KTI INC
8-K, 1997-06-16
COGENERATION SERVICES & SMALL POWER PRODUCERS
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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                                            

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                Date of Report (Date of earliest event reported):
                                  June 4, 1997

                                    KTI, INC.
               (Exact name of Registrant as specified in Charter)


   New Jersey                 33-85234                22-2665282
(State or other juris-      (Commission             (IRS Employer
diction of incorporation)    File Number)           Identification No.)



7000 Boulevard East, Guttenberg, New Jersey            07093
(Address of principal executive office)             (Zip Code)


(Registrant's telephone number including area code) (201) 854-7777



                                 Not Applicable
         (Former name and former address, as changed since last report)


ITEM 5. OTHER EVENTS.

     On June 4, 1997, Timber Energy Resources, Inc. ("TERI"), a subsidiary of
KTI, Inc. (the "Company"), consummated the restructuring of the $13,400,000
Liberty County tax-exempt bond issue used to finance the construction of TERI's
facility in Telogia, Florida.  The restructuring was undertaken in connection
with the Company's acquisition of Timber Energy Investments, Inc., the parent of
TERI ("TEII"), in the fourth quarter of 1996 from Continental Casualty Company
("CNA") and certain other parties.  At the time of the acquisition, the Company
undertook to release CNA from its reimbursement obligations to the Bank of
Montreal, who provided credit enhancement for the tax-exempt bonds at the time
of issuance.  As a result of the restructuring, the credit enhancement provided
by the Bank of Montreal was eliminated and the tax-exempt bonds now carry a
coupon rate of 7.0%.  Had the Company not obtained the release by August 22,
1997, CNA would have had the right to rescind the acquisition of TEII and retain
$250,000 of the purchase price as liquidated damages.

     Also on June 4, 1996, the Company consummated the private placement of
487,500 shares of its Series A Convertible Preferred Stock (the "Series A
Preferred") for gross proceeds of $3,900,000.  The Series A Preferred is
convertible into shares of the Company's common stock, no par value (the "Common
Stock"), at a price of $8.00 per share, subject to adjustment, and may be
redeemed at $12.00 per share, subject to adjustment.  Purchasers of the shares
of Series A Preferred also received, in the aggregate, warrants to purchase
243,750 shares of Common Stock at $9.00 per share and warrants to purchase
32,500 shares of Common Stock at $10.00 per share.  The investors were
represented by First Analysis Corp.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.

     (c) Exhibits

     Exhibit Number Description

     4.1            Certificate of Amendment to the Restated Certificate of
                    Incorporation of KTI, Inc., filed June 2, 1997.

     10.1           Series A Preferred Stock and Warrant Purchase Agreement,
                    dated June 4, 1997, between KTI, Inc. and the purchasers
                    named therein.

     10.2           Warrant Agreement, dated June 4, 1997, between KTI, Inc. and
                    the holders named therein.

     10.3           Warrant Agreement, dated June 4, 1997, between KTI, Inc. and
                    the holders named therein.

     99.1           Press Release issued by KTI, Inc., dated June 5, 1997.
       



                                   SIGNATURES



     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                   KTI, Inc.
                                   (the Registrant)



Dated:  June 4, 1997                    By: /s/ Martin J. Sergi          
                                        Name:     Martin J. Sergi
                                        Title:    President



                                                                     EXHIBIT 4.1

                         CERTIFICATE OF AMENDMENT TO THE
                      RESTATED CERTIFICATE OF INCORPORATION
                                  OF KTI, INC.

     Pursuant to the provisions of Sections 14A:7-2(4) and 14A:9-2(2),
Corporations, General, of the New Jersey Statutes, the undersigned Corporation
executes the following Certificate of Amendment to its Restated Certificate of
Incorporation:

     1.   The name of the corporation is KTI, Inc. (the "Corporation").

     2.   The following resolution was adopted by the Board of Directors of the
Corporation: 

     Resolved that a new ARTICLE TENTH relating to the designation, number
rights, preferences and limitations of a series of preferred stock shall be
added to the Restated Certificate of Incorporation, as amended, and shall read
in its entirety as follows:

                                 "ARTICLE TENTH

     Section 1.     Designation and Amount.  The series of Preferred Stock
designated and known as the "Series A Preferred" shall have no par value and the
number of shares constituting the Series A Preferred shall be 487,500. 

     Section 2.     Rank. The Series A Preferred shall rank:  (i) prior to all
of the Company's Common Stock, no par value ("Common"); (ii) pari passu with any
class or series of convertible Preferred Stock or other capital stock of the
Company hereafter created, which is convertible into Common or which, when
originally issued, was issued simultaneously with Common purchase warrants; and
(iii) junior to any class of preferred stock which is not convertible into any
other class of securities of the Company ("Senior Securities"), in each case as
to distributions of assets upon liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary (all such distributions being referred
to collectively as "Distributions").

     Section 3.     Dividends.     If any dividend or other distribution payable
in cash, securities or other property (other than securities of the Company the
issuance of which gives rise to adjustment of the Conversion Price as set forth
below) is declared on the Common, each holder of shares of Series A Preferred on
the record date for such dividend or distribution shall be entitled to receive
on the date of payment or distribution of such dividend or other distribution
the same cash, securities or other property which such holder would have
received on such record date if such holder was the holder of record of the
number (including any fraction) of shares of Common into which the shares of
Series A Preferred then held by such holder are then convertible.

     Section 4.     Liquidation Preference.

     (a)  In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, the holders of Series A Preferred (the
"Holders"), shall be entitled to receive, prior to any payment with respect to
any shares of Common but after any payment with respect to any outstanding
shares of Senior Securities, an amount per share (the "Liquidation Preference")
equal to the sum of (i) $8.00 for each outstanding share of Series A Preferred,
plus (ii) interest of 8.19 percent per annum calculated based on the number of
actual days elapsed in a 365 day year or a 366 day year, as appropriate, plus
(iii) any dividends which have been declared and which the Holders are entitled
to receive with respect to each share of Series A Preferred.  If upon the
occurrence of such event, the assets and funds available to be distributed among
the Holders shall be insufficient to permit the payment to such Holders of the
full preferential amounts due to such Holders, then the entire assets and funds
of the Company legally available for distribution to such Holders and the
holders of securities pari passu with the Series A Preferred shall be
distributed among the Holders and holders of such pari passu securities on a pro
rata basis.

     Section 5.     Conversion. The record Holders of Series A Preferred shall
have conversion rights as follows (the "Conversion Rights"):

     (a)  Right to Convert.

          (i)  Each record Holder of Series A Preferred shall be entitled to
convert shares of Series A Preferred at any time into that number of fully-paid
and non-assessable shares of Common of the Company calculated in accordance with
the following formula (the "Conversion Rate"):

Number of shares issued upon conversion of one (1) share of Series A Preferred =

                           Liquidation Preference          
                         ------------------------------
                                Conversion Price

where "Conversion Price" means $8.00, as adjusted herein.  

     (b)  Adjustments to Conversion Price.  The Conversion Price shall be
subject to adjustment from time to time upon the occurrence of certain events
described in this Section 5(b).

          (i)  Subdivision or Combination of Common and Common Dividend.  In
case the Company shall at any time subdivide its outstanding Common into a
greater number of shares or declare a dividend upon the Common payable solely in
shares of Common, the Conversion Price in effect immediately prior to such
subdivision or declaration shall be proportionately reduced.  Conversely, in
case the outstanding Common shall be combined into a smaller number of shares of
Common, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.

          (ii) Adjustment Due to Merger, Consolidation, Etc.  If, prior to the
conversion of all Series A Preferred, there shall be any merger, consolidation,
exchange of shares, recapitalization, reorganization, or other similar event,
and as a result of which shares of Common of the Company shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities of the Company or another entity, or other property, the
Holders shall, be given at least 30 days advance written notice of such
transaction.  The Holders shall then have the right to purchase and receive upon
conversion of Series A Preferred, upon the basis and subject to the terms and
conditions specified herein and in lieu of the shares of Common immediately
theretofore issuable upon conversion, such shares of stock and/or securities or
other property as may be issued or payable with respect to or in exchange for
the number of shares of Common immediately theretofore purchasable and
receivable upon the conversion of Series A Preferred held by such Holders had
such merger, consolidation, exchange of shares, recapitalization or
reorganization not taken place.  In any such case appropriate provisions shall
be made with respect to the rights and interests of the Holders to the end that
the provisions hereof (including, without limitation, provisions for adjustment
of the Conversion Rate and of the number of shares issuable upon conversion of
the Series A Preferred) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the conversion thereof.  The Company shall not effect any
transaction described in this subsection 5(b)(ii) unless (1) each Holder has
been given at least 20 days advance written notice of such transaction, and (2)
the resulting successor or acquiring entity (if not the Company) assumes by
written instrument the obligation to deliver to the Holders such shares of stock
and/or securities or other property as, in accordance with the foregoing
provisions, the Holders of may be entitled to receive upon conversion of the
Series A Preferred.  Notwithstanding the foregoing, if any of the events
described herein constitutes a Change in Control Transaction, the Holders shall
have the option, exercisable by written notice to the Company, to receive the
Liquidation Preference for their shares of Series A Preferred pursuant to
Section 4(b) above in lieu of their rights under this Section 5(b)(ii).

          (iii)     Dilutive Issuances.  If the Company shall sell or issue at
any time shares of Common (other than Excluded Securities, as defined in Section
5(b)(viii) below) at a consideration per share less than the Conversion Price
then in effect, the Conversion Price shall be adjusted to a new Conversion Price
(calculated to the nearest cent) determined by dividing:  

               (A)  an amount equal to (i) the total number of "Shares
Outstanding" (as defined below) immediately prior to such issuance, multiplied
by the Conversion Price in effect immediately prior to such issuance plus
(ii) the aggregate of the amount of all consideration, if any, received by the
Company upon such issuance; by

               (B)  the total number of Shares Outstanding immediately after
such issuance or sale.

In no event shall any such adjustment be made pursuant to this Section 5(b)(iii)
if it would increase the Conversion Price in effect immediately prior to such
adjustment, except as provided in Sections 5(b)(vi) and 5(b)(vii).  

          (iv) Definitions.  For purposes of this Section 5(b), the following
definitions shall apply:

               (A)  "Convertible Securities" means any indebtedness or
securities convertible into or exchangeable for Common.

               (B)  "Options" means any rights, warrants or options to subscribe
for or purchase Common or Convertible Securities other than rights, warrants or
options to purchase Excluded Securities (as defined in Section 5(b)(viii)).

               (C)  "Shares Outstanding" means the aggregate of all shares of
Common outstanding and all Common issuable upon exercise of all outstanding
Options and conversion of all outstanding Convertible Securities.

          (v)  Adjustments.  For the purposes of this Section 5(b), the
following provisions shall also be applicable:

               (A)  Cash Consideration.  In case of the issuance or sale of
additional shares of Common for cash, the consideration received by the Company
therefor shall be deemed to be the amount of cash received by the Company from
the recipients or purchasers of the additional shares of Common for such shares
of Common.

               (B)  Non-Cash Consideration.  In case of the issuance (otherwise
than upon conversion or exchange of Convertible Securities) or sale of
additional shares of Common, Options or Convertible Securities for a
consideration other than cash or a consideration a part of which shall be other
than cash, the fair value of such consideration as determined by the Board of
Directors of the Company in the good faith exercise of its business judgment,
irrespective of the accounting treatment thereof, shall be deemed to be the
value of the consideration other than cash received by the Company for such
securities.

               (C)  Options and Convertible Securities.  In case the Company
shall in any manner issue or grant any Options or any Convertible Securities,
the total maximum number of shares of Common issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities (in each case, without giving effect to any future
operation of any anti-dilution clauses in any such Option or Convertible
Securities at the time of such issuance or grant) at the time such Convertible
Securities first become convertible or exchangeable shall (as of the date of
issue or grant of such Options or, in the case of the issue or sale of
Convertible Securities other than where the same are issuable upon the exercise
of Options, as of the date of such issue or sale) be deemed to be issued and to
be outstanding for the purpose of this Section 5(b) and to have been issued for
the sum of the amount (if any) paid for such Options or Convertible Securities
and the amount (if any) payable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities at the time such
Convertible Securities first become convertible or exchangeable; provided that,
subject to the provisions of Section 5(b)(vi), no further adjustment of the
Conversion Price shall be made upon the actual issuance of any such shares of
Common or Convertible Securities or upon the conversion or exchange of any such
Convertible Securities.

          (vi) Change in Option Price or Conversion Rate.  If the purchase price
provided for in any Option referred to in subsection 5(b)(v)(C), or the rate at
which any Convertible Securities referred to in subsection 5(b)(v)(C) are
convertible into or exchangeable for shares of Common shall change at any time
(other than under or by reason of provisions designed to protect against
dilution), then, for purposes of any adjustment required by Section 5(b), the
Conversion Price in effect at the time of such event shall forthwith be
readjusted to the Conversion Price that would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold, provided that if such
readjustment is an increase in the Conversion Price, such readjustment shall not
exceed the amount (as adjusted by Sections 5(b)(i) and 5(b)(v)) by which the
Conversion Price was decreased pursuant to Section 5(b)(ii) upon the issuance of
the Option or Convertible Security.  If the purchase price provided for in any
such Option referred to in subsection 5(b)(v)(C), or the additional
consideration (if any) payable upon the conversion or exchange of any
Convertible Securities referred to in subsection 5(b)(v)(C), or the rate at
which any Convertible Securities referred to in subsection 5(b)(v)(C) are
convertible into or exchangeable for shares of Common, shall be reduced at any
time under or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of shares of Common upon the
exercise of any such Option or upon conversion or exchange of any such
Convertible Security; the Conversion Price then in effect hereunder shall, upon
issuance of such shares of Common be adjusted to such amount as would have
obtained had such Option or Convertible Security never been issued and had
adjustments been made only upon the issuance of the shares of Common delivered
as aforesaid and for the consideration actually received for such Option or
Convertible Security and the shares of Common, provided that if such
readjustment is an increase in the Conversion Price, such readjustment shall not
exceed the amount (as adjusted by Sections 5(b)(i) and 5(b)(iii) by which the
Conversion Price was decreased pursuant to Section 5(b)(iii) upon the issuance
of the Option or Convertible Security.

