SEVERANCE AGREEMENT

Exhibit 10.1

SEVERANCE AGREEMENT

     This Severance Agreement (the “Agreement”) is made as of July 10, 2008 (the “Effective Date”) by and between Layne Christensen Corporation, a Delaware corporation (“Company”), and Eric R. Despain , (“Employee”).

RECITALS

      Whereas , Employee currently serves as a key employee of Company and the services and knowledge of Employee are valuable to Company in connection with the management of the Company’s business;

      Whereas , Company’s Board of Directors (the “Board”) has determined that it is in the best interest of Company and its stockholders to secure the Employee’s continued service and to ensure Employee’s continued dedication and objectivity by providing Employee with certain severance benefits if Company were to actually or constructively terminate Employee’s employment.

      Now, Therefore , in consideration of the premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the adequacy of which is hereby acknowledged, Company and Employee, each intending to be legally bound, agree as follows:

     1.  Term . The term of this Agreement (the “Term”) shall commence on the Effective Date and shall continue until the earlier of (i) the date on which Employee’s employment with Company terminates pursuant to Section 3 or 4 of this Agreement or (ii) twelve (12) months following the date of delivery to the Employee of written notice by the Company of its intent to terminate this Agreement. Notwithstanding the foregoing, however, and regardless of whether written notice by the Company of its intent to terminate this Agreement has already been provided, this Agreement may not be terminated by the Company under clause (ii) above during the Three-Year Period (as defined in Section 4(a) hereof). This Agreement shall, as of the Effective Date, supersede and replace in its entirety any written or verbal employment agreement then in effect between Company and Employee.

     2.   Restrictions on Employee’s Conduct .

          (a) Exclusive Services . During the Term, Employee shall at all times devote Employee’s full-time attention, energies, efforts and skills to the business of Company (which term shall hereinafter include each of Company’s subsidiaries) and shall not, directly or indirectly, engage in any other business activity, whether or not for profit, gain or other pecuniary advantages, without Company’s written consent, provided that such prior consent shall not be required with respect to: (i) business interests that neither compete with Company nor interfere with the performance of Employee’s duties and obligations under this Agreement; or (ii) Employee’s charitable, philanthropic or professional association activities which do not interfere with the performance of Employee’s duties and obligations under this Agreement.

          (b) Confidential Information . During the Term and after the termination of the Term, Employee shall not disclose or use, directly or indirectly, any Confidential Information. For the purposes of this Agreement, “Confidential Information” shall mean all information disclosed to Employee, or known by him as a consequence of or through Employee’s employment with Company (under this Agreement or prior to this Agreement) where such information is not generally known in the trade or industry or was regarded or treated as confidential by Company, and where such information refers or relates in any manner whatsoever to the business activities, processes, services or products of Company. Confidential Information shall include business and development plans (whether contemplated, initiated or completed), information with respect to the development of technical and management services, business contacts, methods of operation, results of analysis, business forecasts, financial data, costs, revenues, and similar information. Upon termination of the Term, Employee shall immediately return to Company all property of Company and all Confidential Information, which is in tangible form, including all copies, extracts, and summaries thereof and any Confidential Information stored electronically on tapes computer disks or in any other manner.

          (c) Business Opportunities and Conflicts of Interests .

          (i) During the Term, Employee shall promptly disclose to Company each business opportunity of a type which, based upon its prospects and relationship to the existing businesses of Company, Company might reasonably consider pursuing. After termination of this Agreement, regardless of the circumstances thereof, Company shall have the exclusive right to participate in or undertake any such opportunity on its own behalf without any involvement of Employee.

          (ii) During the Term, Employee shall refrain from engaging in any activity, practice or act which conflicts with, or has the potential to conflict with, the interests of Company, and he shall avoid any acts or omissions which are disloyal to, or competitive with Company.

          (d) Non-Solicitation . For a period of two years following any termination of this Agreement, Employee shall not, except in the course of Employee’s duties under this Agreement, directly or indirectly, induce or attempt to induce or otherwise counsel, advise, ask or encourage any person to leave the employ of Company, or solicit or offer employment to any person who was employed by Company at any time during the twelve-month period preceding the solicitation or offer.

