Document:

<PAGE>   1
                                                                   EXHIBIT 10.52

                             MODIFICATION AGREEMENT

         THIS MODIFICATION AGREEMENT ("Modification Agreement") is made and
entered into as of this ____ day of March 2001, by and between GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), the other Lenders (as defined below), U.S.
Plastic Lumber Ltd. and The Eaglebrook Group, Inc., each a Delaware corporation
with its chief executive office located at 2300 W. Glades Road, Suite 440, Boca
Raton, Florida 33431 and 2600 W. Roosevelt Road, Chicago, Illinois 60608,
respectively (jointly, severally and collectively, "Debtor"), and U.S. Plastic
Lumber Corp., a Nevada corporation with its chief executive office located at
2300 W. Glades Road, Suite 440, Boca Raton, Florida 33431 ("Guarantor").

                                    RECITALS

           WHEREAS, GE Capital and the Debtor entered into that certain Master
Security Agreement dated as of February 24, 2000 (the "Master Security
Agreement"), pursuant to which Debtor agreed to grant to GE Capital and its
successors and assigns a security interest in any and all property listed on any
Collateral Schedule now or thereafter executed pursuant thereto, in order to
secure, among other things, the payment and performance of certain Promissory
Notes executed from time to time and identified on such Collateral Schedules.

           WHEREAS, GE Capital, The CIT Group/Equipment Financing, Inc., HSBC
Business Credit (USA) f/k/a HSBC Business Loans, Inc., People's Capital and
Leasing Corp. and Safeco Credit Company, Inc. (collectively with GE Capital, the
"Lenders") have each made loans to Debtor, which loans are evidenced by certain
Promissory Notes issued by Debtor to such Lender (whether initially documented
in Lender's name or assigned to Lender by GE Capital) (collectively, the
"Promissory Note") and secured by certain Collateral Schedules executed by
Debtor pursuant to the Master Security Agreement (collectively, the "Collateral
Schedules")

           WHEREAS, pursuant to that certain Corporate Guaranty dated February
24, 2000 (the "Guaranty"), in favor of GE Capital and its successors and
assigns, the Guarantor guaranteed all of Debtor's obligations, now and hereafter
arising, pursuant to the Master Security Agreement, the Promissory Notes and the
Collateral Schedules.

           WHEREAS, an Event of Default has occurred under Section 7(n) of the
Master Security Agreement since the Guarantor has failed to maintain a Minimum
Tangible Net Worth equal to or greater than the amounts required thereunder.

           WHEREAS, Debtor and Guarantor have requested that GE Capital and the
other Lenders waive such Event of Default and modify the Master Security
Agreement pursuant to the terms and conditions set forth herein.

           WHEREAS, GE Capital and the other Lenders are willing to waive such
Event of Default and modify the Master Security Agreement pursuant to the terms
and conditions set forth herein.

           NOW THEREFORE, in consideration of these premises and the covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which the parties hereby acknowledge, the parties hereby agree as
follows:

I. ACKNOWLEDGMENTS, REPRESENTATIONS AND COVENANTS: Debtor and Guarantor hereby
represent, acknowledge, warrant and covenant to GE Capital and the other Lenders
that:

           1) The recitals set forth above are true and accurate. Capitalized
terms used herein without definition shall have the meanings given to such terms
in the Master Security Agreement and the Promissory Note.

           2) The Master Security Agreement, the Promissory Notes, the
Collateral Schedules and the Guaranty are duly executed, binding obligations of
Debtor and Guarantor, as the case may be, are in full force and effect and have
not been terminated.

         3) Debtor and Guarantor have adequate power and capacity to enter into
this Modification Agreement.

<PAGE>   2

          4) The entry into and performance by Debtor and Guarantor of their
respective obligations under this Modification Agreement, the Master Security
Agreement, the Promissory Notes, the Collateral Schedules and the Guaranty do
not (i) violate any judgment, order, law or regulation applicable to Debtor or
Guarantor, as the case may be; or (ii) result in any breach of, constitute a
default under or result in the creation of any lien, charge, security interest
or other encumbrance upon any unit of Collateral or any other assets of Debtor
or Guarantor pursuant to any indenture, security agreement, deed of trust, bank
loan or credit agreement or other instrument (other than the Master Security
Agreement) to which Debtor or Guarantor is a party.

          5) There are no suits or proceedings pending or threatened in court or
before any regulatory commission, board or other administrative governmental
agency against or affecting Debtor or Guarantor, which will have a material
adverse effect on the ability of Debtor or Guarantor to fulfill their respective
obligations under this Modification Agreement, the Master Security Agreement,
the Promissory Notes, the Collateral Schedules or the Guaranty.

          6) The consolidated financial statements of Guarantor and its
subsidiaries, heretofore delivered to the Lenders accurately present the
financial position of Guarantor and its subsidiaries, as of the date of
delivery, and there has been no material adverse change in the financial
condition of Guarantor and its subsidiaries since the date of such financial
statements.

          7) Each of Debtor and Guarantor agrees that, notwithstanding any
provision to the contrary herein, it will continue to fulfill any and all of its
duties and obligations under the Master Security Agreement, the Promissory
Notes, the Collateral Schedules and the Guaranty except as those duties and
obligations are expressly modified by this Modification Agreement.

II. WAIVER, MODIFICATION, ETC.

           1) Solely to the extent relating to Collateral Schedules and
Promissory Notes that are in the name of, or have been assigned to, such Lender,
each Lender hereby waives the Event of Default referred to in the recitals above
solely to the extent relating to the financial reporting period ending December
31, 2001. This waiver only applies to such financial reporting period and shall
not apply to any other time period for such covenant, whether now or hereafter
existing.

2) In the event the indebtedness evidenced by that certain Credit Agreement
dated as of November 13, 2000 (as heretofore and hereafter amended, the "Credit
Agreement"), by and among Guarantor, the financial institutions listed therein
(the "Banks") and Bank of America, N.A., as agent (the "Agent") is refinanced or
replaced by the Banks, the Agent or any other party on or before January 2,
2002, on the date of such refinancing or replacement, Debtor shall pay to each
Lender under each Promissory Note that is in the name of, or has been assigned
to, such Lender, a prepayment of principal in the amount of 10% of the original
principal amount of each such Promissory Note. In addition, on April 2, 2002,
Debtor shall pay to each Lender under each Promissory Note that is in the name
of, or has been assigned to, such Lender, a prepayment of principal in the
amount of 10% of the original amount of each such Promissory Note.

          3) In the event the indebtedness evidenced by the Credit Agreement is
not refinanced or replaced by the Banks, the Agent or any other party on or
before January 2, 2002, on January 2, 2002, Debtor shall pay to each Lender
under each Promissory Note that is in the name of, or has been assigned to, such
Lender, a prepayment of principal in the amount of 10% of the original principal
amount of each such Promissory Note. In addition, on April 2, 2002, Debtor shall
pay to each Lender under each Promissory Note that is in the name of, or has
been assigned to, such Lender, a prepayment of principal in the amount of 10% of
the original amount of each such Promissory Note.

4) Each Promissory Note is hereby amended so that commencing with the Periodic
Installment due during May 2002 under each Promissory Note, the outstanding
principal balance under each Promissory Note shall be paid in forty-eight (48)
consecutive monthly Periodic Installments each in an amount equal to 1/48th of
the outstanding principal balance of each such Promissory Note plus interest at
the Contract Rate. Interest shall continue to accrue and be payable at the
Contract Rate specified in each such Promissory Note in accordance with the
terms thereof. Debtor hereby agrees to execute and deliver any and all
modifications, supplements or other documents requested by the Lenders to
evidence the foregoing modification of the Periodic Installments.

