-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OLxow9ITHI3uAD/PHvUYid/DaWsoGbANdwCo8VBhHb7wrqh7QRMwgX7/CeR4UDvZ 9aQAroFNkKioEtzw/IWlCQ== 0001104659-08-047517.txt : 20080724 0001104659-08-047517.hdr.sgml : 20080724 20080724172221 ACCESSION NUMBER: 0001104659-08-047517 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20080724 DATE AS OF CHANGE: 20080724 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MILLER DOUGLAS H CENTRAL INDEX KEY: 0001051489 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: BUSINESS PHONE: 2143615653 MAIL ADDRESS: STREET 1: 7611 GLENSHANNON CITY: DALLAS STATE: TX ZIP: 75225 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EXCO RESOURCES INC CENTRAL INDEX KEY: 0000316300 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 741492779 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-35504 FILM NUMBER: 08968878 BUSINESS ADDRESS: STREET 1: 12377 MERIT DR STREET 2: SUITE 1700 CITY: DALLAS STATE: TX ZIP: 75251 BUSINESS PHONE: 2143682084 MAIL ADDRESS: STREET 1: 12377 MERIT DR STREET 2: SUITE 1700 CITY: DALLAS STATE: TX ZIP: 75251 SC 13D/A 1 a08-19985_1sc13da.htm AMENDMENT

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

	SCHEDULE 13D/A

Under the Securities Exchange Act of 1934
(Amendment No. 3)*

EXCO Resources, Inc.

(Name of Issuer)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

269279402

(CUSIP Number)

Douglas H. Miller

12377 Merit Drive, Suite 1700, LB 82

Dallas, Texas 75251

(214) 368-2084

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

July 18, 2008

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

^* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 269279402

	1.	Names of Reporting Persons Douglas H. Miller

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) OO (1)

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Texas

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 5,892,518 (2)

			8.	Shared Voting Power 0

			9.	Sole Dispositive Power 5,892,518 (2)

			10.	Shared Dispositive Power 0

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 5,892,518 (2)

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 2.8%(3)

	14.	Type of Reporting Person (See Instructions) IN

(1) See Item 3 below.

(2) Includes 406,225 shares held for the benefit of Mr. Miller’s immediate family members in the following trusts: (i) Douglas H. Miller, Trustee, Samantha Hayes Hokanson 2005 Grantor Retained Annuity Trust, (ii) Douglas H. Miller, Trustee, Thomas Lee Miller 2005 Grantor Retained Annuity Trust, (iii) Douglas H. Miller, Trustee, Anthony Dickson Miller 2005 Grantor Retained Annuity Trust, (iv) Douglas H. Miller, Trustee, Elizabeth Brett Miller 2005 Grantor Retained Annuity Trust, (v) Douglas H. Miller, Trustee, Douglas Austin Miller 2005 Grantor Retained Annuity Trust and (vi) Douglas H. Miller, Trustee, Lana J. Miller Marital Trust. Includes 1,328,750 shares exercisable within 60 days pursuant to two nonqualified stock option agreements and two incentive stock option agreements. Includes 10,795 shares in Mr. Miller’s 401(k) plan.

(3) Based upon 210,876,623 shares of common stock outstanding as of July 18, 2008.

This Amendment No. 3 on Schedule 13D/A amends and supplements the Schedule 13D originally filed by and on behalf of Douglas H. Miller with the Securities and Exchange Commission on October 16, 2006, as amended by Amendment No. 1 thereto filed on December 5, 2006 and Amendment No. 2 thereto filed on October 23, 2007 (collectively, the “Prior Schedule 13D”), with respect to the common stock, par value $0.001 per share (the “Common Stock”), of EXCO Resources, Inc., a Texas corporation (the “Issuer”). The Prior Schedule 13D is hereby amended and supplemented solely to reflect the conversion of all outstanding shares of the Issuer’s Series A-1, Series B and Series C 7.0% Cumulative Convertible Perpetual Preferred Stock and Serie s A-1 Hybrid Preferred Stock (collectively, the “Preferred Stock”) into Common Stock effective July 18, 2008 (the “Conversion Date”) pursuant to the mandatory conversion procedures set forth in the Statements of Designation governing the Preferred Stock. At the close of business on the Conversion Date, an aggregate of 105,210,443 shares of Common Stock were issued upon conversion of the outstanding shares of Preferred Stock. As a result, Mr. Miller ceased to be the beneficial owner of more than five percent of the Common Stock.

