<PAGE>
                                                                   Exhibit 10.17

                                      NOTE

$447,400.00                                                    December 19, 2002

         Quakertown, LLC (the "Company") hereby promises to pay to the order of
Banc of America Strategic Solutions, Inc. (the "Payee"), on or before December
19, 2005, the principal sum of FOUR HUNDRED FORTY SEVEN THOUSAND, FOUR HUNDRED
AND 00/100 DOLLARS ($447,400).

         The Company further agrees to pay interest on the principal amount
hereof from time to time outstanding from and including the date hereof to but
excluding the date such principal is paid in full at a rate per annum equal to
25%; provided that payment of all interest in excess of 10% (or, during the
existence of a Default or after a Quakertown Shortfall (each as defined below),
12%) per annum (such excess, "PIK Interest") shall be deferred until the earlier
of the next Anniversary Date (as defined below) or the Maturity Date (as defined
below). All interest, other than PIK Interest, shall be paid in advance on the
last Business Day of each month for the following month (or, in the case of the
first interest payment, on the date hereof for the remainder of December 2002),
it being understood that if any principal of this Note is prepaid, in whole or
in part, during a month, the Payee shall credit against the obligations of the
Company hereunder (or, if applicable, refund to the Company) any such interest
which was paid but not earned. All PIK Interest shall be paid in cash in arrears
on the first Anniversary Date after the date that it would have been payable if
it were not permitted to be deferred; provided that the Company may, at its
option, on the first and second Anniversary Dates, elect to pay all or any
portion of the PIK Interest payable on such date by the issuance to the Payee of
a new promissory note substantially similar to this Note, except that all
interest thereon shall be deferred until the Maturity Date. All interest
(including PIK Interest) shall be payable on the Maturity Date (and, if not paid
in full on such date, thereafter on demand). All interest shall be calculated
for the actual number of days elapsed based on a year of 360 days.

         Each payment (including any prepayment), and each credit described in
the preceding paragraph against obligations payable, under this Note shall be
applied as set forth in the Quakertown Letter Agreement (as defined below).

         The Company may prepay all or any portion of this Note at any time and
from time to time, without premium or penalty. The Company shall prepay this
Note with any proceeds received from the Quakertown Claim (as defined in the
Security Agreement referred to below) which are to be applied hereto pursuant to
the Quakertown Letter Agreement.

         All payments of principal and interest shall be made to Bank of
America, N.A., as administrative agent (in such capacity, the "Administrative
Agent"), for the account of the Payee in Dollars at the office of the
Administrative Agent located at 231 South LaSalle Street, Chicago, Illinois
60697 (or such other office as the Administrative Agent shall specify in writing
to the Company) not later than noon on the date due, and funds received after
that time shall be deemed to have been received by the Payee on the immediately
following Business Day. If any payment hereunder falls due on a day which is not
a Business Day, the due date for such payment shall be

<PAGE>

extended to the next Business Day (and additional interest shall accrue for the
period of such extension).

         Each of the following events shall constitute a "Default" hereunder:

         (a) The Company shall fail to pay any principal of this Note when due;
or the Company shall fail to pay any interest on this Note when due and such
failure to pay interest shall continue for three Business Days.

         (b) The Administrative Agent shall fail to have a first-priority
perfected security interest in the Quakertown Claim (as defined in the Security
Agreement); or any Lien, other than Liens in favor of the Administrative Agent
and inchoate tax and ERISA liens, shall attach to the Quakertown Claim.

         (c) The Company shall fail to comply with or to perform any provision
of the Security Agreement or the Agency Letter Agreement; or the Company shall
contest in any manner the validity, binding nature or enforceability of the
Security Agreement or the Agency Letter Agreement.

         (d) Any representation or warranty made by the Company herein is false
or misleading in any material respect; any representation, warranty, statement
or certification made by USPL in the Guaranty is false or misleading in any
material respect; any representation or warranty made by the Company or USPL in
the Security Agreement or the Pledge Agreement, as applicable, is untrue or
misleading in any material respect and, as a result thereof, the Administrative
Agent's security interest in any material portion of the collateral under the
applicable agreement is not perfected or the Administrative Agent's rights and
remedies with respect to any material portion of the collateral under the
applicable agreement are materially impaired or otherwise materially adversely
affected; or any representation or warranty made by the Company or USPL in any
other document furnished by the Company or USPL in connection herewith shall be
false or misleading in any material respect on the date as of which such
representation, warranty, statement or certification is made.

         (e) Any "Event of Default" of the type described in Section 9.1.5 of
the Credit Agreement shall occur with respect to the Company or USPL (as defined
below).

         (f) Any "Event of Default" of the type described in Section 9.1.12 of
the Credit Agreement shall occur and be continuing with respect to the Company
or USPL.

         (g) Any "Event of Default" of the type described in Section 9.1.13 of
the Credit Agreement shall occur with respect to USPL, or USPL shall fail to own
100% of the membership interests of the Company.