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<PAGE>   3

         5) Section 7(n) of the Master Security Agreement is hereby deleted in
its entirety and the following is inserted in lieu thereof:

                 "(n) If Guarantor fails to maintain at all times during the
          term of this Agreement and any Schedule, a Minimum Tangible Net Worth
          equal to or greater than the following amounts during the following
          periods: (i) the sum of Forty-Five Million Dollars ($45,000,000.00)
          plus seventy-five percent (75%) of the after tax gain recognized by
          Guarantor on the sale of any businesses or divisions of Guarantor plus
          fifty percent (50%) of Guarantor's after tax Net Income for the
          quarterly period ending March 31, 2001, (ii) Forty-Seven Million Five
          Hundred Thousand Dollars ($47,500,000.00) plus seventy-five percent
          (75%) of the after tax gain recognized by Guarantor on the sale of any
          businesses or divisions of Guarantor plus fifty percent (50%) of
          Guarantor's after tax Net Income for the quarterly period ending June
          30, 2001, (iii) Forty-Seven Million Five Hundred Thousand Dollars
          ($47,500,000.00) plus seventy-five percent (75%) of the after tax gain
          recognized by Guarantor on the sale of any businesses or divisions of
          Guarantor plus fifty percent (50%) of Guarantor's after tax Net Income
          for the quarterly period ending September 30, 2001, (iv) Fifty Million
          Dollars ($50,000,000.00) plus seventy-five percent (75%) of the after
          tax gain recognized by Guarantor on the sale of any businesses or
          divisions of Guarantor plus fifty percent (50%) of Guarantor's after
          tax Net Income for the quarterly period ending December 31, 2001, and
          (v) Fifty-Two Million Five Hundred Thousand Dollars ($52,500,000.00)
          plus seventy-five percent (75%) of the after tax gain recognized by
          Guarantor on the sale of any businesses or divisions of Guarantor plus
          fifty percent (50%) of Guarantor's after tax Net Income at all times
          thereafter. For the purposes of this Section 7(n), "Minimum Tangible
          Net Worth" shall mean Stockholders Equity minus Intangible Assets.
          Capitalized terms used in this Section 7 (n) shall be defined and
          calculated in accordance with generally accepted accounting
          principles.

                 (o) The debt evidenced by that certain Credit Agreement dated
          as of November 13, 2000, as now and hereafter amended, by and among
          Guarantor, the financial institutions listed therein and Bank of
          America, N.A., as agent, or any replacement or successor agreement
          thereof (whether by a refinancing or otherwise), or any other
          obligation for borrowed money in excess of Three Million Dollars
          ($3,000,000.00), is accelerated or becomes due prior to its stated
          date of maturity."

         6) Within forty-five (45) days after the end of each fiscal quarter of
Guarantor, Guarantor will furnish to GE Capital and each of the other Lenders a
certificate of the Chief Financial Officer of Guarantor setting forth the
computations in reasonable detail and satisfactory to GE Capital and each such
Lender demonstrating compliance with the Minimum Tangible Net Worth covenant set
forth in Section 7(n) of the Master Security Agreement for the preceding fiscal
quarter, and to the effect that such officer has not become aware of any Event
of Default that has occurred and is continuing under the Master Security
Agreement.

         7) As a condition to each Lender's execution and delivery of this
Modification Agreement, the Debtor shall pay to GE Capital a modification fee in
the amount of $50,000.00, which fee shall be distributed to each Lender on a
pro-rata basis based on each Lender's aggregate outstanding balance under the
Promissory Notes.

         8) Debtor hereby agrees that on or before May 15, 2001, it shall
provide to GE Capital and each other Lender a copy of the appraisal currently
being completed by Great American Appraisal on all the Collateral described in
the Collateral Schedules. In addition, each Lender reserves the right to request
its own appraisal of the Collateral at any time and all the costs and expenses
of such appraisals shall be borne solely by the Debtor.

III. REMAINING TERMS TO CONTINUE IN EFFECT

           1) Except as expressly modified herein, the conditions and terms of
the Master Security Agreement, the Promissory Notes, the Collateral Schedules
and the Guaranty shall continue in full force and effect in accordance with
their original terms and conditions.

           2) All Exhibits referenced herein and attached hereto are
incorporated herein by reference.

           3) If this Modification Agreement is deemed unenforceable in any
respect, then and in such case the parties agree that the Master Security
Agreement the Promissory Notes, Collateral Schedules and the Guaranty shall be
enforceable in accordance with their original terms and conditions as if this
Modification Agreement had never been executed.

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<PAGE>   4

           4) Debtor hereby certifies, agrees and acknowledges that the
Collateral is installed and fully operational and is now and will continue to be
used and in the conduct of Debtor's business.

         5) Time is of the essence.

          6) Notwithstanding anything herein or in any other document to the
contrary, GE Capital and each of the other Lenders hereby reserves all of its
rights and remedies now or hereafter available to it under the Master Security
Agreement, the Promissory Notes and the Guaranty and its failure to exercise any
of such rights and remedies at this time or any other time shall not preclude GE
Capital or any such Lender from doing so at any time in the future. Neither GE
Capital's nor any other Lender's execution of this Agreement is, or shall be
deemed to be, a waiver of any Event of Default, whether now or hereafter arising
(other than the Event of Default described in the recitals above).

          7) This Modification Agreement shall be binding upon and shall inure
to the benefit of all the parties hereto and their respective administrators,
successors and permitted assigns.

          8) This Modification Agreement shall not modify or affect in any way
the Master Security Agreement to the extent relating to Promissory Notes and
Collateral Schedules that are in the name of, or have been assigned to Siemens
Credit Corporation, or such Promissory Notes or Collateral Schedules themselves.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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           IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and have caused this Agreement to be executed by their respective duly
authorized representatives as of the day first above-written.

U.S. PLASTIC LUMBER  LTD.

By: /s/ MICHAEL D. SCHMIDT
   ------------------------
Title: TREASURER
       --------------------

THE EAGLEBROOK GROUP, INC.

By: /s/ MICHAEL D. SCHMIDT
   ------------------------
Title: TREASURER
       --------------------

U.S. PLASTIC LUMBER CORP.

By: /s/ JOHN W. POLING
   ------------------------
Title: CFO
       --------------------

GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ KUER SCHEFLEIN
   ------------------------
Title:  RISK ANALYST
       --------------------

THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: /s/ SUSAN WILLIAMS
   ------------------------
Title: SENIOR CREDIT ANALYST
       --------------------

SAFECO CREDIT COMPANY, INC.

By: /s/ RON KOENIER
   ------------------------
Title:  DIVISION ASST. V.P.
       --------------------

HSBC BUSINESS CREDIT (USA) INC.

By: /s/ MARK HUNTERBEIN
   ------------------------
Title:  VICE PRESIDENT
       --------------------

PEOPLE'S CAPITAL AND LEASING CORP.

By: /s/ FRANK FONSECA
   ------------------------
Title:  ASSISTANT V.P.
       --------------------

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<PAGE>   6
                           AMENDMENT TO LOAN DOCUMENTS

         THIS AMENDMENT TO LOAN DOCUMENTS (the "Amendment") is made this 30th
day of March, 2001, by and among U.S. PLASTIC LUMBER LTD., a Delaware
corporation, THE EAGLEBROOK GROUP, INC., a Delaware corporation (collectively,
the "Debtor") and SIEMENS FINANCIAL SERVICES, INC., a Delaware corporation,
formerly known as Siemens Credit Corporation (the "Secured Party").