          (vii)     Termination Of Option or Conversion Rights.  In the event of
the termination or expiration of any right to purchase shares of Common under
any Option granted after the date hereof or of any right to convert or exchange
Convertible Securities issued after the date hereof, the Conversion Price shall,
upon such termination, be readjusted to the Conversion Price that would have
been in effect at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the shares of Common issuable
thereunder shall no longer be deemed to be Shares Outstanding, provided that if
such readjustment is an increase in the Conversion Price, such readjustment
shall not exceed the amount (as adjusted by Sections 5(b)(i) and 5(b)(iii)) by
which the Conversion Price was decreased pursuant to Section 5(b)(iii) upon the
issuance of the Option or Convertible Security.  The termination or expiration
of any right to purchase shares of Common under any Option granted prior to the
date hereof or of any right to convert or exchange Convertible Securities issued
prior to the date hereof shall not trigger any adjustment to the Conversion
Price, but the shares of Common issuable under such Options or Convertible
Securities shall no longer be counted in determining the number of Shares
Outstanding on the date hereof for purposes of subsequent calculations under
this Section 5(b).

          (viii)    Excluded Securities.  Notwithstanding anything herein to the
contrary, the Conversion Price shall not be adjusted pursuant to this Section
5(b) by virtue of the issuance and/or sale of "Excluded Securities", which means
the following:  (a) up to 682,185 shares of Common, Options or Convertible
Securities to be issued and/or sold to employees, advisors (including, without
limitation, financial, technical and legal advisers), directors or officers of,
or consultants to, the Company or any of its subsidiaries pursuant to a stock
grant, stock option plan, stock purchase plan, pension or profit sharing plan or
other stock agreement or arrangement existing as of the date hereof and which
has been approved by the stockholders of the Company; (b) the reissuance of any
expired and unexercised, cancelled or forfeited Options under any plan referred
to in subsection (a) above; (c) the issuance of shares of Common, Options and/or
Convertible Securities pursuant to Options and Convertible Securities
outstanding as of the date hereof; (d) the issuance of shares of Common, Options
or Convertible Securities as a stock dividend or upon any subdivision or
combination of shares of Common or Convertible Securities; (e) the issuance of
shares of Common pursuant to the exercise of certain warrants to be issued in
connection with the issuance of the shares of Series A Preferred; or (f) shares
of Common or Convertible Securities issued and sold by and for the account of
the Company pursuant to an effective registration statement filed by the Company
pursuant to the Securities and Exchange Act of 1934, as amended.  For all
purposes of this Section 5(b), all shares of Common which are Excluded
Securities shall be deemed to have been issued for an amount of consideration
per share equal to the Conversion Price in effect at the time of issuance.  

          (ix) All calculations under this Section 5(b) shall be made to the
nearest one half of one cent ($.005) or to the nearest one-tenth of a share, as
the case may be.

          (x)  Notice of Adjustment.  Promptly after adjustment of the
Conversion Price, the Company shall give written notice thereof, by first class
mail, postage prepaid, addressed to the registered Holders at the address of
such Holders as shown on the books of the Company.  The notice shall be signed
by an officer of the Company and shall state the effective date of the
adjustment and the Conversion Price resulting from such adjustment, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.

     (c) Mechanics of Conversion.  Conversion of the Series A Preferred to
Common may be exercised in whole or in part by a Holder telecopying an executed
and completed notice of conversion ("Notice of Conversion") to the transfer
agent of the Company (the "Transfer Agent"), with a copy to the Company, and
delivering the original Notice of Conversion and the certificate representing
the shares of Series A Preferred to the Transfer Agent by hand or by express
courier within three (3) business days of exercise.  Each date on which a Notice
of Conversion is telecopied to the Transfer Agent in accordance with the
provisions hereof shall be deemed a "Conversion Date."  The Transfer Agent will
transmit the certificates representing the Common issuable upon conversion of
all or any part of the shares of Series A Preferred (together with any
certificates for replacement shares of Series A Preferred not previously
converted but included in the original certificate presented for conversion) to
the Holder via express courier within three (3) business days after the Transfer
Agent has received the original Notice of Conversion and certificate for the
shares of Series A Preferred being so converted.  The Notice of Conversion and
certificate representing the portion of the shares of Series A Preferred
converted shall be delivered as follows:

               To the Transfer Agent:

               First City Transfer Company
               111 Wood Avenue South, Suite 206
               Iselin, NJ 08830
               Attn.:    Ms. Kathy Zaleski
               (Tel) (908) 205-4517
               (Fax)     (908) 205-4544

               To the Company: 

               KTI, Inc.
               7000 Boulevard East
               Guttenberg, NJ 07093
               Attn.:    President 
               (Tel)     201-854-7777
               (Fax)     201-854-1771

or to such other person at such other place as the Company shall designate to
the Holder in writing.  The Company shall immediately notify each Holder of any
change of Transfer Agent for the Company or termination of the existing Transfer
Agent.  If there is no Transfer Agent at any time, all references in this
Section 5(c) to "Transfer Agent" shall be deemed to refer to the Company.

          (i)  No Fractional Shares.  No fractional shares shall be issued upon
the conversion of the Series A Preferred.  The Company shall pay to any Holder
who has converted all or any portion of the shares of Series A Preferred cash in
an amount equal to any fractional shares, such amount of cash to be determined
by multiplying the closing trading price on the last trading day prior to the
date of the conversion by the amount of the fractional share.

     (d)  Lost or Stolen Certificates.  Upon receipt by the Company of evidence
of the loss, theft, destruction or mutilation of any certificates representing
shares of Series A Preferred, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of the certificate(s), if mutilated, the Company shall execute
and deliver new certificate(s) of like tenor and date. However, Company shall
not be obligated to re-issue such lost or stolen certificates if Holder
contemporaneously requests Company to convert such Series A Preferred into
Common.

     (e)  Mandatory Conversion.  The Series A Preferred is subject to mandatory
conversion, at which time all shares of Series A Preferred will automatically be
converted at the Conversion Price, (i) upon the completion of a firm
underwritten public offering of Common by the Company (a "Public Offering") in
which (a) gross proceeds to the Company, before expenses and underwriters'
discounts and commissions, of at least $20,000,000 are received, (b) the Common
so offered is sold at an offering price per share to the public of at least 200%
of the Conversion Price then in effect, and (c) the Holders receive, as a
consequence of participation in such Public Offering, net proceeds equal to or
greater than $3,900,000 (a Public Offering which meets the conditions set forth
in (a), (b) and (c) above being referred to as a "Qualified Public Offering"),
or (ii) immediately following the completion of a Public Offering that is not a
Qualified Public Offering, but, (a) in which the Company receives gross
proceeds, before expenses and underwriters' discounts and commissions, of at
least $20,000,000, and (b) upon the "Market Price" (as defined below) for each
share of Common exceeding 200% of the Conversion Price then in effect for twenty
(20) consecutive trading days, and the average daily trading volume of the
Common for such twenty (20) consecutive day period exceeding 10,000 shares. 
"Market Price" shall mean the closing bid price for the Common, as reported by
the Nasdaq National Market System ("Nasdaq"), or if the Common is not traded on
Nasdaq, the closing price or, if not available, the low price of the Common in
the over-the-counter market or the principal national securities exchange on
which the Common is traded. 

     (f)  Reservation of Stock Issuable Upon Conversion.  The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common such number of its shares of Common as shall from time to time be
sufficient to effect the conversion of all then outstanding shares of Series A
Preferred.  The Company covenants and agrees that if at any time it would be
unable to fully convert all shares of Series A Preferred then outstanding, it
will promptly use its best efforts to obtain stockholder approval, within 135
days thereafter, to amend its Certificate of Incorporation to increase the
number of authorized shares of Common by an amount sufficient to permit the
conversion of all shares of Series A Preferred then outstanding.  

     (g) Redemption By Company.

          (i) Redemption Date.  The Company shall redeem all outstanding shares
of the Series A Preferred on the fifth anniversary of the date of the issuance
of the shares of Series A Preferred (the "Redemption Date").

          (ii) Redemption Price.  The redemption price per share of Series A
Preferred shall equal $12.00 per share of Series A Preferred (to be adjusted
proportionately if the shares of Series A Preferred to which such amount is
applicable are subdivided into a greater number or combined into a lesser
number).

          (iii)     Mechanics of Redemption.  The Company shall effect each such
redemption by giving notice thereof ("Redemption Notice"), by facsimile, by 5
P.M. New York City time no later than the tenth (10th) business day prior to the
Redemption Date and shall provide a copy of such redemption notice by overnight
or 2-day courier, to each Holder and the Company's transfer agent for the Series
A Preferred ("Series A Transfer Agent").  Such redemption notice shall indicate
the applicable redemption price and whether the Company has elected, at its
option, to redeem the shares of Series A Preferred for cash (a "Cash
Redemption") or for Common (a "Redemption for Stock").  In the event of a
Redemption for Stock, the Company shall also specify in the Redemption Notice
the number of shares of Common to be issued to the Holder, which shall be based
on the following formula:

Number of shares issued upon redemption of one (1) share of Series A Preferred =


                               Redemption Price           
                        _________________________________
                            Adjusted Conversion Price

where, the "Adjusted Conversion Price" shall equal ninety five percent (95%) of
the average closing bid price of the Common as reported by Nasdaq for the
previous ten (10) business days ending on the day before the Redemption Date.

          (iv) Holder's Conversion Rights.  Notwithstanding the foregoing,
Holder shall have five business days following receipt of the Redemption Notice
from the Company to elect, in its sole discretion, to convert all or part of the
Series A Preferred otherwise being redeemed.  Such conversion shall be effected
in accordance with the provisions of Section 5 hereof, and if an appropriate
Notice of Conversion is delivered to the Company in a timely manner, such shares
of Series A Preferred shall be deemed to be converted and not redeemed.

          (v)  Optional Redemption.  Upon a "Change of Control Transaction" (as
defined herein), the Company shall redeem, at the option of the Holder, upon
receipt of a written redemption request from such Holder, the Series A Preferred
for the accreted value of the shares of Series A Preferred, which shall be the
initial purchase price of $8 per share plus interest of 8.19 percent per annum
calculated based on the number of actual days elapsed in a 365 day year or 366
day year, as appropriate, plus any dividends which have been declared and which
the Holders are entitled to receive with respect to each share of Series A
Preferred.  A "Change of Control Transaction," is defined as any merger,
consolidation or reorganization of the Company pursuant to which shares of
capital stock of the Company are converted into cash, securities or other
property in which the holders of a majority of the voting capital stock of the
Company (on an as-converted and exercised basis) immediately prior thereto
beneficially own, directly or indirectly, less than 50% of the combined voting
power of the capital stock of the company surviving or resulting from such
merger, consolidation or reorganization.

          (vi) Payment of Redemption Price or Issuance of Share Certificates. 
Upon receipt of a Redemption Notice, Holder shall send its shares of Series A
Preferred being redeemed to the Company or its Series A Transfer Agent, and the
Company shall pay the applicable redemption price within three (3) business days
of receipt of the shares of Series A Preferred, if a Cash Redemption, or issue
certificates representing shares of Common, if a Redemption for Stock.  The
Company shall not be obligated to deliver the redemption price or shares of
Common, as the case may be, unless the shares of Series A Preferred so redeemed
are delivered to the Company or its Series A Transfer Agent, or, in the event
one or more certificates have been lost, stolen, mutilated or destroyed, Holder
delivers to the Company a lost certificate affidavit and indemnification
agreement reasonably satisfactory to the Company and the Series A Transfer
Agent.  Any redemption payment owed to any Holder under this Section 5(g) which
is not paid when due shall bear interest at a rate of 4% in excess of the prime
rate of interest in effect as announced by KeyBank of New York.

     Section 6.     Voting Rights.  The Holder of each outstanding share of
Series A Preferred shall have the right to one vote for each share of Common
into which each such share of Series A Preferred could then be converted
(assuming, for this purpose only, that shares of Series A Preferred are
convertible into fractional shares) at the record date for the determination of
stockholders entitled to vote on such matters or, if no such record date is
established, at the date of such vote is taken or any written consent of
stockholders is solicited.  With respect to such vote, such Holder shall have
full voting rights and powers equal to the voting rights and powers of the
holders of shares of Common, shall be entitled to notice of any stockholders'
meeting in accordance with the By-Laws of the Company, and shall be entitled to
vote, together with holders of shares of Common, with respect to any question
upon which stockholders of the Company have the right to vote.  With respect to
all matters upon which stockholders of the Company are entitled to vote, the
holders of outstanding shares of Common and the Holders of all outstanding
shares of Series A Preferred shall vote together without regard to class, except
as expressly required herein, by the Certificate of Incorporation and the By-
Laws of the Company or the Business Corporation Law of the State of New Jersey.

     Section 7.     Status of Converted Stock.  If any shares of Series A
Preferred shall be converted pursuant to Section 5 above, the shares so
converted shall be canceled, shall return to the status of authorized but
unissued Preferred Stock of no designated series, and shall not be issuable by
the Company as Series A Preferred.

