Exhibit 10.3


 


EXECUTION
VERSION


 


January
31, 2017


 


Waste
Services Industries, LLC


333-B
Industrial Drive,


Petersburg,
Virginia 23803


Attn:
Charles A. Wilcox


President
and CEO


 


	 	Re:	Exclusivity Letter




 


Dear
Charles:


 


This
exclusivity letter (this “Exclusivity Letter”) sets forth the intention of the undersigned, Meridian Waste
Solutions, Inc., a New York corporation (“Meridian”), and Waste Services Industries, LLC, a Delaware limited
liability company (“WSI”), to discuss a potential transaction (the “Transaction”) pursuant
to which Meridian would purchase, and WSI would sell, all of the issued and outstanding membership interests of The CFS Group,
LLC, a Virginia limited liability company (“CFS Group”), The CFS Group Disposal & Recycling Services, LLC,
a Virginia limited liability company (“CFS Disposal”), and RWG5, LLC, a Virginia limited liability company
(“RWG5” and together with CFS Group and CFS Disposal, the “Companies” and each a “Company”).


 


		1.	Exclusivity.



 


		(a)	In
                                         order to allow Meridian sufficient opportunity to negotiate the terms of the Transaction,
                                         arrange for its financing, complete its due diligence review and prepare definitive agreements
                                         and other definitive documentation relating thereto, Meridian and WSI hereby agree that
                                         (i) Meridian will deliver to WSI payment in the amount of One Million Five Hundred Thousand
                                         Dollars ($1,500,000) (the “Exclusivity Payment”) on the date hereof
                                         and (ii) WSI agrees that neither it, nor any of the Companies, or any of their respective
                                         affiliates, shareholders, members, partners, officers, directors, managers, employees,
                                         agents or representatives, will, directly or indirectly, pursue, solicit, encourage or
                                         participate in negotiations, furnish information or enter into any agreement or commitments
                                         regarding any transaction involving the Companies by any potential purchaser or investor
                                         other than Meridian, or any merger, sale or other transaction resulting in the purchase,
                                         transfer, assignment or other conveyance of of all or substantially all of the assets
                                         or membership interests of any or all of the Companies during the Exclusivity Period
                                         (as defined below). During the Exclusivity Period, WSI will promptly (and in any event,
                                         within 24 hours) notify Meridian in writing of any third party offers (written or oral)
                                         with respect to the Companies or any assets or securities thereof outside of the ordinary
                                         course of business.



 


		(b)	The
                                         “Exclusivity Period” shall be the period beginning on the date hereof
                                         and ending on the Expiration Date. The “Expiration Date” shall be
                                         March 21, 2017.



 






    


     


    

 


		(c)	The
                                         Exclusivity Payment will be refundable in full to Meridian in the event that (1) (A)
                                         WSI does not negotiate with Meridian the terms and conditions of the Transaction in good
                                         faith, or (B) WSI does not enter into a Definitive Agreement (as defined below) within
                                         the Exclusivity Period or (C) WSI does not consummate the Closing (as defined below)
                                         pursuant to and in accordance with the Definitive Agreement and Meridian stands in good
                                         faith ready, willing and able to do so; or (2) WSI or any of the Companies, or any of
                                         their respective affiliates, shareholders, members, partners, officers, directors, managers,
                                         employees, agents or representatives does not comply with the exclusivity terms set forth
                                         in subsection (a) of this Section 1 above or commits any other breach of this Exclusivity
                                         Letter. If Closing of the Transaction does not occur for any reason other than those
                                         set forth in the preceding sentence, the Exclusivity Payment shall be retained by WSI
                                         as liquidated damages as WSI’s sole and exclusive remedy in such event.



 


		2.	Definitive
                                         Agreement. Consummation of the Transaction as contemplated hereby will be subject
                                         to the negotiation and execution of a mutually satisfactory definitive membership interest
                                         purchase agreement by Meridian and WSI (the “Definitive Agreement”),
                                         setting forth the specific terms and conditions of the Transaction. The total purchase
                                         price for the membership interests in the Companies will be set forth in the Definitive
                                         Agreement, but such purchase price will not exceed (i) $40,000,000 in cash and (ii) 500,000
                                         shares of Meridian’s common stock (which shares Meridian and WSI agree to have
                                         a value of $5,000,000). Such cash portion of the purchase price may be reduced as is
                                         necessary to reflect the Companies’ liabilities, pro-rations or other adjustments
                                         agreed upon in the course of negotiations and due diligence review. The closing of the
                                         Transaction pursuant to the Definitive Agreement (the “Closing”) shall
                                         be subject to the completion by Meridian of a satisfactory review of the legal, financial
                                         and business condition of the Companies and the parties’ completion of negotiations
                                         regarding the specific terms and conditions of the Transaction, including, without limitation,
                                         with respect to the Companies’ assets, contracts, liabilities and other key terms.
                                         The parties will negotiate in good faith such Definitive Agreement. At Closing, the Exclusivity
                                         Payment will be credited against the total purchase price for the membership interests
                                         in the Companies set forth in the Definitive Agreement.



