Document:

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                                                                     EXHIBIT 4.2

This Security Has Not Been Registered Under The Securities Act of 1933, As
Amended, or any State Securities Laws. It May Not Be Transferred, Pledged or
otherwise Sold or assigned Except Pursuant To An Effective Registration
Statement Under Said Act and any Applicable State Securities Law Or An
Applicable Exemption From Such Registration Requirements.

NO. 1                                                     $4,000,000

DATED: JUNE 15, 2001

                            U.S. PLASTIC LUMBER CORP.

                         18% DEBENTURE DUE MAY 31, 2002

         THIS DEBENTURE ("Debenture") is one of a duly authorized issue of
Debentures of U.S. PLASTIC LUMBER CORP., a corporation duly organized and
existing under the laws of the State of Nevada (the "Company"), designated as
the Company's 18% Debentures Due, in an aggregate principal amount of Four
Million U.S. Dollars (U.S.$4,000,000) (the "Debenture").

         FOR VALUE RECEIVED, the Company promises to pay to HALIFAX FUND, L.P.,
the initial holder hereof, or its order (including successors-in-interest, the
"Holder"), the principal sum of FOUR MILLION U.S. DOLLARS (U.S.$4,000,000) on
May 31, 2002 (the "Maturity Date") and to pay interest on the principal sum
outstanding under this Debenture ("Outstanding Principal Amount"), at the rate
of 18% per annum payable quarterly in arrears on the first day of January,
April, July and October of each year (each an "Interest Payment Date"), with the
first such payment due on July 1, 2001. Interest shall accrue daily commencing
on the date hereof and shall continue until payment in full of all amounts due
under this Debenture. The interest so payable will be paid to the person in
whose name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debenture (the "Debenture Register").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Debenture Purchase Agreement dated as of June 4, 2001 between
the Company and the Holder (the "Purchase Agreement") or the Registration Rights
Agreement dated as of June 4, 2001 between the Company and the Holder (the
"Registration Rights Agreement"). Pursuant to Section 3.17 of the Purchase
Agreement, in the event that a sale/leaseback of the Company's real estate in
Chicago (the "Chicago Real Estate") has not been consummated by August 15, 2001,
then effective such date, the interest rate on this Debenture shall, effective
such date, be increased to 25% per annum.

         The principal of, interest on, and default payments (referred to below)
in respect of this Debenture are payable in such coin or currency of the United
States as of the time of payment is legal tender for payment of public and
private debts, at the address last appearing on the Debenture Register of the
Company as designated in writing by the Holder hereof from time to time.

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         The Company will pay any principal due and all accrued and unpaid
interest due upon this Debenture to the person that is the Holder of this
Debenture on the records of the Company as of the applicable Interest Payment
Date and addressed to such Holder at the last address appearing on the Debenture
Register.

         The Outstanding Principal Amount and interest due hereunder shall bear
interest, from and after the 31st day following the occurrence and during the
continuance of an Event of Default hereunder, at the rate equal to the lower of
25% or the highest rate permitted by law.

         Additional cash payments (referred to as "default payments") may be
required pursuant to the Registration Rights Agreement if there occurs an
"Interfering Event" (as defined therein). Such default payments, if not paid in
cash when due, may be treated by the Holder in its sole discretion as being
added to the Outstanding Principal Amount due under this Debenture.

         Subject to applicable law, any interest otherwise payable that is not
paid for any applicable period because it would exceed the highest rate
permitted by law shall become payable whenever the payment thereof, together
with other interest due for any such subsequent period, would not exceed such
highest legal rate.

         The Holder of this Debenture is entitled to certain rights and remedies
pursuant to the Purchase Agreement, Registration Rights Agreement and the
Security Agreement (as defined below), including without limitation provisions
requiring mandatory redemption of the Debenture. This Debenture does not provide
voting rights to the Holder.

         This Debenture is subject to the following additional provisions:

         1.       DENOMINATION. The Debentures are exchangeable for an equal
aggregate principal amount of Debentures of different denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration or transfer or exchange.

         2.       TRANSFERS. This Debenture may be transferred or exchanged in
the United States only in compliance with the Securities Act of 1933, as amended
(the "Act") and applicable state securities laws, or applicable exemptions
therefrom. Prior to due presentment for transfer of this Debenture, the Company
may treat the person in whose name this Debenture is duly registered on the
Company's Debenture Register as the owner hereof for the purpose of receiving
payment as herein provided, whether or not this Debenture is overdue.

         3.       DEFINITIONS. For purposes hereof the following definitions
shall apply:

                  "Change in Control Transaction" shall mean the occurrence of
(x) any consolidation or merger of the Company with or into any other
corporation or other entity or person (whether or not the Company is the
surviving corporation), or any other corporate reorganization or transaction or
series of related transactions in which in excess of 50% of the Company's voting
power is transferred through a merger, consolidation,

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tender offer or similar transaction, (y) any person (as defined in Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
together with its affiliates and associates (as such terms are defined in Rule
405 under the Act), beneficially owns or is deemed to beneficially own (as
described in Rule 13d-3 under the Exchange Act without regard to the 60-day
exercise period) in excess of 50% of the Company's voting power or (z) any sale,
transfer, lease or other disposition whether in one or a series of transactions,
of all or substantially all of the Company's assets.

                  "Closing Date" shall mean the date of original issuance of
this Debenture.

                  "Common Stock" shall mean the common stock, par value $0.0001,
of the Company.

                  "Conversion Notice" shall have the meaning set forth in
Section 5(e).

                  "Conversion Price" shall have the meaning set forth in Section
5(c).

                  "Conversion Rate" shall have the meaning set forth in Section
5(b).

                  "Floating Reference Period" refers to the twenty two (22)
Trading Day period referred to in Section 5(c).

                  "Floating Reference Price" refers to any of the trading prices
calculated in the computation of the Floating Price set forth in Section 5(c).

                  "Holder Conversion Date" shall have the meaning set forth in
Section 5(e).

                  "Market Price for Shares of Common Stock" shall mean the price
of one share of Common Stock determined as follows:

                           (i)      If the Common Stock is listed on NASDAQ, the
closing bid price on the date of valuation;

                           (ii)     If the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, the closing bid price on
such exchange on the date of valuation;

                           (iii)    If neither (i) nor (ii) apply but the Common
Stock is quoted in the over-the-counter market, another recognized exchange, on
the pink sheets or bulletin board, the lesser of (A) the lowest sales price or
(B) the mean between the last reported "bid" and "asked" prices thereof on the
date of valuation; and

                           (iv)     If neither clause (i), (ii) or (iii) above
applies, the market value as determined by a nationally recognized investment
banking firm or other nationally recognized financial advisor retained by the
Company for such purpose, taking into consideration, among other factors, the
earnings history, book value and prospects for the Company, and the prices at
which shares of Common Stock recently have been traded. Such determination shall
be conclusive and binding on all persons.

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                  "Restricted Ownership Percentage" shall have the meaning set
forth in Section 12.

                  "Trading Day" shall mean a day on which the Common Stock is
traded on the NASDAQ or principal exchange on which the Common Stock has been
listed (or any similar organization or agency succeeding such market or
exchange's functions of reporting prices).