Item 1. Security and Issuer.

This statement relates to the Common Stock of the Issuer. The address of the principal executive offices of the Issuer is 12377 Merit Drive, Suite 1700, LB 82, Dallas, Texas 75251.

Item 2. Identity and Background.

This statement is being filed by Douglas H. Miller. His principal business address is 12377 Merit Drive, Suite 1700, LB 82, Dallas, Texas 75251. Mr. Miller is principally employed as the chairman and chief executive officer of the Issuer. During the past five years, Mr. Miller has not been convicted in a criminal proceeding or been a party to a civil proceeding, in either case of the type specified in Items 2(d) or (e) of Schedule 13D. Mr. Miller is a citizen of the United States.

Item 3. Source and Amount of Funds or Other Consideration.

Mr. Miller acquired 4,552,973 shares of Common Stock that he beneficially owns on February 14, 2006 in exchange for an equal number of shares of common stock of EXCO Holdings Inc., the former parent company of the Issuer, when EXCO Holdings Inc. was merged with and into the Issuer. Mr. Miller is deemed the beneficial owner of (i) an additional 1,328,750 shares of Common Stock subject to currently exercisable options granted to him as compensation for his service as a director and executive officer of the Issuer and, formerly, EXCO Holdings Inc. and (ii) an additional 10,795 shares of Common Stock acquired through his 401(k) plan.

Item 4. Purpose of Transaction.

Mr. Miller acquired the shares of Common Stock for investment purposes. Mr. Miller intends to assess his investment in the Issuer from time to time on the basis of various factors, including, without limitation, the Issuer’s business, financial condition, results of operations and prospects, general economic, market and industry conditions, as well as other developments and other investment opportunities. Depending upon the foregoing factors or any other factors deemed relevant by Mr. Miller, Mr. Miller may acquire additional shares of Common Stock, or dispose of all or part of his shares of Common Stock, in open market transactions, privately negotiated transactions or otherwise. Any such acquisitions or dispositions may be effected by Mr. Miller at any time without prior notice. Mr. Miller currently serves as a director and the chairman and chief executive officer of the Issuer. Mr. Miller may engage in communications from time to time with one or more shareholders, officers or directors of the Issuer regarding the Issuer’s operating performance, strategic direction or other matters that, if effected, could result in or relate to, among other things, any of the matters set forth in subparagraphs (a) through (j) of Item 4 of Schedule 13D. Except as described herein, Mr. Miller does not have any present plans or intentions which would result in or relate to any of the matters set forth in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

Item 5. Interest in Securities of the Issuer.

(a) As of July 24, 2008, Mr. Miller was the beneficial owner of the following shares of Common Stock:

Filing Person		No. Shares of Common Stock Beneficially Owned(1)		No. Shares Underlying Options Exercisable within 60 Days		Percentage of Common Stock Beneficially Owned
Douglas H. Miller		5,892,518		1,328,750		2.8	%

(1) Includes the options exercisable within 60 days shown in the option column. Includes 10,795 shares in Mr. Miller’s 401(k) plan. Includes 406,225 shares held for the benefit of Mr. Miller’s immediate family members in six trusts.

(b) As of July 24, 2008, Mr. Miller possessed voting and dispositive power over the following shares of Common Stock:

Douglas H. Miller
Sole power to vote or to direct the vote:		5,892,518 of Common Stock

Shared power to vote or to direct the vote:		0 shares of Common Stock

Sole power to dispose or to direct the		5,892,518 shares of Common Stock
disposition

Shared power to dispose or to direct the		0 shares of Common Stock
disposition

(d) Not applicable.