         (h) USPL shall fail to comply with or to perform any provision of the
Guaranty, the Pledge Agreement or the Agency Letter Agreement; or USPL shall
contest in any manner the validity, binding nature or enforceability of the
Guaranty, the Pledge Agreement or the Agency Letter Agreement.

<PAGE>

         (i) Any representation or warranty made by USPL in the Guaranty or the
Pledge Agreement or any other document furnished by USPL or any Subsidiary
thereof in connection therewith shall be false or misleading in any material
respect on the date as of which such representation, warranty, statement or
certification is made.

         (j) Any event occurs that results in or is reasonably likely to result
in a material adverse effect upon the legality, validity, binding effect or
enforceability of this Note, the Security Agreement, the Guaranty or the Pledge
Agreement.

         (k)      The Company shall engage in any business other than the
prosecution of the Quakertown Claim.

         (l)      The Company shall incur any Debt other than Debt under the
Quakertown Notes.

         (m) The Company shall fail to have an Independent Manager (as defined
in the Limited Liability Company Agreement of the Company dated as of December
19, 2002 as in effect on the date hereof (and without giving effect to any
amendment thereto)) for more than 30 consecutive days.

         (n)      The Company shall make a distribution to any of its members
prior to the payment in full of each of the Quakertown Notes.

         If any Default described in clause (e) of the preceding paragraph
occurs, then all obligations of the Company hereunder shall become immediately
due and payable. If any other Default occurs and is continuing, then the
Administrative Agent may, and upon request of the Required Holders (as defined
below) shall, declare all obligations of the Company hereunder to be immediately
due and payable (whereupon all such obligations shall become immediately due and
payable without notice of any kind).

         As used herein, the following terms have the following meanings,
respectively:

         "Agency Letter Agreement" means the letter agreement dated as of
December 19, 2002 among the Company, USPL, the holders of the Quakertown Notes
and the Administrative Agent captioned "Appointment of Administrative Agent;
Sharing of Proceeds; Agency Fees; etc.".

         "Anniversary Date" means each anniversary of the date of the issuance
of this Note (or, if any such day is not a Business Day, the immediately
following Business Day).

         "Credit Agreement" means the Credit Agreement dated as of September 9,
2002 among the Company, various financial institutions and Bank of America,
N.A., as Administrative Agent, as in effect immediately prior to the issuance
hereof.

         "Guaranty" means the guaranty dated as of the date hereof issued by
USPL of the obligations of the Company under this Note and the other Quakertown
Notes.

         "Maturity Date" means the date the principal hereof becomes due and
payable (by acceleration or otherwise) or is prepaid.

<PAGE>

         "Pledge Agreement" means the Membership Interest Pledge Agreement dated
as of the date hereof between USPL and the Administrative Agent.

         "Quakertown Letter Agreement" means the letter agreement dated as of
December 19, 2002 between the Company and the Administrative Agent captioned
"Application of Quakertown Claim Proceeds".

         "Quakertown Note" means this Note and each other promissory note issued
concurrently herewith pursuant to Section 13.20 of the Credit Agreement, and any
promissory note issued in replacement of any of the foregoing.

         "Quakertown Shortfall" means any settlement or termination of the
Quakertown Claim resulting in proceeds that are insufficient to pay in full all
obligations of the Company under the Quakertown Notes. For the avoidance of
doubt, a Quakertown Shortfall does not, in and of itself, constitute a Default.

         "Required Holders" means holders of more than 50% of the principal
amount of all of the Quakertown Notes and (a) if there are two or three holders,
at least two holders, (b) if there are four holders, at least three holders or
at least two holders holding more than 60% of the Quakertown Notes and (c) if
there are five or more holders, at least 50% of the holders.

         "Security Agreement" means the Second Amended and Restated Security
Agreement dated as of even date herewith between the Company and the
Administrative Agent.

         "USPL" means U.S. Plastic Lumber Corp., a Nevada corporation and the
corporate parent of the Company.

         The Company warrants to the Payee that: (a) it is duly organized,
validly existing and in good standing under the laws of the State of Nevada; (b)
the execution and delivery of this Note and the Security Agreement and the
performance by the Company of its obligations hereunder and thereunder (i) are
within the Company's powers, (ii) have been duly authorized by all necessary
action on the Company's part, (iii) do not and will not contravene or conflict
with the Company's organizational documents, violate or constitute a default
under any law, any presently existing requirement or restriction imposed by any
judicial, arbitral or other governmental instrumentality or any agreement,
instrument or indenture by which the Company is bound or (iv) result in, or
require, the creation or imposition of any Lien on any property of the Company
(other than Liens in favor of the Administrative Agent); and (c) this Note and
the Security Agreement are the Company's legal, valid and binding obligations,
enforceable against the Company in accordance with their respective terms.