     Section 8.     Protective Provision.  So long as shares of Series A
Preferred are outstanding, the Company shall not without first obtaining the
approval (by vote or written consent, as provided by the applicable laws of the
State of New Jersey) of the Holders of at least a majority of the then
outstanding shares of Series A Preferred:

     (a)  alter or change the rights, preferences or privileges of the Series A
Preferred so as to affect adversely the Series A Preferred; 

     (b)  increase the size of the authorized number of Series A Preferred; or

     (c)  do any act or thing not authorized or contemplated by this Certificate
of Designation which would result in taxation of the Holders of shares of the
Series A Preferred under Section 305 of the Internal Revenue Code of 1986, as
amended (or any comparable provision of the Internal Revenue Code as hereafter
from time to time amended).

     If Holders of at least a majority of the then outstanding shares of Series
A Preferred agree to allow the Company to alter or change the rights,
preferences or privileges of the shares of Series A Preferred, pursuant to
subsection 8(a) above, so as to affect the Series A Preferred, then the Company
will promptly deliver notice of such approved change to the Holders that did not
agree to such alteration or change."

     3.   Such resolution was duly adopted by the Board of Directors of the
Corporation on May 28, 1997.

     4.   The Restated Certificate of Incorporation, as amended, is amended so
that the designation and number of shares of each class and series acted upon in
the resolution, and the relative rights, preferences and limitations of each
such class and series, are as stated in the resolution.

     IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on its behalf this 30th day of May, 1997.

                              KTI, Inc.



                              By: /s/ Robert E. Wetzel
                                   Name:  Robert E. Wetzel
                                   Title:    Senior Vice President




                                                                    EXHIBIT 10.1

                      SERIES A PREFERRED STOCK AND WARRANT
                               PURCHASE AGREEMENT

                                    KTI, INC.


     THIS AGREEMENT is made as of the 4th day of June, 1997, between KTI, INC.,
Nasdaq Symbol "KTIE" (the "Company"), a New Jersey corporation, with its
principal office at 7000 Boulevard East, Guttenberg, New Jersey 07093, and the
purchasers listed on Schedule A attached to this Agreement (the "Purchasers").

     IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchasers agree as follows:

     Section 1.  Certain Definitions.  For purposes of this Agreement:

     "Common Stock" means the Common Stock of the Company, no par value.

     "Convertible Preferred Stock" means the shares of Series A Preferred Stock
of the Company, no par value, convertible into Common Stock as hereinafter
provided and which has the rights, preferences and privileges set forth in the
Certificate of Amendment attached hereto as Exhibit A (the "Certificate of
Amendment").

     "Purchase Price" means the aggregate purchase price of the Shares
purchased.

     "Shares" means the shares of Convertible Preferred Stock purchased pursuant
to this Agreement. 

          Section 2.  Sale of Shares and Warrants.

     2.1  Agreement to Sell and Purchase the Shares and Warrants.  On the terms
and subject to the conditions set forth in this Agreement, the Company hereby
agrees to sell, and each Purchaser hereby agrees to buy, the number of Shares
set forth opposite his or its name on Schedule A hereto, at the price of $8.00
per share.  In addition, the Company will issue to each of the Purchasers, for
no additional consideration, that number of (i) immediately exercisable six-year
warrants to purchase shares of Common Stock at an exercise price of $9.00 per
share (the "$9.00 Warrants"), and (ii) immediately exercisable six-year warrants
to purchase shares of Common Stock at an exercise price of $10.00 per share (the
"$10.00 Warrants"; collectively with the $9.00 Warrants, the "Warrants"), set
forth opposite such Purchaser's name on Schedule A hereto, as contemplated by
the Warrant Agreements in the forms attached to this Agreement as Exhibits B and
C, respectively (the "Warrant Agreements").

     2.2  Closing.  The closing of the transactions contemplated by this
Agreement shall be held at the offices of Eilenberg & Zivian, 666 Third Avenue,
New York, NY 10017, upon the execution of this Agreement by both the Company and
each Purchaser.  At or prior to the closing, the following shall occur:

     (a)  Each Purchaser shall remit by wire transfer or tendering of existing
indebtedness the Purchase Price as payment in full for the Shares and Warrants
directly to the Company, provided that such Purchaser has been notified by
counsel to Purchasers that the Company has delivered certificates representing
the Shares and Warrants as provided in subsection (b) below; and

     (b)  The Company shall deliver or cause to be delivered to counsel to
Purchasers (i) certificates representing the Shares and the Warrants purchased
by each of the Purchasers, registered in the name of each Purchaser (or any
nominee designated by a Purchaser), free and clear of all liens, claims, charges
and encumbrances, and (ii) such other certificates and documents as Purchasers'
counsel may reasonably request.  Purchasers shall receive such certificates from
Purchasers' counsel after the Company has received the Purchase Price directly
from the Purchasers.

     (c)  Wire instructions for the Company are as follows:

               Key Bank of Maine
               Portland, Maine
               ABA No. 011200608
               Account No. 020066381
               KTI Environmental Group, Inc.
               Attn.: Missy Cookson

     Section 3.  General Representations and Warranties of the Company.  The
Company hereby represents and warrants to, and covenants with, each Purchaser
that the following are true and correct as of the date of this Agreement:

     3.1  Organization; Qualification.  The Company is a corporation duly
organized and validly existing under the laws of the State of New Jersey and is
in good standing under such laws.  The Company has all requisite corporate power
and authority to own, lease and operate its properties and assets, and to carry
on its business as presently conducted.  The Company is qualified to do business
as a foreign corporation in each jurisdiction in which the ownership of its
property or the nature of its business requires such qualification, except where
failure to so qualify would not have a material adverse effect on the Company.

     3.2  Capitalization.  The authorized capital stock of the Company consists
of: 20,000,000 shares of Common Stock, of which 6,907,262 shares are currently
issued and outstanding, and 10,000,000 shares of preferred stock, of which
487,500 shares have been designated as Convertible Preferred Stock.  All issued
and outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable.  The Company has reserved and will
at all times maintain from its authorized but unissued shares of Common Stock, a
sufficient number of shares of Common Stock to permit the conversion in full of
the outstanding Shares and upon the exercise in full of the Warrants.

     3.3  Authorization.  The Company has all requisite corporate right, power
and authority to execute and deliver this Agreement and the Warrant Agreements
and to consummate the transactions contemplated hereby and thereby.  All
corporate action on the part of the Company, its directors and stockholders
necessary for the authorization, execution, delivery and performance of this
Agreement and the Warrant Agreements by the Company, the authorization, sale,
issuance and delivery of the Shares and the Warrants and the performance of the
Company's obligations hereunder has been taken.  This Agreement and the Warrant
Agreements have been duly executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company enforceable in accordance
with their terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to the indemnification provisions set forth
in Section 7.4 of this Agreement. Upon their issuance and delivery pursuant to
this Agreement, the Shares, Warrants and shares of Common Stock issuable upon
conversion of the Shares (the "Conversion Shares") and exercise of the Warrants
(the "Warrant Shares") (the Shares, Warrants, Conversion Shares and Warrant
Shares herein will collectively be referred to as the "Securities") will be
validly issued, fully paid and nonassessable and will be free of any liens,
claims or encumbrances; provided, however, that the Shares and Warrants are
subject to restrictions on transfer under state and/or federal securities laws. 
Except as set forth on Schedule 3.3, the issuance and sale of the Shares,
Warrants, the Conversion Shares and the Warrant Shares will not give rise to any
preemptive right or right of first refusal or right of participation on behalf
of any person.  Upon registration of the Conversion Shares and the Warrant
Shares pursuant to Section 7 of this Agreement, there shall be no restriction on
the transferability thereof other than applicable prospectus delivery
requirements. 

     3.4  No Conflict.  The execution and delivery of this Agreement and the
Warrant Agreements do not, and the consummation of the transactions contemplated
hereby and thereby will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation or to a
loss of a material benefit, under, (i) any provision of the Certificate of
Incorporation, and any amendments thereto, Bylaws, stockholders agreements and
any amendments thereto of the Company or (ii) any material mortgage, indenture,
lease or other agreement or instrument, permit, concession, franchise, license,
judgment, order, decree statute, law, ordinance, rule or regulation applicable
to the Company, its properties or assets, which in the case of clause (ii) above
would have a material adverse effect on the condition (financial or otherwise),
business, results of operations, prospects or financial condition of the
Company.

     3.5  Accuracy of Reports and Information.  The Company is in compliance, to
the extent applicable, with all reporting obligations under Sections 12(b), 12
(g) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").  The Company has registered its Common Stock pursuant to
Section 12 of the Exchange Act and the Common Stock is quoted and trades on
NASDAQ National Market System ("NMS").

     The Company has filed all material required to be filed pursuant to all
reporting obligations, under either Section 13(a) or 15(d) of the Exchange Act
for a period of at least twelve (12) months immediately preceding the offer or
sale of the Shares (or for such shorter period that the Company has been
required to file such material).

     3.6  SEC Filings/Full Disclosure.  None of the Company's filings with the
Securities and Exchange Commission since January 1, 1996 contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading. The Company has, since
January 1, 1996, timely filed all requisite forms, reports and exhibits thereto
with the Securities and Exchange Commission ("SEC").  The Company's Annual
Report on Form 10-K for the year ended December 31, 1996 (the "1996 10-K"), its
Quarterly Report for the period ended March 31, 1997, and all Current Reports on
Form 8-K filed by the Company from January 1, 1997, to date are referred to as
the "SEC Reports."  

     There is no fact known to the Company (other than general economic
conditions known to the public generally) that has not been disclosed in writing
to Purchaser which could reasonably be expected to have a material adverse
effect on the condition (financial or otherwise) or in the earnings, business
affairs, properties or assets of the Company, or (ii) could reasonably be
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement.

     3.7  Absence of Undisclosed Liabilities.  The Company has no material
liabilities or obligations, absolute or contingent (individually or in the
aggregate) required to be disclosed on a financial statement pursuant to
generally accepted accounting principals, except as set forth in the financial
statements included in the SEC Reports (collectively the "Financial Statements")
or as incurred in the ordinary course of business after the date of the
Financial Statements.  Since the date of the Company's last SEC Report, there
has been no event or condition of any type that has materially and adversely
affected or, to the best knowledge of the Company after inquiry, is likely to
affect materially and adversely, the Company's business, condition, affairs,
operations, properties or assets.

     3.8  Governmental Consent, etc.  No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Shares, or the
consummation of any other transaction contemplated by this Agreement or the
Warrant Agreements, except the filing with the SEC of a registration statement
on Form S-3 for the purpose of registering the Conversion Shares and Warrant
Shares underlying the Shares and the Warrants and applicable state securities
law filings.

     3.9  Intellectual Property Rights.  The Company has sufficient trademarks,
trade names, patent rights, copyrights and licenses to conduct its business as
contemplated therein.  To the Company's knowledge, neither the Company nor its
products is infringing or will infringe any trademark, trade name, patent right,
copyright, license, trade secret or other similar right of others currently in
existence which could have a material adverse effect on the condition (financial
or otherwise), business, results of operations or prospects of the Company; and
there is no claim being made against the Company regarding any trademark, trade
name, patent, copyright, license, trade secret or other intellectual property
right which could have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company.

     3.10  Material Contracts.  Except as set forth on Schedule 3.10, the
agreements to which the Company is a party described in the SEC Reports are
valid agreements, in full force and effect, the Company is not in material
breach or material default (with or without notice or lapse of time, or both)
under any of such agreements, and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements.

     3.11  Litigation.  There is no action, proceeding or investigation pending,
or to the Company's knowledge threatened, against the Company which might have,
either individually or in the aggregate, any material adverse effect on the
condition (financial or otherwise), business, results of operations or prospects
of the Company.  Except as set forth on Schedule 3.11, the Company is not a
party to or subject to the provisions of any order, writ, injunction, judgment
or decree of any court or government agency or instrumentality.  There is no
action, suit, proceeding or investigation initiated by the Company currently
pending or which the Company currently intends to initiate.

     3.12  Title to Assets.  Except as set forth in Schedule 3.12, the Company
has good and marketable title to all properties and material assets described
therein as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than such as are not material to
the business of the Company.

     3.13  Subsidiaries.  Set forth on Schedule 3.13 is a list of all of the
active corporations, partnerships, limited liabilities companies, associations
and other business entities in which the Company presently owns or controls,
directly or indirectly, an interest.

     3.14  Required Governmental Permits.  The Company is in possession of and
operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits (collectively, "Permits") from state, federal and
other regulatory authorities, all of which are valid and in full force and
effect except for such Permits the failure of which to possess would not have a
material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company.

     3.15  Listing.  The Company's Common Stock is currently eligible for
trading on the NMS and the Company has no knowledge of any facts or
circumstances which might cause such listing to be lost.  The Company will at
all times after the date of this Agreement maintain the listing of its Common
Stock on NMS, New York Stock Exchange, American Stock Exchange or other
organized, comparable United States market or quotation system reasonably
acceptable to Purchasers.  

     3.16  Other Outstanding Securities.  Except for (i) the Shares sold to
Purchasers pursuant to this Agreement, (ii) the Common Stock referenced in
Section 3.2 above, and except as otherwise fully disclosed in the SEC Reports or
as set forth in Schedule 3.16, there are no other outstanding debt or equity
securities presently convertible into shares of Common Stock.  Except for as set
forth in Schedule 3.16, the Company has no additional outstanding restricted
shares of Common Stock, or shares of Common Stock sold under Regulation S or
Regulation D under the Securities Act of 1933, as amended (the "Securities Act")
or outstanding under any other exemption from registration, which are available
for sale as unrestricted ("free trading") stock.