 


		3.	Conduct
                                         of Business. Prior to the execution of a Definitive Agreement and the Closing of
                                         the Transaction, the Companies will conduct their operations in the ordinary course consistent
                                         with past practice and will not make any distributions, dividends or other payments to
                                         any affiliate or member outside of the ordinary course of business, except as disclosed
                                         in or allowed by the Definitive Agreement or otherwise in connection with Closing the
                                         Transaction.



 


		4.	Due
                                         Diligence; Confidentiality Agreement. Each party and its representatives, officers,
                                         employees and advisors, including accountants and legal advisors, as applicable, will
                                         provide the other party and its representatives, officers, employees and advisors, including
                                         accountants and legal advisors, as applicable, with all information, books, records and
                                         property (collectively, “Transaction Information”) that such other
                                         party reasonably considers necessary or appropriate in connection with its due diligence
                                         inquiry. Meridian and WSI are parties to a Non-Disclosure Agreement dated September 12,
                                         2016 which remains in full force and affect, and each of the parties acknowledges and
                                         confirms that all Transaction Information shall be governed by and subject to such Non-Disclosure
                                         Agreement; provided, however, that nothing contained therein or in this Exclusivity Agreement
                                         will limit, restrict or prohibit Meridian from making disclosures as determined to be
                                         required under securities laws, in the sole discretion of Meridian and its counsel, nor
                                         will any such disclosure be deemed a breach or violation of the confidentiality obligations
                                         hereunder or thereunder.



 






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		5.	No
                                         Brokers. Each party represents and warrants to the other that there are no brokers
                                         or finders entitled to any compensation with respect to the execution of this Exclusivity
                                         Letter, and each agrees to indemnify and hold the other harmless from and against any
                                         expenses or damages incurred as a result of a breach of this representation and warranty.



 


		6.	Expenses.
                                         Each of the parties will be responsible for its own expenses in connection with the Transaction,
                                         including fees and expenses of legal, accounting and financial advisors.



 


		7.	Choice
                                         of Law. This Exclusivity Letter shall be governed by and construed in accordance
                                         with the internal substantive laws of the Commonwealth of Virginia, without regard to
                                         any principles of conflicts of law and except with respect to service of process methodology.
                                         Each of the parties hereby irrevocably consents and agrees that any legal or equitable
                                         action or proceeding arising under or in connection with this Exclusivity Letter shall
                                         be brought in any federal court located in the Northern District of Georgia or state
                                         court located in Fulton County, Georgia and delivery of this Exclusivity Letter, irrevocably
                                         submits to and accepts the jurisdiction of said courts, (iii) waives any defense that
                                         such court is not a convenient forum, and (iv) consent to any service of process method
                                         permitted by Georgia or federal law.



 


		8.	Counterparts.
                                         This Exclusivity Letter may be executed in counterparts, each of which shall be deemed
                                         an original, but all of which together shall constitute one and the same instrument.
                                         Fax or PDF copies of signatures shall be treated as originals for all purposes.



 


		9.	Effect.
                                         Meridian shall not have any obligation to continue discussions or negotiations relating
                                         to any proposed Transaction if Meridian determines (in its sole discretion) that such
                                         termination of discussions or negotiations is in Meridian’s best interests. Until
                                         the Definitive Agreement is executed and delivered by Meridian and WSI, Meridian shall
                                         not have any obligation to consummate the Transaction or any other liabilities to WSI,
                                         except as expressly provided in this Exclusivity Letter with respect to the Exclusivity
                                         Payment, subject in all respects to Section 1(c) hereof. Accordingly, Meridian may, in
                                         its sole discretion, abandon or terminate these discussions or any negotiations relating
                                         to a proposed Transaction at any time or for any reason, without liability to WSI for
                                         costs or expenses of any sort incurred by WSI in pursuing the proposed Transaction except
                                         as expressly provided in this Exclusivity Letter with respect to the Exclusivity Payment,
                                         subject in all respects to Section 1(c) hereof. This Exclusivity Letter does not constitute
                                         an offer to purchase or an offer to sell, or any purchase or sale of, any securities.
                                         This Exclusivity Letter contains the entire agreement by and among the parties to date
                                         with respect to the subject matter hereof and supersedes any and all prior agreements
                                         and understandings, oral or written, with respect to such matters.



 


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This
Exclusivity Letter will terminate at 5:00 p.m. Eastern standard time on February 3, 2017 unless it has been duly executed by or
on behalf of the parties prior to such time.


 





	 	 	 	Very
    truly yours,
	 	 	 	 	 
	 	 	 	MERIDIAN
    WASTE SOLUTIONS, INC.
	 	 	 	 	 
	 	 	 	By:	/s/
    Jeffrey Cosman
	 	 	 	Name:	Jeffrey
    Cosman
	 	 	 	Title:	Chief
    Executive Officer
	 	 	 	 	 
	Agreed
    and acknowledged:	 	 	 
	 	 	 	 	 
	WASTE
    SERVICE INDUSTRIES, LLC	 	 	 
	 	 	 	 	 
	By:	/s/
    Charles Wilcox	 	 	 
	Name:	Charles
    A. Wilcox	 	 	 
	Title:	President
    and CEO	 	 	 




 


 


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