         So long as any portion of this Note remains unpaid, the Company
covenants and agrees that the Company will (a) provide the Payee, not later than
90 days after the end of each fiscal year of the Company, with unaudited
financial statements of the Company for such fiscal year, including a balance
sheet, income statement, statement of changes in financial position,
reconciliation of members' capital accounts and customary financial notes, and
(b) promptly provide the Payee with such information regarding the assets,
operations and financial condition of the Company as the Payee may from time to
time reasonably request.

<PAGE>

         In no event shall the interest rate provided for hereunder exceed the
maximum rate legally chargeable by the Payee under applicable law with respect
to loans of the type provided for hereunder (the "Maximum Rate"). If, in any
month, the interest rate hereunder, but for this paragraph, would exceed the
Maximum Rate, then the interest rate hereunder for that month shall be the
Maximum Rate, and if, in any future month, the interest rate hereunder would
otherwise be less than the Maximum Rate, then the interest rate hereunder for
that subsequent month shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been limited by the Maximum Rate. In the event
that, upon payment in full of this Note, the total amount of interest paid or
accrued under the terms of this Note is less than the total amount of interest
which would, but for this paragraph, have been paid or accrued if the interest
rate otherwise set forth in this Note had at all times been in effect, then the
Company shall, to the extent permitted by applicable law, be liable to pay the
Payee an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the
interest rate otherwise set forth in this Note, at all times, been in effect
over (b) the amount of interest actually paid or accrued under this Note. If a
court of competent jurisdiction determines that the Payee has received interest
and other amounts hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce,
principal hereunder or, if there is no unpaid principal, the Payee shall refund
to the Company such excess.

         Without limiting the foregoing paragraph, (a) the Company acknowledges
that, in connection with transactions resulting in the execution and delivery of
this Note, the Payee and the other holders of the Quakertown Notes have agreed
to forego payment of an aggregate amount of $2,195,418.62 evidenced by the
Deferred Payment Notes (as defined in the Credit Agreement); and (b) the Company
agrees that, to the extent permitted by applicable law and/or by general
principles of equity, the payments foregone by the Payee and such other holders
shall be taken into account in determining the maximum interest rate permitted
hereunder.

         This Note evidences indebtedness previously outstanding under the
Credit Agreement which was assumed by the Company concurrently with the
contribution by USPL to the Company of the Quakertown Claim. This Note is
secured pursuant to the Security Agreement and guaranteed by USPL pursuant to
the Guaranty. The Guaranty is secured pursuant to the Pledge Agreement.

         The Company agrees to pay all expenses of the Payee in connection with
the preparation, execution and delivery of this Note. In addition, the Company
will pay all costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) incurred by the Payee in connection with any
Default hereunder, the enforcement of its rights hereunder and the collection of
the amounts payable hereunder (in each case whether or not any lawsuit is ever
filed).

         EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE PAYEE WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS NOTE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, AND
AGREES

<PAGE>

THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.

<PAGE>

         The rights and privileges of the Payee hereunder shall inure to the
benefit of its successors and assigns.

         This Note shall be governed by and construed in accordance with the
laws of the State of Illinois applicable to agreements made and to be performed
entirely within the State of Illinois.

                                 QUAKERTOWN, LLC

                                 By: U.S. Plastic Lumber Corp., its sole Member


                                     By:  /s/ Bruce C. Rosetto
                                         ---------------------------------
                                    Title: General Counsel and Secretary
                                         ---------------------------------

<PAGE>

                                      NOTE

$335,400.00                                                    December 19, 2002

         Quakertown, LLC (the "Company") hereby promises to pay to the order of
LaSalle Bank National Association (the "Payee"), on or before December 19, 2005,
the principal sum of THREE HUNDRED THIRTY FIVE THOUSAND, FOUR HUNDRED DOLLARS
($335,400.00).

         The Company further agrees to pay interest on the principal amount
hereof from time to time outstanding from and including the date hereof to but
excluding the date such principal is paid in full at a rate per annum equal to
25%; provided that payment of all interest in excess of 10% (or, during the
existence of a Default or after a Quakertown Shortfall (each as defined below),
12%) per annum (such excess, "PIK Interest") shall be deferred until the earlier
of the next Anniversary Date (as defined below) or the Maturity Date (as defined
below). All interest, other than PIK Interest, shall be paid in advance on the
last Business Day of each month for the following month (or, in the case of the
first interest payment, on the date hereof for the remainder of December 2002),
it being understood that if any principal of this Note is prepaid, in whole or
in part, during a month, the Payee shall credit against the obligations of the
Company hereunder (or, if applicable, refund to the Company) any such interest
which was paid but not earned. All PIK Interest shall be paid in cash in arrears
on the first Anniversary Date after the date that it would have been payable if
it were not permitted to be deferred; provided that the Company may, at its
option, on the first and second Anniversary Dates, elect to pay all or any
portion of the PIK Interest payable on such date by the issuance to the Payee of
a new promissory note substantially similar to this Note, except that all
interest thereon shall be deferred until the Maturity Date. All interest
(including PIK Interest) shall be payable on the Maturity Date (and, if not paid
in full on such date, thereafter on demand). All interest shall be calculated
for the actual number of days elapsed based on a year of 360 days.

