LETTER AMENDMENT NO.3 TO MASTER SHELF AGREEMENT

Exhibit 10 (2)

EXECUTION VERSION

LETTER AMENDMENT NO.3
TO
MASTER SHELF AGREEMENT

June 16, 2006

Prudential Investment Management, Inc.
The Prudential Insurance Company of America
Pruco Life Insurance Company
Security Life of Denver Insurance Company
American Skandia Life Assurance Corporation
Prudential Retirement Insurance and Annuity Company
Time Insurance Company (f/k/a Fortis Insurance Company)
American Memorial Life Insurance Company
Physicians Mutual Insurance Company

c/o Prudential Capital Group
0000 Xxxx Xxxxxx, Xxxxx 0000X
Xxxxxx, Xxxxx 00000

Ladies and Gentlemen:

     We refer to the Master Shelf Agreement dated as of July 31, 2003 and amended by Letter Amendment No. 1 to Master Shelf Agreement dated May 15, 2004 and Amendment No. 2 to Master Shelf Agreement dated September 28, 2005 (as amended, the “Agreement”) among Xxxxx Xxxxxxxxxxx Company (the “Company”), Prudential Investment Management, Inc., The Prudential Insurance Company of America, Pruco Life Insurance Company, Security Life of Denver Insurance Company, American Skandia Life Assurance Corporation, Prudential Retirement Insurance and Annuity Company, Time Insurance Company (f/k/a Fortis Insurance Company), American Memorial Life Insurance Company and Physicians Mutual Insurance Company. Unless otherwise defined herein, the terms defined in the Agreement shall be used herein as therein defined.

     The Company desires to amend the Agreement as set forth below, and Prudential and the Purchasers are willing to agree to such amendments, upon and subject to the terms and conditions set forth herein.

     Therefore, for good and valuable consideration, it is hereby agreed by you and us as follows:

     1. Amendments to the Agreement. Subject to the accuracy of the representations and warranties set forth in paragraph 2 hereof and satisfaction of the conditions set forth

in paragraph 3 hereof, the undersigned holders of the Notes hereby agree with the Company to amend, effective as of the date first above written, the Agreement as follows:

     (a) Paragraph 6. NEGATIVE COVENANTS. Paragraph 6 of the Agreement is amended by:

     (I) amending Paragraph 6A(4) in its entirety as follows:

“6A(4). Priority Debt. The Company will not permit Priority Debt to exceed (i) for all periods prior to September 1, 2008, the greater of (a) 10% of Tangible Net Worth as calculated as of any date, and (b) $12,000,000, and (ii) for all periods from and after September 1, 2008, 10% of Tangible Net Worth as calculated as of any date.”

     (II) in Paragraph 6B(1), (A) deleting “and” at the end of clause (x) thereof, (B) deleting the existing clause (xi), and (D) adding the following new clauses (xi) and (xii) thereto:

“(xi) surety bonds listed on Exhibit A attached to the Third Amendment; and

(xii) Liens other than those described in clauses (i) — (xi) above that secure Indebtedness (other than Indebtedness under the Bank Agreement); provided that after granting such Lien the Company is in compliance with paragraph 6(A).”

     (b) Paragraph 10B. Other Terms. Paragraph 10B of the Agreement is amended to:

     (I) add the following definition of “Third Amendment” in alphabetical order:

“Third Amendment shall mean that certain Letter Amendment No. 3 to Master Shelf Agreement dated as of June 16, 2006.”

     (II) amend the definition of “Indebtedness” by adding, at the end thereof, the following:

“For purposes of calculating the financial covenants pursuant to paragraph 6, the surety bonds listed on Exhibit A to the Third Amendment shall not be considered Indebtedness.”

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2. Representations and Warranties. In order to induce Prudential and the Purchasers to enter into this Amendment, the Company hereby represents and warrants as follows:

     (a) No Defaults. No Default or Event of Default exists under the Agreement, the Notes as amended by the Note Amendments, the Subsidiary Guaranty Agreement or any other agreement or instrument executed in connection therewith and no default or event of default exists under the Bank Agreement, any agreement or instrument executed in connection therewith or any other material contract or agreement to which the Company or any of the Subsidiary Guarantors is a party, and, to the Company’s knowledge, no such default or event of default is imminent.

