CASELLA WASTE SYSTEMS INC, DEF 14A, 1998-09-21

CASELLA WASTE SYSTEMS INC
DEF 14A, 1998-09-21
REFUSE SYSTEMS

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SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934

------------------------
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement

[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-2

Casella Waste Systems, Inc.
(Name of Registrant as Specified In Its Charter)

--
-------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, If Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.

1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>

CASELLA WASTE SYSTEMS, INC.
25 Greens Hill Lane
Rutland, Vermont 05701

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 14, 1998

NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
Casella Waste Systems, Inc., a Delaware corporation (the "Company"), will be
held on Wednesday, October 14, 1998 at 10:00 a.m., local time, at the
Killington Grand Hotel, 228 East Mountain Road, Killington, Vermont (the
"Meeting") for the purpose of considering and voting upon the following
matters:

1. To elect three Class I Directors for the ensuing three years;

2. To approve an amendment to the Company's Second Amended and Restated
Certificate of Incorporation to increase the number of authorized shares
of the Company's Class A Common Stock from 30,000,000 to 100,000,000;

3. To approve the continuation of the Company's 1997 Stock Incentive Plan
and to approve an amendment to such plan, each as described herein;

4. To ratify the selection of Arthur Andersen LLP as independent auditors
of the Company for the current fiscal year; and

5. To transact such other business as may properly come before the Meeting
or any adjournment thereof.

The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.

The Board of Directors has fixed the close of business on Wednesday,
September 16, 1998 as the record date for the determination of stockholders
entitled to notice of and to vote at the Meeting and at any adjournments
thereof.

A copy of the Company's Annual Report to Stockholders for the fiscal year
ended April 30, 1998, which contains consolidated financial statements and
other information of interest to stockholders, accompanies this Notice and the
enclosed Proxy Statement.

September 22, 1998 By Order of the Board of Directors,
John W. Casella, President

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE TO ASSURE
REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE AFFIXED IF THE
PROXY IS MAILED IN THE UNITED STATES.
<PAGE>

CASELLA WASTE SYSTEMS, INC.
25 Greens Hill Lane
Rutland, Vermont 05701

PROXY STATEMENT

For Annual Meeting of Stockholders
To Be Held October 14, 1998

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Casella Waste Systems, Inc. (the
"Company") for the Annual Meeting of Stockholders to be held on Wednesday,
October 14, 1998 at 10:00 a.m., local time, at the Killington Grand Hotel, 228
East Mountain Road, Killington, Vermont (including any adjournments thereof,
the "Meeting").

All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation or a subsequently dated proxy to the Secretary of the
Company or by voting in person at the Meeting. Attendance at the Meeting will
not itself be deemed to revoke a proxy unless the stockholder gives affirmative
notice at the Meeting that the stockholder intends to revoke the proxy and vote
in person.

The Notice of Meeting, this Proxy Statement, the Company's Annual Report
to Stockholders for the year ended April 30, 1998 ("fiscal 1998") and the
enclosed proxy are being mailed to stockholders on or about September 22, 1998.
The Company will, upon written request of any stockholder, furnish without
charge a copy of its Annual Report on Form 10-K for fiscal 1998, as filed with
the Securities and Exchange Commission (the "Commission"), without exhibits.
Please address all such requests to the Company, Attention of Joseph S. Fusco,
Vice President, Communications, 25 Greens Hill Lane, Rutland, Vermont 05701.
Exhibits to such Form 10-K will be provided upon written request and payment of
an appropriate processing fee.

Voting Securities and Votes Required

On September 16, 1998, the record date for determination of stockholders
entitled to notice of and to vote at the Meeting, there were outstanding and
entitled to vote an aggregate of 13,039,976 shares of Class A Common Stock of
the Company, $.01 par value per share (the "Class A Common Stock"), and an
aggregate of 988,200 shares of Class B Common Stock of the Company, $.01 par
value per share (the "Class B Common Stock", and together with the Class A
Common Stock, the "Common Stock"). Each share of Class A Common Stock entitles
the record holder to one vote on each of the matters to be voted upon at the
Meeting and each share of Class B Common Stock entitles the record holder to
ten votes on each of the matters to be voted upon at the Meeting other than the
election of the Class A Director.

The holders of a majority of the shares of the Common Stock, voting as a
single class, issued and outstanding and entitled to vote at the Meeting shall
constitute a quorum for the transaction of business at the Meeting other than
the election of the Class A Director. The holders of a majority of the shares
of the Class A Common Stock issued and outstanding and entitled to vote at the
Meeting shall constitute a quorum for purposes of the election of the Class A
Director. Shares of Common Stock present in person or represented by proxy
(including shares which abstain or do not vote with respect to one or more of
the matters presented for stockholder approval) will be counted for purposes of
determining whether a quorum is present at the Meeting.

The affirmative vote of the holders of shares representing a plurality of
the votes cast by the holders of the Common Stock entitled to vote at the
Meeting is required for the election of directors other than the Class A
Director. The affirmative vote of the holders of shares representing a
plurality of the votes cast by the holders of the Class A Common Stock entitled
to vote at the Meeting is required for the election of the Class A Director.
The affirmative vote of the holders of shares representing a majority of the
votes cast by the holders of the Common Stock entitled to vote at

<PAGE>

the Meeting is required for approval of the continuation of the 1997 Stock
Incentive Plan (the "Incentive Plan") and amendment to such plan and the
ratification of the selection of the Company's independent auditors for the
current fiscal year ending April 30, 1999 ("fiscal 1999"). The affirmative vote
of a majority of the votes represented by the shares of Common Stock that are
entitled to vote at the Meeting is required for the adoption of the proposed
amendment to the Company's Second Amended and Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation").

Shares which abstain from voting as to a particular matter, and shares
held in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and will also not
be counted as votes cast or shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting on a
matter that requires the affirmative vote of a certain percentage of the votes
cast or shares voting on a matter, but will be the equivalent of a "no" vote on
a matter that requires the affirmative vote of a certain percentage of the
votes entitled to be cast on a matter.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information, as of August 3, 1998,
regarding the beneficial ownership of shares of the Company's Common Stock by
(i) each person or entity known by the Company to own beneficially more than 5%
of the outstanding shares of Common Stock ("5% Stockholders"), (ii) each
director and director nominee of the Company, (iii) the Named Executive
Officers (as defined in the Summary Compensation Table below) and (iv) the
directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership(1)
-------------------------------------------------------------------
Class A Class B Total
Common Stock Common Stock Common Stock
------------------------- ----------------------- -------------
Name of Beneficial Owner(1) Number % Number % %
- --------------------------------------------- ------------ ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
John W. Casella(2) .......................... 727,316 5.56% 494,100 50.00% 24.70%
Douglas R. Casella(3) ....................... 727,316 5.56% 494,100 50.00% 24.70%
James W. Bohlig(4) .......................... 470,000 3.58% -- -- 2.04%
Jerry S. Cifor(5) ........................... 166,988 1.28% -- -- *
Gregory B. Peters ........................... 24,684 * -- -- *
John F. Chapple III ......................... 190,643 1.48% -- -- *
Kenneth H. Mead ............................. 522,127 4.04% -- -- 2.30%
Michael F. Cronin(6) ........................ 775,370 6.00% -- -- 3.40%
Weston Presidio Capital II, L.P.(7) ......... 775,370 6.00% -- -- 3.40%
Directors and executive officers as a group
(8 people) (8) ............................. 3,604,444 26.64% 988,200 100.00% 57.60%
</TABLE>

- ------------
*Represents less than 1% of the outstanding shares of Common Stock of the
Company.

(1) Beneficial ownership is determined in accordance with rules of the
Commission, and includes generally voting power and/or investment power
with respect to securities. Shares of Common Stock subject to options
and/or warrants currently exercisable or exercisable within 60 days of
August 3, 1998 ("Currently Exercisable Options") are deemed outstanding
for computing the percentage beneficially owned by the person holding such
options and/or warrants but are not deemed outstanding for purposes of
computing the percentage beneficially owned by any other person. Except as
indicated by footnote, the Company believes that the persons named in this
table, based on information provided by such persons, have sole voting and
investment power with respect to the shares of Common Stock indicated.

2
<PAGE>

(2) Includes 160,166 shares issuable pursuant to Currently Exercisable Options.
Also includes 4,800 shares of Class A Common Stock held in trust for the
benefit of Mr. Casella's minor children. Mr. Casella disclaims beneficial
ownership of such shares. The address of Mr. Casella is c/o Casella Waste
Systems, Inc., 25 Greens Hill Lane, Rutland, Vermont 05701.