         Each payment (including any prepayment), and each credit described in
the preceding paragraph against obligations payable, under this Note shall be
applied as set forth in the Quakertown Letter Agreement (as defined below).

         The Company may prepay all or any portion of this Note at any time and
from time to time, without premium or penalty. The Company shall prepay this
Note with any proceeds received from the Quakertown Claim (as defined in the
Security Agreement referred to below) which are to be applied hereto pursuant to
the Quakertown Letter Agreement.

         All payments of principal and interest shall be made to Bank of
America, N.A., as administrative agent (in such capacity, the "Administrative
Agent"), for the account of the Payee in Dollars at the office of the
Administrative Agent located at 231 South LaSalle Street, Chicago, Illinois
60697 (or such other office as the Administrative Agent shall specify in writing
to the Company) not later than noon on the date due, and funds received after
that time shall be deemed to have been received by the Payee on the immediately
following Business Day. If any payment hereunder falls due on a day which is not
a Business Day, the due date for such payment shall be

<PAGE>

extended to the next Business Day (and additional interest shall accrue for the
period of such extension).

         Each of the following events shall constitute a "Default" hereunder:

         (a) The Company shall fail to pay any principal of this Note when due;
or the Company shall fail to pay any interest on this Note when due and such
failure to pay interest shall continue for three Business Days.

         (b) The Administrative Agent shall fail to have a first-priority
perfected security interest in the Quakertown Claim (as defined in the Security
Agreement); or any Lien, other than Liens in favor of the Administrative Agent
and inchoate tax and ERISA liens, shall attach to the Quakertown Claim.

         (c) The Company shall fail to comply with or to perform any provision
of the Security Agreement or the Agency Letter Agreement; or the Company shall
contest in any manner the validity, binding nature or enforceability of the
Security Agreement or the Agency Letter Agreement.

         (d) Any representation or warranty made by the Company herein is false
or misleading in any material respect; any representation, warranty, statement
or certification made by USPL in the Guaranty is false or misleading in any
material respect; any representation or warranty made by the Company or USPL in
the Security Agreement or the Pledge Agreement, as applicable, is untrue or
misleading in any material respect and, as a result thereof, the Administrative
Agent's security interest in any material portion of the collateral under the
applicable agreement is not perfected or the Administrative Agent's rights and
remedies with respect to any material portion of the collateral under the
applicable agreement are materially impaired or otherwise materially adversely
affected; or any representation or warranty made by the Company or USPL in any
other document furnished by the Company or USPL in connection herewith shall be
false or misleading in any material respect on the date as of which such
representation, warranty, statement or certification is made.

         (e) Any "Event of Default" of the type described in Section 9.1.5 of
the Credit Agreement shall occur with respect to the Company or USPL (as defined
below).

         (f) Any "Event of Default" of the type described in Section 9.1.12 of
the Credit Agreement shall occur and be continuing with respect to the Company
or USPL.

         (g) Any "Event of Default" of the type described in Section 9.1.13 of
the Credit Agreement shall occur with respect to USPL, or USPL shall fail to own
100% of the membership interests of the Company.

         (h) USPL shall fail to comply with or to perform any provision of the
Guaranty, the Pledge Agreement or the Agency Letter Agreement; or USPL shall
contest in any manner the validity, binding nature or enforceability of the
Guaranty, the Pledge Agreement or the Agency Letter Agreement.

<PAGE>

         (i) Any representation or warranty made by USPL in the Guaranty or the
Pledge Agreement or any other document furnished by USPL or any Subsidiary
thereof in connection therewith shall be false or misleading in any material
respect on the date as of which such representation, warranty, statement or
certification is made.

         (j) Any event occurs that results in or is reasonably likely to result
in a material adverse effect upon the legality, validity, binding effect or
enforceability of this Note, the Security Agreement, the Guaranty or the Pledge
Agreement.

         (k)      The Company shall engage in any business other than the
prosecution of the Quakertown Claim.

         (l)      The Company shall incur any Debt other than Debt under the
Quakertown Notes.

         (m) The Company shall fail to have an Independent Manager (as defined
in the Limited Liability Company Agreement of the Company dated as of December
19, 2002 as in effect on the date hereof (and without giving effect to any
amendment thereto)) for more than 30 consecutive days.

         (n)      The Company shall make a distribution to any of its members
prior to the payment in full of each of the Quakertown Notes.

         If any Default described in clause (e) of the preceding paragraph
occurs, then all obligations of the Company hereunder shall become immediately
due and payable. If any other Default occurs and is continuing, then the
Administrative Agent may, and upon request of the Required Holders (as defined
below) shall, declare all obligations of the Company hereunder to be immediately
due and payable (whereupon all such obligations shall become immediately due and
payable without notice of any kind).