         4.       CHANGE IN CONTROL, ETC. If at any time there occurs any Change
in Control Transaction, Holder shall be entitled, at its sole option, to have
the Company redeem this Debenture in whole or in part at a redemption price
equal to 130% of the Outstanding Principal Amount of this Debenture plus all
accrued but unpaid interest and penalties on this Debenture. Such Holder shall
be entitled to make such election at any time after commencement and up to 10
days after the effective date of the Change in Control Transaction. For purposes
of this Section 4, the commencement date shall be the day upon which the Change
in Control Transaction was publicly announced.

         5.       CONVERSION AT THE OPTION OF THE HOLDER. In the event that a
sale/leaseback transaction of the Chicago Real Estate, yielding net proceeds to
the Company of at least $7.5 million, has not been effected by August 15, 2001
(the "TRIGGERING EVENT"), then, the Holder of this Debenture shall have the
following conversion rights.

                  (a)      Holder's Right to Convert. This Debenture shall be
convertible at any time following the Triggering Event, in whole or in part, at
the option of the Holder hereof, into fully paid, validly issued and
nonassessable shares of Common Stock. If this Debenture is converted in part,
the remaining portion of this Debenture not so converted shall remain entitled
to the conversion rights provided herein.

                  (b)      Conversion Price for Holder Converted Shares. The
Outstanding Principal Amount of this Debenture that is converted into shares of
Common Stock at the option of the Holder shall be convertible into the number of
shares of Common Stock which results from application of the following formula:

                                    P + I + D

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

                                Conversion Price

         P =  Outstanding Principal Amount of this Debenture submitted for
              conversion
         I =  accrued but unpaid interest (not previously added to principal) on
              P as of the Holder Conversion Date
         D =  default payments (not previously added to principal) on P as of
              the Holder Conversion Date

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                           The number of shares of Common Stock into which each
$1,000 principal amount of this Debenture hereto may be converted pursuant to
this paragraph hereof is hereafter referred to as the "Conversion Rate."

                  (c)      Conversion Price. Subject to adjustments pursuant to
Section 6, this Debenture will have a conversion price (the "Conversion Price")
equal to the average of the lowest trading prices of the Common Stock on the
principal trading market for such Common Stock (which is currently the Nasdaq
National Market) during any three (3) Trading Days occurring during the 22
Trading Days immediately prior to but not including the Holder Conversion Date.

                  (d)      Adjustments to Floating Reference Prices. In the
event that during the Floating Reference Period provided for above, the Company
shall pay any dividend on the Common Stock payable in Common Stock or in rights
to acquire Common Stock, or shall effect a stock split or reverse stock split
(each such Company action shall be referred to herein as an "Adjustment Event"),
then each Floating Reference Price prior to the date of such Adjustment Event
shall be proportionately decreased or increased, as appropriate, to give effect
to such event.

                  (e)      Mechanics of Conversion. In order to convert this
Debenture (in whole or in part) into full shares of Common Stock, the Holder (i)
shall give written notice in the form of EXHIBIT 1 hereto (the "Conversion
Notice") by facsimile to the Company at such office that the Holder elects to
convert the principal amount (plus accrued but unpaid interest and default
payments) specified therein, which such notice and election shall be revocable
by the Holder at any time prior to its receipt of the Common Stock upon
conversion (the date such notice is given being the "Holder Conversion Date"),
and (ii) as soon as practicable after such notice, shall surrender this
Debenture, duly endorsed, by either overnight courier or 2-day courier, to the
principal office of the Company; provided, however, that the Company shall not
be obligated to issue certificates evidencing the shares of the Common Stock
issuable upon such conversion unless either the Debenture evidencing the
principal amount is delivered to the Company as provided above, or the Holder
notifies the Company that such Debenture(s) have been lost, stolen or destroyed
and promptly executes an agreement reasonably satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection with such lost,
stolen or destroyed Debentures.

                           The Company shall issue and deliver within one
business day of the delivery to the Company of such Conversion Notice, to such
Holder of Debenture(s) at the address of the Holder, or to its designee, a
certificate or certificates for the number of shares of Common Stock to which
the Holder shall be entitled as aforesaid, together with a calculation of the
Conversion Rate and a Debenture or Debentures for the principal amount of
Debentures not submitted for conversion. The date on which the Conversion Notice
is given (the "Holder Conversion Date") shall be deemed to be the date the
Company received by facsimile the Conversion Notice, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on such date.

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                  (f)      In lieu of delivering physical certificates
representing the Common Shares issuable upon conversion of Debentures or the
Warrant Shares (as defined in the Purchase Agreement) deliverable upon exercise
of Warrants (as defined in the Purchase Agreement), provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer ("FAST") program, upon request of the holder, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Common Shares issuable upon conversion or exercise to the Holder,
by crediting the account of Holder's prime broker with DTC through its Deposit
Withdrawal Agent Commission ("DWAC") system. The time periods for delivery
described above shall apply to the electronic transmittals through the DWAC
system. The parties agree to coordinate with DTC to accomplish this objective.
The conversions pursuant to Sections 5 and 6 shall be deemed to have been made
immediately prior to the close of business on the Holder Conversion Date. The
person or persons entitled to receive the Common Shares issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Shares at the close of business on the Holder Conversion Date.

         6.       REORGANIZATIONS.

                  (a)      In the event that at any time or from time to time
after the Closing Date, the Common Stock issuable upon the conversion of the
Debentures is changed into the same or a different number of shares of any class
or classes of stock, whether by merger, consolidation, recapitalization,
reclassification or otherwise (other than a subdivision or combination of shares
or stock dividend or reorganization provided for elsewhere in this Section 6),
then and as a condition to each such event provision shall be made in a manner
reasonably acceptable to the Holders of Debentures so that each Holder of
Debentures shall have the right thereafter to convert such Debenture into the
kind of stock receivable upon such recapitalization, reclassification or other
change by holders of shares of Common Stock, all subject to further adjustment
as provided herein. In such event, the formulae set forth herein for conversion
and redemption shall be equitably adjusted to reflect such change in number of
shares or, if shares of a new class of stock are issued, to reflect the market
price of the class or classes of stock issued in connection with the above
described transaction.

                  (b)      If at any time or from time to time after the Closing
Date there is a capital reorganization of the Common Stock, including by way of
a sale of all or substantially all of the assets of the Company (other than a
recapitalization, subdivision, combination, reclassification or exchange of
shares provided for elsewhere in this Section 6), then, as a part of and a
condition to such reorganization, provision shall be made in a manner reasonably
acceptable to the Holders of the Debentures so that the Holders of the
Debentures shall thereafter be entitled to receive upon conversion of the
Debentures the number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization. In any such
case, appropriate adjustment shall be made in the application of the provisions
of this Section 6 with respect to the rights of the Holders of the Debentures
after the reorganization to the end that the provisions of this Section 6 shall
be applicable after that event and be as nearly equivalent as may be
practicable, including, by way of illustration and not limitation, by equitably
adjusting the

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formulae set forth herein for conversion and redemption to reflect the market
price of the securities or property (applying the same factors used in
determining the Market Price for Shares of Common Stock) issued in connection
with the above described transaction.

         7.       FRACTIONAL SHARES. No fractional shares of Common Stock or
scrip representing fractional shares of Common Stock shall be issuable
hereunder. The number of shares of Common Stock that are issuable upon any
conversion shall be rounded up to the nearest whole share.

         8.       SECURITY. The obligations of the Company pursuant to this
Debenture are secured pursuant to the terms of a security agreement, dated as of
June 4, 2001 by and between the Holder and the Company.

