Exhibit 10.3

November 5, 2012

Harbinger Group Inc.

HGI Energy Holdings, LLC

450 Park Ave., 27th Floor

New York, New York 10022

Attention: Philip A. Falcone

     Omar Asali

     Legal Department

Ladies and Gentlemen:

Reference is made to (i) the Unit Purchase and Contribution Agreement, dated as
of the date hereof (as may be amended from time to time, the “Purchase
Agreement”), by and among HGI Energy Holdings, LLC, a Delaware limited liability
company (“Investor”), EXCO Resources, Inc., a Texas corporation (“EXCO Parent”),
and EXCO Operating Company, LP, a Delaware limited partnership (“EOC”) and to
(ii) the GP LLC Agreement (as defined in the Purchase Agreement) to be entered
into between Investor and EXCO Holding MLP, Inc., a Texas corporation (“EXCO
Holding”). Capitalized terms used herein and not defined have the meanings set
forth in the GP LLC Agreement.

 

  1. Definition. For purposes of this letter agreement, the following terms will
have the meanings given to them below:

“Antero Sale” means the sale of certain Oil and Gas Properties contemplated by
that certain Purchase and Sale Agreement, among EXCO Production Company (WV),
LLC, BG Production Company (WV), LLC and EXCO Resources (PA), LLC, collectively
as sellers, and Antero Resources Appalachia Corporation, as buyer, dated
October 26, 2012, as the same may be amended or modified.

 

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“Appalachia Shallow Rights” means Oil and Gas Properties in New York, Ohio,
Pennsylvania and West Virginia, limited to depths from the surface of the earth
to (a) with respect to the Commonwealth of Pennsylvania, the stratigraphic
equivalent of the base of the Haskill Sandstone Formation (Base of Elk Sequence
formation) at a measured depth of 2,758’, as identified by the Litho Density
Compensated Neutron Array Induction Temperature Log dated June 7, 2005 of the
Seneca Resources operated Fee PGS SGL No. 44 (API 37-047-23649) located in Elk
County, Pennsylvania, (b) with respect to the State of West Virginia, the
stratigraphic equivalent of the base of the Elk Group formation (as marked,
where present, by the Benson Sandstone formation) at a measured depth of 6,612
feet, as identified by the Litho Density Compensated Neutron Array Induction
Temperature Log dated October 8, 2008 of the EXCO – North Coast Energy, Inc.
operated Wentz 4HS (API 47-001-02982) located in Barbour County, West Virginia,
(c) with respect to the State of New York, the stratigraphic equivalent of the
base of the Genesee Formation at a measured depth of 2,548’, as identified by
the Density/Neutron, Gamma/Temperature Log dated May 6, 2005 of the Fortuna
Energy, Inc. operated Cotton-Hanlon #1 well (API 31-107-23185) located in Tioga
County, New York, and (d) with respect to the State of Ohio, 4,000’ true
vertical depth; recognizing that, except with respect to the depths described in
subsection (d) above, actual depths will vary.

“EXCO” means EXCO Parent, EOC, EXCO Holding, EXCO Holding (PA), Inc., a Delaware
corporation, EXCO Production Company (PA), LLC, a Delaware limited liability
company, and EXCO Production Company (WV), LLC, a Delaware limited liability
company.

“Operating Partners” means Persons whose principal business, taken as a whole,
is owning and operating Oil and Gas Properties.

“Appalachia Permitted Sale” means a sale of Appalachia Shallow Rights by EXCO or
its Affiliates in a transaction or series of transactions reasonably expected to
generate net proceeds less than $2.0 million individually or $5.0 million in the
aggregate in any calendar year.

“Permitted Transfer” means any Transfer of Appalachia Shallow Rights by EXCO
(i) to a 100% Affiliate of EXCO and (ii) arising from, or otherwise related to,
a bona fide pledge, mortgage or other collateral-based debt arrangement with a
Third Party.

 

  2. Permitted Dispositions. From and after the Closing, notwithstanding the
provisions of Article XI of the GP LLC Agreement:

 

  a.

