Exhibit 10.3

 

EXCO Resources, Inc.

12377 Merit Drive, Suite 1700, LB 82

Dallas, TX 75251

 

March 28, 2007

 

OCM Principal Opportunities Fund IV, L.P.

OCM EXCO Holdings, LLC

c/o Oaktree Capital Management, LLC

333 South Grand Avenue, 28th Floor

Los Angeles, CA 90071

 

Re:                               Nomination of Designee to the Board of
Directors

 

Ladies and Gentlemen:

 

Reference is made to that certain Preferred Stock Purchase Agreement (the
“Purchase Agreement”), dated as of the date hereof, by and among EXCO Resources,
Inc. (“EXCO”) and the Purchasers named therein.  All capitalized terms used but
not otherwise defined herein shall have the respective meanings set forth in the
Purchase Agreement.  For purposes of this letter, “Oaktree” means, collectively,
OCM Principal Opportunities Fund IV, L.P. (“POF IV”), OCM EXCO Holdings, LLC
(“Holdings”) and any other investment fund or account, whether now in existence
or hereafter formed, which is managed or controlled by Oaktree Capital
Management, LLC (“OCM”) or any of its affiliates (as such term is defined in
Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder), or of which OCM or any of its affiliates is
an advisor.

 

This is the letter referred to in Section 2.04(d) of the Purchase Agreement. 
EXCO hereby agrees, subject to the fiduciary duties of its board of directors,
for the benefit of POF IV and Holdings that following such time when (i) Oaktree
ceases to have the right to elect a director to serve on the Board of Directors
pursuant to Section 5(c) of the Series B 7.0% Preferred Statement of Designation
and (ii) there ceases to be 25% or more of the Initial Preferred Shares (as
defined in the Statements of Designation) outstanding, EXCO shall cause an
individual designated by POF IV (or its designee) to be nominated for election
to serve on the Board of Directors at any annual meeting of the shareholders or
special meeting held to elect directors, for so long as Oaktree beneficially
owns an aggregate of at least 10,000,000 shares of Common Stock (including,
without limitation, Common Stock issuable upon conversion or exchange of
Convertible Securities), subject to adjustment to reflect stock dividends, stock
splits, stock combinations and other similar events occurring after the date
hereof.  In no respect shall this letter obligate EXCO or its directors to
recommend that its shareholders elect such individual or impair their power and
ability to recommend that its shareholders not elect such individual.

 

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This letter is being executed in connection with the Purchase Agreement, and
Sections 7.01, 7.02, 7.06, 7.08 and 7.10 of the Purchase Agreement are
incorporated by reference herein.  This letter shall be governed by, and
construed in accordance with, the laws of the State of Texas without regard to
principles of conflicts of law.  The terms of this letter may not be amended,
modified or supplemented, and waivers or consents to departures from the terms
hereof may not be given, except by the written consent of all of the parties
hereto.  This letter may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts together shall constitute one and the same instrument.

 

[Signature Page Follows]

 

2

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If the foregoing accurately sets forth our understanding, please acknowledge by
signing in the space provided below.

 

 

Sincerely,

 

 

 

EXCO RESOURCES, INC.

 

 

 

 

 

By:

/s/ J. Douglas Ramsey, Ph.D.

 

 

 

Name: J. Douglas Ramsey, Ph.D.

 

 

Title: Vice President and Chief Financial
Officer

 

SIGNATURE PAGE
SIDE LETTER

 

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Agreed to and accepted

as of the date set forth above

 

OCM PRINCIPAL OPPORTUNITIES FUND IV, L.P.

 

By:

OCM Principal Opportunities Fund IV GP, L.P.

 

Its:

General Partner

 

 

 

 

By:

OCM Principal Opportunities Fund IV GP Ltd.

 

Its:

General Partner

 

 

 

 

By:

Oaktree Capital Management, LLC

 

Its:

Sole Director

 

 

 

 

 

 

 

 

By:

/s/ Vincent J. Cebula

 

 

 

Name: Vincent J. Cebula

 

 

Title:   Managing Director

 

 

 

 

 

 

 

 

By:

/s/ Ronald N. Beck

 

 

 

Name: Ronald N. Beck

 

 

Title:   Managing Director

 

 

 

 

 

 

 

OCM EXCO HOLDINGS, LLC

 

 

 

 

By:

Oaktree Capital Management, LLC

 

Its:

Manager

 

 

 

 

 

 

 

 

By:

/s/ Kenneth Liang

 

 

 

Name: Kenneth Liang

 

 

Title:   Managing Director

 

 

 

 

 

 

 

 

By:

/s/ Lisa Arakaki

 

 

 

Name: Lisa Arakaki

 

 

Title:   Senior Vice President, Legal

 

 

SIGNATURE PAGE
SIDE LETTER

 

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