         9.       RESERVATION OF STOCK ISSUABLE UPON CONVERSION.

                  (a)      Reservation Requirement. The Company covenants that
it will at all times reserve and keep available out of its authorized and
unissued Common Stock solely for the purpose of issuance upon conversion of the
Debentures as herein provided, free from preemptive rights or any other present
or contingent purchase rights of persons other than the Holders of the
Debentures, 200% of the maximum number of shares of Common Stock as shall be
issuable (taking into account the adjustments and restrictions of Sections 5 and
6 hereof) upon the conversion of all of the Debentures pursuant hereto. The
Company covenants that all shares of Common Stock that shall be so issuable
shall upon issue, be duly and validly authorized, issued and fully paid and
nonassessable. Without in any way limiting the foregoing, so long as any
Debentures remain outstanding the Company agrees to reserve and at all times
keep available solely for purposes of conversion of Debentures such number of
authorized but unissued shares of Common Stock that is set forth in the Purchase
Agreement.

                  (b)      Deficiency. If the Company does not have a sufficient
number of shares of Common Stock available to satisfy the Company's obligations
to a Holder of Debentures upon receipt of a Conversion Notice or is otherwise
unable to issue such shares of Common Stock in accordance with the terms of this
Agreement such Holder shall be entitled to the rights and remedies set forth in
the Registration Rights Agreement.

         10.      NO REISSUANCE OF THE DEBENTURE. No Debentures acquired by the
Company by reason of redemption, purchase, exchange or otherwise shall be
reissued, and all such Debentures shall be retired.

         11.      NO IMPAIRMENT. The Company shall not intentionally take any
action which would impair the rights and privileges of the Debentures set forth
herein or the Holders thereof.

         12.      LIMITATIONS ON HOLDER'S RIGHT TO CONVERT.

                  (a)      Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired by the Holder
at any time upon conversion of this Debenture (including dividends paid in
shares of Common Stock)

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pursuant to the terms hereof shall not exceed a number that, when added to the
total number of shares of Common Stock deemed beneficially owned by such holder
at such time (other than by virtue of the ownership of securities or rights to
acquire securities that have limitations on the holder's right to convert,
exercise or purchase similar to the limitation set forth herein), together with
all shares of Common Stock deemed beneficially owned (other than by virtue of
the ownership of securities or rights to acquire securities that have
limitations on the right to convert, exercise or purchase similar to the
limitation set forth herein) by the holder's "affiliates" (as defined in Rule
144 of the Securities Act) ("AGGREGATION PARTIES") that would be aggregated for
purposes of determining whether a group under Section 13(d) of the Exchange Act,
exists, would exceed 9.9% of the total issued and outstanding shares of the
Common Stock (the "RESTRICTED OWNERSHIP PERCENTAGE"). Each holder shall have the
right (x) at any time and from time to time to reduce its Restricted Ownership
Percentage to what Holder would otherwise be entitled under this Debenture
immediately upon notice to the Company and (y) (subject to waiver) at any time
and from time to time, to increase its Restricted Ownership Percentage
immediately in the event of the announcement as pending or planned, of a Change
in Control Transaction.

                  (b)      Each holder covenants at all times on each day (each
such day being referred to as a "COVENANT DAY") as follows: During the balance
of such Covenant Day and the succeeding sixty-one (61) days (the balance of such
Covenant Day and the succeeding 61 days being referred to as the "COVENANT
PERIOD") such holder will not acquire shares of Common Stock pursuant to any
right (including conversion of this Debenture) existing at the commencement of
the Covenant Period to the extent the number of shares so acquired by such
Holder and its Aggregation Parties (ignoring all dispositions) would exceed:

                  (A)      the Restricted Ownership Percentage of the total
                           number of shares of Common Stock outstanding at the
                           commencement of the Covenant Period, minus

                  (B)      the number of shares of Common Stock actually owned
                           by such Holder and its Aggregation Parties at the
                           commencement of the Covenant Period.

                           A new and independent covenant will be deemed to be
given by the holder as of each moment of each Covenant Day. No covenant will
terminate, diminish or modify any other covenant. Each holder agrees to comply
with each such covenant. This Section 12 controls in the case of any conflict
with any other provision of the Purchase Agreement or any agreement entered into
in connection therewith.

                           The limitations contained in paragraphs (a) and (b)
above of this Section 12 may be enforced by the Company as follows: the
Company's obligation to issue Common Stock which would exceed the limits
referred to in paragraphs (i) and (ii) of this Section 12 shall be suspended to
the extent necessary until such time, if any, as shares of Common Stock may be
issued in compliance with such restrictions.

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                  (c)      Under certain circumstances specified in Section 3.14
of the Purchase Agreement, certain Debentures that are the subject of a
Conversion Notice must be converted for cash.

         13.      OBLIGATIONS ABSOLUTE. No provision of this Debenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, and interest and default payments on,
this Debenture at the time, place and rate, and in the manner, herein
prescribed.

         14.      WAIVERS OF DEMAND, ETC. The Company hereby expressly and
irrevocably waives demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, notice of acceleration or intent
to accelerate, bringing of suit and diligence in taking any action to collect
amounts called for hereunder and will be directly and primarily liable for the
payment of all sums owing and to be owing hereon, regardless of and without any
notice, diligence, act or omission as or with respect to the collection of any
amount called for hereunder.

         15.      REPLACEMENT DEBENTURE. In the event that any Holder notifies
the Company that its Debenture(s) have been lost, stolen or destroyed,
replacement Debenture(s) identical in all respects to the original Debenture(s)
(except for registration number and Outstanding Principal Amount, if different
than that shown on the original Debenture(s)), shall be issued to the Holder,
provided that the Holder executes and delivers to the Company an agreement
reasonably satisfactory to the Company to indemnify the Company from any loss
incurred by it in connection with such Debenture.

         16.      PAYMENT OF EXPENSES; ISSUE TAXES. The Company agrees to pay
all debts and expenses, including attorneys' fees, which may be incurred by the
Holder in enforcing the provisions of this Debenture and/or collecting any
amount due under this Debenture, the Purchase Agreement, any Warrant or the
Registration Rights Agreement. The Company shall pay any and all issue and other
taxes (excluding any income, franchise or similar taxes) that maybe payable in
respect of any issue or delivery of shares of Common Stock on conversion of any
Debenture pursuant hereto.

