy Plan is exercised, terminates, expires or is forfeited without payment being made in the form of common shares, the shares subject to such option that were not so paid will again be available for distribution under the Energy Plan. In addition, any shares used for full or partial payment of the purchase price of shares with respect to which an option is exercised and any shares we withhold for the purpose of satisfying any tax withholding obligation (other than with respect to ISOs) will automatically become available under the Energy Plan and not count against the authorized limit.

     The number of shares authorized under the Energy Plan is subject to automatic adjustment due to changes resulting from payments of stock dividends or other distributions, stock splits, subdivisions, consolidations, combinations, reclassifications, recapitalizations and other corporate transactions in a manner that the Committee results in an equitable adjustment.

Eligibility and Limits on Options

     Any non-employee director, key employee of Layne Energy or an affiliate of Layne Energy or consultant of Layne Energy will be eligible to receive options under the Energy Plan. ISOs will not be granted to non-employee directors.

     Although no final determination has been made as to which of our or Layne Energy’s employees or non-employee directors will receive grants under the Energy Plan, the Committee anticipates granting an option to Mr. Kinley. No determination has been made as to the number of shares of Layne Energy common stock that would be covered by Mr. Kinley’s option and no determination has been made as to which of our or Layne Energy’s other employees will be eligible for grants under the Energy Plan; therefore, the benefits to be allocated to any individual other than Mr. Kinley, or the specific amount of any benefits to be provided to Mr. Kinley, are not presently determinable.

     The Energy Plan places limits on the maximum amount of shares with respect to options that may be granted in any one taxable year. Participants may not receive awards of options covering in the aggregate more than 5,000 shares in any one taxable year.

     In addition, the aggregate fair market value (as of the grant date) of common stock with respect to which ISOs are exercisable for the first time by a participant during any calendar year (under the Energy Plan or under any other equity plan of ours which qualifies as an incentive stock option plan under Code Section 422) may not exceed $100,000. To the extent such fair market value exceeds $100,000 during any calendar year, amounts in excess of $100,000 are treated as NQSOs.

General Terms of Options

     Each option granted to a participant under the Energy Plan will be evidenced by an option agreement entered by the participant and Layne Energy. The option agreement will specify the terms and conditions of the option, including the number of shares subject to the option, the form of consideration available to be paid upon exercise of the option, the effect on the option of a termination of employment, and all other matters.

     Options granted under the Energy Plan are not assignable or transferable by the participant except in the event of the participant’s death or incapacity and no option may be exercised more than ten years after its date of the grant. The Committee will establish the period of time within which the option, or portions thereof, may be exercised. Unless otherwise provided in an option agreement, in the event that there is a change in control (as defined in the Energy Plan), each option will, without regard to the

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option’s vesting schedule, automatically become fully exercisable, as of the date of such change in control.

     A participant may be granted one or more stock options, which will be designated as either ISOs or NQSOs, however, if the aggregate fair market value of the ISO shares exceeds $100,000 or the maximum limitation in effect at the time of the grant under Section 422(d) of the Code, such stock options in excess of such limit will be treated as NQSOs.

     Each option award agreement will state the option exercise price, which will be determined in each case by the Committee, but in no event may the price be less than the fair market value of the underlying Layne Energy stock on the option’s grant date.

     The Committee may provide that the Layne Energy shares issuable upon the exercise of an option are, under certain conditions, subject to restrictions whereby we or Layne Energy have (i) a right of first refusal with respect to such shares, (ii) specific rights or limitations with respect to the participant’s ability to vote such shares, or (iii) a right or obligation to repurchase all or a portion of such shares, which restrictions or obligations may survive a participant’s termination of employment.

Federal Income Tax Consequences

     Based on current provisions of the Code and the existing regulations thereunder, the anticipated U.S. federal income tax consequences of options granted under the Energy Plan are as described below. The following discussion is not intended to be a complete discussion of applicable law and is based on the U.S. federal income tax laws as in effect on the date hereof. State tax consequences may in some cases differ from those described below.

     Incentive Stock Options. ISOs are defined by Section 422 of the Code. A participant who is granted an ISO does not recognize taxable income either on the date of grant or on the date of exercise. Upon the exercise of an ISO, the difference between the fair market value of the shares received and the option price is, however, a tax preference item potentially subject to the alternative minimum tax.

     Upon disposition of shares acquired from the exercise of an ISO, long-term capital gain or loss is generally recognized in an amount equal to the difference between the amount realized on the sale or disposition and the exercise price. However, if the participant disposes of the shares within two years of the date of grant or within one year of the date of the transfer of the shares to the participant (a “Disqualifying Disposition”), then the participant will recognize ordinary income, as opposed to capital gain, at the time of disposition. In general, the amount of ordinary income recognized will be equal to the lesser of (a) the amount of gain realized on the disposition, or (b) the difference between the fair market value of the shares received on the date of exercise and the exercise price. Any remaining gain or loss is treated as a short-term or long-term capital gain or loss, depending on the period of time the shares have been held.

     The Company is not entitled to a tax deduction upon either the exercise of an ISO or the disposition of shares acquired pursuant to the exercise of an ISO, except to the extent that the participant recognizes ordinary income in a Disqualifying Disposition. For alternative minimum taxable income purposes, on the later sale or other disposition of the shares, generally only the difference between the fair market value of the shares on the exercise date and the amount realized on the sale or disposition is includable in alternative minimum taxable income.

     If a participant pays the exercise price, in whole or in part, with previously acquired shares, the exchange should not affect the ISO tax treatment of the exercise. Upon the exchange, and except as otherwise described herein, no gain or loss is recognized by the participant upon delivering previously acquired shares to the Company as payment of the exercise price. The shares received by the participant, equal in number to the previously acquired shares exchanged therefore, will have the same basis and holding period for long-term capital gain purposes as the previously acquired shares. The participant,

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however, will not be able to utilize the prior holding period for the purpose of satisfying the ISO statutory holding period requirements. Shares received by the participant in excess of the number of previously acquired shares will have a basis of zero and a holding period which commences as of the date the shares are transferred to the participant upon exercise of the ISO. If the exercise of any ISO is effected using shares previously acquired through the exercise of an ISO, the exchange of the previously acquired shares will be considered a disposition of the shares for the purpose of determining whether a Disqualifying Disposition has occurred.

     Nonqualified Stock Options. A participant receiving a NQSO does not recognize taxable income on the date of grant of the NQSO, provided that the NQSO does not have a readily ascertainable fair market value at the time it is granted. In general, the participant must recognize ordinary income at the time of exercise of the NQSO in the amount of the difference between the fair market value of the shares on the date of exercise and the option price. The ordinary income recognized will constitute compensation for which tax withholding generally will be required. The amount of ordinary income recognized by a participant will be deductible by the Company in the year that the participant recognizes the income if the Company complies with the applicable withholding requirements.

     Shares acquired upon the exercise of a NQSO will have a tax basis equal to their fair market value on the exercise date or other relevant date on which ordinary income is recognized, and the holding period for the shares generally will begin on the date of exercise or such other relevant date. Upon subsequent disposition of the shares, the participant will recognize long-term capital gain or loss if the participant has held the shares for more than one year prior to disposition, or short-term capital gain or loss if the participant has held the shares for one year or less.

     If a participant pays the exercise price, in whole or in part, with previously acquired shares, the participant will recognize ordinary income in the amount by which the fair market value of the shares received exceeds the exercise price. The participant will not recognize gain or loss upon delivering the previously acquired shares to the Company. Shares received by a participant, equal in number to the previously acquired common shares exchanged therefore, will have the same basis and holding period for long-term capital gain purposes as the previously acquired shares. Shares received by a participant in excess of the number of such previously acquired shares will have a basis equal to the fair market value of the additional shares as of the date ordinary income is recognized. The holding period for the additional shares will commence as of the date of exercise or such other relevant date.

     Deductibility of Options. Section 162(m) of the Code places a $1,000,000 annual limit on the compensation deductible by the Company or a majority owned subsidiary paid to certain executives. The limit, however, does not apply to “qualified performance-based compensation.” We believe that awards of stock options to the executives subject to Code Section 162(m) will qualify for the performance-based compensation exception to the deductibility limit.

Other Information

     Upon the approval of Layne’s stockholders, the Energy Plan became effective as of March 29, 2007, and will remain in effect, subject to the right of our Board to amend or terminate the Energy Plan, until all shares subject to it have been purchased or acquired according to the Energy Plan’s provisions. No options will be issued under the Energy Plan after March 29, 2017, unless the Energy Plan is re-approved by Layne’s stockholders. Any options granted before the Energy Plan is terminated may extend beyond the expiration date.

     Our Board may amend the Energy Plan at any time, provided that no such amendment will be made without approval by Layne’s stockholders if such approval is required under applicable statutory or regulatory authority, or if the Company is advised by its counsel that stockholder approval is otherwise necessary or desirable. No amendment, modification or termination of the Energy Plan may adversely

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affect the rights of any participant under any then outstanding options granted under the Energy Plan without the consent of that participant.

Mineral Exploration Division Incentive Compensation Plan

     Also on June 7, 2007, the Board of Directors of Layne adopted a Mineral Exploration Division Incentive Compensation Plan, effective as of February 1, 2007 (the “Minerals Plan”). Mr. Eric R. Despain, one of Layne’s executive officers, will participate in the Minerals Plan.

     The Minerals Plan is an incentive compensation plan established and maintained for the purpose of providing additional incentive for the eligible employees to promote the best interests and most profitable operation of the Mineral Exploration Division (the “Division”). All salaried, non-clerical employees of the Division shall be eligible for participation in the Minerals Plan. The Minerals Plan shall be administered by a committee appointed by the Board of Directors of the Company.

     The incentive compensation to be allocated to the bonus pool established for each district or region within the Division and for the Division as a whole shall be based on certain performance benchmarks. Each fiscal year, each district and region within the Division and the Division as a whole shall be assigned a benchmark based on the earnings before interest and taxes (“EBIT”) of such respective district, region or Division. The amount of the bonus pool established for a fiscal year will be calculated based on the percentage of the EBIT benchmark achieved by each respective district, region, or the Division as a whole. The amount of the incentive award to be granted from the bonus pool to each participant in the Minerals Plan shall be determined by the committee, subject to certain maximum awards. For example, Mr. Despain cannot receive a cash incentive award in excess of 100% of his annual regular salary.