          (e) Covenant Not to Compete .

          (i) During the Term, Employee shall not, without Company’s prior written consent, directly or indirectly, either as an officer, director, employee, agent, advisor, consultant, principal, stockholder, partner, owner or in any other capacity, on Employee’s own behalf or otherwise, in any way engage in, represent, be connected with or have a financial interest in, any business which is, or to Employee’s knowledge, is about to become, engaged in any business with which Company is currently or has previously done business or any subsequent line of business developed by Company or any business planned during the Term to be established by Company. Notwithstanding the foregoing, Employee shall be permitted to own passive investments in publicly held companies provided that such investments do not exceed five percent (5%) of any such company’s outstanding equity.

          (ii) For a period of two years following any termination of this Agreement and without regard to whether Company or Employee terminates this Agreement, Employee shall not, engage in competition with Company, or solicit, from any person or entity who purchased any product or service from Company during Employee’s employment hereunder, the purchase of any product or service in competition with then existing products or services of Company.

          (iii) For purposes of this Agreement, Employee shall be deemed to engage in competition with Company if he shall directly or indirectly, either individually or as a stockholder, director, officer, partner, consultant, owner, employee, agent, or in any other capacity, consult with or otherwise assist any person or entity engaged in services similar to those provided by Company or any member of Company’s group of companies. The provisions of this Section 2(e) shall apply in any location in which Company has established, or is in the process of establishing, a business presence.

          (f) Employee Acknowledgment . Employee hereby agrees and acknowledges that the restrictions imposed upon him by the provisions of this Section 2 are fair and reasonable considering the nature of Company’s business, and are reasonably required for Company’s protection.

          (g) Invalidity . If a court of competent jurisdiction or an arbitrator shall declare any provision or restriction contained in this Section 2 as unenforceable or void, the provisions of this Section 2 shall remain in full force and effect to the extent not so declared to be unenforceable or void, and the court may modify the invalid provision to make it enforceable to the maximum extent permitted by law.

          (h) Specific Performance . Employee agrees that if he breaches any of the provisions of this Section 2, the remedies available at law to Company would be inadequate and in lieu thereof, or in addition thereto, Company shall be entitled to appropriate equitable remedies, including specific performance

and injunctive relief. Employee agrees not to enter into any agreement, either written or oral, which may conflict with this Agreement, and Employee authorizes Company to make known the terms of this Section 2 to any person, including future employers of Employee.

          (i) Termination of Agreement by Company . Notwithstanding anything to the contrary, the provisions of Sections 2(d) and (e) above shall not apply with respect to the Employee upon the termination of this Agreement by the Company pursuant to clause (ii) of Section 1 hereof.

     3.  Termination .

          (a) Termination by Company for Cause . Subject to the last sentence of this Section 3(a), at any time during the Term of this Agreement, Company may terminate Employee’s employment for Cause, as defined below, upon at least fourteen (14) days written notice setting forth a description of the conduct constituting Cause. If Employee’s employment is terminated for Cause, he shall be entitled to:

          (i) payment of any earned but unpaid portion of Employee’s annual base salary as in effect from time to time (“Base Salary”) through the effective date of such termination;

          (ii) reimbursement for any reasonable, unreimbursed and documented business expense he has incurred in performing Employee’s duties hereunder;

          (iii) the right to elect continuation coverage of insurance benefits to the extent required by law; and

          (iv) payment of any accrued but unpaid benefits (including without limitation, any bonus due by virtue of having met all applicable performance targets prior to the effective date of such termination), and any other rights, as required by the terms of any employee benefit plan or program of Company.

For purposes of this Agreement, “Cause” shall mean: (1) conviction of Employee of, or the entry of a plea of guilty or nolo contendere by Employee to, any felony, or any misdemeanor involving moral turpitude; (2) fraud, misappropriation or embezzlement by Employee; (3) Employee’s wilful failure, gross negligence or gross misconduct in the performance of Employee’s assigned duties for Company; and (4) wilful failure by Employee to follow reasonable instructions of any officer to whom Employee reports or the Board. Notwithstanding the provisions of this Section 3(a) defining “Cause,” in the event of a Change of Control, as defined hereafter, a Termination for Cause shall mean only a termination for an act of dishonesty by Employee constituting a felony which was intended to or resulted in gain or personal enrichment of Employee at Company’s expense. For purposes of this entire agreement and for the avoidance of doubt, the “termination” of Employee’s employment is intended to be a “separation from service” under Code section 409A(a)(2)(A)(i) and is to be interpreted in a manner consistent with such section and applicable Treasury regulations issued thereunder.