     3.17 No Poison Pill.  The Company represents that it does not have, and has
no current intention to adopt, a stockholder rights plan ("poison pill").

     3.18 Insurance.  All the insurable properties of the Company are insured
for the benefit of the Company in amounts deemed adequate by the Company in its
good faith judgement against all risks usually insured against by persons
operating similar properties in the localities in which such properties are
located under policies in effect and issued by insurers of recognized
responsibility.

     3.19 Fees and Commissions.  The Company has not retained any finder, broker
or other intermediary who may be entitled to compensation in connection with the
transactions contemplated by this Agreement.

     3.20 Illegal Payments.  To its best knowledge, the Company has never made
any illegal payment of any kind, directly or indirectly, including without
limitation payments, gifts or gratuities to national, state or local government
officials, employees or agents.

     3.21  Taxes.  The Company has filed or caused to be filed all federal and
state income tax returns and all other federal and state tax returns which are
required to be filed, and has paid or caused to be paid all taxes shown on said
returns or on any assessment therefor received by the Company to the extent that
such taxes have become due, or has set aside on its books reserves (segregated
to the extent required by generally accepted accounting principals) deemed by
the Company adequate with respect thereto.  There are no pending or, to the
Company's knowledge, threatened claims, notices or audits involving the Company
and any taxing authority, and there are no waivers of applicable statutes of
limitations with respect to taxes for any year currently in effect.  Proper and
accurate amounts have been withheld and remitted by the Company in respect of
all persons from whom the Company is required by law to withhold, for all
periods, in compliance with all applicable laws, rules and regulations.

     Section 4.  Representations, Warranties and Covenants of Purchaser.  Each
Purchaser, severally and not jointly, represents and warrants to, and covenants
with, the Company that the following are true and correct as of the date of this
Agreement with respect to such Purchaser:

     4.1  Authority.  Each Purchaser has all right, power, authority and
capacity to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.  This Agreement and the Warrant Agreements
have been duly executed and delivered by Purchaser and will constitute the
legal, valid and binding obligations of Purchaser, enforceable in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to the indemnification provisions set forth
in Section 7.4 of this Agreement.

     4.2  Investment Experience.  Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act.  Purchaser is aware of the
Company's business affairs and financial condition and has had access to and has
acquired sufficient information about the Company, including the SEC Reports, to
reach an informed and knowledgeable decision to acquire the Shares.  Purchaser
has such business and financial experience as is required to give him or it the
capacity to protect his or its own interests in connection with the purchase of
the Shares and the acquisition of the Warrants.

     4.3  Investment Intent.  Without limiting his or its ability to resell the
Securities pursuant to an effective registration statement, Purchaser represents
that it is purchasing the Shares for investment purposes. Purchaser understands
that his or its acquisition of the Shares and the Warrants has not been
registered under the Securities Act or registered or qualified under any state
securities law in reliance on specific exemptions therefrom, which exemptions
may depend upon, among other things, the bona fide nature of Purchaser's
investment intent as expressed herein.  Purchaser will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of his
or its Securities except in compliance with the Securities Act and any
applicable state securities laws, and the rules and regulations promulgated
thereunder.

     4.4  Registration or Exemption Requirements.  Purchaser further
acknowledges and understands that the Shares and the Warrants may not be resold
or otherwise transferred except in a transaction registered under the Securities
Act and any applicable state securities laws or unless an exemption from such
registration is available.  Purchaser understands that the certificate(s)
evidencing the Shares and the Warrants will be imprinted with a legend as
provided in Section 4.7 below, that prohibits the transfer thereof unless (i)
they are registered or such registration is not required, and (ii) if the
transfer is pursuant to an exemption from registration, an opinion of counsel
reasonably satisfactory to the Company is obtained to the effect that the
transaction is so exempt.

     4.5  No Legal, Tax or Investment Advice.  Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Shares and the acquisition and
issuance of the Warrants constitutes legal, tax or investment advice.  Purchaser
has consulted such legal, tax and investment advisors as he or it, in his or its
sole discretion, has deemed necessary or appropriate in connection with the 
purchase of the Shares and acquisition of the Warrants.

     4.6  Purchaser Review.  Purchaser hereby represents and warrants that
Purchaser has carefully examined the SEC Reports and the Financial Statements
contained therein.  Purchaser acknowledges that the Company has made available
to Purchaser all documents and information that Purchaser has requested relating
to the Company and has provided answers to all of his or its questions
concerning the Company, the Shares and the Warrants.  Nothing stated in the
previous two sentences, however, shall be deemed to affect the representations
and warranties of the Company contained in this Agreement.

     4.7  Legend.  The certificate or certificates representing the Securities
shall be subject to a legend restricting transfer under the Securities Act, such
legend to be substantially as follows:

          "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
     INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. 
     SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
     REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT WHICH IS CONFIRMED IN
     A LEGAL OPINION SATISFACTORY TO THE COMPANY."

The certificates shall also include any legends required by any applicable state
securities laws.

     The legend(s) endorsed on a stock certificate pursuant to this Section 4.7
or on any certificate representing any of the Securities shall be removed and
the Company shall issue a replacement certificate without such legend to the
holder of such certificate if the Securities represented by such certificate are
registered under the Securities Act or if such holder provides to the Company an
opinion of counsel to the effect that a public sale, transfer or assignment of
such Securities may be made without registration.

     Section 5.  Conditions to Purchaser's Obligation to Purchase.  The Company
understands that Purchaser's obligation to purchase the Shares is conditioned
upon:

         
     (a)  Delivery of the Shares and Warrants to counsel to Purchaser; 

     (b)  A certified copy of an amendment to the Company's certificate of
incorporation, certified by the Secretary of New Jersey; 

     (c)  Receipt of an opinion letter from counsel to the Company, or the
Company's general counsel, as the case may be, in form reasonably satisfactory
to Purchaser's counsel, to the effect that:  

          (i)  The Company is duly incorporated, validly existing and in good
          standing in the jurisdiction of its incorporation;

          (ii)  Except as set forth on Schedule 3.11, there is no action,
          proceeding or investigation pending, or to such counsel's knowledge,
          threatened against the Company which might result, either individually
          or in the aggregate, in any material adverse change in the business,
          prospects, conditions, affairs or operations of the Company;

          (iii)  The Company is not a party to or subject to the provisions of
          any order, writ, injunction, judgment or decree of any court or
          government agency or instrumentality;

          (iv)  There is no action, suit, proceeding or investigation initiated
          by the Company currently pending or which the Company currently
          intends to initiate;

          (v)  All issued and outstanding shares of Common Stock have been duly
          authorized and validly issued and are fully paid and nonassessable;

          (vi)  The Certificate of Amendment has been duly filed with the State
          of New Jersey and this Agreement, the Warrant Agreements, the issuance
          of the Shares and Warrants, and the issuance of the Conversion Shares
          and Warrant Shares, have been duly approved by all required corporate
          action and that all such Securities, upon delivery in accordance with
          this Agreement and the Warrant Agreements, shall be validly issued and
          outstanding, fully paid and nonassessable.

          (vii) The execution, delivery and performance of this Agreement and
          the Warrant Agreements by the Company, and the consummation of the
          transactions contemplated thereby, will not, with or without the
          giving of notice or the passage of time or both:

               (A)  Violate the provisions of any law, rule or regulation
               applicable to the Company;

               (B)  Violate the provisions of the charter or bylaws of the
               Company; 

               (C)  To the best of counsel's knowledge, violate any judgment,
               decree, order or award of any court, governmental body or
               arbitrator; or

               (D)  To the best of counsel's knowledge, conflict with, or result
               in the breach or termination of any term or provision of, or
               constitute a default under, or cause any acceleration under, or
               cause the creation of any lien, charge or encumbrance upon the
               properties or assets of the Company pursuant to, any note, bond,
               indenture, mortgage, lease, deed of trust or other instrument,
               obligation, or agreement to which the Company is a party or by
               which the Company, or any of its properties is or may be bound;

          (viii)  This Agreement and the Warrant Agreements constitute the valid
     and legally binding obligations of the Company and are enforceable against
     the Company in accordance with their respective terms, subject to laws of
     general application relating to bankruptcy, insolvency and the relief of
     debtors and rules of law governing specific performance, injunctive relief
     or other equitable remedies, and, with respect to this Agreement, to
     limitations of public policy as they may apply to the indemnification
     provisions set forth in Section 7.4 thereof.

     (e)  Purchaser's reasonable satisfaction that no material adverse change in
the Company's business or prospects has occurred since the date of the Company's
last SEC Report; and

     Section 6.  Conditions to Company's Obligation to Sell.  Each Purchaser
understands that the Company's obligation to sell the Shares and Warrants is
conditioned upon delivery to the Company by Purchaser of good funds as payment
in full for the purchase of the Shares.

     Section 7.  Registration of the Shares; Compliance with the Securities Act.

     7.1  Definitions.  For the purpose of this Section 7:

     (a)  the term "Registration Statement" shall mean any registration
statement required to be filed by Section 7.2 below, and shall include any
preliminary prospectus, final prospectus, exhibit or amendment included in or
relating to such registration statement; and

     (b)  the term "untrue statement" shall include any untrue statement or
alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

     7.2  Registration Procedures and Expenses.  The Company shall:

     (a)  within thirty (30) days after the date of this Agreement and in
sufficient time to have such registration effective one hundred twenty (120)
days from the date of this Agreement, file, subject to receipt of necessary
information from each of the Purchasers, with the SEC a registration statement
under the Securities Act on a form which is appropriate, as determined by the
Company, to register the Conversion Shares and the Warrant Shares for sale by
the Purchasers who shall provide, within ten (10) business days after the
receipt of a written request therefor, such information as the Company may
reasonably request for use in connection with the Registration Statement;

     (b)  use its best efforts, subject to receipt of necessary information from
Purchaser, to cause such Registration Statement to become effective as promptly
after filing as practicable;

     (c)  prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective until termination of
such obligation as provided in Section 7.8 below; provided, however, that upon
the Company giving written notice to each Purchaser of the occurrence of any of
the following events, (1) the issuance by the SEC of a stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any prospectus or the initiation of any proceedings for
that purpose, (2) the happening of any event that makes any statement of a
material fact made in the Registration Statement, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any changes in such Registration Statement or documents
so that the Registration Statement will not contain any untrue statement or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (3) any reasonable determination by
the Company that a post-effective amendment to the Registration Statement would
be appropriate, then the Purchasers shall forthwith discontinue the disposition
of Conversion Shares or Warrant Shares, as the case may be, covered by the
Registration Statement until the Purchaser has received copies of the
supplemented or amended Registration Statement or prospectus, as applicable, or
until such Purchaser is advised in writing by the Company that the use of the
applicable Registration Statement or prospectus may be resumed.  In the event of
any suspension in accordance with the preceding sentence, the time period
regarding the effectiveness of the Registration Statement set forth in Section
7.8 shall be extended by one day for each day a Purchaser could not dispose of
the Conversion Shares of Warrant Shares, as the case may be, as a result of such
suspension.  The Company will use its best efforts to cause any such suspension
to be lifted within 15 business days;

     (d)  furnish to Purchaser with respect to the Conversion Shares and Warrant
Shares registered on the Registration Statement (and to each underwriter, if
any, of such Conversion Shares and Warrant Shares) such number of copies of
prospectuses in conformity with the requirements of the Securities Act and such
other documents as Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Conversion Shares and
Warrant Shares by Purchaser; 

     (e)  file such documents as may be required of the Company for normal
securities law clearance for the resale of the Conversion Shares and Warrant
Shares in such states of the United States as may be reasonably requested by
Purchaser; provided, however, that the Company shall not be required in
connection with this paragraph (e) to qualify as a foreign corporation or
execute a general consent to service of process in any jurisdiction; and

     (f)  bear all expenses in connection with the procedures in paragraphs (a)
through (e) of this Section 7.2 and the registration of the Conversion Shares
and Warrant Shares on such Registration Statement and the satisfaction of the
blue sky laws of such states, including the reasonable fees and expenses of
legal counsel to Purchaser in connection with the procedures in paragraph (a)
through (e) of this Section 7.2, other than underwriting discounts and selling
commissions which shall be borne by Purchaser.

     7.3  Underwriter.  The Company understands that each Purchaser disclaims
being an "underwriter" (as such term is defined under the Securities Act and the
rules and regulations promulgated thereunder (an "Underwriter")), but such
Purchaser being deemed an Underwriter shall not relieve the Company of any of
its obligations under this Section 7.

     7.4  Indemnification. 

     (a)  General Indemnification.  Each of the Company and each Purchaser
(severally and not jointly) agrees to indemnify the other and to hold the other
harmless from and against any and all losses, damages, liabilities, reasonable
costs and expenses (including reasonable attorneys' fees) which the other may
sustain or incur in connection with the breach by the indemnifying party of any
representation, warranty or covenant made by it in this Agreement.

     (b)  Indemnification for Registration Statement.