         17.      DEFAULTS. If one or more of the following described "Events of
Default" shall occur:

                  (A)      The Company shall default in the payment of (i)
                           interest on this Debenture, and such default shall
                           continue for five (5) business days after the due
                           date thereof, or (ii) the principal of this
                           Debenture; or

                  (B)      Any of the representations or warranties made by the
                           Company herein, in the Purchase Agreement, the
                           Security Agreement, the Registration Rights
                           Agreement, any Warrant or in any certificate or
                           financial or other statements heretofore or hereafter
                           furnished by or on behalf of the Company in
                           connection with the execution and delivery of this
                           Debenture or such other documents shall be false or
                           misleading in any material respect at the time made;
                           or

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                  (C)      The Company shall fail to materially perform or
                           observe any covenant or agreement in the Purchase
                           Agreement, the Security Agreement or the Registration
                           Rights Agreement, or any other covenant, term,
                           provision, condition, agreement or obligation of the
                           Company under this Debenture and such failure shall
                           continue uncured for a period of ten (10) business
                           days after notice from the Holder of such failure; or

                  (D)      The Company shall (1) become insolvent; (2) admit in
                           writing its inability to pay its debts generally as
                           they mature; (3) make an assignment for the benefit
                           of creditors or commence proceedings for its
                           dissolution; or (4) apply for or consent to the
                           appointment of a trustee, liquidator or receiver for
                           it or for a substantial part of its property or
                           business; or

                  (E)      A trustee, liquidator or receiver shall be appointed
                           for the Company or for a substantial part of its
                           property or business without its consent and shall
                           not be discharged within thirty (30) days after such
                           appointment; or

                  (F)      Any governmental agency or any court of competent
                           jurisdiction at the instance of any governmental
                           agency shall assume custody or control of the whole
                           or any substantial portion of the properties or
                           assets of the Company and shall not be dismissed
                           within thirty (30) days thereafter; or

                  (G)      The Company shall, in one or a series of
                           transactions, sell or otherwise transfer all or
                           substantially all of its assets; or

                  (H)      Bankruptcy, reorganization, insolvency or liquidation
                           proceedings or other proceedings, or relief under any
                           bankruptcy law or any law for the relief of debt
                           shall be instituted by or against the Company and, if
                           instituted against the Company shall not be dismissed
                           within thirty (30) days after such institution, or
                           the Company shall by any action or answer approve of,
                           consent to, or acquiesce in any such proceedings or
                           admit to any material allegations of, or default in
                           answering a petition filed in any such proceeding; or

                  (I)      The Company shall be in material default of any of
                           its indebtedness that gives the holder thereof the
                           right to accelerate such indebtedness; or

                  (J)      Without limiting the generality of paragraph I above,
                           the Company shall not have paid in full the payment,
                           due June 30, 2001, pursuant to the Loan Agreement (as
                           defined in the Purchase Agreement); provided,
                           however, that such event shall not constitute an
                           Event of Default where, prior to June 30, 2001, the

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                           lenders under the Loan Agreement and the Company
                           shall have agreed to a written amendment to the Loan
                           Agreement whereby the June 30, 2001 payment is
                           eliminated or moved to a later date.

                  (K)      A "going private" transaction under Rule 13e-3
                           promulgated pursuant to the Exchange Act shall have
                           been announced;

                  (L)      A tender offer by the Company under Rule 13e-4
                           promulgated pursuant to the Exchange Act shall have
                           been announced; or

                  (M)      An "Event of Default" shall have occurred under the
                           2000 Debentures (as defined in the Purchase
                           Agreement) or the Company shall be in breach of the
                           terms of the Purchase Agreement, Warrants and
                           Registration Rights Agreement relating thereto.

then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider the
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, anything herein or
in any other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law. In such event, the Debenture shall be
redeemed at a redemption price per Debenture equal to 125% of the Outstanding
Principal Amount of the Debenture, plus accrued but unpaid interest and default
payments on the Debenture.

         18.      SAVINGS CLAUSE. In case any provision of this Debenture is
held by a court of competent jurisdiction to be excessive in scope or otherwise
invalid or unenforceable, such provision shall be adjusted rather than voided,
if possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby, and such provision shall remain
effective in all other jurisdictions.

         19.      ENTIRE AGREEMENT. This Debenture and the agreements referred
to in this Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof. Neither
this Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and the
Holder.

         20.      ASSIGNMENT, ETC. The Holder (but not the Company) may, subject
to compliance with the requirements of the Securities Act of 1933, as amended,
transfer or assign this Debenture or any interest herein and may mortgage,
encumber or transfer any of its rights or interest in and to this Debenture or
any part hereof and, without limitation, each assignee, transferee and mortgagee
(which may include any affiliate of the Holder) shall have the right to transfer
or assign its interest. Each such assignee, transferee and

                                       11
<PAGE>   12

mortgagee shall have all of the rights of the Holder under this Debenture. The
Company agrees that, subject to compliance with the Purchase Agreement, after
receipt by the Company of written notice of assignment from the Holder or from
the Holder's assignee, all principal, interest and other amounts which are then
and thereafter become due under this Debenture shall be paid to such assignee at
the place of payment designated in such notice. This Debenture shall be binding
upon the Company and its successors and affiliates and shall inure to the
benefit of the Holder and its successors and assigns.

         21.      NO WAIVER. No failure on the part of the Holder to exercise,
and no delay in exercising any right, remedy or power hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise by the Holder of any
right, remedy or power hereunder preclude any other or future exercise of any
other right, remedy or power. Each and every right, remedy or power hereby
granted to the Holder or allowed it by law or other agreement shall be
cumulative and not exclusive of any other, and may be exercised by the Holder
from time to time.

         22.      CERTIFICATE FOR CONVERSION PRICE ADJUSTMENT. The Company
shall, upon the written request at any time of any Holder of Debentures, furnish
or cause to be furnished to such Holder a certificate prepared by the chief
financial officer of Company setting forth any adjustments or readjustments of
the Conversion Price pursuant to this Debenture.

         23.      NOTICES. The Company shall distribute to the Holders of
Debentures copies of all notices, materials, annual and quarterly reports, proxy
statements, information statements and any other documents distributed generally
to the holders of shares of Common Stock of the Company, at such times and by
such method as such documents are distributed to such holders of such Common
Stock, but shall not directly or indirectly provide material non-public
information to the Holder without such Holder's prior written consent.

         24.      SPECIFIC ENFORCEMENT. The Company agrees that irreparable
damage would occur in the event that any of the provisions of this Debenture
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Holders of Debentures shall be
entitled to swift specific performance, injunctive relief or other equitable
remedies to prevent or cure breaches of the provisions of this Debenture and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which any of them may be entitled under agreement, at law or
in equity.

         25.      MISCELLANEOUS. Unless otherwise provided herein, any notice or
other communication to a party hereunder shall be sufficiently given if in
writing and personally delivered, facsimilied or mailed to said party by
certified mail, return receipt requested, at its address set forth herein or
such other address as either may designate for itself in such notice to the
other and communications shall be deemed to have been received when delivered
personally or, if sent by mail or facsimile, then when actually received by the
party to whom it is addressed. Whenever the sense of this Debenture requires,
words in the singular shall be deemed to include the plural and words in the

                                       12
<PAGE>   13

plural shall be deemed to include the singular. Paragraph headings are for
convenience only and shall not affect the meaning of this document.

         26.      GOVERNING LAW; CONSENT TO JURISDICTION. This Debenture shall
be governed by and construed and enforced in accordance with the laws of the
State of New York applicable to contracts to be executed and performed entirely
within such state. The Company (i) hereby irrevocably submits to the exclusive
jurisdiction of the state and federal court located in New York County, New York
for the purposes of any suit, action or proceeding arising out of or related to
this Debenture and (ii) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. The Company consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party as provided herein and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.

                             SIGNATURE PAGE FOLLOWS

                                       13
<PAGE>   14

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.

                                 U.S. PLASTIC LUMBER CORP.

                                 By: /s/ Bruce C. Rosetto
                                    ------------------------------------------
                                    Name: Bruce C. Rosetto
                                    Title: Vice President and General Counsel

          SIGNATURE PAGE TO 18% DEBENTURE OF U.S. PLASTIC LUMBER CORP.