         As used herein, the following terms have the following meanings,
respectively:

         "Agency Letter Agreement" means the letter agreement dated as of
December 19, 2002 among the Company, USPL, the holders of the Quakertown Notes
and the Administrative Agent captioned "Appointment of Administrative Agent;
Sharing of Proceeds; Agency Fees; etc.".

         "Anniversary Date" means each anniversary of the date of the issuance
of this Note (or, if any such day is not a Business Day, the immediately
following Business Day).

         "Credit Agreement" means the Credit Agreement dated as of September 9,
2002 among the Company, various financial institutions and Bank of America,
N.A., as Administrative Agent, as in effect immediately prior to the issuance
hereof.

         "Guaranty" means the guaranty dated as of the date hereof issued by
USPL of the obligations of the Company under this Note and the other Quakertown
Notes.

         "Maturity Date" means the date the principal hereof becomes due and
payable (by acceleration or otherwise) or is prepaid.

<PAGE>

         "Pledge Agreement" means the Membership Interest Pledge Agreement dated
as of the date hereof between USPL and the Administrative Agent.

         "Quakertown Letter Agreement" means the letter agreement dated as of
December 19, 2002 between the Company and the Administrative Agent captioned
"Application of Quakertown Claim Proceeds".

         "Quakertown Note" means this Note and each other promissory note issued
concurrently herewith pursuant to Section 13.20 of the Credit Agreement, and any
promissory note issued in replacement of any of the foregoing.

         "Quakertown Shortfall" means any settlement or termination of the
Quakertown Claim resulting in proceeds that are insufficient to pay in full all
obligations of the Company under the Quakertown Notes. For the avoidance of
doubt, a Quakertown Shortfall does not, in and of itself, constitute a Default.

         "Required Holders" means holders of more than 50% of the principal
amount of all of the Quakertown Notes and (a) if there are two or three holders,
at least two holders, (b) if there are four holders, at least three holders or
at least two holders holding more than 60% of the Quakertown Notes and (c) if
there are five or more holders, at least 50% of the holders.

         "Security Agreement" means the Second Amended and Restated Security
Agreement dated as of even date herewith between the Company and the
Administrative Agent.

         "USPL" means U.S. Plastic Lumber Corp., a Nevada corporation and the
corporate parent of the Company.

         The Company warrants to the Payee that: (a) it is duly organized,
validly existing and in good standing under the laws of the State of Nevada; (b)
the execution and delivery of this Note and the Security Agreement and the
performance by the Company of its obligations hereunder and thereunder (i) are
within the Company's powers, (ii) have been duly authorized by all necessary
action on the Company's part, (iii) do not and will not contravene or conflict
with the Company's organizational documents, violate or constitute a default
under any law, any presently existing requirement or restriction imposed by any
judicial, arbitral or other governmental instrumentality or any agreement,
instrument or indenture by which the Company is bound or (iv) result in, or
require, the creation or imposition of any Lien on any property of the Company
(other than Liens in favor of the Administrative Agent); and (c) this Note and
the Security Agreement are the Company's legal, valid and binding obligations,
enforceable against the Company in accordance with their respective terms.

         So long as any portion of this Note remains unpaid, the Company
covenants and agrees that the Company will (a) provide the Payee, not later than
90 days after the end of each fiscal year of the Company, with unaudited
financial statements of the Company for such fiscal year, including a balance
sheet, income statement, statement of changes in financial position,
reconciliation of members' capital accounts and customary financial notes, and
(b) promptly provide the Payee with such information regarding the assets,
operations and financial condition of the Company as the Payee may from time to
time reasonably request.

<PAGE>

         In no event shall the interest rate provided for hereunder exceed the
maximum rate legally chargeable by the Payee under applicable law with respect
to loans of the type provided for hereunder (the "Maximum Rate"). If, in any
month, the interest rate hereunder, but for this paragraph, would exceed the
Maximum Rate, then the interest rate hereunder for that month shall be the
Maximum Rate, and if, in any future month, the interest rate hereunder would
otherwise be less than the Maximum Rate, then the interest rate hereunder for
that subsequent month shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been limited by the Maximum Rate. In the event
that, upon payment in full of this Note, the total amount of interest paid or
accrued under the terms of this Note is less than the total amount of interest
which would, but for this paragraph, have been paid or accrued if the interest
rate otherwise set forth in this Note had at all times been in effect, then the
Company shall, to the extent permitted by applicable law, be liable to pay the
Payee an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the
interest rate otherwise set forth in this Note, at all times, been in effect
over (b) the amount of interest actually paid or accrued under this Note. If a
court of competent jurisdiction determines that the Payee has received interest
and other amounts hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce,
principal hereunder or, if there is no unpaid principal, the Payee shall refund
to the Company such excess.