     The incentive compensation awards payable under the Minerals Plan will be paid in cash or, as permitted under the Company’s 2006 Equity Incentive Plan, in shares of restricted or unrestricted common stock of the Company, or a combination of any of the foregoing as determined by the Board of Directors of the Company or the Compensation Committee thereof. To the extent such award is payable in stock, a participant will receive the Company’s common stock, par value $.01 per share.

     The foregoing description of the Minerals Plan does not purport to be complete and is qualified in its entirety by reference to the Minerals Plan, which is filed as Exhibit 10.3 hereto and incorporated herein by reference.

Amended and Restated Executive Incentive Compensation Plan

     At the Board of Directors meeting held on June 7, 2007, Layne’s Board also approved certain changes to the Company’s Executive Incentive Compensation Plan (the “Executive Plan”), with such changes to be effective as of February 1, 2007. The changes made to the Executive Plan included increases in the percentage of a participant’s annual regular salary that is paid as an incentive compensation award under the Executive Plan if the Company meets the performance targets that have been set by the Board for a particular fiscal year. Such percentage is referred to in the Executive Plan as the “Base Salary Percentage.” The Base Salary Percentage for the President of the Company was increased from 50% to 85%, and the Base Salary Percentage for the Chief Financial Officer and the General Counsel of the Company was increased from 37.5% to 60%. The Executive Plan was also amended to reflect that the President of the Mineral Exploration Division will now participate in the Minerals Plan rather than the Executive Plan. No other changes were made to the Executive Plan, and the previously disclosed performance targets set by the Board for the fiscal year ended January 31, 2008, remain unchanged. Andrew B. Schmitt, the Company’s President and CEO, Jerry W. Fanska, the

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Company’s Chief Financial Officer, and Steven F. Crooke, the Company’s General Counsel, are the three executives of the Company that currently participate in the Executive Plan.

     The foregoing description of the Executive Plan does not purport to be complete and is qualified in its entirety by reference to the Executive Plan (as amended and restated), which is filed as Exhibit 10.4 hereto and incorporated herein by reference.

Departure of Director

     As explained in the Company’s Proxy Statement, dated May 4, 2007, John J. Quicke decided not to stand for re-election at the Company’s Annual Meeting of Stockholders held on June 7, 2007. As a result, Mr. Quicke’s term on the Company’s Board of Directors came to an end on June 7, 2007. In connection with the end of Mr. Quicke’s term, the Company reduced the size of its Board from eight members to seven effective upon the completion of the Company Annual Meeting of Stockholders on June 7, 2007.

SECTION 9 — FINANCIAL STATEMENTS AND EXHIBITS

ITEM 9.01	FINANCIAL STATEMENTS AND EXHIBITS.
	(c)	Exhibits.
			10.1	Layne Energy, Inc. 2007 Stock Option Plan.
			10.2	Form of Nonqualified Stock Option Agreement to be used in connection with the Layne Energy, Inc. 2007 Stock Option Plan.
			10.3	Layne Christensen Company Mineral Exploration Division Incentive Compensation Plan.
			10.4	Layne Christensen Company Executive Incentive Compensation Plan (As Amended and Restated, Effective February 1, 2007).

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	LAYNE CHRISTENSEN COMPANY
Date: June 13, 2007	By:	/s/ A. B. Schmitt
		Name:	Andrew B. Schmitt
		Title:	President and Chief Executive Officer

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EX-10.1

EXHIBIT 10.1

LAYNE ENERGY, INC.
2007 STOCK OPTION PLAN

SECTION 1
INTRODUCTION

1.1	Establishment. Layne Energy, Inc., a corporation organized and existing under the laws of the state of Delaware (the “Company”), hereby establishes the Layne Energy, Inc. 2007 Stock Option Plan (the “Plan”) for certain employees, nonemployee directors and consultants of the Company.
1.2	Purpose. The purpose of this Plan is to encourage employees, nonemployee directors and consultants of the Company and its affiliates and subsidiaries to acquire a proprietary and vested interest in the growth and performance of the Company. The Plan is also designed to assist the Company in attracting and retaining employees, nonemployee directors and consultants by providing them with the opportunity to participate in the success and profitability of the Company.
1.3	Duration. The Plan shall commence on the Effective Date and, subject to the stockholder approval described in Section 1.4, shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Section 11 hereof, until all Shares subject to it shall have been issued, purchased or acquired according to the Plan’s provisions. Unless the Plan shall be reapproved by the stockholders of the Company and the Board renews the continuation of the Plan, no Options shall be issued pursuant to the Plan after the tenth (10th) anniversary of the Plan’s Effective Date.
1.4	Plan Subject to Stockholder Approval. Although the Plan is effective on the Effective Date, the Plan’s continued existence is subject to the approval of the stockholders of Layne Christensen Company, the parent corporation of the Company, within 12 months of the Effective Date. Any Options granted under the Plan after the Effective Date but before the approval of the Plan by the stockholders of Layne Christensen Company will become null and void if the stockholders of Layne Christensen Company do not approve this Plan.

SECTION 2
DEFINITIONS

2.1 The following terms shall have the meanings set forth below.

“1933 Act” means the Securities Act of 1933.

“1934 Act” means the Securities Exchange Act of 1934.

“Affiliate” of the Company means any Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by, or is under common Control with the Company.

“Beneficiary” means the person, persons, trust or trusts which have been designated by a Holder in his or her most recent written beneficiary designation filed with the Company to receive the benefits specified under this Plan upon the death of the Holder, or, if there is no designated beneficiary or surviving designated beneficiary, then the Person or Persons entitled by will or the laws of descent and distribution to receive such benefits.

“Board” means the Board of Directors of the Company.

“Cause” means, unless otherwise defined in an Option Agreement,

(i) A Participant’s conviction of, plea of guilty to, or plea of nolo contendere to a felony or other crime that involves fraud or dishonesty,

(ii)	Any willful action or omission by a Participant which would constitute grounds for immediate dismissal under the employment policies of the Company by which Participant is employed, including intoxication with alcohol or illegal drugs while on the premises of the Company, or violation of sexual harassment laws or the internal sexual harassment policy of the Company by which Participant is employed,
(iii)	A Participant’s habitual neglect of duties, including repeated absences from work without reasonable excuse, or
(iv)	A Participant’s willful and intentional material misconduct in the performance of his duties that results in financial detriment to the Company;

provided, however, that for purposes of clauses (ii), (iii) and (iv), Cause shall not include any one or more of the following: bad judgment, negligence or any act or omission believed by the Participant in good faith to have been in or not opposed to the interest of the Company (without intent of the Participant to gain, directly or indirectly, a profit to which the Participant was not legally entitled). A Participant who agrees to resign from his affiliation with the Company in lieu of being terminated for Cause may be deemed, in the sole discretion of the Committee, to have been terminated for Cause for purposes of this Plan.

“Change in Control” means the first to occur of the following events:

(i)	Any Person is or becomes the Beneficial Owner (within the meaning set forth in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates or held by an employee benefit plan of the Company) representing 50% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (x) of paragraph (ii) of this definition; or
(ii)	There is consummated a merger or consolidation of the Company with any other corporation, OTHER THAN (x) a merger or consolidation which would result in the voting securities of the Company outstanding immediately before such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate thereof at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (y) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing 50% or more of the combined voting power of the Company’s then outstanding securities; or
(iii)	The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

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Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Company’s common stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the Company’s assets immediately following such transaction or series of transactions.

“Code” means the Internal Revenue Code of 1986.

“Committee” means (i) the Board, (ii) one or more committees of the Board to whom the Board has delegated all or part of its authority under this Plan or (iii) the compensation committee of Layne Christensen Company.

“Company” means Layne Energy, Inc., a Delaware corporation, and any successor thereto.

“Control” or “Controlled” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.

“Covered Employee” means an Employee that meets the definition of “covered employee” under Section 162(m)(3) of the Code.

“Date of Grant” or “Grant Date” means, with respect to any Option, the date as of which such Option is granted under the Plan.

“Disabled” or “Disability” means an individual (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than 3 months under a Company-sponsored accident and health plan. Notwithstanding the above, with respect to an Incentive Stock Option and the period after time following a separation from service a Holder has to exercise such Incentive Stock Option, “disabled” shall have the same meaning as defined in Code section 22(e)(3).

“Effective Date” means March 29, 2007.

“Eligible Employees” means key Employees (including officers and directors who are also employees) of the Company or an Affiliate upon whose judgment, initiative and efforts the Company is, or will be, important to the successful conduct of its business.

“Employee” means a common law employee of the Company or an Affiliate.

“Executive Officer” means (i) the president of the Company, any vice president of the Company in charge of a principal business unit, division or function (such as sales, administration, or finance), any other officer who performs a policy making function or any other person who performs similar policy making functions for the Company, (ii) Executive Officers (as defined in part (i) of this definition) of subsidiaries of the Company who perform policy making functions for the Company, and (iii) any Person designated or identified by the Board as being an Executive Officer for purposes of the 1933 Act or the 1934 Act, including any Person designated or identified by the Board as being a Section 16 Person.

“Fair Market Value” means, if the Shares are not traded on a national securities exchange, the value a Share as of any date set forth in an independent appraisal of the Company obtained from an independent qualified appraiser retained by the Committee. If the Committee determines in good faith that, due to such independent appraisal having been obtained within the immediately preceding 12 months, the earlier appraisal continues to reflect the true fair market value of the Shares, the Committee may use the most

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recent independent appraisal as establishing the fair market value of the Shares. If the Shares are traded on a national securities exchange, the Committee may determine that the fair market value of the Shares shall be based upon the closing price on the trading day of the applicable date as reported in The Wall Street Journal and consistently applied. If the securities exchange is closed on the applicable date, the closing price on the next day the securities exchange is open will be the fair market value.