         WHEREAS, Debtor and Secured Party are parties to certain credit
facilities, as evidenced by and set forth in:

                  (a) Master Security Agreement dated February 24, 2000 by and
         among Debtor and Secured Party, as assignee of General Electric Credit
         Company (the "Master Agreement"), solely as it relates to the following
         Schedules:

                           (1) Collateral Schedule IN-1 to Master Security
                  Agreement dated as of February 24, 2000 ("Schedule IN-1");

                           (2) Collateral Schedule IN-2 to Master Security
                  Agreement dated as of February 24, 2000 ("Schedule IN-2");

                           (3) Collateral Schedule FL-1 to Master Security
                  Agreement dated as of February 24, 2000 ("Schedule FL-1");

                           (4) Collateral Schedule FL-2 to Master Security
                  Agreement dated as of February 24, 2000 ("Schedule FL-2");

                           (5) Collateral Schedule FL-3 to Master Security
                  Agreement dated as of February 24, 2000 ("Schedule FL-3");

                  (b) Promissory Note dated March 13, 2000 in the original
         principal amount of One Hundred Five Thousand Four Hundred Twenty-One
         ($105,421.00) Dollars ("Note I");

                  (c) Promissory Note dated March 13, 2000 in the original
         principal amount of Five Hundred Seventy-Eight Thousand One Hundred
         Seventy-Four ($578,174.00) Dollars ("Note II");

                  (d) Promissory Note dated March 13, 2000 in the original
         principal amount of Four Hundred Forty-One Thousand One Hundred
         Seventy-Nine ($441,179.00) Dollars ("Note III");

                  (e) Promissory Note dated April 7, 2000 in the original
         principal amount of One Hundred Thirty-Three Thousand Eight Hundred Ten
         ($133,810.00) Dollars ("Note IV"); and

<PAGE>   7

                  (f) Promissory Note dated April 18, 2000 in the original
         principal amount of One Million Two Hundred Ninety-Two Thousand Nine
         Hundred Seventy-Nine ($1,292,979.00) Dollars ("Note V");

         WHEREAS, (a) the Master Agreement, Schedule IN-1, Schedule IN-2,
Schedule FL-1, Schedule FL-2 and Schedule FL-3 are collectively referred to as
the "Security Agreements", (b) Note I, Note II, Note III, Note IV and Note V are
collectively referred to as the "Notes", and (c) the Security Agreements, the
Notes, and any and all other documents, instruments, writings and agreements
related thereto are collectively and individually referred to as the "Loan
Documents" (capitalized terms used, but not specifically defined, herein shall
have the meaning provided for such terms in the Loan Documents); and

         WHEREAS, to induce Secured Party to enter into the Loan Documents, U.S.
Plastic Lumber Corp. (the "Guarantor") guaranteed the due, regular and punctual
payment and performance of all obligations of Debtor to Secured Party including,
without limitation, the obligations set forth in and evidenced by the Loan
Documents, pursuant to that certain Corporate Guaranty dated February 24, 2000
(the "Guaranty") issued by Guarantor in favor of Secured Party, as assignee of
General Electric Capital Corporation; and

         WHEREAS, the Obligated Parties (collectively, the "Obligated Parties")
have requested that the Secured Party (a) waive, as of December 31, 2000, the
Event of Default that has occurred pursuant to Section 7(n) of the Security
Agreements (the "Existing Event of Default") and (b) amend Section 7(n) and
otherwise amend certain terms and conditions of the Loan Documents ; and

         WHEREAS, to induce the Secured Party to waive the Existing Event of
Default and to otherwise amend certain terms and conditions of the Loan
Documents, the Obligated Parties have offered to execute and deliver this
Amendment;

         NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Secured Party and the Debtor agree as follows:

         1. WAIVER BY SECURED PARTY. In consideration of and subject to
compliance by the Obligated Parties with the terms and conditions of this
Amendment, the Secured Party hereby agrees to and does waive, as of December 31,
2000 only, the Event of Default resulting from a breach of the financial
performance covenant set forth in Section 7(n) of the Security Agreements. This
waiver is given as a one-time accommodation only, and Secured Party shall have
no obligation to grant any other or further waivers of any Events of Default
under the Loan Documents.

         2. ESTOPPEL. The Obligated Parties acknowledge and reaffirm that their
obligations to the Secured Party as set forth in and evidenced by the Loan
Documents, as amended herein, and by the Guaranty are due and owing by the
Obligated Parties to the Secured Party without any defenses, set-offs,
recoupments, claims or counterclaims of any kind as of the date hereof. To the

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extent that any defenses, set-offs, recoupments, claims or counterclaims may
exist as of the date hereof, the Obligated Parties waive and release the Secured
Party from the same.

         3. WAIVER AND RELEASE OF CLAIMS AND DEFENSES BY OBLIGATED PARTIES. The
Obligated Parties hereby waive and release all claims and demands of any nature
whatsoever that they now have or may have against the Secured Party and each of
its directors, officers, employees, affiliates, attorneys and agents, whether
arising under the Loan Documents or the Guaranty, or as a result of any acts or
omissions of the Secured Party, or any of its directors, officers, employees,
affiliates, attorneys or agents, or otherwise, and whether known or unknown,
existing as of the date of the execution of this Amendment, and further waive
and release any and all defenses of any nature whatsoever to the payment of the
Indebtedness (as such term is defined in the Security Agreements) and to the
Obligations (as such term is defined in the Corporate Guaranty dated February
24, 2000) or the performance of their obligations under Loan Documents and the
Guaranty.

         4. PRINCIPAL REDUCTIONS/MANDATORY PREPAYMENTS.

         4.1 (a) Debtor shall, simultaneously with the execution and delivery of
this Amendment, make a lump sum principal payment to Secured Party in an amount
equal to Fifty Thousand ($50,000.00) Dollars.

                  (b) Debtor further agrees that additional principal payments
         shall be due and payable as follows:

                  (1)      Fifty Thousand ($50,000.00) Dollars on April 30,
                           2001;

                  (2)      Fifty Thousand ($50,000.00) Dollars on May 31, 2001;

                  (3)      Fifty Thousand ($50,000.00) Dollars on June 29, 2001;

                  (4)      Fifty Thousand ($50,000.00) Dollars on July 31, 2001;
                           and

                  (5)      Five Hundred Thousand ($500,000.00) Dollars on
                           January 2, 2002.

                  (c) In the event the Debtor shall, at any time during the term
of the Loan Documents, sell, lease, assign, transfer or otherwise dispose of
assets (other than sales of inventory or collection of accounts receivable in
the ordinary course of business of Debtor) which, individually or in the
aggregate, equals or exceeds Twenty Million ($20,000,000.00) Dollars (based upon
the Debtor's cost of or gross selling price of such assets), then no later than
ninety (90) days thereafter, without notice or demand by Secured Party, Debtor
shall make an additional mandatory prepayment of principal in an amount equal to
Two Hundred Fifty Thousand ($250,000.00) Dollars.

         4.3 The prepayments and principal reductions described in this Section
4 shall be applied to the installments of principal due under the Notes,
pro-rata based upon the original principal balance of each of the Notes, in the
inverse order of maturity and shall not alter or postpone the amount or due date
of any subsequent installment of principal and interest thereunder.

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<PAGE>   9

         5. AMENDED TERMS OF LOAN DOCUMENTS.

                  5.1 As of the date hereof, Section 7(n) of the Security
Agreements is amended by the addition of the following at the end of the first
sentence thereof:

                  "; notwithstanding anything contained in this Section 7(n) to
         the contrary, (1) the foregoing Minimum Tangible Net Worth levels shall
         apply from the date hereof through and including December 31, 2000 and
         as at March 31, 2002 until the Indebtedness of Debtor to Secured Party
         is fully paid and satisfied and (2) the following Minimum Tangible Net
         Worth levels shall apply during the following periods: (i) Forty-Five
         Million ($45,000,000) Dollars as at March 31, 2001, (ii) Forty-Seven
         Million Five Hundred Thousand ($47,500,000) Dollars as at June 30, 2001
         and as at September 30, 2001, (iv) Fifty Million ($50,000,000) Dollars
         as at December 31, 2001."

                  5.2 Section 7 of the Security Agreements is amended by the
addition of the following subsection (o) to read in its entirety as follows:

                  "(o) any refinancing or other termination of the Credit
         Agreement dated as of June 30, 2000, as amended, by and among the
         Debtor, the financial institutions listed thereon and Bank of America,
         N.A., as administrative agent."

                  5.3 Section 8(a) of the Security Agreements is amended by the
addition of the following sentence to read in its entirety as follows:

                  "Notwithstanding the foregoing, upon the occurrence of an
         Event of Default under Section 7(o), the Indebtedness shall become and
         be automatically due and payable, with or without notice from or demand
         by Secured Party and Secured Party shall be entitled to interest at the
         default rate described in the preceding sentence."