          (i)  By Company.  To the extent permitted by law, the Company will
indemnify and hold harmless each Purchaser and such Purchaser's nominee or
transferee (collectively, the "Holders"), the directors, if any, of such
Holders, the officers, if any, of such Holders who sign the Registration
Statement, each person, if any, who controls such Holder, any underwriter (as
defined in the Securities Act) for the Holders and each person, if any, who
controls any such underwriter within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, expenses or liabilities
(joint or several) to which any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages,
expenses or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a "Violation"): 
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein, in light of
the circumstance in which they are made, not misleading or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the Company will
reimburse the Holders and each such underwriter or controlling person, promptly
as such expenses are incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability action or proceeding; provided, however, that (i) the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or expenses arises out of or is based upon any
Violation in any final prospectus, if such Violation is corrected in an
amendment or supplement to such final prospectus and the Holder thereafter fails
to deliver such prospectus as so amended or supplemented prior to or
concurrently with the sale of the Securities to the person asserting such loss,
claim, damage, liability or expense after the Company furnished such Holder with
a copy of such amended or supplemented prospectus; and (ii) the Company shall
not be liable of any person uses a prospectus or amendment or supplement thereto
following the giving of notice by the Company as provided in Section 7.2(c); and
provided further, however, that the indemnity agreement contained in this
Section 7.4(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld, nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
the Holders or any such underwriter or controlling person, as the case may be. 
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holders or any such underwriter or
controlling person and shall survive the transfer of the Securities by Holders.

          (ii)  By Holders.  To the extent permitted by law, each Holder,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration Statement,
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, any underwriter and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such Holder or underwriter,
against any losses, claims, damages or liabilities (joint or several) to which
any of them may become subject, under the Securities Act, the Exchange Act or
other federal state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such Registration Statement, and
such Holder will reimburse any legal or other expenses reasonably incurred by
any of them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 7.4(b) shall not apply to amounts paid in
settlement of such loss, claim, damage, liability or action if such settlement
is effected without the consent of such Holder, which consent shall not be
unreasonably withheld; and provided further, that the Holder shall be liable
under this paragraph for only that amount of losses, claims, damages and
liabilities as does not exceed the net proceeds to such Holder as a result of
the sale of the Securities pursuant to such Registration Statement

     (c)  Procedure for Indemnification.  Promptly after receipt by an
indemnified party under this Section 7.4 of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 7.4, deliver to the indemnifying party a written notice of commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel for the indemnifying party, representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding.  The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Section 7.4 only to the extent
prejudicial to its ability to defend such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party other than under this Section 7.4. 
The indemnification required by this Section 7.4 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, promptly as such expense, loss, damage or liability is incurred.

     (d)  Contribution.  To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it otherwise would be
liable under this Section 7.4 to the extent permitted by law, provided that (i)
no contribution shall be made under the circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in this
Section 7.4, (ii) no seller of the Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of the Securities who was not
guilty of such fraudulent misrepresentation and (iii) contribution by any seller
of the Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Securities.  

     7.5  Information Available.  So long as any registration statement is
effective covering the resale of the Conversion Shares or Warrant Shares, the
Company will furnish to Purchaser:

     (a)  as soon as possible after available, one copy of (i) its Annual Report
to Stockholders (which Annual Report shall contain financial statements audited
in accordance with generally accepted accounting principles in the United States
of America by a national firm of certified public accountants); (ii) if not
included in substance in the Annual Report to Stockholders, its annual report on
Form 10-K within 105 days after the end of each fiscal year of the Company,
(iii) each of its Quarterly Reports to Stockholders, and its quarterly report on
Form 10-Q within sixty (60) days after the end of each fiscal quarter, (iv) each
of its Current Reports on Form 8-K within five (5) business days of filing with
the SEC, and (v) a full copy of the Registration Statement covering the
Conversion Shares and Warrant Shares (the foregoing, in each case, excluding
exhibits); and

     (b)  upon the reasonable request of Purchaser, such other information that
is generally available to the public.

     7.6  Rule 144 Reporting.  With a view to making available the benefits of
certain rules and regulations of the SEC which may at any time permit the sale
of the Conversion Shares and the Warrant Shares to the public without
registration, the Company agrees to use its best efforts to:

     (a)  make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date on which the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;

     (b)  use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act;

     (c)  to furnish to each Purchaser forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company, and such other reports
and documents of the Company and other information in the possession of or
reasonably obtainable by the Company as Purchaser may reasonably request in
availing itself of any rule or regulation of the SEC allowing Purchaser to sell
any such Conversion Shares or Warrant Shares without registration.

     7.7  Transfer of Conversion Shares or Warrant Shares Stock After
Registration.  Purchaser hereby covenants with the Company not to make any sale
of the Conversion Shares or Warrant Shares except either (i) in accordance with
the Registration Statement, in which case Purchaser covenants to comply with the
requirement of delivering a current prospectus, (ii) in accordance with Rule
144, in which case Purchaser covenants to comply with Rule 144, or (iii) as
otherwise permitted by applicable law.

     7.8  Termination of Obligations.  The obligations of the Company pursuant
to Sections 7.2 and 7.6 hereof shall cease and terminate upon the earlier of (i)
such time as all of the Conversion Shares or Warrant Shares have been sold by
Purchaser pursuant to an effective Registration Statement and (ii) the sixth
(6th) anniversary of the date of this Agreement.

     Section 8.  Company Covenants.

     8.1  Board of Directors.  The Company will exercise all authority and use
its best efforts, consistent with applicable law, to cause one individual
designated by Purchasers holding more than 50% of the Securities and reasonably
satisfactory to the Company to be elected to the Board of Directors of the
Company for so long as Purchasers collectively hold at least 50% of the Shares. 
The Company agrees that such individual will also serve as a member of the
Company's Compensation and Audit Committees.  If any individual so designated
shall cease to serve as a director for any reason other than pursuant to the
preceding sentence, the vacancy created thereby shall be filled by the Board
with another individual designated by Purchasers holding more than 50% of the
Securities reasonably satisfactory to the Company.  In addition, the Company
agrees that Purchasers shall be provided with at least five (5) days' prior
written notice of each meeting of the Board, or such lesser notice as is
provided to the members of the Company's Board of Directors, and Purchasers
holding more than 50% of the Securities shall have the right to designate one
(1) additional person to attend such meeting as an observer ("Observer").  The
Observer may participate in any such Board meeting in person or via telephone
conference at the request of the Observer.  The Company shall promptly reimburse
the reasonable expenses of the director nominated by Purchasers and the Observer
incurred in connection with attendance at each Board meeting, including without
limitation coach-class airfare and commensurate hotel accommodations.  The
Company hereby covenants to hold Board meetings no less frequently than four
times per year.

     8.2  Management Compensation.  The Company shall, immediately following the
execution of this Agreement, conform its existing agreements with executive
officers of the Company regarding base compensation and bonuses payable to such
officers in accordance with the terms as set forth in Schedule 8.2.

     8.3  Financial Documentation; Inspection Rights.  From the date hereof and
until all Shares have been converted or redeemed, the Company will provide to
all holders of Shares the information otherwise required in Section 7.5(a) and
(b) hereof, together with monthly unaudited financial statements that include,
without limitation, a balance sheet, income statement and statement of cash
flows no later than 15 days after month-end, as well as an annual budget for
each fiscal year no later than 30 days after the commencement of such fiscal
year.  The Company will also permit any Purchaser holding more than 50% of the
Shares to review all books and records of the Company relating to operations and
finance, as available, provided such information is kept confidential, and to
visit the Company's facilities upon reasonable prior notice.

     8.4  Lockup; Right of First Refusal.  The Company will not, without the
prior approval in writing from Purchasers, issue or sell (i) any debt security
convertible into equity securities of the Company, or (ii) any equity securities
of the Company, with a conversion price of less than $8.00 per share or a sale
price of less than $8.00 per share, as the case may be, for a period of one
hundred eighty (180) days following the date of this Agreement.  If the Company
wishes to complete any sale of convertible debt or equity securities for a
period of eighteen (18) months beginning on the day following the one hundred
and eighty (180) day period referenced above, Purchasers shall have the right of
first refusal to participate in such offering or offerings up to the aggregate
amount of $3,500,000, and shall have ten (10) business days to reply in writing
after receipt of written notice of any such proposed financing from the Company.
If one or more of the Purchasers do not desire to participate in any such
offering, or do not notify the Company of its desire to participate in such
offering prior to the expiration of the ten (10) business day period set forth
above, the Company shall be free to sell the securities so offered on terms no
less favorable than those offered to Purchasers. 

     8.5  Certain Restriction and Limitations.  Without the approval, by vote or
written consent, of holders of more than fifty percent (50%) of the Shares
outstanding at any time, the Company will not:

     (a)  Enter into any agreement, indenture or other instrument which contains
     any provisions restricting the issuance by the Company of the Warrant
     Shares or the Conversion Shares;

     (b)  Declare any cash dividends on Common Stock until May 31, 1999;  

     (c)  Voluntarily dissolve or liquidate; or

     (d)  Enter into any agreement restricting the ability of any Purchaser to
     transfer the Securities.


     Section 9.  Legal Fees and Expenses.  The Company hereby agrees to pay the
reasonable fees of Purchaser's counsel (up to $10,000) and additional reasonable
out-of-pocket expenses of Purchaser (up to $20,000 in aggregate including legal
fees) in connection with this Agreement and the transactions contemplated
hereby.  Such amounts shall be paid on the date of this Agreement by wire
transfer to such accounts as Purchaser or its counsel may direct.

     Section 10.  Notices.  All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first class
registered or certified airmail, postage prepaid, or shall be sent by overnight
courier or by facsimile, and shall be deemed given when received:

               (a)  if to the Company, to 

                    KTI Inc.
                    7000 Boulevard East
                    Guttenberg, NJ  07093
                    Attention: Martin J. Sergi, President
                    Tel: 201-854-7777
                    Fax: 201-854-1771 

                    copy to:

                    McDermott, Will & Emery
                    50 Rockefeller Plaza
                    New York, NY 10020
                    Attention: Brian Hoffman, Esq.
                    Tel: 212-547-5427
                    Fax: 212-547-5444

or to such other person at such other place as the Company shall designate to
Purchaser in writing;

               (b)  if to any Purchaser, to the address set forth under such
                    Purchaser's name on Schedule A attached to this Agreement,
                    with a copy to:

                    Eilenberg & Zivian
                    666 Third Avenue, 30th Fl.
                    New York, NY  10017
                    Attn:  Bruce A. Zivian, Esq.
                    Tel: 212-986-2468
                    Fax: 212-986-2399

or at such other address or addresses as may have been furnished to the Company
in writing; or

     (c)  if to any transferee or transferees of a Purchaser, at such address or
addresses as shall have been furnished to the Company at the time of the
transfer or transfers, or at such other address or addresses as may have been
furnished by such transferee or transferees to the Company in writing.

     Section 11.  Miscellaneous.

     11.1  Entire Agreement.  This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof.  No statement, representation, warranty,
covenant or agreement or any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.

     11.2  Amendments.  This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and by Purchaser. 
Any provisions of the Series A Preferred Stock can only be modified or amended
in accordance with the provisions of Section 9 of the Certificate of Amendment.

     11.3  Headings.  The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.

     11.4  Severability.  In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

     11.5  GOVERNING LAW/JURISDICTION.  THIS AGREEMENT WILL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
EXCEPT FOR MATTERS ARISING UNDER THE SECURITIES ACT, WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICTS OF LAW.  EACH OF THE PARTIES CONSENTS TO THE
JURISDICTION OF THE COURTS OF OR LOCATED IN THE STATE OF ILLINOIS, CITY OF
CHICAGO, IN CONNECTION WITH ANY DISPUTE ARISING UNDER THIS AGREEMENT AND HEREBY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY
OBJECTION BASED ON FORUM NON CONVENIENS, TO THE BRINGING OF ANY SUCH PROCEEDING
IN ANY FEDERAL OR STATE COURT LOCATED IN SUCH CITY.  EACH PARTY HEREBY AGREES
THAT IF ANOTHER PARTY TO THIS AGREEMENT OBTAINS A JUDGMENT AGAINST IT IN SUCH A
PROCEEDING, THE PARTY WHICH OBTAINED SUCH JUDGMENT MAY ENFORCE SAME BY SUMMARY
JUDGMENT IN THE COURTS OF ANY COUNTRY HAVING JURISDICTION OVER THE PARTY AGAINST
WHOM SUCH JUDGMENT WAS OBTAINED, AND EACH PARTY HEREBY WAIVES ANY DEFENSES
AVAILABLE TO IT UNDER LOCAL LAW AND AGREES TO THE ENFORCEMENT OF SUCH A
JUDGMENT.  IN ADDITION, THE PARTIES AGREE THAT THE PARTY AGAINST WHOM SUCH
JUDGMENT WAS OBTAINED WILL PAY THE LEGAL FEES OF THE PARTY OBTAINING SUCH
JUDGMENT.  EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS IN ANY SUCH PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH HEREIN. 
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.

     11.6 Recovery of Attorney's Fees.  Should any party bring an action to
enforce the terms of this Agreement then, if Purchaser prevails in such action
it should be entitled to recovery of its attorney's fees from the Company, and
if the Company prevails in such action it shall be entitled to recovery of its
attorney's fees from Purchaser.

     11.7  Fees.  The Company acknowledges that Purchaser shall have no respos1
nsibility for the payment of any of the Company's fees in connection with this
offering.

     11.8  Counterparts/Facsimile.  This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other party.  In lieu of the original, a facsimile
transmission or copy of the original shall be as effective and enforceable as
the original.

     11.9  Publicity.  Purchaser shall not issue any press releases or otherwise
make any public statement with respect to the transactions contemplated by this
Agreement without the prior written consent of the Company, except as may be
required by applicable law or regulation.

     11.10  Survival.  The representations and warranties in this Agreement
shall survive the closing of the transactions contemplated by this Agreement.

                              *****END OF TEXT*****




          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their duly authorized representatives the day and year first above
written.


                              KTI, Inc.