(e) On July 18, 2008, Mr. Miller ceased to be the beneficial owner of more than five percent of the Common Stock.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Registration Rights Agreement

4,552,973 shares of Common Stock beneficially owned by Mr. Miller are subject to a registration rights agreement, the terms of which are summarized below:

Overview. All of the shares of Common Stock that were issued in exchange for shares of EXCO Holdings Inc. when EXCO Holdings Inc. was merged with and into the Issuer on February 14, 2006 are subject to the First Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”). The Registration Rights Agreement entitles the stockholders that are parties thereto to certain rights with respect to the registration of shares of Common Stock for resale under the Securities Act.

Registrations. Pursuant to the Registration Rights Agreement, after the Issuer’s initial public offering, all holders of unregistered shares of Common Stock who are subject to the Registration Rights Agreement can require the Issuer to register their shares in certain circumsta nces. In addition, at any time that the Issuer files a registration statement registering other shares, the holders of shares subject to the Registration Rights Agreement can require that the Issuer include their shares in such registration statement, subject to certain exceptions.

On April 25, 2007, the Issuer’s Registration Statement on Form S-3 covering the resale of all of the shares of Common Stock that were subject to the Registration Rights Agreement was declared effective by the Securities and Exchange Commission.

Stock Option Agreements

As part of the compensation arrangement as the chairman and chief executive officer of EXCO Holdings Inc., on October 5, 2005, Mr. Miller was granted options to acquire 1,705,000 shares of common stock of EXCO Holdings Inc. at an exercise price of $7.50 per share pursuant to two Nonqualified Stock Option Agreements. The options expire on October 4, 2015. The option shares vest in four equal installments, beginning on October 5, 2005 and thereafter annually on such date. In connection with the merger of EXCO Holdings Inc. with and into the Issuer, the Issuer assumed the Nonqualified Stock Option Agreements, and the options to purchase shares of common stock of EXCO Holdings Inc. became options to purchase an equal number of shares of Common Stock of the Issuer. All other terms of the Nonqualified Stock Option Agreements remain the same.

On December 1, 2006, the Issuer granted an option to purchase 60,000 shares of Common Stock to Mr. Miller at an exercise price of $14.62 per share pursuant to an Incentive Stock Option Agreement. The option expires on December 1, 2016. The option shares vest in four equal installments, beginning on December 1, 2006 and thereafter annually on such date.

On December 4, 2007, the Issuer granted an option to purchase 80,000 shares of Common Stock to Mr. Miller at an exercise price of $13.72 per share pursuant to an Incentive Stock Option Agreement. The option expires on December 4, 2017. The option shares vest in four equal instal lments, beginning on December 4, 2007 and thereafter annually on such date.

Except for the Registration Rights Agreement, the Nonqualified Stock Option Agreements and the Incentive Stock Option Agreement filed herewith as exhibits, there are no contracts, arrangements, understandings or relationships between Mr. Miller or any other person with respect to the securities of the Issuer.

Item 7. Material to Be Filed as Exhibits.

Exhibit 1.		First Amended and Restated Registration Rights Agreement, by and among EXCO HoldingsInc. (n/k/a EXCO Resources, Inc., successor by merger) and the Initial Holders (as defined therein), effective January 5, 2006, filed as an Exhibit to the Issuer’s Amendment No. 1 to its Form S-1 (File No. 333-129935) filed on January 6, 2006 and incorporated by reference herein.

Exhibit 2.		Nonqualified Stock Option Agreement, by and between EXCO Holdings Inc. (EXCO Resources, Inc. as successor by merger) and Douglas H. Miller dated as of October 5, 2005 granting an option to purchase 1,655,000 shares of Common Stock, filed as an Exhibit to Mr. Miller’s Schedule 13D filed on October 16, 2006 and incorporated by reference herein.

Exhibit 3.		Nonqualified Stock Option Agreement, by and between EXCO Holdings Inc. (EXCO Resources, Inc. as successor by merger) and Douglas H. Miller dated as of October 5, 2005 granting an option to purchase 50,000 shares of Common Stock, filed as an Exhibit to Mr. Miller’s Schedule 13D filed on October 16, 2006 and incorporated by reference herein.