         Without limiting the foregoing paragraph, (a) the Company acknowledges
that, in connection with transactions resulting in the execution and delivery of
this Note, the Payee and the other holders of the Quakertown Notes have agreed
to forego payment of an aggregate amount of $2,195,418.62 evidenced by the
Deferred Payment Notes (as defined in the Credit Agreement); and (b) the Company
agrees that, to the extent permitted by applicable law and/or by general
principles of equity, the payments foregone by the Payee and such other holders
shall be taken into account in determining the maximum interest rate permitted
hereunder.

         This Note evidences indebtedness previously outstanding under the
Credit Agreement which was assumed by the Company concurrently with the
contribution by USPL to the Company of the Quakertown Claim. This Note is
secured pursuant to the Security Agreement and guaranteed by USPL pursuant to
the Guaranty. The Guaranty is secured pursuant to the Pledge Agreement.

         The Company agrees to pay all expenses of the Payee in connection with
the preparation, execution and delivery of this Note. In addition, the Company
will pay all costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) incurred by the Payee in connection with any
Default hereunder, the enforcement of its rights hereunder and the collection of
the amounts payable hereunder (in each case whether or not any lawsuit is ever
filed).

         EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE PAYEE WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS NOTE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, AND
AGREES

<PAGE>

THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.

<PAGE>

         The rights and privileges of the Payee hereunder shall inure to the
benefit of its successors and assigns.

         This Note shall be governed by and construed in accordance with the
laws of the State of Illinois applicable to agreements made and to be performed
entirely within the State of Illinois.

                                 QUAKERTOWN, LLC

                                 By: U.S. Plastic Lumber Corp., its sole Member

                                     By:  /s/ Bruce C. Rosetto
                                         ---------------------------------
                                     Title: General Counsel and Secretary
                                         ---------------------------------
<PAGE>

                                      NOTE

$217,200.00                                                   December 19, 2002

         Quakertown, LLC (the "Company") hereby promises to pay to the order of
Union Planters Bank National Association (the "Payee"), on or before December
19, 2005, the principal sum of TWO HUNDRED SEVENTEEN THOUSAND, TWO HUNDRED
DOLLARS ($217,200.00).

         The Company further agrees to pay interest on the principal amount
hereof from time to time outstanding from and including the date hereof to but
excluding the date such principal is paid in full at a rate per annum equal to
25%; provided that payment of all interest in excess of 10% (or, during the
existence of a Default or after a Quakertown Shortfall (each as defined below),
12%) per annum (such excess, "PIK Interest") shall be deferred until the earlier
of the next Anniversary Date (as defined below) or the Maturity Date (as defined
below). All interest, other than PIK Interest, shall be paid in advance on the
last Business Day of each month for the following month (or, in the case of the
first interest payment, on the date hereof for the remainder of December 2002),
it being understood that if any principal of this Note is prepaid, in whole or
in part, during a month, the Payee shall credit against the obligations of the
Company hereunder (or, if applicable, refund to the Company) any such interest
which was paid but not earned. All PIK Interest shall be paid in cash in arrears
on the first Anniversary Date after the date that it would have been payable if
it were not permitted to be deferred; provided that the Company may, at its
option, on the first and second Anniversary Dates, elect to pay all or any
portion of the PIK Interest payable on such date by the issuance to the Payee of
a new promissory note substantially similar to this Note, except that all
interest thereon shall be deferred until the Maturity Date. All interest
(including PIK Interest) shall be payable on the Maturity Date (and, if not paid
in full on such date, thereafter on demand). All interest shall be calculated
for the actual number of days elapsed based on a year of 360 days.

         Each payment (including any prepayment), and each credit described in
the preceding paragraph against obligations payable, under this Note shall be
applied as set forth in the Quakertown Letter Agreement (as defined below).

         The Company may prepay all or any portion of this Note at any time and
from time to time, without premium or penalty. The Company shall prepay this
Note with any proceeds received from the Quakertown Claim (as defined in the
Security Agreement referred to below) which are to be applied hereto pursuant to
the Quakertown Letter Agreement.

         All payments of principal and interest shall be made to Bank of
America, N.A., as administrative agent (in such capacity, the "Administrative
Agent"), for the account of the Payee in Dollars at the office of the
Administrative Agent located at 231 South LaSalle Street, Chicago, Illinois
60697 (or such other office as the Administrative Agent shall specify in writing
to the Company) not later than noon on the date due, and funds received after
that time shall be deemed to have been received by the Payee on the immediately
following Business Day. If any payment hereunder falls due on a day which is not
a Business Day, the due date for such payment shall be

<PAGE>

extended to the next Business Day (and additional interest shall accrue for the
period of such extension).

         Each of the following events shall constitute a "Default" hereunder:

         (a) The Company shall fail to pay any principal of this Note when due;
or the Company shall fail to pay any interest on this Note when due and such
failure to pay interest shall continue for three Business Days.

         (b) The Administrative Agent shall fail to have a first-priority
perfected security interest in the Quakertown Claim (as defined in the Security
Agreement); or any Lien, other than Liens in favor of the Administrative Agent
and inchoate tax and ERISA liens, shall attach to the Quakertown Claim.