                                       14
<PAGE>   15

                                    EXHIBIT 1

                      (To be Executed by Registered Holder
                         in order to Convert Debenture)

                                CONVERSION NOTICE
                                       FOR
                         18% DEBENTURE DUE May 31, 2002

The undersigned, as Holder of the 18% Debenture Due May 31, 2002 of U.S. PLASTIC
LUMBER CORP. (the "Company"), in the outstanding principal amount of
U.S.$4,000,000 (the "Debenture"), hereby irrevocably elects to convert that
portion of the outstanding principal amount of the Debenture shown on the next
page into shares of Common Stock, $0.0001 par value per share (the "Common
Stock"), of the Company according to the conditions of the Debenture, as of the
date written below. The undersigned hereby requests that share certificates for
the Common Stock to be issued to the undersigned pursuant to this Conversion
Notice be issued in the name of, and delivered to, the undersigned or its
designee as indicated below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto. No fee will be charged to the Holder for any conversion,
except for transfer taxes, if any.

Conversion Information:         NAME OF HOLDER:
                                               ---------------------------------

                                By:
                                   ---------------------------------------------
                                      Print Name:
                                      Print Title:

                                Print Address of Holder:

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

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

                                Issue Common Stock to:
                                                      --------------------------
                                at:
                                   ---------------------------------------------

                                Electronically transmit and credit Common
Stock to:
                                                   at:
                                ------------------    --------------------------

                                ------------------------------------------------
                                  Date of Conversion

                                ------------------------------------------------
                                  Applicable Conversion Rate

                THE COMPUTATION OF THE NUMBER OF COMMON SHARES TO
                  BE RECEIVED IS SET FORTH ON THE ATTACHED PAGE

<PAGE>   16

PAGE 2 TO CONVERSION NOTICE FOR:
                                ------------------------------------------------
                                      (NAME OF HOLDER)

              COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED

A.       Outstanding Principal Amount converted:                      $
                                                                       ---------

B.       Accrued, unpaid interest on Outstanding Principal Amount     $
converted:                                                             ---------

C.       Default payments due Holder on Outstanding Principal Amount  $
converted:                                                             ---------

                                                                      ----------
TOTAL DOLLAR AMOUNT CONVERTED (TOTAL OF A + B + C)                    $
                                                                       ---------

                                                                      ==========

EXCHANGE PRICE                                                        $
                                                                       ---------

Number of Shares of Common Stock = Total dollar amount converted      $
                                                                      ----------
=                                                                     $
                                    Conversion Price

NUMBER OF SHARES OF COMMON STOCK =
                                    ---------------------------

If the conversion is not being settled by DTC, please issue and deliver _____
certificate(s) for shares of Common Stock in the following amount(s):

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

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

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

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

Please issue and deliver _____ new Debenture(s) in the following amounts:

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

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

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

                                       2<PAGE>   1

                                                                     EXHIBIT 4.3

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED, PLEDGED,
OR OTHERWISE SOLD OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

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

June 15, 2001

                            U.S. PLASTIC LUMBER CORP.

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

                          Common Stock Purchase Warrant

         U.S. Plastic Lumber Corp., a Nevada corporation (the "COMPANY"), hereby
certifies that for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, HALIFAX FUND, L.P., having an address at c/o
The Palladin Group, L.P., 195 Maplewood Avenue, Maplewood, New Jersey 07040
("PURCHASER") or any other Warrant Holder is entitled, on the terms and
conditions set forth below, to purchase from the Company at any time beginning
on the date hereof and ending on the fifth anniversary of the Closing Date
250,000 fully paid and nonassessable shares of Common Stock, par value $0.0001,
of the Company (the "COMMON STOCK"), at a purchase price of $2.00 per share of
Common Stock subject to adjustment pursuant to Section 5 herein (the "PURCHASE
PRICE").

         1.       DEFINITIONS.

                  (a)      The term "AGREEMENT" shall mean the Debenture
Purchase Agreement dated as of June 15, 2001, between the Company and the
Investors signatory thereto.

                  (b)      The term "DEBENTURE" shall mean any of the Company's
18% Debentures Due May 31, 2002.

                  (c)      The term "EFFECTIVE REGISTRATION" shall have the
meaning specified in the Agreement.

                  (d)      The term "CLOSING DATE" shall mean June 15, 2001.

<PAGE>   2
                  (e)      The term "REGISTRATION RIGHTS AGREEMENT" shall mean
the Registration Rights Agreement, dated as of June 15, 2001, between the
Company and the Purchaser signatory thereto.

                  (f)      The term "WARRANT HOLDER" shall mean the Purchaser or
any assignee of all or any portion of this Warrant.

                  (g)      The term "WARRANT SHARES" shall mean the shares of
Common Stock or other securities issuable upon exercise of this Warrant.

         Capitalized terms used but not defined in this Warrant shall have the
meanings specified in the Agreement or the Debentures.

         2.       EXERCISE OF WARRANT.

         The Warrant Holder may exercise this Warrant, in whole or in part, at
any time and from time to time by either of the following methods:

                  (a)      The Warrant Holder may surrender this Warrant,
together with the form of subscription at the end hereof duly executed by
Warrant Holder ("SUBSCRIPTION NOTICE"), at the offices of the Company; or

                  (b)      The Warrant Holder may also exercise this Warrant, in
whole or in part, in a "cashless" or "net-issue" exercise by delivering to the
offices of the Company this Warrant, together with a Subscription Notice
specifying the number of Warrant Shares to be delivered to such Warrant Holder
("DELIVERABLE Shares") and the number of Warrant Shares with respect to which
this Warrant is being surrendered in payment of the aggregate Purchase Price for
the Deliverable Shares ("SURRENDERED SHARES"); provided that the Purchase Price
multiplied by the number of Deliverable Shares shall not exceed the value of the
Surrendered Shares. For purposes of this provision, each Warrant Share as to
which this Warrant is surrendered will be attributed a value equal to the fair
market value (as defined below) of the Warrant Share minus the Purchase Price of
the Warrant Share.

         3.       DELIVERY OF STOCK CERTIFICATES.

                  (a)      Subject to the terms and conditions of this Warrant,
as soon as practicable after the exercise of this Warrant in full or in part,
and in any event within three (3) Trading Days thereafter, the Company shall
transmit the certificates of the Warrant Shares (together with any other stock
or other securities or property to which Warrant Holder is entitled upon
exercise) by messenger or overnight delivery service to reach the address
designated by such holder within three (3) Trading Days after the receipt of the
Subscription Notice ("T+3"). If such certificates are not received by the
Warrant Holder within T+3, then the Warrant Holder will be entitled to revoke
and withdraw its exercise of its Warrant at any time prior to its receipt of
those certificates.

                  In lieu of delivering physical certificates representing the
Warrant Shares deliverable upon exercise of Warrants, provided the Company's
transfer agent is

                                       2
<PAGE>   3

participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the Warrant Holder, the Company shall
use its best efforts to cause its transfer agent to electronically transmit the
Warrant Shares issuable upon exercise to the Warrant Holder, by crediting the
account of Warrant Holder's prime broker with DTC through its Deposit Withdrawal
Agent Commission ("DWAC") system. The time periods for delivery described above
shall apply to the electronic transmittals through the DWAC system. The parties
agree to coordinate with DTC to accomplish this objective. The exchange pursuant
to Section 3 shall be deemed to have been made immediately prior to the close of
business on the date of the Subscription Notice. The person or persons entitled
to receive the Warrant Shares issuable upon such exercise shall be treated for
all purposes as the record holder or holders of such Warrant Shares at the close
of business on the date of the Subscription Notice.