“Holder” means a Participant or Beneficiary who is in possession of an Option Agreement representing an Option that (i) in the case of a Participant has been granted to such individual, or (ii) in the case of a Beneficiary has transferred to such person under the laws of descent and distribution and, with respect to each (i) and (ii), such Option Agreement has not expired, been canceled or terminated.

“Incentive Stock Option” means any Option designated as such and granted in accordance with the requirements of Section 422 of the Code.

“Nonqualified Stock Option” means any Option to purchase Shares that is not an Incentive Stock Option.

“Option” means a right to purchase Stock at a stated price for a specified period of time. Such definition includes both Nonqualified Stock Options and Incentive Stock Options.

“Option Agreement” means a written agreement or instrument between the Company and a Holder evidencing an Option.

“Option Exercise Price” means the price at which Shares subject to an Option may be purchased, determined in accordance with Section 6.2(b).

“Optionee” shall have the meaning as set forth in Section 6.2. For the avoidance of any doubt, in situations where the Option has been passed to a Beneficiary in accordance with the laws of descent and distribution, the Optionee will not be the same person as the Holder of the Option.

“Participant” means a Service Provider of the Company designated by the Committee from time to time during the term of the Plan to receive one or more Options under the Plan.

“Performance Period” means the period of time as specified by the Committee during which any performance goals are to be measured.

“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the 1934 Act and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof.

“Plan” means the Layne Energy, Inc. 2007 Stock Option Plan, as set forth in this instrument and as hereafter amended from time to time.

“Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act.

“Section 16 Person” means a Person who is subject to obligations under Section 16 of the 1934 Act with respect to transactions involving equity securities of the Company.

“Separation from Service” means a Service Provider’s death, retirement, termination of service as a non-employee director or other termination of employment with the Company or Affiliate. A Separation from Service shall not occur if a Service Provider is on military leave, sick leave or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months, or if longer, as long as the Service Provider has a right (either by contract or by statute) to reemployment with the Company. “Separation from Service” shall be interpreted in a manner consistent with Code Section 409A(a)(2)(A)(i).

“Service Provider” means an Eligible Employee, consultant or a nonemployee director of the Company.

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“Share” means a share of Stock.

“Stock” means authorized and issued or unissued common stock of the Company, at such par value as may be established from time to time.

“Subsidiary” means (i) in the case of an Incentive Stock Option a “subsidiary corporation,” whether now or hereafter existing, as defined in section 424(f) of the Code, and (ii) in the case of any other type of Option, in addition to a subsidiary corporation as defined in clause (i), a limited liability company, partnership or other entity in which the Company controls fifty percent (50%) or more of the voting power or equity interests.

“Vested Option” means any Option, or portion thereof, which is exercisable by the Holder. Vested Options remain exercisable only for that period of time as provided for under this Plan and any applicable Option Agreement. Once a Vested Option is no longer exercisable after otherwise having been exercisable, the Option shall become null and void.

2.2 General Interpretive Principles. (i) Words in the singular shall include the plural and vice versa, and words of one gender shall include the other gender, in each case, as the context requires; (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Plan and not to any particular provision of this Plan, and references to Sections are references to the Sections of this Plan unless otherwise specified; (iii) the word “including” and words of similar import when used in this Plan shall mean “including, without limitation,” unless otherwise specified; and (iv) any reference to any U.S. federal, state, or local statute or law shall be deemed to also refer to all amendments or successor provisions thereto, as well as all rules and regulations promulgated under such statute or law, unless the context otherwise requires.

SECTION 3
PLAN ADMINISTRATION

3.1

Composition of Committee. The Plan shall be administered by the Committee. To the extent the Board considers it desirable for transactions relating to Options to be eligible to qualify for an exemption under Rule 16b-3, the Committee may be structured to consist of two or more directors of Layne Christensen Company, all of whom qualify as “nonemployee directors” within the meaning of Rule 16b-3. To the extent the Board considers it desirable for compensation delivered pursuant to Options to be eligible to qualify for an exemption from the limit on tax deductibility of compensation under section 162(m) of the Code, the Committee may be structured to consist of two or more directors of Layne Christensen Company, all of whom shall qualify as “outside directors” within the meaning of Code section 162(m).

3.2

Authority of Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to:

(a)	select the Service Providers to whom Options may from time to time be granted hereunder;
(b)	determine the type or types of Options to be granted to eligible Service Providers;
(c)	determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Options;
(d)	determine the terms and conditions of any Option, including, when initially granting an Option, whether and to what extent, and under what circumstance Options may be canceled, forfeited, or suspended and the method or methods by which Options may be settled, exercised, canceled, forfeited, or suspended;

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(e)	determine whether, and to what extent, and under what circumstances Options may be settled or exercised in cash, Shares, other securities, other Options or other property;
(f)	correct any defect, supply an omission, reconcile any inconsistency and otherwise interpret and administer the Plan and any instrument or Option Agreement relating to the Plan or any Option hereunder;
(g)	modify and amend the Plan, establish, amend, suspend, or waive such rules, regulations and procedures of the Plan, and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and
(h)	make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

3.3 Committee Delegation. The Committee may delegate to any member of the Board or committee of Board members, or, if not already serving as the Committee, the compensation committee of Layne Christensen Company, such of its powers as it deems appropriate, including the power to sub-delegate, except that, pursuant to such delegation or sub-delegation, only the compensation committee of Layne Christensen Company, a member of the Board (or a committee thereof) may grant Options from time to time to specified categories of Service Providers in amounts and on terms to be specified by the Board. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings.

3.4 Determination Under the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, adjustments, interpretations, and other decisions under or with respect to the Plan, any Option or Option Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all persons, including the Company, any Participant, any Holder, and any stockholder. No member of the Committee shall be liable for any action, determination or interpretation made in good faith, and all members of the Committee shall, in addition to their rights as directors, be fully protected by the Company with respect to any such action, determination or interpretation.

SECTION 4
STOCK SUBJECT TO THE PLAN

4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 and subject to the maximum amount of Shares that may be granted to an individual in a calendar year as set forth in Section 5.5, no more than a total of 10,000 Shares are authorized for issuance under the Plan in accordance with the provisions of the Plan and subject to such restrictions or other provisions as the Committee may from time to time deem necessary. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares or Treasury shares. Shares that are subject to an underlying Option and Shares that are issued pursuant to the exercise of an Option shall be applied to reduce the maximum number of Shares remaining available for use under the Plan. The Company shall at all times during the term of the Plan and while any Options are outstanding retain as authorized and unissued Stock, or as Treasury Stock, at least the number of Shares from time to time required under the provisions of the Plan, or otherwise assure itself of its ability to perform its obligations hereunder.

4.2 Unused and Forfeited Stock. Any Shares that are subject to an Option under this Plan that are not used because the terms and conditions of the Option are not met, including any Shares that are subject to an Option that expires or is terminated for any reason, any Shares that are used for full or partial payment of the purchase price of Shares with respect to which an Option is exercised and any Shares retained by the Company pursuant to Section 12.2 shall automatically become available for use under the Plan. Notwithstanding the foregoing, any Shares used for full or partial payment of the purchase price of the Shares with respect to which an Option is exercised and any Shares retained by the Company pursuant to Section 12.2 that were originally Incentive Stock Option Shares must still be considered as having been granted for purposes of determining whether the Share limitation provided for in Section 4.1 has been reached for purposes of Incentive Stock Option grants.

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4.3

Adjustments in Authorized Shares. If, without the receipt of consideration therefore by the Company, the Company shall at any time increase or decrease the number of its outstanding Shares or change in any way the rights and privileges of such Shares such as, but not limited to, the payment of a stock dividend or any other distribution upon such Shares payable in Stock, or through a stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Stock, such that any adjustment is determined by the Committee or the Board to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan then in relation to the Stock that is affected by one or more of the above events, the numbers, rights and privileges of (i) the Shares as to which Options may be granted under the Plan, and (ii) the Shares then included in each outstanding Option granted hereunder, shall be increased, decreased or changed in like manner as if they had been issued and outstanding, fully paid and non assessable at the time of such occurrence.

4.4

General Adjustment Rules.

(a)	If any adjustment or substitution provided for in this Section 4 shall result in the creation of a fractional Share under any Option, such fractional Share shall be rounded to the nearest whole Share and fractional Shares shall not be subject to Options.
(b)	In the case of any such substitution or adjustment affecting an Option such substitution or adjustments shall be made in a manner that is in accordance with the substitution and assumption rules set forth in Treasury Regulations 1.424-1 and the applicable guidance relating to Code section 409A.

SECTION 5
PARTICIPATION

5.1 Basis of Grant. Participants in the Plan shall be those Service Providers, who, in the judgment of the Committee, have performed, are performing, or during the term of their incentive arrangement will perform, important services in the management, operation and development of the Company, and significantly contribute, or are expected to significantly contribute, to the achievement of long-term corporate economic objectives.

5.2 Types of Grants; Limits. Participants may be granted from time to time one or more Options; provided, however, that the grant of each such Option shall be separately approved by the Committee or its designee, and receipt of one such Option shall not result in the automatic receipt of any other Option. Written notice shall be given to such Person, specifying the terms, conditions, right and duties related to such Option. Under no circumstance shall Incentive Stock Options be granted to (i) nonemployee directors or (ii) any person not permitted to receive Incentive Stock Options under the Code.

5.3 Option Agreements. Each Participant shall enter into an Option Agreement(s) with the Company, in such form as the Committee shall determine and which is consistent with the provisions of the Plan, specifying such terms, conditions, rights and duties. Unless otherwise explicitly stated in the Option Agreement, Options shall be deemed to be granted as of the date specified in the grant resolution of the Committee, which date shall be the date of any related agreement(s) with the Participant. Unless explicitly provided for in a particular Option Agreement that the terms of the Plan are being superseded, in the event of any inconsistency between the provisions of the Plan and any such Option Agreement(s) entered into hereunder, the provisions of the Plan shall govern.

5.4 Restrictive Covenants. The Committee may, in its sole and absolute discretion, place certain restrictive covenants in an Option Agreement requiring the Participant to agree to refrain from certain actions. Such Restrictive Covenants, if contained in the Option Agreement, will be binding on the Participant.