(3) Includes 160,166 shares issuable pursuant to Currently Exercisable Options.
Also includes 1,600 shares of Class A Common Stock held in trust for the
benefit of Mr. Casella's minor children. Mr. Casella disclaims beneficial
ownership of such shares. The address of Mr. Casella is c/o Casella Waste
Systems, Inc., 25 Greens Hill Lane, Rutland, Vermont 05701.

(4) Includes 200,000 shares issuable pursuant to Currently Exercisable Options.
Also includes 8,000 shares of Class A Common Stock held in trust for the
benefit of Mr. Bohlig's minor children. Mr. Bohlig disclaims beneficial
ownership of such shares.

(5) Includes 98,988 shares issuable pursuant to Currently Exercisable Options.

(6) Consists of shares held by Weston Presidio Capital II, L.P., of which Mr.
Cronin is a general partner. Mr. Cronin disclaims beneficial ownership of
such shares except to the extent of his pecuniary interest therein. The
address of Mr. Cronin is c/o Weston Presidio Capital II, L.P., One Federal
Street, Boston, MA 02110.

(7) The address of Weston Presidio Capital II, L.P. is One Federal Street,
Boston, MA 02110.

(8) Includes 619,320 shares issuable pursuant to Currently Exercisable Options.

PROPOSAL 1--ELECTION OF DIRECTORS

The Company has a staggered Board of Directors consisting of three Class I
Directors, two Class II Directors and two Class III Directors. At each annual
meeting of stockholders, directors are elected for a full term of three years
to succeed those whose terms are expiring. The Class I Directors will be
elected at the Meeting for a three-year term expiring at the 2001 Annual
Meeting; the Class II Directors will be elected at the 1999 Annual Meeting for
a three-year term expiring at the 2002 Annual Meeting; and the Class III
Directors will be elected at the 2000 Annual Meeting for a three-year term
expiring at the 2003 Annual Meeting.

The persons named in the enclosed proxy will vote to elect, as Class I
Directors, Messrs. Douglas R. Casella, Michael F. Cronin and Kenneth H. Mead,
the three director nominees named below, unless the proxy is marked otherwise.
Messrs. Casella, Cronin and Mead are currently directors of the Company. Mr.
Cronin is the designee of the holders of the Class A Common Stock.

Each Class I director will be elected to hold office until the annual
meeting of stockholders to be held in 2001 and until his successor is duly
elected and qualified. Each of the nominees has indicated his willingness to
serve, if elected; however, if any nominee should be unable to serve, the
person acting under the proxy may vote the proxy for a substitute nominee
designated by the Board of Directors. The Board of Directors has no reason to
believe that any of the nominees will be unable to serve if elected.

3
<PAGE>

Set forth below are the name and age of each member of the Board of
Directors, including those who are nominees for election as Class I Directors,
and the position and offices held by such member, his principal occupation and
business experience during the past five years, the names of other publicly
held companies of which he serves as a director and the year of the
commencement of his term as a director of the Company.

<TABLE>
<CAPTION>
Principal Occupation, Other
Director Business Experience During the Past Five
Name Age Since Years and Other Directorships
---- --- -------- -----------------------------
<S> <C> <C> <C>
Nominees for Terms Expiring in 2001
(Class I Directors)
Douglas R. Casella 42 1993 Mr. Casella founded the Company in 1975. He has
served as Vice Chairman of the Board of Directors of the
Company since 1993 and has been President of Casella
Waste Management, Inc. since 1975. Since 1989,
Mr. Casella has been President of Casella Construction,
Inc., a company owned by Mr. Casella and John W.
Casella which specializes in general contracting, soil
excavation and related heavy equipment work. See
"Certain Relationships and Related Transactions".
Mr. Casella is the brother of John W. Casella.

Michael F. Cronin 44 1995 Mr. Cronin has been a general partner of Weston
Presidio Management Company, a venture capital
management firm, since 1991. Mr. Cronin is a director
of Tekni-Plex, Inc., a manufacturer of plastic products
and materials; Tweeter Home Entertainment Group,
Inc., a specialty retailer of mid to high-end audio and
video consumer electronics products; and
AAi.FosterGrant, Inc., a leading value-added
distributor of optical products, costume jewelry,
watches and other accessories.

Kenneth H. Mead 40 1997 Mr. Mead has served since January 1997 as President of
Materials Exchange Corporation, a consulting firm. From
1986 to January 1997, Mr. Mead was the President and
principal stockholder of Superior Disposal Services, Inc.
and certain related companies, the assets of which were
acquired by the Company in January 1997.
Directors Whose Terms Expire in 1999
(Class II Directors)
James W. Bohlig 52 1993 Mr. Bohlig joined the Company as Senior Vice President
and Chief Operating Officer in 1993 with primary
responsibility for business development, acquisitions and
operations. From 1989 until he joined the Company,
Mr. Bohlig was Executive Vice President and Chief
Operating Officer of Russell Corporation, a general
contractor and developer based in Rutland, Vermont.
Mr. Bohlig is a director of Consumat Environmental
Systems, Inc., a designer and manufacturer of
incineration and pollution control equipment.
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
Principal Occupation, Other
Director Business Experience During the Past Five
Name Age Since Years and Other Directorships
---- --- -------- -----------------------------
<S> <C> <C> <C>
Gregory B. Peters 52 1993 Mr. Peters has been a general partner of Vermont
Venture Capital Partners, L.P., (a venture capital
management company) the General Partner of The
Vermont Venture Capital Fund, L.P.; a general partner
of North Atlantic Capital Partners, L.P. (a venture
capital management company), the General Partner of
North Atlantic Venture Fund II, L.P.; and a general
partner of North Atlantic Investors (a venture capital
management company), the General Partner of North
Atlantic Venture Fund II L.P.
Directors Whose Terms Expire in 2000
(Class III Directors)
John W. Casella 47 1993 Mr. Casella has served as President, Chief Executive
Officer and Chairman of the Board of Directors of the
Company since 1993, and has been Chairman of the
Board of Directors of Casella Waste Management, Inc.
since 1977. Mr. Casella has actively supervised all
aspects of Company operations since 1976, sets overall
corporate policies, and serves as chief strategic planner
of corporate development. Mr. Casella is also an
executive officer and director of Casella Construction,
Inc., a company owned by Mr. Casella and Douglas R.
Casella which specializes in general contracting, soil
excavation and related heavy equipment work. See
"Certain Relationships and Related Transactions".
Mr. Casella is the brother of Douglas R. Casella.

John F. Chapple III 57 1994 From August 1989 to July 1994, Mr. Chapple was
President and owner of Catamount Waste Services,
Inc., a central Vermont hauling and landfill operation,
which was purchased by the Company in May 1994.
Mr. Chapple has been retired since 1995.
</TABLE>

See "Certain Relationships and Related Transactions" and "Security
Ownership of Certain Beneficial Owners and Management" for certain information
concerning the Company's directors, including those who are nominees for
election as Class I Directors.

The holders of Class A Common Stock, voting separately as a class, will at
all times be entitled to elect at least one director. Mr. Michael F. Cronin is
the designee of the holders of Class A Common Stock.

Messrs. James W. Bohlig, John W. Casella, Douglas R. Casella, John F.
Chapple III, Michael F. Cronin and Gregory B. Peters were elected to the Board
of Directors pursuant to the terms of an agreement by and between the Company
and certain stockholders. The agreement terminated upon completion of the
Company's initial public offering in November 1997.

5
<PAGE>

Board of Directors and Committee Meetings

The Board of Directors met eight times (including by telephone conference)
during fiscal 1998. All directors other than Mr. Douglas R. Casella attended at
least 75% of the meetings of the Board of Directors and the meetings of the
committees on which they served. Mr. Douglas Casella attended five of the eight
meetings of the Board of Directors.

The Board of Directors has established a Compensation Committee. The
Compensation Committee, which consists of Messrs. John W. Casella, Michael F.
Cronin and Gregory B. Peters, reviews executive salaries, administers any
bonus, incentive compensation and stock option plans of the Company, and
approves the salaries and other benefits of the executive officers of the
Company. In addition, the Compensation Committee consults with the Company's
management regarding pension and other benefit plans and compensation policies
and practices of the Company. The Compensation Committee held one meeting
during fiscal 1998. The Stock Plan Subcommittee of the Compensation Committee
(the "Stock Plan Subcommittee"), which consists of Messrs. Cronin and Peters,
administers the issuance of stock options and other awards under the Company's
stock option plans to the Company's executive officers and approves the
compensation of Mr. John W. Casella. The Stock Plan Subcommittee held one
meeting during fiscal 1998.