Exhibit 4.		Incentive Stock Option Agreement, by and between EXCO Resources, Inc. and Douglas H. Miller dated as of December 1, 2006 granting an option to purchase 60,000 shares of Common Stock, filed as an Exhibit to Mr. Miller’s Schedule 13D/A Amendment No. 1 filed on December 5, 2006 and incorporated by reference herein.

Exhibit 5.		Incentive Stock Option Agreement, by and between EXCO Resources, Inc. and Douglas H. Miller dated as of December 4, 2007 granting an option to purchase 80,000 shares of Common Stock, filed herewith.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: July 24, 2008	/s/ DOUGLAS H. MILLER
	Douglas H. Miller

INDEX TO EXHIBITS

Exhibit Number		Description
1		First Amended and Restated Registration Rights Agreement, by and among EXCO Holdings Inc. (n/k/a EXCO Resources, Inc., successor by merger) and the Initial Holders (as defined therein), effective January 5, 2006, filed as an Exhibit to the Issuer’s Amendment No. 1 to its Form S-1 (File No. 333-129935) filed on January 6, 2006 and incorporated by reference herein.

2		Nonqualified Stock Option Agreement, by and between EXCO Holdings Inc. (EXCO Resources, Inc. as successor by merger) and Douglas H. Miller dated as of October 5, 2005 granting an option to purchase 1,655,000 shares of Common Stock, filed as an Exhibit to Mr. Miller’s Schedule 13D filed on October 16, 2006 and incorporated by reference herein.

3		Nonqualified Stock Option Agreement, by and between EXCO Holdings Inc. (EXCO Resources, Inc. as successor by merger) and Douglas H. Miller dated as of October 5, 2005 granting an option to purchase 50,000 shares of Common Stock, filed as an Exhibit to Mr. Miller’s Schedule 13D filed on October 16, 2006 and incorporated by reference herein.

4		Incentive Stock Option Agreement, by and between EXCO Resources, Inc. and Douglas H. Miller dated as of December 1, 2006 granting an option to purchase 60,000 shares of Common Stock, filed as an Exhibit to Mr. Miller’s Schedule 13D/A Amendment No. 1 filed on December 5, 2006 and incorporated by reference herein.

5		Incentive Stock Option Agreement, by and between EXCO Resources, Inc. and Douglas H. Miller dated as of December 4, 2007 granting an option to purchase 80,000 shares of Common Stock, filed herewith.

EX-5 2 a08-19985_1ex5.htm EX-5

Exhibit 5

INCENTIVE STOCK OPTION AGREEMENT

THE EXCO RESOURCES, INC.

2005 LONG-TERM INCENTIVE PLAN

1. Grant of Option. Pursuant to the EXCO Resources, Inc. 2005 Long-Term Incentive Plan (the “Plan”) for key employees of EXCO Resources, Inc., a Texas corporation (the “Company”), the Company grants to

Douglas H. Miller

(the “Participant”)

who is an employee of the Company, an option to purchase shares of Common Stock, par value $.001 per share (“Common Stock”), of the Company as follows:

On the date hereof, the Company grants to the Participant an option (the “Option” or “Stock Option”) to purchase eighty thousand (80,000) full shares (the “Optioned Shares”) of Common Stock at an Option Price equal to $13.72 per share (being the Fair Market Value per share of the Common Stock on this Date of Grant or 110% of such Fair Market Value, in the case of a ten percent (10%) or more stockholder as provided in Code Section 422). The Date of Grant of this Stock Option is December 4, 2007.

The “Option Period” shall commence on the Date of Grant and shall expire on the date immediately preceding the tenth (10^th) anniversary of the Date of Grant (or the date immediately preceding the fifth (5^th) anniversary of the Date of Grant, in the case of a ten percent (10%) or more stockholder as provided in Code Section 422). The Stock Option is intended to be an Incentive Stock Option.

2. Subject to Plan. The Stock Option and its exercise are subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent not otherwise inconsistent with the provisions of this Agreement. The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. The Stock Option is subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant in writing. In addition, if the Plan previously has not been approved by the Company’s stockholders, the Stock Option is granted subject to such stockholder approval.