                  5.4 Debtor and Secured Party acknowledge and agree that as of
January 2, 2002, following receipt and application by Secured Party of all
mandatory prepayment and principal reductions, the regularly scheduled principal
payments under the Notes shall automatically adjust, based upon the then
remaining outstanding principal balance of the Notes, to fully amortize such
principal balance, on a straight line basis, plus interest, over the immediately
succeeding forty-eight (48) months. Payments of principal plus interest shall
continue to be due and payable monthly, on the due dates for such payments set
forth in the Notes. The outstanding principal balance of the obligations
evidenced by the Notes, as indicated by Secured Party's books and records, shall
be conclusive evidence of such balance, absent manifest error. Debtor shall
execute such documents, instruments, writings and agreements requested by
Secured Party from time to time to more fully carry out the intent and purpose
of this Section 5.4.

         6. LEGAL FEES AND EXPENSES. The Obligated Parties shall pay on demand
all legal fees, recording expenses and other reasonable and necessary

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<PAGE>   10

disbursements of the Secured Party incident to the preparation, execution and
delivery of this Amendment.

         7. NO PREFERENTIAL TREATMENT. The Obligated Parties have not entered
into this Amendment to provide any preferential treatment to the Secured Party
or any other creditor of the Obligated Parties. The Obligated Parties do not
intend to file for protection or seek relief under the United States Bankruptcy
Code or any similar federal or state law providing for the relief of debtors.

         8. AUTOMATIC STAY. In consideration of the agreements contained in this
Amendment, the Obligated Parties agree that, in the event the Obligated Parties,
any other guarantor of the obligations of the Debtor to the Secured Party or any
of the persons or parties constituting any of the foregoing, shall:

                  (a) file with any bankruptcy court of competent jurisdiction
or be the subject of a petition under Title 11 of the United States Code, as
amended (the "Bankruptcy Code");

                  (b) be the subject of any order for relief under the
Bankruptcy Code;

                  (c) file or be the subject of any petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency, or other relief for debtors;

                  (d) have sought or consented to or acquiesced in the
appointment of any trustee, receiver, conservator or liquidator; or

                  (e) be the subject of any order, judgment, or decree entered
by any court of competent jurisdiction approving a petition filed against such
party for any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or future federal
or state act or law relating to bankruptcy, insolvency, or other relief for
debtors;

the Secured Party shall thereupon be entitled and the Obligated Parties
irrevocably consent to immediate and unconditional relief from any automatic
stay imposed by Section 362 of the Bankruptcy Code, any similar provision under
any other federal or state law, statute, rule, regulation or ordinance, or
otherwise, on or against the exercise of the rights and remedies otherwise
available to the Secured Party herein, in the Loan Documents, in the Guaranty,
or in any other documents or instruments executed and delivered in connection
therewith and as otherwise provided by law, and the Obligated Parties
irrevocably waive any right to object to such relief and will not contest any
motion by the Secured Party seeking relief from the automatic stay.

         9. LEGAL REPRESENTATION. Each of the parties hereto acknowledge that
they have been represented by independent legal counsel in connection with the
execution of this Amendment, that they are fully aware of the terms and
conditions contained herein, and that they have entered into and executed the
within Agreement as a voluntary action and without coercion or duress of any
kind.

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         10. PARTIAL INVALIDITY; NO REPUDIATION. If any of the provisions of
this Amendment shall contravene or be held invalid under the laws of any
jurisdiction, this Amendment shall be construed as if not containing such
provisions and the rights, remedies, warranties, representations, covenants, and
provisions in this Amendment shall be construed and enforced accordingly in such
jurisdiction and shall not in any manner affect such provision in any other
jurisdiction, or any other provisions of this Amendment in any jurisdiction. The
parties hereto acknowledge and agree that the provisions of this Amendment
constitute a reasonable, fair and equitable agreement concerning the Obligations
of the Debtor to the Secured Party.

         11. INDEMNIFICATION. The Obligated Parties hereby agree to and do
indemnify and hold the Secured Party and each of its directors, officers,
employees, affiliates, attorneys and agents harmless from and against any and
all liabilities which may be imposed on, incurred by or asserted against the
same in any manner relating to or arising out of the Loan Documents, the
Guaranty, this Amendment, or any act, event or transaction related to, attendant
to or preceding the execution of this Amendment.

         12. REAFFIRMATION OF LOAN DOCUMENTS AND GUARANTY. The Obligated Parties
hereby agree with, reaffirm and acknowledge the representations and warranties
contained in the Loan Documents and the Guaranty. Furthermore, the Obligated
Parties represent that the representations and warranties contained in the Loan
Documents and the Guaranty continue to be true and in full force and effect.
This agreement, reaffirmation and acknowledgment is given to the Secured Party
by the Obligated Parties without defenses, set-offs, recoupments, claims or
counterclaims of any kind. To the extent that any such defenses, set-offs,
recoupments, claims or counterclaims against the Secured Party may exist, the
Obligated Parties waive and release the Secured Party from same.

         13. RATIFICATION AND REAFFIRMATION OF LOAN DOCUMENTS AND GUARANTY. The
Obligated Parties ratify and reaffirm all terms, covenants, conditions and
agreements contained in the Loan Documents and the Guaranty. The Debtor further
reaffirms

         14. LIMITED EFFECT OF AMENDMENT.

         14.1 All other terms and conditions of the Loan Documents shall remain
unchanged and in full force and effect.

         14.2. This Amendment shall not constitute a waiver or modification of
any of the Secured Party's rights and remedies or of any of the terms,
conditions, warranties, representations, or covenants contained in the Loan
Documents, except as specifically set forth above, and the Secured Party hereby
reserves all of its rights and remedies pursuant to the Loan Documents and
applicable law.

         15. ADDITIONAL EVENT OF DEFAULT UNDER LOAN DOCUMENTS. The failure of
the Obligated Parties to satisfy any of the terms and conditions of this
Amendment or any breach of any of the terms and conditions herein or of any of

                                       6
<PAGE>   12

the representations or warranties provided herein shall constitute an Event of
Default under the Loan Documents and the Guaranty, and the Secured Party shall
be entitled to all of its rights and remedies under the Loan Documents, the
Guaranty and applicable law.

         16. BINDING EFFECT. This Amendment is binding upon the parties hereto
and their respective heirs, administrators, executors, officers, directors,
representatives and agents.

         17. GOVERNING LAW; VENUE.

                  17.1 This Amendment and the Loan Documents shall be governed
by and construed in accordance with the laws of the State of New Jersey, without
giving effect to the conflict of principles of conflict of laws thereof.

                  17.2 THE OBLIGATED PARTIES AND SECURED PARTY AGREE THAT ALL
ACTIONS OR PROCEEDINGS RELATING DIRECTLY OR INDIRECTLY TO THIS AMENDMENT, THE
LOAN DOCUMENTS OR THE TRANSACTION CONTEMPLATED HEREBY OR THEREBY MAY BE
LITIGATED IN THE FEDERAL, STATE OR LOCAL COURTS SITTING IN OR FOR THE COUNTY OF
SOMERSET, NEW JERSEY AND HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF SUCH
COURTS. The Obligated Parties and Secured Party acknowledge that such courts are
convenient forums and waive any defense based upon doctrines of venue or forum
non-conveniens or similar rules or doctrines.

         18. COUNTERPARTS. This Amendment and/or any documentation contemplated
or required in connection herewith may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
be considered one and the same document.

         IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, do hereby execute this Amendment the date and year first above written.

U.S. PLASTIC LUMBER LTD.                    THE EAGLEBROOK GROUP, INC.

By: /s/ JOHN W. POLING                  By: /s/ MICHAEL D. SCHMIDT
   ---------------------------------       ------------------------------------

Print Name: JOHN W. POLING              Print Name: MICHAEL D. SCHMIDT
            ------------------------                ---------------------------

Print Title: CHIEF FINANCIAL OFFICER    Print Title: TREASURER
            ------------------------                ---------------------------

U.S. PLASTIC LUMBER CORP.               SIEMENS FINANCIAL SERVICES, INC.