The Board of Directors has also established an Audit Committee. The Audit
Committee, which consists of Messrs. John F. Chapple III, Michael F. Cronin and
Gregory B. Peters, reviews the professional services provided by the Company's
independent auditors, the independence of such auditors from management of the
Company, the annual financial statements of the Company and the Company's
system of internal accounting controls. The Audit Committee also reviews such
other matters with respect to the accounting, auditing and financial reporting
practices and procedures of the Company as it may find appropriate or as may be
brought to its attention. The Audit Committee held one meeting during fiscal
1998.

The Company does not have a nominating committee or a committee serving a
similar function. Nominations are made by and through the full Board of
Directors.

Compensation of Directors

The Company reimburses non-employee directors for expenses incurred in
attending Board of Directors meetings. Non-employee directors of the Company
receive stock options under the Company's 1997 Non-Employee Director Stock
Option Plan (the "Directors' Plan"). The Directors' Plan provides that each
person who first becomes a non-employee director after November 3, 1997, the
closing of the Company's initial public offering, will receive an automatic
grant of a non-statutory stock option to purchase 5,000 shares of Class A
Common Stock upon his or her initial election to the Board of Directors
(vesting in three equal installments on each of the three anniversaries
following the date of grant). In addition, an option to purchase 2,000 shares
of Class A Common Stock will be granted to each incumbent non-employee director
on the date of each annual meeting of stockholders (other than a director who
was initially elected to the Board of Directors at any such annual meeting of
stockholders) beginning with the Meeting (vesting in three equal annual
installments beginning on the first anniversary of the date of grant). Options
granted under the Directors' Plan expire ten years from the date of grant. The
option price for options granted under the Directors' Plan is equal to the fair
market value of a share of Class A Common Stock as of the date of grant. The
Company has reserved a total of 50,000 shares of Class A Common Stock for
issuance under the Directors' Plan, all of which are currently available for
future grant.

The Company has also entered into or engaged in certain transactions with
directors of the Company or affiliates of directors of the Company. See
"Certain Relationships and Related Transactions".

Compensation Committee Interlocks and Insider Participation

The current members of the Compensation Committee of the Company's Board
of Directors are Messrs. John W. Casella, Michael F. Cronin and Gregory B.
Peters. The current members of the Stock Plan Subcommittee of the Company's
Board of Directors are Messrs. Cronin and Peters. Mr. Casella has served as
President and Chief Executive Officer of the Company since 1993.

6
<PAGE>

In connection with the sale by the Company of its Series D Convertible
Preferred Stock in December 1995, the Company entered into a Management
Services Agreement with BCI Growth III, L.P., North Atlantic Venture Fund, L.P.
and The Vermont Venture Capital Fund, L.P., which were stockholders of the
Company. Under the Management Services Agreement, the Company agreed to pay a
management fee of approximately $22,300 per month in consideration of certain
advisory services provided by such stockholders to the Company. Gregory B.
Peters, a director of the Company, is affiliated with North Atlantic Venture
Fund, L.P. and The Vermont Venture Capital Fund, L.P. This agreement was
terminated and the accrued management fee was paid upon the closing of the
Company's initial public offering in November 1997.

The Company has from time to time engaged Casella Construction, Inc., a
company owned by John and Douglas Casella, to provide construction services for
the Company, including construction, closure and capping activities at the
Company's landfills. In fiscal 1998, the Company paid Casella Construction,
Inc. $4,202,200.

The Company is a party to two real estate leases with Casella Associates,
a Vermont partnership owned by John and Douglas Casella, relating to facilities
occupied by the Company. The leases, relating to the Company's corporate
headquarters in Rutland, Vermont and its Montpelier, Vermont facility, call for
aggregate monthly payments of approximately $18,000 and expire in April 2003.
These leases have been classified by the Company as capital leases for
financial reporting purposes. In addition, the Company leases furniture and
fixtures from Casella Associates pursuant to an operating lease which bears
rent at $950 per month and expires in 1999. In fiscal 1998, the Company paid
Casella Associates an aggregate of $244,500 for such leases. In November 1997,
the lease relating to the Company's corporate headquarters in Rutland, Vermont
was amended to allow the Company to upgrade and make capital improvements to
the premises at an estimated cost of $500,000 to be paid by the Company.
Casella Associates was granted the option to purchase such capital improvements
by December 31, 2002, and if it does not elect to exercise such option the
Company has the right to purchase the premises for $324,000, the fair market
value of the premises prior to the capital improvements, at the expiration of
the term of the lease.

The Company operated an unlined landfill located in Whitehall, New York
owned by Bola, Inc., a corporation owned by John and Douglas Casella which
operated as a single-purpose real estate holding company. The Company paid the
cost of closing this landfill in 1992, and has agreed to pay all post-closure
obligations. In fiscal 1998, the Company paid $3,019 pursuant to this
arrangement.

In connection with the settlement of certain litigation naming the
Company, four of its subsidiaries, Messrs. James W. Bohlig and John W. and
Douglas R. Casella and one unrelated person as defendants, the Company paid an
aggregate of $450,000 plus approximately $200,000 in legal expenses incurred by
the defendants. The lawsuit was brought derivatively in the name of Meridian, a
Vermont corporation engaged in alternative energy project development which has
been inactive since 1993, of which Messrs. Bohlig and John Casella were
officers, directors and stockholders, as well as individually in the names of
the plaintiffs, who were also stockholders of Meridian. In response to the
lawsuit, in an effort to expedite adjudication, a majority of Meridian's
directors, including Messrs. Bohlig and John Casella, voted to place Meridian
into bankruptcy, and Meridian filed a petition under Chapter 7 of the Federal
Bankruptcy Code ("Chapter 7"). The lawsuit was subsequently removed to the
United States Bankruptcy Court for the District of Vermont. On July 14, 1997,
the bankruptcy court approved the settlement. Messrs. Bohlig and John Casella
were officers and directors of Meridian at the time Meridian filed the petition
under Chapter 7.

On or about October 30, 1997, Mr. Matthew M. Freeman commenced a civil
lawsuit against the Company and Messrs. Bohlig and John Casella in the Rutland
Superior Court, Rutland County, State of Vermont. In the complaint, Mr. Freeman
seeks compensation for services allegedly performed by him prior to 1995. Mr.
Freeman is seeking a three percent equity interest in the Company or the
monetary equivalent thereof, as well as punitive damages. The Company and
Messrs. Bohlig and Casella have answered the complaint, denied Mr. Freeman's
allegations of wrongdoing, and asserted various defenses. In order to
facilitate the completion of the Company's initial public offering, certain
stockholders of the Company, including the two officers named as defendants,
agreed to indemnify the Company for any settlement by the Company or any award
against the Company in excess of $350,000 (but not including legal fees paid by
or on behalf of the Company or any other party). The Company has agreed to
indemnify Messrs. Bohlig and Casella for legal fees incurred by them in
connection with the lawsuit, plus settlements or awards up to $350,000 in the
aggregate.

7
<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Such persons are
required by regulations promulgated by the Commission to furnish the Company
with copies of all Section 16(a) forms filed by such person with respect to the
Company.

Based solely on its review of copies of reports filed by reporting persons
pursuant to Section 16(a) of the Exchange Act, or written representations from
reporting persons that no Form 5 filing was required for such person, the
Company believes that, during fiscal 1998, all filings required to be made by
reporting persons of the Company were timely made in accordance with the
requirements of the Exchange Act other than the filing of a Form 3 by Mr. James
M. Hiltner in connection with his appointment as a Regional Vice President of
the Company, which was filed late.

Executive Compensation

Summary Compensation Table

The following table sets forth for each of the last two fiscal years the
cash compensation paid and the shares underlying options granted to (i) the
Company's Chief Executive Officer, and (ii) each of the other executive
officers who received annual compensation in excess of $100,000 during fiscal
1998 (collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Annual Compensation Awards
---------------------- -------------------------------------------------
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options/SARs (#) Compensation
- ----------------------------- -------- ----------- ---------- ---------------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Casella ............. 1998 $156,965 $50,000 $14,279(1) -- $ 500(2)
President, Chief Executive 1997 $136,141 $45,000 $22,755(1) 20,000 $ 985(2)
Officer and Chairman
James W. Bohlig ............. 1998 $146,591 $50,000 -- --
Senior Vice President and 1997 $126,538 $45,000 -- 30,000 --
Chief Operating Officer
Jerry S. Cifor .............. 1998 $126,235 $42,000 -- $ 500(2)
Vice President and Chief 1997 $107,692 $38,000 -- 16,000 $ 838(2)
Financial Officer
</TABLE>

- ------------
(1) Consists of life insurance premiums paid by the Company on behalf of the
Named Executive Officer.