5.5 Maximum Annual Award. The maximum number of Shares with respect to which an Option or Options may be granted to any Participant in any one taxable year of the Company (the “Maximum Annual Participant Award”) shall not exceed 5,000 Shares (subject to adjustment pursuant to Sections 4.3 and 4.4).

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SECTION 6
STOCK OPTIONS

6.1 Grant of Options. A Participant may be granted one or more Options. The Committee in its sole discretion shall designate whether an Option is an Incentive Stock Option or a Nonqualified Stock Option. The Committee may grant both an Incentive Stock Option and a Nonqualified Stock Option to the same Participant at the same time or at different times. Incentive Stock Options and Nonqualified Stock Options, whether granted at the same or different times, shall be deemed to have been awarded in separate grants, shall be clearly identified, and in no event shall the exercise of one Option affect the right to exercise any other Option or affect the number of Shares for which any other Option may be exercised.

6.2 Option Agreements. Each Option granted under the Plan shall be evidenced by a written Option Agreement which shall be entered into by the Company and the Participant to whom the Option is granted (the “Optionee”), and which shall contain, or be subject to, the following terms and conditions, as well as such other terms and conditions not inconsistent therewith, as the Committee may consider appropriate in each case.

(a)	Number of Shares. Each Option Agreement shall state that it covers a specified number of Shares, as determined by the Committee. To the extent that the aggregate Fair Market Value of Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year exceeds $100,000 or, if different, the maximum limitation in effect at the time of grant under section 422(d) of the Code, such Options in excess of such limit shall be treated as Nonqualified Stock Options. The foregoing shall be applied by taking Options into account in the order in which they were granted. For the purposes of the foregoing, the Fair Market Value of any Share shall be determined as of the time the Option with respect to such Share is granted. In the event the foregoing results in a portion of an Option designated as an Incentive Stock Option exceeding the $100,000 limitation, only such excess shall be treated as a Nonqualified Stock Option. If, pursuant to this Section 6.2(a), an Incentive Stock Option is to be treated as a Nonqualified Stock Option and such Nonqualified Stock Option would not qualify for an exemption from Code section 409A, the Option will be automatically amended to be compliant with, or exempt from, Code section 409A.
(b)	Price. Each Option Agreement shall state the Option Exercise Price at which each Share covered by an Option may be purchased. Such Option Exercise Price shall be determined in each case by the Committee, but in no event shall the Option Exercise Price for each Share covered by an Option be less than the Fair Market Value of the Stock on the Option’s Grant Date, as determined by the Committee; provided, however, that the Option Exercise Price for each Share covered by an Incentive Stock Option granted to an Eligible Employee who then owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or Subsidiary corporation of the Company must be at least 110% of the Fair Market Value of the Stock subject to the Incentive Stock Option on the Option’s Grant Date.
(c)	Duration of Options. Subject in all cases to Section 6.3, each Option Agreement shall state the period of time, determined by the Committee, within which the Option may be exercised by the Optionee (the “Option Period”). The Option Period must expire, in all cases, not more than ten years from the Option’s Grant Date; provided, however, that the Option Period of an Incentive Stock Option granted to an Eligible Employee who then owns Stock possessing more than 10% of the total combined voting power of all classes of Stock of the Company must expire not more than five years from the Option’s Grant Date. Each Option Agreement shall also state the periods of time, if any, as determined by the Committee, when incremental portions of each Option shall become exercisable. If any Option or portion thereof is not exercised during its Option Period, such unexercised portion shall be deemed to have been forfeited and have no further force or effect.
(d)	Termination of Service, Death, Disability, etc. Each Option Agreement shall state the period of time, if any, determined by the Committee, within which the Vested Option may be exercised after

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	an Optionee ceases to be a Service Provider on account of the Participant’s death, Disability, voluntary resignation, retirement, cessation as a director, or the Company having terminated such Optionee’s employment with or without Cause.
(e)	Transferability. Options shall not be transferable by the Optionee except by will or pursuant to the laws of descent and distribution. Each Vested Option shall be exercisable during the Optionee’s lifetime only by him or her, or in the event of Disability or incapacity, by his or her guardian or legal representative. Shares issuable pursuant to any Option shall be delivered only to or for the account of the Optionee, or in the event of Disability or incapacity, to his or her guardian or legal representative.
(f)	Exercise, Payments, etc.

(i)

Unless otherwise provided in the Option Agreement, each Vested Option may be exercised by delivery to the Corporate Secretary of the Company a written notice specifying the number of Shares with respect to which such Option is exercised and payment of the Option Exercise Price. Such notice shall be in a form satisfactory to the Committee or its designee and shall specify the particular Vested Option that is being exercised and the number of Shares with respect to which the Vested Option is being exercised. The exercise of the Vested Option shall be deemed effective upon receipt of such notice by the Corporate Secretary and payment to the Company. The purchase of such Stock shall take place at the principal offices of the Company upon delivery of such notice, at which time the purchase price of the Stock shall be paid in full by any of the methods or any combination of the methods set forth in (ii) below.

(ii)

The Option Exercise Price may be paid by any of the following methods:

A.	Cash or certified bank check;
B.	By delivery to the Company Shares then owned by the Holder, the Fair Market Value of which equals the purchase price of the Stock purchased pursuant to the Vested Option, properly endorsed for transfer to the Company; provided, however, that Shares used for this purpose must have been held by the Holder for such minimum period of time as may be established from time to time by the Committee; and provided further that the Fair Market Value of any Shares delivered in payment of the purchase price upon exercise of the Options shall be the Fair Market Value as of the exercise date, which shall be the date of delivery of the Stock used as payment of the Option Exercise Price;
	In lieu of actually surrendering to the Company the Shares then owned by the Holder, the Committee may, in its discretion permit the Holder to submit to the Company a statement affirming ownership by the Holder of such number of Shares and request that such Shares, although not actually surrendered, be deemed to have been surrendered by the Holder as payment of the exercise price;
C.	For any Holder other than an Executive Officer or except as otherwise prohibited by the Committee, by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board; or
D.	Any combination of the consideration provided in the foregoing subsections (A), (B) and (C).

(iii) The Company may not guarantee a third-party loan obtained by a Holder to pay any portion of the entire Option Exercise Price of the Shares.

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(g)

Date of Grant. Unless otherwise specifically specified in the Option Agreement, an option shall be considered as having been granted on the date specified in the grant resolution of the Committee.

(h)

Adjustment of Options. Subject to the limitations set forth below and those contained in Sections 6 and 11, the Committee may make any adjustment in the Option Exercise Price, the number of Shares subject to, or the terms of, an outstanding Option and a subsequent granting of an Option by amendment or by substitution of an outstanding Option. Such amendment, substitution, or re-grant may result in terms and conditions (including Option Exercise Price, number of Shares covered, vesting schedule or exercise period) that differ from the terms and conditions of the original Option; provided, however, the Committee may not, without stockholder approval (i) amend an Option to reduce its Option Exercise Price, (ii) cancel an Option and regrant an Option with a lower Option Exercise Price than the original Option Exercise Price of the cancelled Option, or (iii) take any other action (whether in the form of an amendment, cancellation or replacement grant) that has the effect of “repricing” an Option, as defined under applicable NYSE rules or the rules of the established stock exchange or quotation system on which the Company Stock is then listed or traded if such exchange’s or quotation system’s rules define what constitutes a repricing. The Committee also may not adversely affect the rights of any Optionee to previously granted Options without the consent of such Optionee. If such action is affected by the amendment, the effective date of such amendment shall be the date of the original grant. Any adjustment, modification, extension or renewal of an Option shall be effected such that the Option is either exempt from, or is compliant with, Code section 409A.

6.3 Compliance with Service Recipient Stock Rules Under Code Section 409A. As of the Effective Date, the Proposed Regulations issued under section 409A of the Code (the “Proposed 409A Regulations”) exempt nonqualified stock options from section 409A only if, among other requirements, the stock underlying the option qualifies as “service recipient stock.” The Proposed 409A Regulations provide that, if there is a controlled group of corporations which includes a publicly traded corporation, only the stock of that public entity will qualify as “service recipient stock.” Accordingly, until the Proposed 409A Regulations are modified, no Nonqualified Stock Option issued under this Plan relating to the Company’s stock will be exempt from Code section 409A. It is anticipated that the Final Regulations under Code section 409A may expand the definition of “service recipient stock” to include the stock of any member of the Company’s controlled group. In anticipation of this potential amendment, each nonqualified stock option issued under this Plan will initially be compliant with Code section 409A, such that the option may be exercised only in a calendar year which would otherwise serve as a permissible distribution date under Code section 409A(a)(2). However, if and when the Final Regulations under section 409A are issued and the “service recipient stock” definition is expanded to include stock of the Company, each outstanding Nonqualified Stock Option granted under this Plan may be exercised at any time before its expiration date, subject to the rules under the applicable Option Agreement relating to exercises of stock options after the Optionee’s Separation from Service with the Company.

6.4 Stockholder Privileges. No Holder shall have any rights as a stockholder with respect to any Shares covered by an Option until the Holder becomes the holder of record of such Stock, and no adjustments shall be made for dividends or other distributions or other rights as to which there is a record date preceding the date such Holder becomes the holder of record of such Stock, except as provided in Section 4.

SECTION 7
REORGANIZATION, CHANGE IN CONTROL OR LIQUIDATION

Except as otherwise provided in an Option Agreement or other agreement approved by the Committee to which any Participant is a party, in the event that the Company undergoes a Change in Control, each Option shall without regard to any vesting schedule, automatically become fully exercisable as of the date of such Change in Control. In addition to the foregoing, in the event the Company undergoes a Change in Control or in the event of a corporate merger, consolidation, major acquisition of property (or stock), separation, reorganization or liquidation in which the Company is a party and in which a Change in Control does not occur, the Committee, or the board of directors of any corporation assuming the obligations of the Company, shall have the full power and discretion to prescribe and

10

amend the terms and conditions for the exercise, or modification, of any outstanding Options granted hereunder. The Committee may provide that Options granted hereunder must be exercised in connection with the closing of such transactions, and that if not so exercised such Options will expire. Any such determinations by the Committee may be made generally with respect to all Participants, or may be made on a case-by-case basis with respect to particular Participants. Notwithstanding the foregoing, any transaction undertaken for the purpose of reincorporating the Company under the laws of another jurisdiction, if such transaction does not materially affect the beneficial ownership of the Company’s capital stock, such transaction shall not constitute a merger, consolidation, major acquisition of property for stock, separation, reorganization, liquidation, or Change in Control.

