
<PAGE>
                                                                   EXHIBIT 99.2



                                AMENDMENT NO. 3
                                       TO
                          AGREEMENT AND PLAN OF MERGER

    The Agreement and Plan of Merger dated as of January 12, 1999 (the
"Agreement"), by and among Casella Waste Systems, Inc., a Delaware corporation
("Buyer"), Rutland Acquisition Sub, Inc., a New Jersey corporation and a direct,
wholly-owned subsidiary of Buyer ("Sub") and KTI, Inc., a New Jersey corporation
("Seller"), as amended by Amendment No. 1 to Agreement and Plan of Merger dated
May 12, 1999 ("Amendment No. 1") and by Amendment No. 2 to Agreement and Plan of
Merger dated September 8, 1999 ("Amendment No. 2"), is hereby amended as follows
as of this 23rd day of September, 1999. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Agreement.

1.  The sixth "WHEREAS" clause of the Agreement, which refers to the pooling of
    interests accounting of the Merger, is hereby deleted.

2.  Section 3.14 is hereby deleted, and the following shall be inserted in lieu
    thereof:

    "Section 3.14 Tax Matters. To its knowledge, after consulting with its legal
counsel, neither Seller nor any of its Affiliates (as defined in Section 6.10)
has taken or agreed to take any action which would prevent the Merger from
constituting a transaction qualifying as a reorganization under 368(a) of the
Code."

3.  Section 4.14 is hereby deleted, and the following shall be inserted in lieu
    thereof:

    "Section 4.14 Tax Matters. To its knowledge, after consulting with its legal
counsel, neither Buyer nor any of its Affiliates has taken or agreed to take any
action which would prevent the Merger from constituting a transaction qualifying
as a reorganization under 368(a) of the Code."

4.  Section 6.09 is hereby deleted, and the following shall be inserted in lieu
    thereof: "Intentionally omitted."

5.  Section 6.10 is hereby deleted, and the following shall be inserted in lieu
    thereof:

    "Section 6.10 Affiliate Agreements. Upon the execution of this Agreement,
Seller will provide Buyer with a list of those persons who are, in Seller's
reasonable judgment, "affiliates" of Seller within the meaning of Rule 145 (each
such person who is an "affiliate" of Seller within the meaning of Rule 145 is
referred to as an "Affiliate") promulgated under the Securities Act ("Rule
145"). Seller shall provide Buyer such information and documents as Buyer shall
reasonably request for purposes of reviewing such list and shall notify Buyer in
writing regarding any change in the identity of its Affiliates prior to the
Closing Date. Seller has delivered or caused to be delivered to Buyer, prior to
the execution of this Agreement, from each of its Affiliates, an executed
Affiliate Agreement, in substantially the form appended hereto as Exhibit C-3
(in the case of Seller Affiliates) (collectively, the "Affiliate Agreements").
Buyer shall be entitled to place appropriate legends on the certificates
evidencing any Buyer Common Stock to be received by such Affiliates of Seller
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Buyer Common Stock, consistent with
the terms of the Affiliate Agreements (provided that such legends or stop
transfer instructions shall be removed, two years after the Effective Date, upon
the request of any stockholder that is not then an Affiliate of Buyer). Seller
agrees that any Affiliate Agreements signed by affiliates of Buyer in connection
with the Agreement are hereby terminated.

6.  Section 7.01(f) is hereby deleted, and the following shall be inserted in
    lieu thereof: "Intentionally omitted."


<PAGE>

7.  Section 8.03(a) is hereby deleted, and the following shall be inserted in
    lieu thereof:

    "(a)    If the Merger is consummated as provided for herein, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Buyer. Except as set forth in this
Section 8.03, in the event that the Merger is not consummated as provided for
herein, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses; provided, however, Seller and Buyer shall share equally all fees and
expenses, other than attorneys' fees, incurred with respect to the printing and
filing of the Joint Proxy Statement (including any related preliminary
materials) and the Registration Statement (including financial statements and
exhibits) and any amendments or supplements."

8.  In all other respects, the Agreement shall remain in full force and effect,
    and all references in the Agreement to "this Agreement" shall mean the
    Agreement as amended hereby.














                 [remainder of page intentionally left blank]

<PAGE>

    IN WITNESS WHEREOF, Buyer, Sub and Seller have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.

<TABLE>
<S>                             <C>
                                CASELLA WASTE SYSTEMS, INC.

                                By:             /s/ John W. Casella
                                     -----------------------------------------
                                         John W. Casella, Chairman and CEO

                                RUTLAND ACQUISITION SUB, INC.

                                By:             /s/ John W. Casella
                                     -----------------------------------------
                                             John W. Casella, President

                                KTI, INC.