(2) Consists of amount paid by the Company to the Named Executive Officer's
account in the Company's 401(k) plan.

Stock Options

No stock options to purchase shares of the Company's Class A Common Stock
were granted to any of the Named Executive Officers of the Company during
fiscal 1998.

8
<PAGE>

Fiscal Year-End Option Values

The following table sets forth information for each of the Named Executive
Officers concerning options to purchase Class A Common Stock exercised by the
Named Executive Officers during fiscal 1998 and the number and value of options
outstanding as of fiscal year ended 1998.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Value Options at April 30, 1998 (#) at April 30, 1998 ($)(2)
Acquired on Realized ----------------------------- -----------------------------
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Casella ........... -- -- 148,334 6,666 $4,324,402 $124,173
President, Chief Executive
Officer and Chairman
James W. Bohlig ........... -- -- 300,000 10,000 $8,918,850 $186,250
Senior Vice President and
Chief Operating Officer
Jerry S. Cifor ............ 20,000 $308,000 106,667 5,333 $3,077,792 $ 99,327
Vice President and
Chief Financial Officer
</TABLE>

- ------------
(1) Based on the closing price of the Class A Common Stock as reported on the
Nasdaq National Market on the date of exercise less the option exercise
price.

(2) These values have been calculated on the basis of the last sale price of
the Company's Class A Common Stock on the Nasdaq National Market as of
April 30, 1998 of $31.125 per share, less the aggregate exercise price.

Report of the Compensation Committee on Executive Compensation

The Compensation Committee of the Company's Board of Directors reviews
executive salaries, administers any bonus, incentive compensation and stock
option plans of the Company, and approves the salaries and other benefits of
the executive officers of the Company. In addition, the Compensation Committee
consults with the Company's management regarding pension and other benefit
plans and compensation policies and practices of the Company.

The Compensation Committee, including its Stock Plan Subcommittee, seeks
to achieve three broad goals in connection with the Company's executive
compensation program. First, the Compensation Committee seeks to reward
executives for the achievement of business objectives of the Company. Second,
the executive compensation program is intended to provide executives with
equity incentives so as to link a portion of the executive's compensation with
the future performance of the Company's Class A Common Stock. Finally, the
Compensation Committee structures its executive compensation program so as to
enable it to attract and retain key executives.

To achieve these objectives, the compensation program for the Company's
executive officers consists principally of three elements: base salary, cash
bonuses and long-term incentive compensation in the form of participation in
the Company's stock option plans.

In determining base salaries for the executive officers, the Compensation
Committee evaluates the executive's experience, historical salary level and the
responsibilities of the specific executive position. In addition, the
Compensation Committee assesses the Company's financial and operational
performance for the prior fiscal year and the competitiveness of the Company's
executive compensation program and executive compensation packages of
comparable companies. To the extent determined to be appropriate, the
Compensation Committee also considers

9
<PAGE>

general economic conditions and forecasts. Base salaries are generally set at
or somewhat below competitive levels, with the result that the Company relies
on cash bonuses and longer term incentive compensation to motivate its
executive officers to perform to the full extent of their abilities.

The Compensation Committee also considers the payment of cash bonuses as
part of its compensation program. Annual cash bonuses reflect a policy of
requiring a certain level of Company financial and operational performance for
the prior fiscal year before any cash bonuses are earned by executive officers.
In general, the Compensation Committee has tied potential bonus compensation to
performance factors, including the executive officer's efforts and
contributions towards obtaining Company objectives and the Company's overall
growth.

The executive officers are also eligible to receive stock options under
the Company's stock option plans. The Compensation Committee believes that it
is to the Company's advantage to increase the interest of the executives in the
Company's welfare, as such employees share the primary responsibility for the
management and growth of the Company. In addition, the Compensation Committee
believes that, because new option grants are set at fair market value, such
grants have the effect of "re-setting" the executive's price targets for the
Company's Class A Common Stock. Moreover, the Company's stock option plans
provide a significant non-cash form of compensation, which is intended to
benefit the Company by enabling it to continue to attract and to retain
qualified personnel without negatively impacting cash flow. The Stock Plan
Subcommittee administers the issuance of stock options and other awards under
the Company's stock option plans to the executive officers. See "Report of the
Stock Plan Subcommittee on Executive Compensation".

Compliance with Internal Revenue Code Section 162(m)

Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1,000,000 paid to its chief executive officer
and its four other most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. In this regard, the Company has limited the
number of shares subject to stock options which may be granted to Company
employees in a manner that complies with the performance-based requirements of
Section 162(m). Based on the compensation awarded to the Chief Executive
Officer and the other Named Executive Officers of the Company, it does not
appear that the Section 162(m) limitation will have a significant impact on the
Company in the near term. Incentive stock-based awards previously granted by
the Company generally qualify as a performance-based compensation pursuant to
the "grandfather" provision of Section 162(m). The Company is seeking approval
of the continuation of the Incentive Plan and the amendment to the Incentive
Plan in order to ensure the federal tax deductibility of incentive stock-based
awards granted under that plan. If stockholders do not vote to approve the
continuation of the Incentive Plan and the amendment, the Incentive Plan will
not be continued and the amendment will not be effective.

COMPENSATION COMMITTEE

John W. Casella
Michael F. Cronin
Gregory B. Peters

Report of the Stock Plan Subcommittee on Executive Compensation

The Stock Plan Subcommittee of the Compensation Committee administers the
issuance of stock options and other awards under the Company's stock option
plans to the Company's executive officers and approves the compensation of Mr.
John W. Casella.

The use of stock options is a significant element of the compensation
packages of the Company's executive officers. The timing of new grants depends
upon a number of factors, including the executives' current stock and option
holdings and such other factors as the Stock Plan Subcommittee deems relevant.
In fiscal 1998, the Stock Plan

10
<PAGE>

Subcommittee did not grant stock options to the Named Executive Officers. When
recommending the grant of stock options, it has been the policy of the Stock
Plan Subcommittee to recommend that the exercise price of such options be equal
to the fair market value of a share of Class A Common Stock as of the date of
grant.

The compensation of the Chief Executive Officer is based upon the same
elements and measures of performance as is the compensation for the Company's
other executive officers. In its determination to approve a cash bonus to Mr.
John W. Casella of $50,000, the Stock Plan Subcommittee specifically considered
the successful consummation of the Company's public securities offerings and
acquisitions in the prior fiscal year.

STOCK PLAN SUBCOMMITTEE

Michael F. Cronin
Gregory B. Peters

Certain Relationships and Related Transactions

In connection with the sale by the Company of its Series D Convertible
Preferred Stock in December 1995, the Company entered into a Management
Services Agreement with BCI Growth III, L.P., North Atlantic Venture Fund, L.P.
and Vermont Venture Capital Fund, L.P., which were stockholders of the Company.
Under the Management Services Agreement, the Company agreed to pay a management
fee of approximately $22,300 per month in consideration of certain advisory
services provided by such stockholders to the Company. This agreement was
terminated and the accrued management fee was paid upon the closing of the
Company's initial public offering in November 1997. Gregory B. Peters, a
director of the Company, is affiliated with North Atlantic Venture Fund, L.P.
and The Vermont Venture Capital Fund, L.P.

The Company is party to two real estate leases with Casella Associates, a
Vermont partnership owned by John and Douglas Casella, relating to facilities
occupied by the Company. The leases, relating to the Company's corporate
headquarters in Rutland, Vermont and its Montpelier, Vermont facility, call for
aggregate monthly payments of approximately $18,000 and expire in April 2003.
These leases have been classified by the Company as capital leases for
financial reporting purposes. In addition, the Company leases furniture and
fixtures from Casella Associates pursuant to an operating lease which bears
rent at $950 per month and expires in 1999. In fiscal 1998, the Company paid
Casella Associates an aggregate of $244,500 for such leases. In November 1997,
the lease relating to the Company's corporate headquarters in Rutland, Vermont
was amended to allow the Company to upgrade and make capital improvements to
the premises at an estimated cost of $500,000, to be paid by the Company.
Casella Associates was granted the option to purchase such capital improvements
by December 31, 2002, and if it does not elect to exercise such option the
Company has the right to purchase the premises for $324,000, the fair market
value of the premises prior to the capital improvements, at the expiration of
the term of the lease.