SECTION 8
RIGHTS OF EMPLOYEES; PARTICIPANTS

8.1 Employment. Nothing contained in the Plan or in any Option granted under the Plan shall confer upon any Participant any right with respect to the continuation of his or her services as a Service Provider or interfere in any way with the right of the Company, subject to the terms of any separate employment or consulting agreement to the contrary, at any time to terminate such services or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Option. Whether an authorized leave of absence, or absence in military or government service, shall constitute a termination of Participant’s services as a Service Provider shall be determined by the Committee at the time.

8.2 Nontransferability. No right or interest of any Holder in an Option granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or be subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of a Participant’s death, a Holder’s rights and interests in all Options shall, to the extent not otherwise prohibited hereunder, be transferable by testamentary will or the laws of descent and distribution, and payment of any amounts due under the Plan shall be made to, and exercise of any Options may be made by, the Holder’s legal representatives, heirs or legatees. If, in the opinion of the Committee, a person entitled to payments or to exercise rights with respect to the Plan is disabled from caring for his or her affairs because of a mental condition, physical condition or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator, or other legal personal representative upon furnishing the Committee with evidence satisfactory to the Committee of such status. “Transfers” shall not be deemed to include transfers to the Company or “cashless exercise” procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of Options consistent with applicable laws and the authorization of the Committee.

SECTION 9
GENERAL RESTRICTIONS

9.1 Investment Representations. The Company may require any person to whom an Option is granted, as a condition of exercising such Option, to give written assurances in substance and form satisfactory to the Company and its counsel to the effect that such person is acquiring the Stock subject to the Option for his own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws. Legends evidencing such restrictions may be placed on the certificates evidencing the Stock.

9.2 Compliance with Securities Laws.

(a) Each Option shall be subject to the requirement that, if at any time counsel to the Company shall determine that the listing, registration or qualification of the Shares subject to such Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance or purchase of Shares thereunder, such Option may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been

11

effected or obtained on conditions acceptable to the Committee. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration or qualification.

(b) Each Holder who is a director or an Executive Officer is restricted from taking any action with respect to any Option if such action would result in a (i) violation of Section 306 of the Sarbanes-Oxley Act of 2002, and the regulations promulgated thereunder, whether or not such law and regulations are applicable to the Company, or (ii) any policies adopted by the Company restricting transactions in the Stock.

9.3 Stock Restriction/Put or Call Agreement. The Committee may provide that Shares issuable upon the exercise of an Option shall, under certain conditions, be subject to restrictions whereby the Company has (i) a right of first refusal with respect to such shares, (ii) specific rights or limitations with respect to the Participant’s ability to vote such shares, or (iii) a right or obligation to repurchase all or a portion of such shares, which restrictions or obligations may survive a Participant’s cessation or termination as a Service Provider.

SECTION 10
OTHER EMPLOYEE BENEFITS

The amount of any compensation deemed to be received by a Participant as a result of the exercise of an Option or sale of stock shall not constitute “earnings” with respect to which any other benefits of such Participant are determined, including benefits under (a) any pension, profit sharing, life insurance or salary continuation plan or other employee benefit plan of the Company or (b) any agreement between the Company and the Participant, except as such plan or agreement shall otherwise expressly provide.

SECTION 11
PLAN AMENDMENT, MODIFICATION AND TERMINATION

11.1 Amendment, Modification, and Termination. The Board may at any time terminate, and from time to time may amend or modify, the Plan; provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the stockholders if stockholder approval is required to enable the Plan to satisfy any applicable statutory or regulatory requirements, to comply with the requirements for listing on any exchange where the Shares are listed, or if the Company, on the advice of counsel, determines that stockholder approval is otherwise necessary or desirable.

11.2 Adjustment Upon Certain Unusual or Nonrecurring Events. The Board may make adjustments in the terms and conditions of Options in recognition of unusual or nonrecurring events (including the events described in Section 4.3) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

11.3 Options Previously Granted. Notwithstanding any other provision of the Plan to the contrary (but subject to a Holder’s employment being terminated for Cause and Section 11.2), no termination, amendment or modification of the Plan shall adversely affect in any material way any Option previously granted under the Plan, without the written consent of the Holder of such Option.

SECTION 12
WITHHOLDING

12.1 Withholding Requirement. The Company’s obligations to deliver Shares upon the exercise of an Option shall be subject to the Holder’s satisfaction of all applicable federal, state and local income and other tax withholding requirements.

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12.2 Withholding with Stock. The Committee may, in its sole discretion, permit the Holder to pay all minimum required amounts of tax withholding, or any part thereof, by electing to transfer to the Company, or to have the Company withhold from Shares otherwise issuable to the Holder, Shares having a value not to exceed the minimum amount required to be withheld under federal, state or local law or such lesser amount as may be elected by the Holder. The Committee may require that any shares transferred to the Company have been held or owned by the Participant for a minimum period of time. All elections shall be subject to the approval or disapproval of the Committee. The value of Shares to be withheld shall be based on the Fair Market Value of the Stock on the date that the amount of tax to be withheld is to be determined (the “Tax Date”), as determined by the Committee. Any such elections by Holder to have Shares withheld for this purpose will be subject to the following restrictions:

(a)	All elections must be made prior to the Tax Date;
(b)	All elections shall be irrevocable; and
(c)	If the Holder is an officer or director of the Company within the meaning of Section 16 of the 1934 Act (“Section 16”), the Holder must satisfy the requirements of such Section 16 and any applicable rules thereunder with respect to the use of Stock to satisfy such tax withholding obligation.

SECTION 13
NONEXCLUSIVITY OF THE PLAN

13.1 Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor the submission of the Plan to stockholders of the Company for approval shall be construed as creating any limitations on the power or authority of the Board to continue to maintain or adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees, or nonemployee directors generally, or to any class or group of employees, or nonemployee directors, which the Company now has lawfully put into effect, including any retirement, pension, savings and stock purchase plan, insurance, death and disability benefits and executive short-term incentive plans.

SECTION 14
REQUIREMENTS OF LAW

14.1 Requirements of Law. The issuance of Stock and the payment of cash pursuant to the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or stock exchanges as may be required. Notwithstanding any provision of the Plan or any Option, Holders shall not be entitled to exercise, or receive benefits under any Option, and the Company shall not be obligated to deliver any Shares or other benefits to a Holder, if such exercise or delivery would constitute a violation by the Holder or the Company of any applicable law or regulation.

14.2 Code Section 409A. This Plan is intended to meet or be exempt from the requirements of Code section 409A and may be administered in a manner that is intended to meet those requirements and shall be construed and interpreted in accordance with such intent. Any provision of this Plan that would cause an Option to fail to satisfy Code section 409A shall be amended (in a manner that as closely as practicable achieves the original intent of this Plan) to comply with Code section 409A on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Code section 409A.

14.3 Rule 16b-3. Transactions under the Plan and to the extent even applicable, within the scope of Rule 16b-3 are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of the Plan or any action by the Committee under the Plan fails to so comply, such provision or action shall, without further action by any person, be deemed to be automatically amended to the extent necessary to effect

13

compliance with Rule 16b-3; provided, however, that if such provision or action cannot be amended to effect such compliance, such provision or action shall be deemed null and void to the extent permitted by law and deemed advisable by the Committee.

14.4 Governing Law. The Plan and all agreements hereunder shall be construed in accordance with and governed by the laws of the state of Delaware without giving effect to the principles of the conflict of laws to the contrary.

SUBJECT TO THE STOCKHOLDER APPROVAL REQUIREMENT NOTED BELOW, THIS LAYNE ENERGY, INC. 2007 STOCK OPTION PLAN IS HEREBY ADOPTED BY THE BOARD OF DIRECTORS OF LAYNE ENERGY, INC. THIS 29^th DAY OF MARCH, 2007.

THE PLAN SHALL REMAIN EFFECTIVE ONLY IF APPROVED BY THE STOCKHOLDERS OF LAYNE CHRISTENSEN COMPANY WITHIN 12 MONTHS HEREOF. ALL OPTIONS GRANTED UNDER THIS PLAN AFTER THE DATE HEREOF BUT BEFORE THE APPROVAL OF THE PLAN BY THE LAYNE CHRISTENSEN COMPANY STOCKHOLDERS WILL BECOME NULL AND VOID IF THE PLAN IS NOT APPROVED BY SUCH STOCKHOLDERS.

LAYNE ENERGY, INC.
By:	/s/ A.B. Schmitt
	Name: Andrew B. Schmitt
	Title: Chairman of the Board

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EX-10.2

Exhibit 10.2

Form of NQSO Agreement for Employees

LAYNE ENERGY, INC.
2007 STOCK OPTION PLAN

Nonqualified Stock Option Agreement

Date of Grant:

Number of Shares to Which Option Relates:

Option Exercise Price per Share:

(Representing 100% of the Fair Market Value on the Date of Grant)

          This Agreement dated                                         , is made by and between Layne Energy, Inc., a Delaware corporation (the “Company”), and                                          (the “Optionee”).

RECITALS:

          A. Effective June 7, 2007, the Company and the Company’s stockholders approved the Layne Energy, Inc. 2007 Stock Option Plan (the “Plan”) pursuant to which the Company may, from time to time, grant options to key employees, non-employee directors, and consultants of the Company or an Affiliate thereof to purchase shares of the Company’s common stock.

          B. The Optionee is an employee of the Company or an Affiliate thereof and the Company desires to grant to the Optionee a nonqualified stock option to purchase shares of the Company’s common stock on the terms and conditions reflected in this Option Agreement, the Plan and as otherwise established by the Committee.

AGREEMENT:

          In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

          1. Incorporation of Plan. All provisions of this Option Agreement and the rights of the Optionee are subject in all respects to the provisions of the Plan and the powers of the Committee therein provided. Capitalized terms used in this Option Agreement but not defined will have the meaning set forth in the Plan.