         (c) The Company shall fail to comply with or to perform any provision
of the Security Agreement or the Agency Letter Agreement; or the Company shall
contest in any manner the validity, binding nature or enforceability of the
Security Agreement or the Agency Letter Agreement.

         (d) Any representation or warranty made by the Company herein is false
or misleading in any material respect; any representation, warranty, statement
or certification made by USPL in the Guaranty is false or misleading in any
material respect; any representation or warranty made by the Company or USPL in
the Security Agreement or the Pledge Agreement, as applicable, is untrue or
misleading in any material respect and, as a result thereof, the Administrative
Agent's security interest in any material portion of the collateral under the
applicable agreement is not perfected or the Administrative Agent's rights and
remedies with respect to any material portion of the collateral under the
applicable agreement are materially impaired or otherwise materially adversely
affected; or any representation or warranty made by the Company or USPL in any
other document furnished by the Company or USPL in connection herewith shall be
false or misleading in any material respect on the date as of which such
representation, warranty, statement or certification is made.

         (e) Any "Event of Default" of the type described in Section 9.1.5 of
the Credit Agreement shall occur with respect to the Company or USPL (as defined
below).

         (f) Any "Event of Default" of the type described in Section 9.1.12 of
the Credit Agreement shall occur and be continuing with respect to the Company
or USPL.

         (g) Any "Event of Default" of the type described in Section 9.1.13 of
the Credit Agreement shall occur with respect to USPL, or USPL shall fail to own
100% of the membership interests of the Company.

         (h) USPL shall fail to comply with or to perform any provision of the
Guaranty, the Pledge Agreement or the Agency Letter Agreement; or USPL shall
contest in any manner the validity, binding nature or enforceability of the
Guaranty, the Pledge Agreement or the Agency Letter Agreement.

<PAGE>

         (i) Any representation or warranty made by USPL in the Guaranty or the
Pledge Agreement or any other document furnished by USPL or any Subsidiary
thereof in connection therewith shall be false or misleading in any material
respect on the date as of which such representation, warranty, statement or
certification is made.

         (j) Any event occurs that results in or is reasonably likely to result
in a material adverse effect upon the legality, validity, binding effect or
enforceability of this Note, the Security Agreement, the Guaranty or the Pledge
Agreement.

         (k)      The Company shall engage in any business other than the
prosecution of the Quakertown Claim.

         (l)      The Company shall incur any Debt other than Debt under the
Quakertown Notes.

         (m) The Company shall fail to have an Independent Manager (as defined
in the Limited Liability Company Agreement of the Company dated as of December
19, 2002 as in effect on the date hereof (and without giving effect to any
amendment thereto)) for more than 30 consecutive days.

         (n)      The Company shall make a distribution to any of its members
prior to the payment in full of each of the Quakertown Notes.

         If any Default described in clause (e) of the preceding paragraph
occurs, then all obligations of the Company hereunder shall become immediately
due and payable. If any other Default occurs and is continuing, then the
Administrative Agent may, and upon request of the Required Holders (as defined
below) shall, declare all obligations of the Company hereunder to be immediately
due and payable (whereupon all such obligations shall become immediately due and
payable without notice of any kind).

         As used herein, the following terms have the following meanings,
respectively:

         "Agency Letter Agreement" means the letter agreement dated as of
December 19, 2002 among the Company, USPL, the holders of the Quakertown Notes
and the Administrative Agent captioned "Appointment of Administrative Agent;
Sharing of Proceeds; Agency Fees; etc.".

         "Anniversary Date" means each anniversary of the date of the issuance
of this Note (or, if any such day is not a Business Day, the immediately
following Business Day).

         "Credit Agreement" means the Credit Agreement dated as of September 9,
2002 among the Company, various financial institutions and Bank of America,
N.A., as Administrative Agent, as in effect immediately prior to the issuance
hereof.

         "Guaranty" means the guaranty dated as of the date hereof issued by
USPL of the obligations of the Company under this Note and the other Quakertown
Notes.

         "Maturity Date" means the date the principal hereof becomes due and
payable (by acceleration or otherwise) or is prepaid.

<PAGE>

         "Pledge Agreement" means the Membership Interest Pledge Agreement dated
as of the date hereof between USPL and the Administrative Agent.

         "Quakertown Letter Agreement" means the letter agreement dated as of
December 19, 2002 between the Company and the Administrative Agent captioned
"Application of Quakertown Claim Proceeds".

         "Quakertown Note" means this Note and each other promissory note issued
concurrently herewith pursuant to Section 13.20 of the Credit Agreement, and any
promissory note issued in replacement of any of the foregoing.

         "Quakertown Shortfall" means any settlement or termination of the
Quakertown Claim resulting in proceeds that are insufficient to pay in full all
obligations of the Company under the Quakertown Notes. For the avoidance of
doubt, a Quakertown Shortfall does not, in and of itself, constitute a Default.