                  The term "TRADING DAY" means (x) if the Common Stock is listed
on the New York Stock Exchange or the American Stock Exchange, a day on which
there is trading on such stock exchange, (y) if the Common Stock is not listed
on either of such stock exchanges but sale prices of the Common Stock are
reported on an automated quotation system, a day on which trading is reported on
the principal automated quotation system on which sales of the Common Stock are
reported, or (z) if the foregoing provisions are inapplicable, a day on which
quotations are reported by National Quotation Bureau Incorporated.

                  (b)      This Warrant may not be exercised as to fractional
shares of Common Stock. In the event that the exercise of this Warrant, in full
or in part, would result in the issuance of any fractional share of Common
Stock, then in such event the Warrant Holder shall be entitled to cash equal to
the fair market value of such fractional share. For purposes of this Warrant,
"FAIR MARKET VALUE" shall equal the closing trading price of the Common Stock on
the Approved Market which is the principal trading exchange or market for the
Common Stock (the "PRINCIPAL MARKET") on the date of determination or, if the
Common Stock is not listed or admitted to trading on any Approved Market, the
average of the closing bid and asked prices on the over-the-counter market as
furnished by any New York Stock Exchange member firm reasonably selected from
time to time by the Company for that purpose and reasonably acceptable to the
Warrant Holder, or, if the Common Stock is not listed or admitted to trading on
any Approved Market or traded over-the-counter and the average price cannot be
determined a contemplated above, the fair market value of the Common Stock shall
be as reasonably determined in good faith by the Company's Board of Directors
with the concurrence of the Warrant Holder acting in good faith.

         4.       (A)      REPRESENTATIONS AND COVENANTS OF THE COMPANY.

                  (a)      The Company shall comply with its obligations under
the Registration Rights Agreement with respect to the Warrant Shares, including,
without limitation, the Company's obligation to have filed and declared and
maintained effective a registration statement registering the Warrant Shares
under the Securities Act of 1933, as amended (the "ACT").

                                       3
<PAGE>   4

                  (b)      The Company shall take all necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, including, without limitation, the notification of the Principal
Market, for the legal and valid issuance of this Warrant and the Warrant Shares
to the Warrant Holder under this Warrant.

                  (c)      From the date hereof through the last date on which
this Warrant is exercisable, the Company shall take all steps necessary to
insure that the Common Stock remains listed on the Principal Market.

                  (d)      The Warrant Shares, when issued in accordance with
the terms hereof, will be duly authorized and, when paid for or issued in
accordance with the terms hereof, shall be validly issued, fully paid and
non-assessable. The Company has authorized and reserved for issuance to Warrant
Holder the requisite number of shares of Common Stock to be issued pursuant to
this Warrant.

                  (e)      The Company shall at all times reserve and keep
available, solely for issuance and delivery as Warrant Shares hereunder, 200% of
such number of shares of Common Stock as shall from time to time be issuable
hereunder.

                  (f)      With a view to making available to the Warrant Holder
the benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the Securities and Exchange Commission ("SEC") that may at any
time permit Warrant Holder to sell securities of the Company to the public
without registration, the Company agrees to use its best efforts to:

                           (i)      make and keep public information available,
                  as those terms are understood and defined in Rule 144, at all
                  times;

                           (ii)     file with the SEC in a timely manner all
                  reports and other documents required of the Company under the
                  Act and the Securities Exchange Act of 1934, as amended (the
                  "EXCHANGE ACT"); and

                           (iii)    furnish to any Warrant Holder forthwith upon
                  request a written statement by the Company that it has
                  complied with the reporting requirements of Rule 144 and of
                  the Act and the Exchange Act, a copy of the most recent annual
                  or quarterly report of the Company, and such other reports and
                  documents so filed by the Company as may be reasonably
                  requested to permit any such Warrant Holder to take advantage
                  of any rule or regulation of the SEC permitting the selling of
                  any such securities without registration.

                  (B)      REPRESENTATIONS AND COVENANTS OF THE PURCHASER.

                  The Purchaser shall not resell Warrant Shares, unless such
resale is made pursuant to an effective registration statement under the Act or
pursuant to an applicable exemption from such registration requirements.

                                       4
<PAGE>   5

         5.       ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number
of and kind of securities purchasable upon exercise of this Warrant and the
Purchase Price shall be subject to adjustment from time to time as follows:

                  (a)      Subdivisions, Combinations and other Issuances. If
the Company shall at any time after the date hereof but prior to the expiration
of this Warrant subdivide its outstanding securities as to which purchase rights
under this Warrant exist, by split-up, spin-off, or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant exist, the
number of Warrant Shares as to which this Warrant is exercisable as of the date
of such subdivision, split-up, spin-off or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate proportional adjustments
(decrease in the case of subdivision, increase in the case of combination) shall
also be made to the Purchase Price payable per share, so that the aggregate
Purchase Price payable for the total number of Warrant Shares purchasable under
this Warrant as of such date shall remain the same as it would have been before
such subdivision or combination.

                  (b)      Stock Dividend. If at any time after the date hereof
the Company declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities or rights convertible into or exchangeable for
Common Stock ("COMMON STOCK EQUIVALENTS") without payment of any consideration
by holders of Common Stock for the additional shares of Common Stock or the
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon exercise or conversion thereof), then the number of shares of
Common Stock for which this Warrant may be exercised shall be increased as of
the record date (or the date of such dividend distribution if no record date is
set) for determining which holders of Common Stock shall be entitled to receive
such dividends, in proportion to the increase in the number of outstanding
shares (and shares of Common Stock issuable upon conversion of all such
securities convertible into Common Stock) of Common Stock as a result of such
dividend, and the Purchase Price shall be proportionately reduced so that the
aggregate Purchase Price for all the Warrant Shares issuable hereunder
immediately after the record date (or on the date of such distribution, if
applicable) for such dividend shall equal the aggregate Purchase Price so
payable immediately before such record date (or on the date of such
distribution, if applicable). For the avoidance of doubt, the Purchaser
acknowledges that dividends paid by the Company on its Series A Preferred Stock
and Series B Preferred Stock shall not cause any of the adjustments described in
this paragraph.

                  (c)      Other Distributions. If at any time after the date
hereof the Company distributes to holders of its Common Stock, other than as
part of its dissolution, liquidation or the winding up of its affairs, any
shares of its capital stock, any evidence of indebtedness or any of its assets
(other than Common Stock), then the number of Warrant Shares for which this
Warrant is exercisable shall be increased to equal: (i) the number of Warrant
Shares for which this Warrant is exercisable immediately prior to such event,
(ii) multiplied by a fraction, (A) the numerator of which shall be the fair
market value per share of Common Stock on the record date for the dividend or
distribution, and (B) the denominator of which shall be the fair market value
price per share of Common Stock on

                                       5
<PAGE>   6

the record date for the dividend or distribution minus the amount allocable to
one share of Common Stock of the value (as jointly determined in good faith by
the Board of Directors of the Company and the Warrant Holder) of any and all
such evidences of indebtedness, shares of capital stock, other securities or
property, so distributed. The Purchase Price shall be reduced to equal: (i) the
Purchase Price in effect immediately before the occurrence of any event (ii)
multiplied by a fraction, (A) the numerator of which is the number of Warrant
Shares for which this Warrant is exercisable immediately before the adjustment,
and (B) the denominator of which is the number of Warrant Shares for which this
Warrant is exercisable immediately after the adjustment.