          2. Grant of Nonqualified Stock Option. As of the Date of Grant identified above, the Company grants the Optionee, subject to this Agreement and the Plan, the right, privilege and option (the “Option”) to purchase, in one or more exercises, all or any part of that number of Shares of Stock identified above opposite the heading “Number of Shares to Which Option Relates” (the “Option Shares”), at the per Share price specified above opposite the heading “Option Exercise Price 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 as an employee of the Company. Nothing in this Agreement or in the Plan will confer upon the Optionee any right to continue as an employee of the Company or will interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to terminate the Optionee’s employment with the Company at any time for any reason whatsoever, with or without cause.

          4. Exercisability of Option. This Option, unless it has otherwise expired in accordance with Section 6 or Section 7, may be exercised in accordance with the parameters and conditions set forth in Section 5, according to the following schedule:

Years Elapsed from Date of Grant         Percentage Exercisable

[To be determined by Committee and set forth in Optionee’s Option Agreement.]

          For purposes of this Section 4 a year means a period of 365 days (or 366 days in the event of a leap year). Notwithstanding the above Option vesting schedule, this Option will become fully exercisable upon the Optionee’s death or Disability provided the Option has not otherwise expired, been cancelled or terminated.

          5. Method of Exercise. Provided this Option has not expired, been terminated or cancelled in accordance with the terms of the Plan and if this Option is otherwise exercisable pursuant to Section 4 above, the Option may be exercised in whole or in part, from time to time as provided below:

     (a) All or a portion of the Option may be exercised on either or both of April 30^th and October 31^st of a specific year (each an “Eligible Exercise Date” and collectively the “Eligible Exercise Dates”) by providing to the Company no less than 90 calendar days before the Eligible Exercise Date, a written notice that:

(i) sets forth the number of Shares with respect to which the Option is to be exercised; provided, however, that such number cannot be less than the greater of 1/4th of the total number of Shares originally subject to this Option or the remaining Share(s) subject to this Option which have not been purchased on account of an earlier Option exercise; and

(ii) if the person exercising this Option is not the Optionee, is accompanied by satisfactory evidence of such person’s right to exercise this Option.

     (b) Subject to Optionee’s right to withdraw his request to exercise the Option in accordance with Section 5(c) below, to the extent the proper notice has timely been delivered to the Company informing it of the Optionee’s desire to exercise the Option, the Option (or designated portion thereof), to the extent exercisable, may be exercised by the Optionee by paying in full the Option Exercise Price in the form of cash, or a certified bank check made payable to the order of the Company or any other means allowable under the Plan which the Company in its sole discretion determines will provide legal consideration for the Shares.

     (c) Notwithstanding the Optionee having provided a written notice to the Company indicating Optionee’s desire to exercise all or a portion of the Option, the Optionee may withdraw his request to exercise the Option on the Eligible Exercise Date at any time within the 10 business day period immediately following the Optionee’s receipt of the Fair Market Value determination made by the independent appraisal of the Shares relating to the upcoming Eligible Exercise Date.

          6. Expiration of Option. Unless terminated earlier in accordance with the terms of this Option Agreement or the Plan, the Option granted herein will expire at 5:00 P.M., Central Standard Time, on the 10th Anniversary of the Date of Grant (the “Expiration Date”). If the Expiration Date is a day on which the Company is not open for business, then the Option granted herein will expire, unless earlier terminated in accordance with the terms of this Option Agreement or the Plan, at 5:00 P.M., Central Standard Time, on the first business day before such Expiration Date.

          7. Effect of Separation from Service. If the Optionee ceases to be an employee of the Company for any reason, including cessation by death or Disability, the effect of such termination of employment on this Option is as provided below. Notwithstanding anything below to the contrary, in no event may the Option be exercised after the Expiration Date.

          (a) If the Optionee’s employment is terminated for Cause, the Option will immediately be forfeited as of the time of such termination.

          (b) If the Optionee ceases to be an employee of the Company due to the Optionee’s resignation or termination of employment by the Company not for Cause, if the Option was otherwise exercisable pursuant to Section 4 on the date of such termination of employment, the Option may be exercised by the Optionee at any time before 5:00 P.M., Central Standard Time, on the thirtieth (30^th) calendar day following the effective date of the Optionee’s termination of employment. If such thirtieth (30^th) day is not a business day, then the Option will expire at 5:00 P.M., Central Standard Time, on the first business day immediately following such thirtieth (30^th) day. For purposes of this Section 7(b), the notice requirements set forth above in Section 5(a) will be waived; provided,

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however, if the Company is not reasonably able to accurately determine the Fair Market Value of the Shares subject to the Option for calculating and reporting the applicable income and payroll tax withholding amounts due upon the exercise of the Option within the 30-day time period reflected above, the Company may, in its sole discretion, inform the Optionee that the Option exercise date will be postponed to a later date during the same calendar year when the Fair Market Value of the Shares can appropriately be determined.

          (c) If the Optionee ceases to be an employee of the Company due to the Optionee’s death or Disability, the Option may be exercised by the Optionee (or the Optionee’s beneficiary) at any time prior to 5:00 P.M., Central Standard Time, on the ninetieth (90^th) calendar day following the effective date of the Optionee’s termination of employment. If such ninetieth (90^th) day is not a business day, then the Option will expire at 5:00 P.M., Central Standard Time, on the first business day immediately following such ninetieth (90^th) day. For purposes of this Section 7(c), the notice requirements set forth above in Section 5(a) will be waived; provided, however, if the Company is not reasonably able to accurately determine the Fair Market Value of the Shares subject to the Option for calculating and reporting the applicable income and payroll tax withholding amounts (if any) due upon the exercise of the Option on the 90^th calendar day reflected above, the Company may, in its sole discretion, inform the Optionee that the Option exercise date will be postponed to a later date during the same calendar year when the Fair Market Value of the Shares can appropriately be determined.

          8. Put Right.

     (a) Grant of Put Right. Subject to Section 8(d) below and the terms and conditions relating to the exercise of a Put Right set forth in Section 8(b) below, the Company hereby irrevocably grants and issues to the Optionee the right and option to sell to the Company (hereinafter referred to as the “Put Right”) all or any portion of the Shares acquired pursuant to the exercise of this Option at a per Share purchase price equal to the then Fair Market Value of the Shares.

     (b) Exercise of Put. Subject to the provisions of this Section 8, the Optionee may exercise the Put Right and sell to the Company, and the Company agrees to purchase from Optionee, all or any portion of the Shares subject to the Put Right. The time and manner pursuant to which the Optionee may exercise a Put Right are as follows:

(i) Optionee’s right to exercise the Put Right shall apply only to those Shares that have been purchased by the Optionee in exercising the Option and only then with respect to such Shares if they have been held by the Optionee for at least six months from the date the Shares were purchased.

(ii) Optionee may exercise the Put Right up to two times per calendar year, on May 1^st and November 1^st (each an “Eligible Put Date” and collectively the “Eligible Put Dates”).

(iii) Optionee must provide written notice (the “Put Notice”) to the Company at least 90 calendar days before the Eligible Put Date for which Optionee desires to sell the Shares to the Company. The Put Notice must specify the number of Shares to the purchased by the Company and the Eligible Put Date.

     (c) Withdrawal of Put Right. Before an Eligible Put Date and within the 10 business day period following Optionee’s receipt of the Fair Market Value determination set forth in the independent appraisal of the Shares, Optionee may withdraw, in full or in part, his Put Notice and either have less than all of the Shares originally designated to be put back to the Company purchased on the Eligible Put Date or none of the Shares purchased by the Company on the Eligible Put Date. If the Optionee does not withdraw his Put Notice within the aforementioned 10 business day period, Optionee must sell all of the Shares originally designated to be purchased by the Company in the Put Notice to the Company on the related Eligible Put Date.

     (d) Payment and Delivery of Shares. Subject to Section 8(e) below, if the Optionee has submitted the Put Notice and not withdrawn such notice in accordance with Section 8(c) above, on the Eligible Put Date specified in the Put Notice the Company shall, as provided below, pay to Optionee in cash or by certified, cashier’s or other check acceptable to Optionee, the Fair Market Value for each Share

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put by Optionee and purchased by the Company. Notwithstanding the prior sentence, if any payment to be made by the Company is prohibited by any applicable law, then such payment shall be made by the Company at the earliest time, and to the extent possible, when compliance with the law may be effected, and the Company agrees that it will execute all such documents and take all reasonable other steps as may be necessary to expedite and effectuate to the extent possible such compliance.

     (e) No Put Right while Company is Public. During the period of time (i) commencing upon the closing of an initial underwritten public offering by the Company of its Stock pursuant to an effective registration statement that results in the Stock trading on a national securities exchange and (ii) ending upon the date the Company shall cease to have its Stock traded on a national securities exchange, the Optionee will not have any Put Right for the Shares purchased pursuant to this Option and instead may, subject to any additional blackout periods, Company trading policy restrictions, or restrictions under applicable securities laws, freely transfer the shares on the public markets.

     (f) Amendment. Except as otherwise provided in Section 8(e) above, this Put Right may not be amended, terminated or otherwise modified unless evidenced in writing and signed by the Company and the Optionee.

          9. Call Right.

     (a) Grant of Call Right. Subject to the terms and conditions relating to the exercise of a Call Right set forth in Section 9(b) below, the Optionee hereby irrevocably grants and issues to the Company or its parent corporation, Layne Christensen Company, an option (hereinafter referred to as the “Call Right”) to purchase the Shares purchased by the Optionee under this Agreement.

     (b) Exercise of Call Right. The Company or Layne Christensen Company may exercise the Call Right and acquire from the Optionee the Shares purchased under this Agreement in connection with (i) a Change in Control of the Company or (ii) a “Change in Control” of Layne Christensen Company (as the term “Change in Control” is defined in the Layne Christensen Company 2006 Equity Incentive Plan). In connection with either of the aforementioned two events, the Company or Layne Christensen Company may notify the Optionee of its intention to purchase one or more Shares pursuant to this Call Right and, upon the closing of such specified change in control event, the Company or Layne Christensen Company will purchase the Share(s) from the Optionee.