By: /s/ MICHAEL D. SCHMIDT              By: /s/ PROSIT A. ADAMS
   ---------------------------------       ------------------------------------

Print Name: MICHAEL D. SCHMIDT          Print Name:  PROSIT A. ADAMS
            ------------------------                ---------------------------

Print Title: TREASURER                  Print Title: SENIOR VICE PRESIDENT
            ------------------------                ---------------------------

                                       7<PAGE>   1
                                                                   EXHIBIT 4.16

<PAGE>   2

REGISTERED                                                     PRINCIPAL AMOUNT
NO. -001-                                                      $50,000,000.00
CUSIP NO. 45005PAA2

                              IRT PROPERTY COMPANY

          MEDIUM-TERM NOTE DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
                         UNCONDITIONALLY GUARANTEED BY
                IRT PARTNERS, L.P., IRT CAPITAL CORPORATION II,
        IRT MANAGEMENT COMPANY AND IRT ALABAMA, INC. (THE "GUARANTORS")

         Unless this Security is presented by an authorized representative of
The Depository Trust Company, a New York corporation, 55 Water Street, New
York, New York ("DTC"), to IRT Property Company, a Georgia corporation (herein
called the "Company," which term includes any successor person under the
Indenture referred to on the reverse hereof), or its agent for registration of
transfer, exchange or payment, and any Security issued is registered in the
name of Cede & Co., or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.

         Unless and until it is exchanged in whole or in part for securities in
certificated form, this Security may not be transferred except as a whole by
DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC
or by DTC or any such nominee to a successor of DTC or a nominee of such
successor of DTC.

<TABLE>
<S>                                                   <C>
Original Issue Date:  March 30, 2001                  Initial Redemption Date:  Redeemable at any
Stated Maturity Date:  April 1, 2006                  time in accordance with Annex I
Interest Rate:  7.77%, subject to Step-up             Initial Redemption Price:  Make-whole
adjustments                                           (See Annex I)
Interest Payment Dates:  April 1 and                  Initial Redemption Percentage: N/A
October 1                                             Annual Redemption Percentage Reduction:  N/A
Regular Record Dates:  March 15 and                   Redemption Limitation Date:  N/A
September 15                                          Indexed Note:  Yes [ ]  No [X]
Other/Additional Provisions:  (See Annex I)           Amortizing Note:  Yes [ ]  No [X]
Optional Redemption:  Yes [X]  No [ ]
(See Annex I)

Original Issue Discount Note:  Yes [ ] No [X]         Specified Currency:  U.S. Dollars
Issue Price (percentage of principal):  N/A           Sinking Fund:  Yes [ ] No [X]
Yield to Maturity (%):  N/A                           Option to Elect Repayment:  Yes [ ] No [X]
Initial Accrual Period OID (%):  N/A                  Optional Repayment Dates:  Yes [ ] No [X]
(Constant - Yield Method)
</TABLE>

         IRT PROPERTY COMPANY, a corporation duly organized and existing under
the laws of the State of Georgia (hereinafter called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to Cede & Co. or registered
assigns, the principal sum of Fifty Million Dollars ($50,000,000) on the Stated
Maturity Date specified above (except to the extent redeemed or repaid prior to
such date) and to pay interest thereon, if

<PAGE>   3

any, from the Original Issue Date specified above or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, on
the principal amount hereof at the Interest Rate per annum specified above
(computed on the basis of a 360-day year of twelve 30-day months),
semi-annually in arrears on each Interest Payment Date commencing with the
Interest Payment Date next succeeding the Original Issue Date specified above,
and at Maturity until the principal hereof is paid or duly provided for. Unless
this Security is a Security which has been issued upon transfer of, in exchange
for, or in replacement of, a Predecessor Security, interest on this Security
shall accrue from the Original Issue Date indicated above. If this Security has
been issued upon transfer of, exchange for, or in replacement of, a Predecessor
Security, interest on this Security shall accrue from the last Interest Payment
Date to which interest was paid on such Predecessor Security or, if no interest
was paid on such Predecessor Security, from the Original Issue Date indicated
above. The first payment of interest on a Security originally issued and dated
between a Regular Record Date specified above and an Interest Payment Date will
be due and payable on the Interest Payment Date following the next succeeding
Regular Record Date to the registered owner on such next succeeding Regular
Record Date. Subject to certain exceptions provided in the Indenture referred
to herein below, the interest so payable on any Interest Payment Date will be
paid to the Person in whose name this Security is registered at the close of
business on the Regular Record Date (whether or not a Business Day) next
preceding such Interest Payment Date, and interest payable upon Maturity will
be paid to the person to whom principal is payable.

         Notwithstanding the foregoing, if an Addendum is attached hereto or
"Other/Additional Terms" apply to this Security as specified above, this
Security shall be subject to the terms set forth in such Addendum or such
"Other/Additional Terms."

         The principal of, premium, if any, and interest, if any, on, this
Security is payable by the Company in the Specified Currency specified above.

         Any interest not punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice of
which shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.

         Until this Security is paid in full or payment therefor in full is
duly provided for, the Company will at all times maintain a Paying Agent (which
Paying Agent may be the Trustee) in The Borough of Manhattan in The City of New
York. The Company has initially appointed SunTrust Bank as the Paying Agent at
the offices of its agent, the Harris Trust Company of New York, Wall Street
Plaza, 88 Pine Street, 19th Floor, New York, New York 10005.

         Payments of principal, premium, if any, and interest on this Security
will be made to DTC or its nominee, as Holder of this Security, by wire
transfer of immediately available funds.

         No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

         Any payment on this Security due on any day which is not a Business
Day need not be made on such day, but may be made on the next succeeding
Business Day with the same force and effect as if

<PAGE>   4

made on the due date and no additional interest shall accrue on the amount so
payable for the period from and after such date. For purposes of this Security,
"Business Day" means any day that is not a Saturday or Sunday and that is not a
legal holiday or a day on which banking institutions are generally authorized
or obligated by law, regulation or executive order to close in the City of New
York, New York or any other place where the principal of, premium, if any, and
interest on, the Security is payable.

         Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place. Unless the
certificate of authentication hereon has been executed by the Trustee referred
to on the reverse hereof by manual signature or its duly authorized agent
referred to on the reverse hereof by manual signature, this Security shall not
be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.

<PAGE>   5

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated: March 30, 2001
                                               IRT PROPERTY COMPANY
[SEAL]
                                               By:    /s/ Thomas H. McAuley
                                                   ----------------------------
                                                   Name:  Thomas H. McAuley
                                                   Title: President

ATTEST:

  /s/ W. Benjamin Jones III
----------------------------
W. Benjamin Jones, III
Secretary

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.

SUNTRUST BANK
   as Trustee

By:      /s/
   -----------------------------------------
    Authorized Signature

OR

    ---------------------------------------
    as Authenticating Agent for the Trustee

By:
    ---------------------------------------
    Authorized Signature

<PAGE>   6

                                    GUARANTY

         Each of IRT Partners, L.P., a Georgia limited partnership, IRT Capital
Corporation II, a Georgia corporation, IRT Management Company, a Georgia
corporation, and IRT Alabama, Inc., an Alabama corporation (the "Guarantors,"
which term includes any successors under the Indenture (the "Indenture")
referred to in the Security upon which this Guaranty is endorsed), has
unconditionally guaranteed to the Trustee and the Holder of the Security upon
which this Guaranty is endorsed full and prompt payment and performance, when
due, whether at maturity, by acceleration or otherwise, of (a) the payment and
performance obligations of IRT Property Company, a Georgia corporation (the
"Company"), (i) under the Indenture with respect to the Securities, (ii) under
the Securities and (iii) as a result of the issuance of the Securities and (b)
the obligation to pay an amount equal to the amount of any and all damages
which the Trustee and the Holders, or any part of them, may suffer by reason of
a breach by either the Company or any other obligor of any obligation, covenant
or undertaking under (x) the Indenture with respect to the Securities or (y)
the Securities (collectively, the "Obligations"). Each Obligation shall rank
pari passu with each other Obligation.