                  (d)      Merger, etc. If at any time after the date hereof
there shall be a merger or consolidation of the Company with or into or a
transfer of all or substantially all of the assets of the Company to another
entity, then the Warrant Holder shall be entitled to receive upon or after such
transfer, merger or consolidation becoming effective, and upon payment of the
Purchase Price then in effect, the number of shares or other securities or
property of the Company or of the successor corporation resulting from such
merger or consolidation, which would have been received by Warrant Holder for
the shares of stock subject to this Warrant had this Warrant been exercised just
prior to such transfer, merger or consolidation becoming effective or to the
applicable record date thereof, as the case may be. The Company will not merge
or consolidate with or into any other corporation, or sell or otherwise transfer
its property, assets and business substantially as an entirety to another
corporation, unless the corporation resulting from such merger or consolidation
(if not the Company), or such transferee corporation, as the case may be, shall
expressly assume, by supplemental agreement reasonably satisfactory in form and
substance to the Warrant Holder, the due and punctual performance and observance
of each and every covenant and condition of this Warrant to be performed and
observed by the Company.

                  (e)      Reclassification, etc. If at any time after the date
hereof there shall be a reorganization or reclassification of the securities as
to which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Warrant Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the Purchase Price then in
effect, the number of shares or other securities or property resulting from such
reorganization or reclassification, which would have been received by the
Warrant Holder for the shares of stock subject to this Warrant had this Warrant
at such time been exercised.

                  (f)      Purchase Price Adjustment. If the Company issues or
sells any Common Stock or securities which are convertible into or exchangeable
for its Common Stock or any convertible securities, or any warrants or other
rights to subscribe for or to purchase or any options for the purchase of its
Common Stock or any such convertible securities (other than shares or options
issued or which may be issued (i) pursuant to the Company's employee or director
option plans, (ii) upon exercise of options, warrants or rights outstanding on
the date of the Agreement and listed in the Company's most recent periodic
report filed under the Exchange Act, (iii) as compensation in connection with
arrangements with consultants and promoters of the Common Stock and (iv) as

                                       6
<PAGE>   7

performance-related compensation to individuals that are employees of entities
that have been acquired by or merged into the Company, pursuant to "earn out"
provisions of the acquisition or merger agreements pursuant to which the Company
acquired such entities) at an effective purchase price per share which is less
than the greater of the Purchase Price then in effect or the fair market value
(as defined in Section 3(b) above) of the Common Stock on the trading day next
preceding such issue or sale, then in each such case, the Purchase Price in
effect immediately prior to such issue or sale shall be reduced effective
concurrently with such issue or sale to an amount determined by multiplying the
Purchase Price then in effect by a fraction, (x) the numerator of which shall be
the sum of (1) the number of shares of Common Stock outstanding immediately
prior to such issue or sale, plus (2) the number of shares of Common Stock which
the aggregate consideration received by the Company for such additional shares
would purchase at such fair market value or, Purchase Price as the case may be,
then in effect; and (y) the denominator of which shall be the number of shares
of Common Stock of the Company outstanding immediately after such issue or sale.

                  For the purposes of the foregoing adjustment, in the case of
the issuance of any convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, shares of Common Stock
("CONVERTIBLE SECURITIES"), the maximum number of shares of Common Stock
issuable upon exercise, exchange or conversion of such Convertible Securities
shall be deemed to be outstanding, provided that no further adjustment shall be
made upon the actual issuance of Common Stock upon exercise, exchange or
conversion of such Convertible Securities.

                  The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Purchase Price pursuant to this
paragraph 5(f), so that after such adjustments the aggregate Purchase Price
payable hereunder for the increased number of shares shall be the same as the
aggregate Purchase Price in effect just prior to such adjustments.

                  In the event of any such issuance for a consideration which is
less than such fair market value and also less than the Purchase Price then in
effect, than there shall be only one such adjustment by reason of such issuance,
such adjustment to be that which results in the greatest reduction of the
Purchase Price computed as aforesaid.

         6.       NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Warrant Holder
against impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, and (b) will take all such action as
may be reasonably necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.

                                       7
<PAGE>   8

         7.       NOTICE OF ADJUSTMENTS. Whenever the Purchase Price or number
of Shares purchasable hereunder shall be adjusted pursuant to Section 5 hereof,
the Company shall execute and deliver to the Warrant Holder a certificate
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated and
the Purchase Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the Warrant Holder.

         8.       RIGHTS AS STOCKHOLDER. Prior to exercise of this Warrant, the
Warrant Holder shall not be entitled to any rights as a stockholder of the
Company with respect to the Warrant Shares, including (without limitation) the
right to vote such shares, receive dividends or other distributions thereon or
be notified of stockholder meetings. However, in the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
each Warrant Holder, at least 10 Trading Days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right.

         9.       LIMITATION ON EXERCISE.

                  (a)      Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired by the Holder
at any time upon exercise pursuant to the terms hereof shall not exceed a number
that, when added to the total number of shares of Common Stock deemed
beneficially owned by such Holder at such time (other than by virtue of the
ownership of securities or rights to acquire securities (including the Warrant
and Preferred Shares) that have limitations on the Holder's right to convert,
exercise or purchase similar to the limitation set forth herein), together with
all shares of Common Stock deemed beneficially owned (other than by virtue of
the ownership of securities or rights to acquire securities that have
limitations on the right to convert, exercise or purchase similar to the
limitation set forth herein) by the Holder's "affiliates" (as defined in Rule
144 of the Securities Act) ("AGGREGATION PARTIES") that would be aggregated for
purposes of determining whether a group under Section 13(d) of the Exchange Act,
exists, would exceed 9.9% of the total issued and outstanding shares of the
Common Stock (the "RESTRICTED OWNERSHIP PERCENTAGE"). The Holder shall have the
right (x) at any time and from time to time to reduce its Restricted Ownership
Percentage immediately upon notice to the Company and (y) (subject to waiver) at
any time and from time to time, to increase its Restricted Ownership Percentage
to what the Holder would otherwise be entitled under this Warrant immediately in
the event of the announcement as pending or planned, of a Change in Control
Transaction.

                  (b)      The Holder covenants at all times on each day (each
such day being referred to as a "COVENANT DAY") as follows: During the balance
of such Covenant

                                       8
<PAGE>   9

Day and the succeeding sixty-one (61) days (the balance of such Covenant Day and
the succeeding 61 days being referred to as the "COVENANT PERIOD") such Holder
will not acquire shares of Common Stock pursuant to any right (including
exercise of Warrants) existing at the commencement of the Covenant Period to the
extent the number of shares so acquired by such Holder and its Aggregation
Parties (ignoring all dispositions) would exceed:

                           (i)      the Restricted Ownership Percentage of the
                  total number of shares of Common Stock outstanding at the
                  commencement of the Covenant Period, minus

                           (ii)     the number of shares of Common Stock
                  actually owned by such Holder and its Aggregation Parties at
                  the commencement of the Covenant Period.