3. Vesting; Time of Exercise. Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the Optioned Shares shall be vested and exercisable as follows:

a. Twenty-five percent (25%) of the total Optioned Shares shall be fully vested on the Date of Grant, provided the Participant is employed by the Company or a Subsidiary on that date.

b. Twenty-five percent (25%) of the total Optioned Shares shall be fully vested on the first anniversary of the Date of Grant, provided the Participant is employed by the Company or a Subsidiary on that date.

c. An additional twenty-five percent (25%) of the total Optioned Shares shall be fully vested on the second anniversary of the Date of Grant, provided the Participant is employed by the Company or a Subsidiary on that date.

d. An additional twenty-five percent (25%) of the total Optioned Shares shall be shall be fully vested on the third anniversary of the Date of Grant, provided the Participant is employed by the Company or a Subsidiary on that date.

Notwithstanding the above, the Optioned Shares shall be fully vested automatically upon a Change in Control (as defined in Section 2.6 of the Plan) or upon the death of the Participant or the Total and Permanent Disability (as defined in Section 2.41 of the Plan) of the Participant, provided the Participant is still employed by the Company as of the date of one of such specified events.

4. Term; Forfeiture.

a. Except as otherwise provided in this Agreement, the unexercised portion of the Stock Option that relates to Optioned Shares which are vested will terminate and be forfeited at the first of the following to occur:

i. 5 p.m. on the date the Option Period terminates;

ii. 5 p.m. on the date which is one hundred eighty (180) days following the date of the Participant’s Termination of Service due to death or Total and Permanent Disability;

iii. 5 p.m. on the date which is ninety (90) days from the date of the Participant’s Retirement;

iv. 5 p.m. on the date of the Participant’s Termination of Service by the Company for cause (as defined herein);

v. 5 p.m. on the date which is thirty (30) days following the date of the Participant’s Termination of Service for any reason not otherwise specified in this Section 4.a.;

vi. 5 p.m. on the date the Company causes any portion of the Option to be forfeited pursuant to Section 7 hereof.

vii. For purposes hereof, “cause” shall mean that the Participant shall have committed (i) an intentional material act of fraud or embezzlement in connection with his duties in the course of his employment with the Company; (ii) intentional wrongful material damage to property of the Company; or (iii) intentional wrongful disclosure of material secret processes or material confidential information of the Company. For the purposes of this Agreement, no act, or failure to act, on the part of the Participant shall be deemed “intentional” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.

5. Who May Exercise. Subject to the terms and conditions set forth in Sections 3 and 4 above, during the lifetime of the Participant, the Stock Option may be exercised only by the Participant, or by the Participant’s guardian or personal or legal representative. If the Participant’s Termination of Service is due to

his death prior to the date specified in Section 4.a.i. hereof, or Participant dies prior to the termination dates specified in Sections 4.a.i., ii., iii., iv., v. or vi. hereof, and the Participant has not exercised the Stock Option as to the maximum number of vested Optioned Shares as set forth in Section 3 hereof as of the date of death, the following persons may exercise the exercisable portion of the Stock Option on behalf of the Participant at any time prior to the earliest of the dates specified in Section 4 hereof: the personal representative of his estate, or the person who acquired the right to exercise the Stock Option by bequest or inheritance or by reason of the death of the Participant; provided that the Stock Option shall remain subject to the other terms of this Agreement, the Plan, and applicable laws, rules, and regulations.

6. No Fractional Shares. The Stock Option may be exercised only with respect to full shares, and no fractional share of stock shall be issued.