         This Guaranty shall not be valid or obligatory for any purpose until
the certificate of authentication of the Security upon which this Guaranty is
endorsed shall have been manually executed by or on behalf of the Trustee under
the Indenture.

         All terms used in this Guaranty which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

         This Guaranty shall be governed by and construed in accordance with
the laws of the State of Georgia, except to the extent that the Trust Indenture
Act shall be applicable.

<PAGE>   7

         IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be
duly executed.

Dated: March 30, 2001

                                       IRT PARTNERS, L.P.

                                       By:   IRT PROPERTY COMPANY
                                               as General Partner

                                       By:   /s/ Thomas H. McAuley
                                            -----------------------------------
                                            Name:  Thomas H. McAuley
                                            Title: President and Chief
                                                   Executive Officer

                                       IRT CAPITAL CORPORATION II

                                       By:      /s/ Thomas H. McAuley
                                            -----------------------------------
                                            Name:  Thomas H. McAuley
                                            Title: President

                                       IRT MANAGEMENT COMPANY

                                       By:      /s/ Thomas H. McAuley
                                            -----------------------------------
                                            Name:  Thomas H. McAuley
                                            Title: President

                                       IRT ALABAMA, INC.

                                       By:      /s/ Thomas H. McAuley
                                            -----------------------------------
                                            Name:  Thomas H. McAuley
                                            Title: President
<PAGE>   8

                                [Reverse of Note]

                              IRT PROPERTY COMPANY

                           MEDIUM-TERM FIXED RATE NOTE

                 DUE NINE MONTHS OR MORE FROM THE DATE OF ISSUE

GENERAL

         This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture dated as of September 9, 1998, as amended or
supplemented from time to time (herein called the "Indenture"), among the
Company, the Guarantors and SunTrust Bank, as Trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto, reference is made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Guarantors, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered and guaranteed. The acceptance of this Security
shall be deemed to constitute the consent and agreement by the Holder hereof to
all of the terms and provisions of the Indenture. This Security is one of the
series of the Securities designated above, of the Company, which series is
limited to an aggregate principal amount of $100,000,000 or the equivalent
thereof in one or more foreign or composite currencies. The Securities of this
series may mature at different times, bear interest, if any, at different rates,
be redeemable at different times or not at all, be repayable at the option of
the Holder at different times or not at all, be issued at an original issue
discount and be denominated in different currencies.

         The Securities are issuable only in registered form without coupons and
will be either (a) book-entry securities represented by one or more global
securities recorded in the book-entry system maintained by the Depository or (b)
certificated securities issued to and registered in the names of, the beneficial
owners or their nominees.

ADDITIONAL COVENANTS

         In addition to the covenants and agreements contained in the Indenture,
the Company shall be subject to the following additional covenants with respect
to the Securities. The Company will not, and will not permit any Subsidiary to,
incur any Debt (as defined below) if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds thereof,
the aggregate principal amount of all of the outstanding Debt of the Company and
the Subsidiaries on a consolidated basis determined in accordance with GAAP is
greater than 60% of the sum of (without duplication) (i) the Total Assets (as
defined below) of the Company and the Subsidiaries as of the end of the calendar
quarter covered our Annual Report on Form 10-K or Quarterly Report on Form 10-Q,
as the case may be, most recently filed with the SEC (or, if such filing is not
permitted under the Securities Exchange Act of 1934, as amended, with SunTrust
Bank) prior to the incurrence of such additional Debt, and (ii) the purchase
price of any real estate assets or mortgage receivable acquired, and the amount
of any securities offering proceeds received (to the extent that such proceeds
were not used to acquire real estate assets or mortgagers receivable or used to
reduce Debt), by the Company or any Subsidiary since the end of such calendar
quarter, including those proceeds obtained in connection with the incurrence of
such additional Debt.

<PAGE>   9

         In addition to the foregoing limitation on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt secured
by any Encumbrance (as defined below) upon any of the Company's or any
Subsidiary's property if, immediately after giving effect to the incurrence of
such additional Debt and the application of the proceeds thereof, the aggregate
principal amount of all of the Company's and its Subsidiaries' outstanding Debt
on a consolidated basis which is secured by any Encumbrance on property of the
Company or any Subsidiary is greater than 40% of the sum of (without
duplication) (i) the Total Assets of the Company and the Subsidiaries as of the
end of the calendar quarter covered in our Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, as the case my be, most recently filed with the
SEC (or, if such filing is not permitted under the Securities Exchange Act of
1934, as amended, with SunTrust Bank) prior to the incurrence of such additional
Debt and (ii) the purchase price of any real estate assets or mortgages
receivable acquired, and the amount of any securities offering proceeds received
(to the extent that such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Debt), by the Company or any Subsidiary
since the end of such calendar quarter, including those proceeds obtained in
connection with the incurrence of such additional Debt.

         The Company and its Subsidiaries may not at any time own Total
Unencumbered Assets (as defined below) equal to less than 150% of the aggregate
outstanding principal amount of the Unsecured Debt of the Company and its
Subsidiaries on a consolidated basis.

         In addition to the foregoing limitations on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt if the
ratio of Consolidated Income Available for Debt Service (as defined below) to
the Annual Service Charge (as defined below) for the four consecutive fiscal
quarters most recently ended prior to the date on which such additional Debt is
to be incurred shall have been less than 1.5:1 on a pro forma basis after giving
effect thereto and to the application of the proceeds therefrom, and calculated
on the assumption that (i) such Debt and any other Debt incurred by the Company
and its Subsidiaries since the first day of such four-quarter period and the
application of the proceeds therefrom, including to refinance other Debt, had
occurred at the beginning of such period; (ii) the repayment or retirement of
any other Debt by the Company and its Subsidiaries since the first day of such
four-quarter period had been repaid or retired at the beginning of such period
(except that, in making such computation, the amount of Debt under any revolving
credit facility shall be computed based upon the average daily balance of such
debt during such period); (iii) in the case of Acquired Debt (as defined below)
or Debt incurred in connection with any acquisition since the first day of such
four-quarter period, the related acquisition had occurred as of the first day of
such period with the appropriate adjustments with respect to such acquisition
being included in such pro forma calculation; and (iv) in the case of any
acquisition or disposition by the Company or its Subsidiaries of any asset or
group of assets since the first day of such four-quarter period, whether by
merger, stock purchase or sale, or asset purchase or sale, such acquisition or
disposition or any related repayment of Debt had occurred as of the first day of
such period with the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation.

         As used herein, and in the Indenture:

                  "Acquired Debt" means Debt of a person (i) existing at the
         time such Person becomes a Subsidiary or (ii) assumed in connection
         with the acquisition of assets from such person, in each case, other
         than Debt incurred in connection with, or in contemplation of, such
         person becoming a Subsidiary or such acquisition. Acquired Debt shall
         be deemed to be incurred on the date of the related acquisition of
         assets from any person or the date the acquired Person becomes a
         Subsidiary.

<PAGE>   10

                  "Annual Service Charge," for any period, means the maximum
         amount which is payable during such period for interest on, and the
         amortization during such period of any original issue discount of, Debt
         of the Company and its Subsidiaries and the amount of dividends which
         are payable during such period in respect of any Disqualified Stock.

                  "Capital Stock" means, with respect to any Person, any capital
         stock (including preferred stock), shares, interests, participations or
         other ownership interests (however designated) of such Person and any
         rights (other than debt securities convertible into or exchangeable for
         corporate stock), warrants or options to purchase any thereof.