                                By:              /s/ Ross Pirasteh
                                     -----------------------------------------
                                              Ross Pirasteh, Chairman
</TABLE>







      [Signature page to Amendment No. 3 to Agreement and Plan of Merger]

<PAGE>


                                                                     Exhibit C-3
                                 Amended and Restated Seller Affiliate Agreement

                               AFFILIATE AGREEMENT

                               September ___, 1999

Casella Waste Systems, Inc.
25 Green Hills Lane
Rutland, VT  05701

KTI, Inc.
7000 Boulevard East
Guttenberg, NJ  07093

Ladies and Gentlemen:

         An Agreement and Plan of Merger dated as of January 12, 1999 (the
"Agreement"), as amended as of May 12, 1999, September 8, 1999 and
September ___, 1999, has been entered into by and among KTI, Inc., a New Jersey
corporation ("Seller"), Casella Waste Systems, Inc., a Delaware corporation
("Buyer"), and Rutland Acquisition Sub, Inc., a New Jersey corporation and a
wholly-owned subsidiary of Buyer (the "Merger Sub"). The Agreement provides for
the merger of the Merger Sub with and into Seller (the "Merger"). In accordance
with the Agreement, shares of common stock, no par value per share, of Seller
(the "Seller Common Stock") shall be converted into shares of common stock, $.01
par value per share, of Buyer (the "Buyer Common Stock"), as described in the
Agreement.

         The undersigned has been advised that as of the date of this agreement
the undersigned may be deemed to be an "affiliate" of Seller, as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
Rules and Regulations of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act").

         In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agree as follows:

         1. AMENDMENT AND RESTATEMENT. This letter amends and restates and
supersedes in its entirety the Affiliate Agreement among Seller, Buyer and the
undersigned dated as of January 12, 1999, which shall be of no further force or
effect.

         2. RULE 145. The undersigned will not offer, sell, pledge, hypothecate,
transfer or otherwise dispose of, or reduce its interest in or risk relating to,
any of the shares of Buyer Common Stock issued to the undersigned in the Merger
unless at such time either: (i) such transaction is permitted pursuant to the
provisions of Rule


<PAGE>

145 under the Securities Act; (ii) the undersigned shall have furnished to Buyer
an opinion of counsel, reasonably satisfactory to Buyer to the effect that such
transaction is otherwise exempt from the registration requirements of the
Securities Act; or (iii) a registration statement under the Securities Act
covering the proposed offer, sale, pledge, hypothecation, transfer or other
disposition shall be effective under the Securities Act.

         3. LEGEND.

                  (a) The undersigned understands that all certificates
representing Buyer Common Stock delivered to the undersigned pursuant to the
Merger shall bear a legend in substantially the form set forth below, until the
earlier to occur of (i) one of the events referred to in Section 2 above or (ii)
the date on which the undersigned requests removal of such legend, provided,
that such request occurs at least two years from the Effective Time (as defined
in the Agreement) and that the undersigned is not at the time of such request,
and has not been during the three months period preceding to such request, an
affiliate of Buyer.

         "The shares represented by this certificate were issued in a
         transaction to which Rule 145 of the Securities Act of 1933 applies and
         may only be transferred in accordance with the provisions of such rule.
         In addition, the shares represented by this certificate may only be
         transferred in accordance with the terms of an affiliate agreement
         dated September ___, 1999 between the initial holder hereof and Buyer,
         a copy of which agreement may be inspected by the holder of this
         certificate at the principal offices of Buyer, or furnished by Buyer to
         the holder of this certificate upon written request without charge."

                  (b) Buyer in its discretion may cause stop transfer orders to
be placed with its transfer agent with respect to the certificates for the
shares of Buyer Common Stock that are required to bear the foregoing legend.

         4. GENERAL PROVISIONS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. This agreement shall be binding on
the undersigned's successors and assigns, including his or her heirs, executors
and administrators.

         Execution of this letter should not be considered an admission on the
part of the undersigned that the undersigned is an "affiliate" of Seller as
described in the second paragraph of this letter, or as a waiver of any rights
the undersigned may have to object to, or any claim that the undersigned is such
an affiliate on or after the date of this letter.



<PAGE>

         The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for Buyer.

                                   Very truly yours,



                                   ---------------------------------------
                                   Signature


                                   ---------------------------------------
                                   Print Name

Accepted:

KTI, INC.

By:
    ----------------------------

Name:
      --------------------------

Title:
       -------------------------

Dated:
       -------------------------


CASELLA WASTE SYSTEMS, INC.

By:
    ----------------------------

Name:
      --------------------------

Title:
       -------------------------

Dated:
       -------------------------