          (b) Termination by Company Without Cause or Constructive Termination Not in Connection with a Change of Control . At any time before a Change of Control, Company may terminate Employee’s employment without Cause, by giving written notice of termination. If Employee’s employment is terminated without Cause, or if there is a constructive termination without Cause, as defined below, Employee shall be entitled to receive from Company the following:

          (i) severance benefits including:

          (A) subject to Section 3(h) below, payment of the then current Base Salary for a severance Period of 24-months commencing on the effective date of Employee’s termination (the “Severance Period”), in accordance with Company’s regular salary payment practices;

          (B) continuation of the vesting of any outstanding stock options, restricted stock awards and other equity incentive awards (“Equity-Based Awards”) and continuation of the Employee’s rights to exercise any outstanding Equity-Based Awards, through the full 24 month Severance Period. Employee shall be considered to be an Employee of the Company during the entire Severance Period, and shall abide by the Covenant Not to Compete of Section 3(e) of this Agreement;

          (C) for any outstanding stock options, restricted stock awards or other equity incentive awards which are exercisable, payable or become vested only if one or more pre-established performance criteria are satisfied (“Performance-Based Equity Awards”), each Performance-Based Equity Award will become exercisable, payable or become vested at the time of and only if the underlying performance criteria are satisfied. In the case of any Performance-Based Equity Award that is a stock option which becomes exercisable after the end of the Severance Period, such option will remain exercisable until the earlier of the award’s original expiration date or 90 days after the end of the Severance Period; and

          (D) continued coverage for Employee (and, if applicable under the applicable welfare benefit plan(s), his spouse and family) coverage under employee benefit plans (such as medical, dental, disability and life) that covered him (or them) immediately before Employee’s termination as if he had remained in employment until the end of the Severance Period. If Employee’s participation in any plan is barred, the Company shall either arrange to provide Employee (his spouse and family, if applicable) substantially similar benefits or pay Employee the equivalent tax affected value of the substantially similar benefits in cash, provided such cash payment(s) are made in the tax years such that the payments are compliant with the payment rules under Code section 409A.

          (ii) reimbursement for any reasonable, unreimbursed and documented business expense Employee has incurred in performing his duties hereunder during the Term;

          (iii) payment of any accrued but unpaid benefits up to and including the effective date of the termination of employment (including without limitation, any tax equalization payments, bonus due up to the date on which the Severance Period commences), and any other rights, as required by the terms of any employee benefit plan or program of Company;

          (iv) the right to elect continuation coverage of insurance benefits to the extent required by law; and

          (v) payment of COBRA premiums.

For purposes of this Agreement, termination “without Cause” shall mean involuntary termination of employment, at the direction of Company, in the absence of “Cause” as defined above. For purposes of this Agreement, “constructive termination without Cause” shall mean a termination of Employee at Employee’s own initiative within one year following the occurrence, without Employee’s prior written consent, of one or more of the following events not on account of Cause (“Constructive Termination Events”):

          (i) a significant and adverse diminution in the nature or scope of Employee’s authority, title, responsibilities or duties, unless Employee is given new authority or duties that are substantially comparable to Employee’s previous authority or duties;

          (ii) a reduction in Employee’s then-current Base Salary, or a significant reduction in Employee’s opportunities for earnings under Employee’s incentive compensation plans (not attributable to economic conditions or business performance at the time), or the termination or significant reduction of any employee benefit or perquisite enjoyed by him (except as part of a general reduction that applies to substantially all similarly situated employees or participants);

          (iii) a change in Employee’s place of employment such that Employee is required to work more than 50 miles from Employee’s then current place of employment; or

          (iv) the failure of Company to obtain an assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of Company within 45 days after a merger, consolidation, sale or similar transaction.