         "Required Holders" means holders of more than 50% of the principal
amount of all of the Quakertown Notes and (a) if there are two or three holders,
at least two holders, (b) if there are four holders, at least three holders or
at least two holders holding more than 60% of the Quakertown Notes and (c) if
there are five or more holders, at least 50% of the holders.

         "Security Agreement" means the Second Amended and Restated Security
Agreement dated as of even date herewith between the Company and the
Administrative Agent.

         "USPL" means U.S. Plastic Lumber Corp., a Nevada corporation and the
corporate parent of the Company.

         The Company warrants to the Payee that: (a) it is duly organized,
validly existing and in good standing under the laws of the State of Nevada; (b)
the execution and delivery of this Note and the Security Agreement and the
performance by the Company of its obligations hereunder and thereunder (i) are
within the Company's powers, (ii) have been duly authorized by all necessary
action on the Company's part, (iii) do not and will not contravene or conflict
with the Company's organizational documents, violate or constitute a default
under any law, any presently existing requirement or restriction imposed by any
judicial, arbitral or other governmental instrumentality or any agreement,
instrument or indenture by which the Company is bound or (iv) result in, or
require, the creation or imposition of any Lien on any property of the Company
(other than Liens in favor of the Administrative Agent); and (c) this Note and
the Security Agreement are the Company's legal, valid and binding obligations,
enforceable against the Company in accordance with their respective terms.

         So long as any portion of this Note remains unpaid, the Company
covenants and agrees that the Company will (a) provide the Payee, not later than
90 days after the end of each fiscal year of the Company, with unaudited
financial statements of the Company for such fiscal year, including a balance
sheet, income statement, statement of changes in financial position,
reconciliation of members' capital accounts and customary financial notes, and
(b) promptly provide the Payee with such information regarding the assets,
operations and financial condition of the Company as the Payee may from time to
time reasonably request.

<PAGE>

         In no event shall the interest rate provided for hereunder exceed the
maximum rate legally chargeable by the Payee under applicable law with respect
to loans of the type provided for hereunder (the "Maximum Rate"). If, in any
month, the interest rate hereunder, but for this paragraph, would exceed the
Maximum Rate, then the interest rate hereunder for that month shall be the
Maximum Rate, and if, in any future month, the interest rate hereunder would
otherwise be less than the Maximum Rate, then the interest rate hereunder for
that subsequent month shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been limited by the Maximum Rate. In the event
that, upon payment in full of this Note, the total amount of interest paid or
accrued under the terms of this Note is less than the total amount of interest
which would, but for this paragraph, have been paid or accrued if the interest
rate otherwise set forth in this Note had at all times been in effect, then the
Company shall, to the extent permitted by applicable law, be liable to pay the
Payee an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the
interest rate otherwise set forth in this Note, at all times, been in effect
over (b) the amount of interest actually paid or accrued under this Note. If a
court of competent jurisdiction determines that the Payee has received interest
and other amounts hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce,
principal hereunder or, if there is no unpaid principal, the Payee shall refund
to the Company such excess.

         Without limiting the foregoing paragraph, (a) the Company acknowledges
that, in connection with transactions resulting in the execution and delivery of
this Note, the Payee and the other holders of the Quakertown Notes have agreed
to forego payment of an aggregate amount of $2,195,418.62 evidenced by the
Deferred Payment Notes (as defined in the Credit Agreement); and (b) the Company
agrees that, to the extent permitted by applicable law and/or by general
principles of equity, the payments foregone by the Payee and such other holders
shall be taken into account in determining the maximum interest rate permitted
hereunder.

         This Note evidences indebtedness previously outstanding under the
Credit Agreement which was assumed by the Company concurrently with the
contribution by USPL to the Company of the Quakertown Claim. This Note is
secured pursuant to the Security Agreement and guaranteed by USPL pursuant to
the Guaranty. The Guaranty is secured pursuant to the Pledge Agreement.

         The Company agrees to pay all expenses of the Payee in connection with
the preparation, execution and delivery of this Note. In addition, the Company
will pay all costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) incurred by the Payee in connection with any
Default hereunder, the enforcement of its rights hereunder and the collection of
the amounts payable hereunder (in each case whether or not any lawsuit is ever
filed).

         EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE PAYEE WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS NOTE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, AND
AGREES

<PAGE>

THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.

<PAGE>

         The rights and privileges of the Payee hereunder shall inure to the
benefit of its successors and assigns.

         This Note shall be governed by and construed in accordance with the
laws of the State of Illinois applicable to agreements made and to be performed
entirely within the State of Illinois.

                                 QUAKERTOWN, LLC

                                 By: U.S. Plastic Lumber Corp., its sole Member

                                     By:  /s/ Bruce C. Rosetto
                                         ---------------------------------
                                     Title: General Counsel and Secretary
                                         ---------------------------------