     (c) Determination of Fair Market Value. In the event either Layne Christensen Company or the Company exercises its Call Right for the Shares held by the Optionee and such purchase is in connection with:

(i) A Change in Control of Layne Christensen Company, then the Fair Market Value of the Shares shall be determined based on an independent appraisal of the Company obtained from an independent qualified appraisal retained by the Committee; or

(ii) A Change in Control of the Company, then, notwithstanding the value of the Shares determined by a qualified independent appraisal, the per Share Fair Market Value shall be equivalent to the per Share consideration received by Layne Christensen Company in connection with the Change in Control of the Company.

          10. Notices. Any notice to be given under the terms of this Agreement to the Company will be addressed to the Secretary of the Company at Layne Energy, Inc., 1900 Shawnee Mission Parkway, Mission Woods, Kansas 66205, and any notice to be given to the Optionee will be addressed to him or her at the address given beneath his or her signature hereto. By a notice given pursuant to this Section 10, either party may hereafter designate a different address for notices to be given to him or her. Any notice which is required to be given to the Optionee will, 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 10. Any notice will be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as

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aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.

          11. Nontransferability. Except as otherwise provided in this Agreement or in the Plan, or as may be mutually agreed to in writing by the Company and Optionee, the Option and the rights and privileges conferred hereby, including the Put Right, may not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and may 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, this Option and the rights and privileges conferred hereby will immediately become null and void.

          12. Status of Optionee. The Optionee shall not be deemed a stockholder of the Company with respect to any of the Shares subject to this Option, except for those Shares that have been purchased and issued to him or her. The Company shall not be required to issue or transfer any certificates for Shares purchased upon exercise of this Option until all applicable requirements of law have been complied with and, if applicable, such Shares shall have been duly listed on any securities exchange on which the Shares may then be listed.

          13. Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

          14. Amendment. This Agreement may be amended only by a writing executed by the parties hereto which specifically states that it is amending this Agreement.

          15. Post-Recapitalization Basis. In 2007, the Company adopted a Plan of Recapitalization pursuant to which 90 shares of common stock and 100 shares of preferred stock were issued for each outstanding share of the Company’s common stock (the “2007 Recapitalization”). For the avoidance of doubt, the Shares covered by this Option reflect Shares on a post-2007 Recapitalization basis.

          16. Governing Law. The laws of the State of Delaware will 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.

          17. Binding Effect. Except as expressly stated herein to the contrary, this Agreement will be binding upon and inure to the benefit of the respective heirs, legal representatives, successors and assigns of the parties hereto.

          This Agreement has been executed and delivered by the parties hereto.

The Company:		The Optionee:
Layne Energy, Inc.
By:
	Name:
	Title:	Address of the Optionee:

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EX-10.3

EXHIBIT 10.3

Layne Christensen Company
Mineral Exploration Division Incentive Compensation Plan

Effective February 1, 2007

SECTIONI. Definitions.

     In addition to the terms defined elsewhere throughout this Plan (as defined in Section II below), the following terms shall have the following meanings:

     “Committee” shall mean the administrative committee of this Plan (as defined in Section III below).

     “Company” shall mean Layne Christensen Company and its subsidiaries.

     “District” shall mean a separate profit center of the Company within the Division (as defined below) as determined from the Company’s internal financial records and as set forth in Exhibit A attached hereto; provided, however, that the Committee shall have the authority in its discretion to group one or more profit centers into one “District” for purposes of this Plan.

     “Division” shall mean that portion of the Company which forms the Mineral Exploration Division as determined by the Committee in its sole discretion from time to time.

     “EBIT” shall mean earnings before interest and taxes exclusive of any of the Company’s general and administrative expenses as determined by the Committee in its sole discretion from time to time.

     “EBIT Benchmark” shall mean the performance benchmark assigned to a certain District, Region (as defined below) and/or the Division and based on the EBIT of such respective District, Region or the Division.

     “Pool” shall mean the bonus pool established for each District, Region and/or the Division for each fiscal year.

     “Region” shall mean a separate grouping of Districts within the Division identified on Exhibit B; provided, however, that the Committee shall have the authority in its discretion to change the grouping of Districts and the makeup of all or any Regions from time to time.

SECTIONII. Purpose of the Plan.

     The Company desires to effect a program of making awards as soon as practicable after the end of each fiscal year, as provided below, to certain employees of the Division who during such fiscal year, in the judgment of the Committee, have significantly contributed to the achievement of certain objectives of the Division and of the Districts or Regions in which such employees perform services. The purpose of this program is to provide additional incentive for the eligible employees to promote the best interests and most profitable operation of the Division.

     This program shall be known as the “Layne Christensen Company Mineral Exploration Division Incentive Compensation Plan” (hereinafter referred to as the “Plan”). This Plan supersedes the Layne Christensen Company District Incentive Compensation Plan effective February 1, 2003 (the “District Incentive Compensation Plan”) as it relates to participants of this Plan and no participant of this Plan shall be eligible to participate in the District Incentive Compensation Plan after February 1, 2007.

The existence of the Plan shall not be in lieu of or otherwise affect or be affected by any other compensation plan or arrangement of the Company.

SECTIONIII. Administration.

     The Plan shall be administered by the Committee. The Committee shall consist of at least three persons appointed by the Board of Directors of the Company. Except as otherwise permitted by the Board of Directors of the Company, during the one-year period prior to the commencement of service of a Committee member on the Committee, such member shall not have participated in, and while serving and for one year after serving on the Committee, such member shall not be eligible for participation in, the Plan.

     The Committee shall have full power, in its sole discretion, to interpret, construe and administer the Plan and adopt rules and regulations relating to the Plan.

     Decisions made by the Committee in good faith and in the exercise of its powers and duties hereunder shall be binding upon all parties concerned. No member of the Committee shall be liable to anyone for any action taken or decision made in good faith pursuant to the power or discretion vested in such person under the Plan.

SECTION IV. Participation.

     All salaried, non-clerical employees of the Division shall be eligible for participation in the Plan (and shall hereinafter be referred to as “Participants”).

     In addition to the Participants and at the discretion of the Committee, a portion of the Pool may be set aside for payment to Division employees who do not participate in any other Company bonus or incentive program.

SECTION V. Calculation of Benchmarks.

     The incentive compensation to be allocated to the Pool for each District, Region and the Division shall be based on certain performance benchmarks. Each fiscal year, each District, Region and the Division will be assigned an EBIT Benchmark. The EBIT Benchmark for each District, Region and the Division shall be calculated by adding the EBIT for each respective District, Region and the Division for the three (3) immediately preceding fiscal years and dividing the sum of those three (3) numbers by three (3); provided, however, with respect to the EBIT Benchmark calculation for any fiscal year commencing after fiscal year 2008, the EBIT for any of such three (3) immediately preceding fiscal years shall not be less than three percent (3%) of the revenue, nor more than one hundred twenty-five percent (125%) of the EBIT Benchmark, for such fiscal year.

SECTION VI. Generation of Bonus Pools.

     Subject to the provisions of the second paragraph of this Section VI below, as soon as practical following the end of each fiscal year, a Pool shall be established for each District, Region and the Division in an amount equal to (i) $0.02 for each $1.00 of EBIT generated during such fiscal year to the extent such District, Region or the Division achieves less than eighty percent (80%) of its respective EBIT Benchmark; or (ii) $0.03 for each $1.00 of EBIT generated during such fiscal year to the extent such District, Region or the Division achieves eighty percent (80%) to one hundred percent (100%) of its respective EBIT Benchmark (in which case no amount shall be credited to any Pool under clause (i) above); or (iii) $0.045 for each $1.00 of EBIT generated during such fiscal year to the extent such District, Region or the Division achieves more than one hundred, but less than one hundred twenty-five percent (125%) of its respective EBIT Benchmark (in which case no amount shall be credited to any Pool under clauses (i) or (ii) above); or (iv) $0.065 for each $1.00 of EBIT generated during such fiscal year to the extent such District, Region or the Division achieves more than one hundred twenty-five percent

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(125%) of its respective EBIT Benchmark (in which case no amount shall be credited to any Pool under clauses (i), (ii) or (iii) above).

SECTION VII. Determination of Amount of Award.

     The amount of incentive award to be granted from the Pool to a Participant shall be determined by the Committee.

     The amount of the individual awards shall be discretionary and in the sole judgment of the Committee, based upon the Participant’s performance for the fiscal year in which the incentive award is based, provided, however, that the amount of any cash incentive award shall not exceed: (i) 100% of the Participant’s annual regular salary for Participants included in Group I (as set forth in Exhibit C), (ii) 75% of the Participant’s annual regular salary for Participants included in Group II (as set forth in Exhibit C) and (iii) 50% of the Participant’s annual regular salary for Participants included in Group III (as set forth in Exhibit C). The term “annual regular salary” shall mean the annual regular salary of the Participant as of the first day of such fiscal year.

SECTION VIII. Type of Award.

     The incentive compensation award will be paid in cash or, as permitted under the Company’s 2006 Equity Incentive Plan, in shares of restricted or unrestricted common stock of the Company, or a combination of any of the foregoing as determined by the Board of Directors of the Company or the Compensation Committee thereof. To the extent such award is payable in stock, the Participant shall receive the Company’s common stock, par value $.01 per share.

SECTION IX. Termination of Employment.

     In the event a Participant voluntarily terminates his or her employment with the Company at any time prior to the close of the fiscal year, the Participant will not be eligible for any award otherwise payable for the fiscal year.

     In the event a Participant is involuntarily terminated (without cause) prior to the close of the fiscal year, the Participant will be considered for receipt of the award he or she would have otherwise received (as determined by the Committee in its sole discretion) and, if awarded, prorated to reflect the length of the Participant’s service during the relevant fiscal year. The Committee will take into consideration the circumstances of the termination in determining the propriety and amount of the award. The Company’s payment of severance or post-employment salary support to a Participant will not be considered part of the Participant’s annual regular salary for purposes of the Plan.

SECTION X. Miscellaneous.