11
<PAGE>

of Meridian's directors, including Messrs. Bohlig and John Casella, voted to
place Meridian into bankruptcy, and Meridian filed a petition under Chapter 7.
The lawsuit was subsequently removed to the United States Bankruptcy Court for
the District of Vermont. On July 14, 1997, the bankruptcy court approved the
settlement. Messrs. Bohlig and John Casella were officers and directors of
Meridian at the time Meridian filed the petition under Chapter 7.

On or about October 30, 1997, Mr. Matthew M. Freeman commenced a civil
lawsuit against the Company and Messrs. James W. Bohlig and John W. Casella in
the Rutland Superior Court, Rutland County, State of Vermont. In the complaint,
Mr. Freeman seeks compensation for services allegedly performed by him prior to
1995. Mr. Freeman is seeking a three percent equity interest in the Company or
the monetary equivalent thereof, as well as punitive damages. The Company and
Messrs. Bohlig and Casella have answered the complaint, denied Mr. Freeman's
allegations of wrongdoing, and asserted various defenses. In order to
facilitate the completion of the Company's initial public offering, certain
stockholders of the Company, including the two officers named as defendants,
agreed to indemnify the Company for any settlement by the Company or any award
against the Company in excess of $350,000 (but not including legal fees paid by
or on behalf of the Company or any other party). The Company has agreed to
indemnify Messrs. Bohlig and Casella for legal fees incurred by them in
connection with the lawsuit, plus settlements or awards up to $350,000 in the
aggregate.

In connection with and at the time of the Company's acquisition of the
business of Catamount Waste Services, Inc., the Company entered into a lease in
June 1994 with CV Landfill, Inc., a Vermont corporation affiliated with
Catamount Waste Services, Inc., pursuant to which the Company agreed to lease a
transfer station for a term of 10 years. CV Landfill, Inc. is owned by John F.
Chapple III, who became a director of the Company at the time of the
acquisition of the business of Catamount Waste Services, Inc. Pursuant to the
lease agreement, the Company pays monthly rent for the first five years at a
rate of $5.00 per ton of waste disposed of at the transfer station, with a
minimum rent of $6,650 per month. Following the fifth anniversary of the lease
agreement, the Company is required to pay monthly rent at a rate of $2.00 per
ton, with a minimum rent of $2,500 per month. In fiscal 1998, the Company paid
CV Landfill, Inc. $96,894.

As part of the acquisition by the Company of the assets of Superior
Disposal Service, Inc., Kerkim, Inc. and related companies in January 1997, the
Company engaged Kenneth H. Mead, the sole stockholder of such companies, as a
consultant for a five-year period ending in 2002. Upon such acquisition, Mr.
Mead became a director of the Company. The consulting agreement, which also
contains a non-competition covenant, provides that the Company will pay Mr.
Mead (i) a fee for acquisitions of collection businesses made by the Company
with Mr. Mead's active assistance within a defined geographic area, in an
amount equal to one month's net revenue of any such acquired business; (ii) a
fee of $500,000 for the acquisition by the Company with Mr. Mead's active
assistance of any enumerated landfill within a defined geographic area; and
(iii) a fee, in consideration of Mr. Mead's non-competition covenant, of
$600,000 paid in installments of $200,000 on each of the first and second
anniversaries of the date of the agreement and $100,000 on each of the third
and fourth anniversaries. For fiscal 1998, the Company paid Mr. Mead an
aggregate of $201,871, pursuant to this agreement.

12
<PAGE>

Stock Performance Graph

The stock performance graph below compares the cumulative stockholder
return on the Class A Common Stock of the Company for the period from October
29, 1997 (the first day of trading of the Company's Class A Common Stock)
through April 30, 1998 with the cumulative total return on (i) the Nasdaq
Composite Index and (ii) the Company's Industry Peer Group on the Nasdaq
National Market (the "Industry Peer Group"). This graph assumes the investment
of $100 in the Company's Class A Common Stock (at the initial public offering
price), the Nasdaq Composite Index and the Industry Peer Group on October 29,
1997 and assumes dividends are reinvested.

COMPARISON OF CUMULATIVE TOTAL RETURN*

[Graph as represented in table below]

*Assumes Initial Investment of $100 and Reinvestment of Dividends

<TABLE>
<CAPTION>
October 29, 1997 April 30, 1998
------------------ ---------------
<S> <C> <C>
Casella Waste Systems, Inc. $ 100.00 $ 141.573
Nasdaq Composite Index $ 100.00 $ 116.575
Industry Peer Group(1) $ 100.00 $ 115.641
</TABLE>

- ------------
(1)The selected peer group is comprised of securities of the following
companies: American Disposal Services, Inc., Eastern Environmental Services,
Inc., Superior Services, Inc. and Waste Industries, Inc.

13
<PAGE>

PROPOSAL 2--APPROVAL OF AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION OF THE COMPANY

By resolution adopted on August 13, 1998, the Company's Board of Directors
proposed the adoption of an amendment to the Company's Restated Certificate of
Incorporation pursuant to which the number of authorized shares of Class A
Common Stock would be increased from 30,000,000 to 100,000,000, and the Board
of Directors directed that the proposed amendment be submitted for approval by
the stockholders at the Meeting.

Of the 30,000,000 currently authorized shares of Class A Common Stock, as
of August 14, 1998, 12,912,049 shares were issued and outstanding. In addition,
as of August 14, 1998, the Company had reserved 988,200 shares of Class A
Common Stock for issuance upon conversion of the Class B Common Stock, and
approximately 3,877,727 shares of Class A Common Stock for issuance under the
Company's stock purchase and stock option plans and a nonstatutory stock option
agreement, upon exercise of certain warrants issued by the Company and upon the
expiration of a certain escrow period. In addition, the Company has an
effective Registration Statement on Form S-1 on file with the Commission
registering 2,000,000 shares of the Company's Class A Common Stock for issuance
from time to time as payment of the purchase price for one or more acquisitions
of companies, businesses or assets complementary to the Company's existing
business. Holders of the Common Stock of the Company have no preemptive rights
with respect to any shares which may be issued in the future.

Although currently authorized shares are sufficient to meet all known
present requirements, the Board of Directors believes that it is desirable that
the Company have the flexibility to issue additional shares of Class A Common
Stock without further stockholder action. In particular, the availability of
additional shares of Class A Common Stock will enhance the Company's
flexibility in connection with possible future actions such as stock dividends,
stock splits, financings, employee benefit programs, corporate mergers, or
other corporate purposes. The Company has no plans, commitments or
understandings with respect to the issuance of the additional shares to be
authorized by the proposed amendment.

Authorized shares of Class A Common Stock in excess of shares outstanding
also could be used to make more difficult a change in control of the Company.
For example, such shares could be sold to purchasers who might side with the
Board of Directors in opposing a takeover bid that the Board of Directors
determines not to be in the best interests of the Company and its stockholders.
Such a sale could have the effect of discouraging an attempt by another person
or entity, through the acquisition of a substantial number of shares of the
Company's Class A Common Stock, to acquire control of the Company, since the
issuance of new shares could be used to dilute the stock ownership of the
acquiror. The Board of Directors has no current intention to use the additional
shares of Class A Common Stock to impede a takeover attempt. The Board of
Directors will determine whether, when and on what terms the issuance of shares
of Class A Common Stock may be warranted in connection with any of the
foregoing purposes.

If the proposed amendment to the Restated Certificate of Incorporation is
adopted, all or any of the authorized shares of Class A Common Stock may be
issued in the future for such corporate purposes and such consideration as the
Board of Directors deems advisable from time to time, without further action by
the stockholders of the Company and without first offering such shares to the
stockholders for subscription.

ADOPTION OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
BY STOCKHOLDERS

The affirmative vote of a majority of the votes represented by the shares
of Common Stock that are entitled to vote at the Meeting is required for
adoption of the proposed amendment to the Restated Certificate of
Incorporation. If the proposed amendment is adopted by the stockholders, it
will become effective upon filing and recording a Certificate of Amendment as
required by the Delaware General Corporation Law.

BOARD OF DIRECTORS' RECOMMENDATION

The Board of Directors believes the amendment to the Restated Certificate
of Incorporation is in the best interests of the Company and its stockholders
and therefore recommends that the stockholders vote FOR this proposal.