                  "Consolidated Income Available for Debt Service," for any
         period, means Earnings from Operations (as defined below) of the
         Company and its Subsidiaries plus amounts which have been deducted, and
         minus amounts which have been added, for the following (without
         duplication): (i) interest on Debt of the Company and its Subsidiaries,
         (ii) provision for taxes of the Company and its Subsidiaries based on
         income, (iii) amortization of debt discount, (iv) provisions for gains
         and losses on properties and property depreciation and amortization,
         (v) the effect of any noncash charge resulting from a change in
         accounting principles in determining Earnings from Operations for such
         period and (vi) amortization of deferred charges.

                  "Debt" of the Company or any Subsidiary means any indebtedness
         of the Company or any Subsidiary, whether or not contingent, in respect
         of (i) money borrowed or evidenced by bonds, notes, debentures or
         similar instruments, (ii) indebtedness for borrowed money secured by
         any Encumbrance existing on property owned by the Company or any
         Subsidiary, (iii) the reimbursement obligations, contingent or
         otherwise, in connection with any letters of credit actually issued or
         amounts representing the balance deferred and unpaid of the purchase
         price of any property or services, except any such balance that
         constitutes an accrued expense or trade payable, or all conditional
         sale obligations or obligations under any title retention agreement,
         (iv) the principal amount of all obligations of the Company or any
         Subsidiary with respect to redemption, repayment or other repurchase of
         any Disqualified Stock or (v) any lease of property by the Company or
         any Subsidiary as lessee which is reflected on the Company's
         Consolidated Balance Sheet as a capitalized lease in accordance with
         GAAP, to the extent, in the case of items of indebtedness under (i)
         through (iii) above, that any such items (other than letters of credit)
         would appear as a liability on the Company's Consolidated Balance Sheet
         in accordance with GAAP, and also includes, to the extent not otherwise
         included, any obligation by the Company or any Subsidiary to be liable
         for, or to pay, as obligor, guarantor or otherwise (other than for
         purposes of collection in the ordinary course of business), Debt of
         another Person (other than the Company or any Subsidiary) (it being
         understood that Debt shall be deemed to be incurred by the Company or
         any Subsidiary whenever the Company or such Subsidiary shall create,
         assume, guarantee or otherwise become liable in respect thereof).

                  "Disqualified Stock" means, with respect to any Person, any
         Capital Stock of such Person which by the terms of such Capital Stock
         (or by the terms of any security into which it is convertible or for
         which it is exchangeable or exercisable), upon the happening of any
         event or otherwise (i) matures or is mandatorily redeemable, pursuant
         to a sinking fund obligation or otherwise (other than Capital Stock
         which is redeemable solely in exchange for common stock), (ii) is
         convertible into or exchangeable or exercisable for Debt or
         Disqualified Stock or (iii) is redeemable at the option of the holder
         thereof, in whole or in part (other than Capital Stock which is
         redeemable solely in exchange for common stock), in each case on or
         prior to the stated maturity of the Notes.

<PAGE>   11

                  "Earnings from Operations," for any period, means net earnings
         excluding gains and losses on sales of investments, extraordinary
         items, and property valuation losses, net as reflected in the financial
         statements of the Company and its Subsidiaries for such period
         determined on a consolidated basis in accordance with GAAP.

                  "Encumbrance" means any mortgage, lien, charge, pledge or
         security interest of any kind.

                  "Executive Group" means, collectively, those individuals
         holding the offices of Chairman, Vice Chairman, President, Chief
         Executive Officer, Chief Operating Officer or any Vice President of the
         Company.

                  "Subsidiary" means (i) a corporation, partnership, joint
         venture, limited liability company or other person the majority of the
         shares, if any, of the non-voting capital stock or other equivalent
         ownership interests of which (except directors' qualifying shares) are
         at the time directly or indirectly owned by the Company and/or any
         other Subsidiary or Subsidiaries, and the majority of the shares of the
         voting capital stock or other equivalent ownership interests of which
         (except directors' qualifying shares) are at the time directly or
         indirectly owned by the Company, any other Subsidiary or Subsidiaries,
         and/or one or more individuals of the Executive Group (or, in the event
         of death or disability of any of such individuals, his/her respective
         legal representatives, or such individuals' successors in office as
         officers of the Company) and (ii) any person the accounts of which are
         consolidated with the accounts of the Company.

                  "Total Assets," as of any date, means the sum of (i) the
         Undepreciated Real Estate Assets and (ii) all other assets of the
         Company and its Subsidiaries determined in accordance with GAAP (but
         excluding accounts receivable and intangibles).

                  "Total Unencumbered Assets" means the sum of (i) the
         Undepreciated Real Estate Assets not subject to an Encumbrance for
         borrowed money and (ii) all other assets of the Company and its
         Subsidiaries not subject to an Encumbrance for borrowed money
         determined in accordance with GAAP (but excluding accounts receivable
         and intangibles).

                  "Undepreciated Real Estate Assets," as of any date, means the
         cost (original cost plus capital improvements) of real estate assets of
         the Company and its Subsidiaries on such date, before depreciation and
         amortization determined on a consolidated basis in accordance with
         GAAP.

                  "Unsecured Debt" means Debt which is not secured by any
         Encumbrance upon any of the properties of the Company or any
         Subsidiary.

EVENTS OF DEFAULT

         If an Event of Default, as defined in the Indenture, with respect to
Securities of this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.

MODIFICATION AND WAIVERS; OBLIGATION OF THE COMPANY ABSOLUTE

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the

<PAGE>   12

Holders of the Securities of each series to be affected under the Indenture at
any time by the Company, the Guarantors and the Trustee with the consent of the
Holders of a majority in principal amount of the Securities at the time
Outstanding of all series to be affected, acting together as a class. The
Indenture also contains provisions permitting the Holders of a majority in
principal amount of the Securities of all series at the time Outstanding
affected by certain provisions of the Indenture, acting together as a class, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company and Guarantors with those provisions of the Indenture. Certain past
defaults under the Indenture and their consequences may be waived under the
Indenture by the Holders of a majority in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of all Securities
of such series. Any such consent or waiver by the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on, this Security at the times, place and rate, and in the coin or
currency, herein prescribed, except that in the event the Company deposits money
as provided in Section 401 of the Indenture, such payments will be made only
from proceeds of such money.

DEFEASANCE AND COVENANT DEFEASANCE

         The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness on this Security and (b) certain restrictive covenants and
certain Events of Default, upon compliance by the Company with certain
conditions set forth therein, which provisions apply to this Security.

REDEMPTION

         If so provided on the face hereof, the Company may at its option redeem
this Security in whole or from time to time in part in increments of $1,000
(provided that any remaining principal amount of this Security shall not be less
than the minimum authorized denomination hereof) at any time, or if so provided
on the face hereof, on or after the date designated as the Initial Redemption
Date on the face hereof at 100% of the unpaid principal amount hereof or the
portion thereof redeemed multiplied by a percentage (the "Redemption
Percentage"), together with accrued interest, if any, to the Initial Redemption
Date. If specified on the face hereof, the Redemption Percentage shall initially
be equal to the Initial Redemption Percentage specified on the face hereof and
shall decline at each anniversary of the Initial Redemption Date by the amount
of the Annual Redemption Percentage Reduction specified on the face hereof,
until the Redemption Percentage is equal to 100%. The Company may exercise such
option by causing the Trustee to mail a notice of such redemption at least 30
but not more than 60 days prior to the applicable Redemption Date to each Holder
of the Securities of this series to be re-deemed. In the event of redemption of
this Security in part only, the Company shall issue a new Security or Securities
for the unredeemed portion hereof in the name of the Holder hereof upon the
cancellation hereof. If less than all of the Securities of this series with like
tenor and terms are to be redeemed, the Securities to be redeemed shall be
selected by the Trustee by such method as the Trustee shall deem fair and
appropriate.

SINKING FUND

         Unless otherwise specified on the face hereof, this Security will not
be entitled to any sinking fund.