                              By /s/ Robert E. Wetzel, Esq.
                                     Officer


                              PURCHASER: 


                              By 
                              Its: 



                                                                    EXHIBIT 10.2

                                WARRANT AGREEMENT


     WARRANT AGREEMENT, dated as of June 4, 1997, between KTI Inc., a New Jersey
corporation (the "Company"), and the persons listed on Exhibit A hereto (each a
"Holder" and collectively "Holders").

     WHEREAS, each Holder is being issued the warrants described herein (the
"Warrant") to purchase that number of shares of common stock, no par value, of
the Company ("Shares") in connection with and consideration for its purchase of
shares of the Company's Series A Preferred Stock pursuant to that certain Series
A Preferred Stock and Warrant Purchase Agreement dated as of June 4, 1997, among
the Company and the Holders (the "Stock Purchase Agreement").

     NOW, THEREFORE, in consideration of the premises herein set forth and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     1.  Issue.  The Company hereby issues to each Holder a certificate (the
"Warrant Certificate") dated as of the date hereof providing such Holder with
the right to purchase, at any time until 5:30 p.m., New York time, on June 4,
2003, that number of Shares set forth opposite such Holder's name on Exhibit A
hereto (subject to adjustment as provided in Section 7 below, the "Warrant
Shares") at an initial exercise price equal to $9.00 per Share (as such price
may be adjusted pursuant to Section 7 below, the "Exercise Price").  

     2.  Warrant Certificate.  The Warrant Certificate to be delivered pursuant
to this Agreement shall be in the form set forth in Exhibit X attached to this
Agreement, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Agreement.

     3.  Exercisability of Warrants.  The Warrants shall be immediately
exercisable.

     4.  Procedure for Exercise of Warrants.

     4.1  Cash Exercise.  The Warrants are exercisable, in whole or in part, at
the Exercise Price then in effect payable by wire transfer, certified check or
official bank check in New York Clearing House funds.  Upon surrender of a
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price for the Warrant Shares purchased, at
the Company's principal offices in New Jersey (presently located at 7000
Boulevard East, Guttenberg, NJ 07093), Holder shall be entitled to receive a
certificate for the Warrant Shares so purchased.  In the case of the purchase of
less than all the Warrant Shares purchasable under a Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Warrant Shares purchasable thereunder.

     4.2  Cashless Exercise.  In addition to the exercise of all or a portion of
a Warrant by the payment of the Exercise Price as set forth in Section 4.1
above, and in lieu of any such payment, the Holder has the right to exercise a
Warrant, in full or in part, by surrendering the Warrant Certificate with the
annexed Form of Election to Purchase duly executed, in exchange for the number
of Shares equal to the product of (x) the number of Shares as to which the
Warrant is being exercised, multiplied by (y) a fraction, the numerator of which
is the "Current Market Price" of the Shares (as defined below) less the Exercise
Price then in effect, and the denominator of which is the Current Market Price.

     4.3  Current Market Price.  The term "Current Market Price" means (i) if
the Shares are traded in the over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"),
the average per Share closing bid prices on the twenty (20) consecutive trading
days immediately preceding the date of exercise, as reported by NASDAQ or an
equivalent generally accepted reporting service, or (ii) if the Shares are
traded on a national securities exchange, the average for the twenty (20)
consecutive trading days immediately preceding the exercise date of the daily
per Share closing prices on the principal stock exchange on which the Shares are
listed, as the case may be.  The closing price referred to in clause (ii) above
shall be the last reported sales price or, if no such reported sale takes place
on such day, the average of the reported closing bid and asked prices, in either
case on the national securities exchange on which the Shares are then listed.

     5.   Issuance of Certificate.  Upon the exercise of a Warrant, the issuance
of a certificate for Warrant Shares shall be made forthwith (and in any event
within three (3) business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificate shall (subject to the provisions of
Section 8 below) be issued in the name of, or in such names as may be directed
by, the Holder thereof.

     Each Warrant Certificate and each certificate representing Warrant Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the then present Chairman or Vice Chairman of the Board of Directors or
President or any Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the then
present Secretary or any Assistant Secretary of the Company.  Each Warrant
Certificate shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.

     6.   Registration Under the Securities Act of 1933.  Each Warrant, the
Warrant Shares and any other securities issuable upon exercise of a Warrant
("Other Securities") have not been registered under the Securities Act of 1933,
as amended (the "Act").  Upon exercise, in whole or in part, of a Warrant, a
certificate representing the Warrant Shares underlying such Warrant, and any of
the Other Securities issuable upon exercise of such Warrant (collectively, the
"Warrant Securities") shall bear the following legend unless such Warrant Shares
previously have been registered under the Act in accordance with the terms of
the Stock Purchase Agreement:

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), AND
     MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
     REGISTRATION STATEMENT UNDER THE ACT, OR (ii) AN OPINION OF COUNSEL,
     IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE
     ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
     AVAILABLE.

A Warrant may be sold, transferred, assigned, hypothecated or otherwise disposed
of, in whole or in part, without restriction, subject to compliance with
applicable securities laws. 

     7.  Adjustments to Exercise Price and Number of Securities.  The Exercise
Price and, in some cases, the number of Warrant Shares purchasable upon the
exercise of the Warrants, shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 7.  

     7.1  Subdivision or Combination of Shares and Share Dividend.  If the
Company shall at any time subdivide its outstanding Shares into a greater number
of Shares or declare a dividend upon the Shares payable solely in Shares, the
Exercise Price in effect immediately prior to such subdivision or declaration
shall be proportionately reduced, and the number of Warrant Shares issuable upon
exercise of the Warrants shall be proportionately increased.  Conversely, if the
outstanding Shares of the Company shall be combined into a smaller number of
Shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased, and the number of Warrant Shares issuable upon
exercise of the Warrants shall be proportionately reduced.

     7.2  Dilutive Issuances.  If the Company shall sell or issue Shares at any
time after the date of this Agreement and prior to expiration of any Warrant,
other than "Excluded Securities" (as defined below), at a consideration per
Share less than the Exercise Price then in effect, the Exercise Price shall be
adjusted to a new Exercise Price determined by dividing

          (a)  an amount equal to (i) the total number of "Shares Outstanding"
          (as defined below immediately prior to such issuance, multiplied by
          the Exercise Price immediately prior to such issuance, plus (ii) the
          aggregate of the amount of all consideration, if any, received by the
          Company upon such issuance, by

          (b)  the total number of Shares Outstanding immediately after such
          issuance or sale.

In no event shall any such adjustment be made pursuant to this Section 7.2 if it
would increase the Exercise Price in effect immediately prior to such
adjustment, except as provided in Sections 7.2.3 and 7.2.4.  Upon each
adjustment of the Exercise Price pursuant to this Section 7.2, the holder of any
Warrant shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment, and dividing the product thereof by the Exercise Price
resulting from such adjustment.

          7.2.1  Definitions.  For purposes of this Section 7.2, the following
definitions shall apply:

          (a)  "Convertible Securities" shall mean any indebtedness or
securities convertible into or exchangeable for Shares.

          (b)  "Options" shall mean any rights, warrants or options to subscribe
for or purchase Shares or Convertible Securities other than rights, warrants or
options to purchase Excluded Securities.

          (c)  "Shares Outstanding" shall mean the aggregate of all Shares
outstanding and all Shares issuable upon exercise of all outstanding Options and
conversion of all outstanding Convertible Securities.

          7.2.2  For the purposes of this Section 7.2, the following provisions
shall also be applicable:

               7.2.2.1  Cash Consideration.  In case of the issuance or sale of
     additional Shares for cash, the consideration received by the Company
     therefor shall be deemed to be the amount of cash received by the Company
     from the recipients or purchasers of the additional Shares for such Shares.

               7.2.2.2  Non-Cash Consideration.  In case of the issuance
     (otherwise than upon conversion or exchange of Convertible Securities) or
     sale of additional Shares, Options or Convertible Securities for a
     consideration other than cash or a consideration a part of which shall be
     other than cash, the fair value of such consideration as determined by the
     Board of Directors of the Company in the good faith exercise of its
     business judgment, irrespective of the accounting treatment thereof, shall
     be deemed to be the value of the consideration other than cash received by
     the Company for such securities.

               7.2.2.3  Options and Convertible Securities.  If the Company
     shall in any manner issue or grant any Options or any Convertible
     Securities, the total maximum number of Shares issuable upon the exercise
     of such Options or upon conversion or exchange of the total maximum amount
     of such Convertible Securities (in each case, without giving effect to any
     future operation of any anti-dilution clauses in any such Option or
     Convertible Security at the time of such issuance or grant) at the time
     such Convertible Securities first become convertible or exchangeable shall
     (as of the date of issue or grant of such Options or, in the case of the
     issue or sale of Convertible Securities other than where the same are
     issuable upon the exercise of Options, as of the date of such issue or
     sale) be deemed to be issued and to be outstanding for the purpose of this
     Section 7.2 and to have been issued for the sum of the amount (if any) paid
     for such Options or Convertible Securities and the amount (if any) payable
     upon the exercise of such Options or upon conversion or exchange of such
     Convertible Securities at the time such Convertible Securities first become
     convertible or exchangeable; provided that, subject to the provisions of
     Section 7.2.3, no further adjustment of the Exercise Price shall be made
     upon the actual issuance of any such Shares or Convertible Securities or
     upon the conversion or exchange of any such Convertible Securities.

          7.2.3  Change in Option Price or Conversion Rate.  If the purchase
price provided for in any Option referred to in subsection 7.2.2.3, or the rate
at which any Convertible Securities referred to in subsection 7.2.2.3 are
convertible into or exchangeable for Shares shall change at any time (other than
under or by reason of provisions designed to protect against dilution), then,
for purposes of any adjustment required by Section 7.2, the Exercise Price in
effect at the time of such event shall be readjusted to the Exercise Price that
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold, provided that if such readjustment is an
increase in the Exercise Price, such readjustment shall not exceed the amount
(as adjusted by Sections 7.1 and 7.2) by which the Exercise Price was decreased
pursuant to Section 7.2 upon the issuance of the Option or Convertible Security 
If the purchase price provided for in any such Option referred to in
subsection 7.2.2.3, or the additional consideration (if any) payable upon the
conversion or exchange of any Convertible Securities referred to in
subsection 7.2.2.3, or the rate at which any Convertible Securities referred to
in subsection 7.2.2.3 are convertible into or exchangeable for Shares, shall be
reduced at any time under or by reason of provisions with respect thereto
designed to protect against dilution, then in case of the delivery of Shares
upon the exercise of any such Option or upon conversion or exchange of any such
Convertible Security; the Exercise Price then in effect hereunder shall, upon
issuance of such Shares, be adjusted to such amount as would have obtained had
such Option or Convertible Security never been issued and had adjustments been
made only upon the issuance of the Shares delivered as aforesaid and for the
consideration actually received for such Option or Convertible Security and the
Shares, provided that if such readjustment is an increase in the Exercise Price,
such readjustment shall not exceed the amount (as adjusted by Sections 7.1 and
7.2) by which the Exercise Price was decreased pursuant to Section 7.2 upon the
issuance of the Option or Convertible Security.

          7.2.4  Termination Of Option or Conversion Rights.  In the event of
the termination or expiration of any right to purchase Shares under any Option
granted after the date of this Agreement or of any right to convert or exchange
Convertible Securities issued after the date of this Agreement, the Exercise
Price shall, upon such termination, be readjusted to the Exercise Price that
would have been in effect at the time of such expiration or termination had such
Option or Convertible Security, to the extent outstanding immediately prior to
such expiration or termination, never been issued, and the Shares issuable
thereunder shall no longer be deemed to be Shares Outstanding, provided that if
such readjustment is an increase in the Exercise Price, such readjustment shall
not exceed the amount (as adjusted by Sections 7.1 and 7.2) by which the
Exercise Price was decreased pursuant to Section 7.2 upon the issuance of the
Option or Convertible Security.  The termination or expiration of any right to
purchase Shares under any Option granted prior to the date of this Agreement or
of any right to convert or exchange Convertible Securities issued prior to the
date of this Agreement shall not trigger any adjustment to the Exercise Price,
but the Shares issuable under such Options or Convertible Securities shall no
longer be counted in determining the number of Shares Outstanding on the date of
issuance of the Warrants for purposes of subsequent calculations under this
Section 7.2.

          7.2.5  Excluded Securities.  Notwithstanding anything herein to the
contrary, the Exercise Price shall not be adjusted pursuant to this Section 7.2
by virtue of the issuance and/or sale of "Excluded Securities", which means the
following:  (a) Shares issuable upon the exercise of the Warrants; (b) up to
682,185 Shares, Options or Convertible Securities to be issued and/or sold to
employees, advisors (including, without limitation, financial, technical and
legal advisers), directors, or officers of, or consultants to, the Company or
any of its subsidiaries pursuant to a share grant, share option plan, share
purchase plan, pension or profit sharing plan or other share agreement or
arrangement existing as of the date hereof and which has been approved by the
stockholders of the Company; (c) the reissuance of any expired and unexercised,
cancelled or forfeited Options under any plan referred to in subsection
7.2.5.(b) above; (d) the issuance of Shares, Options and/or Convertible
Securities pursuant to Options and Convertible Securities outstanding as of the
date of this Agreement (including, without limitation, Shares issuable upon
conversion of the Company's Series A Preferred Stock issued as of the date
hereof); (e) the issuance of Shares, Options or Convertible Securities as a
share dividend or upon any subdivision or combination of Shares or Convertible
Securities; or (f) Shares or Convertible Securities issued and sold by and for
the account of the Company pursuant to an effective registration statement filed
by the Company pursuant to the Securities and Exchange Act of 1934, as amended. 
For all purposes of this Section 7.2, all Shares which are Excluded Shares shall
be deemed to have been issued for an amount of consideration per Share equal to
the Exercise Price in effect at the time of such issuance.  