7. Manner of Exercise. Subject to such administrative regulations as the Committee may from time to time adopt, the Stock Option may be exercised by the delivery of written notice to the Committee setting forth the number of shares of Common Stock with respect to which the Stock Option is to be exercised, the date of exercise thereof (the “Exercise Date”) which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon, and whether the Optioned Shares to be exercised will be considered as deemed granted under an Incentive Stock Option as provided in Section 11. On the Exercise Date, the Participant shall deliver to the Company consideration with a value equal to the total Option Price of the shares to be purchased, payable as follows: (a) cash, check, bank draft, or money order payable to the order of the Company, (b) Common Stock (including Restricted Stock) owned by the Participant on the Exercise Date, valued at its Fair Market Value on the Exercise Date, and which the Participant has not acquired from the Company within six (6) months prior to the Exercise Date; provided, that the six (6)-month holding requirement shall only apply to a Reporting Participant at any time following an IPO, (c) if the Company has completed an IPO, by delivery (including by FAX) to the Company or its designated agent of an executed irrevocable option exercise form together with irrevocable instructions from the Participant to a broker or dealer, reasonably acceptable to the Company, to sell certain of the shares of Common Stock purchased upon exercise of the Stock Option or to pledge such shares as collateral for a loan and promptly deliver to the Company the amount of sale or loan proceeds necessary to pay such purchase price, and/or (d) in any other form of valid consideration that is acceptable to the Committee in its sole discretion. In the event that shares of Restricted Stock are tendered as consideration for the exercise of a Stock Option, a number of shares of Common Stock issued upon the exercise of the Stock Option equal to the number of shares of Restricted Stock used as consideration therefor shall be subject to the same restrictions and provisions as the Restricted Stock so tendered.

Upon payment of all amounts due from the Participant, the Company shall cause certificates for the Optioned Shares then being purchased to be delivered to the Participant (or the person exercising the Participant’s Stock Option in the event of his death) at its principal business office within ten (10) business days after the Exercise Date. The obligation of the Company to deliver shares of Common Stock shall, however, be subject to the condition that if at any time the Company shall determine in its discretion that the listing, registration, or qualification of the Stock Option or the Optioned Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with, the Stock Option or the issuance or purchase of shares of Common Stock thereunder, then the Stock Option may not be exercised in whole or in part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not reasonably acceptable to the Committee.

If the Participant fails to pay for any of the Optioned Shares specified in such notice or fails to accept delivery thereof, then the Stock Option, and right to purchase such Optioned Shares may be forfeited by the Company.

8. Nonassignability. The Stock Option is not assignable or transferable by the Participant except by will or by the laws of descent and distribution.

9. Rights as Stockholder. The Participant will have no rights as a stockholder with respect to any shares covered by the Stock Option until the issuance of a certificate or certificates to the Participant for the Optioned Shares. The Optioned Shares shall be subject to the terms and conditions of this Agreement regarding such Optioned Shares. Except as otherwise provided in Section 10 hereof, no adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate or certificates.

10. Adjustment of Number of Optioned Shares and Related Matters. The number of shares of Common Stock covered by the Stock Option, and the Option Prices thereof, shall be subject to adjustment in accordance with Articles 11 - 13 of the Plan.

11. Incentive Stock Option. Subject to the provisions of the Plan, this Stock Option is an Incentive Stock Option. To the extent the number of Optioned Shares exceeds the limit set forth in Section 6.3 of the Plan, such Optioned Shares shall be deemed granted pursuant to a Nonqualified Stock Option. Unless otherwise indicated by the Participant in the notice of exercise pursuant to Section 7, upon any exercise of this Stock Option, the number of exercised Optioned Shares that shall be deemed to be exercised pursuant to an Incentive Stock Option shall equal the total number of Optioned Shares so exercised multiplied by a fraction, (i) the numerator of which is the number of unexercised Optioned Shares that could then be exercised pursuant to an Incentive Stock Option and (ii) the denominator of which is the then total number of unexercised Optioned Shares.

12. Disqualifying Disposition. In the event that Common Stock acquired upon exercise of this Stock Option is disposed of by the Participant in a “Disqualifying Disposition,” such Participant shall notify the Company in writing within thirty (30) days after such disposition of the date and terms of such disposition. For purposes hereof, “Disqualifying Disposition” shall mean a disposition of Common Stock that is acquired upon the exercise of this Stock Option (and that is not deemed granted pursuant to a Nonqualified Stock Option under Section 11) prior to the expiration of either two years from the Date of Grant of this Stock Option or one year from the transfer of shares to the Participant pursuant to the exercise of this Stock Option.

13. [Reserved]

14. Voting. The Participant, as record holder of some or all of the Optioned Shares following exercise of this Stock Option, has the exclusive right to vote, or consent with respect to, such Optioned Shares until such time as the Optioned Shares are transferred in accordance with this Agreement; provided, however, that this Section shall not create any voting right where the holders of such Optioned Shares otherwise have no such right.