If Employee believes there exists a basis for a constructive termination without Cause, Employee shall provide Company written notice within 30 days of the occurrence of the Constructive Termination Event describing such event, and Company shall be provided the opportunity to cure the cause of the constructive termination event within a 30-day period following Company’s receipt of the written notice. If the cause of the constructive termination is cured, then no constructive termination without Cause shall be found to have taken place.

          (c) Voluntary Termination by Employee . Employee may terminate this Agreement at any time by giving 60 days’ written notice to Company. If Employee voluntarily terminates his employment for reasons other than Employee’s death, disability, or constructive termination without Cause, he shall be entitled to:

          (i) payment of any earned but unpaid portion of Employee’s then current Base Salary through the effective date of such termination;

          (ii) reimbursement of any reasonable, unreimbursed and documented business expense Employee has incurred in performing Employee’s duties hereunder.

          (iii) the right to elect continuation coverage of insurance benefits to the extent required by law; and

          (iv) payment of any accrued but unpaid benefits, and any other rights, as required by the terms of any employee benefit plan or program of Company.

Any payments made under this Section 3(c) shall be made within 30 days of Employee’s termination of employment.

          (d) Termination Due to Death . Employee’s employment and this Agreement shall terminate immediately upon Employee’s death. If Employee’s employment is terminated because of Employee’s death, Employee’s estate or Employee’s beneficiaries, as the case may be, shall be entitled to:

          (i) payment of any earned but unpaid portion of Employee’s then current Base Salary through the effective date of such termination;

          (ii) reimbursement for any reasonable, unreimbursed and documented business expense Employee incurred in performing Employee’s duties hereunder;

          (iii) the right to elect continuation coverage of insurance benefits to the extent required by law;

          (iv) any pension survivor benefits that may become due pursuant to any employee benefit plan or program of Company, and

          (v) immediate acceleration of the vesting of any Service-Based Equity Awards and continuation of the Employee’s beneficiary’s rights to exercise any outstanding Service-Based Equity-Based Awards until the earlier of the Award’s original expiration date or 12 months following such death;

          (vi) for any Performance-Based Equity Awards, each Performance-Based Equity Award will become exercisable, payable or become vested at the time of and only if the underlying performance criteria are satisfied and in the case of any Performance-Based Equity Award that is a stock option which becomes exercisable pursuant to this Section 3(d)(vi), such option will remain exercisable until the earlier of the award’s original expiration date or 12 months following such termination;

          (vii) payment of any accrued but unpaid benefits and any other rights as provided by the terms of any employee benefit plan or program of Company.

Any payments made under this Section 3(d) shall be made within 30 days of Employee’s death.

          (e) Termination Due to Disability . Company may terminate Employee’s employment at any time if Employee becomes disabled, upon written notice by Company to Employee. If Employee’s employment is terminated because of Employee’s disability, he shall be entitled to:

          (i) payment of a lump-sum disability benefit equal to 12 months’ then current Base Salary;

          (ii) immediate acceleration of the vesting of any Service-Based Equity Awards and continuation of the Employee’s rights to exercise any outstanding Service-Based Equity-Based Awards through the effective date of such termination and for a period of 12 months following such termination;

          (iii) for any Performance-Based Equity Awards, each Performance-Based Equity Award will become exercisable, payable or become vested if the underlying performance criteria are satisfied and in the case of any Performance-Based Equity Award that is a stock option which becomes exercisable pursuant to this Section 3(e)(iii), such option will remain exercisable until the earlier of the award’s original expiration date or 12 months following such termination;

          (iv) reimbursement for any reasonable, unreimbursed and documented business expense he has incurred in performing Employee’s duties hereunder;

          (v) the right to elect continuation coverage of insurance benefits to the extent required by law; and

          (vi) payment of any accrued but unpaid benefits and any other rights as provided by the terms of any employee benefit plan or program of Company.

Any payments under this Section 3(e) shall be made within 30 days of Employee’s termination of employment. “Disability,” as used in this paragraph, means a physical or mental illness, injury, or condition that (a) prevents, or is likely to prevent, as certified by a physician, Employee from performing one or more of the essential functions of Employee’s position, for at least 120 consecutive calendar days or for at least 15