<PAGE>   13

REPAYMENT AT HOLDER'S OPTION

         If so provided on the face hereof, this Security will be repayable
prior to the Stated Maturity Date at the option of the Holder, in whole or in
part and in increments of $1,000 (provided that any remaining principal amount
of this Security surrendered for partial repayment shall not be less than the
minimum authorized denomination hereof), on or after the date designated as an
Optional Repayment Date on the face hereof at 100% of the principal amount to be
repaid, plus accrued unpaid interest, if any, to the Repayment Date. In order
for this Security to be repaid, the Trustee must receive at the applicable
address of the Trustee set forth below or at such other place or places of which
the Company shall from time to time notify the Holder of the within Security, at
least 30 but not more than 60 calendar days prior to an Optional Repayment Date,
either (i) this Security, with the form below entitled "Option to Elect
Repayment" duly completed, or (ii) a telegram, telex, facsimile transmission, or
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or a trust company
in the United States of America setting forth (a) the name, address and
telephone number of the Holder of this Security, (b) the principal amount of
this Security and the amount of this Security to be repaid, (c) a statement that
the option to elect repayment is being exercised thereby, and (d) a guarantee
stating that the Trustee will receive this Security, with the form below
entitled "Option to Elect Repayment" duly completed, not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter (and this Security and form duly completed are received by the Company by
such fifth Business Day). Any such election shall be irrevocable. The address to
which such deliveries are to be made is the corporate trust office of the
Trustee located on the date hereof at the Harris Trust Company of New York, Wall
Street Plaza, 88 Pine Street, 19th Floor, New York, New York 10005 (or, at such
other place as the Company shall notify the Holders of the Securities of this
series). All questions as to the validity, eligibility (including time of
receipt) and acceptance of any Security for repayment will be determined by the
Company, whose determination will be final and binding. Upon any partial
repayment, this Security shall be cancelled and a new Security or Securities for
the remaining principal amount hereof shall be issued in the name of the Holder
of this Security. Beneficial owners of Global Securities electing to have all or
a portion of their book-entry Securities repaid must instruct the participant
through which they own their interest to direct DTC or its nominee as Holder of
the Security to exercise the repayment option on their behalf.

AUTHORIZED DENOMINATIONS

         Unless otherwise provided on the face hereof, this Security is issuable
only in registered form without coupons in denominations of $1,000 or any amount
in excess thereof which is an integral multiple of $1,000.

REGISTRATION OF TRANSFER

         Upon due presentment for registration of transfer of this Security at
the corporate trust office of the Trustee in The Borough of Manhattan, The City
of New York or at the corporate trust office of the Paying Agent in The Borough
of Manhattan, The City of New York, a new Security or Securities of this series
in authorized denominations for an equal aggregate principal amount will be
issued to the transferee in exchange herefor, as provided in the Indenture and
subject to the limitations provided therein and to the limitations described
below, without charge except for any tax or other governmental charge imposed in
connection therewith.

         If this Security is a Global Security (as specified above), this
Security is exchangeable for definitive Securities in registered form only if
(x) the Depositary notifies the Company that it is unwilling

<PAGE>   14

or unable to continue as Depositary for this Security or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and the Company does not appoint a successor
Depositary within 90 days after receiving such notice or after becoming aware
that the Depositary has ceased to be so registered as a clearing agency, (y) the
Company in its sole discretion determines that this Security shall be
exchangeable for definitive Securities in registered form and notifies the
Trustee thereof or (z) an Event of Default with respect to the Securities
represented hereby has occurred and is continuing. If this Security is
exchangeable pursuant to the preceding sentence, it shall be exchangeable for
definitive Securities in registered form, bearing interest at the same rate,
having the same date of issuance, redemption provisions, Stated Maturity Date
and other terms and of authorized denominations aggregating a like amount.

         If this Security is a Global Security (as specified above), this
Security may not be transferred except as a whole by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor of the Depositary or a nominee of such successor. Except as provided
above, owners of beneficial interests in this Global Security will not be
entitled to receive physical delivery of Securities in definitive form and will
not be considered the Holders hereof for any purpose under the Indenture.

         Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

NO PERSONAL RECOURSE

         No recourse shall be had for the payment of the principal of, premium,
if any, or interest, if any on, this Security, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture or any
indenture supplemental thereto, against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Company, the Guarantors or
any of their respective successor corporations (or other entities), whether by
virtue of any constitution, statute or rule of law, or by any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issuance hereof, expressly waived and
released.

DEFINED TERMS

         All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

GOVERNING LAW

         This Security shall be governed by and construed in accordance with the
law of the State of Georgia, without regard to principles of conflicts of laws,
except to the extent that the Trust Indenture Act shall be applicable.

<PAGE>   15

                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

         TEN COM - as tenants in common

         TEN ENT - as tenants by the entireties

         JT TEN - as joint tenants with right of survivorship and not as tenants
         in common

         UNIF GIFT MIN ACT - __________________ Custodian ________________
                                (Custodian)                    (Minor)

         Under Uniform Gifts to Minors Act

         -------------------------
                  (State)

         Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

Please Insert Social Security or
Other Identifying Number of Assignee

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

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

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

------------------------------------------------------------
(PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL
ZIP CODE OF ASSIGNEE)

the within Security of IRT PROPERTY COMPANY and all rights thereunder and does
hereby irrevocably constitute and appoint __________________ attorney to
transfer the said Security on the books of the within-named Company, with full
power of substitution in the premises.

Dated:_________________________

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

                         Signature Guaranteed: ---------------------------------

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Security in every particular, without
alteration or enlargement or any change whatsoever.

<PAGE>   16

ANNEX I

The Securities will be redeemable, in whole or from time to time in part in
increments of $1,000 or any other integral multiple thereof, at the option of
the Company on any date (a "Redemption Date"), at a redemption price (the
"Redemption Price") equal to the greater of (i) 100% of the principal amount of
the Securities to be redeemed and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon (exclusive of
interest accrued to such Redemption Date) discounted to such Redemption Date on
a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 25 basis points, plus, in either case, accrued and
unpaid interest on the principal amount being redeemed to such Redemption Date;
provided that installments of interest on the Securities which are due and
payable on an Interest Payment Date falling on or prior to the relevant
Redemption Date shall be payable to the holders of the Securities, or one or
more predecessor Securities, registered as such at the close of business on the
relevant Regular Record Date according to their terms and the provisions of the
Indenture.

"Treasury Rate" means, with respect to any Redemption Date for the Securities,
(i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release published by the Board of Governors of the Federal Reserve System
designated as "Statistical Release H.15 (519)" or any successor publication
which is published weekly by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Comparable Treasury Issue (if
no maturity is within three months before or after the Maturity Date, yields for
the two published maturities most closely corresponding to the Comparable
Treasury Issue shall be determined and the Treasury Rate shall be interpolated
or extrapolated from such yields on a straight line basis, rounding to the
nearest month), or (ii) if such release (or successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be
calculated on the third Business Day preceding the Redemption Date.

"Comparable Treasury Issue" means the United States Treasury security selected
by the Independent Investment Banker as having a maturity comparable to the
remaining term of the Securities to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Securities.

"Independent Investment Banker" means Credit Suisse First Boston Corporation or
its successor, or if such firm is unwilling or unable to select the Comparable
Treasury Issue, an independent investment banking institution of national
standing appointed by the Trustee after consultation with the Company.

"Comparable Treasury Price" means with respect to any Redemption Date for the
Securities (i) the average of four Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest such Reference Treasury
Dealer Quotations, or (ii) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.

"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, J.P. Morgan Securities, Inc., UBS Warburg LLC and Merrill Lynch
Government Securities, Inc. and their respective successors; provided, however,
that if any of the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), the Company
will substitute therefore another Primary Treasury Dealer.

<PAGE>   17

"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by the
Trustee, of the bid, and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding such Redemption Date.

Notice of any redemption by the Company will be mailed not less than 30 days nor
more than 60 days before any Redemption Date to each holder of the Securities to
be redeemed. If less than all the Securities are to be redeemed at the option of
the Company, the Trustee shall select, by such method as the Trustee shall deem
fair and appropriate, the Securities to be redeemed in whole or in part.

Unless the Company defaults in payment of the redemption price, on and after any
Redemption Date interest will cease to accrue on the Security or portions
thereof called for redemption.

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