14
<PAGE>

PROPOSAL 3--APPROVAL OF CONTINUATION OF AND AMENDMENT
TO THE 1997 STOCK INCENTIVE PLAN OF THE COMPANY

By resolution adopted on August 13, 1998, the Company's Board of Directors
proposed the adoption of an amendment to the Company's 1997 Stock Incentive
Plan (the "Incentive Plan") pursuant to which the number of authorized shares
of Class A Common Stock subject to purchase under the Incentive Plan would be
increased by 1,000,000 shares, to the sum of 2,308,500 shares of Class A Common
Stock, plus such additional number of shares of Class A Common Stock (up to
1,019,635 shares) as are currently subject to options granted under the
Company's 1993 Incentive Stock Option Plan, 1994 Non-statutory Stock Option
Plan and 1996 Stock Option Plan (the "Terminated Plans") which are not actually
issued under the Terminated Plans because such options expire or otherwise
result in shares not being issued. The Board of Directors directed that the
proposed amendment be submitted for approval by the stockholders at the
Meeting.

The Incentive Plan, as proposed to be amended, has been designed so that
options granted under the plan will qualify as performance-based compensation
and, accordingly, not be subject to the deduction limit imposed by Section
162(m) of the Internal Revenue Code. However, in order to qualify as
performance-based compensation, and thereby ensure the availability of Federal
tax deductions in connection with restricted stock awards or on the exercise of
non-statutory options granted under the Incentive Plan, stockholder approval of
the amendment and continuance of the Incentive Plan at the Meeting is required.
If the stockholders do not vote to continue the Incentive Plan, the Company
will not grant any further options or make any further awards of restricted
stock under the Incentive Plan and the plan will terminate. However, options
issued prior to the date of termination will not be affected.

BOARD OF DIRECTORS' RECOMMENDATION

The Board of Directors believes the continuation and amendment of the
Incentive Plan is in the best interests of the Company and its stockholders and
therefore recommends that the stockholders vote FOR this proposal.

Summary of the Incentive Plan

The Incentive Plan was initially adopted by the Company's Board of
Directors in July 1997 and approved by its stockholders in September 1997, and
will terminate in July 2007, unless earlier terminated in accordance with the
terms of the Incentive Plan.

The Incentive Plan permits the Company to grant incentive stock options,
non-statutory options, restricted stock awards and other stock-based awards,
including the grant of shares based on certain conditions, the grant of
securities convertible into Class A Common Stock and the grant of stock
appreciation rights (collectively, "Awards"). Awards consisting of stock
options may not be granted at an exercise price which is less than 100% of the
fair market value of the Class A Common Stock on the date of grant and may not
be granted for a term in excess of ten years. Subject to adjustment in the
event of stock splits and other similar events, awards may currently (prior to
the proposed amendment) be made under the Incentive Plan for up to the sum of
1,308,500 shares of Class A Common Stock, plus such additional number of shares
of Class A Common Stock (up to 1,019,635 shares) as are currently subject to
options granted under the Terminated Plans but which are not actually issued
under the Terminated Plans because such options expire or otherwise result in
shares not being issued.

Officers, employees, directors, consultants and advisors of the Company
and its subsidiaries are eligible to receive Awards under the Incentive Plan.
The maximum number of shares with respect to which Awards may be granted to any
participant under the Incentive Plan may not exceed 200,000 shares of Class A
Common Stock per calendar year.

The Incentive Plan is administered by the Compensation Committee of the
Board of Directors, provided that the Stock Plan Subcommittee administers the
issuance of awards to the Company's executive officers. The Compensation
Committee has the authority to adopt, amend and repeal the administrative
rules, guidelines and practices relating to the Incentive Plan and to interpret
the provisions of the Incentive Plan. The Compensation Committee selects the
recipients of Awards and determines (i) the number of shares of Class A Common
Stock covered by options and the dates upon which such options become
exercisable; (ii) the exercise price of options (which, in the case of
incentive

15
<PAGE>

stock options, may not be less than 100% of fair market value on the date of
grant or, in the case of incentive stock options granted to a stockholder
owning in excess of 10% of the Company's Common Stock, may not be less than
110% of fair market value on the date of grant); (iii) the duration of options
(which, in the case of incentive stock options, may not exceed ten years or, in
the case of incentive stock options granted to a stockholder owning in excess
of 10% of the Company's Common Stock, may not exceed five years); and (iv) the
number of shares of Class A Common Stock subject to any restricted stock or
other stock-based Awards and the terms and conditions of such Awards, including
conditions for repurchase, issue price and repurchase price. The Board of
Directors is required to make appropriate adjustments in connection with the
Incentive Plan and any outstanding Awards to reflect stock dividends, stock
splits and certain other events. In the event of a merger, liquidation or other
Acquisition Event (as defined in the Incentive Plan), outstanding Awards will
be assumed unless the acquiring or succeeding corporation does not agree to
assume such options, in which case the Board of Directors shall accelerate the
Awards to make them fully exercisable prior to consummation of the Acquisition
Event or provide for a cash-out of the value of any outstanding options. If any
Award expires or is terminated, surrendered, cancelled or forfeited, the unused
shares of Class A Common Stock covered by such Award will again be available
for grant under the Incentive Plan.

As of August 14, 1998, options to purchase a total of 1,061,000 shares of
Class A Common Stock were outstanding under the Incentive Plan and no
restricted stock awards had been made under the plan. As of August 14, 1998,
the Company had 1,140 full-time employees, all of whom were eligible to
participate in the plan. Through August 14, 1998, under the Incentive Plan,
John W. Casella, the Chief Executive Officer, had received 90,000 options,
James W. Bohlig, the Chief Operating Officer, had received 150,000 options and
Jerry S. Cifor, the Chief Financial Officer, had received 110,000 options. As a
group, the Named Executive Officers had received an aggregate of 350,000
options through August 14, 1998. As of such date, all current executive
officers had received an aggregate of 555,000 options under the Incentive Plan.
Mr. Douglas R. Casella, a director nominee, received an aggregate of 90,000
options as of August 14, 1998. As a group, all employees, excluding the Named
Executive Officers, received an aggregate of 484,000 options through August 14,
1998. The number of individuals receiving stock options or restricted stock
awards varies from year to year depending on various factors, such as the
number of promotions and the Company's hiring needs during the year, and thus
the Company cannot now determine future option or award recipients or the
amounts to be allocated to such individuals. On September 16, 1998, the fair
market value of the Class A Common Stock, as reported on the Nasdaq National
Market, was $29.75.

Certain Federal Income Tax Consequences

The following is a summary of the material United States federal income
tax consequences that generally will arise with respect to options and awards
granted under the Incentive Plan and with respect to the sale of Class A Common
Stock acquired under the Incentive Plan. While accurate, the following summary
does not purport to be a complete description of federal tax aspects of the
Incentive Plan.

Incentive Stock Options

In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will recognize
taxable income with respect to an incentive stock option only upon the sale of
Class A Common Stock acquired through the exercise of the option ("ISO Stock").
The exercise of an incentive stock option however, may, subject the participant
to the alternative minimum tax.

Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.

If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be

16
<PAGE>

a capital gain. This capital gain will be a long-term capital gain if the
participant has held the ISO Stock for more than one year prior to the date of
sale.

If a participant sells ISO Stock for less than the exercise price, then
the participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.

Non-statutory Stock Options

As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a non-statutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
non-statutory stock option generally will recognize ordinary compensation
income in an amount equal to the excess of the fair market value of the Class A
Common Stock acquired through the exercise of the option ("NSO Stock") on the
Exercise Date over the exercise price.

With respect to any NSO Stock, a participant will have a tax basis equal
to the exercise price plus any income recognized upon the exercise of the
option. Upon selling NSO Stock, a participant generally will recognize capital
gain or loss in an amount equal to the difference between the sale price of the
NSO Stock and the participant's tax basis in the NSO Stock. This capital gain
or loss will be a long-term capital gain or loss if the participant has held
the NSO Stock for more than one year prior to the date of the sale.

Restricted Stock Awards

A participant will not recognize taxable income upon the grant of a
restricted stock award, unless the participant makes an election under Section
83(b) of the Code (a "Section 83(b) Election"). If the participant makes a
Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary compensation income, for the year in which
the award is granted, in an amount equal to the difference between the fair
market value of the Class A Common Stock at the time the award is granted and
the purchase price paid for the Class A Common Stock. If a Section 83(b)
Election is not made, then the participant will recognize ordinary compensation
income, at the time that the forfeiture provisions or restrictions on transfer
lapse, in an amount equal to the difference between the fair market value of
the Class A Common Stock at the time of such lapse and the original purchase
price paid for the Class A Common Stock. The participant will have a tax basis
in the Class A Common Stock acquired equal to the sum of the price paid and the
amount of ordinary compensation income recognized.