     (b) Representations and Warranties. The representations and warranties of the Company and the Subsidiary Guarantors set forth in the Agreement and the Subsidiary Guaranty Agreement are true and correct on and as of the date hereof, both before and after giving effect to the effectiveness of this Amendment (except to the extent such representations and warranties expressly are limited to an earlier date, in which such representations and warranties are true and correct on and as of such earlier date).

3. Effectiveness. The effectiveness of this Letter Amendment is contingent on Prudential and the Purchasers having received:

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

4. Miscellaneous.

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

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force and effect and is hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Letter Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy under the Agreement nor constitute a waiver of any provision of the Agreement.

     (b) Counterparts. This Letter Amendment may be executed in any number of counterparts and by any combination of the parties hereto in separate counterparts, each of which counterparts shall be an original and all of which taken together shall constitute one and the same letter amendment.

     If you agree to the terms and provisions hereof, please evidence your agreement by executing and returning at least a counterpart of this Letter Amendment to Xxxxx Xxxxxxxxxxx Company, 0000 Xxxxxxx Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxx 00000, Attention: Vice President — Finance and Treasurer. This Letter Amendment shall become effective as of the date first above written when and if counterparts of this Letter Amendment shall have been executed by us and you and the consent attached hereto shall have been executed by each of the Subsidiary Guarantors.

(Remainder of Page Intentionally Left Blank; Signature Pages Follow)

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	Very truly yours, XXXXX XXXXXXXXXXX COMPANY
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Senior Vice President

Agreed as of the date first above written:

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

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

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

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

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

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

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

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

CONSENT

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

	XXXXXX BROS. DRILLING COMPANY, a Utah corporation
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	XXXXXXXXXXX XXXXXX CORPORATION, a Delaware corporation
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	INTERNATIONAL DIRECTIONAL SERVICES, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE TEXAS, INCORPORATED, a Delaware corporation
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	MID-CONTINENT DRILLING COMPANY, a Delaware corporation
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	SHAWNEE OIL & GAS, L.L.C., a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	XXXXX-XXXXXXX INCORPORATED, a Louisiana corporation
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	TOLEDO OIL L& GAS SERVICES, INC., a Louisiana corporation
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	VIBRATION TECHNOLOGY, INC., a Delaware corporation
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE DRILLING PTY LTD, an Australian company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Director

	XXXXX XXXXXXXXXXX AUSTRALIA PTY LTD, an Australian company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Director

	XXXXXXX MINING SERVICES PTY LTD, an Australian company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Director

	SMS HOLDINGS PTY LTD, an Australian company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Director

	WEST AFRICAN HOLDINGS PTY LTD, an Australian company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Director

	WEST AFRICAN DRILLING SERVICES PTY LTD, an Australian company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Director

	WEST AFRICAN DRILLING SERVICES PTY (NO. 2) LTD, an Australian company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Director

	LAYNE ENERGY, INC., a Delaware corporation
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY CHERRYVALE, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY CHERRYVALE PIPELINE, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY XXXXXX, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY XXXXXX PIPELINE, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY ILLINOIS, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY ILLINOIS PIPELINE, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	XXXXX ENERGY MARKETING, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY OPERATING, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY OSAGE, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY PIPELINE, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY PRODUCTION, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY RESOURCES, INC., a Delaware corporation
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY SYCAMORE, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE ENERGY SYCAMORE PIPELINE, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	LAYNE WATER DEVELOPMENT AND STORAGE, LLC, a Delaware limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President

	CHERRYVALE PIPELINE, LLC, a Kansas limited liability company
	By:	/s/ Xxxxx X. Xxxxxx
		Name:	Xxxxx X. Xxxxxx
		Title:	Vice President