          7.2.6.    All calculations under this Section 7.2 shall be made to the
nearest one half of one cent ($.005) or the nearest one-tenth of a share, as the
case may be.

     7.3  Notice of Adjustment.  Promptly after adjustment of the Exercise Price
or any increase or decrease in the number of Warrant Shares purchasable upon the
exercise of any Warrant, the Company shall give written notice thereof, by first
class mail, postage prepaid, addressed to each registered Holder of a Warrant at
the address of such holder as shown on the books of the Company.  The notice
shall be signed by a duly authorized officer of the Company and shall state (i)
the effective date of the adjustment and the Exercise Price resulting from such
adjustment, and (ii) the increase or decrease, if any, in the number of Shares
purchasable at such price upon the exercise of the Warrants, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.  

     7.4  Other Notices.  If at any time:

          (a)  the Company shall declare any cash dividend upon its Shares;

          (b)  the Company shall declare any dividend upon its Shares payable in
securities (other than a dividend payable solely in Shares) or make any special
dividend or other distribution to the holders of its Shares;

          (c)  there shall be any consolidation or merger of the Company with
another corporation, or a sale of all or substantially all of the Company's
assets to another corporation; or

          (d)  there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed each to registered Holder of a
Warrant at the address of such holder as shown on the books of the Company,
(i) at least thirty (30) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend or
distribution or for determining rights to vote in respect of any such
dissolution, liquidation or winding-up; (ii) at least twenty (20) days' prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger or sale, and (iii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, at least thirty (30) days' written
notice of the date when the same shall take place.  Any notice given in
accordance with clause (i) above shall also specify, in the case of any such
dividend, distribution or option rights, the date on which the holders of Shares
shall be entitled thereto.  Any notice given in accordance with clause (iii)
above shall also specify the date on which the holders of Shares shall be
entitled to exchange their Shares for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, as the case may be.  If the registered
Holder of a Warrant does not exercise such Warrant prior to the occurrence of an
event described above, except as provided in Sections 7.1 and 7.5, the Holder
shall not be entitled to receive the benefits accruing to existing holders of
the Shares in such event.  

     7.5  Changes in Shares.  If at any time the Company shall be a party to any
transaction (including, without limitation, a merger, consolidation, sale of all
or substantially all of the Company's assets or recapitalization of the Shares)
in which the previously outstanding Shares shall be changed into or exchanged
for different securities of the Company or common stock or other securities of
another corporation or interests in a non-corporate entity or other property
(including cash) or any combination of any of the foregoing (each such
transaction being called a "Transaction" and the date of consummation of the
Transaction being called the "Consummation Date"), then, as a condition of the
consummation of the Transaction, lawful and adequate provisions shall be made so
that each Holder, upon the exercise of a Warrant at any time on or after the
Consummation Date, shall be entitled to receive, such Warrant shall thereafter
represent the right to receive, in lieu of the Shares issuable upon such
exercise prior to the Consummation Date, the highest amount of securities or
other property to which such Holder would actually have been entitled to receive
upon the consummation of the Transaction if such Holder had exercised such
Warrant immediately prior thereto.  The provisions of this Section 7.5 shall
similarly apply to successive Transactions.

     8.  Exchange and Replacement of Warrant Certificate.  Each Warrant
Certificate is exchangeable without expense upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.

     Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of a Warrant Certificate, and (in the
case of loss, theft or destruction), of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of such Warrant
Certificate, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor and date.

     9.  No Fractional Shares.  No fractional shares shall be issued upon
exercise of any Warrant.  The Company shall pay to any Holder who has exercised
all or any portion of any Warrant cash in an amount equal to any fractional
Shares issuable upon exercise of such Warrant, such amount of cash to be
determined by multiplying the closing trading price on the last trading day
prior to the date of the exercise by the amount of the fractional share.

     10.  Reservation of Shares.  The Company shall at all times reserve and
keep available out of its but unissued Shares, such number of Shares as shall be
issuable upon the exercise of all of the Warrants.  The Company covenants and
agrees that if at any time it would be unable to issue any Shares upon exercise
of the Warrants due to the failure of the Company to maintain sufficient
authorized Shares, it will promptly use its best efforts to obtain stockholder
approval, within 135 days thereafter, to amend its Certificate of Incorporation
to increase the number of authorized Shares by an amount sufficient to permit
the full exercise of the Warrants.

     11.  Rights of Warrant Holders.  Except as otherwise provided in Section
7.4, nothing contained in this Agreement shall be construed as conferring upon
the Holders by virtue of its holding any Warrant the right to vote or to consent
or to receive notice as a shareholder in respect of any meetings of shareholders
for the election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company. 

     12.  Notices.  Except as specifically set forth in this Agreement, all
notices, requests, consents and other communications under this Agreement shall
be delivered in accordance with the Stock Purchase Agreement.

     13.  Supplements and Amendments.  The Company and Holders of majority-in-
interest of the Warrant Shares issued or issuable at any time may from time to
time by mutual written agreement  supplement or amend this Agreement in order to
cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and Holder may deem necessary or desirable.

     14.  Successors.  All the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, each Holder and their
respective heirs, legal representatives, successors and assigns, respectively. 
Any reference herein to the "Company" shall include any entity which is a
successor to the Company.

     16.  Governing Law.  This Agreement and the Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and for all purposes shall be construed in accordance with the laws of
the State of New York without giving effect to the rules of the State of New
York governing the conflicts of laws.

     17.  Entire Agreement; Modification.  This Agreement contains the entire
understanding between the parties with respect to the subject matter hereof and
may not be modified or amended except by a writing duly signed by all of the
parties against whom enforcement of the modification or amendment is sought.

     18.  Severability.  If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.

     19.  Captions.  The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.

     20.  Counterparts.  This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.

                              *****END OF TEXT*****

          IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above written.

                              KTI, INC. 


                              By: /s/ Robert E. Weztel, Esq.
                              Name:  
                              Title: 



                              HOLDER: 


                              By: 
                              Name:
                              Title:



                                                                    EXHIBIT 10.3
                                WARRANT AGREEMENT


     WARRANT AGREEMENT, dated as of June 4, 1997, between KTI Inc., a New Jersey
corporation (the "Company"), and the persons listed on Exhibit A hereto (each a
"Holder" and collectively "Holders").

     WHEREAS, each Holder is being issued the warrants described herein (the
"Warrant") to purchase that number of shares of common stock, no par value, of
the Company ("Shares") in connection with and consideration for its purchase of
shares of the Company's Series A Preferred Stock pursuant to that certain Series
A Preferred Stock and Warrant Purchase Agreement dated as of June 4, 1997, among
the Company and the Holders (the "Stock Purchase Agreement").

     NOW, THEREFORE, in consideration of the premises herein set forth and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     1.  Issue.  The Company hereby issues to each Holder a certificate (the
"Warrant Certificate") dated as of the date hereof providing such Holder with
the right to purchase, at any time until 5:30 p.m., New York time, on June 4,
2003, that number of Shares set forth opposite such Holder's name on Exhibit A
hereto (subject to adjustment as provided in Section 7 below, the "Warrant
Shares") at an initial exercise price equal to $10.00 per Share (as such price
may be adjusted pursuant to Section 7 below, the "Exercise Price").  

     2.  Warrant Certificate.  The Warrant Certificate to be delivered pursuant
to this Agreement shall be in the form set forth in Exhibit X attached to this
Agreement, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Agreement.

     3.  Exercisability of Warrants.  The Warrants shall be immediately
exercisable.

     4.  Procedure for Exercise of Warrants.

     4.1  Cash Exercise.  The Warrants are exercisable, in whole or in part, at
the Exercise Price then in effect payable by wire transfer, certified check or
official bank check in New York Clearing House funds.  Upon surrender of a
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price for the Warrant Shares purchased, at
the Company's principal offices in New Jersey (presently located at 7000
Boulevard East, Guttenberg, NJ 07093), Holder shall be entitled to receive a
certificate for the Warrant Shares so purchased.  In the case of the purchase of
less than all the Warrant Shares purchasable under a Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Warrant Shares purchasable thereunder.

     4.2  Cashless Exercise.  In addition to the exercise of all or a portion of
a Warrant by the payment of the Exercise Price as set forth in Section 4.1
above, and in lieu of any such payment, the Holder has the right to exercise a
Warrant, in full or in part, by surrendering the Warrant Certificate with the
annexed Form of Election to Purchase duly executed, in exchange for the number
of Shares equal to the product of (x) the number of Shares as to which the
Warrant is being exercised, multiplied by (y) a fraction, the numerator of which
is the "Current Market Price" of the Shares (as defined below) less the Exercise
Price then in effect, and the denominator of which is the Current Market Price.

     4.3  Current Market Price.  The term "Current Market Price" means (i) if
the Shares are traded in the over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"),
the average per Share closing bid prices on the twenty (20) consecutive trading
days immediately preceding the date of exercise, as reported by NASDAQ or an
equivalent generally accepted reporting service, or (ii) if the Shares are
traded on a national securities exchange, the average for the twenty (20)
consecutive trading days immediately preceding the exercise date of the daily
per Share closing prices on the principal stock exchange on which the Shares are
listed, as the case may be.  The closing price referred to in clause (ii) above
shall be the last reported sales price or, if no such reported sale takes place
on such day, the average of the reported closing bid and asked prices, in either
case on the national securities exchange on which the Shares are then listed.

     5.   Issuance of Certificate.  Upon the exercise of a Warrant, the issuance
of a certificate for Warrant Shares shall be made forthwith (and in any event
within three (3) business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificate shall (subject to the provisions of
Section 8 below) be issued in the name of, or in such names as may be directed
by, the Holder thereof.

     Each Warrant Certificate and each certificate representing Warrant Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the then present Chairman or Vice Chairman of the Board of Directors or
President or any Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the then
present Secretary or any Assistant Secretary of the Company.  Each Warrant
Certificate shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.

     6.   Registration Under the Securities Act of 1933.  Each Warrant, the
Warrant Shares and any other securities issuable upon exercise of a Warrant
("Other Securities") have not been registered under the Securities Act of 1933,
as amended (the "Act").  Upon exercise, in whole or in part, of a Warrant, a
certificate representing the Warrant Shares underlying such Warrant, and any of
the Other Securities issuable upon exercise of such Warrant (collectively, the
"Warrant Securities") shall bear the following legend unless such Warrant Shares
previously have been registered under the Act in accordance with the terms of
the Stock Purchase Agreement:

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), AND
     MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
     REGISTRATION STATEMENT UNDER THE ACT, OR (ii) AN OPINION OF COUNSEL,
     IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE
     ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
     AVAILABLE.

A Warrant may be sold, transferred, assigned, hypothecated or otherwise disposed
of, in whole or in part, without restriction, subject to compliance with
applicable securities laws. 

     7.  Adjustments to Exercise Price and Number of Securities.  The Exercise
Price and, in some cases, the number of Warrant Shares purchasable upon the
exercise of the Warrants, shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 7.  

     7.1  Subdivision or Combination of Shares and Share Dividend.  If the
Company shall at any time subdivide its outstanding Shares into a greater number
of Shares or declare a dividend upon the Shares payable solely in Shares, the
Exercise Price in effect immediately prior to such subdivision or declaration
shall be proportionately reduced, and the number of Warrant Shares issuable upon
exercise of the Warrants shall be proportionately increased.  Conversely, if the
outstanding Shares of the Company shall be combined into a smaller number of
Shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased, and the number of Warrant Shares issuable upon
exercise of the Warrants shall be proportionately reduced.

     7.2  Dilutive Issuances.  If the Company shall sell or issue Shares at any
time after the date of this Agreement and prior to expiration of any Warrant,
other than "Excluded Securities" (as defined below), at a consideration per
Share less than the Exercise Price then in effect, the Exercise Price shall be
adjusted to a new Exercise Price determined by dividing

          (a)  an amount equal to (i) the total number of "Shares Outstanding"
          (as defined below immediately prior to such issuance, multiplied by
          the Exercise Price immediately prior to such issuance, plus (ii) the
          aggregate of the amount of all consideration, if any, received by the
          Company upon such issuance, by

          (b)  the total number of Shares Outstanding immediately after such
          issuance or sale.

In no event shall any such adjustment be made pursuant to this Section 7.2 if it
would increase the Exercise Price in effect immediately prior to such
adjustment, except as provided in Sections 7.2.3 and 7.2.4.  Upon each
adjustment of the Exercise Price pursuant to this Section 7.2, the holder of any
Warrant shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment, and dividing the product thereof by the Exercise Price
resulting from such adjustment.

          7.2.1  Definitions.  For purposes of this Section 7.2, the following
definitions shall apply:

          (a)  "Convertible Securities" shall mean any indebtedness or
securities convertible into or exchangeable for Shares.

          (b)  "Options" shall mean any rights, warrants or options to subscribe
for or purchase Shares or Convertible Securities other than rights, warrants or
options to purchase Excluded Securities.

          (c)  "Shares Outstanding" shall mean the aggregate of all Shares
outstanding and all Shares issuable upon exercise of all outstanding Options and
conversion of all outstanding Convertible Securities.

          7.2.2  For the purposes of this Section 7.2, the following provisions
shall also be applicable:

               7.2.2.1  Cash Consideration.  In case of the issuance or sale of
     additional Shares for cash, the consideration received by the Company
     therefor shall be deemed to be the amount of cash received by the Company
     from the recipients or purchasers of the additional Shares for such Shares.