Upon the disposition of the Class A Common Stock acquired pursuant to a
restricted stock award, the participant will recognize a capital gain or loss
in an amount equal to the difference between the sale price of the Class A
Common Stock and the participant's tax basis in the Class A Common Stock. This
capital gain or loss will be a long-term capital gain or loss if the shares are
held for more than one year. For this purpose, the holding period shall begin
just after the date on which the forfeiture provisions or restrictions lapse if
a Section 83(b) Election is not made, or just after the award is granted if a
Section 83(b) Election is made.

Tax Consequences to the Company

The grant of an award under the Incentive Plan will have no tax
consequences to the Company. Moreover, in general, neither the exercise of an
incentive stock option nor the sale of any Class A Common Stock acquired under
the Incentive Plan will have any tax consequences to the Company. The Company
generally will be entitled to a business-expense deduction, however, with
respect to any ordinary compensation income recognized by a participant under
the Incentive Plan, including as a result of the exercise of a non-statutory
stock option, a Disqualifying Disposition or a Section 83(b) Election.

17
<PAGE>

PROPOSAL 4--RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS

The Board of Directors has selected Arthur Andersen LLP as auditors of the
Company for fiscal 1999, subject to ratification by stockholders at the
Meeting. If the stockholders do not ratify the selection of Arthur Andersen
LLP, the Board of Directors will reconsider the matter. A representative of
Arthur Andersen LLP, which served as auditors for fiscal 1998, is expected to
be present at the Meeting, to respond to appropriate questions, and to make a
statement if he or she so desires.

STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING

Any proposal that a stockholder intends to present at the 1999 Annual
Meeting of Stockholders must be submitted to the Secretary of the Company at
its offices, 25 Greens Hill Lane, Rutland, Vermont 05701 no later than May 25,
1999 in order to be considered for inclusion in the Proxy Statement relating to
that meeting.

The persons named in the enclosed proxy will have discretionary authority
to vote on any matter proposed by a stockholder for consideration at the
Meeting that is not included in this Proxy Statement and on any matter proposed
by a stockholder for consideration at the 1999 Annual Meeting that is not
included in the proxy statement for such meeting if the Company has not
received notice of such proposal by August 10, 1999.

OTHER MATTERS

The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other business should come before the Meeting, it is the intention of the
persons named in the enclosed proxy to vote, or otherwise act, in accordance
with their best judgment on such matters.

The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, telegraph,
facsimile and personal interviews. The Company will also request brokerage
houses, custodians, nominees and fiduciaries to forward copies of the proxy
material to those persons for whom they hold shares and request instructions
for voting the proxies. The Company will reimburse such brokerage houses and
other persons for their reasonable expenses in connection with this
distribution.

THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED.

STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN
THOUGH THEY HAVE SENT IN THEIR PROXIES.

September 22, 1998 By Order of the Board of Directors,
John W. Casella, President

18
<PAGE>

APPENDIX 1

1997 Stock Incentive Plan, as amended and restated.

<PAGE>

CASELLA WASTE SYSTEMS, INC.

AMENDED AND RESTATED
1997 STOCK INCENTIVE PLAN

TABLE OF CONTENTS

<TABLE>
<S> <C>
1. Purpose ......................................... 1
2. Eligibility ..................................... 1
3. Administration, Delegation ...................... 1
4. Stock Available for Awards ...................... 1
5. Stock Options ................................... 2
6. Restricted Stock ................................ 3
7. Other Stock-Based Awards ........................ 3
8. General Provisions Applicable to Awards ......... 3
9. Miscellaneous ................................... 5
</TABLE>

-i-
<PAGE>

CASELLA WASTE SYSTEMS, INC.

AMENDED AND RESTATED
1997 STOCK INCENTIVE PLAN

1. Purpose

The purpose of this Amended and Restated 1997 Stock Incentive Plan (the
"Plan") of Casella Waste Systems, Inc., a Delaware corporation (the "Company"),
is to advance the interests of the Company's stockholders by enhancing the
Company's ability to attract, retain and motivate persons who make (or are
expected to make) important contributions to the Company by providing such
persons with equity ownership opportunities and performance-based incentives
and thereby better aligning the interests of such persons with those of the
Company's stockholders. Except where the context otherwise requires, the term
"Company" shall include any present or future subsidiary corporations of
Casella Waste Systems, Inc. as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended, and any regulations promulgated thereunder
(the "Code").

2. Eligibility

All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other
stock-based awards (each, an "Award") under the Plan. Any person who has been
granted an Award under the Plan shall be deemed a "Participant".

3. Administration, Delegation

(a) Administration by Board of Directors. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem
advisable. The Board may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award in the manner and to the extent it
shall deem expedient to carry the Plan into effect and it shall be the sole and
final judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.

(b) Delegation to Executive Officers. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum
number of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.

(c) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). If and when the Class
A Common Stock, $.01 par value per share, of the Company (the "Common Stock")
is registered under the Securities Exchange Act of 1934 (the "Exchange Act"),
the Board shall appoint one such Committee of not less than two members, each
member of which shall be an "outside director" within the meaning of Section
162(m) of the Code and a "non-employee director" as defined in Rule 16b-3
promulgated under the Exchange Act. All references in the Plan to the "Board"
shall mean the Board or a Committee of the Board or the executive officer
referred to in Section 3(b) to the extent that the Board's powers or authority
under the Plan have been delegated to such Committee or executive officer.

4. Stock Available for Awards

(a) Number of Shares. Subject to adjustment under Section 4(c), Awards may
be made under the Plan for up to such number of shares of Common Stock as is
equal to the sum of (i) 2,308,500 shares of Common Stock, plus (ii) such
additional number of shares of Common Stock as is equal to the aggregate number
of shares available subject to Awards granted under the Company's 1993
Incentive Stock Option Plan, 1994 Nonstatutory Stock Option Plan and
<PAGE>

1996 Stock Option Plan which are not actually issued because such awards expire
or otherwise result in shares not being issued. If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive
Stock Options (as hereinafter defined), to any limitation required under the
Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

(b) Per-Participant Limit. Subject to adjustment under Section 4(c), for
Awards granted after the Common Stock is registered under the Exchange Act, the
maximum number of shares with respect to which an Award may be granted to any
Participant under the Plan shall be 200,000 per calendar year. The
per-participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code.

(c) Adjustment to Common Stock. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the number and class of security and exercise price per
share subject to each outstanding Option, (iii) the repurchase price per
security subject to each outstanding Restricted Stock Award, and (iv) the terms
of each other outstanding stock-based Award shall be appropriately adjusted by
the Company (or substituted Awards may be made, if applicable) to the extent
the Board shall determine, in good faith, that such an adjustment (or
substitution) is necessary and appropriate. If this Section 4(c) applies and
Section 8(e)(1) also applies to any event, Section 8(e)(1) shall be applicable
to such event, and this Section 4(c) shall not be applicable.

5. Stock Options

(a) General. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered
by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive
Stock Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".

(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

(c) Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement;
provided, however, that no Options will be granted at an exercise price which
is below the fair market value of the Common Stock covered thereby.

(d) Duration of Options. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement; provided, however, that no option shall be
exercisable more than ten years after the date of grant thereof.

(e) Exercise of Option. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.

(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) except as the Board may otherwise provide in an Option Agreement, (i)
by delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient

2
<PAGE>

funds to pay the exercise price, or delivery by the Participant to
the Company of a copy of irrevocable and unconditional instructions
to a creditworthy broker to deliver promptly to the Company cash or a
check sufficient to pay the exercise price, or (ii) by delivery of
shares of Common Stock owned by the Participant valued at their fair
market value as determined by the Board in good faith ("Fair Market
Value"), which Common Stock was owned by the Participant at least six
months prior to such delivery;

(3) to the extent permitted by the Board and explicitly provided in an
Option Agreement (i) by delivery of a promissory note of the
Participant to the Company on terms determined by the Board, or (ii)
by payment of such other lawful consideration as the Board may
determine; or

(4) any combination of the above permitted forms of payment.