EXCO may contribute all or any portion of its Appalachia Shallow Rights to any
Person other than the Partnership, without EXCO Holding or its Affiliates
complying with the provisions of Section 11.1(b) of the GP LLC Agreement, but
only so long as (i) the equity ownership of such Person is, or following such
contribution will be, predominantly held (considered from an economic
perspective), by Operating Partners and (ii) each such Operating Partner
received, or will be entitled to receive, a significant portion of its interests
in such Person in exchange for the contribution thereto of assets of such
Operating Partner (such Person, an “Operating Partnership”). In the event that
any such Operating Partnership includes, or proposes to include, any equity
owner(s) other than Operating Partners (“Non-Operating Partners”), EXCO Parent
shall offer the Partnership the right to invest in such Operating Partnership as
a Non-Operating Partner, subject to the consent of the other Operating Partners
participating in such Operating Partnership, and EXCO Parent shall use its best
efforts to cause such Operating Partnership to permit the Partnership to invest
in such Operating Partnership, concurrent with the contribution by EXCO of all
or a portion of its Appalachia Shallow Rights to such Operating Partnership

 

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  (or, in the case of a subsequent investment by any Non-Operating Partner, at
the time the Operating Partnership offers the investment opportunity to such
Non-Operating Partner). In the event that the Partnership invests in such
Operating Partnership, the foregoing sentence shall no longer apply to EXCO or
any of its Affiliates with respect to future investments in such Operating
Partnership.

 

  b.

EXCO may, without EXCO Holding or its Affiliates complying with the provisions
of Section 11.1(b) of the GP LLC Agreement, sell or otherwise Transfer any
Appalachia Shallow Rights to any Person that is not an Affiliate of EXCO, in a
transaction or series of transactions in which neither EXCO nor any of its
Affiliates (i) remains the operator of such Appalachia Shallow Rights being sold
or otherwise Transferred or (ii) receives any general partnership or other
promoted equity interest (including, for the avoidance of doubt, profits,
incentive or other contingent interests) or any significant Control rights in a
Person in exchange for such Appalachia Shallow Rights being sold (such
transaction, a “ROFO Sale”); provided that, except with respect to (X) the
Antero Sale, (Y) an Appalachia Permitted Sale or (Z) a Permitted Transfer,
Harbinger Group Inc. and its Affiliates (excluding the Partnership and its
Affiliates unless EXCO agrees otherwise) (collectively, “Harbinger”) shall have
a right of first offer with respect to such Appalachia Shallow Rights being sold
in a ROFO Sale as provided below. If EXCO desires to effect a ROFO Sale, then,
except with respect to the Antero Sale, an Appalachia Permitted Sale or a
Permitted Transfer, EXCO Parent shall provide written notice (a “ROFO Notice”)
thereof to Harbinger, setting forth with reasonable specificity the Appalachia
Shallow Rights proposed to be sold. From time to time, EXCO Parent will provide
to Harbinger such additional information with respect to such Appalachia Shallow
Rights proposed to be sold or otherwise Transferred as is reasonably requested
by Harbinger, unless such additional information is subject to confidentiality
restrictions that would prohibit such disclosure or would, based on the advice
of outside counsel to EXCO Parent, reasonably be expected to result in the
waiver of attorney-client privilege (“Designated Information”); provided, EXCO
Parent shall not enter into confidentiality agreements in anticipation or
connection with such transaction that would restrict such disclosure; and
provided, further, to the extent that the sharing of any information reasonably
requested by Harbinger is subject to confidentiality or would reasonably be
expected to result in the waiver of attorney-client privilege, EXCO Parent shall
make commercially reasonable requests for the waiver or consent, or take other
reasonable actions, to permit such disclosure. Upon receipt of a ROFO Notice,
Harbinger Group Inc. (or its designated Affiliate) may, by delivery of written
notice (an “Offer”) to EXCO Parent not later than the later of (x) 30 days
following Harbinger’s receipt of a ROFO Notice or (y) 10

 

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  days following Harbinger’s receipt of the Designated Information (provided
Harbinger has requested such Designated Information within five Business Days
after receipt of a ROFO Notice), offer to acquire such Appalachia Shallow Rights
proposed to be so sold or otherwise Transferred, by indicating in such Offer the
economic and other material terms (including the allocation of liabilities) on
which Harbinger proposes to effect such acquisition. Upon receipt of an Offer,
EXCO may not sell or otherwise Transfer such Appalachia Shallow Rights that are
the subject of such ROFO Notice to any Third Party (as defined in the Purchase
Agreement) at a price and upon material terms that are less favorable in the
aggregate to EXCO than the price and material terms set forth in the Offer, for
the 90-day period following EXCO Parent’s receipt of such Offer. If, following
such 90 day period, EXCO again desires to effect a ROFO Sale, EXCO Parent shall
again deliver a ROFO Notice in respect thereof to Harbinger, and the
aforementioned provisions shall again apply.