               7.2.2.2  Non-Cash Consideration.  In case of the issuance
     (otherwise than upon conversion or exchange of Convertible Securities) or
     sale of additional Shares, Options or Convertible Securities for a
     consideration other than cash or a consideration a part of which shall be
     other than cash, the fair value of such consideration as determined by the
     Board of Directors of the Company in the good faith exercise of its
     business judgment, irrespective of the accounting treatment thereof, shall
     be deemed to be the value of the consideration other than cash received by
     the Company for such securities.

               7.2.2.3  Options and Convertible Securities.  If the Company
     shall in any manner issue or grant any Options or any Convertible
     Securities, the total maximum number of Shares issuable upon the exercise
     of such Options or upon conversion or exchange of the total maximum amount
     of such Convertible Securities (in each case, without giving effect to any
     future operation of any anti-dilution clauses in any such Option or
     Convertible Security at the time of such issuance or grant) at the time
     such Convertible Securities first become convertible or exchangeable shall
     (as of the date of issue or grant of such Options or, in the case of the
     issue or sale of Convertible Securities other than where the same are
     issuable upon the exercise of Options, as of the date of such issue or
     sale) be deemed to be issued and to be outstanding for the purpose of this
     Section 7.2 and to have been issued for the sum of the amount (if any) paid
     for such Options or Convertible Securities and the amount (if any) payable
     upon the exercise of such Options or upon conversion or exchange of such
     Convertible Securities at the time such Convertible Securities first become
     convertible or exchangeable; provided that, subject to the provisions of
     Section 7.2.3, no further adjustment of the Exercise Price shall be made
     upon the actual issuance of any such Shares or Convertible Securities or
     upon the conversion or exchange of any such Convertible Securities.

          7.2.3  Change in Option Price or Conversion Rate.  If the purchase
price provided for in any Option referred to in subsection 7.2.2.3, or the rate
at which any Convertible Securities referred to in subsection 7.2.2.3 are
convertible into or exchangeable for Shares shall change at any time (other than
under or by reason of provisions designed to protect against dilution), then,
for purposes of any adjustment required by Section 7.2, the Exercise Price in
effect at the time of such event shall be readjusted to the Exercise Price that
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold, provided that if such readjustment is an
increase in the Exercise Price, such readjustment shall not exceed the amount
(as adjusted by Sections 7.1 and 7.2) by which the Exercise Price was decreased
pursuant to Section 7.2 upon the issuance of the Option or Convertible Security.
If the purchase price provided for in any such Option referred to in
subsection 7.2.2.3, or the additional consideration (if any) payable upon the
conversion or exchange of any Convertible Securities referred to in
subsection 7.2.2.3, or the rate at which any Convertible Securities referred to
in subsection 7.2.2.3 are convertible into or exchangeable for Shares, shall be
reduced at any time under or by reason of provisions with respect thereto
designed to protect against dilution, then in case of the delivery of Shares
upon the exercise of any such Option or upon conversion or exchange of any such
Convertible Security; the Exercise Price then in effect hereunder shall, upon
issuance of such Shares, be adjusted to such amount as would have obtained had
such Option or Convertible Security never been issued and had adjustments been
made only upon the issuance of the Shares delivered as aforesaid and for the
consideration actually received for such Option or Convertible Security and the
Shares, provided that if such readjustment is an increase in the Exercise Price,
such readjustment shall not exceed the amount (as adjusted by Sections 7.1 and
7.2) by which the Exercise Price was decreased pursuant to Section 7.2 upon the
issuance of the Option or Convertible Security.

          7.2.4  Termination Of Option or Conversion Rights.  In the event of
the termination or expiration of any right to purchase Shares under any Option
granted after the date of this Agreement or of any right to convert or exchange
Convertible Securities issued after the date of this Agreement, the Exercise
Price shall, upon such termination, be readjusted to the Exercise Price that
would have been in effect at the time of such expiration or termination had such
Option or Convertible Security, to the extent outstanding immediately prior to
such expiration or termination, never been issued, and the Shares issuable
thereunder shall no longer be deemed to be Shares Outstanding, provided that if
such readjustment is an increase in the Exercise Price, such readjustment shall
not exceed the amount (as adjusted by Sections 7.1 and 7.2) by which the
Exercise Price was decreased pursuant to Section 7.2 upon the issuance of the
Option or Convertible Security.  The termination or expiration of any right to
purchase Shares under any Option granted prior to the date of this Agreement or
of any right to convert or exchange Convertible Securities issued prior to the
date of this Agreement shall not trigger any adjustment to the Exercise Price,
but the Shares issuable under such Options or Convertible Securities shall no
longer be counted in determining the number of Shares Outstanding on the date of
issuance of the Warrants for purposes of subsequent calculations under this
Section 7.2.

          7.2.5  Excluded Securities.  Notwithstanding anything herein to the
contrary, the Exercise Price shall not be adjusted pursuant to this Section 7.2
by virtue of the issuance and/or sale of "Excluded Securities", which means the
following:  (a) Shares issuable upon the exercise of the Warrants; (b) up to
682,185 Shares, Options or Convertible Securities to be issued and/or sold to
employees, advisors (including, without limitation, financial, technical and
legal advisers), directors, or officers of, or consultants to, the Company or
any of its subsidiaries pursuant to a share grant, share option plan, share
purchase plan, pension or profit sharing plan or other share agreement or
arrangement existing as of the date hereof and which has been approved by the
stockholders of the Company; (c) the reissuance of any expired and unexercised,
cancelled or forfeited Options under any plan referred to in subsection
7.2.5.(b) above; (d) the issuance of Shares, Options and/or Convertible
Securities pursuant to Options and Convertible Securities outstanding as of the
date of this Agreement (including, without limitation, Shares issuable upon
conversion of the Company's Series A Preferred Stock issued as of the date
hereof); (e) the issuance of Shares, Options or Convertible Securities as a
share dividend or upon any subdivision or combination of Shares or Convertible
Securities; or (f) Shares or Convertible Securities issued and sold by and for
the account of the Company pursuant to an effective registration statement filed
by the Company pursuant to the Securities and Exchange Act of 1934, as amended. 
For all purposes of this Section 7.2, all Shares which are Excluded Shares shall
be deemed to have been issued for an amount of consideration per Share equal to
the Exercise Price in effect at the time of such issuance.  

          7.2.6.    All calculations under this Section 7.2 shall be made to the
nearest one half of one cent ($.005) or the nearest one-tenth of a share, as the
case may be.

     7.3  Notice of Adjustment.  Promptly after adjustment of the Exercise Price
or any increase or decrease in the number of Warrant Shares purchasable upon the
exercise of any Warrant, the Company shall give written notice thereof, by first
class mail, postage prepaid, addressed to each registered Holder of a Warrant at
the address of such holder as shown on the books of the Company.  The notice
shall be signed by a duly authorized officer of the Company and shall state (i)
the effective date of the adjustment and the Exercise Price resulting from such
adjustment, and (ii) the increase or decrease, if any, in the number of Shares
purchasable at such price upon the exercise of the Warrants, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.  

     7.4  Other Notices.  If at any time:

          (a)  the Company shall declare any cash dividend upon its Shares;

          (b)  the Company shall declare any dividend upon its Shares payable in
securities (other than a dividend payable solely in Shares) or make any special
dividend or other distribution to the holders of its Shares;

          (c)  there shall be any consolidation or merger of the Company with
another corporation, or a sale of all or substantially all of the Company's
assets to another corporation; or

          (d)  there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed each to registered Holder of a
Warrant at the address of such holder as shown on the books of the Company,
(i) at least thirty (30) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend or
distribution or for determining rights to vote in respect of any such
dissolution, liquidation or winding-up; (ii) at least twenty (20) days' prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger or sale, and (iii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, at least thirty (30) days' written
notice of the date when the same shall take place.  Any notice given in
accordance with clause (i) above shall also specify, in the case of any such
dividend, distribution or option rights, the date on which the holders of Shares
shall be entitled thereto.  Any notice given in accordance with clause (iii)
above shall also specify the date on which the holders of Shares shall be
entitled to exchange their Shares for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, as the case may be.  If the registered
Holder of a Warrant does not exercise such Warrant prior to the occurrence of an
event described above, except as provided in Sections 7.1 and 7.5, the Holder
shall not be entitled to receive the benefits accruing to existing holders of
the Shares in such event.  

     7.5  Changes in Shares.  If at any time the Company shall be a party to any
transaction (including, without limitation, a merger, consolidation, sale of all
or substantially all of the Company's assets or recapitalization of the Shares)
in which the previously outstanding Shares shall be changed into or exchanged
for different securities of the Company or common stock or other securities of
another corporation or interests in a non-corporate entity or other property
(including cash) or any combination of any of the foregoing (each such
transaction being called a "Transaction" and the date of consummation of the
Transaction being called the "Consummation Date"), then, as a condition of the
consummation of the Transaction, lawful and adequate provisions shall be made so
that each Holder, upon the exercise of a Warrant at any time on or after the
Consummation Date, shall be entitled to receive, such Warrant shall thereafter
represent the right to receive, in lieu of the Shares issuable upon such
exercise prior to the Consummation Date, the highest amount of securities or
other property to which such Holder would actually have been entitled to receive
upon the consummation of the Transaction if such Holder had exercised such
Warrant immediately prior thereto.  The provisions of this Section 7.5 shall
similarly apply to successive Transactions.

     8.  Exchange and Replacement of Warrant Certificate.  Each Warrant
Certificate is exchangeable without expense upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.

     Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of a Warrant Certificate, and (in the
case of loss, theft or destruction), of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of such Warrant
Certificate, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor and date.

     9.  No Fractional Shares.  No fractional shares shall be issued upon
exercise of any Warrant.  The Company shall pay to any Holder who has exercised
all or any portion of any Warrant cash in an amount equal to any fractional
Shares issuable upon exercise of such Warrant, such amount of cash to be
determined by multiplying the closing trading price on the last trading day
prior to the date of the exercise by the amount of the fractional share.

     10.  Reservation of Shares.  The Company shall at all times reserve and
keep available out of its but unissued Shares, such number of Shares as shall be
issuable upon the exercise of all of the Warrants.  The Company covenants and
agrees that if at any time it would be unable to issue any Shares upon exercise
of the Warrants due to the failure of the Company to maintain sufficient
authorized Shares, it will promptly use its best efforts to obtain stockholder
approval, within 135 days thereafter, to amend its Certificate of Incorporation
to increase the number of authorized Shares by an amount sufficient to permit
the full exercise of the Warrants.

     11.  Rights of Warrant Holders.  Except as otherwise provided in Section
7.4, nothing contained in this Agreement shall be construed as conferring upon
the Holders by virtue of its holding any Warrant the right to vote or to consent
or to receive notice as a shareholder in respect of any meetings of shareholders
for the election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company. 

     12.  Notices.  Except as specifically set forth in this Agreement, all
notices, requests, consents and other communications under this Agreement shall
be delivered in accordance with the Stock Purchase Agreement.

     13.  Supplements and Amendments.  The Company and Holders of majority-in-
interest of the Warrant Shares issued or issuable at any time may from time to
time by mutual written agreement  supplement or amend this Agreement in order to
cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and Holder may deem necessary or desirable.

     14.  Successors.  All the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, each Holder and their
respective heirs, legal representatives, successors and assigns, respectively. 
Any reference herein to the "Company" shall include any entity which is a
successor to the Company.

     16.  Governing Law.  This Agreement and the Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and for all purposes shall be construed in accordance with the laws of
the State of New York without giving effect to the rules of the State of New
York governing the conflicts of laws.

     17.  Entire Agreement; Modification.  This Agreement contains the entire
understanding between the parties with respect to the subject matter hereof and
may not be modified or amended except by a writing duly signed by all of the
parties against whom enforcement of the modification or amendment is sought.

     18.  Severability.  If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.

     19.  Captions.  The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.

     20.  Counterparts.  This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.

                              *****END OF TEXT*****


               IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above written.

                                   KTI, INC. 


                                   By: /s/ Robert E. Wetzel, Esq.
                                   Name:  
                                   Title: 



                                   HOLDER: 
                                   By: 
                                   Name:
                                   Title:



                                                                    EXHIBIT 99.1

FOR IMMEDIATE RELEASE

                                             June 5, 1997

                          KTI REPORTS DEBT REFINANCING


Guttenberg, NJ, June 5, 1997 ... KTI, Inc. (NASDAQ: KTIE) announced the
refinancing of $13.4 million of tax-exempt debt issued on behalf of a recently
acquired subsidiary, Timber Energy Resources, Inc. (a Texas corporation).  The
transaction resulted in replacing variable rate bonds with 7% fixed coupon rates
with average maturity of 4 years and eliminating the credit enhancement provided
by the Bank of Montreal.  The credit enhancement elimination had been a
condition in the original acquisition of the subsidiary by KTI.

KTI acquired Timber Energy Resources, Inc. on November 22, 1996 from CNA
Financial, the principal seller, and other minority stockholders for $2 million
in cash and $13.4 million in tax exempt debt referred to above.  During the
first full quarter of its ownership by KTI, ended March 31, 1997, the subsidiary
generated $349,000 in profits compared with a loss of $160,000 in the same
period of 1996.  KTI continues to be optimistic about the prospects of this
acquisition which demonstrates the talents of its operating personnel in dealing
with the successful turn-around of troubled facilities it acquires.

                               * * * * * * * * *  

For further information please contact Martin J. Sergi, President at (201) 854-
7777.






June 16, 1997 9:41am




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