6. Restricted Stock

(a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all
or part of such shares at their issue price or other stated or formula price
(or to require forfeiture of such shares if issued at no cost) from the
recipient in the event that conditions specified by the Board in the applicable
Award are not satisfied prior to the end of the applicable restriction period
or periods established by the Board for such Award (each, "Restricted Stock
Award").

(b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name
of the Participant and, unless otherwise determined by the Board, deposited by
the Participant, together with a stock power endorsed in blank, with the
Company (or its designee). At the expiration of the applicable restriction
periods, the Company (or such designee) shall deliver the certificates no
longer subject to such restrictions to the Participant or if the Participant
has died, to the beneficiary designated, in a manner determined by the Board,
by a Participant to receive amounts due or exercise rights of the Participant
in the event of the Participant's death (the "Designated Beneficiary"). In the
absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.

7. Other Stock-Based Awards

The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including
the grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.

8. General Provisions Applicable to Awards

(a) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable
only by the Participant. References to a Participant, to the extent relevant in
the context, shall include references to authorized transferees.

(b) Documentation. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.

(c) Board Discretion. Except as otherwise provided by the Plan, each type
of Award may be made alone or in addition or in relation to any other type of
Award. The terms of each type of Award need not be identical, and the Board
need not treat Participants uniformly.

(d) Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

3
<PAGE>

(e) Acquisition Events

(1) Consequences of Acquisition Events. Upon the occurrence of an
Acquisition Event (as defined below), or the execution by the Company
of any agreement with respect to an Acquisition Event, the Board
shall provide that outstanding Options shall be assumed, or
equivalent Options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), provided that any
such Options substituted for Incentive Stock Options shall satisfy,
in the determination of the Board, the requirements of Section 424(a)
of the Code; provided, however, that in the event the acquiring or
succeeding corporation does not agree to assume all such Options or
other Awards, the Board shall take any one or more of the following
actions with respect to then outstanding Options or other Awards not
so assumed: (i) upon written notice to the Participants, provide that
all then unexercised Options will become exercisable in full as of a
specified time (the "Acceleration Time") prior to the Acquisition
Event and will terminate immediately prior to the consummation of
such Acquisition Event, except to the extent exercised by the
Participants between the Acceleration Time and the consummation of
such Acquisition Event; (ii) in the event of an Acquisition Event
under the terms of which holders of Common Stock will receive upon
consummation thereof a cash payment for each share of Common Stock
surrendered pursuant to such Acquisition Event (the "Acquisition
Price"), provide that all outstanding Options shall terminate upon
consummation of such Acquisition Event and each Participant shall
receive, in exchange therefor, a cash payment equal to the amount (if
any) by which (A) the Acquisition Price multiplied by the number of
shares of Common Stock subject to such outstanding Options (whether
or not then exercisable), exceeds (B) the aggregate exercise price of
such Options; (iii) provide that all Restricted Stock Awards then
outstanding shall become free of all restrictions prior to the
consummation of the Acquisition Event; and (iv) provide that any
other stock-based Awards outstanding (A) shall become exercisable,
realizable or vested in full, or shall be free of all conditions or
restrictions, as applicable to each such Award, prior to the
consummation of the Acquisition Event, or (B), if applicable, shall
be assumed, or equivalent Awards shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof).

An "Acquisition Event" shall mean: (a) any merger or consolidation which
results in the voting securities of the Company outstanding immediately prior
thereto representing immediately thereafter (either by remaining outstanding or
by being converted into voting securities of the surviving or acquiring entity)
less than 50% of the combined voting power of the voting securities of the
Company or such surviving or acquiring entity outstanding immediately after
such merger or consolidation; (b) any sale of all or substantially all of the
assets of the Company; or (c) the complete liquidation of the Company.

(2) Assumption of Options Upon Certain Events. The Board may grant Awards
under the Plan in substitution for stock and stock-based awards held
by employees of another corporation who become employees of the
Company as a result of a merger or consolidation of the employing
corporation with the Company or the acquisition by the Company of
property or stock of the employing corporation. The substitute Awards
shall be granted on such terms and conditions as the Board considers
appropriate in the circumstances.

(f) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law
to be withheld in connection with Awards to such Participant no later than the
date of the event creating the tax liability. The Board may allow Participants
to satisfy such tax obligations in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to a
Participant.

(g) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be
required unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.

4
<PAGE>

(h) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been
satisfied, including any applicable securities laws and any applicable stock
exchange or stock market rules and regulations, and (iii) the Participant has
executed and delivered to the Company such representations or agreements as the
Company may consider appropriate to satisfy the requirements of any applicable
laws, rules or regulations.

(i) Acceleration. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of all restrictions or that any other stock-based Awards
may become exercisable in full or in part or free of some or all restrictions
or conditions, or otherwise realizable in full or in part, as the case may be.

9. Miscellaneous

(a) No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any
other relationship with the Company. The Company expressly reserves the right
at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Award.

(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.

(c) Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is adopted by the Board (the "Effective Date"), but no
Award granted to a Participant designated as subject to Section 162(m) by the
Board shall become exercisable, vested or realizable, as applicable to such
Award, unless and until the Plan has been approved by the Company's
stockholders to the extent Section 162(m) requires stockholder approval. No
Awards shall be granted under the Plan after the completion of ten years from
the earlier of (i) the date on which the Plan was adopted by the Board or (ii)
the date the Plan was approved by the Company's stockholders, but Awards
previously granted may extend beyond that date.

(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no Award granted to a
Participant designated as subject to Section 162(m) by the Board after the date
of such amendment shall become exercisable, realizable or vested, as applicable
to such Award (to the extent that such amendment to the Plan was required to
grant such Award to a particular Participant), unless and until such amendment
shall have been approved by the Company's stockholders.

(e) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

Initially Adopted by the Board of
Directors on July 31, 1997 and, as
Amended and Restated, on August 13,
1998

Initially Approved by the Stockholders
on September 29, 1997 and, as
Amended and Restated, on October [ ],
1998

5
<PAGE>

1677-PS-98

<PAGE>

DETACH HERE

PROXY CASELLA WASTE SYSTEMS, INC. PROXY

ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 14, 1998

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.

The undersigned, having received notice of the meeting and the Proxy Statement
therefor and revoking all prior proxies, hereby appoint(s) John W. Casella,
James W. Bohig and Jerry S. Cifor, and each of them acting singly (with full
power of substitution), as proxies of the undersigned, to attend the Annual
Meeting of Stockholders of Casella Waste Systems, Inc. (the "Company") to be
held on Wednesday, October 14, 1998 and any adjourned session thereof, and there
to vote and act as indicated, upon the matters on the reverse side in respect of
all shares of Class A and Class B Common Stock of the Company which the
undersigned would be entitled to vote or act upon, with all powers the
undersigned would possess if personally present.

Attendance of the undersigned at the meeting or at any adjourned session thereof
will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate thereat the intention of the undersigned to vote said
shares in person. If the undersigned hold(s) any of the shares of the Company in
a fiduciary, custodial or joint capacity or capacities, this proxy is signed by
the undersigned in every such capacity as well as individually.

- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign name(s) exactly as appearing hereon. When signing as attorney,
executor, administrator or other fiduciary, please give your full title as such.
Joint owners should each sign personally. If a corporation, please sign in full
corporate name, by authorized officer. If a partnership, please sign in
partnership name, by authorized person.
- --------------------------------------------------------------------------------

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

- -------------------------------------- ---------------------------------

<PAGE>

DETACH HERE
- --------------------------------------------------------------------------------

PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY ELECTION TO OFFICE OR
PROPOSAL SPECIFIED HEREIN, THIS PROXY WILL BE VOTED FOR SUCH ELECTION TO OFFICE
OR PROPOSAL.

Mark box at right if an address change or comment has been noted on [ ]
the reverse side of this card.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY BELOW.

1. To elect the following persons as Class I Directors for the ensuing three
years:

For All With- For All
Nominees hold Except
Douglas R. Casella [ ] [ ] [ ]
Michael F. Cronin
Kenneth H. Mead

NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME(S) OF THE NOMINEE(S).
YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).

For Against Abstain
2. To approve an amendment to the Company's [ ] [ ] [ ]
Second Amended and Restated Certificate
of Incorporation.

3. To approve the continuation of the [ ] [ ] [ ]
Company's 1997 Stock Incentive Plan
and to approve an amendment to such
plan.

4. To ratify the selection of Arthur [ ] [ ] [ ]
Andersen LLP as independent auditors
of the Company for the current
fiscal year.

IN THEIR DISCRETION, THE NAMED PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT THEREOF.

Stockholder(s) sign here _______________________ Date ________________