                           A new and independent covenant will be deemed to be
given by the Holder as of each moment of each Covenant Day. No covenant will
terminate, diminish or modify any other covenant. The Holder agrees to comply
with each such covenant. This Section 9 controls in the case of any conflict
with any other provision of the Purchase Agreement or any agreement entered into
in connection therewith.

                           The limitation contained in paragraphs (a) and (b)
above of this Section 9 may be enforced by the Company as follows: the Company's
obligation to issue Common Stock which would exceed such limits referred to in
this Section 19 shall be suspended to the extent necessary until such time, if
any, as shares of Common Stock may be issued in compliance with such
restrictions.

                  (c)      Notwithstanding anything contained herein, in no
event shall the Company issue shares of Common Stock hereunder to the extent
that the total number of shares issued or deemed issued to the Holder under the
Purchase Agreement would exceed the Holder's pro-rata portion of 19.9% of the
Company's issued and outstanding shares of Common Stock on the date of issuance
hereof, unless otherwise approved by the Company's shareholders. Instead, the
Company shall redeem this Warrant to the extent necessary at such consideration
required to place the Holder in the same economic position they would have been
if not for such limitation or as otherwise provided under the Purchase
Agreement.

         10.      REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense promptly will execute and deliver, in lieu thereof a new Warrant of like
tenor.

                                       9
<PAGE>   10

         11.      SPECIFIC PERFORMANCE; CONSENT TO JURISDICTION; CHOICE OF LAW.

                  (a)      The Company and the Warrant Holder acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Warrant were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Warrant and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which either of
them may be entitled by law or equity.

                  (b)      Each of the Company and the Warrant Holder (i) hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts located in New York County, New York for the purposes of any suit, action
or proceeding arising out of or relating to this warrant and (ii) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Warrant
Holder consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to
it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this paragraph
shall affect or limit any right to serve process in any other manner permitted
by applicable law.

                  (c)      The Company and the Warrant Holder irrevocably waive
their right to trial by jury.

                  (d)      This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York
applicable to contracts executed and to be performed entirely within such State.

         12.      ENTIRE AGREEMENT; AMENDMENTS. This Warrant, the Exhibits
hereto and the provisions contained in the Agreement or the Registration Rights
Agreement or the Debentures contain the entire understanding of the parties with
respect to the matters covered hereby and thereby and, except as specifically
set forth herein and therein, neither the Company nor the Warrant Holder makes
any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by a
written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.

         13.      NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by
express

                                       10
<PAGE>   11

courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:

                  to the Company:

                                    U.S. Plastic Lumber Corp.
                                    2300 Glades Road
                                    Suite 440 West
                                    Boca Raton, FL 33431
                                    Attention: Bruce Rosetto
                                    Facsimile: (561) 394-5335

                  with a copy to:

                                    Blank Rome Comisky & McCauley LLP
                                    One Logan Square
                                    Philadelphia, PA 19103
                                    Attention: Alan L. Zeiger, Esq.
                                    Facsimile: (215) 569-5628

                  to the Warrant Holder:

                                    Halifax Fund, L.P.
                                    c/o The Palladin Group, L.P.
                                    Investment Manager
                                    195 Maplewood Avenue
                                    Maplewood, NJ 07040
                                    Attention: Robert Chender
                                    Facsimile: (973) 313-6491

                  with copies to:

                                    Kleinberg, Kaplan, Wolff & Cohen, P.C.
                                    551 Fifth Avenue, 18th Floor
                                    New York, NY 10176
                                    Attention: Lawrence D. Hui, Esq.
                                    Facsimile: (212) 986-8866

Either party hereto may from time to time change its address for notices under
this Section 13 by giving at least 10 days' prior written notice of such changed
address to the other party hereto.

         14.      MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
The invalidity or unenforceability of any

                                       11
<PAGE>   12

provision hereof shall in no way affect the validity or enforceability of any
other provision.

         15.      ASSIGNMENT. This Warrant may be transferred or assigned, in
whole or in part, at any time and from time to time by the then Warrant Holder
by submitting this Warrant to the Company together with a duly executed
Assignment in substantially the form and substance of the Form of Assignment
which accompanies this Warrant and, upon the Company's receipt hereof, and in
any event, within three (3) business days thereafter, the Company shall issue a
Warrant to the Warrant Holder to evidence that portion of this Warrant, if any,
as shall not have been so transferred or assigned.

Dated: June 15, 2001          U.S. PLASTIC LUMBER CORP.

                                 By:  /s/ Bruce C. Rosetto
                                    -------------------------------------------
                                      Name:  Bruce C. Rosetto
                                      Title: Vice President and General Counsel

CORPORATE SEAL

Attest:

By: /s/ Michael D. Schmidt
   -------------------------

               (SIGNATURE PAGE OF U.S. PLASTIC LUMBER CORPORATION
                         COMMON STOCK PURCHASE WARRANT)

                                       12
<PAGE>   13

                               NOTICE OF EXERCISE
             (To be executed by the Holder to exercise the right to
          purchase shares of Common Stock under the foregoing Warrant)

To:      U.S. PLASTIC LUMBER CORP.
Re:      COMMON STOCK PURCHASE WARRANT issued on June __, 2001 to
         __________________ to purchase shares of Common Stock (the "Warrant")

(1)      CHECK ONE:

_______           (a)      The undersigned  hereby elects to purchase  ________
                  shares of Common Stock of U.S. PLASTIC LUMBER CORP., pursuant
                  to Section 2 of the Warrant, and will tender payment of the
                  purchase price in full, together with all applicable transfer
                  taxes payable pursuant to the Warrant, if any.

                                             OR
_______           (b)      The undersigned hereby exercises the Warrant with
                  respect to ________ shares of Common Stock of U.S. PLASTIC
                  LUMBER CORP. on a cashless, "net basis" pursuant to Section 2
                  of the Warrant, and hereby instructs the Company to deliver
                  _______ shares of Common Stock to the holder of the Warrant
                  based on a Fair Market Value of $____.

(2)      Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:

                        -------------------------------
                        Name

                        -------------------------------
                        Address

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

(3)      Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:

                        -------------------------------
                        Name

                        -------------------------------
                        Address

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

(4)      The undersigned represents as of the date hereof that, after giving
effect to the exercise of this Warrant pursuant to this Notice of Exercise, the
undersigned will remain in compliance with Section 9 of the Warrant and not
exceed the "Restricted Ownership Percentage" contained in Section 9 of the
Warrant.

Dated:                                 Print Name of Holder:
      ------------------
                                       -----------------------------------------
                                       (Sign) By:
                                                 -------------------------------
                                       Print Name:
                                       Print Title:

                                       13
<PAGE>   14

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

                               FORM OF ASSIGNMENT
                   (TO BE SIGNED ONLY ON TRANSFER OF WARRANT)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto
__________________ the right represented by the within Warrant to purchase
______________ shares of Common Stock of U.S. PLASTIC LUMBER CORP., a Nevada
corporation, to which the within Warrant relates, and appoints as
attorney-in-fact, to transfer such right on the books of U.S. PLASTIC LUMBER
CORP., a Nevada corporation, with full power of substitution of premises.

Dated:
      ----------------------------        --------------------------------------
                                          (Signature must conform to the name
                                          of holder as specified on the face of
                                          the Warrant)

                                          --------------------------------------
                                                        (Address)

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

                                          --------------------------------------
Signed in the presence of:

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

                                       14

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