15. Specific Performance. The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall be enforceable by specific performance. The remedy of specific performance shall be cumulative of all of the rights and remedies at law or in equity of the parties under this Agreement.

16. Participant’s Representations. Notwithstanding any of the provisions hereof, the Participant hereby agrees that he will not exercise the Stock Option granted hereby, and that the Company will not be obligated to issue any shares to the Participant hereunder, if the exercise thereof or the issuance of such shares shall constitute a violation by the Participant or the Company of any provision of any law or regulation of any governmental authority. Any determination in this connection by the Company shall be final, binding, and conclusive. The obligations of the Company and the rights of the Participant are subject to all applicable laws, rules, and regulations.

17. Investment Representation. Unless the Common Stock is issued to the Participant in a transaction registered under applicable federal and state securities laws, by his execution hereof, the Participant represents and warrants to the Company that all Common Stock which may be purchased hereunder will be acquired by the Participant for investment purposes for his own account and not with any intent for resale or distribution in violation of federal or state securities laws. Unless the Common Stock is issued to the Participant in a transaction registered under the applicable federal and state securities laws, all certificates issued with respect to the Common Stock shall bear an appropriate restrictive investment legend and shall be held indefinitely, unless they are subsequently registered under the applicable federal and state securities laws or the Participant obtains an opinion of counsel, in form and substance satisfactory to the Company and its counsel, that such registration is not required.

18. Participant’s Acknowledgments. The Participant acknowledges receipt of a copy of the Plan, which is annexed hereto, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.

19. Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle of Texas law that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

20. No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an employee or as a consultant or as an Outside Director, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an employee, consultant or Outside Director at any time.

21. Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a Court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

22. Covenants and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

23. Entire Agreement. This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

24. Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein. No person or entity shall be permitted to acquire any Optioned Shares without first executing and delivering an agreement in the form satisfactory to the Company making such person or entity subject to the restrictions on transfer contained herein.

25. Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties. Notwithstanding the preceding sentence, the Company may amend the Plan or revoke this Stock Option to the extent permitted by the Plan.

26. Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

27. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

28. Notice. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:

a. Notice to the Company shall be addressed and delivered as follows:

EXCO Resources, Inc.

12377 Merit Dr., Suite 1700

Dallas, Texas 75251

Attn: Chief Financial Officer

Facsimile: (214) 368-2087

b. Notice to the Participant shall be addressed and delivered as set forth on the signature page.

29. Tax Requirements. The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement. The Company or, if applicable, any Subsidiary (for purposes of this Section 29, the term “Company” shall be deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts hereunder paid in cash or other form, any Federal,

state, local, or other taxes required by law to be withheld in connection with this Award. The Company may, in its sole discretion, also require the Participant receiving shares of Common Stock issued under the Plan to pay the Company the amount of any taxes that the Company is required to withhold in connection with the Participant’s income arising with respect to this Award. Such payments shall be required to be made when requested by the Company and may be required to be made prior to the delivery of any certificate representing shares of Common Stock. Such payment may be made (i) by the delivery of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in writing, the actual delivery by the exercising Participant to the Company of shares of Common Stock other than (A) Restricted Stock, or (B) Common Stock that the Participant has not acquired from the Company within six (6) months prior to the date of exercise, which shares so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding payment; (iii) if the Company, in its sole discretion, so consents in writing, the Company’s withholding of a number of shares to be delivered upon the exercise of the Stock Option other than shares that will constitute Restricted Stock, which shares so withheld have an aggregate fair market value that equals (but does not exceed) the required tax withholding payment; or (iv) any combination of (i), (ii), or (iii). The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company to the Participant.

* * * * * * * *

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.

COMPANY:

EXCO RESOURCES, INC.


By:	/s/ J. DOUGLAS RAMSEY
Name: J. Douglas Ramsey
Title: Vice President and Chief Financial Officer


PARTICIPANT:


Signature

Name:		/s/ DOUGLAS H. MILLER
		Douglas H. Miller

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