     There shall be deducted from each cash payment made under the Plan the amount of any tax required by any governmental authority to be withheld by the Company with respect to such payment. A Participant receiving stock hereunder shall have deducted by the Company from the award the amount of any taxes which the Company is required by any governmental authority to withhold with respect to such stock prior to calculation of the number of shares of stock to be awarded.

     Nothing in the Plan shall be construed to give any person any benefit, right or interest except as expressly provided herein, and nothing in the Plan shall be construed as establishing any right of continued employment by the Company.

     A Participant’s rights and interests under the Plan may not be assigned or transferred. In the case of a Participant’s death prior to payment of a Participant’s award, payment in an amount equal to what the Participant would have otherwise received had he or she been employed on the last day of the fiscal year (as determined by the Committee in its sole discretion), prorated to reflect the length of the

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Participant’s service during the relevant fiscal year, shall be made to the personal representatives of the Participant’s estate or such other person or persons as the Committee deems appropriate.

     The Board of Directors of the Company, or the Compensation Committee thereof, may discontinue the Plan, in whole or in part, at any time, or may, from time to time, amend the Plan in any respect that such Board (or Committee) may deem advisable. In the event the Plan is terminated, no further payments will be made under the Plan.

SECTION XI. Effective Date.

     The Plan, as amended, shall be effective as of February 1, 2007.

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EX-10.4

Exhibit 10.4

Layne Christensen Company
Executive Incentive Compensation Plan

(As Amended and Restated, Effective February 1, 2007)

SECTION I. Purpose of the Plan.

     Layne Christensen Company (hereinafter referred to as the “Company”) desires to effect a program of making awards as soon as practicable after the end of each fiscal year to certain executive employees of the Company who, in the judgment of the Board of Directors of the Company (the “Board”) have made significant contributions to the Company during the most recent fiscal year. The purpose of this program is to provide additional incentive for the executive employees to promote the best interests and most profitable operation of the Company.

     This program shall be known as the “Layne Christensen Company Executive Incentive Compensation Plan” (hereinafter referred to as the “Plan”). This Plan amends and supersedes the Layne, Inc. Executive Incentive Compensation Plan previously approved and adopted by the Board of Directors on February 1, 1994; the Layne Christensen Company Executive Incentive Compensation Plan effective May 1, 1997; and the Layne Christensen Company Executive Incentive Compensation Plan effective January 1, 2005. The existence of the Plan shall not be in lieu of or otherwise affect or be affected by any other compensation plan or arrangement of the Company.

SECTION II. Administration.

     The Plan shall be administered by the Board. The Board shall have full power, in its sole discretion, to interpret, construe and administer the Plan and adopt rules and regulations relating to the Plan. Decisions made by the Board in good faith and in the exercise of its powers and duties hereunder shall be binding upon all parties concerned. No member of the Board shall be liable to anyone for any action taken or decision made in good faith pursuant to the power or discretion vested in such person under the Plan.

SECTION III. Participation.

     The following officers, and such other key executive employees of the Company as shall be determined by the Board from time-to-time, shall be eligible to participate in the Plan (and shall hereinafter be referred to as “Participants”);

Group I	Group II
President	Chief Financial Officer General Counsel

SECTION IV. Selection of Targets.

     As soon as practicable after the commencement of each fiscal year, the Board shall establish one or more performance targets, which collectively shall constitute the “Target” hereunder, upon which the incentive compensation of each Participant shall be calculated for such fiscal year. If more than one performance target is selected for the Target, the Board shall assign relative calculation weights to each performance target in determining the Target. Incentive compensation awards hereunder for each Participant are to be based on that Participant’s performance during that fiscal year as compared to the Target. The Target may vary among Participants at the sole discretion of the Board.

SECTION V. Determination of Amount of Award.

     Subject to the last sentence of this Section V, the amount of the incentive compensation award for a fiscal year shall be equal to a percentage (the “Base Salary Percentage’”) of a Participant’s annual regular salary (as determined by the Board) as of the beginning of the fiscal year for which the Target is established (the “Base Salary”). The Base Salary Percentage shall he determined as follows:

GROUP I

     If 100% of the Target is achieved, then the Base Salary Percentage shall be 85%. If more than 100% of the Target is achieved, then for each 1% increase above the Target, the Base Salary Percentage shall be increased by 1.5%; provided, however, that in no event shall the Base Salary Percentage exceed 100%. If less than 100% of the Target is achieved, then for each 1% decrease below the Target, the Base Salary Percentage shall be decreased by 1 %; provided, however, that if 80% or less of Target is achieved then the Base Salary Percentage shall be 0.

GROUP II

     If 100% of the Target is achieved, then the Base Salary Percentage shall be 60%. If more than 100% of the Target is achieved, then for each 1 % increase above Target, the Base Salary Percentage shall be increased by 1.5%; provided, however, that in no event shall the Base Salary Percentage exceed 100%. If less than 100% of the Target is achieved, then for each 1% decrease below the Target, the Base Salary Percentage shall be decreased by 1%; provided, however, that if 80% or less of Target is achieved then the Base Salary Percentage shall be 0.

ILLUSTRATION

     The percentage of the Target achieved and the corresponding Base Salary Percentage are illustrated as follows:

	Percentage				Group I			Group II
	Target				Base Salary			Base Salary
	Achieved				Percentage			Percentage
		130	%			100	%		87	%
		120	%			100	%		78	%
		110	%			97.75	%		69	%
Target		100	%			85	%		60	%
		90	%			76.5	%		54	%
		80	%	or less		0	%		0	%

     Notwithstanding the foregoing, the amount of the incentive compensation award for a fiscal year may be increased or decreased in the sole discretion of the Board by an amount not greater than one third of the incentive compensation award which would be determined under the preceding provisions of this Section V if 100% of the Target were achieved.

SECTION VI. Methods of Payment.

     The incentive compensation award will be paid in cash, common stock of the Company, or a combination of both, in the sole discretion of the Board. Unless a Participant properly makes a deferral election in accordance with Section VII, payment shall be made during the April immediately after the close of the fiscal year for which the award is made.

SECTION VII. Deferred Accounts.

     (a) Deferral Account. The Company shall maintain in its records an account, called the Deferred Account, for each Participant as to whom any payment of incentive compensation awarded under the Plan is deferred in accordance with this Section VII. All amounts deferred pursuant to Section VI above shall bear interest from the date of deferral until the date of payment at the average of the 26-week U.S. Treasury Bill interest rate in effect during said period. All amounts credited to the Deferred Account shall be paid in accordance with Section VII(c), below.

     (b) Timing of Deferral Election. If a Participant desires to defer the receipt of the incentive compensation award, if any, that, absent such a deferral would otherwise be paid to the Participant, the Participant must make such deferral election by filing a written deferral election with the Board no later than the close of the taxable year immediately preceding the taxable year in which the services for which such incentive compensation award would relate. Notwithstanding the foregoing, if the compensation paid in the form of an incentive compensation award would qualify as “performance-based compensation based on services performed over a period of at least 12 months” as referred to in Section 409A(a)(4)(B)(iii) of the Internal Revenue Code, as amended (the “Code”), the Participant may be permitted to defer the payment of the incentive compensation award, if any, that

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would otherwise be paid to the Participant at the end of the current fiscal year if such deferral election is made no later than six months prior to the end of such current fiscal year.

     (c) Payment of Deferred Account. As soon as reasonably practicable following the Participant’s separation from service, as defined below, the amount in the Deferred Account (with interest as required by Section (a), above), shall be paid to the Participant in a lump sum. Notwithstanding the above, in the event that the Participant is a “specified employee”, as defined in Code Section 409A(a)(2)(B)(i), no payment may be made any earlier than the date which is six (6) months after the date of the Participant’s separation from service (or, if earlier, the date of the Participant’s death.) A “separation from service” shall have the same meaning as the term is defined under Code Section 409A(a)(2)(A)(i) and interpreted pursuant to the applicable guidance issued thereunder.

SECTION VIII. Termination of Employment or Change in Control Group

     In the event a Participant’s employment with the Company terminates (for reasons other than retirement, disability or death) said termination being instituted by the Participant or by the Company for cause, prior to the close of a fiscal year, such Participant shall not be entitled to any incentive compensation award for that fiscal year.

     In the event a Participant’s employment with the Company terminates, said termination being by the Company without cause or on account of retirement, disability or death, prior to the close of a fiscal year, such Participant shall be entitled to the incentive compensation award set forth in Section V, pro-rated as of the date of termination.

     If at the beginning of a fiscal year the Participant is in one Group under the Plan, and during the fiscal year the Participant is assigned to a different Group, the Participant’s incentive compensation award for that fiscal year shall be calculated by prorating the award by the number of months for which the Participant was a member of each Group.

SECTION IX. Miscellaneous.

     There shall be deducted from each cash payment made under the Plan the amount of any tax required by any governmental authority to be withheld by the Company with respect to such payment. A Participant receiving common stock hereunder shall be required to pay to the Company the amount of any taxes which the Company is required by any governmental authority to withhold with respect to such common stock.

     Nothing in the Plan shall be construed to give any person any benefit, right or interest except as expressly provided herein, and nothing in the Plan shall obligate the Company with respect to the duration of employment of any employee.

     A Participant’s rights and interests under the Plan may not be assigned or transferred. In the case of a Participant’s death, payment of the Participant’s incentive compensation award shall be made to the Participant’s designated beneficiary or beneficiaries, or in the absence of such designation, by will or the laws of descent and distribution.

     The Board of Directors of the Company may discontinue the Plan, in whole or in part, at any time, or may, from time to time, amend the Plan in any respect that such Board may deem advisable; provided, however, (i) that no such amendment shall be effective to modify or change any right or obligation with respect to any award of incentive compensation theretofore made by the Board, (2) that such Board may not, without approval by the holders of a majority of the issued and outstanding shares of common stock of the Company, materially increase the benefits accruing to Participants under the Plan or materially increase the class of Participants under the Plan and (3) that no such discontinuation of the Plan shall result in any Deferred Account being paid to a Participant until such time as the Participant is otherwise entitled to a payment from his or her deferred account in accordance with Section VII.

SECTION X. Effective Date.

     The Plan shall be effective as of February 1, 2007.

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