 

  c. Except as provided for in Sections 2.a. and 2.b. above, EXCO may not
contribute or Transfer its Appalachia Shallow Rights to any Person in which EXCO
retains a financial interest, unless such contribution or Transfer is
consummated by EXCO Parent or its Affiliates in compliance with Article XI of
the GP LLC Agreement.

 

  3. Permitted Acquisitions. Notwithstanding the provisions of Article XI of the
GP LLC Agreement, from and after the Closing and until the earlier of either
(i) the acquisition by the Partnership of any Appalachia Shallow Rights or
(ii) the sale by EXCO of substantially all of its Appalachia Shallow Rights (in
each case, after which time this Section 3 shall no longer have any effect),
EXCO and its Affiliates shall be permitted to acquire Appalachia Shallow Rights,
without complying with the provisions of Section 11.1(a) of the GP LLC
Agreement, but only if (A) such acquisition is primarily for the purpose of
complementing its existing portfolio of Appalachia Shallow Rights in New York,
Ohio, West Virginia and Pennsylvania, (B) such Appalachia Shallow Rights are
acquired by EXCO solely for its own account, (C) such Appalachia Shallow Rights
are operated by EXCO for its own account (or is operated for EXCO’s account by
EXCO Resources (PA), LLC or the oil and gas operator that operated such assets
immediately prior to their acquisition by EXCO) and (D) except as provided in
the immediately preceding sub-clause (C) and Section 2(a) and (c) above, EXCO
does not provide any Third Party with any equity or equity-linked rights to such
Appalachia Shallow Rights.

 

  4.

Relationship to BG. Any right of first refusal, right of first offer (including
a ROFO Sale) or other purported Transfer, or resulting ownership thereof, of
EXCO’s Appalachia Shallow Rights are subject to, and governed by, the terms and
conditions of the agreements listed on Annex A hereto as in effect on the date
hereof (the “BG Agreements”), which are, by their terms, applicable to such
matters (and subject to any applicable waivers thereof). Notwithstanding

 

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  anything herein or in Article XI in the GP LLC Agreement to the contrary, EXCO
and its Affiliates shall have the right to comply with their existing
obligations under the BG Agreements and such compliance shall not constitute any
breach of this letter agreement or the GP LLC Agreement.

 

  5. Miscellaneous. The EXCO Group shall not take any action that is intended to
circumvent the rights of the Harbinger Group Inc. and Investor under this letter
agreement or Article XI of the GP LLC Agreement. Section headings herein are for
convenience of reference only, and shall not constitute part of this letter
agreement. The terms and provisions of Article XIII (Miscellaneous) (other than
Sections 14.3 (Tax, Recording Fees, Similar Taxes & Fees), 14.5(b) (Limitations
on Specific Performance) and 14.13 (Conspicuous)) of the Purchase Agreement are
incorporated herein by reference, mutatis mutandis. To the extent that the terms
of this letter agreement conflict with any of the terms of the GP LLC Agreement,
the terms of this letter agreement shall control. This letter agreement shall be
binding upon each of Harbinger Group Inc., Investor and EXCO Parent, EOC, EXCO
Holding, and any successor to, or permitted assign of, the ownership of any
Units held by such Person. The Partnership shall be a third party beneficiary of
the rights under this letter to the extent not exercised by Harbinger Group Inc.
or Investor. In the event of the termination of the Purchase Agreement, this
letter agreement shall also terminate automatically.

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Very truly yours, EXCO RESOURCES INC. By:   /s/ Douglas H. Miller   Name:
Douglas H. Miller   Title: Chief Executive Officer EXCO OPERATING COMPANY, LP
By: its general partner, EXCO Partners OLP GP, LLC By:   /s/ Douglas H. Miller  
Name: Douglas H. Miller   Title: Chief Executive Officer

Acknowledged and agreed, as of the date set forth above:

 

HARBINGER GROUP INC. By:   /s/ Omar Asali   Name: Omar Asali   Title: President
HGI ENERGY HOLDINGS, LLC By:   /s/ Omar Asali  

Name: Omar Asali

Title: President

[Signature Page to Appalachia Side Letter]

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ANNEX A: BG AGREEMENTS

1. Joint Development Agreement, dated as of June 1, 2010, by and among EXCO
Production Company (PA), LLC, EXCO Production Company (WV), LLC, BG Production
Company, (PA), LLC, BG Production Company, (WV), LLC and EXCO Resources (PA),
LLC, as amended.

2. Second Amended and Restated Limited Liability Company Agreement of EXCO
Resources (PA), LLC, dated June 1, 2010, by and among EXCO Holding (PA), Inc.,
BG US Production Company, LLC and EXCO Resources (PA), LLC, as amended.